SR-413-002 (4)
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Council Meeting: 1/12/88
Santa Monica,
ccll2A- I
1At:ir 2-1988
Califo1:'nia
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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 Project and four for the Ocean Park Project, for funds
loaned to the Redevelopment Agency by the City.
These notes,
last renewed by the Agency January I, 1987, need to be renewed
for the 1988 calendar year effective January 1, 1988.
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 FY1987/88 Redevelopment Agency
income.
Through June 30, 1987, approximately $1.8 million
(including a $1.5 million repayment made during FY1986/87) has
been repaid.
An additional repayment of approximately $1.9
million has been budgeted for FY1987/88 as part of the
refinancing of the existing Ocean Park bonds, however, completion
of this transaction is contingent on a decrease in municipal bond
interest rates.
Staff will continue to monitor
CCthA_I
~rmi9B&
and proceed as appropriate.
...--
As'shown in Atta.ent I, Agency income fO~FY1987/88 is not
available to effect further repayment of the promissory notes.
since the Agency does not have funds available at this time to
make payment in full for the amounts outstanding as of December
31 1987, the six Promissory Notes should be renewed effective
January I, 1988. The attached Notes include the appropriate
accrued interest through December 31, 1987.
Repayments which may be scheduled for FY19BB/89 will be
determined as part of the regular budget process.
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 $935,653.06 which represents net
accrued interest for the period January 1, 1987 through December
31, 1987 (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 1988. 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% I 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
Redevelaent
Agency
approve
.
authorize
the
Chairperson to execute the six attached Promissory Notes
between the Agency and the city, extending the loans for the
19S8 calendar year.
Prepared by: C.M. Dennis, Agency Treasurer/city
Director of Finance
W.R. Ramsey, Assistant Director of Finance
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Attachment I
STATUS OF REDEVELOPMENT AGENCY PROHISSORY NOTES
I. History of promissory Notes
The following indicates the original debt amount of each of the
six promissory notes between the Redevelopment Agency and the
City, and the total net accrued interest for each promissory note
as of 12/31/87 i the history of note payments is footnoted by
promissory note.
Promissory
Note
Number
Original
Debt
Amount
(date)
Total Accrued
Interest
Through
12/31/87
Promissory
Note
Balance
1/1/88
Downtown Project
l. Downtown
Redevelopment
Project $ 871,840.00 $ 117,602.96(g) $ 989,442.96
(6/30/81) (a)
6. Downtown
Redevelopment
Project $4,400,000.00
(10/24/78) (f) $2,663,098.25(h) $7,063,098.25
Sub-total $5,271,840.00 $2,780,701.21 $8,052,541. 21
Ocean Park Project
2. Ocean Park
Project $1,243,266.88 $1,180,846.86(i) $2,424,113.74
(6/30j81) (b)
3. Ocean Park
Project $ 824,449.00 $ 738,472.80 $1,562,921. 80
(1/1/82) (c)
4. Ocean Park
Project $ 772,568.08 $ 404,019.68 $1,176,587.76
(9/13/83) (d)
5. Ocean Park
Project $ 280,837.00 $ 146,743.96 $ 427,580.96
(9/14/83) (e)
Sub-total $3,121,120.96 $2,470,083.30 $ 5,591,204.26
Total $8,392,960.96 $5,250,784.51 $13,643,745.47
Notes:
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(a) and (c) represent General Fund funds advanced to the Agency
for various administrative and other expenses as of 6/30/81 (per
Agency Resolution 371, 1/12/82).
(b) Represents city CDBG funds advanced to the Agency for the
payment of interest on outstanding Federal proj ect notes (per
Agency Resolution 371, 1/12/82).
(d) Represents General Fund funds advanced to the Agency to pay
off the outstanding Federal Ocean Park Urban Renewal Grant Note.
(e) Represents City CDBG funds held by the Federal government and
appl ied 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
FY1986/87.
(h) Reflects payment of $1,149,452 in FY1986/87
(i) Reflects payment of $183,000 in FY1984/85
II. FY1987/88 Financial Ability of Redevelopment Agency to Repay
Promissory Notes
The following table summarizes (in millions) the budgeted sources
and uses of Redevelopment Agency income for FY1987/88. As this
table indicates, Agency income is not available at this time to
effect further repayment of Agency debt to the City.
Sources
Downtown
Project
Ocean Park
Project
Tax Increment and Interest
city Lease Payment for
Parking structures
$1. 0
$1.1
1.2
Total Sources
$2.2
$1.1
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Uses
Salaries
Supplies & Expenses
Capital outlay and Projects
$ .1
1.9*
1.6**
$ .1
1.0*
1. 0**
Total Uses
$6.6
$2.2
*Includes existing bonded debt payment requirements.
**Includes reappropriated capital projects from prior years which
are primarily financed by designated funds in the appropriate
fund balance.
(rptrapn)
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Attachment II
City of Santa Monica
Extension of Time for Outstanding Notes*
Promissory Accrued Promissory
Note Interest Note
Promissory Balance 1-1-87 Balance
Note Number 1-1-87 12-31-87 1-1-88
Downtown projects
1. Downtown $ 925,145.36 $ 64,297.60 $ 989,442.96
Redevelopment
project**
6. Downtown 6,555,079.58 508,018.67 7,063,098.25
Redevelopment
Project******
Sub-total
Downtown
Project $7,480,224.94 $572,316.27 $8,052,541. 21
Ocean Park Project
2. Ocean Park $2,266,586.01 $157,527.73 $2,424,113.74
Federal
Allocation***
3. Ocean Park 1,461,357.46 101,564.34 1,562,921. 80
Federal
Allocation**
4. Ocean Park 1,100,128.81 76,458.95 1,176,587.76
Federal
Allocation****
5. Ocean Park 399,795.19 27,785.77 427,580.96
Federal
Allocation*****
Sub-total
Ocean Park
Project $ 5,227,867.47 $363,336.79 $ 5,591,204.26
Total $12,708,092.41 $935,653.06 $13,643,745.47
* Effective January 1, 1988 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 1988. 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.
** Reimbursement for various administrative support and
service costs; owed to City's General Fund.
****
*****
******
***
t~pay interest
Loan Note: owed
on
to
Reimbursema of COBG funds used
outstanding Federal Urban Renewal
City's CDBG Fund.
Close out of Ocean Park Federal Urban Renewal proj act:
owed to the City's General Fund.
Close out of Ocean Park Federal Urban Renewal Proj act:
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.