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SR-CC/RA-2 (2) . t . ~e /~A..t 'AN -i ) "~"-. FI:CMD:br:sretopn ... , 1 _ I..)"", Council Meeting: January 12, 1993 Santa Monica, California TO: CITY COUNCIL AND REDEVELOPMENT AGENCY FROM: Clty and Agency Staff SUBJECT: EXTENSION OF TIME FOR OUTSTANDING PROMISSORY NOTES Introductlon 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 I, 1992, need to be renewed for the 1993 calendar year effective January 1, 1993. Background The city has loaned the Agency funds for various administrative, operat~onal and mlscellaneous 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 financlal history of each of the Promlssory Notes, includlng amounts repaid to date, and presents the sources and uses of budgeted FY 1992/93 Redevelopment Agency income. To date, approximately $4.4 million has been budgeted for repayment on these Notes. BUdget/Financial Impact There is no budgetary impact resultlng from the renewal of these ProIDlssory Notes. The financl.al impact is to increase the llability of the Agency by $1,067,083.58 whl.ch represents net ~e/'A ".J.. - 1 - I r ~J .< '-. - n- - 'I." ,"1':' ...... ~ ~ .. Ie . , accrued interest for the period January 1, 1992 through December 31, 1992 (see Attachment II). continuing the policy adopted last year by Council, staff once again recommends that the interest rate for five ProID1ssory Notes be one-half of one percentage point (.5%) more than the City's actual rate of investment earnings for calendar year 1993. The addit10nal .5% is to reimburse the City for carrying this debt. As required in the or1ginal bond covenant, the s1xth Promissory Note must continue at the same rate of interest, 5.98%, as the recently refunded Downtown Redevelopment Project Parking Lease Revenue Bonds. Recommendation It 1S 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 Cha1rperson to execute the S1X attached Promissory Notes between the Agency and the Clty, extending the loans for the 1993 calendar year. Prepared by: M1ke Denn1s, Director of F1nance B111 J1as, Senior Accountant - 2 - , FI:CMD:br:sretopn Councll Meeting: January 12, 1993 Santa Monica, California TO: CITY COUNCIL AND REDEVELOPMENT AGENCY FROM: Clty and Agency Staff SUBJECT: EXTENSION OF TIME FOR OUTSTANDING PROMISSORY NOTES Introduction The City of Santa Monlca holds SlX 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 Clty. These Notes, last renewed by the Agency January 1, 1992, need to be renewed for the 1993 calendar year effective January 1, 1993. Background The Clty has loaned the Agency funds for various admlnlstrative, operatlonal and mlscellaneous expenses. These loans have been forITlallZed ln the form of ProIDlssory Notes wlth payment due annually. until payment In full is received by the city, it is necessary that the Notes be renewed. Attachment I detalls the flnanclal history of each of the Promlssory Notes, lncludlng amounts repald to date, and presents the sources and uses of budgeted FY 1992/93 Redevelopment Agency lncome. To date, approxlmately $4.4 mllllon has been budgeted for repayment on these Notes. BUdget/Financial Impact There is no budgetary impact resulting from the renewal of these Promlssory Notes. The flnanc1al lmpact 1S to increase the llablllty of the Agency by $1,067,083.58 WhlCh represents net - 1 - accrued interest for the perlod January 1, 1992 through December 31, 1992 (see Attachment II). Contlnuing 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 pOlnt ( .5%) more than the C:tty's actual rate of investment earnlngs for calendar year 1993. The addJ.tional .