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FY 2007-2008 RDA Financial StatementsLA QUINTA REDEVELOPMENT AGENCY LA QUINTA, CALIFORNIA FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2008 LA QUINTA REDEVELOPMENT AGENCY JUNE 30, 2008 TABLE OF CONTENTS INDEPENDENT AUDITORS' REPORT Page Number FinancialAudit.......................................................................................................................... 1 ComplianceAudit ....................................... ....................... ............... _...... .......t................................... 3 BASIC FINANCIAL STATEMENTS Government -Wide Financial Statements: Statementof Net Assets ............................ ......... ............ ................................ ........ ...................... 6 Statement of Activities..................................................................................................................7 Fund Financial Statements: Balance Sheet - Governmental Funds........................................................................................ 8 Reconciliation of the Balance Sheet of Government Funds to the Statement of Net Assets.................................................................................................. 10 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds............................................................................................... 11 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statementof Activities...............................................................................................................13 Budgetary Comparison Statement — Low/Moderate Income Housing Fund — PA No. 1.......... 14 Budgetary Comparison Statement— Low/Moderate Income Housing Fund — PA No. 2......... 15 Notes to Financial Statements...................................................................................................... 16 COMBINING AND INDIVIDUAL FUND SCHEDULES Combining Project Area Balance Sheet - AII Governmental Funds ............................... ..... ... 29 Combininn PrnjPr_t Area Statement of Revenues; Expenditures and Changes in Fund Balances - AIIGovernmental Funds............................................................................................................... 32 Computation of Low and Moderate Income Housing FundsExcess/Surplus..................................................................................................................35 Lance Soil & Lunghard LLP Certified Public Accountants INDEPENDENT AUDITORS' REPORT To the Honorable Chair and Members of the Governing Board La Quinta Redevelopment Agency, California Brandon W. Burrows Donald L. Parker Michael K. Chu David E. Hale A Professional Corporalion Donald G. Slater Richard K. Kikuchi Retired Robert C. Lance 1914.1994 Richard C. Soil Fred J. Lunghard, Jr. 1928.1999 We have audited the accompanying financial statements of the governmental activities and each major fund of the La Quinta Redevelopment Agency, a component unit of the City of La Quinta, California as of and for the year ended June 30, 2008, which collectively comprise the Agency's basic financial statements as listed in the table of contents. These basic financial statements are the responsibility of the La Quinta Redevelopment Agency's management. Our responsibility is to express an opinion 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 basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic 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 our audit provides a reasonable basis for our opinion. In our opinion, the 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 La Quinta Redevelopment Agency at June 30, 2008, and the respective changes in financial position thereof and the respective budgetary comparisons for the Low/Moderate Income Housing Fund — PA No. 1 and the Low/Moderate Income Housing Fund - PA No. 2 for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards issued by the Comptroller General of the United States, we have also issued our report dated November 7, 2008, on our consideration of the La Quinta Redevelopment Agency's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal controls over financial reporting and compliance and the results of that testing, and not to provide and opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results or our audit. The La Quinta Redevelopment Agency has not presented a Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not required to be part of, the basic financial statements. 75 YLAR 1 1929 2004 06 {e 203 N. Brea Blvd., Suite 203 • Brea, CA 92821-4056 • (714) 672-0022 • Fax (714) 672-0331 • www.lslcpas.com VSI=X�Id f:. RTMED PI OIA1 A]G(1l1Nt.{N/(. To the Honorable Chair and Members of the Governing Board Redevelopment Agency of the City of La Quinta, California Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency's basic financial statements. The combining project area statements and computation of low and moderate income housing funds excess/surplus 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, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. 04, 0�owl November 7, 2008 LSLLance il & nghard LLP Certified Public Accountants REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Mayor and Members of the City Council La Quinta Redevelopment Agency, California Brandon W. Burrows Donald L. Parker Michael K. Chu David E. Hale A Professional Corporation Donald G. Slater Richard K. Kikuchi Retired Robert C. Lance 1914.1994 Richard C. Soil Fred J. Lunghard, Jr. 1928-1999 We have audited the financial statements of the governmental activities and each major fund of the La Quinta Redevelopment Agency as of and for the year ended June 30, 2008, which collectively comprise the Agency's basic financial statements and have issued our report thereon dated November 7, 2008. 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the La Quinta Redevelopment Agency's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the La Quinta Redevelopment Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the La Quinta Redevelopment Agency's internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the La Quinta Redevelopment Agency's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the La Quinta Redevelopment Agency's financial statements that is more than inconsequential will not be prevented or detected by the La Quinta Redevelopment Agency's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the La Quinta Redevelopment Agency's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section andwvuiu ld not iii ' ecessarily identify all deficiencies in internal control uiat i might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 75 YEARS 1929 ' 2004 0i avice 203 N. Brea Blvd., Suite 203 • Brea, CA 92821-4056 • (714) 672-0022 • Fax (714) 672-0331 • www.lslcpas.com IsCLELP e herd CE::nFfEV PUWC ACCWN IAN TS To the Honorable Chair and Members of the Governing Board Redevelopment Agency of the City of La Quinta, California Compliance and Other Matters As part of obtaining reasonable assurance about whether the financial statements of the La Quinta Redevelopment Agency's financial statements are free of material misstatements, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements; 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. We noted no instances of other matters that are required to be reported under Government Auditing Standards issued by the Comptroller General of the United States. This report is intended solely for the information and use of management, governing board, State Controller, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. November 7, 2008 4 THIS PAGE INTENTIONALLY LEFT BLANK LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF NET ASSETS JUNE 30, 2008 Assets: Cash and investments Receivables: Accounts Interest receivable Loans Total Receivables Due from other governments