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HomeMy WebLinkAbout05. Purpose of Oversight Board MemoOVERSIGHT BOARD MEMORANDUM DATE: April 26, 2012 TO: MEMBERS OF THE OVERSIGHT BOARD FROM: GILBERT A. LIVAS ON BEHALF OF THE SUCCESSOR AGENCY ITEM: Purpose of Oversight Board SUMMARY The Redevelopment Dissolution Act, contained in Assembly Bill 26 from the 2011 -12 First Extraordinary Session of the California Legislature ( "AB1X 26 "), which was signed by the Governor in June 2011, was upheld by the California Supreme Court on December 29, 2011. The Court set the date of February 1, 2012, for dissolution of all California redevelopment agencies. The City of Downey ( "City ") has elected to serve as the Successor Agency ( "Successor Agency ") to the dissolved redevelopment agency functions of the Downey Community Development Commission ( "CDC "). The Dissolution Act requires that each successor agency have an Oversight Board. For your reference, attached is California Health and Safety Code sections 34179 through 34181, which regulate the formation and composition of oversight boards, the public meeting process, and fiduciary responsibilities of oversight boards. Please be advised that this Memorandum is being provided to the Oversight Board for informational purposes only. No legal advice is being given to, or shall be deemed to be given to, the Oversight Board from this Memorandum. Because the Dissolution Act allows an oversight board to receive support from the staff of a successor agency in furtherance of the Oversight Board's duties and responsibilities, the Successor Agency asked that its legal counsel to provide this informational Memorandum as a courtesy to the Oversight Board. ANALYSIS The following are the key components of AB1X 26 with respect to the legal status and role of the Oversight Board: • Oversight Boards are deemed a local governmental entity for purposes of the Brown Act (Government Code section 54950 et seq.), Political Reform Act (Government Code section 81000 et seq.), and Public Records Act (Government Code section 6250 et seq.). • All notices (including agendas) required by law for proposed Oversight Board actions are to be posted on the Successor Agency's website. 5- • A majority of the total membership of the Oversight Board (Le., 4 members) shall constitute a quorum for the transaction of business. • A majority of the total membership of the Oversight Board (i.e., 4 members) is required for the Oversight Board to take action. • Oversight Board members have personal immunity from suit for their actions taken within the scope of their responsibilities as Oversight Board members. • Oversight Board members receive no compensation or reimbursement for expenses for service on the Oversight Board. • Oversight Board members serve at the pleasure of the entity that made the appointment. • Oversight Board members may serve on up to five (5) Oversight Boards. • Notwithstanding Section 1099 of the Government Code, or any other law, any individual may simultaneously be appointed to an oversight board and hold an office in a city, county, city and county, special district, school district, or community college district. • The Successor Agency serves as the staff for the Oversight Board and Oversight Board may direct the staff of the Successor Agency to perform work in furtherance of the Oversight Board's duties and responsibilities. The cost for noticing and holding Oversight Board meetings are to be borne by the Successor Agency and may be included in the Successor Agency's administrative budget. The Oversight Board must report the names of its Chair and Vice Chair to the Department of Finance ( "DOF ") by May 1, 2012. • DOF may review the actions /decisions of the Oversight Board. • All Oversight Board actions shall not be effective for three (3) business days, pending a request for review by the DOF. In the event DOF requests review of a given Oversight Board action /decision, the DOF shall have ten (10) calendar days from the date of its request to approve the action or reject it and return it to the Oversight Board for reconsideration and re- submittal to DOF. The modified Oversight Board action shall not be effective until approved by DOF • The Oversight Board terminates the earlier of (i) when all of the indebtedness of the former redevelopment agency has been repaid, or (ii) July 1, 2016. -2 • If outstanding indebtedness of the former redevelopment agency still needs to be repaid as of July 1, 2016, on that date the existing Oversight Board terminates and a new Oversight Board takes over. As of that date there is one Oversight Board for all of the Successor Agencies within a county. The members of that replacement Oversight Board are: (1) one member appointed by the county board of supervisors; (2) one member appointed by the city selection committee; (3) one member appointed by the independent special district selection committee; (4) one member appointed by the county superintendent of education; (5) one member appointed by the Chancellor of the California Community Colleges; (6) one member of the public appointed by the county board of supervisors; and (7) one member appointed by the recognized employee organization representing the largest number of successor agency employees in the county. • 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). • The Oversight Board must approve Successor Agency actions set forth in Health and Safety Code Section 34180 (see Attachment). • The Oversight Board is to direct the Successor Agency to perform the functions set forth in Health and Safety Code Section 34181 (see Attachment). Attachment: Health and Safety Code Sections 34179 -34181 3 HEALTH AND SAFETY CODE SECTION 34179 -34181 34179. (a) Each successor agency shall have an oversight board composed of seven members. The members shall elect one of their members as the chairperson and shall report the name of the chairperson and other members to the Department of Finance on or before May 1, 2012. Members shall be selected as follows: (1) One member appointed by the county board of supervisors. (2) One member appointed by the mayor for the city that formed the redevelopment agency. (3) One member appointed by the largest special district, by property tax share, with territory in the territorial jurisdiction of the former redevelopment agency, which is of the type of special district that is eligible to receive property tax revenues pursuant to Section 34188. (4) One member appointed by the county superintendent of education to represent schools if the superintendent is elected. If the county superintendent of education is appointed, then the appointment made pursuant to this paragraph shall be made by the county board of education. (5) One member appointed by the Chancellor of the California Community Colleges to represent community college districts in the county. (6) One member of the public appointed by the county board of supervisors. (7) One member representing the employees of the former redevelopment agency appointed by the mayor or chair of the board of supervisors, as the case may be, from the recognized employee organization representing the largest number of former redevelopment agency employees employed by the successor agency at that time. (8) If the county or a joint powers agency formed the redevelopment agency, then the largest city by acreage in the territorial jurisdiction of the former redevelopment agency may select one member. If there are no cities with territory in a project area of the redevelopment agency, the county superintendent of education may appoint an additional member to represent the public. (9) If there are no special districts of the type that are eligible to receive property tax pursuant to Section 34188, within the territorial jurisdiction of the former redevelopment agency, then the county may appoint one member to represent the public. (10) Where a redevelopment agency was formed by an entity that is both a charter city and a county, the oversight board shall be composed of seven members selected as follows: three members appointed by the mayor of the city, where such appointment is subject to confirmation by the county board of supervisors, one member appointed by the largest special district, by property tax share, 4 with territory in the territorial jurisdiction of the former redevelopment agency, which is the type of special district that is eligible to receive property tax revenues pursuant to Section 34188, one member appointed by the county superintendent of education to represent schools, one member appointed by the Chancellor of the California Community Colleges to represent community college districts, and one member representing employees of the former redevelopment agency appointed by the mayor of the city where such an appointment is subject to confirmation by the county board of supervisors, to represent the largest number of former redevelopment agency employees employed by the successor agency at that time (b) The Governor may appoint oversight board member position described been filled by May 15, 2012, or vacant for more than 60 days. individuals to fill any in subdivision (a) that has not any member position that remains (c) The oversight board may direct the staff of the successor agency to perform work in furtherance of the oversight board's duties and responsibilities under this part. The successor agency shall pay for all of the costs of meetings of the oversight board and may include such costs in its administrative budget. Oversight board members shall serve without compensation or reimbursement for expenses. (d) Oversight board members shall have personal immunity from suit for their actions taken within the scope of their responsibilities as oversight board members. (e) A majority of the total membership of the oversight board shall constitute a quorum for the transaction of business. A majority vote of the total membership of the oversight board is required for the oversight board to take action. The oversight board shall be deemed to be a local entity for purposes of the Ralph M. Brown Act, the California Public Records Act, and the Political Reform Act of 1974. (f) All notices required by law for proposed oversight board actions shall also be posted on the successor agency's Internet Web site or the oversight board's Internet Web site. (g) Each member of an oversight board shall serve at the pleasure of the entity that appointed such member. (h) The Department of Finance may review an oversight board action taken pursuant to the act adding this part. As such, all oversight board actions shall not be effective for three business days, pending a request for review by the department. Each oversight board shall designate an official to whom the department may make such requests and who shall provide the department with the telephone number and e -mail contact information for the purpose of communicating with the department pursuant to this subdivision. In the event that the department requests a review of a given oversight board action, it shall have 10 days from the date of its request to approve the oversight board action or return it to the oversight board for reconsideration and such oversight board action shall not be effective until approved by the department. In the event that the department returns the oversight board action to the oversight board 5 for reconsideration, the oversight board shall resubmit the modified action for department approval and the modified oversight board action shall not become effective until approved by the department. (i) Oversight boards shall have fiduciary responsibilities to holders of enforceable obligations and the taxing entities that benefit from distributions of property tax and other revenues pursuant to Section 34188. Further, the provisions of Division 4 (commencing with Section 1000) of the Government Code shall apply to oversight boards. Notwithstanding Section 1099 of the Government Code, or any other law, any individual may simultaneously be appointed to up to five oversight boards and may hold an office in a city, county, city and county, special district, school district, or community college district. (j) Commencing on and after July 1, 2016, in each county where more than one oversight board was created by operation of the act adding this part, there shall be only one oversight board appointed as follows: (1) One member may be appointed by the county board of supervisors. (2) One member may be appointed by the city selection committee established pursuant to Section 50270 of the Government Code. In a city and county, the mayor may appoint one member. (3) One member may be appointed by the independent special district selection committee established pursuant to Section 56332 of the Government Code, for the types of special districts that are eligible to receive property tax revenues pursuant to Section 34188. (4) One member may be appointed by the county superintendent of education to represent schools if the superintendent is elected. If the county superintendent of education is appointed, then the appointment made pursuant to this paragraph shall be made by the county board of education. (5) One member may be appointed by the Chancellor of the California Community Colleges to represent community college districts in the county. (6) One member of the public may be appointed by the county board of supervisors. (7) One member may be appointed by the recognized employee organization representing the largest number of successor agency employees in the county. (k) The Governor may appoint individuals to fill any oversight board member position described in subdivision (j) that has not been filled by July 15, 2016, or any member position that remains vacant for more than 60 days. (1) Commencing on and after July 1, 2016, in each county where only one oversight board was created by operation of the act adding this part, then there will be no change to the composition of that oversight board as a result of the operation of subdivision (b). (m) Any oversight board for a given successor agency shall cease to exist when all of the indebtedness of the dissolved redevelopment agency has been repaid. 34180. All of the following successor agency actions shall first be approved by the oversight board: 6 (a) The establishment of new repayment terms for outstanding loans where the terms have not been specified prior to the date of this part. (b) Refunding of outstanding bonds or other debt of the former redevelopment agency by successor agencies in order to provide for savings or to finance debt service spikes; provided, however, that no additional debt is created and debt service is not accelerated. (c) Setting aside of amounts in reserves as required by indentures, trust indentures, or similar documents governing the issuance of outstanding redevelopment agency bonds. (d) Merging of project areas. (e) Continuing the acceptance of federal or state grants, or other forms of financial assistance from either public or private sources, where assistance is conditioned upon the provision of matching funds, by the successor entity as successor to the former redevelopment agency, in an amount greater than 5 percent. (f) (1) If a city, county, or city and county wishes to retain any properties or other assets for future redevelopment activities, funded from its own funds and under its own auspices, it must reach a compensation agreement with the other taxing entities to provide payments to them in proportion to their shares of the base property tax, as determined pursuant to Section 34188, for the value of the property retained. (2) If no other agreement is reached on valuation of the retained assets, the value will be the fair market value as of the 2011 property tax lien date as determined by the county assessor. (g) Establishment of the Recognized Obligation Payment Schedule. (h) A request by the successor agency to enter into an agreement with the city, county, or city and county that formed the redevelopment agency that it is succeeding. (i) A request by a successor agency or taxing entity to pledge, or to enter into an agreement for the pledge of, property tax revenues pursuant to subdivision (b) of Section 34178. 34181. The oversight board shall direct the successor agency to do all of the following: (a) Dispose of all assets and properties of the former redevelopment agency that were funded by tax increment revenues of the dissolved redevelopment agency; provided, however, that the oversight board may instead direct the successor agency to transfer ownership of those assets that were constructed and used for a governmental purpose, such as roads, school buildings, parks, and fire stations, to the appropriate public jurisdiction pursuant to any existing agreements relating to the construction or use of such an asset. Any compensation to be provided to the successor agency for the transfer of the asset shall be governed by the agreements relating to the construction or use of that asset. Disposal shall be done expeditiously and in a manner aimed at maximizing value. (b) Cease performance in connection with and terminate all existing agreements that do not qualify as enforceable obligations. (c) Transfer housing responsibilities and all rights, powers, duties, and obligations along with any amounts on deposit in the Low and Moderate Income Housing Fund to the appropriate entity pursuant to Section 34176. (d) Terminate any agreement, between the dissolved redevelopment agency and any public entity located in the same county, obligating the redevelopment agency to provide funding for any debt service obligations of the public entity or for the construction, or operation of facilities owned or operated by such public entity, in any instance where the oversight board has found that early termination would be in the best interests of the taxing entities. (e) Determine whether any contracts, agreements, or other arrangements between the dissolved redevelopment agency and any private parties should be terminated or renegotiated to reduce liabilities and increase net revenues to the taxing entities, and present proposed termination or amendment agreements to the oversight board for its approval. The board may approve any amendments to or early termination of such agreements where it finds that amendments or early termination would be in the best interests of the taxing entities. 8