CRA/LA, a Designated Local Authority Successor Agency to The Community Redevelopment Agency of The City of Los Angeles

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1 Successor Agency to The Community Redevelopment Agency of The City of Los Angeles

2 Table of Contents Independent Accountant s Report on Applying Agreed-Upon Procedures 3 Exhibit A - Agreed-Upon Procedures and s 4 Exhibit B - Listing of Transfers from the Former Redevelopment Agency to the City of Los Angeles for the Period From January 1, 2011 through January 31, Exhibit C-1 - Listing of Transfers from the Former Redevelopment Agency to Other Public Agency or Private Parties for the Period From January 1, 2011 through January 31, Exhibit C-2 - Listing of Transfers from the Successor Agency to Other Public Agency or Private Parties for the Period From February 1, 2012 through June 30, Exhibit D - Listing of All Assets of the as of June 30, Exhibit E - Listing of Assets that are Not Liquid as of June 30, Exhibit F-1 - Schedule of Asset Balances that are Dedicated or Restricted for the Funding of Enforceable Obligations as of June 30, Exhibit F-2 - Schedule of Current Unrestricted Balances Necessary for Retention as of June 30, Exhibit G-1 - Recognized Obligation Payment Schedules 2 28 Exhibit G-2 - Recognized Obligation Payment Schedules 3 31 Exhibit H - Summary of Balances Available for Allocation to Affected Taxing Entities as of June

3 3600 WILSHIRE BOULEVARD, SUITE 1710 LOS ANGELES, CA (213) TELEPHONE (213) FAX SIMPSON & SIMPSON CERTIFIED PUBLIC ACCOUNTANTS FOUNDING PARTNERS BRAINARD C. SIMPSON, CPA MELBA W. SIMPSON, CPA Oversight Board of the Successor Agency to the Community Redevelopment Agency of the City of Los Angeles, California Independent Accountant s Report on Applying Agreed-Upon Procedures We have performed the agreed-upon procedures enumerated in Exhibit A, which was generally agreed to by the California State Controller s Office, Department of Finance, and the CRA/LA, a Designated Local Authority and (Successor Agency), solely to assist you in ensuring that the Successor Agency is complying with its statutory requirements with respect to AB Management of the Successor Agency is responsible for the Exhibits B, C-1, C-2, D, E, F-1, F-2, G-1, G-2 and H consisted of Listings, Summary, and Schedules that were prepared in accordance with Health and Safety Code Sections (c)(1) through (c)(6). This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in the report. Consequently, we make no representation regarding the sufficiency of the procedures described in Exhibit A either for the purpose for which this report has been requested or for any other purpose. The scope of this engagement was limited to performing the agreed-upon procedures at your direction as set forth in Exhibit A. Exhibit A identifies the findings noted as a result of the procedures performed. Exhibits B, C-1, C-2, D, E, F-1, F-2, G-1, G-2 and H consisted of Listings, Summary, and Schedules that were prepared in accordance with Health and Safety Code Sections (c)(1) through (c)(6). We were not engaged to and did not conduct an audit, the objective of which would be the expression of an opinion on the Listings, Summary, and Schedules in Exhibits B, C-1, C-2, D, E, F-1, F-2, G-1, G-2 and H or as to the appropriateness of the results summarized in Exhibit A. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the California State Controller s Office, Department of Finance, County of Los Angeles, and the, and 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. Los Angeles, California September 28,

4 1. Obtain from the Successor Agency a listing of all assets ( only) that were transferred from the former redevelopment agency to the Successor Agency on February 1, Agree the amounts on the listing to account balances established in the accounting records of the Successor Agency. Identify the amount of the assets transferred to the Successor Agency as of that date. The Successor Agency provided us with the trial balances of the Low and Moderate Income Housing Funds (LMIHF) (Funds 1202 and 40xx) and a listing of all assets of the LMIHF transferred from the former redevelopment agency to the Successor Agency on February 1, We agreed the amounts on the listing to account balances in the trial balance. We noted a discrepancy of $306,137 for loan receivable between the trial balances of $61,148,500 and the listing of $61,454,637. The Successor Agency has represented to us that the discrepancy was due to a journal entry for reclassifying loan receivable of $306,137 from other housing fund to the LMIHF. The journal entry was not posted in the Successor Agency s accounting records. However, this entry will be reflected in the audited financial statements as of January 31, The amounts transferred to the Successor Agency on February 1, 2012 are as follows: Assets Balances Due from Other Funds (1) $ 65,451,096 Loans Receivable, Net of Allowance for Market 61,454,637 Value Write-Downs and Uncollectibles Prepaid Expenses 315,792 Land Held for Redevelopment 32,991,027 Capital Assets Land 3,702,689 Total Assets for LMIHF $ 163,915,241 (1) The Successor Agency has represented to us that Due from Other Funds in the amount of $65,451,096 consists of LMIHF s equity in the CRA/LA investment pool on February 1, The investment pool is utilized to combine and invest resources of participating funds that do not have yield restrictions or other limitations on investments. 4

5 2. If the State Controller s Office has completed its review of transfers required under both Sections and and issued its report regarding such review, attach a copy of that report as an exhibit to the AUP report. If this has not yet occurred, perform the following procedures: The Successor Agency has represented to us that the State Controller s Office has not completed its review of transfers required under both Sections and ; therefore, we performed procedures 2.A, 2.B, and 2.C. A. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the former redevelopment agency to the city, county, or city and county that formed the redevelopment agency for the period from January 1, 2011 through January 31, For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency s enforceable obligations or other legal requirements. Provide this listing as an attachment to the AUP report. We obtained a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the former redevelopment agency to the City of Los Angeles for the period from January 1, 2011 through January 31, The listing of transfers is in Exhibit B. B. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the Successor Agency to the city, county, or city and county that formed the redevelopment agency for the period from February 1, 2012 through June 30, For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency s enforceable obligations or other legal requirements. Provide this listing as an attachment to the AUP report. The Successor Agency has represented to us that there were no transfers (excluding payments for goods and services) from the Successor Agency to the City of Los Angeles for the period from February 1, 2012 through June 30, 2012; therefore, the procedure was not performed. 5

