SR-413-001 (26)
THE REDEVELOPMENT AGENCY
OF THE CITY OF SANTA MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Basic Financial Statements and Supplemental Data
Year Ended June 30, 2003
(With Independent Auditors' Report Thereon)
THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA, CALIFORNIA
BASIC FINANCIAL STATElVIENTS AND SUPPLEMENTAL DATA
YEAR ENDED JUNE 30, 2003
TABLE OF CONTENTS
FINANCIAL SECTION
Independent Auditors' Report............. .... ...... ............... .......................... ..... ..... ............ ............... 1
Management's Discussion and Analysis (Required Supplementary Information)...................... 3
Basic Financial Statements:
Agency-wide Financial Statements:
Statement of Net Assets .... .............. ...... .... ...... .... ......... .................... ........ ....... .... ........... 10
Statement of Activities ... ...... ..... .......... ........ ....... .............................. ....... ........ ........ ....... 11
Fund Financial Statements:
Balance Sheet - Governmental Funds ......... ................. .................. ....... ......... ......... ....... 12
Reconciliation of the Balance Sheet of Governmental Funds to the
Statement of Net Assets.................................................................. ..... 13
Statements of Revenues, Expenditures, and Changes in Fund Balances-
Governmental Funds...... ........... ................ .......... ................. ................ ...... ............ .... 14
Reconciliation of the Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Statement of Activities. . . . . . . . . . .. . . . . . . . . .. . .. . . . . . . . .. . .. . .... 15
Notes to Basic Financial Statements..................................................................................... 16
Supplemental Schedules:
Schedules of Revenues, Expenditures, and Changes in Fund Balances (Deficits)-
Budget and Actual:
Downtown Redevelopment Low/Mod Housing Capital Projects Fund.......... ...... 30
Earthquake Recovery Redevelopment Low/Mod Housing Capital Projects Fund... 31
Ocean Park Redevelopment Low/Mod Housing Capital Projects Fund............... 32
Downtown Redevelopment Capital Projects Fund.... .......... ..... .................... 33
Earthquake Recovery Redevelopment Capital Projects Fund............. .............. 34
Ocean Park Redeyelopment Capital Projects Fund....... .... ............................ 35
COMPLIANCE SECTION
Independent Auditor's Report on Compliance and on Internal Control over Financial
Reporting Based on an Audit of Financial Statements Performed in Accordance with
Government Auditing Standards ............ ................... ... ...................... ................. .......... ....... 36
CONRAD AND
ASSOCIATES, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
2301 DUPONT DRIVE, SUITE 200
IRVINE, CALIFORNIA 92612
(949) 474-2020
Fax (949) 263-5520
Board of Directors
Redevelopment Agency of the
City of Santa Monica, California
Independent Auditors' Report
We have audited the accompanying basic financial statements of the governmental activities
and each major fund of the Redevelopment Agency of the City of Santa Monica, California
(the Agency), a component unit ofthe City of Santa Monica, California, as of and for the year
ended June 30, 2003, which collectively comprise the Agency's basic financial statements, as
listed in the table of contents. These financial statements are the responsibility of the
management of the Agency. Our responsibility is to express opinions on these financial
statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis
for our opinions. .
In our opinion, the basic financial statements referred to above present fairly, in all material
respects, the respective financial position of the governmental activities and each major fund
of the Redevelopment Agency of the City of Santa Monica, California as of June 30, 2003,
and the respective changes in financial position for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
The information identified in the accompanying table of contents as Management's
Discussion and Analysis is not a required p.art of the basic financial statements, but is
supplementary information required by the Governmental Accounting Standards Board. We
have applied certain limited procedures, which consisted principally of inquiries of
management regarding the methods of measurement and presentation of the required
supplementary information. However, we did not audit the information and express no
opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Redevelopment Agency of the City of Santa Monica's basic
financial statements. The supplementary schedules as listed in the table of contents are
presented for purposes of additional analysis and are not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures applied in the
audit of the basic financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
1
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION
Board of Directors
Redevelopment Agency ofthe
City of Santa Monica, California
Page Two '
In accordance with Government Auditing Standards, we have also issued a report dated
October 16, 2003 on our consideration of the Redevelopment Agency of the City of Santa
Monica's internal control over financial reporting and on our tests of its compliance with
certain provisions of laws, regulations, contracts and grants. That report is an integral part of
an audit performed in accordance with Government Auditing Standards and should be read in
conjunction with this report in considering the results of our audit.
tE>>? r d cI /V7 / /1-5 $ tn"'J /1 't'ii;, / L - L . ~ .
October 16, 2003
2
Management's Discussion and Analysis
As management of the Redevelopment Agency of the City of Santa Monica, (the "Agency"), we offer
readers of the Agency's report this narrative overview and analysis of the financial activities of the Agency
for the fiscal year ended June 30, 2003. We encourage readers to consider the information presented here
in conjunction with additional information that we have furnished in the Agency's basic financial
statements, which immediately follow this section.
Financial Highlights
The assets of the Agency exceeded its liabilities at the close of fiscal year June 30, 2003 by $19,414,613
(net assets).
The Agency's net assets increased by $21,537,335 in fiscal year 2002-03 due to increased tax increment
revenues and decreased project expenditures.
As of the close of fiscal year June 30, 2003, the Agency's governmental funds reported combined ending
fund balances of $24,120,486, an increase of $12,885,927 from the prior year due to increased tax
increment revenues and decreased project expenditures. The Agency's total debt decreased by $960,000
during the current fiscal year as shown in note 3 of the notes to the basic financial statements.
Overview of the Basic Financial Statements
This discussion and analysis is intended to serve as an introduction to the Santa Monica Redevelopment
Agency's basic financial statements. The Agency;s basic [mancial statements consist of three components:
1) agency-wide financial statements, 2) fund financial statements, and 3) notes to the basic financial
statements. In addition to the basic financial statements, also included in this financial report is
supplementary information relating to the Agency's budgets.
Agency- Wide Financial Statements
The agency-wide financial statements are designed to provide readers with a broad overview of the
Agency's finances. These statements include all assets and liabilities, using the full accrual basis of
accounting, which is similar to the accounting used by most private-sector companies. All of the fiscal
year's revenues and expenses are reported as soon as the underlying event giving rise to the change
occurs, regardless of the timing of related cash flows. Thus assets, liabilities and expenses are reported in
these statements for some items that will result in cash flows in future fiscal periods.
3
The statement of net assets presents all of the Agency's assets and liabilities, with the difference reported
as net assets. Over time, increases or decreases in net assets may serve as a useful indicator to determine
whether the financial position of the Agency is improving or deteriorating.
