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FY 1999-2000 RDA Financial StatementsLA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 2000 (with Independent Auditors' Report Thereon) CONED A I-XLADAND ASSOCIATES, SSOCIAl ES' L.L.P. CERTIFIED PUBLIC ACCOUNTANTS LA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 2000 (with Independent Auditors' Report Thereon) (This page intentionally left blank) LA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 2000 TABLE OF CONTENTS Page Independent Auditors' Report 1 Financial Statements: • Combined Balance Sheet - All Fund Types and Account Groups 2 • Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types 3 • Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Governmental Fund Types 4 • Notes to the Financial Statements 1 6 Supplemental Data: Special Revenue Funds: • Combining Balance Sheet 22 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 23 Debt Service Funds: • Combining Balance Sheet 24 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 25 Capital Projects Funds: • Combining Balance Sheet 26 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 27 Report on Compliance and on Internal Control Over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 28 (This page intentionally left blank) CONRADAND ASSOCIATES, 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 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, 2000, as listed in the table of contents. These financial statements are the responsibility of the management of the La Quinta Redevelopment Agency. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above prevent fairly, in all material respects, the financial position of the La Quinta Redevelopment Agency at June 30, 2000, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the 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 financial statements of the La Quinta Redevelopment Agency. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly presented in all material respects in relation to the financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued a report dated August 9, 2000 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 9, 2000 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MFaICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRAC LA QUINTA REDEVELOPMENT AGENCY Combined Balance Sheet - All Fund Types and Account Groups June 30, 2000 Equity and other credits: Investment in general fixed assets Fund balances: Reserved for: Debt service Bond projects Prepaid items Advances to other funds Notes receivable Unreserved: Designations Undesignated Total equity and other credits Total liabilities, equity and other credits - - 9,988,279 Governmental Fund T es Account Groups - 4,827,426 3,306,726 4,703,043 - 7,432,840 - - 12,135,883 14,020,124 332,088 - - General General Totals 551,038 - - - - 551,038 Special Debt Capital Fixed Long -Term (Memorandum Onl Assets and Other Debits Revenue Service Projects Assets Debt 2000 1999 38,631,664 Assets: Cash and investments (note 3) $ 7,178,890 5,718,057 4,134,189 - - 17,031,136 11,976,138 Cash with fiscal agent (note 3) 4,703,043 255,336 7,432,840 - - 12,391,219 120,351 14,204,070 104,906 Accounts receivable 59,451 - 60,900 - - - 332,088 Prepaid items - 332,088 - - 833 290,183 Interest receivable Notes receivable (note 4) 833 2,678,632 - - - _ - 2,678,632 2,668,851 Due from other funds (note 5) - 591 - - 591 591 Due from other governments - - - - 551,038 551,038 Advances to other funds (note 6) 551,038 - - Property, plant and - 9,988,279 - 9,988,279 10,233,506 equipment (note 7) - Other debits: Amount available in - - 4,827,426 4,827,426 3,306,726 debt service funds - - Amount to be provided for _ _ 93,098,569 93,098,569 94,586,137 retirement of long-term debt - - Total assets and other debits $ 15,171,887 6g3O5,481 11,628,520 9,988,279 97,925,995 141,020,162 137,922157 Liabilities E uity and Other Credits Liabilities:133,178 Accounts payable $ 101,917 4,503 26,758 - - 14,806 54,928 15,596 Deposits payable 14,806 - - - = 591 591 Due to other funds (note 5) - 591 - 143 - - - 785,773 775,477 Due to the City of La Quinta 785,630 - - 589,835 Due to other governments - 589,835 - - Advances from other - 551,038 - - ' 551,038 551,038 funds (note 6) Long-term debt - - 97,925,995 97,925,995 97,892,863 (notes 9 through 15) - - Total liabilities902,353 1,145,967 26,901 _ 97,925,995 100,001,216 99,290,493 Equity and other credits: Investment in general fixed assets Fund balances: Reserved for: Debt service Bond projects Prepaid items Advances to other funds Notes receivable Unreserved: Designations Undesignated Total equity and other credits Total liabilities, equity and other credits - - 9,988,279 - 9,988,279 10,233,506 - 4,827,426 _ - - 4,827,426 3,306,726 4,703,043 - 7,432,840 - - 12,135,883 14,020,124 332,088 - - - 332,088 - 551,038 - - - - 551,038 551,038 2,678,632 - - - - 2,678,632 2,668,851 6,981,902 - 4,168,779 - - 11,150,681 (645,0 8,463,522 (612,103) (645,081) 14,269,534 5,159,514 11,601,619 9,988,279 - 41,018,946 38,631,664 $ 15,171,887 6,305,481 .11,628,520,9,98-8,279 y 97,9!25,995 141,020,162 137,922,157 See accompanying notes to financial statements. 2 LA QUINTA REDEVELOPMENT AGENCY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types Year ended June 30, 2000 Revenues: Taxes Developer fees Investment income Rental income Gain (loss) on sale of land Litigation settlement proceeds Total revenues Expenditures: Current: Planning and development Capital outlay Debt service: Principal Interest Payments under pass-through obligations Total expenditures Excess (deficiency) of revenues over (under) expenditures 5,724,249 18,438,484 114,441 24,277,174 21,5692702 2,789,181 297,616 1,184,192 4,270,989 3,643,070 - - 106,773 106,773 - 1,505,000 - 1,505,000 3,160,000 - 4,750,210 - 4,750,210 4,561,667 - 10 5287 - 10,559,287 8,728,082 2,789,181 17,112,113 1,290,965 21,192,259 20,0927819 2,935,068 1,3J 26,371 (1,176,524) 3,084,915 11476,883 Other financing sources (uses): Operating transfers in - 2,078,139 2,349,638 4,427,777 2,967,131 Totals Special Debt Capital (Memorandum Only) Revenue Service Projects 2000 1999 11,601,619 31 030,667 28,398,158 $ 4,449,326 17,797,305 - 22,246,631 17,962,359 48,860 - 5,000 53,860 643,215 460,209 641,179 109,441 1,210,829 1,532,358 404,752 - - 404,752 414,236 361,102 - - 361,102 195,945 - _ _ - 821,589 5,724,249 18,438,484 114,441 24,277,174 21,5692702 2,789,181 297,616 1,184,192 4,270,989 3,643,070 - - 106,773 106,773 - 1,505,000 - 1,505,000 3,160,000 - 4,750,210 - 4,750,210 4,561,667 - 10 5287 - 10,559,287 8,728,082 2,789,181 17,112,113 1,290,965 21,192,259 20,0927819 2,935,068 1,3J 26,371 (1,176,524) 3,084,915 11476,883 Other financing sources (uses): Operating transfers in - 2,078,139 2,349,638 4,427,777 2,967,131 Operating transfers out (2,078,139) (2,349,638) - (4,427,777) (2,967,131) Transfers from the City of La Quinta Transfers to the City of La Quinta 373,267 - - 373,267 570 149 1 (1> ) - ('660 713 ) (3�230405�862189) (4,058,420) (�058833�402 Proceeds of advances from City - 797,916 1,607,273 2,405,189 5,159,514 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 (3,275,021) 526,417 2,296,198 (452,406) (3,225,018) (339,953) 1,852,788 1,119,674 2,632,509 (1,748,135) 14,609,487 3,306,726 10,481,945 28,398,158 30,146,293 $ 14,269,534 5,159,514 11,601,619 31 030,667 28,398,158 See accompanying notes to financial statements. 3 LA QUINTA REDEVELOPMENT AGENCY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Governmental Fund Types Year ended June 30, 2000 Revenues: Taxes Developer fees Investment income Rental income Gain (loss) on sale of land Total revenues Expenditures: Current: Planning and development Capital outlay Debt service: Principal Interest Payments under pass-through obligations Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers in Operating transfers out Transfers from the City of La Quinta Transfers to the City of La Quinta Proceeds of advances from City Total other financing sources (uses) Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses Special Revenue Funds Variance Favorable/ Budget_ Actual (Unfavorable $ 4,000,100 4,449,326 449,226 - 48,860 48,860 220,700 460,209 239,509 341,000 404,752 63,752 150,000 361.102 211,102 4 71� 1,800 5,724,249 1,012,449 3,846,751 2,789,181 1,057,570 3,846,751 2,789,181 1,057,570 865,049 2,935,068 2,070,019 (5,101,876) (2,078,139) 3,023,737 - 373,267 373,267 (3,230,884) (1,570,149) 1,660,735 (8,332,760) (3,275,021) 5,057,739 (7,467,711) (339,953) 7,127,758 Fund balances at beginning of year 14,609,487 14,609,487 - Fund balances at end of year $ 7,141,776 14,269,534 7,127,758 See accompanying notes to financial statements. 4 Debt Service Funds Variance Favorable/ Bud et Actual (Unfavorable) 16,000,397 17,797,305 1,796,908 - 641,179 641,179 16,000,397 18,438,484 2,438,087 16,847,260 295,351 297,616 (2,265) 1,505,000 1,505,000 - 4,850,807 4,750,210 100,597 10,196,102 10,559,287 _ (363,185) 16,847,260 17,112,113 (264,853) 846,863 1,326,371 2,173,234 2,078,139 2,078,139 - (2,349,838) (2,349,638) 200 794,348 797,916 3,568 522.649 526,417 3.768 (324,214) 1,852,788 2,177,002 3,306,726 3,306,726 - 2,982,512 5,1� 59� 2,177,002 5 Capital Projects Funds Variance Favorable/ Budget Actual(Unfavorable) - 5,000 5,000 145,000 109,441 (35,559) 4,397,866) 2,296,198 (30,559) 114,441 145,000 1,372,011 1,184,192 187,819 115,000 106,773 8,227 1,487,011 