6 2. If the State Controller s Office has completed its review of transfers required under both Sections and and issued its report regarding such review, attach a copy of that report as an exhibit to the AUP report. If this has not yet occurred, perform the following procedures: (Continued) C. For each transfer, obtain the legal document that formed the basis for the enforceable obligation that required any transfer. Note in the AUP report the absence of any such legal document or the absence of language in the document that required the transfer. For each transfer in Exhibit B, we obtained the legal document that formed the basis for the enforceable obligation that required the transfer. We noted that item nos. 4 and 6, payments of $65,792 and $250,000 (totaled $315,792) to the City of Los Angeles Office of City Attorney, were for outside legal services retainer. The Successor Agency has represented to us that as of April 27, 2012, the Office of City Attorney of the City of Los Angeles is no longer administering the legal services for the Successor Agency; therefore, the remaining retainer of $315,792 will be returned to the Successor Agency. The retainer was recorded as Prepaid Expenses in the LMIHF at January 31, 2012 and reclassified to Due from the City of Los Angeles at June 30, This is not considered an exception. We also noted that item no. 5, payment of $1,083,000 to the Los Angeles Housing Department (LAHD) was the former redevelopment agency s contribution to the City of Los Angeles Affordable Housing Trust Fund pursuant to the master cooperation agreement (Contract No ) and sub-agreement (Contract No ) between the former redevelopment agency and LAHD. The Successor Agency has represented to us that the amount was paid on June 16, 2011, prior to the Supreme Court action on December 29, 2011 to uphold AB 1x 26. Although the master cooperation agreement with LAHD is invalidated by AB 1x 26, as provided in Section 34178(a), the Oversight Board on May 10, 2012 approved by resolution of the Successor Agency s reentry into the master cooperation agreement with the City of Los Angeles. Once the reentry agreement is executed, the Successor Agency is authorized to pay $2,106,576 to LAHD thereby closing out this enforceable obligation. For two properties (13574 W Foothill Blvd and 214, 216 W 94th Street) that were transferred to the City of Los Angeles, listed as item nos. 7 and 8 in Exhibit B, we noted the absence of language in the legal documents (cooperation agreement and council file) that required the transfer. Except for the transfer of two properties, no exceptions were found as a result of applying the procedure. 6

7 3. If the State Controller s Office has completed its review of transfers required under both Sections and and issued its report regarding such review, attach a copy of that report as an exhibit to the AUP report. If this has not yet occurred, perform the following procedures: The Successor Agency has represented to us that the State Controller s Office has not completed its review of transfers required under both Sections and ; therefore, we performed procedures 3.A, 3.B, and 3.C. A. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the former redevelopment agency to any other public agency or to private parties for the period from January 1, 2011 through January 31, For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency s enforceable obligations or other legal requirements. Provide this listing as an attachment to the AUP report. We obtained a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the former redevelopment agency to any other public agency or to private parties for the period from January 1, 2011 through January 31, The listing of transfers is in Exhibit C-1. B. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the Successor Agency to any other public agency or private parties for the period from February 1, 2012 through June 30, For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency s enforceable obligations or other legal requirements. Provide this listing as an attachment to the AUP report. We obtained a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the Successor Agency to any other public agency or private parties for the period from February 1, 2012 through June 30, The listing of transfers is in Exhibit C- 2. 7

8 3. If the State Controller s Office has completed its review of transfers required under both Sections and and issued its report regarding such review, attach a copy of that report as an exhibit to the AUP report. If this has not yet occurred, perform the following procedures (Continued): C. For each transfer, obtain the legal document that formed the basis for the enforceable obligation that required any transfer. Note in the AUP report the absence of any such legal document or the absence of language in the document that required the transfer. No exceptions were found as a result of applying the procedure. 4. Perform the following procedures: A. Obtain from the Successor Agency a summary of the financial transactions of the Redevelopment Agency and the Successor Agency in the format set forth in the attached schedule for the fiscal periods indicated in the schedule. For purposes of this summary, the financial transactions should be presented using the modified accrual basis of accounting. End of year balances for capital assets (in total) and long-term liabilities (in total) should be presented at the bottom of this summary schedule for information purposes. B. Ascertain that for each period presented, the total of revenues, expenditures, and transfers accounts fully for the changes in equity from the previous fiscal period. C. Compare amounts in the schedule relevant to the fiscal year ended June 30, 2010 to the state controller s report filed for the Redevelopment Agency for that period. D. Compare amounts in the schedule for the other fiscal periods presented to account balances in the accounting records or other supporting schedules. Describe in the report the type of support provided for each fiscal period. The result will be presented in the Agreed-Upon Procedures Report for All Other Funds of the Successor Agency, which is due on December 15,