Deferred charges Prepaid items Restricted assets: Cash and investments with trustees Capital assets (Net of Depreciation): Buildings, net Land Total Capital Assets Total Assets Liabilities: Accounts payable and accrued expenseE Due to other governments Deposits from others Long-term liabilities: Due within one year Due in more than one year Total Long -Term Liabilities Total Liabilities Net Assets: Invested in capital assets, net of related debt Restricted for: Community development Debt service Unrestricted Total Net Assets See Notes to Financial Statements 6 Governmental Activities $ 61,565 283,473 283,333 5,675,968 $ 69,691,905 13,471,498 7,036,210 4,567,730 4,698 40,831,407 74,552,293 210,155,741 4,135,983 1,323,168 42,567 264,238,499 269,740,217 27,383,962 22,300,535 32,008,215 (141,277,188) $ (59,584,476 LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Functions/Programs Governmental Activities: General government $ 3,722,604 $ $ $ $ (3,722,604) Community development 32,245,746 (32,245,746) Interest on long-term debt 14,720,956 - (14,720,956) Total Governmental Activities $ 50,689,306 $ - $ - $ (50,689,306) General Revenues: Taxes (net of pass-through payments) 40,216,054 Intergovernmental 492,355 Use of money and property 5,118,863 Other 866,668 Total General Revenues 46,693,940 Change in Net Assets (3,995,366) Net Assets at Beginning of Year (55,589,110) Net Assets at End of Year $ (59,584,476) See Notes to Financial Statements 7 Net (Expense) Revenues and Program Revenues Changesin Operating Capital Net Assets Charges for Contributions Contributions Governmental Expenses Services and Grants and Grants Activities Functions/Programs Governmental Activities: General government $ 3,722,604 $ $ $ $ (3,722,604) Community development 32,245,746 (32,245,746) Interest on long-term debt 14,720,956 - (14,720,956) Total Governmental Activities $ 50,689,306 $ - $ - $ (50,689,306) General Revenues: Taxes (net of pass-through payments) 40,216,054 Intergovernmental 492,355 Use of money and property 5,118,863 Other 866,668 Total General Revenues 46,693,940 Change in Net Assets (3,995,366) Net Assets at Beginning of Year (55,589,110) Net Assets at End of Year $ (59,584,476) See Notes to Financial Statements 7 LA QUINTA REDEVELOPMENT AGENCY BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2008 Assets: Cash and investments Cash and investments with trustee Receivables: Accounts Interest receivable Loans Due from Low and Moderate Housing Funds Due from other governments Advances to the City of La Quinta Prepaid items Total Assets Liabilities and Fund Balances: Liabilities: Accounts payable Deposits from others Due to Low and Moderate Housing Funds Due to other governments Deferred revenue Total Liabilities Fund Balances: Reserved: Advances to the City of La Quinta Prepaid items Notes receivable Bond projects Unreserved: Designated: Debt service Continuing projects Undesignated Total Fund Balances Total Liabilities and Fund Balances Special Special Capital Capital Revenue Revenue Projects Projects Combined Redevelopment Redevelopment Low and Moderate Redevelopment Agency - PA No. 1 Agency PA No. 2 Housing Agency - PA No. 1 Low and Low and 2004 Moderate Moderate Low/Mod Housing Housing Bond Project $ 3,411,134 $ 10,677,080 $ - $ 22,894,794 - - 24,128,318 16,703,089 11,165 - - - 7,724 57,177 97,051 3,682,658 9,443,802 - - - 5,684,047 - 341,447 122,953 - - - 3,462,579 1,949 971 1170 $ 7,456,077 $ 25,986,030 $ 24,128,318 $ 43,158,683 $ 45,055 $ 27,053 $ - $ 34,495 14,732 - - - - - 5,684,047 2,834 1,501 - 1,606,595 9,443,802 - 1,669,216 9,472,356 5,684,047 34,495 - - - 3,462,579 1,949 971 - 1,170 2,076,063 - - - - 24,128,318 16,703,089 3,708,849 5,786,861 16,512,703 - 22,957,350 - (5,684,047) - 16,513,674 18,444, 271 43,124,188 $ 7,456,077 $ 25,986,030 $ 24,128,318 $ 43,158,683 See Notes to Financial Statements 8 LA QUINTA REDEVELOPMENT AGENCY BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2008 Assets: Cash and investments Cash and investments with trustee Receivables: Accounts Interest receivable Loans Due from Low and Moderate Housing Funds Due from other governments Advances to the City of La Quinta Prepaid items Total Assets Liabilities and Fund Balances: Liabilities: Accounts payable Deposits from others Due to Low and Moderate Housing Funds Due to other governments Deferred revenue Total Liabilities Fund Balances: Reserved: Advances to the City of La Quinta Prepaid items Notes receivable Bond projects Unreserved: Designated: Debt service Continuing projects Undesignated Total Fund Balances Total Liabilities and Fund Balances Capital Debt Debt Projects Service Service Redevelopment Redevelopment Redevelopment Agency PA No. 2 Agency - PA No. 1 Agency PA No. 2 Tax Tax Project Increment Increment Total Governmental $ 1,355,599 $ 16,551,746 $ 14,801,552 $ 69,691,905 - - - 40,831,407 50,400 - - 61,565 5,368 51,531 64,622 283,473 - - 13,126,460 - - - 5,684,047 - 1,365,786 491,811 2,321,997 1,251,634 - - 4,714,213 608 - 4,698 $ 2,663,609 $ 17,969,063 $ 15,357,985 $ 136,719,765 $ 9,550 $ 27,835 $ $ 116,153 - 42,567 - 5,684,047 884,567 434,266 1,323,168 - 11,050,397 884,567 434,266 18,216,332 1,251,634 - 4,714,213 608 - 4,698 2,076,063 40,831,407 - 17,084,496 14,923,719 32,008,215 1,373,982 - 44,552,884 - - - (5,684,047) 2,626, 224 17,084,496 14,923,719 118,503,433 $ 2,663,609 $ 17,969,063 $ 15,357,985 $ 136,719,765 See Notes to Financial Statements 9 LA QUINTA REDEVELOPMENT AGENCY GOVERNMENTAL FUNDS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2008 Fund balances of governmental funds $ 118,503,433 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 74,552,293 Deferred revenue is present in governmental fund financial statements to indicate that receivables are not available currently; however, in the Statement of Net Assets these deferrals are eliminated. 11,050,397 Bond issuance costs is an expenditure in the governmental funds, but it is deferred charges in the statement of net assets: Unamortized debt issuance costs - amortized over life of new bonds 4,567,730 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds Bonds payable (228,440,000) Loans from City (31,378,966) Other debt (5,260,620) Unamortized net original issue discounts and (premiums) 841,087 Accrued interest payable for the current portion of interest due on Tax Allocation Bonds has not been reported in the governmental funds. (4,019,830) Net assets of governmental activities $ (59,584,476) See Notes to Financial Statements 10 LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Fund Balances: Beginning of Year 5,681,326 10,076,956 38,283,337 20,940,367 End of Year $ 5,786,861 $ 16,513,674 $ 18,444,271 $ 43,124,188 See Notes to Financial Statements 11 Special Special Capital Capital Revenue Revenue Projects Projects Combined Redevelopment Redevelopment Low and Moderate Redevelopment Agency - PA No. 1 Agency PA No. 2 Housing Agency - PA No. 1 Low and Low and 2004 Moderate Moderate Low/Mod Housing Housing Bond Project Revenues: Taxes and assessments $ 10,869,078 $ 5,771,938 $ - $ Use of money and property 414,485 853,823 1,602,168 1,411,699 Intergovernmental - - - 180,355 Other revenue 471,811 115,417 201,379 Total Revenues 11,755,374 6,741,178 1,602,168 1,793,433 Expenditures: Current: General government 1,222,329 751,788 - 986,428 Planning and development 6,182,677 4,550,810 147,200 - Capital outlay - 2,111,825 21,294,034 3,623,184 Debt service - - Total Expenditures 7,405,006 7,414,423 21,441,234 4,609,612 Excess (Deficiency) of Revenues Over (Under) Expenditures 4,350,368 (673,245) (19,839,066) (2,816,179) Other Financing Sources (Uses): Transfers in 313,157 9,378,966 25,000,000 Transfers out (4,557,990) (2,269,003) - Long-term debt issued - - - Pass-through agreement payments - - _ - Total Other Financing Sources (Uses): (4,244,833) 7,109,963 - 25,000,000 Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other Uses 105,535 