TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Javier Carcamo, Finance Director
PREPARED BY: Jennifer Terry, Finance Manager
SUBJECT: Approve the Recognized Obligation Payment Schedule and
Administrative Budget for Fiscal Year 2024/25
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RECOMMENDATION
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Adopt Resolution No. RSA 23-31 entitled: A Resolution of the Successor Agency to the Murrieta Redevelopment Agency Approving A Recognized Obligation Payment Schedule for the Period From July 1, 2024, through June 30, 2025, Approving the Successor Agency’s Proposed Administrative Budget for Fiscal Year 2024/25, and Authorizing Posting and Transmittal Thereof.
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PRIOR ACTION/VOTE
On February 21, 2012, the City Council, serving as the Successor Agency to the Murrieta Redevelopment Agency (Successor Agency), adopted Resolution No. RSA 12-02, approving and adopting a Recognized Enforceable Obligation Payment Schedule pursuant to ABX1 26
(Vote: 3-0-2).
On April 17, 2012, the City Council, serving as the Successor Agency to the Murrieta Redevelopment Agency, adopted Resolution No. RSA 12-03, approving and adopting the Recognized Obligation Payment Schedule from July 1, 2012, to December 31, 2012, pursuant to ABX1 26 (Vote: 4-0-1).
On August 21, 2012, the City Council, serving as the Successor Agency to the Murrieta Redevelopment Agency, adopted Resolution No. RSA 12-05, approving and adopting the Recognized Obligation Payment Schedule from January 1, 2013, to June 30, 2013, pursuant to AB X1 26 (Vote: 5-0).
On December 6, 2022, the City Council, serving as the Successor Agency to the Murrieta Redevelopment Agency, adopted Resolution No. RSA 22-28, approving and adopting the Recognized Obligation Payment Schedule and Administrative Budget for July 1, 2023, to June 30, 2024, pursuant to ABX1 26 (Vote: 5-0).
CITY COUNCIL GOAL
Maintain a high performing organization that values fiscal sustainability, transparency, accountability and organizational efficiency.
BACKGROUND
On December 29, 2011, the California Supreme Court issued its decision in CRA v. Matosantos, upholding Assembly Bill (AB) X1 26, which dissolved all redevelopment agencies in California, and overturning AB X1 27, the “voluntary alternative redevelopment program.” With the voluntary redevelopment program provided for in ABX1 27 being ruled unconstitutional by the Court, all California redevelopment agencies were deemed dissolved on February 1, 2012. Thus, as of February 1, 2012, redevelopment agencies throughout the state began the process to wind down.
As ABX1 26 was later modified by AB 1484 and Senate Bill 107 and codified in the State Health and Safety Code (HSC), successor agencies must wind down the affairs of their respective, now-dissolved redevelopment agencies. The City of Murrieta (City) elected to serve as the Successor Agency (Successor Agency) to the dissolved Murrieta Redevelopment Agency (Former RDA).
As part of the dissolution process, the Successor Agency must prepare a Recognized Obligation Payment Schedule (ROPS) showing all the obligations of the Former RDA and the sources of funds for the repayments. The Successor Agency must also prepare an administrative budget for the upcoming Fiscal Year (FY). Both documents must be submitted to the Riverside Countywide Consolidated Oversight Board (Oversight Board) and the California Department of Finance (DOF) for approval.
Discussion
The Successor Agency is being asked to approve the ROPS for the period July 1, 2024, through June 30, 2025 (ROPS 24/25). Once approved, ROPS 24/25 will then go before the Oversight Board for approval, following which, it will be transmitted by the February 1, 2024, deadline to the DOF, California State Controller, and Riverside County Auditor-Controller (CAC) for their review. Descriptions of items on the ROPS 24/25 follow.
Item 9, Administrative Allowance
HSC Section 34177(j) requires the Successor Agency to prepare an Administrative Budget and submit it to the Oversight Board for approval. Pursuant to HSC Section 34171 (b), the administrative allowance is limited to the greater of $250,000 per year, or three percent (3%) of the Redevelopment Property Tax Trust Fund (RPTTF) distributed in the prior FY, excluding the administrative allowance and any City/Former Agency loan repayments. The Successor Agency anticipates needing an administrative allowance in the amount of $46,800 in the 2024/25 FY. Administrative activities for the 2024/25 FY include preparation and legal review of the ROPS, Prior Period Adjustment (PPA) reconciliation, cash balance reconciliation, agenda reports and resolutions, payment of enforceable obligations, attendance at Successor Agency and Oversight Board meetings, and other activities detailed in Exhibit B attached to the accompanying resolution.
