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FY 1994-1995 RDA Financial StatementsLA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 1995 (with Independent Auditors' Report Thereon) LA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 1995 TABLE OF CONTENTS Page Independent Auditors' Report 1 Financial Statements: • Combined Balance Sheet - All Fund Types and Account Groups 2 • Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types 3 • Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Governmental Fund Types 4 • Notes to Financial Statements 5 Supplemental Data: Special Revenue Funds: • Combining Balance Sheet 17 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 18 Debt Service Funds: • Combining Balance Sheet 19 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 20 Capital Projects Funds: • Combining Balance Sheet 21 • Combining Statement of Revenues, Expenditures and Changes in Fund Balances 22 Supplemental Schedule of Tax Increment Shift to Educational Revenue Augmentation Fund 23 Independent Auditors' Compliance Report 24 L 1SSOUL 11 ECJ, L.L.P. A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Board of Directors La Quinta Redevelopment Agency La Quinta, California CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT 1100 MAIN STREET, SUITE C IRVINE, CALIFORNIA 92714 (714) 474-2020 We have audited the accompanying financial statements of the La Quinta Redevelopment Agency, a component unit of the City of La Quinta, California as of and for the year ended June 30, 1995, as listed in the table of contents. These component unit financial statements are the responsibility of the management of the La Quinta Redevelopment Agency. Our responsibility is to express an opinion on these component unit financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the component unit financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the component unit financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall component unit financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the component unit financial statements referred to above present fairly, in all material respects, the financial position of the La Quinta Redevelopment Agency at June 30, 1995, 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 component unit financial statements taken as a whole. The supplemental data listed in the table of contents is presented for purposes of additional analysis and is not a required part of the component unit financial statements of the La Quinta Redevelopment Agency. Such information has been subjected to the auditing procedures applied in the audit of the component unit financial statements and, in our opinion, is fairly presented in all material respects in relation to the component unit financial statements taken as a whole. August 18, 1995 Gia 41.0( %/� S!� ev�t� -1- MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION LA QUINTA REDEVELOPMENT AGENCY Combined Balance Sheet -Ali Fund Types and Account Groups June 30, 1995 Assets and other debits Cash and investments (note 3) Cash with fiscal agent (note 3) Accounts receivable Accrued revenue Prepaid expense Notes receivable Due from other funds Due from other governments Land held for resale Advances to other funds Property, plant and equipment (note 15) Other debits: Amounts available in debt service funds Amount to be provided for retirement of long-term debt Total assets and other debits 5,879,910 - 5,879,910 5,879,910 - 2,340,653 2,340,653 4,146,998 69.987,536 69.987.536 68,975,202 $2.352,334 3.612.757 2.173.082 5.879.910 72.328.189 86.346.272 94.845.588 Liabilities, fund equity, and other credits Liabilities: Accounts payable $ 5,600 - 8,532 Accrued expenses - 721,066 - Due to other funds 217,891 39,135 124,190 Advances from other funds - 511,903 - Advances payable to the City of La Quinta (note 12) - - - Obligations under pass-through agreements (notes 9, 10, and 11) - - - Tax allocation bonds payable (notes 5, 6, 7 and 8) - - - Notes payable - - - Total liabilities 223,491 1,272,104 132,722 - Fund equity and other credits: Account Groups - - - 5,879,910 Fund balances: Governmental Fund Types General General Totals Advances to other funds Special Debt Capital Fixed Long -Term (Memorandum Only) Revenue Service Projects Assets Debt 1995 1994 $1,154,348 3,082,986 6,100 - - 4,243,434 1,972,650 - 529,771 1,953,166 - - 2,482,937 6,304,023 - - 89,626 - - 89,626 - 597 - - - - 597 - - _ _ - - - 399,971 67,120 - - - - 67,120 67,120 257,026 - 124,190 - - 381,216 5,646,114 - _ - - - - 1,092,260 361,340 - - - - 361,340 361,340 511,903 - - - - 511,903 - 5,879,910 - 5,879,910 5,879,910 - 2,340,653 2,340,653 4,146,998 69.987,536 69.987.536 68,975,202 $2.352,334 3.612.757 2.173.082 5.879.910 72.328.189 86.346.272 94.845.588 Liabilities, fund equity, and other credits Liabilities: Accounts payable $ 5,600 - 8,532 Accrued expenses - 721,066 - Due to other funds 217,891 39,135 124,190 Advances from other funds - 511,903 - Advances payable to the City of La Quinta (note 12) - - - Obligations under pass-through agreements (notes 9, 10, and 11) - - - Tax allocation bonds payable (notes 5, 6, 7 and 8) - - - Notes payable - - - Total liabilities 223,491 1,272,104 132,722 - Fund equity and other credits: Investment in