DOWNEY - With the Downey Community Development Commission legislated out of existence last Feb. 1, a successor agency, again by government fiat, was put in place to wind down its affairs.This particular function has been assumed by the city of Downey. To facilitate this, the same Redevelopment Dissolution Act that eliminated all redevelopment agencies in the state, has made it a requirement that each successor agency have a 7-member oversight board to oversee the CDC's dissolution, and to ensure that all its debts are paid and all its assets liquidated. Holding its first official meeting on Thursday last week, the oversight board elected community development director Brian Saeki as chair, while DUSD's Don LaPlante was chosen vice-chair. Membership on the board has special significance: each represents an entity or agency that would share in the distribution of CDC funds, and therefore possesses claims on an accurate and expeditious accounting of future expected revenue streams, if any, as well as of the disbursement of redevelopment funds held and managed by the county. The alliance is completed by the Department of Finance (DOF), which has power of review and other regulatory powers. But first things first. Comprising the oversight board, who will each serve for one year, are the aforementioned Saeki (appointed by the mayor), who will represent the "city that formed the redevelopment agency" (he is also the designee as contact person for DOF inquiries); La Plante, representing the Downey Unified School District; mayor Roger Brossmer; Ali Delawalla of Cerritos College, representing community colleges in the county; Jessica Flores, the Downey Employee Association representative; Stephen Helvey, representing the the L.A. County Board of Supervisors, District 4 (Don Knabe); and Frederick Latham, representing the public and appointed by L.A. County Board of Supervisors. The oversight board will meet every third Thursday of the month at 1 p.m. It is anticipated that additional special meetings are likely to be held during the first couple of months. It was also emphasized by city manager Gilbert Livas in a memorandum to the oversight board that they are "deemed a local governmental entity for purposes of the Brown Act, Political Reform Act, and Public Records Act." Other salient provisions pointed out by Livas: a simple majority of the total membership of the oversight board shall constitute a quorum for the transaction of business; and the DOF may review the actions/decisions of the oversight board; the oversight board has a fiduciary responsibility to holders of enforceable obligations and the taxing entities that benefit from distributions of property tax and other revenues pursuant to Health and Safety Code Section 34188 (distribution from the Redevelopment Property Tax Trust Fund). Among the very first actions the oversight board took were the passing of resolutions on a conflict of interest code, adoption of the "much simpler" Rosenberg's Rules of Order on parliamentary procedure, approving the administrative budgets for the period Feb. 1-June 30, 2012, and July 1-Dec. 31, 2012 (charged to 'administrative cost allowance'), all in pursuance of pertinent provisions of the Health and Safety Code; as well as approving the Recognized Obligation Payment Schedule (ROPS) for the period of Feb. 1-June 30, 2012. The oversight board will also approve the required successor agency actions as set forth in detail in sections 34180 and 34181 of the Health and Safety Code. Examples of items on the ROPS list are: the $9.9 million refunding tax allocation bonds issued in 1997 to defease an outstanding balance on the 1990 bonds and to repay accrued principal and interest on note obligations to the city of Downey, the outstanding balance of which is about $11 million, while the payments due on these bonds are payable semiannually on Feb. 1 and Aug. 1; several loans made to CDC by the city of Downey, the loans specifically granted to finance new economic development projects, and to fund the agency's administrative operations and support costs (the outstanding balance of these series of notes is some $2.5 million; the ROPS includes interest only payments over the next six months); it also includes a master loan agreement with the city of Downey, to provide for a source of funding for the financing of new CDC-generated projects and ongoing administrative support, this agreement providing a maximum line of credit in the amount of $72 million (however, when the AB 1X26 went into effect, the balance owed by CDC under this agreement was $7 million, the full repayment of principal and interest of which is reflected in the ROPS. In the meantime, there is pending legislation to clean up several provisions in AB 1X26, including provisions relating to agreements and loans between a city and a redevelopment agency, etc.; the oversight board is playing it safe: it has scheduled payments which it deems 'true debts." The ROPS also lists a total of $6 million in debt obligations for the following CDC-economic development and housing projects: Porto's Bakery (via an Owner Participation Agreement (OPA) totaling $750,000, of which $250,000 is due and disbursement is anticipated by Dec. 31 (the disbursement of the final payment will be based on the creation of a minimum of 40 new full-time jobs); Bob's Big Boy (under this OPA, $300,000 is due, to be prorated over the next 10 years, provided the project maintains a minimum number of new full-time jobs and generates a set level of gross receipts; as well as the National Community Renaissance agreement, which provides for a subsidy commitment for the development of 50 new affordable housing units; as well as OPAs covering the Chrysler/Jeep dealership (we're talking here of $500,000 with disbursements scheduled over the next ten years, premised on the dealerships exceeding gross sales of $3.5 million a year). Then there are the tax increment deferral agreements between the county and CDC that allowed for the deferral of tax increment payments due to the county, until such time that certain repayment conditions are triggered (the outstanding obligation to the county is some $17 million). A second statutory payment is listed in the ROPS for DUSD with an outstanding obligation of $170,000. And so on and so on. These schedules have been forwarded to DOF for review/approval. In the meantime, Saeki foresees busy days ahead for the oversight board. He says it has to worry about sound analyses from staff, with sound input/interpretations from legal counsel. The next scheduled meeting of the oversight board is scheduled for May 17.
********** Published: May 10, 2012 - Volume 11 - Issue 04