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FY 2000-2001 RDA Financial StatementsLA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year Ended June 30, 2001 (with Independent Auditors' Report Thereon) (This page intentionally left blank) LA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year Ended June 30, 2001 TABLE OF CONTENTS Page Independent Auditors' Report 1 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets 4 Statement of Activities 5 Fund Financial Statements: Governmental Funds: Balance Sheet 6 Reconciliation of the Balance Sheet — Statement of Net Assets 8 Statement of Revenues, Expenditures and Changes in Fund Balances 10 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances — Statement of Activities 12 Notes to the Financial Statements 13 Required Supplementary Information: Notes to Required Supplementary Information Schedules of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual: Low/Moderate Income Housing Fund — PA No. 1 41 Low/Moderate Income Housing Fund — PA No. 2 42 Low/Moderate Bond Fund — PA No.1 43 Low/Moderate Bond Fund — PA No. 2 44 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 45 (This page intentionally left blank) CONRADAND ASSOCIATES, L.L.P Board of Directors La Quinta Redevelopment Agency La Quinta, California CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT 1100 MAIN STREET, SUITE C IRVINE, CALIFORNIA 92614 (949) 474-2020 Fax (949) 263-5520 We have audited the accompanying basic 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, 2001, as listed in the table of contents. These basic financial statements are the responsibility of the management of the La Quinta Redevelopment Agency. Our responsibility is to express an opinion on these basic financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion. In our opinion, the basic financial statements referred to above prevent fairly, in all material respects, the financial position of the La Quinta Redevelopment Agency at June 30, 2001, and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America. As discussed further in the notes to the basic financial statements, the accompanying financial statements reflect certain changes in the presentation of financial data required as a result of the implementation of GASB No. 34 for the year ended June 30, 2001. The La Quinta Redevelopment Agency has not presented Management's Discussion and Analysis that the Governmental Accounting Standards Board has determined is necessary to supplement, although not required to be part of, the basic financial statements. The information identified in the accompanying table of contents as required supplementary information is not a required part of the basic financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audit was made for the purpose of forming an opinion on the basic 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 basic financial statements of the La Quinta Redevelopment Agency. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly presented in all material respects in relation to the basic financial statements taken as a whole. MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION In accordance with Government Auditing Standards, we have also issued a report dated August 17, 2001 on our consideration of the Agency's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. August 17, 2001 (This page intentionally left blank) LA QUINTA REDEVELOPMENT AGENCY Statement of Net Assets June 30, 2001 Total assets 47,422,183 Liabilities: Accounts payable Governmental Accrued salaries and benefits Activities Assets: 1,376,631 Cash and investments (note 2) $ 18,662,739 Accounts receivable 149,199 Prepaid items 3,515 Interest receivable 833 Notes receivable (note 3) 8,861,382 Due from other governments 260,388 Restricted assets: Cash and investments with fiscal agent (note 2) 9,714,808 Capital assets, net (note 6) 9,769,319 Total assets 47,422,183 Liabilities: Accounts payable 55,226 Accrued salaries and benefits 16,469 Interest payable 1,376,631 Deposits payable 14,283 Due to the City of La Quinta 767,170 Due to other governments 730,884 Noncurrent liabilities (notes 8 to 13): Due within one year 11,074,078 Due in more than one year 84,381,709 Total liabilities 98,416,450 Net assets: Restricted for: Low moderate housing 18,287,655 Debt service (85,792,039) Capital projects 16,510,117 Total net assets $ (50,994,267) See accompanying notes to the basic financial statements. 4 LA QUINTA REDEVELOPMENT AGENCY Statement of Activities Year Ended June 30, 2001 Program Revenues Operating Capital Net Charges for Contributions Contributions Governmental Expenses Services and Grants and Grants Activities Governmental activities: Planning and development $ 5,420,117 Low and moderate housing 5,432,992 Interest expense 5,432,682 Total governmental activities $ 16,285,791 450,662 (4,969,455) 6,045,848 612,856 Y - - (5,432,682) 6,496,510 (9,789,281) General revenues: Taxes: Property taxes Investment income Rental income Gain on sale of capital assets Miscellaneous revenues - - Total general revenues Change in net assets Net assets at beginning of year Net assets at end of year See accompanying notes to the basic financial statements. F 15,324,183 1,195,109 388,121 318,461 - 25,096 17,250,970 7,461,689 (58,455,956) $ (50,994,267) Assets Cash and investments (note 2) Cash and investments with fiscal agent (note 2) Accounts receivable Prepaid items Interest receivable Notes receivable (note 3) Due from other funds (note 4) Due from other governments Advances to other funds (note 5) Total assets Liabilities and Fund Balances Liabilities: Accounts payable Accred salaries and benefits Deferred revenue Deposits payable Due to other funds (note 4) Due to the City of La Quinta Due to other governments Advances from other funds (note 5) Total liabilities Fund balances: Reserved for: Bond projects Prepaid items Notes receivable Advances to other funds Unreserved: Designations Undesignated Total fund balances LA QUINTA REDEVELOPMENT AGENCY Governmental Funds - Balance Sheet June 30, 2001 Special Revenue Funds Low/Moderate Low/Moderate Low/Moderate Low/Moderate Income Housing - Income Housing - Bond - Bond - PA No. 1 PA No. 2 PA No. 1 PA No. 2 $ 2,985,890 3,740,675 - 340,862 - - 1,550,700 2,390,586 88,299 - _ _ - - 833 - 2,861,382 10,627,172 - 39,929 12,149 511,903 39.135 $ _ 6,487,403 14,419,131 1,551,533 2,731,448 $ 14,102 24,644 - 16,469 - - 751,732 10,627,172 14,283 - _ _ - - 100,000 - - - 618,603 148,567 780,117 10,668,285 718,603 148567 - - 1,550,700 2,390,586 2,109,650 - 511,903 39,135 - - 3,085,733 3,711,711 - 192,295 - - (717,770) - 5,707,286 3,750,846 832,930 2,582,881 Total liabilities and fund balances $ 6,487,403 14,419,131 1,551,533 2,731,448 See accompanying notes to the basic financial statements. 