SR-413-001 (17)
4
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RA -(
Dre 1 1 1984
C/ED:EDD:AP:mb
Council Meeting 12/11/84
Santa Monica, CalifornIa
TO:
Chairperson and Redevelopment Agency
FROM:
Redevelopmen~ Agency Staff
SUBJECT: 198 )-84 Annual Repor t f or the Redevelopment Agency of
the CIty of Santa MonIca
INrRODLJCT10N
ThIS report transmlts an Independent audIt report for fIscal year
1983-84 of the Redevelopment Agency of the Clty of Santa Mon1ca
pursuant to Heal th and Safety Code SectIons 33020.2 - 33080.4.
The r-eport also lncludes:
(1) a work program for FIscal Year
1984-85;
(2) an ex: amInatIon of the prev lOUS year I s goal sand
acnlevements; (3) recommendations for needed legIslatIon to carry
on a program of nouslng and communIty development 1n CalifornIa;
and (4) a descrlptlon of the Agency's actlvitIes affectIng hous-
Ing and dIsplacement.
INDEPENDENT FINANCIAL AUDIT
Tne Agency contracted Wltn toe accountlng flrm of Peatl Marwlckl
MItchell & Co. for an Independent finanCIal audlt of the fIscal
year July ~, 1983 through June 30, 1984. The audIt, performed to
comply wl th standard s set out In SectIon 33080.1 of the Heal th
and Safety Code 1.S attached to thls report and is hereby flIed
Wltn the Agency.
The Agency J s record s we re found to present
faIrly the fInanclal posltlon of the varlOUS funds and account
~A -I
o[e 11 \9&4
- 1 -
groups of the Redevelopment Agency of the City of Santa Monlca as
of June 30. 1984. There were no negat~ve aud~t f~ndIngs.
FISCAL YEAR 1984-ti5 GOALS AND OBJECTIVES
The Redevelopment Agency currently Das two actIve proJect areas:
Ocean Park and the Downtown ProJect.
Dur~ng the Agency's annual
budget process. the Agency approved the follOWIng goals and ob-
]ectIves for Flscal Year 1984-85.
Ocean Pa~k R~de~elopment ProJect Goals &ObJectl~es
The fInal phase of the Ocean Park Redevelopment ProJect Includes
development of market rate housIng, an on-site park, off-SIte
beach Improvements and affordable nousIng. Construction of the
market rate hOUSIng IS to be undertaken by a prIvate developer
and IS scheduled to begIn In January, 1985. The CIty IS respon-
sible for development of the park and beach Improvements and wlll
contract vHth a non-profIt developer for the development of the
affordable houslng. ~he Agency goal for FY 1984-85 1S to coordl-
nate the llnplementation of Oced.n Park Redevelopment ProJect Im-
provements. In order to accompl1sn thiS goal, the follOWIng ob-
JectIves have been adopted.
o Complete worlung draWings for a 6.5 acre on-SIte park
and obtaln necessary State approvals;
o Complete an EnVIronmental Impact Report on a Beach Im-
provements Plan and obtaln a Coastal Permit;
o Prepare a f lnancing plan for proJect l.mprovements and
Issue tax allocatlon bonds;
o Prepare Beach Improvement Plan workIng drawings;
o Prepare Request for Proposals and select contractors for
constructlon of Beach and Park ~mprovements;
o Monl.tor construct1on of Beach and Park lmprovements;
o Coord1nate w1th the Houslng D~v1sion the lmplementatlon
of the affordable hOUSIng program; and
o InvestIgate the feasibIlity of remOVIng submerged
pilIngs from the former Paclflc Ocean PIer (Removal of
the old plllngs 1S part of the Ocean Park Redevelopment
Plan and would mltlgate the potential danger from par-
tially e~posed plllngs to Ocean Park beach area users).
- 2 -
Downto~n Redevelopment ProJect Goals & Object~ves
The Downtown ProJect cons~sts of a 550,000 square foot reg~onal
shopping center - Santa MonIca Place. Tne Agency's goal for FY
1984-&5 is to ass~st In the revItalizatIon of the downtown area.
The obJect1ve 1S to plan and 1mplement a publ~c Improvement pro-
gram WhIch provides publ~c amen~t1es and improves pedestrIan ac-
cess from nearby park~ng structures.
AddItIonal Agency Act~vIties
The Agency has also establ~shed a Congregate SenIor HOUSIng Pro-
gram for FY 1984-85. The program WIll provIde deferred loans to
a non-profIt corporat~on for the development of a congregate af-
fordable hOUSIng fdC~lIty for low-~ncome senior CitIzens.
FISCAL YEAR 1983-84 GOALS AND ACHIEVEMENTS
The prIor year's goals and achIevements ar~ recounted by program
area as follows:
Agency Goals and Achieve~ents
o EstablIsh and Implement an admin~stratlve program management
system for the Redevelopment Agency.
An outside flrm was contracted to analyze and make
recommendatIons for the 1mprovement of the flnanc~al
management systems ut11~zed by the Agency. It was
recommended that budget procedures be revIsed so that
the Agency's annual budget can be prepared and admInls-
tered by proJect and ref lect all ant~cipated eK pendl-
tures and revenues. These program management system
recommendations were implemented ~n FY 1983-84. In
partlcular, manually maIntaIned accountIng records were
elim~nated. All Agency fInancIal transact~ons w~ll also
be processed tnrough the CIty'S automated account~ng
system by Agency proJect. PerlodlC reportIng procedures
were establIsned whereby Agency staff and management
rece1.ve analyzed f1nancIal Information In a form which
faCIlItates management control of Agency operat~ons.
o Establ13h Downtown and Ocean Park Housing Trust Funds.
The trust funds were establIshed pursuant to Callfornla
Redevelopment Law and prOVIde loans to eliglble non-
profIt corporations to purchase and rehabIlItate afford-
able hous~ng throughout the Cl ty. At least 85% of as-
slsted nouseholds are requIred to meet applIcable State
- 3 -
elig~lib~l~ty requuements. AcqUIsItIon of between 70
and 100 unIts WIll be facilItated at thIS fund~ng level.
ProJect Goals and Achievements
o CoordInate the Implementat~on of the flnal phase of the Ocean
Park ProJect.
Staff secured architectural services to prepare plans
for beach Improvements and an on-SIte park.
Staff developed a fInancIal plan for on- and off-slte
lmprovements and for the fInal close-out of the HUD
Federal urban Renewal Project Notes. A total of $1.5
ffillll.on of ProJect Note s were retIred and add 1 tl.onal
consultant serVlces were procured to prepare a tax al-
location bond offerIng for f1nanclng the flnal phase of
Project implementation.
o Seek resolutlon of lltlgatlon by Santa MonIca Place ASSOCI-
ate S l.nvolv Ing the Downtown Project tax l.ncrement reco r-d Ing
process WIth the County of Los Angeles.
At thIS tIme Santa Monica Place ASSOCIates IS 1n litiga-
t10n WIth Los Angeles County regardIng the assessed
value of Santa 1'1onIca Place. The Redevelopment Agency
of the C1ty of Santa Mon1ca has entered the case on be-
half of the County of Los Angeles. The assessed valua-
tlon has long-term consequences for the tax lncrement
revenue to the Agency. The Cal~fornla Super 10r Court
has ruled ~n favor of a lower pre-improvement asse ssed
value. However, the Super lor Court 1S not able to es-
tabllsh t:he pre-Improvement assessed value and has de-
ferred that matter to the Assessment Appeals Board. The
Assessment Appeals Board has not yet deCIded upon the
reVIsed pre-Improvement assessed value. Agency counsel
contInued to monltor the legal and Board proceedlngs.
Add1tlonal Agency AC~lvltles durIng FY 1983-84
The Agency also prOVIded addltIonal hOUSIng and communlty 1m-
provement actl.VltJ.es for FY 1984-85. These Included plannIng
actlvl tIes for tne renOVatIOn and seIsmIC improvements to the
Ocean Park L1.brary, fundIng a commun1.ty based non-profIt corpora-
t1.on for acquIS1.tIon and renovation of hous1.ng for low and moder--
ate 1ncome persons and fund1ng d program for prov1ding shelter to
the homeless under the VI tale-G1lpin Fund. The Vi tale-G1lpin
Fund IS a legal settlement agreement reqUiring the Agency to set
aSide a portIon of Agency funds from the Downtown Redevelopment
Pro) ect ejt pressly for f undlng programs thdt provide hOUSIng for
low and very low income people.
- 4 -
AGENCY ACTIVITIES AFFECTING HOUSING AND DISPLACEMENT
Assembly Bl11 1123 requires that the Annual Report include the
followlng Informatlon regardless of the fundIng source for the
activities:
ACtlVity
Number
The total number of households that were
dIsplaced or moved from their dwelling units
as part of a redevelopment proJect of the
Agency durlng the preViOUS fiscal year.
o
The total number of households that the
Agency estImates Will be dlsplaced or Will
move from thelr dwellings as part of a
redevelopment proJect of the Agency during
the present f lscal year. (Relocatlon of
175 Ocean Park tenants.) .......
o
The total number of dwelling unlts hOUSing
persons and families of low and moderate
income Which have been destroyed or removed
from the low and moderate income hOUSing
market durlng the preViOUS fiscal year as
part of a redevelopment proJect of the Agency 0
The total number of developments constructed,
rehabllitated, or developed affordable to
persons or famllies of low and moderate
lncome . . . .. . . . . . . . . . . . . . .
8
RECOMMENDATIONS CONCERNING NEEDED LEGISLATiON
Pursuant to Heal th and Safety Code Sections 33020.2 - 33080.4,
thiS report should transmit any recommendations concerning needed
leglslatlon for redevelopment agencies.
Based on the current
status of both redevelopment proJect areas, no leglslatlve chang-
es are recornmendeo In order to proceed with implementation of
both proJects.
RECOHt-1ENDAr ION
Staff respectfully recommends that the Agency adopt thIS Annual
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Report and d~rect the Execut~ve D~rector to submlt thIs report to
the CalifornIa HousIng and Communlty Development Department.
Prepared by: Ernesto R. Flores, Manager
Allen D. Perry, Project Manager
EconomIc Development UnIt
CommunIty and EconomIC Development Department
Attachments
IX
RASR
- 6 -
r=I PEAT
I t:.I MAR WICK
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICAt CALIFO~~IA
Combined Financial Statements
June 30, 1984
(With Accountants' Report Thereon)
r=I PEAT
I ~ MARWICK
Peat, \'laf'\lck, :\'htcheIl & Co
Certified Public ....cc:ount,mts
555 South Flower Street
Los Angdes. Cahforfild 90071
The Xembers of the Redevelopment Agency of
the City of Santa Monlca, Californla:
We have examined the comb1ned balance sheet of the varLOus funds and account
group of the Redevelopment Agency of the City of Santa Mon1ca as of June 30,
1984 and the related comb1ned statement of revenuest expendltures and changes
in fund balances (deficlts) for the year then ended. Our eXarnlnatlon was made
in accordance wlth generally accepted auditlng standards andt accordlngly,
included such tests of the accountlng records and such other auditing
procedures as we considered necessary 10 the circumstances.
In our oplniont the aforementioned combined flnanclal statements present fairly
the flnancla1 positlon of the various funds and account group of the
Redevelopment Agency of the City of Santa Monlca at June 30, 1984 and the
results of operat~ons of such funds for the year then ended) in courorm1ty wlth
generally accepted accounting prlnciples applled on a basls conslstent wlth
that of the preceding year.
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lmo:)
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA, CALIFORNIA
Notes to Combined Financial Statements
June 30, 1984
(~) Summary of Signi~lcant Accounting Policies
General
The Redevelopment Agency of the City of Santa Monica (Agency) was
established by the Santa Monica City Council in 1957 pursuant to the
Community Redevelopment Law of Californ~a as codified 1n the State of
California Health and Safety Code. The purpose of the Agency is to
eliminate blight and to promote economic revita11zation w~thln designated
project areas of the City of Santa Monica.
The Agency is funded by Federal and local sources. The only source of
Federal funding has been provided under programs sponsored by the U.S.
