1. AFFORDABLE HOUSING; HOUSING ASSETS:

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1 CLIENT UPDATE FROM: VARNER & BRANDT LLP SUBJECT: SUMMARY OF ASSEMBLY BILL 1484 DATE: AUGUST 7, 2012 In respnse t issues and questins resulting frm the implementatin f Assembly Bill x1 26 ( ABx1 26 ), the State s redevelpment disslutin bill, the Califrnia Legislature intrduced and the Gvernr signed Assembly Bill 1484 ( AB 1484 ) int law n June 27, AB 1484 nt nly clarifies certain ambiguities f ABx1 26, but als creates significant new bligatins applicable t bth successr agencies and versight bards. In additin, AB 1484 raises new issues which will require further judicial and legislative interpretatin as well as practical applicatin befre successr agencies and versight bards will fully understand the bligatins and rights emanating frm the bill. Successr agencies and versight bards shuld particularly nte that AB 1484 sets critical deadlines, prvides additinal rights t the Department f Finance ( DOF ), the State Cntrller and the cunty auditr-cntrller, creates significant penalties fr failure t cmply with the law and suspends all successr agency prperty dispsitins until successr agencies have cmplied with certain requirements under the law. AB 1484 als prvides that versight bard actins supersede actins by the successr agency and its staff. In rder t cmply with ABx1 26 and AB 1484, it is imprtant fr successr agencies and versight bards t establish a basic understanding f the new law. Diligence and preparatin will be key in rder fr successr agencies and versight bards t carry-ut their respective respnsibilities. This client update is intended t prvide a summary f the key prvisins f AB 1484 in rder assist versight bards and successr agencies in navigating the nuances and details f AB Unless therwise prvided, all sectin references in this client update are t sectins f the Califrnia Health and Safety Cde. Given the infancy f AB 1484, we believe that additinal interpretatin f this legislatin will likely fllw. Accrdingly, we intend t supplement this client update frm time t time as further judicial and legislative interpretatin and practice applicatin result in a cmprehensive evaluatin f AB * * * * * * 1. AFFORDABLE HOUSING; HOUSING ASSETS: Revisins t Sectin nt nly prvide a definitin f husing assets, but als require a successr agency t prvide a list f husing assets t the DOF by August 1, 2012 fr the DOF s review f the husing asset transfers frm the successr agency t the entity assuming the husing functins f the successr agency. AB 1484 requires the versight bard t review any prject that has bth husing assets and nn-husing assets and make equitable arrangements fr the mixed uses. 1

2 Definitin f Husing Assets. New Sectin 34176(e) prvides a definitin f husing assets, and prvides that husing assets include: Real Prperty. Any real prperty, interest in, r restrictin n the use f real prperty, whether imprved r nt, and any persnal prperty prvided in residences, including furniture and appliances, all husing-related files and lan dcuments, ffice supplies, sftware licenses, and mapping prgrams, that were acquired fr lw- and mderate-incme husing purpses, either by purchase r thrugh a lan, in whle r in part, with any surce f funds. Encumbered Funds. Any funds that are encumbered by an enfrceable bligatin t build r acquire lw- and mderate-incme husing, unless required in the bnd cvenants t be used fr repayment purpses f the bnd. Lan r Grant Receivables. Any lan r grant receivables, funded frm the Lw and Mderate Incme Husing Fund, frm hmebuyers, hmewners, nnprfit r fr-prfit develpers, and ther parties that require ccupancy by persns f lw- r mderate-incme. Rents Frm Operatins. Any funds derived frm rents r peratin f prperties acquired fr lw- and mderate-incme husing purpses by ther parties that were financed with any surce f funds, including residual receipt payments frm develpers, cnditinal grant repayments, cst savings and prceeds frm refinancing, and principal and interest payments frm hmebuyers subject t enfrceable incme limits. Rents Frm Operatins Fr Affrdable Husing. A stream f rents r ther payments frm husing tenants r peratrs f lw- and mderate-incme husing financed with any surce f funds that are used t maintain, perate, and enfrce the affrdability f husing r fr enfrceable bligatins assciated with lw- and mderate-incme husing. Amunts Owed t Lw and Mderate Incme Husing Fund. Repayments f lans r deferrals wed t the Lw and Mderate Incme Husing Fund (e.g., deferred payments as f February 1, 2012), which must be used cnsistent with the affrdable husing requirements. Repayment cannt start befre the fiscal year and the maximum repayment amunt authrized each fiscal year fr repayments made is strictly limited by statute. Transfer f Husing Assets. (Sectin 34176(a)(2)) The entity assuming the husing functins f the frmer redevelpment agency must submit t the DOF by August 1, 2012, a list f all husing assets, tgether with an explanatin f hw the assets qualify as husing assets. The DOF will have up t 30 days frm the date f receipt f the list t bject t any f the assets r transfers f assets identified n the list. If the DOF bjects t assets n the list, the entity assuming the husing functins f the frmer redevelpment agency may request a meet and cnfer prcess within 5 business days f receiving the DOF bjectin. If the transferred asset is nt deemed a husing asset, it will be returned t the successr agency. If a husing asset has been previusly pledged t pay fr bnded indebtedness, the successr agency must maintain cntrl f the asset in rder t pay fr the bnd debt. 2

