Board of Supervisors Meeting

September 13, 2011

Finance Committee Recommendations on Options

for County Redevelopment Program

Report Organization

Overview of the Fiscal Challenges Overview of the new law “Opt-In” Option “Opt-Out” Option Cash Flow Analysis Findings and Recommendations

Agency Budget by Project Type

Pay to Others

$3,926,553

Debt Repayment

$8,956,000

Future Debt Reserves

$14,224,399

Capital Projects

$26,782,918

Economic Development

$11,496,609

Housing

$12,631,701

Planning

$664,547

Administration

$1,838,000

Community Improvement

$3,582,095

Agency Budgetby Revenue Source

Tax Increment, $33,192,523

Bonds, $44,894,844

Other, $5,015,455

Agency Budgetby Project Area

North Richmond$21,564,598

Bay Point$15,608,973

Rodeo$16,559,341

Montalvin Manor$3,097,507

Contra Costa Centre$27,272,403

Tax Increment Historyby Project Area

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

$7,000,000

$8,000,000

$9,000,000

Contra Costa Centre North Richmond Bay Point Rodeo Montalvin

FY 08

FY 09

FY 10

FY 11

Tax Increment History& Projections by Project

Area

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

Contra Costa Centre North Richmond Bay Point Rodeo Montalvin

FY 08FY 09FY 10FY 11FY12FY 13FY 14FY 15FY 16

$0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

Fiscal Year

Bay Point Annual Tax Increment History and Projections

FY 08

FY 09

FY 10

FY 11

FY 12

FY 13

FY 14

FY 15

FY 16

Fiscal Pressures

Significant drop in assessed valuation

High debt Payments to State Future Continuation Payments

Overview of Legislation and Litigation

AB x1 26 the Dissolution Act and

AB x1 27 the Voluntary Redevelopment Program Act

Dissolution Act: Suspension

Immediate suspension of Agency activities;

Adoption of Enforceable Obligation Payment Schedule by 8/29/11;

File Statement of Indebtedness by 10/1/11; and

Dissolution effective 10/1/11, unless continuation ordinance adopted

Dissolution Act: Wind-down

Contracts between Agency and County invalidated;

Successor Agency liquidates assets and pays off Agency’s debts; and

Oversight Board created to monitor Successor Agency activities, 3 of 7 members appointed by County

Dissolution Act: Wind-down

Distribution of Property Taxes: Statutory and Contract Pass-thrus to

taxing entities Enforceable Obligations Administrative Fees Taxing entities as property taxes

Dissolution Act: Wind-down

Oversight Board has power to order Successor Agency to terminate or renegotiate enforceable obligations; and

Oversight board has fiduciary responsibility to both holders of enforceable obligations and to taxing entities

Voluntary Redevelopment Program

Adopt continuation ordinance prior 10/1/11

Make continuation payments to: County ERAF- school entities Special District Fund- fire and

transportation districts

Opt-In Option

FY2011-12 Continuation Payment $5.3M

Reallocating Funds/Delaying Projects

Reducing Reserves Deferring Payments

Opt-In Option

Ongoing annual payments $1.25M Special Districts receiving funds:

CCFPD, Rodeo-Hercules FD BART and AC Transit WCCUSD, JSUSD, MDUSD, Acalanes Community College District

Opt-Out Option

Successor Agency takes over Oct. 1. RDA contracts with County become

unenforceable obligations. Non-Housing assets sold. Oversight Board reviews

enforceable obligations. Funding for blight removal ends.

Overview ofCash Flow Analysis

RDA Financial Model

PFM built a financial model to help the Agency evaluate: The near-term fiscal health of its

project areas given recent AV declines.

The long-term impact of new state laws on net tax increment for redevelopment.

Assumptions

Tax increment (TI) projections prepared by Agency’s fiscal consultant: Gross TI Revenue (assumes 2% growth

and 50% reduction in Prop 8 appeals) Pass-Through Payments Housing Set Aside

Bond debt service includes estimated impact of Debt Reduction Plan.

RDA Model Scenarios “Opt-In” Scenario

Agency makes “Continuation Payment” and operates normally.

“Opt-Out” Scenarios (Agency dissolves) No “Continuation Payments”. No housing set-aside or non-contractual

obligation payments. Net TI distributed to County and other tax-

sharing entities.

“Opt-Out” Scenarios:34183 vs 34188 RDA model scenarios reflect competing

interpretations of AB x1 27. Section 34183: assumes normal pass-thru

payments are made before net TI is distributed to County and other entities.

Section 34188: assumes no pass-thru payments; all net TI is distributed.

Interpretation has substantial impact on net TI funds distributed to County GF.

Agency Continues

Agency Dissolves(34183)

Delta Agency Dissolves(34188)

Delta

Sources of Tax Increment

Tax Increment 310 310 0 310 0Fund Balance 27 27 0 27 0Total 337 337 0 337 0

Uses of Tax Increment

State Property Tax Admin 3 3 0 3 0Debt Service 103 103 0 103 0Net Non-Housing Tax Increment 52 0 52 0 52Housing Tax Increment 26 0 26 0 26Project Spending 51 38 13 38 13Property Taxes Passed thru or Redistributed to General Fund 9 27 -18 30 -21

96 161 -65 156 -60

Successor Agency Admin0 7 -7 9 -9

Total Uses of TI 340 339 1 339 1

Property Taxes Passed thru or Redistributed to Special Districts and Schools

EXHIBIT CDisposition of Tax Increment Revenue

(Dollars in $Millions Net Present Value thru 2036)

Tax-Sharing Entity Payments Summary

Under Section 34183 special districts retain a higher proportion of net TI.

Dissolution Benefits to special districts and schools varies greatly.

Contra Costa County RDA Model – Example Distribution to Tax-Sharing Entities

County Fire Protection District

FYE Opt-In Opt-Out (34183) VS Opt-In Opt-Out (34188) VS Opt-In

2012 $702,465 $3,064,263 $2,361,798 $2,625,932 $1,923,467

2013 $858,118 $1,153,520 $295,402 $750,254 ($107,864)

2014 $926,077 $1,306,933 $380,856 $868,846 ($57,231)

2015 $995,377 $1,457,042 $461,666 $983,441 ($11,935)

2016 $1,061,327 $1,580,556 $519,230 $1,070,793 $9,467

Total: $4,543,364 $8,562,315 $4,018,951 $6,299,267 $1,755,904

Rodeo Hercules Fire Protection District

FYE Opt-In Opt-Out (34183) VS Opt-In Opt-Out (34188) VS Opt-In

2012 $247,801 $791,448 $543,647 $606,600 $358,799

2013 $256,175 $323,829 $67,654 $134,723 ($121,452)

2014 $276,409 $351,400 $74,991 $149,130 ($127,279)

2015 $297,048 $380,560 $83,512 $164,863 ($132,185)

2016 $312,929 $409,296 $96,367 $180,058 ($132,871)

Total: $1,390,362 $2,256,533 $866,171 $1,235,375 ($154,987)

Findings

Agency can afford Voluntary Program and continue to remove blight.

Opt-Out benefits to General Fund & Special Districts are not guaranteed.

Action needed now to keep Bay Point and Montalvin Manor solvent.

Recommendations

1. Adopt Continuation Ordinance.2. Authorize continuation payments.3. Authorize agreements for Statement

of Indebtedness by October 1.4. Authorize study to restructure RDA

and update 5-year plans.5. Report on progress implementing the

Voluntary Redevelopment Program