City I\4anager's Office September 18,2018

ln the Direct JPA model, each member delegates to the JPA a function that each member has the legal authority to provide. This shared approach results in cost savings and better efficiency on behalf of taxpayers. Response,' The City of Richmond agreeswith this finding.

The CircularJPAs with a single controlling entity, such as a city council, have the potential to avoid legal debt limits and provide limited disclosures to taxpayer. Resoonse.' The City of Richmond disagrees with this finding. A Joint Powers Authority (JPA) is a separate legal public entity as defined by the Government Code. As such, JPAs have the abilityto incurtheir own debt separate from the municipality. ln the case where the JPArssues /ease revenue bonds it does so because if is not subject to the constitutional debt limit. The City enters into a /ease with the JPA as part of the transaction. The City is subjectto the constitutionaldebt limit, but the /ease with the JPA is not considered a debt because it is subject to abatement. Thistype of arrangement has been well-litigated and consistently held up by the courts. A lease financing requires approval by the JPA Board as well as the City Council, both of which are subject to the Brown Act and as such must notiee each of their meetings with a detailed agenda. Often, though not always, a lease financing 450 Civic Center Plaza, Rich mond, CA 94804-1 630 Telephone: (510) 620-6512 Fax: (51 0) 62A-6542 www.ci.richmond.ca.us ! CoR Response - "Joint Powers Authorities" requires a public hearing and a ftnding of public benefit (the exceptions to this requirement are statutory). lt is also worth noting that a /ease financing is not backed by the taxing power of the City. The "single controlling entity," even if made up of the same members as a City Council, sfrT/ seryes in a separate legal role. Disclosures and audits of JPAs are made in accordance with state law. ln addition, a city that assumes debt as part of a JPA would disc/ose that debt and associated payments through a number of channels, including its budget, Comprehensive Annual Financial Report (CAFR), and ongoing disclosure requirements. Aloreover, the City of Richmond makes full disclosure to taxpayers and other interested parties.

ln Contra Costa County, there are 12 CircularJPAs created by cities with RDAs that no longerexist. These JPAs may no longerbe valid because each is a member of anotherFinancial JPAwhich maytake on newdebtwithoutthe prohibition (Gov. Codes Sections 6505 3416134170 et seq.) placed on Successor Agencies. Response; The Ci$ of Richmond disagrees with this finding. The Dissolution Law preserues the existence of joint powers authorities whose members included a former redevelopment agency.

Cities that have created the 12 Financial JPAs do not provide JPA-specific financial information in theirbudgetdocument. As a result, the public may have difficu lty evaluating JPA's fin ancial performan ce. Response; The City of Richmond disagreeswith this finding. The City of R i ch m o nd provi d e s fi n a n ci al i nfo rm ati on reg a rdi n g Ri ch m o n d's J oi nt P u bl i c Financing Authority in the "Combining Statement of Changes in Assef and Liabilities" report in the Comprehensive AnnualFinancial Report (CAFR).The CAFR rs presenfed to City Council and is available on the City's website at http://www.ci.richmand.ca.us/2969/Comprehensive-Annual-Financial-Report-CA. REGOMMENDATIONS :