Department of Housing and Urban Development (HUD). Through HUD, the
Agency has received funds for its Conventional Urban Renewal Program
(Title I) and the Community Development Block Grant Program (CDBG). All
Federal programs were terminated during the year with payment of all
outstand~ng debt. Local funds are provided pr1ncipally from incremental
property taxes and rentals for parking facilities.
Basis of Accounting
The accompanying combined financ~al statements of the Agency have been
prepared on the modified accrual basis of accounting. The modified
accrual basis of accounting is defined as the basis of accounting under
which revenues are recognized when they become both measurable and
available to finance operations of the current period. Expend~tures are
recognized when the related liability is incurred, except for princ~pal
and interest on general long-term debt, which is recognized when due.
Investments
Investments are stated at cost and generally cons~st of Federal
Government-backed securities.
Long-Term Liabilities
Long-term liabilities are accounted for in tae General Long-Term Debt
Account Group.
1
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICAt CALIFORNIA
Notes to Combined F1nancial Statements, Continued
Tax Increment Revenues
Incremental property taxes are considered as project revenues by the
Agency when they become both measurable and available for financ~ng the
Agency's redevelopment activities dur~ng the year. Property taxes are
considered available if received within 60 days following year-end in
accordance with the National Council on Governmental Accounting's Inter-
pretation No.3.
Incremental property tax revenues represent property taxes collected from
the excess of taxes levied and collected each year on any redevelopment
project over that amount which would have been levied and collected on
the base year property tax assessment. A property tax base year ~s
determ~ned to be the year prior to the establishment of a redevelopment
project area.
Reporting Entity
The Redevelopment Agency of the City of Santa Monica is a component unlt
of the City of Santa Monica as defined by National Councll on Govern-
mental AccountingJs Statement No.7. As such, the operatlons of the
Agency are also included in the Comprehensive Annual Financ~al Report of
the City of Santa Monica.
Total (Memorandum Only)
The column in the accompanying combined f1nancial statements captloned
"Total (memorandum only)" is not necessary for a falr presentatlon in
accordance with generally accepted accounting princlples but is presented
as additional analytic data.
(2) Bonds Payable and Notes Payable
On November 2> 1978, the Agency authorized the offerlng of $14t470.000 1n
Downtown Redevelopment Project Parking Lease Revenue Bonds. Proceeds
from the bonds have been used by the Agency to finanee the acqu~s~t~on
and eonstruction of two garages (the Parking Facility), WhlCh provlde
parking facilities for a major shopping center in the City of Santa
Monica.
2
mE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA~ CALIFORNIA
Notes to Combined Financial Statements~ Continued
A summary of project bonds payable held in the Agency.s general
debt account group at June 30) 1984 tollows:
Bond issue
Date of
issue
Interest
rate
Outstanding)
June. 30,1984
$ 13,895,000
Downtown Project Bonds
12/01/78
6.25-7.75%
In addition, the Agency was indebted to the City of Santa Monic
loans with interest per annum accruing on principal only as fol
Date Original
of amount In
Note payable ~o note of not~
Ci ty of Santa Moni ca General Fund 1101/84 $ 6,168,531
City of Santa Monica General Fund 1/01/84 1,064,342 1
City of San ta Monica General Fund 9/13/84 772,568 1:
Ci ty of Santa Monica CDBG Fund 1/01/84 It059,077 1
City of Santa Monica CDBG Fund 9/14/83 280,837 1:
City of Santa Monica General Fund 1/01/84 1) 800) 77 4 1:
-
Total $ 11,146,129
The above bonds and notes are payable when future tax increment
are received by the projects. It is not anticipated that these
will be repaid with available spendable resources.
(3) Restricted Assets
As part of the covenants for the Agency's Downtown Redevelopment
Parking Lease Revenue Bonds) the fiscal agent is required to mai
three separate cash fundss as follows.
Bond Service Account
Monies are transferred into this account each May 15 in amounts
interest due on the next ensuing interest payment dates. In add
each November 1St an amount equal to the principal amount of bon
maturing on the next ensuing December 1 is transferred into this
account.
3
"
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA, CALIFORNIA
Notes to Comblned Financial Statements, Continued
WorkiD$ Cap~tal Account
The sum provided in this account is to be used to pay any taxes and
assessments levied on the Agency's interest in the leased prem1ses,
insurance premiumst annual fiscal costs of maintenance and operation, if
the City defaults on the lease. The fund is to be ma2ntained at $5,000.
