From: Tina RodriguezTo: "Barr, Michael"Cc: kburns@auditor.lacounty.gov; Scott, RobertBcc: Susan Cola; Andy Agle; Gigi Decavalles; Nia Tang; Randy Chow; Elsa Trujillo; Barbara Collins; James KemperSubject: RE: Santa Monica IROPS ReviewDate: Wednesday, March 21, 2012 2:38:12 PMAttachments: Response to DOF 3-20-12.docx

Supporting Documents List.pdf1a. Contract # 8922 - Credit Agreement.pdf1b. BofA Line of Credit Funding Summary.pdf1c. 2602 Broadway 2008 LOAN AGREEMENT.PDF

Mr. Barr, Attached is our response to the review questions included in your March 19, 2012 e-mail below.Please note that we are also forwarding you several attachments with supporting documents inresponse to your review questions. This e-mail constitutes part 1 of 7 consecutive e-mails that Iwill be sending you. Please confirm that you have received all 7 e-mails so that we can ensure thatyou have received all the supporting documents. –Thank you   From: Barr, Michael [mailto:Michael.Barr@dof.ca.gov] Sent: Monday, March 19, 2012 5:19 PMTo: Tina RodriguezCc: kburns@auditor.lacounty.gov; Barr,Michael; Scott, RobertSubject: Santa Monica IROPS Review Ms. Rodriguez, The California Department of Finance reviewed your recently submitted Initial RecognizedObligation Payment Schedule (IROPS) dated March 8, 2012 and documents submittedfrom an email request. Health and Safety Code section 34171 (d) lists characteristics ofenforceable obligations. Based on our review of the IROPS and supporting documents,the following items do not meet the characteristics of an enforceable obligation and shouldnot be reported on your final Recognized Obligation Payment Schedule due April 15, 2012:

Page 1, line item 10 for a line of credit. HSC section 34163 (b) prohibits aredevelopment agency from incurring any obligations or making commitments afterJune 29, 2011. It is our understanding that commitments have not been madetoward the $47.7 million balance of the line of credit issued by Bank of America.

Page 1, line item 11 in the amount of $5,849,344. HSC section 34163 (b) prohibits aredevelopment agency from entering into a contract with any entity after June 29,2011. It is our understanding that contracts for these line items were awarded afterJune 29, 2011.

Page 1, line item 13 in the amount of $8,669,699. The requirement to set aside 20percent of RDA tax increment for low and moderate income housing purposes endedwith the passing of the redevelopment dissolution legislation. HSC section 34177 (d)requires that all unencumbered balances in the Low and Moderate Income HousingFund be remitted to the county auditor controller for distribution to the taxing entities.

mailto:/O=EXCHROOT/OU=FIRST ADMINISTRATIVE GROUP/CN=RECIPIENTS/CN=ERNESTINA.RODRIGUEZmailto:Michael.Barr@dof.ca.govmailto:kburns@auditor.lacounty.govmailto:Robert.Scott@dof.ca.govmailto:Susan.Cola@SMGOV.NETmailto:Andy.Agle@SMGOV.NETmailto:Gigi.Decavalles@SMGOV.NETmailto:Nia.Tang@SMGOV.NETmailto:Randy.Chow@SMGOV.NETmailto:Elsa.Trujillo@SMGOV.NETmailto:Barbara.Collins@SMGOV.NETmailto:James.Kemper@SMGOV.NET

Mr. Barr,Part 1 of 7

Below is our response to your review of the three line items in the Draft Recognized Obligation Payment Schedule adopted by the Successor Agency on 2/28/12 that you have identified as not meeting the characteristics of an enforceable obligation. We believe that these items are legally binding enforceable obligations and the agreements setting forth these obligations were entered into prior to June 29, 2011.

· Page 1, line item 10 for a line of credit.  HSC section 34163 (b) prohibits a redevelopment agency from incurring any obligations or making commitments after June 29, 2011. It is our understanding that commitments have not been made toward the $47.7 million balance of the line of credit issued by Bank of America.

Response:

· The Credit Agreement between the former Redevelopment Agency and Bank of America entered into on May 1, 2008, provides for the revolving line of credit to be used specifically for financing for housing activities eligible for funding from the Low and Moderate Income Housing Fund. (See page 2 of Credit Agreement.)

· The entire amount of the Line Credit funding was committed on various affordable housing developments prior to June 29, 2011. Attached is a listing of those enforceable obligations made to specific housing developments (See attached Bank of America Line of Credit Funding Summary.) We are providing you with copies of either the Loan Agreements or the Loan Commitment Letters, setting forth the enforceable obligations.

