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FY 1995-1996 RDA Financial StatementsLA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 1996 (with Independent Auditors' Report Thereon) (This page intentionally left blank) LA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 1996 TABLE OF CONTENTS Page Independent Auditors' Report 1 Financial Statements: • Combined Balance Sheet - All Fund Types and Account Groups 2 • Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types 3 • Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Governmental Fund Types 4 • Notes to the Financial Statements 6 Supplemental Data: Special Revenue Funds: • Combining Balance Sheet 18 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 19 Debt Service Funds: • Combining Balance Sheet 20 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 21 Capital Projects Funds: ► Combining Balance Sheet 22 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 23 Independent Auditors' Compliance Report 24 (This page intentionally left blank) �SOCI 1TES, L.L.P. A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Board of Directors La Quinta Redevelopment Agency La Quinta, California CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT 1100 MAIN STREET, SUITE C IRVINE, CALIFORNIA 92614 (714) 474-2020 We have audited the accompanying financial statements 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, 1996, as listed in the table of contents. These component unit financial statements are the responsibility of the management of the La Quinta Redevelopment Agency. Our responsibility is to express an opinion on these component unit financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards 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 component unit financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the component unit financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall component unit financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the component unit financial statements referred to above present fairly, in all material respects, the financial position of the La Quinta Redevelopment Agency at June 30, 1996, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the component unit financial statements taken as a whole. The supplemental data listed in the table of contents is presented for purposes of additional analysis and is not a required part of the component unit financial statements of the La Quinta Redevelopment Agency. Such information has been subjected to the auditing procedures applied in the audit of the component unit financial statements and, in our opinion, is fairly presented in all material respects in relation to the component unit financial statements taken as a whole. August 20, 1996 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION LA QUINTA REDEVELOPMENT AGENCY Combined Balance Sheet -All Fund Types and Account Groups June 30, 1996 Account Groups Governmental Fund Tvaes General General Totals Special Debt Capital Fixed Long -Term (Memorandum Only) Revenue Service Proiects Assets Debt 1996 1995 Assets and other debits Cash and investments (note 3) $ 4,764,878 3,287,145 1,989,452 - 10,041,475 4,243,434 Cash with fiscal agent (note 3) 11,802,982 392,525 2,056,746 - 14,252,253 2,482,937 Accounts receivable 5,951 - 63,000 - 68,951 89,626 Accrued revenue - - - - 597 Prepaid expenses - 250,015 22,500 - 272,515 Interest receivable 51,170 35,953 21,856 - - 108,979 Notes receivable 95,445 - - - 95,445 67,120 Due from other funds - - - 342,081 Land held for resale - - - - - - 361,340 Advances to other funds 551,038 - - - 551,038 551,038 Property, plant and equipment (note 16) - - - 11,526,745 - 11,526,745 5,879,910 Other debits: Amounts available in debt service funds - - - - 3,024,598 3,024,598 2,340,653 Amount to be provided for retirement of long-term debt - - 90.703.857 90.703 69,987,536 Total assets and other debits 517,271,464 3,965,638 4,153,554 11,526.745 93„728.455 130,645.856 86,346.272 Liabilities, fund equity, and other credits Liabilities: Accounts payable $ 18,066 4,356 56,653 - 79,075 14,132 Accrued expenses - 385,646 20,725 - 406,371 721,066 Deposits payable 14,142 - - - 14,142 - Contracts payable 510,756 - - - 510,756 Due to other funds - - - - 342,081 Advances from other funds - 551,038 - - 551,038 551,038 Advances payable to the City of La Quinta (note 13) - - 6,653,852 6,653,852 6,048,957 Obligations under pass-through agreements (notes 10, 11 and 12) 24,999,603 24,999,603 25,749,232 Tax allocation bonds payable (notes 5, 6, 7 and 8) - - - - 39,620,000 39,620,000 40,530,000 Housing tax allocation bonds payable (note 9) - - - - 22,455.000 22,455,000 - Total liabilities 542,964 941.040 77,378 - 93,728.455 95,289,837 73,956,506 Fund equity and other credits: Investment in general fixed assets - - - 11,526,745 - 11,526,745 5,879,910 Fund balances: Reserved for: Bond reserve requirement - 510,065 - - 510,065 509,490 Advances to other funds 551,038 - - - 551,038 511,903 Notes receivable 95,445 95,445 67,120 Land held for resale - - - - 361,340 TDC owner participation agreement - - 1,820,357 - 1,820,357 1,820,357 Prepaid expenses - 250,015 22,500 - 272,515 - Unreserved: Designations 16,082,017 2,264,518 2,233,319 - 20,579,854 79-,854 3,239,646 Total fund equity and other credits 16,728,500 3,024,598 4,076,176 11,526,745 35,356,019 12,389,766 Total liabilities, fund equity, and other credits $17,271,464 3,965,638 4,153,554 11,526,745 93,728,455 130,645,856 86.346,272 See accompanying notes to the financial statements. 2 LA QUINTA REDEVELOPMENT AGENCY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types Year ended June 30, 1996 Total expenditures 9,333,360 11 A6.451 1,376,345 22,596,156 Excess (deficiency) of revenues over expenditures (3,801,995) 43,443 (1,018,855 (4,777,407 Other financing sources (uses): Operating transfers in 1,853,715 1,287,060 Operating transfers out (5,126,866) (1,251,453) Transfers from the City of La Quinta - - Transfers to the City of La Quinta - Proceeds of bonds (net of issuance costs) 21,674,803 Proceeds of advances from City - Total other financing sources (uses) 18,401,652 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 14,599,657 Fund balances at beginning of year 2,128,843 Fund balances at end of year $16,728,500 604,895 19,187,854 (4,302-547 3,237,544 6,378,319 3,552,193 - (6,378,319) (3,552,193) Totals 175,343 Special Debt Capital (Memorandum Only) 604,895 Revenue Service Proiects 1996 1995 Revenues: Tax increment $ 2,952,336 11,809,354 - 14,761,690 14,152,262 Intergovernmental - - 166,224 166,224 10,650 Interest 693,402 120,540 182,114 996,056 364,210 Rental income 328,059 - - 328,059 - Sale of land 1,314,582 - - 1,314,582 - Litigation settlement proceeds - - 9,152 9,152 353,118 Miscellaneous 242,986 - - 242,986 5,067 Total revenues 5,531,365 11.929,894 357,490 17,818,749 14,885 307 Expenditures: Current: Administrative 717,844 - 686,853 1,404,697 1,322,057 Professional fees 485,574 212,831 407,664 1,106,069 942,436 Planning and development 4,243,675 - 172,500 4,416,175 3,743,340 Capital projects 3,886,267 - - 3,886,267 178,474 Debt service: Principal - 910,000 - 910,000 1,698,311 Interest - 3,965,676 9,600 3,975,276 2,903,619 Repayment of advances from City - - - - 894,295 Payments under pass-through obligations - 6,797,944 99,728 6,897,672 6,954,152 Mandated education contribution - - - 551,170 Total expenditures 9,333,360 11 A6.451 1,376,345 22,596,156 Excess (deficiency) of revenues over expenditures (3,801,995) 43,443 (1,018,855 (4,777,407 Other financing sources (uses): Operating transfers in 1,853,715 1,287,060 Operating transfers out (5,126,866) (1,251,453) Transfers from the City of La Quinta - - Transfers to the City of La Quinta - Proceeds of bonds (net of issuance costs) 21,674,803 Proceeds of advances from City - Total other financing sources (uses) 18,401,652 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 14,599,657 Fund balances at beginning of year 2,128,843 Fund balances at end of year $16,728,500 604,895 19,187,854 (4,302-547 3,237,544 6,378,319 3,552,193 - (6,378,319) (3,552,193) 109,034 109,034 175,343 (291,907) (291,907) (481,635) - 21,674,803 - 604,895 2,621,457 640,502 3,054,671 22,096,825 2,315,165 683,945 2,035,816 17,319,418 (1,987,382) 2,340,653 2,040,360 6,509,856 8,497,238 3,024,598 4.076.1.76 23,829,274 6,509.856 See accompanying notes to the financial statements. 3 LA QUINTA REDEVELOPMENT AGENCY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Governmental Fund Types Year ended June 30, 1996 Revenues: Tax increment Intergovernmental Interest Rental income Sale of land Litigation settlement proceeds Miscellaneous Total revenues Expenditures: Current: Administrative Professional fees Planning and development Capital projects Debt service: Principal Interest Payments under pass-through obligations Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Operating transfers in Operating transfers out Transfers from the City of La Quinta Transfers to the City of La Quinta Proceeds of bonds (net of issuance costs) Proceeds of advances from City Special Revenue Funds 717,844 68,956 627,970 Variance - 142,396 5,643,743 Favorable Budget Actual (Unfavorable) 83,733 $ 2,811,600 2,952,336 140,736 115,000 693,402 578,402 426,000 328,059 (97,941) 1,850,000 1,314,582 (535,418) 187.300 242.986 55,686 5.389.900 5,531,365 141,465 786,800 717,844 68,956 627,970 485,574 142,396 5,643,743 4,243,675 1,400,068 3,970,000 3,886,267 83,733 11,028,513 9,333,360 1,695,153 (51638,613} 3 8( 01.95) 1,836,618 - 1,853,715 1,853,715 (5,125,809) (5,126,866) (1,057) 25,504,535 21,674,803 (3,829,732) Total other financing sources (uses) 20,378,726 18,401,652 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Fund balances at beginning of year Fund balances at end of year 14,740,113 14,599,657 2,128,843 2,128,843 $16,868,956 16,728.50.0 See accompanying notes to the financial statements. 4 (1 977 074 (140,456) 1( 40,456) Debt Service Funds Variance - - Variance - Bum Actual Favorable Budge Actual (Unfavorable) 11,246,250 11,809,354 563,104 155,000 120,540 (34,460) 11.40-11250 11,929,894 528,644 288,300 212,831 75,469 Cauital Froiects Funds 723,900 686,853 293,280 407,664 172,500 172,500 910,000 Variance - - Favorable Bum Actual (Unfavorable) - 166,224 166,224 5,000 182,114 177,114 - 9,152 9,152 5,000 357,490 352,490 723,900 686,853 293,280 407,664 172,500 172,500 910,000 910,000 - - - 4,191,512 3,965,676 225,836 - 9,600 6,964,028 6,797,944 166,084 1,920,357 99,728 12,353,840 11,886,451 467,389 3,110,037 1,376,345 (952,5901 43,443 996,033 (3.10 5,037)1 018 855) 37,047 (114,384) (9,600) 1,820,629 1,733,692 2,086,182 1,400,219 1,287,060 (113,159) 4,165,045 3,237,544 (927,501) (850,245) (1,251,453) (401,208) - - - - - - - 109,034 109,034 - - - (284,791) (291,907) (7,116) 604,895 604,895 - - - - 1,154,869 640,50251( 4,367) 3,880,254 3,054671 (825,583) 202,279 683,945 481,666 775,217 2,035,816 1,260,599 2,340,653 2,340,653 - 2,040,360 2,040,360 - 2,54Z932 3,024,598 48.1,666 2,815,577 4,076,176 1,260,599 ig LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements June 30, 1996 (1 ) Summary of Significant Accounting Policies The following is a summary of the significant accounting policies of the La Quinta Redevelopment Agency: (a) Fund Accounting The basic accounting and reporting entity is a "fund". A fund is defined as an independent fiscal and accounting entity with a self -balancing set of accounts, recording resources, related liabilities, obligations, reserves and equities segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The accounting records of the Agency are organized on the basis of funds and account groups classified for reporting purposes as follows: GOVERNMENTAL FUNDS Special Revenue Funds The Special Revenue Funds consist of the Low and Moderate Income Housing Funds of the Redevelopment Agency and are used to account for the portion of the Agency's tax increment revenue that is legally restricted for increasing or improving housing for low or moderate income households. Debt Service Funds The Debt Service Funds account for tax increment revenues bond proceeds and any related interest income required to be set aside for future debt service. The funds are used to repay principal and interest on indebtedness of the Agency. Under provisions of the Health and Safety Code and the Agency's bond resolutions, these funds are referred to as "Special Funds". Capital Projects Funds The Capital Projects Funds account for bond proceeds available for project improvements, interest income on invested funds and certain other income. The funds are expended primarily for redevelopment project costs and administrative expenses. Under provisions of the Health and Safety Code and the Agency's bond resolutions, these funds are referred to as "Redevelopment Funds". LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued) ACCOUNT GROUPS General LonLy-Term Debt Account Grou This account group is used to account for all long-term debt of the Agency. The proceeds of the indebtedness is recorded in the Capital Projects (Redevelopment) fund and serves as a financing source for redevelopment expenditures. General Fixed Assets Account Group2 The General Fixed Assets Account Group is used to account for the cost of fixed assets acquired to perform general government functions. Assets purchased are recorded as expenditures in the governmental funds and capitalized at cost in the general fixed assets account group. Contributed fixed assets are recorded in general fixed assets at fair market value at the time received. Fixed assets acquired under a capital lease are recorded at the net present value of future lease payments. No depreciation has been provided on general fixed assets. (b) Basis of Accounting The modified accrual basis of accounting is utilized by all funds of the Agency. Under the modified accrual basis of accounting, expenditures are recorded when a current liability is incurred and revenues are recorded when received in cash unless susceptible to accrual (i.e., measurable and available to finance the Agency's operations). (c) Relationship to the City of La Ouinta The Agency is an integral part of the reporting entity of the City of La Quinta. The funds and account groups of the Agency have been included within the scope of the financial statements of the City because the City Council of the City of La Quinta exercises oversight responsibility over the operations of the Agency. Only the funds and account groups of the Agency are included herein and these financial