RDA Asset Transfer Review 1/1/2011 - 1/31/2012POWAY REDEVELOPMENT AGENCY
Review Report
ASSET TRANSFER REVIEW
January 1, 2011, through January 31, 2012
Betty T. Yee
California State Controller
May 2015
BETTY T. YEE
California State Controller
May 19, 2015
Scott Edwards, Director of Administrative Services
Successor Agency /City of Poway
13325 Civic Center Drive
Poway, CA 92064
Dear Mr. Edwards:
Pursuant to Health and Safety Code section 34167.5, the State Controller's Office (SCO)
reviewed all asset transfers made by the Poway Redevelopment Agency (RDA) to the City of
Poway (City) or any other public agency after January 1, 2011. This statutory provision states,
"The Legislature hereby finds that a transfer of assets by a redevelopment agency during the
period covered in this section is deemed not to be in furtherance of the Community
Redevelopment Law and is thereby unauthorized." Therefore, our review included an assessment
of whether each asset transfer was allowable and whether the asset should be turned over to the
Successor Agency.
Our review applied to all assets including, but not limited to, real and personal property, cash
funds, accounts receivable, deeds of trust and mortgages, contract rights, and rights to payment
of any kind. We also reviewed and determined whether any unallowable transfers to the City or
any other public agency have been reversed.
Our review found that the RDA transferred $159,522,094 in assets after January 1, 2011,
including unallowable transfers totaling $135,831,880, or 85.15% of transferred assets. The
unallowable transfers included $96,502,200 to the City and $39,329,680 to the Housing
Authority.
However, on and after February 1, 2012, the City and the Housing Authority turned over
$135,831,880 in assets to the Successor Agency. Therefore, no further action is necessary.
Scott Edwards -2- May 19, 2015
If you have any questions, please contact Elizabeth Gonzalez, Chief, Local Government
Compliance Bureau by telephone at (916) 324 -0622 or by email at eonzalez @sco.ca.gov.
Sincerely
FF V. BROWNFIELD, CPA
Chief, Division of Audits
JVB /Is
Attachment
cc: Andrew White, Finance Manager
Successor Agency /City of Poway
Bruce Tarzy, Chair
Oversight Board to Poway Successor Agency
Richard J. Chivaro, Chief Legal Counsel
State Controller's Office
Elizabeth Gonzalez, Bureau Chief
Division of Audits, State Controller's Office
Scott Freesmeier, Audit Manager
Division of Audits, State Controller's Office
Trisha L. Quiambao, Auditor -in- Charge
Division of Audits, State Controller's Office
David Botelho, Program Budget Manager
California Department of Finance
Tracy Sandoval, CPA, Auditor Controller
San Diego County
Poway Redevelopment Agency Asse( Transfer Review
Contents
Review Report
Summary............................................................................................. ............................... 1
Background......................................................................................... ............................... 1
Objective, Scope, and Methodology .................................................. ............................... 2
Conclusion........................................................................................... ............................... 2
Views of Responsible Officials .......................................................... ............................... 2
RestrictedUse ..................................................................................... ............................... 3
Findings and Orders of the Controller ................................................. ............................... 4
Schedule 1— Unallowable Asset Transfers to the City of Poway ....... ............................... 8
Schedule 2— Unallowable Asset Transfers to the Housing Authority .............................. 14
Attachment 1—City of Poway's Response to the Draft Review Report
Poway Redevelopment Agency Asset Transfer Review
Asset Transfer Review Report
Summary The State Controller's Office (SCO) reviewed the asset transfers made
by the Poway Redevelopment Agency (RDA) after January 1, 2011. Our
review included, but was not limited to, real and personal property, cash
funds, accounts receivable, deeds of trust and mortgages, contract rights,
and rights to payments of any kind from any source.
Our review found that the RDA transferred $159,522,094 in assets after
January 1, 2011, including unallowable transfers totaling $135,831,880
or 85.15% of transferred assets. The unallowable transfers included
$96,502,200 to the City of Poway (City) and $39,329,680 to the Housing
Authority.
However, on and after February 1, 2012, the City and the Housing
Authority turned over $135,831,880 in assets to the Successor Agency.
Therefore, no further action is necessary.
Background In January of 2011, the Governor of the State of California proposed
statewide elimination of redevelopment agencies (RDAs) beginning with
the fiscal year (FY) 2011 -12 State budget. The Governor's proposal was
incorporated into Assembly Bill 26 (ABXI 26, Chapter 5, Statutes of
2011, First Extraordinary Session), which was passed by the Legislature,
and signed into law by the Governor on June 28, 2011.
ABXI 26 prohibited RDAs from engaging in new business, established
mechanisms and timelines for dissolution of the RDAs, and created RDA
successor agencies and oversight boards to oversee dissolution of the
RDAs and redistribution of RDA assets.
A California Supreme Court decision on December 28, 2011 (California
Redevelopment Association et al. v. Malosantos), upheld ABXI 26 and
the Legislature's constitutional authority to dissolve the RDAs.
ABXI 26 was codified in the Health and Safety (H &S) Code beginning
with section 34161.
H &S Code section 34167.5 states in part, "... the Controller shall review
the activities of redevelopment agencies in the state to determine whether
an asset transfer has occurred after January 1, 2011, between the city or
county, or city and county that created a redevelopment agency or any
other public agency, and the redevelopment agency."
The SCO identified asset transfers that occurred after January 1, 2011,
between the RDA, the City and /or any other public agency. By law, the
SCO is required to order that such assets, except those that already had
been committed to a third party prior to June 28, 2011, the effective date
of ABX1 26, be turned over to the Successor Agency. In addition, the
SCO may file a legal action to ensure compliance with this order.
-1-
Poway Redevelopment Agency Asset Tranwfer Review
Objective, Scope, Our review objective was to determine whether asset transfers that
and Methodology occurred after January 1, 2011, and the date upon which the RDA ceased
to operate, or January 31, 2012, whichever was earlier, between the city
or county, or city and county that created an RDA or any other public
agency, and the RDA, were appropriate.
We performed the following procedures:
• Interviewed Successor Agency personnel to gain an understanding of
the Successor Agency's operations and procedures.
• Reviewed meeting minutes, resolutions, and ordinances of the City,
the RDA, the Successor Agency, and the Oversight Board.
• Reviewed accounting records relating to the recording of assets.
• Verified the accuracy of the Asset Transfer Assessment Form. This
form was sent to all former RDAs to provide a list of all assets
transferred between January 1, 2011, and January 31, 2012.
• Reviewed applicable financial reports to verify assets (capital, cash,
property, etc.).
Conclusion Our review found that the Poway Redevelopment Agency transferred
$159,523,094 in assets after January 1, 2011, including unallowable
transfers totaling $135,831,880, or 85.15% of transferred assets. The
unallowable transfers included $96,502,200 to the City of Poway (City)
and $39,329,680, to the Housing Authority.
However, on and after February 1, 2012, the City and the Housing
Authority turned over $135,831,880 in assets to the Successor Agency.
Therefore, no further action is necessary.
Details of our findings are described in the Findings and Orders of the
Controller section of this report.
Views of We issued a draft review report on December 17, 2014. Scott Edwards,
Responsible Director of Administrative Services, responded by letter dated
January 23, 2015, partially disagreeing with the review results. The
Officials City's response is included in this final review report as an attachment.
-2-
Poway Redevelopment Agency Asset Transfer Review
Restricted Use This report is solely for the information and use of the City of Poway, the
Successor Agency, the Oversight Board, Housing Authority, and the
SCO. It is not intended to be and should not be used by anyone other
than these specified parties. This restriction is not intended to limit
distribution of this report, which is a matter of public record when issued
final.
JEFFREY V. BROWNFIELD, CPA
Chief, Division of Audits
May 19, 2015
-3-
Poway Redevelopment Agency Asset Trawler Review
Findings and Orders of the Controller
FINDING 1— The Poway Redevelopment Agency (RDA) made unallowable asset
Unallowable asset transfers of $96,502,200 to the City of Poway (City). The transfers
transfers to the occurred after January 1, 2011, and the assets were not contractually
City of Poway committed to a third party prior to June 28, 2011.
The unallowable transfers were as follows:
On January 18, 2011, the RDA adopted Resolution No. R -11 -02
approving and restating the Cooperation Agreement between the
RDA and the City and the repayment of a loan owed by the RDA to
the City. A total of $18,778,448 in loan repayments were made on
various dates during the period of January 1, 2011, through
January 31, 2012.
• On March 11, 2011, the RDA adopted resolution R11 -06, to amend
the Cooperation Agreement between the RDA and the City, and
resolution R11 -07, to transfer assets and obligations from the RDA
and the City. Transfers were made on and after March 11, 2011. The
transfers included the following:
Cash
$ 12,991,060
Note Receivable
7,680,253
Land held for resale
1,029,392
Land
17,527,517
Building and Improvements
17,581,602
Infrastructure
11,016,803
Construction in process
9,897,125
Total transfers $ 77,723,752
Pursuant to Health and Safety (H &S) Code section 34167.5, the RDA
may not transfer assets to a city, county, city and county, or any other
public agency after January 1, 2011. The assets must be turned over to
the Successor Agency for disposition in accordance with H &S Code
section 34177(d) and (e).
Order of the Controller
Pursuant to H &S Code section 34167.5, the City is ordered to reverse the
transfers totaling $96,502,200 and turn over the assets to the Successor
Agency.
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Poway Redevelopment Agency Asset Transfer Review
However, as of June 30, 2012, the City turned over $96,502,200 in assets
to the Successor Agency. This amount included the following:
Loan repayments
$ 18,778,448
Cash
12,991,060
Notes Receivable
7,680,253
Land held for resale
1,029,392
Land
17,527,517
Building and Improvements
17,581,602
Infrastructure
11,016,803
CIP
9,897,125
Total $ 96,502,200
Therefore, no further action is necessary.
City's Response
The City's response in regard to the finding was, in part:
The City respectfully disagrees with the SCO's determination for the
following reasons: (1) balances were written off because expenditures
for design had been capitalized, but no tangible asset had been
produced, (2) assets had been sold or transferred to the other entities
pre- dissolution, but had not been removed from the Redevelopment
Agency's (the Agency) records, and (3) assets had been transferred to
the City predissolution, but had not been removed from the Agency's
records.
In accordance with Health and Safety Code 34176 (b)(2), the City
elected upon dissolution of the Redevelopment Agency on February 1,
2012, to transfer the housing assets and functions previously performed
by the Redevelopment Agency to the Poway Housing Authority.
Here, the Settlement Agreement, the Stipulation and the Judgment
require that the funds be used for affordable housing purposes.
Therefore, because the City elected pursuant to Health and Safety Code
34176, to transfer the housing assets and functions previously
performed by the Redevelopment Agency to the Poway Housing
Authority, the Smith Funds are required by California state law to be in
the possession of the Poway Housing Authority.
SCO's Comment
The SCO acknowledges the receipt of additional documentation and
agrees with the City's explanation related to the transfers of various
capital assets. The Finding and Order of the Controller has been modified
accordingly.
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Poway Redevelopment Agency Asset Transfer Review
With regards to the transfer of Smith Settlement funds, the SCO
acknowledges that pursuant to H &S Code section 34176, these funds,
which were required to be used for housing purposes, are to be
transferred to the Entity Assuming the Housing Functions, the City's
Housing Authority (Authority) elected to serve. However, it is noted that
due to pending litigation between the Authority and the Department of
Finance, the Authority has yet to execute a book transfer of these funds.
We made necessary adjustments in the Order of the Controller and the
Schedule 1— Unallowable Asset Transfers to the City of Poway sections
of this report. No further action is necessary.
FINDING 2— The RDA made unallowable asset transfers of $39,329,680 to the Poway
Unallowable Housing Authority (Housing Authority). The transfers occurred after
transfers to the January 1, 2011, and the assets were not contractually committed to a
Poway Housing third party prior to June 28, 2011.
Authority On March 11, 2011, the RDA adopted the following resolutions:
• Resolution No. RI 1 -08 to transfer available funds to the Housing
Authority for the implementation of the newly adopted Cooperation
Agreement between the RDA and the Housing Authority. This
transfer was accepted by the Housing Authority via adoption of
Resolution No. Hl 1 -04 on the same date.
Resolution No. RI 1 -09 to transfer various assets from the Low and
Moderate Income Housing Fund to the Housing Authority. This
transfer was accepted by the Housing Authority via adoption of
Resolution No. H11 -05 on the same date.
Transfers were made on and after March 11, 2011. The transfers
included the following:
Cash $ 19,168,950
Land 20,160,730
Total transfers $ 39,329,680
Pursuant to H &S Code section 34167.5, the RDA may not transfer assets
to a city, county, city and county, or any other public agency after
January 1, 2011, that were not contractually committed to a third party
prior to June 28, 2011. The assets must be turned over to the Successor
Agency for disposition in accordance with H &S Code section 34177 (d)
and (e).
In accordance with H &S Code section 34176(bx2):
(b) If a city, county, or city and county does not elect to retain the
responsibility for performing housing functions previously performed
by a redevelopment agency, all rights, powers, assets, duties, and
obligations associated with the housing activities of the agency,
excluding enforceable obligations retained by the successor agency and
any amounts in the Low and Moderate Income Housing Fund, shall be
transferred as follows:
0
Poway Redevelopment Agency Asset Transfer Review.
(2) If there is one local housing authority in the territorial jurisdiction
of the former redevelopment agency, to that local housing authority.
And In accordance with H&S Code section 34177(g):
Successor agencies are required to do all of the following:
(g) Effectuate transfer of housing functions and assets to the
appropriate entity designated pursuant to Section 34176.
Order of the Controller
Pursuant to H &S Code section 34167.5, the Housing Authority is
ordered to reverse the transfers totaling $39,329,680 and turn over the
assets to the Successor Agency.
However, on and after February 1, 2012, the Housing Authority turned
over $22,033,709 in assets to the Successor Agency. This amount
included the following:
Cash $ 19,022,695
Land 2,864,759
Fiscal year end June 30, 2012 AP 16,953
Fiscal year end June 30, 2012 Lease Revenues 129,302
Total $ 22,033,709
In addition, on January 17, 2012, the Successor Agency effectuated the
transfer of $17,295,971 in land by electing the Housing Authority to
serve as the Housing Successor in accordance with H &S Code section
34176 (b)(2) and 34177 (g). Therefore, no further action is necessary.
City's Response
The City did not comment on this finding.
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Poway Redevelopment Agency Asset Transfer Review
Schedule 1—
Unallowable Asset Transfers to
the City of Poway
January 1, 2011, through January 31, 2012
Unallowable
Date Description Transfers
Loan Repayments
Fund 312 - City RDA Debt Service
702,823
03/09/11
RDA loan repayment to the City's Water Fund
$ 1,539,889
03/09/11
RDA loan repayment to the City's Water and
258,227
various
Drainage Funds
5,001,111
03/11/11
RDA loan repayment to the City's General,
6,020,831
various
Drainage, Street, Water, and Sewer Funds
7,372,560
12/31/11
RDA loan repayment to the City's General Fund
516,356
01/31/12
RDA loan repayment to the City's Sewer Fund
4,348,532
various
Subtotal Loan repayments
18,778,448
Cash transfers
various
Fund 312 - City RDA Debt Service
702,823
various
Fund 417 - City RDA CIP Housing 2001 TABS
2,279
various
Fund 424 - City RDA CIP 2001 TABS
258,227
various
Fund 425 - City RDA CIP 2003 TABS
191,678
various
Fund 426 - City RDA CIP Fund
6,020,831
various
Fund 427 - City RDA CIP Housing 2001 TABS
2,272,935
various
Fund 428 - City RDA Admin Fund
497,096
03/11/11
Fund 429 - City Special Programs (Smith
various
Settlement)
3,045,191
Subtotal Cash transfers 12,991,060
Notes Receivable transfers
03/11/11 Poinsettia note receivable 5,787,950
03/11/11 Hotel note receivable 1,892,303
Subtotal Note Receivable transfers 7,680,253
Land held for resale transfers
03/11/11 Property transfer 436 LHFR 474,974
03/11/11 Property transfer 438 LHFR 554,418
Subtotal Land held for resale transfers 1,029,392
Land transfers
03/11/11
Wanesta@Hilleary, 317 - 101 -27
202,121
03 /I1 /1I
CIVIC CNT SITE -GAMMA 77 31419339/40/41
260,199
03/11/11
CIVIC CNT SITE -13620 TEMPLE /13621
ADRIAN
394,646
03/11/11
LAND,HILLEARY PMSOUTH ACCESS
32,000
03 /11 /I1
LIBRARY SITE,WESTERN
LUMBER(POWAYRD)
375,000
03/11/11
SITE,COMMERCIAL,WESTERN
LUMBER,13137
560,323
03/11/11
1.54Acres:NW ComerTamscan@PowayRd -13100
Poway Rd APN317 -101 -06
1,158,018
03/11/11
Auto Dealership Off -Site Storage Lot @ Business
park
2,949,250
0
Poway Redevelopment Agency Asset Transfer Review
Schedule 1 (continued)
Unallowable
Date Description Transfers
Land transfers (continued
03/11/11
2 Acres Commercial Midland Road Old Poway
03/11/11
Park Agency Owned
03/11/11
Big Stone Lodge acquisition (Deposit)
03/11/11
14038 York Escrow Close on Field Property
03/11/11
Acquisition
03/11/11
14055 York Ave Escrow Close on Field Property
03/11/11
Acquisition
03/11/11
14152 Sycamore Ave
03/11/11
14152 Sycamore Ave Escrow Close on Field
03/11/11
Property Acquisition
03/11/11
14134 Sycamore Ave
03/11/11
Auto Dealership Off -Site Storage Lot (5 Acre
03/11/11
Industrial Park - RDA Owned)
03/11/11
14134 Sycamore Ave 314 - 201 -20
03/11/11
12237 Old Pomerado Road 317- 232 -22 (Big Stone
03/11/11
Lodge)
03/11/11
Dunster Property 317- 540 -73
03/11/11
13033 Poway Rd, 317 - 472 -18
03/11/11
14146 Sycamore. 314 - 201 -19
03/11/11
14056 York, 314 -214 -05
03/11/11
14049 York,
03/11/11
Property Field Acquisition
03/11/11
Dunster Property 317-540-73
03/11/11
Property Field Acquisition
03/11/11
LAND,BREIHAN PROPTY,ESCROW
DEPOSIT(COMM)
03/11/11
LAND,E OF COMMUNITY,SOF CIVICCNT
RD,BREI
Subtotal Land transfers
Buildin¢ and Improvement transfers
03/11/11
STARRIDGE PARK RESTROOM
03/11/11
GARDEN PARK RESTROOM
03/11/11
CHAIN LINK FENCE AT COMMUNITY PARK
03/11/11
