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FY 1993-1994 RDA Financial StatementsLA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 1994 (with Independent Auditors' Report Thereon) 16010110 "TES CERTIFIED PUBLIC ACCOUNTANTS LA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 1994 (with Independent Auditors' Report Thereon) LA QUINTA REDEVELOPMENT AGENCY Financial Statements and Supplemental Data Year ended June 30, 1994 TABLE OF {CONTENTS Paee 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 SSOCI TES 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, 1994, 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. 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, 1994, 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. 'K�'rerl W .4s vuaI—eld December 2, 1994 -1- MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION See accompanying notes to financial statements. -2- LA QUINTA REDEVELOPMENT AGENCY Combined Balance Sheet-All Fund Types and Account Groups June 30, 1994 Account Groups Governmental Fund Types General General Totals Special Debt Capital Fixed Long-Term (Memorandum Only)_ _k1ovenue Service Projects Assets Debt 1994 1993 Assets and other debits Cash and investments (note 3) $ - 1,972,650 - - - 1,972,650 10,156,438 Cash with fiscal agent (note 3) - 1,382,449 4,921,574 - - 6,304,023 6,968,546 Accounts receivable - - - - - - 3,973 Prepaid expense - 399,971 - - - 399,971 - Notes receivable 67,120 - - - - 67,120 127,520 Due from other funds 4,056,211 1,589,903 - - - 5,646,114 1,928,918 Due from other governments - - 1,092,260 - - 1,092,260 658,468 Land held for resale 361,340 - - - - 361,340 - Property, plant and equipment (note 16) - - - 5,879,910 - 5,879,910 5,879,910 Amounts available in debt service funds - - - - 4,146,998 4,146,998 2,167,172 Amount to be provided for retirement of long-term debt - - - 68.975.202 68.975,202 68,305.074 Total assets and other debits $A-484-6714 6.013.834 5.879.910 IL122.200 4.845 58 6.196.019 Liabilities, fund equity, and other credits Liabilities: Accounts payable $ 43,762 646,937 569,811 - - 1,260,510 425,374 Claims and settlements payable (note 18) - - - - - - 2,000,000 Due to other funds - 551,038 5,095,076 - - 5,646,114 1,9289918 Advances payable to the City of La Quinta (note 13) - - - - 4,321,796 4,321,796 5,291,736 Obligations under pass-through agreements (notes 9, 10, and 11) - - - - 26,743,004 26,743,004 21,723,487 Tax allocation bonds payable (notes 5, 6, 7 and 8) - - - - 40,810,000 40,810,000 40,085,000 Notes payable (note 12) - - - 1,247,400 1,247,4 1,663,200 Total liabilities 43,762 1,197,975 5,664,887 - 73,122,200 80,028,824 73.117.715 Fund equity and other credits: Investment in general fixed assets - - - 59879,910 - 5,879,910 5,879,910 Fund balances: Reserved for: Bond reserve requirement - 1,218,892 - - - 1,218,892 1,891,997 Notes receivable 67,120 - - - - 67,120 127,520 Land held for resale 361,340 - - - - 361,340 - TDC owner participation agreement - - 1,820,793 - - 1,820,793 2,183,124 Unreserved: Designations 4,012,449 2,928,1.06 (1,471,846) - - 5,4684709 "S, 753 Total fund equity and other credits 4,440,909 4,146,298 348,947 5,879,910 - 14,816,76.4 23.078,304 Total liabilities, fund equity, and other credits $d,,484,.{�7t_ 5.344.973 6.013.834 5.879.910 73.122.200 96.196.019 See accompanying notes to financial statements. -2- LA QUINTA REDEVELOPMENT AGENCY Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types Year ended June 30, 1994 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 311,753 - 730,446 1,042,199 637,067 257,434 Totals 1,081,023 Special Debt Capital (Memorandum Only) 7,238,245 Revenue Service Projects 1994 1993 Revenues: Tax increment $2,171,571 11,061,864 - 13,233,435 12,715,196 Intergovernmental - - 2,975,750 2,975,750 225,605 Developer fees 33,760 - 41,777 75,537 75,464 Interest 186,733 164,628 52,237 403,598 802,062 Miscellaneous - 3,995 2,995 37,721 Total revenues 2,392,064 11,230,487 3,069,764 16,692,315 13,856,048 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 311,753 - 730,446 1,042,199 