Successor Agency

Serving Successor Agencies

On Friday, March 18, the Irwindale Successor Agency closed escrow on the sale of a property listed in its Long Range Property Management Plan. Located at 4954 Azusa Canyon Road, the property is 0.52 acres, zoned for light manufacturing, and improved with an approximately 10,000 square foot building.

RSG served as the broker for the transaction. We marketed the property, preparing and distributing an offering memorandum and other marketing materials to interested parties and local businesses and advertising the property in various online forums. In order to recommend the best offer to the Successor Agency, RSG reviewed all of the offers, guided by the Successor Agency’s vision for the property, the content of the offers, and the experience of those making the offers.

As consultants who provide Successor Agency services, we also drafted staff reports and resolutions for the Successor Agency and Oversight Board meetings in which the Exclusive Negotiation Agreement (ENA) and Purchase and Sale Agreement (PSA) were approved. We attended those meetings and coordinated with the State Department of Finance to ensure the approval of the sale.

Given RSG’s mission to improve communities, we provide more services than a traditional broker. In addition to wanting to sell the property, we endeavor to ascertain that the property is sold to a buyer who will develop or maintain it as an asset to the community.

Congratulations, Irwindale! If your city’s Successor Agency needs assistance in selling properties, give us a call.

Written by Dominique Clark, an Associate at RSG

Top Priority Issues Identified at the League of California Cities Conference

On Monday, we told you about our attendance at the League of California Cities conference. As we live in a time of emails and social media, RSG truly enjoys face-to-face interaction with our existing clients, as well as staff and Councilmembers from other cities throughout the State.  We had many interesting and productive conversations with attendees about the important issues currently facing cities.

Many of these conversations were sparked by the unique game that we had at our booth. Using poker chips as voting tools, we had six jars representing six priority issues for many cities:
           •    Aging Infrastructure
           •    Affordable/Workforce Housing
           •    Sales Tax Generators
           •    Hotels
           •    Closing Budget Deficit
           •    Job Creation

We received over 100 votes over our two days at the exhibit hall.  And the winner was…….        

!!! Affordable/Workforce Housing !!!

Those who provided a business card at the conference will receive an infographic on Affordable/Workforce Housing that contains valuable data and research on the subject. We’ll delve a bit deeper into affordable/workforce housing solutions without tax increment financing in a post later this week.

At the booth, we also offered an infographic that summarizes the key points of both Senate Bill 107 (Redevelopment Dissolution Trailer Bill) and Assembly Bill 2 (Community Revitalization and Investment Areas that allow for tax increment financing). There was considerable interest from many conference attendees regarding both bills and how the new laws would affect their particular communities.  The infographics are shown here. 

All in all, the conference was a wonderful experience and gave RSG partners and staff the opportunity to connect with clients and others about the challenges and triumphs experienced by communities across the State.

For more information on any of the topics mentioned above, please contact Hitta Mosesman at hmosesman@webrsg.com

Written by Hitta Mosesman, a Principal at RSG.

Jargons and Acronyms Are Just the Beginning

Jargon for blog.png

Did you know that “ammo” is slang for “amortization”? No matter how educated and experienced people are, they must constantly be on the lookout for new jargon and acronyms that appear with alarming frequency in every field. 

The Urban Land Institute (ULI) published a helpful list defining real estate jargon. The helpful article by John McNellis in Urban Land magazine even breaks down the categories of jargon into Economic Terms; Architectural and Construction Terms; Surveys, Site Plans, Leasing Plans, Plot Plans Terms; Lease Terms; Loan Terms; and Miscellaneous Terms.

At RSG, we deal a lot in jargon and acronyms. Real estate development uses a lot of jargon. Redevelopment dissolution is another great example of acronym usage, involving ROPS (Recognized Obligation Payment Schedules), LRPMP (Long Range Property Management Plan), SERAF (Supplemental Educational Revenue Augmentation Fund) repayment and many more.

We pride ourselves, however, on going well beyond just defining the jargon and explaining the acronyms. That’s just the beginning of our professional services. We help cities to review a developer’s NOI (net operating income) to check whether or not the requested subsidy is justifiable. We help successor agencies to prepare their ROPS to maximize repayment of enforceable obligations and adjust for cash flow imbalance. 

Contact us to see how we can help you to apply the jargon and acronyms to benefit your city’s financial well-being, and we’ll TTYL.

Written by Dima Galkin, Senior Analyst at RSG

A New Challenge

 

As a firm that deeply cares about Community and Economic Development and ultimately the fate of our Cities, we are constantly grappling with ways that we can help our Cities succeed despite the tough economic times.  It is extremely difficult to try to summarize the immensity and scope of the problems that different Cities face, but here are some quick observations being on the front line of the process:

The Challenge - After being wiped out from the redevelopment dissolution, many communities are strapped for resources and long-reaching fiscal challenges.  All of a sudden Cities are in the business of selling property, either because of obligation to do so under the law or driven by a larger asset management strategy to put the community on the right track. We are often asked by our City Clients the same questions: “Do we need an RFP, should we advertise, go to auction, and what are reasonable business terms now that we don’t have an RDA to help make a project work? Please help!”

Our Double Bottom Line Solution - After really analyzing the challenge we developed a guiding mandate to ensure that every transaction that we are involved in:  #1 - meets specific Community Development goals and #2 - is financially successful.

What does this really mean?  In basic terms, it means taking into account each City’s’ goals and visions that came with the original acquisition of the property.  It means enhancing the value of the property not solely on a financial basis but also positively impacting the surrounding community through job creation, low environmental impacts, pleasing aesthetics and sensible building design, a thought towards serving the surrounding community and many other principles that a City can uphold as the property owner.

Some of these problems can be tackled via a rigorous methodology; has a highest and best use analysis been completed?  Have the interests and values of the local community been adequately understood?  Can we carefully develop opinion of value calculations for different real estate solutions to better weigh the financial impacts of different types of projects?  What terms will the City be willing to negotiate on, and what are the guiding principles that the City will not waiver on?

A Time of Hope - My final observation is that we are at the early stages of developing creative strategies to meet the unique challenges of each City Client and that in some ways we are in a new phase of redevelopment, and that’s an exciting prospect.

Written by Andrew Gee, who is a Senior Associate at RSG.

Has Your Successor Agency Received a Claim for Pass Through Payments Owed?

 

In this post-redevelopment dissolution world, it is now becoming commonplace for school districts and other taxing entities to submit claims to a successor agency for historical pass-through payments owed because of either (1) non-payment or (2) a dispute over the way payments were calculated in prior years.  In some cases, there was a long-running dispute between a taxing entity and a former redevelopment agency that began before redevelopment was eliminated.  Regardless of the circumstances, the successor agency staff should complete the following steps prior to placing any repayments on the Recognized Obligation Payment Schedule:

  1. Verify the claim – all documents and information should be independently reviewed and analyzed by staff or consultants:

    • Check the precise language of a negotiated pass-through agreement (taxing agencies may have a different interpretation of the legal language in the agreement that can result in claims with significantly over-inflated amounts owed).

    • For statutory pass through payments, make sure that the assessed valuation information matches your records and that the correct formulas pursuant to Health and Safety Code requirements are being used for the calculations.

    • Look at historical tax increment receipts and assessed valuations to ensure that the actuals match the amounts being used in the taxing agencies’ calculations.

    • Make sure that the tax increment excludes all legally obligated payments that were made (i.e., low moderate income housing set aside, SERAF) unless a negotiated agreement explicitly excludes these specific payments.

    • If pass-through payments owed resulted from an SB211 amendment (eliminating the time limit to incur debt), be sure to verify that the correct “adjusted base year” is being used by the taxing entity.  The incorrect adjusted base year can result in significantly higher payments allegedly owed.

  2. Meet with the taxing entity to review methodologies.
  3. Draft a Settlement Agreement for both parties to sign.
  4. Obtain the appropriate approvals.
  5. Submit the required documentation to DOF.

DOF won’t necessarily approve all repayments to taxing entities right away and a meet-and-confer may need to take place in order to walk DOF staff through the requirements and methodologies.

Following these steps can identify inaccuracies in methodologies that can result in significantly reduced residual revenues to all taxing entities (other than the taxing entity making the claim), including the City (i.e., General Fund).

In summary, these calculations should be reviewed very carefully order to preserve General Fund revenues.

Written by Hitta Mosesman, Principal at RSG.