CITY COUNCIL STAFF REPORT
December 19, 2023 {{section.number}}d
APPROVAL OF THE ADMINISTRATIVE BUDGET AND THE RECOGNIZED OBLIGATION PAYMENT SCHEDULE (ROPS) FOR FISCAL YEAR 2024-25 RELATED TO THE SUCCESSOR AGENCY’S CLAIM FOR REDEVELOPMENT PROPERTY TAX TRUST FUNDS RECOMMENDATION:
Approve the Administrative Budget and the Recognized Obligation Payment Schedule (ROPS) for July 1, 2024 to June 30, 2025.
BACKGROUND:
On September 22, 2015, Governor Brown signed Senate Bill No. 107 (SB 107). SB 107 terminated the preparation of the six-month schedule of payments called the ROPS as of December 31, 2015, and requires yearly ROPS reporting for each fiscal year. The City Council, acting as the Board of the Successor Agency, is required to approve the ROPS. Once the City Council approves, the ROPS will be submitted for approval to the Countywide Redevelopment Successor Agency Oversight Board. As of July 1, 2018, local Oversight Boards were replaced with regional Oversight Boards. The San Diego Countywide Oversight Board will meet in January to review the ROPS for all the Successor Agencies in San Diego County.
SB 107 redefined administrative cost allowance in Health and Safety Code Section 34177.3(b) to mean the maximum amount of administrative costs (3% of the actual prior year Redevelopment Property Tax Trust Fund (RPTTF) is $568,180) which may be paid by a successor agency from the RPTTF funds in a fiscal year. Beginning on July 1, 2016, and for every fiscal year thereafter, the administrative cost allowance was set at a maximum of three percent (3%) of the actual RPTTF funds available to the Successor Agency by the County Auditor and Controller in the preceding fiscal year for payment of approved enforceable obligations, reduced by the Successor Agency’s administrative cost allowance and any loan repayments made to the City under Health and Safety Code Section 34191.4(b) during the preceding fiscal year.
As a result of the interest rate savings and the early redemption feature (“turbo redemptions”) of the 2018 Tax Allocation Refunding Bonds (TARB), it is expected that the Successor Agency (SA) will retire TARB obligations by Fiscal Year 2027-28. This is eight years earlier than was previously expected.
ANALYSIS:
Staff has prepared a draft ROPS for July 1, 2024 through June 30, 2025. The following list highlights noteworthy items on the ROPS 2023-24:
Bond payments and trustee fees scheduled during the period are reflected in items 66 through 68. The total amount of obligations for these lines is $23,071,125. Included in this amount is $5,000 for bond trustee fees, $10,526,125 for debt service in FY 2024-25, and a turbo payment of $12,545,000 (approved for prior year was $9,190,000). Item 17 is an obligation of $5,570 for the re-entered lifeguard tower loan. Item 30 is administrative expenses of the Successor Agency for FY 2024-25, estimated to be $316,319.
Item 46 represents a property tax reimbursement payment to Five Star Theatres, Inc. based upon the terms of the Participation Agreement and is estimated to be approximately $44,500.
The enforceable obligations amount due during the coming fiscal year is $23,442,514. In addition to the ROPS payments, the RPPTF is pledged to pay for San Diego County Tax Collection/Administrative expenses, property tax pass-through to the Coronado Unified School District and to the State of California (the residual RPTTF amount which is left over after payment of all other pledges).
Successor Agency Administrative Budget for FY 2023-24
The Administrative Budget and ROPS 2024-25 must be submitted to the State Department of Finance (DoF) and the San Diego County Auditor and Controller no later than February 1, 2024.
A copy of the draft ROPS 2023-24 and the Administrative Budget will be posted on the City’s website. SB 107 gives the DoF until April 15, 2024, to make a determination of the enforceable obligations listed on ROPS 2024-25. Within five business days of the DoF’s determination, the Successor Agency may request additional review and a meet and confer over any disputed items, except for those items which are the subject of litigation disputing the DoF’s previous or related determination.
Description Amount
Personnel $ 264,984
Audit Services 10,000
JanitorialCosts 9,625
Utilities - Electricity 17,188
Utilities - Gas 411
Utilities Water 4,125
Rental-Equipment 261
R&M Office Equip 825
R&M Bldg & Structure 138
Communications - Telephone 5,090
Postage & Courier Services 2,475
Misc Services & Supplies 688
Paper & Preinter Supplies 510
Total Successor Agency Administrative Costs $ 316,319
FISCAL IMPACT:
The ROPS 2024-25 lists all of the remaining obligations of the former Community Development Agency (CDA), including bonded debt, contract obligations, and the administrative costs due during the period July 1, 2024 through June 30, 2025. The ROPS 2024-25 approval is the Successor Agency’s claim for the continued receipt of funds from the Redevelopment Property Tax Trust Fund (RPTTF) in the upcoming period. The total requested ROPS 2024-25 amount is $23,442,514.
The City’s administrative efforts to manage the Successor Agency and the implementation of the dissolution process are paid by an “administrative allowance” which is limited to 3% of actual RPTTF amount received in the preceding year, but no less than $250,000 per fiscal year unless the permissible maximum annual administrative costs are less than $250,000. The amount estimated for FY 2024-25 is $316,319.
SUCCESSOR AGENCY AUTHORITY: Senate Bill 107 (SB 107) requires the Successor Agency to submit the Oversight Board approved annual ROPS for Fiscal Year 2024-25 to the State of California Department of Finance (DoF) and the San Diego County Auditor and Controller on a DoF-approved form pursuant to instructions provided by the DoF no later than February 1, 2024.
ROPS 2024-25 is subject to DoF review. The DoF may modify, eliminate and/or approve ROPS entries.
ALTERNATIVE:
The Council may direct staff to revise the submitted Administrative Budget and the ROPS for Fiscal Year 2024-25.
CALIFORNIA ENVIRONMENTAL QUALITY ACT:
Not Applicable
PUBLIC NOTICE:
No notice required.
ATTACHMENTS:
1. ROPS 2024-25 Draft
Submitted By: Administrative Services Department / John Kim