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COMMUNITY REDEVELOPMENT AGENCY <br />OF THE CITY OF SANTA ANA <br />Notes to the Basic Financial Statements (Continued) <br />Year Ended June 30, 2011 <br />August 15, the requirement to adopt an Enforceable Obligations Payment Schedule ( "EOPS ") by <br />August 29, 2011, and the requirement to prepare a preliminary draft of the initial Recognized <br />Obligation Payment Schedule ( "ROPS ") by September 30, 2011. <br />Because the stay provided by AB X1 26 only affects enforcement, each agency must adopt an <br />Enforceable Obligation Payment Schedule and draft Recognized Obligation Payment Schedule prior to <br />September 30, as required by the statute. Enforceable obligations include bonds, loans and payments <br />required by the federal or State government; legally enforceable payments required in connection with <br />agency employees such as pension payments and unemployment payments, judgments or settlements; <br />legally binding and enforceable agreements or contracts; and contracts or agreements necessary for the <br />continued administration or operation of the agency that are permitted for purposes set forth in AB X1 <br />26. <br />On September 19, 2011, City Ordinance No. NS -2823 was adopted, indicating that the City will <br />comply with the Voluntary Alternative Redevelopment Program in order to permit the continued <br />existence and operation of the agency, in the event AB X1 26 and /or 27 are upheld as constitutional. <br />The initial payment by the City is estimated to be $20.5 million with one half due on January 15, 2012, <br />and the other half due May 15, 2012. Thereafter, an estimated $5 million will be due annually. The <br />amounts to be paid after fiscal year 2012 -13 have yet to be determined by the State Legislature. The <br />semi - annual payments will be due on January 15 and May 15 of each year and would increase or <br />decrease with changes in tax increment. Additionally, an increased amount would be due to schools if <br />any "new debt" is incurred. AB X1 27 allows a one -year reprieve on the agency's obligation to <br />contribute 20% of tax increment to the low - and - moderate - income housing fund so as to permit the <br />Agency to assemble sufficient funds to make its initial payments. Failure to make these payments <br />would require agencies to be terminated under the provisions of AB X1 26. <br />Management believes that the Agency will have sufficient funds to pay its obligations as they become <br />due during the fiscal year ending June 30, 2012. The nature and extent of the operation of <br />redevelopment agencies in the State of California beyond that time frame are dependent upon the <br />outcome of litigation surrounding the actions of the state. In the event that AB X1 26 and/or 27 are <br />specifically found by the courts to be unconstitutional, there is a possibility that future legislative acts <br />may create new challenges to the ability of redevelopment agencies in the State of California to <br />continue in view of the California State Legislature's stated intent to eliminate California <br />redevelopment agencies and to reduce their funding. <br />41 <br />