The statement of activities presents information showing the Agency's revenues and expenses for the
fiscal year. Functional activities are highlighted in this statement, whereby direct and indirect functional
costs are shown net of related program revenue. This statement shows the extent to which the various
functions depend on general taxes and non-program revenues for support.
Both of the agency-wide financial statements highlight functions of the Agency that are principally
supported by property tax increment and bond proceeds. The governmental activities of the Agency
include redevelopment activities and interest on long-term debt. Redevelopment activities, in general,
include providing needed public improvements, assisting with development and rehabilitation of existing
properties, and providing low and moderate-income housing to eliminate or alleviate blighting conditions.
The agency-wide financial statements can be found on pages 10 and 11 of this report.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The Agency uses fund accounting to ensure and
demonstrate compliance with finance-related legal requirements. The Agency only has governmental fund
types.
Governmental funds - Government funds are used to account for essentially the same functions reported
as governmental activities in the agency-wide financial statements. However, unlike the agency-wide
financial statements, governmental fund financial statements focus on near-term inflows and outflows of
spendable resources as well as on balances of spendable resources available at the end of the fi~cal year.
Such information may be useful in evaluating the agency's near-term financing requirements.
Because the focus of governmental funds is narrower than that of the agency-wide financial statements, it
is useful to compare the information presented for governmental funds with similar information presented
for governmental activities in the agency-wide financial statements. By doing so, readers may better
understand the long-term impact of the agency'~ near-term financing decisions. Both the governmental
fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund
balances provide a reconciliation to the agency-wide financial statements on pages 13 and 15 to facilitate
this comparison between governmental funds and governmental activities. The Agency maintains seven
individual governmental funds. Information is presented separately in the governmental fund balance sheet
and in the governmental fund statement of revenues, expenditures, and changes in fund balances, for each
of these funds.
The governmental funds financial statements can be found on pages 12 and 14 of this report.
Notes to Basic Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in
the agency-wide and fund financial statements. The notes to the basic financial statements can be found on
pages 16 - 29 of this report.
4
Agency-Wide Financial Analysis
Our agency-wide analysis focuses on the net assets and changes III net assets for the Agency's
governmental activities.
A summary ofthe Agency's net assets (deficit) as of June 30, 2003 and June 30, 2002 are as follows:
Summary of Net Assets
June 30, 2003 and 2002
Governmental Activities
Current and other assets
Capital assets, net
Total assets
$
2003
74,058,809
78,507,340
152,566,149
21,571,942
111,579,594
133,151,536
Current and other liabilities
Long-term liabilities
Total liabilities
Net assets (deficit):
Invested in capital assets, net of related debt
Restricted
Unrestricted
Total net assets (deficit)
$
11,114,597
2,076,374
6,223,642
19,414,613
2002
59,500,725
70,357,527
129,858,252
44,861,398
87,119,576
131,980,974
(2,449,409)
9,297,255
(8,970,568)
(2,122,722)
As noted earlier, net assets may serve over time as a useful indicator of the agency's financial position. In
the case of the Agency, assets exceeded liabilities by $19,414,613 at June 30, 2003. By far the largest
portion of the Agency's liabilities reflects its bonded indebtedness, totaling $87,480,000. The Agency,
operating under California Redevelopment Law, must maintain debt in excess of its available assets to
legally receive tax increment revenue. Bond proc"eeds are used to construct infrastructure, which becomes
an asset of the Agency, or to alleviate blight. However, such expenditures do not generally create assets to
offset bo;nded debt. Future tax increment revenues must be used to liquidate non-currentbond liabilities.
5
Governmental Activities
Governmental activities increased the Agency's net assets by $21,537,335. Key elements of this increase
are as follows:
Changes in Net Assets
Year Ended June 30, 2003 and 2002
Governmental Activities
2003
2002
Revenues
General revenues
Property taxes
Investment earnings
Rental income
Miscellaneous
$
31,073,143
1,456,804
591,250
442,808
33,564,005
24,792,260
1,676,153
1,151,706
81, 194
27,701,313
Total general revenues
Expenses
Redevelopment activities
Interest on long term debt
Total expenses
Increase in net assets
6,116,486
5,910,184
12,026,670
21,537,335
(2,122,722)
19,414,613
4,826,945
6,386,791
11,213,736
16,487,577
(18,610,299)
(2,122,722)
Net assets (deficit) - beginning of year
Net assets (deficit) - end of year
$
Property tax increment revenues of$31,073,143 are the Agency's major source of revenue. This revenue
increased by $6,280,883 or 25.3% from the prior year as a result of increased assessed valuation and sale
of properties.
Investment earnings of $1 ,456,804 were received from investments of available funds.
Redevelopment activities expenses of $6, 116,486 shown on the statement of activities consist of:
Redevelopment and public improvement project operating costs
Low and moderate housing projects
Depreciation
Total redevelopment activities expenses
$
2,368,944
3,054,203
693,339
6,116,486
$
Redevelopment and public improvement project operating costs of $2,368,944 are comprised of operating
expenses such as administrative fees charged by the County for collection and disbursement of property
taxes, operating transfers to the General Fund, payment to the General Fund in accordance with a
reimbursement agreement in conjunction with the Downtown Redevelopment Project, lease payment for
the Ocean Park Boulevard Housing Project and administrative indirect costs.
6
Low and moderate housing project expenditures of $3,054,203 included development and monitoring of
affordability covenants for both new and existing housing projects, monitoring of construction activities,
and administrative costs.
Financial Analysis of the Agency's Funds
As noted earlier, the Agency uses fund accounting to ensure and demonstrate compliance with finance-
related legal requirements.
Governmental Funds
The focus of the Agency's governmental funds is to provide information on near-term inflows, outflows,
and balances of spendable resources. Such information is useful in assessing the Agency's financing
requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net
resources available for spending at the end of the fiscal year.
As of June 30, 2003, the Agency's governmental funds reported total ending fund balances of
$24,120,486, which is an increase of $12,885,927 from the prior year: The fund balance of $48,291,556 is
reserved to indicate that 'it is not available for new spending. It is comprised of $36,198,447 for
continuing capital projects, $6,463,749 for debt service, $3,156,975 for notes receivable and $5,242,188
for advances to the City of Santa Monica. The remainder of the fund deficit, $26,940,873, is unreserved,
undesignated.
The key elements of the $12,885,927 increase in fund balance from the prior year are as follows:
$1,735,020 increased funding requirements in the Debt Service Fund for the Downtown Project and Ocean
Park Project bonds, $7,914,301 increase in the Downtown Project Earthquake Recovery Project Fund due
to increased tax increment revenues, and $3,236,606 revenue that has been reserved for continuing capital
projects.
