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Council Meeting June 23, 1998 Santa MOnica, Cahfornla
TO City CouncIl and Redevelopment Agency
FROM City and Agency Staff
SUBJECT Extension Of Time For Outstanding Promissory Notes
Introduction
Currently, there are seven Promissory Notes for funds loaned by the City of Santa
MOnica to the Santa Monica Redevelopment Agency two for the Downtown
Redevelopment ProJect, three for the Ocean Park Redevelopment Project, and two
for the Earthquake Recovery Redevelopment Project These Promissory Notes
need to be renewed for the penod July 1, 1998 through June 30, 1999
Background
The City has loaned the Agency funds for various adminIstrative, operational and
mIscellaneous expenses 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, Includmg
amounts repaid to date, and presents the sources and uses of budgeted FY 1998-99
Redevelopment Agency Income To date, $7 1 million has been repaid on these
Notes, an additional $0 3 million has been budgeted to be repaId In FY 1998-99, and
PromIssory Note #3 has been paId In full
Cc./RA~3
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BudgetlFmanclallmpact
There IS no budgetary Impact resulting from the renewal or establishment of these
PromIssory Notes The fmanclal Impact IS to mcrease the liability of the Agency by
$577,01991, which represents the net of accrued Interest and repayments to the
General Fund for the penod July 1, 1997 through June 30, 1998 (see Attachment II)
Contlnumg the polley adopted by Council, staff once again recommends that the
mterest rate for SIX Promissory Notes be one-half of one percentage pomt ( 5%)
more than the CIty's actual rate of mvestment earnmgs The addItIonal 5% IS to
reimburse the City for carrying this debt As required m the onglnal bond covenant,
the seventh Promissory Note must contmue at the same rate of Interest, 598%, as IS
beIng paId for the refunded Downtown Redevelopment Project ParkIng Lease
Revenue Bonds
Recommendation
It IS recommended that
(A) The City Council agree to renew the seven outstanding loans, and
(B) The Redevelopment Agency approve and authOrize the ChaIrperson to
execute the attached Promissory Notes between the Agency and the City
Prepared by Mike Dennis, DIrector of Fmance
Bill Jlas, Actmg Account Payable Supervisor
-2-
ATTACHMENT I
STATUS OF REDEVELOPMENT AGENCY PROMISSORY NOTES
I History of Promissory Notes
The followmg mdlcates the ongmal debt amount of each of the eIght promissory notes between the
Redevelopment Agency and the City, and the total net accrued Interest for each promissory note as of
6/30/97, the history of note payments by promissory note IS footnoted
Total Net
Onglnal Accrued
Debt Interest Promissory
Promissory Note Amount Through Note Balance
Number and Descnptlon (date) 6/30/98 at 7/1/98
Downtown PrOject
1 Downtown
Redevelopment Project $ 871,840 00 $ 1,058,096 08!g) $ 1,929,936 08
(6/30/81 )(a)
6 Downtown
Redevelopment Project 4,400,000 00 8,103,829 41 (h) 12,503,829 41
(10/24/78)(f)
SubtotaJ $ 5.271.840 00 $ 9,161.925.49 $ 14,433,76549
Ocean Park Project
2 Ocean Park Project $ 1,243,266 88 $ 2,765,544 15(1) $ 4,008,811 03
(6/30/81 )!b)
3 Ocean Park Project 824,449 00 (824,449 OOP) -0-
(1/1/82)rc)
4 Ocean Park Project 772,568 08 (52,42658)(kl 720,141 50
(9f13f83)'d)
5 Ocean Park Project 280,83700 177,06346(fj 457,900 46
(9/14/83)(e)
Subtotal $ 3.121.12096 $ 2,065,73203 $ 5,186,85299
Total Net
Onglnal Accrued
Debt Interest Promissory
Promissory Note Amount Through Note Balance
Number and Descnotlon ( date) 6/30/98 at 7/1198
Earthquake Recovery Project
7 Earthquake Recovery $ 400,00000 $ 25,400 00 $ 425,400 00
(6/28/94)(m)
8 Earthquake Recovery 600,00000
(6/20/95) (m) 38.10000 638.100 00
Sub total $ 1,000.000 00 $ 63.500 00 $ 1.063.50000
Total $ 9.392.960 96 $ 11,291.15752 $ 20.684.118 48
Notes
(a) Represents General Fund funds advanced to the Agency for vanous 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)
(c) same as "a" above
(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 outstandmg
Federal Ocean Park Urban Renewal Grant Note
(f) Represents the value of vanous 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 In FY1983/84, $347,548 In FY1986/87 and $63,099 In FY1997/98
(h) Reflects payments of $1,149.452 In FY1986/87, $200,000 In FY1990/91 (bUdgeted In FY1989/90),
$428,42552 In FY1992/93, $53,31268 In FY1993/94, $129,19925 In FY1994/95, $122,39540 In
FY1995/96, $132,10000 In FY 1996/97, and $244,100 00 In FY1997/98
(I) Reflects payments of $183.000 In FY1984/85 and $445,779 In Interest In FY1987/88
(j) Reflects payments of $365,000 of pnmanly Interest In FY1987/88, $480,000 In Interest In FY1990/91,
$33,000 In Interest In FY1991/92, $130,696 In mterest In FY1992/93, payments of $1,095,45660 In
FY1994/95, and $139,897 38 In FY1995/96
(k) Reflects payments of $563,975 In Interest and pnnclpal In FY1987/88, $130,696 In Interest In
FY1992/93, $160,384 021n Interest and pnnclpal In FY1995/96, $102,203 241n Interest and pnnclpal In
FY1996/97, and $63,099 00 In mterest and pnnclpalln FY1997/98
(1) Reflects payment of $205,011 In Interest In FY1987/88
(m) Represents General Fund funds advanced to the Agency for various administrative expenses
associated with the Earthquake Recovery PrOject
JI FY1998-99 Fmanclal Abllltv of Redevelooment Agency to Reoay PromIssory Notes
The following table summarizes (In millions) the budget for sources and uses of Redevelopment Agency
funds for FY1998/99
Downtown Ocean Park Earthquake
Sources PrOlect Pralect Recoverv Prolect
Tax Increment $1 2 $16 $40
City Lease Payment for Parkmg Structures(1) 1 1 - -
Other ~ - 02
-
Total Sources $26 $1 6 $42
(1) 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 fram the City, and b) $ 5 million payment from
Redevelopment Agency for putting credit of the General Fund behmd the 1992 bond Issue
Uses
Downtown Ocean Park Earhtquake
Project PrOlect Recoverv Prolect
Operations (2) $22 $13 $1 2
Capital
Projects (3) ----.2 ---.2 8
Total Uses $24 $1 5 $20
Net $ 2(4) $ 1 (4) $22(5)
f2} Consists of the following costs Downtown PrOlect - 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, and c) $ 6 million reimbursement to the General Fund
consisting of $ 1 million for earthquake Insurance on Parkmg Structures, $ 2 million for general
adminIstrative costs, and $ 3 million repayment of Interest to the General Fund on outstanding
promissory notes, Ocean Park Project - a) $ 9 million debt servIce on 1992 refunded bonds, and b) $ 4
million reimbursement to the General Fund consisting of $ 1 million for various administrative support
services, $ 1 million annual lease payment to Parking AuthOrity for development of 175 Ocean Park
Boulevard (paId through the Low/Moderate Income HOUSing Fund), and $ 2 million reimbursement for
HOUSing programs of benefit to the project area, and Earthouake Recovery ProJect - a) $ 8 mIllion
payment to various government agencies for theIr tax Increment share, b) $ 3 million payment to the
General Fund for administrative support services, and c) $ 1 million payment to the Pier Fund for
Economic Development DIVISion staff support
13) Consists of the following capital projects a) Downtown ProJect - $ 3 mIllion for housing projects of
benefIt to the project area, Ocean Park Project - $ 3 mIllIon for housmg projects of benefit to the project
area, and Earthquake Recovery Project - for low/moderate Income housing
(4) Increases fund balance to ensure sufficient funds necessary for ongoing operations
{51 These funds remarn to be allocated to a reasonable operatrng fund balance and prevIously
appropriated capital Improvement projects
ATTACHMENT II
City of Santa Monica
Extension of Time for OutstandIng Notes(1)
Promissory Accrued Repayment To Promissory
Note Interest General Fund Note
Promissory Balance 7/1J97- 7J1/97- Balance
Note Number 7/1/97 6/30/98 6/30J98 7/1/98
Downtown PrOlects
1 Downtown Redevelopment $ 1,875,917 70 $ 117,117 38 $ 63,099 00 $ 1,929,93608
ProJect(2)
6 Downtown Redevelopment $12.035,50481 $ 712,42460 $244,10000 $ 12,503,829 41
PrOJect(6)
Subtotal Downtown Project $13,911,42251 $ 829.541 98 $307,19900 $ 14,433,765.49
Ocean Park PrOlect
2 Ocean Park Federal $ 3,769,450 90 $ 239,360 13 $ -0. $ 4,008,811 03
Allocatlon(3\
3 Ocean Park Federal $ -0- $ -0- $ -0- $ ~o-
Allocatlon(2)
4 Ocean Park Federal $ 738,358 15 $ 44,882 35 $ 63,09900 $ 720,141 50
Allocatlon(4)
5 Ocean Park Federal $ 430,559 91 $ 27,340 55 $ -0- $ 457,900 46
Allocatlon(5)
Subtotal Ocean Park Project $ 4.938.368.96 $ 311.583 03 $ 63,09900 $ 5.186.852 99
Earthquake Recovery Prolect
7 Earthquake Recovery
ProJect(7) $ 400,000 00 $ 25,400 00 $ -0- $ 425,400 00
8 Earthquake Recovery
ProJect(8) $ 600.000 00 $ 38,10000 $ -0- $ 638.100.00
Subtotal Earthquake
Recovery Project $ 1.000.00000 $ 63.500 00 $ -O- S 1.063.500.00
Total $19,849,791 47 $1.204.625 01 $370.298 00 $20.684.118.48
ill Effective July 1, 1998 Notes 1, 2, 4 , 5, 7 and 8 Will carry an Interest rate one half a percentage pOint
( 5%) higher than the City's actual rate of Investment earnings for fiscal year 1998-99 However, Note 6
Will continue to carry an Interest rate of 5 98% ThiS IS the same rate of Interest on the refunded
Downtown Redevelopment Project Parkmg Lease Revenue Bonds
(2) Reimbursement for vanous administrative support and service costs, owed to CIty's General Fund
(3) Reimbursement of CDBG funds used to pay Interest on outstandmg Federal Urban Renewal Loan Note,
owed to City's COBG Fund
(4) Close out of Ocean Park Federal Urban Renewal Project, owed to the City's General Fund
(5) Close out of Ocean Park Federal Urban Renewal Project, owed to the CIty's COBG Fund
(6) Represents the value of vanous 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.
(7) and (8) Reimbursement for various administrative costs, owed the City's General Fund
7 Original Promissory Notes transmitted to Belnadette
Calkers in Treasury
c:-~ ~l ' {;-'
----0~LL- - /~ ~C
~ ~ ~ / -~ ~~ 'L---?
Bernadette Calkers
August 7, 1998
PROMISSORY NOTE
Downtown Santa Monrca, Callforma
Redevelopment Project July 1, 1998
On June 30, 1999, 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, Nine Hundred Twenty-Nme
Thousand, Nme Hundred Thirty-SIX Dollars and Eight Cents ($1,929,93608), with Interest from July 1,
1998, at the rate of one-half of one percentage pomt ( 5%) more than the City's actual rate of Investment
earnings for fiscal year 1998-99 (July 1, 1998 - June 30. 1999) This total amount now owed represents the
anginal June 30, 1981 debt less subsequent payments plus subsequently Incurred Interest In no event
shall the Interest rate be more than 12% per annum Pnnclpal 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 lAL~~ ~\i'!-'n'_.J BY ~~
Mana Stewart \ Robert Holbrook
Secretary Chairperson
APPROVED AS TO FORM
BY hGJJU~AvALA.u
Marsha Jone~ outne
Agency Attorney
P N #1
PROMISSORY NOTE
Ocean Park Santa MOnica, California
Federal Allocation July 1,1998
On June 30, 1999, 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 Four Million, Eight Thousand, Eight Hundred
Eleven Dollars and Three Cents ($4,008,811 03), with mterest from July 1, 1998, at the rate of one-half of
one percentage pOint ( 5%) more than the City'S actual rate of Investment earnings for fiscal year 1998-99
(July 1, 1998 - June 30, 1999) This total amount now owed represents the anginal June 30, 1981 debt
less subsequent payments plus subsequently Incurred Interest In no event shall the Interest rate be more
than 12% per annum Pnnclpal and Interest are payable 10 lawful money of the Umted 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
'--~ C 4-~
BY ~~ '-~a.d: BY
Marla Stewart Robert Holbrook
Secretary ChaIrperson
APPROVED AS TO FORM
ByL, L-~~fu.e
Marsha Jo s Moutne
Agency Attorney
P N #2
PROMISSORY NOTE
Ocean Park Santa MOnica, California
Federal Allocation July 1,1998
On June 30, 1999, 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 Seven Hundred Twenty Thousand, One
Hundred Forty-One Dollars and Fifty Cents ($720,141 50), with interest from July 1, 1998. at the rate of
one-half of one percentage pOint ( 5%) more than the City's actual rate of Investment earnings for fiscal
year 1998-99 (July 1, 1998 - June 30, 1999) This total amount now owed represents the anginal
September 13, 1983 debt less subsequent payments plus subsequently Incurred Interest In no event shall
the Interest rate be more than 12% per annum Pnnclpal 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,
Includmg reasonable attorney's fees .
The Redevelopment Agency of
the City of Santa MOnica
ATTEST
'-- ~~
'\ ~ $"..,0..&-
BY ~(\-'-(- BY
\
Marla Stewart "- Robert Holbrook
Secretary Chairperson
APPROVED AS TO FORM
h (~
BY tJLs.Lt~hLt/U&
Marsha J01ies Moutrre
Agency Attorney
P N #4
- ----- - - ---
PROMISSORY NOTE
Ocean Park Santa MOnica, Callforma
Federal Allocation July 1 t 1998
On June 30, 1999, 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 Four Hundred Fifty-Seven Thousand, Nine
Hundred Dollars and Forty-SIx Cents ($457,900 46), with Interest from July 1, 1998 at the rate of one-half of
one percentage pOint ( 5%) more than the City's actual rate of Investment earnings for fiscal year 1998-99
(July 1 t 1998 - June 30, 1999) ThIS amount now owed represents the original September 14, 1983 debt
less subsequent payments plus subsequently Incurred Interest 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
:~~ u '~oA- BY /L.~
Mana Stewart \ Robert Holbrook
Secretary Chairperson
APPROVED AS TO FORM
BY h 01,&.1 %.L.I f1u.u.JW
Marsha JQnes Moutne
Agency Attorney
P N #5
PROMISSORY NOTE
Downtown Santa MOnica, CalifornIa
Redevelopment Project July 1, 1998
On June 30, 1999, 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 Twelve Million. Five Hundred Three
Thousand, EIght Hundred Twenty-Nine Dollars and Forty-One Cents ($12,503,82941), With Interest from
July 1, 1998, at the rate of five and ninety-eight one hundredths percent (5 98%) per annum ThiS amount
now owed represents the anginal October 24, 1978 debt less subsequent payments plus subsequently
Incurred Interest Prmclpal 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
~.~-~o.k BY ~~
Mana Stewart \ Robert Holbrook
Secretary Chairperson
APPROVED AS TO FORM
BY tu JUJL~J{q
Marsha JoneS Moutne
Agency Attorney
P N #6
PROMISSORY NOTE
Earthquake Recovery Santa MOnica, California
Redevelopment Project July 1.1998
On June 30, 1999, for the value received, the underSigned promises to pay to the order of the
CIty of Santa MOnica, a mUnicIpal corporation, at Santa MOnlca, the sum of Four Hundred
Twenty-Five Thousand, Four Hundred Dollars ($425,40000), with mterest from July 1, 1998.
at the rate of one-half of one percentage pOint (5%) more than the City's actual rate of
Investment earnIngs for fiscal year 1998-99 (July 1 t 1998 - June 30, 1999) This total amount
now owed represents the onglnal June 28, 1994 debt I n no event shall the Interest rate be
more than 12% per annum Pnnclpal and Interest are payable In lawful money of the Umted
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~ ~ l~o..J: BY A.r-~
Mana Stewart "- Robert Holbrook
Secretary Chairperson
APPROVED AS TO FORM'
BY Au~ U1~UA~
Marsha Joo'es Moutne
Agency Attorney
P N #7
PROMISSORY NOTE
Earthquake Recovery Santa Montca, California
Redevelopment ProJect July 1, 1998
On June 30, 1999, 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 SIX Hundred Thirty Eight
Thousand One Hundred Dollars ($638,10000), with Interest from July 1, 1998, at the rate of one-
half of one percentage pOInt ( 5%) more than the City's actual rate of Investment earnings for fiscal
year 1998-99 (July 1, 1998 - June 30, 1999) This total amount now owed represents the anginal
June 20, 1995 debt In no event shall the Interest rate be more than 12% per annum Pnnclpal
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
~
Mana Stewart Robert Holbrook
Secreta ry Chairperson
APPROVED AS TO FORM
BY 'rtcu>o1~huu~
Marsha Jo~s Moutne
Agency Attorney
P N #8