statements, therefore, do not purport to represent the financial position or results of operations of the City of La Quinta, California. LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (1) SummM of Significant Accounting Policies. (Continued) (d) Cash and Investments Investments are reported at cost. An estimated loss is accrued for an impairment of investment market value when it is probable that the loss will become realized and the amount of loss can be reasonably estimated. (e) Land Held for Resale Land held for resale represents property acquired by the Agency for resale. The property is recorded at original cost. No write-down for a lower market value has been reflected in the accompanying financial statements. (f) Budgetary Reporting The Agency adopts an annual budget prepared on the modified accrual basis for all of its governmental funds. (g) Memorandum Only Totals Columns in the accompanying financial statements captioned "Totals (Memorandum Only)" are not necessary for a fair presentation of the financial statements in accordance with generally accepted accounting principles, but are presented as additional analytical data. 2 Organization and Tax Increment Financia 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. 0 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) 2 O anization and Tax Increment Financin Continued 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 which was found to exist in the project areas. The Coachella Valley Water District is jointly financing projects with the Agency to help prevent the potential flooding of the project areas. Tax Increment Financin-g 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. (3) Cash and Investments Cash and investments held by the Agency at June 30, 1996 consisted of the following: Equity in City cash and investment pool $10,041,475 Cash and investments held by fiscal agent at June 30, 1996 consisted of the following: United States Treasury Bills (market value $8,540,126) $ 8,497,795 Mutual funds - Pacific Horizons Treasury Fund 730 Mutual funds - Pacifica Treasury Money Market Fund 5,753,728 Total cash and investments held by fiscal agent '� 14,252,253 The market value of the mutual funds approximates the carrying amount. LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) 3 Cash and Investments Continued The Agency is generally authorized under state statutes and local resolutions to invest in the following investments: Investment Tyne Maximum % Savings/operating accounts 85% Certificates of deposit 60% U.S. government and agency securities 75% Government pool 50% Money market and short intermediate term bond funds 60% 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 which are received from the County within sixty days after year end. Lien date Levy date Due dates Collection dates March 1 June 30 November 1 and February 1 December 10 and April 10 The La Quinta Redevelopment Agency's primary source of revenues 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. 10 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (5) General Long -Term Debt Changes in general long-term debt for the year ended June 30, 1996, were as follows: Project Area No. 1: Tax allocation bonds Housing tax allocation bonds Pass through agreements payable: Due to County of Riverside Desert Sands Unified School District Coachella Valley Unified School District Advances from City of La Quinta Project Area No. 2: Tax allocation bonds Housing tax allocation bonds Due to County of Riverside Advances from City of La Quinta Total long-term debt (6) Tax Allocation Bonds, Series 1991 Balance at Balance at July 1. 1995 Additions Deletions June 30, 1996 $34,800,000 - 805,000 33,995,000 - 17,721,486 - 17,721,486 10,517,138 - - 10,517,138 1,904,660 _ 628,000 1,276,660 12,271,885 - 474,517 11,797,368 2,340,443 234,044 - 2,574,487 5,730,000 - 105,000 5,625,000 - 4,733,514 - 4,733,514 1,055,549 352,888 - 1,408,437 3.708.514 370.851 - 4.079.365 $7232a,189 23,412,781 2,012,517 93,728,455 La Quinta Redevelopment Project Tax Allocation Bonds, Series 1991, were issued by the Agency, October 1, 1991, in the amount of $8,700,000 for Project Area No. 1. Interest is payable semi-annually, on March 1, and September 1 of each year commencing March 1, 1992. Interest rates are 6.375% per annum. Term Bonds maturing on September 1, 2014 are subject to mandatory sinking fund redemption, in whole or in part, on September 1, 2010 and on each September 1, thereafter, through September 1, 2014, at a prepayment price equal to 100% of the principal amount plus accrued interest. Under the terms of the issue, the maximum annual debt service amount of $734,480 is to be set aside in reserve funds unless the Agency elects to maintain the reserve requirement by obtaining a letter of credit for the amount. The Agency has elected to purchase a surety agreement to satisfy the bond reserve requirement. The amount of principal outstanding on the 1991 Tax Allocation Bonds payable at June 30, 1996 was $7,925,000. 