The Demise of RDA's-Joseph Buchman
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Transcript of The Demise of RDA's-Joseph Buchman
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The Demise of RDAs: An Opportunity to Restore Fiscal Health with a Vision for
Future Economic Development
California Contract Cities Association Annual Municipal Seminar
Indian Wells, California
May 18, 2012
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Joseph P. Buchman
Burke Williams & Sorensen LLP444 S. Flower Street
Suite 2400Los Angeles, CA 90071
www.bwslaw.com
(213) 236-2872 (direct)(213) 236-2700 (fax)
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City Expenditures
• General Government– Legislative– Management and Support
• Public Safety– Police– Fire– Emergency Medical Services– Street Lighting
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• Transportation– Streets, Highways and Storm Drains– Public Transit– Airports– Ports and Harbors
• Community Development– Planning– Construction and Engineering Regulation
Enforcement
City Expenditures
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• Health– Solid Waste Disposal– Sewers
• Culture and Leisure– Parks and Recreation– Libraries
City Expenditures
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• Public Utilities– Water– Gas– Electricity
City Expenditures
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Summary of City Expenditures
Source: State Controller’s Cities Annual Report for Fiscal Year ending 6/30/2010 (11/11/2011).
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City Revenues • Tax Revenues
– General Property Taxes– Sales and Use Tax and Transactions and
Use Tax– Gross Receipts Tax– Business License Fees and Taxes– Utility Users Tax– Transient Occupancy Tax
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• Tax Revenues (Cont.)– Excise Taxes
• Development Tax• Admissions Tax• Parcel Tax• Documentary Transfer Tax
City Revenues
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• Tax Revenues (Cont.)– Special Taxes
• Mello-Roos• Community Facilities Districts• Police and Fire Protection• Libraries• Transportation
City Revenues
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• Tax Revenues (Cont.)– Special Benefit Assessment Districts
• Public Improvements: street, drainage, flood control, etc.
• Landscaping and Lighting• Business Improvement Districts • Infrastructure Financing Districts
City Revenues
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• Charges, Rates and Fees• Development Fees• Sewer Service Charges and Connection
Fees• Solid Waste Fees• Water Service Charges and Connection
Fees• Franchise Fees: Cable TV, Electricity,
Telephone, Gas and Oil
City Revenues
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• Charges, Rates and Fees (Cont.)• Fines and Forfeitures• Park and Recreation Fees• Airport• Ports and Harbors• Licenses and Permits
City Revenues
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• Intergovernmental Agencies– State Subventions– Federal and State Grants– County and Other Local Agencies Revenue
Sharing
City Revenues
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• Other Financing Sources– Revenues From Use of Money and Property– Gifts– Sale of Bonds– Leasing Public Property
City Revenues
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Summary of City Revenues
Source: State Controller’s Cities Annual Report for Fiscal Year ending 6/30/2010 (11/11/2011).
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City Revenues: Illustration
ServiceCharges
(water, sewer, refuse, etc.)
39%
Fees8% State &
Fed 10%
NotRestricted
36%
Debt Service
1%Taxes 3%
Lic & Permits 2%
Assessments 1%
x
Utility UserTax 4%
Sales Tax 10%
Property Tax11%
Other Tax 7%
Other 4%
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Revenue Losses• ERAF Shifts
– Educational Revenue Augmentation Funds
• Property Tax Shift from Cities, Counties and Special Districts to Schools Since 1992
• FY 2010-11 amount equals $7.5 billion.
– “SERAF” from Redevelopment Agencies
• FY 2010-11 SERAF total was $350 million
• VLF Loss (The “Triple Flip” to the “Flip Off”)
– SB 89 redirects all VLF revenue to law enforcement grants usable only for police services.
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Redevelopment Agencies
• Property Tax Increment Funding
• Expenditures for Community Redevelopment
• Agencies dissolved as of February 1, 2012
• Successor Agencies and Oversight Boards dealing with the aftermath
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ABX1 26 Dissolution Bill• January 10, 2011
– Governor Brown releases budget proposal, includes elimination of redevelopment.
• June 15– State Legislature passes ABx1 26 and 27.
• June 28– Legislature passes new budget bill, and forwards
ABx1 26 and 27 to Governor for signature. Governor signs, and the bills take effect immediately.
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ABX1 26 Dissolution Bill
• Froze redevelopment agency activities other than as necessary to meet “enforceable obligations.”
• Required preparation of Enforceable Obligation Payment Schedule within 60 days of Effective Date.
• Preliminary draft of Recognized Obligation Payment Schedule (“ROPS”) was to be provided to Successor Agency by September 30.
• Dissolution of Agencies to occur October 1, 2011, with a Successor Agency taking over with decisions to be made by an Oversight Board.
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ABX1 26 Dissolution Bill• July 18, 2011
– CRA and LOCC filed suit in California Supreme Court challenging ABx1 26 and 27.
• August 11– Supreme Court announced it would hear lawsuit,
and issued order staying portions of ABx1 26 and all of ABx1 27.
• December 29– Supreme Court upholds ABx1 26 and invalidates
ABx1 27. Pre- May 1, 2012 deadlines extended 4 months. All Redevelopment Agencies dissolve as of February 1, 2012.
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Redevelopment Agencies: Endgame• Oversight Boards
– Formation and duties defined in Health & Safety Code §§ 34179-34181.
– Oversight Board establishes the ROPS for the Successor Agency.
– Oversight Board charged with disposing of all assets and properties of the former RDA funded by tax increment revenues.
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Redevelopment Agencies: Endgame• Former RDA Properties and Assets
– City may retain properties and assets of the former RDA (HSC 34180(f)).
– Requires Compensation Agreement with other taxing entities for the agreed value of the property retained.
– If no agreement on the value of the property, then the county assessor is to determine fair market value as of January 1, 2011.
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Redevelopment Agencies: Endgame• Former RDA Properties and Assets
– Oversight Board may also direct the successor agency to transfer ownership of assets that were constructed and used for a governmental purpose to the appropriate public entity (HSC 34181(a)).
– May require compensation to the successor agency depending on any agreements governing the use of the asset.
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Redevelopment Agencies: Endgame• Former RDA Properties and Assets
– Governor’s Revised State Budget relies on RDA cash assets generating $1.4 billion for K-14 education in FY 2012-13 and estimates another $600 million in FY 2013-14.
– Budget Trailer Bill includes proposed AB x1 26 “Clean-Up” Legislation
– http://www.dof.ca.gov/budgeting/trailer_bill_language/business_transportation_and_housing/documents/%5B210%5D%20ABx1%2026%20Redevelopment%20Clean-Up%20and%20RDA%20Asset%20Disposition.pdf
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Redevelopment Agencies: Endgame• Proposed “Clean-Up” Legislation
– Successor Agency Administrative Cost Allowance
– “Enforceable Agreements” between City and Former RDA
– RDA Assets
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Redevelopment Agencies: Endgame• Proposed “Clean-Up” Legislation
– Successor Agency
• Separate Public Entity/Liabilities
• Has Two Governing Boards
• Can Sue and Be Sued
• Accountant For Due Diligence Review
• Can Issue Bonds to Refund RDA Bonds
• Can File Bankruptcy
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Redevelopment Agencies: Endgame• Proposed “Clean-Up” Legislation
– Oversight Board
• Not a Separate Public Entity
• Cannot Be Sued
• Can Contract For Administrative Support
• Decisions Supersede Those of Successor Agency Board and Staff
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Redevelopment Agencies: Endgame• Proposed “Clean-Up” Legislation
– Department of Finance
• 10 Days Notice Before Disposition of Assets
• Oversight Board’s Decision Not Effective For 5 Business Days, Plus Up to 60 more
• Clawback Authority