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FY 1996-1997 RDA Financial StatementsLA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 1997 (with Independent Auditors' Report Thereon) (This page intentionally left blank) LA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 1997 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 20 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 21 Debt Service Funds: • Combining Balance Sheet 22 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 23 Capital Projects Funds: • Combining Balance Sheet 24 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 25 Independent Auditors' Compliance Report 26 (This page intentionally left blank) 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, 1997, 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, 1997, 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 22, 1997 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, 1997 Governmental Fund Types Account Groups _ General General Totals Special Debt Capital Fixed Long -Term (Memorandum Onlw) Revenue Service Proiects Assets Debt 1997 1996 Assets and other debits Cash and investments (note 3) Cash with fiscal agent (note 3) Accounts receivable Prepaid expenses Interest receivable Notes receivable Due from other governments Land held for resale Advances to other funds Property, plant and equipment (note 16) Other debits: Amounts available in debt service funds Amount to be provided for retirement of long-term debt Total assets and other debits Liabilities, fund equity, and other credits Liabilities: Accounts payable Accrued expenses Deposits payable Contracts payable Advances from other funds Advances payable to the City of La Quinta (note 13) Obligations under pass-through agreements (notes 10, 11 and 12) Tax allocation bonds payable (notes 5, 6, 7 and 8) Housing tax allocation bonds payable (note 9) Total liabilities Fund equity and other credits: Investment in general fixed assets Fund balances: Reserved for: Bond reserve requirement Bond Projects Advances to other funds Notes receivable Land held for resale TDC owner participation agreement Prepaid expenses Unreserved: Designations Total fund equity and other credits Total liabilities, fund equity, and other credits $ 5,387,341 4,680,466 927,453 - - 10,995,260 10,041,475 10,809,165 524,613 729,428 - - 12,063,206 14,252,253 197,567 - 63,000 - - 260,567 68,951 - 276,546 - - - 276,546 272,515 24,091 - 8,426 - - 32,517 108,979 2,452,283 - 99,791 - 2,552,074 95,445 1,237 4,950 - - 6,187 - 86,320 - - - 86,320 - 551,038 - - - - 551,038 551,038 - - - 11,438,745 - 11,438,745 11,526,745 - 4,021,464 4,021,464 3,024,598 - 89,019,080 89019,080 90,703,857 $19,509.042 5.486.575 l;,828,098 11 4_, 38.7,15 93,040,544 131.303.004 130.645.856 $ 10,929 34,224 - 34,000 914,073 - - 14,398 - - 30,008 - - - - 551,038 - 89,335 1,465,111 34,224 - - - - 11,438,745 - 512,231 - 10,809,165 - 729,428 551,038 - 2,452,283 - 99,791 86,320 - - - 276,546 - 5,520,901 3.232,687 964,655 - 45,153 79,075 - 948,073 406,371 - 14,398 14,142 - 30,008 510,756 - 551,038 551,038 8,100,070 8,100,070 6,653,852 24,160,474 24,160,474 24,999,603 60,780,000 60,780,000 39,620,000 - 22,455.000 93,040.544 94,629,214 m 95,289,837 - 11,438,745 11,526,745 512,231 510,065 11,538,593 551,038 551,038 2,552,074 95,445 86,320 - - 1,820,357 276,546 272,515 9.718,243 20,579.854 19,419.707 4,021.464 1.793.874 11,438,745 36,673,790 35.356,019 $19.509.042 5,486.575 1.828,098 11,138.745 93,04(1,544131,303.004 130,645.856 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, 1997 Revenues: Tax increment Developer reimbursements 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 Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources ove (under) expenditures and other financing uses Fund balances at beginning of year, 728,046 - 729,072 1,457,118 1,404,697 432,755 147,126 322,868 902,749 1,106,069 962,595 - 119,500 1,082,095 4,416,175 - - - - 3,886,267 1,295,000 - 1,295,000 910,000 4,450,140 33,410 4,483,550 3,975,276 - 7,505,062 - 77 5505,,062 6 8^,. 