FINAL REPORT - San Bernardino Superior Court

Section 1: Financial Condition
(4) Any residual balance in the Trust Fund is then redistributed to any county, cities,
special districts, schools, county education offices, and community colleges that were
impacted by the creation, and now dissolution, of the redevelopment agency.
In accordance with AB 26, the City of Victorville now has control of the former VVRDA’s
assets and liabilities and must now dispose of the assets and meet all of VVRDA’s payment
obligations. Proceeds from the City’s disposal of assets would be deposited into the Trust Fund
controlled by the County Auditor and then distributed according to the priority distribution listed
above. The City receives allocated tax increment from the County Auditor and makes the actual
payments to the obligations listed in the ROPS.
Recognized Obligations
The City was required to submit a draft Recognized Obligation Payment Schedule (ROPS) to the
County Auditor by March 1, 2012. There are three main categories of debt and obligations
included in the City’s ROPS which are eligible for payment through tax increment funds. In
order of payment priority, these categories are:
• Debt obligation from Tax Allocation Bonds issued under the former VVRDA;
• Debt obligation from SCLAA issued bonds because tax increment designated for
VVRDA were pledged to repay several of the bonds when they were first issued;
• Third party contracts and agreements, including inter-fund loans, and,
• Administrative costs associated with operating the Successor Agency, such as salaries for
personnel.
However, if there is insufficient tax increment to meet these payment obligations, the City, as
Successor Agency, would be required to meet these obligations through the use of reserve funds
or inter-fund loans. This provision of the law has been upheld by the California Supreme Court.
According to the City’s financial statements, the principal balance of Tax Allocation Bonds
issued under the former VVRDA was $42,395,000 as of June 30, 2011. Based on an analysis of
VVRDA’s receipt of tax increment and debt service payments over the last four fiscal years, the
City should still be able to receive sufficient tax increment funds to make debt service payments
for the VVRDA bonds. As shown in Table 1.11 below, the City had an average surplus of
$4,861,822 in tax increment over the past four fiscal years after debt service payments were
made, though tax increment has steadily decreased.
1-17
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