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Council Meeting: January 8, 1991 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, 1990, need to be renewed for the 1991 calendar year
effective January 1, 1991.
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 FY1990/91 Redevelopment Agency
income. To date, approximately $4.1 million has been budgeted
for repayment on these Notes.
Repayments which may be scheduled for FY1991/92 will be
determined as part of the regular budget process.
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r.;. .~~~~et;FinanClal Impact
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There is no budgetary impact resulting from the renewal of these
promissory Notes. The flnancial impact is to increase the
liability of the Agency by $1,188,103.53 which represents net
accrued interest for the period January I, 1990 through
December 31, 1990 (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%) mare than the City's actual rate of
investment earnings for calendar year 1991- The additional .5%
is to reimburse the city for carrying this debt. As requ~red 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 Prom1ssory
Notes; and
(B) The Redevelopment Agency approve and authorize the
Chairperson to execute the six attached Prom1ssory Notes
between the Agency and the City, extending the loans far the
1991 calendar year.
Prepared by: Mike Dennis, Director of Finance
Bill Jias, senior Accountant
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Attachment I
STATUS OF REDEVELOPMENT AGENCY PROMISSORY NOTES
I. History of Promlssory Notes
The following indicates the original debt amount of each of the SlX promissory
notes between the Redevelopment Agency and the Clty, and the total net accrued
interest for each promlssory note as of 12/31/90; the hlstory of note payments
is footnoted by promissory note.
Original Total Accrued Promissory
Promlssory Debt Interest Note
Note Amount Through Balance
Number (date) 12/31/90 1/1/91
Downtown Project
1. Downtown
Redevelopment
ProJect $ 871,840.00 S 407,827.44(g) $1,279,667.44
(6/30/81) (a)
6. Downtown
Redevelopment
ProJ ect $4,400,000.00
(10/24/78) (f) $4~248~137.81(h) $8,648,137.81
Sub- tota 1 $5,271,840.00 $4~655,965.25 $9,927,805.25
Ocean Park Project
2. Ocean Park
ProJect $1,243,266.88 $1,328,084.49{i) $ 2,571,351.37
(6/30/81){b)
3. Ocean Park
Project $ 824,449.00 $ 255,271.59{j) $ 1,079,720.59
(1/1/82){c)
4. Ocean Park
Project $ 772,568.08 $ 35,842.38{k) $ 808,410.46
(9/13/83) (d)
5. Ocean Park
ProJect $ 280,837.00 $ 12,871.79(1) $ 293,708.79
(9/14/83) (e)
Sub-total $3,121,120.96 $1,632,070.25 $ 4,753, 191. 21
Total $8,392,960.96 $6,288~O35.50 S14,680~996.46
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Notes.
(a) and (c) represent General Fund funds advanced to the Agency for vanous
admwl strat lVe and other expenses as of 6/30/81 (per Agency Resal ut lOn 371,
1/12/82).
(b) Represents C 1 ty CDBG funds advanced to the Agency for the payment of
lnterest on outstandlng Federal proJect notes (per Agency Resol ut 100 371,
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 COBG funds held by the Federal government and appl1ed to
payoff the outstand1ng Federal Ocean Park Urban Renewal Grant Note.
(f) Represents the value of var10US parcels of property transferred from the
C1ty to the Agency for the Downtown Redevelopment ProJ ect (per Agency
Resolutlon 352, 10/24/78).
(g) Reflects payments of $150,000 1n F~1983/84 and $347,548 1n F~1986/87.
(h) Reflects payment of Sl,149,452 1n FY1986/87 and $200.000 1n FY1990/91
(budgeted 1n FY1989j90).
(i) Reflects payment of $183,000 in FYl984/85 and 5445,779 1n lnterest 1n
FY1987/88
(J) Reflects payment of 5365,000 of prl manl y 1nterest 1 n FY1987/88 and
$480,000 1n 1nterest in FY1990/91.
(k) Reflects payment of 5563,975 1n 1nterest and pr1nclpal 1n F~1987/88
(l) Reflects payment of $205,011 1n 1nterest 1n FY1987j88
II. FYl990(91 Financlal Ab1lity of RedevelopmeDt Agency to Repay Promlssory
Notes
The following :able summarlzes (In m1ll1ons) the budgeted sources and uses of
~~develooment ~ncy income for fY~990/91.
Downtown Ocean Park
Sources ProJect ProJect
Tax Increment and Interest S1.1 $2.2
City Lease Payment for
Parking Structures. 1.2 -
Total Sources $2.3 $2.2
* This lease payment 1S made by the General Fund to the Redevelopment
Agency. The General Fund payment is financed by: a) $.6 m1ll1on payment
from Santa Monica Place to offset lost property taxes due to Proposltlon
13; b) $.1 m1llion payment from Santa Mon1ca Place for sublease of parking
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structures; and c) $.5 ml1l1on payment from Redevelopment Agency for
puttlng credlt of the General Fund behlnd the 1978 bond issue.
Uses ****
Operatlons $2.2* $1.7*
Capltal Projects .2** .5**
Total Uses $2.4 $2.2
Net $(.1)*** $ -
* Consists of the following costs: Downtown Project - a) $1.2 million debt
service payment on 1978 bonds; b) $.5 mlllion payment to the General Fund
for putting credit of the General Fund behind the Redevelopment Agency's
1978 bond lSsue; c} $.1 million earthquake insurance on Parking
Structures; d) $.1 mlll ion payment to the General Fund for various
administratlve support serVlces; e) $.1 million reimbursement to Housing
staff for operations of benefit to the proJect area; and f) $.2 .,11ion in
Redeve 1 opment Agency other operati"9 expenses app 1; cab 1 e to the project
area; and Ocean Park Project - a) $1 .3 mllllon debt service on 1988
refunded bonds and the repayment of interest to the General Fund on
outstanding Promissory Notes; b) $.1 million payment to the General Fund
for varlOUS administratlVe support services; c) $.1 million annual lease
payment to Parking Authorlty for development of 175 Ocean Park Boulevard;
d) $.1 mlllion reimbursement to Housing staff for operations of benefit to
the project area, and e) $.1 mlllion in Redevelopment Agency other
operating expenses applicable to the project area.
** Cons 1 s ts 0 f the fo 11 OWl ng capi ta 1 projects: a) Downtown ProJect - $.2
ml11ion for housing proJects of benefit to the project area, and b} Ocean
Park ProJect - $.3 mlllion for housing projects of benefit to the proJect
area and $.2 million for playground equipment and slgnage at the Ocean
Park Beach Park.
*** Available fund balances are belng used to finance the excess of uses over
annual revenues.
****Excludes uses relmbursed directly from the General Fund for Bayside
District Corporation and some assoclated administrative costs.
(sretopn3)
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Attachment II
City of Santa Monlca
Extenslon of Time for Outstandlng Notes*
Promlssory Accrued Repayment To Promlssory
Note Interest Genera 1 Nate
Promlssory Balance 1/1/90- Fund Balance
Note Number 1/1/90 12/31/90 12/31/90 1(1/91
Downtown ProJects
1. Downtown 5 1,173,514.05 S 106,153.39 $ -o- S 1,279,667.44
Redevelopment
ProJect**
6. Downtown 8,200.301.20 647,836.61 . 200,000 00 8,648.137.81
Redevelopment
ProJect******
Sub-total
Downtown
Project 59,373,815.25 5753.990.00 S 200,000.00 S 9~927,805.25
Ocean Park ProJect
2. Ocean Park $2,358,047.79 5213,303.58 $ -o- S 2,571,351.37
Federal
All ocat 1 on***
3. Ocean Park 1,430,335.71 129,384.88 480.000.00 1,079,720.59
Federal
Al1ocatlon**
4. Ocean Park 741,349.67 67,060.79 -0- 808,410.46
Federa 1
Allocatlon****
5. Ocean Park 269,344.51 24,364.28 -0- 293,708.79
Federa 1
All ocat 1 on*****
Sub-total
Ocean Park
Project 5 4,799,077.68 $434,113.53 $ 480,000.00 S 4,7531191.21
Total S14,172,892.93 SI,188rlO3.53 S 680.000.00 S14.680,996.46
* Effective January 1, 1991 Notes 1 through 5 will carry an lnterest rate
one half a percentage pOlnt (.5%) hlgher than the City/s actual rate of
lnvestment earnings for calendar year 1991. However, note 6 wlll
contlnue to carry an lnterest rate of 7-3/4%. This lS the same rate of
1 nterest on the Downtown Redevelopment Project Parkl ng Lease Revenue
Bonds.
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** Reimbursement for various admi n1 strat i ve support and service costs;
owed to C1ty'S General Fund.
*** Reimbursement of COBG funds used to pay interest on outstanding Federal
Urban Renewal Loan Note; owed to City's COaG Fund.
**** Close out of Ocean Park Federal Urban Renewal Project; owed to the
City's General Fund.
***** Close out of Ocean Park F edera 1 Urban Renewal ProJ ect ; owed to the
City's COBG 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.
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PRO MIS S 0 R Y NOT E
DOTNntown Santa Monica, Callfornla
Redevelopment ProJect January 1, 1991
On December 31, 1991, for value recelved, the undersigned
promlses to pay to the order of the city of Santa Monlca, a
munlcipal corporation, at Santa Monica, the sum of One Mll1ion,
T.wo Hundred Seventy-Nine Thousand, six Hundred Slxty-Seven
Dollars and Forty-Four Cents ($1,279,667.44) , wlth lnterest from
January 1, 1991, at the rate of one-half of one percentage pOlnt
(.5%) more than the City's actual rate of investment earnlngs for
calendar year 1991. In no event shall the .lnterest rate be more
than 12% per annum. Principal and interest are payable ln lawful
money of the Unlted States. If action be inst1.tuted on th.ls
note, the underslgned prOInlSeS to pay all costs of collectlon,
lncluding reasonable attorney's fees.
The Redevelopment Agency of
the Clty of Santa Monlca
AT'l'EST
BY: ~~/~ BY: JuJbdf?
c1 cfflce Johnsew
Secretary Chalrperson
APPROVED AS TO FORM:
BY:
Robert M. Myers
Agency Attorney
P.N. lfl
PRO MIS S 0 R Y NOT E
Ocean Park Santa Monica, California
Federal Allocation January 1, 1991
On December 31, 1991, for value received, the underslgned
promises to pay to the order of the City of Santa Monica, a
municipal corporation, at Santa Monica, the sum of Two Million,
Five Hundred Seventy-One Thousand, Three Hundred Fifty-one
Dollars and Thirty-Seven Cents ($2,571,351.37) , wlth interest
from January 1, 1991, at the rate of one half of one percentage
pOl..nt (.5%) more than the City's actual rate of investment
earnl..ngs for calendar year 1991. In no event shall the ~nterest
rate be more than 12% per annum. Principal and interest are
payable in lawful Irtoney 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 Monlca
ATTEST
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BY: -aa~~s~ BY: ri ad
JUiJy ~ Abdo-
Secretary Chairperson
APPROVED AS TO FORM:
BY:
Robert M. Myers
Agency Attorney
P.N. #2
PRO MIS S 0 R Y NOT E
Ocean Park Santa Monica, California
Federal Allocatlon January I, 1991
On December 31, 1991, for value recelved, the undersigned
promises to pay to the order of the City of Santa Monlca, a
municipal corporation, at Santa Monica, the sum of One Milllon,
Seventy-Nine Thousand, Seven Hundred Twenty Dollars and
Fifty-Nine Cents ($1,079,720.59) , w~th lnterest from
January 1, 1991, at the rate of one half of one percentage pOlnt
(.5%) more than the City's actual rate of investment earnlngs for
calendar year 1991. In no event shall the lnterest 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,
including reasonable attorney's fees.
The RedevelopT'lent Agency of
the City of Santa Monlca
ATTEST
BY: L~h~tJt.~-- BY: Judy J ~t
/Cl'~rl.ce Johnsen/'
Secretary Chalrperson
APPROVED AS TO FORM:
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BY:
Robert M. Myers
Agency Attorney
P.N. #3
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PRO MIS S 0 R Y NOT E
Ocean Park Santa Monica, CalifornJ.a
Federal Allocation January 1, 1991
Upon demand or on December 31, 1991, for value received, the
underslgned promises to pay to the order of the city of Santa
Monica, a mun~cipal corporation, at Santa Mon~ca, the sum of
Eight Hundred Eight Thousand, Four Hundred Ten Dollars and
Forty-Six Cents ($808,410.46) , with interest from January I,
1991, at the rate of one half of one percentage pOlnt ( .5%) more
than the City's actual rate of investment earnlngs for calendar
year 1991. In no event shall the interest rate be more than 12%
per annum. Princlpal 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 af Santa Monlca
ATTEST
BY: ~~~ ~ BY: ~ d;/b
--- Clarlce Johnse~ Judy Ab b
Secretary Chalrpersan
APPROVFD AS TO FORM:
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BY:
Robert M. Myers
Agency Attorney
P.N. #4
PRO MIS S 0 R Y NOT E
Ocean Park Santa Monica, Cal~fornia
Federal Allocation January 1 J 1991
Upon demand or on December 31, 1991, 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
Hundred Ninety-Three Thousand, Seven Hundred Eight Dollars and
Seventy-Nine Cents ($293,708.79) , ''Ilith interest from January 1,
1991, at the rate of one half of one percentage p01nt (.5%) more
than the City's actual rate of investment earnings for calendar
year 1991. In no event shall the interest rate be more than 12%
per annum. Princ~pal and interest are payable ln lawful money of
the United States. If action be inst~tuted on thls note, the
underslgned prCIDl.SeS to pay all costs of collectlon, including
reasonable attorney's fees.
The Redevelopment Agency of
the city of Santa Mon1ca
ATTi:ST
/~ Judy ~d:;f/f
BY: ~u.f2. . . BY:
Clar~ce Johnse~
Secretary Chairperson
APPROVED AS TO FORM:
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BY: .'
Robert M. Myers
Agency Attorney
P.N. #5
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PRO MIS S 0 R Y NOT E
Downtown Santa Monl.ca, California
Redevelopment ProJect January 1, 1991
On December 31, 1991, for value recel.ved, the undersigned
proml.ses to pay to the order of the City of Santa Monl.ca, a
municipal corporation, at Santa Monica, the sum of Eight Million,
Six Hundred Forty-Eight Thousand, One Hundred Thirty-Seven
Dollars and El.ghty-One Cents ($8,648,137.81) , with l.nterest from
January 1, 1991, at the rate of seven and three quarters percent
(7.75%) per annum. In no event shall the l.nterest rate be more
than 12% per annum. Princl.pal and interest are payable l.n lawful
money of the United States. If actl.on be instituted on this
note, the undersigned promises to pay all costs of collectl.on,
l.ncluding reasonable attorney's fees.
The Redevelopment Agency of
the city of Santa Monica
ATTEST
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BY: dL?~ . BY:
I f - I
~cfar.lce JOhnwn Judy -
secretary Cha l.rp rson
APPROVED AS TO FORM:
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BY:
Robert M. Myers
Agency Attorney
P.N. #6