Long Beach Oversight Board Okays Redevelopment Obligations Despite State Opposition
By Sean Belk - Staff Writer
May 22, 2012 – The newly appointed seven-member Long Beach Oversight Board of the Successor Agency to the former Long Beach Redevelopment Agency (RDA) took up its first order of business, including approving millions of dollars worth of obligations of the dissolved RDA, during its first meeting April 30.
Among several agenda items related to governance, including adopting an administrative budget, the board approved the recognized obligations payment schedule (ROPS) – a long list of obligations of the former RDA – deeming them “enforceable.”
Oversight boardmembers were appointed by Los Angeles County, the Long Beach Community College District, the Los Angeles County Board of Education and the City of Long Beach. Under the state’s RDA Dissolution Act, AB 1X 26, the board has a “fiduciary responsibility” to holders of enforceable obligations and taxing entities that may benefit from the distribution of property taxes and revenues as a result of the closure of redevelopment agencies.
The ROPS included nearly $100 million in loans to be paid back to the City of Long Beach, consisting of about $95 million in “seed” money paid to the former RDA to establish the Downtown RDA Project Area and about $5 million paid for the CityPlace parking structure, also as part of the downtown project area.
Earlier this year, the state department of finance, however, declared that several items in the initial obligations payment schedule, including the city’s loan repayments, “do not meet the characteristics of an enforceable obligation,” instructing the successor agency, made up of the Long Beach City Council, to “remove all the items from all ROPS.”
Since then, the city has retained a private law firm, Rutan & Tucker, LLP, to provide a legal analysis of the former RDA’s obligations. The law firm has stated that the obligations in question both qualify as “enforceable obligations” and should be approved by the oversight board, according to a May 2 letter sent by attorney Jeffrey Oderman.
The law firm cited several reasons for its determination, including the fact that the obligations between the city and the RDA were entered into prior to the state’s January, 1 2011, deadline under the Dissolution Act. The law firm also stated that the determination is consistent with interpretations by the state attorney general’s office and pointed to pending legislation, AB 1585, which seeks to resolve the interpretive discrepancies.
Additionally, the letter stated that if the loan agreements aren’t listed on the ROPS, “there is a danger that funds owing to the City will be ‘swept’ to the Los Angeles county Auditor-Controller and disbursed to other taxing entities that are not entitled to receipt of the funds, which will result in accounting problems, confusion, potential offsets of funds owning to the taxing entities at a later date and even litigation.”
The recently approved ROPS was submitted to the Los Angeles County Auditor-Controller, the state controller’s office and the state department of finance and awaits final approval. Amy Bodek, director of Long Beach Development Services, told the Business Journal via e-mail that, as of May 18, “the Department of Finance has not provided the city with its determination of these issues.”
Also, due to the state law’s ambiguous language, it remains uncertain who owns about 230 individual parcels that the city transferred from the RDA to the city’s control in March 2011. According to Bodek, the properties are in the name of the City of Long Beach. But she said there remains “uncertainty” as to whether the city has clear title to the properties or whether the successor agency holds the title. Bodek added that the current market value of the properties is undetermined.
“This issue is not unique to Long Beach, as other cities are grappling with this same issue,” she said. “If it is ultimately determined the property is subject to transfer back to the successor agency, they will then make recommendations to the oversight board on the disposition of assets.”
In addition, the oversight board recently approved contract amendments, allowing the construction of Fire Station No. 12 to move forward, and a settlement agreement with Sprint PCS Assets, LLC, related to a tenant leasehold eminent domain case.
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