97,672 2,123,396 13,397,328 1204_,850 16,725574 2-2596 _j 5,012,490 1,380 80592( 2,284] 2,709,401(4.777,407) 1,587,792 1,772,776 - 3,360,568 6,378,319 (3,360,568) - - (3,360,568) (6,378,319) 109,034 (453,062) - (2,201,338) (2,654,400) (291,907) - 21,674,803 - _ 604,895 841,320 I,446,215 604,895 2 2( ,225 838) 2,377,671 (1,360,018 1 208 185 22,096,825 2,786,652 996,866 (2,282,302) 1,501,216 17,319,418 as restated (note 17) 16,633,055 3,024,598 4,076,176 23,733.829 6 ,509,856 Fund balances at end of year $19,419„707 4,021;164 1 793,874 25,235,045 23,829,274 See accompanying notes to the financial statements. 3 Totals Special Debt Capital (Memorandum Only) Revenue Service Proiects 1997 1996 $ 2,971,135 11,884,541 - 14,855,676 14,761,690 2,119,347 - 99,728 2,219,075 - - - 860 860 166,224 1,275,590 131,982 151,987 1,559,559 996,056 715,203 - - 715,203 328,059 - - - - 1,314,582 - - 29,991 29,991 9,152 54,611 - - 54,611 7,135,886 3_, 5,886 12,016,523 282,566 19,434,975 I7,818,749 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 Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources ove (under) expenditures and other financing uses Fund balances at beginning of year, 728,046 - 729,072 1,457,118 1,404,697 432,755 147,126 322,868 902,749 1,106,069 962,595 - 119,500 1,082,095 4,416,175 - - - - 3,886,267 1,295,000 - 1,295,000 910,000 4,450,140 33,410 4,483,550 3,975,276 - 7,505,062 - 77 5505,,062 6 8^,. 97,672 2,123,396 13,397,328 1204_,850 16,725574 2-2596 _j 5,012,490 1,380 80592( 2,284] 2,709,401(4.777,407) 1,587,792 1,772,776 - 3,360,568 6,378,319 (3,360,568) - - (3,360,568) (6,378,319) 109,034 (453,062) - (2,201,338) (2,654,400) (291,907) - 21,674,803 - _ 604,895 841,320 I,446,215 604,895 2 2( ,225 838) 2,377,671 (1,360,018 1 208 185 22,096,825 2,786,652 996,866 (2,282,302) 1,501,216 17,319,418 as restated (note 17) 16,633,055 3,024,598 4,076,176 23,733.829 6 ,509,856 Fund balances at end of year $19,419„707 4,021;164 1 793,874 25,235,045 23,829,274 See accompanying notes to the financial statements. 3 LA QUINTA REDEVELOPMENT AGENCY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Governmental Fund Types Year ended June 30, 1997 Other financing sources (uses): Operating transfers in Special Revenue Funds 102,052 Operating transfers out (4,716,023) Variance - 1;355,455 Transfer to the City of La Quinta (453,062) Favorable - Budget Actual (Unfavorable) Revenues: Total other financing sources (uses) (3,683,345 2,22M& 83$) Tax increment $ 3,063,850 2,971,135 (92,715) Developer reimbursements - 2,119,347 2,119,347 Intergovernmental - - - Interest 323,650 1,275,590 951,940 Rental income 341,000 715,203 374,203 Litigation settlement proceeds - - - Miscellaneous 120,000 54,611 (65,38 Total revenues 3,848,500 7,135,886 3,287,386, Expenditures: Current: Administrative 1,002,027 728,046 273,981 Professional fees 760,048 432,755 327,293 Planning and development 1,076,500 962,595 113,905 Debt service: Principal - - - Interest - - - Payments under pass-through obligations - - - Total expenditures 2.838.575 2.123.396 715,179 Excess (deficiency) of revenues over expenditures 1,009,925 5,012,490 4,002,565 Other financing sources (uses): Operating transfers in 1,485,740 1,587,792 102,052 Operating transfers out (4,716,023) (3,360,568) 1;355,455 Transfer to the City of La Quinta (453,062) (453,062) - Transfer from the City of La Quinta - - - Total other financing sources (uses) (3,683,345 2,22M& 83$) 1,457,507 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (2,673,420) 2,786,652 5,460,072 Fund balances at beginning of year, as restated (note 17) 16,633,055 16,633,055 Fund balances at end of year $13,959,635 19,419,747 5,460,072 See accompanying notes to the financial statements. 