· In addition, all of the line of credit proceeds were drawn down by January 2011.

· Page 1, line item 11 in the amount of $5,849,344.  HSC section 34163 (b) prohibits a redevelopment agency from entering into a contract with any entity after June 29, 2011.  It is our understanding that contracts for these line items were awarded after June 29, 2011.

Response:

· The Memorandum of Understanding between the Agency and the Santa Monica Unified School District was entered into on June 28, 2011. It is a legally binding and enforceable obligation. (See attached Agreement.)

· Page 1, line item 13 in the amount of $8,669,699.  The requirement to set aside 20 percent of RDA tax increment for low and moderate income housing purposes ended with the passing of the redevelopment dissolution legislation.  HSC section 34177 (d) requires that all unencumbered balances in the Low and Moderate Income Housing Fund be remitted to the county auditor controller for distribution to the taxing entities.

Response:

· This item is no longer on the Amended Enforceable Obligation Schedule and was superceded by the Draft ROPS approved by the Successor Agency on 2/28/12.

Please let us know if you have any further questions. We would appreciate the opportunity to discuss your final recommendations.

1a

1bAddress Street Name Type of Document Agreement Date

1c Loan Agreement 02/29/20081d Loan Agreement 02/01/20111e 1513 Centinela Loan Agreement 12/03/20081f 2029 20th St. Loan Agreement 12/16/20081g 430 Pico Blvd. Loan Agreement 01/12/20091h 2802 Pico Blvd. Loan Agreement 02/02/20091i Loan Agreement 06/29/20091j Loan Agreement 11/17/20111k Commitment Letter 06/30/20101l 2411 Centinela Loan Agreement 07/29/20091m Loan Agreement 11/30/20091n Loan Agreement 09/16/20111o Commitment Letter 07/14/20101p 1959 High Place [E] Loan Agreement 11/30/20091q 217 Bicknell Ave. Loan Agreement 12/02/20091r 1328 2nd Street Loan Agreement 11/30/20101s 1930 Stewart Street Part 1 Loan Agreement 12/29/20101t 1930 Stewart Street Part 2 Loan Agreement 12/29/20101u 1458 14th St. Loan Agreement 03/15/20112. Santa Monica Malibu Unified School District-Civic Center Joint Use Project Memorandum

of Understanding

Bank of America - Line of Credit Funding Summary

2602 Broadway

Santa MonicaList of Supporting Documents

1754 19th St.; 1753 18th St.; & 1924-30 Euclid St.

High Place [W]1942

Credit Agreement

LOC projects only

Address Street Name# of

UnitsLine of Credit

AmountLoan Agreement

DateLoan Obligation

Date **

$6,582,323 02/29/2008

$2,824,780 02/01/2011

1513 Centinela 8 $3,112,089 12/03/2008

2029 20th St. 12 $4,517,723 12/16/2008

430 Pico Blvd. 32 $3,720,204 01/12/2009

2802 Pico Blvd. 33 $5,595,897 02/02/2009

$4,424,711 06/29/2009

$217,435 * 11/17/2011 06/30/2010

2411 Centinela 36 $2,162,906 07/29/2009

$953,111 * 11/30/2009

$7,082,370 * 09/16/2011 07/14/2010

1959 High Place [E] 45 $1,331,155 * 11/30/2009

217 Bicknell Ave. 13 $4,503,698 12/02/2009

1328 2nd Street 36 $2,314,674 11/30/2010

1930 Stewart Street 20 $179,782 * 12/29/2010

1458 14th St. 20 $477,142 03/15/2011

TOTAL: 384 $50,000,000

* Amount listed represents the Line of Credit-funded portion of the total loan provided.** Loan Obligation dates are not shown for loans executed before June 29,2011.

Bank of America - Line of Credit Funding Summary

1754 19th St.; 1753 18th St.; & 1924-30 Euclid St.

49

2602 Broadway 33

1942 High Place [W] 47

LOC projects only

If you believe we have reached this conclusion in error, please provide an explanation whyyou believe the above meet the definition of an enforceable obligation and providesupporting documentation. Please return your explanation and documents by March 21,2012. Finance will issue denial letters for unenforceable obligations within two weeks. Michael Barr, Lead AnalystDepartment of Finance915 L StreetSacramento, CA 95814 (916) 322-2985 x3126