The Successor Agency to the Garden Grove Agency for Community Development (“Successor Agency”) is performing its functions under the Dissolution Law, Parts 1.8 and 1.85 of the Health and Safety Code, as amended by Assembly Bill 1484 and other subsequent legislation including most recently by Senate Bill 107 effective on September 22, 2015 (“SB 107”) (together, the “Dissolution Law”), to administer the enforceable obligations and otherwise unwind the former Agency's affairs, all subject to the review and approval by this seven-member Oversight Board.

At previous meetings of the Successor Agency and Oversight Board, pursuant to the Dissolution Law, all prior Recognized Obligation Payment Schedules (“ROPS”) were approved and thereafter submitted to the DOF, and ultimately approved with modifications.  All prior ROPS were for six-month fiscal periods, but SB 107 modified the ROPS process and establishes an annual ROPS, and this is the first annual ROPS.  Under Section 34171(h) of Part 1.85, as amended by SB 107, the ROPS is “the document setting forth the minimum payment amounts and due dates of payments required by enforceable obligations for each fiscal year as provided in subdivision (o) of Section 34177.”

Under the dates in the Dissolution Law, the Successor Agency is required to consider and adopt the ROPS for the 16-17 A-B fiscal period of July 1, 2016 to June 30, 2017, and submit such approved ROPS 16-17 A-B to the DOF on or before February 1, 2016.

Section 34177(l) of Part 1.85, as amended by SB 107, requires the Successor Agency to take actions with regard to each ROPS as follows:

“(l) (1) … For each recognized obligation, the Recognized Obligation Payment Schedule shall identify one or more of the following sources of payment:

(A) Low and Moderate Income Housing Fund.

(B) Bond proceeds.

(C) Reserve balances.

(D) Administrative cost allowance.

(E) The Redevelopment Property Tax Trust Fund, but only to the extent no other funding source is available or when payment from property tax revenues is required by an enforceable obligation or by the provisions of this part.

(F) Other revenue sources, including rents, concessions, asset sale proceeds, interest earnings, and any other revenues derived from the former redevelopment agency, as approved by the oversight board in accordance with this part.

(o) (1) Commencing with the Recognized Obligation Payment Schedule covering the period from July 1, 2016, to June 30, 2017, inclusive, and for each period from July 1 to June 30, inclusive, thereafter, a successor agency shall submit an oversight board-approved Recognized Obligation Payment Schedule to the department and to the county auditor-controller no later than February 1, 2016, and each February 1 thereafter…”

SB 107 also made other administrative changes, including that the Successor Agency and Oversight Board no longer have to submit separately to the DOF the administrative budget that is a part of each ROPS.  New subsection (h)(1) to Section 34179 provides:

“Without abrogating the department’s authority to review all matters related to the Recognized Obligation Payment Schedule pursuant to Section 34177, oversight boards are not required to submit the following oversight board actions for department approval:

(A) Meeting minutes and agendas.

(B) Administrative budgets.

(C) Changes in oversight board members, or the selection of an oversight board chair or vice chair.

(D) Transfers of governmental property pursuant to an approved long-range property management plan.

(E) Transfers of property to be retained by the sponsoring entity for future development pursuant to an approved long-range property management plan.”

Staff has prepared and attached ROPS 16-17 A-B that was approved by the Successor Agency at its January 26, 2016, regular meeting, which ROPS also includes the FY 16-17 administrative budget.  The attached Oversight Board Resolution approves the ROPS in the gross amount of $20,421,757 requested from the Redevelopment Property Tax Trust Fund (“RPTTF”), subject to submittal to and review by the DOF; authorizes posting and transmittal of the ROPS to the County Administrative Officer, County Auditor-Controller and the State Controller’s Office.

Several items on ROPS 16-17 A-B are explained in further detail as follows.

Importantly, the first debt service payment due for the Waterpark Hotel Bond Refunding Obligation is listed as Item No. 56 on the ROPS.

The Successor Agency administrative budget of $594,809 is listed as Item No. 31, and a copy of the budget is attached.

The “housing entity administrative cost allowance” of $150,000 per fiscal year for the Garden Grove Housing Authority acting as the Housing Successor as authorized by Section 34171(p) is listed.  This item has been previously included by staff and approved by the Successor Agency and Oversight Board on prior ROPS, but the DOF continues to deny funding for this line item.  However, there are several cases pending in the Sacramento Superior Court with rulings both in favor and against successor agencies, so until the appellate courts resolve the statutory interpretation counsel recommends listing this item per Section 34171(p).

Several items on ROPS 16-17 A-B relate to the continued implementation of the Stipulation for Entry of Interlocutory Judgment (“Judgment”) issued in the action Marina Limon, et al v. Garden Grove Agency for Community Development, Orange County Superior Court, Case No. 30-2009-00291597.  After the Judgment was entered in early 2014, the DOF denied funding to the Successor Agency through the ROPS process, so the Limon plaintiffs filed suit against the DOF (Case No. 34-2014-80001994) in Sacramento Superior Court per the Dissolution Law, which action resulted in a ruling adverse to the DOF and in favor of the Limon plaintiffs and the Successor Agency and Housing Authority, as real parties in interest.  The Court ruled the Judgment in all respects is an enforceable obligation under the Dissolution Law, including ordering that the payments due (such as award of attorneys’ fees to Limon plaintiffs) and obligations to be performed by Garden Grove (such as development of replacement housing units) to implement the Judgment are to be funded through the ROPS process.  The Housing Authority and Successor Agency continue to implement the Judgment; 46 affordable, replacement housing units are now under construction on a site leased by the United Methodist Church.  An affiliate of Jamboree Housing Corporation is the developer of this family/senior housing project; and, the Housing Authority is providing two subordinate loans to the development.  One loan has been funded and the second loan of $1.6M is due to be disbursed at completion of construction which will occur during the 16-17 A-B period; this $1.6M loan amount is listed on this ROPS along with the various legal and consultants’ fees that the Successor Agency and Housing Authority continue to incur in implementation of the Judgment.

Further, this ROPS 16-17 A-B lists other Enforceable Obligations comparable to items in prior ROPS and includes the FY 16-17 administrative budget.

The timing for DOF’s review of each annual ROPS also was amended by SB 107.  Now, new subsection (o) of Section 34177 provides that for each ROPS:

“the department shall make its determination of the enforceable obligations and the amounts and funding sources of the enforceable obligations no later than April 15, 2016, and each April 15 thereafter. Within five business days of the department’s determination, a successor agency may request additional review by the department and an opportunity to meet and confer on disputed items, except for those items which are the subject of litigation disputing the department’s previous or related determination. An untimely submittal of a Recognized Obligation Payment Schedule may result in a meet and confer period of less than 30 days. The department shall notify the successor agency and the county auditor-controller as to the outcome of its review at least 15 days before the date of the first property tax distribution for that period.”

Successor Agency staff is available to explain ROPS 16-17 A-B and answer any questions the Oversight Board may have about this ROPS and related Successor Agency matters.

None until approved by the DOF.  If the DOF approves the ROPS as submitted, the Successor Agency will receive $20,421,757 (which includes $594,809 for the administrative budget) for the period July 1, 2016, to June 30, 2017, to pay the Successor Agency’s enforceable obligations.

It is recommended that the Oversight Board:

• Adopt the attached Resolution approving ROPS 16-17 A-B for the annual fiscal period of July 1, 2016 to June 30, 2017, including the administrative budget, subject to submittal to and review by the State Department of Finance, and authorizing posting and transmittal of the ROPS.  Further, the Assistant City Manager and his designees, in consultation with legal counsel, shall be authorized to request and complete meet and confer session(s) with the DOF and authorized to make augmentations, modifications, additions or revisions as may be necessary or directed by DOF.