637,067 257,434 193,854 685,559 1,136,847 1,081,023 2,115,775 - - 2,115,775 1,244,563 240,961 - 11,734,600 11,975,561 7,238,245 - 850,000 - - 3,398,885 16,828 21,715 815,010 137,210 850,000 760,000 3,415,713 3,305,589 973,935 9,851,766 6,217,002 - 6,217,002 8,152,245 $51,038 551,038 1,587,351 2.947.63$ 12,025.789 13,304,643 28,278,070 33.8g,,$49 (555.574) (795,302) (10,234,879) (11,585,755) (20,001,801) 239,290 1,360,223 1,599,513 9,979,914 - (842,768) (756,745) (1,599,513) (9,979,914) 1,488,654 1,488,654 - (7,020) - (16,380) (23,400) (475,168) - 28,349,926 28,349,926 5,590,416 (27,922,526) (27,922,526) - - - 9,279,019 3,378,606 52,955 3,431,561 - - (2,000.000)2 0�,�04,000) Total other financing sources (uses) x,020) 2,775,128 556,107 3,324,215 14,344,267 Excess (deficiency) of revenues and other sources over (under) expenditures and other uses Fund balances at beginning of year Fund balances at end of year (562,594) 1,979,826 (9,678,772) (8,261,540) (5,607,534) 5&03.50.3 2,167,172 10,027,_719 17,198,394 22.805.928 See accompanying notes to financial statements. -3- See accompanying notes to financial statements. 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, 1994 Special Revenue Funds Debt Service Funds Capital Projects Funds Variance- Variance- Variance - Favorable Favorable Favorable Budget. Actual (Unfavorable) Budget Actual (Unfavorable) Budget Actual (Unfavorable) Revenues: Tax increment $2,330,079 2,171,571 (158,508) 11,811,725 11,061,864 (749,861) - - -- Intergovernmental - - _ - - - 4,155,303 2,975,750 (1,179,553) Developer fees 145,000 33,760 (111,240) - - - 105,000 41,777 (63,223) Interest 67,000 186,733 119,733 196,435 164,628 (31,807) 402,500 52,237 (350,263) Miscellaneous 3,995 3,995 - - - Total revenues 2.542,079 2.392,064 (150,015) 12,008,160 11.230.487 (777,673) 4,662,803 3,069,764 (1.593,039) Expenditures: Administrative 336,668 311,753 24,915 - - - 789,153 730,446 58,707 Professional fees 177,850 257,434 (79,584) - 193,854 (193,854) 592,800 685,559 (92,759) Planning and development 769,472 2,115,775 (1,346,303) - _ - - - - Capital projects 240,961 240,961 - - - - 16,054,889 11,734,600 4,320,289 Debt service: Principal - - - 850,000 850,000 - - - - Interest - - 2,819,202 3,398,885 (579,683) 16,828 (16,828) Payment of advances - 21,715 (21,715) 800,000 815,010 (15,010) _ 137,210 (137,210) Interest accrued on advances from City - - - - - - - - - 41 Payment under pass through agreements - - - 2,267,874 6,217,002 (3,949,128) - - - ' Mandated education contribution - - - 544,885 551,038 (6,153) Total expenditures 1,524,951 2.947.638 (1.422,687) 7,281.961 12,025,789 (4.743..828) 17,436,842 13,304,643 4.132,199 Excess (deficiency) of revenues over expenditures 1,017,128 555 574) (1.572,702) 4,726.199 (795,302) (5,521,501) (12.774.039) (10.234,879) 2.539.160 Other financing sources (uses): Operating transfers in - - - - 239,290 239,290 1,267,455 1,360,223 92,768 Operating transfers out - - - (100,000) (842,768) (742,768) (918,955) (756,745) 162,210 Transfers from the City of La Quinta - - - - - - 1,488,654 1,488,654 - Transfers to the City of La Quinta (7,020) (7,020) - - - - (16,380) (16,380) - Proceeds of bonds (net of premium and Issuance costs) - - - - - - 28,349,926 28,349,926 - Payment to refunded bond escrow agent - - - - - - (27,922,526) (27,922,526) - Proceeds of advances from City - - - - - - - - - Litigation settlement proceeds - - - - 3,378,606 3,378,606 - 52,955 52,955 Litigation settlement payments - - - - - - (2,300.000) (2,000,000) 300.000 Total other financing sources (uses) (7.020) (7,020) - (100.000) 2,775,128 2,875,128 _ (51,826) 556,107 607.933 Excess (deficiency) of revenues and other sources over (under) expenditures and other uses 1,010,108 (562,594) (1,572,702) 4,626,199 1,979,826 (2,646,373) (12,825,865) (9,678,772) 3,147,093 Fund balances at beginning of year 5.003,503 5,003,503 - 2.167.172 2,167,172 - 10,027,71.9 10,027,719 - Fund balances at end of year56,01 II 4� 40=909 (1.572,7 ) 6.793.371 4.146.99 ( .6) 2.798.146) 348.947ijALM See accompanying notes to financial statements. LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements June 30, 1994 (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. D-ebt 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. Qntinuedi ACCOUNT GROUPS General Long—Term Debt Account Gr= 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. G n ral Fixed Assets AccountGroup 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 r capitalized at cost in t assets are recorded in received. Fixed assets present value of future general fixed assets. (b) Basis f Accounting ecorded as expenditures in the governmental funds and he general fixed assets account group. Contributed fixed 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) Relationshipto 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) St]mmau 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 Finan in C ntin ed 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 $1,972,650 Cash with fiscal agent 6,304,023 Total cash and investments $8.276.673 The Agency is generally authorized under state statutes and local resolutions to invest in the following investments: Demand deposits with financial institutions Savings accounts Certificates of deposit U.S. treasury securities Federal agency securities State of California notes or bonds Notes or bonds of agencies within the State of California Bankers' acceptances Los Angeles County Investment Fund California Local Agency Investment Fund -8- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) 3] Cash and Investments, (Cgntinued) Under the California Government Code, a financial institution is required to secure deposits made by state or local governmental units by pledging securities held in the form of an undivided collateral pool. The market value of the pledged securities in the collateral pool must be equal to at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure public deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. Deposits of cities and other state or local governments are classified in three categories to give an indication of the level of custodial risk assumed by the entity: Category 1_ - includes deposits that are insured or collateralized with securities held by the Agency or its agent in the Agency's name. Category 2 - includes deposits collateralized with securities held by the pledging financial institution's trust department or agent in the Agency's name. Category 2 also includes deposits collateralized by an interest in an undivided collateral pool held by an authorized Agent of Depository and subject to certain regulatory requirements under State Law. Category 3 - includes deposits collateralized with securities held by the pledging institution, or by its trust department or agent but not in the Agency's name. Category 3 also includes any uncollateralized deposits. Investments of cities in securities are classified in three categories to give an indication of the level of custodial risk assumed by the entity: Category I - includes investments that are insured or registered or for which the securities are held by the Agency or the Agency's custodial agent (which must be a different institution other than the party through which the Agency purchased the securities) in the Agency's name. Investments held "in the Agency's name" include securities held in a separate custodial or fiduciary account and identified as owned by the Agency in the custodian's internal accounting records. Category 2 - includes uninsured and unregistered investments for which the securities are held in the Agency's name by the dealer's agent (or by the institution and another department of the institution purchased the securities for the Agency). Category 3 - includes uninsured and unregistered investments for which the securities are held by the dealer's trust department or agent, but not in the Agency's name. Category 3 also includes all securities held by the broker-dealer agent of the Agency (the party that purchased the securities for the Agency) regardless of whether or not the securities are being held in the Agency's name. -9- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (3) Cash and Investments, (Continued) Form of Investment Mutual funds Local Agency Investment Fund Total investments Carrying Market Amount Value $6,304,023 6,304,023 1.972.650 1,9717,650 The above investments are not classified in risk categories because they do not represent a direct investment in specific securities. 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 Levy date Due dates Collection dates March 1 June 30 November 1 and February 1 December 10 and April 10 The La Quinta Redevelopment Agency's primary source of revenues comes from property taxes. Property taxes allocated to the Agency are computed in the following manner: (a) The assessed valuation of all property within the project area is determined on the date of adoption of the Redevelopment Plan. (b) Property taxes related to the incremental increase in assessed values after the adoption of the Redevelopment Plan are allocated to the Agency; all taxes on the "frozen" assessed valuation of the property are allocated to the City and other districts. The Agency has no power to levy and collect taxes and any legislative property tax shift might reduce the amount of tax revenues that would otherwise be available to pay the principal of, and interest on, debt. Broadened property tax exemptions could have a similar effect. Conversely, any increase in the tax rate or assessed valuation, or any reduction or elimination of present exemptions would increase the amount of tax revenues that would be available to pay principal and interest on debt. -10- 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, 1994, were as follows: Balance at Balance at July 1. 1993 Additions Deletions June 30, 1994 Project Area No. 1: Tax allocation bonds $34,240,000 Pass through agreements payable: Due to County of Riverside 4,669,328 Desert Sands Unified School District 3,090,270 Coachella Valley Unified School District 13,672,712 Notes payable - individuals 708,708 Advances from City of La Quinta 120,333 Claims and settlements payable 2,000,000 Project Area No. 2: Tax allocation bonds 5,845,000 Due to County of Riverside - Notes payable - individuals 954,492 Advances from City of La Quinta 5,171,403 26,665,000 25,905,000 35,000,000 5,847,810 763,287 - 10,517,138 524,050 2,566,220 776,353 12,896,359 177,177 531,531 120,333 - 2,000,000 - 35,000 5,810,000 - 763,287 238,623 715,869 849,607 4,321.796 Total long-term debt $70.472,246 33.276.097 30.626.143 .122.200 -11- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) 6 Tax AllocatiQn Bonds. Serigs 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. A total of $735,284 was set aside at June 30, 1994. The amount of principal outstanding on the 1991 Tax Allocation Bonds payable at June 30, 1994 was $8,335,000. 7 Tax Allogation-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 4.5% 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, 1994, the amounts deposited in the reserve and escrow funds were $483,608 and $526,866, respectively. The principal balance of outstanding bonds at June 30, 1994 was $5,810,000. -12- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) 8 Tax Allocation Refunding Bons 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 was 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 on 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, 1994 is $26,665,000. A portion of the bond proceeds, in the amount of $27,922,526, were 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, 1994, $7,075,000 and $18,015,000 of the 1989 and 1990 defeased bonds are outstanding, respectively. (9) Due to County of Riverside Project Area No, 1 Based on an agreement amended December 21, 1993 between the Agency, the City of La Quinta, and the County of Riverside (County), the Agency will pay to the County $10,517,138 from 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, 1994 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, 1994 was $763,287. -13- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) 10 Notes Pa able 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 $547,505 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, 1994 totaled $2,566,220. 11 Not s Pay -ab t oachella Valle Unifi d chool 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 $353,699 to $834,076 for a total amount of $15,284,042. Tax increment payments outstanding at June 30, 1994 totaled $12,896,359. 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) Notes Payable to Individuals In the fiscal year ended June 30, 1991, the Agency purchased several parcels of land from individuals and as a result incurred $3,383,500 of debt. Interest on the notes ranges from 9% to 10.5% per annum principal balances on the notes at June $531,531 and $715,869, respectively. {13) Advances from the City cif La Quinta and is payable monthly and quarterly. The 30, 1994 for Project Area No 1. and 2 was 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: Balances at Balances at July 1. 1993 Proceeds Repayments June 30. 1994 Agency expenditures incurred by the City: Project Area No. 1 $ 120,333 - 120,333 - Project Area No. 2 5.171,403= 48 9,667 4,321,796 Totals $5,291,736 20- M 4.321.796 -14- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (14) 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, 1994 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): Principal & Interest 15,103,992 47,977,728 12,095,563 2,566,220 12,896,359 15,463,410 1,471,932 107,575,204 Less: Interest (6,768,992) (21,312,725) (6,285,563) - - 14,946,272) (224,532) (39,538.08?) Total Principal $8.335.000 26.665.000 __5 181iLUN 12.896.359 10.517.138 1.,24L400 ,_.6$.037.117 -15- Pass-through Agreements Redevelopment Agency RDA Prosect Area No. 1 Notes Project Areg No. 1 PA #2 Desert Coachella Payable Tax Tax Tax Sands Valley to Year Allocation Allocation Allocation Unified Unified County Individuals Ending Series Series Series School School of (PA #1 43% June 30 1991 1994 1992 District District Riverside PA #2 57X) Total 1994-95 725,743 1,435,740 472,457 661,560 624,473 386,764 528,066 4,834,803 1995-96 722,675 2,306,582 493,857 628,000 474,517 386,764 490,644 5,503,039 1996-97 723,810 2,629,851 503,607 707,650 526,560 386,764 453,222 5,931,464 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 - 421,167 - - 4,205,331 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 - - 50$,250 - - - - 5.08,250 Principal & Interest 15,103,992 47,977,728 12,095,563 2,566,220 12,896,359 15,463,410 1,471,932 107,575,204 Less: Interest (6,768,992) (21,312,725) (6,285,563) - - 14,946,272) (224,532) (39,538.08?) Total Principal $8.335.000 26.665.000 __5 181iLUN 12.896.359 10.517.138 1.,24L400 ,_.6$.037.117 -15- LA QUINTA REDEVELOPMENT AGENCY Notes to Financial Statements (Continued) (15) 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. (I6)Changes in General Fixed Assets The Agency purchased land during the fiscal year ended June 30, 1991 for $5,372,978 which is intended to be used for community facilities. A summary of general fixed assets transactions for the fiscal year ended June 30, 1994 is as follows: Balances at July 1, 1993 Land $5A19., SIR Additions Deletions (17) Commitments under Development Agreements Balances at June 30, 1994 WNW 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. ME 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. -16- LA QUINTA REDEVELOPMENT AGENCY Special Revenue Funds Combining Balance Sheet June 30, 1994 Assets Cash and investments Notes receivable Due from other funds Land held for resale Total assets Liabilities and Fund Balances Liabilities: Accounts payable Fund balances: Reserved for: Notes receivable Land held for resale Unreserved: Designations Total fund balances Total liabilities and fund balances Low Income Low Income Housing Housing Project Project Area #1 Area #2 Tol4ls 1994 1993 $ - -- -- 4,875,983 67,120 - 67,120 127,520 2,759,160 1,297,051 4,056,211 - 361,340 361.340 - $3_.187.620 1.297.051 4.484.671 5.003.503 $ 42,255 1.507 43,762 67,120 - 67,120 127,520 361,340 - 361,340 2,716,905 1,295.544 4-012,449 4,875,983 3,145,365 1, 2'95 , 544 4,440,909 5,003,503 -17- LA QUINTA REDEVELOPMENT AGENCY Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 1994 Expenditures: Administrative Professional fees Planning and development Capital projects Payment of advances from City Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers to the City of La Quinta Proceeds of advances from City Total other financing sources (uses) Excess (deficiency) of revenues and other sources over expenditures and other uses 207,835 Low Income Low Income 29,241 226,021 31,413 Housing Housing 2,115,775 - 2,115,775 Project Project Totals 240,961 256,840 Area #1 Area #2 1994 1993 223 Revenues: 2.947 638 1.787,336 Tax increment $1,700,574 470,997 2,171,571 2,068,455 Developer fees 33,760 - 33,760 75,464 Interest 139,682 47,051 186,733 120,110 Miscellaneous 28.472 Total revenues 1.874.016 518.048 2,392.064 2.292.501 Expenditures: Administrative Professional fees Planning and development Capital projects Payment of advances from City Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers to the City of La Quinta Proceeds of advances from City Total other financing sources (uses) Excess (deficiency) of revenues and other sources over expenditures and other uses 207,835 103,918 311,753 29,241 226,021 31,413 257,434 256,692 2,115,775 - 2,115,775 1,244,563 240,961 - 240,961 256,840 18,431 3.284 21,715 223 138,615 2.947 638 1.787,336 (935,007) _ 379,433 (555.574) 505,165 (4,680) (2,340) (7,020) (603,617) : - 517,.779 (4-680) (2,340) (7,020) (85.838) (939,687) Fund balances at beginning of year 4J85,_052 Fund balances at end of year $3,145,36a -18- 377,093 (562,594) 419,327 918,451 5.003,503 4,584,176 1.295.544 4.440.909 5.003.503 LA QUINTA REDEVELOPMENT AGENCY Debt Service Funds Combining Balance Sheet June 30, 1994 Assets Cash and investments Cash with fiscal agent Prepaid expense Due from other funds Due from other governments Total assets Liabilities n Fund -Balances Liabilities: Accounts payable Due to other funds Obligations under pass- through agreements Total liabilities Fund balances: Reserved for: Bond reserve requirement Unreserved: Designations Total fund balances Total liabilities and fund balances Redevelopment Redevelopment Agency Agency Totals PA #1 PA #2____ 1994 _ 1993 $1,806,781 165,869 1,972,650 1,846,144 975,765 406,684 1,382,449 1,892,568 399,971 - 399,971 - 612,520 977,383 1,589,903 -- 57,059 3.795.771 $ 467,946 178,991 646,937 -- 511,903 39,135 551,038 1,337,422 291,177 97 ,�49 218.126 1,197.975 1.628,599 735,284 483,608 1.,218,892 1,891,997 2.079.904 848,202 2.928.106 275.175 2,815,188 , 1,331.81.0 4,146.99$ 2,167,172 -19- LA QUINTA REDEVELOPMENT AGENCY Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 1994 Revenues: Tax increment Interest Refund for overpayment on City advance Total revenues Redevelopment Redevelopment Agency Agency Totals PA #1 PA #2 1994 1993 903,324 3,398,885 $9,177,876 1,883,988 11,061,864 10,646,741 76,185 88,443 164,628 183,673 3,C'19" 9,288,396 3,995 - 9,258,056 1,972.431 11,230.487 10.830.414 Expenditures: Professional fees Debt service: Principal Interest Payment of advances from City Payments under pass-through obligations Mandated education contribution 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 193,854 - 193,854 815,000 35,000 850,000 2,495,561 903,324 3,398,885 - 815,010 815,010 5,272,078 944,924 6,217,002 511,903 39,135 551,038 9,288,396 2.737.393 12,025,789 10,902 760,000 3,305,589 9,851,766 8,152,245 1,587,351 23,667,853 (30.340) (764,962) (795,302) (12j3_7,439) 239,290 - (842,768) - 3,378,606 - 2,775,128 2,744,788 70,400 $2,815.188 -20- 239,290 9,979,914 (842,768) - 3.378.606 2.775.128 9,979.914 (764,962) 1,979,826 (2,857,525) 2,096,772 2,1.67,172 5,024,697 .331.810 4.146.998 =2j.UX172 LA QUINTA REDEVELOPMENT AGENCY Capital Projects Funds Combining Balance Sheet June 30, 1994 Redevelopment Redevelopment Agency Agency Totals PA #1 PA #2 1994 1993 Assets Cash and investments $ -- 3,434,311 Cash with fiscal agent - 4,921,574 4,921,574 5,075,978 Accounts receivable - - - 3,973 Due from other funds - - - 1,928,918 Due from other governments 563,017 529,243 1,092,260 _ 601,409 Total assets 563.017 5,450,817 6.013,834 Liabilities and Fund Balances Liabilities: Accounts payable $ 456,631 113,180 569,811 425,374 Due to other funds 2,859,777 2,235,299 5 09_, 5,076 591.496 Total liabilities 3,316,408 2,348.479 5,664,887 1,016,870 Fund balances: Reserved for: TDC owner participation agreement 1,820,793 1,820,793 2,183,124 Unreserved: Designated for special projects (2,75-3,391) 1,281,545 (1. 471846) 7.844,595 Total fund balances2f ,753,391) 3,102,338 348,947 10,027,719 Total liabilities and fund balances L--a�417 5, 450, 517 6.013.834 11,044- -21- LA QUINTA REDEVELOPMENT AGENCY Capital Projects Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances Year ended June 30, 1994 Excess (deficiency) of revenues and other sources over expenditures and other uses Fund balances at beginning of year Fund balances at end of year (8,071,169) (1,607,603) (9,678,772) (3,169,336) 5,317,778 -22- 4,709,941 10,027-,719 13.197.055 Redevelopment Redevelopment Agency Agency Totals PA #1 PA #2 1994 1993 Revenues: Intergovernmental $ 1,508,784 1,466,966 2,975,750 225,605 Developer fees - 41,777 41,777 - Interest - 52,237 52,237 498,279 Miscellaneous 9.249 Total revenues 1,508,784 1,560,980 3,069.764 733,133 Expenditures: Administrative 487,319 243,127 730,446 607,826 Professional fees 558,518 127,041 685,559 813,429 Capital projects 8,366,478 3,368,122 11,734,600 6,981,405 Interest 16,828 - 16,828 - Payment of advances 105.897 31,313 137.210 - Total expenditures 9,535,040 3,769,603 13,304,643 8,402,660 Excess (deficiency) of revenues over expenditures (8,026,25 ) (2.208,623) (1.0,234,879) (7.669.527) Other financing sources (uses): Operating transfers in 842,768 517,455 1,360,223 - Operating transfers out (756,745) - (756,745) (9,376,297) Transfers from City of La Quinta 1,399,627 89,027 1,488,654 - Transfers to City of La Quinta (10,918) (5,462) (16,380) (475,168) Proceeds of bonds (net of premium and issuance costs) 28,349,926 - 28,349,926 5,590,416 Payment to refunded bond escrow agent (27,922,526) - (27,922,526) - Proceeds of advances from City - - - 8,761,240 Litigation settlement proceeds 52,955 - 52,955 - Litigation settlement payments (2,000,000) - (2,000,000) - Total other financing sources (uses) (44.913) 601.020 556,107 4,500,191 Excess (deficiency) of revenues and other sources over expenditures and other uses Fund balances at beginning of year Fund balances at end of year (8,071,169) (1,607,603) (9,678,772) (3,169,336) 5,317,778 -22- 4,709,941 10,027-,719 13.197.055 LA QUINTA REDEVELOPMENT AGENCY Supplemental Schedule of Tax Increment Shift to Educational Revenue Augmentation Fund Year ended June 30, 1994 Total Tax Increment to be shifted to the Educational Revenue Augmentation Fund (ERAF) per State Department of Finance (DOF) $551.038 Funding sources: Redevelopment Agency: Agency tax increment - Other agency funds - Total agency funds - Agency borrowing: From current 20% low and moderate income housing funds $551,038 From legislative body - Total borrowed funds $551.038 Total tax increment shift to ERAF $551,= -23- CONRAD A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS Board of Directors La Quinta Redevelopment Agency La Quinta, California CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' COMPLIANCE REPORT 1100 MAIN STREET, SUITE C IRVINE, CALIFORNIA 92714 (714) 474-2020 We have audited the component unit financial statements of the La Quinta Redevelopment Agency ("Agency") as of and for the year ended June 30, 1994 and have issued our report thereon dated December 2, 1994. 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 Agency complied, in all material respects, with the provisions referred to on the preceding paragraph. With respect to the items not tested, nothing came to our attention that caused us to believe that the Agency had not complied, in all material respects, with those provisions. 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. �vsr�wc� ��tOuw��G� December 2, 1994 -24- MEMBERS OF AICPA AND CALIFORNIA SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PRIVATE COMPANIES PRACTICE SECTION