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SR-CC/RA-2 (3) < CG/ 111- 7- FI:CMD:br:sretopn JAN 1 1 1994 Council Meeting: January 11, 1994 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 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, 1993, need to be renewed for the 1994 calendar year effective January 1, 1994. 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 FY 1993/94 Redevelopment Agency income. To date, approximately $4.8 million has been repaid on these Notes. 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 $233,035.86 which represents net ..IAN 1 1 1994 - 1 - C C./fl.A - 1- accrued interest for the period January 1, 1993 through December 31, 1993 (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 1994. 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, 5.98%, as the recently refunded 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 1994 calendar year. Prepared by: Mike Dennis, Director of Finance Bill Jias, Senior Accountant - 2 - Attachment I STATUS OF REDEVELOPMENT AGENCY PROMISSORY 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 12/31/93; the history of note payments is footnoted by promissory note. Original Total Net Accrued Promissory Promissory Debt Interest Note Note Amount Through Balance Number (date) 12/31/93 1/1/94 Downtown Project 1. Downtown Redevelopment Project $ 871,840.00 $ 661,180.62(g) $ 1,533,020.62 (6/30/81) (a) 6. Downtown Redevelopment Project $4,400,000.00 (10/24/78) (f) $S,SOS,707.36(h) $10,208,707.36 Sub-total $5,271,840.00 $6,469,887.98 $11,741,727.98 pcean Park project 2. Ocean Park project $1,243,266.88 $1,837,169.93(i) $ 3,080,436.81 (6/30/81) (b) 3. Ocean Park Project $ 824,449.00 $ 296,363.40(j) $ 1,120,812.40 (1/1/82) (c) 4. Ocean Park Project $ 772,568.08 $ 58,728.95(k) $ 831,297.03 (9/13/83) (d) 5. Ocean Park Project $ 280,837.00 $ 71,021.32(1) $ 351,858.32 (9/14/83) (e) Sub-total $~ , 121, 120.96 $2,263,283.60 $ 5,384,404.56 Total $8,392,960.96 $8,733,171.58 $17,126,132.54 Notes: (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 project notes (per Agency Resolution 371, 1/12/82). (d) Represents General Fund funds advanced to the Agency to payoff the outstanding Federal Ocean Park Urban Renewal Grant Note. (e) Represents City CDBG 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 far 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 payments of $1,149,452 in FY1986/87, $200,000 in FY1990/91 (budgeted in FY1989/90) and $428,425.52 in FY1992/93. (i) Reflects payments of $183,000 in FY1984/85 and $445,779 in interest in FY1987/88. (j) Reflects payments of $365,000 of primarily interest in FY1987/88, $480,000 in interest in FY1990/91, $33,000 in interest in FY1991/92 and $130,696 in interest in FY1992/93. (k) Reflects payments of $563,975 in interest and principal in FY1987/88 and $130,696 in interest in FY1992/93. (1) Reflects payment of $205,011 in interest in FY1987/88. II. FY1993/94 Financial Abllity of Redevelopment Agency to Repay promissory Notes The following table summarizes (in millions) the adopted budget for sources and uses of Redevelopment Agency income for FY1993/94. Downtown Ocean Park Sources Project Project Tax Increment and Interest $1.2 $1. 7 city Lease Payment for Parking structures. 1.1 - Total Sources $2.3 $1. 