SR-413-002 (17)
Council Meeting: June 15, 2004 Santa Monica, California
TO: City Council and Redevelopment Agency
FROM: City and Agency Staff
SUBJECT: Renewal of 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
Redevelopment Project. 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, 2004 through June 30, 2005.
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 A details the financial history of each of the Promissory Notes, including
amounts repaid to date, and presents the sources and uses of budgeted FY 2004-05
Redevelopment Agency income. To date, $20.4 million has been repaid on all Notes and
an additional $1.7 million has been budgeted to be repaid in FY 2004-05.
1
Budget/Financial Impact
There is no budgetary impact resulting from the renewal of these Promissory Notes. The
financial impact is that the liability of the Agency has been reduced by $3,126,438.46, the
net of accrued interest and repayments to the General Fund for the period July 1, 2003
through June 30, 2004 (see Attachment B). Continuing the policy adopted by Council,
staff recommends that the interest rate for five Promissory Notes be continued at one-half
of one percentage point (0.5%) more than the City's actual rate of investment earnings.
The additional 0.5% is to reimburse the City and the Agency for carrying this debt. As
required in the original bond covenant, one Promissory Note between the City and Agency
concerning the Downtown Redevelopment Project must continue at a rate of interest of
4.60% that is equal to the rate of interest being paid for the refunded Downtown
Redevelopment Project Lease Revenue Bonds, Series 2002.
Recommendation
It is recommended that the City Council and Agency agree to renew the six outstanding
loans and the City Council and Redevelopment Agency approve and authorize the Mayor
and Chairperson to execute the attached Promissory Notes between the Agency and the
City.
Prepared by: Steve Stark, Director of Finance
Randy Chow, Senior Accountant
Attachment A Status of Redevelopment Agency Promissory Notes
Attachment B FY 2003/04 Financial Activity on Outstanding Promissory Notes
Attachment C Redevelopment Agency Promissory Notes #1, #2, #5, #6, and #9; and
City of Santa Monica Promissory Note #10
2
3
ATTACHMENT A
STATUS OF REDEVELOPMENT AGENCY PROMISSORY NOTES
I. History of Promissory Notes
The following indicates the original debt amount of each of the currently outstanding six
promissory notes between the Redevelopment Agency and the City, and the total net
adjustments for each promissory note as of 6/30/04:
OriginalTotal NetPromissory
Promissory NoteDebt AmountAdjustment toNote Balance
No.Description(Date)Note Balanceas of 7/1/04
Downtown Project
1Downtown Redevelopment Project$ 871,840.00$ 408,630.35$ 1,280,470.35
(6/30/81)
6Downtown Redevelopment Project 4,400,000.00 11,029,441.83 15,429,441.83
(10/24/78)
Subtotal$ 5,271,840.00$11,438,072.18$16,709,912.18
Ocean Park Project
2Ocean Park Project$ 1,243,266.88$ 4,044,373.77$ 5,287,640.65
(6/30/81)
5Ocean Park Project 280,837.00 323,135.86 603,972.86
(9/14/83)
Subtotal$ 1,524,103.88$ 4,367,509.63$ 5,891,613.51
Earthquake Recovery Project
9Low/Mod. Income Housing Fund$10,242,188.00$ (8,742,000.00)$ 1,500,188.00
(2/27/01)
Total Redevelopment Agency$17,038,131.88$ 7,063,581.81$24,101,713.69
City of Santa Monica
10City of Santa Monica General Fund$10,242,188.00$ (8,742,000.00)$ 1,500,188.00
II. FY2004-05 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 FY2004-05, including sources and uses budgeted in the
Low/Moderate Income Fund but financed from each of the indicated funds.
Earthquake
Downtown Ocean Park Recovery Project
SourcesProject FundProject FundFund
Tax Increment$ 1.6$ 2.8$ 31.8
City Lease Payment for Parking Structure 1.2 - -
Other 0.3 0.1 2.0
Total Sources$ 3.1$ 2.9$ 33.8
Downtown Ocean Park Earthquake
UsesProjectProjectRecovery Project
Operations$ 2.3$ 1.8$ 13.8
Loan Payment - - 2.5
Capital - Proposed Budget 0.8 0.9 17.8
Total Uses$ 3.1$ 2.7$ 34.1
Net Source (Use)$ -$ 0.2$ (0.3)
(1)
(1) Portion of current fund balance is being used to fund the Earthquake Recovery Project net use.
ATTACHMENT B
(a)
FY 2003/04 FINANCIAL ACTIVITY ON OUTSTANDING PROMISSORY NOTES
PromissoryAccruedRepayment ToPromissory
Promissory NoteNote BalanceInterestGeneral FundNote Balance
No.Description7/1/037/1/03 - 6/30/047/1/03 - 6/30/047/1/04
Downtown Project
1Downtown Redevelop. Proj. (d)$ 1,296,484.06$ 29,686.29$ 45,700.00$ 1,280,470.35
6Downtown Redevelop. Proj. (d) 14,932,062.39 682,614.46 185,235.02 15,429,441.83
Subtotal$16,228,546.45$ 712,300.75$ 230,935.02$16,709,912.18
Ocean Park Project
2Ocean Park Fed. Allocation (b)$ 5,167,201.79$ 120,438.86$ -$ 5,287,640.65
5Ocean Park Fed. Allocation (c) 590,215.91 13,756.95 - 603,972.86
Subtotal$ 5,757,417.70$ 134,195.81$ -$ 5,891,613.51
Earthquake Recovery Project
9Low/Mod. Income Hsing Fd. (e)$ 5,242,188.00$ 34,966.88$ 3,776,966.88$ 1,500,188.00
Total Redevelop. Agency$27,228,152.15$ 881,463.44$ 4,007,901.90$24,101,713.69
City of Santa Monica
10City of Santa Monica Gen. Fd. (e)$ 5,242,188.00$ 34,966.88$ 3,776,966.88$ 1,500,188.00
(a) Effective July 1, 2004 Notes 1, 2, 5, 9 and 10 will carry an interest rate one half a percentage point
(.5%) higher than the City's actual rate of investment earnings for fiscal year 2004-05. 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.
(b) Reimbursement of CDBG funds used to pay interest on outstanding Federal Urban Renewal Loan
Note; owed to City's CDBG Fund.
(c) Close out of Ocean Park Federal Urban Renewal Project; owed to the City's CDBG Fund.
(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); owed to General Fund.
(e) 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.
ATTACHMENT C
PROMISSORY NOTES
PROMISSORY NOTE
Downtown Santa Monica, California
Redevelopment Project July 1, 2004
On June 30, 2005, 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, Two Hundred Eighty Thousand, Four Hundred Seventy Dollars and Thirty-Five
Cents ($1,280,470.35), with interest from July 1, 2004, at the rate of one-half of one
percentage point (.5%) more than the City's actual rate of investment earnings for fiscal
year 2004-05 (July 1, 2004 - June 30, 2005). 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 Richard Bloom
Secretary Chairperson
APPROVED AS TO FORM:
BY: ______________________
Marsha Jones Moutrie
Agency Attorney
P.N. #1
PROMISSORY NOTE
Ocean Park Santa Monica, California
Federal Allocation July 1, 2004
On June 30, 2005, 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
Million, Two Hundred Eighty-Seven Thousand Six Hundred Forty Dollars and Sixty-Five
Cents ($5,287,640.65) with interest from July 1, 2004, at the rate of one-half of one
percentage point (.5%) more than the City's actual rate of investment earnings for fiscal
year 2004-05 (July 1, 2004 - June 30, 2005). 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 Richard Bloom
Secretary Chairperson
APPROVED AS TO FORM:
BY: ______________________
Marsha Jones Moutrie
Agency Attorney
P.N. #2
PROMISSORY NOTE
Ocean Park Santa Monica, California
Federal Allocation July 1, 2004
On June 30, 2005, 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 Three Thousand, Nine Hundred Seventy-Two Dollars and Eighty-Six Cents
($603,972.86), with interest from July 1, 2004 at the rate of one-half of one percentage
point (.5%) more than the City's actual rate of investment earnings for fiscal year 2004-05
(July 1, 2004 - June 30, 2005). 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 Richard Bloom
Secretary Chairperson
APPROVED AS TO FORM:
BY: ______________________
Marsha Jones Moutrie
Agency Attorney
P.N. #5
PROMISSORY NOTE
Downtown Santa Monica, California
Redevelopment Project July 1, 2004
On June 30, 2005, 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 Fifteen
Million, Four Hundred Twenty-Nine Thousand, Four Hundred Forty-One and Eighty-Three
Cents ($15,429,441.83), with interest from July 1, 2004 at the rate of four and sixty one
hundredths percent (4.60%) 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 Richard Bloom
Secretary Chairperson
APPROVED AS TO FORM:
BY: ______________________
Marsha Jones Moutrie
Agency Attorney
P.N. #6
PROMISSORY NOTE
Low/Moderate Income Housing Santa Monica, California
Redevelopment Project July 1, 2004
On June 30, 2005, 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, Five Hundred Thousand, One Hundred Eighty-Eight Dollars ($1,500,188.00), with
interest from July 1, 2004, at the rate of one-half of one percentage point (.5%) more than
the City's actual rate of investment earnings for fiscal year 2004-05 (July 1, 2004 - June
30, 2005). This total amount now owed represents the original February 27, 2001 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 Richard Bloom
Secretary Chairperson
APPROVED AS TO FORM:
BY: ______________________
Marsha Jones Moutrie
Agency Attorney
P.N. #9
PROMISSORY NOTE
City of Santa Monica Santa Monica, California
July 1, 2004
On June 30, 2005, for the value received, the undersigned promises to pay to the order of
the Redevelopment Agency of the City of Santa Monica, at Santa Monica, the sum of One
Million, Five Hundred Thousand, One Hundred Eighty-Eight Dollars and ($1,500,188.00),
with interest from July 1, 2004, at the rate of one-half of one percentage point (.5%) more
than the Redevelopment Agency?s City?s actual rate of investment earnings for fiscal year
2004-05 (July 1, 2004 - June 30, 2005). This total amount now owed represents the
original February 27, 2001 debt less subsequent payments plus subsequent 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.
City of Santa Monica
ATTEST:
BY: ______________________ BY: ______________________
Maria Stewart Richard Bloom
City Clerk Mayor
APPROVED AS TO FORM:
BY: ______________________
Marsha Jones Moutrie
City Attorney
P.N. #10