Enforceable & Recognized Obligation Payment Schedules (EOPS & ROPS)
DISSOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF BANNING
The Community Redevelopment Agency of the City of Banning was activated by the City Council on June 12, 1978 to eliminate blight and revitalize the economic conditions of the City. For over 30 years, the Agency carried out this mandate by rehabilitating existing developments, attracting new businesses, eliminating blight, providing affordable housing options, and expanding public benefits.
2011 STATE BUDGET
On June 29, 2011 the Governor signed into law the State’s FY 2011-12 budget along with several budget trailer bills including AB x1 26 and AB x1 27, directly impacting over 400 Redevelopment Agencies across the State to make one of the following choices: 1) cease to exist, or 2) make payments for the right to exist. Lawsuits were subsequently filed and the matter taken to the California Supreme Court (the “Court”).
On December 29, 2011, the Court delivered its decision in the California Redevelopment Association v. Matosantos case, finding the provisions of AB x1 26 (the “Dissolution Act”) constitutional and AB x1 27 (the “Alternative Redevelopment Program Act”) unconstitutional. This ruling puts in motion the dissolution and winding down of every California redevelopment agency, and provides upcoming milestones for implementation of the Dissolution Act.
SUMMARY OF COURT DECISION AND REASONING
I. The Decision
The Court’s bifurcated decision means that all RDAs will be dissolved under the constitutional Dissolution Act, and none will have the opportunity to opt into continued existence under the unconstitutional Alternative Redevelopment Program Act.
II. The Court’s Reasoning
The Court found the Dissolution Act constitutional because the Legislature has the broad power to establish or dissolve local agencies as it sees fit. The Court found the Alternative Redevelopment Program Act unconstitutional concluding that the continuation payments required under the Alternative Redevelopment Program Act were not in fact “voluntary” and thus violate the prohibitions in the California Constitution (Proposition 22) related to the enactment of any laws that require RDAs to shift funds to schools or other agencies.
The Court held that the Dissolution Act and the Alternative Redevelopment Program Act are severable from one another because of the differences in the application of the severability clauses of each bill and because large parts of the Dissolution Act are independently enforceable despite the Court’s finding that the Voluntary Program Act is unconstitutional.
Finally, the Court reformed and revised the effective dates or deadlines for performance under the Dissolution Act, calling instead for those dates and deadlines to be advanced four months from the dates specified in the Dissolution Act.
BANNING REDEVELOPMENT HISTORIC PERSPECTIVE
Since its inception in 1978, redevelopment has provided benefits to the Banning community. The Banning Redevelopment Agency has both unilaterally and through participation in joint public/private partnerships, facilitated a number o successful projects and programs aimed at economic development revitalization, blight reduction, and affordable housing production. Key accomplishments have included:
- Completion of collateral material for trade shows and economic development
- Pre-design and design in concert with Cal Trans on the Sunset Grade Separation
- Provision on assistance with off-site infrastructure and land write-downs
- Establishment of a Project Review Committee and expedition of plan review services for all development projects
- Partnerships with outside agencies including SCORE, SBA, SBDC, & EDA, to provide financial assistance to bring business support services to Banning
- Agency funding of code enforcement & compliance programs, weed abatement programs, and abandoned vehicle programs
- Completion of Downtown Design Guidelines
- Completion of Paseo San Gorgonio Master Plan
- Downtown upgrades and enhancements including: police station development, the Banning Justice Center, I-10 & 8th Street enhancement project, commercial façade program, Civic Center parking lot/streetscape enhancements, and acquisition, site assembly and redevelopment planning for San Gorgonio Inn site and related downtown property
- Assistance with Mt. San Jacinto Community College infrastructure
- Creation of a single-family housing rehabilitation program
- Provision of technical assistance for proposed multi-family affordable housing projects in the project area
- Funding of the Williams Street storm drain project in a residential neighborhood to promote development of affordable housing
- Funding of multiple Habitat for Humanity in-fill projects
- Development & implementation of a first time home buyer silent second mortgage program
- Property acquisition for key redevelopment & economic development projects
These vital public projects alone have resulted in an investment of tens of millions back into the Banning economy, while creating hundreds of construction and non-construction related jobs.
CITY OF BANNING AS SUCCESSOR AGENCY TO THE FORMER COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF BANNING
Effective February 1, 2012, redevelopment agencies are dissolved and replaced with successor agencies responsible for winding down the affairs of the former redevelopment agency including disposing of their assets and continued payments of enforceable obligations pursuant the Enforceable Obligation Payment Schedule (“EOPS”) adopted by the former redevelopment agency until a Recognized Obligation Payment Schedule (“ROPS”) is prepared by the successor agency, certified by the county auditor-controller and approved by the oversight board.
Enforceable obligations consists of bonds, loans, payments required by governments (except pass-through payments), court judgments and settlements, legal contracts and agreements and contracts necessary for continued administration.
On January 24, 2012, the City Council elected to become the successor agency of its former redevelopment agency. The City, as successor agency, became operative on February 1, 2012. On that date all assets, properties, contracts, and leases of the former redevelopment agency were transferred to the successor agency.
As part of its duties, the successor agency will establish a Redevelopment Obligation Retirement Fund and perform obligations required by the EOPS, maintain reserves, dispose of assets and property, and enforce all rights for the benefit of taxing agencies. The successor agency will continue to oversee development of properties, use bond proceeds to continue funded activities and defease bonds and prepare administrative budgets.
By March 1, 2012 the successor agency had prepared a draft of the Recognized Obligation Payment Schedule (“ROPS”) for payments through July 1, 2012. From May 1, 2012 forward only payments listed on the ROPS may be made by the successor agency.