6,436,718 (19,839,066) 22,183,821 Fund Balances: Beginning of Year 5,681,326 10,076,956 38,283,337 20,940,367 End of Year $ 5,786,861 $ 16,513,674 $ 18,444,271 $ 43,124,188 See Notes to Financial Statements 11 LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Revenues: Taxes and assessments Use of money and property Intergovernmental Other revenue Total Revenues Expenditures: Current: General government Planning and development Capital outlay Debt service Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers in Transfers out Long-term debt issued Pass-through agreement payments Total Other Financing Sources (Uses): Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances: Beginning of Year End of Year Capital Debt Debt Projects Service Service Redevelopment Redevelopment Redevelopment Agency PA No. 2 Agency - PA No. 1 Agency PA No. 2 - 9,378,966 Tax Tax Project Increment Increment $ - $ 43,476,312 105,906 698,249 312,000 Total Governmental Funds $ 23,087,750 $ 83,205,078 477,356 5,563,686 - 492,355 788,607 417,906 44,174,561 23,565,106 90,049,726 157,238 386,073 202,081 3,705,937 - - - 10,880,687 324,792 - - 27,353,835 - 16,164,800 3,901,896 20,066,696 482,030 16,550,873 4,103,977 62,007,155 (64,124) 27,623,688 19,461,129 28,042,571 - 4,557,990 1,955,846 41,205,959 (25,000,000) (9,378,966) (41,205,959) - 9,378,966 9,378,966 (23,585,426) (19,403,598) (42,989,024) (44,027,436) (17,447,752) (33,610,058) (64,124) (16,403,748) 2,013,377 (5,567,487) 2,690,348 33,488,244 12,910,342 124,070,920 $ 2,626,224 $ 17,084,496 $ 14,923,719 $ 118,503,433 See Notes to Financial Statements 12 LA QUINTA REDEVELOPMENT AGENCY GOVERNMENTAL FUNDS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Net change in fund balances - total governmental funds $ (5,567,487) Amounts reported for governmental activities in the statement of activities differ Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. 5,495,558 Bond issuance costs is an expenditure in the governmental funds, but it is deferred charges in the statement of net assets: Amortization for current fiscal year (185,679) Unamortized premium or discounts on bonds issued are revenue or expenditures in the governmental funds, but these are spread to future periods over the life of the new bonds: Amortization for current fiscal year (36,143) Governmental funds report capital outlay as expenditures. However., in the statement of activities the cost of those assets in capitalized and allocated over their estimated useful lives through depreciation expense: Capital outlay expenditures removed 5,988,776 Disposal of capital asset (432,687) Depreciation (16,667) Proceeds of debt is revenue in the governmental funds, but these are additions to the statement of net assets. (9,378,966) Revenues reported in the governmental funds which were previously deferred and meet the revenue recognition criteria currently and, therefore, are not reported as revenues in the Statement of Activity. 65,925 Expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: Current accrual of interest due on bonds (4,019,830) Prior year accrual of interest due on bonds 4,091,834 Change in net assets of governmental activities $ (3,995,366) See Notes to Financial Statements 13 CITY OF LA QUINTA BUDGETARY COMPARISON STATEMENT LOWIMODERATE INCOME HOUSING PA NO. 1 YEAR ENDED JUNE 30, 2008 Budgetary Fund Balance, July 1 Resources (Inflows): Taxes and Assessments: Tax increment Use of Money and Property: Interest income Rental income Other revenue: Miscellaneous revenues Loan repayments Transfers from other funds Proceeds from sale of capital asset Amounts Available for Appropriation Charges to Appropriation (Outflow): Current: General Government: Administrative costs Professional services Planning and development: Real estate acquisitions Acquisition cost Subsidy to low and moderate housing Transfer to other funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Original Final $ 5,681,326 $ 5,681,326 10,600,600 11,166,237 404,800 404,800 252,000 252,000 Variance with Final Budget Actual Positive Amounts (Negative) $ 5,681,326 $ 10,869,078 (297,159) (19,241) (424,041) 275,665 23,665 129,000 131,581 2,581 350,000 340,230 (9,770) - 313,157 313,157 - 150,000 150,000 158,061 8,061 $ 17,088,726 $18,446,520 $ 17,749,857 $ (696,663) 761,421 761,421 754,215 7,206 454,914 615,499 468,114 147,385 - 10,276,127 5,904,674 4,371,453 150,000 425,000 86,953 338,047 250,000 225,000 191,050 33,950 4,450,261 4,557,990 4,557,990 6,066,596 16,861,037 11,962,996 4,898,041 $ 11,022,130 $ 1,585,483 $ 5,786,861 $ 4,201,378 14 CITY OF LA QUINTA BUDGETARY COMPARISON STATEMENT LOW/MODERATE INCOME HOUSING PA NO. 2 YEAR ENDED JUNE 30. 2008 Budgetary Fund Balance, July 1 Resources (Inflows): Taxes and Assessments: Tax increment Use of Money and Property: Interest income Other revenue: Loan repayments Transfers from other funds Proceeds from sale of capital asset Amounts Available for Appropriation Charges to Appropriation (Outflow): Current: General Government: Administrative costs Professional services Planning and development: Real estate acquisitions Acquisition cost Subsidy to low and moderate housing Capital Outlay: Project improvement costs Transfer to other funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Budaet Amounts Original Final _ $ 10,076,956 $10,076,956 $ 5,563,900 5,701,660 742,100 400,000 127,200 115,417 (11,783) - 9,378,966 9,378,966 12,694,301 352,687 352,687 - $ 29,077,257 $26,037,469 $ 26,197,100 $ 159,631 413,685 413,685 Variance with 3,292 Final Budget Actual Positive Amounts (Negative) 10,076,956 $ - 5,771,938 70,278 501,136 101,136 127,200 115,417 (11,783) - 9,378,966 9,378,966 12,694,301 352,687 352,687 - $ 29,077,257 $26,037,469 $ 26,197,100 $ 159,631 413,685 413,685 410,393 3,292 483,984 729,102 341,395 387,707 - 333,555 38,798 294,757 100,000 100,000 - 100,000 - 4,512,012 4,512,012 - 2,111,825 2,111,825 - 1,955,846 4,754,119 2,269,003 2,485,116 2,953,515 12,954,298 9,683,426 3,270,872 $ 26,123,742 $13,083,171 $ 16,513,674 $ 3,430,503 See Notes to Financial Statements 15 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 Note 1: Organization and Summary of Significant Accounting Policies a. Organization and Tax Increment Financing The La Quinta Redevelopment Agency is a component unit of a reporting entity that consists of the following primary and component units: Reporting Entity: Primary Government: City of La Quinta Component Units: La Quinta Redevelopment Agency City of La Quinta Public Financing Authority Redevelopment Goals and Objectives The general objective of the Redevelopment Plan adopted by the Agency is to encourage investment in the Redevelopment Project Areas by the private sector. The Redevelopment Plan provides for the demolition of buildings and improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improvements. The Redevelopment Plan also includes the ability to redevelop land by private enterprise or public agencies, the rehabilitation of structures, the rehabilitation or construction of single family and low and moderate income housing, and participation by owners and tenants of properties in the Redevelopment Project. Redevelopment Project Areas The Agency has established two redevelopment project areas. On November 29, 1983, the City Council approved and adopted the Redevelopment Plan for the La Quinta Redevelopment Project Area No. 1. On May 16, 1989, the City Council approved and adopted the Redevelopment Plan for the La Quinta Redevelopment Project Area No. 2. These plans provide for the elimination of blight and deterioration that was found to exist in the project areas. Tax Increment Financing The Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a redevelopment project. The assessed valuation of a redevelopment project last equalized prior to adoption of a redevelopment plan or amendment to such redevelopment plan, or "base roll', is established and, except for any period during which the assessed valuation drops below the base year level, the taxing bodies, thereafter, receive the taxes produced by the levy of the current tax rate upon the base roll. Taxes collected upon any increase in assessed valuation over the base roll ("tax increment") are paid and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment agencies themselves have no authority to levy property taxes. 