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HomeMy WebLinkAboutStaff Report 3.G 12/03/2012 • AgionciaiItevw#3 .Q St 485$ DATE: December 3, 2012 • TO: Honorable Chair and Members of the Petaluma Community Development Successor Agency Board through Executive Director FROM: Ingrid Alverde, Economic Development/ Redevelopment Manager SUBJECT: A Resolution of the Petaluma Community Development Successor Agency Accepting the Due Diligence Review Pursuant to Health and Safety Code Section 34179.5 RECOMMENDATION It is recommended that the Successor Agency adopt the attached Resolution (Attachment 1) accepting the Non-housing Fund Due Diligence Review pursuant to Health and Safety Code Section 34179.5. BACKGROUND On June 27, 2012, the State enacted AB 1484; revising ABxI 26 (the Redevelopment Dissolution Act) to require successor agencies to identify and remit unobligated funds to the County for distribution to the taxing agencies. The law created procedureslfor a "Due Diligence Review" which is like an audit that spells out:which funds, if any, are available and unobligated. The first step was to review the affordable! housing fund balances, which was completed in October (Housing Fund Review). The second step isito review the non-affordable housing funds (Non-housing Fund Review), which is the subject of this report. DISCUSSION Successor-Agency staff hired the County-approved accounting firm Pun & McGeady, LLP to complete both Reviews. The Housing Fund Review was completed, approved by the Successor Agency and the Oversight Board, and submitted to the State Department of Finance (DOE) and other oversight agencies in October. Since-then, the DOF accepted the housing fund balance determination and staff transferred those funds to the County. This draft Non-housing Fund Review (Attachment 2)is due to the Oversight Board and State and County oversight agencies by December 15, 2012. The Oversight Board will vote on the Review on January 9, 2013 following a>required public comment session on.December 19, 2012. At its discretion, the Oversight Board can consider any opinions of the County Auditor-Controller, may Agenda Review: City Attorney 1' ■ ^ Finance Director City Manager cS i adjust amounts in the Review, request additional materials, and may authorize the Successor Agency to retain certain assets and funds. The final, approved Review is due to the State and County oversight agencies by January 15, 2011 The DOF has until April I, 2013 to respond and request payment of the identified fund balances which may or may not be the same as those identified in the Review. The funds will then be due to the County within five business days unless the Successor Agency contests DOF's determination. FISCAL IMPACTS The $10,000 cost to prepare both Reviews is budgeted in the Successor Agency's administrative budget approved on ROPS 2. The draft Non-housing Fund Review identifies $8,400,000 in unobligated fund balances, which if accepted by the Successor Agency, approved by the Oversight Board and the DOF, and not contested by the Successor Agency, will be due to the County in April or May of 2013. ATTACHMENTS 1. Resolution accepting the Non-housing,:Fund Due Diligence Review 2. Non-housing Fund Due Diligence Review 2 ATTACHMENT #1 PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR'AGENCY RESOLUTION NO. -2012 A RESOLUTION OF THE PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR AGENCY ACCEPTING THE DUE DILIGENCE REVIEW OF THE NON AFFORDABLE HOUSING FUNDS PURSUANT TO HEALTH AND SAFETY CODE SECTION 34179.5 WHEREAS, Assembly Bill ABxI 26 (ABxI 26) was enacted by the State Legislature and signed by the Governor as of June 29, 2011; and WHEREAS, ABx1 26 dissolved redevelopment agencies, including the former Petaluma Community Development Commission (PCDC), effective February 1, 261'2; and WHEREAS, pursuant to California Health and Safety Code § 34173(d), the City of Petaluma elected to serve as the successor agency to the PCDC. by City Council Resolution No. 2012-007 adopted on January 9, 2012, and has been serving in this capacity following PCDC dissolution on February 1, 2012; and WHEREAS, pursuant to, Assembly Bill 1484 enacted on June 27, 2012, the City Council of Petaluma on August 6, 2012, established and acknowledged the "Petaluma Community Development Successor Agency"(PCDSA) as the successor agency to the former PCDC,, separate and distinct°from the City of Petaluma, and to provide for its governance; and WHEREAS, California Health and Safety Code section §34179.5 requires each successor agency to employ a licensed accountant; approved by the county auditor-controller, to conduct a due diligence review to determine the unobligated balances in the low and moderate income housing fund and the other funds and accounts of its former redevelopment that are available for transfer to taking entities; and WHEREAS, the PCDSA has contracted with Pun & McGcady, LLP, Certified Public Accountants, to complete the due diligence review of'the former PCDC Non-housing Funds by December 15, 2012; and WHEREAS, the Sonoma County Auditor-Controller has approved Pun.& McGeady, LLP for the purpose of undertaking such due diligence review; and WHEREAS, the Successor Agency has reviewed the results of the Non-housing Fund Due Diligence Review. 