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ROPS 13-14A and Administrative Budget
<br />February 19, 2013
<br />Page 2
<br />The first, second, and third ROPS and associated administrative budgets were approved by the
<br />Successor Agency on April 2, 2012, May 7, 2012, and August 20, 2012, respectively, and by the
<br />Oversight Board on April 10, 2012, May 8, 2012, and August 28, 2012, respectively. The
<br />documents were made available to the appropriate entities (the State Controller's Office, DOF,
<br />and County-Auditor Controller) as required by law. The DOF approved ROPS I and II on May 24,
<br />2012, and ROPS III on October 19, 2012; however, several items deemed enforceable
<br />obligations by the Successor Agency and Oversight Board were disapproved by DOF, which the
<br />Agency disputed via a Meet and Confer on November 20, 2012.
<br />As a result of the Meet and Confer, the DOF issued a Determination Letter dated December 18,
<br />2012, reversing its decision on several items finding them enforceable obligations. Specifically,
<br />these items include the Certificates of Participation for the public parking garages (Item 13),
<br />Litigation expenses related to defense of the Peebler/South Main Settlement Agreement (Items
<br />18 and 118), and the Santa Ana Venture/Main Place Owner Participation Agreement and
<br />associated project costs (Items 35, 36 and 117). A few items remain disputed, including all five
<br />Settlement Agreements, and past due project costs erroneously allocated to administrative
<br />expenses. These are in addition to the Affordable Housing Disposition and Development
<br />Agreements the DOF denied under the Housing Due Diligence Review, which are still under
<br />dispute as well.
<br />The hearing for the South Main Settlement Agreement litigation mentioned above (Gerald
<br />Peebler, et al., v. State of California Department of Finance, et al., Case No. 34-2012-80001172),
<br />was held on February 1, 2013. The UCI Law Clinic argued on behalf of Peebler, while Iris Yang
<br />of the law firm Best Best Krieger argued on behalf of Santa Ana. After a tentative ruling in
<br />advance of the hearing, the judge took the case under submission. Additional litigation by the
<br />impacted housing developers, as well as a low-income housing advocacy group is expected.
<br />The ROPS (Exhibit A of Exhibit 1) and Budget (Exhibit B of Exhibit 1) for the July 1, 2013 through
<br />December 31, 2013 period is now being presented for Successor Agency approval. Both were
<br />submitted for Oversight Board consideration earlier today. Following action by the Successor
<br />Agency, the ROPS and Budget will be forwarded to the DOF, County and other appropriate
<br />entities as required by AB 1484. Pursuant to AB 1484 and DOF directive, the approved ROPS
<br />must be submitted to the DOF no later than March 1, 2013, or the Successor Agency/City will be
<br />subject to severe financial penalties. The City Manager and/or Director of Finance need the
<br />ability to make modifications, additions or revisions to the ROPS in order to comply with any
<br />further discretion received by DOF.
<br />FISCAL IMPACT
<br />The Successor Agency is limited to making only payments listed on the approved ROPS for each
<br />six month period and the administrative expenditures of the Successor Agency are limited to
<br />items listed in the approved Administrative Budget for each six month period.
<br />California Health and Safety Code Section 34173(e) stipulates that "the liability of any successor
<br />agency, acting pursuant to the powers granted under the act adding this part, shall be limited to
<br />the extent of the total sum of property tax revenues it receives pursuant to this part and the value
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