Enforceable Obligation Payment Schedule

In June, the Governor signed into law Assembly Bill 1X 26 and Assembly Bill 1X 27 as part of the State budget package which have the combined effect of abolishing every redevelopment agency unless the community that created the agency agrees to participate in an Alternative Voluntary Redevelopment Program (“Alternate Redevelopment Program”) and pay a “community remittance” pursuant to AB 1X 27.  AB 1X 26, requires redevelopment agencies to adopt, by August 27, 2011, an Enforceable Obligations Payment Schedule (“EOPS”), which will serve as the basis for the payment of the Agency’s outstanding financial obligations if the City does not adopt an ordinance electing to participate in the Alternate Redevelopment Program and the Agency is dissolved.


The Redevelopment Agency of the City of San Jacinto (“Agency”) was created by the City Council for the purposes of implementing redevelopment activities in the City.  On June 28, 1983 and December 28, 1983, respectively, the City Council adopted the Redevelopment Plan for the San Jacinto and Soboba Springs Redevelopment Project Areas in accordance with the Community Redevelopment Law (Health and Safety Code § 33000 et seq.) (“CRL”).  The San Jacinto and Soboba Springs Redevelopment Project Areas were found to have a significant number of physical and economic blighting conditions that necessitated adoption of the Redevelopment Plan.  The Redevelopment Plan authorizes the Agency to receive tax increment revenue to pay for programs and projects that address these conditions consistent with the CRL. 

In January, 2011, the Governor announced his intent to eliminate redevelopment agencies as a way to help balance the State budget.  The Legislature then enacted and the Governor signed, Assembly Bill 1X 26 and Assembly Bill 1X 27; many believe these bills violate a number of provisions in the California Constitution, including the recently enacted Proposition 22.  These bills took effect on June 29, 2011. The California League of Cities and the California Redevelopment Association filed suit in the California Supreme Court challenging the constitutionality of these bills. On August 11, the Supreme Court agreed to take the case and issued an immediate stay of AB 1X 27 in its entirety and a partial stay of AB 1X 26.

Prior to the stay, Assembly Bill 1X 26 immediately suspended all new redevelopment activities and incurrence of indebtedness, and dissolves redevelopment agencies effective October 1, 2011 (the "Dissolution Act"). It does this by terminating virtually all otherwise legal functions of the redevelopment agency and mandating a liquidation of any assets for the benefit of local taxing agencies.  Some debts would be allowed to be repaid, but any such remittances would be managed by a successor agency, that would function primarily as a debt repayment administrator.  The successor agency could not continue or initiate any new redevelopment projects or programs.  The activities of the successor agency would be overseen by an oversight board, comprised primarily of representatives of other taxing agencies, until such time as the remaining debts of the former redevelopment agency were paid off, all agency assets liquidated and all property taxes were redirected to local taxing agencies. The Court allowed AB 1X 26 to remain in effect insofar as it precludes existing redevelopment agencies from incurring new indebtedness, transferring assets, acquiring real property, entering into new contracts or modifying existing contracts, and adopting or amending redevelopment plans, but it stayed enforcement of both statutes in all other respects.

Assembly Bill 1X 27, which was stayed in its entirety, allows a city or county that has a redevelopment agency to avoid the consequences of the Dissolution Act by adopting an ordinance (“Continuation Ordinance”) stating it will comply with the Alternate Redevelopment Program and pay specified “community remittances.”


The City adopted an Urgency version of the Continuation Ordinance on July 19, 2011. The City also held a first reading of a regular version of the Continuation Ordinance on July 19, 2011 and a second reading on August 16, 2011. Since the adoption of the urgency ordinance the Agency has been operating under the provisions of AB 1X 27.

If a City chose not to adopt the Continuation Ordinance or was unable to enact the Continuation Ordinance prior to August 27, 2011, the provisions of AB 1x 26 required the Agency to adopt an EOPS The EOPS must list all of the “enforceable obligations” of the Agency, and is subject to approval by the Department of Finance.  Until October 1, 2011, “enforceable obligations” include: bonds; loans legally required to be repaid pursuant to a payment schedule with mandatory repayment terms; payments required by the federal government, preexisting obligations to the state or obligations imposed by state law; judgments, settlements or binding arbitration decisions that bind the agency; legally binding and enforceable agreements or contracts; and contracts or agreements necessary for the continued administration or operation of the agency, including agreements to purchase or rent office space, equipment and supplies.  After an EOPS is adopted, the Agency cannot make any payment unless it is listed in an adopted EOPS. 

Because AB 1X 27, the statutory scheme which the City and Agency had opted into through the adoption of the Continuation Ordinance has been stayed, it appears the Agency must adopt an EOPS.

The EOPS is important as it appears the Agency may only make payments during the time the stay is in place for debts and obligations listed on the EOPS. If the stay is lifted and AB 1X 26 is found constitutional, the EOPS is the basis for future actions following dissolution of the Agency.  If an ordinance is not adopted and the redevelopment agency is dissolved, then starting October 1, 2011, a successor agency takes over, and is required to prepare a Recognized Obligation Payment Schedule (“ROPS”) covering a 6 month period (the first to cover January 1, 2012 to June 30, 2012), based on the EOPS, to fulfill the enforceable obligations during that period.  The ROPS must be reviewed and approved by the oversight board, and then submitted to the county auditor-controller, the State Controller and the Department of Finance and posted on the successor agency’s website.  Prior to January 1, 2012, the successor agency is authorized to make payments under the adopted EOPS.  After January 1, 2012, only payments listed in the approved ROPS may be made by the successor agency.  Further, after January 1, 2012, all contracts entered into between the agency and the city or county that created it are declared to be invalid by the legislation, and no longer binding on the successor agency, except for written agreements to pay certain debt obligations in connection with issuance of bonds, or written agreements that provided loans or other startup funding for the agency that were entered into within two years of the formation of the agency. 

The EOPS must be adopted at a public meeting, and must be posted on the Agency or City website.  The EOPS was approved by the Redevelopment Agency Board of Directors on August 16, 2011 and is posted herewith on the City website.

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