Items 57-59, Bonds Debt Service and Fiscal Agent Fees
The Successor Agency refunded the 2002, 2005, and 2007 Tax Allocation Bonds with an issue of 2017 Tax Allocation Refunding Bonds to take advantage of lower interest rates and to reduce the sum of total future debt service payments. The 2017 Series A and B bonds appear on the ROPS 24/25 as items 57-59, including associated fiscal agent fees and continuing disclosure costs. The Successor Agency requests $1,177,881 for the 2017 Series A bond, $1,629,625 for the Series B bond, and $8,875 for fiscal agent fees and continuing disclosure costs on the ROPS 24/25.
Cash Balances
The Report of Cash Balances in the current ROPS represents the Successor Agency’s cash balance as of June 30, 2022. It shows the inflow and outflow of funds held by the Successor Agency and assists the Successor Agency in identifying other funds available to spend on enforceable obligations in place of RPTTF. In FY 2021/22, Successor Agency staff and its consultant, RSG, Inc., performed a cash balance reconciliation to analyze the Successor Agency’s true cash balance and determined that the Successor Agency does not have any available cash on hand to spend on enforceable obligations in place of RPTTF for FY 2024/25. The Successor Agency has also retained revenue from previous FYs to fund debt service obligations in future years, as detailed below:
• The Successor Agency has retained $13,685 in property tax revenues received, but not spent, for obligations in FY 2019/20 for expenditures in FY 2022/23. This amount is also known as the 19/20 PPA.
• The Successor Agency has retained $13,500 in property tax revenues received, but not spent, for obligations in FY 2020/21 for expenditures in FY 2023/24. This amount is also known as the 20/21 PPA.
The Successor Agency had a negative cash balance as of June 30, 2022. The Successor Agency will continue to reconcile the cash balances, will request RPTTF to ensure the Successor Agency’s obligations are paid in a timely manner, and will cover the negative cash balance with accrued interest revenue.
ROPS 21-22 Prior Period Adjustment
As required by HSC Section 34186(c), the Successor Agency prepared a reconciliation between approved and actual payments on enforceable obligations from the ROPS covering FY 2021/22 and submitted this reconciliation to the CAC prior to the October 1, 2023, deadline. There was a $12,746 difference between approved and actual payments.
Last and Final ROPS
Pursuant to HSC Section 34191.6(a), beginning January 1, 2016, agencies that have received a Finding of Completion may submit a Last and Final ROPS if all the following conditions are met:
1) The remaining debt is limited to administrative costs and payments pursuant to enforceable obligations with defined payment schedules, including, but not limited to, debt service, loan agreements, and contracts.
2) All remaining obligations have been previously listed on the ROPS and approved for payment by DOF pursuant to HSC Section 34177(m) or (o).
3) The agency is not a party to outstanding/unresolved litigation, except as specified in HSC Section 34191.6(a)(3).
A Last and Final ROPS will reduce the administrative burden on the Successor Agency and eliminate the need for annual Oversight Board meetings to approve the ROPS. The Successor Agency can amend the Last and Final ROPS twice. The Successor Agency meets the required conditions; however, prefers to maintain an annual ROPS at this time. Furthermore, DOF has oversight over all Last and Final ROPS approvals and has been limiting the Successor Agency administrative allowance to approximately $5,000 per enforceable obligation.
Riverside Countywide Oversight Board
As of July 1, 2018, the Riverside County Consolidated Oversight Board (Oversight Board) was established pursuant to HSC Section 34179(j). This Oversight Board reviews actions taken by all successor agencies within the County and can direct successor agencies to perform certain actions.
The Oversight Board has scheduled its general meetings to occur in the Riverside County Board Chambers on the first floor at 4080 Lemon Street in Riverside. The deadline for the Successor Agency to submit its ROPS 24/25 to the Oversight Board for the January 18, 2024, meeting is December 28, 2023. This deadline allows for County staff to review the submission and provide feedback, as well as for the Successor Agency to incorporate feedback, if necessary. With the consolidation of the Oversight Boards, expenditures are being more stringently monitored, and successor agencies have to provide additional supporting documentation, especially for the administrative allowance. Upon approval of the recommended action, Successor Agency staff will submit the ROPS along with supporting documentation to the Oversight Board for the January 18, 2024, meeting.
FISCAL IMPACT
The ROPS 24/25 must be approved by the Murrieta Successor Agency and the Oversight Board. Upon approval, the ROPS will be forwarded to the DOF by February 1, 2024, for the Murrieta Successor Agency to receive RPTTF, administered by the CAC, to pay enforceable obligations during the ROPS 24/25 period. The FY 2024/25 administrative and debt service budgets for the Successor Agency will be included in the biennial budget.
ATTACHMENTS
1. Resolution No. RSA 23-31