JOINT USE FACILITY -CNT FOR PERF ARTS
03/11/11
TWIN PKS MULTI -PURP CNT
IMPROVEMENTS
03/11/11
TWIN PKS MULTI -PURP CNT
IMPROVEMENTS
03/11/11
COMMUNITY PARK REST ROOM BLDG
03/11/11
COMMUNITY PARK RST RM -BLDG
UTILITIES
03/11/11
COMMUNITY PARK RST RM -BLDG
03/11/11
COMMUNITY PARK RSTRM -BLDG
03/11/11
BACKSTOP, INSATLL
03/11/11
RESTROOM COMPLETION
03/11/11
PERF ARTS CNT CIP CLOSED
03/11/11
CPA JOINT USE FACILITY
in
1,348,988
50,000
312,198
321,400
5,000
296,115
5,000
7,695
343,800
809,671
160,000
4,601,382
458,026
412,672
5,000
570,200
88,950
140,638
84,250
1,574,975
17,527,517
105,030
104,005
9,620
180,039
6,340
14,834
13,467
48,383
6,768
7,384
9,539
11,250
7,923,004
82,213
Poway Redevelopment Agency Asset Transfer Review
Schedule 1 (continued)
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Unallowable
Date
Description
Transfers
Building and Improvement transfers (continued)
03 /I1 /I1
Meadowbrook Multi- Purpose Room
157,563
03/11/11
Meadowbrook Multi- Purpose Room
100,000
03/11/11
Meadowbrook Multi- Purpose Room
300,000
03/11/11
Meadowbrook Multi- Purpose Room
150,000
03/11/11
Meadowbrook Multi- Purpose Room
150,000
03/11/11
Meadowbrook Multi- Purpose Room
119,042
03/11/11
GYM,MEADOWBROOK
SCHOOL,PO# 18602,PAY #6
49,579
03/11/11
GYM,MEADOWBROOK
SCHOOL,PO# 18602,PAY #9
158,108
03/11111
GYM,MEADOWBROOK
SCHOOL,PO# 18602,PAY# 10
118,295
03/11/11
TRACK RAILROAD,65LB,MISLAND RD PARK
13,359
03/11/11
RESTROOM BLDG,HILLEARY PRK,PAY #1
12,375
03/11/11
FENCE, 12'
W /GATES &WINDSCREEN,HILLEARYPK
13,204
03/11/11
RESTROOM BLDG,HILLEARY PRK,PAY #3
4,950
03/11/11
GUARDRAIL,CABLE W/POSTS,HILLEARY
PARK
8,910
03/11/11
PLAYSTRUCTURE,SERIES800,HILLRY
PK,PAY #3
5,670
03/11/11
FENCE,12',HILLEARY PK,PAY #3
13,730
03/11/11
FENCE,8',CHAINLINK,HILLEARY PK,PAY #4
5,206
03/11/11
FENCE, I0',CHAINLiNK,HILLRY
PK,ITM38,PAY4
6,458
03/11/11
GUARDRAIL,CABLE
W/POSTS,HILLRY,ITM42,PY4
12,015
03/11/11
HANDRAIL
W /CONNS,580LF,HILLRY,ITM43,PAY4
21,780
03111/11
RESTROOM BLDG,HILLEARY
PRK,ITM8I,PAY4
7,425
03/11/11
BLEACHERS,2BANKS,3ROWS EA,MVBL
W/PWR UNI
10,552
03/11/11
GUARDRAIL,CABLE W/POSTS,ITM #42,PAY #7
17,874
03/11/11
GUARDRAIL,CABLE W/POSTS,ITM #42,PAY #8
5,400
03/11/11
BLDG,CONCESSION,MAIN,13.5 %COMPLETE
58,003
03/11/11
BLDG,CONCESSION,MAIN, 17.5% COMPLETE
17,211
03/11/11
BATTING CAGE @ SPORTS PARK
8,257
03/11/11
BLDG,CONCESSION(MAW)SPORTS
PARK,PAY #4
64,887
03/11/11
BLDG,CONCESSION(MAIN)SPORTS
PARK,PAY #5
109,465
03/11/11
BLDG,RESTRM,HILL'RY PRK,ITM #81,FINAL
PAY
2,750
03/11/11
BLDG,CONCSSN(MAIN)SPORTS PRK
24,871
03/11/11
SIGNAL,CROSSING,RAILROAD,MAT'L &LAB
OR
21,825
03/11/11
CPA JOINT USE FACILITY:92 /93
CAPITALIZED
15,684
03/11/11
BLDG,CONCESSN,MAIN,S PWY SPORTS
PARK
37,607
03/11/11
BLDG,MTCE,SOUTH POWAY SPORTS PARK
22,802
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Poway Redevelopment Agency Asset Transfer Review
Schedule 1 (continued)
Unallowable
Date Description Transfers
Buildine and Improvement transfers (continued
03/11/11
BLDG,CONCSSN,SMALL,S POWAY SPORTS
PARK
5,898
03/11/11
BLDG,GYM,MEADOWBROOK MULTI-
PURPOSE ROOM
77,346
03/11/11
BLDG,CONCESSION,MAIN,SPOWAY SPORTS
PARK
21,643
03/11/11
BLDG,MTCE,SPOWAY SPORTS PARK
39,147
03/11/11
BLDG,CONCESSION,SMALL,SPOWAY
SPORTS PARK
9,644
03/11/11
BLDG,CONCESSION,MAIN,SPOWAY SPORTS
PARK
26,419
03/11/11
BLDG,MTCE,SPOWAY SPORTS PARK
2,489
03/11/11
BLDG,TICKET BOOTH,SPOWAY SPORTS
PARK
9,735
03/11/11
GLDG,CONCESSION,MAIN,SPOWAY SPORTS
PARK
47,374
03/11/11
BLDG,MTCE,SPOWAY SPORTS PARK
2,825
03/11/11
BLDG,CONCESSION,SMALL,SPOWAY
SPORTS PARK
4,397
03/11/11
BLDG,TICKET BOOTH,SPOWAY SPORTS
PARK
3,484
03111/11
BLDG,CONCESSION,MAIN,SPOWAY SPORTS
PARK
18,502
03/11/11
BLDG,CONCESSION,SMALL,SPOWAY
SPORTS PARK
865
03/11/11
BLDG,TICKET BOOTH,SPOWAY SPORTS
PARK
549
03/11/11
HVAC REVISIIONS,PCPA(50° /a)
22,613
03/11/11
DOORDOUBLE,REMODEL@PCPA
5,000
03 /I1 /11
BUILDING ,CONCESSION,SPSPRK,MAIN,100%
,COM
4,303
03/11/11
BUILDING ,CONCESSION,SMALL,SPSPRK,100
%CO
185
03/11/11
BOOTH,TICKET,SPWYSPRTS PRK, I 00%COMP
LETE
139
03/11/11
BACKSTOP ,CHAINLINK.30',70 ° /.,COMMPRK E
BAL
18,207
03/11/11
PCPA HVAC, PAY #2
13,195
03/11/11
OLD POWAY PARK - GAZEBO
5,625
03/11/11
Bldg Gazebo,Old Poway Park
9,800
03/11/11
Improvements- Other.Fountain,Old Poway Park
13,940
03/11111
Bldg,Gazebo,Old Poway Park
5,625
03/11/11
Bldg,Gazebo,Old Poway Park
5,625
03/11/11
Non - Structural Improvements- Fencing,Old Poway
Park
6,534
03/11/11
Bldg,Concession,Main,S Pwy Sports Prk:Cap
retention
47,810
03/11/11
Bldg,Concession,SmaII,S Pwy Sports Prk:Cap
retention
2,332
03/11/11
B1dg,Maintenance,S Pwy Sports Prk:Cap retention
7,474
03/11/11
Bldg,Booth,Ticket,S Pwy Sports Prk:Cap Retention
1,545
-11-
Poway Redevelopment Agency Asset Transfer Review
Schedule l (continued)
Unallowable
Date Description Transfers
Buildine and Improvement transfers (continued
03/11/11
Improves ,Park,Fencing- OldPowayPark:3731f Pay
#5
6,714
03/11/11
PCPA HVAC -Band Room
Modification :Ducts;Tubing;Fittings
5,976
03/11/11
Bldg Main,Concessions,Spwy Sports
Park:Curvilinear Stairway
14,576
03/11/11
Senior Cot Remodel:Pay#1-
Framing,Plumbg,Electric,Etc
32,643
03/11/11
BIdg:SeniorCnt@CommunityPrk -95 Remodel