Major Funds
The Debt Service fund balance increased $1,735,020 due to lower funding requirements for the
Downtown Project and Ocean Park Project bonds. Principal and interest payments have been reduced due
to the issuance of Refunding Bonds during fiscal year 2002.
The Downtown Project Low/Mod Housing fund balance increased by $568,069 primarily due to increased
20% set.:.aside funds. The Downtown Project fund balance increased $1,033,152 due to increased tax
increment revenues.
The Earthquake Recovery Project Low/Mod Housing fund balance increased $3,572,875 due to increased
20% set-aside funds. The Earthquake Recovery Project fund balance increased $6,451,392 due to
increased tax increment revenues.
The Ocean Park Project Low/Mod Housing fund balance decreased $872,844 due to higher project
improvement expenditures. The Ocean Park Project fund balance increased $398,263 due to lower project
improvement and debt service expenditures.
7
Capital Asset and Debt Administration
Capital Assets
The Agency's investment in capital assets for its governmental activities as of June 30, 2003 amounts to
$78,507,340 (net of accumulated depreciation). This investment in capital assets includes parking
structures, buildings, land, and equipment. A summary of the Agency's capital assets, net of depreciation,
follows:
Governmental Activities
Land
Buildings, parking structures, and improvements
Machinery and equipment
Construction in progress
Sub-total
$
2003
61,467,500
16,723,799
6,303
7,212,810
85,410,412
(6,903,072)
78,507,340
2002
60,500,000
13,707,317
6,303
2,353,640
76,567,260
(6,209,733)
70,357,527
Less accumulated depreciation
Total
$
Long-Term Liabilities
At the end of the current fiscal year, the Agency had total bonded debt and long-term liabilities of
$87,480,000. The bonds are secured solely by specified revenue sources (i.e., property tax increment).
The Agency's total debt decreased by $960,000 (1.1%) during the current fiscal year. The decrease was
due to scheduled debt service payments on the Earthquake Recovery Project outstanding obligations.
Time limitations on incursion of debts exist in all project areas. Time limitations vary by the date when an
area was added to the project.
Proj ect area
Ocean Park 1A
Ocean Park 1 B
Downtown
Earthquake Recovery
Time limitation to incur debt
January 1,2004
January 1, 2004
January 1, 2004
June 21, 2014
The Agency does not have an overall credit rating; however, the Agency has received bond ratings on all
of its outstanding bond issues as follows: Downtown Redevelopment Refunding Project Lease Revenue
Bonds, "AAA" and "Aaa;" Ocean Park Redevelopment Project Tax Allocation Bonds, "BBB+," "Baal"
and "A;" and Earthquake Recovery Redevelopment Project Tax Allocation Bonds, "AAA" and "Aaa."
Additional information on outstanding long-term liabilities may be found in note 3 of the notes to the basic
financial statements.
8
Economic Factors and Next Year's Budget
The assessed value of property is estimated to rise in all project areas. In the Downtown Redevelopment
Project as a result of standard minimum increases; in the Earthquake Redevelopment Project area due to
sales of property and commercial development; and in the Ocean Park Project area as a result of standard
minimum increases and sales of properties.
Request for Information
This financial report is designed to provide a general overview of the Agency's finances for all those with
an interest in the Agency's finances. Questions concerning any of the information provided in this report
or request for additional financial information should be addressed to the Santa Monica Redevelopment
Agency, 2121 Cloverfield Blvd., Suite 100, Santa Monica, California 90064 or (310) 458-2232.
9
Tbe Redevelopment Agency of tbe City of Santa Monica
(A Component Unit of the City of Santa Monica, California)
Statement of Net Assets
June 30, 2003
Assets:
Cash and investments (note 2)
Cash and investments with fiscal agents (notes 2 and 4)
Accounts receivable
Interest receivable
Property tax increment receivable
Unamortized bond issuance costs, net
Notes receivable, net (note 11)
Capitalized lease receivable (note 5)
Advances to the City of Santa Monica (note 10)
Capital assets (note 6):
Land
Construction in progress
Other capital assets, net
Total assets
Liabilities:
Accounts payable and other liabilities
Accrued interest payable on bonds
Contracts retainage payable (note 8)
Due to City of Santa Monica Parking Authority (note 8)
Due to other agencies
Noncurrent liabilities (note 3):
Due within one year
Due in more than one year
Total liabilities
Net assets:
Invested in capital assets, net of related debt
Restricted:
Low- and moderate-income housing
Unrestricted
Total net assets
See accompanying notes to basic financial statements.
10
Governmental
Activities
$ 37,953,004
20,087,257
78,250
127,831
1,093,804
679,500
3,156,975
5,640,000
5,242,188
61,467,500
7,212,810
9,827,030
152,566,149
786,478
2,373,923
5,657,991
2,958,016
3,522,734
6,27Z,800
111,579,594
133,151,536
11,114,597
2,076,374
6,223,642
$ 19,414,613
Functions/programs:
Governmental activities:
Housing and community development
Interest on long term debt
Total governmental activities
General revenues:
Property taxes
Investment earnings
Rental income
Miscellaneous
Total general revenues
Change in net assets
Net assets (deficit) - beginning of year.
Net assets - end of year
The Redevelopment Agency of the City of Santa Monica
(A Component Unit of the City of Santa Monica, California)
Statement of Activities
Expenses
$ 6,116,486
5,910,184
12,026,670
See accompanying notes to basic financial statements.
Year Ended June 30, 2003
Charges
for Services
11
Program Revenues
Operating Grants
and Contributions
Capital Grants
and Contributions
Net (expense)
revenue
and changes
in net assets
Total
$ (6,116,486)
(5,910,184)
(\2,026,670)
$ 31,073,143
1,456,804
591,250
442,808
33,564,005
21,537,335
(2,122,722)
$ 19,414,613
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The Redevelopment Agency of the City of Santa Monica
(A Component Unit of the City of Santa Monica, California)
Reconciliation of the Balance Sheet of Governmental Funds
to the Statement of Net Assets
June 30, 2003
Total fund balances-governmental funds
Amounts reported for governmental activities in the statement of net assets are
different because:
Capital assets used in governmental activities that are not financial resources,
and, therefore, are not reported in funds:
Capital assets
Accumulated depreciation
Other long term assets that are not available to pay for current-period expenditures
and therefore, are deferred in funds .
Long-term liabilities, that are not payable in the current period and therefore not
reported in funds:
Bonds payable
Accrued interest payable
Deferred charge for issuance cost to be amortized over life of debt
Net assets of governmental activities
See accompanying notes to the basic financial statements.
13
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(87,158,790)
(2,373,923)
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en
The Redevelopment Agency of the City of Santa Monica
(A Component Unit of the City of Santa Monica California)
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance
to the Statement of Activities
Year Ended June 30, 2003
Net change in fund balance - governmental funds
Net change in governmental activities in the statement of activities are different because:
Governmental funds report project improvements as expenditures. Such expenditures
are capitalized in the statement of net assets
The cost of capital asstes is allocated over their estimated useful lives and reported
as depreciation expense in the statement of activities
Principal payments on long-term debt use current financial resources but have no
effect on net assets
Change in accrued interest expense on long-term debt is recorded as an expense in
the statement of activities, but is not recorded in the governmental funds
Costs of issuance are recorded as expenditures in the governmental funds. Such
costs are capitalized and amortized in the statement of activities
The loss on bond refunding is amortized in the statement of activities
Other changes, net
Change in net assets of governmental activities
See accompanying notes to basic financial statements.
15
$
12,885,927
8,843,152
(693,339)
960,000
(343,487)
(75,704)
(42,077)
2,863
$ 21,537,335
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
(1) Summary of Significant Accounting Policies
(a) General
The Redevelopment Agency of the City of Santa Monica, California (Agency) was established by
the Santa Monica City Council in 1957 pursuant to the Community Redevelopment Law of
California as codified in the State of California Health and Safety Code. The purpose of the
Agency is to eliminate blight and to promote economic revitalization within designated project
areas of the City of Santa Monica. The Agency has three project areas: the Downtown
Redevelopment Project Area, the Earthquake Recovery Redevelopment Project Area and the
Ocean Park Redevelopment Project .Area.
Local funds are provided principally from incremental property taxes and rentals for parking
facilities.
(b) Reporting Entity
The Agency is a component unit of the City of Santa Monica, California (City). As such, the
operations of the Agency are also included in the Comprehensive Annual Financial Report of the
City.
(c) Basis of Accounting and Measurement Focus
The basic financial statements of the Agency are composed of the following:
. Agency-wide financial statements
· Fund financial statements
. Notes to the financial statements
Agency-Wide Financial Statements
Agency-wide financial statements (i.e., the Statement of Net Assets and the Statement of
Activities) display information about the Agency as a whole. All significant interfund activity has
been eliminated in the Statement of Activities. The Agency provides only governmental activities
which are supported principally by property tax increments. Agency-wide financial statements are
reported using the economic resources measurement focus and the accrual basis of accounting.
Revenues are recorded when earned and expenses are recorded when a liability is incurred,
regardless of the timing of related cash flows. Property taxes are recognized as revenues in the
year for which they are levied.
Amounts paid to acquire capital assets are capitalized as assets in the agency-wide financial
statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a
16
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
liability in the agency-wide financial statements, rather than as another financing source.
Amounts paid to reduce long-term indebtedness of the reporting government are reported as a
reduction of the related liability, rather than as an expenditure.
In the Agency-wide financial statement, net assets are classified in the following categories:
Invested in Capital Assets. Net of Related Debt: This category groups all capital assets, including
infrastructure, into one component of net assets. Accumulated depreciation and the outstanding
balances of debt that are attributable to the acquisition, construction or improvement of these
assets reduce this category.
Restricted Net Assets: This category presents external restrictions imposed by creditors, grantors,
contributions or laws or regulations of other governments and restrictions imposed by law
through constitutional provisions or enabling legislation.
Unrestricted Net Assets: Represents the net assets of the Agency, not restricted for any project or
other purpose.
Fund Financial Statements
The accounting system of the Agency is organized and operated on the basis of separate funds.
The operations of each fund are accounted for with a separate set of self-balancing accounts that
comprise its assets, liabilities, fund equity, revenues, and expenditures. I
Fund financial statements are reported using the current financial resources measurement focus
and the modified accrual basis of accounting. The modified accrual basis of accounting is defmed
as the basis of accounting under which expenditures, other than accrued interest on long-term
debt, are recorded at the time liabilities are incurred. Revenues are recorded when received in
cash, except for measurable and available revenues, which are defined as available to finance
current period expenditures and are accrued to properly reflect the revenues earned. Revenues
,which are susceptible to accrual include property tax increment, interest income, and rental
Income.
All governmental funds are accounted for on a spending or "financial flow" measurement focus.
Generally, only current assets, and current liabilities are included on the balance sheets. However,
non-current portions of long-term receivables related to governmental funds are also reported on
their balance sheets and are offset by deferred revenue or fund balance reserve accounts.
Statements of revenues, expenditures, and changes in fund balances for governmental funds
generally present increases (revenues and other financing sources) and decreases (expenditures
and other financing uses) in net current assets.
17
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA lYIONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
(d) Budget and Budgetary Accounting
The following procedures have been used in establishing the budgetary data reflected in the basic
financial statements:
Formal budgetary adoption is employed as a management control device during the year for
the Capital Projects Funds budgets. The Agency Board Members do not adopt a budget for
the Debt Service Fund.
The budget is prepared on a non-GAAP-budgetary basis that considers encumbrances
outstanding at year-end as an expenditure of that year, whereas encumbrances are not
considered as expenditures under GAAP.
Budgeted amounts are as originally adopted or as amended by the Agency Board Members
during the year
(e) Major Funds
The Agency considers all of its funds as major governmental funds. They are:
The Capital Project Funds are as follows: Downtown Low/Mod Housing, Earthquake Recovery
Low/Mod Housing, Ocean Park Low/Mod Housing, Downtown Redevelopment, Earthquake
Recovery Redevelopment and Ocean Park Project Areas. The Capital Projects Funds are used to
account for bond proceeds available for project improvements, interest income on invested funds,
tax increment revenues and certain other income.
The Debt Service Fund is used primarily to account for repayment of principal and interest on
long-term indebtedness of the Agency.
(f) Investments
Investments are stated at fair value and generally consist of federal government-backed securities.
In order to maximize investment return, the Agency pools its available cash except for cash
required to be held by outside fiscal agents under the provisions of bond indentures. All
investment decisions are made by the City Treasurer based on the Agency's investment policy or
controlling bond indentures.
Interest income, realized gains and losses and changes in fair value of investments arising from
such pooled cash and investments are apportioned to each participating Agency fund based on the
relationship of such fund's respective cash balances to aggregate pooled cash and investments.
Interest income, realized gains and losses and changes in fair value of investments arising from
18
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
cash and investments held by outside fiscal agents under the provisions of bond indentures is
credited directly to the related fund.
The Agency's investments are stated at fair value. Fair value is determined based upon market
closing prices or bid/asked prices for regularly traded securities. The fair value of guaranteed
investment contracts and other investments with no regular market are estimated based on similar
traded investments. The fair value of mutual funds, government-sponsored investment pools and
other similar investments are stated at share value, or appropriate allocation of fair value of the
pool, if separately reported. Certain money market investments with initial maturities at the time
of purchase of less than one year are recorded at cost. The calculation of realized gains and
losses is independent of the calculation of the net increase in the fair value of investments.
Realized gains and losses on investments that had been held in more than one fiscal year and sold
in the current fiscal year may have been recognized as an increase or decrease in fair value of
investments reported in the prior year.
(g) Long-Term Liabilities
In the Agency-wide financial statements, long-term debt and other long-term liabilities are
reported' as liabilities in the statement of net assets.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amourlt of debt
issued is reported as other financing sources. Premiums received on debt issuance are reported as
other financing sources while discounts on debt issuance are reported as other financing uses.
Issuance costs, whether or not withheld from the actual debt proceeds receiyed, are reported as
debt service expenditures.
(h) Tax Increment Revenues
Incremental property taxes are considered as project revenues by the Agency when they become
both measurable and available for financing the Agency's redevelopment activities during the
year. Property taxes are considered available if received within 60 days following year-end in
accordance with generally accepted accounting principles.
Incremental property tax revenues represent property taxes collected from the excess of taxes
levied and collected each year on any redevelopment project over that amount which would have
been levied and collected on the base year property tax assessment. A property tax base year is
determined to be the year prior to the establishment of a redevelopment project area.
19
THE REDEVELOPMENT AGENCY OF THE
CI'fY OF SANTA MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
(i) Deferred Revenue
Funds received and not used in the current fiscal year are carried over to the next fiscal year and
are included in deferred revenue as depicted in the accompanying fund financic:o.l statements.
OJ Low- and Moderate-"lncome Housing
Under requirements of the State of California :Health and Safety Code, the Agency is required to
set aside 20% of tax increment revenues for use in housing projects benefiting low- and
moderate-income households. At June 30, 2003, the net cumulative unspent low- and
moderate-income housing set aside funds have been obligated by the Agency and are included in
the respective project area Low and Moderate Income Capital Projects Fund for 20% set aside.
(k) Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of changes in net assets during the reporting
period. Actual results could differ from those estimates.
(2) Cash and Investments
Cash and investments of the Redevelopment Agency are pooled and invested with all other idle funds
of the City.
Equity in the City of Santa Monica investment portfolio
$37.953.004
Cash and investments with fiscal agent (note 4):
Money market mutual fund
Federal agencies
$13,162,375
6,924,882
Total cash and investments with fiscal agent
$20.087.257
Detailed information concerning the City's pooled cash and investments can be found in the City's
Comprehensive Annual Financial Report for the year ended June 30,2003.
Interest income earned on pooled cash and investments is allocated monthly by the City of Santa
Monica to the various funds based on the month-end cash balances. Interest income from cash and
investments with fiscal agents is credited directly to the related fund.
20
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
Included in the Agency's pooled cash and investments is $4,030,874 in cash and investments restricted
for continuing capital projects in low- and moderate-income housing funds at June 30, 2003.
The Agency's investments are categorized in the following table:
. Category I - Includes investments that are insured or registered or for which the securities are held
by the Agency or its agent (other than the counterparty) in the Agency's name.
. Category 2 ~ Includes uninsured and unregistered investments for which the securities are held by
the counterParty's trust department or agent in the Agency's name.
Trustee-held securities:
Federal agencies
Money market
Not Required
To Be Fair value,
Category 1 Category 2 Categorized June 30, 2003
$ 6,924,882 6,924,882
13,162,375 13,162,375
$ 6,924,882 13,162,375 20,087,257
Total
(3) Long-term Liabilities
On May 2,2002, the Redevelopment Agency issued $5,640,000 of Downtown Project refunding bonds
bearing interest at 4.6% to defease the outstanding 1992 Downtown Project Bonds.
On May 2, 2002, the Redevelopment Agency issued $19,315,000 of Ocean Park refunding and new
money bonds bearing interest at 5.03% to defease the outstanding 1992 Ocean Park Project Bonds and
to provide funds for new low/moderate income projects.
On December 1, 1999, the Redevelopment Agency issued Earthquake Recovery Redevelopment Project
Area Tax Allocation Bonds for $65,285,000 at various interest rates of 4.45% to 7.50% which were
initially given underlying ratings of A by Fitch, Baal by Moody's, and A- by Standard and Poor's, but
all rated the issue AAA with insurance. The bonds were issued to purchase approximately 11.3 acres in
the Civic Area of the City and to finance other redevelopment activities of benefit to the Project Area.
21
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
A summary of the changes in the long-term liabilities of the Agency for the year ended June 30, 2003 is
as follows:
Downtown Earthquake Ocean Park
Redevelopment Recovery Redevelopment
Bo~ds payable Project Bonds Project Bonds Project Bonds Total
Beginning balance $ 5,640,000 63,485,000 19,315,000 88,440,000
Debt retired (960,000) (960,000)
Total bonds payable 5,640,000 62,525,000 19,315,000 87,480,000
Premium on bond issue,
Net 42,465 42,465
Deferred loss on
Refunding, net (125,898) (237,777) . (363,675)
Ending balance $ 5,514,102 62,525,000 19,119,688 87,158,790
Due within one year $ 390,000 1,000,000 865,000 2,255,000
Debt service requirements for the Agency's bonds at June 30, 2003 are as follows:
Downtown Redevelopment Project Bonds
Principal Interest Total
Fiscal year ending June 30:
2004 $ 390,000 168,600 558,600
2005 985,000 152,388 1,137,388
2006 1,015,000 125,357 1,140,357
2007 1,050,000 93,840 1,143,840
2008 1,080,000 58,680 1,138,680
2009 1,120,000 20,160 1 , 140, 160
Total $ 5,640,000 619,025 6,259,025
22
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
. Year Ended June 30, 2003
Earthquake Recovery Pro,ject Bonds
Principal Interest
Ocean Park Project Bonds
Principal Interest Total
Fiscal year ending June 30:
2004 $ 865,000 859,091 1,724,091
2005 905,000 820,448 i 1,725,448
2006 945,000 784,629 1,729,629
. 2007 980,000 748,535 1,728,535
.2008 1,015,000 711,129 1,726,129
2009 - 2013 5,740,000 2,869,926 8,609,926
2014 - 2018 7,205,000 1,346,510 8,551,510
2019 1,660,000 41,500 1,701,500
Total $ 19,315,000 8,181,768 27,496,768
Fiscal year ending June 30:
2004
2005
2006
2007
2008
2009 - 2013
2014 - 2018
2019 - 2023
2024 - 2028
2029 - 2030
$
1,000,000
1,045,000
1,095,000
1,145,000
1,195,000
7,450,000
10,110,000
13,265,000
17,610,000
8,610,000
62,525,000
Total
$
3,673,210
3,627,198
3,579,047
3,528,075
3,456,927
15,783,075
13,099,314
9,849,679
5,347,500
524,100
62,468,125
Total
4,673,210
4,672,198
4,674,047
4,673,075
4,651,927
23,233,075
23,209,314
23,114,679
22,957,500
9,134,100
124,993,125
In addition, the Agency is indebted to the City of Santa Monica for the following loans, with interest at
varying rates per annum accruing on principal only. These notes are for a period of one year. At the
end of that period, the notes are reissued, with accrued interest, for a one-year period. Both the Agency
and the City expect to renew these notes until such time as sufficient future unpledged tax increment is
available to redeem them.
23
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
The notes consist of the foIlowingat June 30, 2003:
Balance at Principal Principal Balance at Due within
Advance payable to June 30,2002 addition reduction June 30,2003 one year
Downtown Redevelopment Project Capital
Projects Fund:
City of Santa Monica General Fund $ 1,292,291 40,893 (36,700) 1,296,484 45,800
City of Santa Monica General Fund 14,481,490 661,482 (210,910) 14,932,062 230,000
15,773,781 702,375 (247,610) 16,228,546 275,800
Earthquake Recovery Redevelopment
Project Capital Projects Fund:
City of Santa Monica General Fund
loan to LowlMod Housing fund 8,742,188 (3,500,000) 5,242,188 3,742,000
City of Santa Monica Miscellaneous
Grants Special Revenue Fund 3,118,900 3,118,900
City of Santa Monica CDBG Special
Revenue Fund 346,552 346,552
12,207,640 (3,500,000) 8,707,640 3,742,000
Ocean Park Redevelopment Project Capital
Projects Rund:
City of Santa Monica CDBG Special
Revenue Fund 5,006,493 160,709 5,167,202
City of Santa Monica CDBG Special
Revenue Fund 571,859 18,357 590,216
5,578,352 179,066 5,757,418
Total advances payable to the City
of Santa Monica $ 33,559,773 881,441 (3,747,610) 30,693,604 4,017,800
The notes payable in the Earthquake Recoyery Redevelopment Project Capital Projects Fund with
outstanding balances of $3,118,900 and $346,552, respectively, as of June 30, 2003 are non-interest
bearing.
The above bonds, notes and advances are payable when future tax increment revenues are received by
the projects. Management does not anticipate that the remaining balance of these notes and advances
will be repaid with currently available spendable resources.
Management believes that the Agency is in compliance with all significant financial restrictions and
requirements as set forth in its yarious bond covenants.
24
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA, CALIFORl~IA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
(4) Investments Maintained by Fiscal Agent
As part of the Agency's bonded debt covenants, an independent fiscal agent is required to maintain
various funds/accounts. Balances in these funds/accounts at June 30, 2003 total $20,087,257 and are
described as follows:
Earthquake
Downtown Recovery Ocean Park
Redevelopment Project Tax Redevelop-
Project Lease Allocation ment Project
Revenue Bonds Bonds Bonds Total
Debt Service Fund:
Interest and principal accounts $ 462,492 2,847,855 1,304,818 4,615,165
Reserve Fund 1,848,589 1,848,589
Agency Retention Deposit 5,267,838 5,267,838
Redevelopment Fund 484,739 1,926,734 2,411,473
Housing Account 5,835,857 5,835,857
Expense Fund 13,775 68,435 20,895 103,105
City Fund 2,862 2,368 5,230
Total $ 479,129 8,668,867 10,939,261 20,087,257
.
(5) Capitalized Lease
On May 1, 1978, the City of Santa Monica entered into a lease agreement with the Agency to provide
parking for the shopping center in the Do~town Project. The lease requires the City to pay the
Agency a base rental at an estimated rate of approximately $1,130,000 per year, and in addition, the
lease requires the City to make additional payments each year sufficient to operate and maintain the
Parking Facility. The lease extends for a period of 35 years or repayment of the bonds issued to finance
construction ofthe Parking Facility, whichever occurs earlier.
Upon termination of the lease, ownership of the Parking Facility will rest with the City. Such lease
meets the criteria of a capitalizable financing lease. At June 30, 2003, the present value of the lease
payments receivable from the City was $5,640,000.
25
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANl'A MONICA, CALIFORNIA
(A Component Unit .of the City of Santa Monica, California)
Notes tG Basic Financial Statements
Year Ended June 30, 2003
(6) Capital Assets
A summary of changes in the capital assets is as follows:
Beginning Ending
balance Additions Deletions balance
Nondepreciable:
Land $ 60,500,000 967,500 61,467,500
Construction in progress 2,353,640 5,859,170 (1,000,000) 7,212,810
Depreciable:
Buildings, parking structures,
and improvements 13,707,317 3,016,482 16,723,799
Machinery and equipment 6,303 6,303
Total at historical
cost 76,567,260 9,843,152 (1,000,000) 85,410,412
Accumulated depreciation:
Buildings, parking structures,
and improvements (6,208,472) (691,129) (6,899,601)
Machinery and equipment (1,261) (2,210) (3,471)
Total accumulated
depreciation (6,209,733) (693,339) (3,903,072)
Total $ 70,357,527 9,149,813 (1,000,000) 78,507,340
Depreciation expense in the amount of $693,339 was charged to the Housing and Community
Development function in the Statement of Activities.
(7) Fund Deficits
(a) A deficit fund balance in the amount of $13,687,097 exists in the Downtown Redevelopment
Project Fund, primarily due to the issuance oflong-term debt for redevelopment purposes.
(b) A deficit fund balance in the amount of $255,139 exists in the Ocean Park Redevelopment Project
Fund, primarily due to the issuance of long-term debt for redevelopment purposes.
Management plans to use future tax increment revenues to payoff the long-term debt and eliminate the
fund deficits.
26
THE REDEVELOPMENT AGENCY OF THE
CITY OFSANT A MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
(8) Contracts Retainage Payable and Other Liabilities
By far the largest portion of the Agency's contracts retainage payable and other liabilities is the
retention deposit. This represents funds deposited by the Rand Corporation per an OVimer participation
agreement that provides for timely satisfaction of obligations and payment of all costs and expenses per
the participation agreement. As of June 30, 2003, the outstanding balance totals $5,267,838 of the total
$5,657,991 contracts retainage payable balance.
During the year, the Redevelopment Agency and the Parking Authority entered into a purchase/sales
agreement for the purchase/sale of six downtown parking structures with related land for $60 million.
The related promissory note, secured by a deed of trust, calls for annual principal payments of $2
million for 30 years with interest.
These parking structures with related land, built generally in the late 60's, were carried on the books of
the Parking Authority at historical cost less related depreciation. At the time of sale, the book value of
the six structures and land was $2,958,016.
The sale/purchase transaction has been recorded as a transfer of the structures and land from the
Parking Authority to the Redevelopment Agency and a corresponding receivablelliability for the book
value of the assets transferred. The excess of the purchase price over the book value is not recorded as
a gain on the transfer because the transaction is between two blended component uIlits of the City of
Santa Monica. As related parties, no gain on the sale is recorded. Once the Redevelopment Agency's
payments exceed the book value of the assets transferred, all future promissory note payments will be
considered recorded as inter fund transfers on the financial statements of the two component units.
27
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
(9) Interfund Transactions
Transfers (to) from other funds at June 30, 2003 are as follows:
Out In
Debt Service Fund:
Transfers in from the Downtown Redevelopment $ 7,015,304
Project, Earthquake Recovery Redevelopment
Project, and Ocean Park Redevelopment
Project funds for debt service payments
Earthquake Recovery Redevelopment Project
Low/Mod Housing Fund:
Transfers out to the Debt Service Fund for bond (938,633)
debt service payments
Ocean Park Redevelopment Project Low/Mod
Housing Fund:
Transfers out to the Debt Service Fund for bond (349,366)
debt service payments
Downtown Redevelopment Project:
Transfers out to the Debt Service Fund for bond (575,310)
debt service payments
Earthquake Recovery Redevelopment Project:
Transfers out to the Debt Service Fund for bond (3,754,529)
debt service payments
Ocean Park Redevelopment Project:
Transfers out to the Debt Service Fund for bond (1,397,466)
debt service payments
Total $ (7,015,304) 7,015,304
(10) Advances to the City
On February 27,2001, the Agency advanced $10,242,188 to the City to finance housing improvement
projects. The note bears interest equal to the interest rate earned on the City's investment pool plus
0.5% per annum. The advance was originally issued for a one-year period. At the end of the one-year
period, the note is annually reissued, with accrued interest, if any, for a one-year period. During the
fiscal year 2002-03, the City made principal payments of $3,500,000. At June 30, 2003, the
outstanding principal balance was $5,242,188.
28
THE REDEVELOPMENT AGENCY OF THE
CITY OF SANTA :MONICA, CALIFORNIA
(A Component Unit of the City of Santa Monica, California)
Notes to Basic Financial Statements
Year Ended June 30, 2003
(11) Notes Receivable
Balance at
July 1,2002
Additions
Deletions
Balance at
June 30, 2003
Community Corporation of Santa
Monica (a) $
Habitat for Humanity -
Los Angeles (b)
Community Corporation of Santa
Monica (c)
1,069,260
1,069,260
470,432
470,432
1,571,033
1,571,033
Low income senior housing (d)
46,250
46,250
46,250
3,110,725
3,156,975
Total Notes Receivable
$
a. A promissory note in the amount of $1,382,619 was executed with Community Corporation of
Santa Monica for an Affordable Housing Project located at 1512 Fifteenth Street. This loan is for
the acquisition of land and pre development expenses for future low/moderate income housing.
This is a 0% loan with the principal amount due and payable after a two-year deferral period. At
June 30, 2003, $1,069,260 had been disbursed to the borrower.
b. A promissory note in the amount of $575,000 was executed with Habitat for Humanity - Los
Angeles for an Affordable Housing Project located at 2018 Nineteenth Street. This loan is for the
acquisition of a vacant parcel of land where Habitat will build up to six new ownership units that
will be sold to very low income buyers. This is a 0% loan with the principal amount due and
payable after a two-year deferral period. At June 30, 2003, $470,432 had been disbursed to the
borrower. .
c. A promissory note in the amount of $2,714,033 was executed with Community Corporation of
Santa Monica for an Affordable Housing ~roject located at 2601 - 2615 Santa Monica Blvd. This
loan is for the acquisition of land and predevelopment expenses for a 40-unit income housing
development. This is a 0% loans with the principal amount due and payable after a two-year
deferral period. At June 30, 2003, $1,571,033 had been disbursed to the borrower. The
Earthquake Recovery Redevelopment Project and the Ocean Park Redevelopment Project
provided $318,307 and $1,252,726 respectively.
d. The Redevelopment Housing Trust Fund, formerly known as "CHARP" provides funds to eligible
borrowers in the form of deferred payment loans to make up the financial gap between available
non-program resources, including the borrower's equity and private financing, and the limited
equity cooperatives. At June 30, 2003, loans totaling $46,250 are outstanding.
29
The Redevelopment Agency of the City of Santa Monica
(A Component Unit of the City of Santa Monica, California)
Downtown Redevelopment Low/Mod Housing Capital Projects Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
Year Ended June 30, 2003
Variance
with final
b:.Idget -
Actual Positive
Final budget amounts (Negative)
Revenues:
. Property tax increment $ 358,080 566,843 208,763
Investment income 11,024 1,226 (9,798)
Total revenues 369,104 568,069 198,965
Expendi ttlres:
Current:
Project improvements 860,997 860,997
Total expenditures 860,997 860,997
Net change in fund balances (491,893) 568,069 1,059,962
Fund balances:
Beginning of year 557,692 557,692
End of year $ 65,799 1,125,761 1,059,962
I
30
The Redevelopment Agency of the City of Santa Monica
(A Component Unit of the City of Santa Monica, California)
Earthquake Recovery Redevelopment Low/Mod Housing Capital Projects Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances (Deficits) - Budget and Actual
Year Ended June 30,2003
Variance
with final
budget -
Actual Positive
Final budget amounts (Negative)
Revenues:
Property tax increment $ 5,341,845 6,577,635 1,235,790
Investment income 100,987 23,871 (77,116)
Other income 168,926 168,926
Total revenues 5,442,832 6,770,432 1,327,600
Expenditures:
Current:
Project improvements 5,768,350 2,034,475 3,733,875
Debt service:
Interest and others 224,321 224,449 ( 128)
Total expenditures 5,992,671 2,258,924 3,733,747
Excess (deficiency) of revenues
over (under) expenditures (549,839) 4,511,508 5,061,347
Other financing uses - transfers out (938,733) (938,633) ! 100
Net change in fund balances (1,488,572) 3,572,875 5,061,447
Fund balances (deficits):
Beginning of year (2,700,527) (2,700,527)
End of year $ (4,189,099) 872,348 5,061,447
31
The RedevelopmentAgency of the City of Santa Monica
(A Component Unit of the City of Santa Monica, California)
Ocean Park Redevelopment Low/Mod Housing Capital Projects Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances - Budget and Actual
Year Ended June 30,2003
Variance
with final
budget -
Actual Positive
Final budget amounts (Negative)
Revenues:
Property tax increment $ 548,216 548,539 323
Investment income 87,989 69,645 (18,344)
Other income 11,068 11,068
Total revenues 636,205 629,252 (6,953)
Expenditures:
Current:
Project improvements 6,860,812 1,152,730 5,708,082
Total expenditures 6,860,812 1,152,730 5,708,082
Excess (deficiency) of revenues
over (under) expenditures (6,224,607) (523,478) 5,701,129
Other financing uses - transfers out (349,394) (349,366) 28
Net change in fund balances (6,574,001) (872,844) 5,701,157
Fund balances:
Beginning of year 6,804,653 6,804,653
End of year $ 230,652 5,931,809 5,701,157
32
The Redevelopment Agency of the City of Santa Monica
(A Component Unit of the City of Santa Monica, California)
DowntowitRedevelopment Capital Projects Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances (Deficits) - Budget and Actual
Year Ended June 30, 2003
Variance
with final
budget -
Actual Positive
Final budget amounts (Negative)
Revenues:
Property tax increment $ 1,431,322 2,217,771 786,449
Investment income 259,400 233,250 (26,150)
Property rental 591,250 591,250
Other income 89,475 89,475
Total revenues 2,281,972 3,131,746 849,774
Expenditures:
Current:
Project improvements 2,233,034 820,909 1,412,125
Debt service:
Interest and others 274,100 702,375 (428,275)
Total expenditures 2,507,134 1,523,284 983,850
Excess (deficiency) of revenues
over (under) expenditures (225,162) 1,608,462 1,833,624
Other financing uses - transfers out (591,300) (575,310) 15,990
Net change in fund balances (816,462) 1,033,152 1,849,614
Fund balances (deficits):
Beginning of year (14,720,249) (14,720,249)
End of year $ (15,536,711) (13,687,097) 1,849,614
33
The Redevelopment Agency of the City of Santa Monica
(A Component Unit of the City of Santa Monica, California)
Earthquake Recovery Redevelopment Capital Projects Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances (Deficits) - Budget and Actual
Year Ended June 30, 2003
Variance
with final
budget -
Actual Positive
Final budget amounts (Negative)
Revenues:
Property tax increment $ 21,369,380 25,665,755 4,296,375
Investment income 539,700 927 ,654 387,954
Other income 75,000 158,475 83,475
Total revenues 21,984,080 26,751,884 4,767,804
Expenditures:
Current:
Project improvements 32,819,028 9,968,328 22,850,700
Pass through agreements 6,587,739 6,577,635 10,104
Total expenditures 39,406,767 16,545,963 22,860,804
Excess (deficiency) of revenues
over (under) expenditures (17,422,687) 10,205,921 27,628,608
Other financing uses - transfers out (3,756,600) (3,754,529) 2,071
Net change in fund balances (21,179,287) 6,451,392 27,630,679
Fund balances (deficits):
Beginning of year 17,217,663 17,217,663
End of year .$ (3,961,624) 23,669,055 27,630,679
34
The Redevelopment Agency of the City of Santa Monica
(A Component Unit of the City of Santa Monica, California)
Ocean Park Redevelopment Capital Projects Fund
Schedule of Revenues, Expenditures, and
Changes in Fund Balances (Deficits) - Budget and Actual
Year Ended June 30, 2003
Variance
with final
budget -
Actual Positive
Final budget amounts (Negative)
Revenues:
Property tax increment $ 2,192,866 2,074,235 (118,631)
Investrnentincome 95,000 102,711 7,711
Other income 12,001 12,001
Total revenues 2,287,866 2,188,947 (98,919)
Expenditures:
Current:
Project improvements 3,608,570 214,153 3,394,417
Debt service:
Interest and others 179,065 (179,065)
Total expenditures 3,608,570 393,218 3,215,352
Excess (deficiency) of revenues over
expenditures and other uses (1,320,704) 1,795,729 3,116,433
Other fmancing uses - transfers out (1,379,623) (1,397,466) (17,843)
Net change in fund balances (2,700,327) 398,263 3,098,590
Fund balances (deficits):
Beginning of year (653,402) ( 653,402)
End of year '$ (3,353,729) (255,139) 3,098,590
35
CONRAD AND
ASSOCIATES, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS
2301 DUPONT DRIVE, SUITE 200
IRVINE, CALIFORNIA 92612
(949) 474-2020
Fax (949) 263-5520
The Board Members
Redevelopment Agency of the
City of Santa Monica, California
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS -
We have audited the basic financial statements of the Redevelopment Agency of the City of Santa
Monica, California (Agency), a component unit of the City of Santa Monica, California, as of and for the
year ended June 30, 2003, and have issued our report thereon dated October 16,2003. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the
. standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether the financial statements of the Redevelopment
Agency of the City of Santa Monica are free of material misstatements, we performed tests of its
compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which
could have a direct and material effect on the determination of financial statement amounts. Such
provisions included those provisions of laws and regulations identified in the Guidelines for Compliance
Audits of California Redevelopment Agencies, issued by the State Controller and as interpreted in the
Suggested Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment
Agencies, issued by the Governmental Accounting and Auditing Committee of the California Society of
Certified Public Accountants. However, providing an opinion on compliance with those provisions was
not an objective of our audit and, accordingly, we do not express such an opinion. The results of our
tests disclosed no instances of noncompliance that are required to be reported under Government
Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Agency's internal control over financial
reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the
financial statements and not to provide assurance on the internal control over financial reporting. Our
consideration of the internal control over financial reporting would not necessarily disclose all matters in
the internal controls that might be material weaknesses. A material weakness is a condition in which the
design or operation of one or more ofthe internal control components does not reduce to a relatively low
level the risk that misstatements in amounts that would be material in relation to the financial statements
being audited may occur and not be detected within a timely period by employees in the normal course
of performing their assigned functions. We noted no matters involving the internal control over financial
reporting and its operation that we consider to be material weaknesses.
This report is intended solely for the information of the management of the Agency and the State
Controller and is not intended to be and should not be used by anyone other than these specified parties.
trJ1 r' ~{d' 1't4-1 dO' A~ S,C -Ct' 4! ide /' L . L__ . r'
October 16, 2003
36
MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION