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The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
The Demise of RDA's-Joseph Buchman
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The Demise of RDA's-Joseph Buchman

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Session #1 the Demise of RDA's: An Opportunity to Restore Fiscal Health with a Vision for Future Economic Development.

Session #1 the Demise of RDA's: An Opportunity to Restore Fiscal Health with a Vision for Future Economic Development.

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  • 1. The Demise of RDAs: An Opportunity to Restore Fiscal Health with a Vision for Future Economic Development California Contract Cities Association Annual Municipal Seminar Indian Wells, California May 18, 2012
  • 2. Joseph P. Buchman Burke Williams & Sorensen LLP 444 S. Flower Street Suite 2400 Los Angeles, CA 90071 www.bwslaw.com (213) 236-2872 (direct) (213) 236-2700 (fax) jbuchman@bwslaw.com
  • 3. City Expenditures• General Government – Legislative – Management and Support• Public Safety – Police – Fire – Emergency Medical Services – Street Lighting 3
  • 4. City Expenditures• Transportation – Streets, Highways and Storm Drains – Public Transit – Airports – Ports and Harbors• Community Development – Planning – Construction and Engineering Regulation Enforcement 4
  • 5. City Expenditures• Health – Solid Waste Disposal – Sewers• Culture and Leisure – Parks and Recreation – Libraries 5
  • 6. City Expenditures• Public Utilities – Water – Gas – Electricity 6
  • 7. Summary of City ExpendituresSource: State Controller’s Cities Annual Report forFiscal Year ending 6/30/2010 (11/11/2011). 7
  • 8. City Revenues• Tax Revenues – General Property Taxes – Sales and Use Tax and Transactions and Use Tax – Gross Receipts Tax – Business License Fees and Taxes – Utility Users Tax – Transient Occupancy Tax 8
  • 9. City Revenues• Tax Revenues (Cont.) – Excise Taxes • Development Tax • Admissions Tax • Parcel Tax • Documentary Transfer Tax 9
  • 10. City Revenues• Tax Revenues (Cont.) – Special Taxes • Mello-Roos • Community Facilities Districts • Police and Fire Protection • Libraries • Transportation 10
  • 11. City Revenues• Tax Revenues (Cont.) – Special Benefit Assessment Districts • Public Improvements: street, drainage, flood control, etc. • Landscaping and Lighting • Business Improvement Districts • Infrastructure Financing Districts 11
  • 12. City Revenues• Charges, Rates and Fees • Development Fees • Sewer Service Charges and Connection Fees • Solid Waste Fees • Water Service Charges and Connection Fees • Franchise Fees: Cable TV, Electricity, Telephone, Gas and Oil 12
  • 13. City Revenues• Charges, Rates and Fees (Cont.) • Fines and Forfeitures • Park and Recreation Fees • Airport • Ports and Harbors • Licenses and Permits 13
  • 14. City Revenues• Intergovernmental Agencies – State Subventions – Federal and State Grants – County and Other Local Agencies Revenue Sharing 14
  • 15. City Revenues• Other Financing Sources – Revenues From Use of Money and Property – Gifts – Sale of Bonds – Leasing Public Property 15
  • 16. Summary of City RevenuesSource: State Controller’s Cities Annual Report forFiscal Year ending 6/30/2010 (11/11/2011). 16
  • 17. City Revenues: Illustration Utility User Tax 4% Service Charges (water, sewer, Sales Tax 10% refuse, etc.) 39% Not Restricted 36% x Property Tax 11% Debt Other Tax 7% Service Fees 1% 8% Other 4% State &Taxes 3% Fed 10% Assessments Lic & Permits 1% 2% 17
  • 18. Revenue Losses• ERAF Shifts – Educational Revenue Augmentation Funds • Property Tax Shift from Cities, Counties and Special Districts to Schools Since 1992 • FY 2010-11 amount equals $7.5 billion. – “SERAF” from Redevelopment Agencies • FY 2010-11 SERAF total was $350 million• VLF Loss (The “Triple Flip” to the “Flip Off”) – SB 89 redirects all VLF revenue to law enforcement grants usable only for police services. 18