16 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 1: Organization and Summary of Significant Accounting Policies (Continued) b. Basis of Accounting and Measurement Focus The basic financial statements of the Agency are composed of the following: • Government -wide financial statements • Fund financial statements • Notes to the basic financial statements Government -wide Financial Statements Government -wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business -type activities of the primary government (including its blended component units), as well as its discreetly presented component units. The La Quinta Redevelopment Agency has no business -type activities or discretely presented component units. For the most part, effect of interfund activity has been removed from these statements. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated). However, general government expenses have not been allocated as indirect expenses to the various functions of the Agency. The accompanying government -wide financial statements for the Agency present negative net assets because the primary activity of the Agency is to issue debt to construct infrastructure that will be owned and maintained by the City. Government -wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government -wide financial statements. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from non- exchange transaction are recognized in accordance with the requirements of GASB Statement No. 33. Program revenues include charges for services and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Amounts paid to acquire capital assets are capitalized as assets in the government -wide financial statements, rather than reported as expenditure. Proceeds of long-term debt are recorded as a liability in the government -wide financial statements, rather than as other 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. 17 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 1: Organization and Summary of Significant Accounting Policies (Continued) Fund Financial Statements The underlying accounting system of the Agency is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. 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 or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Fund financial statements for the primary government's governmental, proprietary, and fiduciary funds are presented after the government -wide financial statements. These statements display information about major funds individually and non -major funds in the aggregate for governmental and enterprise funds. Fiduciary statements include financial information for fiduciary funds and similar component units. Fiduciary funds primarily represent assets held by the Agency in a custodial capacity for other individuals or organizations. The Agency has no non -major funds, enterprise funds, or fiduciary funds. Governmental Funds In the fund financial statements,. governmental funds and agency funds are presented using the modified -accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The Agency uses a sixty day availability period. Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government -mandated and voluntary non-exchange transactions are recognized as revenues when all applicable eligibility requirements have been met. In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. 18 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 1: Organization and Summary of Significant Accounting Policies (Continued) Non-current portions of long-term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered "available spendable resources," since they do not represent net current assets. Recognition of governmental fund type revenues represented by noncurrent receivables are deferred until they become current receivables. Noncurrent portions of other long-term receivables are offset by fund balance reserve accounts. Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other financing source rather than as a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures. When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources, and then from unrestricted resources. c. Major Funds The following funds are presented as major funds in the accompanying basic financial statements: Special Revenue Low and Moderate Income Housing P.A, No. 1 and No. 2 Funds — To account for the required 20% set aside of property tax increments that is legally restricted for increasing or improving housing for low and moderate income households. Debt Service Funds, P.A. No. 1 and No. 2 — To account for the accumulation of resources for the payment of debt service for bond principal, interest and trustee fees. Capital Pro'ects Funds P.A. No. 1 and No. 2 — To account for the bond proceeds, interest and other funding that will be used for development, planning, construction and land acquisition. 2004 Low and Moderate Income Housing Fund — To account for the bond proceeds, interest and other funding that will be used for development, planning, construction, and land acquisition for low and moderate income housing projects. d. Cash and Investments For financial reporting purposes, investments are reported at their fair market value. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments. 19 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 4: Notes Receivable e. Capital Assets Capital assets (including infrastructure) are recorded at cost where historical records are available and at an estimated historical cost where no historical records exist. Contributed fixed assets are valued at their estimated fair market value at the date of the contribution. Generally, fixed asset purchases in excess of $5,000 are capitalized if they have an expected useful life of three years or more. Buildings are depreciated over a useful life of thirty years. Capital assets include public domain (infrastructure) general fixed assets consisting of certain improvements including roads, streets, sidewalks, medians, and storm drains. Note 2: Stewardship, Compliance and Accountability a. Budgetary Data Budgets and Budgetary Accounting The Governing Board adopts an annual budget prepared on the modified accrual basis of accounting for its governmental funds. The City Manager or his designee is authorized to transfer budgeted amounts between the accounts of any department. Revisions that alter the total appropriations of any department or fund are approved by the Governing Board. Prior year appropriations lapse unless they are approved for carryover into the following fiscal year. Expenditures may not legally exceed appropriations at the department level. b. Encumbrances Encumbrances are estimations of costs related to unperformed contracts for goods and services. These commitments are recorded for budgetary control purposes in the General, Special Revenue and similar governmental funds. Encumbrances outstanding at year-end are reported as a reservation of fund balance. They represent the estimated amount of the expenditure ultimately to result if unperformed contracts in -process at year-end is completed. They do not constitute expenditures or estimated liabilities. As of June 30, 2008, the Agency had no encumbrances. c. Budget Basis of Accounting Budgets for governmental funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). Note 3: Cash and Investments Cash and investments reported in the accompanying financial statements consisted of the following: Cash and investments pooled with the City $ 69,691,905 Cash and investments with