9 5. Obtain from the Successor Agency a listing of all assets of the Low and Moderate Income Housing Fund as of June 30, 2012 for the report that is due October 1, When this procedure is applied to the, the schedule attached as an exhibit will include only those assets of the that were held by the Successor Agency as of June 30, 2012 and will exclude all assets held by the entity that assumed the housing function previously performed by the former redevelopment agency. Agree the assets so listed to recorded balances reflected in the accounting records of the Successor Agency. The listings should be attached as an exhibit to the appropriate AUP report. We obtained a listing of all assets of the LMIHF as of June 30, 2012 and we agreed the assets listed to the trial balances of LMIHF as of June 30, We noted a discrepancy of $306,137 for loan receivable between the trial balance of $61,148,500 and the listing of $61,454,637. The Successor Agency has represented to us that the discrepancy was due to a journal entry for reclassifying loan receivable of $306,137 from other housing fund to the LMIHF. The journal entry was not posted in the Successor Agency s accounting records. However, this entry will be reflected in the audited financial statements as of June 30, Except for the discrepancy noted above, no exceptions were found as a result of applying the procedure. The listing of all assets of the LMIHF as of June 30, 2012 is in Exhibit D. Also, the Successor Agency has represented to us that the listing of all assets of the LMIHF as of June 30, 2012 included assets that will be transferred to the Los Angeles Housing Department (LAHD). On January 25, 2012, the City of Los Angeles elected to retain the housing assets of the former redevelopment agency and to perform the housing functions previously performed by the former redevelopment agency (Council File ). The City of Los Angeles identifies Los Angeles Housing Department (LAHD) as the representative in carrying out the housing functions and responsibilities. As of the report date, the Successor Agency has not transferred the assets of the LMIHF to the LAHD. 9

10 6. Obtain from the Successor Agency a listing of asset balances held on June 30, 2012 that are restricted for the following purposes: A. Unspent bond proceeds: i. Obtain the Successor Agency s computation of the restricted balances (e.g., total proceeds less eligible project expenditures, amounts set aside for debt service payments, etc.) ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by the Successor Agency as restricted. The Successor Agency has represented to us that there are no asset balances held on June 30, 2012 that are restricted for unspent bond proceeds; therefore, the procedures were not performed. B. Grant proceeds and program income that are restricted by third parties: i. Obtain the Successor Agency s computation of the restricted balances (e.g., total proceeds less eligible project expenditures). ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the grant agreement that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by the Successor Agency as restricted. The Successor Agency has represented to us that there are no asset balances held on June 30, 2012 that are grant proceeds and program income restricted by third parties; therefore, the procedures were not performed. 10

11 6. Obtain from the Successor Agency a listing of asset balances held on June 30, 2012 that are restricted for the following purposes: (Continued) C. Other assets considered to be legally restricted: i. Obtain the Successor Agency s computation of the restricted balances (e.g., total proceeds less eligible project expenditures). ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by the Successor Agency as restricted. The Successor Agency has represented to us that there are no asset balances held on June 30, 2012 that are considered to be legally restricted; therefore, the procedures were not performed. D. Attach the above mentioned Successor Agency prepared schedule(s) as an exhibit to the AUP report. For each restriction identified on these schedules, indicate in the report the period of time for which the restrictions are in effect. If the restrictions are in effect until the related assets are expended for their intended purpose, this should be indicated in the report. Procedures 6.A, 6.B, and 6.C were not performed; therefore, procedure 6.D is not applicable. 11

12 7. Perform the following procedures: A. Obtain from the Successor Agency a listing of assets as of June 30, 2012 that are not liquid or otherwise available for distribution (such as capital assets, land held for resale, long-term receivables, etc.) and ascertain if the values are listed at either purchase cost (based on book value reflected in the accounting records of the Successor Agency) or market value as recently estimated by the Successor Agency. We obtained a listing of assets as of June 30, 2012 that are not liquid. See Exhibit E. The Successor Agency has represented to us that land held for redevelopment, capital assets land, and advances to other funds were recorded at cost and loans receivable was recorded at market value at June 30, 2011 (the most recent estimates by the Successor Agency). B. If the assets listed at 7(A) are listed at purchase cost, trace the amounts to a previously audited financial statement (or to the accounting records of the Successor Agency) and note any differences. Balances of land held for redevelopment and capital assets land at June 30, 2012 agreed with the amounts in the previously audited financial statements as of June 30, The advances to other funds balance of $3,120,514 agreed to the due from other funds balance of $3,120,514 in the previously audited financial statements as of June 30,

13 7. Perform the following procedures: (Continued) C. For any differences noted in 7(B), inspect evidence of disposal of the asset and ascertain that the proceeds were deposited into the Successor Agency trust fund. If the differences are due to additions (this generally is not expected to occur), inspect the supporting documentation and note the circumstances. No any differences noted in 7(B) and therefore, the procedure 7(C) is not performed. D. If the assets listed at 7(A) are listed at recently estimated market value, inspect the evidence (if any) supporting the value and note the methodology used. If no evidence is available to support the value and\or methodology, note the lack of evidence. The loan receivable balances at June 30, 2012 are listed at recently estimated market value of June 30, We inspected the appraised value and methodology of the mortgage loan portfolio reports as of June 30, 2011, which was prepared by the independent valuation company, Millar Valuation Company. No exceptions were found as a result of applying the procedure. 13

14 8. Perform the following procedures: A. If the Successor Agency believes that asset balances need to be retained to satisfy enforceable obligations, obtain from the Successor Agency an itemized schedule of asset balances (resources) as of June 30, 2012 that are dedicated or restricted for the funding of enforceable obligations and perform the following procedures. The schedule should identify the amount dedicated or restricted, the nature of the dedication or restriction, the specific enforceable obligation to which the dedication or restriction relates, and the language in the legal document that is associated with the enforceable obligation that specifies the dedication of existing asset balances toward payment of that obligation. i. Compare all information on the schedule to the legal documents that form the basis for the dedication or restriction of the resource balance in question. ii. Compare all current balances to the amounts reported in the accounting records of the Successor Agency or to an alternative computation. iii. Compare the specified enforceable obligations to those that were included in the final Recognized Obligation Payment Schedule approved by the California Department of Finance. iv. Attach as an exhibit to the report the listing obtained from the Successor Agency. Identify in the report any listed balances for which the Successor Agency was unable to provide appropriate restricting language in the legal document associated with the enforceable obligation. The Successor Agency has represented to us that asset balances need to be retained to satisfy enforceable obligations. We obtained an itemized schedule of asset balances that need to be retained to satisfy enforceable obligations as of June 30, 2012 (see Exhibit F-1). In performing the procedures, the following items are noted as questionable. 14

15 8. Perform the following procedures: (Continued) ROPS item 0974 According to ROPS 1, the enforceable obligation of $15,000 is payable to LTSC & CRCD (Borrower) for the remaining loan balance of an affordable housing loan agreement. The Successor Agency has represented to us that the loan agreement also consists of a loan guarantee of $2,000,000 (Take-out Loan), in the event that the State of California Multifamily Housing Program (MHP) funds are not made available to the Borrower. However, according to the loan agreement, the loan guarantee shall terminate on the earlier of (A) the date the State fund the MHP loan or (B) October 30, 2011, unless extended in writing at the discretion of the Chief Executive Officer, or designee of CRA/LA. The Successor Agency has represented to us that it is their intent to extend the loan guarantee and they are in the process of obtaining the written extension. The Successor Agency anticipates that they will be notified whether the Take-out Loan is necessary by the end of calendar year ROPS item 0975 We cannot compare this ROPS item, payable to LTSC Community Development Corporation, to the ROPS 1 or ROPS 2 approved by the California Department of Finance. We noted that this ROPS item was included in the Appendix A of ROPS 1. Appendix A of ROPS 1 includes enforceable obligations for which there is no scheduled payment in ROPS 1. According to the Oversight Board s resolution, approval of the items listed in Appendix A is not intended to imply that the Oversight Board has determined that as a matter of law these items are enforceable obligations as defined in Health & Safety Code Section 34179(d)(1) for purpose of future ROPS. The Oversight Board reserves the right to make that determination for each item listed in Appendix in each six-month ROPS period in which payments are scheduled. The Successor Agency has also represented to us that this ROPS item is included in ROPS 3. However, as of the report date, ROPS 3 has not been approved by the California Department of Finance. 15

16 8. Perform the following procedures: (Continued) B. If the Successor Agency believes that future revenues together with balances dedicated or restricted to an enforceable obligation are insufficient to fund future obligation payments and thus retention of current balances is required, obtain from the Successor Agency a schedule of approved enforceable obligations that includes a projection of the annual spending requirements to satisfy each obligation and a projection of the annual revenues available to fund those requirements and perform the following procedures: i. Compare the enforceable obligations to those that were approved by the California Department of Finance. Procedures to accomplish this may include reviewing the letter from the California Department of Finance approving the Recognized Enforceable Obligation Payment Schedules for the six month period from January 1, 2012 through June 30, 2012 and for the six month period July 1, 2012 through December 31, ii. Compare the forecasted annual spending requirements to the legal document supporting each enforceable obligation. a. Obtain from the Successor Agency its assumptions relating to the forecasted annual spending requirements and disclose in the report major assumptions associated with the projections. iii. For the forecasted annual revenues: a. Obtain from the Successor Agency its assumptions for the forecasted annual revenues and disclose in the report major assumptions associated with the projections. The Successor Agency has represented to us that they do not believe that future revenues together with balances dedicated or restricted to an enforceable obligation are insufficient to fund future obligation payments and thus retention of current balances is required; therefore, the procedures were not performed. 16

17 8. Perform the following procedures: (Continued) C. If the Successor Agency believes that projected property tax revenues and other general purpose revenues to be received by the Successor Agency are insufficient to pay bond debt service payments (considering both the timing and amount of the related cash flows), obtain from the Successor Agency a schedule demonstrating this insufficiency and apply the following procedures to the information reflected in that schedule. i. Compare the timing and amounts of bond debt service payments to the related bond debt service schedules in the bond agreement. ii. Obtain the assumptions for the forecasted property tax revenues and disclose major assumptions associated with the projections. iii. Obtain the assumptions for the forecasted other general purpose revenues and disclose major assumptions associated with the projections. The Successor Agency has represented to us that they believe that projected property tax revenues and other general purpose revenues to be received by the Successor Agency are sufficient to pay bond debt service payments; therefore, the procedures were not performed. 17

18 8. Perform the following procedures: (Continued) D. If procedures A, B, or C were performed, calculate the amount of current unrestricted balances necessary for retention in order to meet the enforceable obligations by performing the following procedures. i. Combine the amount of identified current dedicated or restricted balances and the amount of forecasted annual revenues to arrive at the amount of total resources available to fund enforceable obligations. ii. Reduce the amount of total resources available by the amount forecasted for the annual spending requirements. iii. Include the calculation in the AUP report. We calculated the amount of current unrestricted balances necessary for retention in order to meet the enforceable obligation in Exhibit F-2. 18

19 9. If the Successor Agency believes that cash balances as of June 30, 2012 need to be retained to satisfy obligations on the Recognized Obligation Payment Schedule (ROPS) for the period of July 1, 2012 through June 30, 2013, obtain a copy of the final ROPS for the period of July 1, 2012 through December 31, 2012 and a copy of the final ROPS for the period January 1, 2013 through June 30, For each obligation listed on the ROPS, the Successor Agency should add columns identifying (1) any dollar amounts of existing cash that are needed to satisfy that obligation and (2) the Successor Agency s explanation as to why the Successor Agency believes that such balances are needed to satisfy the obligation. Include this schedule as an attachment to the AUP report. The Successor Agency has represented to us that cash balances as of June 30, 2012 are needed to be retained to satisfy obligations on ROPS 2 for the period of July 1, 2012 through December 31, 2012 and ROPS 3 for the period of January 1, 2013 through June 30, See LMIHF s obligations on ROPS 2 and 3 in Exhibit G-1 and G-2, respectively. 10. Include (or present) a schedule detailing the computation of the Balance Available for Allocation to Affected Taxing Entities. Amounts included in the calculation should agree to the results of the procedures performed in each section above. The schedule should also include a deduction to recognize amounts already paid to the County Auditor-Controller on July 12, 2012 as directed by the California Department of Finance. The amount of this deduction presented should be agreed to evidence of payment. Separate schedules should be completed for the Low and Moderate Income Housing Fund and for all other funds combined (excluding the Low and Moderate Income Housing Fund). We performed the procedure and the result is presented in Exhibit H. The Successor Agency has represented to us that they have elected not to recognize a deduction for the amount paid to the County Auditor-Controller in regards to the LMIHF. The amount paid will be deducted from the All Other Funds calculation. 19

20 11. Obtain a representation letter from Successor Agency management acknowledging their responsibility for the data provided to the practitioner and the data presented in the report or in any attachments to the report. Included in the representations should be an acknowledgment that management is not aware of any transfers (as defined by Section ) from either the former redevelopment agency or the Successor Agency to other parties for the period from January 1, 2011 through June 30, 2012 that have not been properly identified in the AUP report and its related exhibits. Management s refusal to sign the representation letter should be noted in the AUP report as required by attestation standards. We obtained a representation letter from the Successor Agency. 20

21 Successor Agency to the Community Redevelopment Agency of the City of Los Angeles, California Exhibit B LISTING OF TRANSFERS FROM THE FORMER REDEVELOPMENT AGENCY TO THE CITY OF LOS ANGELES For the Period from January 1, 2011 through January 31, 2012 A) Transfer of Payments: No. Transfer To Date Check Number Amount Legal Basis Description 1 Los Angeles Housing 02/01/2011 CKUB $ 19, Cooperation Agreement Reimbursed LAHD for the CRA/LA's Share Department (LAHD) and Vendor Invoices Cost of Property Maintenance Expenses 2 Los Angeles Housing Department (LAHD) 3 Los Angeles Housing Department (LAHD) 02/01/2011 CKUB , Cooperation Agreement and Vendor Invoices 03/08/2011 CKUB , Cooperation Agreement and Vendor Invoices Reimbursed LAHD for the CRA/LA's Share Cost of Property Maintenance Expenses Reimbursed LAHD for the CRA/LA's Share Cost of Property Maintenance Expenses 4 City of Los Angeles - Office of City Attorney 5 Los Angeles Housing Department (LAHD) 6 City of Los Angeles - Office of City Attorney 03/18/2011 CKUB , Council File, Contract Agreement 06/16/2011 CKUB ,083, Master Cooperation Agreement and Subagreement 01/30/2012 CKUB , Council File, Contract Agreement 1,429, Retainer for Outside Legal Services CRA/LA's Reimbursement for Funding of Low-Moderate Housing Projects Retainer for Outside Legal Services B) Transfer of Properties: No. Transfer To Date Address Amount Legal Basis Description 7 City of Los Angeles 6/29/ W Foothill Blvd 992, Cooperation Agreement, Council File, and Grant Deed (A) Transfer of Properties In Connection With the Implementation of the Cooperation Agreement (Council File S1) 8 City of Los Angeles 6/29/ , 216 W 94th Street 2,195, Cooperation Agreement, Council File, and Grant Deed 3,187, Total Transfers to the City of Los Angeles $ 4,617, (A) Transfer of Properties In Connection With the Implementation of the Cooperation Agreement (Council File S1) Total Transfers to the City of Los Angeles Without Language Requiring the Transfer in the Cooperation Agreement and Council File $ 3,187, (A) Absence of language in the cooperation agreement and council file that required the transfer. 21

22 Successor Agency to the Community Redevelopment Agency of the City of Los Angeles, California Exhibit C-1 LISTING OF TRANSFERS FROM THE FORMER REDEVELOPMENT AGENCY TO OTHER PUBLIC AGENCY OR PRIVATE PARTIES For the Period from January 1, 2011 through January 31, 2012 A) Transfer of Payments: No. Transfer To Date Check Number Amount Legal Basis Description 1 CRA/LA Fund Disbursement 2/15/2011 CKUB $ 75, Promissory Note Transferred to Escrow Account for Loan 2 CRA/LA Fund Disbursement 02/17/2011 CKUB , Promissory Note Transferred to Escrow Account for Loan 3 CRA/LA Fund Disbursement 03/01/2011 CKUB ,700, Promissory Note Transferred to Escrow Account for Loan 4 CRA/LA Fund Disbursement 03/08/2011 CKUB ,700, Promissory Note Transferred to Escrow Account for Loan 5 CRA/LA Fund Disbursement 03/10/2011 CKUB , Promissory Note Transferred to Escrow Account for Loan 6 CRA/LA Fund Disbursement 03/10/2011 CKUB , Promissory Note Transferred to Escrow Account for Loan 7 CRA/LA Fund Disbursement 03/17/2011 CKUB , Promissory Note Transferred to Escrow Account for Loan 8 CRA/LA Fund Disbursement 04/07/2011 CKUB ,646, Promissory Note Transferred to Escrow Account for Loan 9 CRA/LA Fund Disbursement 04/12/2011 CKUB ,872, Promissory Note Transferred to Escrow Account for Loan 10 The Midnight Mission 04/28/2011 CKUB , Grant Agreement Grant to Non-Profit Organization for Housing Program 11 Weingart Center Association 04/28/2011 CKUB , Grant Agreement Grant to Non-Profit Organization for Housing Program 12 CRA/LA Fund Disbursement 05/10/2011 CKUB ,680, Promissory Note Transferred to Escrow Account for Loan 13 CRA/LA Fund Disbursement 06/16/2011 CKUB , Promissory Note Transferred to Escrow Account for Loan 14 Penn Escrow Inc. 06/23/2011 CKUB ,755, Grant Agreement Grant to Non-Profit Organization for Housing Program 15 A Community of Friends 06/24/2011 CKUB , Grant Agreement Grant to Non-Profit Organization for Housing Program 16 CRA/LA Fund Disbursement 08/09/2011 CKUB , Promissory Note Transferred to Escrow Account for Loan 17 CRA/LA Fund Disbursement 08/16/2011 CKUB ,587, Promissory Note Transferred to Escrow Account for Loan 18 Behringer Harvard NoHo, LLC 10/20/2011 CKUB ,810, Owner Participation Agreement Annual Housing Subsidy 19 Redrock NoHo Residential, 10/21/2011 CKUB , Owner Participation Agreement Annual Housing Subsidy LLC 20 CRA/LA Fund Disbursement 10/27/2011 CKUB , Promissory Note Transferred to Escrow Account for Loan 21 Centre Street Lofts, LLC 12/13/2011 CKUB ,575, Loan Agreement Loan Payoff 22 CRA/LA Fund Disbursement 12/21/2011 CKUB ,000, Promissory Note Transferred to Escrow Account for Loan 23 U.S. Bank 02/03/2011 CKUBWT , Bond Official Statement Transferred Tax Increment Revenue to Fiscal Agent for Bond Repayment 24 U.S. Bank 08/23/2011 CKUBWT , Bond Official Statement Transferred Tax Increment Revenue to Fiscal Agent for Bond Repayment 25 U.S. Bank 12/01/2011 CKUBWT , Bond Official Statement Transferred Tax Increment Revenue to Fiscal Agent for Bond Repayment 26 U.S. Bank 12/27/2011 CKUBWT ,101, Bond Official Statement Transferred Tax Increment Revenue to Fiscal Agent for Bond Repayment Total Transfers to Other Public Agency or Private Parties $ 27,889,

23 Successor Agency to the Community Redevelopment Agency of the City of Los Angeles, California Exhibit C-2 LISTING OF TRANSFERS FROM THE SUCCESSOR AGENCY TO OTHER PUBLIC AGENCY OR PRIVATE PARTIES For the Period from February 1, 2012 through June 30, 2012 A) Transfer of Payments: No. Transfer To Date Check Number Amount Legal Basis Description 1 CRA/LA Fund Disbursement 02/07/2012 CKUB $ 347, Promissory note Transferred to Escrow Account for Loan 2 CRA/LA Fund Disbursement 02/09/2012 CKUB ,296, Promissory note Transferred to Escrow Account for Loan 3 CRA/LA Fund Disbursement 03/06/2012 CKUB , Promissory note Transferred to Escrow Account for Loan 4 CRA/LA Fund Disbursement 03/06/2012 CKUB ,605, Promissory note Transferred to Escrow Account for Loan 5 CRA/LA Fund Disbursement 04/24/2012 CKUB ,500, Promissory note Transferred to Escrow Account for Loan 6 Century Law Group 06/01/2012 CKUB , Claim Settlement Agreement Loss of goodwill settlement claim 7 CRA/LA Fund Disbursement 06/21/2012 CKUB ,416, Promissory note Transferred to Escrow Account for Loan 8 East LA Community Corporation 06/29/2012 CKUB , Grant agreement Grant to Non-Profit Organization for Housing Program Total Transfers to Other Public Agency or Private Parties $ 10,378,

24 Successor Agency to the Community Redevelopment Agency of the City of Los Angeles, California Exhibit D LISTING OF ALL ASSETS OF THE LOW AND MODERATE INCOME HOUSING FUND As of June 30, 2012 Due from Other Funds (1) $ 53,867,883 Loans receivable, net of allowance for market value write downs and uncollectibles 61,454,637 Other Receivable 21,652 Due from the City of Los Angeles 315,792 Land Held for Redevelopment 32,991,027 Capital Assets - Land 3,702,689 Advances to Other Funds $ 3,120, ,474,194 (1) The Successor Agency has represented to us that Due from Other Funds in the amount of $53,867,883 consists of LMIHF s equity in the CRA/LA investment pool as of June 30, The investment pool is utilized to combine and invest resources of participating funds that do not have yield restrictions or other limitations on investments. 24

25 Successor Agency to the Community Redevelopment Agency of the City of Los Angeles, California Exhibit E LISTING OF ASSETS THAT ARE NOT LIQUID As of June 30, 2012 Loans Receivable, Net of Allowance for Market Value Write-Downs and Uncollectibles $ 61,454,637 Land Held for Redevelopment 32,991,027 Capital Assets - Land 3,702,689 Advances to Other Funds Total Properties Transferred to the City of Los Angeles Without Language 3,120, ,268,867 Requiring the Transfer in the Cooperation Agreement and Council File (see Exhibit B) 3,187,479 Total $ 104,456,346 25

26 Successor Agency to the Community Redevelopment Agency of the City of Los Angeles, California Exhibit F-1 Contract/ Purchase Order/ Loan No. No. ROPS No. Project Area Payee Legal Form Description Nature NH HHP - Elmer, LLC Loan Agreement Developer is revising the Design Development drawings; and is preparing to submit its tract map application PA Meta Housing Corporation Loan Agreement Amount indicated is required to fund the Predevelopment and Acquisition Loan C9 Donna Desmond Associates Purchase Order Vendor hired to complete a goodwill appraisal to resolve an Retained Assets Amount Construction Loan $ 1,100, Acquisition Loan 1,866, Goodwill Loss Appraisal Services 10, outstanding relocation issue with a tenant on a Successor Agencyowned housing site. Appraisal was completed and final payment should be during ROPS 2 period C9 Little Tokyo Service Center (LTSC) Loan Agreement Balance on Affordable Housing Loan for Commercial Façade Affordable Housing Loan 2,000, (A) & Coalition for Responsible Community Development (CRCD) Work and a Loan Guarantee for Multifamily Housing Program. Amount indicated is required, pursuant to agreement, in the event that developer is not awarded State funding. It is anticipated that the Developer will close on their permanent financing by January WK LTSC Community Development Loan Agreement The project is progressing. Developer is applying for funds from Affordable Housing Loan 1,119, (A) 1) LAHD in December 2012 for an allocation of Housing Trust Funds; 2) Federal Home Bank Affordable Housing Program in March 2013, and 3) CTCAC in March 2013 for 9% tax credits PA Meta Housing Corporation Loan Agreement Amount indicated is the shortfall in the Pacific Corridor's Low- Acquisition Loan 508, Moderate Fund. This amount is required to fund Predevelopment and Acquisition Loan BH Los Angeles Grand Avenue Conveyance and Parcel M Phase IIB completed. Payment issued in full on Affordable Housing Loan 5,626, Funding Agreement 7/19/ C9 Odona Central Security Contract Agreement Payment issued in full on 8/8/2012 Security Guard Services 21, NH Meyers Nave Riback & Silver Purchase Order Ongoing legal services needed to pay invoices for work Legal Services 250, $ 12,501, (A) See for Procedure 8.A on pages 14 and 15 in Exhibit A. SCHEDULE OF ASSET BALANCES THAT ARE DEDICATED OR RESTRICTED FOR THE FUNDING OF ENFORECABLE OBLIGATOINS As of June 30,

27 Exhibit F-2 Successor Agency to the Community Redevelopment Agency of the City of Los Angeles, California SCHEDULE OF CURRENT UNRESTRICTED BALANCES NECESSARY FOR RETENTION As of June 30, 2012 Description Amount Current Dedicated or Restricted Balances $ 12,501,161 Forecasted Annual Revenues - Total Resources Available to Fund Enforceable Obligation 12,501,161 Less: Forecasted for the Annual Spending Requirements - Current Unrestricted Balances Necessary for Retention $ 12,501,161 27

28 Exhibit G-1 THE OVERSIGHT BOARD FOR THE CRA/LA, A DESIGNATED LOCAL AUTHORITY: APPROVED ON MAY 10, 2012 RECOGNIZED OBLIGATION PAYMENT SCHEDULE (ROPS): ROPS 2 (JULY 1, DECEMBER 31, 2012) LOW AND MODERATE INCOME HOUSING FUND Per AB26 - Section and NAME OF AGENCY: CRA/LA, a Designated Local Authority and Successor to the Community Redevelopment Agency, CA PROJECT AREAS: Laurel Canyon (LC); North Hollywood (NH); Pacoima/Panorama City (PC); Adelante Eastside (EA); Monterey Hills (MH); Reseda/Canoga Park (RP); East Hollywood/Beverly Normandie (EB); Hollywood (HW); Mid City Corridors (MD); Pico Union 1 (P1); Pico Union 2 (P2); Westlake (WL); Wilshire Center/Koreatown (WK); Bunker Hill (BH); Central Industrial (CI); Chinatown (CH); City Center (CT); CD9 Corridors (C9); Little Tokyo (LT); Broadway/Manchester (MC); Crenshaw (CR); Exposition/University Park (HO); Normandie 5 (N5); Vermont/Manchester FUNDING SOURCE: 1. Low & Moderate Income Hsg Fund 2. Bond proceeds 3. Reserve balances 4. Administrative cost allowance 5. Property Tax Trust Fund 6. Other revenue sources LINE # Category Code ROPS # Contract/PO/ Loan / 015 (City Claim C-75, C-76, C-77, C-80, C-81) Project Area Payee MD, EB, City of Los Angeles - General Services C9, EA, Department EB Execution Date Description 8/31/2009 See Note 14: Cooperation Agreement for construction and maintenance services. Remaining balances: Work Order 012: $33,164, Work Order 015: $58,089, Work Order 027: $4,752, Work Order 028: $125,834. Paid in May O TOTAL T Existing Cash to Total Obligation PAYMENT: A Satisfy as of 5/1/12 JUL-DEC L Obligation Funding Source Explanation 138 7A XXXXX BH Grand Ave.JPA (County acting as Fiscal Agent) 5/31/2011 Phase IIB: funding for 56 affordable units in Related Project for Grand Avenue. Funds to be held by County and disbursed to Related when project is ready for construction A HW AMCAL MULTI HOUSING, INC 3/8/2011 Argyle Apt: Affordable housing Loan. To be paid in 12/ Housing 40 units North Western Avenue 1 5,626, ,435,000 3,435,000 3,435,000 The project remains on schedule. It is anticipated that the funds will be disbursed at loan closing in December A 7A MD JEFFERSON BOULEVARD HOUSING PARTNERS LP 3/8/2011 Housing Loan Agreement for the 5th Avenue and Jefferson Boulevard Apartments Project, 2401 West Jefferson Boulevard. $1.5 million of the $3 million investment will be reimbursed by the California i Department t of Housing and Community Development (HCD) via the Prop 1C grant awarded to CRA/LA. The Prop 1C grant is ROPS item #1271 and was executed on 6/28/2011. Disbursed in May/June A NH HHP - Elmer, LLC 6/28/2011 Predevelopment and Construction Loan to Heritage Housing Partners (also known as HHP-Elmer LLC) for 10 homeownership units for individuals/families of moderateincomes located at Elmer Avenue A RP CANBY WOODS, LP 6/14/2011 Acquisition/predevelopment/construction loan in the amount of $6.3 million for Canby Woods, a 98-unit affordable housing development located at 7238 N. Canby Ave. Project under construction A PC SPIELGEL DEVELOPMENT INC 6/2/2011 Construction/Permanent Loan Agreement for Jerome Apartment Homes, a 26 unit affordable housing project located at 9041 Laurel Canyon Blvd A RP Kittridge Housing, LP 3/8/2011 Acquisition/predevelopment/construction loan for Kittridge Family Housing, a 77-unit affordable housing development located at Kittridge Street. 1 2,962,231 1,396,435 1,396,435 Developer is revising the Design Development drawings; and is preparing to submit its tract map application 1 1,862,000 1,675, ,500,000 1,500,000 1,500,000 Funding encumbered pursuant to terms of Construction/Permanent Loan agreement. Loan is secured/awaiting signed loan docs in order to fund the loan. Developer is actively sourcing required outside financing 1 3,300,583 1,189, A HW Hollywood Community Housing Corporation 9/29/2010 Coronel: Affordable Housing Loan - 54 units 1601 North Hobart and North Serrano ,144,678 1,044,578

29 Project Area LINE # Category Code ROPS # Contract/PO/ Loan Payee Description 154 7A EA 3555 WHITTIER PARTNERS 6/11/2008 Remaining disbursement on affordable housing loan for 1 1,000, ,000 Whittier Apartments (355 Whittier Blvd) 157 7A C9 PACIFIC CENTER PLACE,LLC 4/21/2010 Rehabilitation subsidy for 812 E. 59th Street per DDLA 1 750, ,000 Execution Date Funding Source Total Obligation as of 5/1/12 TOTAL PAYMENT: JUL-DEC O T Existing Cash to A Satisfy L Obligation Exhibit G-1 Explanation 159 7A C9 Figueroa 7621, LP 3/8/2011 Figueroa Apartments affordable housing loan; Payment is required in next fiscal year A HW AMERICAN COMMUNITIES,LLC 3/12/2011 Affordable housing Loan - Housing 21 units North Gordon Avenue 173 7A C9 AMCAL SUNRISE FUND,L.P. 8/6/2009 Sunrise Apartments: remaining balance of affordable housing Loan which needs to be disbursed. Project is near completion and needs ongoing monitoring A RP SHERMAN VILLAGE APARTMEN 10/15/2009 Acquisition/predevelopment/construction loan in the amount of $4.4 million for Sherman Village, a 73-unit affordable housing development located at 7135 N. Wilbur Ave. Project under construction A PA META HOUSING CORPORATION 5/20/2010 Pacific Ave. Arts Colony: affordable hsg loan for predevelopment and acquisition 1 700, , ,500, , , ,385, , ,500, , ,943 Amount indicated is required for loan not yet funded. The Pacific Corridor's Low-Mod fund has a shortfall of $508, A RP San Fernando Valley Assoc for the Retarded 5/11/2010 Acquisition/predevelopment/construction loan in the amount of $370,653 for Arminta Street Housing, a group home for special needs development located at Arminta Street. Project in predevelopment , , A MD WARD ECONOMIC DEVELOPMENT 8/20/2010 Phase I Construction Loan Disbursements, Tuelyn Terrace, South Western Avenue (91-units) 189 7A C9 COMMUNITY ENHANCEMENT CO 3/5/2008 Loan disbursements for maintenance/security and 1 61,340 13,340 predevelopment p for Angelus Funeral Home Project per DDA 192 7A C9 VERMONT 4925, L.P. 9/30/2010 Remaining disbursement on affordable housing loan 1 25,500 25, A CT GATEWAYS APARTMENTS, L.P. 3/9/2011 affordable housing Loan Agreement. Loan not fully disbursed (see 12/15/11 EOPS) 1 7, A ALL PLAYA VISTA JOB OPPORTUNITY 10/22/2008 Jobs Coordinator Services - Contract Compliance 1 300, , ,000 Funds are required to fulfill obligations to thirdparty vendor. Vendor continues to provide contract compliance on construction jobs for the active development projects funded through the CRA/LA-DLA. A number of projects are in construction or are anticipated to start construction and will require these services 346 8A HO COMMUNITY HOUSING MANAGE 5/27/2010 Property Mgmnt svc: 2600 S Hoover St (Casa de Rosas). Continued maintenance and security needed 371 8A CI California Housing Partnership Corp. 2/10/2011 Housing Underwriting Services used for multiple projects in Downtown and Harbor regions. Underwriting services no longer needed. Final payments for prior service have been paid. Close-out ,908 15, A C9 LEIGHTON CONSULTING 8/21/2008 Alquist-Priolo fault investigation-18-5 N. Highland Ave. 1 10,000-29