TO: ADAM PIRRIE, CITY MANAGER
FROM: JEREMY STARKEY, FINANCE DIRECTOR
DATE: DECEMBER 10, 2024
Reviewed by:
City Manager: AP
SUBJECT:
Title
APPROVAL OF THE RECOGNIZED OBLIGATION PAYMENT SCHEDULE (ROPS) OF THE DISSOLVED CLAREMONT REDEVELOPMENT AGENCY FOR THE PERIOD JULY 1, 2025 THROUGH JUNE 30, 2026 AND THE ADMINISTRATIVE BUDGET FOR THE PERIOD OF JULY 1, 2025 THROUGH JUNE 30, 2026 (FUNDING SOURCE: SUCCESSOR AGENCY FUNDS)
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SUMMARY
On December 29, 2011, the California Supreme Court upheld Assembly Bill x1 26 (the Dissolution Act) and directed that all redevelopment agencies in the State be dissolved effective February 1, 2012. On January 10, 2012, the City Council of the City of Claremont elected to become the Successor Agency to the Claremont Redevelopment Agency. As the Successor Agency, the City will wind down the affairs of the former Redevelopment Agency, with certain actions subject to the approval of an oversight board.
In September 2015, the State of California approved Senate Bill No. 107 (SB 107), which guides the final technical steps in the dissolution of local redevelopment agencies. The legislation called for counties with more than forty oversight boards to consolidate into five oversight boards, each of which having jurisdiction over each Successor Agency. As of July 1, 2018, each local Oversight Board in Los Angeles County was consolidated into one of five Countywide Oversight Boards. The City of Claremont is part of the First District Oversight Board (Oversight Board).
The Successor Agency remains responsible for the continued payment of enforceable obligations of the dissolved Claremont Redevelopment Agency. The Successor Agency must prepare a Recognized Obligation Payment Schedule (Payment Schedule), which sets forth the payment amounts, and due dates of payments required under enforceable obligations. The Oversight Board is required to review and approve each Payment Schedule. The State Department of Finance (DOF) may review an Oversight Board action.
Successor agencies were previously required to submit a projected Payment Schedule every six months. Beginning with the Payment Schedule for the period beginning July 1, 2016, the Successor Agency must submit an annual Payment Schedule on or before February 1 of each year, listing all payments that may come due during the following fiscal year. The Payment Schedule recommended for approval covers payments coming due during 2025-26. The Oversight Board must approve each Payment Schedule before the County releases any property tax funds to the Successor Agency.
The Successor Agency is also responsible for submitting an Administrative Budget to the Oversight Board for approval each fiscal year. Under California Health and Safety Code Section 34177(k), the Successor Agency will provide to the County of Los Angeles Auditor Controller, the administrative cost estimates from the approved Administrative Budget to be paid from property tax revenues deposited into the Redevelopment Property Tax Trust Fund for the period of July 1, 2025 to June 30, 2026.
RECOMMENDATION
Recommended Action
Staff recommends the Successor Agency Board adopt A RESOLUTION OF THE SUCCESSOR AGENCY OF THE FORMER REDEVELOPMENT AGENCY TO THE CITY OF CLAREMONT APPROVING THE RECOGNIZED OBLIGATION PAYMENT SCHEDULE FOR THE PERIOD JULY 1, 2025 THROUGH JUNE 30, 2026 AND APPROVING THE SUCCESSOR AGENCY ADMINISTRATIVE BUDGET FOR THE PERIOD OF JULY 1, 2025 THROUGH JUNE 30, 2026.
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ALTERNATIVE TO RECOMMENDATION
In addition to the staff recommendation, there is the following alternative:
• Request additional information from staff.
FINANCIAL REVIEW
Approving the Payment Schedule for 2025-26 will allow the Successor Agency to receive funds required to pay enforceable obligations and administrative costs to facilitate the wind down of the former Redevelopment Agency.
The staff cost to prepare this report is estimated at $1,500 and is included in the operating budget of the Finance Department.
