Four Key Elements
The dissolution process contains four key elements that provide a framework for winding-down redevelopment agencies:
1. Local Management and Oversight
In most cases, the county or city that created the redevelopment agency opted to manage its dissolution and act as its Successor Agency. The Oversight Board is comprised of representatives from the affected local taxing agencies. The Oversight Board’s role is to supervise the Successor Agency’s work.
2. List of Future Redevelopment Expenditures
Local oversight boards and government entities are tasked with developing and reviewing lists of future redevelopment expenditures, or “enforceable obligations.” These obligations include payments for redevelopment bonds and loans, but typically exclude payments for projects not currently under contract. A Successor Agency to a former RDA may pay only those financial obligations included on these lists.
3. Local Distribution of Funds
Funds that formerly would have been distributed to the RDA as tax increment were deposited into a redevelopment trust fund, known as the Redevelopment Property Tax Trust Fund (RPTTF). This fund is used to pay obligations listed on the Enforceable Obligation Payment Schedule (EOPS) and the Recognized Obligation Payment Schedule (ROPS). The EOPS is the initial list of obligations developed prior to the dissolution of the RDAs. The ROPS is a semi-annual list of obligations that determines how a Successor Agency can spend its revenues. After the enforceable obligations have been paid, any remaining monies in the RPTTF will be distributed to the local taxing entities in the project area.
4. State Review
Actions of local Oversight Boards are subject to review by the Department of Finance (DOF) and actions by the County Auditor-Controller are subject to review by the State Controller’s Office (SCO).
What is an Enforceable Obligation Payment?
“Enforceable obligation” means any of the following:
1. Bonds, including the required debt service, reserve set-asides and any other payments required under the indenture or similar documents governing the issuance of the outstanding bonds of the Redevelopment Agency.
2. Loans of moneys borrowed by the redevelopment agency for a lawful purpose, including moneys borrowed from the Low and Moderate Income Housing Fund.
3. Payments required by the federal government, preexisting obligations to the state or obligations imposed by state law, other than pass-through payments that are made by the County Auditor-Controller, or legally enforceable payments required in connection with the agencies’ employees, including, but not limited to, pension payments, pension obligation debt service, and unemployment payments.
4. Judgments or settlements entered by a competent court of law or binding arbitration decisions against the former redevelopment agency. Along with the Successor agency, the oversight board shall have the authority and standing to appeal any judgment or to set aside any settlement or arbitration decision.
5. Any legally binding and enforceable agreement or contract that is not otherwise void as violating the debt limit or public policy.
6. Contracts or agreements necessary for the continued administration or operation of the redevelopment agency to the extent permitted by this part, including, but not limited to, agreements to purchase or rent office space, equipment and supplies, and pay-related expenses and for carrying insurance.
7. Amounts borrowed from or payments owing to the Low and Moderate Income Housing Fund of a redevelopment agency, which had been deferred. Provided, however, that the repayment schedule is approved by the Oversight Board.