REQUEST FOR SUCCESOR AGENCY ACTION
SUBMITTED TO: Honorable Chair and Board Members
SUBMITTED BY: Travis Hopkins, Acting Executive Director
PREPARED BY: David Cain, Interim Chief Financial Officer
Subject:
title
Adopt Successor Agency Resolution Nos. 2025-01 and 2025-02 approving the Recognized Obligation Payment Schedule (ROPS) and Administrative Budget for the Huntington Beach Successor Agency for the period of July 1, 2025, through June 30, 2026, in accordance with Health and Safety Code Section 34177 and related actions
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Statement of Issue:
The Successor Agency is requested to approve the Recognized Obligation Payment Schedule (ROPS) and Administrative Budget for the period of July 1, 2025, through June 30, 2026. An approved ROPS must be submitted to the County of Orange Oversight Board by January 22, 2025, and then to the Department of Finance (DOF) by February 1, 2025. This is the seventh year that the Successor Agency is submitting the annual ROPS to the Countywide Oversight Board.
Financial Impact:
The ROPS provides the County Auditor-Controller with the amount of the former Redevelopment Agency’s enforceable obligations for which the Successor Agency anticipates incurring expenditures. Once approved by DOF, the Successor Agency will be entitled to receive property tax revenue up to the amount of the DOF-approved enforceable obligations included in the Payment Schedule. The ROPS requests $10,768,498 in funds to support existing legally required enforceable obligations for FY 2025/26.
Recommended Action:
recommendation
A) Adopt Resolution No. 2025-01, “A Resolution of the Successor Agency to the Redevelopment Agency of the City of Huntington Beach Approving the Recognized Obligation Payment Schedule for the Period July 1, 2025 - June 30, 2026 (‘ROPS 25-26’);” and
B) Adopt Resolution No. 2025-02, “A Resolution of the Successor Agency to the Redevelopment Agency of the City of Huntington Beach Approving the Successor Agency Administrative Budget for the Period July 1, 2025, through June 30, 2026.”
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Alternative Action(s):
Do not approve the recommended action(s) and direct staff accordingly.
Per Health and Safety Code Section 34179(j), the Successor Agency is required to submit the ROPS to the Countywide Oversight Board and the Department of Finance by February 1st of each year. Per Health and Safety Code Section 34177 (o)(1), the City would be assessed a $10,000 per-day penalty for failure to submit the ROPS on a timely basis. Additionally, failure to submit the ROPS within ten (10) days of the deadline may result in a 25% reduction of the Successor Agency’s maximum administrative cost allowance for the period covered by the delinquent ROPS. Should the Agency fail to submit the ROPS, expenditures totaling $2,330,100 would need to be covered through alternate sources of funding in Fiscal Year 2025-26. The Agency would also postpone the receipt of $8,438,398 in loan funds to be repaid to the City’s General Fund and Low and Moderate Income Housing Asset Fund to the Fiscal Year 2026-27 ROPS or later.
Analysis:
As part of the 2011 Budget Act, as recommended by then Governor Jerry Brown, the Legislature approved the dissolution of the State’s Redevelopment Agencies. After litigation, the California Supreme Court ruled on the Dissolution Act that all redevelopment agencies in California were dissolved effective February 1, 2012.
The Dissolution Act, AB 1484, and related legislation describe the procedures to wind down the affairs of the former redevelopment agencies. These provisions include the continued payment of recognized enforceable obligations as defined in the law. The ROPS for July 1, 2025, through June 30, 2026, requests payment for enforceable obligations associated with development agreements, legal services, administrative budget, and other miscellaneous costs.
Of note, the ROPS also includes a request for funds in the amount of $8,438,398 to repay a portion of monies owed to the City from the former Redevelopment Agency for the purchase of real property (the “Waterfront Loan”) in Fiscal Year 1988-89 in the amount of $22.4M, which was loaned to the agency at a 10-percent interest rate. Between 1989 and 2011, the former Redevelopment Agency made payments on various City-Agency loans, with $14.8M of these payments being applied to the Waterfront loan. This loan had been listed on previous ROPS and denied by the DOF until it was ultimately approved as an enforceable obligation by the California Superior Court on February 17, 2023. The Department of Finance concurred with the Court’s ruling in their letter dated May 19, 2023, stating the following:
“Waterfront Commercial Master Site Plan. Finance no longer denies this item. In compliance with the Judgement, the Agreement for the Purchase and Sale of Property (Waterfront Loan) dated September 19, 1988, between the City and the former Redevelopment Agency of the City of Huntington Beach is considered an enforceable obligation, and future requests for funding of supported outstanding amounts will be allowable.”
The total amount of the loan as of June 30, 2025, will be $23,076,317, comprised of $13,804,292 in principal and $9,272,025 in accrued interest calculated in accordance with Health and Safety Code Section 34191.4(b)(3)
“If the oversight board finds that the loan is an enforceable obligation, any interest on the remaining principal amount of the loan that was previously unpaid after the original effective date of the loan shall be recalculated from the date of origination of the loan as approved by the redevelopment agency on a quarterly basis, at a simple interest rate of 3 percent. The recalculated loan shall be repaid to the city, county, or city and county in accordance with a defined schedule over a reasonable term of years. Moneys repaid shall be applied first to the principal, and second to the interest.”
The $8,438,398 repayment amount requested in the FY 2025/26 ROPS was calculated using the Department of Finance’s Sponsoring Entity Loan Repayment Calculator based on the provisions outlined in Health and Safety Code Section 34191.4(b)(3)(A), which calculated the maximum repayment amount authorized per fiscal year. This amount will be recalculated each fiscal year based on the estimated tax revenue available for repayment of the loan as required by Health and Safety Code Section 34191.3(b)(3)(A).
The County Oversight Board will review and approve the City’s current ROPS during its January 28,
2025 meeting. The City must submit to the State DOF by February 1, 2025. The State DOF will
make its determination by April 15th. The City’s ROPS will not be effective until approved by the State
DOF.
Environmental Status:
This action is not subject to the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly.
Strategic Plan Goal:
Goal 2 - Fiscal Stability, Strategy A - Consider new revenue sources and opportunities to support the City's priority initiatives and projects.
Attachment(s):
1. Resolution No. 2025-01, “A Resolution of the Successor Agency to the Redevelopment Agency of the City of Huntington Beach Approving the Recognized Obligation Payment Schedule for the Period July 1, 2025 - June 30, 2026 (‘ROPS 25-26’)”
2. Resolution No. 2025-02, “A Resolution of the Successor Agency to the Redevelopment Agency of the City of Huntington Beach Approving the Successor Agency Administrative Budget for the Period July 1, 2025 Through June 30, 2026”
3. Superior Court of California Ruling dated February 17, 2023
4. Department of Finance Recognized Obligation Payment Schedule Letter dated May 19, 2023
5. Department of Finance Section 34191.4(b)(3)(A) Sponsoring Entity Loan Repayment Calculator
6. Recalculated Waterfront Loan per Health and Safety Code Section 34191.4(b)(3)
7. PowerPoint Presentation