6 Debt Service Funds Redevelopment Redevelopment Agency - Agency - PA No. 1 PA No. 2 Capital Projects Funds Redevelopment Redevelopment Agency - Agency - PA No. 1 PA No. 2 Totals 4,173,459 1,181,553 2,955,712 3,284,588 18,662,739 199,964 2,143 5,357,019 214,396 9,714,808 - - - 60,900 149,199 3,515 - 3,515 - - 833 - - - - 13,488,554 100,000 - - - 100,000 159,715 48,595 - - 260,388 - - - - 551,038 4,633,138 1,232,291 8,316,246 3,559,884 42,931,074 11,689 4,791 55,226 - - - 16,469 - 11,378,904 - - - - 14,283 100,000 - - - - 767,170 200,899 529,985 - - 730,884 511,903 39,135 - - 551,038 712,802 569,120 11,689 4,791 13,613,974 5,357,019 214,396 9,512,701 3,515 - 3,515 - - 2,109,650 - - 551,038 - - 2,944,023 3,340,697 13,274,459 3,920,336 663,171 - - 3,865,737 3,920,336 663,171 8,304,557 3,555,093 29,317,100 4,633,138 1,232,291 8,316,246 3,559,884 42,931,074 7 LA QUINTA REDEVELOPMENT AGENCY Governmental Funds Reconcilation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2001 Fund balances of governmental funds $ 29,317,100 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets, net of depreciation, have not been included as financial resouces in governmental fund activity. 9,769,319 Long-term debt from the General Long -Term Debt Account Group that have not been included in the governmental fund activity. (95,455,787) Accrued interest payable for the current portion of interest due on Long-term debt has not been reported in the governmental funds. (1,376,631) Revenues that are measurable but not available. Amounts are recorded as deferred revenue under the modified accrual basis of accounting. 6,751,732 Net assets of governmental activities $ (50,994,267) See accompanying notes to the basic financial statements. (This page intentionally left blank) LA QUINTA REDEVELOPMENT AGENCY Governmental Fund Types Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 2001 Special Revenue Funds Low/Moderate Low/Moderate Low/Moderate Low/Moderate Income Housing - Income Housing - Bond - Bond - PA No. 1 PA No. 2 PA No. 1 PA No. 2 Revenues: Taxes $ 3,737,113 1,517,600 - - Developer fees 45,848 - - - Investment income 96,383 185,625 268,391 74,163 Rental income 388,121 - - - Proceeds from sale of property 406,461 - - - Miscellaneous revenues 25,096 - - - Total revenues 4,699,022 1,703,225 268,391 74,163 Expenditures: Current: Planning and development 3,265,008 837,605 - - Capital outlay - - Debt service: Principal Interest Payments under pass-through obligations - - - Total expenditures 3,265,008 837,60.5 - - Excess (deficiency) of revenues over (tinder) expenditures 1,434,014 865,620 268,391 74,163 Other financing sources (uses): Transfers in (note 16) - - - - Transfers out (note 16) (1,739,031) (338,760) - - Transfers to the City of La Quinta - (153,379) (1,177,000) - Proceeds of advances from City Total other financing sources (uses) (1,739,031) (492,139) (1,177,000) - Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (305,017) 373,481 (908,609) 74,163 Fund balances at beginning of year, as restated (note 17) 6,012,303 3,377,365 1,741,539 2,508,718 Fund balances at end of year $ 5,707,286 3,750,846 832,930 2582,881 See accompanying notes to the basic financial statements. 10 Debt Service Funds Capital Projects Funds 3,634,347 Redevelopment Redevelopment Redevelopment Redevelopment Agency - Agency - Agency - Agency - PA No. 1 PA No. 2 PA No. 1 PA No. 2 Totals 14,948,451 6,070,400 - - 26,273,564 - - - 5,000 50,848 575,845 84,159 67,250 166,832 1,518,648 - - - - 388,121 - - - - 406,461 - - - - 25,096 15,524,296 6,154,559 67,250 171,832 28,662,738 237,341 98,580 830,458 276,321 5,545,313 - - - 46,040 46,040 3,349,544 155,531 - - 3,505,075 4,228,397 1,229,894 - - 5,458,291 6,231,592 4,717,789 - - 10,949,381 14,046,874 6,201,794 830,458 322,361 25,504,100 1,477,422 (47,235) (763,208) (150,529) 3,158,638 1,739,031 338,760 3,888,672 1,230,180 7,196,643 (3,888,672) (1,230,180) - - (7,196,643) - - (2,788,179) (1,158,905) (5,277,463) 405,584 629,283 - - 1,034,867 (1,744,057) (262137 1,100,493 71,275 (4,242,596) (266,635) 4,186,971 3,920,336 (309,372) 972,543 663,171 337,285 7,967,272 8,304,557 (79,254) (1,083,958) 3,634,347 30,401,058 3,555,093 29,317,100 LA QUINTA REDEVELOPMENT AGENCY Reconcilation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended June 30, 2001 Net changes in fund balances - total governmental funds Amounts reported for governmental activities in the statement of activities is different because: Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Governmental funds report gross proceeds from property sales . In the statement of activities, proceeds are netted against book value. Proceeds of long-term debt is recorded as an other financing source in governmental Rinds. In the statement of activities, new debt increases liabilities Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. The statement of net assets includes accrued interest on long-term debt. Revenues that are measurable but not available. Amounts are recorded as revenues under the full accrual basis of accounting. Change in net assets of governmental activities See accompanying notes to the basic financial statements. 12 $ (1,083,958) 15,707 (88,000) (1,034,867) 3,505,075 25,609 6,122,123 $ 7,461,689 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements Year Ended June 30, 2001 (1) SLimmary of Significant Accounting Policies The following is a summary of the significant accounting policies of the La Quinta Redevelopment Agency: (a) Organization and Tax Increment Financing Redevelopment Goals and Obiectives The general objective of the Redevelopment Plan adopted by the Agency is to encourage investment in the Redevelopment Project Areas by the private sector. The Redevelopment Plan provides for the demolition of buildings and improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improvements. The Redevelopment Plan also includes the ability to redevelop land by private enterprise or public agencies, the rehabilitation of structures, the rehabilitation or construction of single family and low and moderate income housing, and participation by owners and tenants of properties in the Redevelopment Project. Redevelopment Project Areas The Agency has established two redevelopment project areas. On November 29, 1983 the City Council approved and adopted the Redevelopment Plan for the La Quinta Redevelopment Project Area No. 1. On May 16, 1989 the City Council approved and adopted the Redevelopment Plan for the La Quinta Redevelopment Project Area No. 2. These plans provide for the elimination of blight and deterioration that was found to exist in the project areas. Tax Increment Financing The Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a redevelopment project. The assessed valuation of a redevelopment project last equalized prior to adoption of a redevelopment plan or amendment to such redevelopment plan, or "base roll', is established and, except for any period during which the assessed valuation drops below the base year level, the taxing bodies, thereafter, receive the taxes produced by the levy of the current tax rate upon the base roll. Taxes collected upon any increase in assessed valuation over the base roll C 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. 13 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued) (b) Basis of Accounting and Measurement Focus The basic financial statements of the Agency are composed of the following: O Government -wide financial statements • Fund financial statements * Notes to the financial statements Financial reporting is based upon all GASB pronouncements, as well as the FASB Statements and Interpretations, APB Opinions, and Accounting Research Bulletins that were issued on or before November 30, 1989 that do not conflict with or contradict GASB pronouncements. FASB Pronouncements issued after November 30, 1989 are not followed in the preparation of the accompanying financial statements. Government -wide Financial Statements Government -wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business -type activities of the primary government (including its blended component units), as well as its discreetly presented component units. The La Quinta Redevelopment Agency has no business -type activities or discretely presented component units. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated). However, general government expenses have not been allocated as indirect expenses to the various functions of the Agency. The accompanying government -wide financial statements for the Agency present negative net assets because the primary activity of the Agency is to issue debt to construct infrastructure that will be owned and maintained by the City. Government -wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government -wide financial statements. Basis of accounting refers -to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Linder the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transaction are recognized in accordance with the requirements of GASB Statement No. 33. 14 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (l) Summary of Significant Accounting Policies, (Continued) Amounts paid to acquire capital assets are capitalized as assets in the government -wide financial statements, rather than reported as an expenditure. Proceeds of long-term debt are recorded as a liability in the government -wide financial statements, rather than as an other financing source. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure. Fund Financial Statements The underlying accounting system of the Agency is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Fund financial statements for the primary government's governmental, proprietary, and fiduciary funds are presented after the government -wide financial statements. These statements display information about major funds individually and nonmajor funds in the aggregate for governmental and enterprise funds. Fiduciary statements include financial information for fiduciary fiends and similar component units. Fiduciary fiends of the Agency primarily represent assets held by the Agency in a custodial capacity for other individuals or organizations. The Agency has no nonmajor funds, enterprise funds, or fiduciary funds. Governmental Funds In the fund financial statements, governmental funds and agency funds are presented using the modified -accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The Agency uses a thirty day availability period. Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or 15 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 1 Summary of Significant Accounting Policies, (Continued) when they are received, whichever occurs first. Government -mandated and voluntary non-exchange transactions are recognized as revenues when all applicable eligibility requirements have been met. In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources." Governmental fiind operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Non-current portions of long-term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered "available spendable resources," since they do not represent net current assets. Recognition of governmental fiend type revenues represented by noncurrent receivables are deferred until they become current receivables. Noncurrent portions of other long-term receivables are offset by fund balance reserve accounts. Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other financing sources rather than as a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures, When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources, and then from unrestricted resources. c) Activities in Major Finds The following funds are presented as major funds in the accompanying basic financial statements: Special Revenue Low and Moderate Income Housing P.A. No. 1 and No. 2 Funds — To account for the required 20%o set aside of property tax increments that is legally restricted for increasing or improving housing for low and moderate income households. Vi LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued) Moderate Bond Fund P.A. No. I and account for bond procee+ income housing programs. Funds - To �d moderate Debt Service Funds, P.A. No. 1 and No. 2 — To account for the accumulation of resources for the payment of debt service for bond principal, interest and trustee fees. Capital Projects Funds P.A. No. 1 and No. 2 — To account for the bond proceeds, interest and other funding that will be used for development, planning, construction and land acquisition. "Total fund balances" of the Agency's governmental funds of $29,317,100 differs from "net assets" of governmental activities of $(57,745,999) reported on the Statement of Net Assets. The difference primarily results from the long-term economic focus of the Statement of Net Assets versus the current financial resources focus of the governmental funds balance sheets. Reclassifications and Eliminations Interfund balances must generally be eliminated in the government -wide statements. Due to/from other funds $100,0{}0 Advances from/to other funds 551,038 Total reclassifications and eliminations 5651.038 17 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) l Summary of Significant Accounting, Policies, (Continued) (d) Explanation of Differences between Governmental Funds Balance Sheet and the Statement of Net Assets Liabilities: Accounts payable Total Accrued salaries and benefits 16,469 - - Interest payable Governmental Capital Accumulated Deposits payable Funds Assets Depreciation Assets: 767,170 - - Due to other governments 730,884 - - Cash and investments $ 18,662,739 - - Cash with fiscal agent 9,714,808 - - Accounts receivable 149,199 - - Prepaid items 3,515 - - Interest receivable 833 - - Notes receivable 13,488,554 - - Due from other funds 100,000 - - Due from other governments 260,388 - - Advances to other funds 551,038 - - Land - 9,065,319 - Buildings - 880,000 (176,000) Total assets $ 42,931,074 9,945,319 (176,000) Liabilities: Accounts payable $ 55,226 - - Accrued salaries and benefits 16,469 - - Interest payable - - - Deferred revenue 11,378,904 - - Deposits payable 14,283 - - Due to other funds 100,000 - - Due to the City of La Quinta 767,170 - - Due to other governments 730,884 - - Advances from other funds 551,038 - - Long-term debt - - - Total liabilities 13,613,974 - - Fund balances/net assets 29,317,100 9,945,319 (176,000) Total liabilities and fund balances/net assets $ 42,931,074 9,945,319 (176,000) 18 Long-term Certain Reclassifications Statement of Debt Interest Deferred and Net Assets Transactions Payable Revenue Eliminations Totals - - 18,662,739 - - 9,714,808 - - - 149,199 - - - 3,515 - - - 833 - (4,627,172) - 8,861,382 - (100,000) - 260,388 (551,038) -- - - 9,065,319 - 704,000 - - (4,627,172) (651,038) 47,422,183 - - - - 55,226 - - - - 16,469 - 1,376,631 - - 1,376,631 - - (11,378,904) - - - - - - 14,283 - - - (100,000) - - - - - 767,170 - - - - 730,884 - - - (551,038) - 95,455,787 - - - 95,455,787 95,455,787 1,376,631 (11,378,904) (651,038) 98,416,450 (95,455,787) 1,376,631) 6,751,732 - (50,994,267) - -(4,627,172) (651,038) 47,422,183 19 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued) "Total fund balances" of the Agency's governmental funds of $29,317,100 differs from "net assets" of governmental activities of $(57,745,999) reported on. the Statement of Net Assets. The difference primarily results from the long-term economic focus of the Statement of Net Assets versus the current financial resources focus of the governmental funds balance sheets. Reclassifications and Eliminations Interfund balances must generally be eliminated in the government -wide statements. Due to/from other funds $100,000 Advances from/to other funds 551,038 Total reclassifications and eliminations d51 038 20 (This page intentionally left blank.) 21 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 1 Summpa of Significant Accounting Policies. Continued (e) Explanation of Differences between Governmental Funds Ogerating Statements and the Statement of Activities Revenues: Taxes Developer fees Investment income Rental income Proceeds from sale of property Miscellaneous revenues Total revenues Expenditures: Current: Planning and development Capital projects Debt service: Principal Interest Payments under pass-through obligations Total expenditures Other financing sources (uses): Transfers in Transfers out Transfers to the City of La Quinta Proceeds of advances from City Total other financing sources (uses) Net change in Rind balances/net assets Fund balances/net assets, beginning of year, as restated Fund balances/net assets, end of year Total Governmental Funds Capital Accumulated Assets Depreciation $ 26,273,564 - - 50,848 - - 1,518,648 - - 388,121 - - 406,461 (88,000) - 25,096 - - 28,662,738 (881000) - 5,545,313 - 29,333 46,040 (45,040) - 3,505,075 - - 5,458,291 - - 10,949,381 _ - 25,504,100 (45,040) 29,333 7,196,643 - - (7,196,643) - - (5,277,463) - - 1,034,867 - - (4,242,596) - - (1,083,958) (42,960) (29,333) 30,401,058 9,988,279 (146,667) $ 29,317,100 9,945,319 (176,000) 22 Long-term Certain Reclassifications Statement Debt Interest Deferred and of Activities Transactions Payable Revenue Eliminations Totals - - _ - - - (10,949,381) 15,324,183 - - 6,000,000 - 6,050,848 - - 122,123 - 1,640,771 388,121 318,461 25,096 6,122,123 (10,949,381) 23,747,480 ' - - - 5,574,646 ' - - - 1,000 (3,505,075) - - _ - - (25,609) - - 5,432,682 - - - (10,949,381) - (3,505,075) (25,609) (10,949,381) 11,008,328 - - - (7,196,643) - - - - 7,196,643 - - - - (5,277,463) (1,034,867) (1,034,867) - - - (5,277,463) 2,470,208 25,609 6,122,123 - 7,461,689 (97,925,995) I402,240) 629,609 - (58,455,956) (95,455,787) (1,376,631) 6,751,732 - (50,994,267) 23 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 1 Summary