trustees 40.831.407 $ 110,523,312 The Agency's funds are pooled with the City of La Quinta's cash and investments in order to generate optimum interest income. The information required by GASB Statement No. 40 related to investments, credit risk, etc., is available in the annual report of the City. 20 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 4: Notes Receivable Outstanding Balance at June 30, 2008 In September 1994, the Agency sold certain real property to LINC Housing for $2,112,847. The property was used to construct single-family homes , and rental units to increase the City's supply of low and moderate income housing. The note bears interest at 6% per annum and is due in full on June 15, 2029. $ 3,641,983 In December 2000, the Agency entered into an agreement with LINC Housing to receive $9,500,000 as a reimbursement for Agency costs incurred for the construction of infrastructure related to the development of senior apartments. Payments are due to the Agency in the amount of annual positive cash flow generated by the rental of the units. All unpaid principal and interest on the note are due fifty-five years after the completion of the project. Interest on the note accrues at 3% per annum. 9,443,802 Other notes receivable 40,675 Total notes receivable $ 13,126,460 Note 5: Due from Other Governments The Redevelopment Agency advanced funds to the City of La Quinta to help the City meet the cost of developing the public -owned improvements to the La Quinta Community Park and Civic Center Campus. There is no stipulated repayment date established for the Agency advances. Interest accrues at the earning rate of the City's Investment Pool funds, and shall be adjusted quarterly. At June 30, 2008, outstanding Project Area No. 1 advances were $3,462,579 and Project Area No. 2 advances were $939,634. In addition, Project Area No. 2 advanced $312,000 during the year to the City of La Quinta's RCTC fund. Note 6: Capital Assets Capital asset activity for the year ended June 30, 2008, was as follows. Buildings Total cost of depreciable assets Less accumulated depreciation: Buildings Net depreciable assets Capital assets not depreciated: Land Capital assets, net Balances at June 30, 2007 Balances at June 30, 2008 $ 520,000 - $(20,000) $ 500,000 (208,000) (16,667) 8.000 (216,667) 312,000 (16,667) (12,000) 283,333 68,700,871 5,988,776 (420,687) 74,268,960 $ 69,012,871 $ 5,972,109 432,687 $ 74,552,293 21 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 6: Capital Assets (Continued) Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General government - $16,667 Note 7: Property Taxes Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes are recorded initially in a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City of La Quinta accrues only those taxes that are received from the County within sixty days after year-end. Lien date January 1 Levy date July 1 Due dates November 1 and February 1 Collection dates December 10 and April 10 The La Quinta Redevelopment Agency's primary source of revenue comes from property taxes. Property taxes allocated to the Agency are computed in the following manner: a. The assessed valuation of all property within the project area is determined on the date of adoption of the Redevelopment Plan. b. Property taxes related to the incremental increase in assessed values after the adoption of the Redevelopment Plan are allocated to the Agency; all taxes on the "frozen" assessed valuation of the property are allocated to the City and other districts. The Agency has no power to levy and collect taxes and any legislative property tax shift might reduce the amount of tax revenues that would otherwise be available to pay the principal of, and interest on, debt. Broadened property tax exemptions could have a similar effect. Conversely, any increase in the tax rate or assessed valuation, or any reduction or elimination of present exemptions would increase the amount of tax revenues that would be available to pay principal and interest on debt. Note 8: Long -Term Liabilities Tax Allocation Refunding Bonds, Series 1994 Tax allocation refunding bonds, Series 1994, in the amount of $26,665,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1989 and 1990. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 1. Interest rates on the bonds range from 3.80% to 8% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable solely from pledged tax increment revenues. The bonds are not subject to redemption prior to maturity. There are certain limitations regarding the issuance of parity debt as further described in the official statement. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2008, is $10,785,000. 22 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 8: Long -Term Liabilities (Continued) Tax Allocation Refunding Bonds, Series 1998 - Project Area No. 1 Tax allocation refunding bonds, Series 1998, in the amount of $15,760,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1991. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 1. Interest rates on the bonds range from 5.20% to 5.25% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable from pledged tax increment revenues. There are certain limitations regarding the issuance of parity debt as further described in the official statement. Term Bonds maturing September 1, 2028, are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2013, and on each September 1 thereafter, through September 1, 2028, at a price equal to the principal amount thereof plus accrued interest. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2008, is $15,760,000. Tax Allocation Refunding Bonds, Series 1998 - Project Area No. 2 Tax allocation refunding bonds, Series 1998, in the amount of $6,750,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1992. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 2. Interest rates on the bonds range from 3.75% to 5.25% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable solely from pledged tax increment revenues of Project Area No. 2. Term Bonds maturing September 1, 2028 and September 1, 2033, are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2009 and September 1, 2019, respectively, and on each September 1, thereafter at a price equal to the principal amount thereof plus accrued interest. There are certain limitations regarding the issuance of parity debt as further described in the official statement. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2008, is $5,915,000. Tax Allocation Bonds, Series 2001 — Project Area No. 1 On August 15, 2001, the Agency issued tax allocation bonds in the amount of $48,000,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 1. The 2001 tax allocation bonds were issued at a discount of $422,400 and issuance costs of $1,517,325. The bonds consist of $17,280,000 of term bonds that accrue interest at 5.00% and mature on September 1, 2021, and $30,720,000 of term bonds that accrue interest at 5.18% and mature on September 1, 2031. The interest and principal on the bonds are payable from pledged tax increment revenues. A portion of the proceeds were used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2008, is $48,000,000. 