7 . This lease payment is 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 and sub-lease of parking structure from the city, and b) $.5 million payment from Redevelopment Agency for putting credit of the General Fund behind the 1992 bond issue. Uses ... Operations $2.0* $1.5* Capital Projects .2*. .4*. - Total Uses $2.2 $1.9 - - Net $ .1 $(.2)**** . Consists of the following costs: Downtown Project - a) $1.1 million debt service payment on 1992 bonds; b) $.5 million payment to the General Fund for putting credit of the General Fund behind the Redevelopment Agency's 1992 bond issue; c) $.1 million earthquake insurance on Parking structures; d} $.1 million state mandated payment to the Los Angeles County Educational Revenue Augmentation fund (per state Department of Finance); and e} $.2 ,million administrative indirect costs; and Ocean Park project - a} $.9 million debt service on 1992 refunded bonds; b) $.2 million payment to the General Fund for various administrative support services; c) $.1 million annual lease payment to Parking Authority for development of 175 Ocean Park Boulevard; d) $.1 million reimbursement for Housing operations of benefit to the project area; e) $.l million state mandated payment to the Los Angeles County Educational Revenue Augmentation Fund (per state Department of Finance) i and f) $.1 million in Redevelopment Agency other operating expenses applicable to the project area. .. Consists of the following capital projects: a) Downtown project - $.2 million for housing projects of benefit to the project area, and b) Ocean Park Project - $.4 million for housing projects of benefit to the project area. *.'" ExclUdes uses reimbursed directly from the General Fund for Bayside District Corporation and some associated administrative costs. "'."'. Financed from available fund balance. (sretopn3) Attachment II city of Santa Monica Extension of Time for Outstanding Notes* Promissory Accrued Repayment To Promissory Note Interest General Note Promissory Balance 1/1/93- Fund Balance Note Number 1/1/93 12/31/93 FY 1992/93 1/1/94 Downtown projects 1. Downtown $ 1,460,715.22 $ 72,305.40 $ -0- $ 1,533,020.62 Redevelopment project** 6. Downtown 10,040,542.05 596,590.83 428,425.52 10,208,707.36 Redevelopment project****** Sub-total Downtown Project $11,501,257.27 $668,896.23 $428,425.52 $11,741,727.98 Ocean Park Project 2. Ocean Park $ 2,935,147.04 $145,289.77 $ -0- $ 3,080,436.81 Federal Allocation*** 3. Ocean Park 1,198,644.92 52,863.48 $130,696.00 $ 1,120,812.40 Federal Allocation** 4. Ocean Park 922,784.64 39,208.39 130,696.00 831,297.03 Federal Allocation**** 5. Ocean Park 335,262.81 16,595.51 -0- 351,858.32 Federal Allocation***** Sub-total Ocean Park Project $ 5,391,839.41 $253,957.15 $261(392.00 $ 5,384,404.56 Total $16,893,096.68 $922,853.38 $689,817.52 $17,126,132.54 * Effective January 1, 1994 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 1994. However, note 6 will continue to carry an interest rate of 5.98%. This is the same rate of interest on the recently refunded Downtown Redevelopment Project Parking Lease Revenue Bonds. ** Reimbursement for various administrative support and service costs; owed to City's General Fund. *** Reimbursement of COBG funds used to pay interest on outstanding Federal Urban Renewal Loan Note; owed to City's CDBG 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 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. (sretopn4 ) PRO MIS S 0 R Y NOT E Ocean Park Santa Monica, California Federal Allocation January 1, 1994 on December 31, 1994, for the 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 Eight Hundred Thirty-One Thousand, Two Hundred Ninety-Seven Dollars and Three cents ($831,297.03), with interest from January 1, 1994, at the . rate of one-half of one percentage point (.5%) more than the city's actual rate of investment earnings for calendar year 1994. 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 - :: _~-- -~-J_ ~... ~ ~ - - - - --' - ~ -- - - ---- - -- Y__J_.'_--? a-. - ~- - Al J.~ BY: $, (.R/b . -.- ~ Clarice -Dyk9.o1.uie Ju Abdo ~ Secretary- - - Chairperson - - -- APPROVED AS TO FORM: BY~~ *,-fu~ J sepi. La'wience ~ting Agency Attorney P.N. #4 ~ PRO MIS S 0 R Y NOT E Ocean Park Santa Monica, California Federal Allocation January 1, 1994 On December 31, 1994, for the 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 Twenty Thousand, Eight Hundred Twelve Dollars and Forty cents ($1,120,812.40), with interest from January 1, 1994, at the rate of one-half of one percentage point (.5t) more than the City's actual rate of investment earnings for calendar year 1994. 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 ~:-'----~I_~ _~ , BY; ~"~ll~j~ BY: a ill """nl~ricl! ~knoulle Judyf)t{bdo Secretary _ _ Chairperson APPROVED AS TO FORM: BY~. .~J\n~ ~Lawrence cting Agency Attorney P.N. #3 . PRO MIS S 0 R Y NOT E Ocean Park Santa Monica, California Federal Allocation January 1, 1994 - On December 31, 1994, for the 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 Million, Eighty Thousand, Four Hundred Thirty-Six Dollars and Eighty-One cents ($3,080,436.81), with interest from January 1, 1994, at the rate of one-half of one percentage point ( . 5%) more than the . City's actual rate of investment earnings for calendar year 1994. 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. v - - The Redevelopment Agency of '- ~ - ---." ~- - . the city of Santa Monica - . .. _ - -_-J. - - - - ATTEST- ~ . - - ~___.J'~~ ------- . /. - .~ -;. c BY:' ~?;o~~ BY: fY t&v& "-"'""'"cla-rioe oykhous"'e Jud/j'" Abdo secret~!-!' _~ . .: .- Chairperson . APPROVED AS TO FORM: By:Gr~dL~ J sepfi Lawrence A ting Agency Attorney P.N. #2 .. -. PRO MIS S 0 R Y NOT E .. Downtown santa Monica, California Redevelopment Project January 1, 1994 On December 31, 1994, for the value received, the undersigned promises to pay to the order of the ci ty of Santa Monica, a municipal corporation, at Santa Monica, the sum of One Million, Five Hundred Thirty-Three Thousand, Twenty Dollars and Sixty-Two . cents ($1,533,020.62), with interest from January 1, 1994, at the rate of one-half of one percentage point (. 5%) more than the city's actual rate of investment earnings for calendar year 1994. In no event shall the interest rate be more than 12% per annum. principal and interest are payable in lawful money of the United States. If action be instituted on this note, the undersigned promises to pay all costs of collection, including reasonable attorney's fees. _ ",-. The Redevelopment Agency of - '" - the City of Santa Monica ~- ATTEST _:------~..-- > ~-.---'-"~-.-._~~.- ,.t ~- . ,'. . . _.;, /J / BY: ---- - - ~ BY:;t- Y . Cl:aric"'-Dykho ...,~ JUd$~O sec!etary Chairperson APPROVED AS TO FORM: !~~ Lawrence Agency Attorney P.N. #1 . . PRO MIS S 0 R Y NOT E Ocean Park Santa Monica, California Federal Allocation January 1, 1994 On December 31, 1994, for the 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 Fifty-One Thousand, Eight Hundred Fifty-Eight Dollars and Thirty- Two cents ($351,858.32) , with interest from January 1, 1994, at the rate of one-half of one percentage point ( . 5%) more than the City'S actual rate of investment earnings for calendar year 1994. . 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 - _ - '-'-- J - - -- - - - BY: a~~ JU% Abd, - ~ Ch irperson . ~ - -- APPROVED AS TO FORM: ~~~ Lawrence Agency Attorney P.N. #5 . . . PRO MIS S 0 R Y NOT E Downtown Santa Monica, California Redevelopment Project January 1, 1994 On December 31, 1994, for the 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, ~ Two Hundred Eight Thousand, Seven Hundred Seven Dollars and Thirty-six cents ($10,208,707.36), with interest from January 1, 1994, at the rate of one-half of five and ninety-eight one hundredths percent (5.98%-) 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 -/......._- --- - ~-~ B~?L)P~ BY: %,C-S/b Cbrrit;e DykhOuse -, Judy: do Secretary - - Chairperson . - - -- APPROVED AS TO FORM: BY~pQ ~~ J sepl'i Lawrence ~ting Agency Attorney P.N. #6 -