RPVCCA_RDA_SR_2010_03_02_B_RDA_Mid_Year_Financial_ReportCITY OF
MEMORANDUM
RANCHO PALOS VERDES
TO:
FROM:
DATE:
SUBJECT:
REVIEWED:
Project Manager:
HONORABLE CHAIR &BOARD MEMBERS
DENNIS McLEAN,DIRECTOR OF FINANCE &~
INFORMATION TECHNOLOGY
MARCH 2,2010
FY09·10 REDEVELOPMENT AGENCY MIDYEAR
FINANCIAL REPORT
CAROLYN LEHR,CITY MANAGER 09--
Kathryn Downs,Deputy Director of Finance &Information
Technology
RECOMMENDATION
1.Receive and file the attached midyear financial report,inclusive of the annual tax
increment study in accordance with Resolution No.RDA 90-24.
2.Adopt Resolution No.RDA 2010-,A RESOLUTION OF THE RANCHO PALOS
VERDES REDEVELOPMENT AGENCY,AMENDING RESOLUTION RDA2009-07,
THE BUDGET APPROPRIATION FOR FY09-10,TO ADJUST THE BUDGET IN
THE DEBT SERVICE AND HOUSING SET-ASIDE FUNDS OF THE
REDEVELOPMENT AGENCY
EXECUTIVE SUMMARY
Midyear Budget Review
The Municipal Code requires that a midyear review of the RedevelopmentAgency's (RDA)
annual budget be presented to the RDA Board.Summaries of RDA debt and RDA fund
balances are presented as follows:
Summary Of Debt Owed To County
County Bond s
Deferred Interest Debt
RDA B-1
FY09·10 Redevelopment Agency Midyear Financial Report
March 2,2010
Page 2 of 5
Summary Of Debt Owed To City
Abalone Cove Principal
Abalone Cove Interest
Abalone Cove Owed To City
Portuguese Bend Principal
Po rtug uese B end Interest
Portuguese Bend Owed To City
1,898,992
1,905,005
3,803,997
4,320,552
8,762,421
13,082,973
1,985,823
2,078,605
4,064,428
4,320,552
9,349,221
13,669,773
Summary Of Fund Balances Available For Projects
Abalone Cove Fund
Portuguese Bend Fund
Housing Set-Aside Fund -Affordable Housing Projects Only
BACKGROUND
6,171
541,041
1,365,359
6,261
517,266
7,984
County Debt and Annual Tax Increment Study
In 1987,the City and RDA entered into the Horan Settlement Agreement with the County
of Los Angeles and various property owners.The Agreement required issuance of
$10,000,000 in County bond debt to finance landslide abatement activities in the Abalone
Cove area of the Agency.Soon after the bond issuance,the Agency Board approved
Resolution No.RDA 90-24.The resolution requires an annual tax increment study to
review the adequacy of tax increment revenues to satisfy any County debt obligations.In
accordance with the 1990 Board resolution,Staff has performed the FY09-10 annual tax
increment analysis and offers its report below.
In 1997,the RDA Board approved a Memorandum of Understanding (MOU)agreeing to
restructure the $10,000,000 County bond.At that time,the RDA made a lump sum
payment of $4,545,000 and issued tax increment bonds for the balance of $5,455,000.Of
the $4,545,000 paid,$2,000,000 was provided from tax increment revenue accumulated in
the Debt Service Fund for retirement of the $10,000,000 County bond debt.The balance
of the payment was provided by a $1,545,000 loan to the Abalone Cove Fund from the
General Fund of the City and the use of $1,000,000 in Abalone Cove fund balance
reserves.
The terms of the MOU require the RDA to make scheduled tax increment bond principal
and interest payments through the year 2028.The MOU payment schedule requires semi-
annual graduated principal payments that began in FY04-05.The payments increase an
average of 2.5%each year until the scheduled payments are made in full.These debt
payments will be paid solely from the tax increment received by the RDA,and are recorded
as expenditures in the Debt Service Fund.
Excess tax increment revenue over the bond principal and interest payments noted above
RDA B-2
FY09-10 Redevelopment Agency Midyear Financial Report
March 2,2010
Page 3 of 5
is used to repay the $3,111,400 of deferred interest attributable to the original County
bonds paid off as part of the 1997 restructuring.The County and RDA have agreed to
allow the County to intercept (escrow)the available tax increment revenue until the
obligation owed the County is satisfied.In the event the debt owed the County is satisfied
prior to the end of the Agency's legislated ability to collect tax increment to repay debt in
2034,tax increment revenue will be available for repayment of loans made to the RDA by
the City.
Since approval ofthe MOU,tax increment revenues have always exceeded the scheduled
interest and principal payments on the tax increment bonds.Based on the FY09-10 tax
increment estimates discussed in this report,Staff is confident that tax increment revenue
will exceed budget and fully satisfy the interest payments due the County in the coming
year.
Although the custody of tax increment revenue remains with the County using the intercept
procedures,the money is an asset of the RDA until paid in accordance with the terms of
the MOU.Therefore,tax increment revenue earned and used to pay the interest and
principal on the tax increment bonds and the deferred interest debt continues to be
reported in the Debt Service Fund.As of June 30,2009,the Agency has accumulated
$603,676 of tax increment in excess of annual debt service payments,which will be applied
to the remaining $1,490,909 deferred interest component of the 1997 bond restructuring
($3,111,400 original deferred interest debt net of $1,620,491 excess tax increment applied
through June 30,2009).
City Loans
Landslide area projects have also been financed by loans from the General Fund of the
City.The loans have always been made with the knowledge that the available RDA tax
increment revenue may not be sufficient to pay both the County debt and the City loans.
However,a loan accounting is maintained in order to provide a mechanism for the City to
receive some repayment should the available tax increment exceed the debt owed to the
County.Even if the loan mechanism did not exist,it would be necessary to finance any
additional projects with General Fund monies.
In recent years,additions to the City loans have been for administrative costs such as the
annual County fee to administer tax increment collection and remittance to the RDA and
the City's annual cost of providing staff to administer the RDA.
DISCUSSION
It is important to understand that the FY09-10 midyear projections are based upon Staffs
analysis using trend comparisons with previous years and reports provided by the County.
In the following paragraphs,discussion and analysis about revenues and expenditures of
the RDA is presented.If no mention is made of certain revenue sources or program
expenditures,it merely indicates that there is nothing significant to report at this time and
that anticipated results are not expected to materially deviate from the FY09-10 budget.
RDA B-3
FY09·10 Redevelopment Agency Midyear Financial Report
March 2,2010
Page 4 of 5
TAX INCREMENT REVENUE
Due to widespread property re-assessments in 2009,the FY09-10 budgetfortax increment
revenue was conservatively based on no growth.Tax increment revenue has increased an
average of about 9%annually over the last 10 years.After adoption of the FY09-10
budget,the County estimated that tax increment would increase 8.5%from FY08-09 to
FY09-10.Staff recommends adjustments of $26,000 and $6,500 to increase the tax
increment revenue budgets for the Debt Service and Housing Set-Aside Funds,
respectively.
California Redevelopment law requires 20%of all gross tax increment be segregated in a
"housing set-aside"fund for the development of low and moderate income housing.
EXPENDITURES
Portuguese Bend Capital Projects Fund
FY09-10 expenditures budgeted,within the Portuguese Bend Fund,are entirely for
administrative costs including the annual membership dues for the Abalone Cove
Landslide Abatement District and the Klondike Canyon Landslide Abatement District.Staff
does not expect that FY09-1 0 expenditures will materially deviate from budgeted amounts.
Abalone Cove Capital Projects Fund
The remaining fund balance is available for landslide abatement capital projects within the
Abalone Cove area of the RDA project area.At this time,there are no appropriations of
the $6,261 estimated fund balance.
Debt Service Fund
As stated previously,the terms of the 1997 MOU with the County require the RDA to make
scheduled tax increment bond principal and interest payments through the year 2028.Per
the debt service schedule accompanying the 1997 MOU,FY09-10 principal and interest
payments are $65,000 and $265,125,respectively.In addition,the Debt Service Fund will
account for the FY09-10 payment of deferred interest debt in the amount of $354,606.
The Debt Service Fund acts as a pass through entity for recording accrued (unpaid)
interest on the loans between the RDA and the City.The estimated FY09-10 principal
addition to the City loan for administrative costs is $86,831.The estimated accrued
interest for FY09-1 0 is $173,600 for the Abalone Cove project area and $586,800 for the
Portuguese Bend project area.
Finally,the Debt Service Fund accounts for the pass-through of 17%of RDA tax increment
to Los Angeles County Fire Protection District.The pass-through is an expenditure of the
Debt Service Fund.
The FY09-10 budget is adequate for each of these expenditures.
RDA B-4
FY09-10 Redevelopment Agency Midyear Financial Report
March 2,2010
Page 5 of 5
Housing Set-Aside Fund
Consistent with the Disposition and Development Agreement (DDA)approved by the
Agency Board on March 17,2009,the RDA will contribute $3,600,000 to AMCAL Mirandela
Fund,L.P.for the City/RDA funding commitment to the Mirandela Senior Apartment
project.Ofthat amount,up to $3,333,543 will be available to expend during FY09-1 O.The
Housing Set-Aside FY09-10 budget already includes $907,000 for this project.Staff
recommends appropriating an additional $660,175 ofthe estimated June 30,2010 Housing
Set-Aside fund balance,as well as the $1,766,368 that was transferred from the City's
Affordable Housing Fund to the RDA for this project.These adjustments would bring the
total FY09-10 appropriation for this project to $3,333,543.
As a housekeeping item,Staff also recommends an adjustment to increase the FY09-10
transfer budget in the Housing Set-Aside Fund for receipt of the $1,766,368 from the City.
SUMMARY OF ESTIMATED FUND BALANCES
The following summary of estimated RDA fund balances at June 30,2010 includes the
adjustments requested in this report.
Housing Set-Aside
Debt Service
Portuguese Bend
Abalone Cove
1,365,359
603,676
541,041
6,171
222,300
1,607,300
7,300
90
1,766,368 3,346,043
1,597,700
31,075
7,984
613,276
517,266
6,261
RDA B-5
RESOLUTION NO.RDA 2010-
A RESOLUTION OF THE RANCHO PALOS VERDES REDEVELOPMENT
AGENCY,AMENDING RESOLUTION RDA 2009-07,THE BUDGET
APPROPRIATION FOR FY09-10,TO ADJUST THE BUDGET IN THE DEBT SERVICE
AND HOUSING SET-ASIDE FUNDS OF THE REDEVELOPMENT AGENCY
$26,000TaxIncrementRevenue
WHEREAS,Section 3.32.070 of the Rancho Palos Verdes Municipal Code provides
that all expenditures in excess of budgeted allocations must be by supplemental
appropriation of the Board of the Rancho Palos Verdes Redevelopment Agency;and
WHEREAS,on June 30,2009,the Agency Board adopted Resolution 2009-07,
approving a spending plan and authorizing a budget appropriation for FY09-1 0;and
WHEREAS,certain FY09-10 revenues and expenditures,as described below,are
expected to exceed the amount budgeted;and
WHEREAS,the Board desires that the FY09-10 budget be adjusted as follows:
Debt Service Fund
#410-2010-311-10-00
Housing Set-Aside Fund
#218-4018-311-10-00
#218-4018-391-1 0-00
#218-4018-441-73-00
Tax Increment Revenue $6,500
Transfer from City Affordable Housing $1,766,368
Construction of Affordable Housing $2,426,543
PASSED,APPROVED,AND ADOPTED THE 2nd DAY OF MARCH 2010.
AGENCY CHAIR
ATTEST:
AGENCY SECRETARY
State of California )
County of Los Angeles )ss
City of Rancho Palos Verdes )
I,CARLA MORREALE,Secretary of the Rancho Palos Verdes Redevelopment Agency,
hereby certify that the above Resolution No.RDA 2010-was duly and regularly
passed and adopted by the said Board at regular meeting thereof held on March 2,
2010.
AGENCY SECRETARY
RDA B-6