14,151
03111/11
Structure:Shade Structure @ Adobe Ridge Mini -
Park
10,260
03/11/11
Equip,Playground,BT -5204B Tom Around
Structure AdobeRidge
5,337
03/11/11
Expansion,Weingart Senior Cot 96 Upgrades
11,777
03/11/11
Weingart Sr Cnt Expansion -
94 /95:Concrete,Framing,Electrical
38,702
03/11/11
Atarm,Fire:Weingart Senior Cnt'96 Addition
23,030
03/11/11
Expansion ,WeingartSeniorCnt(CommPrk):'96
Improvements
115,689
03/11/11
Expansion ,WeingartSeniorCnt(CommPrk).'96
Improvements
37,350
03/11/11
Struct ure ,Shade,ArbolitosMiniPark,Pay#2
6,286
03/11/11
Expansion,Weingart Senior Cot 96 Improvements
24,772
03/11/11
Expansion,Weingart Senior Cnt,96Improvements
14,646
03/11/11
Expansion ,Weingart Cnt,96Improvements
19,760
03/11/11
PatioEnclsureElectricUpgrades HamburgrFact @OI
dPwyPrk
5,000
03/11/11
PatioEnclsureHeating ,HamburgrFact @OldPwyPrk
7,000
03/11/11
8' ConcreteBlockWallAroundCo-GenerationUnit-
5534A (8325)
5,000
03/11/11
Netted Fence @SPSportsPark Proj 5620B (8325)
10,364
03/11/11
Restrooms@LkPwy FY97Costs(UpperLake)Proj
5629 (8313)
88,445
03/11/11
12 'AlumDocks/4'AlumGangway @LkPwy
Proj5638A (8325)
46,261
03/11/11
RestRooms @LkPwyPark- PdFY98forFY97(8313)
256
03/11/11
Restrooms@ ArbolitosSportsField (InitialPay)(8311)
18,600
03/11/11
PCPA Courtyard Upgrade:FY98
6,574
03/11/11
Arbolitos Park Restrooms
12,555
03/11/11
Arbolitos Park Restrooms
50,220
03/11/11
Arbolitos Park Restrooms
4,185
03/11111
Restrooms @ LkPoway (Final Pay)
22,067
03/11/11
Shelter,Picnic,4-
Post, I 2X I 2,SteelRoof@SilversetPark
8,500
03/11/11
RR Turntable @ Old Poway Park ProgPay#2
8,095
03/11/11
RR Turntable @ OPP- Construction Etc
240,506
03/11/11
Old Poway Park Improvements- Phase IV
26,968
-12-
Poway Redevelopment Agency Asset Transfer Review
Schedule 1 (continued)
Unallowable
Date Description Transfers
Buildine
and improvement transfers (continued)
74,516
03/11/11
Old Poway Park Train Depot
1,326,097
03/11/11
Fire Station I Apparatus Door Replacement (4 Doors)
—
03/1 1/11
Blue Sky Parking Lot and Grading
1,159,309
03/11/11
Community Park Parking Lot
641,657
03/11/11
Auto Dealership Off -Site
2,201,941
03/11/11
Auto Dealership Off -Site
21,685
03/11/11
Poway Royal Pool
—
03/11/1l
Veteran Memorial Park Imp
481,646
03/11/11
Subtotal Building and Improvement transfers
17,581,602
Infrastructure transfers
03/11/11
Poway Community Road
74,516
03/11/11
Poway Mino de Oro
273,149
03/11111
Midland Road widening
1,876,863
03/11111
Midland Road widening
1,354,900
03/11/11
Titan & Espola Left Lane
349,073
03/11/11
Tarascan Drive Extension
363,156
03/11/11
Poway Road Street Improvement
369,500
03/11/11
Civic Center Drive Extension
775,530
03/11/11
Civic Center Drive Extension
843,116
03/11/11
Orchid Ave Extension
883,133
03/11111
Midland Village Improvement
3,250,700
03/11/11
Brandalise Homeownership Street Improvement
603,167
Subtotal Infrastructure transfers
11,016,803
CIP transfers
03/11/11
Tarascan Drive Extension
75,254
03/11/11
Oak Knoll Widening
6,607
03/11/11
Oak Knoll Widening
216,777
03/11/11
Oak Knoll Widening
363,175
03/11/11
Oak Knoll Widening
2,806,523
03111/11
Oak Knoll Widening
2,253,530
03/11/11
Poway Rd Mixed Use Fund -Town Center
2,462,635
03/11/11
Poway Rd Mixed Use Fund -Town Center
7,164
03/11/11
Poway Rd Mixed Use Fund -Town Center
24,986
03/11/11
Poway Rd Mixed Use Fund -Town Center
22,319
03/11/11
Big Slone Lodge Rehab
2,215
03/11/11
Big Slone Lodge Rehab
17,903
03111/11
Veterans Memorial Park
12,764
03/11/11
Veterans Memorial Park
465,861
03/11/11
Business Park /Restaurant Site
673,423
03/11/11
Business Park /Restaurant Site
311,666
03/11/11
Business Park /Restaurant Site
68,464
03/11/11
Business Park /Restaurant Site
105,859
Subtotal CIP transfers
9,897,125
Total Unallowable Transfers
96,502,200
Assets turned
over to the Successor Agency on June 30, 2012
(96,502,200)
Assets subject to Health & Safety Code section 34167.5
$ 0
-13-
Poway Redevelopment Agency Asset Traufer Review
Schedule 2—
Unallowable Asset Transfers to
the Housing Authority
January 1, 2011, through January 31, 2012
Date Descriotion Amounts
Cash transfers
various Fund 416 - City RDA Housing $ 19,168,950
Land transfers
03/11/11
Housing Acquisition West of Library
283,928
03/11/11
Community Road Multi - Family Housing Site
5,000
03/11/11
Community Road Multi - Family Housing Site
106,086
03/11/11
Twin Pks at Espola, 321. 190 -28
846,270
03/11/11
14048 Sycamore, 314-214-18
436,220
03/11/11
13031 Poway Road APN# 317472 -06
347,000
03/11/11
12341 -12355 Oak Knoll Road APN 317- 152 -14
2,089,711
Civic Center Site -Parma Prcl APN #314- 220- 42x/Parcel # Changed
03/11/11
To 314- 220 -69
298,513
03/11/11
Land, Brookview Village Property, Escrow #29548 (Deposit)
50,000
03/11/11
Land, Huber Property, Ecrow #32148 -A, APN 317473 -18 (Deposit)
50,000
03/11/11
Land, Huber Property, APN 317473 -18 (Deposit)
1,598,105
Land, Brookwiew Village Property, 6.7 Acres, APN 317 -521-
03/11/11
02/03/04
1,082,074
03/11/11
Land, Brookview Vill Proj, 6.7 Ac, APN 31752102/03/04 Acq Cost
11,064
03/11/11
12674 Monte Vista Rd #275. 460 -61
1,291,346
03/11 /11
14025/41/56 Brighton at Edgemoor #314- 220 - 07/12/66
1,122,119
03/11/11
Brighton Ave Properties: FY01 Charges to Land Acct
1,596,864
03/11/11
13406 Community Rd Property
1,316,847
03/11/11
Brighton Ave Properties
25,101
03/11/11
13406 Community Road
88,511
13021 Poway Rd Schneider Property Acq Costs for Housing West of
03/11/11
Library
1,944,212
03/11/11
Port Lots 4 &5 Poway Tr 84-03 Gateway Park Rd
1,502,000
03/11/11
13956 Poway Road (Brandalise) 323- 203 -19
795,000
03/11/11
13917 Courier Way (Brandalise) 323 - 203 -18
405,000
03/11/11
13424 Scots Way Acquisition
5,000
03/11/11
13655 (13649) Poway Road APN 317- 190 -21
2,864,759
Total Land transfers 20,160,730
Total unallowable transfers 39,329,680
Less Adjustments:
2/1/2012 Cash transfers to the Successor Agency (19,022,695)
06/30/12 Land transfer to Successor Agency - 13655 (13649) Poway Road
APN 317 - 190 -21 (2,864,759)
various Third party invoices (16,953)
various FY 12 lease revenues received after the election to assume housing
assets and function (129,302)
January 17, 2012 — Housing Authority election to retain housing assets per City
Council meeting held (17,295,971)
Total transfers subject to H &S Code section 34167.5 $
-14-
Poway Redevelopment Agency Asset Transfer Review
Attachment
City of Poway's Response to
Draft Review Report
In addition to the attached letter, the City provided additional documents. Due to their size, we
are not including them as an attachment to this report. Please contact the City for copies of the
additional documents:
-15-
SrLVE VAUS, Mcyoc CITY OF POWAY w
DAVE GROSCH, Depwy Mnym
JIM CUNNINGHAM, CouncilmeN,ec
JOHN MU[LIN, Coundlmembm
January 23, 2015
Mr. Jeffrey V. Brownfield, CPA
Chief, Division of Audits
California State Controller's Office
P.O. Box 942850
Sacramento, CA 94250 -5874
Dear Mr. Brownfield:
In response to the State Controller's Office Asset Transfer Review letter, dated December 17,
2015, the City believes the findings can be broken down into two issues, Capital Assets and the
Smith Judgment, with each issue being addressed below.
Capital Assets:
The California State Controller's Office ( "SCO') is ordering the return of approximately
$21,845,296 in Capital Assets to the Successor Agency. (See, Draft Asset Transfer Review, pg. 7,
Fund 429 — City Special Programs). The change in the capital asset transfer amount can be
attributed to several factors as documented in the attached schedule (Attachment "A'7. The City
respectfully disagrees with the SCO's determination for the following reasons: (1) balances were
written off because expenditures for design had been capitalized, but no tangible asset had been
produced, (2) assets had been sold or transferred to other entities pre- dissolution, but had not been
removed from the Redevelopment Agency's (the Agency) records, and (3) assets had been
transferred to the City pre - dissolution, but had not been removed from the Agency's records.
Additional support in the form of grant deeds is included with Attachment A.
Smith ,Judgment:
I. Fund 429 — City Special Programs (The Smith Fund)
The California State Controller's Office ( "SCO ") is ordering the return of approximately $2,762,808
to the Successor Agency. (See, Draft Asset Transfer Review, pg. 7, Fund 429 — City Special
Programs). The Successor Agency respectfully disagrees with the SCO's determination for the
following reasons: (1) the funds represent housing assets that are mandated by law to be turned over to
the Poway Housing Authority ("Housing Authority') and not to the Successor Agency; (2) a portion of
the funds are committed to third parties and therefore, to the extent committed, those funds cannot be
turned over to the Successor Agency; and (3) the Successor Agency has received its finding of
completion ( "FOC'l from the California Department of Finance ( "DOF'7 and therefore a
City Hall Located at 13325 Civic Center Drive
Mailing Address: P.O. Box 789, Poway, California 920740789
www.poway.org
W. Jeffrey V. Brownfield, CPA
January 23,2015
Page 12
determination has been made that the tracing entities have received all the funds to which they are
entitled.
Accordingly, for the foregoing reasons, which are discussed in further detail below, the SCO should
reverse its finding that the funds at issue be turned over to the Successor Agency.
II. Background Of The Smith Fund
The funds at issue are part of the Housing Special Program Food that was created as part of a
settlement agreement (the "Settlement Agreement ") in Smith et al. v. All Persons Interested, SDSC
Case No. 667691 (the "Smith Action'), a reverse validation action that challenged an Amendment to
the 1993 Redevelopment Plan for the Paguay Redevelopment Project Area. [A copy of the Reporter's
Transcript detailing the Settlement in open court is attached hereto as Exhibit 1 to Attachment B.] The
Settlement Agreement required and produced a Stipulation re Settlement (the "Stipulation'), attached
as Exhibit 2 to Attachment B. Pursuant to the Stipulation, a stipulated judgment (the "Judgment'),
attached as Exhibit 3 to Attachment B, was entered in the Smith Action on January 26, 1995.
The Stipulation and the Judgment required the following:
(a) Two Percent for Non - Profit Housing Corporations. Commencing in the fiscal year
2000 -2001 Poway shall allocate 2% of its gross tax increment funds for the life of the
redevelopment project to be distributed to qualified, non -profit 501(c)(3) or
comparable organizations in the following order of priority: A. First, to capacity
building; B. Second for pre - development costs; and C. Third for community outreach
and education concerning housing issues.
To comply with the Settlement Agreement, the Stipulation and the Judgment, former Poway
Redevelopment Agency ("Redevelopment Agency') established the Housing Special Program (the
"Program') in 2001 for the purpose of disbursing two percent of its property tax increment to
nonprofit housing developers. This was in addition to the 20% act aside required by the
.e Program's mission was to increase, improve, and preserve
that is well- managed and valued in the community.
Program funds (the "Fund(sy are disbursed annually in the form of grants and loans for: (1) capacity
building, (2) predevelopment costs, and (3) community outreach and education concerning housing
issues, in this order of priority. The Funds have provided significant support to local nonprofit
organizations allowing them to continue their mission of developing and maintaining quality
affordable housing in Poway.
In March, 2011, the Fund balance was transferred from the Redevelopment Agency to the City
pursuant to a Cooperation Agreement. The City has administered the Fund and the Program ever
since.
Pursuant to their obligations under the Settlement Agreement, the Stipulation and the Judgment, the
former Redevelopment Agency, and later the City pursuant to the Cooperation Agreement, have
Mr. Jeffrey V. Brownfield, CPA
January 23,2015
Page 13
entered into various loao/fimding agreements with various nonprofit organizations, including, but not
limited to, Community Housing Works, Wakelend Housing and Development Corp., and San Diego
Interfaith Housing Foundation (the "Funding Agreements "), [Copies of the loan/funding agreements
are attached hereto as Exhibits 4.6 to Attachment B, respectively.]
HI. The Dissolution Act' Mandates that the Funds Be Transferred To The Housipa Authoriri
Health and Safety Code § 34176(b)(2), states, in part:
"If a city, county, or city and county does not elect to retain the responsibility for performing
housing functions previously performed by a redevelopment agency, all rights, powers, assets,
duties, and obligations associated with the housing activities of the agency, excluding
enforceable obligations retained by the successor agency and any amounts in the Low and
Moderate Income Housing Fund, shall be transferiod as follows: ... (2) If there is one local
housing authority in the territorial jurisdiction of the former redevelopment agency, to that
local housing authority."
In accordance with Health and Safety Code § 34176(b)(2), the City elected, upon dissolution of the
Redevelopment Agency on February 1, 2012, to transfer the housing assets and functions previously
performed by the Redevelopment Agency to the Poway Housing Authority. As such, to the extent
permitted by the California Constitution and by §§ 34173 and 34176 of the Health and Safety Code,
many of the Redevelopment Agency's rights, powers, duties, and obligations associated with those
housing fimctions became rights, powers, duties, and obligations of the Poway Housing Authority
("Housing Authorlty'7.
Health and Safety Code § 34176.5 states in pertinent part, "...the Controller shall review the activities
of redevelopment agencies in the state to determine whether an asset transfer has occurred after
January 1, 2011, between the city or county, or city and county that created a redevelopment agency or
any other public agency, and the redevelopment agency. If such an asset transfer did occur during that
period and the government agency that received the assets is not contractually committed to a third
parry for the expenditure or encumbrance of those assets, to the extent not prohibited by state and
federal law, the Controller shall order the available assets to be returned to the redevelopment
agency..." (emphasis added).
Here, the Settlement Agtcement, the Stipulation and the Judgment require that the funds be used for
affordable housing purposes. Health and Safety Code section 34176(e)(2) states that a housing asset is
"[a]ny funds that are encumbered by an enforceable obligation to build or acquire low - and moderate -
income housing..."
Therefore, because the City elected pursuant to Health and Safety Code section 34176, to transfer the
housing assets and functions previously performed by the Redevelopment Agency to the Poway
LThe Dissolution Act is hereby defined as AB 26, a emended by AB 1494 and further amended by various assembly and senate
bills passed by the Legislature and signed by the Governor. 'fho Dissolution Act is codified as Hoahh and Safety Coda § 33500,
at seq.
Mr. Jeffrey V. Brownfield, CPA
January 23,2015
Pa.ge 14
Housing Authority, the Smith Funds are required by California state law to be in the possession of the
Poway Housing Authority.
Accordingly, because California state law prohibits the Smith Funds from being transferred to any
other entity other than the Housing Authority, the SCO should reverse its finding that the Funds be
transferred to the Successor Agency.
IV. Portions Of The Smith Funds Are Contractually Committed To Third Parties And
Therefore Cannot Be Ordered Transferred To The Successor A¢enov
Health and Safety Code section 34167.5, states in pertinent part
"Commencing on the effective date of the act adding this part, the Controller shall review the
activities of redevelopment agencies in the state to determine whether an asset transfer has
occurred after January 1, 2011, between the city or county, or city and county that created a
redevelopment agency or any other public agency, and the redevelopment agency. If such an
asset transfer did occur during that period and the government agency that received the assets
is not contractually committed to a third oarty for the expenditure or encumbrance of those
assets, to the extent not prohibited by state and federal law, the Controller shall order the
available assets to be returned to the redevelopment agency or, on or after October 1, 2011, to
the successor agency..." (emphasis added).
Further, with respect to any transfers that occurred post - dissolution (i.e., after February 1, 2012), AB
1963 (which took effect in July as emergency legislation) prevents the SCO from reviewing any _
transfers that occurred after February 1, 2012.
Here, approximately $135,967.01 of the Funds were contractually committed to third parties pursuant
to the Funding Agreements attached as Exhibits 5 and 6 to Attachment B hereto, and therefore must be
excluded from the amounts ordered returned to the Successor Agency.
Specifically, on August 17, 2010, the former Redevelopment Agency and San Diego Interfaith
Housing Foundation (" Interfaith") entered into a Funding Agreement whereby the former
Redevelopment Agency pledged a portion of the Funds to Interfaith to be used for affordable housing
purposes.
Further, on July 1, 2011, the former Redevelopment Agency and Community Housing Works
("CHW') entered into a Funding Agreement whereby the former Redevelopment Agency pledged a
portion of the Funds to CHW to be used for affordable housing purposes.
At the time of dissolution, CHW had approximately $123,150.71 and Interfaith had approximately
$12,816.30 in Funds pledged to them for affordable housing purposes. Those amounts that had been
pledged were returned to the Fund balance in June, 2012, but still remain encumbered pursuant to the
Funding Agreements.
Mr. Jeffiey V. Brownfield, CPA
January 23,2015
Page 15
Accordingly, to the extent the SCO continues to order that the Funds be tamed over to the Successor
Agency, at least $135,967.01 must be deducted from the Fund balance.
V.
AB 1484 requires two "due diligence reviews" (each, a "DDR' of business transacted between
January 1, 2011, and June 30, 2012, by the Redevelopment Agency and the Successor Agency. (Health
and Safety Code § 34179.5.) The reviews must identify "the dollar value of any cash or cash
equivalents transferred after January 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." (Id
§ 34179.5(c)(3).) One DDR is for transactions involving the Redevelopment Agency's Low and
Moderate Income Housing Fund, and the other is for transactions involving the Redevelopment
Agency's Other Funds and Accounts ( "OFA DDR').
The purpose of the DDRs is to identify "net balances ... available for allocation to" other public
agencies that receive ad valorem property taxes collected within the jurisdictional limits of the former
Redevelopment Agency. (Id § 34179.5(cx6).) The statute specifies that this "available" balance must
include "any amounts that were transferred as identified in [section 34179.5(ex3)] if an enforceable
obligation to make that transfer did not exist" (Id)
AB 1484 gives DOF final authority to approve the DDRs, and to direct payment by the Successor
Agency to the Auditor - Controller of any "available" balances. (Id § 34179.6(d).)
if a successor agency disagrees with DOF's determination concerning the DDR, the successor agency
may request a "meet and wafer" with DOF to discuss the reasons for the determination. If a meet and
confer is requested on the DDR, than DOF is to issue its final determination within thirty (30) days of
the request for the meet and confer. (Health and Safety Code, § 34179.6(d) and (e).)
As required by Health and Safety Code § 34179.6(c), on January 15, 2013 the Successor Agency
submitted to DOF the OFA DDR approved by its Oversight Board. The OFA DDR reflected the
transfer of the Funds to the City and subsequent deposits into the Fund resulting in a Fund balance of
$2,846,518.2 The OFA DDR was not required to include the Fund amount in the funds available for
distribution to the taxing agencies.
On March 27, 2013, DOF issued a determination letter, attached as Exhibit 7 to Attachment B, as to
the OFA DDR that determined that the transfer of the Funds to the City was "disallowed" as not being
supported by an enforceable obligation with the City. However, DOF also determined that the
taxing entities.
2. Because the Judgment and Stipulation required the Redevelopment Agency to set aside tax incmment in addition to the 20%
required to be deposited In the J.MIHF, and because the Funds were never deposited into the IN111F, they were included in the
OFA DDR
Mr. Jeffrey V. Brownfield, CPA
January 23,2015
Page 16
In a letter dated May 2, 2013, attached as Exhibit 8 to Attachment B, COP directed that the Funds be
returned to the Successor Agency and used for its intended Purposes under the Settlement
Agreement. Stipulation and the Judement through the Recognized Obligation Payment Schedule
( "ROPS'� process.
On May 24, 2013, following the OFA DDR and pursuant to Health and Safety Code § 34179, DOF
issued a Finding of Completion ("FOC "), attached as Exhibit 9 to Attachment B, to the Successor
Agency, stating that the Successor Agency had paid the full amount as determined during both due
diligence reviews and that the San Diego Auditor - Controller ( "Auditor-Controller") had reported those
payments to DOE.
successor.
On August 21, 2013, the Oversight Board approved and ratified Resolution No. OSB 13 -003 (the
"Resolution'l, attached as Exhibit 10 to Attachment B, approving the City's transfer of the Funds to
the Housing Authority, and subsequently sent the Resolution to DOF as required by Health and Safety
Code § 34181(c) & (f).
On December 5, 2013, DOF issued a letter, attached as Exhibit I1 to Attachment B, disapproving the
Resolution by telling the position for the very first time, and in direct contravention of both the FOC
and its May 2, 2013 letter, that the Funds were unrestricted and therefore considered "available" to be
used to pay enforceable obligations prior to requesting RP7TF.
DOF's position that the funds are unrestricted has the unlawful effect of diverting housing assets that
an mandated by law to be transferred to the Housing Authority. DOF's new position further
completely undermines the purpose and findings of the FOC, which provides that the taxing entities
have received all the funds to which they are entitled
Because of the foregoing dispute, the City, Successor Agency and Housing Authority have filed a
lawsuit (City of Poway, or al. Y. Cohen, et d., Sacramento Superior Court Case No. 34 -2014-
80001923) against DOF and the Auditor - Controller seeking an order that the Funds are housing assets
that are required by law to be transferred to the Housing Authority, and that the Funds must he used to
fulfill the obligations of the former Redevelopment Agency under the Settlement Agreement, the
Stipulation and the Judgment.
If the Funds are transferred to the Successor Agency, it would: (1) have the effect of increasing the
distribution of RPTIT to the taxing agencies, in direct conflict with the FOC; and (2) would
unlawfully divert a housing asset from the Housing Authority.
Mr. Jeffrey V. Brownfield, CPA
January 23,2015
Page 17
Given that DOF has previously issued a FOC to the Successor Agency, as well as California state law
requiring that the Funds be deposited with the Housing Authority to be used to satisfy the Settlement
Agreement, die Stipulation and the Judgment, the SCO should reverse its finding that the Funds be
transferred to the Successor Agency.
If you have any questions please contact me by telephone at (858) 668 -4413 or by e-mail at
sedw oway.ora or Andrew White by telephone at (858) 668 -4426 or by e-mail at
awhiteftoway.ora.
Sincerely,
Sco
Director of Administrative Services
Attachments:
A. Capital Asset Reconciliation (with Exhibits)
B. Smith Judgment (with Exhibits)
cc via e-mail:
Richard J. Chivaro, Chief Legal Counsel
State Controller's Office
Elizabeth Gonzalez, Bureau Chief
Division of Audits, State Controller's Office
Scott Freesmeier, Audit Manager
Division of Audits, State Controller's Office
Trisha L. Quiambao, Auditor -in- Charge
Division of Audits, State Controller's Office
Tina White, Assistant City Manager
Successor Agency /City of Poway
Andrew White, Finance Manager
Successor Agency /City of Poway
State Controller's Office
Division of Audits
Post Office Box 942850
Sacramento, CA 94250 -5874
http: /Avww.sco.ca.gov
S15-RDA-9015