3 NOW, THEREFORE, BE IT RESOLVED by the Petaluma Community Development Successor Agency that the above recitals and findings are adopted as part of this resolution and are true and that it hereby: I. Accepts the Non-housing.Fund Due Diligence Review of the former PCDC Non-housing Fund balances as performed by Pun& McGeady, LLP 2. Directs the ,Executive Director of the Successor Agency, or his designees to transmit a copy of the Non-housing Fund Due Diligence Review to the Oversight Board, the County auditor-controller, the State Controller and the Department of Finance pursuant to §Section 341179.5. It is hereby certified that the foregoing Resolution No. -2012 was duly introduced and adopted.by the Petaluma Community Development Successor Agency at regular meeting held on the 3rd day of December, bythe followingavote: 4 Poicichyneed- tk Petaluma Community Development Successor Ageitter Petaluma, California H< ' A / Independent Aecountanes Report on Applying Agreed-UpOn Procedures relating to the Due DiligencCgeifiew in accordance with AB 1484 applied lora Other Funds of the Successor Agency For the year ended June 30, 2012 rmi „i• PV,N1, McGEADY \\ i N I- Petaluma Community Development Successor Agency Table of Contents Page INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES 1 r � ATTACHMENT A - AGREED-UPON PROCEDURES AND FINDINGS V 2-17 EXHIBITS \N Exhibit A /','\\ 1' All assets transferred Worn the former redevelopment agencjto the Successor Agency on February 1, 2012 /' Exhibit B Summary of Financial Transactions 7'1 ExhibitC 1 ,/,„ Assets of all other funds ofthe;Successor Agency-as,-of;Jiine 30, 2012 a �,.� Exhibit D Asset balances held on 30, 2012 restricted for various purposes Exhibit E Assets as of June 30, 2012notrliquid or.otherwise available for distribution Exhibit F , �" Balances needed to satisfy ROPS'for the current fiscal year Exhibit.G , Summary of Balances%Available for Allocation Exhibit H Management Representation Letter • • 9 Corporate Park [gm Suite 130 ' I"r"vine, California 92606 1 u PUN & McGEADY Phone: (949) 777-8800 Fax: (949) 777-8850 www.pm-llp.com INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED-UPON PROCEDURES To the:Oversight Board 61 the, Petaluma Community Development Successor Agency Petaluma, California v We have performed the required ;agreed-upon procedures ("AUP")'enumerated„in Attachment A, which were agreed to by'the California State.Controller's Office-arid the Cahforni;State Department of Finance, solely to assist the Oversight Board of the Petaluma/Community ,Development Successor Agency ("Successor Agency"); that the dissolved Petaluma Community'Development Commission ("Agency") of the City ofPetaluma, California ("City") is.complying.with its statutory requirements with respect to Assembly Bill ("AB") 1484. Management'of the City is responsible for the accounting records pertaining to statutory compliance pursuant,to'California health and Safety Code section 34179.5(c)(1) through 34179.5(c)(6). These procedures only applied to all funds ofthe,SuccessorAgcncy other than the Low and Moderate Income Housing Fund, not the Successor Agency as a whole: This agreed-upon procedures engagement,was conducted in accordance with attestation standards established by the American Institute of ;Certified, Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in the report. Consequently, we snake no representation regarding the sufficiency of the procedures described..below either for the purpose for which this report has been ieguested`or for any other purpose. We were not engaged to and',did not conduct an audit, the objective of which would be the expression of an opinion as to the;appropriateness of the financial information summarized in Exhibits, as listed in the table of contents.\Accordingly, we do,not express,such an!,opinion. Had we performed additional procedures„other matters,mighthave come to our attention that would have been reported to you. This report is intended solely for the information and use of.the;Successor Agency, the Agency, the City, California StateiController'ss Office and the California State. Department of Finance, and is not intended to be, and should not be'used by anyone other than these specified parties. This restriction-is not intended to limit distributio;iof this report, which is a matter of public.record. Irvine, California November XX, 2012 / • ATTACHMENT A- AGREED:UPON PROCEDURES AND RESULTS • ' 9 Petaluma Community Development Successor Agency Agreed Upon Procedures" AB 1 484 Due Diligence Review All Other Funds of the Successor Agency ,Page 3 Citation: 34179.5(c)(1) The dollar value of assets transferred from the former redevelopment agency to the successor agency on or about Penman' 1,2012. Procedures Performed: 1. Obtain from the Successor Agency a listing, of all assets that;were transferred^from the former redevelopment agency to the'Successor Agency on February 1/2012. Agree the'amounts on this listing to account balances e§tablished in the accounting records of theiSiiccessor Agency. Identify in the Agreed-Upon Procedures (AUP) report the amount`ofithe,assets,transferred'to the Successor Agency as of that date. �\ Results: - Reviewed trial balance reports and journal entries and noted all assets were transferred from the former redevelopment agency to the Successor- Agency effective February 1,;2012 as journal entries were posted after February 1; 2012 therefore maderetroacrive to February 1, 2012. Also noted new funds were created to account forassets,and liabilities of the Successor Agency upon RDA dissolution. See Exhibit A for the listing obtained from'thelSuccessor Agency of all assets that were transferred from the former redevelopment agency to the.Successor,Agency onFebruary 1, 2012. •t 1 1 /a Petaluma Community Development Successor Agency Agreed Upon-Procedures - AB1484 Due,Diligence Review AIl'Other Funds of the Successor Agency Page 4 Citation: 34179.5'c)(2) The dollar value of assets and cash and cash equivalents transferred after January 1, 2011, through June 30, 2012, by the redevelopment agency or the successor:agency to the city, county, or city and county that formed the redevelopment agency and the purpose of each transfer. The review shall provide documentation of any enforceable obligation that required the transfer. Procedures Performed: 2. If the.State Controller's Office has completed its review of transfers-required undei'both Sections 34167.5 and 34178.8 and issued its report regarding such review, attach a copy ofthat report as an exhibit to the AUP report. If this has;not yet occurred, perform the following procedures: A: Obtain a listing prepared :by the Successor Agency:of transfers.(excluding payments for , goods and services)_from the former redevelopment agency to,the city, county, or city and county that formed the redevelopment agency for the period'from January 1, 2011 through January 31, 2012. For each transfer, the:Successor Agency'should describe the purpose of the transfer and describe in what sense the+;transfer was required by one of the Agency's enforceable obligations or other legal requirement . Provide this listing as an attachment to l the AUP report. 13. Obtain a listing prepared by the`Successor.Agency of transfers (excluding payments for goods and services) from ,the Successor Agency to the city, county, or city and county that formed the redevelopment agency foi 'the period from February 1, 2012 through June 30, 2012. For each transfer, the'Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency's enforceable obligations or other legal requirements. Provide this listing as an attachment to the AUP report. C. For each transfer, obtain the legal document that formed the basis for the enforceable obligation that required,ahy transfer. Note in the AUP report the.absence of any such legal document:or the absence_of language in the document that required the transfer. Results: - The State Controller's Office has not completed its review of transfers required under California Health and Safety Code Sections .34167:5 and 34178.8. ;However, there were no transfers from the former, redevelopment agency to the city, county,or'city and county that:formed the redevelopment agency for the period froth Jahuary 1, 2011 through June 30, 2012. Therefore, these procedures are not applicable. • Petaluma Community Development Successor Agency Agreed,Upon Procedures AB 1484 Due,Diligence Review All'Other Funds of the Successor,Agency Page 5 Citation: 34179.5(c)(3) The'dollar value of any civil, or cash equivalents,transferred,affer Minton' 1, 2011, through June,30, 2012, by the redevelopment agency or the successor agency to any other public agency or private party and the purpose of each transfer. The review Shall provide documentation of and enforceable obligation that required the transfer. Procedures Performed: 3. If the State Controller's Office has completed' its review of transfers reci ired under,both Sections 341673 and 34178.8 and issued its report regarding such review, attaci(a copy of'that report as an exhibit to the AUP report. If this has not yet occurred, perform the following procedures: A. Obtain a listing prepared by the Successor Agency.of transfers (excluding payments for goods and services) (from the former redevelopment'agency to any other public agency or ' to private parties ft: /the period from January 1, 2011 through January 31, 2012. For each transfer, the Successor Agency should describe the,purpose of the transfer and describe in what sense the transfer was required by one-of the Agency's enforceable obligations or other legal requirements. Provide this listing,as an attachment,to the AUP report. B: Obtain a listing, prepared by the°Successor Agency of transfers (excluding payments for goods and services) [from the Successor Agency to any other public agency or private parties for the period_from February, 1, 2012 through June,30„2012. For each transfer, the Successor Agency should describe thepurpose;of the transfer and describe in what sense the transfer was required by ,one of the Agency's enforceable obligations or other legal requirements. Provide this listing;asan attachmenbto the AUP report. C For each transfer, ,obtain the legal docunierit that formed the basis for the enforceable obligation that required-any transfer. Note in the AUP report the absence of any such legal document or the absence°Maiiguage iii the document that required the transfer. Results: The State Controller's Office;has not completed its review of transfers required.under California Health and Safety Code:Secfions:34167:5 and 34178.8. However, there-were no transfers from the former redevelopment agency to:'aiiy other public agency or to private parties for the period from January 1, 2011.through.June 30,2012: Therefore,these procedures are not applicable. � I I(2—• • Petaluma Community Development Successor Agency Agreed Upon Procedures AB 1484 Due Diligence Review All Other Funds of the Successor Agericy Page 6 Citation: 34179.5(c)(4) The review shall provide expenditure and revenue accounting information and identifj transfers and funding sources for the 2010-11 and 2011-12 fiscal years that reconciles balances, assets, and liabilities of the successor agency on June.30, 2012 to those:reported,to the Controller for the,2009-10 fiscal year. Procedures Performed: ti 4. Perform the following procedures: A. Obtain from the Successor Agency a summary of the financial jtransactions of the Redevelopment Agency andt the Successor Agency in the format set forth in the attached schedule for the fiscal periods indicated in the schedule. For purposes of this summary, the financial transactions should be presented using the modified/accrual basis of accounting. End of year balances forcapital assets (in total) and long-term liabilities (in total) should be presented at the bottom of this summary schedulefforinformation purposes. B. Ascertain that for each period presented},'the'total,ofrevenues; expenditures, and transfers • accounts'fully for'the changes in equity from the previous fiscal period. C.. Compare amountsan the schedulelelevant to the"fiscal yearended June30, 2010 to the state controller's report filed for the?Redevelopment•'Agency for that-period. D. Compare amounts'in the schedule for;the other fiscal periods presented to account balances in the accounting records or other supporting schedules. Describe in the report the type of support provided for each fiscal period. Results: See Exhibit B for the summary obtaihed'from the Successor Agency of the financial transactions of the Redevelopment Agency andrtlie Successor Agency in the forrriat set forth int the attached schedule for the fiscal periodsiiniiicated(initheschedule. • • ■3 Petaluma Community Development Successor Agency Agreed Upon Procedures - AS1484 Due Diligence Review All Other Funds of the Successor Agency Page 7 Citation: 34179.5(c)(5)A separate accounting for the balance for the Lou,and Moderate Income Housing Fund for all other fluids and accournes coniliined shall he made as follows; (A) A statement of the total value Of each flint'as of June 30, 2012 Procedures Performed: 5. Obtain from the Successor Agencya-listing of all assets of the Low andJModerate1Iicome Housing Fund as of June 30, 2012 for the report that is clue October 1,.2012and a listing,of all assets of all other funds of the Successor:Agency,as of June30,2012 (excludingithe previously reported assets of the Cow and Moderate Income Housing`Fund) for the report that;i`s'due December 15, 2012. When this procedure,is applied to the Low.and Moderate.Iicome.Housing Fund,.the.schedule attached as an exhibit will include onlythose assets'of the Low'aud_Moderatelncome Housing Fund that were held by the Successor Agency as of:June 30,2012 and will exclude:all assets held by the entity that assumed the housing function previously performed by-,the former redevelopment agency. Agree the assets so listed to recorded balances reflectedtin the accounting records of the Successor Agency The listings should be attached.as an exhibit to the appropriate AUP report. • Results: ' See Exhibit C for the listing obtained from the-Successor Agency of all assets oPall other funds of the Successor Agency as of June 30, 2012 excluding the previously reported assets of the Low and Moderatelnconie Housing Fund. ",, �. • if 1 'FetaIntna Community Development Successor Agency Agreed Upon Procedures - AB 1484 Due.Diligence Review All Other Funds of the Successor Agency Page 8 Citation: 34179.5(c)(5)(B) An itemized statement listing any amounts that are:regally restricted as:to:p:.trpose and cannot be provided to taxing entities. This could.inclnde the proceeds of any'bonds, grant funds, or funds provided by other governmental entities that place conditions on their use. Procedures Performed: 6. Obtain from the Successor Agency a listing of asset balances held on June 30, 2012 that are restricted for the following purposes: A. Unspent bond"proceeds: 1. Obtain the Successor Agency's computation of-the `restricted balances (e.g., total proceeds less eligible project expenditures, amounts setdside for debt service payments, etc.) 2. Trace individual ,components of this coniputationi to related account balances in the accounting records, or to'other supporting:documentation (specify in the AUP report a description of such documentation). ,' ; f; 3. Obtain from the Successor Agency`a copy of the legal document that sets forth the restriction pertaining:to these balances. Note'iii,the AUP-report the absence of language restricting the use of the balances that were identified by the Successor Agency as restricted. Results: The listing included cash and investments of$21,832,229 in the'Debt Service Fund (Fund 5215) restricted as unspent bond proceeds.and reserves. Reviewed trust accounts with U.S. Bank and requisitions for draws.agairisbthm2007 and 2011 TaxAllocation Bonds (TAB)Project Funds. B. Grant proceeds and program.income that are'restricted by third parties: i. Obtain the Successor Agency's computation of the "restricted balances (e.g.,, total proceed less eligible project expenditures). ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the.AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the grant.agreement that sets forth the restriction pertaining'to these balances. Note in the-AUP report the absence of language restricting the use of the balances that were identified by the Successor Agency as restricted. Results: There were no grantproceeds or program income that are restricted by third parties at June 30, 2012. Therefore, these procedures are not applicable. 15- Petaluma Community Development Successor Agency Agreed Upon Procedures -'AB 1484.Due Diligence Review All Otlier^Funds of the Successor Agency Page 9 C Other assets considered4o1be legally.restricted: A. Obtain the Successor Agency's computation of the restricted balances (e.g., total. proceeds less eligible project expenditures)?, ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description ofsuch:documentation). iii. Obtain from the Successor Agency a copy of the legal document-that sets forth the restriction pertaining to;these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by,,S'uccessor the Agency as restricted. h '� Results: The listing included refundable,deposits of 8129,750'in ihe'Suteessoi-Agency Administrative Fund (Fund 54151. .Reviewed (1) the Owner Participation. Agreernent: by and between the Community Development Commission of the City,of Petalumaand'Lok,Petaluma Marina Hotel Company, LLC„a;California limited liability company',($125,000), (2) a copy of the check in the amount of $3,750 received from Petaluma Area.Cliainber of Commerce, and (3) a copy of the check in the amount of'$1,000%received frorm'Petalunia Valley Athletic'Club and noted they are, (1) assistance provided for river. front enhancement}improvements,. (2) security deposit for rental property, and (3) security deposit for land lease;respectively. Verified the documents set forth the restriction pertaining.tothosekbalances. L' D. Attach the above mentioned Successor Agency prepared schedule(s) as an exhibit to the AUP report. For each restriction identified on these schedules, indicate in, the report the period of time for whichlthe restrictions are in effect:.If the restrictions are=ineffect until the related assets are expended for their:intended purpose; this should be indicated in the report. Results: See ExhibihD for the liking-obtained fromahe Successor Agency of asset balances held on Juiie 30, 2012 that are restricted for the purposes:specified above: • l& Petaluma Community DevelopmeintSuccessor Agency Agreed Upon Procedures - AB 1484 Due Diligence Review All Other Funds of the'SuccessorAgency Page 10 Citation: 34779.5(c)(5)(C) An itemized statement of the values of any assets that are not cash or cash equivalents. This may include physical assets, land records, and•equtipnrnent' For flhe'purpose of this accounting, physical assets may he valued at purchase cost or at any recently estimated market value. The statement shall list separately housing- related assets. Procedures Performed: 7. Perform the followingprocedures: A. Obtain from theSuccessor Agency a listing ofassets_as.of June 30;;,201-2 that are not liquid or otherwise available for distribution (such as capital assets/land held for resale, long-term receivables, etc.) and ascertain if the values are listed at either'ptitchase cost (based on book value reflected in the accounting records of the Successor,•Agency) or market value as recently estimated by the'Successor Agency. Results: The listing included deposits and prepaids of'$1,059,373,and loans receivable of$234,744 in the Successor Agency Administrative Fund (Fund 5415). Reviewed the account statement as of June 30, 2012 of the Condemnation Deposits Fund, which is held by the State 'treasurer's Office, and the loan agreement for the Storefront Improvement Loan and noted they are not available for distribution as:they are not due within a reasonable period of time therefore not deemed liquid within the meaning of California Health and Safety Code section 34179:5(c)(5)(C).. See Exhibit E for the'listing,oBtained from the_Successor Agency of assets as of June 30, 2012 that are not liquid or otherwise available for distribution. B: If the assets listed.at-7(A) are listed at purchase cost, trace the amounts to a previously audited,finaricial:statement (or to the accounting records of the Successor Agency) and note any differences.. .Results: , Noted no differences. 17 Petaluma Community Development Successor Agency Agreed Upon Procedures AB 1484,Due Diligence•Review All,Other,Funds of the,Successor Agency ,Page 11 C I For any differences noted in 7(B), inspect evidence of/disposal of the asset and ascertain that the proceeds,were.d'eposited.i ito the Successor Agency trust fun d. If the differences are due to additions.(this,generally is not expected to occur), inspect the supporting documentation and note tilecircumstances. Results: Noted no differences. Dl If the assets listed at 7(A) are listed at recently estimated market value, inspectithe evidence (if any) supporting the value and note the methodology used.:If`n'osevidence is available to support•the,value and\or methodology, note the lack of evidence. A`�� Results: The assets listed''at'7(A) ace listed,at.actual cost. • • ig Petal)ma Cam niunityDevelopment Successor Agency Agreed Upon.Procedures -A&1484:DueDiligence Review All Other'Funds>of the!$uccessor Agency Pagel2 Citation: • 34179.5(0(5)(Q)An itemized listing, of any current balances that are legally or coin:Ve finally dedicated' or restricted for the f nding of an enforceable obligation that identifies the nature of the dedication or restriction and the specific enforceable obligation. In addition, the successor agency shall provide a listing of all approved enforceable Obligations that.includes a=projection of annual spending requirements to satisfijrench obligation and a projection of annual revenues avnilable to fund those requireiuents..lf areview'finds that figure revenues together with dedicated or restricted balances are insfficient''to flinit future obligations and thiis'retention of current balances is required; itshall_identifj the amount of current balances necessary for retention. The review shall also detail tlitprojected property tali revenues and.other'general purpose;revenues tp'mbe,received,,hy the successor agency, together with both the amount and timing of the bond debt service.payments of the successor agency,for the period iii which the oversight board anticipates the successor agency Will have insufficient property tax revenue to pay the specified obligations. - • Procedures Performed: -- - 8. Perform the following procedures: A. If',the Successor Agency believes that asset balances need To be retained to satisfy enforceable obligations, obtain from the Successor Agency an itemized schedule of asset balances (resources) as of June 30, 2012 that are dedicated or restricted for the funding of enforceable obligations and perform the following,procedures.The schedule should identify the amount dedicated or restricted, the nature 'of the dedication or •restriction, the specific enforceable obligation to which the dedication or restriction-relates, and the language in the legal document that is associated with the enforceable obligation that specifies the dedication of existing asset balances toward paymentof-Thatoblig?lion. Compare all info`rriatioii On the schedule to the legal documents that form the basis for the dedication•or:restriction of the resource balance;in,question. ii. Compareall current balances to the amounts reported in the accounting records of the Successor Agency on to an alternative computation. Comparefthe'specified enforceable obligations to those that were included in the final Recognized Obligation Payment Schedule approved by the. California Department of Finance. ' iv. Attached as an exhibit to 'the report the listing obtained from the Successor Agency: Identify in the report4anylisted•balances for which the.Successor Agency was unable to provide appropriate restricting language in the legal document associated with, the enferceable•obligation. • Results: The Successor Agency does hot 'believe that asset balances need to be retained to satisfy enforceable obligations. • G1. Petaluma-Community Development Successor Agency Agreed:Upon Procedures -.AB1484 Due Diligence;Review All Other;Funds of the'Sttecesso`r.Agency page-13 B. If ithe Successor Agency believes that future revenues together with balances dedicated or restricted to an enforceablei obligation are,°insufficient to fund future obligation payments and thus retention of current balances is required, obtain from,the Successor. Agency=a schedule of approved enforceable obligations than includes a projection of the annual spending requirements to satisfy each obligation and a projection of the annual revenues available to fund those requirements. and perform theifollowing procedures: �i. Compare' the enforceable 'obli'gations to those that were approved.;by the California Department of Finance. Procedures-.to accomplish this may;include reviewing the letter 1 i• from the California Department ,of Finance, approving: the. Recognized Enforceable Obligation Payment Schedules for the si>c month,period fron`Y.January, 1', 2012 through June30,2012and for the six month period July 1y2012 through Decembef31,2012. ii. Compare the forecasted annual spending: requirements .`to the legal document supporting each:enforceable obligation. - • a. Obtain; from the Successor`Agency ifs assumptions relating to the forecasted annual spending requirements and;disclose' in ,the' report major assumptions • associated:with the projections. lb. For the forecasted annual.-revenues:- , a. Obtain from the Successor Agency'its assumptions for the forecasted annual revenues and disclose in the reportranajor assumptions associated with. the projections: Results: The Successor Agency does not believe that future revenues together-With balances•dedicated or restricted to an enforceable'obligation are insufficient to fund future obligation payments and thus retention=of current balances is'required._ C. If -the Successor Agency believes that projected` property tax revenues and other general purpose revenues, to be received by the Successor Agency ,are insufficient to pay bond debt service payments (considering;both the,timing and ,amounEof the related cash flows), obtain frbitt theISUccessor Agency a adsedule demoiSstrafifrg Yliis:insufficiency�and.apply the following procedures toltheinformation reflected in that schedule. 1. .+Compare the timing and 'amounts of bond debt service payniehts to the..relatedbond debt schedules in the bond=agreement: Il. Obtain the assumptions _for'the forecasted.. property tax revenues and disclose :major assumptions associated with.the•projections. iii. Obtain the for the forecasted other general purpose=revenues:=and disclose major assumptions.associated with the[projections'. Results: The Successor,Agency'does not believe that projected property'tax revenues and other general purpose revenues to bes received by the Successor.Agency are insufficient to pay bond debt service payments. ao Petaluma Community Development;Successor Agency Agreed Upon Procedures - AB'-1484 Due Diligence Review All Other Funds of the Successor Agency Page'14 D. If procedures•,A, B, or C"were performed, Calculate:the;amount of current unrestricted balances necessary for retention in order to meet the enforceable obligations by performing the following procedures. i. Combine the amount of identified current dedicated or-'restricted balances and the amount of forecasted annual revenues to the amount of total resources available to fwidSenforceahle obligations. ii. Reduce the amount of total resources available by the amount forecasted for the annual spending,requirements. A negative result indicates the amount of current unrestricted balances that needs to be retained. in Include the calculation in.the AUP report: Results: Since procedures A,B„or C were not performed, this proceduFeismotapplicable. • ' I Petaluma Community Development Successor Agency Agreed Upon Procedures - AB 1484 DueDiligence Review AlCOther Funds of the Successor Agency Page 15 Citation: 34179.5(c)(5)(E) An itemized list and nnalysis of any amounts of current balances that are needed to satisfy obligation's that will be placed orr the Recognized Obligation Payment Schedules for'the current fiscal year. Procedures Performed: 9. If the Successor Agency believes thatcash balances as.of June 30,.2012.need to beretained to satisfy obligations on the Recognized Obligation Payment Schedule (ROPS) for the period of July 1, 2012 through June 30, 2013, obtain a copy of the final ROPS for the period,'of July 1; 2012 through December 31, 2012 and a copy of the final ROPS for the period 1anuar Y 1 ~2013 through June 30, 2013. For each obligation listed on the ROPS, the y Successor Agenc should add columns identifying (1) any dollar amounts of existing cash that are needed to'Satisfy. that obligation and (2) the Successor Agency's explanation as to why the Successor. Agency believes that such balances are needed to satisfy the obligation. Include'this schedule as an attachment to the AUP report. Results: The Successor Agency received a payment of $3,111,384 on June 6, `2012 from the Sonoma County Auditor-Controller's Office for the Recognized Obligation Payiiient Schedules (ROPS) for the period of July 1, 2012 to December 31, 2012. Also, the payment received for ROPS for the period of January 1, 2012 to June 30, 2012 had a remaining balancejof$1;944,010 as.of June 30, 2012. ROPS for the period of January 1, 2013 to June 30, 2013 included enforceable' obligations disqualified by the Department of Finance (DOF). Meet and Confer'With DOF has been;scheduled to appeal the ruling. • See Exhibit F for balances needed to.satisfy ROPS for the current fiscalyear. Petalunia'Community:Development''Successor Agency Agreed,Upon Procedures - AB 1484 Due Diligence Review All Funds.of the Successor Agency Page 16 Citation: 34179.5(c)(6) The review shall total the net balances available,after deducting the total amounts described in subparagraphs (B),,to (E), inclusive; of paragraph.(5). ,The review shall add any amounts that mere transferred as identified in paragraphs (2) and (3) of subdivision (c)'if an enforceable obligation to Hake that transfer did not exist. Thelresulting sum shall be available for allocation to affected taring entities'pursuant to Section 34179.6: It shall be a;rebuttable presumption thaEcash and cash. equivalent balances available to the:successor agency are available and sufficient to disbuese'the aniountdeterniined in this paragraph to_taxing entities If the review finds that there arc insufficient cash balances to transferor that cash or cash egtirvnlents are;specifically obligated to the purposes described in,subparagraphs^(B), (D), and (E),of paragraph (5) in:such auwuntsthat there is insufficient cash to provide the full amount deternuned pursuant to this paragraph tlat.amount shall he demonstrated in an additionahiteniized schedule. Procedures Performed: 10. Include (or present) a scheduleid'etailing the computation of the Balance Available for Allocation to Affected Taxing;Entities. Amounts included,in the Calcillationt should:.agree to-the results of the procedures performed in each section above. ,The+schedule ishould also include a deduction to recognize amounts already paid toe the County Auditor-Controller on July.12, 2012 as directed by the California Department of Finance: The amount of tjis deduction presented Should be agreed to evidence of payment. The attached example summary schedule may be considered for this purpose.Separate schedules;sl ouldbe`completed:for the Low and Moderate Income Housing Fund and for all other funds combined (excluding the'Low and:Moderate Income Housing Fund). Results: The total amount of assets heldlby..the Successor Agency asrof,June 30, 2012,included the amount to be remitted:to the County for disbursement to taxing entities for-the Low and Moderate Income Housing Fund. See Exhibit C far schedule detailing1hecompu tation of the Balance Available for Allocation to Affected Taxing Entities. - �3 P,ettaluma Community 1Yevelopment Successor,Agency Agreed Upon Procedures;- AB 1484,Due Diligence.Review All Obliet,Funds obthe'Sbccessor Agency Page 17' Managenient Representation Letter 11. Obtain a representation letter from Successor Agency management acknowledging their responsibility for the data provided to the practitioner, and the data presented in the report or in any attachments to the report. Included in the represehtatiohsishould be an acknowledgment that management is not aware of,any transfers (as defined by Section 341795) from either the former redevelopment agency or"the,Successor Agency to other parties-for,the period;from January 1, 2011 through June 30, 2012 that havenot-been properly identified,in the AUP rep ?t and its related exhibits. Management's refusal to sign the representation letter should be noted in the AUP report as required by attestation standards. Results: i ` See Exhibit H for Management Representation Letter. I , g ,1 EXHIBITS Exhibit A All assets transferred from the former redevelopmentager cy to the Successor Agency on February 1,2012 • Exhibit B Summary of Financial Transactions Exhibit C Assets'of all other funds of the,Successor Agency as of June-30,-2012 Exhibit D Asset;balance§held oil June-30, 2012 restricted for various purposes Exhibit E Assets as of June 30, 2012: not-lit' idi t btlierwise,availalile for distribution Exhibit F Balances needed;to,satisfy ROES for the current_fiscal year Exhibit G Suriiniary of Balance-s Available.for Allocation Exhibit H Management Representation Letter I � PetalumaCommun,ty Development St eeSS 'r,Agacy AlliOtherFunds of°the Successor Agency Agreed,Upon t rocedures - AB'1484 For theyear ended June_30;2012 EXHIBIT A j All assets,transferred from the former redevelopment agency to the Successor Agency on February 1,'2012 RedevelopnientA"geicy Redevelopment 7 Months Ended 1/31/2012. Agency :Debt Service Capital'projects Administration 7 Months Ended Fund,5200 Fbnd 5300 'Prini1 5400 1/31/2012 ASSETS Cash and investments $ 416315 $ 1,817,447 -$ 12,468,704 $ 14,702,466 Restricted cash'and investments 588 24,155,626 24,156,214 Receivables Intergovernmental receivable 62;450 62,450 Deposits and prepaids 1,059;3-73 1,059373 Loa_ns-receivable _ :235,580 235,580 Total Assets $ '416;903 $ 25,973,073 $' 73,826107 $ 40;216,083 Deposits and prepaids State Treasurer's Office Condemn tion Deposits Fund Syers Properties 5 388,373. • The Novak Property,-LL C :671;000 "Total deposits and prepaids $ 1;059,373' • Loans'receivable Storefront Improvement.Loan $ ,235,580 Total loans.receivable $ 235,580 • Petalun a Community Development'Successor Agency All Other Funds of the'SuccessorAgeicy Agreed Upon'Procedures,-AB 1484- F,or'the year ended Jiine•30;2012, EXHIBIT B Summary Of Financial Transactions, Redevelopment Redevelopment Redevelopment Successor Agency .Agency Agency Agency '12 Months Ended 12 Months Ended 7 Months'Ended 5 Months Ended 6/30/2010 6/30/2011 .1/31/2012 6/30/2012 ASSETS Cash and investments: $ 10,378,060 $ 10,504,336 $1 14;702,466 $ 14,256,790 Restricted cash and investments 17,131,971 28;329,760 24,156,214 21,832,229 Receivables( Accounts'receivable,net 37,086 25,426 - - Intergovernmental receivable 214,782 881869 62,450 49,319 Deposits and prepaids 127 671,000' 1,059,373 1,059,373 Loans receivable 251,670 241,105 235,580 234,744 Total Assets 28,013,696 - 39,860;496. 40;216,083 37,432,455 LIABILITIES Accounts payable 152,003 .277,330 79,598 71,710 Wages payable 6,470 19,354 18,614 4,428 Deferred revenue 591 500 - Refu Refundable deposits 129,750 129,750 129,750 129,750 Total Liabilities 288,814 426,934 227,962 205,888 Total Pond Balances 27;724,882 39,433;562 39,988,121 37,226,567 Total Liabilities and Fund Balances 28,013,696 39,860,496 40,276,1183 37,432,455 Total Revenues 14,191,782 13,274,020 5,894,348 3,106,319 Total Expenditures (18,889,696) (14,050,213) (5,263,388) (4;414445) OTl IER FINANCING SOURCES(USES) 4,842,235' 12;484,873 (76,401) 38,531,693 NET CHANGE IN FUND BALANCES 144,321 11,708;680 554,559 37;226,567 BEGINNING FUND BALANCES?(DEFICIT): 27580;561 27,724;882 ,39;433,562 ENDINGFUND BALANCES(DEFICIT) $' 27,724,882 $" • 39;433,562 $ .391988,121 $ 37,226,567 Other Information(show,year end balances:for'.all four periods presented): Capital assets as of end of year $ 11,503,078 $ - $ - $ - Long-turn debt as of end ofyear $ 71,144,879 $ 84056,574 $ 81,056,574 $ 79,113;269 • , I ,i a7 Petaluma'Community DevelopmentSilccessorAgeny All Other Funds of+the Successor-Agency. Agreed Upon Procedure`s- AB1484 For the year ended'June 30,2012 EXHIBIT C Assets of'all.other funds of'thelSuccessorAgency `Successor/Agency Successor 5'Months Ende''6/3072012 Agency Debt Service Capital Projects• Administration Trust 5 Months Ended FundI5215 Fund 5315 .Fund 5415 Fund 8195 6/30/2012 ASSETS .' Cash and investments $ 4,736;859. 5 199,314 $ .9,267,349. $ 52,996 $ 14,256,518 Restricted cash and investments 21,832;229, 1 21,832,229 'Receivables Intergovernmental receiable 49,319 49,319 Deposits and prepaids 1_,059,373 1,059,373 Loans'receinable 234;744 234,744 Total.Assets $ 26,569,088. .$ 199,314 1$. 10,610;785 $ 52,996 $ 37,432,183 • Deposits and'prepaids State Treasurer's Office Condemnation deposits kind Syers Properties $ 388;373 The Novak Property,l;I.0 671,000 'I'otal:deposits and prepaids ,$. 1,059,373' Loans receivable Storefront Improvement Loan .$ 231;744 'I'otaltloans receivable $ .234;744 • • � I ' Wig. Petaluma Community Development Successor Agency All Other Funds of the Successor Agency Agreed Upon Procedures- AB 1484 For the year ended June 30,2012 EXHIBIT D Assetbalances held June30,-2012 restricted for various purposes Successor Agency 5 Months Ended Description 6/30/2012 RESTRICTED ASSETS _ Restricted cash and investments ' Debt Service Fund 5215 Unspent 2007 TAB proceeds $ 10,666,292 Debt Service Fund 5215 Unspent_2011 TAB proceeds 10,027,961 Debt Service Fund 5215 .2011,TA 6,reserves 1,137;367 Debt Service Fund 5215 Miscellaneous 609 Refundable deposits Administrative Fund 5415 Assistance provided for river front enhancement improvements 125,000 Administrative Fund 5415 Security deposit for rental property 3,750 Administrative Fund 5415 Security deposit for land:lease 1,000 Total Restricted Assets $ 21,967 979 • I i a9 • Petaluma Community Development Successor'Agency All Other;Funds,of the Successor Agency Agreed'Upon Procedures- AB;1484' For the year ended June 30,2012 :EXHBIT:E Assets as of June 30,2012 not liquid or otherniiseiaVailable for distribution Successor Agency 5 Months Ended Descriptioif 6/30/2012 NON'-LIQUID ASSETS Deposits andprepaids Administrative Fund 5415 St<itc:Trcasu rcrs Office CondemnatiimjDcposits Pimd Syets Properties, $ 388,373 The Novak Property, LLC 671,000 Loins receivable Adni inistrative.Fund 5415 Storefront Improvement Loan 234;744 1 Tdta l Non-Liquid Assets $ 1,294,117 • • f f , ! ✓ Retain ma,Community Elevelopment;$uccessor Agency All Other Funds ofithe Successor'Agency Agreed Upon Procedures - AB1484 For the year ended June 30, 2012 EXHIBIT F Balances needed to-satisfy ROPS for the•currentfiscal year ROPS for the period of July 1,2012 to Protect Name/Debt Obligation Description/Project Scope December 31,2012 TAB-2001A Tax Allocation-Bonds Binds issued to fund non-housing.projects $ 204,525 TAB-2003A Tax AllocationBonds 'Bonds issued to fund non-housingpprojects 748,843 TAB-2005'A Tax Allocation'Bonds Bonds issued to fund non housing!projccts. 522;869 TAB-2007A Tax Allocation.Bonds Bonds issued to fund non-housing•projects 798,906 TAB-2011 Tax ARocatloir Bonds Bonds issued to fund non housingiprojects. 597,720 PM-Financial Administration- Fiscal oversight on bonds and.Trustee Fernand Adiiiiii 34,500 CIP+Station Area Master Plan. .Prolect:Management 7500' CIP-Underground Tank Remediation Project Management 11,225- . MISC-Office Equipment Lease Officeeituipment 3,096 MISC-Legal Services Legal!Services 25000 MISC-SMART Lease 'Railroad Depot lease 64100 MISC-Ice House Lease Commercial lease for SMART 1,200 MISC-LegalScrvices-Oversight Board` Oversight Board legal services .25,000 ADM--Administrative payments Administrative Payment 125,000 Payment received for ROPS II.on June 6;2012 3,11.1;384. Remaining balance on payment'received.for ROT'S I 1,944,010 Balances needed to satisfy ROPS,for the current fiscal year 5,055,394 • • rt 31 Petaluma Community Deyelopment;Successor Agency All Other;Fu nds'of-the$uccessor:Agency Agreed'Upon Procedures - AB 1484. Fbri the year ended June 30;2012 EXHIBIT G Summarydf Balances*'Available for Allbcation Total amount of assets held by the Successor,Agency as of June 30;2012(Exhibit c) $ 37,432;183 Amount to be remitted to county for d ishu rsement to taxing entities for Low and.Moderate Income Housing Fund (672,528) Less assets legally restricted for usesspecified:by'debtcohenants,.grant restrictions,or restrictions imposed,by other`governments'(Ezhibit D) (21,961,979) Less assets that are not cash or cash equivalents (i.e. physical:assets)(Exhibit F) (1,294,117) Less payment received for ROPS II on;June 6,2012.(Exhibit F) (3311,384) Less remaining balance on payment received for ROES L(Exhibit F) (1,944,010) Amount to be remitted to county for disbursement to taxing entities $ 8,448,165 Note that sepal-ale corupitlotions re✓equired forthe.Loui mid Moderate!meanie Housing Fund held by the Successor Agency and for all other fiinds held by:the SuccessorAgenn/. NOTES:For each line shown above,an Exhibit is attached showing the composition of the summarized amount. I • '32 Petaluma!Community Development.Successor,Agency All Other Funds olithe Successor Agency Agreed Upon Procedures - AB 1484 For the year ended'June r30,2012 EXHIBIT H Management Representation Letter • 33