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From: Dennis Wilberg Dear Pat, I hope you know that I try not to bother your office unless it becomes absolutely necessary to seek your assistance. As a result of the unrealistic deadlines and convoluted and ever changing processes included in the recently adopted AB 1484 “clean up” legislation, the City of Mission Viejo indeed finds itself in the position where we need your help. As you know, redevelopment agencies have been dissolved effective February 1, 2012 pursuant to ABx1 26 (Health & Safety Code 34170). While there have been many inconsistencies in the implementation process, we have been able to abide by the almost weekly updates of interpretation presented by the California Department of Finance (DOF). We recognize that the State has also placed a significant administrative burden on the counties as well. In an effort to “clean up” the numerous questions raised by ABx1 26, the Governor signed AB 1484 on June 27, less than two weeks ago. Through this legislation the County Auditor-Controller has been tasked with the unenviable job of implemented AB 1484 locally. This past Monday, July 9th, at 5:30 pm, we received a Demand for Payment dated July 9th (copy attached) from Jan E. Grimes, Chief Deputy Auditor-Controller of the County of Orange. Payment in the amount of $2,646,895 is due by July 12, 2012, that’s tomorrow! Failure to make payment is subject to a civil penalty. Additionally, the city that created the RDA shall also be subject to civil penalty and the withholding of sales and use tax scheduled for distribution on July 18, 2012 We believe the demand amount is incorrect and should be zero. Furthermore, because we have paid our approved enforceable obligations pursuant to the terms established by the DOF, we do not have the funds to pay the amount demanded and still be able to pay our ongoing enforceable obligations including DOF approved debt service on bonds. The County of Orange demand is based on DOF calculations that are not correct because of the ambiguity in terminology identifying funding sources. In essence the crux of the matter in this case has to do with how the DOF is classifying property tax increment revenue received by redevelopment agencies between July 2011 and January 2012, before ABx1 26 became effective. The DOF considers these monies as being part of the “Redevelopment Property Tax Trust Fund (RPTTF)” established by ABx1 26 as of October 1, 2011. However, the RPTTF did not exist until February 1, 2012 (Health and Safety Code 34170). Therein lies the biggest and most troubling issue with this demand letter. What is listed as ROPS approved for 1/1/12 to 6/30/12 as $1,113,221 should actually be $4,695,263. If this correct number is used our demand would be zero. I have attached a letter from the Santa Cruz Auditor-Controller to the DOF explaining the flaws in the DOF mandate and citing the reasons why that County will not implement that mandate including the discrepancy in effective date. While there certainly are numerous ambiguities in the DOFGÇÖs process and in the legislation, we have towed the line and met all deadlines imposed including the timely payment of pass through obligations to affected taxing entities including the County of Orange and school districts. This action also is being used to our detriment in the DOF calculation which does not credit us for having made the payments! My staff has left telephone messages on Tuesday and again today with both County staff members referenced in the demand letter. Our phone calls have not been returned. My staff also sent an email to the same County Auditor-Controller staff, and DOF staff, explaining the issues in detail. We have been contacted by DOF staff and have been told 1)our points are valid and shared by many other successor agencies and will be investigated; and 2)AB 1484 gave the local County Auditor-Controller more discretion in the administration of AB 1484. Our hope would be that your office could intervene and ask that the Auditor Controller staff to contact us so the issue can be discussed and resolved. The City’s sales tax is now in jeopardy. I cannot stress how critical that funding is to the effective and continuous flow of public services in this community. We respectfully request your immediate attention to this matter given the state imposed deadline of Thursday July 12th and the County of Orange demand letter. Thank you for your help and ongoing support of our community. Dennis Wilberg |
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