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FY 2006-2007 RDA Financial StatementsLA QUINTA REDEVELOPMENT AGENCY LA QUINTA, CALIFORNIA FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2007 Lance 0 Lunahard LLP Certified Public Accountants r1Lr-OXY (Fi6 copy must fie retumed. thaIL unu) LA QUINTA REDEVELOPMENT AGENCY LA QUINTA, CALIFORNIA FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2007 LA QUINTA REDEVELOPMENT AGENCY JUNE 30, 2007 TABLE OF CONTENTS Page Number INDEPENDENT AUDITORS' REPORT Financial Audit ............................. . ComplianceAudit......................................................................................................................,....3 BASIC FINANCIAL STATEMENTS Government -Wide Financial Statements: Statementof Net Assets.....:.......................................................................................................7 Statementof Activities......................,...................,...,...............,..................................,,....,......8 Fund Financial Statements: Balance Sheet - Governmental Funds....,. .............. . Reconciliation of the Balance Sheet of Government Funds to the Statement of Net Assets ........................ 11 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds ................. Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statementof Activities .............. ......... ............ ............................................................................ 14 Budgetary Comparison Statement — Low/Moderate Income Housing Fund — PA No. 1...........15 Budgetary Comparison Statement — Low/Moderate Income Housing Fund — PA No. 2...........16 Notes to Financial Statements ............................ COMBINING AND INDIVIDUAL FUND SCHEDULES Combining Project Area Balance Sheet - AII Governmental Funds ............................. Combining Project Area Statement of Revenues, Expenditures and Changes in Fund Balances - AII Governmental Funds ....:.................... Computation of Low and Moderate Income Housing Funds Excess/Surplus..................................................................... .. LLSLLance il & nghard LLP Certified Public Accountants INDEPENDENT AUDITORS' REPORT To the Honorable Chair and Members of the Governing Board La Quinta Redevelopment Agency, California Brandon W. Burrows Donald L. Parker Michael K. Chu David E. Hale A Professional Corporation Donald G. Slater Richard K. Kikuchi Retired Robert C. Lance 1914-1994 Richard C. Soll Fred J. Lunghard, Jr. 1928-1999 We have audited the accompanying financial statements of the governmental activities and each major fund 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, 2007, which collectively comprise the Agency's basic financial statements as listed in the table of contents. These basic financial statements are the responsibility of the La Quinta Redevelopment Agency's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the La Quinta Redevelopment Agency at June 30, 2007, and the respective changes in financial position thereof and the respective budgetary comparisons for the Low/Moderate Income Housing Fund — PA No. 1 and the Low/Moderate Income Housing Fund - PA No. 2 for the year then ended in conformity with accounting principles generally accepted in the United States of America. In accordance with Government Auditing Standards issued by the Comptroller General of the United States, we have also issued our report dated October 31, 2007, on our consideration of the La Quinta Redevelopment Agency's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal controls over financial reporting and compliance and the results of that testing, and not to provide and opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results or our audit. The La Quinta Redevelopment Agency has not presented a Management's Discussion and Analysis that accounting principles generally accepted in the United States of America has determined is necessary to supplement, although not required to be part of, the basic financial statements. 75 YEARS 421C fftd� I929 2004 Qi EX&ffWM 203 N. Brea Blvd., Suite 203 0 Brea, CA 92821-4056 • (714) 672-0022 9 Fax (714) 672-0331 * www.lslcpas.com USELS-011 ce s ghard LLP CERTIFIED PVBLIC ACCOUNTANTS To the Honorable Chair and Members of the Governing Board Redevelopment Agency of the City of La Quinta, California Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency's basic financial statements. The combining project area statements and computation of low and moderate income housing funds excess/surplus are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. October 31, 2007 2 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Chair and Members of the Governing Board La Quinta Redevelopment Agency, California We have audited the financial statements of the governmental activities and each major fund of the La Quinta Redevelopment Agency as of and for the year ended June 30, 2007, which collectively comprise the Agency's basic financial statements, and have issued our report thereon dated October 31, 2007. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the La Quinta Redevelopment Agency's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the La Quinta Redevelopment Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the La Quinta Redevelopment Agency's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the La Quinta Redevelopment Agency's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the La Quinta Redevelopment Agency's financial statements that is more than inconsequential will not be prevented or detected by the La Quinta Redevelopment Agency's internal control. We consider the following deficiencies to be significant deficiencies in internal control: 75 YEARS 1929 2064 0i EX&NOW 203 N. Brea Blvd., Suite 203 - Brea, CA 92821-4056 a (714) 672-0022 9 Fax (714) 672-0331 • www.lslcpas.com Lance Brandon W. Burrows Donald L. Parker �+O N Michael K. Chu David E. Hale Lu n g ha rd AProfessional Corporation Donald G. Slater LLP Richard K. Kikuchi Certified Public Accountants Retired Robert C. Lance 1914-1994 Richard C. Soll Fred J. Lunghard, Jr. 1928.1999 REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the Honorable Chair and Members of the Governing Board La Quinta Redevelopment Agency, California We have audited the financial statements of the governmental activities and each major fund of the La Quinta Redevelopment Agency as of and for the year ended June 30, 2007, which collectively comprise the Agency's basic financial statements, and have issued our report thereon dated October 31, 2007. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the La Quinta Redevelopment Agency's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the La Quinta Redevelopment Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the La Quinta Redevelopment Agency's internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the La Quinta Redevelopment Agency's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the La Quinta Redevelopment Agency's financial statements that is more than inconsequential will not be prevented or detected by the La Quinta Redevelopment Agency's internal control. We consider the following deficiencies to be significant deficiencies in internal control: 75 YEARS 1929 2064 0i EX&NOW 203 N. Brea Blvd., Suite 203 - Brea, CA 92821-4056 a (714) 672-0022 9 Fax (714) 672-0331 • www.lslcpas.com tmLancs 5011 L.unghard CERMIED PUMOC ACCOUNTANTS To the Honorable Chair and Members of the Governing Board Redevelopment Agency of the City of La Quinta, California Audit Journal Entries We requested that the Finance Department make certain journal entries as the result of the account analyses we performed during the audit. These journal entries included adjustments to record pass-through payments which were paid in August 2007 but which should have - been reported as accounts payable at June 30, 2007. Capital Asset Policv During our inquiries with management, it was brought to our attention that Agency does not have a formal written capital asset policy. The Agency should consider creating one which details the capitalization threshold, depreciation policies and capitalization policies. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the La Quinta Redevelopment Agency's internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, we believe that none of the significant deficiencies described above are material weaknesses. Compliance and Other Matters As part of obtaining reasonable assurance about whether the La Quinta Redevelopment Agency's financial statements are free of material misstatements, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. Such provisions included those provisions of laws and regulations identified in the Guidelines for Compliance Audits of California Redevelopment Agencies issued by the State Controller and as interpreted in the Suggested Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies issued by the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed the following instance of noncompliance or other matters that is required to be reported under Government Auditing Standards issued by the Comptroller General of the United States: In accordance with the California Health and Safety Code Section 33080.1, the Redevelopment Agency is required to produce and present, an annual report (due six months following the end of the Agency's fiscal year-end date), to the State Controller and its legisiative body. This report was produced and presented, however, it did not contain the following required components: a. A loan report identifying loans (receivable) which equal or exceed $50,000 and that were found by the Agency during the previous fiscal year to have either defaulted or not complied with the terms of the agreements approved by the Agency. b. A property report which describes the properties owned by the agency and those acquired in the previous fiscal year. 2 V9Lance Sail s Lunghard LLP CERTIFIED PUBLIC ACCOUNTANTS To the Honorable Chair and Members of the Governing Board Redevelopment Agency of the City of La Quinta, California The Agency did not produce and present the required information for the annual report as required by the Code. We recommend that the Agency accomplish procedural steps necessary to comply with this section of the Code. This report is intended for the information of the governing board, management and the State Controller and is not intended to be and should not be used by anyone other than these specific parties. October 31, 2007 5 THIS PAGE INTENTIONALLY LEFT BLANK LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF NET ASSETS JUNE 30, 2007 Assets: Cash and investments Receivables: Accounts Interest Notes Total Receivables Due from other governments Deposits Deferred charges Prepaid items Restricted assets: Cash and investments with fiscal agent Capital assets: Buildings, net Land Total Capital Assets Total Assets Liabilities: Accounts payable and accrued expenses Due to other governments Deposits payable Long-term liabilities: Due within one year Due in more than one year Total Long -Term Liabilities Total Liabilities Net Assets: Invested in capital assets, net of related debt Restricted for: Community development Debt service Unrestricted Total Net Assets See Notes to Financial Statements 7 Governmental Activities $ 79,339 241,125 13,066,117 312,000 68,700,871 5,395,558 254,923,390 $ 55,118,104 13,386,581 5,546,842 206,050 4,753,409 7,977 61,492,009 69,012,871 209,523,843 4,193,069 560,698 40,238 260,318,948 265,112,963 41,624,909 38,283,337 46,398,586 (181,895,942) $ (55,589,110) LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2007 General Revenues: Taxes (net of pass-through payments) 42,009,753 Use of money and property Net (Expense) Other 1,093,958 Total General Revenues Revenues and Change in Net Assets 6,262,867 Program Revenues Changes in Restatement of Net Assets (1,475,320) Operating Capital Net Assets Charges for Contributions Contributions Governmental Expenses Services and Grants and Grants Activities Functions/Programs Governmental Activities: General government $ 3,395,820 $ - $ $ $ (3,395,820) Planning and development 25,679,389 (25,679,389) Interest on long-term debt 14,550,754 - - (14,550,754) Total Governmental Activities $ 43,625,963 $ - $ $ - (43,625,963) General Revenues: Taxes (net of pass-through payments) 42,009,753 Use of money and property 6,785,119 Other 1,093,958 Total General Revenues 49,888,830 Change in Net Assets 6,262,867 Net Assets at Beginning of Year (60,376,657) Restatement of Net Assets (1,475,320) Net Assets at End of Year $ (55,589,110) See Notes to Financial Statements 8 LA QUINTA REDEVELOPMENT AGENCY BALANCE SHEET GOVERNMENTALFUNDS JUNE 30, 2007 Assets: Cash and investments Cash and investments with fiscal agent Receivables: Accounts Interest Notes Due from capital projects funds Due from other governments Advances to the City of La Quinta Deposits Prepaid items Total Assets Liabilities and Fund Balances: Liabilities: Accounts payable Deposits payable Due to debt service funds Due to other governments Deferred revenue Total Liabilities Fund Balances: Reserved: Bond projects Prepaid items Notes receivable Deposits Advances to the City of La Quinta Unreserved: Designated: Debt service Continuing projects Undesignated Total Fund Balances Total Liabilities and Fund Balances Special Revenue Capital Projects Low/Moderate Low/Moderate 2004 Redevelopment Income Housing - Income Housing - Low/Mod Agency - PA No. 1 PA No. 2 Bond PA No. 1 $ 3,311,795 $ 10,020,157 $ - $ 71,795 - - 44,469,386 17,022,623 9,939 8,500 - 25,937 12,875 - 3,566,117 9,500,000 - 82,488 60,556 _ 3,878,873 206,050 - _ 2,485 1,504 - 2,485 $ 7,204,811 $ 19,603,592 $ 44,469,386 $ 20,975,776 $ 26,610 $ 26,636 $ - 12,403 - - - - 6,186,049 1,484,472 9,500,000 35,409 1,523,485 9,526,636 6,186,049 35,409 44,469,386 17,022, 623 2,485 1,504 - 2,485 2,081,645 - _ 206,050 3,878,873 3,391,146 10,075,452 - 36,386 - - (6,186,049) _ 5,681,326 10,076,956 38,283,337 20,940,367 $ 7,204,811 $ 19,603,592 $ 44,469,386 $ 20,975,776 See Notes to Financial Statements 9 LA QUINTA REDEVELOPMENT AGENCY BALANCE SHEET GOVERNMENTALFUNDS JUNE 30, 2007 Liabilities and Fund Balances: Liabilities: Accounts payable $ 12,580 $ - $ - $ 101,235 Deposits payable 27,835 - - 40,238 Due to debt service funds - - 6,166,049 Due to other governments 168,201 392,497 560,698 Deferred revenue - - 10,984,472 Total Liabilities Capital 168,201 392,497 17,872,692 Fund Balances: Projects Debt Service Redevelopment Redevelopment Redevelopment Total Agency - Agency- Agency- Governmental 61,492,009 PA No. 2 PA No. 1 PA No. 2 Funds Assets: Notes receivable - - Cash and investments $ 1,716,384 $ 33,187,356 $ 6,810,617 $ 55,118,104 Cash and investments with fiscal agent - - - 61,492,009 Receivables: Unreserved: Accounts 60,900 - - 79,339 Interest 7,306 133,761 61,246 241,125 Notes - - - 13,066,117 Due from capital projects funds - - 6,186,049 6,186,049 Due from other governments - 335,328 244,927 723,299 Advances to the City of La Quinta 944,670 - - 4,823,543 Deposits - $ 2,730,763 - 206,050 Prepaid items 1,503 - - 7,977 Total Assets $ 2,730,763 $ 33,656,445 $ 13,302,839 $ 141,943,612 Liabilities and Fund Balances: Liabilities: Accounts payable $ 12,580 $ - $ - $ 101,235 Deposits payable 27,835 - - 40,238 Due to debt service funds - - 6,166,049 Due to other governments 168,201 392,497 560,698 Deferred revenue - - 10,984,472 Total Liabilities 40,415 168,201 392,497 17,872,692 Fund Balances: Reserved: Bond projects - - - 61,492,009 Prepaid items 1,503 - 7,977 Notes receivable - - 2,081,645 Deposits - - 206,050 Advances to the City of La Quinta 944,670 - - 4,823,543 Unreserved: Designated: Debt service 33,488,244 12,910,342 46,398,586 Continuing projects 1,744,175 - - 15,247,159 Undesignated - - - (6,186,049) Total Fund Balances 2,690,348 33,488,244 12,910,342 124,070,920 Total Liabilities and Fund Balances $ 2,730,763 $ 33,656,445 $ 13,302,839 $ 141,943,612 See Notes to Financial Statements 10 LA QUINTA REDEVELOPMENT AGENCY GOVERNMENTAL FUNDS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS JUNE 30, 2007 Fund balances of governmental funds $ 124,070,920 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds 69,012,871 Deferred revenue is present in governmental fund financial statements to indicate that receivables are not available currently; however, in the Statement of Net Assets these deferrals are eliminated. 10,984,472 Bond issuance costs is an expenditure in the governmental funds, but it is deferred charges in the statement of net assets: Unamortized debt issuance costs - amortized over life of new bonds 4,753,409 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the funds Bonds payable (232,915,000) Loans from City Other debt (22,100,000) Unamortized net original issue discounts and (premiums) (6,181,178) 877,230 Accrued interest payable for the current portion of interest due on Tax Allocation Bonds has not been reported in the governmental funds. (4,091,834) Net assets of governmental activities $ (55,589,110) See Notes to Financial Statements 11 LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Revenues: Taxes and assessments Use of money and property Other revenue Total Revenues Expenditures: Current: General government Planning and development Capital outlay Debt service Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers in Transfers out Long-term debt Issued Pass-through agreement payments Proceeds from sale of capital asset Total Other Financing Sources (Uses): Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances: Beginning of Year End of Year Special Revenue Capital Projects Low/Moderate Low/Moderate 2004 Redevelopment Income Housing - Income Housing - Low/Mod Agency - PA No. 1 PA No. 2 Bond PA No. 1 $ 10,507,377 $ 5,194,289 $ $ _ 740,204 343,072 2,706,511 1,137,304 987,611 59,409 82,841 12,235,192 5,596,770 2,706,511 1,220,145 994,529 546,749 - 1,027,937 137,029 19,966,444 4,705,800 - - 1,173,210 16,564,295 4,336,775 1,131,558 21,686,403 21,270,095 5,364,712 11,103,634 (16,089,633) (18,563,584) (4,144,567) 100,000 16,000,000 (20,448,138) (1,954,560) - 124,097 (20,224,041) 14,045,440 (9,120,407) (2,044,193) (18,563,584) (4,144,567) 14,801,733 12,121,149 56,846,921 25,084,934 $ 5,681,326 $ 10,076,956 $ 38,283,337 $ 20,940,367 See Notes to Financial Statements 12 LA QUINTA REDEVELOPMENT AGENCY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Revenues: Taxes and assessments Use of money and property Other revenue Total Revenues Expenditures: Current: General government Planning and development Capital outlay Debt service Total Expenditures Excess (Deficiency) of Revenues Over (Under) Expenditures Other Financing Sources (Uses): Transfers in Transfers out Long-term debt issued Pass-through agreement payments Proceeds from sale of capital asset Total Other Financing Sources (Uses): Excess (Deficiency) of Revenues and Other Sources Over (Under) Expenditures and Other Uses Fund Balances: Beginning of Year End of Year Capital Projects Redevelopment Agency - PA No. 2 Debt Service Redevelopment Redevelopment Agency- Agency - PA No. 1 PA No. 2 Total Governmental Pimrl. $ - $ 42,029,504 $ 20,777,158 $ 78,508,328 125,423 1,054,152 556,329 6,662,995 - - - 1,129,861 125,423 43,083,656 21,333,487 86,301,184 117,398 506,056 184,484 3,377,153 ` - - 24,809,273 66,107 - - 22,140,387 - 16,042,698 3,474,345 19,517,043 183,505 16,548,754 3,658,829 69,843,856 (58,082) 26,534,902 17,674,658 16,457,328 4,448,138 1,954,560 22,502,698 - (100,000) - (22,502,698) - 100,000 - 100,000 - (19,044,700) (17,453,875) (36,498,575) - 124.097 - (14,596,562) (15,499,315) (36,274,478) (58,082) 11,938,340 2,175,343 (19,817,150) 2,748,430 21,549,904 10,734,999 143,888,070 $ 2,690,348 $ 33,488,244 $ 12,910,342 $ 124,070,920 See Notes to Financial Statements 13 LA QUINTA REDEVELOPMENT AGENCY GOVERNMENTALFUNDS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Net change in fund balances - total governmental funds $ (19,817,150) Amounts reported for governmental activities in the statement of activities differ because: Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. 5,120,449 Bond issuance costs is an expenditure in the governmental funds, but it is deferred charges in the statement of net assets: Amortization for current fiscal year (185,679) Unamortized premium or discounts on ponds issued are revenue or expenditures in the governmental funds, but these are spread to future periods over the life of the new bonds: Amortization for current fiscal year (36,143) Governmental funds report capital outlay as expenditures. However, in the statement of activities the cost of those assets in capitalized and allocated over their estimated useful lives through depreciation expense: Amount by which capital outlay exceeds depreciation 21,110,271 Depreciation (18,667) Proceeds of debt is revenue in the governmental funds, but these are additions to the statement of net assets, (100,000) Revenues reported in the governmental funds which were previously deferred and meet the revenue recognition criteria currently and, therefore, are not reported as revenues in the Statement of Activities 122,124 Expenses reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds: Current accrual of interest due on bonds (4,091,834) Prior year accrual of interest due on bonds 4,159,496 Change in net assets of governmental activities $ 6,262,867 See Notes to Financial Statements 14 LA QUINTA REDEVELOPMENT AGENCY BUDGETARY COMPARISON STATEMENT LOW/MODERATE INCOME HOUSING PA NO. 1 FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Budgetary Fund Balance, July 1 Resources (Inflows): Taxes and Assessments: Tax increment Use of Money and Property: Interest income Rental income Other revenue: Miscellaneous revenues Loan repayments Transfers from other funds Proceeds from sale of capital asset Amounts Available for Appropriations Charges to Appropriation (Outflow): Current: General Government: Administrative costs Professional services Planning and development: Real estate acquisitions Subsidy to low and moderate housing Transfers to other funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Amounts Original Final $ 14,801,733 $ 14,801,733 8,915,100 10,349,200 333,300 442,300 252,000 252,000 505,876 63,576 234,328 (17,672) 50,000 Variance with 112,038 Final Budget Actual Positive Amounts (Negative) $ 14,801,733 $ - 10,507,377 158,177 505,876 63,576 234,328 (17,672) 50,000 162,038 112,038 1,000,000 825,573 (174,427) - 140,000 100,000 (40,000) 150,000 645,000 124,097 (520,903) 24,452,133 27,680,233 27,261,022 (419,211) 591,827 591,827 581,980 9,847 466,081 466,081 412,549 53,532 7,150,000 8,950,000 12,029 8,937,971 750,000 750,000 125,000 625,000 4,448,304 20,448,304 20,448,138 166 13,406,212 31,206,212 21,579,696 9,626,516 $ 11,045,921 $ (3,525,979) $ 5,681,326 $ 9,207,305 See Notes to Financial Statements 15 LA QUINTA REDEVELOPMENT AGENCY BUDGETARY COMPARISON STATEMENT LOW/MODERATE INCOME HOUSING PA NO.2 FOR THE FISCAL YEAR ENDED JUNE 30, 2007 Charges to Appropriation (Outflow): Current: General Government: Administrative costs 314,053 314,053 315,022 Variance with Professional services 277,481 277,481 231,727 Final Budget Planning and development: Budget Amounts Actual Positive Original Final Amounts (Negative) Budgetary Fund Balance, July 1 $ 12,121,149 $ 12,121,149 $ 12,121,149 $ Resources (Inflows): housing - 4,500,000 - Taxes and Assessments: Capital Outlay: Tax increment 4,870,400 5,401,800 5,194,289 (207,511) Use of Money and Property: Transfers to other funds 781,432 5,918,706 _ 1,954,560 Interest income 275,300 441,000 343,072 (97,928) Other revenue: Budgetary Fund Balance, June 30 $ 14,570,673 $ 14,072,402 $ 10,076,956 Loan repayments - 100,000 59,409 (40,591) Transfers from other funds 16,000,000 16,000,000 Proceeds from sale of capital asset - 12,641,903 - (12,641,903) Amounts Available for Appropriations 17,266,849 46,705,852 33,717,919 (12,987,933) Charges to Appropriation (Outflow): Current: General Government: Administrative costs 314,053 314,053 315,022 (969) Professional services 277,481 277,481 231,727 45,754 Planning and development: Real estate acquisitions 150,000 20,450,000 19,966,444 483,556 Subsidy to low and moderate housing - 4,500,000 - 4,500,000 Capital Outlay: Project improvement costs 1,173,210 1,173,210 1,173,210 Transfers to other funds 781,432 5,918,706 _ 1,954,560 3,964,146 Total Charges to Appropriations 2,696,176 32,633,450 23,640,963 8,992,487 Budgetary Fund Balance, June 30 $ 14,570,673 $ 14,072,402 $ 10,076,956 $ (3,995,446) See Notes to Financial Statement 16 LA QUINTA REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS JUNE 30, 2007 Note 1: Organization and Summary of Significant Accounting Policies a. Organization and Tax Increment Financing The La Quinta Redevelopment Agency is a component unit of a reporting entity that consists of the following primary and component units: Reporting Entity: Primary Government: City of La Quinta Component Units: La Quinta Redevelopment Agency City of La Quinta Public Financing Authority Redevelopment Goals and Objectives The general objective of the Redevelopment Plan adopted by the Agency is to encourage investment in the Redevelopment Project Areas by the private sector. The Redevelopment Plan provides for the demolition of buildings and improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improvements. The Redevelopment Plan also includes the ability to redevelop land by private enterprise or public agencies, the rehabilitation of structures, the rehabilitation or construction of single family and low and moderate income housing, and participation by owners and tenants of properties in the Redevelopment Project. Redevelopment Project Areas The Agency has established two redevelopment project areas. On November 29, 1983, the City Council approved and adopted the Redevelopment Plan for the La Quinta Redevelopment Project Area No. 1. On May 16, 1989, the City Council approved and adopted the Redevelopment Plan for the La Quinta Redevelopment Project Area No. 2... These plans provide for the elimination of blight and deterioration that was found to exist in the project areas. Tax Increment Financing The Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a redevelopment project. The assessed valuation of a redevelopment project last equalized prior to adoption of a redevelopment plan or amendment to such redevelopment plan, or "base roll', is established and, except for any period during which the assessed valuation drops below the base year level, the taxing bodies, thereafter, receive the taxes produced by the levy of the current tax rate upon the base roll. Taxes collected upon any increase in assessed valuation over the base roll ("tax ncrement") 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. 17 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 1: Organization and Summary of Significant Accounting Policies (Continued) b. Basis of Accounting and Measurement Focus The basic financial statements of the Agency are composed of the following: • Government -wide financial statements • Fund financial statements • Notes to the basic financial statements Government -wide Financial Statements Government -wide financial statements display information about the reporting government as a whole, except for its fiduciary activities. These statements include separate columns for the governmental and business -type activities of the primary government (including its blended component units), as well as its discreetly presented component units. The La Quinta Redevelopment Agency has no business -type activities or discretely presented component units. For the most part, effect of interfund activity has been removed from these statements. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated). However, general government expenses have not been allocated as indirect expenses to the various functions of the Agency. The accompanying government -wide financial statements for the Agency present negative net assets because the primary activity of the Agency is to issue debt to construct infrastructure that will be owned and maintained by the City. Government -wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government -wide financial statements. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange -like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from non-exchange transaction are recognized in accordance with the requirements of GASB Statement No. 33. Program revenues include charges for services and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular 'program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program. Amounts paid to acquire capital assets are capitalized as assets in the government -wide financial statements, rather than reported as expenditure. Proceeds of long-term debt are recorded as a liability in the government -wide financial statements, rather than as other financing source. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as an expenditure. 18 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 1: Organization and Summary of Significant Accounting Policies (Continued) Fund Financial Statements The underlying accounting system of the Agency is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self -balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Fund financial statements for the primary government's governmental, proprietary, and fiduciary funds are presented after the government -wide financial statements. These statements display information about major funds individually and nonmajor funds in the aggregate for governmental and enterprise funds. Fiduciary statements include financial information for fiduciary funds and similar component urrits. Fiduciary funds primarily represent assets held by the Agency in a custodial capacity for other individuals or organizations. The Agency has no nonmajor funds, enterprise funds, or fiduciary funds. Governmental Funds In the fund financial statements, governmental funds and agency funds are presented using the modified -accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The Agency uses a sixty day availability period. Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first. Government -mandated and voluntary non-exchange transactions are recognized as revenues when all applicable eligibility requirements have been met. In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period. 19 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 1: Organization and Summary of Significant Accounting Policies (Continued) Non-current portions of long-term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered "available spendable resources," since they do not represent net current assets. Recognition of governmental fund type revenues represented by noncurrent receivables are deferred until they become current receivables. Noncurrent portions of other long-term receivables are offset by fund balance reserve accounts. Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities. Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as an other financing source rather than as a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures. When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources, and then from unrestricted resources. c. Major Funds The following funds are presented as major funds in the accompanying basic financial statements: Special Revenue, Low and Moderate Income Housing-P.A. No. 1 and No. 2 Funds — To account for the required 20% set aside of property tax increments that is legally restricted for increasing or improving housing for low and moderate income households, Debt Service Funds, P.A, No. I and No. 2 — To account for the accumulation of resources for the payment of debt service for bond principal, interest and trustee fees. Capital Protects Funds, P.A. No. 1 and No. 2 — To account for the bond proceeds, interest and other funding that will be used for development, planning, construction and land acquisition. 2044 Low and Moderate Income Housinq Fund — To account for the bond proceeds, interest and other funding that will be used for development, planning, construction, and land acquisition for low and moderate income housing projects. d. Cash and Investments For financial reporting purposes, investments are reported at their fair market value. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation or sale of investments, 0181 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 4: Notes Receivable e. Capital Assets Capital assets (including infrastructure) are recorded at cost where historical records are available and at an estimated historical cost where no historical records exist. Contributed fixed assets are valued at their estimated fair market value at the date of the contribution. Generally, fixed asset purchases in excess of $5,000 are capitalized if they have an expected useful life of three years or more. Buildings are depreciated over a useful life of thirty years. Capltal assets include public domain (infrastructure) general fixed assets consisting of certain improvements including roads, streets, sidewalks, medians, and storm drains. Note 2: Stewardship, Compliance and Accountability a. Budgetary Data Budgets and Budgetary Accounting The Governing Board adopts an annual budget prepared on the modified accrual basis of accounting for its governmental funds. The City Manager or his designee is authorized to transfer budgeted amounts between the accounts of any department. Revisions that alter the total appropriations of any department or fund are approved by the Governing Board. Prior year appropriations lapse unless they are approved for carryover into the following fiscal year. Expenditures may not legally exceed appropriations at the department level. b. Encumbrances Encumbrances are estimations of costs related to unperformed contracts for goods and services. These commitments are recorded for budgetary control purposes in the General, Special Revenue and similar governmental funds. Encumbrances outstanding at year-end are reported as a reservation of fund balance. They represent the estimated amount of the expenditure ultimately to result if unperformed contracts in -process at year-end is completed. They do not constitute expenditures or estimated liabilities. As of June 30, 2007 the Agency had no encumbrances. c. Budget Basis of Accounting Budgets for governmental funds are adopted on a basis consistent with generally accepted accounting principles (GAAP). Note 3: Cash and Investments Cash and investments reported in the accompanying financial statements consisted of the following: Cash and investments pooled with the City $ 55,118,104 Cash and investments with fiscal agent 61,492,009 $ 116,610,113 The Agency's funds are pooled with the City of La Quinta's cash and investments in order to generate optimum interest income. The information required by GASB Statement No. 40 related to investments, credit risk, etc., is available in the annual report of the City. 21 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 4: Notes Receivable Outstanding Balance at June 30, 2007 In September 1994, the Agency sold certain real property to LINC Housing for $2,112,847. The property was used to construct single-family homes and rental units to increase the City's supply of low and moderate income housing. The note bears interest at 6% per annum and is due in full on June 15, 2029. $ 3,519,860 In December 2000, the Agency entered into an agreement with LINC Housing to receive $9,500,000 as a reimbursement for Agency costs incurred for the construction of infrastructure related to the development of senior apartments. Payments are due to the Agency in the amount of annual positive cash flow generated by the rental of the units. All unpaid principal and interest on the note are due fifty-five years after the completion of the project. Interest on the note accrues at 3% per annum. 9,500,000 Other notes receivable 46,257 Total notes receivable $ 13,066,117 Note 5: Due from Other Governments The Redevelopment Agency advanced funds to the City of La Quinta to help the City meet the cost of developing the public -owned improvements to the La Quinta Community Park and Civic Center Campus. There is no stipulated repayment date established for the Agency advances. Interest accrues at the earning rate of the City's Investment Pool funds, and shall be adjusted quarterly. At June 30, 2007, outstanding Project Area No. 1 advances were $3,878,873 and Project Area No. 2 advances were $944,670. Note 6: Capital Assets Capital asset activity for the year ended June 30, 2007 was as follows: 22 Balances at Balances at __June 30, 2006 Additions Deletions June 30, 2007 Buildings $ 560,000 - $ (40,000) $ 520,000 Total cost of depreciable assets 560,000 - (40,000) 520,000 Less accumulated depreciation: Buildings 205,333 (18,667) 16,000 (208,000) Net depreciable assets 354,667 (18,667) (24,000) 312,000 Capital assets not depreciated: Land 47,566,600 21,270,271 (136,000) 68,700,871 Capital assets, net $ 47,921,267 $ 1,251,604 $(160,000) $ 69,012,871 22 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 6: Capital Assets (Continued) Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General government - $18,667 Note 7: Property Taxes Under California law, property taxes are assessed and collected by the counties up to 11% of assessed value, plus other increases approved by the voters. The property taxes are recorded initially in a pool, and are then allocated to the cities based on complex formulas. Accordingly, the City of La Quinta accrues only those taxes that are received from the County within sixty days after year-end. Lien date January 1 Levy date July 1 Due dates November 1 and February 1 Collection dates December 10 and April 10 The La Quinta Redevelopment Agency's primary source of revenue 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. Note 8: Long -Term Liabilities Tax Allocation Refunding Bonds, Series 1994 Tax allocation refunding bonds, Series 1994, in the amount of $26,665,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1989 and 1990. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 1. Interest rates on the bonds range from 3.80% to 8% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable solely from pledged tax increment revenues. The bonds are not subject to redemption prior to maturity, There are certain limitations regarding the issuance of parity debt as further described in the official statement. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2007 is $12,525,000. 23 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 8: Long -Term Liabilities (Continued) Tax Allocation Refunding Bonds, Series 1998 - Project Area No. 1 Tax allocation refunding bonds, Series 1998, in the amount of $15,760,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1991. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 1. Interest rates on the bonds range from 5.20% to 5.25% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable from pledged tax increment revenues. There are certain limitations regarding the issuance of parity debt as further described in the official statement. Term Bonds maturing September 1, 2028, are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2013 and on each September 1 thereafter, through September 1, 2028, at a price equal to the principal amount thereof plus accrued interest. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2007 is $15,760,000. Tax Allocation Refunding Bonds, Series 1998 - Project Area No. 2 Tax allocation refunding bonds, Series 1998, in the amount of $6,750,000 were issued by the Agency to refund the outstanding aggregate principal amount of the Agency's Tax Allocation Bonds, Series 1992. The remaining proceeds were used to finance certain capital improvements within the La Quinta Redevelopment Project Area No. 2. Interest rates on the bonds range from 3.75% to 5.25% and are payable semi-annually on March 1 and September 1 of each year until maturity. The interest and principal of the bonds are payable solely from pledged tax increment revenues of Project Area No. 2. Term Bonds maturing September 1, 2028 and September 1, 2033, are subject to mandatory sinking fund redemption, in part by lot, on September 1, 2009 and September 1, 2019, respectively, and on each September 1 thereafter at a price equal to the principal amount thereof plus accrued interest. There are certain limitations regarding the issuance of parity debt as further described in the official statement. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2007 is $6,025,000. Tax Allocation Bonds, Series 2001 — Project Area No. 1 On August 15, 2001, the Agency issued tax allocation bonds in the amount of $48,000,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 1. The 2001 tax allocation bonds were issued at a discount of $422,400 and issuance costs of $1,517,325. The bonds consist of $17,280,000 of term bonds that accrue interest at 5.00% and mature on September 1, 2021, and $30,720,000 of term bonds that accrue interest at 5.18% and mature on September 1, 2031. The interest and principal on the bonds are payable from pledged tax increment revenues. A portion of the proceeds were used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2007 is $48,000,000. 24 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 8: Long -Term Liabilities (Continued) Tax Allocation Bonds, Series 2002 — Project Area No. 1 On June 12, 2002, the Agency issued tax allocation bonds in the amount of $40,000,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 1. The 2002 tax allocation bonds were issued at a discount of $360,000 and issuance costs of $1,250,096. The bonds consist of $6,355,000 of serial bonds and $33,645,000 of term bonds. Interest rates on serial bonds range from 1.75% and 4.00% and are payable semi-annually on March 1 and September 1 of each year until maturity. Term bonds accrue interest at 5.00% and 5.125% and mature on September 1, 2022 and September 1, 2023. The interest and principal on the bonds are payable from pledged tax increment revenues. A portion of the proceeds were used to obtain a surety agreement to satisfy the bond reserve requirement. The principal balance of outstanding bonds at June 30, 2007 is $37,675,000. Tax Allocation Bonds, Series 2003 — Project Area No. 1 On September 1, 2003, the Agency issued tax allocation bonds in the amount of $26,400,000 to finance capital projects benefiting the La Quinta Redevelopment Project Area No. 1. The 2003 tax allocation bonds were issued at a discount of $277,200 issuance costs of $629,191. Interest is payable semi-annually on March 1 and September 1 of each year, commencing March 1, 2004. Interest payments range from 4.24% to 6.44% per annum. The interest and principal on the bonds are payable from pledged tax increment revenues. Term bonds maturing on September 1, 2013 through September 1, 2032, are subject to mandatory redemption from minimum sinking fund payments, in part by lot, on September 1, 2004, September 1, 2014, and September 1, 2024, respectively, and on each September 1 thereafter at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. A portion of the proceeds was used to obtain a surety agreement to satisfy the bond reserve requirement. There are certain limitations regarding the issuance of parity debt as further described in the official statement. The principal balance of outstanding bonds at June 30, 2007 is $25,185,000. 2004 Series A Local Agency Revenue Bonds On June 29, 2004, the La Quinta Financing Authority issued revenue bonds in the amount of $90,000,000 to finance projects benefiting low and moderate income Dousing in La Quinta Redevelopment Project Area No. 1 and the La Quinta Redevelopment Project Area No. 2 and to advance refund the -Agency's Redevelopment Project Areas No. 1 and 2, 1995 Housing Tax Allocation Bonds. The 2004 local agency revenue bonds were issued with issuance costs of $2,600,229 and a premium of $476,496. Interest is payable semi-annually on March 1 and September 1 of each year, commencing September 1, 2004. Interest payments range from 3% to 5.25% per annum. The interest and principal on the bonds are payable from pledged tax increment revenues. 25 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 8: Long -Term Liabilities (Continued) Term bonds maturing on September 1, 2024, September 1, 2029 and September 1, 2034, are subject to mandatory redemption from minimum sinking fund payments, in part by lot, on September 1, 2017, September 1, 2025, and September 1, 2030, respectively, and on each September 1 thereafter at a redemption price equal to the principal amount thereof plus accrued interest to the redemption date. A portion of the proceeds was used to obtain.a surety agreement to satisfy the bond reserve requirement. There are certain limitations regarding the issuance of parity debt as further described in the official statement. The principal balance of outstanding bonds at June 30, 2007 is $87,745,000. Due to County of Riverside — Project Area No. 2 Based on an agreement dated July 5, 1989 between the Agency and the County, until the tax increment reaches $5,000,000 annually in Project Area No. 2, the Agency will pay to the County 50% of the County portion of tax increment. At the County's option, the County's pass-through portion can be retained by the Agency to finance new County facilities or land costs that benefit the County and serve the La Quinta population. Per the agreement, the Agency must repay all amounts withheld from the County. The tax increment is to be paid to the County in amounts ranging from $100,000 to $250,000 over a payment schedule through June 30, 2015. Interest does not accrue on this obligation. The balance at June 30, 2007 is $1,750,000. Pass-through Agreement Payable to Coachella Valley Unified School District An agreement was entered into in 1991 between the Agency, the City of La Quinta and the Coachella Valley Unified School District (District), which provides for the payment to the District a portion of tax increment revenue associated with properties within District confines. Such payments are subordinate to other indebtedness of the Agency incurred in furtherance of the Redevelopment Plan for Project Area No. 1. This tax increment is paid to the District over a payment schedule through August 1, 2012 in amounts ranging from $474,517 to $834,076 for a total amount of $15,284,042. Tax increment payments outstanding at June 30, 2007 totaled $4,431,178. The District agrees to use such funds to provide classroom and other construction costs, site acquisition, school buses, expansion or rehabilitation of current facilities. Advances from the City of La Quinta The City of La Quinta advances money to the Redevelopment Agency to cover operating and capital shortfalls. As of June 30, 2007, the amount due to the General f=und from Project Area No. 1 was $12,100,000. This consists of an outstanding advance of: 1) $6,000,000 loaned to the Redevelopment Agency with repayments beginning in 2030/31 and accrues interest at 10% per annum. 2) $6,000,000 loaned to the Redevelopment Agency requires repayments beginning in 2030/31 and accrues interest at 7% per annum. - 3) $100,000 loaned to the Redevelopment Agency for the purpose of funding escrow deposits and due diligence studies for Washington Street iand acquisitions to be repaid by the Agency after the annexation of the Washington Street properties and accrues interest at 7 % per annum. WS La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 8: Long -Term Liabilities (Continued) As of June 30, 2007, the amount due to the General Fund from Project Area No. 2 was $10,000,000. The advance loaned to the Redevelopment Agency with repayment beginning in 2035/36 and accrues interest at 10% per annum. The following is a schedule of changes in long-term debt of the Agency for the fiscal year ended June 30, 2007: ProOct Area No. 1: City Loans - Principal Pass-through agreement payable: 1994 Tax Allocation Bonds 1998 Tax Allocation Bonds 2001 Tax Allocation Bonds 2002 Tax Allocation Bonds 2003 Tax Allocation Bonds 2004 Series A Local Agency Revenue Bonds Total Project Area No. 2: City Loans - Principal Due to County of Riverside 1998 Tax Allocation Bonds 2004 Series A Local Agency Revenue Bonds Total Unallocated to Pna)ect Areas 2004 Series A Local Agency Revenue Bonds Total Balance TaxAllocation Refunding Bonds, Tax Allocation Refunding Bonds, Balance Due Within July 1, 2006 AdjustmentsAdditions Repayments June 30, 2007 One Year Principal $ 12, 000, 000 $ $ 100,000 $ - $ 12,100, 000 $ 5,186,627 2008-2009 755,449 4,431,178 770,558 14,145,000 2,009-2010 1,620,000 12,525,000 1,740,000 15,760,000 - - 15,760,000 - 46,383,564 1.616,436 2,305,000 48,000,000 - 36,879,584 1,395,416 600,000 37,675,000 615,000 24,746,542 858,458 420,000 25,185,000 440,000 16, 948, 677 382,555 - 293,360 16,937, 872 303,010 1,485,900 2027-2032 171,949,994 4,252,865 100,000 31688,809 172,614,050 3,869,566 $ 10,000,000 $ - $ $ - $ 10,000,000 $ 1,650,000 100,000 1,750,000 150,000 6,130,000 - 105,000 6,025,000 110,000 4,553,671 103,468 79,344 4,577,795 81,954 22,533,671 103,468 284,344 22,352,795 341,954 $ 65,880,501 5 1,496,126 5 $ 1,147,296 $ 66,229,333 $ 1,185,036 65.880.5011 1,496,128 1,147,296 66,229,333 1,165,036 Total - All Project Areas $260,364,166 S 5,852,461 $ 100,000 S 5,120,449 $ 261,196,178 5 5, U,5,558 Adjustments: Unamortized net original issue (discount) or premium (677,230) Net Long-term Debt $ 260,318,948 " Adjustments were to reclassify reporting of deferred charges and original issue (discount)/premium The following schedule illustrates the debt service requirements to maturity for the debt outstanding as of June 30, 2007: Tax Allocation Refunding Bonds, Series 1998 - PA No. 2 Principal TaxAllocation Refunding Bonds, Tax Allocation Refunding Bonds, $ 310,135 Series 1994 - PA No. 1 Series 1998 - PA No. 1 299,550 Principal Interest Principal Interest 2007-2008 $ 1,740,000 $ 850,815 $ - $ 819,520 2008-2009 1,865,000 719,233 - 819,520 2,009-2010 2,000,000 578,160 - 819,520 2010-2011 2,145,000 426,868 - 819,520 2011-2012 2,305,000 264,443 819,520 2012-2017 2,470,000 90,155 2,835,000 3,812,250 2017-2022 - 4,455,000 2,805,270 2022-2027 5,740,000 1,485,900 2027-2032 2,730,000 143,780 2032-2037 Tax Allocation Refunding Bonds, Series 1998 - PA No. 2 Principal Interest $ 110,000 $ 310,135 115,000 305,184 120,000 299,550 125,000 293,272 130,000 286,738 765,000 1,322,859 975,000 1,100,075 1,270,000 807,188 1,635,000 428,006 780,000 41,475 Totals $ 12,525,000 $ 2,929,674$ 15,760,000 $ 12,344,800 $ 6,025,000 $ 5,194,482 27 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 8: Long -Term Liabilities (Continued) Note 9: Pledge 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. Note 10: Transfers In and Out Tax Allocation Bonds, Tax Allocation Bonds, Tax Allocation Bonds, Series 2001 - PA No. 1 Series 2002 - PA No. 1 Series 2003 - PA No. 1 Principal Interest Principal Interest Principal Interest 2007-2008 $ - $ 2,430,720 $ 615,000 $ 1,849,616 $ 440,000 $ 1,549,882 2008-2009 2,430,720 - 16,000,000 4,448,138 635,000 1,829,914 460,000 1,530,802 2009-2010 1,954,560 - 2,430,720 660,000 1,807,556 475,000 1,508,106 2010-2011 Total $ 100,000 $ 16,000,000 $ 4,448,138 2,430,720 $ 22,502,698 680,000 1,782,926 505,000 1,481,401 2011-2012 - 2,430,720 705,000 1,756,429 530,000 1,453,198 2012-2017 6,755,000 11,498,975 3,755,000 8,287,856 3,130,000 6,763,557 2017-2022 10,525,000 9,200,475 4,710,000 7,245,156 4,220,000 5,636,456 2022-2027 13,455,000 6,186,173 6,025,000 5,899,091 5,730,000 4,085,165 2027-2032 17,265,000 2,288,753 12,385,000 3,795,959 7,815,000 1,926,043 2032-2037 - - 7,505,000 192,316 1,880,000 60,536 Totals $ 48,000,000 $ 41,327,976 $ 37,675,000 $ 34,446,819 $ 25,185,000 $ 25,995,146 2004 Series A Local Agency Pass-through Payable - Coachella Revenue Bonds Due to County of Riverside Valley Unified School District Principal Interest Principal Interest Principal Interest 2007-2008 $ 1,570,000 $ 4,356,806 $ 150,000 $ - $ 770,558 $ 2008-2009 1,615,000 4,304,994 200,000 - 785,968 2009-2010 1,670,000 4,243,331 200,000 - 801,688 2010-2011 1,740,000 4,175,131 200,000 - 817,722 2011 -2012 1,805,000 4,099,719 250,000 - 834,076 2012-2017 10;405,000 19,076,413 750,000 - 421,166 2017-2022 13,385,000 16,001,125 - - 2022-2027 17,280,000 12,014,144 2027-2032 22,115,000 7,061,797 2032-2037 16,160,000 1,269,975 - - Totals $ 87,745,000 $ 76,603,435 $ 1,750,000 $ - $ 4,431,178 $ - Note 9: Pledge 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. Note 10: Transfers In and Out The following transfers were made during the year ended June 30, 2007: Transfers In Special Revenue Debt Service Low/Moderate Low/Moderate Redevelopment Redevelopment Income Housing Income Housing Agency- Agency - PA No. 1 PA No. 2 PA No. 1 PA No. 2 Total Transfers Out: Special Revenue: Low/Moderate Income Housing PA No. 1 - 16,000,000 4,448,138 - 20,448,138 Low/Moderate Income Housing PA No. 2 - - 1,954,560 1,954,560 Debt Service: Redevelopment Agency - PA No. 1 100,000 - - - 100,000 Total $ 100,000 $ 16,000,000 $ 4,448,138 $ 1,954,560 $ 22,502,698 28 La Quinta Redevelopment Agency Notes to Financial Statements (Continued) Note 10: Transfers In and Out (Continued) a) $4,448,138 was transferred from the Low/Moderate Income Housing PA No. 1 Fund to the Redevelopment Agency Debt Service Project Area No. 1 Fund to pay a portion of the 2004 Series A Local Agency Revenue Bond debt service. b) $1,954,560 was transferred from the Low/Moderate Income Housing PA No. 2 Fund to the Redevelopment Agency Debt Service PA No. 2 Fund to pay a portion of the 2004 Series A Local Agency Revenue Bond debt service. C) $100,000 was transferred from the Redevelopment Agency PA No. 1 to the Low/Moderate Income Housing PA No. 1 Fund for an escrow deposit on the purchase of land. These funds were advanced to the Agency from the City. d) $16,000,000 was transferred from the Low/Moderate Income Housing PA No. 1 Fund to the Low/Moderate Income Housing PA No. 2 Fund to purchase land. Note 11: Due To/From Other Funds The following interfund receivables and payables were made during the year ended June 30, 2007: Due From Other Funds Due To Other Funds Amount Debt Service — RDA PA No. 2 Capital Projects — 2004 Low/Mod Bond $ 6,186,049 (a) (a) Short term borrowing to cover temporary cash shortfall. Note 12: Insurance The La Quinta Redevelopment Agency is covered under the City of La Quinta's insurance policies. Therefore, the limitations and self-insured retentions applicable to the City of La Quinta also apply to its Redevelopment Agency, Additional information as to coverage and self-insured retentions can be obtained by contacting the City. Note 13: Restatements of Net Assets Beginning net assets have been restated on the government -wide financial statements by ($1,475,320) relating to the adjustment of accrued interest payable on long-term liabifities. In addition, beginning net assets were adjusted for an understatement of deferred charges and understatement of long-term liabilities in the amount of $5,582,461 both related to the prior accounting treatment of unamortized costs of issuance. The combined affect of these two net asset restatements was zero. 29 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA BALANCE SHEET ALL GOVERNMENTAL FUNDS JUNE 30, 2007 30 Project Area No. 1 Capital Debt Capital Special Projects Service Projects Revenue 2004 Redevelopment Redevelopment Low/Moderate Low/Mod Agency- Agency- Income Housing - Bond PA No. 1 PA No. 1 PA No. 1 ASSETS Cash and investments $ - $ 33,187,356 $ 71,795 $ 3,311,795 Cash and investments with fiscal agent 44,469,386 - 17,022,623 Receivables: Accounts Interest - 133,761 - - 9,939 25,937 Notes Due from capital projects funds - _ - 3,566,117 Due from other governments - 335,328 - 82,488 Advances to the City of La Quinta Deposits - - 3,878,873 Prepaid items - - 206,050 - 2,485 2,485 Total Assets $ 44,469,386 $ 33,656,445 $ 20,975,776 $ 7,204,811 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ - $ - $ 35,409 $ 26,610 Deposits payable Due to debt service funds - 6,186,049 - - - 12,403 Due to other governments - 168,201 - Deferred revenue " - - 1,484,472 Total Liabilities 6,186,049 168,201 35,409 1,523,485 Fund Balances: Reserved: Bond projects 44,469,386 - 17,022,623 Prepaid items Notes receivable - 2,485 2,485 Deposits " _ 2,081,645 Advances to the City of La Quinta - -206,050 Unreserved: 3878;873 , - Designated: Debt service - 33,488,244 - Continuing projects Undesignated - (6,186, 049) - - 36,386 _ 3;391,146 Total Fund Balances 38,283,337 33,488,244 20,940,367 5,681,326 Total Liabilities and Fund Balances $ 44,469,386 $ 33,656,445 $ 20,975,776 $ 7,204,811 30 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA BALANCE SHEET ALL GOVERNMENTAL FUNDS JUNE 30, 2007 31 Project Area No. 2 Debt Capital Special Service Projects Revenue Redevelopment Redevelopment Low/Moderate Agency- Agency- Income Housing - PA No. 2 PA No. 2 PA No. 2 ASSETS Cash and investments $ 6,810,617 $ 1,716,384 $ 10,020,157 Cash and investments with fiscal agent Receivables: Accounts - 60,900 8,500 Interest Notes 61,246 7,306 12,875 Due from capital projects funds 6,186,049 - 9,500,000 Due from other governments 244,927 - 60,556 Advances to the City of La Quinta - 944,670 Deposits Prepaid items - 1,503 1,504 Total Assets $ 13,302,839 $ 2,730,763 $ 19,603,592 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ - $ 12,580 $ 26,636 Deposits payable 27,835 Due to debt service funds Due to other governments 392,497 - Deferred revenue - - 9,500,000 Total Liabilities 392,497 40,415 9,526,636 Fund Balances: Reserved: Bond projects Prepaid items 1,503 1,504 Notes receivable Deposits - Advances to the City of La Quinta 944,670 Unreserved: Designated: Debt service 12,910,342 Continuing projects - 1,744,175 10,075,452 Undesignated Total Fund Balances 12,910,342 2,690,348 10,076,956 Total Liabilities and Fund Balances $ 13,302,839 $ 2,730,763 $ 19,603,592 31 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA BALANCE SHEET ALL GOVERNMENTAL FUNDS JUNE 30, 2007 32 TOTALS Debt Capital Special Service Projects Revenue ASSETS Funds Funds Funds Cash and investments Cash and investments with fiscal agent $ 39,997,973 $ 1,788,179 $ 13,331,952 Receivables: - 61,492,009 Accounts Interest - 60,900 18,439 Notes 195,007 7,306 38,812 Due from capital projects funds 13;066,117 Due from other governments 6,186,D49 - Advances to the City of La Quinta 580,255 143,044 Deposits - 4,823,543 - Prepaid items 206,050 3,988 3,989 Total Assets $ 46,959,284 $ 68,175,925 $ 26,808,403 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ Deposits payable $ 47,989 $ 53,246 Due to debt service funds 27,835 12,403 Due to other governments - 6,186,049 Deferred revenue 560,698 - ' 10, 984,472 Total Liabilities 560,698 6,261,873 11,050,121 Fund Balances: Reserved: Bond projects Prepaid items - 61,492,009 Notes receivable 3,988 3,989 Deposits 2,081,645 Advances to the City of La Quinta - - 206,050 Unreserved: 4,823,543 - Designated: Debt service 46,398,586 Continuing projects Undesignated - 1,780,561 13,466,598 - (6,186,049) _ Total Fund Balances 46,398,586 61,914,052 15,758,282 Total Liabilities and Fund Balances $ 46,959,284 $ 68,175,925 $ 26,808,403 32 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 33 Project Area No. 1 Capital Debt Capital Special Projects Service Projects Revenue 2004 Redevelopment Redevelopment Low/Moderate Low/Mod Agency- Agency- Income Housing - Revenues: Bond PA No. 1 PA No. 1 PA No. 1 Taxes and Assessments: Tex increment Use of Money and Property: $ $ 42,029,504 $ $ 10,507,377 Interest income Rental income 2,706,511 1,054,152 1,1.37,304 505,876 Other revenue: 234,328 Miscellaneous revenues Loan repayments 82,841 162,038 825,573 Total Revenues 2,706,511 43,083,656 1,220,145 12,235,192 Expenditures: Current: General Government: Administrative costs Professional services 362,062 293,692 581,980 Planning and development; 143,994 734,245 412,549 Real estate acquisitions Subsidy to low and moderate 12,029 housing Capital Outlay: 4, 705, 800 125,000 Project improvement costs Debt Service; 16,564,295 4,336,775 Interest expense Long-term debt repayments - 11,626,849 4,413,849 Total Expenditures 21,270,095 16,548,754 5,364,712 1,131,558 Excess of Revenues over (under) Expenditures $(18,563,584) — $ 26,534,902 $ (4,144,567) $ 11,103,634 Other Financing Sources (Uses) Transfers in Transfers out $ $ 4,448,138 $ $ 100,000 Long-term debt issued (100,000) (20,448,138) Pass through agreement payments 100,000 Proceeds from sale of capital asset (19,044,700) - 124,097 Total Other Financing Sources (Uses) (14,596,562) (20,224,041) Excess of Revenues and Other Sources over (under) Expenditures and Other Uses (18,563,584) 11,938,340 (4,144,567) (9,120,407) Fund Balances Beginning of Year 56,846,921 21,549,904 25,084,934 14,801,733 End of Year $ 38,283,337 $ 33,488,244 $ 20,940,367 $ 5,681,326 33 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 34 Project Area No. 2 Debt Capital Special Service Projects Revenue Redevelopment Redevelopment Low/Moderate Agency- Agency- Income Housing - Revenues: PA No, 2 PA No. 2 PA No. 2 Taxes and Assessments: Tax increment$ Use of Moneyneyand Properly: n 20,777,158 $ $ 5,194,289 Interest income Rental income 556,329 125,423 343,072 Other revenue: Miscellaneous revenues Loan repayments - - 59,409 Total Revenues 21,333,487 125,423 5,596,770 Expenditures: Current: General Government: Administrative costs Professional services 184,484 76,401 315,022 Planning and development: - 40,997 231,727 Real estate acquisitions Subsidy to low and moderate 19,966,444 housing Capital Ouflay: Project improvement costs Debt Service: 66,107 1,173,210 Interest expense Long-term debt repayments 2,767,745 706,600 _ Total Expenditures 3,65.8,829 183,505 21,866,4{F3 Excess of Revenues over (under) Expenditures $ 77,674,658 5 (58,082) $ (16,088,633) Other Financing Sources (Uses) Transfers in Transfers out $ 1,954,560 $ - $ 16,000,000 Long-term debt issued - - (1,954,560) Pass through agreement payments Proceeds from sale of capital asset (17,453,875) Total Other Financing Sources (Uses) (15,499,315) 14,045,440 Excess of Revenues and Other Sources over (under) Expenditures and Other Uses 2,175,343 (58,082) (2,044,193) Fund Balances Beginning of Year 10,734,999 2,748,430 12,121,149 End of Year $ 12,910,342 $ 2,690.348 $ 10,076,956 34 LA QUINTA REDEVELOPMENT AGENCY COMBINING PROJECT AREA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUNDS FOR THE FISCAL YEAR ENDED JUNE 30, 2007 35 TOTALS Debt Capital Spec€al Service Projects Revenue Revenues: Funds Funds Funds Taxes and Assessments: Tax increment Use of Money and Property: $ 52,806,662 $ - $ 15,701,666 Interest income Rental income 1,610,481 3,969,238 848,948 Other revenue: - 234,328 Miscellaneous revenues Loan repayments 82,841 162,038 ' - 884,962 Total Revenues 64,417,143 4,062,079 17,837„962 Expenditures: Current: General Government: Administrative costs Professional services 546,546 370,093 897,002 Planning and development: 143,994 775,242 644,276 Real estate acquisitions Subsidy to low and moderate - 19,978,473 housing Capital Outlay: 4,705,800 125,000 Project improvement costs Debt Service: 20,967,177 1,173,210 Interest expense Long-term debt repayments 14,396,594 - 5,120,449 - Total Expenditures 20,207,583 26,818,312 22,817,961 Excess of Revenues over (under) Expenditures $ 44,209,560 $ (22,766,233) $ (4,985,999) Other Financing Sources (Uses) Transfers in Transfers out $ 6,402,698 $ $ 16,100,000 Long-term debt issued (100,000) (22,402,698) Pass through agreement payments 100,000 Proceeds from sale of capital asset (36,498,575) 124,097 Total Other Financing Sources (Uses) (30,095,877) (6,178,601) Excess of Revenues and Other Sources over (under) Expenditures and Other Uses 14,113,683 (22,766,233) (11,164,600) Fund Balances Beginning of Year 32,264,903 84,680,285 26,922,882 End of Year $ 46,398,586 $ 61,914,052 $ 15,758,262 35 LA GIUINTA REDEVELOPMENT AGENCY COMPUTATION OF LOW AND MODERATE INCOME HOUSING FUNDS EXCESSISURPLUS 36 Low and Moderate Low and Moderate Housing Funds - All Project Areas Housing Funds - All Project Areas July 1, 2006 July 1, 2007 Opening Fund Balance $ 63,769,803 $ 54,041,619 Less Unavailable Amounts: Unspent debt proceeds (Section 33334.12 (g)(3)(13)) (56,846,921) (38,283,337) Notes receivable (12,974,945) (13,066,,117) (69,821,866) (51,349,454) Available Low and Moderate Income Housing Funds 13,947,937 2,692,165 Limitation (greater of $1,000,000 or four years set-aside) Set -Aside for last four years: 2006-2007 $ - $ 15,701,666 2005-2006 14,089,024 14,089,024 2004-2005 10,282,664 10,282,664 2003-2004 9,023,407 9,023,407 2002-2003 7,750,765 - Total $ 41,145,860 $ 49,096,761 Base Limitation $ 1,000,000 $ 1,000,000 Greater amount 41,145,860 49,096,761 Computed Excess/Surplus None None 36