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<br /> <br /> <br /> Response to DOF May 3, 2012 Letter <br /> May 18, 2012 <br /> Page 3 <br /> Enforceable Obligations entered into with third parties prior to the June 28, 2011 date, the <br /> Successor Agency has a continuing obligation to ensure compliance with development and <br /> performance obligations, which will cause the Successor Agency to incur project costs for prOjcct <br /> management, construction management, etc. Such costs are properly payable from the RPTTF, as <br /> intended by ABXI 26 [e.g., HSC Section 34174(a)] and permitted by the DOF directive (set forth <br /> in "Exhibit 4" on the DOF webpage devoted to ABXI 26 issues) which states "specific project <br /> implementation activities such as construction inspection, project management or actual <br /> construction [which] would not be viewed by Finance as `administrative."' <br /> Additionally, pursuant to HSC Section 34167(f), "...nothing shall be construed to interfere with <br /> the Agency's authority with respect to enforceable obligations to make payments due, enforce <br /> existing covenants and obligations or perform its obligations." Further, HSC Section 34177(x), <br /> (c), and (f) require the Successor Agency to make payments required by enforceable obligations, <br /> perform obligations required by enforceable obligations, and enforce rights of the termer Agency <br /> and covenants imposed by the Agency. DOF's own guidance (set forth in "Exhibit 3" or1 the DOF <br /> webpage devoted to ABXI 26 issues) acknowledges and reiterates HSC Section 34174(a) which <br /> states ` ....nothing herein is intended to absolve the successor agency of payment or other <br /> obligations due or imposed pursuant to the enforceable obligations; and provided further, that <br /> nothing in the act adding this part is intended to be construed as an action or circumstance that <br /> may give rise to an event of default under any of the documents governing the enforceable <br /> obligations." <br /> • Page 5, item 41, Engineering services totaling $4000. The DOF Letter states the Agency <br /> claimed $10,000 on the ROPS, however the contract states the amount should not exceed $6,000. <br /> Therefore, $4000 of the $10,000 claimed is not an EO. <br /> Response: The ROPS has been amended to reflect the outstanding contract balance at that point <br /> in time. <br /> • Page 7, line items 86, 98, and 99, various projects totaling $8.7 million using unexpended <br /> bond funds- The DOF Letter cites HSC Section 34177(i) which states "...Bond proceeds shall be <br /> used for the purposes for which bonds were sold unless the purposes can no longer be achieved, in <br /> which case, the proceeds may be used to defease the bonds." The DOF Letter also makes an <br /> assumption that "it is not the intent of ABXI 26 to allow successor agencies to enter into new <br /> contracts, unless those contracts are specifically required pursuant to the terms of another pre- <br /> existing contract that meets the requirements of ABXI 26, or are specifically required by bond <br /> indentures" and "the unexpended funds may not be used to enter into new obligations." <br /> 1esponse: We respectfully disagree and find that the DOF assumption stated above is incorrect <br /> and does not reflect either the letter or spirit of ABXI 26. Pursuant to HSC Section 34177(i), the <br /> Successor Agency is required to utilize bond proceeds for the pUrpOSes for which bonds were sold <br /> 3-36 <br />