City of Cypress*

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 ROPS as authorized by ABX1 26. Response: The City of Cypress agrees in part with this finding. We cannot verify other agencies' administration costs as a percent of tax increment. In regards to the City of Cypress, the report indicates that the City is at 8%. While we don't know where this figure comes from or what is included, it should be noted that the Cypress Redevelopment Agency and Successor Agency submitted a ROPS higher than the DOF has approved Leroy Mills, Mayor Todd W. Seymore, Mayor Pro Tem Doug Bailey, Council Member Phil Luebben, Council Member Prakash Narain, M.D., Council Member The Honorable Thomas J. Borris June 27, 2012 that could cause the percentage to be higher than compared to the initial EOPS. However the State will only pay the amount under the 5% or $250,000 and the City and Successor Agency will follow the law.

Of the agencies surveyed, only Costa Mesa and Santa Ana reported having a citizen involvement committee along the the line of a Project Area Committee as authorized by Section 33385 of the Health and safety Code. Response: The City of Cypress agrees in part with this finding. We do not know the status of other Redevelopment Agencies and having citizen involvement committees. In regards to the City of Cypress, when the project areas were established and when specific plans were established in these project areas, there were citizen involvement committees used for input. However, the City does not maintain an on-going committee subsequent to the plans being approved.

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 Cypress disagrees partially with this finding, as far as it applies to the City of Cypress, since we cannot answer for other Redevelopment Agencies. We do not agree that external oversight has been missing or ineffective in monitoring redevelopment compliance and performance. As noted in the Grand Jury report, the State Controller and Department of Finance monitor expenditures and in addition, the Agency prepared annual reports brought before the City Council and public every year on what projects were going on, been completed and the results of redevelopment within the City. There has always been complete transparency by the Agency on its finances and project status. Responses to Grand Jury Recommendations: