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HomeMy WebLinkAboutSA Resolution 2013-01 (Non-Housing Funds Audit)RESOLUTION NO. 2013-01 (SA) RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL, IN THE CITY'S CAPACITY AS SUCCESSOR AGENCY OF THE SAN RAFAEL. REDEVELOPMENT AGENCY ACCEPTING THE AUDIT OF NON HOUSING FUNDS AND DIRECTING THE CITY MANAGER OR TIIE CITY MANAGER'S DESIGNEE TO TAKE ALL ACTION NECESSARY AND APPROPRIATE ON BEHALF OF THE CITY AS SUCCESSOR AGENCY UNDER THE COMMUNITY REDEVELOPMENT LAW AS REQUIRED BY HEALTH AND SAFETY CODE SECTION 34179.5 WHEREAS, the California State Legislature enacted Assembly Bill xl 26 ("Dissolution Act") to dissolve redevelopment agencies formed under the Community Redevelopment Law (Health and Safety Code Section 33000 et seg.); and WHEREAS, on December 29, 2011, the California Supreme Court delivered its decision in the California Redevelopment Association i,. Matosantos case, finding the Dissolution Act largely constitutional, with the result that all California redevelopment agencies, including the Redevelopment Agency of the City of San Rafael ("Redevelopment Agency"), would be dissolved on February 1, 2012; and WHEREAS, on January 3, 2012 and pursuant to Health and Safety Code Section 34173, the City Council of the City of San Rafael ("City Council") declared that the City of San Rafael, a municipal corporation ("City"), would act as successor agency (the "Successor Agency") for the dissolved Redevelopment Agency effective February 1, 2012; and WHEREAS, on February 1, 2012, the Redevelopment Agency was dissolved pursuant to Health and Safety Code Section 34172; and WHEREAS, the Successor Agency now holds the former Redevelopment Agency's unobligated housing funds and its non -housing funds and assets and is charged with the responsibility of paying off the former Redevelopment Agency's existing debts, disposing of the former Redevelopment Agency's properties and assets to help pay off debts and return revenues to the local government entities that receive property taxes ("Taxing Entities"), and winding up the affairs of the former Redevelopment Agency; and WHEREAS, on June 27, 2012, the State Legislature passed, and the Governor signed. Assembly Bill 1484 ("AB 1484"). which makes clean-up amendments to the Dissolution Act and adds several new procedures to the process of winding -down the affairs of the former Redevelopment Agency: and WHEREAS. AB 1484 clarifies that the Successor Agency is a separate legal entity from the City: and WLIF,REAS, pursuant to the Dissolution Act, an oversight board ("Oversight Board") has been established with specific duties as set forth in the Dissolution Act and AB 1484, all subject to final approval by the California Department of Finance ("DOF' ), and 144,1}1 12o4258 l WHEREAS, Health and Safety Code Section 34179.5 requires reviews to be conducted of the available cash assets of the former Redevelopment Agency ("Review"), one for unobligated Low and Moderate Income Housing Fund ("LMIIIF") and another for all other funds; and WHEREAS, the Successor Agency has hired Maze and Associates, a licensed accountant approved by the County Auditor -Controller, to conduct the two Reviews; and WHEREAS, the Oversight Board held a public comment session on the non -housing fund review (the "Review") on January 11, 2013 and received no comments and the Oversight Board met on January 22, 2013 and reviewed and approved the Review; and WHEREAS, copies of the Review have been submitted to the County Administrative Officer, the County Auditor -Controller, the State Controller's Office and the DOF as required by Health and Safety Code Section 34179.5; and WHEREAS, the Review may result in a determination that a payment of available cash is to be made by the Successor Agency to the County Auditor -Controller for distribution to the Taxing Entities; and WHEREAS, the Oversight Board can adjust amounts set forth in the Review to reflect additional information and analysis and can authorize the Successor Agency to retain the restricted funds, non-cash assets, and the cash balances that are contractually committed or needed for items to be placed on the Recognized Obligation Payment Schedule ("ROPS") during the fiscal year; and WHEREAS, the DOF may also adjust the amounts determined to be available for allocation to the "Taxing Entities in the Review, and WHEREAS, the Successor Agency can request a meet and confer session with the DOF, after the DOF has made its determination of the amount available for allocation to the Taxing Entities pursuant to the Review, within five business days of receipt of the DOF's determination; and WHEREAS, AB 1484 authorizes the State to order withholding of future sales and use and/or property tax distributions to the City if the Successor Agency does not pay the amount owed under the Review process within five business days after the final determination by the DOF; and W1IEREAS, due to the five business day period to request a meet and confer with the DOF, the Successor Agency Board desires to authorize the Successor Agency Executive Director to make any meet and confer requests to DOF in consultation with legal counsel: and 2 1-11'01 1204-153.1 WHEREAS, due to the five business day period in which to make payment upon notice of the final determination of the amount of any payment owed pursuant to the Review process, the Successor Agency Board desires to authorize the Successor Agency Executive Director to make such payment, or make such payment under protest as determined by the Successor Agency Executive Director in consultation with legal counsel. NOW, THEREFORE, BE IT RESOLVED that the Board of the Successor Agency accepts the Review of the non -housing funds which is on file with the City Clerk and hereby directs and authorizes transmittal of the Review to the Oversight Board and the County Administrative Officer, the County Auditor -Controller, the State Controller's Office and the DOF as required by AB 1484. BE IT FURTHER RESOLVED that the Board of the Successor Agency hereby authorizes the Successor Agency Executive Director to make any meet and confer requests to DOF, in consultation with legal counsel, as permitted by AB 1484. BE IT FURTHER RESOLVED that the Board of the Successor Agency hereby authorizes the Successor Agency Executive Director to make any required payment after the final determination of the amount of any payment owed pursuant to the Review process, or to make such payment under protest as determined by the Successor Agency Executive Director in consultation with legal counsel. I, Esther C. Beirne, Secretary of the San Rafael Successor Agency, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the San Rafael Successor Agency, held on Tuesday, the twenty-second day of January 2013, by the following vote, to wit: AYES: Members: Colin, Connolly, McCullough & Vice -Mayor Heller NOES: Members: None ABSENT: Members: Mayor Phillips 6 - Esther C. Beirne, Secretary, San Rafael Successor Agency 3 141M\12042>,8 I INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED UPON PROCEDURES ON ALL OTHER FUNDS OF THE SUCCESSOR AGENCY (EXCLUDING THE LOW AND MODERATE INCOME HOUSING FUND) ASSOCIATED WITH CALIFORNIA HEALTH AND SAFETY CODE SECTIONS 34179.5(c)(1) THROUGH 34179.5(c)(6) Attachment A This Page Left Intentionally Blank MAZE & ASSOCIATES INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED LTON PROCEDURES ON ALL OTBER FUNDS OF THE SUCCESSOR AGENCY 13 S&B PLN V Lei Q%W11 I I'm N 1W_ To the Oversight Board of the Successor Agency of the Redevelopment Agency of the City of San Rafael Sail Rafael, California We have applied the procedures below, which were agreed to by the Successor Agency of the Redevelopment Agency of the City of San Rafael, California, solely to assist you with respect to the procedures required under California Health and Safety Code Sections 341719.5(c)(1) through 34179.5(c)(6), referred to as the '-due diligence review" by the Code, for the All Other Funds (excluding the L,ow and Moderate Income Housing Fund) of the Successor Agency of the Redevelopment Agency of the City of San Rafael for the year ended June 30, 2012. These procedures were suggested by the Governmental Auditing and Accounting Committee, as agreed to by the California State Department of Finance and State Controller's Office. Management of the Successor Agency is responsible for the accounting records and the Attachments and information provided pertaining to the statutory compliance pursuant to Health and Safety Code Section 34179.5. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of the specified users of this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures you requested us to perform and our findings were as follows: Citation: 34179.5(c)(1) The dollar value of assets Iransferredfi-oln the former re(levelopment agency to the successor agency on or about February 1, 2012. Suggested Procedure(s): 1. Obtain from the Successor Agency a listing of all assets that were transferred from the former redevelopment agency to the Successor Agency on February 1, 2012. Agree the arnounts on this listingto account balances established in the accounting records of the Successor Agency. C� - identify in the Agreed-t.'pon Procedures, (AUP) report the amount of the assets transfcrred to the Successor Agency as ofthat date. Accountancy Corporation t, mazeassociates.com Results: We obtained the following listing from the staff of the City of San Rafael and agreed the amount transferred to the Successor Agency to the accounting records without exception. Redevelopment Balances Balances Agency transferred to transferred to Fund the Successor the Housing Successor Balances Agency (All (Low and Moderate Income January 31, 2012 other funds) on Housing fund) on (Prior to transfer) February 1, 2012 February 1, 2012 ASSETS Current assets: Cash and investments $2,672,320 $1,283,907 $1,388,413 Total current assets 2,672,320 1,283,907 1,388,413 Noncurrent assets: Restricted cash and investments 1,375,315 1,375,315 