of Significant Accounting Policies, (Continued) The "net change in fund balances" for governmental funds of ($1,083,958) differs from the "change in net assets" for governmental activities of $1,339,566 reported on the Statement of Activities. The difference primarily results from the long-term economic focus of the Statement of Activities versus the current financial resources focus of the governmental funds balance sheets. Reclassifications and Eliminations Interfund balances must generally be eliminated in the government -wide statements, except for net residual amount due between governmental activities. Property taxes passed through to other agencies $10,949,381 Transfers in/out 7,196,643 Total reclassifications and eliminations $18,146,024 (fl Cash and Investments For financial reporting purposes, investments are adjusted to their fair value whenever the difference between fair value and the carrying amount is material. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments. (g) Capital Assets Capital assets (including infrastructure) are recorded at cost where historical records are available and at an estimated historical cost where no historical records exist. Contributed fixed assets are valued at their estimated fair market value at the date of the contribution. Generally, fixed asset purchases in excess of $500 are capitalized if they have an expected useful life of three years or more. Capital assets include public domain (infrastructure) general fixed assets consisting of certain improvements including roads, streets, sidewalks, medians, and storm drains. 24 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (2) Cash and Investments Cash and investments held by the Agency at June 30, 2001 consisted of the following: Equity in State of California Local Agency Investment Fund $ 1,123,381 Equity in City cash and investment pool 17,539,358 Total cash and investments held by the Agency $18,662,739 Cash and investments held by fiscal agent at June 30, 2001 consisted of the following: Mutual funds - First American Treasury Obligations $ 9,714,808 Total cash and investments held by fiscal agent S 9,714,808 The Agency is authorized by the City's investment policy to invest in the following types of investments: Investment Type Maximum % Government Pools 15% U.S. government and agency securities 75% Commercial Paper 30% Mutual Funds 20% Certificates of Deposit 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 Agency or the Agency's custodial agent (which must be a different institution other than the party through which the Agency purchased the securities) in the Agency's name. Investments held "in the Agency's name" include securities held in a separate custodial or fiduciary account and identified as owned by the Agency in the custodian's internal accounting records. Category 2 - includes uninsured and unregistered investments for which the securities are held in the Agency'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 Agency.) 25 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (2) Cash and Investments, (Continued) 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 Agency's name. Category 3 also includes all securities held by the broker-dealer agent of the Agency (the party that purchased the securities for the Agency) regardless of whether or not the securities are being held in the Agency's name, Carrying Category Amount 1 2 3 Investments subject to categorization_ Investments held by the City not subject to categorization: Investment in State of California Local Agency Investment Fund 1,123,381 Equity in City cash and investment pool 17,539,358 Investments held by fiscal agent not subject to categorization: Investment in mutual funds: First American Treasury Obligation Fund 9,714,808 28,377.547 The Agency is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City's investment in this pool is reported in the accompanying financial statements at amounts based upon the City's pro -rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgage- backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. 26 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 3) Notes Receivable In September 1994, the Agency sold certain real property to LINC Housing for $2,112,847. The property was used to construct single-family homes and rental units to increase the City's supply of low and moderate income housing. The note bears interest at 6% per annum and is due in full on June 15, 2029. In October 2000, the Agency entered into an agreement with DC&TC, LLC to provide for the construction of certain infrastructure related to the development of affordable housing within Project Area No. 2. A promissory note in the amount of $4,627,172 was entered into with the Developer. The note bears no interest and is payable on October 25, 2010. The balance of the note is reduced by one -fifty-ninth (1/59) upon the close of each escrow for the units sold within the specifications of the Affordable Housing Agreement. In December 2000, the Agency entered into an agreement with DC&TC, LLC to receive $6,000,000 as a reimbursement for Agency costs incurred for the construction of infrastructure related to the development of senior apartments. Payments are due to the Agency in the amount of annual positive cash flow generated by the rental of the units. All wipaid principal and interest on the note are due fifty-five years after the completion of the project. Interest on the note accrues at three percent per annum. Other notes receivable Total per Governmental Funds — Balance Sheet 27 Outstanding Balance at unc _a 0, 2001 $ 2,797,297 4,627,172 . 