SR-413-002 (2)
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Council Meeting: January 9, 1990
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Santa Monica, California
TO: CITY COUNCIL AND REDEVELOPMENT AGENCY
FROM: City and Agency Staff
SUBJECT: EXTENSION OF TIME FOR OUTSTANDING PROMISSORY NOTES
Introduction
The City of Santa Monica holds six Promissory Notes, two for the
Downtown Redevelopment Project and four for the Ocean Park
Redevelopment Project, for funds loaned to the Redevelopment
Agency by the Ci ty .
These Notes, last renewed by the Agency
January 1, 1989, need to be renewed for the 1990 calendar year
effective January 1, 1990.
Background
The City has loaned the Agency funds for various administrative,
operational and miscellaneous expenses.
These loans have been
formalized in the form of Promissory Notes with payment due
annually. If payment in full is not received by the city, it is
necessary that the Notes be renewed.
Attachment I details the financial history of each of the
Promissory Notes, including amounts repaid to date, and presents
the sources and uses of budgeted FY1989/90 Redevelopment Agency
income.
Through June 30, 1989, approximately $3.4 million has
been repaid on these Notes.
Repayments which may be scheduled for FY1990j91 will be
determined as part of the regular budget process.
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BUdget/Financial Impact
There is no budgetary impact resulting from the renewal of these
Promissory Notes.
The financial impact is to increase the
liability of the Agency by $1,110,721.20 which represents net
accrued interest for the period January 1, 1989 through
December 31, 1990 (see Attachment II).
continuing the policy
adopted last year by Council, staff once again recommends that
the interest rate for five Promissory Notes be one-half of one
percentage point (.5%) more than the City's actual rate of
investment earnings for calendar year 1990. The additional .5%
is to reimburse the city for carrying this debt. As required in
the original bond covenant, the sixth promissory Note must
continue at the same rate of interest, 7.75%, as the Downtown
Redevelopment Project Parking Lease Revenue Bonds.
Recommendation
It is recommended that:
(A) The City council agree to renew the six loans to the
Redevelopment Agency and to accept the attached Promissory
Notes: and
(B) The
Redevelopment Agency
approve
and
authorize
the
Chairperson to execute the six attached Promissory Notes
between the Agency and the city, extending the loans for the
1990 calendar year.
Prepared by: Mike Dennis, Director of Finance
Louise Baker, Accounting Manager
Bill Jias, Senior Accountant
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Attachment I
STATUS OF REDEVELOPMENT AGENCY PROMISSORY NOTES
I. History of Promissory Notes
The following indicates the origlnal debt amount of each of the six promissory
notes between the Redevelopment Agency and the City, and the total net accrued
lnterest for each promissory note as of 12/31/89; the history of note payments
;s footnoted by promissory note.
Promissory
Note
Number
Onglnal
Debt
Amount
(date)
Total Accrued
Interest
Through
12/31/89
Promissory
Note
Balance
1/1/90
Downtown Project
1. Downtown
Redevelopment
Project $ 871,840.00 $ 301,674.05(g} $1,173,514.05
(6/30/81) (a)
6. Downtown
Redevelopment
Project $4,400,000.00
(10/24/78)(f) $318001301.20(h) $8,200,301.20
Sub-total $5,271,840.00 $4,101,975.25 $9,373,815.25
Ocean Park Project
2. Ocean Park
ProJect $1,243,266.88 $1,114,780.91(i} $2,358,047.79
(6/30/81}{b)
3. Ocean Park
Project $ 8?4,449.00 $ 605,886.71{j) $1,430,335.71
(l/1/82)(c)
4. Ocean Park
Project $ 772,568.08 $ {31,218.41){k} $ 741,349.67
(9jI3/83) (d)
5. Ocean Park
Project $ 280,837.00 $ (Il,492.49)(1) $ 269,344.51
(9/14/83)(e)
Sub-tota 1 $31121,120.96 $1,677,956.72 $ 4,799,077.68
Tota 1 $8,392,960.96 $5,779,931.97 $14,172,892.93
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Notes:
(a) and (c) represent General Fund funds advanced to the Agency for various
administrative and other expenses as of 6/30/81 (per Agency Resolut10n 371,
1/12/82) .
(b) Represents City COBG funds advanced to the Agency for the payment of
interest on outstanding Federal project notes (per Agency Resolution 371.
l/l2/8l) .
(d) Represents General Fund funds advanced to the Agency to payoff the
outstanding Federal Ocean Park Urban Renewal Grant Note.
(e) Represents City COBG funds held by the Federal government and applied to
payoff the outstanding Federal Ocean Park Urban Renewal Grant Note.
(f) Represents the value of various parcels of property transferred from the
City to the Agency for the Downtown Redevelopment Project (per Agency
Resolution 352, 10/24/78).
(g) Reflects payments of $150,000 in FY1983/84 and $347,548 in FY198S/87.
{h} Reflects payment of $1,149,452 in FY1986/87
(i) Reflects payment of $183,000 in FVI984/85 and $445,779 in interest in
FY1987/88
(j) Reflects payment of $365,000 of primarily interest in FY1987/88
{k} Reflects payment of $563,975 in interest and principal 1n FY1987/88
(1) Reflects payment of $205,011 in interest 1n FY1987/88
II. FY1989/90 Financial Abil ity of Redevelopment Agency to Repay Promissory
Notes
The following table summarizes (in millions) the budgeted sources and uses of
Redevelopment Agency income for FYI989/90. As this table indicates, in FY
1989/90, S200,000 of Agency income will be available to effect a partial
repayment of Agency debt to the City.
Sources
Downtown
Project
Ocean Park
Project
Tax Increment and Interest
City Lease Payment for
Parking Structures*
Total Sources
S1.2
1.2
$2.4
$1. 7
$1. 7
*This lease payment is made by the General Fund to the Redevelopment Agency.
The General Fund payment is fi nanced by: a) $.6 mill i on payment from Santa
Monica Place to offset lost property taxes due to Proposition 13; b) $.1
mill; on payment from Santa Moni ca Pl ace for subl ease of park; ng structures;
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. and c) $.5 million payment from Redevelopment Agency for putting credlt of the
General Fund behind the 1978 bond issue.
Uses
Salaries
Supplies & Expenses
Capltal Projects
Total Uses
$ .1
2.2*
.3**
$ .1
1.2*
.6**
$2.6***
$1.9***
*Consists of the following costs: Downtown Project - a) $1.1 million debt
service payment on 1978 bonds; b} $.5 million payment to the General Fund for
putting credit of the General Fund behind the Redevelopment Agency's 1978 bond
issue; c) $.1 million earthquake insurance on Parking Structures; d) $.1
million payment to the General Fund for various administrative support
services; e} $.1 million reimbursement to Housing staff for operations of
benefit to the project area; f) $.2 mill ion partial repayment of Promissory
Notes to the General Fund; and g) $.2 mi 11 ion in Redevelopment Agency other
operating expenses applicable to the project area; and Ocean Park Project - a)
$.8 million debt service on 1988 refunded bonds; b) $.1 million payment to the
General Fund for various administrative support services; c) $.1 mlllion
annua 1 1 ease payment to Parki ng Authori ty for development of 175 Ocean Park
Boulevard; d} $.1 million reimbursement to Housing staff for operations of
benefit to the project area, and e} S.l million in Redevelopment Agency other
operating expenses appllcable to the project area.
**Consists of the following capital projects: a} Downtown Project - $.1
million for housing projects of benefit to the project area, and and b) Ocean
Park Project - $.4 million for housing projects of benefit to the project area
and $.4 milli on for construction of pergolas and shade structures in the
central plaza area at the foot of Ocean Park Boulevard.
***Available fund balances are being used to finance the excess of uses over
annual revenues.
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Attachment II
City of Santa Monica
Extension of Time for Outstanding Notes*
Promissory Accrued Promissory
Note Interest Note
Promissory Balance 1/1/89- Balance
Note Number 1/1/89 12/31/90 1/1/90
Downtown Projects
1 Downtown $ 1,071,164.30 $ 102,349 75 $1,173,514 05
Redevelopment
ProJect**
6. Downtown 7,610,488.36 589,812.84 8,200,301. 20
Redevelopment
Project******
Sub-total
Downtown
Project ~8,681,652.66 ~6921162,59 ~9, 373,815.25
Ocean Park ProJect
2. Ocean Park $2,152,387.19 $205,660.60 $2,358,047,79
Federal
Allocation***
3 Ocean Park 1,305,586 88 124,748.83 1,430,335.71
Federal
A11ocation**
4. Ocean Park 676,691. 77 64,657 90 741,349 67
Federal
A1location****
5 Ocean Park 245,853 23 23,491. 28 269,344 51
Federal
Allocation*****
Sub-total
Ocean Park
Project $ 4,380,519.07 $418,558.61 $ 4,799,077.68
Total ~131062,171 73 ~l,1l0, 721. 20 ~14rl72,892.93
* Effective January 1, 1990 Notes 1 through 5 will carry an interest rate
one half a percentage point ( 5%) higher than the City's actual rate of
investment earnings for calendar year 1990. However, note 6 will
continue to carry an interest rate of 7-3/4%. as required by the
Resolution of the Agency acknowledging the debt. This is the same rate
of interest on the Downtown Redevelopment Project Parking Lease Revenue
Bonds.
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** Reimbursement for various admin1strative support and service costs,
owed to City's General Fund
*** Reimbursement of CDBG funds used to pay interest on outstanding Federal
Urban Renewal Loan Note; owed to City's CnBG Fund.
**** Close out of Ocean Park Federal Urban Renewal Project; owed to the
City's General Fund.
***** Close out of Ocean Park Federal Urban Renewal proj ect; owed to the
City's CDBG Fund
****** Represents the value of various parcels of property transferred from
the City to the Agency for the Downtown Redevelopment Project (per
Agency Resolution 352, 10/24/78). Owed to General Fund
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