Calexico School District Stops Pool Bond Payments to the City of Calexico

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CALEXICO – During Tuesday’s city council meeting, city officials were informed by the Calexico Unified School District (CUSD) that effective immediately, CUSD would no longer make payments related to the $1.8 million Community Redevelopment Agency of the City of Calexico 2011 Tax Allocation Bond that had earmarked net funds of $1.4 million to be used to partially fund the new pool project at Calexico High School. The pool is currently under construction.

Calexico’s Assistant Superintendent Mai Randle approached the board during the public comments section and delivered a formal letter from CUSD’s attorneys Atkinson, Anderson, Loya, Ruud & Romo. The letter stated the school district had reached a critical stage after being informed by the California Department of Finance (DOF) that the payment of the bond proceeds to the CUSD had not been recognized as an enforceable obligation and therefore, funds would not be released absent a written agreement.

It appears that no formal agreement was ever executed and approved by either the RDA or the school district for the issuance of the 2011 RDA Bonds and payment of the proceeds to the district.

“The district must now take the position that if there is no enforceable obligation for the payment of the 2011 RDA bond proceeds to the district, then there is no enforceable obligation on the district’s part to pay the city for the bond proceeds that it will likely never receive,” explained Randle.

Additionally, Randle requested the city refund $416,710 in bond debt payments previously made to the city from 2013 to 2015 in increments of $59,530. The school district must now look to other funding sources to cover the shortfall.

According to Interim City Manager Nick Fenley, the city is working diligently in locating the missing documents between the city and the district.

The Calexico school district remains hopeful the state Department of Finance will approve the 2011 RDA Bond funds in the near future.

BACKGROUND

In May 2011, the Community Redevelopment Agency of the City of Calexico (RDA) issued 2011 Tax Allocation Bonds in the amount of $1,815,000, with the intent that the net funds of $1,446,592, would be used to partially fund a new pool project at Calexico High School. On October 1, 2015, the city of Calexico, as the successor agency to the RDA, allocated the entire $1,446,592 to be paid to the district.

On November 9, 2015, the DOF informed the city that it was disallowing the $1,446,592 on the ROPS 15-16B because there was no evidence of an agreement that required the RDA to give the RDA 2011 Bond proceeds to the school district. After a meet and confer process was requested by the city, the DOF issued its final determination that the RDA 2011 Bond proceeds were not an enforceable obligation because there was no written agreement between the RDA and the district obligating the RDA to provide the funds to the district. Under a Health and Safety Code statute, the DOF allowed $71,864 or 5% of the proceeds.

Following that final determination, the district met with staff members of Sen. Ben Hueso (40th District) and Assemblymember Eduardo Garcia to enlist their assistance in getting the DOF to release the RDA 2011 Bond proceeds to the district. On January 27, a meeting was held with Sen. Hueso, representatives from Garcia’s office, and the Director of the Department of Finance, Michael Cohen, in Sacramento to discuss the DOF’s rejection of the 2011 RDA Bonds on the ROPS 15-16B.

The DOF made it clear that absent a written agreement between the RDA and the district, it would not recognize the payment of the 2011 RDA Bond proceeds to the district as an enforceable obligation. It is the same position that the DOF took during the meet and confer process in December 2015.

Following the meeting with DOF, the district searched its files and submitted a Public Records Act request to the city seeking all documents related to the issuance of the 2011 RDA Bond, and specifically an “agreement between the Community Redevelopment Agency and the CUSD for the issuance of bonds and the payment of the proceeds to the District for the pool project.” With regard to the request for a copy of the agreement, the city responded that “the City has not found any records responsive to this request.”