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Home My WebLink About2012/07/12 Item 1SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY AGENDA STATEMENT ~`{~~ .CITY OF "~" CHULA VISTA JULY 12, 2012, Item A RESOLUTION OF THE SUCCESSOR AGENCY TO THE ITEM TITLE: REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA APPROVING AN APPROPRIATION OF $5,529,373 FROM ITS REDEVELOPMENT OBLIGATION RETIREMENT FUND TO MAKE THE REQUIRED PAYMENT PURSUANT HEALTH AND SAFETY CODE SECTION 34183.5(b)(2)(A), WITH A RESERVATION OF ANY AND ALL RIGHTS AND REMEDIES NT CITY MANAGERf SUBMITTED BY: ASSISTA DIRECTOR OF DEVE OPMENT SERVICES REVIEWED BY: CITY MANAGER 4/STHS VOTE: YES ~ NO ^ SUMMARY The Governor signed AB 1484 as part of the fiscal year 2012-13 State of California budget package. The primary purpose of AB 1484 is to make amendments to ABXl 26, the RDA dissolution bill. As a budget "trailer bill," AB 1484 took immediate effect upon signature by the Governor. Due to the passage of this legislation there was a "true up" component of the bill that requires the Successor Agency to the Redevelopment Agency of the City of Chula Vista to make a payment of $5,529,373 by July 12, 2012, to the County of San Diego Auditor and Controller. Failure to make a timely payment will result in severe sanctions to the Successor Agency and the City of Chula Vista, including suspension of the July 18, 2012, sales and use tax distribution to the City. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the appropriation request of $5,529,373from the Redevelopment Obligation Retirement Fund is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change to the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the actions proposed are not subject to CEQA. 1-1 JULY 12, 2012, Item Page 2 of 2 RECOMMENDATION That the Successor Agency adopt the resolution. BOARDS/COMMISSION RECOMMENDATION Not applicable DISCUSSION The Governor signed AB .1484 as part of the fiscal year 2012-13 State of Califomia budget package: The primary purpose of AB 1484 is to make amendments to ABXl 26, the RDA dissolution bill. As a budget "trailer bill," AB 1484 took immediate effect upon signature by the Governor. Due to the passage of this legislation there was a "true up" component of the bill that requires the Successor Agency to the Redevelopment Agency of the City of Chula Vista to make a payment of $5,529,373 by July 12, 2012, to the County of San Diego Auditor and Controller. Pursuant to Health and Safety Code Section 34183.5(b)(2)(A), the County of San Diego Auditor and Controller sent the City a letter dated July 9, 2012, (Attachment) demanding that the Successor Agency make the payment by July 12, 2012. The letter, also advised the Successor Agency that in accordance with Health and Safety Code Section 34183.5(b)(2)(C), failure to make this payment by July 12, 2012, will result in civil penalties to the Successor Agency and the City. The penalties are calculated as 10% of the required payment that equals $552,937.34 to the Successor Agency and an equal amount to the City for a total penalty amount of $1,105,875 if the payment is not made. In addition, the State of California will withhold the distribution of sales and use tax to the City beginning on July 18, 2012 up to the amount of the demanded payment. The payment of the demanded amount will be made under protest and with a reservation of any and all rights and remedies for both the City of Chula Vista and the Successor Agency. DECISION MAKER CONFLICT Staff has reviewed the decisions contemplated by this item and have determined that the actions contemplated are not site-specific and, consequently, the 500-foot rule found in California Code of Regulations section 18704.2(a) is not applicable. CURRENT YEAR FISCAL IMPACT The fiscal impact will be $5,529,373 from the Redevelopment Obligation Retirement Fund reserves. ONGOING FISCAL IMPACT There is no on-going fiscal impact as a result of this action. ATTACHMENTS: County of San Diego Demand Letter Prepared by.' Phillip Davis, Assistant Director of Finance 1-2 DONALD F. STEUER CHIEF FINANCIAL OFFICER (619)531-5413 FAX (619) 531-5219 July 9, 2012 ~~w .e° '••e«< C~oixxt#~ of ~5~xxt ~tE~u AUDITOR AND CONTROLLER 7600 PACIFIC HIGHWAY STE 166, SAN DIEGO, CALIFORNIA 92107-2478 Maria Kachadoorian City of Chula Vista 276 Fourth Avenue Chula Vista, CA 91910 Dear Ms. Kachadoorian: DEMAND FOR PAYMENT PURSUANT TO AB 1484 ATTACHMENT TRACY M. SANDOVAL ASST. CHIEF FINANCIAL OFFICER/ AUDITOR 8 CONTROLLER (619)531-5413 FA% (819) 5313219 Pursuant to Health and Safety (H&S) Code Section 34183.5(b)(2)(A), our office has determined the residual balance that your agency must remit for allocation to affected taxing entities no later than July 12, 2012, is as follows: Tax Increment (Nov 2011 to Jan 2012 $7,706,422.86 Service Fee ($65,696.49) Pass-through payment - DOF approved Max RPTTF Exhibit 12 column E ($2,111,353.00) Residual Balance $5,529,373.37 The DOF approved RPTTF amount above is based on Exhibit 12 as updated on July 8, 2012 at 5:00 p.m. Our office will send a revised letter if the DOF makes any revisions to Exhibit 12. We will accept remittances via wire transfer (wiring instructions attached) or a warrant. Please notify us immediately which payment method your agency will utilize. If your agency chooses to send a warrant, please send it to the address below and also send an electronic copy of the warrant to PTS FGGCa~sdcounty.ca.aov. Please send warrant to: County of San Diego Auditor and Controller Property Tax Services 1600 Pacific Highway, Room 077 San Diego, CA 92101-2478 1-3 Demand for Payment Pursuant to AB 1484 Page Two July 9, 2012 Please be advised that in accordance with H&S 34183.5(b)(2)(C), failure to make this payment by July 12, 2012 will result in civil penalties for your agency and the City. Additionally, if full payment is not received by July 12, 2012, your agency is prohibited from making payments for obligations, other than bond debt service; and the City will not receive its distribution of sales and use tax beginning July 18, 2012. If you have any questions, please contact Nenette de Jesus or Juan Perez of Property Tax Services at (619) 531-5399. Sincerely, "~~ UJI TRACY M. SANDOVAL Auditor and Controller/Assistant Chief Financial Officer PTS:JP:ge Attachment 1-4 SUCCESSOR AGENCY RESOLUTION NO. 2012- A RESOLUTION OF THE SUCCESSOR AGENCY TO REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA APPROVING AN APPROPRIATION OF $5,529,373 FROM ITS REDEVELOPMENT OBLIGATION RETIREMENT FUND TO MAKE THE REQUIRED PAYMENT PURSUANT TO HEALTH AND SAFETY CODE SECTION 341835(b)(2)(A), WITH A RESERVATION OF ANY AND ALL RIGHTS AND REMEDIES WHEREAS, the State of California passed several trailer bills as part of the State budget for Fiscal Year 2012-2013, including AB 1484 pertaining to community redevelopment; and WHEREAS, AB 1484 made changes to AB X1 26, including the addition of Health and Safety Code section 34183.5, requiring specified payments by the Successor Agency to the County Auditor Controller for payment to the "taxing entities" by July 12, 2012; and WHEREAS, Health and Safety Code section 34183.5(b)(2)(A) required the County Auditor Controller to present to the City by July 9, 2012 a demand specifying the amount of payment due by July 12, 2012; and WHEREAS, the San Diego County Auditor Controller submitted to the City a "Demand for Payment Pursuant to AB 1484" demanding payment in the amount of five million five hundred twenty nine thousand three hundred seventy three dollars ($5,529,373) which is due on July 12, 2012; and WHEREAS, Health and Safety Code section 34183.5(b)(2)(C) imposes upon the Successor Agency and the City of Chula Vista severe sanctions if the aforementioned payment is not made by July 12, 2012; and WHEREAS, Health and Safety Code section 34183.5(b)(2)(C) imposes upon the Successor Agency, for an untimely payment, a civil penalty of 10% of the payment amount owed and a .5% penalty per month the payment is not made and a prohibition from making any payments on obligations except bond payments until the amount is paid; and WHEREAS, Health and Safety Code section 34183.5(b)(2)(C) imposes upon the City of Chula Vista, for an untimely Successor Agency payment, a civil penalty of 10% of the amount owed and a 1.5% penalty per month the payment is not made and withholding up to the amount of the payment of the July 18, 2012 sales and use tax distribution to the City; and WHEREAS, the Successor Agency and the City of Chula Vista do not agree that the amount demanded by the County Auditor Controller (and the State Department of Finance) is proper, but, given the severe penalties for non-payment, the Successor Agency will make the demanded payment; and 1-5 Resolution No. Page 2 WHEREAS, the payment of the demanded amount is made under protest and with a reservation of all rights and remedies available to the Successor Agency and the City of Chula Vista. NOW, THEREFORE, BE IT RESOLVED by the Successor Agency to the Redevelopment Agency for the City of Chula Vista as follows: Section 1. The foregoing Recitals are incorporated into this Resolution by this reference. Section 2. The appropriation of $5,529,373 from its Redevelopment Obligation Retirement Fund, Other Expenses category, to make the required payment pursuant Health and Safety Code section 34183.5(b)(2)(a) is approved. Section 3. The aforementioned payment is made under protest and the Successor Agency and the City of Chula Vista reserve any and all rights and remedies to dispute or challenge the demanded payment. Presented by Jim Sandoval City Manager Approved as to form by Glen R. Googins City Attorney 1-6