4 Debt Service Funds 2,255,500 - Variance - 2,550,359 Favorable Budge Actual (Unfavorable) 2,255,500 11,884,541 (370,959) - 131,982 131,982 12,016,523 (218.977) Capital Projects Funds - Variance - 2,550,359 Favorable Budget Actual (Unfavorable) - 99,728 99,728 - 860 860 56,250 151,987 95,737 - 29,991 29,991 56,250 282,566 226,316 - - - 2,550,359 729,072 1,821,287 422,850 147,126 275,724 263,400 322,868 (59,468) - - - 119,500 119,500 - 1,295,000 1,295,000 - - - - 4,576,882 4,450,140 126,742 - 33,410 (33,410) 7,678958 7,505,062 173,896 - - - 13,973,690 13,397,328 576,362 2,933,259 1.204,850 1728,409 (1,718,190) (1,380,805) 337,385 (2,877,000 9C 22,284) 1,954,725 1,875,252 1,772,776 (102,476) 594,500 - (594,500) (594,500) - 594,500 - _ - - - - (3,770,545) (2,201,338) 1,569,207 728,400 604,895 (123,505) - 841,320 841,320 2,009 152 2,377,671 368,5193 1(, L6.,.045)1,3{ 60.018) 1,816,027 290,962 996,866 705,904 (6,053,054) (2,282,302) 3,770,752 3,024,598 3,024,598 - 4,076,176 4,076,176 - 3,315,560 4,021,464 10,904 1 97G 878 1,793,874 3,770,752 9 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements June 30, 1997 (1) Summary of Significant Accounting Policies The following is a summary of the significant accounting policies of the La Quinta Redevelopment Agency: (a) Fond 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 Pro,ects 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". G7 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (1) Summary of Significant Accounting Policies (Continued) ACCOUNT GROUPS General Long -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) fiend and serves as a financing source for redevelopment expenditures. General Fixed Assets Account Grouta 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 Cily of La Q,uinta 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) Summary of Significant Accounting Policies, (Continued) (d) Cash and Investmen 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 Financing 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. LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (2] Organization and Tax Increment Financing, -(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 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. 3 Cash and Investments Cash and investments held by the Agency at June 30, 1997 consisted of the following: State of California Local Agency Investment Fund $ 4,612,550 Equity in City cash and investment pool 66 382,710 Total cash and investments held by the Agency $10,995,260 Cash and investments held by fiscal agent at June 30, 1997 consisted of the following: United States Treasury Bills (market value $6,592,429) $ 6,562,374 FNMA 3,488,400 Mutual funds - Pacific Horizons Treasury Fund 357 Mutual funds - Pacifica Treasury Money Market Fund 2,012,075 Total cash and investments held by fiscal agent $12,063,206 9 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 40% Money market and short intermediate term bond funds 60% Investments of cities in securities are classified in three categories to give an indication of the level of custodial risk assumed by the entity. Category 1 - includes investments that are insured or registered or for which the securities are held by the City or the City's custodial agent (which must be a different institution other than the party through which the City purchased the securities) in the City's name. Investments held "in the City's name" include securities held in a separate custodial or fiduciary account and identified as owned by the City in the custodian's internal accounting records. Category 2 - includes uninsured and unregistered investments for which the securities are held in the City's name by the dealer's agent (or by the trust department of the dealer if the dealer was a financial institution and another department of the institution purchased the securities for the City.) Category 3 - includes uninsured and unregistered investments for which the securities are held by the dealer's trust department or agent, but not in the City's name. Category 3 also includes all securities held by the broker-dealer agent of the City (the party that purchased the securities for the City) regardless of whether or not the securities are being held in the City's name. 10 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (3) Cash and Investments, (Continued) (Continued) Category 1 2 3 Investments held by fiscal agent: U.S. Treasury Bills $ - 6,562,374 FNMA - 3,488,400 10.050.774 Investments held by the City not subject to categorization: Investment in State of California Local Agency Investment Fund Equity in City cash and investment pool Market Carrying Contract/ Amount Value 6,562,374 6,592,429 3.4158.400 3.497.611 10,050,774 10,090,040 4,612,550 4,632,292 6,382,710 6,382,710 Investments held by fiscal agent not subject to categorization: Investment in mutual funds: Pacific Horizons Treasury Fund 357 357 Pacifica Treasury Money Market Fund 2,012,075 2,012,075 $23,058.466 23,117,4741 The management of the State of California Pooled Money Investment Account (generally referred to as "LAIF") has indicated to the City that as of June 30, 1997 the carrying amount (at amortized cost) of the pool was $28,515,398,747 and the estimated market value of the pool (including accrued interest) was $28,637,448,331. The City's proportionate share of the pool's market value (as determined by LAIF) as of June 30, 1997 was $4,632,292. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage- backed securities, other asset-backed securities, loans to certain state fiends, and floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. (4) 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. 11 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (4) Property Taxes, (Continued) 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. (5) General Loniz-Term Debt Changes in general long-term debt for the year ended June 30, 1997, were as follows: 12 Balance at Balance at July 1, 1996 Additions Deletions June 30, 1997 Project Area No. 1: Tax allocation bonds $33,995,000 - (1,175,000) 32,820,000 Housing tax allocation bonds 17,721,486 - - 17,721,486 Pass through agreements payable: Due to County of Riverside 10,517,138 - - 10,517,138 Desert Sands Unified School District 1,276,660 - (707,650) 569,010 Coachella Valley Unified School District 11,797,368 - (526,560) 11,270,808 Advances from City of La Quinta 2,574,487 1,075,365 - 3,649,852 Project Area No. 2: Tax allocation bonds 5,625,000 - (120,000) 5,505,000 Housing tax allocation bonds 4,733,514 - - 4,733,514 Due to County of Riverside 1,408,437 395,081 - 1,803,518 Advances from City of La Quinta 4,079 365 _ 370 853 - 4,450,218 Total long-term debt $91728,455 1,841,299 (2,222,210) 93,040,544 12 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) Tax Allocation Bonds, Series 1991 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, 1997 was $7,700,000. 