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•'e'4T Op. <br />4 = Z <br />W II n <br />a ►� <br />DEPARTMENT OF EDMUND G. BROWN JR. - GOVERNOR <br />Q411f'ORN�r F I N A N C E 91 5 L STREET ■ SAURAMENT12 CA ■ 95814-3700 0 WWW.013F.13A.13mv <br />December 15, 2012 <br />Ms. Susan Gorospe, Senior Management Analyst <br />Community Development Agency <br />City of Santa Ana <br />20 Civic Center Plaza, M -25 <br />Santa Ana, CA 92701 <br />Dear Ms. Gorospe: <br />Subject: Low and Moderate Income Housing Fund Due Diligence Review <br />This letter supersedes Finance's original Low and Moderate Income Housing Fund (LMIHF) - <br />Due Diligence Review (DDR) determination letter dated November 9, 2012. Pursuant to Health <br />and Safety Code (HSC) section 34179.6 (c), the City of Santa Ana Successor Agency (Agency) <br />submitted an oversight board approved LMIHF DDR to the California Department of Finance <br />(Finance) on October 11, 2012. Finance issued a LMIHF DDR determination letter on November <br />9, 2012. Subsequently, the Agency requested a Meet and Confer session on one or more items <br />adjusted by Finance. The Meet and Confer Session was held on December 4, 2012. <br />Based on a review of additional or clarifying information provided to Finance during the Meet <br />and Confer process, Finance continues to believe the adjustments made to the DDR's stated <br />balance of LMIHF available for distribution to the taxing entities is appropriate. HSC section <br />34179.6 (d) authorizes Finance to make these adjustments. We maintain the adjustments <br />continue to be necessary for the following reasons: <br />Finance originally disallowed the Agency's improper transfers to the Santa Ana Housing <br />Authority on February 1, 2012, and adjusted the amount available by $26,080,925. <br />During the Meet and Confer process, the Agency stated that although the cash is <br />currently unencumbered, it was received due to judgments, settlements, and <br />agreements resulting from lawsuits against the former redevelopment agency, and <br />therefore represent an enforceable obligation per HSC 34176 (e)(2). <br />Further, the Agency contends the retention Is necessary for anticipated housing <br />obligations. However, Finance contends that these funds are not encumbered by <br />existing contracts, and per HSC 34163 (a) an agency shall not have the authority to <br />enter Into contracts with, Incur obligations, or make commitments to any entity, for any <br />purpose, including agreements for redevelopment activities. <br />The Agency also Identified $438,954 as non -cash assets; the market value on <br />investments in the amount of $179,704 is not cash, and the Multi- Famliy Mortgage <br />Backed Securities in the amount of $259,250 is a housing revenue bond that does not <br />