  • 19. Redevelopment Agencies• Property Tax Increment Funding• Expenditures for Community Redevelopment• Agencies dissolved as of February 1, 2012• Successor Agencies and Oversight Boards dealing with the aftermath 19
  • 20. ABX1 26 Dissolution Bill• January 10, 2011 – Governor Brown releases budget proposal, includes elimination of redevelopment.• June 15 – State Legislature passes ABx1 26 and 27.• June 28 – Legislature passes new budget bill, and forwards ABx1 26 and 27 to Governor for signature. Governor signs, and the bills take effect immediately. 20
  • 21. ABX1 26 Dissolution Bill• Froze redevelopment agency activities other than as necessary to meet “enforceable obligations.”• Required preparation of Enforceable Obligation Payment Schedule within 60 days of Effective Date.• Preliminary draft of Recognized Obligation Payment Schedule (“ROPS”) was to be provided to Successor Agency by September 30.• Dissolution of Agencies to occur October 1, 2011, with a Successor Agency taking over with decisions to be made by an Oversight Board. 21
  • 22. ABX1 26 Dissolution Bill• July 18, 2011 – CRA and LOCC filed suit in California Supreme Court challenging ABx1 26 and 27.• August 11 – Supreme Court announced it would hear lawsuit, and issued order staying portions of ABx1 26 and all of ABx1 27.• December 29 – Supreme Court upholds ABx1 26 and invalidates ABx1 27. Pre- May 1, 2012 deadlines extended 4 months. All Redevelopment Agencies dissolve as of February 1, 2012. 22
  • 23. Redevelopment Agencies: Endgame• Oversight Boards – Formation and duties defined in Health & Safety Code §§ 34179-34181. – Oversight Board establishes the ROPS for the Successor Agency. – Oversight Board charged with disposing of all assets and properties of the former RDA funded by tax increment revenues. 23
  • 24. Redevelopment Agencies: Endgame• Former RDA Properties and Assets – City may retain properties and assets of the former RDA (HSC 34180(f)). – Requires Compensation Agreement with other taxing entities for the agreed value of the property retained. – If no agreement on the value of the property, then the county assessor is to determine fair market value as of January 1, 2011. 24
  • 25. Redevelopment Agencies: Endgame• Former RDA Properties and Assets – Oversight Board may also direct the successor agency to transfer ownership of assets that were constructed and used for a governmental purpose to the appropriate public entity (HSC 34181(a)). – May require compensation to the successor agency depending on any agreements governing the use of the asset. 25
  • 26. Redevelopment Agencies: Endgame• Former RDA Properties and Assets – Governor’s Revised State Budget relies on RDA cash assets generating $1.4 billion for K-14 education in FY 2012-13 and estimates another $600 million in FY 2013-14. – Budget Trailer Bill includes proposed AB x1 26 “Clean-Up” Legislation – http://www.dof.ca.gov/budgeting/trailer_bill_language/business_transportation_and_housing/ documents/%5B210%5D%20ABx1%2026%20Redevelopment%20Clean-Up%20and %20RDA%20Asset%20Disposition.pdf 26
  • 27. Redevelopment Agencies: Endgame• Proposed “Clean-Up” Legislation – Successor Agency Administrative Cost Allowance – “Enforceable Agreements” between City and Former RDA – RDA Assets 27
  • 28. Redevelopment Agencies: Endgame• Proposed “Clean-Up” Legislation – Successor Agency • Separate Public Entity/Liabilities • Has Two Governing Boards • Can Sue and Be Sued • Accountant For Due Diligence Review • Can Issue Bonds to Refund RDA Bonds • Can File Bankruptcy 28
  • 29. Redevelopment Agencies: Endgame• Proposed “Clean-Up” Legislation – Oversight Board • Not a Separate Public Entity • Cannot Be Sued • Can Contract For Administrative Support • Decisions Supersede Those of Successor Agency Board and Staff 29
  • 30. Redevelopment Agencies: Endgame• Proposed “Clean-Up” Legislation – Department of Finance • 10 Days Notice Before Disposition of Assets • Oversight Board’s Decision Not Effective For 5 Business Days, Plus Up to 60 more • Clawback Authority 30

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