23 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 8: Long -Term Liabilities (Continued) Tax Allocation Bonds, Series 2002 — Project Area No. 1 On June 12, 2002, the Agency issued tax allocation bonds in the amount of $40,000,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 1. The 2002 tax allocation bonds were issued at a discount of $360,000 and issuance costs of $1,250,096. The bonds consist of $6,355,000 of serial bonds and $33,645,000 of term bonds. Interest rates on serial bonds range from 1.75% and 4.00% and are payable semi-annually on March 1 and September 1 of each year until maturity. Term bonds accrue interest at 5.00% and 5.125% and mature on September 1, 2022 and September 1, 2023. The interest and principal on the bonds are payable from pledged tax increment revenues. A portion of the proceeds were used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2008, is $37,060,000. Tax Allocation Bonds, Series 2003 — Project Area No. 1 On September 1, 2003, the Agency issued tax allocation bonds in the amount of $26,400,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 1. The 2003 tax allocation bonds were issued at a discount of $277,200 issuance costs of $629,191. Interest is payable semi-annually on March 1 and September 1 of each year, commencing March 1, 2004. Interest payments range from 4.24% to 6.44% per annum. The interest and principal on the bonds are payable from pledged tax increment revenues. Term bonds maturing on September 1, 2013 through September 1, 2032, are subject to mandatory redemption from minimum sinking fund payments, in part by lot, on September 1, 2004, September 1, 2014 and September 1, 2024, respectively, and on each September 1 thereafter at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. There are certain limitations regarding the issuance of parity debt as further described in the official statement. The principal balance of outstanding bonds at June 30, 2008, is $24,745,000. 2004 Series A Local Agency Revenue Bonds On June 29, 2004, the La Quinta Financing Authority issued revenue bonds in the amount of $90,000,000 to finance projects benefiting low and moderate income housing in La Quinta Redevelopment Project Area No. 1 and the La Quinta Redevelopment Project Area No. 2 and to advance refund the Agency's Redevelopment Project Areas No. 1 and 2, 1995 ousing Tax Allocation i uo ids. The 2vv4 local -agency revenue iue bol ids were issued with issuance costs of $2,600,229 and a premium of $476,496. Interest is payable semi-annually on March 1 and September 1, of each year, commencing September 1, 2004. Interest payments range from 3% to 5.25% per annum. The interest and principal on the bonds are payable from pledged tax increment revenues. 24 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 8: Long -Term Liabilities (Continued) Term bonds maturing on September 1, 2024, September 1, 2029 and September 1, 2034, are subject to mandatory redemption from minimum sinking fund payments, in part by lot, on September 1, 2017, September 1, 2025 and September 1, 2030, respectively, and on each September 1 thereafter at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. There are certain limitations regarding the issuance of parity debt as further described in the official statement. The principal balance of outstanding bonds at June 30, 2008, is $86,175,000. Due to County of Riverside — Project Area No. 2 Based on an agreement dated July 5, 1989, between the Agency and the County, until the tax increment reaches $5,000,000 annually in Project Area No. 2, the Agency will pay to the County 50% of the County portion of tax increment. At the County's option, the County's pass-through portion can be retained by the Agency to finance new County facilities or land costs that benefit the County and serve the La Quinta population. Per the agreement, the Agency must repay all amounts withheld from the County. The tax increment is to be paid to the County in amounts ranging from $100,000 to $250,000 over a payment schedule through June 30, 2015. Interest does not accrue on this obligation. The balance at June 30, 2008, is $1,600,000. Pass-through Agreement Payable to Coachella Valley Unified School District An agreement was entered into in 1991 between the Agency, the City of La Quinta and the Coachella Valley Unified School District (District), which provides for the payment to the District a portion of tax increment revenue associated with properties within District confines. Such payments are subordinate to other indebtedness of the Agency incurred in furtherance of the Redevelopment Plan for Project Area No. 1. This tax increment is paid to the District over a payment schedule through August 1, 2012, in amounts ranging from $474,517 to $834,076 for a total amount of $15,284,042. Tax increment payments outstanding at June 30, 2008, totaled $3,660,620. The District agrees to use such funds to provide classroom and other construction costs, site acquisition, school buses, expansion or rehabilitation of current facilities. Advances from the City of La Quinta The City of La Quinta advances money to the Redevelopment Agency to cover operating and capital shortfalls. As of June 30, 2008, the amount due to the General Fund from Project Area No. 1 was $12,000,000. This consists of an outstanding advance of: 1) $6,000,000 loaned to the Redevelopment Agency with repayments beginning in 2030/31 and accrues interest at 10% per annum. 2) $6.000.000 loaned to the Redevelopment Agency requires repayments beginning_ in 2030/31 and accrues interest at 7% per annum. As of June 30, 2008, the amount due to the General Fund from Project Area No. 2 was $19,378,966. This consists of an outstanding advance of: 1) $10,000,000 loaned to the Redevelopment Agency with repayment beginning in 2035/36 and accrues interest at 10% per annum. 25 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 8: Long -Term Liabilities (Continued) 2) $9,378,966 loaned to the Redevelopment Agency for the acquisition of nine acres located on south side of Highway 111 and East of Dune Palms Road with no repayment schedule and accruing interest at the City's Local Agency Investment Fund rate. The following is a schedule of changes in long-term debt of the Agency for the fiscal year ended June 30, 2008: The following schedule illustrates the debt service requirements to maturity for the debt outstanding as of June 30, 2008: Tax Allocation Refunding Bonds, Balance $ Principal Balance Due Within $ 1,865,000 July 1, 2007 Additions Repayments June 30, 2008 One Year Project Area No. 1: 426,868 2011 -2012 2,305,000 264,443 2012-2013 City Loans - Principal $ 12,100,000 $ $ 100,000 $ 12,000,000 $ Pass-through agreement payable: 4,431,178 2023-2028 770,558 3,660,620 785,968 1994 Tax Allocation Bonds 12,525,000 2033-2038 1,740,000 10,785,000 1,865,000 1998 Tax Allocation Bonds 15,760,000 - 15,760,000 - 2001 Tax Allocation Bonds 48,000,000 48,000,000 2002 Tax Allocation Bonds 37,675,000 615,000 37,060,000 635,000 2003 Tax Allocation Bonds 25,185,000 440,000 24,745,000 460,000 2004 Series A Local Agency Revenue Bonds 16,937,872 303,010 16,634,862 311,695 Total 172,614,050 3,968,568 168,645,482 4,057,663 Project Area No. 2: City Loans - Principal 10,000,000 9,378,966 - 19,378,966 - Due to County of Riverside 1,750,000 150,000 1,600,000 200,000 1998 Tax Allocation Bonds 6,025,000 110,000 5,915,000 115,000 2004 Series A Local Agency Revenue Bonds 4,577,795 - 81,954 4,495,841 84,303 Total 22,352,795 9,378,966 341,954 31,389,807 399,303 Unallocated to Project Areas 2004 Series A Local Agency Revenue Bonds 66,229,333 1,185,036 65,044,297 1,219,002 Total 66,229,333 - 1,185,036 65,044,297 1,219,002 Total - All Project Areas $ 261 ,196,178 $ 9,378,966 $ 5,495,558 265,079,586 $ 5,675,968 Adjustments: Unamortized net original issue (discount) or premium (841,087) Net Long-term Debt $ 264,238,499 The following schedule illustrates the debt service requirements to maturity for the debt outstanding as of June 30, 2008: Tax Allocation Refunding Bonds, TaxAllocation Refunding Bonds, Series 1998 - PA No. 1 Principal Series 1994 - PA No. 1 $ Principal Interest 2008-2009 $ 1,865,000 $ 719,233 2009-2010 2,000,000 578,160 2010-2011 2,145,000 426,868 2011 -2012 2,305,000 264,443 2012-2013 2,470,000 90,155 2013-2018 - - 2018-2023 2023-2028 2028-2033 2033-2038 TaxAllocation Refunding Bonds, Series 1998 - PA No. 1 Principal Interest $ $ 819,520 120,000 819,520 125,000 819,520 130,000 819,520 140,000 819,520 3,635,000 3,644,030 4,690,000 2,567,500 6,035,000 1,179,750 1,400,000 36,400 Tax Allocation Refunding Bonds Series 1998 - PA No. 2 Principal Interest $ 115,000 $ 305,184 