111 111 64,085 13 488,554 S LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) Due From and To Other Funds Current interfund receivables and payables balances at June 30, 2001 are as follows: Due To RDA Debt Service PA No. 1 Due From Low/Moderate Bond — PA No. 1 The interfund receivable and payable is to cover short-term cash deficiencies. Advances To and From Other Funds Long-term interfund receivables and payables at June 30, 2001 are as follows: Advances From Advances To Redevelopment Redevelopment Agency Agency Debt Service - Debt Service - PA No. 1 PA No. 2 Totals Low/Moderate Income Housing - PA No. 1 $511,903 Low/Moderate Income Housing - PA No. 2 39,135 511,903 39,135 Totals 511903 39.135 551,03$ The Agency elected to borrow $511,903, and $39,135 from Project Area No. 1 and Project Area No. 2, respectively, of the Low/Moderate Income Housing Funds to make the ERAF payment in fiscal year ended June 30, 1994. The Redevelopment Agency Project Area No. 1 and Project Area No. 2 Debt Service Funds will repay the Low/Moderate Income Housing Special Revenue Funds. The Agency has ten years to repay this loan. The Agency has elected to make repayment in the tenth year (2003-04). 28 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (6) Capital Assets Capital asset activity for the year ended June 30, 2001 was as follows: Land Buildings Totals at historical cost Less accumulated depreciation for: Buildings Total capital assets, net 7 Property Taxes Balances at Balances at June 31_2000 Additions Deletions .lune 30 2001 $9,108,279 45,040 (88,000) 9,065,319 880,000 - - _880.000 9988279 45,040((88,000) 9,945,319 146,667 29,333 - 176,000 9 4 b 15 _OM00) 9 J 699 3j9 Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes are recorded initially in a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City of La Quinta accrues only those taxes that are received from the County within sixty days after year-end. Lien date January 1 Levy date July 1 Due dates November 1 and February 1 Collection dates December 10 and April 10 The La Quinta Redevelopment Agency's primary source of revenue comes from property taxes. Property taxes allocated to the Agency are computed in the following manner: (a) The assessed valuation of all property within the project area is determined on the date of adoption of the Redevelopment Plan. (b) Property taxes related to the incremental increase in assessed values after the adoption of the Redevelopment Plan are allocated to the Agency; all taxes on the "frozen" assessed valuation of the property are allocated to the City and other districts. 29 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (7) Property Taxes, (Continued) 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. (8) Long -Term Liabilities Long-term liability activity for the year ended June 30, 2001 was as follows: Project Area No. 1: 1994 Tax Allocation Bonds 1998 Tax Allocation Bonds 1995 Housing Tax Allocation Bonds Pass-through agreements payable: Due to County of Riverside Coachella Valley Unified School District Advances from City of La Quinta Project Area No. 2: 1998 Tax Allocation Bonds 1995 Housing Tax Allocation Bonds Due to County of Riverside Advances from City of La Quinta Total long-term liabilities (9) Tax Allocation Bonds $92.925.995 LQZME ILM5,) 9>,4.j 1 0 Tax Allocation Refunding Boyds, 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. 30 Amounts Balance at Balance at due within June 30, 2000 Additions Deletions June 30, 2001 one year $22,005,000 - (1,140,000) 20,865,000 1,195,000 15,760,000 - - 15,760,000 - 16,904,618 (279,469) 16,625,149 291,277 9,899,102 (1,259,257) 8,639,845 8,639,845 9,418,223 - (670,818) 8,747,405 684,233 4,055,839 405,584 - 4,461,423 - 6,670,000 - (80,000) 6,590,000 85,000 4,570,382 - (75,531) 4,494,851 78,723 2,350,000 - - 2,350,000 100,000 6,292,831 629,283 6.922.114 - $92.925.995 LQZME ILM5,) 9>,4.j 1 0 Tax Allocation Refunding Boyds, 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. 30 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 9) Tax Allocation Bonds, (Continued 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. There are certain limitations regarding the issuance of parity debt as further described in the official statement. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2001 is $20,865,000. Tax Allocation Refunding yonds, Series -1 998 - Project Area No. 1 Tax allocation refunding bonds, Series 1998, in the amount of $15,760,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1991. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 1. The unexpended balance of proceeds at June 30, 2001 is $5,357,019. Interest rates on the bonds range from 5.20% to 5.25% and are payable semi, -annually on March I and September i of each year until maturity. The interest and principal of the bonds are payable from pledged tax increment revenues on a parity with the Agency's previously issued Tax Allocation Refunding Bonds, Series 1994. There are certain limitations regarding the issuance of parity debt as further described in the official statement. Term Bonds maturing September 1, 2028 are subject to mandatory sinking fund redemption, in part by Iot, on September 1, 2013 and on each September 1 thereafter, through September 1, 2028, at a price equal to the principal amount thereof plus accrued interest. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2001 is $15,760,000. Tax Allocation Refunding Bonds, Series 1998 - Project Area No. 2 Tax allocation refunding bonds, Series 1998, in the amount of $6,750,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1992. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 2. The unexpended balance of proceeds at June 30, 2001 is $214,396. Interest rates on the bonds range from 3.75% to 5.25% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable solely from pledged tax increment revenues of Project Area No. 2. 31 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (9) Tax Allocation Bonds, (Continued) Term Bonds maturing September 1, 2028 and September 1, 2033 are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2009 and September 1, 2019, respectively, and on each September 1 thereafter at a price equal to the principal amount thereof plus accrued interest. There are certain limitations regarding the issuance of parity debt as further described in the official statement. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2001 is $6,590,000. 1( 0) 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. The interest and principal of the bonds are payable from pledged tax increment revenues of both project areas. 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. There are certain limitations regarding the issuance of parity debt as further described in the official statement. The principal balance of outstanding bonds at June 30, 2001 is $21,120,000. 32 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (13) Advances from the City of La ,Quinta The City of La Quinta advances money to the Redevelopment Agency to cover operating and capital shortfalls. There is no stipulated repayment date established for the City advance. Interest accrues at 10% per annum. At Tune 30, 2001, the outstanding balances for Project Area No. 1 and Project Area No. 2 are $4,461,423 and $6,922,114, respectively. 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, 2001 are as follows (advances payable to the City have been excluded since minimum annual debt service payments have not been established): 34 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (11) Due to County of Riverside Proi ect 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. Unpaid balances accrue interest at 5.5% per annum. The balance at June 30, 2001 is $8,639,845. Project Area No. 2 Based on an agreement dated July 5, 1989 between the Agency and the County, until the tax increment reaches $5,000,000 annually in Project Area No. 2, the Agency will pay to the County 50% of the County portion of tax increment. At the County's option, the County's pass-through portion can be retained by the Agency to finance new County facilities or land costs that benefit the County and serve the La Quinta population. Per the agreement, the Agency must repay all amounts withheld from the County. The tax increment is to be paid to the County in amounts ranging from $100,000 to $250,000 over a payment schedule through June 30, 2015. Interest does not accrue on this obligation. The balance at June 30, 2001 is $2,350,000. (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 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, 2001 totaled $8,747,405. The District agrees to use such funds to provide classroom and other construction costs, site acquisition, school buses, expansion or rehabilitation of current facilities. 33 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (14) Debt Service Requirements to Maturity, (Continued Redevelopment Agency RDA RDA PA No. 1 Project Area No. I. PA No. 2 and No. 2 Pass -throe h A regiments Tax Tax Tax Coachella Allocation Allocation Allocation 1995 Valley Bonds Bonds Bonds Housing Tax Unified County Fiscal Series Series Series Allocation School of Year 1994 1998 1998 Bonds District Riverside Total 2001-02 $2,620,315 819,520 419,249 1,590,690 684,233 8,739,845 14,873,852 2002-03 2,620,855 819,520 420,747 1,592,820 697,918 100,000 6,251,860 2003-04 2,599,465 819,520 417,080 1,588,538 711,877 100,000 6,236,480 2004-05 2,612,140 819,520 418,264 1,587,990 726,114 100,000 6,264,028 2005-06 2,597,700 819,520 419,167 1,590,890 740,636 100,000 6,267,913 2006-07 2,593,456 819,520 419,785 1,645,502 755,449 100,000 6,333,712 2007-08 2,590,816 819,520 420,135 1,646,470 770,558 150,000 6,397,499 2008-09 2,584,232 819,520 420,184 1,645,125 785,968 200,000 6,455,029 2009-10 2,578,160 819,520 419,550 1,641,540 801,688 200,000 6,460,458 2010-11 2,571,868 819,520 418,272 1,640,840 817,722 200,000 6,468,222 2011-12 2,569,442 819,520 416,738 1,641,650 834,076 250,000 6,531,426 2012-13 2,560,155 819,520 419,819 1,638,750 421,166 250,000 6,109,410 2013-14 - 1,457,490 417,516 1,638,300 - 250,000 3,763,306 2014-15 - 1,457,520 414,956 1,635,150 - 250,000 3,757,626 2015-16 - 1,455,730 417,012 1,634,150 - - 3,506,892 2016-17 - 1,456,990 418,556 1,630,150 - - 3,505,696 2017-18 - 1,451,300 414,716 1,632,850 - - 3,498,866 2018-19 - 1,453,530 415,491 1,627,100 - - 3,496,121 2019-20 - 1,453,420 415,631 1,627,750 - 3,496,801 2020-21 - 1,450,970 415,131 1,624,500 - - 3,490,601 2021-22 - 1,451,050 414,106 1,622,200 - 3,487,356 2022-23 - 1,448,530 417,425 1,620,550 - 3,486,505 2023-24 - 1,448,280 415,088 1,619,250 - - 3,482,618 2024-25 - 1,445,170 417,094 1,613,150 - - 3,475,414 2025-26 - - 1,444,070 413,444 1,611,950 - - 3,469,464 2026-27 - 1,439,850 414,137 - - - 1,853,987 2027-28 - 1,437,380 414,044 - 1,851,424 2028-29 - 1,436,400 413,162 - - 1,849,562 2029-30 - - 411,494 - - - 411,494 2030-31 - - 413,906 - - - 413,906 2031-32 - - 410,400 - - 410,400 2032-33 _ _ 410,975 - - - 410,975 2033-34 - - 41.0,500 - - 410.5110 Principal and interest 31,098,604 33,021,920 13,733,774 40,587,855 8,747,405 10,989,845 138,179,403 Less: Interest { 10,233,604) (17{261,920} 7 143 774) 1919 4( ; 67.855) - - 154,107, 153) Total Principal ( L& 76()&O.a5C21 dM -8,2Q1L5 35 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic 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) Transfers In and Out The accompanying schedule identifies the funds from which interfund transfers are made and the funds to which those amounts are transferred: Transfers To Redevelopment Agency Debt Service — PA No. 1 Redevelopment Agency Debt Service — PA No. 2 Redevelopment Agency Capital Projects — PA No. 1 Redevelopment Agency Capital Projects — PA No. 2 Totals Transfers From Low/Moderate . Low/Moderate Redevelopment Redevelopment Income Housing - Income Housing - Agency Debt Agency Debt PA No. 1 PA No. 2 Service PA No. I Service PA No. 2 Totals $1,739,031 - - - 1,739,031 (17) Restatement of Fund Balances 338,760 - - 338,760 3,888,672 - 3,888,672 The following fund balances were restated at July 1, 2000 as follows: U30,180 180 1.230.180 Special Revenue Low/Moderate Income flousin — PA No. 1 Fund balances at July 1, 2000 $6,641,912 To record the effects of deferred revenue on notes receivable6{ 29,609) Fund balances at July 1, 2000, as restated 26.012 1-Q3 36 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (18) Subsequent Events On August 1, 2001, the Redevelopment Agency Project No. 1 issued $48,000,000 of tax allocation bonds to finance certain redevelopment projects benefiting the project area. Interest rates on the bonds range from 5.00% to 5.10% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable from pledged tax increment revenues on a parity with the Agency's previously issued 1994 and 1998 tax allocation bonds. Principal payments are due in annual installments ranging from $1,565,000 to $3,805,000. The final maturity date of the bonds is September 1, 2031. 37 (This page intentionally left blank) 38 REQUIRED SUPPLEMENTARY INFORMATION 39 LA QUINTA REDEVELOPMENT AGENCY Notes to Required Supplementary Information Year ended June 30, 2001 (1) Budizets and Budgetary Accounting The Agency adopts an annual budget prepared on the modified accrual basis of accounting for its governmental funds and on the accrual basis of accounting for its proprietary finds. The City Manager or his designee is authorized to transfer budgeted amounts between the accounts of any department. Revisions that alter the total appropriations of any department or fund are approved by City Council. Additional appropriations in the amount of $2,076,590 were made during the year. Prior year appropriations lapse unless they are approved for carryover into the following fiscal year. Expenditures may not legally exceed appropriations at the department level. Reserves for encumbrances are not recorded by the City of La Quinta. 40 LA QUINTA REDEVELOPMENT AGENCY Low/Moderate Income Housing Fund - PA No. 1 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year Ended June 30, 2001 41 Budget Variance with Final Budget Original Final Actual Eative) Positive (PSE Taxes Developer fees $ 3,100,292 - 3,486,725 3,737,113 250,388 Investment income 312,880 312,880 45,848 96,383 45,848 (216,497) Rental income Proceeds from sale of property 341,000 150,000 341,000 150,000 388,121 47,121 Miscellaneous revenues 406,461 256,461 - - 25,096 25,096 Total revenues 3,904,172 4,290,605 4,699,022 408,417 Expenditures: Current: Planning and development 7,508,980 8,725,380 3,265,008 1,460,372 Total expenditures 7,508,980 8,725,380 3,265,008 5,460,372 Excess (deficiency) of revenues over (under) expenditures (3,604,808) (4,434,775) 1,434,014 5,868,789 Other financing sources (uses): Transfers out (1,739,031) 1,739,031) 1,739,031) - Total other financing sources (uses) (1,739,031) (1,739,0 (1,739,031) _ Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (5,343,839) (6,173,806) (305,017) 5,868,789 Fund balances at beginning of year, as restated 6,012,303 6,012,303 6,012,303 _ Fund balances at end of year $ 668,464 (161,503) 5,707,286 5,868,789 41 LA QUINTA REDEVELOPMENT AGENCY Low/Moderate Income Housing Fund - PA No. 2 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year Ended June 30, 2001 42 Bildilaret Variance with Final Budget Original Final Actual Positive (negative) Revenues: Taxes Investment income $ 1,219,165 60,800 1,410,644 60,800 1,517,600 106,956 185,625 124,825 Total revenues 1,279,965 1,471,444 1,703,225 231,781 Expenditures: Current: Planning and development 2,152,482 3,012,672 837,605 2,175,067 Total expenditures 2,152,482 3,0� 112 6.72 837,605 2,175,067 Excess (deficiency) of revenues over (under) expenditures (872,517) (1,541,228) 865,620 2,406,848 Other financing sources (uses): Transfers out Transfers to the City of La Quinta (338,760) - (338,760) 1,602,639 (338,760) (153,379) 1,449,260 Total other financing sources (uses) (338,760) 1,941,399 (492,139 1,449,260 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (1,211,277) (3,482,627) 373,481 3,856,108 Fund balances at beginning of year 3,377,365 3,377,365 3,377,365 - Fund balances at end of year $ 2,166,088 (105,262) 3,750,846 3,856,108 42 LA QUINTA REDEVELOPMENT AGENCY Low/Moderate Bond Fund - PA No. 1 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year Ended June 30, 2001 Budget Original Final Revenues: Investment income $ Total revenues _ Other financing sources (uses): Transfers to the City of La Quinta _ Total other financing sources (uses) _ Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses _ Fund balances at beginning of year 1,741,539 Fund balances at end of year $ 1,741 539 43 1,784,724 (1,784.724 (1,784,724) 1,741,539 ( ) Actual 268,391 268,391 1,177,000 1,177,000 (908,609) 1,741,539 832,930 Variance with Final Budget Positive (negative) 268,391 268,391 607,724 607,724 876,115 876,115 LA QUINTA REDEVELOPMENT AGENCY Low/Moderate _Bond Fund - PA No. 2 Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Year Ended June 30, 2001 Budget Original Final Revenues: Investment income $ Total revenues - Other financing sources (uses): Transfers out Total other financing sources (uses) - Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses - Fund balances at beginning of year 2,508,718 Fund balances at end of year $ 2,508,718 44 (2,522;731) (2,522,731) (2,522,731) 2,508,718 (14,013) Actual 74,163 74,163 74,163 2,508,718 2,582,881 Variance with Final Budget Positive (negative) 74,163 74,163 2,522,731 2,522,731 2,596,894 2,596,894 CONRADAND CERTIFIED PUBLIC ACCOUNTANTS L.L.P. 11 MAIN STREET, SUITE C ASSOCIATES, IRVINE, CALIFORNIA 92614 Board of Directors (949) 474-2020 La Quinta Redevelopment Agency Fax (949) 263-5520 La Quinta, California REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING EASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMP—D We have audited the financial statements of the La Quinta Redevelopment Agency as of and for the year ended June 30, 2001, and have issued our report thereon dated August 17, 2001. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Compliance As part of obtaining reasonable assurance about whether the financial statements of the La Quinta Redevelopment Agency are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. Such provisions include those provisions of laws and regulations identified in the Guidelines for Compliance Audits of C'alifarnia redevelopment Agencies, issued by the State Controller. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. Internal Control Over Financial Reporting In planning and performing our audit, we considered the La Quinta Redevelopment Agency's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of the Audit committee, management, and the State Controller and is not intended to be and should not be used by anyone other than those specified parties. August 17, 2001 45 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION (This page intentionally left blank) 46