7 Tax Allocation Bonds, Series 1992 La Quinta 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, 1997, the amounts deposited in the reserve and escrow funds were $512,231 and $2,578, respectively. The principal balance of outstanding bonds at .lune 30, 1997 was $5,505,000. 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 13 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (8) Tax Allocation Refunding _Bonds, Series 1994, (Continued) 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, 1997 is $25,120,000. 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, 1997, $6,500,000 and $16,460,000 of the 1989 and 1990 defeased bonds are outstanding, respectively. 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, 1997 is $22,455,000. (10) Due to County of Riverside Project 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 14 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) f10) Due to County of Riverside, (Continued) 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, 1997 was $10,517,138. Proiect 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 installinents. Interest does not accrue on this obligation. The balance at June 30, 1997 was $1,803,518. (l 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, 1997 totaled $569,010. 1f 2) Notes Pgyable 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, 1997 totaled $11,270,808. The District agrees to use such funds to provide classroom and other construction costs, site acquisition, school busses, expansion or rehabilitation of current facilities. 15 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (13) Advances from the Cixy 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: (14) Debt Service Requirements to Maturity The minimum annual requirements (including sinking fund requirements) to amortize the long-term debt of the Agency as of June 30, 1997 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): 16 Balances at Balances at Julv 1,_1996 Proceeds Repayments June 30 1997 Agency expenditures incurred by the City: Project Area No. 1 $2,574,487 1,075,365 - 3,649,852 Project Area No. 2 4,075065 370,853 - 4,45U18 Totals $6,653,852 1.446,218 - 8.1 WOW (14) Debt Service Requirements to Maturity The minimum annual requirements (including sinking fund requirements) to amortize the long-term debt of the Agency as of June 30, 1997 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): 16 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (14) Debt Service Requirements to Maturity. Cotatinued) Redevelopment Agency RDA 2,632,040 Pass-through Agreements Project Area No. 1 PA No. 2 RDA PA No. 1 Project Area No, I Tax Tax Tax and No. 2 Desert Coachella Allocation Allocation Allocation 1995 Sands Valley Year Bonds Bonds Bonds Housing Tax Unified Unified County Ending Series Series Series Allocation School School of June 30 1991 1994 1992 Bonds District District Riverside Total 1997-98 $ 723,988 2,632,040 502,127 1,594,915 1998-99 723,210 2,625,330 510,065 1,591,790 1999-00 721,475 2,624,696 501,805 1,592,570 2000-01 723,625 2,624,885 508,265 1,592,187 2001-02 724,500 2,620,315 503,500 1,590,690 2002-03 719,259 2,620,855 508,100 1,592,820 2003-04 722,744 2,599,465 501,550 1,588,538 2004-05 719,794 2,612,140 509,490 1,587,990 2005-06 720,409 2,597,700 505,890 1,590,890 2006-07 719,431 2,593,456 506,400 1,645,502 2007-08 716,860 2,590,816 505,650 1,646,470 2008-09 717,535 2,584,232 503,850 1,645,125 2009-10 716,297 2,578,160 506,000 1,641,540 2010-11 713,080 2,571,868 506,750 1,640,840 2011-12 712,720 2,569,442 506,100 1,641,650 2012-13 714,959 2,560,155 509,050 1,638,750 2013-14 709,799 - 505,250 1,638,300 2014-15 712,079 - 505,050 1,635,150 2015-16 - - 503,100 1,634,150 2016-17 - - 509,400 1,630,150 2017-18 - - 508,250 1,632,850 2018-19 - - - 1,627,100 2019-20 - - - 1,627,750 2020-21 - - 1,624,500 2021-22 - - - 1,622,200 2022-23 - - - 1,620,550 2023-24 - - - 1,619,250 2024-25 - - - 1,613,150 2025-26 - - - 1611,950 Principal and interest 12,931,764 41,605,555 10,625,642 46,959,317 Less: Interest (5.231,764) 16,485,555) 5,120.642) (24.504.3 17) Total Principal $ 7,700,000 25,120,000 5,505,000 22,455,000 17 569,010 580,683 773,528 7,376,291 - 621,976 773,528 6,845,899 649,927 773,528 6,864,001 - 670,817 1,803,705 7,923,484 - 684,233 1,803,705 7,926,943 - 697,918 1,803,705 7,942,657 - 711,877 2,190,473 8,314,647 - 726,114 2,190,473 8,346,001 - 740,636 2,190,473 8,345,998 - 755,449 - 6,220,238 - 770,558 - 6,230,354 - 785,968 - 6,236,710 - 801,688 - 6,243,685 817,722 - 6,250,260 834,076 - 6,263,988 421,166 - 5,844,080 - - - 2,853,349 - - - 2,852,279 - - - 2,137,250 - - - 2,139,550 - - - 2,141,100 - - - 1,627,100 - - - 1,627,750 - - - 1,624,500 - - 1,622,200 - 1,620,550 - - 1,619,250 - - - 1,613,150 - - 1,611.950 569,010 11,270,808 14,303,118 138,265,214 3.785.980) (55.128.258) 569.010 11.270.808 10 5� 11� 83,136.956 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. (16) Cliang�es 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, 1997 is as follows: Balances at Balances at July 1. 1996 Additions Deletions June 30. 1997 Land $11,526,745 - (88.000) 11,438,745 (l 7) Restatement of Beginning Fund Balances The accompanying financial statements reflect adjustments which resulted in the restatement of beginning fund balances of the Special Revenue Fund for the Low Income Housing Project Area No. 1 and Low/Moderate Bond Project Area No. 1 in the amount of $67,120 and $28,325, respectively. These adjustments were made to remove certain notes receivable which had not been properly recorded in prior years. Therefore, beginning fund balance is adjusted as follows: Fund balances at beginning of year, as previously restated Adjustment for notes receivable Fund balances at beginning of year, as restated 18 Special Revenue $16,728,500 (95.445) $16.633.055 SUPPLEMENTAL DATA 19 LA QUINTA REDEVELOPMENT AGENCY Special Revenue Funds Combining Balance Sheet June 30, 1997 Low/Moderate Low/Moderate Income Income Housing Housing Project Project Area No. 1 Area No. 2 Assets Low/ Low/ Moderate Moderate Bond Bond PA No. 1 PA No. 2 Totals 1997 1996 Cash and investments $3,436,967 1,144,080 667,898 138,396 5,387,341 4,764,878 Cash with fiscal agent - - 7,489,554 3,319,611 10,809,165 11,802,982 Accounts receivable 15,133 - 173,185 9,249 197,567 5,951 Interest receivable - - 24,091 - 24,091 51,170 Notes receivable 2,452,283 - - - 2,452,283 95,445 Due from other governments 341 896 - - 1,237 - Land held for resale 86,320 - - - 86,320 - Advances to other funds 511,903 39,135 551,038 551,038 Total assets 56.502,947 1,184,! 11 8.354.728 3,467.256 19,509.042 17 271.464 Liabilities and Fund Balances Liabilities: 860.609 Accounts payable $ 2,288 Accrued expenses 34,000 Deposits payable 14,398 Contracts payable 30.008 Total liabilities 80,694 Fund balances: 3.467.256 Reserved for: Bond projects - Advances to other funds 511,903 Notes receivable 2,452,283 Land held for resale 86,320 Unreserved: Designations 3,371,747 Total fund balances 6,422,253 Total liabilities and fund balances 56.502,947 1,671 4,565 2,405 10,929 18,066 - - - 34,000 - - - 14,398 14,142 30.008 510.756 1,671 4,565 2,405 89,335 542,964 - 7,489,554 3,319,611 10,809,165 39,135 - - 551,038 - - 2,452,283 86,320 1,143,305 860.609 145,240 5,520,901 1.182,440 8,350,163 3,464,85 i 19.419,717 1.184.111 8.354,728 3.467.256 19.509.042 20 551,038 95,445 16,082,017 16,728,500 17,271,464 Expenditures: 728,046 LA QUINTA REDEVELOPMENT AGENCY 73,695 29,808 Administrative 156,100 98,505 Professional fees 296,905 Special Revenue Funds Planning and development 509,895 181,850 Capital projects - Combining Statement of Revenues, Expenditures and Changes in Fund Balances revenues over (under Year ended June 30, 1997 458.264 Other financing sources (uses): Operating transfers in 102,052 Low/Moderate Low/Moderate (273,700) Transfer to the City of LaQuinta (25,153) Income Income Low/ Low/ issuance costs) - Total other financing Housing Housing Moderate Moderate Excess (deficiency) of revenues and other Project Project Bond Bond Totals and other financing Area No. 1 Area No. 2 PA No. 1 PA No. 2 1997 1996 Revenues: 997.876 Fund balances at end of year $6.422.253 1.182.440 Tax increment $2,268,971 702,164 - 2,971,135 2,952,336 Developer reimbursements 2,119,347 - - - 2,119,347 - Interest 573,896 68,802 506,845 126,047 1,275,590 693,402 Rental income 436,436 278,767 715,203 328,059 Sale of land - - - - - 1,314,582 Miscellaneous - 54,611 - 54,611 28.6 Total revenues 5.398,650 770.966 840,223 126.047 7.135.886 5,531,365 Expenditures: 728,046 Current: 73,695 29,808 Administrative 156,100 98,505 Professional fees 296,905 32,347 Planning and development 509,895 181,850 Capital projects - Total expenditures 962,900 312,702 Excess (deficiency) of revenues over (under expenditures 4.435,750 458.264 Other financing sources (uses): Operating transfers in 102,052 - Operating transfers out (1,542,389) (273,700) Transfer to the City of LaQuinta (25,153) - Proceeds of bonds (net of issuance costs) - Total other financing sources (uses)1.�1� 65.490) 273,700 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 2,970,260 184,564 Fund balances at beginning of year, as restated 3.451,993 997.876 Fund balances at end of year $6.422.253 1.182.440 21 331,706 141,735 728,046 717,844 73,695 29,808 432,755 485,574 270,850 - 962,595 4,243,675 3,886.267 676,251 171,543 2.123396 9,333,360 163,9724( 5,496) 5,012.490 (1801.995? 43,313 1,442,427 1,587,792 1,853,715 (1,544,479) - (3,360,568) (5,126,866) (427,909) (453,062) - 21,674.803#.803 1.50( 1,166) 1.014,51822f , 25.838) 18.401.652 (1,337,194) 969,022 2,786,652 9,687.357 2.495.829 16.633.055 8,350,163 3.464 851 19,419,707 14,599,657 2,128,843 16,728,500 LA QUINTA REDEVELOPMENT AGENCY Debt Service Funds Combining Balance Sheet June 30, 1997 Assets Cash and investments Cash with fiscal agent Prepaid expenses Interest receivable Due from other governments Total assets Liabilities and Fund Balances Liabilities: Accounts payable Accrued expenses Advances from other funds Total liabilities Fund balances: Reserved for: Bond reserve requirement Prepaid expenses Unreserved: Designations Total fund balances Total liabilities and fund balances Redevelopment Redevelopment Agency Agency PA No. 1 PA No. 2 $2,981,084 358 276,546 1.366 $3,259,354 139,976 511,903 651,879 276,546 2.330.929 2,607,475 $3,259,354 22 1,699,382 524,255 3,584 2,227,221 774,097 39,135 813,232 512,231 901,758 1,413,989 2,227,221 Totals 1997 1996 4,680,466 3,287,145 524,613 392,525 276,546 250,015 - 35,953 4.950 - 5,486.575 3,965,63 914,073 551,038 1,465,111 512,231 276,546 3,232,687 4,021,464 5,486,575 4,356 385,646 551,038 941,040 510,065 250,015 2,264,518 3,024,598 3,965,638 LA QUINTA REDEVELOPMENT AGENCY Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 1997 Redevelopment Redevelopment Agency Agency PA No. 1 PA No. 2 Totals 1997 1996 Revenues: Tax increment $ 9,075,885 2,808,656 11,884,541 11,809,354 Interest 54,389 77,593 131,982 120,540 Total revenues 9,130,274 2,886,249 12,016,523 11,929,894 Expenditures: Current: Professional fees 109,725 Debt service: Principal 1,175,000 Interest 3,427,787 Payments under pass- through obligations 5,641,121 Total expenditures 10.353,633 Excess (deficiency) of revenues over expenditures (1,223.359) Other financing sources (uses): Operating transfers in 1,499,076 Operating transfers out - Proceeds of advances from City _ 234,044 Total other financing sources (uses) 1,733.120 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 509,761 Fund balances at beginning of year 2,097,714 Fund balances at end of year $ 2.607.475 23 37,401 147,126 120,000 1,295,000 1,022,353 4,450,140 1,863,941 7,505,062 3,043,695 13,397,328 057,446) (1,380,805) 273,700 1,772,776 370.851 604,895 644.551 487,105 926,884 1,413,989 2,377671 996,866 3_,024,598 4,021,464 212,831 910,000 3,965,676 6.797.944 11,886.451 43,443 1,287,060 (1,251,453) 604,895 640,502 683,945 2,340,653 3,024,598„ LA QUINTA REDEVELOPMENT AGENCY Capital Projects Funds Combining Balance Sheet June 30, 1997 24 Redevelopment Redevelopment Agency Agency Totals PA No. 1 PA No. 2 1997 1996 Assets Cash and investments $36,456 890,997 927,453 1,989,452 Cash with fiscal agent - 729,428 729,428 2,056,746 Accounts receivable - 63,000 63,000 63,000 Prepaid expenses - - - 22,500 Interest receivable - 8,426 8,426 21,856 Notes receivable - 99,791 99,791 - Total assets $36,456 1,791,642 1_,828.198 4,153,554 Liabilities and Fund Balances Liabilities: Accounts payable $31,202 3,022 34,224 56,653 Accrued expenses - - - 20,725 Total liabilities 31,202 3,022 34.224 77,378 Fund balances: Reserved for: TDC owner participation agreement - - _ 1,820,357 Prepaid expenses - - - 22,500 Bond projects - 729,428 729,428 - Notes receivable - 99,791 99,791 - Unreserved: Designated for special projects 5,254 959.401 964,655 2,233,319 Total fund balances 5,254 1,788,620 1,793,874 4,076,176 Total liabilities and fund balances $36,456 1,791642 1,828.098 4,153,554 24 LA QUINTA REDEVELOPMENT AGENCY Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 1997 Redevelopment Redevelopment OW Agency Agency Totals PA No. 1 PA No. 2 1997 1996 Revenues: Developer reimbursements $ - 99,728 99,728 - Intergovernmental - 860 860 166,224 Interest - 151,987 151,987 182,114 Litigation settlement proceeds 29,991 - 29,991 9,152 Total revenues 29,991 252,575 282,566 357,490 Expenditures: Current: Administrative 488,496 240,576 729,072 686,853 Professional fees 243,314 79,554 322,868 407,664 Planning and development 80,311 39,189 119,500 1729500 Debt service: Interest 33,410 - 33,410 9,600 Payments under pass- through obligations - - - 99,728 Total expenditures 845,531 359,319 1,204,850 1,376,345 Excess (deficiency) of revenues over expenditures 815 540)106 744) 9{ 22,284)1 0(, 18,.855) Other financing sources (uses): Operating transfer in - - - 3,237,544 Transfers from the City of La Quinta - - - 109,034 Transfers to the City of La Quinta - (2,201,338) (2,201,338) (291,907) Proceeds of advances from City of La Quinta _841,320 - 841,320 - Total other financing sources (uses) 841,320 (2,201,33B) (1.360.018) 3,054.671 Excess (deficiency) of revenues and other financing sources over (under) expenditure and other financing uses 25,780 (2,308,082) (2.,282,302) 2,035,816 Fund balances (deficit) at beginning of year (20,526) 4096,702 4,076,176 2,040,360 Fund balances (deficit) at end of year $ 5,254 1,788,620 -1791874 4,076,176 OW SSOU 11 ES, L.L.P. A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Board of Directors La Quinta Redevelopment Agency La Quinta, California CERTIFIED PUBLIC ACCOUNTANTS 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, 1997 and have issued our report thereon dated August 22, 1997. We conducted our audit in accordance with generally accepted 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. 41. August 22, 1997 26 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION