2011-08-24 - AGENDA REPORT - ENFORCEMENT OBLIGATIONS ABX1 26

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Resolutions Pursuant to ABX1 26 & ABX1 27 August 24, 2011 Page 2 if the legislative body of the city or county makes annual "community remittances" to school districts and special districts. The State hopes to realize $1.7 billion from these payments statewide in FY 2011-12 and an additional $400 million each subsequent year. In order to participate in the alternative voluntary redevelopment program, the City is required to enact an ordinance to comply with Part 1.9 of Division 24 of the California Health and Safety Code by October 1, 2011. However, the City can adopt a non-binding resolution of intent to enact the ordinance and extend the deadline to November 1, 2011. The California Redevelopment Association and League of California Cities filed a lawsuit in the California Supreme Court challenging the constitutionality of this legislation and seeking an immediate stay of both bills. On August 11, 2011, the California Supreme Court agreed to review the petition and stayed specified portions of the legislation, indefinitely postponing certain provisions' effectiveness. Legal counsel is recommending that the City preserve its options by proceeding with the adoption of both the Agency Resolution establishing the Enforceable Obligation Payment Schedule, as well as the City Council Resolution declaring its intention to enact a Continuation Ordinance. While this matter is being considered in court, the Agency can continue with its "enforceable obligations"; however, no new agreements, amendments to existing agreements, disposition of assets (except per existing enforceable obligations), etc. are permitted. The stay will remain in effect until the court issues a decision, which is expected by January 15, 2012. The State Department of Finance recently released the official remittance amounts due from each redevelopment agency for FY 2011-12 pursuant to ABX1 27. The Community Redevelopment Agency of the City of Santa Ana's (Agency) amount is $20,489,170. If the continuation ordinance is enacted, this amount is due in two equal payments on January 15, 2012 and May 15, 2012. The remittance amount thereafter is approximately $5 million annually. However, as provided by the legislation, the Agency filed an appeal on August 15, 2011 with the California Department of Finance regarding the "opt -in" remittance amount. It has been determined that there were 96 successful property tax assessment appeals that were filed and resolved for FY 2008-09, resulting in an estimated appeals refund totaling $741,995. As the majority of the successful appeals were not resolved by the County of Orange until 2009 and 2010, this information was not available at the time the Agency was required to submit the 2008-09 State Controller's Report. Factoring this into the state's formula may result in a decrease in the initial base year remittance amount by as much as $350,000. Many cities/counties are also expected to file appeals. Therefore, it cannot be assured that the state will not make further adjustments to the calculations that will affect the estimated remittances. The State Director of Finance has until September 15, 2011 to reject or approve the appeal, and may also extend the decision deadline until October 15, 2011. The Department of Finance has indicated it will review appeals and issue advisory opinions pending the California Supreme Court -issued partial stay on the petition challenging the constitutionality of ABX1 26 and 27. x:11