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AGENDA ITEM NO. 12.
CITY OF HAWTHORNE Successor Agency AGENDA BILL For the meeting of 12/09/2025 Originating Department: Finance |
Exec. Director:
Legal Counsel:
SUBJECT:
Approving a Recognized Obligation Payment Schedule (“ROPS”) for the twelve-month fiscal period from July 1, 2026 through June 30, 2027 (“ROPS 26-27”) and taking certain related actions.
RECOMMENDED MOTION:
Staff recommend that the City Council adopt SA Resolution 2025-05 approving ROPS 26-27, a Recognized Obligation Payment Schedule for the twelve-month fiscal period from July 1, 2026 through June 30, 2027 and taking certain related actions.
DISCUSSION:
BACKGROUND:
Assembly Bill (“AB”) x1 26, AB 1484, and Senate Bill 107 (collectively, the “Dissolution Act”) dissolved Redevelopment agencies and requires the Successor Agency to the Hawthorne Redevelopment Agency (“Successor Agency”) to wind down the obligations of the former Hawthorne Redevelopment Agency (“Former Agency”). The wind down is accomplished, in large part, through the preparation of an annual ROPS, covering the upcoming fiscal year. The ROPS lists the obligations to be funded and serves as a request for an allocation of property tax increment revenue deposited by the Auditor-Controller in the Redevelopment Property Tax Trust Fund (“RPTTF”).
The ROPS must be approved by the Oversight Board to the Successor Agency (“Oversight Board”) and submitted to the State Department of Finance (“DOF”). Pursuant to Health and Safety Code (“HSC”) Section 34177(l), DOF provides the ROPS form for successor agencies to use to report enforceable obligations. Pursuant to HSC Section 34177(l)(2)(C), a copy of the ROPS must also be submitted to the Los Angeles County Auditor-Controller (“Auditor-Controller”) and State Controller’s Office.
DISCUSSION:
The Successor Agency has already paid off several of the Former Agency’s obligations. Remaining obligations include the 2025 Tax Allocation Refunding Bonds and related costs, Oceangate Owner Participation Agreement (“OPA”) rebates, Gateway Disposition and Development Agreement rebates, as well as administrative expenses. The ROPS Detail page lists each of the remaining obligations, including the amount requested in the current year and an estimate of the total debt or obligation remaining for each item.
In total, the Successor Agency requests approval for $4,204,707 in expenditures, including $1,310,438 from a reserve balance set aside in the prior fiscal year and $2,894,269 in funds from the RPTTF. This represents an overall decrease from the amount requested in the prior year’s ROPS, mostly due to the lower debt service payment (Item 38) and an adjustment to the OPA rebate calculation (Item 35), as detailed in the OPA. The 2016 Tax Allocation Refunding Bonds related to Items 36, 37, and 38 were refunded in June 2025 to realize savings for the Successor Agency and further the wind down process outlined in the Dissolution Act. The ROPS 26-27 includes three (3) new items, 46, 47, and 48, pertaining to the 2025 Tax Allocation Refunding Bonds (TARBS).
Debt service for the 2025 TARBS (Attachment 2) shows $460,736.09 due during the 2025-26B Period and $1,183,500 due during the 2026-27A Period. Funds on hand, including the approved 2016 TARBS Reserve funds from the 25-26B period of $1,396,125, and the approved 2016 TARBS debt service payment of $366,125, will be used to pay these debt service amounts due. This leads to a ROPS 26-27 A period reserve balance request for Item 46 of $1,310,438 ($1,183,500 per the debt service + $126,938 difference from the 25-26B and 26-27A debt service and the funds on hand). The $126,938 difference amount will be filtered back to the Successor Agency’s ROPS through the 26-27 PPA process. Applying this calculation now will help smooth the transition from the prior 2016 Bonds to the new 2025 Refunding Bonds. Moving forward, the ROPS requests will only involve the 2025 Refunding Bonds and will follow the debt service schedule more closely.
This ROPS 26-27 request also includes a slight increase in its administrative budget compared to last year’s. A separate contract item for the Oceangate Owner Participation Agreement (“OPA”) was included in the Fiscal Year 2026-27 Administrative Budget (Exhibit B to Attachment 1) to fully account for the Successor Agency’s costs administering the OPA. This adjustment more accurately aligns with the Successor Agency’s existing contract with its administrative consultant. The ROPS 26-27 administrative cost request of $235,400 remains below the $250,000 maximum administrative cost allowance per HSC Section 34171(b).
On the Report of Cash Balances, the Successor Agency identifies any available funds that can be used to pay enforceable obligations. After all available funds are allocated or exhausted, the Successor Agency can request funding for enforceable obligations from RPTTF.
Assembly Bill (“AB”) x1 26, AB 1484, and Senate Bill 107 (collectively, the “Dissolution Act”) dissolved Redevelopment agencies and requires the Successor Agency to the Hawthorne Redevelopment Agency (“Successor Agency”) to wind down the obligations of the former Hawthorne Redevelopment Agency (“Former Agency”). The wind down is accomplished, in large part, through the preparation of an annual ROPS, covering the upcoming fiscal year. The ROPS lists the obligations to be funded and serves as a request for an allocation of property tax increment revenue deposited by the Auditor-Controller in the Redevelopment Property Tax Trust Fund (“RPTTF”).
The ROPS must be approved by the Oversight Board to the Successor Agency (“Oversight Board”) and submitted to the State Department of Finance (“DOF”). Pursuant to Health and Safety Code (“HSC”) Section 34177(l), DOF provides the ROPS form for successor agencies to use to report enforceable obligations. Pursuant to HSC Section 34177(l)(2)(C), a copy of the ROPS must also be submitted to the Los Angeles County Auditor-Controller (“Auditor-Controller”) and State Controller’s Office.
DISCUSSION:
The Successor Agency has already paid off several of the Former Agency’s obligations. Remaining obligations include the 2025 Tax Allocation Refunding Bonds and related costs, Oceangate Owner Participation Agreement (“OPA”) rebates, Gateway Disposition and Development Agreement rebates, as well as administrative expenses. The ROPS Detail page lists each of the remaining obligations, including the amount requested in the current year and an estimate of the total debt or obligation remaining for each item.
In total, the Successor Agency requests approval for $4,204,707 in expenditures, including $1,310,438 from a reserve balance set aside in the prior fiscal year and $2,894,269 in funds from the RPTTF. This represents an overall decrease from the amount requested in the prior year’s ROPS, mostly due to the lower debt service payment (Item 38) and an adjustment to the OPA rebate calculation (Item 35), as detailed in the OPA. The 2016 Tax Allocation Refunding Bonds related to Items 36, 37, and 38 were refunded in June 2025 to realize savings for the Successor Agency and further the wind down process outlined in the Dissolution Act. The ROPS 26-27 includes three (3) new items, 46, 47, and 48, pertaining to the 2025 Tax Allocation Refunding Bonds (TARBS).
Debt service for the 2025 TARBS (Attachment 2) shows $460,736.09 due during the 2025-26B Period and $1,183,500 due during the 2026-27A Period. Funds on hand, including the approved 2016 TARBS Reserve funds from the 25-26B period of $1,396,125, and the approved 2016 TARBS debt service payment of $366,125, will be used to pay these debt service amounts due. This leads to a ROPS 26-27 A period reserve balance request for Item 46 of $1,310,438 ($1,183,500 per the debt service + $126,938 difference from the 25-26B and 26-27A debt service and the funds on hand). The $126,938 difference amount will be filtered back to the Successor Agency’s ROPS through the 26-27 PPA process. Applying this calculation now will help smooth the transition from the prior 2016 Bonds to the new 2025 Refunding Bonds. Moving forward, the ROPS requests will only involve the 2025 Refunding Bonds and will follow the debt service schedule more closely.
This ROPS 26-27 request also includes a slight increase in its administrative budget compared to last year’s. A separate contract item for the Oceangate Owner Participation Agreement (“OPA”) was included in the Fiscal Year 2026-27 Administrative Budget (Exhibit B to Attachment 1) to fully account for the Successor Agency’s costs administering the OPA. This adjustment more accurately aligns with the Successor Agency’s existing contract with its administrative consultant. The ROPS 26-27 administrative cost request of $235,400 remains below the $250,000 maximum administrative cost allowance per HSC Section 34171(b).
On the Report of Cash Balances, the Successor Agency identifies any available funds that can be used to pay enforceable obligations. After all available funds are allocated or exhausted, the Successor Agency can request funding for enforceable obligations from RPTTF.
ECONOMIC DEVELOPMENT STRATEGIC PLAN:
.
FISCAL IMPACT:
ROPS 26-27 must be approved by the Hawthorne Successor Agency’s Oversight Board and submitted to DOF for the Successor Agency to receive RPTTF, administered by the Los Angeles County Auditor-Controller (“Auditor-Controller”), and to pay enforceable obligations during the ROPS 26-27 period. In total, the Successor Agency requests approval for $4,204,707 in expenditures, including $1,310,438 from a reserve balance set aside in the prior fiscal year and $2,894,269 in funds from the RPTTF.
NOTICING PROCEDURE:
None.