Deferred loans 553,307 553,307 Capital Assets Land 39,000 39,000 Depreciable capital assets, net 17,381 17,381 Total noncurrent assets 1,985,003 1,375,315 609,688 Total Assets $4,657,323 $2,659,222 $1,998,101 Citation: 34179.5(c)(2) The dollar value of assets and cash and cash equivalents transferred after January 1, 2011, through June 30, 2012, by the redevelopment agency or the successor agency to the city, county, or city and county that formed the redevelopment agency and the purpose of each transfer. The review shall provide documentation of any enforceable obligation that required the transfer, Suggested Procedure(s): 2. If the State Controller's Office has completed its review of transfers required under both Sections 34167.5 and 34178.8 and issued its report regarding such review, attach a copy of that report as an exhibit to the AUP report. If this has not yet occurred, perform the following procedures: A. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the former redevelopment agency to the city, county, or city and county that formed the redevelopment agency for the period from January 1, 2011 through January 31, 2012, For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency's enforceable obligations or other legal requirements. Provide this listing as an attachment to the AUP report. Results: The State Controller's Office has not yet completed its review of transfers. Per our inquiries with City staff, during the period January 1, 2011 through January 31, 2012, the former Redevelopment Agency made the following transfers (excluding payments for goods and services) to the City. For each of the transfers listed, we traced to legal agreements without exception. See table below: Date Purpose Amount Qualification 113112012 Road and parking lot improvements in the RDA project area using bond proceeds. $111,443 Per reso 74.14 and San Rafael Redevelopment Project Contract between the City and RDA dated 6114114. 113112012 Road and parking lot improvements in the RDA project area using bond proceeds. 268,372 Per reso 74-14 and San Rafael Redevelopment Project Contract between the City and RDA dated 6114,N, 1/3112012 Road and parking lot improvements in the RDA project area using bond proceeds. 45,574 Per to 74-14 and San Rafael Redevelopment Project Contract between the City and RDA dated 6114r/4, 113112012 Road and parking lot improvements in the RDA project area using bond proceeds, 233,778 Per resp 74.14 and San Rafael Redevelopment Project Contract between the City and RDA dated 6114174, 113112012 Building maintenance in the RDA project area using bond proceeds. 25,540 Per resp 74.14 and San Rafael Redevelopment Project Contract between the City and RDA dated 6114174, $734,107 B. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the Successor Agency to the city, county, or city and county that formed the redevelopment agency for the period from February 1, 2012 through June 30, 2012. For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency's enforceable obligations or other legal requirements. Provide this listing as an attachment to this Agreed Upon Procedures report. Results: Per inquiry of City staff, the Successor Agency did not make any transfers (excluding payments for goods and services) to the City for the period from February 1, 2012 through June 30, 2012. C. For each transfer, obtain the legal document that formed the basis for the enforceable obligation that required any transfer. Note in the AUP report the absence of any such legal document or the absence of language in the document that required the transfer. Results: See 2A above. Citation: 34179.5(c)(3) The dollar value of any cash or cash equivalents transferred after January 1, 2011, through June 30, 2012, by the redevelopment agency or the successor agency to anv other public agency or private party and the purpose of each transfer. The review shall provide documentation of any enforceable obligation that required the transfer. Suggested Procedure(s): 3. If the State Controller's Office has completed its review of transfers required under both Sections 34167.5 and 34178.8 and issued its report regarding such review, attach a copy of that report as an exhibit to this Agreed Upon Procedures report. If this has not yet occurred, perform the following procedures: A. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the former redevelopment agency to any other public agency or to private parties for the period from January 1, 2011 through January 31, 2012. For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency's enforceable obligations or other legal requirements. Provide this listing as an attachment to this Agreed Upon Procedures report. Results: Per inquiry of City staff, the former Redevelopment Agency did not make transfers (excluding payments for goods and services) to other public agencies or to private parties for the period from January 1, 2011 through January 31, 2012, B. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the Successor Agency to any other public agency or private parties for the period from February 1, 2012 through June 30, 2012. For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency's enforceable obligations or other legal requirements. Provide this listing as an attachment to this Agreed Upon Procedures report. Results: Per inquiry of City staff, the Successor Agency made the following transfer (excluding payments for goods and services) to other public agencies or to private parties for the period from February 1, 2012 through June 30, 2012. For the transfer listed, we traced to the legal document without exception. See listing below: Date Purpose Amount Qualification 6/30/2012 Transfer to County for the Demand Payment $148,589 Demand payment notice from the County, dated 7%9112. C. For each transfer, obtain the legal document that formed the basis for the enforceable obligation that required any transfer. Note in the AUP report the absence of any such legal document or the absence of language in the document that required the transfer. Results: See responses to 3B above. Citation: 34179.5(c)(4) The review shall provide expenditure and revenue accounting information and identify transfers and funding sources for the 2010-11 and 2011-12 fiscal years that reconciles balances, assets, and liabilities of the successor agency on June 30, 2012 to those reported to the Controller for the 2009--10frscal year. Suggested Procedure(s): 4. Perform the following procedures: A. Obtain from the Successor Agency a summary of the financial transactions of the Redevelopment Agency and the Successor Agency in the format set forth in Attachment A for the fiscal periods indicated in the schedule. For purposes of this summary, the financial transactions should be presented using the modified accrual basis of accounting. End of year balances for capital assets (in total) and long-term liabilities (in total) should be presented at the bottom of this summary schedule for information purposes. B. Ascertain that for each period presented, the total of revenues, expenditures, and transfers accounts fully for the changes in equity from the previous fiscal period. C. Compare amounts in the schedule relevant to the fiscal year ended June 30, 2010 to the state controller's report filed for the Redevelopment Agency for that period. D. Compare amounts in the schedule for the other fiscal periods presented to account balances in the accounting records or other supporting schedules. Describe in the report the type of support provided for each fiscal period. Results: We obtained Attachment A from City staff. We performed the procedures above without exception. Citation: 34179.5(c)(5) A separate accounting for the balance for the Low and Moderate Income Housing Fund for all other funds and accounts combined shall be made as follows: (A) A statement of the total value of each fund as of June 30, 2012, Suggested Procedure(s): Obtain from the Successor Agency a listing of all assets of the Low and Moderate Income Housing Fund as of June 30, 2012 for the report that is due October 1, 2012 and a listing of all assets of all other funds of the Successor Agency as of June 30, 2012 (excluding the previously reported assets of the Loss and Moderate Income Housing Fund) for the report that is due December 15, 2012. When this procedure is applied to the Low and Moderate Income Housing Fund, the schedule attached as an exhibit will include only those assets of the Low and NIoderate Income Housing Fund that were held by the Successor Agency as of June 30, 2012 and will exclude all assets held by the entity that assumed the housing function previously performed by the former redevelopment agency. Agree the assets so listed to recorded balances reflected in the accounting records of the Successor Agency. The listings should be attached as an exhibit to the appropriate AUP report. Results: We obtained the following table from City staff and agreed the assets listed to the accounting records without exception. Total Assets $ 2,960,449 Citation: 34179.5(c)(5)(B) An itemized statement listing any amounts that are legally restricted as to purpose and cannot be provided to taxing entities. This could include the proceeds of any bonds, grant funds, or funds provided by other governmental entities that place conditions on their use. Suggested Procedure(s): 6. Obtain from the Successor Agency a listing of asset balances held on June 30, 2012 that are restricted for the following purposes: A. Unspent bond proceeds: i. Obtain the Successor Agency's computation of the restricted balances (e.g., total proceeds less eligible project expenditures, amounts set aside for debt service payments, etc.) ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by the Successor Agency as restricted. Results: Per inquiry of City staff, the Successor Agency held the following balances of unspent bond proceeds as of June 30, 2012. We agreed the balances to the accounting records and legal documents without exception. Type of Asset Amount Restricted Period of Time Cash and investments $704,429 until assets are expended Restricted cash and investments 1,375,314 until assets are expended Interest Receivables 1,368 until assets are expended Total unspent bond proceeds $2,081,111 6 Successor Agency Total 6/30/2012 Assets (modified accrual basis) Cash and Investments $ 1,110,123 Restricted Cash and Investments 1,375,314 Receivables: Accounts Receivables 472,959 Interest Receivables 2,053 Total Assets $ 2,960,449 Citation: 34179.5(c)(5)(B) An itemized statement listing any amounts that are legally restricted as to purpose and cannot be provided to taxing entities. This could include the proceeds of any bonds, grant funds, or funds provided by other governmental entities that place conditions on their use. Suggested Procedure(s): 6. Obtain from the Successor Agency a listing of asset balances held on June 30, 2012 that are restricted for the following purposes: A. Unspent bond proceeds: i. Obtain the Successor Agency's computation of the restricted balances (e.g., total proceeds less eligible project expenditures, amounts set aside for debt service payments, etc.) ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by the Successor Agency as restricted. Results: Per inquiry of City staff, the Successor Agency held the following balances of unspent bond proceeds as of June 30, 2012. We agreed the balances to the accounting records and legal documents without exception. Type of Asset Amount Restricted Period of Time Cash and investments $704,429 until assets are expended Restricted cash and investments 1,375,314 until assets are expended Interest Receivables 1,368 until assets are expended Total unspent bond proceeds $2,081,111 6 B. Grant proceeds and program income that are restricted by third parties: i. Obtain the Successor Agency's computation of the restricted balances (e.g., total proceeds less eligible project expenditures). ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the grant agreement that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by the Successor Agency as restricted. Results: Per inquiry of City staff, there were no such grant proceeds or program income that was restricted for this purpose as of June 30, 2012. C. Other assets considered to be legally restricted: i. Obtain the Successor Agency's computation of the restricted balances (e.g., total proceeds less eligible project expenditures). ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by Successor the Agency as restricted. Results: Per inquiry of City staff, the Successor Agency has legally restricted assets as of June 30, 2012. The restriction is in effect until the RDA is reimbursed for payments in ROPS 1. We agreed the balance to the accounting records and legal documents without exception. See the table below: Type of Asset Amount Restricted Period of Time Accounts receivables $472,959 Payment requested by ROPS I but pending reimbursement from the County Total Assets $472,959 D. Attach the above mentioned Successor Agency prepared schedule(s) as an exhibit to the AUP report. For each restriction identified on these schedules, indicate in the report the period of time for which the restrictions are in effect. If the restrictions are in effect until the related assets are expended for their intended purpose, this should be indicated in the report. Results: See responses to 6A and 6C above. Citation: 34179.5(c)(5)(C) An itemised statement of the values of any assets that are not cash or cash equivalents. This may include physical assets, lana records, and equipment. For the purpose of this accounting, physical assets may be valued at purchase cost or at any recently estimated market value. The statement shall list separately housing -related assets. Suggested Procedure(s): 7. Perform the following procedures: A. Obtain from the Successor Agency a listing of assets as of June 30, 2012 that are not liquid or otherwise available for distribution (such as capital assets, land held for resale, long-term receivables, etc.) and ascertain if the values are listed at either purchase cost (based on book value reflected in the accounting records of the Successor Agency) or market value as recently estimated by the Successor Agency. B. If the assets listed at 7(A) are listed at purchase cost, trace the amounts to a previously audited financial statement (or to the accounting records of the Successor Agency) and note any differences. C. For any differences noted in 7(B), inspect evidence of disposal of the asset and ascertain that the proceeds were deposited into the Successor Agency trust fund. If the differences are due to additions (this generally is not expected to occur), inspect the supporting documentation and note the circumstances. D. If the assets listed at 7(A) are listed at recently estimated market value, inspect the evidence (if any) supporting the value and note the methodology used. If no evidence is available to support the value and\or methodology, note the lack of evidence. Results: Per Inquiry of City staff, the Successor