1,290,965 196,046 (1,342,011) (1,176,524) 165.487 3,849,838 2,349,638 (1,500,200) (8,362,704) (1,660,713) 6,701,991 115,000 1,607,273 1,492,273 4,397,866) 2,296,198 6,694,064 (5,739,877) 1,119,674 6,859,551 10,481,945 10,481,945 4,742,068 11,601,619 6,859,551 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements June 30, 2000 (1) Summary of Si nificant Accounting Policies The following is a summary of the significant accounting policies of the La Quinta Redevelopment Agency: (a) Fund Accounting The basic accounting and reporting entity is a "fund". A fund is defined as an independent fiscal and accounting entity with a self -balancing set of accounts, recording resources, related liabilities, obligations, reserves and equities segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The accounting records of the Agency are organized on the basis of funds and account groups classified for reporting purposes as follows: GOVERNMENTAL FUNDS Special Revenue Funds The Special Revenue Funds consist of the Low and Moderate Income Housing Funds of the Redevelopment Agency and are used to account for the portion of the Agency's tax increment revenue that is legally restricted for increasing or improving housing for low or moderate income households. Debt Service Funds The Debt Service Funds account for tax increment revenues, bond proceeds and any related interest income required to be set aside for future debt service. The funds are used to repay principal and interest on indebtedness of the Agency. Under provisions of the Health and Safety Code and the Agency's bond resolutions, these funds are referred to as "Special Funds". Capit Fro ect5 Funds The Capital Projects Funds account for bond proceeds available for project improvements, interest income on invested funds and certain other income. The funds are expended primarily for redevelopment project costs and administrative expenses. Under provisions of the Health and Safety Code and the Agency's bond resolutions, these funds are referred to as "Redevelopment Funds". LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (1 } Sui��mary of Significant Accounting Policies. (Continued) ACCOUNT GROUPS General Long -Term Debt Account Grou This account group is used to account for all long-term debt of the Agency. The proceeds of the indebtedness are recorded in the Capital Projects (Redevelopment) Funds and serve as a financing source for redevelopment expenditures. General Fixed Assets Account 'Groh The General Fixed Assets Account Group is used to account for the cost of fixed assets acquired to perform general government functions. Assets purchased are recorded as expenditures in the governmental fonds and capitalized at cost in the general fixed assets account group. Contributed fixed assets are recorded in general fixed assets at fair market value at the time received. Fixed assets acquired under a capital lease are recorded at the net present value of future lease payments. No depreciation has been provided on general fixed assets. (b) Basis of _Accounting The modified accrual basis of accounting is utilized by all funds of the Agency. Under the modified accrual basis of accounting, expenditures are recorded when a current liability is incurred and revenues are recorded when received in cash unless susceptible to accrual (i.e., measurable and available to finance the Agency's operations). (e) Relationship to the City of La Quinta The Agency is an integral part of the reporting entity of the City of La Quinta. The funds and account groups of the Agency have been included within the scope of the financial statements of the City because the City Council of the City of La Quinta exercises oversight responsibility over the operations of the Agency. Only the funds and account groups of the Agency are included herein and these financial statements, and therefore, do not purport to represent the financial position or results of operations of the City of La Quinta, California. 7 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (1) Summary of Significant Accounting Policies, (Continued) (d) 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. (e) BudgetaryReporting The Agency adopts an annual budget prepared on the modified accrual basis for all of its governmental funds. (f) Memorandum Only Totals Columns in the accompanying financial statements captioned "Totals (Memorandum Only)" are not necessary for a fair presentation of the financial statements in accordance with generally accepted accounting principles, but are presented as additional analytical data. 2 Organization and Tax Increment Financing Redevelopment Goals and Objectives The general objective of the Redevelopment Plan adopted by the Agency is to encourage investment in the Redevelopment Project Areas by the private sector. The Redevelopment Plan provides for the demolition of buildings and 'improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improvements. The Redevelopment Plan also includes the ability to redevelop land by private enterprise or public agencies, the rehabilitation of structures, the rehabilitation or construction of single family and low and moderate income housing, and participation by owners and tenants of properties in the Redevelopment Project. Redevelopment Pro`ect Areas The Agency has established two redevelopment project areas. On November 29, 1983 the City Council approved and adopted the Redevelopment Plan for the La Quinta Redevelopment Project Area No. 1. On May 16, 1989 the City Council approved and adopted the Redevelopment Plan for the La Quinta Redevelopment Project Area No. 2. These plans provide for the elimination of blight and deterioration which was found to exist in the project areas. LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (2) Organization and Tax Increment Financing, (Continued) The Coachella Valley Water District is jointly financing projects with the Agency to help prevent the potential flooding of the project areas. Tax Increment Financin The Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a redevelopment project. The assessed valuation of a redevelopment project last equalized prior to adoption of a redevelopment plan or amendment to such redevelopment plan, or "base roll", is established and, except for any period during which the assessed valuation drops below the base year level, the taxing bodies, thereafter, receive the taxes produced by the levy of the current tax rate upon the base roll. Taxes collected upon any increase in assessed valuation over the base roll ("tax increment") are paid and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment agencies themselves have no authority to levy property taxes. (3) Cash and Investments Cash and investments held by the Agency at June 30, 2000 consisted of the following: State of California Local Agency Investment Fund $ 4,407,855 Equity in City cash and investment pool 12,623,281 Total cash and investments held by the Agency $17,031,136 Cash and investments held by fiscal agent at June 30, 2000 consisted of the following: United States Treasury Notes Federal Farm Credit Bank Mutual funds - First American Treasury Obligations Total cash and investments held by fiscal agent 9 $ 6,960,864 1,477,728 3,952,627 $12,391219 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) 3 Cash and Investments Continued The City and its component units are authorized by its investment policy to invest in the following types of investments: Investment Type Maximum % Savings/operating accounts 85% Local Agency Investment Fund (LAIF) 35% 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 City or the City's custodial agent (which must be a different institution other than the party through which the City purchased the securities) in the City's name. Investments held "in the City's name" include securities held in a separate custodial or fiduciary account and identified as owned by the City in the custodian's internal accounting records. Category 2 - includes uninsured and unregistered investments for which the securities are held in the City's name by the dealer's agent (or by the trust department of the dealer if the dealer was a financial institution and another department of the institution purchased the securities for the City.) Category 3 - includes uninsured and unregistered investments for which the securities are held by the dealer's trust department or agent, but not in the City's name. Category 3 also includes all securities held by the broker-dealer agent of the City (the party that purchased the securities for the City) regardless of whether or not the securities are being held in the City's name. 10 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements 3 Cash and Investments Continued (Continued) Category --_ I 2 3 Investments held by fiscal agent: U.S. Treasury Notes $ - 6,960,864 Federal Farm Credit Bank - 1,477,728 $_- 8,438,592 - Investments held by the City not subject to categorization: Investment in State of California Local Agency Investment Fund Equity in City cash and investment pool Investments held by fiscal agent not subject to categorization: Investment in mutual funds: First American Treasury Obligations Carrying Amount 6,960,864 1,477,728 8,438,592 4,407,855 12,623,281 3,952,627 $29,422,355 The City 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. (4) Notes Receivables In September 1994, the Agency sold certain real property to E.G. Williams Development Corporation 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. At June 30, 2000, the Outstanding balance plus accrued interest is $2,664,997. At June 30, 2000, the total outstanding balance of all notes receivable (including other notes aggregating $13,635) is $2,678,632. 11 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (5) Due From and To Other Funds Current interfund receivables and payables balances at June 30, 2000 are as follows: Current Current Interfund Interfund Receivables Payables Debt Service Fund: Redevelopment Agency - PA No. 2 $ - 591 Capital Projects Fund: Redevelopment Agency - PA No. 2 591 - 591 591 (6) Advances to and From Other Funds 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). (7) Changes in General Fixed Assets The Agency has purchased land which is intended to be used for community facilities. A summary of general fixed assets transactions for the fiscal year ended June 30, 2000 is as follows: Balances at Balances at July 1, 1999 Additions Deletions June 30, 2000 Land 10,233.506106.773 3500) 9,9$8.279 12 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) 8) Propelly PropertyTaxes Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes are recorded initially in a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City of La Quinta accrues only those taxes which are received from the County within sixty days after year end. Lien date Levy date Due dates Collection dates March 1 June 30 November 1 and February 1 December 10 and April 10 The La Quinta Redevelopment Agency's primary source of revenues comes from property taxes. Property taxes allocated to the Agency are computed in the following manner: (a) The assessed valuation of all property within the project area is determined on the date of adoption of the Redevelopment Plan. (b) Property taxes related to the incremental increase in assessed values after the adoption of the Redevelopment Plan are allocated to the Agency; all taxes on the "frozen" assessed valuation of the property are allocated to the City and other districts. The Agency has no power to levy and collect taxes and any legislative property tax shift might reduce the amount of tax revenues that would otherwise be available to pay the principal of, and interest on, debt. Broadened property tax exemptions could have a similar effect. Conversely, any increase in the tax rate or assessed valuation, or any reduction or elimination of present exemptions would increase the amount of tax revenues that would be available to pay principal and interest on debt. 13 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (9) General Long -Term Debt Changes in general long-term debt for the year ended June 30, 2000, were as follows: Project Area No. 1: Tax allocation bonds 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: Tax allocation bonds Housing tax allocation bonds Due to County of Riverside Advances from City of La Quinta Total long-term debt 10 Tax Allocation Bonds Balance at Balance at July 1, 1999 Additions Deletions June 30, 2000 $38,850,000 17,172,278 10,116,237 (1,085,000) - (267,660) 10,068,149 - 3,586,358 469,481 (217,137) 37,765,000 16,904,618 9,899,100 (649,924) 9,418,225 4,055,839 6,750,000 - (80,000) 6,670,000 4,642,722 - (72,340) 4,570,382 2,350,000 - - 2,350,000 4.357,119 1,935,712 - 6,292,831 $97,892,863 2.405,193 (2.372.061 97,925,995 Tax Allocation Refundin Bonds Series 1994 Tax allocation refunding bonds, Series 1994, in the amount of $26,665,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1989 and 1990. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 1. Interest rates on the bonds ranges from 3.80% to 8% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable solely from pledged tax increment revenues. The bonds are not subject to redemption prior to maturity. 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, 2000 is $22,005,000. 14 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (10) Tax Allocation Bonds, (Continued) Tax Allocation Refunding Bonds, Series 1994, (Continued) A portion of the bond proceeds, in the amount of $27,922,526, was deposited in an irrevocable trust with an escrow agent to provide for all fixture debt service payments on the 1989 and 1990 Tax Allocation Bonds. As a result, the bonds are considered to be defeased and the liability for those bonds has been removed from the general long-term debt account group. As of June 30, 2000, $14,585,000 of 1990 defeased bonds are outstanding. 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. The unexpended balance of proceeds at June 30, 2000 is $6,800,003. 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 on a parity with the Agency's previously issued flax 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 lot, on September 1, 2013 and on each September 1 thereafter, through September 1, 2028, at a price equal to the principal amount thereof plus accrued interest. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2000 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, 2000 is $632,837. 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. 15 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (10) _ Tax Allocation Bonds, (Continued) Tax Allocation Refunding Bonds, Series 1998 - Project Area No. 2, (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, 2000 is $6,670,000. (11) 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, 2000 is $21,475,000. (12) Due to County of Riverside Project Area No. 1 Based on an agreement amended December 21, 1993 between the Agency, the City of La Quinta, and the County of Riverside (County), the Agency will pay to the County $10,517,138 from tax increment revenue relating to Project Area No. 1. This agreement is in consideration of the tax revenues lost by the County as a result of the formation of Project 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, 2000 is $9,899,100. 16 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) 12 Due to County of Riverside Continued 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, 2000 is $2,350,000. 13 Notes Payable to Coachella Valley Unified School District An agreement was entered into in 1991 between the Agency, the City of La Quinta and the Coachella Valley Unified School District (District) which provides for the payment to the District of a portion of tax increment revenue associated with properties within District confines. Such payments are subordinate to other indebtedness of the Agency incurred in fi€rtherance 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, 2000 totaled $9,418,225. The District agrees to use such funds to provide classroom and other construction costs, site acquisition, school buses, expansion or rehabilitation of current facilities. (14) Advances from the City of La Quinta The following represents a summary of the various transactions between the City of La Quinta and the Agency, accounted for as advances from the City: There is no stipulated repayment date established for the City advance. Interest is paid at 10% per year. 17 Balances at Balances at July 1, 1999 Proceeds Repayments June 30, 2000 Agency expenditures incurred by the City: Project Area No. 1 $3,586,358 469,481 - 4,055,839 Project Area No. 2 4,3579119 1,935,712 - 6,292,831 Totals $1943,477 2,405,193 - 10,348 670 There is no stipulated repayment date established for the City advance. Interest is paid at 10% per year. 17 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) 15 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, 2000 are as follows (advances payable to the City have been excluded since minimum annual debt service payments have not been established): 18 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) 151 Debt Service Reauirements to Maturity. (Continued Principal and interest 33,723,489 Less: Pass-throuch Agreements Coachella Valley Unified Redevelopment Agency RDA RDA PA No. 1 District Project Area No. 1 PA No. 2 and No. 2 684,233 Tax Tax Tax 711,877 2,290,473 Allocation Allocation Allocation 1995 755,449 Bonds Bonds Bonds Housing Tax Fiscal Series Series Series Allocation Year 1994 1998 1998 Bonds 2000-01 $2,624,885 819,520 417,467 1,592,187 2001-02 2,620,315 819,520 419,249 1,590,690 2002-03 2,620,855 819,520 420,747 1,592,820 2003-04 2,599,465 819,520 417,080 1,588,538 2004-05 2,612,140 819,520 418,264 1,587,990 2005-06 2,597,700 819,520 419,167 1,590,890 2006-07 2,593,456 819,520 419,785 1,645,502 2007-08 2,590,816 819,520 420,135 1,646,470 2008-09 2,584,232 819,520 420,184 1,645,125 2009-10 2,578,160 819,520 419,550 1,641,540 2010-11 2,571,868 819,520 418,272 1,640,840 2011-12 2,569,442 819,520 416,738 1,641,650 2012-13 2,560,155 819,520 419,819 1,638,750 2013-14 - 1,457,490 417,516 1,638,300 2014-15 - 1,457,520 414,956 1,635,150 2015-16 - 1,455,730 417,012 1,634,150 2016-17 - 1,456,990 418,556 1,630,150 2017-18 - 1,451,300 414,716 1,632,850 2018-19 - 1,453,530 415,491 1,627,100 2019-20 - 1,453,420 415,631 1,627,750 2020-21 - 1,450,970 415,131 1,624,500 2021-22 - 1,451,050 414,106 1,622,200 2022-23 - 1,448,530 417,425 1,620,550 2023-24 - 1,448,280 415,088 1,619,250 2024-25 - 1,445,170 417,094 1,613,150 2025-26 - 1,444,070 413,444 1,611,950 2026-27 - 1,439,850 414,137 2027-28 - 1,437,380 414,044 - 2028-29 - 1,436,400 413,162 2029-30 - - 411,494 - 2030-31 - - 413,906 - 2031-32 - - 410,400 - 2032-33 - - 410,975 » 2033-34 - - 410,500 - Principal and interest 33,723,489 Less: Pass-throuch Agreements Coachella Valley Unified County School of District Riverside 670,817 1,803,705 684,233 1,903,705 697,918 1,903,705 711,877 2,290,473 726,114 2,290,473 740,636 2,290,473 755,449 100,000 770,558 150,000 785,968 200,000 801,688 200,000 817,722 200,000 834,076 250,000 421,169 250,000 250,000 250,000 Total 7,928,581 8,037,712 8,055,565 8,426,953 8,454,501 8,458,386 6,333,712 6,397,499 6,455,029 6,460,458 6,468,222 6,531,426 6,109,413 3,763,306 3,757,626 3,506,892 3,505,696 3,498,866 3,496,121 3,496,801 3,490,601 3,487,356 3,486,505 3,482,618 3,475,414 3,469,464 1,853,987 1,851,424 1,849,562 411,494 413,906 410,400 410,975 410,500 33,841,440 14,151,241 42,180,042 9,418,225 14,332,534 147,646,971 Interest117, 18 89) (18.081,440) (7,481,241) (20,705.042] - 2,083,434) (60.069,646] Total Principal X22005 0 �5&O U0�0 �Q=Q$� 9k418.225 j.�4� (i,� 77 .325 19 LA QUINTA REDEVELOPMENT AGENCY Notes to the Financial Statements (Continued) (16) 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. 20 SUPPLEMENTAL DATA 21 Assets Cash and investments Cash with fiscal agent Accounts receivable Interest receivable Notes receivable Advances to other funds Total assets Liabilities and Fund Balances Liabilities: Accounts payable Deposits payable Due to the City of La Quinta Total liabilities Fund balances: Reserved for: Bond projects Advances to other funds Notes receivable Unreserved: Designations Undesignated Total fund balances Total liabilities and fund balances LA QUINTA REDEVELOPMENT AGENCY Special Revenue Finds Combining Balance Sheet June 30, 2000 Low/ Low/ Moderate Moderate Low/ Low/ Income Income Moderate Moderate Housing- Housing- Bond- Bond- Totals PA No. 1 PA No. 2 PA No. 1 PA No. 2 2000 1999 $ 3,491,036 3,346,138 - 341,716 7,178,890 5,950,451 - - 2,386,620 2,316,423 4,703,043 6,110,194 59,451 - - - 59,451 44,006 - - 833 - 833 229,099 2,678,632 - - - 2,678,632 2,556,508 511,903 39,135 - - 551,038 551,038 $ 6,741,022 3„385273 2387,453 2,658,139 15,171,887 15,441,296 $ 84,274 7,888 8,929 826 101,917 40,807 14,806 - - - 14,806 15,596 30 20 636,985 148,595 785,630 775,406 99,110 7,908 645,914 149,421 902,353 831,809 - - 2,386,620 2,316,423 4,703,043 6,110,194 511,903 39,135 - - 551,038 551,038 2,678,632 - - - 2,678,632 2,556,508 3,451,377 3,338,230 - 192,295 6,981,902 6,003,850 - - (645,081) - (645,081 (612,103) 6,641,912 3,377,365 1,74I,539 2,508,718 14,269,534 14,609,487 $ 6,741,022 3,385+,273 2,387,453 2,658;139 15,171,887 15,441,296 22 LA QUINTA REDEVELOPMENT AGENCY Special Revenue Funds Combining Statement of ReN,ciwes, Expenditures and Changes in Fund Balances Year ended June 30, 2000 Low/ Low/ Moderate Moderate Low/ Low/ Income Income Moderate Moderate Housing- Housing- Bond- Bond- Totals PA No. 1 PA No. 2 PA No. 1 PA No. 2 2000 1999 Revenues: Taxes Developer fees Investment income Rental income Gain (loss) on sale of land Total revenues Expenditures: Current: Planning and development Total expenditures Excess (deficiency) of revenues over (under) expenditures Other financing sources (uses): Operating transfers out Transfers from the City of La Quints 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 $ 3,194,919 1,254,407 - _ 4,449,326 3,592,472 48,860 - - - 48,860 638,215 267,399 151,458 32,618 8,734 460,209 1,044,786 404,752 - - - 404,752 414,236 361,102 - - - 361,102 195,945 4,277,032 1,405,865 32,618 8,734 5,724,249 5,885,654 2,164,104 532,773 67,695 _ 24,609 2,789,181 2,704,025 2,164,104 532,773 67,695 24,609 2,789,181 2,704,025 2,112,928 873,092 35,07 15,875 2,935,068 3,181,629 (1,739,297) (338,842) - (2,078,139) (1,302,637) 373,267 373,267 - - (1,570,149) - (1,570,149) (3,501,574) (1,739,29 (338,842) (1,570,149 373,267 (3,275,021) (4,804,211) 373,631 534,250 (1,605,226) 357,392 (339,953) (1,622,582) 6,268,281 2,843115 3,346,765 2,151,326 14,609,487 16,232,069 $ 6,641,912 3,377,365 1,741,539 21508 14,269,534 14,609,487 23 Assets Cash and investments Cash with fiscal agent Prepaid items Interest receivable Due from other governments Total assets Liabilities and Fund Balances Liabilities: Accounts payable Due to other funds Due to other govemunents Advances from other funds Total liabilities Fund balances: Reserved for: Prepaid items Debt service Total fund balances Total liabilities and fund balances LA QUINTA REDEVELOPMENT AGENCY Debt Service Funds Combining Balance Sheet June 30, 2000 Redevelopment Redevelopment Agency -PA No. 1 Agency -PA No. 2 $ 4,281,480 255,172 332,088 $ 4,868,740 $ 4,503 165,363 511,903 681,769 332,088 3,854,883 4,186,971 $ 4,868,740 24 1,436,577 164 1,436,741 591 424,472 39,135 464,198 972,543 972,543 1,436,741 2000 5,718,057 255,336 332,088 6,305,481 4,503 591 589,835 551,038 1,145,967 332,088 4,827,426 5,159,514 6,305,481 Totals 3,641,336 183,946 37,465 11 3,862,758 4,403 591 551,038 556,032 3,306,726 3,306,726 37862,758 LA QUINTA REDEVELOPMENT AGENCY Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 2000 25 Redevelopment Redevelopment Totals Agency -PA No. 1 Agency -PA No.2 2000 1999 Revenues: Taxes $ 12,779,677 5,017,628 17,797,305 14,369,887 Investment income 588,883 52,296 641,179 212,862 Total revenues 13,368,560 5,069,924 18;438,484 14,582,749 Expenditures: Current: Planning and development 214,629 82,987 297,616 261,530 Debt service: Principal 1,352,660 152,340 1,505,000 3,160,000 Interest 3,707,492 1,042,718 4,750,210 4,561,667 Payments under pass- through obligations 6,842,720 3,716,567 10,559,237 8,728,082 Total expenditures 12,117,501 4,994,612 17,112,113 16,711,279 Excess (deficiency) of revenues over (under) expenditures 1,251,059 75,312 1,326,371 (2,128,530) Other financing sources (uses): Operating transfers in 1,739,297 338,842 2,078,139 1,569,263 Operating transfers out (1,855,699) (493,939) (2,349,638) (1,254,118) Proceeds of advances from City 362,208 435,708 797,916 833,402 Total other financing sources (uses) 245,806 280,611 526,417 1,148,547 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses 1,496,865 355,923 1,852,788 (979,983) Fund balances at beginning of year 2,690,106 616,620 3,306,726 4,286,709 Fund balances at end of year $ 4,186,971 972,543 5,159,514 3,306,726 25 LA QUINTA REDEVELOPMENT AGENCY Capital Projects Funds Combining Balance Sheet June 30, 2000 Liabilities and Fund Balances Liabilities: Accounts payable $ 4,918 21,840 26,758 9,718 Due to the City of La Quinta 95 48 143 71 Total liabilities 5,013 21,888 26,901 9,789 Fund balances: Redevelopment Redevelopment Totals Reserved for: Agency -PA No.1 Agency -PA No.2 2000 1999 Assets 6,800,003 632,837 7,432,840 7,909,930 Cash and investments $ 1,172,282 2,961,907 4,134,189 2,384,351 Cash with fiscal agent 6,800,003 632,837 7,432,840 7,909,930 Accounts receivable - 60,900 60,900 60,900 Interest receivable - - - 23,619 Notes receivable - - - 112,343 Due from other funds - 591 591 591 Total assets $ 7,972,285 3,656,235 11,628,520 10,491,734 Liabilities and Fund Balances Liabilities: Accounts payable $ 4,918 21,840 26,758 9,718 Due to the City of La Quinta 95 48 143 71 Total liabilities 5,013 21,888 26,901 9,789 Fund balances: Reserved for: Bond projects 6,800,003 632,837 7,432,840 7,909,930 Notes receivable - - - 112,343 Unreserved: Designations 1,167,269 3,001,510 4,168,779 2,459,672 Total fund balances 7,967,272 3,634,347 11,601,619 10,481,945 Total liabilities and fund balances $ 7,972,285 3,656,235 11,628,520 10,491,734 26 LA QUINTA REDEVELOPMENT AGENCY Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 2000 27 Redevelopment Redevelopment Totals Agency -PA No. l Agency -PA No.2 2000 1999 Revenues: Developer fees $ - 5,000 5,000 5,000 Investment income 11,413 98,028 109,441 274,710 Litigation settlement proceeds - - - 821,589 Total revenues 11,413 103,028 114,441 1,101,299 Expenditures: Current: Planning and development 783,471 400,721 1,184,192 677,515 Capital outlay 106,773 - 106,773 - Total expenditures 890,244 400,721 1,290,965 677,515 Excess (deficiency) of revenues over (under) expenditures (878,831) 297,693 (1,176,524) 423,784 Other financing sources (uses): Operating transfers in 1,855,699 493,939 2,349,638 1,397,868 Operating transfers out - - - (410,376) Transfers to the City of La Quints (1,428,676) (232,037) (1,660,713) (556,846) Proceeds of advances from City 107,273 1,500,000 1,607,273 - Total other financing sources (uses) 534,296 1,761,902 2,296,198 430,646 Excess (deficiency) of revenues and other financing sources over (under) expenditures and other financing uses (344,535) 1,464,209 1,119,674 854,430 Fund balances at beginning of year 8,311,807 2,170,138 10,481,945 9,627,515 Fund balances at end of year $ 7,967,272 3,634,347 11,601,619 10,481,945 27 CONRADAND ASSOCIATES; L.L.P Board of Directors La Quinta Redevelopment Agency La Quinta, California CERTIFIED PUBLIC ACCOUNTANTS 1100 MAIN STREET, SUITE C IRVINE, CALIFORNIA 92614 (949) 474-2020 Fax (949) 263-5520 We have audited the financial statements of the La Quinta Redevelopment Agency as of and for the year ended June 30, 2000, and have issued our report thereon dated August 9, 2000. We conducted our audit in accordance with generally accepted auditing standards 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. 28 MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION Board of Directors La Quinta Redevelopment Agency Page Two 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 9, 2000 29 (This page intentionally left blank)