120,000 299,550 125,000 293,272 130,000 286,738 140,000 279,819 800,000 1,282,756 1,030,000 1,047,784 1,335,000 738,806 1,720,000 339,938 400,000 10,500 Totals $ 10,785,000 $ 2,078,859 $ 15,760,000 $ 11,525,280 $ 5,915,000 $ 4,884,347 26 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 8: Long -Term Liabilities (Continued) All tax revenues received by the Agency other than the amount required by law to be deposited in a low and moderate income housing fund, are required to be used to meet debt service requirements of the bond indentures before any payments may be made on other obligations of the Agency. Note 10: Transfers In and Out The following transfers were made during the year ended June 30, 2008: Transfers in Special Revenue capital Projects Debt Service Transfers cut: pecial Revenue' Loin/Moderate Income Housing PA No 1 Low/Moderate Income Housing PA No. 2 Debt Service: Redevelopment Agency - PA No. 1 Redevelopment Agency- PA No. 2 Total 313,157 PA No. 1 PA No. 2 PA No 1 PA No. 2 Total $ - $ $ 4,557,990 $ $ 4,557,990 - 1,955,646 2,269,003 - 25,000,000 25,000,000 - 9,378,966 - 9,378,966 $313,157 $ 9,378,966 $ 25,000,000 $ $ 4,557,990 $ 1,955,646 $41,205,959 27 Tax Allocation Bonds, Series 2001 Tax Allocation Bonds, Series Tax Allocation Bonds Series 2003 - - PA No. 1 2002 - PA No. 1 PA No. 1 Principal Interest Principal Interest Principal Interest 2008-2009 $ $ 2,430,720 $ 635,000 $ 1,829,914 $ 460,000 $ 1,530,802 2009-2010 - 2,430,720 660,000 1,807,556 475,000 1,508,106 2010-2011 2,430,720 680,000 1,782,926 505,000 1,481,401 2011 -2012 2,430,720 705,000 1,756,429 530,000 1,453,198 2012-2013 2,430,720 735,000 1,727,981 560,000 1,423,495 2013-2018 8,660,000 11,113,600 3,875,000 8,100,781 3,315,000 6,569,346 2018-2023 11,050,000 8,659,885 4,945,000 7,003,781 4,485,000 5,364,860 2023-2028 14,145,000 5,482,373 6,330,000 5,583,175 6,095,000 3,707,560 2028-2033 14,145,000 1,487,798 18,495,000 3,004,659 8,320,000 1,406,496 Totals $ 48,000,000 $ 38,897,256 $ 37,060,000 $ 32,597,202 $ 24,745,000 $ 24,445,264 2004 Series A Local Agency Pass-through Payable -Coachella Revenue Bonds Due to County of Riverside Valley Unified School District Principal Interest Principal Interest Principal Interest 2008-2009 $ 1,615,000 $ 4,304,994 $ 200,000 $ - $ 785,968 $ 2009-2010 1,670,000 4,243,331 200,000 - 801,688 2010-2011 1,740,000 4,175,131 200,000 817,722 2011 -2012 1,805,000 4,099,719 250,000 834,076 2012-2013 1,890,000 4,016,581 750,000 421,166 2013-2018 10,925,000 18,533,713 - 2018-2023 14,090,000 15,279,906 2023-2028 18,165,000 11,107,313 2028-2033 23,235,000 5,912,966 2033-2038 11,040,000 572,975 - - Totals $ 86,175,000 $ 72,246,629 $ 1,600,000 $ $ 3,660,620 $ Note 9: Pledge Tax Revenues All tax revenues received by the Agency other than the amount required by law to be deposited in a low and moderate income housing fund, are required to be used to meet debt service requirements of the bond indentures before any payments may be made on other obligations of the Agency. Note 10: Transfers In and Out The following transfers were made during the year ended June 30, 2008: Transfers in Special Revenue capital Projects Debt Service Transfers cut: pecial Revenue' Loin/Moderate Income Housing PA No 1 Low/Moderate Income Housing PA No. 2 Debt Service: Redevelopment Agency - PA No. 1 Redevelopment Agency- PA No. 2 Total 313,157 PA No. 1 PA No. 2 PA No 1 PA No. 2 Total $ - $ $ 4,557,990 $ $ 4,557,990 - 1,955,646 2,269,003 - 25,000,000 25,000,000 - 9,378,966 - 9,378,966 $313,157 $ 9,378,966 $ 25,000,000 $ $ 4,557,990 $ 1,955,646 $41,205,959 27 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 10: Transfers In and Out (Continued) a) $4,557,990 was transferred from the Low/Moderate Income Housing PA No. 1 Fund to the Redevelopment Agency Debt Service Project Area No. 1 Fund to pay a portion of the 2004 Series A Local Agency Revenue Bond debt service and the 1994 Tax Allocation Refunding Bond debt service. b) $1,955,846 was transferred from the Low/Moderate Income Housing PA No. 2 Fund to the Redevelopment Agency Debt Service PA No. 2 Fund to pay a portion of the 2004 Series A Local Agency Revenue Bond debt service. c) $313,157 was transferred from the Low/Moderate Income Housing PA No. 2 to the Low/Moderate Income Housing PA No. 1 Fund for the purchase of land. d) $9,378,966 was transferred from the Redevelopment Agency Debt Service PA No. 2 Fund to the Low/Moderate Income Housing PA No. 2 Fund to purchase land. e) $25,000,000 was transferred from the Redevelopment Agency Debt Service PA No. 1 to the Redevelopment Agency Capital Project PA No. 1 for phase 2 improvements at SilverRock Resort. Note 11: Due To/From Other Funds The following interfund receivables and payables were made during the year ended June 30, 2008: Due From Other Funds Due To Other Funds Amount Capital Projects — 2004 Low/Mod Special Revenue — PA No. 2 Bond $ 5,684,047 (a) (a) Short term borrowing to cover temporary cash shortfall. Note 12: Insurance The La Quinta Redevelopment Agency is covered under the City of La Quinta's insurance policies. Therefore, the limitations and self-insured retentions applicable to the City of La Quinta also apply to its Redevelopment Agency. Additional information as to coverage and self-insured retentions can be obtained by contacting the City. Note 13: ERAF Tax Increment Revenue Shift On September 30, 2008 the California Legislature passed AB 1389, requiring a shift in tax increment revenues during fiscal year 2008-2009 to the State Educational Revenue Augmentation Fund (ERAF). It is estimated that the La Quinta Redevelopment Agency's 'share of the ERAF shift for fiscal year 2008-2009 will amount to approximately $4,874,744. 28 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA BALANCE SHEET ALL GOVERNMENTAL FUNDS JUNE 30, 2008 29 Redevelopment Agency - PA No. 1 Capital Debt Capital Special Projects Service Projects Revenue Combined Low and Housing Tax Moderate Fund Increment Project Housing ASSETS Cash and investments $ - $ 16,551,746 $ 22,894,794 $ 3,411,134 Cash and investments with trustee 24,128,318 - 16,703,089 - Receivables: Accounts - - 11,165 Interest receivable 51,531 97,051 7,724 Loans - 3,682,658 Due from Low and Moderate Housing Funds - - - Due from other governments - 1,365,786 - 341,447 Advances to the City of La Quinta - - 3,462,579 - Prepaid items - - -1,170 1,949 Total Assets $ 24,128,318 $ 17,969,063 $ 43,158,683 $ 7,456,077 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ - $ - $ 34,495 $ 45,055 Deposits from others - - - 14,732 Due to Low and Moderate Housing Funds 5,684,047 - - - Due to other governments - 884,567 - 2,834 Deferred revenue - - - 1,606,595 Total Liabilities 5,684,047 884,567 34,495 1,669,216 Fund Balances: Reserved: Advances to the City of La Quinta - - 3,462,579 - Prepaid items 1,170 1,949 Notes receivable - - 2,076,063 Bond projects 24,128,318 - 16,703,089 - Unreserved: Designated: Debt service - 17,084,496 - Continuing projects - 22,957,350 3,708,849 Undesignated (5,684,047) - - Total Fund Balances 18,444,271 17,084,496 43,124,188 5,786,861 Total Liabilities and Fund Balances $ 24,128,318 $ 17,969,063 $ 43,158,683 $ 7,456,077 29 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA BALANCE SHEET ALL GOVERNMENTAL FUNDS JUNE 30, 2008 30 Redevelopment Agency PA No. 2 Debt Capital Special Service Projects Revenue Low and Tax Moderate Increment Project Housing ASSETS Cash and investments $ 14,801,552 $ 1,355,599 $ 10,677,080 Cash and investments with trustee - Receivables: Accounts 50,400 - Interest receivable 64,622 5,368 57,177 Loans - - 9,443,802 Due from Low and Moderate Housing Funds - 5,684,047 Due from other governments 491,811 - 122,953 Advances to the City of La Quinta - 1,251,634 - Prepaid items - 608 971 Total Assets $ 15,357,985 $ 2,663,609 $ 25,986,030 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ - $ 9,550 $ 27,053 Deposits from others 27,835 - Due to Low