CITY OF SAN MATEO ACTING AS SUCCESSOR AGENCY TO THE SAN MATEO REDEVELOPMENT AGENCY SPECIAL MEETING OVERSIGHT BOARD

Transcription

1 CITY OF SAN MATEO ACTING AS SUCCESSOR AGENCY TO THE SAN MATEO REDEVELOPMENT AGENCY SPECIAL MEETING OVERSIGHT BOARD THURSDAY August 29, 2013 ROOM C, CITY HALL 330 WEST 20TH AVENUE, SAN MATEO 5:30pm Board Members: John Maltbie (Chairperson).County of San Mateo Councilmember Brandt Grotte (Vice Chairperson) City of San Mateo Ron Munekawa... City of San Mateo Barbara Christensen... San Mateo Community Colleges Chancellor s Office Penny Bennett... County of San Mateo Joe Galligan... Peninsula Health Care District Elizabeth McManus... San Mateo County Office of Education Advisory: Gary Baum Attorney for the Oversight Board Lisa Grote... Community Development Director, City of San Mateo Sandy Russell...Housing and Economic Development Specialist, City of San Mateo Sandy Belluomini... Administrative Aide, City of San Mateo MEETING AGENDA MEETING CALL TO ORDER... Chairperson Maltbie 1. Approve Minutes of April 16, Update on Long Range Property Management Plan 3. Oral Update on Department of Finance Determinations:

2 Oversight Board Meeting August 29, 2013 a. Approval to use bond funds for Fire Station 24 b. Approval to use former tax increment funds for Vendome loan c. Finding of Completion issued April 26, Informational Report on the Successor Agency Administrative Allowance 5. Review and Approval of Jan-June 2014 (ROPS 13-14B) Recognized Obligation Payment Schedule 6. Update on Santa Clara lawsuits 7. OTHER BUSINESS (Chair) a. Future Meeting Dates PUBLIC COMMENT: Comments from members of the public on items not on this meeting ADJOURNMENT: AMERICANS WITH DISABILITIES ACT In compliance with the Americans with Disabilities Act, those requiring accommodation for this meeting should notify the Planning Department 24 hours prior to the meeting at (650)

3 City of San Mateo Acting as Successor Agency to the San Mateo Redevelopment Agency Oversight Board MINUTES TUESDAY April 16,2013 5:30PM CONFERENCE ROOM C, CITY HALL, SAN MATEO MEETING CALLED BY TYPE OF MEETING FACILITATOR NOTE TAKER ATTENDEES John Maltbie Oversight Board John Maltbie Sandy Belluomini Ron Munekawa, John Maltbie, Brandt Grotte, Barbara Christensen, Elizabeth McManus, Gary Baum, Lisa Grote, Sandy Russell, Sandy Belluomini Agenda Topics ITEM 1: APPROVE MINUTES FOR FEBRUARY 5, 2013 John Maltbie Discussion Minutes of the February 5, 2013 meeting were approved. Motion by Brandt Grotte, 2 nd by Barbara Christensen. Motion passed ITEM 2: REVIEW AND APPROVAL OF COOPERATION AGREEMENT John Maltbie BETWEEN THE CITY OF SAN MATEO AND THE CITY OF SAN MATEO ACTING AS SUCCESSOR AGENCY FOR THE REDEVELOPMENT AGENCY OF THE CITY OF SAN MATEO FOR THE FUNDING OF THE DEMOLITION AND RECONSTRUCTION OF FIRE STATION 24 Discussion A discussion between board members and staff addressed various questions about the cooperation agreement. Motion to approve the cooperation agreement, authorize the City Manager to execute the agreement and adopt a resolution approving the cooperation agreement by Brandt Grotte, 2 nd by Ron Munekawa. Motion passed (Christensen opposed, Bennett and Galligan absent) ITEM 3: OTHER BUSINESS Discussion Confirmation of June 4, 2013 as the next meeting date. Motion by Brandt Grotte, 2 nd by Barbara Christensen PUBLIC COMMENT Discussion No additional business. No public comment. Meeting adjourned at 5:47 pm.

4 CITY OF SAN MATEO ACTING AS SUCCESSOR AGENCY TO THE SAN MATEO REDEVELOPMENT AGENCY REPORT TO THE OVERSIGHT BOARD DATE: August 29, 2013 TO: Oversight Board FROM: Lisa Grote, Community Development Director Sandy Russell, HED Specialist RE: August 29, 2013 Agenda Item 2 Update on the Long Range Property Management Plan RECOMMENDATION Receive an update on the Long Range Property Management Plan. DISCUSSION AB1484 requires, as a part of the dissolution of redevelopment agencies, that the Successor Agency to the former Redevelopment Agency prepare a Long Range Property Management Plan for the disposition of real property owned by the Successor Agency. The Plan must be approved by the Oversight Board of the Successor Agency and by the Department of Finance. Disposition of property cannot take place until the Department of Finance issues a Finding of Completion to the Successor Agency. To receive the Finding of Completion the Successor Agency must complete the Housing and Non-housing Due Diligence Reviews and make any required payments to the County for distribution to the taxing entities. The Successor Agency has met these requirements and received its Finding of Completion on April 26, The Agency, after receiving its Finding of Completion, has six months to prepare and submit the Long Range Property Management Plan to the Oversight Board and the Department of Finance for approval. The plan must address the use or disposition of all properties owned by the Successor Agency. Permissible uses include 1) retention of the property for governmental use, 2) retention for future development, 3) sale of the property, 4) use of the property to fulfill an enforceable obligation, and 5) transfer to the City of properties which were identified for a project in an approved redevelopment plan.

5 Oversight Board August 29, 2013 Page 2 of 2 The Long Range Property Management Plan will be presented to the Successor Agency Board of Directors for review. If approved, it will be presented to the Oversight Board of the Successor Agency and the Department of Finance for review. Staff is currently drafting the Long Range Property Management Plan and anticipate taking it to the Successor Agency Board of Directors on September 3, 2013, to the Oversight Board for action in September and to the Department of Finance no later than October 26, 2013.

6 CITY OF SAN MATEO ACTING AS SUCCESSOR AGENCY TO THE SAN MATEO REDEVELOPMENT AGENCY REPORT TO THE OVERSIGHT BOARD DATE: August 29, 2013 TO: Oversight Board FROM: Lisa Grote, Community Development Director Rhonda L. Budnick, Accounting Manager RE: August 29, 2013 Agenda Item 4 Informational Report on the Successor Agency Administrative Allowance RECOMMENDATION Receive an informational report on the Successor Agency Administrative Allowance. DISCUSSION This informational report is being presented in response to questions from the Oversight Board (OB) and to comply with AB 1484 requirements that the successor agency (SA) provide the estimated costs included in its administrative allowance budget of $250,000 for fiscal year To build a line item budget for the administrative allowance would require identifying direct costs for each City staff member providing support services to the SA and OB and then applying an indirect cost rate to cover overhead associated with employee costs as well as facility usage, utilities, insurance, etc. Rather than building the cost of support services into each department budget, the City of San Mateo centrally budgets the costs of providing all such support services and uses a full cost allocation method to recover administrative expenditures from user departments. This method utilizes overhead rates that accurately account for the true cost of providing various services within City operations. The City uses a Full Cost Allocation Plan method for allocating its indirect cost wherein the primary objective is to spread costs from central support departments to cost centers (departments, divisions, funds, programs) that receive services in support of conducting their operations. In August 2011, the City contracted with Matrix Consulting Group (Matrix) to update its indirect cost rates based on fiscal year 2011 actual expenditures. The previous rates had been in use since The Full Cost Allocation Plan issued by Matrix in March 2012 was adopted for use by the City and the new indirect cost rates were incorporated in the Business Plan. Cornerstones of the plan methodology are: 1) the costs to be distributed are necessary and reasonable; and, 2) the allocation basis is related to the benefit received. The indirect cost rates are applied to all

7 Oversight Board August 29, 2013 Page 2 of 3 cost centers within the City and appropriate reimbursement assessments are levied on special revenue, enterprise and debt service funds. The costs allocated to each activity vary by the nature of the activity and the method of cost allocation varies by the nature of the cost. For instance, Golf and Sewer are allocated a portion of the human resources department costs based on full-time equivalent employees in their operations while the general obligation (GO) bond debt service fund is not allocated any of these costs since it does not directly fund any employees. However, all of these cost centers, sewer, golf, and the GO bond fund, are allocated business services department costs for accounting and reporting costs based on budgeted expenditures and accounts payable based on the number of invoices paid. Beginning in July 2013, the primary, continuing activity of the successor agency will be debt service administration and reporting for the three outstanding Redevelopment Agency Merged Area and Housing Set Aside tax allocation bonds (RDA bonds). Based on this, the most appropriate allocation of costs to the SA is one used for like-types of debt service funds. Comparing indirect costs allocated to budgeted expenditures for the landfill revenue bond debt service fund (41) and the GO bond fund (48), the table below shows that the rates range from 3.73% to 2.24%, respectively. Landfill General Obligation (Fund 41) (Fund 48) Budgeted Annual Expenditures $ 560,848 $ 2,488,023 Administrative Costs to be Allocated Fund Dept Name Cost Allocation to Debt Service Funds Building Use - - Equipment Use City Council 369 1, City Manager 1,465 6, City Clerk City Attorney Business Services 12,625 18, Information Technology 6,447 28, Human Resources - - $ 20,906 $ 55,612 Indirect Cost Rate 3.73% 2.24% The activities required to administer debt service are similar for the landfill revenue, GO and RDA bonds. However, there are additional external compliance and oversight requirements for the SA under AB1484 and the City under California Code of Regulations for the underlying activities of RDA dissolution and landfill post closure monitoring, respectively. Considering the additional reporting and compliance requirements, the City would apply the higher indirect cost rate of 3.73% to the successor agency activities.

8 Oversight Board August 29, 2013 Page 3 of 3 The estimated annual expenditures for the SA are $11,389,139 as shown in the column labeled Total Due During Fiscal Year in the approved Recognized Obligation Payment Schedule (ROPS) 13-14A, attached. Excluding the $250,000 administrative allowance, total direct costs are $11,139,139. Applying the indirect rate of 3.73% to this amount would yield an administrative budget in the amount of $415,499. Given the $250,000 annual limit, using the lower indirect cost rate for the GO bond fund is the only option and results in an administrative allowance budget calculated at $248,981 for Attachment 1 Recognized Obligation Payment Schedule 13-14A

9

10

11

12

13

14

15

16

17

18 CITY OF SAN MATEO ACTING AS SUCCESSOR AGENCY TO THE SAN MATEO REDEVELOPMENT AGENCY REPORT TO THE OVERSIGHT BOARD DATE: August 29, 2013 TO: Oversight Board FROM: Lisa Grote, Community Development Director Sandy Russell, HED Specialist RE: August 29, 2013 Agenda Item 5 Review and Approval of January-June 2014 Recognized Obligation Payment Schedule 13-14B RECOMMENDATION That the Oversight Board review and approve the January-June 2014 Recognized Obligation Payment Schedule 13-14B. DISCUSSION The January-June 2014 Recognized Obligation Payment Schedule 13-14B reflects the next six-month estimated payment obligations for the Successor Agency. This is the Department of Finance approved format and also includes the estimated and actual prior payments for the January-June, 2012 Recognized Obligation Payment Schedule. The January-June 2014 Recognized Obligation Payment Schedule 13-14B will be submitted to the Department of Finance and County at the same time as it is submitted to the Oversight Board in accordance with the requirements of AB 1484, budget trailer legislation passed by the Legislature and signed by the Governor in June, 2012, which made technical and substantive amendments to AB x1 26, the legislation dissolving redevelopment agencies. This Recognized Obligation Payment Schedule is on the Department of Finance approved form provided by the Department of Finance. The Vendome Hotel loan from the County was originally disallowed by the Department of Finance. It was later included on the non-housing due diligence review in order to provide an opportunity for additional review. After a Meet and Confer meeting with the Department of Finance, the Department of Finance determined the Vendome Hotel loan from the County is an enforceable obligation. Additionally, the Department of Finance also determined that the Successor Agency, after receiving its Finding of Completion, is eligible to expend the bond funds issued prior to January 1, 2011, so the Fire Station 24 demolition and construction is on the ROPS 13-14B. Staff is currently preparing the January-June 2014 Recognized Obligation Payment Schedule 13-14B and anticipate it will be available by August 27, 2013 for distribution and review. Attachments: Attachment A January-June 2014 Recognized Obligation Payment Schedule 13-14B (to be distributed under separate cover by August 27, 2013) Attachment B - Resolution

19 OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN MATEO RESOLUTION NO. (2013) APPROVING REVISED RECOGNIZED OBLIGATION PAYMENT SCHEDULE FOR PERIOD OF JANUARY 1, 2014 THROUGH JUNE 30, 2014 WHEREAS, state law requires that the Oversight Board approve a Recognized Obligations Payment Schedule for the period January 1, 2014 through June 30, 2014; and WHEREAS, the Oversight Board has reviewed the proposed Recognized Obligations Payment Schedule for this period prepared by the Successor Agency staff and determine that it appropriately states the enforceable obligations to be paid during this period; and WHEREAS, the January 1, 2014 through June 30, 2014 Recognized Obligation Payment Schedule uses the new Department of Finance format and complies with AB 1484; NOW, THEREFORE, THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN MATEO HEREBY RESOLVES that: 1. The revised Recognized Obligation Payment Schedule for the period of January 1, 2014 through June 30, 2014, attached to this resolution as Exhibit A, is approved. ATTEST: Sandra Belluomini, Secretary to the Board BRANDT GROTTE, VICE CHAIR 1 S:\OVERSIGHT BOARD\Oversight Board\ Meeting\Item 5 - Attachment ROPS IV 13-14B Resolution August 28, 2013.doc

20 MEMORANDUM TO: FROM: SUBJECT: Oversight Board for the City of San Mateo Gary M. Baum, Oversight Board Counsel Update on Forty Niners SC Stadium Company v. Oversight Board of the City of Santa Clara Redevelopment Agency and Vinod K. Sharma v. City of Santa Clara DATE: August 21, Introduction A few Oversight Board members inquired about the status of two lawsuits involving the County of Santa Clara and the City of Santa Clara. The first lawsuit is entitled Forty Niners SC Stadium Company v. Oversight Board of the City of Santa Clara Redevelopment Agency ( 49ers lawsuit ) and the second is Vinod K. Sharma v. City of Santa Clara ( Sharma lawsuit ). Neither lawsuit has been resolved as of the date of the memorandum. 2. Summary of 49ers Lawsuit In June of 2012 the San Francisco 49ers filed a Petition for a Writ of Mandate against the Oversight Board of the Successor Agency to the City to the City of Santa Clara Redevelopment Agency and the County of Santa Clara among others. The City of Santa Clara was not named in the lawsuit. The County filed a cross complaint against the Department of Finance. The 49ers sued for payment of $40,000,000 from the Successor Agency for funds expended for predevelopment for the new 49ers stadium in the City of Santa Clara. The Sacramento Superior Court granted a preliminary injunction in the matter effectively freezing the $40,000,000, which has not been distributed to the taxing entities. The case background is as follows: The City of Santa Clara and the Redevelopment Agency of the City of Santa Clara formed a joint powers agency, entitled the Santa Clara Stadium Authority, to construct the stadium. The Stadium Authority and the Redevelopment Agency entered into a Cooperation Agreement with the 49ers in which the Agency agreed to contribute up to $40,000,000 for stadium development costs. The 49ers were listed in the Cooperation Agreement as a third party beneficiary of the agreement.

21 Oversight Board for the City of San Mateo Update on Forty Niners SC Stadium Company v. Oversight Board of the City of Santa Clara Redevelopment Agency and Vinod K. Sharma v. City of Santa Clara August 21, 2013 The judge in the action has ruled preliminarily that the 49ers claim was an enforceable obligation and that the 49ers were a direct party to the Agreements at issue. The judge declined to order that the amount claimed as due by the 49ers be placed on ROPS 13-14B, but instead ordered that the matter be remanded to the Oversight Board for the purposes of determining whether preconditions have been met and whether it is appropriate to list the amount or some lesser amount on ROPS B. A copy of the judge s second order is attached as Attachment 1. The Oversight Board and the 49ers have continuing issues despite the Court order as the Oversight Board has declined to list the $40,000,000 on ROPS B and the 49ers are arguing that the amount should be listed. Each side has filed a number of documents on the issue and the Court has ordered a joint filing by both parties as an update. The Oversight Board has asked for additional time and the 49ers have alleged that the Oversight Board is dragging its feet. There may be some resolution by the time the ROPS B is approved by late September. The Court ordered both parties to provide a joint filing on August 8 outlining progress made on resolving the dispute. Review of the August 8 filing show that the Oversight Board determined that the Successor Agency should pay the funds in The 49ers argue that the payment should be made prior to that date. 3. Summary of Sharma Lawsuit This lawsuit was filed in February 2013 and is also unresolved and perhaps even more complex than the 49ers lawsuit. Vinod Sharma is the County s Auditor-Controller and the lawsuit is filed in his name and on behalf of the Santa Clara County Office of Education. It was filed as a Petition for Writ of Mandate against the Successor Agency to the Redevelopment Agency of the City of Santa Clara ("Successor Agency"), City of Santa Clara, Housing Authority of the City of Santa Clara ( Housing Authority ), Santa Clara Stadium Authority ( Stadium Authority ) and the Sports & Open Space Authority of the City of Santa Clara ( SOSA ). The Department of Finance is listed as real party in interest. The County is seeking to have the Successor Agency turn over approximately $300,000,000 in land, lease revenue and other monies to the County for the purpose of distributing the funds to the taxing entities. The writ petition alleges that the City of Santa Clara set up the Housing Authority, Stadium Authority and SOSA and that the City of Santa Clara Redevelopment Agency transferred real property and/or monies to these entities in violation of AB 1X 26 and ultimately AB The County is seeking an order transferring the assets back to the Successor Agency for ultimate distribution to the taxing entities. The Successor Agency has filed a demurrer challenging the pleadings and also in the alternative filed an answer should the demurrer be summarily denied. A primary issue involves the ownership and future of the real property and where the proceeds of the ground leases from these properties should go. The properties include the Techmart, Great America Amusement Park and the Santa Clara Convention Center. 2

22 Oversight Board for the City of San Mateo Update on Forty Niners SC Stadium Company v. Oversight Board of the City of Santa Clara Redevelopment Agency and Vinod K. Sharma v. City of Santa Clara August 21, 2013 The Successor Agency's defenses include: 1. The lawsuit is premature as the Department of Finance has not ruled on the DDR for the non-housing funds. 2. The lawsuit is premature with respect to the Housing funds because the Successor Agency agrees to return the funds to the Taxing Agencies, but is working out a payment plan on the $63,000,000 at issue. 3. The properties were not purchased with tax increment, thus the Successor Agency is not required to sell them with the proceeds going to taxing entities. 4. The doctrine of judicial abstention applies and the Court should not act on this Writ and should instead defer action until the DOF has completed its analysis. 5. Failure to join necessary parties. 6. The State Controller has not determined the appropriate assets or amounts for transfer. The County filed a Motion for Preliminary Injunction which was heard on July 26. The Court issued a final ruling granting the Motion for Preliminary Injunction on August 8. According to the Court s Ruling 1 (attached as Attachment #2), the Court granted the Preliminary injunction and required that the City hold all of the assets and not spend any assets. The Successor Agency's demurrer, which challenges the sufficiency of the pleadings, was heard by the Court also on July 26. The Court granted part of the demurrer, denied part of the demurrer and stayed the underlying lawsuit until the DOF could make its final determination. The County was granted a Preliminary Injunction requiring that the Successor Agency be prohibited from spending any funds pending the outcome of the litigation, and has asked that the status quo be preserved and that all funds be frozen until the resolution of the lawsuit. The County notes that that the City has refused to enter into a Standstill Agreement as other cities have. The City is spending lease proceeds in their general fund and the County objects to those ongoing expenditures. The County claims that the City would have to file bankruptcy in order to satisfy the $300,000,000 requested. The County alleges that the funds were transferred to the Stadium Authority, SOSA and Housing Authority in an attempt to circumvent the Redevelopment Dissolution law. The County is claiming irreparable harm to the school district and to children s education if the injunction is not granted. The City made many of the same arguments as raised in the response to the demurrer as well as a number of other arguments. The City argues that the County is overstating the amount of money involved and that the real property is not in the process of being sold or transferred. The City also argues that the real property, specifically the Convention Center, serves a public purpose. The City claims that a substantial portion of the funds represents bond proceeds and that those funds can continue to be used for the purpose for which the bonds were issued. The City makes similar ripeness arguments and indicates that it will pay the housing assets to the taxing entities. 1 The rulings on the Court website are labeled Tentative. The Court ordered that a former order for Preliminary Injunction be filed. An attempt will be made to verify that these tentative rulings represent the final order of the Court and were not substantively modified. 3

23 Oversight Board for the City of San Mateo Update on Forty Niners SC Stadium Company v. Oversight Board of the City of Santa Clara Redevelopment Agency and Vinod K. Sharma v. City of Santa Clara August 21, Conclusion These intricate cases are still in the process of being litigated. In one case the 49ers appear to have the upper hand, while in the other case, the City has had a Preliminary Injunction granted against it freezing all former RDA assets, whether cash or real property. These cases do not presently have any direct impact upon the Oversight Board for the City of San Mateo. When subsequent rulings are made the Oversight Board will be informed. Memo to Oversight Board San Mateo Oversight Board City of Santa Clara Lawsuits Version #

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44