Since redevelopment dissolution went into effect on February 1, 2012, the Successor Agency has completed all of the requirements of both ABx1-26 and AB-1484, the statutes governing redevelopment dissolution. On May 15, 2013, the Department of Finance (“DOF”) letter approving Garden Grove’s Finding of Completion was received.

With the Finding of Completion, pursuant to AB-1484, the Successor Agency, as of the 2013-14 Fiscal Year, may begin the payback of any loans between the Former Agency and the City, or the payback of loans by the former Agency to the LMIHF used to pay the state mandated ERAF and SERAF payments in various years. Loans from the LMIHF, however, must be paid back in full prior to any City/Agency loans being addressed. Pursuant to AB-1484, the maximum repayment amount authorized each fiscal year shall be equal to one-half of the increase between “the amount distributed” to the taxing entities in that fiscal year and the amount distributed to taxing entities in the 2012-13 base year. Garden Grove’s base year amount has been calculated to be $6,343,083 based on the June 1, 2014 Redevelopment Property Tax Trust Fund disbursement.

The outstanding balance from funds borrowed from the LMIHF by the Former Agency in order to pay the state mandated ERAF and SERAF payments from Fiscal Year 2003-04 to Fiscal Year 2010-11 is approximately $13.7 million. The Former Agency was to begin repayment of these loans, but redevelopment dissolution nullified those requirements, and AB-1484 set forth new repayment requirements described above.

Prior to being able to make payments on the ERAF and SERAF loans, a Successor Agency must adopt a resolution (Attachment No. 1) creating a repayment schedule for the payback, and submit it to the Oversight Board for approval. Due to the difficulty in projecting these payments, recent correspondence from the DOF on this issue indicates that DOF would not be opposed to a repayment schedule that indicated the repayment amount for each fiscal year will be equal to the maximum amount allowed pursuant to HSC Section 34176(e)(6)(B). As such, staff has prepared the repayment schedule with that specific language.

Approval of the Repayment Schedule will allow the Successor Agency to place loan payments on future ROPS to the LMIHF, which is now known as the Low and Moderate Income Housing Asset Fund administered by the Garden Grove Housing Authority as the Housing Successor to the Former Agency.

Staff recommends the Successor Agency:

• Adopt the attached Resolution approving a repayment schedule to the Low and Moderate Income Housing Fund for the ERAF/SERAF loans of the Former Agency;
  
  
• Authorize the Director to transmit said Resolution to the Oversight Board for approval

By:  Monica Covarrubias, Project Manager