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FY 2001-2002 RDA Financial StatementsLA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 2002 (with Independent Auditors' Report Thereon) (This page intentionally left blank) LA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 2002 TABLE OF CONTENTS Page Independent Auditors' Report 1 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Assets 2 Statement of Activities 3 Fund Financial Statements: Governmental Funds: Balance Sheet 4 Reconciliation of the Balance Sheets of Governmental Funds to the Statement of Net Assets 6 Statement of Revenues, Expenditures and Changes in Fund Balances 7 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 10 Notes to the Basic Financial Statements 11 Required Supplementary Information: Notes to Required Supplementary Information 39 Schedule of Revenues, Expenditures, and Changes in Fund Balances — Budget and Actual: Low/Moderate Income Housing Fund — PA No. 1 40 Low/Moderate Income Housing Fund — PA No. 2 41 Low/Moderate Bond Fund — PA No.1 42 Low/Moderate Bond Fund — PA No. 2 43 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 44 (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, 2002, 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 present fairly, in all material respects, the financial position of the La Quinta Redevelopment Agency at June 30, 2002, and the results of its operations for the year then ended, in conformity with accounting principles generally accepted in the United States of America. 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. In accordance with Government Auditing Standards, we have also issued a report dated August 16, 2002 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. 14t -m& / A pj el L . L .rte August 16, 2002 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 Statement of Net Assets June 30, 2002 Assets: Cash and investments (note 2) Accounts receivable Prepaid items Interest receivable Notes receivable (note 3) Due from the City of La Quinta Due from other governments Advances from the City of La Quinta Restricted assets: Cash and investments with fiscal agent (note 2) Capital assets (note 6): Land Other capital assets, net Total assets Liabilities: Accounts payable Accrued salaries and benefits Interest payable Deposits payable Due to the City of La Quinta Due to other governments Noncurrent liabilities (notes 8 to 13): Due within one year Due in more than one year Total liabilities Net assets: Invested in capital assets, net of related debt Restricted for: Low moderate housing Capital projects Unrestricted Total net assets Governmental Activities 2002 2001 $ 21,358,275 18,662,739 166,984 149,199 - 3,515 - 833 12,509,966 8,861,382 2,294,106 - 693,210 260,388 1,249,728 - 39,447,831 9,714,808 51,450,306 9,065,319 644,000 704,000 129,814,406 47,422,183 188,307 2,222,309 15,788 2,805,860 55,226 16,469 1,376,631 14,283 767,170 730,884 2,537,918 11,074,078 167,496,980 84,381,709 175,267,162 1,182,033 98,416,450 20,617,434 18,287,655 39,769,632 16,510,117 (107,021,855) (85,792,039) $ (45,452,756) (50,994,267) See accompanying notes to the basic financial statements. N LA QUINTA REDEVELOPMENT AGENCY Statement of Activities Year ended June 30, 2002 Program revenues Operating Capital Charges for Contributions Contributions Governmental Activities Expenses Services and Grants and Grants 2002 2001 Governmental activities: Planning and development $ 5,968,560 - - 996,861 (4,971,699) (4,969,455) Low and moderate housing 5,633,451 - - 3,548,584 (2,084,867) 612,856 Interest expense 7,387,676 - - - (7,387,676) (5,432,682) Total governmental activities $ 18,989,687 _ - 4,545,445 (14,444,242) (9,789,281) General revenues: Taxes: Property taxes 18,899,329 15,324,183 Investment income 761,259 1,195,109 Rental income 321,145 388,121 Gain (loss) on sale of capital assets (21,397) 318,461 Miscellaneous revenues 25,417 25,096 Total general revenues Change in net assets Net assets (deficit) at beginning of year Net assets (deficit) at end of year 19,985,753 17,25 0,970 5,541,511 7,461,689 (50,994,267) (58,455,956) $ (45,452,756) (54}� 9 See accompanying notes to the basic financial statements. CI LA QUINTA REDEVELOPMENT AGENCY Governmental Funds - Balance Sheet June 30, 2002 Assets Cash and investments Cash and investments with fiscal agent Accounts receivable Prepaid items Interest receivable Notes receivable Due from other funds (note 4) Due from the City of La Quinta Due from other governments Advances to other funds (note 5) Advances to the City of La Quinta Total assets Liabilities and Fund Balances Liabilities: Accounts payable Accrued 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) Advances from the City of La Quinta (notes 8 and 13) Total liabilities Fund balances: Reserved for: Bond projects Debt service Prepaid items Notes receivable Advances to other funds Advances to the City of La Quinta Unreserved, reported in: Special revenue funds Debt service funds Capital projects funds SDecial 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 $ 3,278,978 4,633,313 - 342,643 - - 213,022 2,030,747 106,084 - - - 3,009,966 10,205,840 - - - - - 2,538 72,504 66,138 - - - 39,135 - S 6,467,532 14,944,426 213,022 2,375,928 $ 34,496 26,805 - - 873,855 10,205,840 - 15,788 - - - 5,907 5,688 150,348 - 930,046 10,238,333 150,348 y 2,136,111 - - - 39,135 - - 3,401,375 4,666,958 Total fund balances 5,537,486 4,7061093 Total liabilities and fund balances $ 6,467,532 14,944,426 See accompanying notes to the basic financial statements. 4 62,674 2,375,928 62,674 2,375,928 213,022 2,3� 7 Debt Service Funds Capital Projects Funds Redevelopment Redevelopment Redevelopment Redevelopment Agency - Agency - Agency - Agency - PA No. 1 PA No. 2 PA No. 1 PA No. 2 9,584,722 1,768,561 - 1,750,058 115,367 290,015 264,553 9,990,104 2,033,114 37,087,727 2,176, 682 1,249,728 40,514,137 968 60,900 117,424 1,929,350 Totals 2002 2001 21,358,275 18,662,739 39,447,831 9,714,808 166,984 149,199 - 3,515 - 833 13,215,806 13,488,554 2,538 100,000 2,294,106 - 693,210 260,388 39,135 551,038 1,249,728 - 78,467,613 42,931,074 97,068 - 20,452 9,486 188,307 55,226 - - - - - 16,469 - - - - 11,079,695 11,378,904 - - - - 15,788 14,283 - 2,538 - - 2,538 100,000 - - 2,642,491 1,426 2,805,860 767,170 - - - - - 730,884 - 39,135 - 39,135 551,038 4,907,565 7,614,325 - - 12,521,890 - 5,004,633 7,655,998 2,662,943 10,912 26,653,213 13,613,974 - - 37,087,727 968 37,088,695 9,512,701 4,985,471 - - - 4,985,471 4,583,507 - - - - - 3,515 - - - - 2,136,111 2,109,650 - - - - 39,135 551,038 - - 1,249,728 - 1,249,728 - - - - - 10,506,935 6,271,969 - (5,622,884) - - (5,622,884) - - - (486,261) 1,917,470 1,431,209 6,284,720 4,985,471 05,622,884) 37,851,194 1,918,438 51,814,400 29,317,100 9,990,104 2,033,114 40,514,137 1,929,350 78,467,613 42,931,074 E LA QUINTA REDEVELOPMENT AGENCY Governmental Funds Reconcilation of the Balance Sheet of Governmental Funds to the Statement of Net Assets June 30, 2002 Fund balances of governmental funds $ 51,814,400 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. 52,094,306 Long term debt from the General Long Term Debt Account Group that have not been included in the governmental fund activity. (157,513,008) Accrued interest payable for the current portion of interest due on Long term debt has not been reported in the governmental funds. (2,222,309) Revenues that are measurable but not available. Amounts are recorded as deferred revenue under the modified accrual basis of accounting. 10,373,855 Net assets of governmental activities $ 45,452,756) See accompanying notes to the basic financial statements. Col (This page intentionally left blank) LA QUINTA REDEVELOPMENT AGENCY Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 2002 Low/Moderate Income Housing - PA No. 1 Revenues: Special Revenue Funds Low/Moderate Income Housing - PA No. 2 Low/Moderate Low/Moderate Bond - Bond - PA No. 1 PA No. 2 Taxes $ 4,488,487 2,025,212 - - Developer fees 48,584 - - - Investment income 266,303 115,748 62,674 16,964 Rental income 321,145 - - - Miscellaneous revenues 25,417 - - - Total revenues 5,149,936 2,140,960 62,674 16,964 Expenditures: Current: Planning and development 3,729,333 682,703 - - Capital outlay - - - - Debt service: Principal - - - - Interest - - - - Payments under pass-through obligations - - - - Total expenditures 3,729,333 682,703 - - Excess (deficiency) of revenues over (under) expenditures 1,420,603 1,458,257 62,674 16,964 Other financing sources (uses): Proceeds of tax allocation bonds - - - Proceeds of advances from City - - - - Sale of capital assets 146,603 - - - Transfers in (note 15) - - - - Transfers out (note 15) (1,737,006) (338,442) - - Transfers to the City of La Quinta - (164,568) (832,930 (223,917) Total other financing sources (uses) (1,590,403) (503,010) (832,930) (223,917) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (169,800) 955,247 (770,256) (206,953) Fund balances (deficit) at beginning of year, as restated (note 16) 5,707,286 3,750,846 832,930 2,582,881 Fund balances (deficit) at end of year $ 5,537,486 4,706,093 62,674 2,375,928 See accompanying notes to the basic financial statements. 8 Debt Service Funds Redevelopment Agency - PA No. 1 Redevelopment Agency - PA No. 2 Capital Projects Funds Redevelopment Redevelopment Agency - Agency - PA No. 1 PA No. 2 Totals 2002 2001 17,953,949 8,100,847 - - 32,568,495 26,273,564 - - - - 48,584 50,848 344,259 28,769 728,658 72,622 1,635,997 1,518,648 - - - - 321,145 388,121 - - - - 25,417 25,096 18,298,208 8,129,616 728,658 72,622 34,599,638 28,256,277 285,551 123,147 4,892,719 227,402 9,940,855 5,545,313 - - - - - 46,040 10,126,122 947,956 - - 11,074,078 3,505,075 5,255,819 1,286,179 - - 6,541,998 5,458,291 8,194,449 5,474,717 - - 13,669,166 10,949,381 23,861,941 7,831,999 4,892,719 227,402 41,226,097 25,504,100 (5,563,733) 297,617 (4,164,061) (154,780) (6,626,459) 2,752,177 - 88,000,000 - 88,000,000 - - - - - - 1,034,867 - - - - 146,603 406,461 11,090,291 338,442 - - 11,428,733 7,196,643 - - (9,353,285) - (11,428,733) (7,196,643) - - (44,936,01 (1,481,875) (47,639,307) (5,277,463) 11,090,291 338,442 33,710,698 (1,481,875) 40,507,296 (3,836,135) 5,526,558 636,059 29,546,637 (1,636,655) 33,880,837 (1,083,958) (541,087) (6,258,943) 8,304,557 3,555,093 17,933,563 30,401,058 4,985,471 (5,622,884) 37,851,194 1,918,438 51,814,400 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, 2002 Net changes in fund balances - total governmental funds $ 33,880,837 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, th 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. 42,492,987 Governmental funds report gross proceeds from property sales . In the statement of activities, proceeds are netted against book value. (168,000) Proceeds of long term debt is recorded as an other financing source in governmental funds. In the statement of activities, new debt increases liabilities (88,000,000) Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. 11,074,078 Bond issuance costs are recorded as an expenditure in the governmental funds while full accrual requires the amortization of these costs over the life the debt. 3,485,164 The statement of net assets includes accrued interest on long term debt. (845,678) Revenues that are measurable but not available. Amounts are not recorded as revenues under the modified accrual basis of accounting. 3,622,123 Changes in net assets of governmental activities $ 5,541,511 See accompanying notes to the basic financial statements. 10 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements Year ended June 30, 2002 T Summ 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 Objectives The general objective of the Redevelopment Plan adopted by the Agency is to encourage investment in the Redevelopment Project Areas by the private sector. The Redevelopment Plan provides for the demolition of buildings and improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improvements. The Redevelopment Plan also includes the ability to redevelop land by private enterprise or public agencies, the rehabilitation of structures, the rehabilitation or construction of single family and low and moderate income housing, and participation by owners and tenants of properties in the Redevelopment Project. Redevelopment Project Areas The Agency has established two redevelopment project areas. On November 29, 1983 the City Council approved and adopted the Redevelopment Plan for the La Quints Redevelopment Project Area No. 1. On May 16, 1989 the City Council approved and adopted the Redevelopment Plan for the La Quinta Redevelopment Project Area No. 2. These plans provide for the elimination of blight and deterioration that was found to exist in the project areas. Tax Increment Financing The Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a redevelopment project. The assessed valuation of a redevelopment project last equalized prior to adoption of a redevelopment plan or amendment to such redevelopment plan, or "base roll", is established and, except for any period during which the assessed valuation drops below the base year level, the taxing bodies, thereafter, receive the taxes produced by the levy of the current tax rate upon the base roll. Taxes collected upon any increase in assessed valuation over the base roll {"tax increment"} are paid and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment agencies themselves have no authority to levy property taxes. 11 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (1) Summaa of Significant Accounting Policies, (Continued) (b) Basis of Accounting and Measurement Focus The basic financial statements of the Agency are composed of the following: a Government -wide financial statements Fund financial statements • Notes to the 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. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from nonexchange transaction are recognized in accordance with the requirements of GASB Statement No. 33. 12 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 1) SUITIMaiti of Sip-nificant Accounting Policies, (Continued Program revenues include charges for service and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Amounts paid to acquire capital assets are capitalized as assets in the government -wide financial statements, rather than reported as 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 funds and similar component units. Fiduciary funds primarily represent assets held by the Agency in a custodial capacity for other individuals or organizations. The Agency has no 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 sixty day availability period. 13 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued} Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government -mandated and voluntary non-exchange transactions are recognized as revenues when all applicable eligibility requirements have been met. In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. Non-current portions of long-term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered "available spendable resources," since they do not represent net current assets. Recognition of governmental fund type revenues represented by noncurrent receivables are deferred until they become current receivables. Noncurrent portions of other long-term receivables are offset by fund balance reserve accounts. Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other financing 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. 14 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued) (c) Activities in Major Funds The following funds are presented as major funds in the accompanying basic financial statements: Special Rever To account fc restricted for households. ie, Low_ and Moderate Income Housing P.A. No. 1 and No. 2 Funds — the required 20% set aside of property tax increments that is legally increasing or improving housing for low and moderate income Special Revenue, Low and Moderate Bond Fund P.A. No. 1 and No. 2 Funds — To account for bond proceeds and expenditures of bond -financed low and moderate income housing programs. 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 $51,814,400 differs from "net assets" of governmental activities of $(45,452,756) 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 $ 2,538 Advances from/to other funds 39,135 Total reclassifications and eliminations 41 673 15 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 1 Summm of Significant Accounting Policies Continued (d) Explanation of Differences between Governmental Funds Balance Sheet and the Statement of Net Assets Assets: Cash and investments Cash with fiscal agent Accounts receivable Notes receivable Due from other funds Due from the City of La Quinta Due from other governments Advances to other funds Advances to the City of La Quinta Land Buildings, net Total assets Liabilities: Accounts payable Interest payable Deferred revenue Deposits payable Due to other funds Due to the City of La Quinta Advances from other funds Advances from the City of La Quinta Long term liabilities Total liabilities Fund balances/net assets Total liabilities and fund balances/net assets Total Governmental Capital Accumulated Funds Assets Depreciation $ 21,358,275 - - 39,447,831 - - 166,984 - - 13,215,806 - - 2,538 - - 2,294,106 - - 693,210 - - 39,135 - - 1,249,728 - - - 51,450,306 - - 840,000 (196,000) S 78,467,6 13 52,290,306 196,000) $ 188,307 - - 11,079,695 - - 15,788 - - 2,538 - - 2,805,860 - - 39,135 - - 12,521,890 - - 26,653,213 - 51,814,400 52,290,306 (196,000) $ 78,467,613 52,290,306 (196,000 16 Long-term Certain Reclassifications Statement of Debt Interest Deferred and Net Assets Transactions Payable Revenue Eliminations Totals 21,358,275 39,447,831 166,984 (705,840) - 12,509,966 - (2,538) - - - 2,294,106 - 693,210 - - (39,135) - 1,249,728 - 51,450,306 _ - - 644,000 (705,840) (41,673) 129,814,406 - - - _ 188,307 - 2,222,309 - 2,222,309 - - (11,079,695) _ - - - - - 15,788 - - - (2,538) - _ - - 2,805,860 - - - (39,135) - - _ - - 12,521,890 157,513,008 - - 157,513,008 157,513,008 2,222,309 (11,079,695) (41,673) 175,267,162 157,513,008 (2,222,309 10,373,855 - (45,452,756) - - 705,840 (41,673) 129,814,406 17 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 $33,880,837 differs from the "change in net assets" for governmental activities of $5,541,511 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. Transfers to/from other funds $ 11,428,733 Reclassification of pass-through payments 13,669,166 Total reclassifications and eliminations S 25.097.899 18 (This page intentionally left blank.) 19 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 1 Summn of Significant Accvuntrn Policies Continued (e) E lanation of Differences between Governmental Funds Operating Statements and the Statement of Activities Total Governmental Capital Funds Assets Revenues: Taxes $ 32,568,495 Developer fees 48,584 Investment income 1,635,997 Rental income 321,145 Miscellaneous revenues 25,417 Total revenues 34,599,638 Expenditures: Current: Planning and development 9,940,855 Debt service: Principal 11,074,078 Interest 6,541,998 Payments under pass-through obligations 13,669,166 Total expenditures 41,226,097 Other financing sources (uses): Proceeds of tax allocation bonds 88,000,000 Sale of capital assets 146,603 Transfers in 11,428,733 Transfers out (11,428,733) Transfers to the City of La Quinta (47,639,307) Total other financing sources (uses) 40,507,296 Net change in fund balances/net assets 33,880,837 Fund balances/net assets, beginning of year 17,933,563 Fund balances/net assets, end of year $ 51,814,400 20 (176,000) 42,520,987 42,344,987 42,344,987 Accumulated Depreciation 28,000 28,000 8,000 8,000 (20,000) 9,945,319 176,000) 52,290,306 (196,000) Long-term Certain Reclassifications Statement Debt Interest Deferred and of Activities Transactions Payable Revenue Eliminations Totals - - - (13,669,166) 18,899,329 - - 3,500,000 3,548,584 - - 122,123 - 1,758,120 (3,485,164) - (11,074,078) - - 845,678 (14,559,242 845,678 (88,000,000) - 321,145 25,417 3,622,123 (13,669,166) 24,552,595 - - 6,483,691 - - 7,387,676 (13,669,166) - (13,669,166) 13,871,367 (88,000,UUU) - - (73,440,758) (845,678) 3,622,123 (84,072,250) 1,376,631 6,751,732 (21,397) (11,428,733) - 11,428,733 - - (52118,320) (5,139,717) 5,541,511 - 0,994,267) (157,513,008) 2,222,309 10,373,855 - (45,452,756) 21 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (1) Stimmary of Significant Accounting Policies, Continued) (f) 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. 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. Buildings are depreciated over a useful life of thirty years. Capital assets include public domain (infrastructure) general fixed assets consisting of certain improvements including roads, streets, sidewalks, medians, and storm drains. 2 Cash and Investments Cash and investments held by the Agency at June 30, 2002 consisted of the following: Equity in State of California Local Agency Investment Fund $ 6,267,584 Equity in City cash and investment pool 15,090,691 Total cash and investments held by the Agency $21,358 275 Cash and investments held by fiscal agent at June 30, 2002 consisted of the following: Mutual funds - First American Treasury Obligations $39,447,831 Total cash and investments held by fiscal agent $39,447,831 The Agency is authorized by the City's investment policy to invest in the following types of investments: 22 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (2) Cash and Investments, (Continued) Investment Type Government Pools U.S. government and agency securities Commercial Paper Mutual Funds Certificates of Deposit Restriction $30 million and 20% of portfolio 100% of portfolio $2 million per issuer, and 90 days 20% 60% All investments have a maximum maturity of two years. 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.) 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. 23 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 2 Cash and Investments. Contintied Carrying Category Amount 1 2 5 Investments subject to categorization Investments held by the City not subject to categorization: Investment in State of California Local Agency Investment Fund 6,267,584 Equity in City cash and investment pool 15,090,691 Investments held by fiscal agent not subject to categorization: Investment in mutual funds: First American Treasury Obligation Fund 39,447,831 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. 24 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) Outstanding (3) Notes Receivable Balance at June 30, 2002 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. $ 2,909,244 In December 2000, the Agency entered into an agreement with DC&TC, LLC to receive $9,500,000 as a reimbursement for Agency costs incurred for the construction of infrastructure related to the development of senior apartments. Payments are due to the Agency in the amount of annual positive cash flow generated by the rental of the units. All unpaid principal and interest on the note are due fifty-five years after the completion of the project. Interest on the note accrues at three percent per annum. 9,500,000 Other notes receivable 100,722 Total notes receivable $12,509,966 (4) Due From and To Other Funds Current interfund receivables and payables balances at June 30, 2002 are as follows: Due to Special Revenue — Low/Moderate Bond — PA No. 2 Fund from: Debt Service Project Area No. 2 2 538 The interfund receivable and payable is to cover short-term cash deficiencies. 25 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 5() — Advances To and From Other Funds Long-term interfund receivables and payables at June 30, 2002 are as follows: Advances from Special Revenue — Low/Moderate Income Housing — Project Area No. 2 Fund to: Debt Service Project Area No. 2 $39,135 The Agency elected to borrow $39,135 from Project Area No. 2, of the Low/Moderate Income Housing Fund to make the ERAF payment in fiscal year ended June 30, 1994. The Redevelopment Agency Project Area No. 2 Debt Service Fund will repay the Low/Moderate Income Housing Special Revenue Fund. The Agency has ten years to repay this loan. The Agency has elected to make repayment in the tenth year (2003-04). (6) Capital Assets Capital asset activity for the year ended June 30, 2002 was as follows: Balances at Balances at June 30, 2001 Additions Deletions Jame 30, 2002 Buildings $ 880,000 - (44,000) 840,000 Total cost of depreciable assets 880,000 - (40,000) 840,000 Less accumulated depreciation for: Buildings Net depreciable assets Capital assets not depreciated: Land Capital assets, net (7) Property Taxes 1� ( 76,000)2( 8,900) 8,000 (196,000) 704,000 (28,0.00) (32,000) 644,000 9,065,319 42,520,9871( 36,000) 51,450,306 Ib9 3=19 42,492 9$7 (i6$,M) 52jt4.19 Under California law, property taxes are assessed and collected by the counties up to I% 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. 26 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (7) Property Taxes, (Continued) Lien date January 1 Levy date July 1 Due dates November 1 and February 1 Collection dates December 10 and April 10 The La Quinta Redevelopment Agency's primary source of revenue comes from property taxes. Property taxes allocated to the Agency are computed in the following manner: (a) The assessed valuation of all property within the project area is determined on the date of adoption of the Redevelopment Plan. (b) Property taxes related to the incremental increase in assessed values after the adoption of the Redevelopment Plan are allocated to the Agency; all taxes on the "frozen" assessed valuation of the property are allocated to the City and other districts. The Agency has no power to levy and collect taxes and any legislative property tax shift might reduce the amount of tax revenues that would otherwise be available to pay the principal of, and interest on, debt. Broadened property tax exemptions could have a similar effect. Conversely, any increase in the tax rate or assessed valuation, or any reduction or elimination of present exemptions would increase the amount of tax revenues that would be available to pay principal and interest on debt. 27 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 8) Long -Term Liabilities Long-term liability activity for the year ended June 30, 2002 was as follows: Amounts Balance at Balance at due within June 30, 2001 Additions Deletions June 30, 2002 one Year Project Area No. 1: 1994 Tax Allocation Bonds $ 20,865,000 (1,195,000) 19,670,000 1,260,000 1995 Housing Tax Allocation Bonds 16,625,149 (291.277) 16,333,872 307,022 1998 Tax Allocation Bonds 15,760,000 - 15,760,000 - 2001 Tax Allocation Bonds - 46,124,932 - 46,124,932 - 2002 Tax Allocation Bonds - 38,389,904 - 38,389,904 - Pass-through agreements payable: Due to County of Riverside 8,639,845 - (8,639,845) - Coachella Valley Unified School District 8,747,405 - (684,233) 8,063,172 697,918 Advances from City of La Quinta 4,461,423 446,142 - 4,907,565 - Project Area No. 2: 1995 Housing Tax Allocation Bonds 4,494,851 - (78,723) 4,416,128 82,978 1998 Tax Allocation Bonds 6,590,000 - (85.000) 6,505,000 90,000 Due to County of Riverside 2,350,000 - (100,000) 2,250,000 100,000 Advances from City of La Quinta 6,922,1 14 692.211 _7.614,325 - Total long-term liabilities (9) Tax Allocation Bonds $_93,i55. 7 $x.,653 181 lj,974X4 8) 170,03.1,898 2,531,?a Tax Allocation Refunding Bonds, Series 1994 Tax allocation refunding bonds, Series 1994, in the amount of $26,665,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1989 and 1990. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 1. Interest rates on the bonds ranges from 3.80% to 8% and are payable semi-annually on March I 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, 2002 is $19,670,000. 28 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 91 Tax Allocation Bands, (Continued Tax Allocation Refunding Bonds, Series 1998 - Project Area No. 1 Tax allocation refunding bonds, Series 1998, in the amount of $15,760,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1991. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 1. Interest rates on the bonds range from 5.20% to 5.25% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable from pledged tax increment revenues. 'There are certain limitations regarding the issuance of parity debt as further described in the official statement. Term Bonds maturing September 1, 2028 are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2013 and on each September 1 thereafter, through September 1, 2028, at a price equal to the principal amount thereof plus accrued interest. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at .lune 30, 2002 is $15,760,000. Tax Allocation Refunding Bonds, Series 1998 - Project Area No. 2 Tax allocation refunding bonds, Series 1998, in the amount of $6,750,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1992. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 2. Interest rates on the bonds range from 3.75% to 5.25% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable solely from pledged tax increment revenues of Project Area No. 2. Term Bonds maturing September 1, 2028 and September 1, 2033 are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2009 and September 1, 2019, respectively, and on each 'September 1 thereafter at a price equal to the principal amount thereof plus accrued interest. There are certain limitations regarding the issuance of parity debt as further described in the official statement. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2002 is $6,505,000. F LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 9) Tax Allocation Bonds, (Continued Tax Allocation Bonds, Series 2001 — Prosect Area No. 1 On August 15, 2001, the Agency issued tax allocation bonds in the amount of $48,000,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 1. The 2001 tax allocation bonds were issued at a discount of $422,400 and issuance costs of $1,517,325. The bonds consist of $17,280,000 of term bonds that accrue interest at 5.00% and mature on September 1, 2021 and $30,720,000 of term bonds that accrue interest at 5.18% and mature on September 1, 2031. The interest and principal on the bonds are payable from pledged tax increment revenues. A portion of the proceeds were used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bands at June 30, 2002 is $46,124,932 ($48,000,000 net of unamortized discount and issuance costs of $1,875,068). Tax Allocation Bonds, Series 2002 — Project Area No. 1 On June 12, 2002, the Agency issued tax allocation bonds in the amount of $40,000,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 1. The 2002 tax allocation bonds were issued at a discount of $360,000 and issuance costs of $1,250,096. At June 30, 2002, the unexpended balance of bond proceeds is $37,087,727. The bonds consist of $6,355,000 of serial bonds and $33,645,000 of term bonds. Interest rates on serial bonds range from 1.75% and 4.00% and are payable semi-annually on March 1 and September 1 of each year until maturity. Term bonds accrue interest at 5.00% and 5.125% and mature on September 1, 2022 and September 1, 2023. The interest and principal on the bonds are payable from pledged tax increment revenues. A portion of the proceeds were used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2002 is $38,389,904 ($40,000,000 net of unamortized discount and issuance costs of $1,610,096). 30 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (9) Tax Allocation Bonds, (Continued) The minimum annual requirements (including sinking fund requirements) to amortize tax allocation bonds as of June 30, 2002 are as follows: Project Area No. 2 1998 Tax Allocation Bonds Principal Interest 90,000 Project Area No. 1 90,000 327,080 95,000 323,264 1994 Tax Allocation Bonds 1998 Tax Allocation Bonds 2001 Tax Allocation Bonds 2002 Tax Allocation Bonds June 30 Principal Interest Principal Interest Principal Interest Principal Interest 2003 $ 1,260,000 1,360,855 - 819,520 - 2,430,720 - 1,433,076 2004 1,325,000 1,274,465 - 819,520 - 2,430,720 565,000 1,905,825 2005 1,430,000 1,182,140 - 819,520 - 2,430,720 575,000 1,895,131 2006 1,510,000 1,087,700 - 819,520 - 2,430,720 585,000 1,882,361 2007 1,620,000 973,455 - 819,520 - 2,430,720 600,000 1,867,091 2008 1,740,000 850,815 - 819,520 - 2,430,720 615,000 1,849,617 2009 1,865,000 719,233 - 819,520 - 2,430,720 635,000 1,829,914 2010 2,000,000 578,160 - 819,520 2,430,720 660,000 1,807,557 2011 2,145,000 426,868 819,520 2,430,720 680,000 1,782,926 2012 2,305,000 264,443 819,520 2,430,720 705,000 1,756,430 2013 2,470,000 90,155 819,520 2,430,720 735,000 1,727,981 2014 - - 655,000 802,490 1,565,000 2,391,595 705,000 1,695,656 2015 - 690,000 767,520 1,645,000 2,311,345 735,000 1,659,656 2016 - 725,000 730,730 1,730,000 2,226,970 770,000 1,6227031 2017 - 765,000 691,990 1,815,000 2,138,345 810,000 1,582,531 2018 - 800,000 651,300 1,905,000 2,045,345 855,000 1,540,906 2019 - 845,000 608,530 2,000,000 1,947,720 895,000 1,497,156 2020 - 890,000 563,420 2,100,000 1,845,220 940,000 1,451,281 2021 - - 935,000 515,970 2,205,000 1,737,595 985,000 1,403,156 2022 - 985,000 466,050 2,315,000 1,624,595 1,035,000 1,352,656 2023 - - 1,035,000 413,530 2,430,000 1,504,755 1,090,000 1,299,531 2024 - - 1,090,000 358,280 2,555,000 1,377,637 1,140,000 1,243,069 2025 - - 1,145,000 300,170 2,685,000 1,244,018 1,200,000 1,183,106 2026 - - 1,205,000 239,070 2,820,000 1,103,640 1,265,000 1,119,941 2027 - - 1,265,000 174,850 2,965,000 956,123 1,330,000 1,053,444 2028 - - 1,330,000 107,380 3,120,000 800,955 1,395,000 983,615 2029 - - 1,400,000 36,400 3,275,000 637,882 1,470,000 910,200 2030 - - - - 3,445,000 466,523 3,015,000 795,272 2031 - - - 3,620,000 286,365 3,170,000 636,781 2032 - - - 3,805,000 97,027 3,335,000 470,091 2033 - - - - 7,505,000 192,316 2034 - - - - Project Area No. 2 1998 Tax Allocation Bonds Principal Interest 90,000 330,747 90,000 327,080 95,000 323,264 100,000 319,168 105,000 314,785 110,000 310,135 115,000 305,184 120,000 299,550 125,000 293,272 130,000 286,737 140,000 279,819 145,000 272,516 150,000 264,956 160,000 257,013 170,000 248,556 175,000 239,716 185,000 230,491 195,000 220,631 205,000 210,131 215,000 199,106 230,000 187,425 240,000 175,087 255,000 162,094 265,000 148,444 280,000 134,138 295,000 119,044 310,000 103,163 325,000 86,494 345,000 68,906 360,000 50,400 380,000 30,975 400,000 10,500 $ 19.670.000 8,808,289 15,760,000 16,442,400 48,000,000 53,481,575 40,000,000 43,430,304 6.505,000 6,809,527 31 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (10) 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, 2002 is $20,750,000. 32 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (10) 1995 Housing Tax Allocation Bonds, _(Continued) The minimum annual requirements (including sinking fund requirements) to amortize housing tax allocation bonds as of June 30, 2002 are as follows: 20.750.000 1$.246,175 33 1995 Housing TAB's June 30 Principal Interest 2003 $ 390,000 1,202,820 2004 405,000 1,183,538 2005 425,000 1,162,000 2006 450,000 1,140,890 2007 530,000 1,115,502 2008 560,000 1,086,470 2009 590,000 1,055,125 2010 620,000 1,021,540 2011 655,000 985,840 2012 695,000 946,650 2013 735,000 903,750 2014 780,000 858,300 2015 825,000 810,150 2016 875,000 759,150 2017 925,000 705,150 2018 985,000 647,850 2019 1,040,000 587,100 2020 1,105,000 522,750 2021 1,170,000 454,500 2022 1,240,000 382,200 2023 1,315,000 305,550 2024 1,395,000 224,250 2025 1,475,000 138,150 2026 1.565.000 46.950 20.750.000 1$.246,175 33 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (11) Due to County of Riverside Project Area No. 2 Based on an agreement dated July 5, 1989 between the Agency and the County, until the tax increment reaches $5,000,000 annually in Project Area No. 2, the Agency will pay to the County 50% of the County portion of tax increment. At the County's option, the County's pass-through portion can be retained by the Agency to finance new County facilities or land costs that benefit the County and serve the La Quinta population. Per the agreement, the Agency trust 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, 2002 is $2,250,000. The minimum annual requirement to amortize due to County of Riverside as of June 30, 2002 are as follows: June 30 Principal 2003 $ 100,000 2004 100,000 2005 100,000 2006 100,000 2007 100,000 2008 150,000 2009 200,000 2010 200,000 2011 200,000 2012 250,000 2013 250,000 2014 250,000 2015 250,000 2 250 000 (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, 2002 totaled $8,063,172. The District agrees to use such funds to provide classroom and other construction costs, site acquisition, school buses, expansion or rehabilitation of current facilities. 34 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) (12) Notes Payable to Coachella Valley Unified School District, (Continued The minimum annual requirements to amortize payable to Coachella Valley Unified School District as of June 30, 2002 are as follows: June 30 Principal 2003 $ 697,918 2004 711,877 2005 726,114 2006 740,636 2007 755,449 2008 770,558 2009 785,968 2010 801,688 2011 817,722 2012 834,076 2013 421,166 $8,063,172 (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 June 30, 2002, the outstanding balances for Project Area No. 1 and Project Area No. 2 are $4,907,565 and $7,614,325, respectively. 14 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. 35 LA QUINTA REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) 5) Transfers In and Out The following transfers were made during the year ended June 30, 2002: Transfers to the Debt Service — Project Area No. 1 Fund from: Capital Projects —Project Area No. 1 $ 9,353,285 Special Revenue — Low/Moderate Income Housing — Project Area No. 1 1,737,006 11,090,291 Transfers to the Debt Service — Project Area No. 2 Fund from: Special Revenue — Low/Moderate Income Housing — Project Area No. 2 338,442 Total transfers $11,428,733 (16) Restatement of Fund Balances The following fund balances were restated at July 1, 2001 as follows: Fund balances at July 1, 2001 Debt Service Debt Service PA No. I PA No. 2 $3,920,336 663,171 To record the effects of removing advances from the City of La Quinta from the long-term debt account group and recording the liability in the fund responsible for repayment (4,461,423 (6,922 114 Fund balances (deficit) at July 1, 2001, as restated $ 5�) 6 258 943 36 REQUIRED SUPPLEMENTARY INFORMATION 37 (This page intentionally left blank) 38 LA QUINTA REDEVELOPMENT AGENCY Notes to Required Supplementary Information Year ended June 30, 2002 (1) Budgets and Budgetary Accounting The Agency adopts an annual budget prepared on the modified accrual basis of accounting for its governmental funds. The City Manager or his designee is authorized to transfer budgeted amounts between the accounts of any department. Revisions that alter the total appropriations of any department or fund are approved by City Council. Appropriations were reduced by $94,194 during the year. Prior year appropriations laps: unless they are approved for carryover into the following fiscal year. Expenditures 111ay not legally exceed appropriations at the department level. Reserves for encumbrances are not recorded by the City of La Quinta. 39 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, 2002 Expenditures: Current: Planning and development Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Sale of capital assets 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 Fund balances at end of year 4,640,731 5,345,808 3,729,333 1,616,475 4,640,731 5,345,808 3,729,333 1,616,475 (508,404) (749,182) 1,420,603 2,169,785 3,265,008 3,265,008 1,027,553 150,000 150,000 146,603 (3,397) Variance with Prior (3,951,649) Budget 2,214,643 (1.739,031) Final Budget Year Original Final Actual Positive (negative) Actual (1,332,570) Revenues: Taxes $ 3,591,327 4,205,626 4,488,487 282,861 3,737,113 Developer fees - - 48,584 48,584 45,848 Investment income 200,000 50,000 266,302 216,302 96,383 Rental income 341,000 341,000 321,145 (19,855) 388,121 Miscellaneous revenues - - 25.418 25,418 25,096 Total revenues 4,132,327 4,596,626 5,149,936 553,310 4,292.561 Expenditures: Current: Planning and development Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Sale of capital assets 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 Fund balances at end of year 4,640,731 5,345,808 3,729,333 1,616,475 4,640,731 5,345,808 3,729,333 1,616,475 (508,404) (749,182) 1,420,603 2,169,785 3,265,008 3,265,008 1,027,553 150,000 150,000 146,603 (3,397) 406,461 (1,737,006) (3,951,649) (1,737,006) 2,214,643 (1.739,031) 5.537.486 4,381,031 5,707.286 (1.787,006) (3,801,649) (1,590,403) 2,211,246 (1,332,570) (2,095,410) (4,550,831) (169,800) 4,381,031 (305,017) 5,707,286 5,707,286 5,707,286 - 6.012.303 $ 3.611.876 1.156.455 5.537.486 4,381,031 5,707.286 40 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, 2002 Revenues: Taxes Investment income Total revenues Expenditures: Current: Planning and development Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Transfers out 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 Fund balances at end of year 2,827,167 2,027,896 682,702 1,345,194 837,605 2,827,167 2,027,896 682,702 1,345,194 837,605 (1,353,813) (166,086) 1,458,257 1,624,343 (338,442) (338,442) (338,442) - 2,449,259 164,568 2,284,691 (338,442) (2,787,701) (503,010) 2,284,691 (1,692,255) (2,953,787) Variance with Prior Budget 3,750,846 Final Budget Year Original Final Actual Positive (negative) Actual $ 1,452,654 1,841,110 2,025,212 184,102 1,517,600 20,700 20,700 115,747 95,047 185,625 1,473,354 1,861,810 2,140,959 279,149 1,703,225 2,827,167 2,027,896 682,702 1,345,194 837,605 2,827,167 2,027,896 682,702 1,345,194 837,605 (1,353,813) (166,086) 1,458,257 1,624,343 (338,442) (338,442) (338,442) - 2,449,259 164,568 2,284,691 (338,442) (2,787,701) (503,010) 2,284,691 (1,692,255) (2,953,787) 955,247 3,750,846 3,750,846 3,750,846 $ 2.058.591 797,059 4,706.093 41 3,909,034 3.909.034 865,620 (338,760) (153,379) (492,139 373,481 3,377,365 3.750.846 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, 2002 Variance with Prior Budget Final Budget Year Original _ Final Actual Positive (negative) Actual Revenues: Investment income $ - _ 62,674 62,674 268,391 Total revenues - - 62,674 62,674 268.391 Other financing sources (uses): Transfers to the City of La Quinta - 832,930 (832,930 - (1,177,000) Total other financing sources (uses) _ (832,930 (832,930) - (1,177,000) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses - (832,930) (770,256) 62,674 (908,609) Fund balances at beginning of year 832,930 832,930 832,9L0 - 1,741,539 Fund balances at end of year $ 832,930 - 62,674 62.674 832.930 42 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, 2002 Variance with Prior Budget Final Budget Year Original _ Final Actual Positive (negative) Actual Revenues: Investment income $ - - 16,964 16,964 74,163 Total revenues - - 16,964 16,964 74,163 Other financing sources (uses): Transfers to the City of La Quint - (2,582,881) (223,917) 2,358,964 - Total other financing sources (uses) - (2,582,881) (223,917) 2,358,964 - Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses - (2,582,881) (206,953) 2,375,928 74,163 Fund balances at beginning of year 2,582,881 2,582,881 2,582,881 - 2,508,718 Fund balances at end of year $ 2,582,881 - 2,375,928 2,375,928 2,582,881 43 CONRADAND CERTIFIED PUBLIC ACCOUNTANTS ASSOCIATES, L.L.P.1100 STREET, SUITE C IRVI EAIN CALIFORNIA 92614 (949) 474-2020 Board of Directors Fax (949) 263-5520 La Quinta Redevelopment Agency La Quinta, California REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL T? t~ 13n1?Tn (r R A T) ON AN AT II]IT OF FINANCIAL STATEMENTS PERFORMED We have audited the financial statements of the La Quinta Redevelopment Agency as of and for the year ended June 30, 2002, and have issued our report thereon dated August 16, 2002. 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 California 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 16, 2002 44 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION