Agency Dissolved: City Must Pay $39 Million

Over the first six months of 2013, the city will spend $438 an hour cutting its own redevelopment agency, in accordance with state law.

The Mission Viejo City Council will be asked Monday night to approve a plan to wipe out the city's own redevelopment agency, in accordance with state law.

The city's owes almost $39 million dollars in unpaid bonds and services.

The first steps of the dissolution are expected to cost $94,600 from Jan. to June 2013—that's $438.65 an hour in staff fees. That money will be paid to 10 staff positions, including the city manger, who costs the city $63.33 for every hour worked.

Staffers will be determining how to pay the city's remaining redevelopment obligations. These obligations are collectively known as the Recognized Obligation Payment Schedule, or ROPS in the language of the state legislature's bill requiring the dissolution.

The money will come from low income housing funds, bond proceeds, reserve balances and other sources.

By far the most expensive obligation the city is required to pay is $25.4 million. That comes from a debt incurred in 1999 chiefly to build two public parking structures at . The Mission Viejo mall renovation cost $150 million, and the city issued $41.6 million in bonds to be paid by 2028 for its share in the private/public partnership.

Here are more obligations the city must find a way to pay. Note that the administrative costs are an estimate of how much it will cost the city over the next 45-55 years to fund the other obligations, said Cheryl Dyas, the city's director of finance.

Project/Service Name Debt Owed Date of Debt Agreement Date Debt Expires Payee The Ridge affordable housing agreement $1.6 million 2010-2012 2018-2056 Lennar Homes, Consultant and Lawyers
Administration $7.5 million 2/1/2012 12/31/2033 City of Mission Viejo SERAF Loan Repayment $1.4 million 3/1/2010 6/30/2017 Mission Viejo Housing Authority Crown Valley Widening $1 million 2/21/2011 6/30/2013 Consultants, Lawyers, Construction Companies and the City of Laguna Niguel Owner Participation Agreement (Infiniti of Mission Viejo) $381,356 4/3/2000 6/30/2013 GSM Development
Sharon Cody August 21, 2012 at 06:47 PM
Peter, I am not sure where you got the information for this article but there are a number of statements here that are not accurate. The short version is that debt obligation will be paid by property tax in much the same way that it was before the redevelopment agency was dissolved. Here is a better explanation from a high level source: The Agency was dissolved in February so last night had nothing to do with “approving a plan to wipe out the city’s own redevelopment agency..” The state took care of that for the city. What the Successor Agency did last night was approve what is called a Recognized Obligation Payment Schedule or ROPS (and this is the 3rd one by the way). What the ROPS does is document all the payments the Successor Agency is obligated to make over the next 6 month period (in this case January –June 2013). Once the ROPS is approved by the State DOF, it forms the basis from which payments will be made to agencies out of the RPTTF (Redevelopment Property Tax Trust Fund) which in essence is where the former Property Tax Increment is now held.
Peter Schelden August 21, 2012 at 07:32 PM
That's very well put, Sharon. As a journalist I always try to break down complex matters into bite-sized chunks. I may have accidentally done some mangling in my prose, but I think your comment goes a long way toward clarifying the situation. Thanks for sharing this with the community.
Desi Kiss September 05, 2012 at 03:15 PM
City finances are such a hot potato. Smoke & mirrors & fuzzy math, but who is telling the truth? I've attended last night the City Council meeting and according to F. Ury and D. Leckness the City has 53% of its budget in reserves. That is approximately 34.6 million from the 65.2 million approved budget for next year. When pressed by C. Schlicht, the City Manager said that the reserves are only 25 million ( that is approximately only 38%). That was disputed as well by Schlicht as inaccurate and as "earmarks". Council member Schlicht indicated that the reserves are in reality less than 800K. That was disputed by Mr. Ury stating that the City would not have a AAA credit rating if the surplus would be only 800K. D. Wilberg in summary could not clearly indicate the real number but said that the State billed the City in error the 2.6 million for the Redevelopment Agency and the City no longer has to pay at least that bill. --
Desi Kiss November 06, 2012 at 03:15 PM
The City Treasurer published the 2012 MV Consolidated Financial Report in compliance with CA requirements. The uniform disclosures are filed with the State Controller each year by all cities. Mayor Ury at all times tried to defend City spending and recently claimed a 1M surplus. According to the press and MV blogs the last 5 year deficits are as follows: 2012 = 5.3 M (see uploaded file), 2011= 3.3M, 2010=0.76M, 2009= 3.2M, 2008=11.0M. Moreover the 1M surplus also became a deficit when the OCR published that the City owes staff 1.65M in leave time compensation. (i.e. 1.0M-1.65M = -0.65M) One must wonder what is the real balance on the books?


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