SR-413-002 (6)
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D~ ; 71985
FI:CMD:BR:g:opnI2184
Council Meeting: 12/17/85
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 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 1, 1985, need to be renewed
for the 1986 calendar year effective January 1, 1986.
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 vIi th payment due
annually. If payment in full is not received by the city, it is
necessary that the Notes be renewed. Since the Agency does not
have funds available at this time to meet payments due, the six
Promissory Notes should be renevled effective January I, 1986.
The attached notes include the appropriate accrued interest
through December 31, 1985.
(iff JI?I1-3
'1~ 171985
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BUdget/Financial Impact
There is no budgetary impact from the renewal of these Promissory
Notes. The financial impact is to increase the liability of the
Agency by $971,640.62 which represents net accrued interest for
the period 1/1/85 - 12/31/35. Five of the six promissory notes
carried an interest rate of twelve percent for CY1985 which was
the maximum allowed by law. Effective January 1, 1986,the legal
maximum interest rate for these promissory notes changes to ten
percent per year.
The sixth promissory note must continue to
bare 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
1986 calendar year.
Prepared by: C.M. Dennis, Agency Treasurer/City
Director of Finance
W.R. Ramsey, Assistant Director of Finance
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City of Santa Monica
Extension of Time for Outstanding Notes
10% per Annum*
Promissory Accrued Promissory
Note Interest Note
Promissory Balance 1-1-85 to Balance
Note Number 1-1-85 12-31-85 1-1-86
1. Downtovln $1,036,894.71 $124,427.37 $1,161,322.08
Redevelopment
project**
2. Ocean Park 2,016,866.86 226,665.88 2,060,532.74
Federal
Allocation***
3. Ocean Park 1,186,166.77 142,340.01 1,328,506.78
Federal
Allocation**
4. Ocean Park 892,961. 70 107,155.40 1,000,117.10
Federal
Allocation****
5. Ocean Park 324,509.08 38,941. 09 363,450.17
Federal
Allocation*****
6. Downtown 6,646,591.84 515,110.87 7,161,702.71
Redevelopment
Project******
* Maximum interest rate allowed by law during 1985 was 12%.
Effective January I, 1986 the maximum interest rate
allowed by law is 10%. Notes 1 through 5 carried an
interest rate of 12% through 1985. Effective January 1,
1986 Notes 1 through 5 will carry an interest rate of 10%.
However, note 6 continues 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.
*** Reimbursement of CDBG funds used to pay interest on
outstanding Federal Urban Renewal Loan Note; owed to
city's CDBG Fund. Principal payment of $183,000 made
April 1985.
**** Close out of Ocean Park Federal Urban Renewal Project~ and
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.