SR-413-002 (14)
F:CMD:BJ\f:\finance\share\bill\wpdocs\sretopn7 0304.doc
Council Meeting: June 17, 2003 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 five Promissory Notes for funds loaned by the City of Santa Monica to the Santa Monica
Redevelopment Agency: two for the Downtown Redevelopment Project, two 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, 2003 through June 30, 2004.
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 2003-04 Redevelopment Agency income.
To date, $16.6 million has been repaid on all Notes and an additional $3.9 million has been budgeted
to be repaid in FY 2003-04.
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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 $2,866,169.32, which represents the net of accrued
interest and repayments to the General Fund for the period July 1, 2002 through June 30, 2003 (see
Attachment II). Continuing the policy adopted by Council, staff recommends that the interest rate for
five 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 and the Agency for
carrying this debt. As required in the original bond covenant, one Promissory Note between the City
and Agency concerning the Downtown Redevelopment project must continue at a rate of interest of
4.60% that is equal to the rate of interest being paid for the refunded Downtown Redevelopment
Project Lease Revenue Bonds, Series 2002.
Recommendation
It is recommended that the City Council and Agency agree to renew the six outstanding loans and the
City Council and Redevelopment Agency approve and authorize the Mayor and 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 2002/03 Financial Activity on Outstanding Promissory Notes
III. Redevelopment Agency Promissory Notes #1, #2, #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 six promissory notes
between the Redevelopment Agency and the City, and the total net accrued interest for each promissory note
as of 6/30/03; 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) 6/30/03 at 7/1/03
Downtown Project
1 Downtown
(e)
Redevelopment Project $ 871,840.00 $ 424,644.06 $ 1,296,484.06
(a)
(6/30/81)
6 Downtown
(f)
Redevelopment Project 4,400,000.00 10,532,062.39 14,932,062.39
(d)
(10/24/78)
___________ ____________ ___________
Subtotal $ 5,271,840.00 $ 10,956,706.45 $ 16,228,546.45
Ocean Park Project(I)
(g)
2 Ocean Park Project $ 1,243,266.88 $ 3,923,934.91 $ 5,167,201.79
(b)
(6/30/81)
(h)
5 Ocean Park Project 280,837.00 309,378.91 590,215.91
(c)
(9/14/83)
___________ ___________ ___________
Subtotal $ 1,524,103.88 $ 4,233,313.82 $ 5,757,417.70
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Total Net
Original Accrued
Debt Interest Promissory
Promissory Note Amount Through Note Balance
Number and Description __(date) 6/30/03 at 7/1/03
Earthquake Recovery Project
(i) (j)
9 Low/Moderate Housing Funds 10,242,188.00 (5,000,000.00) 5,242,188.00
(2/27/01)
___________ ___________ ____________
Total Redevelopment Agency $ 17,038,131.88 $ 10,190,020.27 $27,228,152.15
(i) (j)
10 City of Santa Monica Gen Fd $ 10,242,188.00 $ (5,000,000.00) $ 5,242,188.00
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 City CDBG funds held by the Federal government and applied to pay off the outstanding Federal
Ocean Park Urban Renewal Grant Note.
(d) 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).
(e) 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, $98,100 in FY 2000/01, $847,444.80 in FY 2001/02 and $36,700 in FY
2002/03.
(f) 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, $306,510.51 in FY 2000/01, $164,404.00 in FY 2001/02 and $210,909.86 in FY 2002/03.
(g) Reflects payments of $183,000 in FY1984/85 and $445,779 in interest in FY1987/88.
(h) Reflects payment of $205,011 in interest in FY1987/88.
(i) 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.
(j) Reflects payments of $226,517.91 in FY 2000/01, $1,500,000.00 in FY 2001/02 and $3,724,449.23 in FY
2002/03.
II. FY2003-04 Financial Ability of Redevelopment Agency to Repay Promissory Notes
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$3.7
The following table summarizes (in millions) the budgeted sources and uses of Redevelopment Agency funds for
FY2003-04, including sources and uses budgeted in the Low/Moderate Income Fund but financed from each of
the indicated funds.
Downtown Ocean Park Earthquake Recovery
Sources Project Fund Project Fund Project Fund
Tax Increment $ 1.8 $ 2.8 $28.3
City Lease Payment for
(1)
Parking Structures - -
1.1
Other 0.3 0.1 0.6
Total Sources $ 3.2 $ 2.9 $28.9
Downtown Ocean Park Earthquake
Uses Project Project Recovery Project
(2)
Operations $ 2.3 $ 1.8 $16.2
(5)
Loan Payment - 3.5
-
Capital - Proposed
(3)
Budget
0.8 1.3 7.1
Total Uses $ 3.1 $ 3.1 $26.8
(4)
Net $ 0.1 $(0.2) $2.1
(1)
This lease payment is made by the General Fund to the Redevelopment Agency, Downtown Project.
(2)
Consists of the following costs: Downtown Project - a) $1.1 million debt service payment on 2002 refunded
bonds; b) $.5 million payment to the General Fund for placing credit of the General Fund behind the
Redevelopment Agency's 2002 refunding bond issue; and c) $.6 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 $.3 million repayment of interest to the General Fund on outstanding
promissory notes; Ocean Park Project - a) $1.4 million debt service on 2002 refunded bonds; and b) $.4
million reimbursement to the General Fund consisting of $.1 million annual lease payment to Parking
Authority for development of 175 Ocean Park Boulevard (paid through the Low/Moderate Income Housing
Fund), and $.3 million reimbursement for Housing programs of benefit to the project area; and Earthquake
Recovery Project - a) $6.4 million payment to various government agencies for their share of tax increment
revenue; b) $1.1 million payment to the General and Pier Funds for administrative support services; c) $8.6
million debt service payment on 1999 tax allocation bonds and to the Parking Authority and General Fund on
a promissory note; and d) $.1 million repayment of interest to the General Fund on outstanding promissory
notes.
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(3)
Consists of the following capital projects: a) Downtown Project - $.8 million for housing projects of benefit to
the project area, Ocean Park Project - $1.3 million for housing projects of benefit to the project area; and
Earthquake Recovery Project - $1.1 million for housing projects of benefit to the project area, $2.5 million for
th
Palisades Bluff Stabilization Project, $.1 million for 20 Street and Cloverfield Project and $3.4 million for
Seismic Retrofit of Parking Structures.
(4)
Portion of current fund balance is being used to finance this use.
(5)
Continuing repayment on funds loaned from the General in February 2001 for housing projects.
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ATTACHMENT II
(1)
FY 2002/03 FINANCIAL ACTIVITY ON OUTSTANDING PROMISSORY NOTES
Promissory Accrued Repayment To Promissory
Note Interest General Fund Note
Promissory Balance 7/1/02- 7/1/02- Balance
Note Number 7/1/02 6/30/03 6/30/03 7/1/03
Downtown Projects
1. Downtown Redevelopment $ 1,292,290.57 $ 40,893.49 $ 36,700.00 $ 1,296,484.06
(2)
Project
6. Downtown Redevelopment 14,481,490.32 661,481.93 210,909.86 14,932,062.39
(4)
Project
Subtotal Downtown Project $ 15,773,780.89 $ 702,375.42 $ 247,609.86 $ 16,228,546.45
Ocean Park Project
2. Ocean Park Federal $ 5,006,493.35 $ 160,708.44 $ -0- $ 5,167,201.79
(2)
Allocation
5. Ocean Park Federal 571,859.23 18,356.68 -0- 590,215.91
(3)
Allocation ______ ___________ ___________ ____________
Subtotal Ocean Park Project $ 5,578,352.58 $ 179,065.12 $ -0- $ 5,757,417.70
Earthquake Recovery Project
(5)
9. Low/Mod Housing Fund$ 8,742,188.00 $ 224,449.23 $3,724,449.23 $ 5,242,188.00
Total Redevelopment Agency $ 30,094,321.47 $ 1,105,889.77 $3,972,059.09 $ 27,228,152.15
10. City of Santa Monica -
(5)
General Fund$ 8,742,188.00 $ 224,449.23 $3,724,449.23 $ 5,242,188.00
Effective July 1, 2003 Notes 1, 2, 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 2002-03. Note 6 will carry an interest
rate of 4.60%. This is the same rate of interest on the refunded Downtown Redevelopment Project Lease
Revenue Bonds, Series 2002.
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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 CDBG Fund.
(3)
Represents the value of various parcels of property transferred from the City to the Agency for the Downtown
(4)
Redevelopment Project (per Agency Resolution 352, 10/24/78). Owed to General Fund.
Represents Earthquake Recovery Redevelopment Project Area loan to the General Fund for housing
(5)
projects, and loan by the General Fund to the Redevelopment Low/Moderate Income Housing Projects Fund
to implement the housing projects. The beginning balance of note #9 and note #10 has been reduced by
$457,523.46 to reflect an interest payment that was made at 6/30/02
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ATTACHMENT III
PROMISSORY NOTES
NOT AVAILABLE ELECTGRONICALLY
SEE ?8B ATT-1? FROM THIS MEETING
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