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FY 1988-1989 RDA Financial Statements• 1 1 Y '10111: 7Di • • I� !!� 1 r• «r• v ry I� ►. DIEHL,EVANS &COMPANY OTHER OFFICES -AT: CERTIFIED PUBLIC ACCOUNTANTS 2965 ROOSEVELT ST. - - CARLSBAD�CA 92008-2389 rARrneur�nn+cwnwonccovrorANcrcoRroRunoNs (619) 729-2343 18401 VON KARMAN, SUITE 200 120 WEST WOODWARD AVE. IRVINE •CALIFORNIA 92715-1542 ESCONDIDO. CA 92025-9990 ' PHONE (714) 757-7700 (619)-741-3141 FAX(714j 757-2707 August 25, 1989 INDEPENDENT AUDITORS REPORT Boatel of Directors _ La Quinta Redevelopment Agency La Quinta, California _ We have audited the general purpose financial statements of the La Quinta Redevelopment Agency, as of and for the year ended June 30, 1989, as listed in the table of contents. These financial statements are the responsibility of Agency's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted Our audit in accordance with generally -accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting -principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit provides a reasonable t basis for our opinion. In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, -the -financial position of the La Quinta Redevelopment Agency as of June 30, 1989, and the results of its operations for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The financial statements listed in the table of contents as supplementary information are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the La Quinta Redevelopment Agency. The information. has been subjected to the auditing procedures applied in the -audit of the general purpose financial statements and, in our- 'opinion, -is fairly. stated- in .all`- material respects in relation to the general purpose financial statements taken as a whole. LA QUIM'RIMEVEIDRIERr AGENCY - COMBINED BAIANM SfM ALL FUND TYPES AND ACCOUNT GROUP . June 30, 1989 Governmental Account_ Rrid Types Group Totals Capital Debt Long -Term (Memorandtim P.rSSFsTS. Projects Service Debt Only) Cash and temporary investments (Notes lc and 3) $ 7,763,044 $ 2,580,451 $ - $ 40,_343,495 - Tax increment receivable (Note 4) 14,423 _ 139,011 - 153,434 Aocru,ed interest receivable Restricted assets: 3,.490-: 60,973 - - 6.4, 463 - Cash with fiscal agent a (Notes 3 and 6) - 4,130,786 - .4,130,786 Amount available for Debt Service - - 6,761,738 6,761,738 Amount to be provided for retirement of Long-Ttim Debt - - 26,723,518 26,723,518 TOM ASSETS $ 7,780,957 $ 6,9112221 $33,485,256 $ 48,177,434 ITA Rrramr S AND FUND BALANCES Accounts payable $ 378,459.$ - $ - $ 378,459 Due to other agencies - 149,438 - - 149,438 Bonds payable (Nate 8) - - 28,000,000 28,000,000 Due to County of Riverside _ (Note 8) - - 3,084,309 -3,084,309 Note payable to School Districts (Note 8) - - 2,229,995 2,229,995 Loan payable to City of La Qulnta (Note 8) - - 170,952 170,952 7 TOTAL TIABITITIES 378,459 1491,438 33,485,256 34,013,153 - FUND BAIANCESS (NOMSS 7 AND 8): Reserved for capital projects 7,402,498 - - 7,402,498: Reserved for debt service - 6,761,783 - 6,761,783 - TOTAL FUND BALANCES 7,402,498 6,761,783 - 14,164,281 TOTAL LIABIIITMS AND FUND BALANCES $ 7,780,957- $ 6,911j221.$ 33-,-485,256=:°$ 48,177,434 - See independent auditors' report and notes to financial statements. -2- `. REVENUES: Tax increment revenue (Note 4) Interest ..: 1 e TCFML REVENUE. Trustee fees .111 -(Note • e consulting sexvices Project o . - e 1d) Debt Service: Taxing agencypayments - (Note • . Interest, on bonds Principal payments (Note TOTAL EXPEMITURES EXCESS OF REVENUES OVER (UNDER) ECPMITURES OTHER FINANCIM SOURCES (USES): Loans from City (Note 8) Proceeds frati ..(Note T= OTHER FMMCIM SOURCES (USES) EXCESS OF REVENUES AND amm SOURCES OVER EXPENDITURES AND aimm USES FUND M y. JULY 1, 1988 FUND BALANCES, JUNE 30, 1989 $ 435,413 $ 4,193,266, $ 4,628,679 289,728 377.840 667,568- 725,141 4,571,106 5,296,247 16,077, - _ 16,077- 168,809 6,077168,809 - 168,809- 32,133 - 32,133- 1,135,954 1,135,954 338,844 - 338,844 53,433 53,433 2,003,028 2,003,028 41021160 1,102 ,160 1,691,817 _ 3,158,621 4,850,438 (966,676) 1,412,485 445,809 1,091,104 - 1,-091,104 7,264,400 752,705 8,017,105 8,355,504 752,705 9,108,209 7,388,828 2,165,190 9,554,018 13,670 _4,596,593 4,610,263: $ 7,402,498 $ 6,761,783 ,S 14,164,281 See irriependent auditorsreport and notes to financial statements. -3- IA WTA I=VEMRMU � AGENCY NOI S TO FINANCIAL STATEMENTS June 30, 1989 1.. S[JNIMARY OF SIGNIFICANT ACOM=G POLICI i a. Description of funds and account group: Zhe accounts of the La Quinta Redevelopment Agency (the Agency) --are organized on the basis of funds and account group, each of which is considered a separate accounting entity with a self -balancing set of accounts. The funds and account group used in the. accompanying financial statements and described below are those specified for governmental units by the Governmental Accounting Standards Board (GASB) Capital Project Funds Capital Project Funds are established to account for bond proceeds available for project improvements and interest income on invested funds. The funds are expender} primarily for administrative -expenses and redevelopment project costs. Included as a capital project fund is the low income housing fund which accounts for twenty percent of all taxes which are allocated by the Agency pursuant to the California Health and Safety Code. .These funds shall be used -by the Agency for the purpose of providing affordable housing. Under provisions of the Health and Safety Code, such funds are referred to as !'Redevelopment Funds". Debt Service Fund Debt service funds are established to. account for tax increment revenues, bond proceeds required to be -set-aside for future debt:serv_ ice and related interest income. -.The fund is used to repay principal and interest on indebtedness of the Agency. Under provisions of the Health and Safety Code, such funds are referred to as "Special Funds". Long -Term Debt Group of Accounts The Long -Term Debt Group of Accounts is used to account for bonds payable and other long-term debt indebtedness of the Agency. b. Basis of Accounting: The modified accrual basisofaccounting is used for all funds of the Agency. Revenues are recognized when they become -measurable and available to finance expenditures - of the current period. Accrued revenues include tax increment revenue and accrued interest on investments. Expenditures are recorded - wlien- the -related liability is incurred, except that principal and interest payments on bonds are, recorded as expenditures when due. Accrued interest on amounts due to the County of Riverside - and - the Coachella Valley Water District is reflected in the long-term debt group of accounts. See independent auditors, report. -4- 1.. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (OM?rINUED): c. Investments: Investments are stated at cost, or amortized. cost, which approximates market value. (See Note 3)..- d. Bond Discounts and Bond Issue Costs: As described at Note lb. above, interest on bonds payable is not accrued, but rather is recorded as an expenditure when due. Consistent with this policy, discounts on the sale of bonds and bond --issue costs are recorded as expenditures when paid in the year -the bonds are issued. e. Budgetary Reporting: ` The budgets of the Agency are primarily "long-term" budgets which emphasize major programs and -capital outlay plans extending over a number of years. Because of the long-term nature of projects, "annual" budget comparisons are not considered.meaningful, and accordingly, no budgetary information is included in the accompanying financial statements. f. Total Columns on Combined Statements: Total columns on the financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis and such data is not comparable to a consolidation. Interfund eliminations -have not been made in the- aggregation of -this data.: g. Measurement Focus: All governmental funds are -accounted for on a spending or "financial flow" measurement focus. This means that. generally only current assets and current liabilities are included on their -balance sheets. Statements of revenue, expenditures and .changes in fund balances for governmental funds generally present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. 2. HISTORY AND ORGANIZATION: The Agency was activated on July 5, 1983. The primary purpose of'the Agency is to eliminate blight through the process of. redevelopment. On November 29, 1983 the City Council approved and adopted the Redevelopment Plan. for .: the La Quinta Redevelopment Pro eat. Thi s. plan_ provides for the elimination. of blight and deterioration utich was found to exist in the project area. The Project area encompasses approximately 17.5 square miles of the City. The Coachella Valley Water District is constructing the Agency's projects. to correct flooding of the project area. See independent auditors' report. -5- LA QU= REDEVEIIJM=' AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June'30, 1989 3. CASH AND INVESTMENTS: The following disclosures are made in accordance with Statement No. 3 of the Governmental Accounting Standards Board (GASB 3): Investments Authorized Investments: Under provisions of the Agency's Investment Policy, and in accordance -with Section 53601 of the- California Government Code, the Agency may invest. in. the following types of investments: U. S. Treasury Bills, Nous or Bonds Bonds issued by the City of Bankers Acceptances La Quinta or La Quinta Negotiable Certificates of Deposit- Redevelopment Agency Repurchase Agreements California Local Agency Investment California County investment Pools Fund (LAIF) Federal Agency Obligations California Local Agency Investment Fund (LAIF):. The LAIF is a special fund of the California State Treasury through which local governments may pool investments. The City and the Agency each may invest up to $5,000,000 in the fund. Investments in LAIF are highly liquid, as deposits can be converted to' cash within 24 hours without loss of interest. All investments with LAIF are -secured by the full faith -and credit of the State of California. Allocation of Interest income Among Funds: Interest income from pooled investments is allocated to those funds which are required by law or administrative action to receive interest. Interest is allocated on a quarterly basis based on the weighted average cash balances in each fund receiving interest. Classification of Deposits and Investments By Credit Risk GASB 3 requires that deposits- and investments be classified into three categories of credit risk. These categories are as follows.: Deposits: Category 1 - Deposits which are insured by FDIC', FSLIC, a stAte depository, insurance fund or a multiple -financial institution -collateral pool, or deposits which are collateralized with securities_ held by the Agency or the Agency's agent in the Agency's name. See independent auditorsreport. -6- I.A. QiTLNI'A REDEVEIlJP14ERr AGENCY NOTES TO FIIwCIAI, STA a mN'T'S (Continued) June 30, 1989 3. • "AM AND INVES'IrIEN'I5 (COId'I'I=) Category 2 - Deposits which are collateralized with securities held by the pledging financial institutions trust department in -the Agency's name. Category 3 - Deposits which are uncollateralized, or collateralized but the pledged securities are not held in the Agency's name. Investments: Category 1 - Investments which -are. insured by SIPC, or where -the securities .are held by the Agency or the Agency's agent in -the Agency's name. Category 2 - Investments which are uninsured, where the securities are held by the purchasing financial institution's trust department or agent in the Agency's name. Category 3 - Investments which are uninsured, where the -securities are held by the purchasing financial institution's trust department or agent, but not in the Agency's name. Deposits and investments were categorized as follows at June 30, 1989: Category Market 1 2 3 cost value Deposits: Banks: Demand accounts (overdraft) Investments: Federal Obligations: U.S. Treasury Bills Fiscal agent investments California Local Agency Investment Fund (LAIF) Total Cash and Investments $ (764,969)$ - $ - $ (764,969)$ (764,969) 7,274,464- - - 7,274,464 71274,464 4,130,786 4,130,786 4;130,786 $6,509,495 $ ' - $4,130,786 10,640,281 10,640,281 o See independent auditors' report. -3-834.1000-."- 3j834,000: $14,474,281 $14,474;281-. -7- • • V. -401N 21 to - 1D • !40 June 30, 1989 3.. CASH AND INVESTMENTS (CONTD [JED) : - Cash and investments are reported -in the acc=panying combined -balance sheet as follows: Cash and investments - unrestricted $ 10,343,495 Cash and investments with fiscal agent - restricted 4,130 786 $ 14,474,281 4. TAX mamma FINANCING AND Rin RECEIVABLES: K The Agency's primary source of revenue comes from property taxes, referred to in the accompanying financial statements as "tax increment revenue". Property taxes allocated to the Agency are computed in the following manner: a. The assessed valuation of all property within the project area is determined on the date of adoption of the Redevelopment Plan. b. Property taxes related to the -incremental increase in assessed values after the adoption of the Redevelopment Plan _are except where otherwise provided by specific agreement, allocated to the Agency; all taxes on the "frozen" assessed valuation of the property are allocated to the City and other districts. In 1989 other districts received a total of $149,438 in tax increment revenue allocated to the Agency. The Agency has no power to levy and collect -taxes and any legislative property tax de -emphasis might necessarily reduce the amount of tax -revenues that would otherwise be available to pay the principal of, and interest on bonds payable. 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 necessarily increase the amount of tax revenues that would be available to pay principal and interest on bonds payable. The tax increment receivable of $153,434 represents assessments attributable to the fiscal year ended June 30, 1989 that were remitted to the Agency by the County of Riverside after the year end. lmaolak 1 If Pursuant to the terms of a "reimbursement agreement, 'the Agency has -_ reimbursed the City $168,809._for the use of -City facilities- during the past: year. This amount is included in the administrative expenditures of the Capital Projects Find. = See independent auditors' report. 6.. RESTRICTED ASSETS Mese assets are restricted in their use to the retirement of principal and interest on bonds (see Note 8), and are not available for use.by.the Agency for any other purpose. 7. FUND BALANCE RESERVES: Under generally accepted accounting principles, a governmental entity may set up "reserves" of fund equity to segregate -fund balances which are not appropriable for expenditure in future periods, or which are'.- legally set _ aside for a specific future use; Fund "designations" also are established to indicate tentative plans for financial resource utilization in a future period. Me entire net equity of the debt service fund is reserved for future debt service, and accordingly, is not available for general expenditures. The 1985 and 1989 series bond indentures require $2,145,478 and $735,518, respectively to be reserved. The trustee.has-currently reserved $2,234,279 and $759,979 which exceeds the bond indenture requirement. Other funds held _ by the trustee also are pledged for debt service. At June 30,-1989, a "Reserve for Capital Projects" was set up in the Capital Projects Eland to indicate that the related assets were set aside for capital projects. 8. U G-TEE2T'I DEBT: - Changes in long-term debt during the year -ended June 30, 1989 were as follows: June 30, June 30, 1988 Additions Payments 1989 Bonds payable $ 20,000,000 $ 8,000,0001.$ - $ 28,000,000 v Due to County of i Riverside 2,206,812- 877,497 - 3,084,309 Notes payable: Coachella Water District 96,005 - 96,005 - Desert Sands Unified School District - 982,800 - �J 982,800 G ' Coachella Valley Unified School District - .1,247,.195 = 1,247,195 - Loan payable to City = of La Quinta 86;-003_ 1,091,104 1F006,155 170,952 Total $ 22,388:820 $12 198 596 $ 1 102 ,160 $ 33,485,256 See independent auditors, report. IA QUIN'I'A rdMEVEIDPM NT AGENCY NOTES TO FINANCIAL STA INEWS (Continued) June 30, 1989 8LONG-TERM DEBT (CONTINUED): Unpaid accrued interest and subventions due to the County of Riverside, the Desert Sands Unified School District and the Coachella Valley Unified School District in the amounts of $877;497, $982,800 and $1,560,506 ✓respectively have been added to long-term debt. However, these amounts have not been included as expenditures for the -year ended June 30, 1989. Bonds Payable Ia Quinta Redevelopment Project Tax Allocation Bonds, Series 1985 were r issued during the fiscal-yeaending June 30, 1987. The bonds were issued in the amount of $20,000,000 and have an average interest rate-of_9.404% per annum. Tax allocation bonds, Series 1989 were issued during the fiscal year ending June 30, 1989 in the amount of $8,000,000 with an average interest rate of 8% per annum. Accrued interest of $17,105 was received with the bond proceeds. The net proceeds of the bonds are used to finance certain flood control improvements in the -designated project area. Principal payments on both issues are paid annually on September -1, beginning in 1989. Interest payments -are payable semi-annually on March 1 and -September 1. Bonds maturing on or before September 1, 1995.for -series 1985 and September 1, 1998 for Series 1989 are not subject to- call -and redemption prior. to maturity. Bonds maturing on or after September 1, 1996 and September 1, 1999 are subject to redemption on any interest payment date at par plus a premium together with accrued interest to the date of redemption. The scheduled future debt service payments on both bond issues are as follows: Year Ended June 30, Principal Interest Total 1990 $ 570,000 $ 2,310,996 $ 2,880,996 1991 400,000 2;473,443 2,873,443 1992 435,000 2,440,290 2,875,290 1993 4751000 2,403,895 2,878,895 1994 515,000 2,363,833 2,878,833 All subsequent years 25,605,000 29,223,881 54,828,881 Total $ 28,000,000 $ 41,216,338 $ 69,216,338 •' 1 V MID VON16, ISI • CI DO ! • 1 /° W 1� a• June 30, 1989 8. TONG-TERA DEBT (CONTINUED) Due to County of Riverside Based on an agreement dated November 29, 1983 between the Agency, the City of La Quinta and the County of Riverside, the Agency shall repay to the County 50 percent of tax increment. received which would have been retained by the County if the Agency did not exist. these repayments. are -subordinate to certain debt service of the Agency and exclude amounts allocated to the low-income housing fund. The repayments -will begin when certain conditions of the bond indenture agreement have been met. Unpaid balances accrue - interest at 10% per annum. The --total amount payable to the County under this agreement at June 30, 1989 is .$3,084,309 including $239,295 of current year accrued interest. This amount has been recorded in the long-term debt group of accounts. In addition to the obligation to repay 50% of tax increment described above, the Agency agreed to pay debt and expenditures of no more than $3,000,000 annually and $10,000,000 total on mutually agreeable project costs and set aside low and moderate income housing funds from the remaining -50%. Amounts in excess of these limits shall be paid to the.County.- No amounts are due under this provision at June 30, 1989. Notes Payable to Water District The Coachella Valley Water District advanced $778,000 to the Agency -during the fiscal year ending June 30, 1986 for engineering -costs incurred for a flood control project. This amount accrued interest at the rate of interest being earned by funds deposited with the State of California Local Agency Investment Fund. The original advance was repaid to the Water District in November, 1987 and the accumulated accrued interest of $96,005 was paid to the District in July, 1989. Notes Payable to Desert Sands Unified School District Based on an agreement dated June 21, 1988 between the Agency, the City of La Quinta and the Desert Sands Unified School District (District), the Agency shall allocate all tax increment revenue received by the Agency that the District would have received in the absence of a redevelopment plan to be placed in a fund titled "Desert Sands Unified School District Capital Fund" and then to be paid to the District over a payment schedule from June 29, 1988 to July 1, 1998 in amounts ranging from $21,505 to $547,505 for a total amount of $4,132,020.. Or, alternatively, such -tax revenues. plus interest accrued required by this agreement maybe"retained by the Agency to pay on behalf of the District --principal and interest -on loans, construction projects or money advanced to -finance a sports complex and related amenities. as specified by the District.: See independent auditors, report. -11- LA rA REDEVELDPN�3V'r AGIIJCY . NOTES TO FINANCIAL SPATIMMM (Continued) June 30, 1989 8. - IDNO-TER4 DEBT (CON INLJED) : _ Notes Payable to Desert Sands Unified School District (-Continued) The District's allocable share of tax increment from- the- County for the fiscal year ended June 30, 1989 totalled $982,800. Note Payable to Coachella Valley Unified School District An agreement dated January 25, 1984 _between the Agency, the City of La Quinta and the Coachella Valley Unified School District - (District) provides - for the allocation of tax revenue that the District would -have received in the absence of a redevelopment plan, less 20% for low and moderate income housing set-aside and less 3% for administrative costs, to be paid to the District. Such payment is subordinated to other indebtedness of the Agency incurred in furtherance of the Redevelopment Plan adopted November 29, 1983. The District agrees to use such funds to provide classroom and other construction costs, site acquisition, school busses or expansion or rehabilitation of current facilities.. Alternatively the District may direct the Agency to retain such funds to be used fox' the purposes just described. The cumulative balance to be set aside under this agreement at June 30, 1989 is $1,247,195, which is considered to be debt of the Agency. loans Payable to the City of La Ouinta The City of La Quinta periodically makes operating advances to the. Agency. Outstanding advances frcm the City to the Agency were $170,952 at June 30, 1989. Pledged Tax Revenues All tax revenues received by the Agency other than the amount required by law to be deposited in a low and. moderate in=ne housing fund, are -required to be deposited in a Special Fund to be used to meet debt service requirements of the bond indentures before any payments may be made on other obligations of the Agency. See independent auditors' report. -12- LAQUINTA REDEVEMPNEW AGENCY CC MINIM BALANCE SHEET - CAPITAL PROJECT, FUNDS June 30, 1989 Flood Iaw Control Income ASSE'T'S Projects Housi.nq - Totals Cash and tenporary investments $ 7,378,836 $ 384,208 $ 7,763,044 Tax increment revenue -receivable - 14,423 14,423 Accrued interest receivable - 3;490 3,490 TOM ASSET'S $ 7,378,836402 121 �_ $ 7,780,957 T TAIL ELI= AND FUND BALANCE LIABILITIES: Accounts payable and accrued expenses $ 378,459 $ - $ 378,459 FUND BALANCE: Reserved for capital projects -7-,000,377 402,121 71402.498 TOTAL LIABILITIES AND FUND BALANCE 7,378,836 LAgaLJ21 $ 7,780,957 See independent auditors' report and notes to financial statements, -13- IA QUI M REDE VEMPME W AGENCY - COMIN.ING STATE[= =0F REVENUES, EXPENDITURES AND Ci NGES IN FUND BAIANCES - CAPITAL PROIT CT RUM For the year ended June 30, 1989- Flood Lord Control. Income Projects Housinq Totals REVENUES: Tax increment revenue $ - $ 435-1413 $, 435, 413 - - Interest income 282,581 7,147 289;728 TOIAL 282,581 442,560._ 725,141 EXPENDITURES Trustee fees Administrative Professional and consulting services- Project ervicesProject costs Bond issue costs TIAL EXPENDITURES EXCESS OF REVENUES OVER (UNDER) EXPENDITURES OTHER FENCING SCURC'E.S (USES)-: Loan from City Bond proceeds TOTAL OTHER FINANCING SaJRCES (USES) EXCESS OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES FUND BALANCES, JULY 1, 1988 FUND BALANCES, JUNE 30, 1989 16,077 - 16,077 168,809 - 168,809 32,133 32,133 1,127,648 8,306 1,135,954 338,844 - 338,844 1,651,378 40,439- 1,691,817 (1,368,797) 402,121 (966,676) 1,091,104 - -1,091,104 7,264,400 - 7;264,400 81355,504 - 8,355,504 6,986,707 402,121 7,388,828 13,670 - 13,670 $ 7,000,377 $ 402,121 $ 7,402,498 - See independent auditors' report and notes to financial statements. -14= IA QiTIlM REDEVE OPMENr AGENCY August 25, 1989 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH AUDIT GUIDE,INE.S FOR CAMFORNIA REDEVELOPMENT AGENCIES In connection with our audit of the financial statements.of the La Quinta Redevelopment Agency for- the year ended June -30, 1989, we have performed, to -the extent applicable, the tasks contained in Sections I through. -V of the "Guidelines for Compliance Audits of California Redevelopment Agencies" published by the State Controller. Based on the above procedures, we are of the opinion that the Agency.ccmplied in all material respects with criteria established in the State Controller's guidelines referred to above. -15-