3 Oversight Bard Review f Mixed Use Assets. (Sectin 34176(f)) If a develpment includes bth lw- and mderate-incme husing and meets the definitin f a husing asset and includes ther types f prperty use, including, but nt limited t, cmmercial use, gvernmental use, pen space, and parks, the versight bard must cnsider the verall value t the cmmunity as well as the benefit t taxing entities f keeping the entire develpment intact r dividing the title and cntrl ver the prperty between the husing successr and the successr agency r ther public r private agencies. The dispsitin f such mixed use assets may be made by a revenue-sharing arrangement apprved by the versight bard n behalf f the affected taxing entities. Excess Husing Funds. (Sectin 34176(g)) A successr husing agency must prvide the successr agency with a list f excess husing funds 20 days befre the deadline t submit ROPS. The successr agency must specifically designate such excess husing funds n a ROPS. The versight bard must apprve the designatin and cmmitment f excess husing funds nly t ensure that: (i) such designatin and use are cnsistent with the underlying bnd cvenants, and (ii) sufficient funds are available t satisfy the bnd requirements. 2. DUE DILIGENCE REVIEW & REPORT: The new Sectin requires the successr agency t either emply a licensed accuntant apprved by the cunty auditr-cntrller r utilize a cunty auditr-cntrller audit t review the unbligated successr agency funds available fr transfer t the taxing entities. The new statute als prvides specific deadlines fr submitting the infrmatin and requires the versight bard t review the results and determinatins in public at least 5 days befre an apprval vte. Due Diligence Review f Unbligated Funds. A successr agency must emply a licensed accuntant (apprved by the cunty auditr-cntrller) t cnduct a due diligence review t determine the unbligated successr agency funds available fr transfer t the taxing entities. As an alternative, and upn the cncurrence f the versight bard, an audit prvided by the cunty auditr-cntrller that prvides the infrmatin required by Sectin (set frth belw) may be used. The due diligence review must include: Dllar value f assets transferred frm the frmer redevelpment agency t the successr agency n r abut February 1, 2012; Dllar value and purpse f assets and cash and cash equivalents transferred after January 1, 2011 thrugh June 30, 2012, by the frmer redevelpment agency r the successr agency; Dllar value and purpse f any cash r cash equivalents transferred after January 1, 2011 thrugh June 30, 2012, by the frmer redevelpment agency r the successr agency t anther public agency r private party; Expenditure and revenue accunting infrmatin identifying transfers and funding surces fr the and fiscal years that recnciles 3

4 balances, assets, and liabilities f the successr agency n June 30, 2012 t thse reprted t the State Cntrller fr the fiscal year; and A separate accunting fr the balance fr the Lw and Mderate Incme Husing Fund fr all ther funds and accunts. Deadlines Fr Submissin f Results and Determinatins. (Sectin ) Octber 1, 2012 The successr agency must prvide t the (i) the versight bard, (ii) the cunty auditr-cntrller, (iii) the State Cntrller, and (iv) the DOF the results f the due diligence review fr the Lw and Mderate Incme Husing Fund and specifically the amunt f cash and cash equivalents determined t be available fr allcatin t taxing entities. December 15, 2012 The successr agency must prvide t the (i) the versight bard, (ii) the cunty auditr-cntrller, (iii) the State Cntrller, and (iv) the DOF the results f the due diligence review fr all f the ther fund and accunt balances and specifically the amunt f cash and cash equivalents determined t be available fr allcatin t taxing entities. Once the results are received, the versight bard must cnvene a public cmment sessin at least 5 days befre the versight bard hlds the apprval vte. By Octber 15, 2012, fr the Lw and Mderate Incme Husing Fund and by January 15, 2013, fr all ther funds and accunts, the versight bard must review, apprve, and transmit t the DOF and the cunty auditr-cntrller the determinatin f the amunt f cash and cash equivalents that are available fr disbursement t taxing entities. The review and apprval must ccur in public sessin. Oversight Bard Actins Based n Results frm Due Diligence Review. (Sectin (c)) The versight bard may request frm the successr agency any materials the versight bard deems necessary t assist in its review and apprval f the determinatin f amunts available fr transfer. An versight bard may authrize the successr agency t retain assets r funds that are: Amunts that are legally restricted and cannt be prvided t taxing agencies; Assets that are nt cash r cash equivalents; Enfrceable bligatins that require retentin f any current balances; and Current balances that are needed t satisfy bligatins that will be placed n the ROPS fr the current fiscal year. If the versight bard authrizes the successr agency t retain assets, it must ntify the DOF and identify: the amunt f funds authrized fr retentin; the surce f thse funds; and the purpses fr which thse funds are being retained. The versight bard s determinatin and authrizatin t retain funds and assets is subject t the review and apprval f the DOF. 4

5 DOF Review f Funds Determined T Be Available Fr Transfer. (Sectin (d)) DOF may adjust any amunt that is determined t be available fr transfer. DOF must ntify the versight bard n later than Nvember 9, 2012 f its decisin t verturn a determinatin f the versight bard f the Lw and Mderate Incme Husing Fund and the DOF must ntify the versight bard n later than April 1, 2013, f its decisin t verturn a determinatin fr the ther funds and accunts. (Sectin (d)) An explanatin f the basis fr verturning r mdifying a determinatin will be prvided by the DOF t the successr agency and the versight bard. The successr agency and the entity that created the frmer redevelpment agency may request a meet and cnfer with the DOF t reslve any disputes invlving the amunts and surces f funds determined by the DOF. (Sectin (e)). 3. SUCCESSOR AGENCY S OBLIGATION TO TRANSFER FUNDS TO COUNTY AUDITOR- CONTROLLER: The fllwing summary f changes t the law created by AB 1484 is prvided fr reference as it des nt directly invlve versight bards. Transfer f Unencumbered Funds t Cunty Auditr-Cntrller. (Sectin (f)) Within 5 wrking days f receipt f the DOF s ntificatin regarding the amunt f funds the DOF has determined are subject t transfer, the successr agency must transmit such amunt t the cunty auditr-cntrller. The successr agency must make diligent effrts t recver any funds determined t have been transferred withut an enfrceable bligatin. The DOF will ntify the cunty auditr-cntrller f the DOF s actins and the cunty auditr-cntrller must disburse the funds received frm the successr agency t taxing entities within 5 wrking days f receipt. Deadline fr Reprting Transfer f Unencumbered Funds. (Sectin (g)) December 1, 2012 The cunty auditr-cntrller must prvide the DOF with a reprt specifying the amunt submitted by each successr agency fr lw- and mderateincme husing funds, and specifically nting thse successr agencies that failed t remit the full required amunt. April 20, 2013 The cunty auditr-cntrller must prvide the DOF with a reprt detailing the amunt submitted by each successr agency fr all ther funds and accunts, and specifically nting thse successr agencies that failed t remit the full required amunt. Failure t Transfer Funds t Cunty Auditr-Cntrller. (Sectin (h)) If a successr agency fails t remit t the cunty auditr-cntrller the sums required by the deadlines, the fllwing remedies are available: Transfer t anther public agency. If the successr agency cannt prmptly recver the funds that have been imprperly transferred t anther public agency, the funds may 5

6 be recvered thrugh an ffset f sales and use tax r prperty tax allcatins t the lcal agency. T recver the funds, the DOF may rder the State Bard f Equalizatin t make an ffset; hwever if the DOF des nt rder a sales tax ffset, the cunty auditrcntrller may reduce the prperty tax allcatins t any lcal agency in the cunty that fails t repay funds. 1 Transfer t private party. If funds imprperly transferred t a private persn r ther private entity are nt repaid within 60 days, the funds may be recvered thrugh any lawful means f cllectin and are subject t a 10% penalty plus interest at the rate charged fr late persnal incme tax payments frm the date the imprper payment was made t the date the mney is repaid. Finding f Cmpletin. (Sectin ) Upn cnfirmatin that payments f amunts determined t be due have been received by the cunty auditr-cntrller, the DOF will issue a finding f cmpletin t the successr agency within 5 days. 4. ENFORCEABLE OBLIGATIONS: AB 1484 expands the definitin f enfrceable bligatins and prvides that the successr agency may nt create new enfrceable bligatins unless the enfrceable bligatin either: (i) cmplies with an enfrceable bligatin that existed n r befre June 27, 2011, r (ii) invlves the cnduct f wrk t wind dwn the affairs f the frmer redevelpment agency. (Sectin ) N New Enfrceable Obligatins. (Sectin ) A successr agency must nt create new enfrceable bligatins r begin any new redevelpment wrk, except: In cmpliance with an enfrceable bligatin that existed n r befre June 27, 2011(Sectin (a)); r T cnduct the wrk f winding dwn the redevelpment agency (including hiring staff, prfessinal administrative services and legal cunsel and prcuring insurance) (Sectin (b)); r With versight bard apprval, the successr agency may brrw mney frm the entity that frmed the frmer redevelpment agency fr administrative csts, enfrceable bligatins and/r prject related expenses. (Sectin 34173(h)) Expanded Definitin Of Enfrceable Obligatins. (Sectin 34171(d)(1)(C)) Sectin 34171(d)(1)(C) includes csts incurred t fulfill cllective bargaining agreements fr layffs r terminatins f city emplyees wh perfrmed wrk directly n behalf f the frmer redevelpment agency. The successr agency r designated lcal authrity shall enter int an agreement with the husing entity t reimburse it fr any csts f the emplyee bligatins. 1 The cnstitutinality f these ffset prcedures is questinable, and will likely be challenged. 6

7 Sectin 34171(d)(1)(F) includes agreements cncerning litigatin expenses related t assets r bligatins, settlements and judgments, and the csts f maintaining assets prir t dispsitin. Sectin 34171(d)(1)(G) any repayments fr amunts brrwed under this sectin must be transferred t the Lw and Mderate Incme Husing Asset Fund as a husing asset and shall be used in a manner cnsistent with the affrdable husing requirements f the Cmmunity Redevelpment Law (Part 1 (cmmencing with Sectin 33000)). 5. NEW POWERS OF THE STATE CONTROLLER: The fllwing summary f changes is prvided fr reference nly as it des nt directly invlve versight bards. Review f Successr Agency Activities. (Sectin ) The State Cntrller is required t review the activities f the successr agency t determine if an asset transfer ccurred after January 31, 2012, between the successr agency and the city r cunty, r any ther public agency that was nt pursuant t an enfrceable bligatin f an apprved ROPS. If a transfer ccurred, the State Cntrller is required t rder the city r cunty t return the assets t the successr agency. 6. SUBMISSION AND APPROVAL OF ROPS: The revisins t Sectin set frth critical timelines and penalties fr failure t timely submit ROPS. Submissin f ROPS; Deadlines. (Sectin 34177) A successr agency is required t submit a cpy f the ROPS t: (i) the cunty administrative fficer; (ii) the cunty auditr-cntrller; and (iii) the DOF at the same time the successr agency submits the ROPS t the versight bard fr apprval. (Sectin 34177(l)(2)(B)) ROPS fr the perid f January 1, 2013, thrugh June 30, 2013, must be submitted n later than September 1, (Sectin 34177(m)) Beginning with the ROPS cvering the perid July 1, 2013, thrugh December 31, 2013, the successr agency must submit apprved ROPS t the DOF and the cunty auditr-cntrller n less than 90 days befre the date f prperty tax distributin. DOF must make determinatin f the enfrceable bligatins and amunt within 45 days that the ROPS is submitted. Within 5 days the successr agency may request an additinal review by the DOF and an pprtunity t meet and cnfer regarding the disputed items. Successr Agency must submit a cpy f the ROPS t the DOF electrnically. Penalties Fr Nt Submitting ROPS By The Deadlines. If the ROPS is nt submitted by the September 1, 2012 deadline fr the perid January 1, 2013, thrugh June 30, 2013, r 90 days prir t the date f prperty tax distributin fr all subsequent ROPS, the city, cunty, r city and cunty that created the redevelpment agency will be subject t a civil penalty equal t $10,000 per day fr every day the ROPS is nt submitted t the DOF. Any creditr f the successr agency r the DOF may als seek a writ f mandate requiring the successr agency t immediately perfrm. 7

8 In additin, if ROPS are nt submitted within 10 days f any deadline, the maximum administrative cst allwance fr that perid will be reduced by 25%. 7. OVERSIGHT BOARD GENERALLY CHANGES TO SECTION 34179: Sectin makes revisins t the makeup and the activities f the versight bard. Of nte, the versight bard must adpt reslutins fr any actins taken by the versight bard and any such actins (within the authrity f the versight bard) take precedent ver thse made by the successr agency and its staff. The cunty auditr-cntrller determines the largest special district fr purpses f versight bard appintments. (Sectin 34179(a)(3)(B)) The versight bard member representing the emplyees frm the frmer redevelpment agency may be appinted by the recgnized emplyee rganizatin. (Sectin 39179(a)(7)) All actins taken by the versight bard must be adpted by reslutin. (Sectin 34179(e)) Ntice and infrmatin abut all actins taken by the versight bard must be sent t the DOF electrnically. (Sectin 34179(e)) N actin will be effective until 5 business days after ntice and infrmatin is prvided t the DOF. (Sectin 34179(e)) Under AB x1 26, the versight bard actin was effective 3 business days after ntice and infrmatin is prvided t the DOF. If the DOF requests review f the versight bard actin, it will have 40 days frm the date f the request t apprve the actin, request additinal infrmatin, r return the actin t the versight bard fr recnsideratin. (Sectin 34179(e)) Under AB x1 26, DOF had 10 days frm the date f the request t apprve, request additinal infrmatin, r return the actin t the versight bard. Prir t the date f allcatin f funds t successr agency, the DOF may eliminate r mdify any item n the ROPS prir t apprving it. (Sectin 34179(e)) If the versight bard cntinues t dispute a determinatin with the DOF, ne r mre future ROPS may reflect any reslutin f that dispute. (Sectin 34179(e)) The versight bard may direct the successr agency staff t prvide additinal legal and/r financial advise independent frm the successr agency. (Sectin 34179(n)) The versight bard may cntract with the cunty r ther public r private agencies fr administrative supprt. (Sectin 34179()) Decisins made by the versight bard supersede decisins made by the successr agency bard r staff f the successr agency. (Sectin 34179(p)) It shuld als be nted that Sectin 34171(b) allws the versight bard t reduce the successr agencies administrative csts belw the $250,000 annual threshld. 8

9 8. OVERSIGHT BOARD APPROVAL POWER CHANGES TO SECTION 34180: AB 1484 clarifies the apprval pwers f the versight bards and mdifies the prcess f infrmatin transmittal t the Department f Finance. Apprval f Issuance f Bnds. Subsectin (b) f Sectin is deleted and replaced with apprval fr issuance f bnds r ther indebtedness r the pledge r agreement fr the pledge f prperty tax revenues. Reestablish Agreements with the City r Cunty. (Sectin 34180(h)) An versight bard des nt have the authrity t reestablish lan agreements between the successr agency and the city, cunty, r city and cunty that frmed the redevelpment agency except as prvided in the pstcmpliance prvisins. Any actins t reestablish any ther agreements that are in furtherance f enfrceable bligatins, with the city, cunty, r city and cunty that frmed the redevelpment agency are invalid until they are included in an apprved and valid ROPS. Submissin f Dcument t Other Entities. (Sectin 34180(j)) Any dcument submitted by a successr agency t an versight bard fr apprval must als be submitted t the: (i) cunty administrative fficer; (ii) the cunty auditr-cntrller; and (iii) the DOF at the same time that the successr agency submits the dcument t the versight bard. 9. OVERSIGHT BOARD DIRECTED POWER CHANGES TO SECTION 34181: AB 1484 als clarifies the versight bard s directive authrity regarding dispsitin f prperties and husing assets. It als prvides the DOF with additinal time t review decisins f the versight bard. Dispsitin f Assets and Prperties. The qualifying reference that were funded by tax increment revenues f the disslved redevelpment agency when referring t the assets and prperties f the frmer redevelpment agency has been deleted. (Sectin 34181(a)) The descriptin f assets used fr a gvernmental purpse has been expanded t include plice and fire statins, libraries, and lcal agency administrative buildings. (Sectin 34181(a)) Asset distributin can be made by a distributin f incme t taxing agencies prprtinate t their prperty tax share frm ne r mre prperty that may be transferred t a public r private agency fr management as directed by the versight bard. (Sectin 34181(a)) Reslutins f the Oversight Bard. The directive t dispse f frmer redevelpment agency assets r transfer husing assets must be apprved by a reslutin f the versight bard at a public meeting after at least 10 days ntice t the public. (Sectin 34181(f)) 9

10 Actins Reviewed By DOF; Timing f Review and Challenge. All actins regarding transfer f frmer redevelpment agency assets r transfer f husing assets are subject t the DOF review which may be extended t 60 days. (Sectin 34181(f)) If the DOF des nt bject t any actin, the actin is cnsidered final and can be relied upn as cnclusive by any persn if n actin is cmmenced within 60 days f apprval by the versight bard. (Sectin 34181(f)) If an actin is brught t challenge an versight bard actin invlving title r an interest in real prperty, a ntice f pendency f actin must be recrded by the claimant within the 60 day perid. (Sectin 34181(f)) 10. NEW REVIEW POWERS OF THE COUNTY AUDITOR-CONTROLLER: The new Sectin adds the cunty auditr-cntrller as an entity with review and apprval authrity. Authrity t Review ROPS. (Sectin ) Cunty auditr-cntrller has the right t review ROPS and bject t the inclusins f items that are nt shwn t be enfrceable bligatins and bject t the funding surce. This review can ccur befre r after the ROPS are submitted t the versight bard. Ntice f the bjectin must be submitted prmptly t the successr agency, the versight bard and the DOF and must be given at least 60 days prir t an allcatin date, except that fr the January 1, 2013, t June 30, 2013, ROPS, ntice shall be given n later than Octber 1, If an versight bard disputes the finding f the cunty auditr-cntrller, it may refer the matter t the DOF fr a determinatin f what will be apprved fr inclusin in the ROPS. 11. CLAW-BACK PROVISIONS FOR PAYMENTS TO TAXING ENTITY: The fllwing summary f changes is prvided fr reference nly as it des nt invlve versight bards. It shuld be nted thugh that if the successr agency fails t make required payments, the cunty auditr-cntrller may take actins t take the funds frm successr agency tax allcatins. Sectin (a)(1) If a redevelpment agency r successr agency did nt pay any prtin wed fr the fiscal year t an affected taxing entity pursuant t statute r t any passthrugh agreement entered int befre January 1, 1994, and t the extent the cunty auditr-cntrller did nt remit the amunts wed fr passthrugh payments during the fiscal year, the cunty auditr-cntrller will make the required payments t the taxing entities wed passthrugh payments by reducing the amunts t which the successr agency wuld therwise be entitled at the next allcatin f prperty tax. If the amunt f available prperty tax allcatin t the successr agency is nt sufficient t make the required payment, the cunty auditr-cntrller will cntinue t reduce allcatins t the successr agency until the time that the amunt wed is 10

11 fully paid. Alternately, the cunty auditr-cntrller may accept payment frm the successr agency s reserve funds fr payments f passthrugh payments wed. Sectin (a)(2) If a redevelpment agency did nt pay any prtin f the amunt wed fr the fiscal year t an affected taxing entity pursuant t statute r any passthrugh agreement entered int befre January 1, 1994, but the cunty auditr-cntrller did pay the difference that was wing, the cunty auditr-cntrller will deduct frm the next allcatin f prperty tax t the successr agency, the amunt f the payment made n behalf f the successr agency by the cunty auditr-cntrller, nt t exceed ne-half the amunt f passthrugh payments wed fr the fiscal year. If the amunt f available prperty tax allcatin t the successr agency is nt sufficient t make the required deductin, the cunty auditr-cntrller shall cntinue t reduce allcatins t the successr agency until the time that the amunt is fully deducted. Alternatively, the cunty auditr-cntrller may accept payment frm the successr agency s reserve funds fr deductins f passthrugh payments wed. 12. CHAPTER 9 POST-COMPLIANCE PROVISIONS: Chapter 9 suspends the prperty and asset dispsitin prcess fr successr agencies and versight bards pending cmpliance with this chapter. It is unclear exactly hw this impacts nn-real prperty assets, except thse that are related t enfrceable bligatins. Suspensin f Dispsitin f Prperty. (Sectin ) The dispsitin bligatins f the successr agency and the versight bard are suspended, ther than fr gvernmental use prperties, until the DOF has apprved the successr agency s lng-range prperty management plan, at which pint the plan shall gvern, and supersede all ther prvisins relating t, the dispsitin and use f the real prperty assets f the frmer redevelpment agency. If a plan has nt been apprved by the DOF by January 1, 2015, then the suspended prvisins regarding prperty dispsitin will becme perative again. Finding f Cmpletin DOF. (Sectin ) Upn the issuance f a finding f cmpletin by the DOF: All real prperty and interests in real prperty identified as nt cash r cash equivalents f the Lw and Mderate Incme Husing Fund shall be transferred t the Cmmunity Redevelpment Prperty Trust Fund f the successr agency, unless that prperty is subject t the requirements f any existing enfrceable bligatin. Lan agreements entered int between the frmer redevelpment agency and the city r cunty will be deemed enfrceable bligatins if the versight bard makes a finding that the lan was fr a legitimate redevelpment purpse. Repayment f lans may nt be made prir t the fiscal year and the repayment amunt will be at a maximum amunt set frth in the statute. 11

12 Lng-Range Prperty Management Plan Real Prperty Dispsitin. (Sectin ) Successr agency is respnsible fr preparing and must submit the plan t the versight bard and DOF fr apprval n later than 6 mnths after the successr agency receives the finding f cmpletin. The lng-range prperty management plan must include: Inventry f all prperties. Inventry must include: date f acquisitin and value at that time; estimated current value; purpse fr which the prperty was acquired; parcel data, including address, lt size, current zning, specific plan r general plan; estimate f current market value; estimate f any lease, rental r ther revenues generated frm the prperty; envirnmental matters; develpment ptential; and histry f previus develpment prpsals. Use r dispsitin f the prperties. Permissible uses including retentin fr gvernmental use, future develpment, sale f prperty, r use f the prperty t fulfill enfrceable bligatin. If the plan directs use r liquidatin f prperty fr a prject identified in an apprved redevelpment plan, the prperty must transfer t the city r cunty. If the plan directs liquidatin f the prperty r use f the revenues frm the prperty fr any purpse ther than t fulfill an enfrceable bligatin, the prceeds frm the sale must be distributed t the taxing entities. N prperty may be transferred t a successr agency, city r cunty unless the plan has been apprved by the versight bard and the DOF. 13. MISCELLANEOUS / CLEAN-UP CHANGES: The fllwing prvides sme additinal cleanup changes. Of nte, the versight bard members have been granted express immunity applicable t the public agencies and public emplyees. Expanded definitin f Administrative Cst Allwance. (Sectin 34171(b)) New definitins fr Sectins 34171(l) (): Prperty taxes; Department; Spnsring entity; and Final judicial determinatin. Any actins taken by the frmer redevelpment agency after June 27, 2011, are invalid and d nt create enfrceable bligatins. (Sectin (d)) A successr agency r an versight bard may nt reenter/reaffirm an agreement, cntract r arrangement that restred funding fr an enfrceable bligatin between the successr agency and the city r cunty if the DOF deleted r reduced the matter. (Sectin 34178(a)) 12

13 Oversight bard members are prtected by the immunities applicable t public agencies and public emplyees by Part 1 (cmmencing with Sectin 810) and Part 2 (cmmencing with Sectin 814) f Divisin 3.6 f Title 1 f the Gvernment Cde. Designated lcal authrity members are prtected by the immunities applicable t public entities and public emplyees gverned by Part 1 (cmmencing with Sectin 810) and Part 2 (cmmencing with Sectin 814) f Divisin 3.6 f Title 1 f the Gvernment Cde. (Sectin 34173(d)(3)(B)) Existing cleanup plans and liability limits authrized under the Planc Redevelpment Act are transferred t the successr agency and may be transferred t the successr husing entity. (Sectin 34173(f)) A successr agency is a separate public entity frm the public agency that prvides its gvernance. All litigatin invlving a redevelpment agency autmatically transfers t the successr agency. (Sectin 34173(g)) Successr Agency must have a CPA cnduct an annual pst-audit f the financial transactins and recrds f the successr agency. (Sectin 34177(n)) 13