Agency does have assets that are not cash or cash equivalents as of June 30, 2012. The Successor Agency has accounts receivables in the amount of $472,959. The accounts receivable is a restricted asset and is recorded in the response to number 6C. We traced the accounts receivable balance to the June 30, 2012 accounting records, without exception. Citation: 34179.5(c)(5)(D) An itemized listing of any current balances that are legally or contractually dedicated or restricted for the funding of an enforceable obligation that identifies the nature of the dedication or restriction and the specific enforceable obligation. Irr addition, the successor agency shall provide a listing of all approved enforceable obligations that includes a projection of annual spending requirements to satisfy each obligation and a projection of annual revenues available to fund those requirements. If a review finds that future revenues together with dedicated or restricted balances are insufficient to fund future obligations and thus retention of current balances is required it shall identify the amount of current balances necessary jor retention. The review shall also detail the projected property tax revenues and other general purpose revenues to be received by the successor agency, together with both the amount and timing of the bond debt .service payments of the successor agency, for the period in which the oversight board anticipates the successor agency will have insufficient property tax revenue to pay the specified obligations. Suggested Procedure(s): 8. Perform the following procedures: A. If the Successor Agency believes that asset balances need to be retained to satisfy enforceable obligations, obtain from the Successor Agency an itemized schedule of asset balances (resources) as of June 30, 2012 that are dedicated or restricted for the funding of enforceable obligations and perform the following procedures. The schedule should identify the amount dedicated or restricted, the nature of the dedication or restriction, the specific enforceable obligation to which the dedication or restriction relates, and the language in the legal document that is associated with the enforceable obligation that specifies the dedication of existing asset balances toward payment of that obligation. i. Compare all information on the schedule to the legal documents that form the basis for the dedication or restriction of the resource balance in question. ii. Compare all current balances to the amounts reported in the accounting records of the Successor Agency or to an alternative computation. iii. Compare the specified enforceable obligations to those that were included in the final Recognized Obligation Payment Schedule approved by the California Department of Finance. iv. Attach as an exhibit to the report the listing obtained from the Successor Agency. Identify in the report any listed balances for which the Successor Agency was unable to provide appropriate restricting language in the legal document associated with the enforceable obligation. Results: Per inquiry of City staff, the Successor Agency held the following assets at June 30, 2012' to be retained to satisfy the following enforceable obligations. We agreed the asset balances to accounting records without exception. For each obligation, we traced to legal documents without exception. We also traced the obligations to be fulfilled to the Recognized Obligation Payment Schedule approved by the California Department of Finance. See listing below: Cash and Investments Interest Receivables Total assets to be retained Due to the San Rafael High School District Notes payable 2002 Bond payment 2009 Bond payment Total obligations to be fulfilled Total obligations in excess of assets Total Assets to be Retained $405,694 685 $406,379 Total Obligations to be Fulfilled ($179,000) (299,489) (1,802,006) (1,219,725) ($3,500,220) ($3,093,841) B. If the Successor Agency believes that future revenues together with balances dedicated or restricted to an enforceable obligation are insufficient to fund future obligation payments and thus retention of current balances is required, obtain from the Successor Agency a schedule of approved enforceable obligations that includes a projection of the annual spending requirements to satisfy each obligation and a projection of the annual revenues available to fund those requirements and perform the following procedures: i. Compare the enforceable obligations to those that were approved by the California Department of Finance. Procedures to accomplish this may include reviewing the letter from the California Department of Finance approving the Recognized Enforceable Obligation Payment Schedules for the six month period from January 1, 2012 through June 30, 2012 and for the six month period July 1, 2012 through December 31, 2012. ii. Compare the forecasted annual spending requirements to the legal document supporting each enforceable obligation. 1. Obtain from the Successor Agency its assumptions relating to the forecasted annual spending requirements and disclose in the report major assumptions associated with the projections, iii. For the forecasted annual revenues: 1. Obtain from the Successor Agency its assumptions for the forecasted annual revenues and disclose in the report major assumptions associated with the projections. 10 Results: Not applicable. Per inquiry of City staff, the Successor Agency did not have any available assets as of June 30, 2012 to be retained for this purpose. At June 30, 2012, all assets of the "Other Funds" of the Successor Agency were restricted as identified on Procedures 6, 7 and 8A. Future Redevelopment Property Tax Trust Fund revenues will be used to meet requirements on future Recognized Enforceable Obligation Payment Schedule related to the continuing obligations of the Successor Agency. C. If the Successor Agency believes that projected property tax revenues and other general purpose revenues to be received by the Successor Agency are insufficient to pay bond debt service payments (considering both the timing and amount of the related cash flows), obtain from the Successor Agency a schedule demonstrating this insufficiency and apply the following procedures to the information reflected in that schedule. i. Compare the timing and amounts of bond debt service payments to the related bond debt service schedules in the bond agreement. ii. Obtain the assumptions for the forecasted property tax revenues and disclose major assumptions associated with the projections. iii. Obtain the assumptions for the forecasted other general purpose revenues and disclose major assumptions associated with the projections. Results: Not applicable, per inquiry of City staff, they believe that there are sufficient future revenues to fund future obligation payments. D. If procedures A, B, or C were performed, calculate the amount of current unrestricted balances necessary for retention in order to meet the enforceable obligations by performing the following procedures. i. Combine the amount of identified current dedicated or restricted balances and the amount of forecasted annual revenues to arrive at the amount of total resources available to fund enforceable obligations. ii. Reduce the amount of total resources available by the amount forecasted for the annual spending requirements. A negative result indicates the amount of current unrestricted balances that needs to be retained. iii. Include the calculation in the AUP report. Results: See response to 8A above. Citation: 34179.5(c)(5)(L) An itemized list and analysis of any amounts of current balances that are needed to satisfy obligations that will be placed on the Recognized Obligation Paynient Schedules .for the currentfiscal fiscal year. Suggested Procedure(s): 9. If the Successor Agency believes that cash balances as of June 30, 2012 need to be retained to satisfy obligations on the Recognized Obligation Payment Schedule ( -ROPS) for the period of' July 1, 2012 through June 30, 2013. obtain a copy of the final ROPS for the period of July 1, 2012 through December 31, 2012 and a copy of the final ROPS for the period January 1, 2013 through June 30, 2013. For each obligation listed on the BOPS, the Successor Agency should add columns identifying (1) any dollar amounts of existing cash that are needed to satisfy that obligation and (2) the Successor Agency's explanation as to why the Successor Agency belieGes that such balances are needed to satisfz the obligation. Include this schedule as an attachment to the AUP report. Results: Not applicable. Per inquiry of City staff, the Successor Agency did not have any available assets as of June 30, 2012 to be retained for this purpose. At June 30, 2012, all assets of the "Other Funds" of the Successor Agency were restricted as identified on Procedures 6A, 6C, 7, and 8A. Citation: 34179.5(c)(6) The review shall total the net balances available after deducting the total amounts described in subparagraphs (13) to (F,), inclusive, of paragraph (5). The review shall add any amounts that were transferred as identified in paragraphs (2) and (3) of subdivision (c) if an enforceable obligation to make that transfer did not exist. The resulting sum shall be available for allocation to affected taxing entities pursuant to Section 34179.6. It shall be a rebuttable presumption that cash and cash equivalent balances available to the successor agency are available and sufficient to disburse the amount determined in this paragraph to taxing entities. If'the review finds that there are insufficient cash balances to transfer or that cash or cash equivalents are specifically obligated to the purposes described in subparagraphs (13), (D), and (E) of paragraph (5) in such amounts that there is insufficient cash to provide the full amount determined pursuant to this paragraph, that amount shall be demonstrated in an additional itemized schedule. Suggested Procedure(s): 10. Include (or present) a schedule detailing the computation of the Balance Available for Allocation to Affected Taxing Entities (Attachment B). Amounts included in the calculation should agree to the results of the procedures performed in each section above. The schedule should also include a deduction to recognize amounts already paid to the County Auditor -Controller on July 12, 2012 as directed by the California Department of Finance. The amount of this deduction presented should be agreed to evidence of payment. The attached example summary schedule may be considered for this purpose. Separate schedules should be completed for the Low and Moderate Income Housing Fund and for all other funds combined (excluding the Low and Moderate Income Housing Fund). Results: See Attachment B. Suggested Procedure(s): 11. Obtain a representation letter from Successor Agency management acknowledging their responsibility for the data provided to the practitioner and the data presented in the report or in any attachments to the report. Included in the representations should be an acknowledgment that management is not aware of any transfers (as defined by Section 34 179.5) from either the former redevelopment agency or the Successor Agency to other parties for the period from January 1, 2011 through June 30, 2012 that have not been properly identified in the AUP report and its related exhibits. Management's refusal to sign the representation letter should be noted in the AUP report as required by attestation standards. Results: Management representation letter was obtained. 12 We were not engaged to, and did not, conduct an audit, the objective of which would be the expression of an opinion on the information provided for the purposes of the agreed-upon procedures and the Attachments. Accordingly, we do not express such an opinion. Had we performed additional procedures Z_ or had we performed an audit of the information provided for the purposes of the agreed-upon procedures and the Attachments, matters might have come to our attention which would have been reported to you. This report is intended for the information of management and the Oversight Board, the State Department of Finance and State Controller's Office. llo�vever, this restriction is not intended to limit the distribution of this report, which is a matter of public record. December 14. 2012 a Attachment A $6,243,438 Redevelopment Redevelopment Redevelopment Agency Agency Agency 12 Months Ended 12 Months Ended 7 Months Ended 6/30/2010 6/30/2011 1/31/2012 Assets (modified accrual basis) Cash and Investments $6,243,438 Restricted Cash and investments 289,591 Receivables: Accounts Receivables 21,900 Tax Receivables 3,276 Grants Receivables 26,624 Interest Receivables 5,696 Loans Receivables 307,555 Total Assets $6,898,080 Liabilities (modified accrual basis) Current Liabilities Accounts Payable $48,812 Interest Payable Notes Payable Developer Bonds payable 25,000 Arbitrage Payable 25,127 Deferred Revenue Total Liabilities $98,939 Equity - Total Liabilities + Equity $98,939 Total Revenues: $5,325,818 Total Expenditures: $5,852,374 Total Transfers: $695,856 Net change in equity $1,774,276 Beginning Equity: $5,024,865 Ending Equity: $6,799,141 Other Information (show year end balances for all four periods presented): Capital assets as of end of year 60.542 Long-term debt as of end of year 35,524,988 14 $5,520,068 431,582 95,576 2,024 26,624 4,686 314,322 $6,394,882 $149,042 25,000 25,127 26,624 $225,793 $225,793 $4,699,178 $5,470,609 $141,379 ($630,052) $6,799,141 $6,169,089 57,914 33,467,499 $2,672,320 1,375,315 553,307 $4,600,942 $31,973 255,838 291,326 $579,137 $579,137 $3,088,493 $3,953,906 ($5,012,350) ($5,877,763) $6,169,089 56,381 31,191,577 Successor Agency 5 Months Ended 6/30/2012 $1,110,123 1,375,314 472,959 2,053 $2,960,449 $169,517 255,838 299,489 $724,844 $724,844 $1,073,374 $1,067,000 ($28,925,831) ($28,919,457) ($28,919,457) 31,155,062 Attachment B SUMMARY OF BALANCES AVAILABLE FOR ALLOCATION TO AFFECTED TAXING ENTITIES Total amount of assets held by the successor agency as of June 30, 2012 (procedure 5) $2,960,449 Add the amount of any assets transferred to the city or other parties for which an enforceable obligation with a third party requiring such transfer and obligating the use of the transferred assets did not exist (procedures 2 and 3) Less assets legally restricted for uses specified by debt covenants, grant restrictions, or restrictions imposed by other governments (procedure 6) (2,554,070) Less assets that are not cash or cash equivalents (e.g., physical assets) -(procedure 7) Less balances that are legally restricted for the funding of an enforceable obligation (net of projected annual revenues available to fund those obligations) - (procedure 8) (3,093,841) Less balances needed to satisfy ROPS for the 2012-13 fiscal year (procedure 9) Less the amount of payments made on July 12, 2012 to the County Auditor -Controller as directed by the California Department of Finance (148,589) Amount to be remitted to county for disbursement to taxing entities a ($2,836,051) This Page Left Intentionally Blank