City of Costa Mesa California 92628-1200*

As of the date of dissolution of redevelopment (February 1, 2012), all city operated redevelopment agencies, except Mission Viejo and Seal Beach, were exceeding the administrative costs limit of 5% of the tax increment distributed related to the Recognized Obligations Payment Schedule (ROPS) as authorized by AB X1 26. Response - The City and Successor Agency acknowledge the finding. However, it is noted that until dissolution the CRL did not limit administrative costs by percentage of tax increment or a specific monetary amount. Under the CRL, prior to dissolution, expenditures for planning and general administrative costs paid from the Low to Moderate Income Housing Fund were limited to those directly related to affordable housing programs and activities pursuant to Section 33334.3(e)(1), but were not limited to a specific percentage or dollar amount.

Of the agencies surveyed, only Costa Mesa and Santa Ana reported having a citizen involvement committee along the line of a Project Area Committee as authorized by Section 33385 of the Health and Safety Code. Response - The City and Successor Agency agree with F2 as Costa Mesa has had, and continues to have, a citizen involvement committee called the Redevelopment and Residential Rehabilitation (3R) Committee that includes stake-holders as authorized by Section 33385 of the Health and Safety Code. In the appointment of the 3R members, special emphasis has been placed to ensure equitable representation by business owners-managers and residents within the (former) Costa Mesa Redevelopment Agency Downtown Project Area. The 3R committee was formed in 1989 and is composed of ten members and two alternates. The following provides specifics about Costa Mesa's 3R Committee: COMMITTEE: Redevelopment & Residential Rehabilitation Committee (3R Committee) REPRESENTATION: Ten members and two alternates; one or more liaison(s) from the City Council-Redevelopment Agency; one liaison from the Planning Commission. Due to attrition the 3R Committee makeup was changed on October 2011 to nine DOCSOC/1579312v2/200410-0000 members and 2 alternates. In appointment of the members, special emphasis is to be placed to ensure equitable representation by business owners-managers and residents within the [now former] Downtown Project Area. PURPOSE: 1. To promote community understanding of and involvement in the redevelopment process and activities funded by the U.S. Department of Housing and Urban Development (HUD), Community Development Block Grant (CDBG) and/or HOME Investment Partnership Act (HOME) funds. 2. To review the existing [now former] Redevelopment Plan for the Downtown Redevelopment Area and to suggest possible modifications to increase relevance and effectiveness. 3. To serve as an advisory body to the [now dissolved] Costa Mesa Redevelopment Agency with respect to major new redevelopment activities. 4. To serve as an advisory body to the City Council on activities funded by HUD, Community Development Block Grant (CDBG) and-or HOME Investment Partnership Act (HOME) funds, in fulfillment of the City's Citizen Participation Plan. TERMS: All members' terms are two (2) years; six (6) members are assigned to odd numbered years and five (5) members are assigned to even-numbered years. Alternates who are moved to an incumbent's term will fulfill that term and then may re-apply as a full member. Scheduled Meetings: Fourth Tuesday of every other month at 6:00 p.m.

Historically, external oversight over redevelopment has been missing or ineffective in monitoring redevelopment agency compliance and performance. The newly formed oversight boards offer a potential to improve on that record by providing critical evaluation of existing projects and management of the successor agency debt. Response - The City of Costa Mesa disagrees with F3 that external oversight over redevelopment has been missing as there have been several groups that have provided continuous oversight to redevelopment outside the Redevelopment Agency including the 3R Committee, the Planning Commission, and the City Council. They have been very careful in reviewing all projects and programs presented to them and for the most part preferred to see projects completed through the private sector with little or no involvement from redevelopment. Below are the City of Costa Mesa's responses to Recommendations R1, R2, R4 and