general fixed assets - - - 5,879,910 Fund balances: Reserved for: Bond reserve requirement - 509,490 - - Advances to other funds 511,903 - - - Notes receivable 67,120 - - - Land held for resale 361,340 - - - TDC owner participation agreement - - 1,820,357 - Unreserved: Designations 1,188,480 1,831,163 220,003 - Total fund equity and other credits 2,128,843 2,340,653 2,040,360 5,879,910 - 14,132 1,260,510 - 721,066 - - 381,216 5,646,114 - 511,903 - 6,048,957 6,048,957 4,321,796 25,749,232 25,749,232 26,743,004 40,530,000 40,530,000 40,810,000 1,247,400 72,328,189 73,956,506 80,028,824 - 5,879,910 5,879,910 509,490 1,218,892 511,903 - 67,120 67,120 361,340 361,340 1,820,357 1,820,793 3.239.646 5.468.709 - 12,389,766 14,816,764 Total liabilities, fund equity, and other credits $2.352.334 3.612,757 2.173.082 5.879,910 72.328.189 86.346.272 94 845.588 See accompanying notes to the financial statements. -2- LA QUINTA REDEVELOPMENT AGENCY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types Year ended June 30, 1995 Revenues: Tax increment Intergovernmental Developer fees Interest Miscellaneous Total revenues Expenditures: Administrative Professional fees Planning and development Capital projects Debt service: Principal Interest Repayment of advances from City Payments under pass through agreements Mandated education contribution Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Operating transfers in Operating transfers out Transfers from the City of La Quinta Transfers to the City of La Quinta Proceeds of bonds (net of premium and issuance costs) Payment to refunded bond escrow agent Proceeds of advances from City Litigation settlement proceeds Litigation settlement payments Total other financing sources (uses) Excess (deficiency) of revenues and other sources over (under) expenditures and other uses Fund balances (deficit) at beginning of year, as restated (note 18) Fund balances at end of year (2,046,455) (160,875) (2,448,335) (4,655,665) (12,025,371) 817,244 2,734,949 3,552,193 1,599,513 (265,611) (2,462,714) (823,868) (3,552,193) (1,599,513) - - 175,343 175,343 1,488,654 - (481,635) (481,635) (23,400) - - - 28,349,926 - - - (27,922,526) 2,621,457 2,621,457 - 353,118 353,118 3,431,561 - - (2,000,000) (265,611) (1,645,470) 4,579,364 2,668,283 3,324,215 (2,312,066) (1,806,345) 2,131,029 (1,987,382) (8,701,156) 4.440,909 4,146.998 (90,669) 8,497,238 17.198,394 2.128.843 2.340.653 2.040.360 6.509.856 8.497.238 See accompanying notes to the financial statements. -3- Totals Special Debt Capital (Memorandum Only) Revenue Service Projects 1995 1994 $2,813,394 11,338,868 - 14,152,262 13,233,435 - - 10,650 10,650 2,536,134 - - - - 75,537 123,813 169,676 70,721 364,210 403,598 5,067 5,067 3,995 2,942,274 11,508,544 81,371 14,532,189 16,252,699 404,880 - 917,177 1,322,057 1,042,199 401,125 191,094 350,217 942,436 1,136,847 3,574,904 - 168,436 3,743,340 2,115,775 - - 178,474 178,474 11,975,561 607,820 280,000 810,491 1,698,311 850,000 - 2,798,708 104,911 2,903,619 3,415,713 - 894,295 - 894,295 973,935 - 6,954,152 - 6,954,152 6,217,002 551,170 551,170 551,038 4,988,729 11,669,419 2,529,706 19,187,854 28,278,070 (2,046,455) (160,875) (2,448,335) (4,655,665) (12,025,371) 817,244 2,734,949 3,552,193 1,599,513 (265,611) (2,462,714) (823,868) (3,552,193) (1,599,513) - - 175,343 175,343 1,488,654 - (481,635) (481,635) (23,400) - - - 28,349,926 - - - (27,922,526) 2,621,457 2,621,457 - 353,118 353,118 3,431,561 - - (2,000,000) (265,611) (1,645,470) 4,579,364 2,668,283 3,324,215 (2,312,066) (1,806,345) 2,131,029 (1,987,382) (8,701,156) 4.440,909 4,146.998 (90,669) 8,497,238 17.198,394 2.128.843 2.340.653 2.040.360 6.509.856 8.497.238 See accompanying notes to the financial statements. -3- LA QUINTA REDEVELOPMENT AGENCY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - All Governmental Fund Types Year ended June 30, 1995 Revenues: Tax increment Intergovernmental Interest Miscellaneous Total revenues Expenditures: Administrative Professional fees Planning and development Capital projects Debt service: Principal Interest ' Repayment of advances from City Payments under pass through agreement: Mandated education contribution Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Operating transfers in Operating transfers out Transfers from the City of La Quinta Transfers to the City of La Quinta Proceeds of advances from City Litigation settlement proceeds Total other financing sources (uses) Excess (deficiency) of revenues and other sources over (under) expenditures and other uses Fund balances (deficit) at beginning of year, as restated (note 18) Fund balances (deficit) at end of year Special Revenue Funds Debt Service Funds Capital Projects Funds (19,383) - Variance- (894,295) 6,994,830 Variance- 40,678 551,035 Variance - 135) (750,158) Favorable Favorable - Favorable Budget Actual (Unfavorable ) Budget Actual (Unfavorable) Budget Actual (Unfavorable) $2,433,965 2,813,394 379,429 11,333,925 11,338,868 4,943 - - - - _ _ _ _ - - 10,650 10,650 136,200 123,813 (12,387) 142,500 169,676 27,176 5,000 70,721 65,721 536,116 5,067 (531,049) - - - - - - 3,106,281 2,942,274 (164,007) 11,476,425 11,508,544 32,119 5,000 81,371 76,371 404,880 (404,880) - 401,125 (401,125) 4,006,939 3,574,904 432,035 225,015 - 225,015 607,820 (607,820) 