Department of Finance Reviews RDA Successor Agency Budgets

CP&DR Staff on
Apr 19, 2012

The fate of thousands of would-be redevelopment projects now rests in the very busy hands of the California Department of Finance. Working with an augmented crew, the department has so far received roughly 200 Recognized Obligation Payment Schedules (ROPS) and has so far sent back roughly 20 for review by their respective successor agencies. Letters such as these (pdf) have gone out to those cities so that they can amend their ROPS or justify the listed expenditures. 

Department spokesperson HD Palmer could not offer definitive specific numbers in part because the action has been furious this week.

Successor agencies were supposed to have submitted their ROPS to DOF by April 15. Not all of them submitted on time, however, so more ROPS are arriving by the hour. DOF has three days to review and respond to ROPS, all of which must be reviewed by May 1 at the latest are to pay their bills. 

"It's in their interests to submit them because, under the provisions of the bill, expenditures can't be made after May 1 unless they're approved," said Palmer.   

ROPS are the list of projects that successor agencies believe to be eligible for continued funding under AB X1 26, the law that ordered the dissolution of redevelopment agencies and guides the wind-down process. 

Finance is charged with making sure that all tax increment monies go back to the state, such as AB X1 26 allows. The means that they are on the lookout for projects that were approved after a June 27, 2011 deadline or, commonly, loans made to cities by redevelopment agencies after the governor announced his intention to dissolve agencies in January 2011. 

Some cities whose ROPS are under review include: 

  • Riverside, with over $150 million in expenditures that DOF claims do not adhere to AB 1X 26; they include over $100 million in loans and grants made between the city and redevelopment agency
  • Scotts Valley, with $3.6 million in loans to the city
  • Orange, with $7 million for a project not approved until November 2011
  • San Leandro, with a $2 million loan and nearly $9 million in cooperative agreements

If Finance ultimately refuses to approve funds for these items -- and similarly questionable expenses at other cities -- the projects will be among the thousands of redevelopment projects that are already moribund.  

With roughly 400 successor agencies and ROPS's varying in length -- from hardly any projects in small towns to potentially thousands in large cities -- the department has called in reinforcements.

"We knew we were going to have to do a significant amount of review in a relatively limited time frame. That's why we a) redirected members of our audit staff to work full-time on this, and b) brought back some retired (employees)," said Palmer. "We're confident that we'll be able to do the kind of reviews that are necessary."

Palmer said that roughly 60 staff people are working full-time to address the flood of ROPS.