SR-CC/RA-3
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, council Meeting: January 14, 1992 Santa Monica, California
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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 Redevelopment Project and four for the Ocean Park
Redevelopment Project, for funds loaned to the Redevelopment
Agency by the city. These Notes, last renewed by the Agency
January 1, 1991, need to be renewed for the 1992 calendar year
effective January 1, 1992.
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. until payment in full is 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 FY1991/92 Redevelopment Agency
income. To date, approximately $4.1 million has been budgeted
for repayment on these Notes, including $680,000 that was repaid
during FY1990-91 and $33,000 to be repaid during FY1991-92.
Repayments which may be scheduled for FY1992/93 will be
determined as part of the regular budget process. ~~/~A-'" ~
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'Budqet/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 $1,145,016.64 which represents net
accrued interest for the period January 1, 1991 through
December 31, 1991 (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 1992. 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
1992 calendar year.
Prepared by: Mike Dennis, Director of Finance
Angie Lee, Accountant
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Attachment I
STATUS OF REDEVELOPMENT AGENCY PROMISSORY NOTES
I. History of Promissory Notes
The following lndicates the origlnal 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 12/3]/91; the history of note payments
is footnoted by promissory note.
Original Total Accrued Promissory
Promlssory Debt Interest Note
Note Amount Through Balance
Number (date) 12/31/91 1/1/92
Downtown Project
1. Downtown
Redevelopment
Project $ 871,840.00 $ S08,537.26(g} $ 1,380,377.26
(6/30/81) (a)
6. Downtown
Redevelopment
Project $4,400,000.00
(10/24/78) (f) $4,91B1368.49{h) $ 913181368.49
Sub-total $5,271~840.00 $5~426,905.75 $101698~745.75
Ocean Park Project
2. Ocean Park
ProJect $1,243,266.88 $1,530,449.84(i) $ 2,773,716.72
(6/30/81) (b)
3. Ocean Park
Project $ 824,449.00 $ 340,245.60(j} $ 1,164,694.60
(1/1/82) (c)
4. Ocean Park
ProJect $ 772,568.08 $ 99,464.28(k) $ 872,032.36
(9/13/83) (d)
5. Ocean Park
Project $ 280,837.00 $ 35,986.67 (1) $ 316,823.67
(9/14/83)(e)
Sub-total $31121~120.96 $2~OO6~146.39 $ 5~1271267.35
Total $8,392,960.96 S7,4331052.14 SI5,a26~013.10
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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 (pel" Agency Resolution 371,
1/12/82) .
(b) Represents City CDBG funds advanced to the Agency for the payment of
interest on outstanding Federal project notes (per Agency Resolution 371,
1/12/82) .
(d) Represents Genera 1 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 1n FY1983/84 and $347,548 in FY1986/87.
(h) Reflects payment of $I, 149,452 in FY1986/87 and $200,000 in FYl990/91
(budgeted in FY1989/90).
( 1) Refl ects payment of $183 I 000 in FYI984/85 and $445,779 in interest in
FYI 987/88
(j) Reflects payment of $365,000 of primari ly interest 1n FY1987/88 and
$480,000 in interest in FYI990/91.
(k) Reflects payment of $563,975 10 interest and princ1pal in FYI987/88
(1) Reflects payment of $205,011 in interest in FY1987/88
II. FYl991/92 Financlal Abil1ty of Redevelopment Agency to Repay Promissory
Notes
The following table summarlzes (in millions) the budgeted sources and uses of
Redevelopment Agency income for FY1991/92.
Downtown Ocean Park
Sources ProJect Project
Tax Increment and Interest $1.0 $1.6
City Lease Payment for
Parking Structures* 1.2 -
Total Sources $2.2 $1.6
* This 1 ease payment i s made by the General Fund to the Redevelopment
Agency. The General Fund payment is financed by: a) $.6 million payment
from Santa Monica Place to offset lost property taxes due to Proposition
13; b} $.1 million payment from Santa Monica Place for sublease of parking
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structures; and c) $.5 mill10n payment from Redevelopment Agency for
putting credit of the General Fund behind the ]978 bond issue.
Uses ****
Operat1ons $2.3* $1.5*
Capital ProJects .2** .3**
Total Uses $2.5 $1.8
Net $(.3)*** $(.2)***
* Consists of the following costs: Downtown Project - a) $1.1 mill10n debt
service payment on 1978 bonds; b) $.5 million payment to the General Fund
for putting credlt of the General Fund behind the Redevelopment Agency's
]978 bond issue; c) $.1 mi 11 ion earthquake insurance on Parking
Structures; d) $.2 million payment to the General Fund for various
administrative support serV1ces; e) $.2 million re1mbursement for Housing
operations of benefi t to the proJect area; and f) $.2 mill10n in
Redevelopment Agency other operating expenses appl icable to the proJect
area; and Ocean Park ProJect - a) $.8 mill10n debt serV1ce on 1988
refunded bonds and the repayment of interest to the General Fund on
outstanding Promissory Notes; b) $.2 million payment to the General Fund
for various administrative support services; c) $.1 mill ion annual lease
payment to Parking Authority for development of 175 Ocean Park Boulevard;
d) $ . 2 mi 111 on reimbursement for Hous1ng operations of benefi t to the
project area, and e) S.2 million in Redevelopment Agency other operating
expenses applicable to the proJect area.
** Consi sts of the following capital proJects: a) Downtown Project - $.2
million for housing proJects of benef1t to the project area, and b) Ocean
Park Project - $.3 million for housing proJects of benefit to the proJect
area.
*** Ava1lable fund balances are be1ng used to finance the excess of uses over
annual revenues.
****Excludes uses reimbursed directly from the General Fund for Bayslde
District Corporatlon and some assoclated adm1nistrat1ve costs.
(sretopn3)
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Attachment II
City of Santa Monica
Extension of Time for Outstanding Notes*
Promissory Accrued Repayment To Promissory
Note Interest Genera 1 Note
Promissory Balance 1/1/91- Fund Balance
Note Number 1/1/91 12/31/91 12/31/91 1/1/92
Downtown ProJects
1. Downtown $ 1,279,667.44 $ 100,709.82 $ -0- $ 1,380,377 .26
Redevelopment
ProJect**
6. Downtown 8,648,137.81 670,230.68 -0- 9,318,368.49
Redevelopment
ProJect******
Sub-total
Downtown
Project $9,927,805.25 $770,940.50 $ -0- $10~698,745.75
Ocean Park Project
2. Ocean Park. 52,571,351.37 $202,365.35 $ -0- $ 2,773,716.72
Federal
Allocation***
3. Ocean Park. 1, 079,720.59 84,974.01 -0- 1,164,694.60
Federal
Allocation**
4. Ocean Park 808,410.46 63,621.90 -0- 872,032.36
Federa 1
Allocatlon****
5. Ocean Park 293,708.79 23,114.88 -0- 316,823.67
Federa 1
Allocation*****
Sub-total
Ocean Park
Project $ 4~753,191.21 S374~076.14 $ -o- S 5,127,267.35
Total $14,680,996.46 $1,145,016.64 $ -0- $15,826,013 .10
* Effective January 1, 1992 Notes 1 through 5 wlll carry an lnterest rate
one half a percentage pOlnt (.5%) higher than the CityJs actual rate of
investment earnlngs for calendar year 1992. However, note 6 wlll
continue to carry an interest rate of 7-3/4%. This is the same rate of
interest on the Downtown Redevelopment Project Parki n9 Lease Revenue
Bonds.
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** Reimbursement for vari ous administrative support and serVl ce costs;
owed to City's General Fund.
*** Reimbursement of CDBG funds used to pay lnterest on outstanding Federal
Urban Renewal Loan Note; owed to City/s CDBG Fund.
**** Close out of Ocean Park Federal Urban Renewa 1 Project; owed to the
City's General Fund.
***** Close out of Ocean Park Federal Urban Renewal Project; owed to the
Clty'S COBG Fund.
****** Represents the val ue of various parcel s 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.
(sretopn4)
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CITY OF SANTA MONICA
INTER-DEPARTMENT MEMORANDUM
DATE: FEBRUARY 3, 1992
TO: Mike Dennis, Finance Director
FROM: Joan L. Jensen, City Clerk's Office
SUBJECT: Promissory Notes Dated January I, 1992
Attached are 6 Promissory Notes approved at the Council meeting
of January 14, 1992.
I hereby acknowledge the receipt of the 6 Promissory Notes.
,
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Mlke DennlS
j j redp
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PRO MIS S 0 R Y NOT E
.
Downtown Santa Mon~ca, California
Redevelopment ProJect January 1, 1992
On December 31, 1992, for value received, the undersigned
promises to pay to the order of the City of Santa Monica, a
municipal corporation, at Santa Monica, the sum of One Million,
Three Hundred Eighty Thousand, Three Hundred Seventy-Seven
Dollars and Twenty-Six cents ($1,380,377.26) , with interest from
January I, 1992, at the rate of one-half of one percentage point
( . 5%) more than the City's actual rate of ~nvestment earn~ngs for
calendar year 1992. In no event shall the interest rate be more
than 12% per annum. Principal and interest are payable in lawful
money of the United states. If action be instituted on this
note, the undersigned promises to pay all costs of collection,
~ncluding reasonable attorney's fees.
The Redevelopment Agency of
the City of Santa Mon~ca
ATTEST
BY: ~/A~ BY:
-Clarice Dykhousel
Secretary
APPROVED AS TO FORM:
BY: ~ VV'-. ~-"-
Robert M. Myers
Agency Attorney
P.N. ~1
~
PRO MIS S 0 R Y NOT E
Ocean Park Santa Monica, California
Federal Allocat~on January 1, 1992
On December 31, 1992, for value recel.ved, the undersigned
promlses to pay to the order of the City of Santa Monlca, a
munic~pa1 corporatlon, at Santa Monica, the sum of Two Million,
Seven Hundred Seventy-Three Thousand, Seven Hundred sixteen
Dollars and Seventy-Two Cents ($2,773,716.72), wlth ~nterest from
January 1, 1992, at the rate of one half of one percentage point
(.5%) more than the c~tyls actual rate of ~nvestment earnings for
calendar year 1992. In no event shall the interest rate be more
than 12% per annum. princ~pal and interest are payable in lawful
money of the Unlted States. If actlon be inst~tuted on th~s
notel the undersigned promJ.ses to pay all costs of collectl.on,
including reasonable attorneyls fees.
The Redevelopment Agency of
the City of Santa Monlca
ATTEST
BY: ~~~ f Pr~ BY: d;;
Ken Gen~
--Clarice Dykh-ouse I
Secretary Chal.rperson
APPROVED AS TO FORM:
BY: ~t~'a--
Robert M. Myers
Agency Attorney
P.N. #2
PRO MIS S 0 R Y NOT E
Ocean Park Santa Monica, Callfornia
Federal Allocation January 1, 1992
On December 31, 1992, for value recelved, the underslgned
promises to pay to the order of the City af Santa Manlca, a
munlcipal corporatlon, at Santa Monica, the sum of One Million,
One Hundred Sixty-Four Thousand, six Hundred Ninety Four Dollars
and Sixty Cents ($1,164,694.60) , wlth lnterest from January 1,
1992, at the rate of one half of one percentage point ( . 5%) more
than the Clty'S actual rate of lnvestment earnlngs for calendar
year 1992. In no event shall the lnterest rate be more than 12%
per annum. Prlnclpal and interest are payable in lawful money of
the United states. If actlon be instltuted on this note, the
undersigned promlses to pay all costs of collection, including
reasonable attorney's fees.
The Redevelopment Agency of
the city of Santa Monlca
ATTEST
BY: ,.---~CL~ ~ BY:~~
Clarlce Dykhouse/ Ke. Genset
Secretary Chalrperson
APPROVED AS TO FORM:
BY: ~1-- "'^-- ~
Robert M. Myers -0
Agency Attorney
P.N. ~3
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PRO MIS S 0 R Y NOT E
Ocean Park Santa MonIca, CalifornIa
Federal AllocatIon January 1, 1992
On December 31, 1992, for value recelved, the undersigned
promises to pay to the order of the City of Santa Monl.ca, a
munIcl.pal corporation, at Santa Monlca, the sum of Elght Hundred
Seventy-Two Thousand, Thl.rty-Two Dollars and Thirty-Six Cents
($872,032.36), with lnterest from January 1, 1992, at the rate of
one hal f of one percentage pOlnt (.5 %) more than the city's
actual rate of investment earnlngs for calendar year 1992. In no
event shall the Interest rate be more than 12% per annum.
Principal and Interest are payable ln lawful money of the United
States. If actIon be InstItuted on thlS note, the undersigned
promIses to pay all costs of collection, Includlng reasonable
attorney's fees.
The Redevelopment Agency of
the CIty of Santa MonIca
ATTEST
/~. ~
. / 1:/
BY:;~Ak~/'~flj~ BY: _ ~
~larIce Dykhouse / Ken Gense
Secretary ChaIrpers
APPROVED AS TO FORM:
BY : rw~t """..-. - '- 15
Robert M. Myers
Agency Attorney
P.N. #4
.
PRO MIS S 0 R Y NOT E
Ocean Park Santa Monica, California
Federal Allocat~on January 1, 1992
On December 31, 1992, for value rece~ved, the underslgned
prom~ses to pay to the order of the C~ty of Santa Monlca, a
munlclpal corporat~on, at Santa Monlca, the sum of Three Hundred
sixteen Thousand, Eight Hundred Twenty-Three Dollars and
S~xty-Seven Cents ($316,823.67) , wlth ~nterest from January 1,
1992, at the rate of one half of one percentage point ( . 5%) more
than the c~ty's actual rate of lnvestment earnings for calendar
year 1992. In no event shall the interest rate be more than 12%
per annum. Principal and lnterest are payable in lawful money of
the United states. If action be instituted on this note, the
undersigned promises to pay all costs of collectlon, lncludlng
reasonable attorney's fees.
The Redevelopment Agency of
the Clty of Santa Monlca
ATTEST
BY: ~.M-"_/ A~ BY: ~~
--Clarice Dykhouse / Ken Gense1 ...
Secretary Chalrperso
APPROVED AS TO FORM:
~\ \,-.,-. ~ "
BY:
Robert M. Myers
Agency Attorney
P.N. #5
.
. PROMISSORY NOTE
Downtown Santa Monlca, Callfornia
Redevelopment project January 1, 1992
On December 31, 1992, for value recelved, the undersigned
promises to pay to the order of the city of Santa Monica, a
municipal corporation, at Santa Monica, the sum of Nine Million,
Three Hundred Eighteen Thousand, Three Hundred Sixty-Eight
Dollars and Forty-Nine Cents ($9,318,368.49), with interest from
January 1, 1992, at the rate of seven and three quarters percent
(7.75%) per annum. In no event shall the lnterest rate be more
than 12% per annum. Principal and interest are payable in lawful
money of the United states. If actlon be instltuted on this
note, the undersigned promises to pay all costs of collection,
lncluding reasonable attorney's fees.
The Redevelopment Agency of
the City of Santa Monica
ATTEST ~
BY: ~/ 4~ BY: ~~
~Clarice Dykhouse/ Ken Genset
Secretary Chalrperson
APPROVED AS TO FORM:
BY: rw--u--v\ \. .'.. ~. ~
Robert M. Myers
Agency Attorney
P. N. #6