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FY 2010-2011 RDA Financial StatementsLA QUINTA REDEVELOPMENT AGENCY LA QUINTA, CALIFORNIA FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2011 203 North Brea Blvd Suite 203 Brea, CA 92821 Lance Soll & Lunghard, LLP 41185 Golden Gate Circle Suite 103 Murrieta, CA 92562 LA QUINTA REDEVELOPMENT AGENCY LA QUINTA, CALIFORNIA FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2011 THIS PAGE INTENTIONALLY LEFT BLANK LA QUINTA REDEVELOPMENT AGENCY JUNE 30, 2011 TABLE OF CONTENTS Page Number INDEPENDENT AUDITOR’S REPORT ............................................................................................. 1 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE AND INTERNAL CONTROL OVER COMPLIANCE ............................................................................................... 3 Management’s Discussion and Analysis ........................................................................................... 5 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Assets ............................................................................................................ 13 Statement of Activities ............................................................................................................... 15 Fund Financial Statements: Balance Sheet - Governmental Funds ...................................................................................... 16 Reconciliation of the Balance Sheet of Government Funds to the Statement of Net Assets .................................................................................................. 19 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds ............................................................................................... 20 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ............................................................................................................... 23 Budgetary Comparison Statement – Low/Moderate Income Housing Fund – PA No. 1 .......... 24 Budgetary Comparison Statement – Low/Moderate Income Housing Fund – PA No. 2 .......... 25 Budgetary Comparison Statement – Housing Authority Fund – PA No. 1 ................................ 26 Budgetary Comparison Statement – Housing Authority Fund – PA No. 2 ................................ 27 Notes to Financial Statements ...................................................................................................... 29 COMBINING AND INDIVIDUAL FUND SCHEDULES Combining Project Area Balance Sheet - All Governmental Funds ............................................................................................................... 48 Combining Project Area Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Funds ............................................................................................................... 52 Computation of Low and Moderate Income Housing Funds Excess/Surplus .................................................................................................................. 55 THIS PAGE INTENTIONALLY LEFT BLANK INDEPENDENT AUDITOR'S REPORT To the Honorable Chair and Members of the Governing Board La Quinta Redevelopment Agency City of La Quinta, California We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of the La Quinta Redevelopment Agency (Agency), a component unit of the City of La Quinta, California, as of and for the year ended June 30, 2011, which collectively comprise the Agency's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the Agency's management. Our responsibility is to express opinions on these financial statements based on our audit. 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. 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 the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, each major fund, and the aggregate remaining fund information of the Agency, as of June 30, 2011, and the respective changes in financial position and budgetary comparisons for the Low/Moderate Income Housing Fund – PA No. 1, Low/Moderate Income Housing Fund – PA No. 2, Housing Authority Fund – PA No. 1 and Housing Authority Fund – PA No. 2, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. We would like to draw the reader’s attention to Note 16 – “California Redevelopment Agency Uncertainty”. The note provides information on two bills passed, AB1X26 and 27 which dissolve redevelopment agencies effective October 1, 2011 and provide an option to avoid dissolution by making certain defined payments. In accordance with Government Auditing Standards, we have also issued our report dated September 27, 2011, 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 grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Accounting principles generally accepted in the United States of America require that the management's discussion and analysis as listed in the table of contents be presented to supplement the basic financial Brandon W. Burrows, CPA David E. Hale, CPA, CFP A Professional Corporation Donald G. Slater, CPA Richard K. Kikuchi, CPA Susan F. Matz, CPA Shelly K. Jackley, CPA Bryan S. Gruber, CPA Lance, Soll & Lunghard, LLP 203 North Brea Boulevard Suite 203 Brea, CA 92821 TEL: 714.672.0022 Fax: 714.672.0331 www.lslcpas.com 41185 Golden Gate Circle Suite 103 Murrieta, CA 92562 TEL: 951.304.2728 Fax: 951.304.3940 To the Honorable Chair and Members of the Governing Board La Quinta Redevelopment Agency statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency’s financial statements as a whole. The combining project area statements and computation of low and moderate income housing funds excess/surplus are presented for purposes of additional analysis and are not a required part of the financial statements. These are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Brea, California September 27, 2011 2 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE AND INTERNAL CONTROL OVER COMPLIANCE To the Honorable Chair and Members of the Governing Board La Quinta Redevelopment Agency City of La Quinta, California Compliance We have audited La Quinta Redevelopment Agency’s (Agency) compliance with the California Health and Safety Code as required by Section 33080.1 for the year ended June 30, 2011. Compliance with the requirements referred to above is the responsibility of Agency’s management. Our responsibility is to express an opinion on Agency’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the Guidelines for Compliance Audits of California Redevelopment Agencies, June 2011, issued by the State Controller and as interpreted in the Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies, August 2011, issued by the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a material effect on redevelopment program has occurred. An audit includes examining, on a test basis, evidence about the Agency’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the Agency’s compliance with those requirements. In our opinion, the Agency complied, in all material respects, with the compliance requirements referred to above that are applicable to the redevelopment program for the year ended June 30, 2011. Internal Control Over Compliance Management of the Agency is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit, we considered the Agency’s internal control over compliance to determine the auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Agency’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis. Brandon W. Burrows, CPA David E. Hale, CPA, CFP A Professional Corporation Donald G. Slater, CPA Richard K. Kikuchi, CPA Susan F. Matz, CPA Shelly K. Jackley, CPA Bryan S. Gruber, CPA Lance, Soll & Lunghard, LLP 203 North Brea Boulevard Suite 203 Brea, CA 92821 TEL: 714.672.0022 Fax: 714.672.0331 www.lslcpas.com 41185 Golden Gate Circle Suite 103 Murrieta, CA 92562 TEL: 951.304.2728 Fax: 951.304.3940 To the Honorable Chair and Members of the Governing Board La Quinta Redevelopment Agency Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies, or material weaknesses in internal control over compliance. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended for the information of management, the Audit Committee, and the California State Controller and it is not intended to be and should not be used by anyone other then these specified parties. Brea, California September 27, 2011 4 LA QUINTA REDEVELOPMENT AGENCY MANAGEMENT’S DISCUSSION AND ANALYSIS June 30, 2011 Our discussion and analysis of the La Quinta Redevelopment Agency’s (Agency) financial performance for the fiscal year ended June 30, 2011, provides a comparison of current year to prior year ending results based on the government- wide statements, an analysis of the Agency’s overall financial position and results of operations to assist users in evaluating the Agency’s financial position, and a discussion of significant changes that occurred within each fund. In addition, it describes the activities during the year for capital assets and long-term debt. We end our discussion and analysis with a description of currently known facts, decisions and conditions that are expected to have a significant effect on the financial position or results of operations. Please read it in conjunction with the Agency’s financial statements. FINANCIAL HIGHLIGHTS • The Agency’s governmental activities net assets deficit increased $59.70 million, or -72%. • During the year, the Agency had expenses that were $45.58 million more than the $56.47 million in expenses recorded by the Agency in its governmental activities in prior years. • The Agency’s governmental activities program revenues and g eneral revenues increased by $3,839,000, or 10% from the prior year, and program expenses increased $45.58 million, or 80.73%. USING THIS ANNUAL REPORT This annual report consists of a series of financial statements. The Statement of Net Assets and Statement of Activities provide information about the activities of the Agency as a whole and present a long-term view of the Agency’s finances. Following these Statements are governmental fund statements that tell how these services were financed in the short term as well as what remains for future spending. Fund financial statements also report the Agency’s operation in more detail than the government-wide statements by providing information about the Agency’s most significant funds. REPORTING THE AGENCY AS A WHOLE The financial reports contained in this document are prepared on two basis of accounting – accrual and the modified accrual basis of accounting as follows: 5 Government-Wide Financial Statements: The Statement of Net Assets and the Statement of Activities report information using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid. These two statements report the Agency’s net assets and changes in them. Net assets are the difference between assets and liabilities, which is one way to measure the Agency’s financial health, or financial position. Over time, increases or decreases in the Agency’s net assets are an indication of whether its financial health is improving or deteriorating. In the Statement of Activities, we separate the Agency expenditures into general government, planning and development and interest on long-term debt. Revenues are separated into program and General revenues. The major General revenue is property taxes, which are netted against the payments the Agency must pay to other agencies in accordance with Tax Sharing Agreements. Both of these Statements are summary in nature as opposed to the following discussion of the Fund Financial Statements, which are more detailed in nature. Fund Financial Statements: The fund financial statements provide detailed information about the most significant funds and other funds – not the Agency as a whole. Some funds are required to be established by State law and by bond covenants. However, management established many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other resources. The Agency only has governmental type funds. Governmental Funds - Most of the Agency’s basic services are reported in governmental funds, which focus on how money flows in and out of those funds and the balances left at year-end that are available for spending. These funds are reported using the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the Agency’s general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the Agency’s programs. The differences of results in the Governmental Fund financial statements to those in the Government-Wide financial statements are explained in a reconciliation following each Governmental Fund financial statement. 6 THE AGENCY AS A WHOLE The analysis below focuses on the net deficit and changes in net deficit of the Agency’s Government-Wide activities. The Agency’s net assets deficit increased $59.7 million, or -72%. The Agency’s Net Assets are made up of three components: Investment in Capital Assets, Net of Related Debt, Restricted Net Assets and Unrestricted Net Deficit. Unrestricted deficit, the part of net deficit that can be used to finance day-to-day operations, increased from $(166.33) million to $(179.21) million, or 7.75%. The Agency currently has an unrestricted net deficit because of the debt it has issued. Proceeds from the debt were used for capital improvements on behalf of the City or contributed to other taxing agencies or the public and is not offset by investments in capital assets. Examples of these contributions would be the issuing of bonds to construct flood control improvements which were donated to the Coachella Valley Water District, bond proceeds that were used for street improvements in the Cove that were dedicated to the City, and bond proceeds for the construction of SilverRock that were dedicated to the Golf Enterprise Fund. Total assets decreased by $86.04 million, which generally represents a decrease in cash of $52.58 million, a decrease of capital assets of $62.83 million, an increase of restricted cash from bond proceeds of $26.03 million and an increase in loans receivable of $ 3.03 million. Total liabilities decreased by $26.34 million, which generally represent an increase in accounts payable of $3.99 million, a decrease of pass through payments to other governmental entities of $13.26 million, and a net decrease of $13.49 million in long term liabilities due in more than one year. Description 2011 2010 Change Current and other assets $ 102,869,302 $ 126,077,764 $ (23,208,462) Capital assets 10,630,944 73,459,707 (62,828,763) Total assets 113,500,246 199,537,471 (86,037,225) Current liabilities 4,611,064 17,809,384 (13,198,320) Non-current liabilities 251,841,013 264,980,257 (13,139,244) Total liabilities 256,452,077 282,789,641 (26,337,564 Net assets: Invested in capital assets, net of related debt Restricted 36,262,681 54,781,140 (18,518,459) Unrestricted (179,214,512) (166,329,057) (12,855,455) Total net assets $ (142,951,831) $ (83,252,170) $ (59,699,661) (28,295,747) - 28,295,747 NET ASSETS Governmental activities 7 Total revenues increased by $3,839,000 to $42.35 million, or 10%. The major reasons that contributed to the net increase were the following: • Decrease in property values that provided less tax increment revenue (net of pass-through payments of – 8.66%. • Increase in use of money and property from the sale of property at SilverRock ($4.88 million) and along Highway 111 ($3.45 million). The major factors that contributed to the increase in expenses from $56.47 million to $102.1 million or 80.81% was: • Increase of $59.1 million in capital contributions to other agencies consisting primarily of the transfer of public property and buildings to the La Quinta Housing Authority and the City of La Quinta. GOVERNMENTAL FUNDS The combined fund balance of $92.73 million decreased from $106.07 million, or - 12.58%. The Agency has restricted as nonspendable a total of $ 65.13 million in long term receivables, future debt service and low and moderate income housing purposes. In addition, $27.60 million has been assigned for future community development construction projects. More detailed information about the combined fund balance reserves may be found in the notes to the financial statements. Description 2011 2010 Change Program revenues: Charges for services - - - Operating grants and contributions - - - Capital grants and contributions - 1,101,442 (1,101,442) General revenues: Property taxes (net of pass-through payments) 32,569,795 35,390,317 (2,820,522) Use of money and property 9,290,106 1,062,027 8,228,079 Intergovernmental - 498,682 (498,682) Gain on sale of assets 120,628 - 120,628 Other 372,818 461,550 (88,732) Total revenues 42,353,347 38,514,018 3,839,329 Expenses: - General government 4,171,683 4,320,577 (148,894) Planning and development 17,246,705 13,506,150 3,740,555 Contributions to other governments 7,549,574 23,582,367 (16,032,793) Capital contributions to other agencies 59,061,958 - 59,061,958 Interest on long-term debt 14,023,088 15,059,646 (1,036,558) Total expenses 102,053,008 56,468,740 45,584,268 Change in Net Assets (59,699,661) (17,954,722) (41,744,939) Net assets - 7/1/2010 (83,252,170) (65,297,448) (17,954,722) Net assets - 6/30/2011 (142,951,831) (83,252,170) (59,699,661) CHANGES IN NET ASSETS 8 Major funds balance changes are noted below: • For the 2011 Low and Moderate Income Housing Fund, fund balance increased by $25.54 million from a $28.85 million bond issue. • For the 2004 Low and Moderate Income Housing Fund, fund balance decreased $119,000. • For the Redevelopment Agency Debt Service PA 1 and PA 2 Funds, fund balances decreased by $8.07 million and $13.90 million, respectively, based upon tax increment revenues and interest earnings exceeding debt service, pass through h payments, and transfers. In addition, $22 million in debt service payments for the repayment of an outstanding advance to the City in Debt Service PA No. 1 Fund and a similar increase of $19.38 million in debt service payments for the repayment of an outstanding advance to the City in Debt Service PA No. 2 Fund were made. • For the Redevelopment Agency Low and Moderate Income PA 1 and PA 2 Funds, fund balance increased by $811,000 and $1.16 million, respectively, based upon tax increment revenues and interest earnings exceeding debt service transfers, capital outlay, and general and planning and development expenditures. • The Redevelopment Agency Capital Project PA 1 Fund decreased by $20.85 million based upon the use of money and property being less than general costs, capital outlays, and transfers. • The Redevelopment Agency Capital Project PA 2 Fund increased by $587,000 based upon the use of money and property and the issuance of $6 million in bonds being more than general costs, capital outlays, and transfers. • For the Housing Authority Special Revenue PA 1 and PA 2 Funds, fund balances increased by $930,000 and $620,000, respectively, based upon transfers into the funds for the La Quinta Cove and Washington Street rental programs. More detailed information on the fund financial statements balances is presented in the notes to the financial statements. 9 Budgetary Highlights During the Fiscal Year, the Agency’s Board makes revisions to the Agency budget. Revisions are made on a case by case basis and presented to the Agency Board by staff for their consideration at Agency Board meetings. These revisions are generally for appropriations relating to Capital Improvement Projects to request an additional appropriation to cover the cost of a change order or an additional construction amount based on a bid opening. In addition, a review of all revenue and expenditure Agency line items is conducted by staff based upon mid-year data to determine if changes in other revenue and expenditure line items should be presented to the Agency Board for their consideration. Formal budgetary integration is employed as a management control device during the year for all Agency Funds. Budgetary data for the Agency two (2) Special Revenue Housing Funds has been presented herein. More detailed information about the Agency’s budget is presented in the Notes to the financial statements. In addition, the Capital Projects No. 2 Fund includes the unspent bond proceeds from the 2011 Subordinate Taxable Tax Allocation Bonds. In addition, during Fiscal Year 2009-2010, the La Quinta Housing Authority was created. This separate legal entity has been included in the La Quinta Redevelopment Agency Statements and follows the same budgetary practices that were previously discussed. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At the end of 2011, the Agency had $10.63 million invested in land. This amount represents a decrease of $62.83 million, or 85.53% over last year. Description 2011 2010 Change Land $ 10,630,944 $ 69,855,143 $ (59,224,199) Buildings - 4,010,888 (4,010,888) Less Accumulated depreciation - (406,324) 406,324 Net Buildings after depreciation - 3,604,564 (3,604,564) Total $ 10,630,944 $ 73,459,707 $ (62,828,763) CAPITAL ASSETS ( NET OF DEPRECIATION) This year’s additions to capital assets were as follows: The Agency purchased $8.23 million in land in the Village of La Quinta. 10 This year’s deletions to capital assets were as follows: • The Agency transferred land and buildings with a historical cost of $27.73 million, to be used for public purposes, to the La Quinta Housing Authority. • The Agency transferred land and buildings with a historical cost of $27.45 million, to be used for public purposes, to the City of La Quinta. • The Agency sold two single family homes with a historical cost of $283,000 to income eligible families. • The Agency sold two parcels of property with a historical cost of $17.16 million, to be used for public purposes, to the City of La Quinta. Debt At year-end, the Agency’s governmental activities had $251.84 million in bonds and notes versus $264.98 million last year, a decrease of $13.14 million, or -4.96%. Description 2011 2010 Change Loans Payable $ 2,232,816 $ 2,272,129 $ (39,313) City Advances - 41,378,966 $ (41,378,966) Pass through agreement 2,255,243 3,272,965 $ (1,017,722) 137,531,922 135,031,234 $ 2,500,688 109,821,032 83,024,965 $ 26,796,067 Total $ 251,841,013 $ 264,980,259 $ (13,139,246) Revenue bonds ( net original issue premium) Tax allocation bonds ( net original issue discount) OUTSTANDING DEBT AT YEAR END The Agency was able to meet its current year debt obligation in a timely manner. In addition the Agency repaid the City $41.38 million in advances during the year and issued two bond issues - $6 million in subordinated non-housing taxable bonds and $28.85 million in subordinated housing taxable revenue bonds. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS In preparing for Fiscal Year 2011-2012, management is looking at the following factors that will impact its operations: The State of California Budget for Fiscal Year 2011/2012 included AB x1 26 (the “Dissolution Act”) which immediately suspends all new redevelopment activities and incurrence of indebtedness, and dissolves redevelopment agencies effective October 1, 2011; and AB x1 27 (the “Continuation Act”) which allows redevelopment agencies to avoid dissolution under the Dissolution Act if their 11 host cities/counties elect to comply with the alternative redevelopment program described in Part 1.9 thereof. Under the Continuation Act, a redevelopment agency can continue to exist if its host community commits to making certain payments beginning in January of 2012. On August 2, 2011, the City Council adopted an ordinance declaring the City’s decision to comply with the Continuation Act in order to enable the Agency to resume its redevelopment activities. The California Redevelopment Association, the League of California Cities, and two cities filed a legal challenge to the Dissolution Act and the Continuation Act directly in the California Supreme Court. On August 11, 2012, the Court issued an order indicating that it would exercise jurisdiction over the lawsuit. The Court set an expedited briefing schedule to allow it to decide the case before the first payment is due in January 2012. The Court also stayed the effectiveness of all of the Continuation Act, and portions of the Dissolution Act. Because the Continuation Act is currently on hold, the Agreement provides that it is not effective until the Dissolution Act and Continuation Act have been upheld by the Court. The Agreement also attempts to preserve the Agency’s and City’s right to challenge the Dissolution Act and/or Continuation Act, and provides that it automatically terminates if any court of competent jurisdiction determines that either the Dissolution Act or Continuation Act are unconstitutional or otherwise invalid. While the Redevelopment Agency’s Project Areas have available land for future development, the recent economic downturn has impacted property tax values in two ways. Construction activity has slowed significantly and projects that had been approved and planned have been postponed due to the inability of builders and buyers to obtain financing. In addition, existing properties have had their property values reassessed downward by the County Assessor. CONTACTING THE AGENCY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the Agency’s finances and to show the Agency’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact Mr. John Falconer in the Finance Department at the City of La Quinta, 78-495 Calle Tampico, La Quinta, California 92253-1504, or (760) 777-7150. 12 LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF NET ASSETS JUNE 30, 2011 Governmental Activities Assets: Cash and investments 44,037,780$ Receivables: Tax increment 40,746$ Accounts 78,624 Interest 31,191 Loans 6,953,592 Total Receivables 7,104,153 Due from other governments 4,564,860 Deposits with others 6,000 Prepaid costs 10,563 Deferred charges 4,441,840 Net pension asset 100,393 Restricted assets: Cash and investments with trustees 42,603,713 Capital assets (net of depreciation): Land 10,630,944 Total Capital Assets 10,630,944 Total Assets 113,500,246 Liabilities: Accounts payable and accrued expenses 4,089,937 Due to other governments 474,741 Deposits from others 46,386 Long-term liabilities: Due within one year 6,601,909 Due in more than one year 245,239,104 Total Long-Term Liabilities 251,841,013 Total Liabilities 256,452,077 Net Assets: Restricted for: Community development 34,957,138 Debt service 1,305,543 Unrestricted (179,214,512) Total Net Assets (142,951,831)$ See Notes to Financial Statements 13 THIS PAGE INTENTIONALLY LEFT BLANK 14 LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Net (Expense) Revenues and Changes in Operating Capital Net Assets Charges for Contributions Contributions Governmental Expenses Services and Grants and Grants Activities Functions/Programs Governmental Activities: General government 4,171,683$ -$ -$ -$ (4,171,683)$ Planning and development 17,246,705 - - - (17,246,705) Interest on long-term debt 14,023,088 - - - (14,023,088) Contributions to other governments 7,549,574 - - - (7,549,574) Capital contributions to other agencies 59,061,958 - - - (59,061,958) Total Governmental Activities 102,053,008$ -$ -$ -$ (102,053,008) General Revenues: Taxes (net of pass-through payments)32,569,795 Use of money and property 9,290,106 Gain on sale of assets 120,628 Other 372,818 Program Revenues See Notes to Financial Statements Total General Revenues 42,353,347 Change in Net Assets (59,699,661) Net Assets at Beginning of Year (83,252,170) Net Assets at End of Year (142,951,831)$ See Notes to Financial Statements 15 LA QUINTA REDEVELOPMENT AGENCY BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2011 Special Special Special Special Revenue Revenue Revenue Revenue Low and Low and Moderate Moderate Housing Housing Housing Housing Authority Authority Assets: Cash and investments 8,474,291$ 22,939,847$ 934,767$ 597,765$ Cash and investments with trustee - - - - Receivables: Tax increment 6,871 1,278 - - Accounts - - 13,542 37,082 Interest 5,414 15,926 616 - Loans 4,012,106 641,486 - - Prepaid costs - - - 10,563 Due from capital projects funds - - - - Due from low and moderate housing funds 3,500 24,760 - - Due from City - - - - Deposits with others - - - 6,000 Advances to other funds 4,328 - - - Total Assets 12,506,510$ 23,623,297$ 948,925$ 651,410$ Liabilities and Fund Balances: Liabilities: Accounts payable 82,824$ 40,465$ -$ 2,263$ Deposits from others - - 19,967 26,419 Due to capital projects funds - - - - Due to low and moderate housing funds - - - - Due to other governments - - - - Deferred revenue 1,930,492 641,486 - - Advances from other funds - - - 4,328 Total Liabilities 2,013,316 681,951 19,967 33,010 Fund Balances: Nonspendable: Prepaid expenditures - - - 10,563 Long-term receivables and deposits 2,081,614 - - 6,000 Restricted for: Debt service - - - - Low and moderate income housing 8,411,580 22,941,346 928,958 601,837 Community development - - - - Total Fund Balances 10,493,194 22,941,346 928,958 618,400 Total Liabilities and Fund Balances 12,506,510$ 23,623,297$ 948,925$ 651,410$ Redevelopment Agency PA No. 1 Redevelopment Agency PA No. 2 Redevelopment Agency PA No. 1 Redevelopment Agency PA No. 2 See Notes to Financial Statements 16 LA QUINTA REDEVELOPMENT AGENCY BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2011 Assets: Cash and investments Cash and investments with trustee Receivables: Tax increment Accounts Interest Loans Prepaid costs Due from capital projects funds Due from low and moderate housing funds Due from City Deposits with others Advances to other funds Total Assets Liabilities and Fund Balances: Liabilities: Accounts payable Deposits from others Due to capital projects funds Due to low and moderate housing funds Due to other governments Deferred revenue Advances from other funds Total Liabilities Fund Balances: Nonspendable: Prepaid expenditures Long-term receivables and deposits Restricted for: Debt service Low and moderate income housing Community development Total Fund Balances Total Liabilities and Fund Balances (Continued) Capital Capital Capital Capital Projects Projects Projects Projects Combined Combined Low/Moderate Low/Moderate Housing Housing 2011 2004 Low/Mod Low/Mod Bond Bond Project Project -$ -$ 9,943,802$ -$ 25,535,470 3,331,915 9,204,891 3,931,437 - - - - 3,500 - - 24,500 - - 8,549 307 - - - 2,300,000 - - - - - - 637,754 - - - - - - - 3,284,621 1,280,239 - - - - - - - - 25,538,970$ 3,331,915$ 23,079,617$ 7,536,483$ -$ -$ 53,296$ 28,944$ - - - - - - - 637,754 3,500 24,760 - - - - - - - - - 2,300,000 - - - - 3,500 24,760 53,296 2,966,698 - - - - - - - - - - - - 25,535,470 3,307,155 - - - - 23,026,321 4,569,785 25,535,470 3,307,155 23,026,321 4,569,785 25,538,970$ 3,331,915$ 23,079,617$ 7,536,483$ Redevelopment Agency PA No. 1 Redevelopment Agency PA No. 2 See Notes to Financial Statements 17 LA QUINTA REDEVELOPMENT AGENCY BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2011 Assets: Cash and investments Cash and investments with trustee Receivables: Tax increment Accounts Interest Loans Prepaid costs Due from capital projects funds Due from low and moderate housing funds Due from City Deposits with others Advances to other funds Total Assets Liabilities and Fund Balances: Liabilities: Accounts payable Deposits from others Due to capital projects funds Due to low and moderate housing funds Due to other governments Deferred revenue Advances from other funds Total Liabilities Fund Balances: Nonspendable: Prepaid expenditures Long-term receivables and deposits Restricted for: Debt service Low and moderate income housing Community development Total Fund Balances Total Liabilities and Fund Balances Debt Debt Service Service Total Tax Tax Governmental Increment Increment Funds 1,132,207$ 15,101$ 44,037,780$ - 600,000 42,603,713 27,485 5,112 40,746 - - 78,624 379 - 31,191 - - 6,953,592 - - 10,563 - - 637,754 - - 28,260 - - 4,564,860 - - 6,000 - - 4,328 1,160,071$ 620,213$ 98,997,411$ -$ -$ 207,792$ - - 46,386 - - 637,754 - - 28,260 414,728 60,013 474,741 - - 4,871,978 - - 4,328 414,728 60,013 6,271,239 - - 10,563 - - 2,087,614 745,343 560,200 1,305,543 - - 61,726,346 - - 27,596,106 745,343 560,200 92,726,172 1,160,071$ 620,213$ 98,997,411$ Redevelopment Agency PA No. 1 Redevelopment Agency PA No. 2 See Notes to Financial Statements 18 LA QUINTA REDEVELOPMENT AGENCY GOVERNMENTAL FUNDS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2011 Fund balances of governmental funds 92,726,172$ Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds.10,630,944 Deferred revenue is present in governmental fund financial statements to indicate that receivables are not available currently; however, in the Statement of Net Assets these deferrals are eliminated.4,871,978 Governmental funds report all pension contributions as expenditures, however in the Statement of Net Assets any excesses or deficiencies in contributions in relation to the required contribution are recorded as an asset or liability.100,393 Bond issuance costs is an expenditure in the governmental funds, but it is deferred charges in the statement of net assets: Unamortized debt issuance costs - amortized over life of new bonds 4,441,840 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds: Bonds payable (250,712,816) Other debt (2,255,242) Unamortized net original issue discounts/(premiums)1,127,045 Accrued interest payable for the current portion of interest due on Tax Allocation Bonds has not been reported in the governmental funds.(3,882,145) Net assets of governmental activities (142,951,831)$ See Notes to Financial Statements 19 LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Special Special Special Special Revenue Revenue Revenue Revenue Low and Low and Moderate Moderate Housing Housing Housing Housing Authority Authority Revenues: Taxes and assessments 8,798,118$ 4,837,259$ -$ -$ Use of money and property 285,314 143,643 251,940 666,159 Other revenue 54,157 8,719 1,302 3,185 Total Revenues 9,137,589 4,989,621 253,242 669,344 Expenditures: Current: Planning and development 2,786,661 1,002,756 224,581 318,911 Capital outlay 320,045 409,734 - - Debt service - - 11 239,768 Total Expenditures 3,106,706 1,412,490 224,592 558,679 Excess (Deficiency) of Revenues Over (Under) Expenditures 6,030,883 3,577,131 28,650 110,665 Other Financing Sources (Uses): Transfers in - - 781,094 509,112 Transfers out (5,220,026) (2,461,105) - - Long-term debt issued - - - - Pass-through agreement payments - - - - Gain/(loss) on sale of land held for resale - - 120,628 - Payment to Supplemental Educational Revenue Augmentation Fund - - - - Miscellaneous - - - - Total Other Financing Sources (Uses):(5,220,026) (2,461,105) 901,722 509,112 Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other Uses 810,857 1,116,026 930,372 619,777 Fund Balances: Beginning of Year 9,682,337 21,825,320 (1,414) (1,377) End of Year 10,493,194$ 22,941,346$ 928,958$ 618,400$ Redevelopment Agency PA No. 1 Redevelopment Agency PA No. 2 Redevelopment Agency PA No. 1 Redevelopment Agency PA No. 2 See Notes to Financial Statements 20 LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Revenues: Taxes and assessments Use of money and property Other revenue Total Revenues Expenditures: Current: Planning and development Capital outlay Debt service Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers in Transfers out Long-term debt issued Pass-through agreement payments Gain/(loss) on sale of land held for resale Payment to Supplemental Educational Revenue Augmentation Fund Miscellaneous Total Other Financing Sources (Uses): Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances: Beginning of Year End of Year (Continued) Capital Capital Capital Capital Projects Projects Projects Projects Combined Combined Low/Moderate Low/Moderate Housing Housing 2011 2004 Low/Mod Low/Mod Bond Bond Project Project -$ -$ -$ -$ 12,065 6,429 5,045,584 3,465,925 - - 305,455 - 12,065 6,429 5,351,039 3,465,925 - - 9,144,495 2,582,605 - 125,124 2,018,681 1,797,569 632,214 - - 194,707 632,214 125,124 11,163,176 4,574,881 (620,149) (118,695) (5,812,137) (1,108,956) - - - - - - (15,039,194) (4,303,660) 28,850,000 - - 6,000,000 - - - - - - - - - - - - (2,694,381) - - - 26,155,619 - (15,039,194) 1,696,340 25,535,470 (118,695) (20,851,331) 587,384 - 3,425,850 43,877,652 3,982,401 25,535,470$ 3,307,155$ 23,026,321$ 4,569,785$ Redevelopment Agency PA No. 2 Redevelopment Agency PA No. 1 See Notes to Financial Statements 21 LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Revenues: Taxes and assessments Use of money and property Other revenue Total Revenues Expenditures: Current: Planning and development Capital outlay Debt service Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers in Transfers out Long-term debt issued Pass-through agreement payments Gain/(loss) on sale of land held for resale Payment to Supplemental Educational Revenue Augmentation Fund Miscellaneous Total Other Financing Sources (Uses): Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances: Beginning of Year End of Year Debt Debt Service Service Total Tax Tax Governmental Increment Increment Funds 35,192,471$ 19,349,036$ 68,176,884$ 12,802 47,887 9,937,748 - - 372,818 35,205,273 19,396,923 78,487,450 386,145 215,555 16,661,709 - - 4,671,153 38,198,962 23,043,762 62,309,424 38,585,107 23,259,317 83,642,286 (3,379,834) (3,862,394) (5,154,836) 19,478,126 6,255,653 27,023,985 - - (27,023,985) - - 34,850,000 (19,309,866) (16,297,223) (35,607,089) - - 120,628 (4,855,193) - (4,855,193) - - (2,694,381) (4,686,933) (10,041,570) (8,186,035) (8,066,767) (13,903,964) (13,340,871) 8,812,110 14,464,164 106,067,043 745,343$ 560,200$ 92,726,172$ Redevelopment Agency PA No. 2 Redevelopment Agency PA No. 1 See Notes to Financial Statements 22 LA QUINTA REDEVELOPMENT AGENCY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2011 Net change in fund balances - total governmental funds (13,340,871)$ Amounts reported for governmental activities in the Statement of Activities differs from the amounts reported in the statement of activities because: Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets.47,631,001 Bond issuance costs is an expenditure in the governmental funds, but it is deferred charges in the Statement of Net Assets: Debt issuance costs on bonds issued 431,875 Amortization for current fiscal year (186,407) Unamortized premium or discounts on bonds issued are revenue or expenditures in the governmental funds, but these are spread to future periods over the life of the new bonds: Current year original issuance premium on bonds issued 395,047 Amortization for current fiscal year (36,803) Governmental funds report capital outlay as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives through depreciation expense: Capital outlay expenditures 4,668 Sale of capital assets (3,688,222) Transfer of capital assets to the City (59,061,958) Depreciation (83,251) Proceeds of debt is revenue in the governmental funds, but these are additions to the Statement of Net Assets.(34,850,000) Revenues reported as deferred revenue in the governmental funds and recognized in the Statement of Activities. These are included in the intergovernmental revenues in the governmental fund activity.3,040,580 Contributions in excess to the required contribution to PERS are expenditures in the governmental funds, however in the Statement of Activity only the current contribution is an expense.(6,944) Expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: Current accrual of interest due on bonds (3,882,145) Prior year accrual of interest due on bonds 3,933,769 Change in net assets of governmental activities (59,699,661)$ See Notes to Financial Statements 23 LA QUINTA REDEVELOPMENT AGENCY BUDGETARY COMPARISON STATEMENT LOW/MODERATE INCOME HOUSING PA NO. 1 YEAR ENDED JUNE 30, 2011 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 9,682,337$ 9,682,337$ 9,682,337$ -$ Resources (Inflows): Taxes and Assessments: Tax increment 9,912,200 8,802,408 8,798,118 (4,290) Use of Money and Property: Interest income 46,800 46,800 42,092 (4,708) Other revenue: Miscellaneous revenues - - 780 780 Loan repayments - 23,029 53,377 30,348 Transfers from other funds - 40,000 - (40,000) Proceeds from sale of capital asset 150,000 243,222 243,222 - Amounts Available for Appropriation 19,791,337 18,837,796 18,819,926 (17,870) Charges to Appropriation (Outflow): Current: Planning and development: Real estate acquisitions - - 678,600 (678,600) Administrative costs 1,071,265 1,071,265 382,103 689,162 Professional services 250,440 250,440 907,077 (656,637) Acquisition cost 1,350,000 51,624 23,383 28,241 Rehabilitation costs 470,558 (470,558) Subsidy to low and moderate housing - 466,000 324,940 141,060 Capital Outlay: Project improvement costs - - 320,045 (320,045) Transfer to other funds 4,631,684 8,205,277 5,220,026 2,985,251 Total Charges to Appropriations 7,303,389 10,044,606 8,326,732 1,717,874 Budgetary Fund Balance, June 30 12,487,948$ 8,793,190$ 10,493,194$ 1,700,004$ See Notes to Financial Statements 24 LA QUINTA REDEVELOPMENT AGENCY BUDGETARY COMPARISON STATEMENT LOW/MODERATE INCOME HOUSING PA NO. 2 YEAR ENDED JUNE 30, 2011 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 21,825,320$ 21,825,320$ 21,825,320$ -$ Resources (Inflows): Taxes and Assessments: Tax increment 5,573,400 4,800,480 4,837,259 36,779 Use of Money and Property: Interest income 56,900 54,200 143,643 89,443 Rental income 665,700 - - - Other revenue: Loan repayments - 8,719 8,719 - Amounts Available for Appropriation 28,121,320 26,688,719 26,814,941 126,222 Charges to Appropriation (Outflow): Current: Planning and development: Administrative costs 628,134 625,099 225,496 399,603 Professional services 354,700 512,000 765,192 (253,192) Acquisition cost 450,000 450,000 - 450,000 Subsidy to low and moderate housing 432,300 435,335 12,068 423,267 Capital Outlay: Project improvement costs - - 409,734 (409,734) Debt Service: Interest expense 200,443 200,443 - 200,443 Long-term debt repayments 39,313 39,313 - 39,313 Transfer to other funds 1,951,993 12,785,865 2,461,105 10,324,760 Total Charges to Appropriations 4,056,883 15,048,055 3,873,595 11,174,460 Budgetary Fund Balance, June 30 24,064,437$ 11,640,664$ 22,941,346$ 11,300,682$ See Notes to Financial Statements 25 LA QUINTA REDEVELOPMENT AGENCY BUDGETARY COMPARISON STATEMENT HOUSING AUTHORITY PA NO. 1 YEAR ENDED JUNE 30, 2011 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 (1,414)$ (1,414)$ (1,414)$ -$ Resources (Inflows): Use of Money and Property: Interest income - - 3,744 3,744 Rental income 216,000 216,000 248,196 32,196 Sale of real estate - 120,628 120,628 - Other revenue: Miscellaneous revenues - - 1,302 1,302 Transfers from other funds 167,075 979,075 781,094 (197,981) Amounts Available for Appropriation 381,661 1,314,289 1,153,550 (160,739) Charges to Appropriation (Outflow): Current: Planning and development: Administrative costs 6,600 6,850 1,939 4,911 Professional services 22,000 39,000 1,139 37,861 Operation of acquired property 350,000 350,000 221,503 128,497 Debt Service:- Interest expense - - 11 (11) Transfer to other funds - 40,000 - 40,000 Total Charges to Appropriations 378,600 435,850 224,592 211,258 Budgetary Fund Balance, June 30 3,061$ 878,439$ 928,958$ 50,519$ See Notes to Financial Statements 26 LA QUINTA REDEVELOPMENT AGENCY BUDGETARY COMPARISON STATEMENT HOUSING AUTHORITY PA NO. 2 YEAR ENDED JUNE 30, 2011 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 (1,377)$ (1,377)$ (1,377)$ -$ Resources (Inflows): Use of Money and Property: Interest income - 3,600 1,046 (2,554) Rental income - 661,500 665,113 3,613 Other revenue: Miscellaneous revenues - 4,200 3,185 (1,015) Transfers from other funds 25,675 534,787 509,112 (25,675) Amounts Available for Appropriation 24,298 1,202,710 1,177,079 (25,631) Charges to Appropriation (Outflow): Current: Planning and development: Administrative costs 4,000 4,000 1,800 2,200 Professional services 15,000 15,000 1,139 13,861 Operation of acquired property 4,500 433,800 315,972 117,828 Interest expense - 200,443 200,455 (12) Long-term debt repayments - 39,313 39,313 - Total Charges to Appropriations 23,500 692,556 558,679 133,877 Budgetary Fund Balance, June 30 798$ 510,154$ 618,400$ 108,246$ See Notes to Financial Statements 27 THIS PAGE INTENTIONALLY LEFT BLANK 28 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2011 Note 1: Organization and Summary of Significant Accounting Policies a. Organization and Tax Increment Financing The La Quinta Redevelopment Agency (Agency) is a component unit of a reporting entity that consists of the following primary and component units: Reporting Entity: Primary Government: City of La Quinta Component Units: La Quinta Redevelopment Agency City of La Quinta Public Financing Authority La Quinta Housing Authority The La Quinta Housing Authority (Authority) was established pursuant to California Housing Authorities Law (Health and Safety Code Sections 34200 et seq.) on September 15, 2009. The purpose of the Authority is to provide safe and sanitary housing opportunities for La Quinta residents. Although the Authority is legally separate, it is reported as if it were part of the Agency because the Agency’s governing board also serves on the governing board for the Authority. Separate financial statements of the Authority are not prepared. 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 Quinta Redevelopment Project Area No. 1. On May 16, 1989, the City Council approved and adopted the Redevelopment Plan for the La Quinta Redevelopment Project Area No. 2. These plans provide for the elimination of blight and deterioration that was found to exist in the project areas. Tax Increment Financing The Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a redevelopment project. The assessed valuation of a redevelopment project last equalized prior to adoption of a redevelopment plan or amendment to such redevelopment plan, or “base roll”, is established and, except for any period during which the assessed valuation drops below the base year level, the taxing bodies, thereafter, receive the taxes produced by the levy of the current tax rate upon the base roll. Taxes collected upon any increase in assessed valuation over the base roll (“tax increment”) are paid and may be pledged by a redevelopment agency to the 29 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 1: Organization and Summary of Significant Accounting Policies (Continued) repayment of any indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment agencies themselves have no authority to levy property taxes. b. Basis of Accounting and Measurement Focus The basic financial statements of the Agency are composed of the following: Government-wide financial statements Fund financial statements Notes to the basic 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 it’s discreetly presented component units. The Agency has no business-type activities or discretely presented component units. For the most part, effect of interfund activity has been removed from these statements. 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 non-exchange transaction are recognized in accordance with the requirements of GASB Statement No. 33. Program revenues include charges for services 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 expenditures. Proceeds of long-term debt are recorded as a liability in the government-wide financial statements, rather than as 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. 30 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 1: Organization and Summary of Significant Accounting Policies (Continued) Fund Financial Statements The underlying accounting system of the Agency is organized and operated on the basis of separate funds, each of which is consider ed 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 non-major 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 non-major 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 60 day availability period. Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or 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 31 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 1: Organization and Summary of Significant Accounting Policies (Continued) 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 source 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 unrestricted resources. c. Major Funds The following funds are presented as major funds in the accompanying basic financial statements: Special Revenue, Low and Moderate Income Housing P.A. No. 1 and No. 2 Funds – To account for the required 20% set aside of property tax increments that is legally restricted for increasing or improving housing for low and moderate income households. Special Revenue, Housing Authority P.A. No. 1 and No. 2 Funds – To account for activities of the Housing Authority, including the operation of the Authority’s housing units. 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. 2004 and 2011 Low and Moderate Income Housing Fund – To account for the bond proceeds, interest and other funding that will be used for development, planning, construction, and land acquisition for low and moderate income housing projects. d. Cash and Investments For financial reporting purposes, investments are reported at their fair market value. 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. 32 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 1: Organization and Summary of Significant Accounting Policies (Continued) e. 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 $5,000 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. f. Fund Balance The Agency implemented Governmental Accounting Standards Board Statement 54, “Fund Balance Reporting and Governmental Fund Type Definitions”, for the year ended June 30, 2011. As a result, the Agency now reports the following classifications of fund balance: Nonspendable Fund Balance - Includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted Fund Balance - Includes amounts that have constraints on the use of resources by being externally imposed, imposed by law through constitution, or through enabling legislation. Assigned Fund Balance – Includes amounts that are constrained by the Agency’s intent to be used for a specific purpose. Unassigned Fund Balance - The residual classification which includes all spendable amounts not contained in other classifications. The Agency’s Board authorizes assigned amounts for specific purposes pursuant to the policy-making powers granted through a resolution. When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the Agency considers restricted amounts to be used first, then unrestricted. When an expenditure is incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used, they are considered to be spent in the order as follows: committed, assigned and then unassigned. Note 2: Stewardship, Compliance and Accountability a. Budgetary Data Budgets and Budgetary Accounting The Governing Board 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 the Governing Board. 33 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 2: Stewardship, Compliance and Accountability (Continued) Prior year appropriations lapse unless they are approved for carryover into the following fiscal year. Expenditures may not legally exceed appropriations at the department level. b. Budget Basis of Accounting Budgets for governmental funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). Note 3: Cash and Investments Cash and investments reported in the accompanying financial statements consisted of the following: The Agency’s funds are pooled with the City of La Quinta’s cash and investments in order to generate optimum interest income. The information required by GASB Statement No. 40 related to investments, credit risk, etc., is available in the annual report of the City. Note 4: Notes Receivable In September 1994, the Agency sold certain real property to LINC Housing for $2,112,847. The property was used to construct single-family homes and rental units to increase the City's supply of low and moderate income housing. The note bears interest at 6% per annum and is due in full on June 15, 2029. The balance at June 30, 2011 including matured, unpaid interest of $1,930,492 is $3,965,880. In July 2010, the Agency entered into an Owner Participation Agreement (OPA) with an Garff Properties-La Quinta, LLC (“Garff”) that provides for the Agency to provide a rehabilitation loan to Garff of up to $2,300,000 for the construction of a new auto dealership facility and rehabilitation of an existing dealership facility. In connection with the OPA, Garff has executed a promissory note which is secured by a deed of trust, and an operating covenant. The loan will be repaid by crediting future sales and property tax increment taxes generated on the site until the cumulative taxes collected equals the loan amount. At that time, the note will be cancelled and the operating covenant will terminate. If, after ten years of operation, a shortfall exists between the revenues collected and the outstanding loan amount, the note will be cancelled and the operating covenant will terminate. Further, if at any time through no fault of the dealership certain future events outside of the dealership control occur the note will be cancelled and the operating covenant will terminate. The balance at June 30, 2011 is $2,300,000. In February 2011, the Agency entered into Disposition and Development Agreement with Coral Mountain Partners L.P. (“Coral Mountain”) to fund up to $29,000,000 for the construction of a low and moderate income apartment complex with an estimated completion date of the apartment complex of March 2015. The Agency’s $29,000,000 loan is evidenced by a Promissory Note executed by Coral Mountain (“Note”). Interest on the outstanding note amount will bear simple interest of 1%. Principal and interest will be repaid on or before May 1st of each year from annual residual receipts as defined in the Note once the project is completed and may be repaid early if the property is refinanced, or if the property is transferred to another entity. As of June 30, 2011, the outstanding principal portion on the Note is $640,090 and the outstanding interest portion is $1,396. Other notes receivable totaled $46,226 at June 30, 2011. Cash and investments pooled with the City 44,037,780$ Cash and investments with trustees 42,603,713 86,641,493$ 34 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 5: Due from Other Governments The Agency advanced funds to the City of La Quinta to help the City meet the cost of developing the public-owned improvements to the La Quinta Park, La Quinta Library and the Highway 111 Median Improvement Project. There is no stipulated repayment date established for the Agency advances. Interest accrues at the earning rate of the City’s Investment Pool funds, and shall be adjusted quarterly. At June 30, 2011, outstanding Project Area No. 1 advances were $3,284,621 and Project Area No. 2 advances were $1,280,239. Note 6: Capital Assets Capital asset activity for the year ended June 30, 2011, was as follows: *Note: Deletions include transfer of capital assets to the City of La Quinta. Depreciation expense was charged to the following functions of the primary government: Governmental Activities: General government - $83,251 Note 7: Property Taxes Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes are recorded initially in a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City of La Quinta accrues only those taxes that are received from the County within sixty days after year-end. Lien date January 1 Levy date July 1 Due dates November 1 and February 1 Collection dates December 10 and April 10 The Agency’s primary source of revenue comes from property taxes. Property taxes allocated to the Agency are computed in the following manner: Balances at July 1, 2010 Additions Deletions* Balances at June 30, 2011 Depreciable assets: Buildings $ 4,010,888 $ - $ 4,010,888 $ - Total cost of depreciable assets 4,010,888 - 4,010,888 - Less accumulated depreciation: Buildings (406,324) (83,251) (489,575) - Net depreciable assets 3,604,564 (83,251) 3,521,313 - Capital assets not depreciated: Land 69,855,143 4,668 59,228,867 10,630,944 Capital assets, net $ 73,459,707 $ (78,583) $ 62,750,180 $ 10,630,944 35 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 7: Property Taxes (Continued) 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. Note 8: Long-Term Liabilities 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 range 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, 2011 is $4,775,000. 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 June 30, 2011 is $15,760,000. 36 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 8: Long-Term Liabilities (Continued) 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, 2011 is $5,555,000. Tax Allocation Bonds, Series 2001 – Project 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 bonds at June 30, 2011 is $48,000,000. 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. 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, 2011 is $35,085,000. 37 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 8: Long-Term Liabilities (Continued) Tax Allocation Bonds, Series 2003 – Project Area No. 1 On September 1, 2003, the Agency issued tax allocation bonds in the amount of $26,400,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 1. The 2003 tax allocation bonds were issued at a discount of $277,200 issuance costs of $629,191. Interest is payable semi-annually on March 1 and September 1 of each year, commencing March 1, 2004. Interest payments range from 4.24% to 6.44% per annum. The interest and principal on the bonds are payable from pledged tax increment revenues. Term bonds maturing on September 1, 2013 through September 1, 2032, are subject to mandatory redemption from minimum sinking fund payments, in part by lot, on September 1, 2004, September 1, 2014 and September 1, 2024, respectively, and on each September 1 thereafter at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. 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, 2011 is $23,305,000. 2004 Series A Local Agency Revenue Bonds On June 29, 2004, the La Quinta Financing Authority issued revenue bonds in the amount of $90,000,000 to finance projects benefiting low and moderate income housing in La Quinta Redevelopment Project Area No. 1 and the La Quinta Redevelopment Project Area No. 2 and to advance refund the Agency’s Redevelopment Project Areas No. 1 and 2, 1995 Housing Tax Allocation Bonds. The 2004 local agency revenue bonds were issued with issuance costs of $2,600,229 and a premium of $476,496. Interest is payable semi-annually on March 1 and September 1, of each year, commencing September 1, 2004. Interest payments range from 3% to 5.25% per annum. The interest and principal on the bonds are payable from pledged tax increment revenues. Term bonds maturing on September 1, 2024, September 1, 2029 and September 1, 2034, are subject to mandatory redemption from minimum sinking fund payments, in part by lot, on September 1, 2017, September 1, 2025 and September 1, 2030, respectively, and on each September 1 thereafter at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. 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, 2011 is $81,150,000. 2011 Subordinate Taxable Tax Allocation Bonds On June 6, 2011, the Agency issued subordinate taxable tax allocation bonds in the amount of $6,000,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 2. The 2001 tax allocation bonds were issued at a discount of $86,207 and issuance costs of $108,500. 38 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 8: Long-Term Liabilities (Continued) The bonds consist of $190,000 of term bonds that accrue interest at 5.375% and mature on September 1, 2016, $280,000 of term bonds that accrue interest at 7.125% and mature on September 1, 2021, $380,000 of term bonds that accrue interest at 7.600% and mature on September 1, 2026, and $5,150,000 of term bonds that accrue interest at 8.150% 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 fund the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2011 is $6,000,000. 2011 Series A Local Agency Subordinate Taxable Revenue Bonds On June 9, 2011, the La Quinta Financing Authority issued revenue bonds in the amount of $28,850,000 to finance projects benefiting low and moderate income housing in La Quinta Redevelopment Project Area No. 1 and La Quinta Redevelopment Project Area No. 2. The 2011 local agency subordinate taxable revenue bonds were issued with issuance costs of $323,375 and a discount of $308,839. Interest is payable semi-annually on March 1 and September 1 of each year, commencing September 1, 2011. Interest payments range from 3.750% to 8.185% per annum. The interest and principal on the bonds are payable from pledged tax increment revenues. Term bonds maturing on September 1, 2026, September 1, 2031 and September 1, 2036, are subject to mandatory redemption from minimum sinking fund payments, in part by lot, on September 1, 2022, September 1, 2027, and September 1, 2032, respectively, and on each September 1 thereafter at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. A portion of the proceeds was used to fund 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, 2011 is $28,850,000. 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 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, 2011 is $1,000,000. Pass-through Agreement 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 39 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 8: Long-Term Liabilities (Continued) $834,076 for a total amount of $15,284,042. Tax increment payments outstanding at June 30, 2011 totaled $1,255,242. The District agrees to use such funds to provide classroom and other construction costs, site acquisition, school buses, expansion or rehabilitation of current facilities. Washington Street Apartments In October 2008, the Agency acquired the Washington Street Apartments for cash and the assumption of the following debt: Provident Bank Loan This loan was originally entered into with the previous owner of the Washington Street Apartments and Provident Bank for $1,696,000 in August 2001 at an 8.36% interest rate. The loan is amortized on a thirty year basis with the outstanding balance due in twenty years or August 2021. The outstanding principal balance in October 2008, when the property was acquired by the Agency was $1,572,031. The loan is secured by a deed of trust on the property and is senior to the United States Department of Agriculture (USDA) loan which is also secured by a deed of trust on the property. Repayment of the monthly loan amount of $12,873 is made from tenant rent receipts. The source for the final principal payment due in August 2021, of $1,050,109 will be determined at a future date. The principal balance of this loan at June 30, 2011 is $1,503,433. United States Department of Agriculture (USDA) Rural Development Promissory Note This promissory note was originally entered into with the previous owner of the Washington Street Apartments and USDA – Rural Development for $1,500,000 in November 1980 at a 10.00% interest rate. The note is amortized on a fifty year basis with the outstanding balance due in October 2030. The outstanding principal balance, in October 2008, when the property was acquired by the Agency was $760,721. The loan is secured by a deed of trust on the property and is subordinated to the Provident loan which is also secured by a deed of trust on the property. Repayment of the monthly loan amount of $7,107 is made from tenant rent receipts and a rental subsidy from the USDA. Rural Development has agreed to a 9% interest rate subsidy on the Promissory Note as long as the Apartment renters meet certain program eligibility requirements. The principal balance of this note at June 30, 2011 is $729,383. Advances from the City of La Quinta The City of La Quinta advances money to the Agency to cover operating and capital shortfalls. As of June 30, 2011, the amount due to the General Fund from Project Area No. 1 and Project Area No. 2 were $0. 40 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 8: Long-Term Liabilities (Continued) The following is a schedule of changes in long-term debt of the Agency for the fiscal year ended June 30, 2011: Balance Balance Due Within July 1, 2010 Additions Repayments June 30, 2011 One Year Redevelopment Agency PA No. 1 City Loans - Principal 22,000,000$ -$ 22,000,000$ -$ -$ Coachella Valley USD Pass-Through Payable 2,072,964 - 817,722 1,255,242 834,076 1994 Tax Allocation Bonds 6,920,000 - 2,145,000 4,775,000 2,305,000 1998 TAB Project Area #1 15,760,000 - - 15,760,000 - 2001 Tax Allocation Bonds 48,000,000 - - 48,000,000 - 2002 Tax Allocation Bonds 35,765,000 - 680,000 35,085,000 705,000 2003 Tax Allocation Bonds 23,810,000 - 505,000 23,305,000 530,000 2004 Series A Local Agency Revenue Bonds 16,000,857 - 335,820 15,665,037 348,365 Total 170,328,821 - 26,483,542 143,845,279 4,722,441 Redevelopment Agency PA No. 2 City Loans - Principal 19,378,966 - 19,378,966 - - Provident Loan 1,530,958 - 27,525 1,503,433 29,918 US Department of Agriculture 741,171 - 11,788 729,383 12,915 Notes - Due to the County of Riverside 1,200,000 - 200,000 1,000,000 250,000 1998 TAB Project Area #2 5,680,000 - 125,000 5,555,000 130,000 2011A Subordinate TAB Bonds - 6,000,000 - 6,000,000 - 2004 Series A Local Agency Revenue Bonds 4,324,364 - 90,828 4,233,536 94,221 Taxable Revenue Bonds 2011 Series A - 28,850,000 - 28,850,000 - Total 32,855,459 34,850,000 19,834,107 47,871,352 517,054 Unallocated Between Project Areas 2004 Series A Local Agency Revenue Bonds 62,564,779 - 1,313,352 61,251,427 1,362,414 Total 62,564,779 - 1,313,352 61,251,427 1,362,414 Total - All Project Areas 265,749,059$ 34,850,000$ 47,631,001$ 252,968,058$ 6,601,909$ Adjustments: Unamortized net original issue (discount) or premium (1,127,045) Net Long-term Debt 251,841,013$ 41 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 8: Long-Term Liabilities (Continued) The following schedule illustrates the debt service requirements to maturity for the debt outstanding as of June 30, 2011: Principal Interest Principal Interest Principal Interest 2011 - 2012 2,305,000$ 264,443$ -$ 819,520$ 130,000$ 286,738$ 2012 - 2013 2,470,000 90,155 - 819,520 140,000 279,819 2013 - 2014 - - 655,000 802,490 145,000 272,516 2014 - 2015 - - 690,000 767,520 150,000 264,956 2015 - 2016 - - 725,000 730,730 160,000 257,013 2016 - 2021 - - 4,235,000 3,031,210 930,000 1,149,525 2021 - 2026 - - 5,460,000 1,777,100 1,205,000 872,156 2026 - 2031 - - 3,995,000 318,630 1,555,000 511,744 2031 - 2036 - - - - 1,140,000 91,875 Totals 4,775,000$ 354,598$ 15,760,000$ 9,066,720$ 5,555,000$ 3,986,342$ Principal Interest Principal Interest Principal Interest 2011 - 2012 -$ 2,430,720$ 705,000$ 1,756,429$ 530,000$ 1,453,198$ 2012 - 2013 - 2,430,720 735,000 1,727,981 560,000 1,423,495 2013 - 2014 1,565,000 2,391,595 705,000 1,695,656 590,000 1,392,158 2014 - 2015 1,645,000 2,311,345 735,000 1,659,656 620,000 1,356,736 2015 - 2016 1,730,000 2,226,970 770,000 1,622,031 660,000 1,316,800 2016 - 2021 10,025,000 9,714,225 4,485,000 7,475,031 3,970,000 5,891,984 2021 - 2026 12,805,000 6,854,645 5,730,000 6,198,303 5,390,000 4,438,109 2026 - 2031 16,425,000 3,147,848 10,380,000 4,379,313 7,340,000 2,414,034 2031 - 2036 3,805,000 97,028 10,840,000 662,406 3,645,000 238,441 Totals 48,000,000$ 31,605,096$ 35,085,000$ 27,176,806$ 23,305,000$ 19,924,955$ Principal Interest Principal Interest Principal Interest 2011 - 2012 1,805,000$ 4,099,719$ 250,000$ -$ 834,076$ -$ 2012 - 2013 1,890,000 4,016,581 250,000 - 421,166 - 2013 - 2014 1,975,000 3,924,681 250,000 - - - 2014 - 2015 2,075,000 3,823,431 250,000 - - - 2015 - 2016 2,175,000 3,714,463 - - - - 2016 - 2021 12,715,000 16,686,250 - - - - 2021 - 2026 16,430,000 12,885,194 - - - - 2026 - 2031 21,055,000 8,149,884 - - - - 2031 - 2036 21,030,000 2,222,969 - - - - Totals 81,150,000$ 59,523,172$ 1,000,000$ -$ 1,255,242$ -$ 2004 Series A Local Agency Revenue Bonds Tax Allocation Refunding Bonds, Series 1994 - PA No. 1 Tax Allocation Refunding Bonds, Series 1998 - PA No. 1 Tax Allocation Refunding Bonds Series 1998 - PA No. 2 Tax Allocation Bonds, Series 2001 - PA No. 1 Tax Allocation Bonds, Series 2002 - PA No. 1 Tax Allocation Bonds Series 2003 - PA No. 1 Due to County of Riverside Pass-through Payable - Coachella Valley Unified School 42 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 8: Long-Term Liabilities (Continued) Principal Interest Principal Interest Principal Interest 2011 - 2012 12,915$ 72,367$ 29,918$ 124,558$ -$ 488,648$ 2012 - 2013 14,267 71,014 32,515 121,959 - 2,171,767 2013 - 2014 15,761 69,520 35,341 119,134 520,000 2,171,767 2014 - 2015 17,412 67,870 38,411 116,064 540,000 2,152,267 2015 - 2016 19,235 66,047 41,748 112,726 565,000 2,127,967 2016 - 2021 130,952 295,458 269,873 502,499 3,340,000 10,117,192 2021 - 2026 215,456 210,953 1,055,627 14,670 4,685,000 8,774,045 2026 - 2031 303,385 73,179 - - 6,780,000 6,681,460 2031 - 2036 - - - - 9,930,000 3,530,174 2036 - 2041 - - - - 2,490,000 200,943 Totals 729,383$ 926,408$ 1,503,433$ 1,111,610$ 28,850,000$ 38,416,230$ USDA Rural Development Provident Bank Loan 2011 Series A Local Agency Subordinate Taxable Revenue Bonds Principal Interest 2011 - 2012 -$ 107,723$ 2012 - 2013 35,000 478,768 2013 - 2014 35,000 476,886 2014 - 2015 40,000 475,005 2015 - 2016 40,000 472,855 2016 - 2021 255,000 2,323,194 2021 - 2026 355,000 2,216,496 2026 - 2031 515,000 2,056,974 2031 - 2036 1,635,000 1,776,702 2036 - 2041 3,090,000 654,033 Totals 6,000,000$ 11,038,636$ 2011 Subordinate Taxable Tax Allocation Bonds Note 9: Pledge Tax Revenues As previously discussed, the Agency has pledged, as security for bonds it has issued, either directly or through the Financing Authority, a portion of the tax increment revenue (including Low and Moderate Income Housing set-aside) that it receives. These bonds were to provide financing for various capital projects and accomplish Low and Moderate Income Housing projects. The Agency has committed to appropriate each year, from these resources amounts sufficient to cover the principal and interest requirements on the debt. Total principal and interest remaining on the debt is $449,572,555 with annual debt service requirements as indicated above. For the current year, the total tax increment revenue, net of pass through payments, recognized by the City was $32,569,795 and the debt service obligation on the bonds was $16,604,838. 43 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 10: Transfers In and Out The following transfers were made during the year ended June 30, 2011: a) $4,438,932 was transferred from the Low/Moderate Income Housing PA No. 1 Fund to the Redevelopment Agency Debt Service Project Area No. 1 Debt Service Fund to pay a portion of the 2004 Series A Local Agency Revenue Bond and 1994 Tax Allocation Bonds debt services. b) $1,951,993 was transferred from the Low/Moderate Income Housing PA No. 2 Fund to the Redevelopment Agency Debt Service PA No. 2 Fund to pay a portion of the 2004 Series A Local Agency Revenue Bond debt service. c) $781,094 was transferred from the Low/Moderate Income Housing PA No. 1 Fund to the Housing Authority PA No. 1 to pay for rental subsidies associated with the La Quinta Cove Homes. d) $509,112 was transferred from the Low/Moderate Income Housing PA No. 2 Fund to the Housing Authority PA No. 2 to pay for rental subsidies associated with the Washington Street Apartments. e) $15,039,194 was transferred from the Redevelopment Agency Capital Project Area No. 1 to the Redevelopment Agency Debt Service PA No. 1 Fund to repay its part of the City advances. f) $4,303,660 was transferred from the Redevelopment Agency Capital Project Area No. 2 to the Redevelopment Agency Debt Service PA No. 2 Fund to repay its part of the City advances and to fund the SERAF payment. PA No. 1 PA No. 2 Housing Authority PA No. 1 Housing Authority PA No. 2 Total Transfers Out: Capital Project Redevelopment Agency - PA No. 1 15,039,194$ -$ -$ -$ 15,039,194$ Redevelopment Agency - PA No. 2 - 4,303,660 - - 4,303,660 Special Revenue: Low/Moderate Income Housing PA No. 1 4,438,932 - 781,094 - 5,220,026 Low/Moderate Income Housing PA No. 2 - 1,951,993 - 509,112 2,461,105 Total 19,478,126$ 6,255,653$ 781,094$ 509,112$ 27,023,985$ Debt Service Transfers in Special Revenue 44 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 11: Due To/From Other Funds The following interfund receivables and payables were made during the year ended June 30, 2011: All amounts were for short term borrowing to cover temporary cash shortfall. Note 12: Advances To/From other funds The advance was for operating costs. Note 13: Insurance The Agency is covered under the City of La Quinta’s insurance policies. Therefore, the limitations and self-insured retentions applicable to the City of La Quinta also apply to its Agency. Additional information as to coverage and self-insured retentions can be obtained by contacting the City. Note 14: Net Pension Asset In September 2009, the City contributed funds to CalPERS to payoff the side fund for the Past Service Cost in order to reduce future contribution rates. This amount will be amortized over the next twelve years. The Agency’s portion of the payoff was $107,336. The contribution requirements of plan member and the City are established and may be amended by CalPERS. Additional information on the plan can be obtained from the annual report of the City. The balance of the net pension asset as of June 30, 2011 is $100,393. Note 15: Transactions with the State of California a. SERAF Shift for fiscal year 2010-2011 On July 23, 2009, the State adopted legislation, requiring a shift of monies during fiscal years 2009-2010 and 2010-2011 to be deposited into the County “Supplemental” Educational Revenue Augmentation Fund (SERAF). These monies were to be distributed to meet the State’s Prop 98 obligations to schools. The California Redevelopment Association (CRA) and its member agencies filed a legal action in an attempt to stop Due From Other Funds Due To Other Funds Amount 3,500$ 24,760 637,754 Total 666,014$ Special Revenue Low/Mod PA No. 1 Special Revenue Low/Mod PA No. 2 Capital Projects Redevelopment PA No. 1 Capital Projects – 2011 Low/Mod Bond Capital Projects Redevelopment PA No. 2 Capital Projects – 2004 Low/Mod Bond Advances To Other Funds Advances From Other Funds Amount Special Revenue Low/Mod PA No. 1 Special Revenue Low/Mod PA No. 2 4,328$ 45 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 15: Transactions with the State of California (Continued) these amounts from having to be paid; however, in May 2010 the Sacramento Superior Court upheld the legislation. The payment of the SERAF was due on May 10, 2011 for fiscal year 2010-2011 and it was made in the amount of $4,855,193 using available resources. Note 16: California Redevelopment Agency Uncertainty On July 18, 2011, the California Redevelopm ent Association (“CRA”) and the League of California Cities (“League”) filed a petition for writ of mandate with the Califo rnia Supreme Court, requesting the Court to declare unconstitutional two bills that were passed as part of the 2011-12 State Budget, AB1X 26 and 27. AB1X 26 dissolves redevelopment agencies effective October 1, 2011. AB1X 27, give redevelopment agencies an option to avoid dissolution if it commits to making defined payments for the benefit of the State, school districts and certain special districts. In 2011-12, these payments amount to a state-wide total of $1.7 billion. In 2012-13 and subsequent years, the payments total $400 million, annually. Each city or county’s share of these payments is determined based on its proportionate share of state-wide tax increment. CRA and the League contend that AB1X 26 and 27 are unconstitutional because they violate Proposition 22 which was passed by the voters in November, 2010. The effect of the legislation is to achieve a possible unconstitutional result, the use of redevelopment agencies’ tax increment funds to benefit the State and other units of local government, by way of threatening of the dissolution of redevelopment agencies. Therefore, the CRA and the League have requested that the Court issue a stay, suspending the effectiveness of AB1X 26 and 27 until the Court can rule on its constitutionality. CRA and the League also asked the Court to expedite the briefing and hearing of the case so that a decision can be rendered by the Court before January 15, 2012, when the first payments are due. On August 11th, the California Supreme Court agreed to hear the case and granted a partial stay which was subsequently clarified. As of the time of the issuance of this report, the outcome of AB1X 26 and 27 upon the Agency is unknown and consequently the status and even future existence of the Agency is uncertain as such. In accordance with AB1X 27, the Agency has passed a resolution of intent to continue and will be required to make a payment to the State by January 15, 2012 to avoid dissolution. The Department of Finance issued their estimated payment amounts and the Agency filed an appeal regarding the calculation. The estimated payment amount based on the revised calculation is $17,018,721. Note 17: Subsequent Event In June 2011, the Agency entered into an Owner Participation Agreement (OPA) with an autodealer, Mega Dealer, LLC (“Torre Nissan”) that provides for the Agency to provide a rehabilitation loan to Torre Nissan of up to $1,500,000 for the remodeling of the existing dealership and an expansion of the dealership facility to accommodate a new line of electric and commercial vehicles. The new expansion will also include service and parts sales facilitates. In connection with the OPA, Torre Nissan has executed a promissory note, which is secured by a subordinated deed of trust and an operating covenant. Interest on the note 46 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2011 Note 17: Subsequent Event (Continued) shall accrue on the outstanding principal balance at the 1-year LIBOR Rate, adjusted annually on each June 30th. The loan will be repaid by crediting future sales and property tax increment taxes generated on the site until the cumulative taxes collected equals the outstanding loan amount. At that time, the note will be cancelled and the operating covenant will terminate. If at any time during the term of the note Nissan Motor Company ceases to exist, the note will be cancelled and the operating covenant will terminate. At the end of the ten-year operating covenant, the operating covenant will terminate and the note will be cancelled, and any outstanding loan balance will be forgiven. As of June 30, 2011 no payments have been made under this agreement. 47 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA BALANCE SHEET ALL GOVERNMENTAL FUNDS JUNE 30, 2011 Capital Capital Debt Capital Projects Projects Service Projects 2004 2011 Low/Mod Low/Mod Tax Bond Bond Increment Project ASSETS Cash and investments -$ -$ 1,132,207$ 9,943,802$ Cash and investments with trustee 3,331,915 25,535,470 - 9,204,891 Receivables: Tax increment - - 27,485 - Accounts - 3,500 - - Interest - - 379 8,549 Loans - - - - Prepaid costs - - - - Due from capital projects funds - - - 637,754 Due from low and moderate housing funds - - - - Due from City - - - 3,284,621 Deposits with others - - - - Advances to other funds - - - - Total Assets 3,331,915$ 25,538,970$ 1,160,071$ 23,079,617$ LIABILITIES AND FUND BALANCES Liabilities: Accounts payable -$ -$ -$ 53,296$ Deposits from others - - - - Due to capital projects funds - - - - Due to low and moderate housing funds 24,760 3,500 - - Due to other governments - - 414,728 - Deferred revenue - - - - Advances from other funds - - - - Total Liabilities 24,760 3,500 414,728 53,296 Fund Balances: Nonspendable: Prepaid costs - - - - Long-term receivables and deposits - - - - Restricted for: Debt service - - 745,343 - Low and moderate income housing 3,307,155 25,535,470 - - Community development - - - 23,026,321 Total Fund Balances 3,307,155 25,535,470 745,343 23,026,321 Total Liabilities and Fund Balances 3,331,915$ 25,538,970$ 1,160,071$ 23,079,617$ Redevelopment Agency PA No. 1 48 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA BALANCE SHEET ALL GOVERNMENTAL FUNDS JUNE 30, 2011 ASSETS Cash and investments Cash and investments with trustee Receivables: Tax increment Accounts Interest Loans Prepaid costs Due from capital projects funds Due from low and moderate housing funds Due from City Deposits with others Advances to other funds Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Deposits from others Due to capital projects funds Due to low and moderate housing funds Due to other governments Deferred revenue Advances from other funds Total Liabilities Fund Balances: Nonspendable: Prepaid costs Long-term receivables and deposits Restricted for: Debt service Low and moderate income housing Community development Total Fund Balances Total Liabilities and Fund Balances (Continued) Special Special Debt Capital Revenue Revenue Service Projects Low and Housing Moderate Tax Authority Housing Increment Project 934,767$ 8,474,291$ 15,101$ -$ - - 600,000 3,931,437 - 6,871 5,112 - 13,542 - - 24,500 616 5,414 - 307 - 4,012,106 - 2,300,000 - - - - - - - - - 3,500 - - - - - 1,280,239 - - - - - 4,328 - - 948,925$ 12,506,510$ 620,213$ 7,536,483$ -$ 82,824$ -$ 28,944$ 19,967 - - - - - - 637,754 - - - - - - 60,013 - - 1,930,492 - 2,300,000 - - - - 19,967 2,013,316 60,013 2,966,698 - - - - - 2,081,614 - - - - 560,200 - 928,958 8,411,580 - - - - - 4,569,785 928,958 10,493,194 560,200 4,569,785 948,925$ 12,506,510$ 620,213$ 7,536,483$ Redevelopment Agency PA No. 1 Redevelopment Agency PA No. 2 49 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA BALANCE SHEET ALL GOVERNMENTAL FUNDS JUNE 30, 2011 ASSETS Cash and investments Cash and investments with trustee Receivables: Tax increment Accounts Interest Loans Prepaid costs Due from capital projects funds Due from low and moderate housing funds Due from City Deposits with others Advances to other funds Total Assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Deposits from others Due to capital projects funds Due to low and moderate housing funds Due to other governments Deferred revenue Advances from other funds Total Liabilities Fund Balances: Nonspendable: Prepaid costs Long-term receivables and deposits Restricted for: Debt service Low and moderate income housing Community development Total Fund Balances Total Liabilities and Fund Balances Special Special Revenue Revenue Low and Debt Capital Special Housing Moderate Service Projects Revenue Authority Housing Funds Funds Funds 597,765$ 22,939,847$ 1,147,308$ 9,943,802$ 32,946,670$ - - 600,000 42,003,713 - - 1,278 32,597 - 8,149 37,082 - - 28,000 50,624 - 15,926 379 8,856 21,956 - 641,486 - 2,300,000 4,653,592 10,563 - - - 10,563 - - - 637,754 - - 24,760 - - 28,260 - - - 4,564,860 - 6,000 - - - 6,000 - - - - 4,328 651,410$ 23,623,297$ 1,780,284$ 59,486,985$ 37,730,142$ 2,263$ 40,465$ -$ 82,240$ 125,552$ 26,419 - - - 46,386 - - - 637,754 - - - - 28,260 - - - 474,741 - - - 641,486 - 2,300,000 2,571,978 4,328 - - - 4,328 33,010 681,951 474,741 3,048,254 2,748,244 10,563 - - - 10,563 6,000 - - - 2,087,614 - - 1,305,543 - - 601,837 22,941,346 - 28,842,625 32,883,721 - - - 27,596,106 - 618,400 22,941,346 1,305,543 56,438,731 34,981,898 651,410$ 23,623,297$ 1,780,284$ 59,486,985$ 37,730,142$ T O T A L S Redevelopment Agency PA No. 2 50 THIS PAGE INTENTIONALLY LEFT BLANK 51 COMBINING PROJECT AREA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 LA QUINTA REDEVELOPMENT AGENCY Capital Capital Debt Capital Projects Projects Service Projects 2004 2011 Low/Mod Low/Mod Tax Bond Bond Increment Project Revenues: Taxes and Assessments: Tax increment -$ -$ 35,192,471$ -$ Use of Money and Property: Interest income 6,429 12,065 12,802 170,584 Rental income ---- Sale of real estate - - - 4,875,000 Other revenue: Miscellaneous revenues - - - 305,455 Loan repayments ---- Total Revenues 6,429 12,065 35,205,273 5,351,039 Expenditures: Current: Planning and Development: Administrative costs - - 386,145 169,567 Professional services - - - 741,732 Real estate acquisitions - - - 8,199,012 Acquisition cost - - - 22,184 Operation of acquired property ---- Relocation costs - - - 1,257 Site clearance costs - - - 10,743 Rehabilitation costs ---- Subsidy to low and moderate housing ---- Capital Outlay: Project improvement costs 125,124 -- 2,018,681 Debt Service: Debt issuance costs - 632,214 -- Interest expense -- 10,885,440 - Long-term debt repayments -- 27,313,522 - Total Expenditures 125,124 632,214 38,585,107 11,163,176 Excess of Revenues over (under) Expenditures (118,695) (620,149) (3,379,834) (5,812,137) Other Financing Sources (Uses) Transfers in -- 19,478,126 - Transfers out --- (15,039,194) Long-term debt issued - 28,850,000 -- Pass through agreement payments -- (19,309,866)- Proceeds from sale of capital assets ---- Gain (Loss) on sale of land held for resale ---- Payment to Supplemental Educational Revenue Augmentation Fund -- (4,855,193)- Contributions to other agencies - (2,694,381)-- Total Other Financing Sources (Uses)- 26,155,619 (4,686,933) (15,039,194) Excess of Revenues and Other Sources over (under) Expenditures and Other Uses (118,695) 25,535,470 (8,066,767) (20,851,331) Fund Balances Beginning of Year 3,425,850 - 8,812,110 43,877,652 End of Year 3,307,155$25,535,470$745,343$23,026,321$ Redevelopment Agency PA No. 1 52 COMBINING PROJECT AREA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 LA QUINTA REDEVELOPMENT AGENCY Revenues: Taxes and Assessments: Tax increment Use of Money and Property: Interest income Rental income Sale of real estate Other revenue: Miscellaneous revenues Loan repayments Total Revenues Expenditures: Current: Planning and Development: Administrative costs Professional services Real estate acquisitions Acquisition cost Operation of acquired property Relocation costs Site clearance costs Rehabilitation costs Subsidy to low and moderate housing Capital Outlay: Project improvement costs Debt Service: Debt issuance costs Interest expense Long-term debt repayments Total Expenditures Excess of Revenues over (under) Expenditures Other Financing Sources (Uses) Transfers in Transfers out Long-term debt issued Pass through agreement payments Proceeds from sale of capital assets Gain (Loss) on sale of land held for resale Payment to Supplemental Educational Revenue Augmentation Fund Contributions to other agencies Total Other Financing Sources (Uses) Excess of Revenues and Other Sources over (under) Expenditures and Other Uses Fund Balances Beginning of Year End of Year (Continued) Special Special Debt Capital Revenue Revenue Service Projects Low and Housing Moderate Tax Authority Housing Increment Project -$8,798,118$19,349,036$ -$ 3,744 42,092 47,887 20,925 248,196 --- --- - 1,302 780 -- -53,377 -- 253,242 8,894,367 19,396,923 20,925 1,939 382,103 215,555 50,632 1,139 907,077 - 231,973 - 678,600 -- -23,383 -- 221,503 --- --- - --- - - 470,558 - 2,300,000 - 324,940 -- - 320,045 - 1,797,569 --- 194,707 11 - 2,765,596 - -- 20,278,166 - 224,592 3,106,706 23,259,317 4,574,881 28,650 5,787,661 (3,862,394) (4,553,956) 781,094 - 6,255,653 - - (5,220,026)- (4,303,660) --- 6,000,000 -- (16,297,223)- - 243,222 - 3,445,000 120,628 --- --- - --- - 901,722 (4,976,804) (10,041,570) 5,141,340 930,372 810,857 (13,903,964) 587,384 (1,414) 9,682,337 14,464,164 3,982,401 928,958$10,493,194$560,200$4,569,785$ Redevelopment Agenc PA No. 1 Redevelopment Agency PA No. 2 53 COMBINING PROJECT AREA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 LA QUINTA REDEVELOPMENT AGENCY Revenues: Taxes and Assessments: Tax increment Use of Money and Property: Interest income Rental income Sale of real estate Other revenue: Miscellaneous revenues Loan repayments Total Revenues Expenditures: Current: Planning and Development: Administrative costs Professional services Real estate acquisitions Acquisition cost Operation of acquired property Relocation costs Site clearance costs Rehabilitation costs Subsidy to low and moderate housing Capital Outlay: Project improvement costs Debt Service: Debt issuance costs Interest expense Long-term debt repayments Total Expenditures Excess of Revenues over (under) Expenditures Other Financing Sources (Uses) Transfers in Transfers out Long-term debt issued Pass through agreement payments Proceeds from sale of capital assets Gain (Loss) on sale of land held for resale Payment to Supplemental Educational Revenue Augmentation Fund Contributions to other agencies Total Other Financing Sources (Uses) Excess of Revenues and Other Sources over (under) Expenditures and Other Uses Fund Balances Beginning of Year End of Year Special Special Revenue Revenue Low and Debt Capital Special Housing Moderate Service Projects Revenue Authority Housing Funds Funds Funds -$4,837,259$54,541,507$ -$ 13,635,377$ 1,046 143,643 60,689 210,003 190,525 665,113 --- 913,309 --- 4,875,000 - 3,185 -- 305,455 5,267 - 8,719 -- 62,096 669,344 4,989,621 54,602,196 5,390,458 14,806,574 1,800 225,496 601,700 220,199 611,338 1,139 765,192 - 973,705 1,674,547 --- 8,199,012 678,600 --- 22,184 23,383 315,972 --- 537,475 --- 1,257 - --- 10,743 - --- 2,300,000 470,558 - 12,068 -- 337,008 - 409,734 - 3,941,374 729,779 --- 826,921 - 200,455 - 13,651,036 - 200,466 39,313 - 47,591,688 - 39,313 558,679 1,412,490 61,844,424 16,495,395 5,302,467 110,665 3,577,131 (7,242,228) (11,104,937) 9,504,107 509,112 - 25,733,779 - 1,290,206 - (2,461,105)- (19,342,854) (7,681,131) --- 34,850,000 - -- (35,607,089)-- --- 3,445,000 243,222 ---- 120,628 -- (4,855,193)-- --- (2,694,381)- 509,112 (2,461,105) (14,728,503) 16,257,765 (6,027,075) 619,777 1,116,026 (21,970,731) 5,152,828 3,477,032 (1,377) 21,825,320 23,276,274 51,285,903 31,504,866 618,400$22,941,346$1,305,543$56,438,731$34,981,898$ T O T A L S Redevelopment Agency PA No. 2 54 LA QUINTA REDEVELOPMENT AGENCY COMPUTATION OF LOW AND MODERATE INCOME HOUSING FUNDS EXCESS/SURPLUS Low and Moderate Housing Funds Low and Moderate Housing Funds All Project Areas All Project Areas July 1, 2010 July 1, 2011 Opening Fund Balance 34,933,507$ 62,277,165$ Less Unavailable Amounts: Unspent debt proceeds (Section 33334.12 (g)(3)(B)) (5,569,552)$ (28,867,385)$ Rehabilitation loans and advances (2,088,709) (2,081,614) (7,658,261) (30,948,999) Available Low and Moderate Income Housing Funds 27,275,246 31,328,166 Limitation (greater of $1,000,000 or four years set-aside) Set-Aside for last four years: 2010 - 2011 - 13,635,337 2009 - 2010 14,820,242 14,820,242 2008 - 2009 15,825,773 15,825,773 2007 - 2008 16,641,016 16,641,016 2006 - 2007 15,701,666 - Total 62,988,697$ 60,922,368$ Base Limitation 1,000,000$ 1,000,000$ Greater amount 62,988,697 60,922,368 Computed Excess/Surplus None None 55 THIS PAGE INTENTIONALLY LEFT BLANK 56