The Successor Agency is performing its functions under Parts 1.8 and 1.85 of the California 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, “Dissolution Law”), to administer the enforceable obligations and otherwise unwind the former Agency's affairs, all subject to the review and approval by the seven-member Oversight Board.

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, as amended by SB 107, the Successor Agency is required to consider and adopt the ROPS for the 17-18 A-B fiscal period of July 1, 2017 to June 30, 2018, and submit such approved ROPS 17-18 A-B to the DOF on or before February 1, 2017.

Section 34177(l), 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.

Staff has prepared and attached is ROPS 17-18 A-B for the Successor Agency’s consideration and approval, and includes the FY 17-18 administrative budget. The attached Successor Agency Resolution approves the ROPS in the gross amount of $23,983,508 requested from the Redevelopment Property Tax Trust Fund (“RPTTF”), subject to submittal to and review by the Oversight Board and then by the DOF, and authorizing posting and transmittal of the ROPS.  Several items on ROPS 17-18 A-B are explained in further detail as follows. Importantly, the request for the annual unfunded CalPERS pension liabilities dating back to ROPS 11-12 by fiscal year, listed as line items #59-65, as authorized by Section 34171(d)(1)(C). 

(C) Payments required by the federal government, preexisting obligations to the state or obligations imposed by state law, other than passthrough payments that are made by the county auditor-controller pursuant to Section 34183, or legally enforceable payments required in connection with the agencies’ employees, including, but not limited to, pension payments, pension obligation debt service, unemployment payments, or other obligations conferred through a collective bargaining agreement.

The Successor Agency administrative budget of $595,031 is listed as item #31.  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 as item #51.  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).

A couple of items on ROPS 17-18 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; 6 very low income replacement housing units will be obtained as part of a larger acquisition rehabilitation project consisting of 78 units known as Sycamore Court.  The project is currently underway and a portion of the funds being requested are for a deficit in ROPS 16-17.

Further, this ROPS 17-18 A-B lists other Enforceable Obligations comparable to items in prior ROPS. 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, 2017. 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.

None until approved by the DOF.  If the DOF approves the ROPS as submitted, the Successor Agency will receive $23,983,508 (which includes $595,031 for the administrative budget) for the period July 1, 2017 to June 30, 2018, to pay the Successor Agency’s enforceable obligations.

It is recommended that the Successor Agency:

• Adopt the attached Resolution approving ROPS 17-18 A-B for the annual fiscal period of July 1, 2017 to June 30, 2018, subject to submittal to and review by the Oversight Board and then by the State Department of Finance, and authorizing posting and transmittal of the ROPS.  Further, the Community and Economic Development Director and her 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.

By:   Monica L. Covarrubias, Project Manager