11 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) 7 Tax Allocation Bonds Series 1992 La Quints Redevelopment Project Tax Allocation Bonds, Series 1992, were issued by the Agency, December 1, 1992, in the amount of $5,845,000 for Project Area No. 2. Interest is payable semi-annually on June 1 and December I of each year, commencing June 1, 1993..The interest on and principal of the bonds are payable solely from pledged tax increment revenues. Interest payments range from 5% to 6.9% per annum. The bonds maturing on or after December 1, 1996 are subject to mandatory redemption in part without premium on June 1, 1996. Under the terms of the bond, the maximum annual debt service amount of $510,065 excluding the principal amount of the proceeds of the bonds held in the escrow fund, is to be set aside in reserve funds unless the Agency elects to maintain the reserve requirement by obtaining a letter of credit for the account. As of June 30, 1996, the amounts deposited in the reserve and escrow funds were $391,279 and $2,457, respectively. The principal balance of outstanding bonds at June 30, 1996 was $5,625,000. 8 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 ranges 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. 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, 1996 is $26,070,000. A portion of the bond proceeds, in the amount of $27,922,526, was deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1989 and 1990 Tax Allocation Bonds. As a result, the bonds are considered to be defeased and the liability for those bonds has been removed from the general long-term debt account group. As of June 30, 1996, $6,705,000 and $17,010,000 of the 1989 and 1990 defeased bonds are outstanding, respectively. 12 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) 9? 1995 Housing Tax Allocation Bonds La Quinta Redevelopment Project Areas Nos. 1 and 2 1995 Housing Tax Allocation Bonds, were issued by the Agency, July 1, 1995, in the amount of $22,455,000 to increase, improve and/or preserve the supply of low and moderate income housing in the City. Interest is payable semi-annually on March 1 and September 1 of each year commencing March 1, 1996. Interest payments range from 4% to 6% per annum. Term Bonds maturing on September 1, 2025 are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2011 and on each September 1, thereafter, through September 1, 2025, at a price equal to the principal amount 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, 1996 is $22,455,000. 103 Due to Countv of Riverside Proiect Area No. 1 Based on an agreement amended December 21, 1993 between the Agency, the City of La Quinta, and the County of Riverside (County), the Agency will pay to the County $10,517,138 from tax increment revenue relating to Project Area No. 1. This agreement is in consideration of the tax revenues lost by the County as a result of the formation of Project Area No. 1. The tax increment is to be paid to the County over a payment schedule through June 30, 2006 in annual amounts ranging from $386,764 to $2,190,473 with principal payments commencing in June 1998. Unpaid balances accrue interest at 5.5% per annum. The balance at June 30, 1996 was $10,517,138. 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 Agency is required to begin repayment in the year in which tax increment reaches $5,000,000 in ten equal annual installments. Interest does not accrue on this obligation. The balance at June 30, 1996 was $1,408,437. 13 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) 11 Notes Payable to Desert Sands Unified School District Based on an agreement dated June 21, 1988 between the Agency, the City of La Quinta and the Desert Sands Unified School District (District), the Agency identified tax increment revenue associated with the District for Project Area No. 1. The tax increment is paid to the District over a payment schedule through July 1, 1998 in amounts ranging from $21,505 to $663,825 for a total amount of $4,132,020. Alternatively, such tax increment revenues plus interest accrued required by this agreement may be retained by the Agency to pay on behalf of the District principal and interest on loans, construction projects or money advanced to finance a sports complex and related amenities as specified by the District. Tax increment payments outstanding at June 30, 1996 totaled $1,276,660. (12) Notes 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 of 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, 1996 totaled $11,797,368. The District agrees to use such funds to provide classroom and other construction costs, site acquisition, school busses, expansion or rehabilitation of current facilities. ( 13) Advances from the City of La Quinta The following represents a summary of the various transactions between the City of La Quinta and the Agency, accounted for as advances from the City: Agency expenditures incurred by the City: Project Area No. 1 Project Area No. 2 Totals Balances at July 1, 1995 Proceeds Rel2ayments $2,340,443 234,044 3,708,51 08,514 370,851 I&048-957 604,895 143 Debt Service Requirements to Maturity Balances at June 30, 1996 2,574,487 4,079,365_ 6,653.852 The minimum annual requirements (including sinking fund requirements) to amortize the long-term debt of the Agency as of June 30, 1996 are as follows (advances payable to the City and the pass-through obligation owed by Project Area No. 2 to the County have been excluded since minimum annual debt service payments have not been established): 14 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (14) _ Debt Service Requirements to Maturity, (Continued) Redevelopment Agency Project Area No. 1 Tax Tax Allocation Allocation Year Bonds Bonds Ending Series Series June 30 1991 1994 1996-97 $ 723,810 1997-98 723,988 1998-99 723,210 1999-00 721,475 2000-01 723,625 2001-02 724,500 2002-03 719,259 2003-04 722,744 2004-05 719,794 2005-06 720,409 2006-07 719,431 2007-08 716,860 2008-09 717,535 2009-10 716,297 2010-11 713,080 2011-12 712,720 2012-13 714,959 2013-14 709,799 2014-15 712,079 2015-16 - 2016-17 - 2017-18 - 2018-19 - 2019-20 - 2020-21 - 2021-22 - 2022-23 - 2023-24 - 2024-25 - 2025-26 684,233 Principal and 7,926,943 interest 13,655,574 - Less: 1,803,705 2,629,851 2,632,040 2,625,330 2,624,696 2,624,885 2,620,315 2,620,855 2,599,465 2,612,140 2,597,700 2,593,456 2,590,816 2,584,232 2,578,160 2,571,868 2,569,442 2,560,155 RDA PA No. 2 Tax Allocation Bonds Series 1992 503,607 502,127 510,065 501,805 508,265 503,500 508,100 501,550 509,490 505,890 506,400 505,650 503,850 506,000 506,750 506,100 509,050 505,250 505,050 503,100 509,400 508,250 44,235,406 11,129,249 48,245, 532 1,276,660 11,797,368 14,689,882 145,029,671 Interest (5,730,574) (18,165,406) 5 04,249 (25,790,532) 4 1{ , 72,744} (59,363,505] Total Principal S 7,925,000 26,070.000 5,625,000 22,455,000 1,276,660 11,797,3.68 10,517,138 85 666,166 15 Pass-through Agreements RDA PA No. 1 Proiect Area No. 1 and No. 2 Desert Coachella 1995 Sands Valley Housing Tax Unified Unified County Allocation School School of Bonds District District Riverside Total 1,286,215 707,650 526,560 386,764 6,764,457 1,594,915 569,010 580,683 773,528 7,376,291 1,591,790 - 621,976 773,528 6,845,899 1,592,570 - 649,927 773,528 6,864,001 1,592,187 - 670,817 1,803,705 7,923,484 1,590,690 - 684,233 1,803,705 7,926,943 1,592,820 - 697,918 1,803,705 7,942,657 1,588,538 - 711,877 2,190,473 8,314,647 1,587,990 - 726,114 2,190,473 8,346,001 1,590,890 - 740,636 2,190,473 8,345,998 1,645,502 - 755,449 - 6,220,238 1,646,470 - 770,558 - 6,230,354 1,645,125 - 785,968 - 6,236,710 1,641,540 - 801,688 - 6,243,685 1,640,840 - 817,722 - 6,250,260 1,641,650 - 834,076 - 6,263,988 1,638,750 - 421,166 - 5,844,080 1,638,300 - - - 2,853,349 1,635,150 - - - 2,852,279 1,634,150 - - - 2,137,250 1,630,150 - - - 2,139,550 1,632,850 - - - 2,141,100 1,627,100 - - - 1,627,100 1,627,750 - - - 1,627,750 1,624,500 - - - 1,624,500 1,622,200 - - - 1,622,200 1,620,550 - - - 1,620,550 1,619,250 - - - 1,619,250 1,613,150 - - - 1,613,150 1,61 I,950 1,61 1,350 48,245, 532 1,276,660 11,797,368 14,689,882 145,029,671 Interest (5,730,574) (18,165,406) 5 04,249 (25,790,532) 4 1{ , 72,744} (59,363,505] Total Principal S 7,925,000 26,070.000 5,625,000 22,455,000 1,276,660 11,797,3.68 10,517,138 85 666,166 15 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) 15 Pledged 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. 6) Changes in General Fixed Assets The Agency has purchased land which is intended to be used for community facilities. A summary of general fixed assets transactions for the fiscal year ended June 30, 1996 is as follows: Balances at Balances at July 1. 1995 Additions Deletions Adjustments* .lune 30 1996 Land $5,879,910 8,286,267 2,958,750 319.318 11,526.745 * These adjustments reconcile General Fixed Assets to a physical inventory performed as of lune 30, 1995 by a fixed asset appraisal firm. 17 Commitments under Develo meat Agreement Washington_ Adams The Agency has entered into an Owner Participation Agreement (OPA) with Washington/Adams, a California limited partnership. In this agreement, Washington/ Adams is responsible for the development of a retail center located at the intersection of Washington Avenue and Highway 111. The Agency and. Washington/Adams are to share in specific infrastructure improvements, with the Agency being responsible for a maximum of $3,156,000. In addition, the Agency agrees to reimburse Washington/Adams a maximum of $575,460 for engineering design, permit fees, plan checks and inspections, and general contractor fees. As of June 30, 1996, $1,820,357 remains to be expended under this agreement for infrastructure improvement costs to be incurred in future fiscal years. 16 SUPPLEMENTAL DATA 17 LA QUINTA REDEVELOPMENT AGENCY Special Revenue Funds Combining Balance Sheet June 30, 1996 Low Income Low Income Housing Housing Project Project Area No. 1 Area No. 2 Assets Low/ Cash and investments $3,420,080 Cash with fiscal agent Bond Accounts receivable - Accrued revenue - Interest receivable 37,090 Notes receivable 67,120 Due from other funds - Land held for resale - Advances to other funds 511,903 Total assets4 0$ , 36, I9-3 Liabilities and Fund Balances 51,170 Liabilities: - Accounts payable $ 6,324 Deposits payable - Contracts payable 510.756 Due to other funds - Total liabilities 517.080 Fund balances: _ Reserved for: 361,340 Advances to other funds 511,903 Notes receivable 67,120 Land held for resale - Unreserved: 2,498,636 Designations 2,940.090 Total fund balances 3,519,113 Total liabilities and fund balances $4,036.193 Low/ Low/ Moderate Moderate Bond Bond PA No. i PA No. 2 Totals 1996 1995 950,394 372,804 21,600 4,764,878 1,154,348 - 9,326,180 2,476,802 11,802,982 - 9,715,682 2.495.829 5,951 - 5,951 1.7.271.464 _ _ - 597 10,297 3,549 234 51,170 - - 28,325 - 95,445 67,120 _ _ - 217,891 _ _ - 361,340 39,135 - 551,038 551,038 999,826 9,736,809 2,498,636 17.271.464 2,352,334 1,950 6,985 2,807 18,066 5,600 - 14,142 - 14,142 - - 510,756 - 217.891 1,950 21,127 2,807 542,964 223,491 39,135 - - 551,038 - 28,325 - 95,445 958,741 9,687,357 2,499829 16,082,017 997.876 9,715,682 2.495.829 16.728.500 999.826 9.736,809 2.498636 1.7.271.464 18 551,038 67,120 361,340 149.345 2,128,843 2,352,334 LA QUINTA REDEVELOPMENT AGENCY Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 1996 Low Income Low Income Housing Housing Project Project Area No. 1 Area No. 2 Revenues: Low/ 87,768 25,374 Tax increment $2,338,108 Moderate 614,228 Interest 156,539 24,867 Miscellaneous 1,703 Rental income - - Sale of land 118.312 1,196,270 Total revenues _2.614.662 2,813,394 1.835,365 Expenditures: 693,402 123,813 Current: - 242,986 Administrative 172,418 100,462 Professional fees 350,682 21,750 Planning and development - - Capital projects _ - Debt service: 2,942.274 Principal Total expenditures 523,100 122,212 Excess (deficiency) of revenues over (under) expenditures 2,091,562 1,713,153 Other financing sources (uses): Operating transfers in 1,810,402 43,313 Operating transfers out (1,101,754) (2,168,530) Proceeds of bonds (net of issuance costs) Total other financing sources (uses) 708.6482 12(, 5,217) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 2,800,210 (412,064) Fund balances at beginning of year 718,903 1,409,940 Fund balances at end of year 53,519,113 997,876 19 Low/ Low/ 87,768 25,374 485,574 401,125 Moderate Moderate 1,909,257 1,977,010 3,886,267 - Bond Bond Totals PA No. 1 PA No. 2 1996 1995 - - 2,952,336 2,813,394 405,101 106,895 693,402 123,813 241,283 - 242,986 5,067 328,059 - 328,059 - - 1,314,582 - 974.443 106,89+ 5,531,365 2,942.274 311,281 133,683 717,844 404,880 87,768 25,374 485,574 401,125 4,243,675 - 4,243,675 3,574,904 1,909,257 1,977,010 3,886,267 - 607.820 6,551.981 2,136,067 9,333,360 4,988„729 (5,577,538 2 029 172 (3.801.995} (2,046,455} 1,853,715 - (1,812,686) (43,896) (5,126,866) (265,611) 17,,105,906 4.568.897 21.674,803 - 1593.220 4.525,001 18,40I.65226( 5.611} 9,715,682 2,495,829 14,599,657 (2,312,066) 9,715,682 2.495,829 2,128,843 4,440,909 16.728.500 2,128,843 LA QUINTA REDEVELOPMENT AGENCY Debt Service Funds Combining Balance Sheet June 30, 1996 20 Redevelopment Redevelopment Agency Agency Totals PA No. 1 PA No. 2 1996 1995 Assets Cash and investments $2,480,688 806,457 3,287,145 3,082,986 Cash with fiscal agent 729 391,796 392,525 529,771 Prepaid expenses 250,015 - 250,015 - Interest receivable 26,867 9,086 35,953 - Total assets 112L8-,299 299 1,207,339 3,965,638 3,612,757 Liabilities and Fund Balances Liabilities: Accounts payable $ 4,356 - 4,356 - Accrued expenses 144,326 241,320 385,646 721,066 Advances from other funds 511,903 39,135 551,038 551,038 Total liabilities 660,585 280,455 941 040 1,272,104 Fund balances: Reserved for: Bond reserve requirement - 510,065 510,065 509,490 Prepaid expenses 250,015 - 250,015 - Unreserved: Designations _ 1,847,699 416,819 2,264.518 1,831,163 Total fund balances 2,097,714 926,884 3,024.598 2,340,653 Total liabilities and Rind balances $2,758,299 1,207,339 3,965,638 3,612,757 20 LA QUINTA REDEVELOPMENT AGENCY Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 1996 Redevelopment Redevelopment 21 Agency Agency Totals PA No. 1 PA No. 2 1996 1995 Revenues: Tax increment $9,352,441 2,456,913 11,809,354 11,338,868 Interest 47.740 72,800 120.540 169,676 Total revenues 9400,181 2,529,713 11,929,994 11-508,544 Expenditures: Current: Professional fees 179,868 32,963 212,831 191,094 Debt service: Principal 805,000 105,000 910,000 280,000 Interest 3,050,453 915,223 3,965,676 2,798,708 Repayment of advances from City - - - 894,295 Payments under pass-through obligations 5,180,568 1,617,376 6,797,944 6,954,152 Mandated education contribution - - - 551,170 Total expenditures 9,215,889 2,670,562 11,886,451 11,669,419 Excess (deficiency) of revenues over expenditures 184,292 140.849) 43.443 160,875) Other financing sources (uses): Operating transfers in 1,104,037 183,023 1,287,060 817,244 Operating transfers out (601,700) (649,753) (1,251,453) (2,462,714) Proceeds of advances from City 234,044 370,851 604,895 - Total other financing sources (uses) 736.3819( 5,879) 640,502 1.645 470) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 920,673 (236,728) 683,945 (1,806,345) Fund balances at beginning of year 1,177,041 1,163,612 2340,653 4,146,998 Fund balances at end of year 2 097 714 926,884 3,024,598 2,340,653 21 LA QUINTA REDEVELOPMENT AGENCY Capital Projects Funds Combining Balance Sheet June 30, 1996 Redevelopment Redevelopment Agency Agency Totals PA No. 1 PA No. 2 1996 1995 Assets Cash and investments $17,859 1,971,593 1,989,452 6,100 Cash with fiscal agent - 2,056,746 2,056,746 1,953,166 Accounts receivable - 63,000 63,000 89,626 Prepaid expenses 15,000 7,500 22,500 - Interest receivable 193 21,663 21,856 - Due from other funds - - - 124,190 Total assets J23,052 4,120,502 44 15 3.554 2,173,082 Liabilities and Fund Balances Liabilities: Accounts payable $32,853 23,800 56,653 8,532 Accrued expenses 20,725 - 20,725 - Due to other funds - - - 124,190 Total liabilities 53,578 23,800 77,378 132,722 Fund balances: Reserved for: TDC owner participation agreement 1,820,357 1,820,357 1,820,357 Prepaid expenses 15,000 7,500 22,500 - Unreserved: Designated for special projects3( 5,526) 2,268,845 2,233,319 220,003 Total fund balances (deficit) Q.526) 4 096.,702 4,076,176 2,040,360 Total liabilities and fund balances JK,052 4 1.201,502 4,153,554 2,173&82 22 LA QUINTA REDEVELOPMENT AGENCY Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 1996 Redevelopment Redevelopment Agency Agency PA No. 1 PA No. 2 Revenues: Intergovernmental $ - 166,224 Interest - 182,114 Litigation settlement proceeds 9,152 - Total revenues 9,152 348.338 Expenditures: 2,035,816 Current: 1,922,376 Administrative 457,723 Professional fees 276,724 Planning and development 114,350 Capital outlay - Debt service: Principal - Interest 9,600 Payments under pass-through obligations - Total expenditures 858.397 Excess (deficiency) of revenues over expenditures (849-2 Other financing sources (uses): Operating transfers in 601,701 Operating transfers out - Transfers from the City of La Quinta 109,034 Transfers to the City of La Quinta - Proceeds of advances from City of La Quinta - Total other financing sources (uses) 710,735 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (138,510) Fund balances (deficit) at beginning of year 117.984 Fund balances (deficit) at end of year $ 2,525) 23 Totals 1996 1995 166,224 10,650 182,114 70,721 9.152 353.118 357.490 434,489 229,130 686,853 917,177 130,940 407,664 350,217 58,150 172,500 168,436 - - 178,474 r - 810,491 9,600 104,911 99.728 99.728 - 517.948 1,376,345 2,529,706 (169,61 0)(1,018,855)) 2,635,843 3,237,544 2,734,949 - - (823,868) 109,034 175,343 (291,907) (291,907) (481,635) - 2,621,457 343,936 3,054,671 4,226,246 2,174,326 2,035,816 2,131,029 1,922,376 2,040,3609( 0,669) 4.096,702 4,076,176 2,040,360 CON Pi D CERTIFIED PUBLIC ACCOUNTANTS OCI 1TES, L.L.P. A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Board of Directors La Quinta Redevelopment Agency La Quinta, California INDEPENDENT AUDITORS' COMPLIANCE REPORT 1100 MAIN STREET, SUITE C IRVINE, CALIFORNIA 92614 (714)474-2020 We have audited the financial statements of the La Quinta Redevelopment Agency ("Agency") as of and for the year ended June 30, 1996 and have issued our report thereon dated August 20, 1996. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Compliance with laws and regulations applicable to the Agency is the responsibility of the Agency's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the Agency's compliance with provisions of laws and regulations contained in the Guidelines for Compliance Audits of California Redevelopment Agencies issued by the State Controller's Office, Division of Local Government Fiscal Affairs. The results of our tests indicated that, with respect to the items tested, the La Quinta Redevelopment Agency complied, in all material respects, with the provision referred to in the preceding paragraph. This report is intended for the information of the Agency and the State Controller's office. However, this report is a matter of public record and its distribution is not limited. August 20, 1996 24 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION