City Manager September 11, 2018 Honorable Anita Santos, Judge of the Superior Court Mario Gutierrez, Foreperson,

In 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. City Response: Agree.

The Circular JPAs with a single controlling entity, such as a city council, have the potential to avoid legal debt limits and provide limited disclosures to taxpayer. City Response: Partially disagree. A Joint Powers Authority (JPA) is a separate legal public entity as defined by the Government Code. As such, JPAs have the ability to incur their own debt separate from the municipality. A city may employ the lease exception to State constitutional debt limit through a partnership with any type of joint powers authority (JPA) or another partner organization, not just a “circular JPA.” The “single controlling entity”, even if made up of the same members as a City Council, still serves in a separate legal role. All meetings of JPAs are publicly noticed and comply with the Brown Act, and disclosures and audits of JPAs are made in accordance with state law. In addition, a city that assumes debt as part of a JPA would disclose that debt and associated payments through a number of channels, including its budget, comprehensive annual financial report, and ongoing disclosure requirements.

In Contra Costa County, there are 12 Circular JPAs created by cities with RDAs that no longer exist. These JPAs may no longer be valid because each is a member of another Financial JPA which may take on new debt without the prohibition (Gov. Codes Sections 6505 3416/34170 et seq.) placed on Successor Agencies. City Response: Disagree. While the Dissolution Law voided most agreements between former redevelopment agencies and their host cities, the Dissolution Law preserves the existence of joint powers authorities whose members included a former redevelopment agency. See Health & Safety Code section 34178(b). The City of Hercules has already verified with its Special Counsel that the Hercules Public Financing Authority is still validly constituted.

Cities that have created the 12 Financial JPAs do not provide JPA-specific financial information in their budget document. As a result, the public may have difficulty evaluating JPA's financial performance. City Response: Disagree. As noted above, a city that assumes debt as part of a JPA would disclose that debt and associated payments through a number of channels, including its budget, comprehensive annual financial report, and ongoing disclosure requirements.