Agenda packet, special meeting — Hawthorne City Council, December 12, 2023

Alex Vargas, Mayor
Angie Reyes English, Mayor Pro Tem
Katrina Manning, Councilmember
Alex Monteiro, Councilmember
L. David Patterson, Councilmember
Dayna S. Williams-Hunter,
City Clerk
Marie Poindexter-Hornback,
City Treasurer

CITY OF HAWTHORNE

CITY COUNCIL SUCCESSOR AGENCY SPECIAL MEETING
AGENDA FOR DECEMBER 12, 2023 6:00 PM

COUNCIL CHAMBER AT CITY HALL
4455 W. 126th STREET, HAWTHORNE, CALIFORNIA

MEETING INFORMATION

IF YOU ARE AN INDIVIDUAL WITH A DISABILITY AND NEED REASONABLE

ACCOMMODATION OR MODIFICATION PURSUANT TO THE AMERICANS WITH

DISABILITIES ACT (ADA) PLEASE CONTACT THE CITY CLERK DEPARTMENT AT [email protected] OR CALL (310) 349-2915 PRIOR TO THE MEETING FOR ASSISTANCE.

THE MEETING IS SHOWN LIVE ON CABLE CHANNEL 22, AND WILL BE REBROADCAST

AS PART OF THE REGULAR CITY COUNCIL, SUCCESSOR AGENCY, AND RELATED MEETINGS ACCORDING TO THE PUBLISHED CABLE SCHEDULE OF PROGRAMS. IT SHALL

ALSO BE BROADCAST LIVE AND BE MADE AVAILABLE THEREAFTER ON THE CITY OF HAWTHORNE'S WEBSITE:
https://www.cityofhawthorne.org/departments/community-services/hawthornecommunity-television/meeting-videos Or online on YouTube by searching for Hawthorne Community Television ______________________

THE AGENDA, STAFF REPORTS AND ATTACHMENTS ARE AVAILABLE ONLINE AT https://www.cityofhawthorne.org/departments/community-services/hawthornecommunity-television/meeting-videos AND THEN SELECTING THE DESIRED MEETING. MEMBERS OF THE PUBLIC MAY INSPECT (AT NO COST) AND/OR OBTAIN COPIES (UPON PAYMENT OF THE CITY’S

CURRENT COPYING FEE) OF ANY REGULAR SESSION ITEM BY CONTACTING THE CITY CLERK DEPARTMENT AT CITY HALL VIA TELEPHONE (310) 349-2915 OR EMAIL [email protected].

CALL TO ORDER

ROLL CALL

ORAL COMMUNICATIONS

ORAL COMMUNICATION INSTRUCTIONS
PURSUANT TO GOVERNMENT CODE SECTION 54954.3 THE PUBLIC SHOULD DIRECTLY ADDRESS THE LEGISLATIVE

BODY CONCERNING ITEMS THAT HAVE BEEN DESCRIBED IN THE NOTICE OF SPECIAL MEETING

SUCCESSOR AGENCY

1. Approving a Recognized Obligation Payment Schedule (“ROPS”) for the twelvemonth fiscal period from July 1, 2024 through June 30, 2025 (“ROPS 24-25”) and taking certain related actions.

RECOMMENDED MOTION:

Staff recommends that the City Council adopt SA Resolution 2023-02 approving ROPS 24-25, a Recognized Obligation Payment Schedule for the twelve-month fiscal period from July 1, 2024 through June 30, 2025 and taking certain related actions.

ADJOURNMENT

CERTIFICATION

STATE OF CALIFORNIA )

COUNTY OF LOS ANGELES ) SS

CITY OF HAWTHORNE )
I, DIANA CUCALON, Deputy City Clerk for the City of Hawthorne, certify that a true and correct copy of the foregoing City Council Meeting Agenda was posted not less than 24 hours before the City Council Meeting to be held on Tuesday, December 12, 2023 . __________________________________

DIANA CUCALON, HAWTHORNE DEPUTY CITY CLERK

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AGENDA ITEM NO. 1

CITY OF HAWTHORNE
City Council

AGENDA BILL
For the meeting of December 12, 2023
Originating Department: Finance
City Manager: __________
Vontray Norris
Dir. of Finance: ___________
Felice Lopez
SUBJECT:

Approving a Recognized Obligation Payment Schedule (“ROPS”) for the twelve-month fiscal period from July 1, 2024 through June 30, 2025 (“ROPS 24-25”) and taking certain related actions.

RECOMMENDED MOTION:

DISCUSSION:

Assembly Bill (“AB”) x1 26, AB 1484, and Senate Bill 107 (collectively, the “Dissolution Act”) dissolved Redevelopment agencies and require the Successor Agency to the Hawthorne Redevelopment Agency (“Successor Agency”) to wind down the obligations of the former Hawthorne Redevelopment Agency (“Former Agency”). The wind down is accomplished, in large part, through the preparation of an annual ROPS, covering the upcoming fiscal year. The ROPS lists the obligations to be funded and serves as a request for an allocation of property tax increment revenue deposited by the Auditor-Controller in the Redevelopment Property Tax Trust Fund (“RPTTF”).

The ROPS must be approved by the Oversight Board to the Successor Agency (“Oversight Board”) and submitted to the State Department of Finance (“DOF”). Pursuant to Health and Safety Code (“HSC”) Section 34177(l), DOF provides the ROPS form for successor agencies to use to report enforceable obligations. Pursuant to HSC Section 34177(l)(2)(C), a copy of the ROPS must also be submitted to the Los Angeles County Auditor-Controller (“Auditor-Controller”) and State Controller’s Office.

Page 2 of 3 ends

The Successor Agency has already paid off several of the Former Agency’s obligations. Remaining obligations include the 2016 Tax Allocation Refunding Bonds and related costs, Oceangate Owner Participation Agreement (“OPA”) rebates, Gateway Disposition and Development Agreement rebates, as well as administrative expenses. The ROPS Detail page lists each of the remaining obligations, including the amount requested in the current year and an estimate of the total debt or obligation remaining for each item.

A 2011 City Loan Consolidation Agreement (Item 41) is being retired after repeated unsuccessful attempts to get approval from the DOF and a lawsuit that resulted in an adverse decision from the Superior Court of the State of California. The City and the Successor Agency attempted to get the loan consolidation agreement approved because it represents the consolidation of advances from the City to the Former Agency. Following DOF’s denial, the Successor Agency filed suit against DOF to the Superior Court of the State of California. The court ruled that the consolidated agreement between the City and the Former Agency did not meet the requirements for enforceable loan agreements pursuant to the Dissolution Act.

In total, the Successor Agency requests approval for $5,800,340 in expenditures, including $2,245,875 from a reserve balance set aside in the prior fiscal year and $3,554,465 in funds from the RPTTF. This represents a decrease from the amount requested on the prior year’s ROPS, mostly due to the lower debt service payment (item 38) and an adjustment to the calculation of the OPA rebate (item 35) as detailed in the OPA. The Successor Agency reduced the administrative budget following the County’s direction for all successor agencies to find ways to reduce their administrative expenses. There are no new items on the ROPS.

On the Report of Cash Balances, the Successor Agency identifies any available funds that can be used to pay enforceable obligations. After all available funds are allocated or exhausted, which they have been, the Successor Agency can request funding for enforceable obligations from RPTTF.

FISCAL IMPACT:

ROPS 24-25 must be approved by the Hawthorne Successor Agency’s Oversight Board and submitted to DOF for the Successor Agency to receive RPTTF, administered by the Los Angeles County Auditor-Controller (“Auditor-Controller”), and to pay enforceable obligations during the ROPS 24-25 period. In total, the Successor Agency requests approval for $5,800,340 in expenditures, including $2,245,875 from a reserve balance set aside in the prior fiscal year and $3,554,465 in funds from the RPTTF.

NOTICING PROCEDURES:

None
ATTACHMENT(S):

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1. Resolution 2023-02 approving a Recognized Obligation Payment Schedule for the twelvemonth fiscal period from July 1, 2024 through June 30, 2025 and taking certain related actions. a. Exhibit A: ROPS 24-25
b. Exhibit B: Fiscal Year 2024-25 Administrative Budget RESOLUTION NO. 2023-02

A RESOLUTION OF THE SUCCESSOR AGENCY TO THE HAWTHORNE

REDEVELOPMENT AGENCY APPROVING A RECOGNIZED OBLIGATION

PAYMENT SCHEDULE FOR THE TWELVE-MONTH FISCAL PERIOD FROM JULY 1, 2024 THROUGH JUNE 30, 2025 AND TAKING CERTAIN RELATED

ACTIONS
WHEREAS, the City of Hawthorne elected to serve as the Successor Agency to the former Hawthorne Redevelopment Agency (“Successor Agency”) pursuant to Assembly Bill x1 26 (“ABx1 26”) as codified in the California Health & Safety Code (“HSC”); and WHEREAS, ABx1 26 was amended by Assembly Bill 1484 and Senate Bill 107 (collectively, the “Dissolution Act”); and
WHEREAS, among the duties of successor agencies under the Dissolution Act as amended is the preparation of an annual Recognized Obligation Payment Schedule (“ROPS”), per HSC Section 34177 (l), that includes the ensuing two six-month periods for consideration by a consolidated oversight board and the California Department of Finance (“DOF”) for purposes of administering the wind-down of financial obligations of the former Redevelopment Agency; and WHEREAS, HSC Section 34177 (l) further requires that the proposed ROPS be transmitted to the County Oversight Board, after which time the County Oversight Board may approve the ROPS and the Successor Agency’s transmittal of the adopted ROPS to DOF, the County Auditor-Controller, and the State Controller’s Office for their consideration; and WHEREAS, the proposed ROPS 24-25 for the six-month periods from July 1, 2024 through December 31, 2024 and January 1, 2025 through June 30, 2025, attached hereto as Exhibit “A”, has been prepared and is consistent with the provisions of the Dissolution Act and in the format made available by DOF; and
WHEREAS, the Successor Agency is required to prepare an annual administrative budget and submit it to the Oversight Board per HSC Section 34177 (j); and WHEREAS, the Successor Agency prepared the Fiscal Year 2024-25 Administrative Budget in accordance with the Dissolution Act, attached hereto as Exhibit “B”; and WHEREAS, the Oversight Board will review the ROPS 24-25 and the Fiscal Year 2024- 25 Administrative Budget on January 16, 2024; and
WHEREAS, the Successor Agency desires to approve the ROPS 24-25, along with the Fiscal Year 2024-25 Administrative Budget, and transmit it to various parties as required by the Dissolution Act.

NOW, THEREFORE, the Successor Agency to the Hawthorne Redevelopment Agency does hereby resolve as follows:

Section 1. The above recitals are true and correct and are a substantive part of this Resolution, incorporated herein by this reference.

Section 2. The Successor Agency hereby approves and adopts the ROPS 24-25 covering the period of July 1, 2024 to June 30, 2025 in substantially the form attached hereto as Exhibit “A”, as required by the Dissolution Act. The Successor Agency accepts changes made by the Consolidated Oversight Board in advance in order to enable the Successor Agency to submit the ROPS 24-25 to DOF by the deadline of February 1, 2024.

Section 3. Pursuant to the Dissolution Act, the Successor Agency approves the Fiscal Year 2024-25 Administrative Budget for the period July 1, 2024 to June 30, 2025 submitted herewith as Exhibit “B”, which is incorporated herein by this reference.

Section 4. The City Manager or another representative of the Successor Agency is hereby authorized and directed to post a copy of the ROPS 24-25 on the City’s website and transmit a copy of the ROPS 24-25 to the offices of the Los Angeles County Auditor-Controller, the State Controller’s Office, and the State of California Department of Finance.

PASSED AND ADOPTED by the Successor Agency at a meeting held on the 12th day of December, 2023.

ALEX VARGAS,

CHAIR, SUCCESSOR AGENCY TO THE

HAWTHORNE REDEVELOPMENT AGENCY
ATTEST:

DAYNA S. WILLIAMS-HUNTER,

SECRETARY, SUCCESSOR AGENCY
ATTEST:

APPROVED AS TO FORM:

ROBERT KIM,

LEGAL COUNSEL

EXHIBIT A
ROPS 24-25

EXHIBIT B
Fiscal Year 2024-25 Administrative Budget

EXHIBIT B

HAWTHORNE SUCCESSOR AGENCY
ADMINISTRATIVE BUDGET FY 2024-25
FOR JULY 1, 2024 to JUNE 30, 2025
Expense Category Responsibilities
FY 2024-25
Proposed
Budget

AGENCY STAFF
Finance
• Process payment of enforceable obligations
• Maintain documentation of Agency records
• Coordinate with consultant to answer questions and provide documentation as requested by Oversight Board, County Auditor-Controller, and Department of Finance
$57,000
Legal • Provide general legal services as needed $38,000 City Manager • Provide direction to other staff and consultants as needed $28,500 Other • Administration and implementation of Agency wind-down $19,000 AGENCY STAFF TOTAL $142,500

CONTRACTS
Administrative services
• Prepare ROPS, PPA, staff reports, and resolutions
• Assist with administration of the Owner Participation Agreement (“OPA”) and other reporting
• Coordinate with and answer questions for Oversight Board, County Auditor-Controller, and Department of Finance
• Attend Oversight Board meeting
• Monitor and project cash flow to ensure sufficient revenues for obligations and to inform Agency staff of expected revenues
$47,500
Legal services • Provide special legal services as needed $47,500 CONTRACTS TOTAL $95,000
TOTAL BUDGET $237,500
Recognized Obligation Payment Schedule (ROPS 24-25) - Summary Filed for the July 1, 2024 through June 30, 2025 Period Successor Agency: Hawthorne
County: Los Angeles
Current Period Requested Funding for Enforceable
Obligations (ROPS Detail)
24-25A Total
(July -
December)
24-25B Total
(January -
June)
ROPS 24-25
Total
A Enforceable Obligations Funded as Follows (B+C+D) $ 2,245,875 $ - $ 2,245,875 B Bond Proceeds - - -
C Reserve Balance 2,245,875 - 2,245,875
D Other Funds - - -
E Redevelopment Property Tax Trust Fund (RPTTF) (F+G) $ 434,548 $ 3,119,917 $ 3,554,465 F RPTTF 315,798 3,001,167 3,316,965
G Administrative RPTTF 118,750 118,750 237,500
H Current Period Enforceable Obligations (A+E) $ 2,680,423 $ 3,119,917 $ 5,800,340 Certification of Oversight Board Chairman:

Alex Vargas Mayor
Pursuant to Section 34177 (o) of the Health and Safety
code, I hereby certify that the above is a true and
accurate Recognized Obligation Payment Schedule for
the above named successor agency. /s/
Signature Date
Hawthorne
Recognized Obligation Payment Schedule (ROPS 24-25) - ROPS Detail July 1, 2024 through June 30, 2025

OPA/DDA/
Construction
06/23/
2001
11/25/2034 Oceangate
Properties
Tax Increment
Payments Due
to Oceangate
Properties per
6th
Implementation
Agreement
Project
Area
No. 2
2,069,519 N $169,733 - - - 169,733 - $169,733 - - - - - $- 9 Successor
Agency
Administrative/
Employee
Costs
Admin
Costs
02/01/
2012
09/01/2036 City of
Hawthorne
Employees
and
Various
Vendors
Payroll cost for
Successor
Agency
employees,
consultants,
salaries,
insurance, and
benefits,
supplies,
equipment,
and other
operational
supplies.

All
Project
Areas
3,250,000 N $237,500 - - - - 118,750 $118,750 - - - - 118,750 $118,750 31 Gateway DDA
Tax Increment
Payment

OPA/DDA/
Construction
09/07/
2000
09/13/2029 US Bank Tax increment
payments into
Special Fund
required by the
Gateway
Center
Disposition
and
Development
Agreement
Project
Area
No. 2
1,675,995 N $146,065 - - - 146,065 - $146,065 - - - - - $- 35 Tax Rebates -
Oceangate
OPA Sales
Tax
Component
Business
Incentive
Agreements
07/01/
1992
11/25/2034 Oceangate
Properties
Tax rebates for
Oceangate
Properties
Project
Area
No. 2
11,700,000 N $1,222,917 - - - - - $- - - - 1,222,917 - $1,222,917 36 2016 Tax
Allocation
Refunding
Bonds
Refunding
Bonds
Issued After
6/27/12
01/28/
2016
09/01/2036 US Bank Principal and
Interest
payments on
bond
Project
Area
No. 2
23,401,125 N $2,636,500 - 2,245,875 - - - $2,245,875 - - - 390,625 - $390,625 37 Fiscal Agent
Fees
Fees 01/28/
2016
09/01/2036 US Bank Trustee Fees
for 2016 Bonds
Project
Area
No. 2
91,000 N $7,000 - - - - - $- - - - 7,000 - $7,000
38 2016 Tax Reserves 01/28/ 09/01/2036 US Bank Reserve Project 1,370,625 N $1,370,625 - - - - - $- - - - 1,370,625 - $1,370,625

A B C D E F G H I J K L M N O P Q R S T U V W
Item
# Project Name Obligation Type
Agreement
Execution
Date
Agreement
Termination
Date
Payee Description Project
Area
Total
Outstanding
Obligation
Retired
ROPS
24-25
Total
ROPS 24-25A (Jul - Dec)
24-25A
Total
ROPS 24-25B (Jan - Jun)
24-25B
Total
Fund Sources Fund Sources
Bond
Proceeds
Reserve
Balance
Other
Funds RPTTF Admin RPTTF
Bond
Proceeds
Reserve
Balance
Other
Funds
RPTTF
Admin
RPTTF
Allocation
Refunding
Bond Reserve
2016 required per
bond indenture
Area
No. 2
39 Continuing
Disclosure
Professional
Services
12/01/
2016
09/01/2036 Harris &
Associates
Continuing
Disclosure
reports for
2001 and 2016
TAB's
Project
Area
No. 2
130,000 N $10,000 - - - - - $- - - - 10,000 - $10,000
41 2011 City
Loan
Consolidation
Agreement
City/County
Loan (Prior
06/28/11),
Cash
exchange
09/13/
1976
06/30/2029 City of
Hawthorne
Repayment of
City loan
based on
March 8, 2011
Conolidated
Loan
Repayment
Agreement
All
Project
Areas
- Y $- - - - - - $- - - - - - $-
Hawthorne
Recognized Obligation Payment Schedule (ROPS 24-25) - Report of Cash Balances July 1, 2021 through June 30, 2022
(Report Amounts in Whole Dollars)
Pursuant to Health and Safety Code section 34177 (l), Redevelopment Property Tax Trust Fund (RPTTF) may be listed as a source of payment on the ROPS, but only to the extent no other funding source is available or when payment from property tax revenues is required by an enforceable obligation.

A B C D E F G H
ROPS 21-22 Cash Balances
(07/01/21 - 06/30/22)
Fund Sources
Comments
Bond Proceeds Reserve Balance Other Funds RPTTF
Bonds issued
on or before
12/31/10
Bonds issued
on or after
01/01/11
Prior ROPS
RPTTF and
Reserve
Balances retained
for future
period(s)
Rent, grants,
interest, etc.

Non-Admin
and Admin
1 Beginning Available Cash Balance (Actual 07/01/21)
RPTTF amount should exclude "A" period distribution
amount.
3,346,928 (2,173) 601,907 E: Includes $2,119,125 requested as reserve in 20-21 for 21-22 expenditures, plus 19-20
PPA of $455,591, plus 20-21 PPA of
$772,212. F: Other funds are negative
following the ROPS 21-22 cash balance
correction. G: 18-19 PPA, which reduced the
RPTTF distribution for ROPS 21-22.
2 Revenue/Income (Actual 06/30/22)
RPTTF amount should tie to the ROPS 21-22 total
distribution from the County Auditor-Controller
- 2,531 3,946,001 F: Interest earnings in FY 21-22 G: RPTTF received for ROPS 21-22.
3 Expenditures for ROPS 21-22 Enforceable Obligations
(Actual 06/30/22)
2,119,122 2,281,794 E: Expenditure of reserves on 2016 Bonds debt service, per DOF approval. G: Based on
the ROPS 21-22 PPA CAC reported actuals
for RPTTF non-administration and
administration less $2,165,125 held as
reserve to pay 2016 TABs.
4 Retention of Available Cash Balance (Actual 06/30/22) RPTTF amount retained should only include the amounts
distributed as reserve for future period(s)
1,227,806 358 2,165,125 E: 19-20 PPA of $455,591, 20-21 PPA of $772,212 plus $3 to offset the negative
balance. G: Reserve for 2016 TABs debt
Pursuant to Health and Safety Code section 34177 (l), Redevelopment Property Tax Trust Fund (RPTTF) may be listed as a source of payment on the ROPS, but only to the extent no other funding source is available or when payment from property tax revenues is required by an enforceable obligation.

Non-Admin
and Admin
service payment in ROPS 21-22.
5 ROPS 21-22 RPTTF Prior Period Adjustment
RPTTF amount should tie to the Agency's ROPS 21-22 PPA
form submitted to the CAC
No entry required 100,989 G: 21-22 requested PPA of $100,989. 6 Ending Actual Available Cash Balance (06/30/22)
C to F = (1 + 2 - 3 - 4), G = (1 + 2 - 3 - 4 - 5)
$- $- $- $- $-
Hawthorne
Recognized Obligation Payment Schedule (ROPS 24-25) - Notes July 1, 2024 through June 30, 2025
Item # Notes/Comments
8 The requested amount is calculated assuming a standard 2% increase in property values, with a 10% buffer added to the resulting payment calculation in case a property increases in value more significantly due to improvements or a transfer of ownership. 9 31 The rebate is based on 50% of the incremental property tax revenue generated by the DDA properties, less a pro rata share of County administrative fees, the former 20% low & moderate income housing set aside, pass through payments, and debt service on the 1998, 2004, and 2006 Bonds (refunded by the 2016 Bonds). The requested amount is projected using the prior year's actual payment amount, plus a 10% buffer.
35 Payment is based on sales taxes, which are difficult to predict. As of Fiscal Year 2023-24, a sales tax rebate is paid only for Parcel 1 sales taxes above a threshold. Applying recent annual growth provides a projected rebate amount of $1,111,743. Adding a 10% buffer to projected sales tax revenues suggests an appropriate estimate of $1,222,917.
36 37
38 39
41 The State Department of Finance (Finance) has denied this item multiple times. While the Successor Agency does not agree with Finance, this item is being retired. The Successor Agency will seek alternative approaches to reconcile its negative cash balance.

Hawthorne City CouncilDecember 12, 2023

Hawthorne City Council
December 12, 2023