4,231,954 4,988,729 (756,775) - 191,094 (191,094) 21,750 - 21,750 285,000 280,000 51000 2,779,325 2,798,708 (19,383) - 894,295 (894,295) 6,994,830 6,954,152 40,678 551,035 551,170 135) 10,631,940 11,669,419 (1,037,479) 917,177 (917,177) - 350,217 (350,217) 3,352,101 168,436 3,183,665 - 178,474 (178,474) 810,491 (810,491) - 104,911 (104,911) 3,352,101 2,529,706 822,395 (1,125,673) (2,046,455) (920,782) 844,485 (160,875) (1,005,360) (3,347,101) (2,448,335) 898,766 - - - - 817,244 817,244 - 2,734,949 2,734,949 - (265,611) (265,611) - (2,462,714) (2,462,714) (73,710) (823,868) (750,158) - 175,343 175,343 - (481,635) (481,635) - 2,621,457 2,621,457 353,118 353,118 - (265,611) (265,611) - (1,645,470) (1,645,470) (73,710) 4,579,364 4,653,074 (1,125,673) (2,312,066) (1,186,393) 844,485 (1,806,345) (2,650,830) (3,420,811) 2,131,029 5,551,840 4,440,909 4,440,909 4,146,998 4.146,998 - (90,669) (90,669) - JJJ15.236 2.128.843 (1.186.393) 4.991.483 2,340.653 (2.650.830) (3.511,480) 2.040.360 5.551.840 See accompanying notes to the financial statements. LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements June 30, 1995 (1) Summary of Significant Accounting Policies The following is a summary of the significant accounting policies of the La Quinta Redevelopment Agency: (a) Fund Accounting The basic accounting and reporting entity is a "fund". A fund is defined as an independent fiscal and accounting entity with a self -balancing set of accounts, recording resources, related liabilities, obligations, reserves and equities segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions or limitations. The accounting records of the Agency are organized on the basis of funds and account groups classified for reporting purposes as follows: GOVERNMENTAL FUNDS Special Revenue Funds The Special Revenue Funds consist of the Low and Moderate Income Housing Funds of the Redevelopment Agency and are used to account for the portion of the Agency's tax increment revenue that is legally restricted for increasing or improving housing for low or moderate income households. Debt Service Funds The Debt Service Funds account for tax increment revenues and bond proceeds required to be set aside for future debt service and related interest income. The funds are used to repay principal and interest on indebtedness of the Agency. Under provisions of the Health and Safety Code and the Agency's bond resolutions, these funds are referred to as "Special Funds". Capital Projects Funds The Capital Projects Funds account for bond proceeds available for project improvements, interest income on invested funds and certain other income. The funds are expended primarily for redevelopment project costs and administrative expenses. Under provisions of the Health and Safety Code and the Agency's bond resolutions, these funds are referred to as "Redevelopment Funds". -5- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (1) Summary of Significant Accounting Policies (Continued) ACCOUNT GROUPS General Long,—Term Debt Account Group This account group is used to account for all long—term debt of the Agency. The proceeds of the indebtedness is recorded in the Capital Projects (Redevelopment) fund and serves as a financing source for redevelopment expenditures. General Fixed Assets Account Group The General Fixed Assets Account Group is used to account for the cost of fixed assets acquired to perform general government functions. Assets purchased are recorded as expenditures in the governmental funds and capitalized at cost in the general fixed assets account group. Contributed fixed assets are recorded in received. Fixed assets present value of future general fixed assets. (b) Basis of Accounting general fixed assets at fair market value at the time acquired under a capital lease are recorded at the net lease payments. No depreciation has been provided on The modified accrual basis of accounting is utilized by all funds of the Agency. Under the modified accrual basis of accounting, expenditures are recorded when a current liability is incurred and revenues are recorded when received in cash unless susceptible to accrual (i.e., measurable and available to finance the Agency's operations). (c) Relationship to the City of La Quinta The Agency is an integral part of the reporting entity of the City of La Quinta. The funds and account groups of the Agency have been included within the scope of the financial statements of the City because the City Council of the City of La Quinta exercises oversight responsibility over the operations of the Agency. Only the funds and account groups of the Agency are included herein and these financial statements, therefore, do not purport to represent the financial position or results of operations of the City of La Quinta, California. (d) Cash and Investments Investments are reported at cost. An estimated loss is accrued for an impairment of investment market value when it is probable that the loss will become realized and the amount of loss can be reasonably estimated. -6- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (1) Summary of Significant Accounting Policies. (Continued) (e) Land Held for Resale Land held for resale represents property acquired by the Agency for resale. The property is recorded at original cost. No write-down for a lower market value has been reflected in the accompanying financial statements. (f) Budgetary Reporting The Agency adopts an annual budget prepared on the modified accrual basis for all of its governmental funds. (g) Memorandum Only Totals Columns in the accompanying financial statements captioned "Totals (Memorandum Only)" are not necessary for a fair presentation of the financial statements in accordance with generally accepted accounting principles, but are presented as additional analytical data. (2) Organization and Tax Increment Financing Redevelopment Goals and Objectives The general objective of the Redevelopment Plan adopted by the Agency is to encourage investment in the Redevelopment Project Areas by the private sector. The Redevelopment Plan provides for the demolition of buildings and improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improvements. The Redevelopment Plan also includes the ability to redevelop land by private enterprise or public agencies, the rehabilitation of structures, the rehabilitation or construction of single family and low and moderate income housing, and participation by owners and tenants of properties in the Redevelopment Project. Redevelopment 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 which was found to exist in the project areas. -7- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (2) Organization and Tax Increment Financing, (Continued) The Coachella Valley Water District is jointly financing projects with the Agency to help prevent the potential flooding of the project areas. Tax Increment Financing The Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a redevelopment project. The assessed valuation of a redevelopment project last equalized prior to adoption of a redevelopment plan or amendment to such redevelopment plan, or "base roll', is established and, except for any period during which the assessed valuation drops below the base year level, the taxing bodies thereafter receive the taxes produced by the levy of the current tax rate upon the base roll. Taxes collected upon any increase in assessed valuation over the base roll ("tax increment") are paid and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment agencies themselves have no authority to levy property taxes. (3) Cash and Investments Cash and investments are classified in the accompanying combined balance sheet as follows: Cash and investments $4,243,434 Cash with fiscal agent 2,482,937 Total cash and investments $6,726,371 The composition of the above balances consists of the following: Cash and investments: Equity in City cash and investment pool $4,243,434 Cash and investments held by fiscal agent: Mutual funds 2,482,937 Total cash and investments $6,726,371 The market value of the mutual funds approximates the carrying amount. The Agency is generally authorized under state statutes and local resolutions to invest in the following investments: Investment Type Maximum % Savings/operating accounts 85% Certificates of deposit 60% U.S. government and agency securities 75% Government pool 90% Money market and short intermediate term bond funds 60% LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (4) 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 which are received from the County within sixty days after year end. Lien date March 1 Levy date June 30 Due dates November 1 and February 1 Collection dates December 10 and April 10 The La Quinta Redevelopment Agency's primary source of revenues comes from property taxes. Property taxes allocated to the Agency are computed in the following manner: (a) The assessed valuation of all property within the project area is determined on the date of adoption of the Redevelopment Plan. (b) Property taxes related to the incremental increase in assessed values after the adoption of the Redevelopment Plan are allocated to the Agency; all taxes on the "frozen" assessed valuation of the property are allocated to the City and other districts. The Agency has no power to levy and collect taxes and any legislative property tax shift might reduce the amount of tax revenues that would otherwise be available to pay the principal of, and interest on, debt. Broadened property tax exemptions could have a similar effect. Conversely, any increase in the tax rate or assessed valuation, or any reduction or elimination of present exemptions would increase the amount of tax revenues that would be available to pay principal and interest on debt. -9- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (5) General Long -Term Debt Changes in general long-term debt for the year ended June 30, 1995, were as follows: Balance at Balance at July 1, 1994 Additions Deletions June 30, 1995 Project Area No. 1: Tax allocation bonds $35,000,000 - 200,000 34,800,000 Pass through agreements payable: Due to County of Riverside 10,517,138 - - 10,517,138 Desert Sands Unified School District 2,566,220 - 661,560 1,904,660 Coachella Valley Unified School District 12,896,359 - 624,474 12,271,885 Notes payable - individuals 531,531 - 531,531 - Advances from City of La Quinta - 2,621,457 281,014 2,340,443 Claims and settlements payable - - - - Project Area No. 2: Tax allocation bonds 5,810,000 - 80,000 5,730,000 Due to County of Riverside 763,287 292,262 - 1,055,549 Notes payable - individuals 715,869 - 715,869 - Advances from City of La Quinta 4,321,796 - 613.282 3,708,514 Total long-term debt $73,122JM 2.913.719 3,707,730 .328.189 -10- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (6) Tax Allocation Bonds, Series 1991 La Quinta Redevelopment Project Tax Allocation Bonds, Series 1991, were issued by the Agency, October 1, 1991, in the amount of $8,700,000 for Project Area No. 1. Interest is payable semi-annually, on March 1, and September 1 of each year commencing March 1, 1992. Interest rates are 6.375% per annum. Term Bonds maturing on September 1, 2014 are subject to mandatory sinking fund redemption, in whole or in part, on September 1, 2010 and on each September 1, thereafter, through September 1, 2014, at a prepayment price equal to 100% of the principal amount plus accrued interest. Under the terms of the issue, the maximum annual debt service amount of $734,480 is to be set aside in reserve funds unless the Agency elects to maintain the reserve requirement by obtaining a letter of credit for the amount. In the current year, a surety agreement was purchased to satisfy the bond reserve requirement. The amount of principal outstanding on the 1991 Tax Allocation Bonds payable at June 30, 1995 was $8,135,000. (7) Tax Allocation Bonds, Series 1992 La Quinta Redevelopment Project Tax Allocation Bonds, Series 1992, were issued by the Agency, December 1, 1992, in the amount of $5,845,000 for Project Area No. 2. Interest is payable semi-annually on June 1 and December 1 of each year, commencing June 1, 1993. The interest on and principal of the bonds are payable solely from pledged tax increment revenues. Interest payments range from 5% to 6.9% per annum. The bonds maturing on or after December 1, 1996 are subject to mandatory redemption in part without premium on June 1, 1996. Under the terms of the bond, the maximum annual debt service amount of $509,490 excluding the principal amount of the proceeds of the bonds held in the escrow fund, is to be set aside in reserve funds unless the Agency elects to maintain the reserve requirement by obtaining a letter of credit for the account. As of June 30, 1995, the amounts deposited in the reserve and escrow funds were $524,602 and $167,660, respectively. The principal balance of outstanding bonds at June 30, 1995 was $5,730,000. -11- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (8) Tax Allocation Refunding Bonds, Series 1994 Tax allocation refunding bonds, Series 1994, in the amount of $26,665,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1989 and 1990. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 1. Interest rates on the bonds ranges from 3.80% to 8% and are payable semi-annually on March 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. 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, 1995 is $26,665,000. A portion of the bond proceeds, in the amount of $27,922,526, was deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the 1989 and 1990 Tax Allocation Bonds. As a result, the bonds are considered to be defeased and the liability for those bonds has been removed from the general long-term debt account group. As of June 30, 1995, $6,895,000 and $17,530,000 of the 1989 and 1990 defeased bonds are outstanding, respectively. (9) Due to County of Riverside Proiect Area No. 1 Based on an agreement amended December 21, 1993 between the Agency, the City of La Quinta, and the County of Riverside (County), the Agency will pay to the County $10,517,138 from tax increment revenue relating to Project Area No. 1. This agreement is in consideration of the tax revenues lost by the County as a result of the formation of Project Area No. 1. The tax increment is to be paid to the County over a payment schedule through June 30, 2006 in annual amounts ranging from $386,764 to $2,190,473. Unpaid balances accrue interest at 5.5% per annum. The balance at June 30, 1995 was $10,517,138. 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 Agency is required to begin repayment in the year in which tax increment reaches $5,000,000 in ten equal annual installments. Interest does not accrue on this obligation. The balance at June 30, 1995 was $1,055,549. -12- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (10) 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 identified tax increment revenue associated with the District for Project Area No. 1. The tax increment is paid to the District over a payment schedule through July 1, 1998 in amounts ranging from $21,505 to $663,825 for a total amount of $4,132,020. Alternatively, such tax increment revenues plus interest accrued required by this agreement may be 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. Tax increment payments outstanding at June 30, 1995 totaled $1,904,660. (11) Notes Payable to Coachella Valley Unified School District An agreement was entered into in 1991 between the Agency, the City of La Quinta and the Coachella Valley Unified School District (District) which provides for the payment to the District of a portion of tax increment revenue associated with properties within District confines. Such payments are subordinate to other indebtedness of the Agency incurred in furtherance of the Redevelopment Plan for Project Area No. 1. This tax increment is paid to the District over a payment schedule through August 1, 2012 in amounts ranging from $474,517 to $834,076 for a total amount of $15,284,042. Tax increment payments outstanding at June 30, 1995 totaled $12,271,885. The District agrees to use such funds to provide classroom and other construction costs, site acquisition, school busses, expansion or rehabilitation of current facilities. (12) Advances from the City of La Quinta The following represents a summary of the various transactions between the City of La Quinta and the Agency, accounted for as advances from the City: Agency expenditures incurred by the City: Project Area No. 1 Project Area No. 2 Totals Balances at Balances at July 1, 1994 Proceeds Repayments June 30, 1995 $ - 2,621,457 281,014 2,340,443 4,321,796 - 613.282 3.708,514 4.321.796 2.621.457 DA,29 6 6.048.957 -13- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (13) Debt Service Requirements to Maturity The minimum annual requirements (including sinking fund requirements) to amortize the long-term debt of the Agency as of June 30, 1995 are as follows (advances payable to the City and the passthrough obligation owed by Project Area No. 2 to the County have been excluded since minimum annual debt service payments have not been established): Less: Interest (6,243,249) (19.876,988) (5,893,106) - - (4,559.508) (36.572.851) Total Principal 8.135.000 26.665.000 .7 1.904.660 12.271.885 10.517.138 65.223.683 -14- Pass-through Agreements Redevelopment Agency RDA Project Area No. 1 Project Area No. 1 PA #2 Desert Coachella Tax Tax Tax Sands Valley Year Allocation Allocation Allocation Unified Unified County Ending Series Series Series School School of June 30 1991 1994 1992 District District Riverside Total 1995-96 $ 722,675 2,306,582 493,857 628,000 474,517 386,764 5,012,395 1996-97 723,810 2,629,851 503,607 707,650 526,560 386,764 5,478,242 1997-98 723,988 2,632,040 502,127 569,010 580,683 773,528 5,781,376 1998-99 723,210 2,625,330 510,065 - 621,976 773,528 5,254,109 1999-00 721,475 2,624,696 501,805 - 649,927 773,528 5,271,431 2000-01 723,625 2,624,885 508,265 - 670,817 1,803,705 6,331,297 2001-02 724,500 2,620,315 503,500 - 684,233 1,803,705 6,336,253 2002-03 719,259 2,620,855 508,100 - 697,918 1,803,705 6,349,837 2003-04 722,744 2,599,465 501,550 - 711,877 2,190,473 6,726,109 2004-05 719,794 2,612,140 509,490 - 726,114 2,190,473 6,758,011 2005-06 720,409 2,597,700 505,890 - 740,636 2,190,473 6,755,108 2006-07 719,431 2,593,456 506,400 - 755,449 - 4,574,736 2007-08 716,860 2,590,816 505,650 - 770,558 - 4,583,884 2008-09 717,535 2,584,232 503,850 - 785,968 - 4,591,585 2009-10 716,297 2,578,160 506,000 - 801,688 - 4,602,145 2010-11 713,080 2,571,868 506,750 - 817,722 - 4,609,420 2011-12 712,720 2,569,442 506,100 - 834,076 - 4,622,338 2012-13 714,959 2,560,155 509,050 - 421,166 - 4,205,330 2013-14 709,799 - 505,250 - - - 1,215,049 2014-15 712,079 - 505,050 - - - 1,217,129 2015-16 - - 503,100 - - - 503,100 2016-17 - - 509,400 - - - 509,400 2017-18 - - 508.250 - - - 508.250 Principal and interest 14,378,249 46,541,988 11,623,106 1,904,660 12,271,885 15,076,646 101,796,534 Less: Interest (6,243,249) (19.876,988) (5,893,106) - - (4,559.508) (36.572.851) Total Principal 8.135.000 26.665.000 .7 1.904.660 12.271.885 10.517.138 65.223.683 -14- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (14) Pledged Tax Revenues All tax revenues received by the Agency other than the amount required by law to be deposited in a low and moderate income housing fund, are required to be used to meet debt service requirements of the bond indentures before any payments may be made on other obligations of the Agency. (15) Changes in General Fixed Assets The Agency has purchased land which is intended to be used for community facilities. A summary of general fixed assets transactions for the fiscal year ended June 30, 1995 is as follows: Balances at July 1, 1994 Additions Deletions (16) Commitments under Development Agreements Washington Adams Balances at June 30. 1995 The Agency has entered into an Owner Participation Agreement (OPA) with Washington/Adams, a California limited partnership. Washington/Adams is responsible for the development of a retail center located at the intersection of Washington Avenue and Highway 111. Certain infrastructure improvements will be necessary as a result of this retail development project. Because of the regional benefit of these improvements, the Agency has agreed to contribute toward the cost of certain of the infrastructure improvements up to a maximum of $3,156,000. E.G. Williams On July 5, 1994, the Agency entered into a disposition and development agreement with E.G. Williams Development Corporation. In this agreement, E.G. Williams is responsible for the development of 60 detached single-family homes, 90 rental units designed for occupancy by senior citizens, one manager unit, and streets, gutters, drainage and other off-site facilities. In return, the Agency will convey title to the property for an agreed upon price. (17) Settlement Payments Litigation settlement payments reflect the payments made to Iowa Trust in settlement of a claim by Iowa Trust with regard to funds previously invested by the Agency with an investment management company. -15- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (18) Prior Period Adjustment The accompanying financial statements reflect certain adjustments to the opening fund balance of the Redevelopment Agency Project Area No. 2 capital projects fund. The effect of this change on the beginning fund balance of the capital projects fund type is as follows: Capital Projects Fund balance at beginning of year, as previously reported $348,947 Adjustment of intergovernmental receivable43( 9,616) Fund balance at beginning of year, as restated (90.669) (19) Subsequent Events On August 1, 1995, the Agency issued $22,455,000 of housing tax allocation bonds dated July 1, 1995 to increase, improve, and preserve the supply of low and moderate income housing in the City. Interest is payable semi—annually on September 1 and March 1 of each year commencing September 1, 1997. Interest payments range from 4% to 5.6%. -16- LA QUINTA REDEVELOPMENT AGENCY Special Revenue Funds Combining Balance Sheet June 30, 1995 -17- Low Income Low Income Housing Housing Project Project Totals Area #1 Area #2 1995 1994 Assets Cash and investments $ - 1,154,348 1,154,348 - Accrued revenue 597 - 597 - Notes receivable 67,120 - 67,120 67,120 Due from other funds - 257,026 257,026 4,056,211 Land held for resale 361,340 - 361,340 361,340 Advances to other funds 511,903 - 511,903 - Total assets 1.411.374 2.352.334 4.484,671 Liabilities and Fund Balances Liabilities: Accounts payable $ 4,166 1,434 5,600 43,762 Due to other funds 217.891 - 217,891 - Total liabilities 222,057 1,434 223,491 43,762 Fund balances: Reserved for: Advances to other funds 511,903 - 511,903 - Notes receivable 67,120 - 67,120 67,120 Land held for resale 361,340 - 361,340 361,340 Unreserved: Designations (221,460) 1,409,940 1,188,480 4,012,449 Total fund balances 718,903 1,409,940 2,128,843 4,440,909 Total liabilities and fund balances $9AQ,9M 1.411.374 2.352,334 4 484.671 -17- LA QUINTA REDEVELOPMENT AGENCY Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 1995 Low Income Low Income Housing Housing Project Project Area #1 Area #2 Revenues: Totals 1995 1994 Tax increment $2,301,158 512,236 2,813,394 Developer fees - - - Interest 52,485 71,328 123,813 Miscellaneous 5,067 - 5,067 Total revenues 2,358,710 583,564 2,942,274 Expenditures: Administrative Professional fees Planning and development Debt service: Principal Payment of advances from City Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Operating transfers out Total other financing sources (uses) Excess (deficiency) of revenues and other sources over expenditures and other uses Fund balances at beginning of year Fund balances at end of year 272,749 132,131 404,880 342,765 58,360 401,125 3,561,838 13,066 3,574,904 607,820 - 607,820 4,785,172 203,557 4,988,729 2,171,571 33,760 186,733 2,392,064 2,684,962 21,715 2,947,638 (2.426,462) 380,007 (2 046,455) (555,574) (2,426,462) 3,145,365 $ 718.903 -18- (265,611) (265,611) (7,020) (265,611) (265,611) (7,020) 114,396 (2,312,066) (562,594) 1,295.544 4,440,909 5,003.503 1.409.940 2,128.843 4.440.909 LA QUINTA REDEVELOPMENT AGENCY Debt Service Funds Combining Balance Sheet June 30, 1995 Redevelopment Redevelopment Agency Agency Totals PA #1 PA #2 1995 1994 Assets Cash and investments $2,211,017 871,969 3,082,986 1,972,650 Cash with fiscal agent 4,910 524,861 529,771 1,382,449 Prepaid expense - - - 399,971 Due from other funds - - - 1,589,903 Total assets $2,215,927 1.396,830 3,612,757 5.344.973 Liabilities and Fund Balances Liabilities: Accounts payable $ - - - 646,937 Accrued expenses 526,983 194,083 721,066 - Due to other funds - 39,135 39,135 551,038 Advances from other funds 511,903 - 511,903 - Total liabilities 1,038,886 233,218 1,272,104 1,197,975 Fund balances: Reserved for: Bond reserve requirement - 509,490 509,490 1,218,892 Unreserved: Designations 1,177,041 654,122 1,831,163 2,928,106 Total fund balances 1,177,041 1,163,612 2,340,653 4,146,998 Total liabilities and fund balances 2.215.927 1.396,830 3,612,757 5,344,973 -19- LA QUINTA REDEVELOPMENT AGENCY Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Revenues: Tax increment Interest Miscellaneous Total revenues Expenditures: Year ended June 30, 1995 Redevelopment Redevelopment Agency Agency Totals PA #1 PA #2 1995 1994 $9,289,918 2,048,950 11,338,868 11,061,864 94,878 74,798 169,676 164,628 OUR 9,384,796 2,123,748 11,508,544 11.230.487 Professional fees 153,754 Debt service: Principal 200,000 Interest 1,980,982 Repayment of advances from City 281,013 Payments under pass-through agreements 5,979,079 Mandated education contribution 512.025 Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Operating transfers in Operating transfers out Litigation settlement proceeds Total other financing sources (uses) Excess (deficiency) of revenues and other sources over expenditures and other uses Fund balances at beginning of year Fund balances at end of year 9,106,853 277,943 546,624 (2,462,714) 37,340 191,094 193,854 80,000 280,000 850,000 817,726 2,798,708 3,398,885 613,282 894,295 815,010 975,073 6,954,152 6,217,002 39,145 551.170 551.038 2,562,566 11,669,419 12,025,789 (438,818) (160,875) (795,302) 270,620 817,244 239,290 - (2,462,714) (842,768) 3.378.606 (1,916,090) 270,620 (1,645,470) 2,775,128 (1,638,147) (168,198) (1,806,345) 1,979,826 2,815,188 1,331,810 4,146,998 2,167,172 1.177.041 L163.6 2,340,653 4.146.998 -20- LA QUINTA REDEVELOPMENT AGENCY Capital Projects Funds Combining Balance Sheet June 30, 1995 Assets Cash and investments Cash with fiscal agent Accounts receivable Due from other funds Due from other governments Total assets Liabilities and Fund Balances Liabilities: Accounts payable Due to other funds Total liabilities Fund balances: Reserved for: TDC owner participation agreement Unreserved: Designated for special projects Total fund balances Total liabilities and fund balances Redevelopment Redevelopment Agency Agency Totals PA #1 PA #2 1995 1994 $ - 6,100 6,100 - - 1,953,166 1,953,166 4,921,574 - 89,626 89,626 - 124,190 - 124,190 - 1,092,260 X4.190 2.048.892 2,173,082 6.013.834 $ 6,206 2,326 8,532 569,811 124,190 124,190 5,095,076 6,206 126,516 132,722 5,664,887 - 1,820,357 1,820,357 1,820,793 117,984 102,019 220,003 (1,471,846) 117,984 1,922,376 2,040,360 348,947 ,0� 2.173.082 6.0 -21- LA QUINTA REDEVELOPMENT AGENCY Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 1995 Revenues: Intergovernmental Developer fees Interest Total revenues Expenditures: Administrative Professional fees Planning and development Capital outlay Debt service: Principal Interest Payment of advances Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Operating transfers in Operating transfers out Transfers from the City of La Quinta Transfers to the City of La Quinta Payment to refunded bond escrow agent Proceeds of advances from City Litigation settlement proceeds Litigation settlement payments Total other financing sources (uses) Excess (deficiency) of revenues and other sources over (under) expenditures and other uses Fund balances (deficit) at beginning of year, as restated Fund balances at end of year Redevelopment Redevelopment Agency Agency Totals PA #1 PA #2 1995 1994 175,343 175,343 - $ - 10,650 10,650 2,536,134 - - - 41,777 - 70,721 70,721 52,237 - 81,371 81,371 2,630,148 447,578 4,579,364 556,107 618,617 298,560 917,177 - 226,956 123,261 350,217 - 131,453 36,983 168,436 1,416,005 178,474 - 178,474 11,734,600 - 810,491 810,491 - 104,911 - 104,911 16,828 137,210 1,260,411 1,269,295 2,529,706 13,304,643 (1,260,411) (1.187,924) (2,448,335) (10,674,495) 2,462,714 272,235 2,734,949 2,848,877 (823,868) - (823,868) (773,125) - 175,343 175,343 - (481,635) - (481,635) 28,349,926 - - - (27,922,526) 2,621,457 - 2,621,457 - 353,118 - 353,118 52,955 - - - (2,000,000) 4,131,786 447,578 4,579,364 556,107 2,871,375 (740,346) 2,131,029 (10,118,388) (2,753,391) 2,662,722 $ 117.984 .922.376 -22- (90,669) • LA QUINTA REDEVELOPMENT AGENCY Supplemental Schedule of Tax Increment Shift to Educational Revenue Augmentation Fund Year ended June 30, 1995 Total Tax Increment to be shifted to the Educational Revenue Augmentation Fund (ERAF) per State Department of Finance (DOF) Funding sources: Redevelopment Agency: Agency tax increment 551,170 Other agency funds - Total agency funds Agency borrowing: From current 20% low and moderate income housing funds From legislative body - Total borrowed funds Total tax increment shift to ERAF -23- $551,170 $551,170 1 CCN RAD CERTIFIED PUBLIC ACCOUNTANTS S11VOCf LS, L.L.P. 11RV EAIN CALIFORNIA 9STREET,12714 A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS (714) 474-2020 Board of Directors La Quinta Redevelopment Agency La Quinta, California INDEPENDENT AUDITORS' COMPLIANCE REPORT We have audited the component unit financial statements of the La Quinta Redevelopment Agency ("Agency") as of and for the year ended June 30, 1995 and have issued our report thereon dated August 18, 1995. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Compliance with laws and regulations applicable to the Agency is the responsibility of the Agency's management. As part of obtaining reasonable assurance about whether the component unit financial statements are free of material misstatement, we performed tests of the Agency's compliance with provisions of laws and regulations contained in the Guidelines for Compliance Audits of California Redevelopment Agencies issued by the State Controller's Office, Division of Local Government Fiscal Affairs. The results of our tests indicated that, with respect to the items tested, the La Quinta Redevelopment Agency complied, in all material respects, with the provision referred to in the preceding paragraph, except as follows: During the year, the Agency was not in compliance with Health and Safety Code Section 33302 in that the City's housing element did not include complete quantified objectives for the element's planning period. The Agency revised its housing element to eliminate the deficiencies noted by the State Department of Housing and Community Development (HCD) and submitted these revisions to HCD. On September 11, 1995, HCD formally accepted the City's revisions to its housing element and informed the City that it was now in full compliance with the law. This report is intended for the information of the Agency and the State Controller's office. However, this report is a matter of public record and its distribution is not limited. August 18, 1995 -24- MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION