O V E R S IG H T B O A R D R E SO L U T IO N N U M B E R OB-2012-22 A RESOLUTION O F T H E OVERSIGHT B O A R D FO R C IT Y OF SA N D IE G O R E D E V E L O PM E N T SU C C E SSO R AGENCY A P P R O V IN G T H E T H IR D R E C O G N IZ E D OBLIGATION P A Y M E N T S C H E D U L E FO R JA N U A R Y T H R O U G H JU N E 2013 (R O PS 3 ), THE SIX -M O N T H ADMINISTRATIVE B U D G E T O F T H E SU C C E SSO R A G E N C Y CORRESPONDING T O R O PS 3 , A N D ASSOCIATED ACTIONS. (O B -20 12-22) W H E R E A S, the form er R edevelopm ent A gency o f the C ity o f S an D iego (Form er R D

A) adm inistered the im plem entation o f various redevelopm ent projects, programs, and activities w ithin designated redevelopm ent project areas throughout the C ity o f San D iego (C ity); and W H E R E A S, in accordance w ith A ssem bly B ill x l 26 (A B 26), the Form er R D A dissolved as o f February 1, 2012, at w hich tim e the C ity o f San D iego, solely in its capacity as the designated successor agency to the Form er R D A (Successor Agency), assum ed the Former RDA's assets and obligations; and

WHEREAS, the Successor A gency is w inding dow n the Form er RDA's affairs in accordance w ith A B 26, enacted on June 28, 2011, and A ssem bly B ill1484 (A B 1484), enacted on June 27 , 2012 (collectively, the D issolution L aw s); and

WHEREAS, the O versight B oard has been form ed to oversee certain actions and decisions o f the Successor A gency in accordance w ith the D issolution L aw s; and

WHEREAS, the San D iego C ounty A uditor-C ontroller (C ounty A uditor), the State C ontroller, and the State D epartm ent o f Finance (D O

F) also possess certain rights and obligations under the D issolution L aw s w ith respect to the Successor Agency's administration of the Form er RDA's operations; and W H E R E A S, pursuant to C alifornia H ealth and Safety C ode

section 3 417 7 (1), Successor A gency staff must prepare a R ecognized O bligation Payment

Schedule (R O PS) on a forward- D ocum ent N um ber: 427064

(O B -20 12-22) .. . - .. looking basis for each six-m onth fiscal period, show ing the paym ents to be m ade tow ard enforceable obligations and the funding source for the paym ents; and W H E R E A S, Successor A gency staffhas prepared the proposed third R O PS covering the period from January 1, 2013 through June 3 0, 2013 (R O PS 3 ), a copy ofwhich is included as A ttachm ent A to the S taff R eport accom panying this item (S taff R eport), and w hich is incorporated herein by reference; and W H E R E A S, C alifornia H ealth and Safety C ode

section 34171(d)(l)(

F) confirm s that contracts necessary for the adm inistration or operation o f the Successor A gency, including, but not lim ited to, agreem ents concerning litigation expenses related to assets or obligations, settlem ents and judgm ents, and agreem ents related to the costs o f m aintaining assets prior to disposition, are enforceable obligations; and W H E R E A S, all contracts and agreem ents betw een the C ity and the Form er R D A that are included in R O PS 3 w ere m ade for legitim ate redevelopm ent purposes and w ill be o f benefit to the local taxing entities; and W H E R E A S, C alifornia H ealth and Safety C ode

section 34177.3(

b) states that the Successor A gency m ay create new enforceable obligations to conduct the w ork o f w inding down the Form er RDA's operations, including hiring staff, acquiring necessary professional adm inistrative services and legal counsel, and procuring insurance; and W H E R E A S, R O PS 3 includes a line item for costs, up to an aggregate m axim um of $ 500,000 during the applicable six-m onth period, that the Successor A gency m ay incur, above and beyond the costs estim ated in specific line item s in R O PS 3 , for m anagem ent and security of properties and other assets, and unforeseen litigation and claim s; and D ocum ent N um ber: 427064

(O B -20 12-22) · W H E R E A S, R O PS 3 also includes a line item for costs, up to an aggregate m axim um of $ 500,000 during the applicable six-m onth period, that the Successor A gency m ay incur, above and beyond the costs estim ated in specific line item s in R O PS 3 , in order to w ind dow n the R edevelopm ent A gency's operations in an orderly fashion and to avoid or m inim ize liabilities, including, but not lim ited to, exposure to claim s or litigation; and W H E R E A S, with respect to the tw o above-described line item s in R O PS 3 , the additional costs that m ay be incurred by the Successor A gency are not yet identified under an existing contract w ith a specific payee; and W H E R E A S, the D O F r.eleased an updated tem plate o f the R O PS on or about A ugust 1, 2012, made further revisions to that tem plate on or about A ugust 9 , 2012, and distributed written guidance regarding the contents ofR O P S 3 on A ugust 23 , 2012; and W H E R E A S, Successor Agency staff has updated R O PS 3 to reflect the DOF's release of the revised, mandatory R O PS tem plate, and is evaluating the DOF's m ore recent w ritten guidance to determ ine w hether any additional changes to R O PS 3 w ill be required; and ~ W H E R E A S, California H ealth and Safety C ode

section 34177(

m) requires the Successor Agency to obtain the O versight B oard's approval ofROPS 3 and to subm it R O PS 3 to the DOF by Septem ber 1, 2012 (w hich is automatically extended to Septem ber 4, being the first business day after Septem ber 1), and subjects both the C ity and the Successor A gency to specified civil penalties in the event that ROPS 3 is not tim ely subm itted to the D O F; and

WHEREAS, C alifornia H ealth and Safety C ode

section 34179(

h) provides the D O F with a review period on ROPS 3 , during w hich the D O F w ill m ake a determ ination on the am ount of enforceable obligations and the proposed funding sources and m ay elim inate or m odify any item on R O PS 3 prior to its approval; and D ocum ent Number: 427064

(OB-2012-22) W H E R E A S, based on C alifornia H ealth and Safety C ode section34177(m), the Successor A gency m ay, w ithin five business days after the DOF's determination on R O PS 3, request additional review by the D O F and an opportunity to m eet and confer w ith the D O F on disputed item s in R O PS 3 , and the D O F m ust notifY the Successor A gency and the County A uditor regarding the outcome o f its additional review at least 15 days before the date of the County A uditor's sem i-annual distribution o f property taxes related to ROPS 3 ; and W H E R E A S, California H ealth and Safety C ode

section 3 4182.5 enables the County A uditor to deliver w ritten notice by O ctober 1, 2012, objecting to the inclusion of any item s in R O PS 3 that are not dem onstrated to be enforceable obligations, and further enables the O versight B oard, in response to the C ounty A uditor's objection, to refer any disputed R O PS 3 item to the D O F for a determ ination o f w hat w ill be approved for inclusion in R O PS 3 ; and W H E R E A S, C alifornia H ealth and Safety C ode

section 341770) requires the Successor Agency to prepare, and to subm it to the O versight B oard for approval, an adm inistrative budget for each upcom ing six-m onth fiscal period, estim ating the adm inistrative costs to be expended during the applicable fiscal period, identifying the proposed sources o f paym ent for such adm inistrative costs, and identifY ing proposed arrangem ents for adm inistrative and operations services provided by a city or other entity; and

WHEREAS, Successor A gency staffhas prepared a proposed six-m onth Administrative and Project M anagem ent B udget for the Successor A gency covering the period o f January 1, 2013 through June 3 0, 2013 (R O PS 3 A dm inistrative B udget), a copy ofwhich is included as Attachment B to the S taff Report, and w hich is incorporated herein by reference; and W H E R E A S, the R O PS 3 A dm inistrative B udget includes the total am ount of $4,195,500, ofw hich $2,800,750 is allocated to adm inistrative costs and $1,394,750 is allocated to project- D ocum ent N um ber: 427064

(OB-2012-22) specific costs and litigation costs, as such categories of costs are described in C alifornia H ealth and Safety C ode

section 3 417 1 (b); and

WHEREAS, the R O PS 3 A dm inistrative B udget contem plates the Successor A gency's paym ent of funds to the C ity in exchange for the provision o f certain services by the C ity and a City-owned nonprofit public benefit corporation related to w inding down the Form er RDA's affairs; and W H E R E A S, the O versight B oard's decisions regarding approval ofROPS 3 and the R O PS 3 A dm inistrative Budget w ill not becom e effective until after those decisions have been approved or deem ed approved by the D O F in accordance w ith California H ealth and Safety Code

section 3 417 9 (h), subject to the outcome o f any m eet-and-confer process on R O PS 3 initiated by Successor A gency staffw ith the DOF. N O W , T H E R E FO R E , B E IT R E SO L V E D by the Oversight B oard as follows: 1. R O PS 3 is hereby approved, w ith the proviso that Successor A gency staffis authorized to include in R O PS 3 the additional am ounts of pass-through paym ents dem anded in w riting by the San D iego Unified School District and the San D iego C om m unity C olleges District after the docketing of R O PS 3.

T he Oversight B oard reserves the right to revisit the content ofROPS 3 in the future based on the outcom e ofthe agreed-upon procedures audit which is anticipated by O ctober 1, 2012, and any objections raised by the C ounty A uditor or the DOF. 2.

Successor A gency staffis authorized, w ith the approval o f O versight B oard legal counsel, to m ake any necessary adjustments to R O PS 3 based on recent changes m ade by the D O F to the m andatory R O PS form at, as w ell as w ritten guidance from the DOF transm itted after the distribution of the updated R O PS form at, provided that the substantive content ofROPS 3 rem ains substantially the same. D ocum ent N um ber: 427064

(OB-2012-22) 3. T he R O PS 3 Administrative B udget is hereby approved . 4. T he Successor A gency is authorized to m ake paym ents in accordance w ith the R O PS 3 A dm inistrative Budget , utilizing the funding sources identified therein . 5. T he Successor A gency is authorized to enter into services contracts, management contracts and sim ilar contracts , and am endm ents to existing contracts o f that nature , for items that are budgeted in the approved R O PS 3 , consistent w ith C alifornia H ealth and Safety Code Sections 34171(d)(l)(

F) and 34177. 3(b). 6. T he O versight Board ' s approval ofROPS 3 is conditioned upon the following reservation o f rights: the O versight B oard approves the item s listed in the payment

schedule for the R O PS, but reserves the right to revisit those item s in the future based on any objections or questions subsequently raised by the C ounty Auditor-Controller , the State Department of Finance , any m em ber(

s) ofthe public , and any m em ber(

s) o f the O versight B oard. PASSED AND ADOPTED by the O versight B oard at a duly noticed m eeting ofthe O versight B oard held on A ugust 28, 2012. T he Oversight Board adopted bifurcated m otions with respect to the action item s in this Resolution. In one m otion, the O versight B oard approved the line item s in R O PS 3 showing San D iego G as & E lectric and / or Sempra E nergy as the payee o f an enforceable obligation. T hat m otion w as adopted by a vote o f 4 to 0, w ith C hair Nelson and Board M em ber D avies abstaining, and B oard M em ber D ow d absent.

In another m otion , the O versight B oard approved all other action items addressed in this Resolution , w ith the exception o f the item addressed in the first motion. T hat second motion w as adopted by a vote of 5 to 1 , w ith Board M em ber Davis voting no and B oard M em ber Dowd absent. C hair, O versight Board Document Numb e r: 427064

(OB-2012-22) V ice-C hair, Oversight Board D ocum ent N um ber: 427064