SR-413-002 (12)
F:CMD:BR\f:\finance\admin\stfrpts\sretopn7.wpd
Council Meeting: June 19, 2001 Santa Monica, California
TO: City Council and Redevelopment Agency
FROM: City and Agency Staff
SUBJECT: Extension Of Time For Outstanding Promissory Notes
Introduction
There are six 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 one for the Low/Moderate Income Housing Fund. There is also one
Promissory Note for a loan from the Earthquake Recovery Project to the City of Santa Monica. These
Promissory Notes must be renewed for the period July 1, 2001 through June 30, 2002.
Background
The City has loaned the Agency funds for various administrative, operational and miscellaneous
expenses, and the Agency has loaned funds to the City for housing projects. 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 2001-02 Redevelopment Agency income.
To date, $9.7 million has been repaid on these Notes and an additional $2.6 million has been
budgeted to be repaid in FY 2001-02.
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Budget/Financial Impact
There is no budgetary impact resulting from the renewal of these Promissory Notes. The financial
impact is to reduce the liability of the Agency by $180,386.28, which represents the net of accrued
interest and repayments to the General Fund for the period July 1, 2000 through June 30, 2001 (see
Attachment II). Continuing the policy adopted by Council, staff recommends that the interest rate for
six Promissory Notes be continued at one-half of one percentage point (.5%) more than the City's
actual rate of investment earnings. The additional .5% is to reimburse the City for carrying this debt.
As required in the original bond covenant, the seventh Promissory Note must continue at an equal
rate of interest, 5.98%, as is being paid for the refunded Downtown Redevelopment Project Parking
Lease Revenue Bonds.
Recommendation
It is recommended that the City Council agree to renew the seven outstanding loans and 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 Finance
Bill Jias, Senior Accountant
Attachments: I. Status of Redevelopment Agency Promissory Notes
II. FY 2000/01 Financial Activity on Outstanding Promissory Notes
III. Redevelopment Agency Promissory Notes #1, #2, #4, #5, #6, and #9; and
City of Santa Monica Promissory Note #10
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ATTACHMENT I
STATUS OF REDEVELOPMENT AGENCY PROMISSORY NOTES
I. History of Promissory Notes
The following indicates the original debt amount of each of the currently outstanding seven promissory notes
between the Redevelopment Agency and the City, and the total net accrued interest for each promissory note
as of 6/30/01; the history of note payments by promissory note is footnoted:
Total Net
Original Accrued
Debt Interest Promissory
Promissory Note Amount Through Note Balance
Number and Description (date) 6/30/01 at 7/1/01
Downtown Project
1 Downtown
(f)
Redevelopment Project $ 871,840.00 $ 1,188,986.93 $ 2,060,826.93
(a)
(6/30/81)
6 Downtown
(g)
Redevelopment Project 4,400,000.00 9,453,993.23 13,853,993.23
(e)
(10/24/78)
___________ ____________ ___________
Subtotal $ 5,271,840.00 $ 10,642,980.16 $ 5,914,820.16
Ocean Park Project(I)
(h)
2 Ocean Park Project $ 1,243,266.88 $ 3,533,009.93 $ 4,776,276.81
(b)
(6/30/81)
(i)
4 Ocean Park Project 772,568.08 (153,144.63) 619,423.45
(c)
(9/13/83)
(j)
5 Ocean Park Project 280,837.00 264,726.09 545,563.09
(d)
(9/14/83)
___________ ___________ ___________
Subtotal $ 2,296,671.96 $ 3,644,591.39 $ 5,941,263.35
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Total
Original Accrued
Debt Interest Promissory
Promissory Note Amount Through Note Balance
Number and Description __(date) 6/30/01 at 7/1/01
Earthquake Recovery Project
7 Earthquake Recovery $ 400,000.00 $ (400,000.00) $ -0-
(k)
(6/28/94)
8 Earthquake Recovery 600,000.00 (600,000.00) -0-
(k)
(6/25/95)
(m)
9 Low/Moderate Housing Funds 10,242,188.00 226,517.91 10,468,705.91
(2/27/01)
___________ ___________ ____________
Subtotal $ 11,242,188.00 $ (773,482.09) $10,468,705.91
Total Redevelopment Agency $18,810,699.96 $ 13,514,089.46 $32,324,789.42
(m)
10 City of Santa Monica Gen Fd $10,242,188.00 $ 226,517.91 $10,468,705.91
Notes:
(a) Represents 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).
(c) Represents General Fund funds advanced to the Agency to pay off the outstanding Federal Ocean Park
Urban Renewal Grant Note.
(d) Represents City CDBG funds held by the Federal government and applied to pay off the outstanding Federal
Ocean Park Urban Renewal Grant Note.
(e) 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).
(f) Reflects payments of $150,000 in FY1983/84, $347,548 in FY1986/87, $63,099 in FY1997/98, $45,646 in FY
1998/99, $74,000 in FY1999/00 and $98,100 in FY 2000/01.
(g) Reflects payments of $1,149,452 in FY1986/87, $200,000 in FY1990/91 (budgeted in FY1989/90),
$428,425.52 in FY1992/93, $53,312.68 in FY1993/94, $129,199.25 in FY1994/95, $122,395.40 in FY1995/96,
$132,473.84 in FY 1996/97, $289,397.89 in FY1997/98, $258,552.00 in FY 1998/99, $328,967.66 in
FY1999/00 and $306,510.51 in FY 2000/01.
(h) Reflects payments of $183,000 in FY1984/85 and $445,779 in interest in FY1987/88.
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$3.7
(i) Reflects payments of $563,975 in interest and principal in FY1987/88, $130,696 in interest in FY1992/93,
$160,384.02 in interest and principal in FY1995/96, $102,203.24 in interest and principal in FY1996/97,
$63,099.00 in interest and principal in FY1997/98, $45,646.00 in interest and principal in FY1998/99, $74,000
in interest and principal in FY1999/00 and $98,100 in interest and principal in FY 2000/01.
(j) Reflects payment of $205,011 in interest in FY1987/88.
(k) Represents General Fund funds advanced to the Agency for various administrative expenses associated with
the Earthquake Recovery Project. Promissory Note #7 and Promissory Note #8 were fully repaid as of FY
1999/00.
(l) Promissory Note #3 was fully repaid as of FY 1995/96.
(m) Represents Earthquake Recovery Redevelopment Project Area loan to the General Fund for housing
projects, and loan by the General Fund to the Redevelopment Low/Moderate Income Housing Projects
fund to implement the housing projects.
II. FY2001-02 Financial Ability of Redevelopment Agency to Repay Promissory Notes
The following table summarizes (in millions) the budgeted sources and uses of Redevelopment Agency funds for
FY2001-02, including sources and uses budgeted in the Low/Moderate Income Fund but financed from each of
the indicated funds.
Downtown Ocean Park Earthquake
Sources Project Fund Project Fund Recovery Project Fund
Tax Increment $1.9 $2.7 $18.7
City Lease Payment for
-
(1)
Parking Structures -
1.2
Other 0.3 0.1 1.3
Total Sources $3.4 $2.8 $20.0
Downtown Ocean Park Earthquake
Uses Project Project Recovery Project
(2)
Operations $ 2.4 $1.3 $10.6
Loan Payment - 1.5
-
0.4
Capital - Proposed
0.4 10.6
(3)
Budget
Capital Projects-
(3)
Final Changes 0.9 -
1.1
Total Uses $ 3.7 $22.7
$2.8
(4)(4)
Net $(0.3) $ - $(2.7)
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(1)
This lease payment is made by the General Fund to the Redevelopment Agency. The General Fund
payment is financed by: a) $.6 million available annually from settlement payment made by Santa Monica
Place in October 1999 to offset lost property taxes due to Proposition 13 and sublease 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.
(2)
Consists of the following costs: Downtown Project - a) $1.2 million debt service payment on 1992 refunded
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) $.7 million reimbursement to the General Fund consisting
of $.1 million for earthquake insurance on Parking Structures, $.2 million for housing programs of benefit to
the project area, and $.4 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 interest payment on outstanding Promissory Notes and
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 Earthquake Recovery Project - a)
$4.1 million payment to various government agencies for their share of tax increment revenue; b) $1.0
million payment to the General Fund for administrative support services; c) $.1 million payment to the Pier
Fund for Economic Development Division staff support; d) $4.7 million debt service payment on 1999 tax
allocation bonds; and e) $.7 million repayment of interest to the General Fund on outstanding promissory
notes.
(3)
Consists of the following capital projects: a) Downtown Project - $1.3 million for housing projects of benefit to
the project area, Ocean Park Project - $1.5 million for housing projects of benefit to the project area; and
Earthquake Recovery Project - $.7 million for housing projects of benefit to the project area, $8.9 million for
seismic retrofit of parking structure and $1.0 million for Palisades Bluff Project balance is being used.
(4)
Portions of current fund balances are being used to finance these uses.
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ATTACHMENT II
(1)
FY 2000/01 FINANCIAL ACTIVITY ON OUTSTANDING PROMISSORY NOTES
Promissory Accrued Repayment To Promissory
Note Interest General Fund Note
Promissory Balance 7/1/00- 7/1/00- Balance
Note Number 7/1/00 6/30/01 6/30/01 7/1/01
Downtown Projects
1. Downtown Redevelopment $ 2.029,969.10 $ 128,957.83 $ 98,100.00 $ 2,060,826.93
(2)
Project
6. Downtown Redevelopment $ 13,370,134.37 $ 790,369.37 $ 306,510.51 $ 13,853,993.23
(5)
Project
Subtotal Downtown Project $ 15,400,103.47 $ 919,327.20 $ 404,610.51 $ 15,914,820.16
Ocean Park Project
2. Ocean Park Federal $ 4,484,345.89 $ 291,930.92 $ -0- $ 4,776,276.81
(2)
Allocation
4. Ocean Park Federal $ 676,665.67 $ 40,857.78 $ 98,100.00 $ 619,423.45
(3)
Allocation
5. Ocean Park Federal $ 512,217.72 $ 33,345.37 $ -0- $ 545,563.09
(4)
Allocation ______ ___________ ___________ ____________
Subtotal Ocean Park Project $ 5,673,229.28 $ 366,134.07 $ 98,100.00 $ 5,941,263.35
Earthquake Recovery Project
7. Earthquake Recovery
(6)
Project $ 475,861.98 $ -0- $ 475,861.98 $ -0-
8. Earthquake Recovery
(7)
Project $ 713,792.96 $ -0- $ 713,792.97 -0-
(8)
9. Low/Mod Housing Fund
$ 10,242,188.00 $ 226,517.91 $ -0- $ 10,468,705.91
Subtotal Earthquake
Recovery Project $ 11,431,842.95 $ 226,517.91 $1,189,654.95 $10,468,705.91
Total Redevelopment Agency $ 32,505,175.70 $ 1,511,979.18 $1,692,365.46 $32,324,789.42
10. City of Santa Monica -
(8)
General Fund$ 10,242,188.00 $ 226,517.91 $ -0- $10,468,705.91
Effective July 1, 2001 Notes 1, 2, 4 , 5, 9 and 10 will carry an interest rate one half a percentage point (.5%)
(1)
higher than the City's actual rate of investment earnings for fiscal year 2001-02. 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 Parking Lease Revenue Bonds.
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)
Reimbursement of CDBG funds used to pay interest on outstanding Federal Urban Renewal Loan Note;
(2
owed to City's CDBG Fund.
Close out of Ocean Park Federal Urban Renewal Project; owed to the City's General Fund.
(3)
Close out of Ocean Park Federal Urban Renewal Project; owed to the City's CDBG Fund.
(4)
Represents the value of various parcels of property transferred from the City to the Agency for the Downtown
(5)
Redevelopment Project (per Agency Resolution 352, 10/24/78). Owed to General Fund.
and Reimbursement for various administrative costs; owed the Citys General Fund.
(6)(7)
=
Represents Earthquake Recovery Redevelopment Project Area loan to the Genera Fund for housing projects,
(8)
and loans by the General Fund to the Redevelopment Low/Moderate Income Housing Projects Fund to
implement the housing projects.
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ATTACHMENT III
PROMISSORY NOTES
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PROMISSORY NOTE
Ocean Park Santa Monica, California
Federal Allocation July 1, 2001
On June 30, 2002, 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, Seven Hundred
Seventy-Six Thousand, Two Hundred Seventy-Six Dollars and Eighty-One Cents ($4,776,276.81), with
interest from July 1, 2001, at the rate of one-half of one percentage point (.5%) more than the City's actual
rate of investment earnings for fiscal year 2001-02 (July 1, 2001 - June 30, 2002). This total amount now
owed represents the original June 30, 1981 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
BY: ______________________ BY: ______________________
Maria Stewart Michael Feinstein
Secretary Chairperson
APPROVED AS TO FORM:
BY: ______________________
Marsha Jones Moutrie
Agency Attorney
P.N. #2
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PROMISSORY NOTE
Ocean Park Santa Monica, California
Federal Allocation July 1, 2001
On June 30, 2002, 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 Nineteen Thousand,
Four Hundred Twenty-Three Dollars and Forty-Five Cents ($619,423.45) with interest from July 1, 2001,
at the rate of one-half of one percentage point (.5%) more than the City's actual rate of investment
earnings for fiscal year 2001-01 (July 1, 2001 - June 30, 2002). This total amount now owed represents
the original September 13, 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
BY: ______________________ BY: ______________________
Maria Stewart Michael Feinstein
Secretary Chairperson
APPROVED AS TO FORM:
BY: ______________________
Marsha Jones Moutrie
Agency Attorney
P.N. #4
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PROMISSORY NOTE
Ocean Park Santa Monica, California
Federal Allocation July 1, 2000
On June 30, 2002, 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 Five Hundred Forty-Five Thousand,
Five Hundred Sixty-Three Dollars and Nine Cents ($545,563.09), with interest from July 1, 2001 at the
rate of one-half of one percentage point (.5%) more than the City's actual rate of investment earnings for
fiscal year 2001-02 (July 1, 2001 - June 30, 2002). 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
BY: ______________________ BY: ______________________
Maria Stewart Michael Feinstein
Secretary Chairperson
APPROVED AS TO FORM:
BY: ______________________
Marsha Jones Moutrie
Agency Attorney
P.N. #5
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PROMISSORY NOTE
Downtown Santa Monica, California
Redevelopment Project July 1, 2001
On June 30, 2002, 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 Thirteen Million, Eight Hundred Fifty-
Three Thousand, Nine Hundred Ninety-Three Dollars and Twenty-Three Cents ($13,853,993.23), with
interest from July 1, 2001 at the rate of five and ninety-eight one hundredths percent (5.98%) per annum.
This amount now owed represents the original October 24, 1978 debt less subsequent payments plus
subsequently incurred interest. 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: ______________________ BY: ______________________
Maria Stewart Michael Feinstein
Secretary Chairperson
APPROVED AS TO FORM:
BY: ______________________
Marsha Jones Moutrie
Agency Attorney
P.N. #6
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PROMISSORY NOTE
Downtown Santa Monica, California
Redevelopment Project July 1, 2001
On June 30, 2002, 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 Two Million, Sixty Thousand, Eight
Hundred Twenty-Six Dollars and Ninety-Three Cents ($2,060,826.93), with interest from July 1, 2001, at
the rate of one-half of one percentage point (.5%) more than the City's actual rate of investment earnings
for fiscal year 2001-02 (July 1, 2001 - June 30, 2002). This total amount now owed represents the original
June 30, 1981 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
BY: ______________________ BY: ______________________
Maria Stewart Michael Feinstein
Secretary Chairperson
APPROVED AS TO FORM:
BY: ______________________
Marsha Jones Moutrie
Agency Attorney
P.N. #1
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PROMISSORY NOTE
Earthquake Recovery Santa Monica, California
Redevelopment Project July 1, 2001
On June 30, 2002, 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, Four Hundred
Sixty-Eight Thousand, Seven Hundred Five Dollars and Ninety-One cents ($10,468,705.91), with
interest from July 1, 2001, at the rate of one-half of one percentage point (.5%) more than the
Citys actual rate of investment earnings for fiscal year 2001-02 (July 1, 2001 - June 30, 2002).
=
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: BY: _________________
Maria Stewart Michael Feinstein
Secretary Chairperson
APPROVED AS TO FORM:
BY:
Marsha Jones Moutrie
Agency Attorney
P.N. #9
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PROMISSORY NOTE
Low/Moderate Income Housing Santa Monica, California
Redevelopment Project July 1, 2001
On June 30, 2002, for the value received, the undersigned promises to pay to the order of the
Redevelopment Agency of the City of Santa Monica, a California public body, corporate and
political, at Santa Monica, the sum of Ten Million, Four Hundred Sixty-Eight Thousand, Seven-
Hundred Five Dollars and Ninety-One cents ($10,468,705.91), with interest from July 1, 2001, at
the rate of one-half of one percentage point (.5%) more than the Citys actual rate of investment
=
earnings for fiscal year 2001-02 (July 1, 2001 - June 30, 2002). 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.
City of Santa Monica
ATTEST
BY: BY: ____________________
Maria Stewart Susan E. McCarthy
Secretary City Manager
APPROVED AS TO FORM:
BY: _
Marsha Jones Moutrie
Agency Attorney
P.N. #10
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