Reserve Fund Account
A sum to be equal to at least the maximum annual debt serv~ce amount over
the life of the bonds is to be maintained in thlS account. Monies 1n the
Reserve Fund may be used by the Agency; first, for the payment of losses
sustained by reason of accident or destruction of the Park2ng Facility
financed by issuance of the bonds and not covered by the required
insurance so long as the balance remaining in the Fund is equal to 50% of
maximum annual debt service; second, to help redeem the bonds outstanding
under circumstances where the Parking Facility is not to be repaired or
rebuilt; and third, for the payment of interest on, and prinCipal of, the
bonds in the event no other funds are available therefor or for the final
retirement of all bonds then outstanding.
On June 30, 1984t the aforementioned accounts reflected the following
balances:
Bond Service Fund $ 468,826
Working Capital Fund 5,000
Reserve Fund 1 t18.9 , 705
Total $ 1,663,531
The balances of each of such assets are held in trust by an independent
fiscal agent and are recorded as restricted cash in the Debt Service Fund.
(4) Capita11zed Lease
On May It 1978, the City of Santa Monica entered into a lease agreement
with the Agency to provide parking for the shopping cencer in the
Downtown Project. The lease requires the City to pay the Agency a base
rental at an estimated rate of approximately $1)190)000 per year) and in
additiont the lease requires the City to make additlonal payments each
year sufficient to operate and maintain the Parking Fac212ty. The lease
extends for a period of 35 years or repayment of the bonds issued to
finance construction of the Parking FacilitYt whichever occurs earlier.
4
THE REDEVELOPMENT AGENCY OF THE
CITY OF S~~TA MONICA, CALIFORNIA
Notes to Combined Financial Statements. Cont1nued
Upon termination of the lease, ownership of the Parking Facility will
rest with the City. Such lease meets the criteria of a capitalizab1e
financing lease; however, in accordance with generally accepted
accounting principles this long-term receivable is not recorded 1n the
Downtown Project Fund since it does not represent available spendable
resources. At June 30, 1984, the present value of the lease payments
receivable from the City was $12,568,558 and is shown as an amount to be
provided for the repayment of the Agency's bonds payable.
(5) Deficit Fund Balance
At June 30, 1984, the Ocean Park Redevelopment Project had a def~cit fund
balance of $502. It is anticipated that this fund deficit w11l be
alleviated through future tax increment revenue and other prOject
revenues.
)
r;r. PEAT
I ~ MARWICK
Peat. :\lanuck, MItchell & Co
Cemlzed PublIc Accountants
555 South FlO\\er Street
Los o\ngeles_ CalifornIa 900'71
The Board of Directors
The Redevelopment Agency
City of Santa Monica,
of the
California
We have examined the financial statements of the various funds and account
group of the Redevelopment Agency of the City of Santa Monica (Agency) as of
and for the year ended June 30, 1984 and have issued our report thereon dated
October 12, 1984. Our exam1nation was made in accordance w1th generally
accepted auditing standards and, accordinglYt included such tests of the
account1ng records and such other aud1t1ng procedures as we conS1dered
necessary 1n the circumstances.
We performed the procedures contained 1n the publication ent1tled Guide12nes
for Compliance Audits of California Redevelopment A~encies as promulgated by
the Controller of the State of Ca11fornia in connection w1th a review of the
Agency's compliance with laws, regulations and adm1n~strat~ve requirements
governing activities of the Agency, as requ~red by Section 33080.1(a) of the
Health and Safety Code of the State of California. The procedures we performed
would not necessarily disclose instances of noncomp12ance because they were
based on selective tests of accounting records and related data.
Dur~ng the performance of the aforementioned procedures, nothing came to our
attent10n that would lead us to bel~eve that the Agency dld not comply wlth
appllcable lawst regulatlons and adminlstrative requ1rements governlng ~ts
actlvitles. This report is to be used solely for filings with approprlate
regulatory agencies and is not intended for any other purpose.
:r J!IJ.:t TJI ~ ~ tl klL 9 e.o .
J , ,
October 12, 1984