ANALYSIS
As a result of the Court’s ruling on the Dissolution Act, all redevelopment agencies in California were dissolved effective February 1, 2012. The Dissolution Act prescribes the procedures to wind down the affairs of former redevelopment agencies. These provisions include the continued payment of enforceable obligations of the dissolved Redevelopment Agency.
The Successor Agency is responsible for establishing a Payment Schedule, which sets forth the payment amounts and due dates of payments required by enforceable obligations for the following fiscal year. Before the Payment Schedule is considered operative, it must be approved by the Oversight Board and DOF and certified by the County Auditor-Controller. Successor agencies are now required to submit a projected Payment Schedule by February 1 of each year, providing for payments that may come due during the following fiscal year. The Oversight Board must approve each Payment Schedule before the County releases funds to the Successor Agency. Pursuant to Health and Safety Code Section 34171(k), the Successor Agency must also submit an Administrative Budget which is eligible to be payable from the Redevelopment Property Tax Trust Fund for each fiscal year (Exhibit 1 to the Attachment). The Administrative Budget must also be approved by the Oversight Board.
Actions of the Oversight Board are not effective for five business days to allow the State Department of Finance to determine whether it would like to review an Oversight Board action. If the Department of Finance requests a review of an action, it has forty calendar days from the date of its request to either approve the Oversight Board action or return it to the Oversight Board for reconsideration.
Once the Payment Schedule is approved and certified, the Los Angeles County Auditor-Controller will use these schedules as the basis for distributing funds on the following June 1 and January 2 to the Successor Agency for the payment of enforceable obligations.
The enforceable obligations included in the Payment Schedule are:
2013 Tax Allocation Refunding Bonds - The Successor Agency to the Claremont Redevelopment Agency issued these bonds in 2013 to refund the 2001 Tax Allocation Bonds for savings. The total outstanding obligation has been fully paid for the ROPS period in question.
2014 Tax Allocation Refunding Bonds - The Successor Agency to the Claremont Redevelopment Agency issued these bonds in 2014 to refund the 2004 Tax Allocation Bonds for savings. The total outstanding obligation is $389,500 with $389,500 due during the ROPS period in question.
Bond Administration Fees - The City of Claremont is required to pay US Bank Administration fees in connection with the 2014 bonds. The total obligation is estimated at $1,000 for the ROPS period in question.
Contract for Rental Subsidies - The City of Claremont is responsible for providing monthly rental subsidies to low income, senior residents at the Claremont Villas Senior Apartments totaling $10,128 for the ROPS period in question.
Reinstated City Loan Agreement - The enactment of AB 1484 in 2012 permitted the reinstatement of former loans between the City and former Redevelopment Agency. These loans were for a variety of projects, including the acquisition of land for the operation of the DoubleTree Hotel, the acquisition of land for the Courier Place affordable housing project, and for the administrative and overhead costs of the former redevelopment agency. The Successor Agency to the Claremont Redevelopment Agency approved a Reinstated City Loan Agreement on November 14, 2017. The Claremont Oversight Board approved the action on November 29, 2017 and this was subsequently approved by the State Department of Finance. The total outstanding obligation has been fully paid for the ROPS period in question.
Employee, Legal, and Consultant Services Costs - The City of Claremont is responsible for employee costs and costs of various legal and consultant services for administration, accounting, and financial reporting totaling $150,251 in 2025-26. These costs will be paid out of the annual administrative cost allowance provided for in the Dissolution Act.
The costs of winding down the former Claremont Redevelopment Agency are expected to be fewer in the following years with the investment of staff, consultant, and legal counsel time declining. The burden of servicing outstanding obligations still includes ongoing audits and financial reporting of Successor Agency financial activities and the administrative tasks necessary to evaluate options regarding the transition to the County Oversight Board, including consideration of preparing a last and final ROPS.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: Council Priorities.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by:
Jeremy Starkey
Finance Director
Attachment:
Resolution Approving the 2025-26 ROPS and Administrative Budget