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, 5.98%, as the recently refunded Downtown Redevelopment Project Parking Lease Revenue Bonds. Recommendatlon It lS recommended that: (A) The city Counell agree to renew the SlX loans to the Redevelopment Agency and to accept the attached Promissory Notesi and (B) The Redevelopment Agency approve and authorize the Chalrperson to execute the six attached Promissory Notes between the Agency and the City, extending the loans for the 1993 calendar year. Prepared by: Mlke Dennls, Director of Finance Bill Jias, Senlor Accountant - 2 - Attachment I STATUS OF REDEVELOPMENT AGENCY PROMISSORY NOTES I Hlstory of Promlssory Notes The followlng lndlcates the orlglnal debt amount of each of the SlX promlssory notes between the Redevelopment Agency and the Clty, and the total net accrued lnterest for each promissory note as of 12/31/92; the hlstory of note payments 1S footnoted by promlssory note. Onglnal Total Net Accrued Promlssory Promlssory Debt Interest Note Note Amount Through Balance Number (date) 12/31/92 1/1/93 Downtown Project 1. Downtown Redevelopment Project S B71 ,840 00 $ 588,875 22(g) $ 1,460,715.22 (6/30/81)(a) 6. Downtown Redevelopment Project 4,400.000.00 (10/24;78) (f) 5,640.542.05(h) 10,040,542 05 Sub-total 55,271 ,840.00 $6,229,417.27 511.501.257.27 Ocean Park Project 2. Ocean Park Project 51,243,266.88 S 1,691 ,880. 16 ( 1 ) 2,935.147.04 (6j30/81)(b) 3. Ocean Park Project 824,449.00 374, 195.92(J} 1.198,644.92 (1/1/82) (c) 4. Ocean Park Project 772,568.08 IS0.216.56(k) 922,784.64 (9/13/83)(d) 5. Ocean Park Project 280,837.00 54,425.81(1) 335.262.81 (9/14 I 83) (e) Sub-total $3,121.120.96 $2.270,718 45 S 5,391,839.41 T ota 1 $8,392,960.96 $8,500.135.72 $16.893,096.68 - 3 - Notes (a) and (c) represent General Fund funds advanced to the Agency for van ous adml n1 strat 1 ve and other expenses as of 6/30/81 (per Agency Resolut1on 371, 1/12/82) . (b) Represents C1 ty CDBG funds advanced to the Agency for the payment of 1nterest on outstandlng Federal proJect notes (per Agency Resolutlon 371, 1/12/82) (d) Represents General Fund funds advanced to the Agency to pay off the outstand1ng Federal Ocean Park Urban Renewal Grant Note (e) Represents C1ty CDBG funds held by the Federal government and applled to payoff the outstand1ng Federal Ocean Park Urban Renewal Grant Note (f) Represents the value of varlOUS parcels of property transferred from the Clty to the Agency for the Downtown Redevelopment Project (per Agency Resolutlon 352, 10/24/78) (g) Reflects payments of S150,000 1n fY1983j84 and $347,548 1n FY1986j87. (h) Reflects payment of $1,149,452 In FY1986/87 and S200,000 1n FYl990/91 (budgeted 1n FYI989/90) (1) Reflects payment of S183,000 1n FYl984/85 and $445.779 1n 1nterest 1n FYl987(88 (J) Reflects payment of 5365.000 of pr1mar11y 1nterest 1n FY1987/88, $480,000 1n 1nterest 1n FY1990/91 and S33,000 1n lnterest 1n fY1991/92 (k) Reflects payment of S563,975 In 1nterest and pr1nc1pal 1n FY1987/88 (1) Reflects payment of 5205,011 1n interest in FY1987/88 II. FYl991/92 Flnanclal Ab111ty of Redevelopment Agency to Repay Promissory Notes - The follow1ng table summanzes (In m111lOns) the adopted budget for sources and uses of Redevelopment Agency 1ncome for FYI992/93. Downtown Ocean Park Sources ProJect ProJect Tax Increment and Interest $1.0 51.7 C1ty Lease Payment for Parklng Structures* 1.2 - - - Total Sources $2.2 51. 7 * Th1S lease payment 1 S made by the General Fund to the Redevelopment Agency. The General Fund payment 1 s f1 nanced by. a) $.6 mlllion payment from Santa Mon1ca Place to offset lost property taxes due to Propos1t1on 13, b) $.1 mllllon payment from Santa Monlca Place for sublease of park1ng - 4 - structures: and c) 5.5 mllllOn payment from Redevelopment Agency for puttlng credlt of the General Fund behlnd the 1978 bond lssue. Uses *** - Operatlons S2.0* $1.4* Capltal ProJects .2** .2** Total Uses $2.2 S1.6 Net $ .0 $ .1 * Conslsts of the followlng costs: Downtown Project - a) $1.3 mllllon debt serVlce payment on 1978 bonds; b) $.5 mlll10n payment to the General Fund for puttlng credlt of the General Fund beh1nd the Redevelopment Agency's 1978 bond lssue; c) $ 1 milllon earthquake lnsurance on Parking Structures; and d) $ .1 mllllon in Redevelopment Agency other operatlng expenses appllcable to the project area; and Ocean Park Project - a) $.9 mllllon debt serVlce on 1988 refunded bonds and the repayment of lnterest to the General Fund on outs tand lng Promlssory Notes; b) $ .1 mllllOn payment to the General Fund for varlOUS admlnlstratlve support serVlces; c) $ 1 mllllon annual lease payment to Parklng Authority for development of 175 Ocean Park Boulevard: d) S.2 mlllion relmbursement for Houslng operatlons of beneflt to the project area, and e) $.1 mllllon In Redeve 1 opment Agency other operat 1 og expenses app 11 cab 1 e to the project area. ** Conslsts of the fo 11 OWl n9 capltal proJects: a) Downtown Project - $.2 mllllon for houslng projects of beneflt to the project area, and b) Ocean Park Project - S.2 ml1110n for hous1ng projects of benef1t to the project area. *** Excludes uses relmbursed dlrectly from the General Fund for Bayslde Dlstrlct Corporation and some assoclated admlnistratlve costs. (sretopn3) - 5 - Attachment II C1ty of Santa Mon1ca ExtensIon of Tlme for Outstandlng Notes* Prom,ssory Accrued Repayment To Prom,ssory Note Interest General Note Prom, ssory Balance 1/ 1/92- Fund Balance Note Number 1/1/92 12/31/92 12/31/92 1/1/93 Downtown Projects 1. Downtown S 1,380,377.26 $ 80,337.96 S -0- $ 1,460,715.22 Redevelopment ProJect** 6. Downtown 9,318,368.49 722,173.56 -0- 10,040,542.05 Redevelopment ProJect****** Sub-total Downtown ProJect S 10,698,745.75 $802,511. 52 S -0- 511,501,257.27 Ocean Park PrOJect 2. Ocean Park S 2,773,716.72 $161,430.32 $ -o- S 2,935, 147. 04 Federal Allocatlon*** 3. Ocean Park 1,164,694.60 66,950.32 S 33,000.00 $ 1,198,644.92 Federa 1 Allocatlon** 4. Ocean Park 872,032.36 50,752.28 -0- 922,784.64 Federa 1 Allocat1on**** 5. Ocean Park 316,823.67 18,439,14 -0- 335,262.81 Federal Allocat1on***** Sub-total Ocean Park ProJect $ 5,127,267.35 S 297,572.06 $ 33,000.00 $ 5,391,839.41 Total $15,826,013.10 51,100,083.58 5 33,000.00 $16,893,096.68 * Effect1ve January 1, 1993 Notes 1 through 5 w1ll carry an 1nterest rate one half a percentage p01nt (,5%) h1gher than the C1ty'S actual rate of 1nvestment earm ngs for calendar year 1993. However, note 6 will contlnue to carry an 1nterest rate of 5.98%. Th1S 15 the same rate of interest on the recently refunded Downtown Redevelopment ProJect Parklng Lease Revenue Bonds. - 6 - ** Reimbursement for vanous admlnlstratlve support and serVlce costs; owed to Clty'S General Fund. *** Relmbursement of CD8G funds used to pay lnterest on outstandlng Federal Urban Renewal Loan Note; owed to Clty'S COBG 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 Project; owed to the Clty'S COBG Fund. ****** Represents the value of varlOUS 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. (sretopn4) - 7 - PRO MIS S 0 R Y NOT E Downtown Santa Monica, California Redevelopment Project January 1, 1993 On December 31, 1993, 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, Four Hundred Sixty Thousand, Seven Hundred Fifteen Dollars and Twenty-Two cents ($1,460,715.22) , with interest from January 1, 1993, at the rate of one-half of one percentage point (.5%) more than the City's actual rate of investment earnings for calendar year 1993. 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 act~on be lnstituted on this note, the underslgned promises to pay all costs of collection, ~ncluding reasonable attorney's fees. The Redevelopment Agency of the city of Santa Monica ATTEST ~~;(L2~ BY' L/1 ~A Clarlce Dykhouse JudY/' bdo Secretary Chairperson APPROVED AS TO FORM: BYd~~~ ose~h Lawrence gency Attorney P. N. #1 PRO MIS S 0 R Y NOT E Downtown Santa Monica, California Redevelopment ProJect January 1, 1993 On December 31, 1993, 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 Ten Million, Forty Thousand, Five Hundred Forty-Two Dollars and Five Cents ($10,040,542.05), with interest from January 1, 1993, at the rate of five and ninety-eight one hundredths percent (5.98%) per annum. 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 underslgned promises to pay all costs of collection, including reasonable attorney's fees. The Redevelopment Agency of the city of Santa Monica ATTEST ~~EjJ~ BY: a~ k?k Clarice Dykhovse Judy fl,1;dO Secretary Chairperson APPROVED AS TO FORM: Byc];A~~ oseph :Cawrence geney Attorney P.N. #6 , . . PRO MIS S 0 R Y NOT E Ocean Park Santa Monica, California Federal Allocation January 1, 1993 On December 31, 1993, 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 Three Hundred Thirty-Five Thousand, Two Hundred Sixty-Two Dollars and Eighty-One Cents ($335,262.81) , with interest from January 1, 1993, at the rate of one half of one percentage point ( . 5%) more than the City's actual rate of investment earnings for calendar year 1993. 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, including reasonable attorney's fees. The Redevelopment Agency of the City of Santa Mon1ca ATTEST Byv~tA~ BY: a if A ClariceDykho~e Jud \.bdO Secretary Chairperson APPROVED AS TO FORM: ~ P.N. , . . PRO MIS S 0 R Y NOT E Ocean Park Santa Monica, California Federal Allocation January 1, 1993 On December 31, 1993, 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 Nine Hundred Twenty-Two Thousand, Seven Hundred Eighty-Four Dollars and Sixty-Four Cents ($922,784.64) , with interest from January 1, 1993, at the rate of one half of one percentage point ( . 5%) more than the City's actual rate of investment earnings for calendar year 1993. 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, including reasonable attorney's fees. The Redevelopment Agency of the City of Santa Monica ATTEST ByAbH,~j]~ BY: Q LrfA - ~larice -Oykh6use Judy-Abdo Secretary Chairperson APPROVED AS TO FORM: ~ , . . , PRO MIS S 0 R Y NOT E Ocean Park Santa Monica, California Federal Allocation January 1, 1993 On December 31, 1993, 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, One Hundred Ninety-Eight Thousand, Six Hundred Forty-Four Dollars and Ninety-Two Cents ($1,198,644.92) , with interest from January 1, 1993, at the rate of one half of one percentage point ( . 5%) more than the City's actual rate of investment earnings for calendar year 1993. 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, including reasonable attorney's fees. The Redevelopment Agency of the City of Santa Monica ATTEST ~~/~ BY: ~tf/44 Clarice Dykhouse Jud Secretary Chalrperson APPROVED AS TO FORM: ~~ Lawrence Attorney P.N. - --- - . . . , PRO MIS S 0 R Y NOT E Ocean Park Santa Monica, California Federal Allocation January 1, 1993 On December 31, 1993, 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 Two Million, Nine Hundred Thirty-Five Thousand, One Hundred Forty-Seven Dollars and Four Cents ($2,935,147.04) , with interest from January 1, 1993, at the rate of one half of one percentage point ( .5%) more than the city's actual rate of investment earnings for calendar year 1993. In no event shall the interest rate be more than 12% per annum. Principal and interest are payable 1n lawful money of the United states. If action be instituted on this note, the undersigned promises to pay all costs of collection, including reasonable attorney's fees. The Redevelopment Agency of the City of Santa Monica ATTEST BY: ~p%Xl~ BY: LlAlA ------ Clar1ce Dykhou~e Judf Abdo Secretary Chairperson APPROVED AS TO FORM: