THE CITY OF HERCULES AS THE SUCCESSOR AGENCY TO THE HERCULES REDEVELOPMENT AGENCY DATE: January 10, 2023
TO: The City of Hercules as Successor Agency to the Hercules Redevelopment Agency VIA: Dante Hall, City Manager/Executive Director
SUBMITTED BY: Edwin Gato, Director of Finance
SUBJECT: Recognized Obligation Payment Schedule for the period of July 1, 2023, through June 30, 2024 (ROPS 23-24) RECOMMENDED ACTION:
Adopt a resolution approving the Recognized Obligation Payment Schedule for the period July 1, 2023, through June 30, 2024 (ROPS 23-24).
DISCUSSION:
Health and Safety Code (HSC) Section 34177 requires that successor agencies must, amongst other things, prepare a Recognized Obligation Payment Schedule (ROPS) for each upcoming fiscal year. A ROPS is the document that sets forth the maximum payment amounts, and due dates of payments required by enforceable obligations. Enforceable obligations are defined in HSC Section 34171(d) and include the payment of bonds and loans, payments required by the federal government, judgments or settlements, any legally binding agreement or contract, and contracts or agreements necessary for the administration or operation of the successor agency.
HSC Section 34177(1) requires successor agencies to submit the ROPS to a Countywide Oversight Board and California Department of Finance (DOF) for approval.
The ROPS template used for the ROPS 23-24 includes the following worksheets:
Recognized Obligation Payment Schedule Summary
Recognized Obligation Payment Schedule – ROPS Detail - This worksheet includes a section for ROPS A (July 1, 2023 through December 31, 2023) and a section for ROPS 23-24 B (January 1, 2024 through June 30, 2024).
Recognized Obligation Payment Schedule – Report of Cash Balances Recognized Obligation Payment Schedule – Notes
Summary
Hercules ROPS 23-24 requests $8.9 million in obligations, of which $7.1 million is from Redevelopment Property Tax Trust Funds (RPTTF) and $1.8 million is from Reserve Balance. Obligations consist of bond debt service ($3.6 million), payments owed to third parties pursuant to various agreements entered into prior to dissolution ($4.8 million), and an administrative cost allowance ($250,000 for the current year and $250,000 for an unfunded allowance in 2022-23). 2022 Bond Refunding
ROPS Item 32 requests debt service under a new 2022 Tax Allocation Refunding Bond (2022 Bond). Items 1-4 and 25-31 are related to the 2005 and 2007 Tax Allocation Bonds (Prior Bonds) and will be retired. Item 32 requests $3.6 million for bond debt service, of which $1.8 million is requested from RPTTF and $1.8 million is from Reserve Balance. The Reserve Balance consists of the difference between RPTTF received for the Prior Bonds on the ROPS 22-23 and how much was due under the 2022 Bond. The unused funds were transferred to the bond trustee to hold as a reserve to make part of the ROPS 23-24A payment.
County Pass-Through Payments
When the Successor Agency refunded its bonds last year, the County Auditor-Controller found that $9.3 million was past-due to the County of Contra Costa (County) under a negotiated pass-through agreement. The County had been underpaid since 2018. The County Auditor-Controller began making past-due pass-through payments in June 2022. Under HSC 34183(b), the County Auditor-Controller has funded current year pass-through payments, bond debt service, then prior year pass-through payments. As a result, non-bond debt service obligations were not funded on the ROPS 22-23. There will be no Residual RPTTF until the overdue County pass-through payments are paid off.
The Successor Agency structured its 2022 Bond debt service payments to be lower upfront so the County pass-through payments could be paid off as soon as possible. The Successor Agency currently projects they will be paid off in June 2023, however the actual date depends on available property tax increment.
Unfunded ROPS 22-23 Obligations
ROPS Items 5, 10, and 22 include a request for $2.5 million for ROPS 22-23 obligations that were not funded due to the County Pass-Through Payments. They consist of $2.2 million owed under a developer agreement (Item 5), $130,000 owed for an affordable senior housing project subsidy (Item 10), and the Successor Agency’s $250,000 administrative cost allowance (Item 22).
The Successor Agency estimates that unfunded non-bond debt service obligations will be repaid in January and June 2024, however the actual date depends on available property tax increment.
Prior Period Adjustment
The ROPS 23-24 Report of Cash Balance worksheet shows $62,431 in RPTTF money received for ROPS 20-21 (July 1, 2020, through June 30, 2021) was not expended and will be applied to pay for ROPS 23-24 obligations as a Prior Period Adjustment.
The Recognized Obligation Payment Schedule (ROPS) are posted on the City of Hercules website (www.ci.hercules.ca.us).
ATTACHMENTS:
Resolution approving the Recognized Obligation Payment Schedule (ROPS) for the period July 1, 2023, through June 30, 2024 ROPS 23-24