and Moderate Housing Funds - - Due to other governments 434,266 - 1,501 Deferred revenue - - 9,443,802 Total Liabilities 434,266 37,385 9,472,356 Fund Balances: Reserved: Advances to the City of La Quinta 1,251,634 Prepaid items - 608 971 Notes receivable - - Bond projects - Unreserved: Designated: Debt service 14,923,719 - - Continuing projects - 1,373,982 16,512,703 Undesignated - - - Total Fund Balances 14,923,719 2,626,224 16,513,674 Total Liabilities and Fund Balances $ 15,357,985 $ 2,663,609 $ 25,986,030 30 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA BALANCE SHEET ALL GOVERNMENTAL FUNDS JUNE 30, 2008 31 TOTALS Debt Capital Special Service Projects Revenue Funds Funds Funds ASSETS Cash and investments $ 31,353,298 $24,250,393 $ 14,088,214 Cash and investments with trustee - 40,831,407 - Receivables: Accounts - 50,400 11,165 Interest receivable 116,153 102,419 64,901 Loans - 13,126,460 Due from Low and Moderate Housing Funds - 5,684,047 Due from other governments 1,857,597 - 464,400 Advances to the City of La Quinta - 4,714,213 Prepaid items - 1,778 2,920 Total Assets $ 33,327,048 $ 69,950,610 $ 33,442,107 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ - $ 44,045 $ 72,108 Deposits from others - 27,835 14,732 Due to Low and Moderate Housing Funds - 5,684,047 - Due to other governments 1,318,833 - 4,335 Deferred revenue - - 11,050,397 Total Liabilities 1,318,833 5,755,927 11,141,572 Fund Balances: Reserved: Advances to the City of La Quinta - 4,714,213 Prepaid items 1,778 2,920 Notes receivable - 2,076,063 Bond projects - 40,831,407 - Unreserved: Designated: Debt service 32,008,215 - - Continuing projects - 24,331,332 20,221,552 Undesignated - (5,684,047) - Total Fund Balances 32,008,215 64,194,683 22,300,535 Total Liabilities and Fund Balances $ 33,327,048 $69,950,610 $ 33,442,107 31 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Revenues: Taxes and Assessments: Tax increment Use of Money and Property: Interest income Rental income Intergovernmental: Other intergovernmental Otherrevenue: Miscellaneous revenues Loan repayments Total Revenues Expenditures: Current: General Government: Administrative costs Professional services Planning and development: Real estate acquisitions Acquisition cost Subsidy to low and moderate housing Capital Outlay: Project improvement costs Debt Service: Interest expense Long-term debt repayments Total Expenditures Excess of Revenues over (under) Expenditures Other Financing Sources (Uses) Transfers in Transfers out Long-term debt issued Pass through agreement payments Sales of capital assets Total Other Financing Sources (Uses) Excess of Revenues and Other Sources over (under) Expenditures and Other Uses Fund Balances Beginning of Year End of Year $ $ 43,476,312 $ 1,602,168 698,249 - $ 10,869,078 1,411,699 (19,241) - 275,665 180,355 - 201,379 131,581 - 340,230 1,602,168 44,174,561 1,793,433 11,597,313 Redevelopment Agency - PA No. 1 Capital Debt Capital Special Projects Service Projects Revenue Combined - Low and Housing Tax Moderate Fund Increment Project Housing $ $ 43,476,312 $ 1,602,168 698,249 - $ 10,869,078 1,411,699 (19,241) - 275,665 180,355 - 201,379 131,581 - 340,230 1,602,168 44,174,561 1,793,433 11,597,313 4,557,990 25,000,000 313,157 (25,000,000) (4,557,990) (23,585,426) - 158,061 - (44,027,436) 25,000,000 (4,086,772) (19,839,066) (16,403,748) 22,183,821 105,535 38,283,337 33,488,244 20,940,367 5,681,326 $ 18,444,271 $ 17,084,496 $ 43,124,188 $ 5,786,861 32 384,198 334,718 754,215 1,875 651,710 468,114 - - 5,904,674 - 86,953 147,200 - 191,050 21,294,034 - 3,623,184 - 11,447,342 - - 4,717,458 - 21,441,234 16,550,873 4,609,612 7,405,006 (19,839,066) 27,623,688 (2,816,179) 4,192,307 4,557,990 25,000,000 313,157 (25,000,000) (4,557,990) (23,585,426) - 158,061 - (44,027,436) 25,000,000 (4,086,772) (19,839,066) (16,403,748) 22,183,821 105,535 38,283,337 33,488,244 20,940,367 5,681,326 $ 18,444,271 $ 17,084,496 $ 43,124,188 $ 5,786,861 32 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Revenues: Taxes and Assessments: Tax increment Use of Money and Property: Interest income Rental income Intergovernmental: Other intergovernmental Other revenue: Miscellaneous revenues Loan repayments Total Revenues Expenditures: Current: General Government: Administrative costs Professional services Planning and development: Real estate acquisitions Acquisition cost Subsidy to low and moderate housing Capital Outlay: Project improvement costs Debt Service: Interest expense Long-term debt repayments Total Expenditures Excess of Revenues over (under) Expenditures Other Financing Sources (Uses) Transfers in Transfers out Long-term debt issued Pass through agreement payments Sales of capital assets Total Other Financing Sources (Uses) Excess of Revenues and Other Sources over (under) Expenditures and Other Uses Fund Balances Beginning of Year End of Year 33 Redevelopment Agency PA No. 2 Debt Capital Special Service Projects Revenue Tax 482,030 Moderate Increment Project Housing $ 23,087,750 $ - $ 5,771,938 477,356 105,906 501,136 (9,378,966) 312,000 (2,269,003) - - 115,417 23,565,106 417,906 6,388.491 202,081 32,561 410,393 - 124,677 341,395 - 38,798 - 4,512,012 - 324,792 2,111,825 3,123,796 - - 778,100 4,103,977 482,030 7,414,423 19,461,129 (64,124) (1,025,932) 1,955,846 9,378,966 (9,378,966) (2,269,003) 9,378,966 (19,403,598) - 352,687 (17,44/,752) ' 7,462,65.0 2,013,377 (64,124) 6,436,718 12,910,342 2,690,348 10,076,956 $ 14,923,719 $ 2,626,224 $ 16,513,674 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2008 34 TOTALS Debt Capital Special Service Projects Revenue Funds Funds Funds Revenues: Taxes and Assessments: Tax increment $ 66,564,062 $ - $ 16,641,016 Use of Money and Property: Interest income 1,175,605 3,119,773 481,895 Rental income - 275,665 Intergovernmental: Other intergovernmental 492,355 Other revenue: Miscellaneous revenues 201,379 131,581 Loan repayments - - 455,647 Total Revenues 67,739,667 3,813,507 17,985,804 Expenditures: Current: General Government: Administrative costs 586,279 367,279 1,164,608 Professional services 1,875 776,387 809,509 Planning and development: Real estate acquisitions - 5,943,472 Acquisition cost 86,953 Subsidy to low and moderate housing 147,200 4,703,062 Capital Outlay: Project improvement costs - 25,242,010 2,111,825 Debt Service: Interest expense 14,571,138 Long-term debt repayments 5,495,558 - - Total Expenditures 20,654,850 26,532,876 14,819,429 Excess of Revenues over (under) Expenditures 47,084,817 (22,719,369) 3,166,375 Other Financing Sources (Uses) Transfers in 6,513,836 25,000,000 9,692,123 Transfers out (34,378,966) - (6,826,993) Long-term debt issued 9,378,966 Pass through agreement payments (42,989,024) Sales of capital assets 510.748 Total Other Financing Sources (Uses) (61,475,188) 25,000,000 3,375,878 Excess of Revenues and Other Sources over (under) Expenditures and Other Uses (14,390,371) 2,280,631 6,542,253 Fund Balances Beginning of Year 46,398,586 61,914,052 15,758,282 End of Year $ 32,008,215 $ 64,194,683 $ 22,300,535 34 LA QUINTA REDEVELOPMENT AGENCY COMPUTATION OF LOW AND MODERATE INCOME HOUSING FUNDS EXCESS/SURPLUS Low and Moderate Housing Funds - All Project Areas July 1, 2007 Opening Fund Balance $ 54,041,619 Less Unavailable Amounts: Unspent debt proceeds (Section 33334.12 (g)(3)(13)) $ (38,283,337) Notes receivable (2.081.645) Available Low and Moderate Income Housing Funds Limitation (greater of $1,000,000 or four years set-aside) Set -Aside for last four years: 2007-2008 2006-2007 2005-2006 2004-2005 2003-2004 Total Base Limitation Greater amount Computed Excess/Surplus 15,701,666 14,089,024 10,282,664 9,023,407 $ 49,096,761 $ 1,000,000 35 (40,364,982) 13,676,637 49,096,761 None Low and Moderate Housing Funds - All Project Areas July 1. 2008 $ (18,444,271) (2,076,063) 16,641,016 15,701,666 14,089,024 10,282,664 $ 56,714,370 $ 1,000,000 $ 40,744,806 (20,520,334) 20,224,472 56,714,370 None