1999 RRA Financial Report10
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Rosemead Redevebpment Agency
Rosemead, California
ANNUAL MNANCML REPORT
FWAL YEAR ENDED JUNE 309 1999
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ROSEMEAD REDEVELOPMENT AGENCY
FINANCIAL AND COMPLIANCE REPORT
JUNE 30,1999
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I CONTENTS
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S REPORT ON THE FINANCIAL STATEMENTS
INDEPENDENT AUDITOR
AND SUPPLEMENTARY INFORMATION
I and 2
'
FINANCIAL STATEMENTS
Combined balance sheet - all fund types and account groups
3 and 4
Combined statement of revenue, expenditures and changes in
fund balances - all governmental fund types
5 and 6
Combined statement of revenue, expenditures and changes in fund balances -
budget and actual - all governmental fund types
7-9
Notes to financial statements
10 - 20
SUPPLEMENTARY INFORMATION
'
Special revenue funds:
Combining balance sheet - special revenue funds
21
Combining statement of revenue, expenditures and changes in fund balances -
'
special revenue funds
22
Year 2000 Compliance
23
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INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH AUDIT
GUIDELINES FOR CALIFORNIA REDEVELOPMENT AGENCIES
24
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INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL
CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
'
GOVERNMENTAL AUDITING STANDARDS
25 and 26
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McGLADREY& PULLEN, LL P
® Certified Public Accountants
RSM
international
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INDEPENDENT AUDITOR'S REPORT ON THE FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
To the Governing Board
Rosemead Redevelopment Agency
Rosemead, California
We have audited the accompanying general purpose financial statements of Rosemead Redevelopment
Agency (the Agency), a component unit of the City of Rosemead, California, as of and for the year ended
June 30, 1999. These general purpose financial statements are the responsibility of the Agency's
management. Our responsibility is to express an opinion on these general purpose financial statements
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards and the standards
applicable to financial audits contained in Governmental Auditing Standards issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the general purpose financial statements referred to above present fairly, in all material
respects, the financial position of the Agency as of June 30, 1999, and the results of its operations for the
year then ended in conformity with generally accepted accounting principles.
In accordance with Government Auditing Standards, we have also issued a report dated August 31, 1999
on our consideration of the Agency's internal control over financial reporting and our tests of its
compliance with certain provisions of laws, regulations, contracts and grants.
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Our audit was made for the purpose of forming an opinion on the general purpose financial statements
taken as a whole. The combining and individual fund statements and schedules listed in the table of
contents as supplementary information are presented for purposes of additional analysis on pages 21 to
22 and are not a required part of the general purpose financial statements of the Agency. Such
information has been subjected to the auditing procedures applied in the audit of the general purpose
financial statements and, in our opinion, is fairly presented in all material respects in relation to the
general purpose financial statements taken as a whole.
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The Year 2000 supplementary information on page 23 is not a required part of the basic financial
statements but is supplementary information required by the Governmental Accounting Standards Board.
We have applied certain limited procedures, which consisted principally of inquiries of management
regarding the methods of measurement and presentation of the supplementary information. However, we
did not audit the information and do not express an opinion on it. In addition, we do not provide
assurance that the Agency is or will become year 2000 compliant, that the Agency's year 2000
remediation efforts will be successful in whole or in part, or that parties with which the Agency does
business are or will become year 2000 compliant.
Pasadena, California
August 31, 1999
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ROSEMEAD REDEVELOPMENT AGENCY
COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS
June 30, 1999
Governmental Fund Types
Special
Debt
Capital
Assets and Other Debits
Revenue
Service
Projects
Assets
Cash and investments
$ 5,140,173
$ 2,322,185 $
15,836,240
Receivables
64,849
11,191
373,832
Due from the City of Rosemead
1,017,757
-
5
Property and equipment
-
-
Other Debits
Amount available in debt service fund
Amount to be provided for retirement of general
long-term debt
-
-
-
Total assets
$ 6,222,779
$ 2,333,376 $
16,210,077
Liabilities, Municipal Equity and Other Credits
Liabilities
Accounts payable and accrued liabilities
Due to the City of Rosemead
Tax allocation bonds
Total liabilities
Municipal Equity and Other Credits
Investment in general fixed assets
Fund balances:
Reserved for debt service
Reserved for low-moderate income housing
Unreserved, designated for redevelopment
projects
Total municipal equity and other credits
Total liabilities, municipal equity and
other credits
$ 15,447 $ $ 252,708
15,447 252,708
- 2,333,376
5,857,163 - -
350,169 - 15,957,369
6,207,332 2,333,376 15,957,369
$ 6,222,779 $ 2,333,376 $ 16,210,077
See Notes to Financial Statements.
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Account Groups Totals (Memorandum Only)
General General
Fixed Long-term
Assets Debt 1999 1998
$ $ $ 23,298,598 $ 25,316,018
449,872 390,080
1,017,762 -
9,346,119 - 9,346,119 8,718,584
- 2,333,376 2,333,376 2,353,274
- 32,966,624 32,966,624 33,256,726
$ 9,346,119 $ 35,300,000 $ 69,412,351 $ 70,034,682
$ $ $ 268,155 $ 325,621
- 6,994
35,300,000 35,300,000 35,610,000
35,300,000 35,568,155 35,942,615
9,346,119 - 9,346,119
8,718,584
- - 2,333,376
2,353,274
- 5,857,163
4,565,862
- 16,307,538
18,454,347
9,346,119 - 33,844,196
34,092,067
$ 9,346,119 $ 35,300,000 $ 69,412,351 $ 70,034,682
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ROSEMEAD REDEVELOPMENT AGENCY
COMBINED STATEMENT OF REVENUE, EX
PENDITURES A
ND CHANGES IN FUND
,
BALANCES - ALL GOVERNMENTAL FUND TYPES
Year Ended June 30, 1999
Special
Debt
Capital
'
Revenue
Service
Projects
Revenue:
Property tax increment
$
$
$ 2,870,290
'
Intergovernmental
1,000,000
-
Use of money and property
616,816
117,386
765,201
Other
-
-
182
,
1,616,816
117,386
3,635,673
Expenditures:
Current:
Improvements to project area
Operating
Professional fees
City administrative services
Debt service:
Principal
Interest
Revenue over(under)expenditures
Other financing sources (uses):
Operating transfers:
From other funds
(To) other funds
Revenue and other financing sources
over (under) expenditures and other
financing sources (uses)
Fund Balance, beginning
Fund Balance, ending
See Notes to Financial Statements.
- - 2,680,606
201,065 - -
11,805 - 39,399
90,000 - 952,219
310,000
- 1,960,187 -
302,870 2,270,187 3,672,224
1,313,946 (2,152,801) (36,551)
638,885 2,132,903 651
(400,000) - (2,372,439)
238,885 2,132,903 (2,371,788)
1,552,831 (19,898) (2,408,339)
4,654,501 2,3 53,274 18,365, 708
$ 6,207,332 $ 2,333,376 $ 15,957,369
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Totals (Memorandum Only)
1999 1998
$ 2,870,290 $ 2,770,865
1,000,000 -
1,499,403 1,759,174
182 45,015
5,369,875 4,575,054-
2,680,606 1,350,424
201,065
173,512
51,204
48,144
1,042,219
1,044,262
310,000
295,000
1,960,187
1,984,054
6,245,281
4,895,396
(875,406)
(320,342)
2,772,439 2,507,180
(2,772,439) (2,507,180)
(875,406) (320,342)
25,373,483 25,693,825
$ 24,498,077 $ 25,373,483
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ROSEMEAD REDEVELOPMENT AGENCY
COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND
BALANCES - BUDGET AND ACTUAL - ALL GOVERNMENTAL FUND TYPES
Year Ended June 30, 1999
Special Revenue Funds
Variance
Favorable
Budget Actual (Unfavorable)
Revenue:
Property tax increment $ $ - $
intergovernmental 1,000,000 1,000,000
Use of money and property 371,350 616,816 245,466
Other 5,000 - (5,000)
376,350 1,616, 816 1,240,466
Expenditures:
Current:
Improvement to project area
Operating
Professional fees
City administrative services
Debt service:
Principal
Interest
Revenue over (under) expenditures
Other financing sources (uses):
Operating transfers:
From other funds
(To) other funds
Revenue and other financing sources
over (under) expenditures and other
financing uses
Fund Balance, beginning
Fund Balance, ending
See Notes to Financial Statements.
5,213,040 201,065 5,011,975
8,000 11,805 (3,805)
90,000 90,000
i - - -
5,311,040 302,870 5,008,170
(4,934,690) 1,313,946 6,248,636
652,440
(5,143,909)
638,885
(400,000)
(13,555)
4,743,909
(4,491,469)
238,885
4,730,354
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$ (9,426,159) 1,552,831 $ 10,978,990
4,654,501 '
$ 6,207,332
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Debt Service Fund
Capital Projects Fund
Variance
Variance
Favorable
Favorable
Budget Actual
(Unfavorable)
Budget
Actual (Unfavorable)
$ $
$
$ 2,800,000
$ 2,870,290 $
70,290
130,000 117,386
(12,614)
330,000
765,201
435,201
- _
-
182
182
130,000 117,386
(12,614)
3,130,000
3,635,673
505,673
9,075,700
2,680,606
6,395,094
36,000
39,399
(3,399)
957,200
952,219
4,981
310,000
310,000 -
1,968,713
1,960,187 8,526 - - -
2,278,713
2,270,187 8,526 10,068,900 3,672,224 6,396,676
(2,148,713)
(2,152,801) (4,088) (6,938,900) (36,551) 6,902,349
2,278,710 2,132,903 (145,807) 651 651
- - (2,931,150) (2,372,439) 558,711
2,278,710 2,132,903 (145,807) (2,931,150) (2,371,788) 559,362
$ 129,997 (19,898) $ (149,895) $ (9,870,050) (2,408,339) $ 7,461,711
2,353,274
$ 2,333,376
18,365,708
$ 15,957,369
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ROSEMEAD REDEVELOPMENT AGENCY
'
COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES I
N FUND
BALANCES - BUDGET AND ACTUAL -
ALL GOVERNMENTAL FUND TYPES,
CONTINUED
'
Year Ended June 30, 1999
Totals
Variance
Favorable
Budget
Actual
(Unfavorable)
'
Revenue:
Property tax increment
$ 2,800,000
$ 2,870,290
$ 70,290
Intergovernmental
-
1,000,000
1,000,000
Use of money and property
831,350
1,499,403
668,053
Other
5,000
182
(4,818)
3,636,350
5,369,875
1,733,525
Expenditures:
Current:
'
Improvement to project area
9,075,700
2,680,606
6,395,094
Operating
5,213,040
201,065
5,011,975
Professional fees
44,000
51,204
(7,204)
City administrative services
1,047,200
1,042,219
4,981
Debt service:
Principal
310,000
310,000
-
Interest
1,968,713
1,960,187
8,526
17,658,653
6,245,281
11,413,372
Revenue over (under) expenditures
(14,022,303)
(875,406)
13,146,897
Other financing sources (uses):
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Operating transfers:
From other funds
2,931,150
2,772,439
(158,711)
(To) other funds
(8,075,059)
(2,772,439)
5,302,620
(5,143,909)
5,143,909
Revenue and other financing sources
over (under) expenditures and other
financing uses
$ (19,166,212)
(875,406)
$ 18,290,806
Fund Balance, beginning
25,373,483
Fund Balance, ending
$ 24,498,077
See Notes to Financial Statements.
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ROSEMEAD REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups, and
Significant Accounting and Reporting Policies
The Rosemead Redevelopment Agency (the Agency) was established in June 1972 pursuant to State of
California Health and Safety Code Section 33000, entitled Community Redevelopment Law. Its purpose
is to finance street, park and utility improvements. It also acquires and constructs major capital facilities
all within the Rosemead Project Area No. 1. The Agency is a component unit of the City of Rosemead
(the City), California, and is included in the general purpose financial statements of the City. The
Agency has the same fiscal year as the City. The financial statements contain information for the
Agency only. The City financial statements can be obtained from the Finance Department of the City.
The financial statements of the Agency have been prepared in conformity with generally accepted
accounting principles (GAAP) as applied to government units. The Governmental Accounting Standards
Board (GASB) is the accepted standard-setting body for establishing governmental accounting and
financial reporting principles. The more significant of the Agency's accounting principles are described
below:
Reporting entity
As required by generally accepted accounting principles, these financial statements present the
government and its component unit, an entity for which the government is considered to be financially
accountable. A blended component unit, although a legally separate entity, is, in substance, part of the
government's operations and, therefore, data from this unit is combined with data of the primary
government.
The blended component unit included in the Agency's reporting entity is the Rosemead Housing
Development Corporation (the Corporation). The Corporation is a California nonprofit public benefit
corporation organized under Section 501(c)(3) of the Internal Revenue Code. The Corporation accounts
for the construction, financing and operations of - and moderate-income housing. The Corporation's
financial statements can be obtained from the Finance Department of the City.
Fund accounting
The accounts of the Agency are organized on the basis of funds or account groups, each of which is
considered to be a separate accounting entity. The operations of each fund are accounted for by
providing a separate set of self-balancing accounts which comprise its assets, liabilities, equity, revenue
and expenditures.
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I Note I. Reporting Entity, Nature of Operations, Description of Funds and Account Groups, and
ROSEMEAD REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Significant Accounting and Reporting Policies, Continued
The various funds and account groups are presented as follows:
Governmental fund types
The Special Revenue Funds account for the proceeds of specific revenue resources (other than major
capital projects) that are legally restricted to expenditures for specified purposes. The Special Revenue
' Funds and their purposes are as follows:
-Moderate Income Housing Set-Aside Fund - Accounts for the 20% of gross property tax increment
' revenue received by the Agency to fund future projects involving the replacing or rehabilitation of low-
and moderate-income housing within City limits.
Rosemead Housing Development Corporation - Accounts for the construction and financing of low-
and moderate-income housing.
' The Debt Service Fund accounts for the accumulation of resources for the payment of general long-tern
debt principal, interest and related costs.
The Capital Projects Fund accounts for the financial resources to be used for the improvement and
rehabilitation of the community redevelopment project areas and acquisition or construction of major
capital facilities within the Agency.
' Account groups
The General Fixed Assets Account Group accounts for all Agency general fixed assets.
The General Long-term Debt Account Group accounts for the outstanding principal balances of all
' Agency long-term debt expected to be financed from governmental fund types.
The following is a summary of the significant accounting and reporting policies:
' Basis of accounting
Governmental fund types are accounted for using the modified-accrual basis of accounting. Revenue is
' recognized in the accounting period in which it becomes both measurable and available to finance the
expenditures of the current period. "Measurable" means the amount of the transaction can be
determined. "Available" means collectible within the current period or soon enough thereafter to pay
' current liabilities.
Expenditures are generally recognized in the accounting period in which the fund liability- is incurred, if
' measurable, except expenditures for debt service on long-term obligations, which are recognized when
due.
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I NOTES TO FINANCIAL STATEMENTS
ROSEMEAD REDEVELOPMENT AGENCY
' Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups, and
Significant Accounting and Reporting Policies, Continued
' Cash and investments
The Agency pools cash and investment resources of some of its funds in order to facilitate the
management of cash. Cash applicable to a particular fund is readily identifiable. The balance in the
pooled cash accounts is available to meet current operating requirements.
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Investments are stated at fair value. The fair value is the amount at which a financial instrument could
be exchanged in a current transaction between willing parties, other than in a forced liquidation. The fair
value of the investments is generally based on published market prices and quotations from major
investment firms. Investment earnings are allocated based on the source of funds.
Receivables
Property taxes attach as an enforceable lien on property as of March I. Taxes are levied on July I and
are payable in two installments on December 10 and April 10. The County of Los Angeles bills and
collects the property taxes and remits them to the Agency in installments during the year. Property taxes
received within 60 days after the Agency's fiscal year end are considered "measurable" and "available"
and are accrued in the Agency's financial statements.
All other receivables are reported at their gross value and, where appropriate, are reduced by the
estimated portion that is expected to be uncollectible.
Property and equipment
All property and equipment of the Agency are accounted for in the general fixed assets account group.
Property and equipment items acquired or constructed for general governmental operations are recorded
as expenditures in the fund making the expenditure and capitalized in the General Fixed Assets Account
Group.
All general fixed assets which were purchased or constructed are stated at cost. Assets acquired by gift
or bequest are recorded at their fair market value at the date of transfer. No depreciation is recorded on
general fixed assets.
Fund balances
The reserved portion of the fund balances represents that amount which has been legally identified for
the specific purpose or it represents that amount which is not available to liquidate current liabilities.
The unreserved portion represents the amount available for future appropriations. Designated fund
balances represent tentative plans for future use of financial resources.
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ROSEMEAD REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Note]. Reporting Entity, Nature of Operations, Description of Funds and Account Groups, and
Significant Accounting and Reporting Policies, Continued
"Memorandum Only "total columns
Included on the combined financial statements are total columns captioned "Memorandum Only" to
indicate that they are presented only for informational purposes. Adjustments to eliminate interfund
transactions have not been recorded in arriving at such amounts and the memorandum totals are not
intended to fairly present the financial position or results of operations of the reporting entity taken as a
Additionally, the 1998 totals presented in the "Memorandum Only" columns are included to provide a
' summarized comparison with comparable 1999 amounts and are not intended to present all information
necessary for a fair presentation of financial position and results of operations in accordance with
generally accepted accounting principles.
' Budget matters
' Budgets presented in this report for comparison to actual amounts are presented in accordance with
generally accepted accounting principles. The modified-accrual basis of accounting is employed in the
preparation of the budget. Reported budget amounts represent the original adopted budget as amended.
' The legal level of budgetary control is at the department level.
Unexpended budgeted amounts lapse at the end of the budget year.
' Note 2. Cash and Investments
The components of cash and investments at June 30, 1999 are as follows:
Cash:
Cash in bank $ 901,472
Time certificates of deposit 1,850,000
Cash subtotal 2,751,472
'
Investments:
Debt securities investments
1,735,807
Cash with fiscal agent
2,322,186
'
Guaranteed investment contracts
Investment in State Treasurer's Investment Pool
1,527,898
14
961
235
,
,
t
Investments subtotal
20,547,126
Cash and investments total
$ 23,298,598
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' ROSEMEAD REDEVELOPMENT AGENCY
' NOTES TO FINANCIAL STATEMENTS
I Note 2 Cash and Investments, Continuer(
Cash
' The Agency maintains cash and investment pools that are available for use by all funds. Each fund's or
fund type's share of the pool balance is reported in the financial statements as cash and cash investments.
' Earnings from the pooled investments are allocated monthly to each participating fund based on a
formula that takes into consideration each fund's average investment in the pool.
At year end, the carrying amount of the Agency's deposits was $2,751,472 and the bank balance was
$2,846,067.
' In accordance with state statutes, the Agency maintains deposits at those depository institutions insured
by the Federal Deposit Insurance Corporation. The California Government Code requires California
banks and savings and loan associations to collateralize the deposits of governmental entities by pledging
' government securities as collateral. The market value of pledged securities must equal at least 110% of
those deposits. California law also allows financial institutions to secure the deposits of governmental
entities by pledging first trust deed mortgage notes having a collateral value of 150% of an agency's total
' deposits.
The cash deposits are classified in three categories of credit risk as follows: Category one includes
' deposits that are insured or collateralized with securities held by the entity or by its agent in the entity's
name; Category two includes deposits that are collateralized with securities held by the pledging
financial institution's trust department or agent in the entity's name; Category three includes deposits are
uncollateralized.
Category
1 2 3 Bank Balance
Cash deposits $ 375,901 $ 620,166 $ $ 996,067
Time certificates of deposit - 1,850,000 1,850,000
$ 375,901 $ 2,470,166 $ $ 2,846,067
' Investments
' State statutes authorize the Agency to invest any available funds in securities issued or guaranteed by the
United States Treasury or agencies of the United States, bank certificates of deposit, bankers
acceptances, negotiable certificates of deposit, the State Treasurer's Investment Pool (LAIF), repurchase
' agreements, commercial paper and bonds, and registered warrants or treasury notes of the State of
California and its local agencies. An advisory board has been established to monitor LAIF's compliance
with regulations and investment alternatives established by the State.
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I NOTES TO FINANCIAL STATEMENTS
ROSEMEAD REDEVELOPMENT AGENCY
' Note 2. Cash and Investments, Continued
investments include cash with fiscal agent of $2,322,186 which includes $2,321,421 invested in a
' guaranteed investment contract which accrues interest monthly at a rate of 5.8%, maturing October 1,
2013. Investments also included $1,527,898 of amounts in various guaranteed investment contracts
which accrue interest quarterly at rates ranging from 7.18% to 7.41 maturing October 1, 1999.
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The Agency participates in a voluntary external investment pool, LAIF, which is managed by the State
Treasurer. LAIF has oversight provided by the Local Agency Investment Advisory Board. The Board
consists of five members as designated by state statute. The Chairman of the Board is the State
Treasurer or his designated representative. The fair value of the Agency's shares in the pool
approximates the fair value of the position in the pool.
At June 30, 1999, the Agency's pooled investments in LAW in the amount of $14,961,235 are not subject
to custodial credit risk categorization. The total estimated fair value invested by all public agencies in
LAIF is $36,801,515,428. Of that amount, 94.73% is invested in non-derivative financial products, and
$5.27% in derivative financial products.
The Agency's investments as of June 30, 1999 are categorized in the following schedule to give an
indication of the level of risk assumed by the entity at year end:
Category
Investment 1 2 3 Fair Value
U.S. government and
government agency securities $ $ $ 1,234,494 $ 1,234,494
State and municipal bonds 501,313 501,313
$ $ $ 1,735,807 1,735,807
Cash with fiscal agent 2,322,186
Guaranteed investment
contracts 1,527,898
Investment in State Treasurer's
Investment Pool 14,961,235
Total investments $ 20,547,126
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ROSEMEAD REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Note 2. Cash and Investments, Continued
The three preceding risk description categories are defined as follows:
Category Description
I Investments that are insured, registered or for which the securities are held by the Agency
or its agent in the Agency's name.
2 Uninsured and unregistered investments for which the securities are held by the
counterparty's Trust Department (if a bank) or agent in the Agency's name.
3 Uninsured and unregistered investments for which the securities are held by the
counterparty's Trust Department (if a bank) or agent, but not in the Agency's name.
Note 3. Receivables
' Receivables as of June 30, 1999 consisted of the following:
Special
Revenue Debt Capital
Fund Service Projects Total
' Property tax increment $ - $ - $ 135,687 $ 135,687
Accrued interest 64,849 11,191 238,145 314,185
$ 64,849 $ 11,191 $ 373,832 $ 449,872
' Note 4. Reimbursement Agreements and Related Party Transactions
' The Agency has entered into various reimbursement agreements with the City which require the City to
install certain public improvements for the benefit of the Rosemead Redevelopment Agency Project Area
No. 1. In addition, the Agency reimburses the City for administrative services, facilities and other
operating services which totaled $1,097,300 for the fiscal year ended June 30, 1999. The Agency and
' City are commonly controlled by the City Council.
The amount due from the City is $1,017,757 as of June 30, 1999. This is related to federal funds
' received by the City plus interest accrued to reimburse the Agency for land acquisition costs associated
with the development of a senior housing project. The City reimbursed the Agency in July 1999.
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I Note 6. Long-term Debt
$ 8,718,584 $ 627,535 $ 9,346,119
The following is a summary of general long-term debt transactions for the year ended June 30, 1999:
' Tax Tax
Allocation Allocation
' Bonds Bonds
Series 1993A Series 1993B Total
Balance, July 1, 1998 $ 34,275,000 $ 1,335,000 $ 35,610,000
Payments of principal (310,000) (310,000)
' Balance, June 30 1999 $ 34,275,000 $ 1,025,000 $ 35,300,000
In November 1993, the Rosemead Redevelopment Agency issued tax allocation bonds amounting to
$34,275,000 (Series 1993A) and taxable tax allocation refunding bonds amounting to $2,435,000 (Series
1993B) to finance a portion of the cost of the redevelopment area known as Project Area No. 1. The
bonds bear interest ranging from 4.6% to 5.6% and 5.2% to 5.9% for Series 1993A and B, respectively.
' $14,652,398 of Series A proceeds and $2,382,551 of Series B proceeds, along with the existing reserve
amount of $2,651,000 on deposit with the fiscal agent, were used to purchase U.S. government securities.
Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt
' service payments on the 1987 and 1991 Tax Allocation Bonds which are, therefore, considered defeased.
Series 1993A bonds mature after October 1, 2001 and before October 1, 2033, and Series 1993B bonds
mature on or before October 1, 2001.
In addition, the 1993 bond issue reallocated the $6,813,850 of the proceeds from the 1991 bond issue
deposited in the Low-Moderate Income Housing Set-Aside Fund in October 1991. The reallocation had
' the effect of satisfying the $423,574 borrowed from the Educational Revenue Augmentation Fund
(ERAF) in fiscal year ended June 30, 1993 and satisfying the set-aside requirements as follows:
$812,342 for fiscal year ended June 30, 1992, $847,147 for fiscal year ended June 30, 1993 and $469,142
' for each of the fiscal years ended June 30, 1997 through June 30, 2022.
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ROSEMEAD REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Note 5. Property and Equipment
During the year ended June 30, 1999, the changes in the general fixed assets were as follows:
Balance
Balance
July 1,
June 30,
1998
Acquisitions 1999
Land $ 4,187,639 $ - $ 4,187,639
Buildings and improvements 3,733,988 621,038 4,355,026
Furniture and fixtures 796,957 6,497 803,454
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ROSEMEAD REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
I Note 6. Long-term Debt, Continued
The annual requirements, principal and interest to amortize the outstanding debt as of June 30, 1999 are
'
as follows:
'
During the Year
Endin
June 30
Series 1993A Bonds
al Interest
Princi
Series 1993B Bonds
Principal Interest
Total
g
,
p
2000
$
$ 1,892,193
$ 330,000
$ 50,065
$ 2,272,258
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2001
_
1,892,193
345,000
30,655
2,267,848
2002
20,000
1,892,193
350,000
10,325
2,272,518
2003
425,000
1,891,273
-
-
2,316,273
'
2004
445,000
1,870,873
2,315,873
Years thereafter
33,385,000
35,137,719
68,522,719
'
$ 34,275,000
$ 44,576,444
$ 1,025,000
$ 91,045
$ 79,967,489
' Tax allocation bonds, Series 1993 A and B
The Tax Reform Act instituted certain arbitrage restrictions with respect to the issuance of tax-exempt
bonds. Arbitrage regulations deal with the investment of all tax-exempt bond proceeds at an interest
' yield greater than the interest yield paid to bondholders. Generally, all interest paid to bondholders can
be retroactively rendered taxable if applicable rebates are not paid to the federal government at least
every five years.
' During the current year, the Agency performed calculations of excess investment earnings on various
bonds and financings in accordance with arbitrage regulations. The Agency has determined that no
' arbitrage rebate liability exists as of June 30, 1999.
Dejeasance ojprior debt
The Agency has advance refunded two bond issues, which are considered defeased and, accordingly, the
long-term debt liability has been removed from the general long-term debt account group. The Agency
' is, however, contingently liable if, for any reason, the funds on deposit are not sufficient to retire the
defeased debt. As of June 30, 1999, $5,939,631 of outstanding bond principal are considered defeased.
1 Note 7. Risk Management
' The Agency is exposed to various risks of loss related to torts; thefts of, damage to and destruction of
assets; errors and omissions; and natural disasters. The Agency, through the City of Rosemead, carries
commercial liability insurance coverage. The Agency carries no insurance coverage for natural disasters.
' Since the Agency does not have any employees (it uses employees from the City of Rosemead), it is not
liable for injury to employees, workers' compensation, or employee health and accident insurance. The
City has had no reductions in insurance coverage nor did the City have any settlements which were in
' excess of insurance coverage in any of the three preceding years.
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ROSEMEAD REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Note 8. Commitments and Contingent Liabilities
Low-Moderate Income Housing Set-Aside Fund
Under state law, the Agency is required to set aside a portion of its property tax increment revenue for
low- and moderate-income housing. The Agency has made findings that, for the years ended June 30,
1986 through June 30, 1991, it was allowed to defer funding of the set-aside. The set-aside amounts
incurred during the fiscal year ended June 30, 1994, 1995, 1996, 1997, and 1998 were also deferred until
the fiscal year ending June 30, 2023, as provided by the Agency's adoption of the housing deficit
repayment plan. As of June 30, 1999, the accumulated set-aside amount not yet funded was
approximately $4,947,000. As required by law, the Agency devised a plan to fund the accumulating
amount.
Advance agreement
In February 1995, the Agency approved an agreement with a local utility company to advance the utility
company $117,600 required to install water distribution mains within the Agency redevelopment area.
The agreement was put on hold by the Agency and, as of August 31, 1999 the agreement remains on
hold.
Note 9. Property Management and Operations
The Agency through the Corporation has an agreement with a management company, dated July 1994, to
operate the development housing. This agreement is automatically renewed for successive periods of
one year, unless terminated by the Corporation. The management company is responsible for collecting
rents and receipts, employing an on-site manager and maintaining financial records. Total fees paid to
the management company were $18,600 during fiscal year ended June 30, 1999.
Note 10. Pronouncements Issued But Not Yet Adopted
In December 1998, the GASB issued Statement of Governmental Accounting Standards No. 33,
Accounting and Financial Reporting for Nonexchange Transactions. This Statement establishes
accounting and financial reporting standards for nonexchange transactions involving financial or capital
resources (e.g., most taxes, grants and private donations). In a nonexchange transaction, a government
gives (or receives) value without directly receiving (or giving) equal value in return. Statement No. 33 is
required to be adopted for years beginning after June 15, 2000. The Agency has not completed its
assessment of the effect that the adoption of Statement No. 33 will have on its financial statements.
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I ROSEMEAD REDEVELOPMENT AGENCY
I NOTES TO FINANCIAL STATEMENTS
1 Note 10. Pronouncements Issued But Not Yet Adopted, Continued
In June 1999, the GASB issued Statement of Governmental Accounting Standards No. 34, Basic
' Financial Statements - and Management's Discussion and Analysis - for State and Local
Governments. This Statement establishes new financial reporting requirements for state and local
governments. The Agency will have to disclose the details about the full cost of providing government
services and to allocate expenses and revenue to allow calculation of net costs program by program. In
addition, the Agency will need to report all capital assets, including infrastructure assets, and begin to
track depreciation on these items year to year. The Agency will be required to implement the new
' financial model for its fiscal years ending June 30, 2003. The Agency has not completed its assessment
of the effect that the adoption of Statement No. 34 will have on its financial statements.
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ROSEMEAD REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET - SPECIAL REVENUE FUNDS
June 30, 1999
Assets
Cash and investments
Receivables
Due from the City of Rosemead
Total assets
Low-Moderate
Income Rosemead
Housing Housing
Set-Aside Development Totals
Fund Corporation 1999 1998
$ 4,774,557 $ 365,616 $ 5,140,173 $ 4,598,505
64,849 - 64,849 71,703
1,017,757 1,017,757 -
$ 5,857,163 $ 365,616 $ 6,222,779 $ 4,670,208
Liabilities and E(
L,iaoumes, aCCOUnu
accrued liabilities
$ 15,447 $ 15,447 $ 15,707
Equity:
Fund balances:
Reserved for low-moderate
income housing 5,857,163
Unreserved, designated for
5,857,163 4,565,862
redevelopment projects - 350,169 350,169 88,639
5,857,163 350,169 6,207,332 4,654,501
Total liabilities and equity $ 5,857,163 $ 365,616 $ 6,222,779 $ 4,670,208
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ROSEMEAD REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN
FUND BALANCES - SPECIAL REVENUE FUNDS
Year Ended June 30, 1999
evenue:
Intergovernmental
Use of money and property
Other
Expenditures:
Current:
Operating
Professional fees
City administrative services
Low-Moderate
Income Rosemead
Housing Housing
Set-Aside Development Totals
Fund Corporation 1999 1998
$ 1,000,000 $ - $ 1,000,000 $
452,416 164,400 616,816 404,506
- 160
1,452,416 164,400 1,616,816 404,666
201,065
201,065
173,512
11,805
11,805
7,540
90,000
90,000
90,000
70
Revenue over (under)
expenditures
Other financing sources (uses):
Operating transfers:
From other funds
(To) other funds
Revenue and other
financing sources over
expenditures and other
financing uses
Fund Balance, beginning
Fund Balance, ending
1,452,416 (138,470) 1,313,946 133,614
238,885 400,000
638,885
372,039
(400,000) -
(400,000)
(150,000)
(161,115) 400,000
238,885
222,039
1,291,301
261,530
1,552,831
355,653
4,565,862
88,639
4,654,501
4,298,848
$ 5,857,163 $
350,169
$ 6,207,332
$ 4,654,501
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' ROSEMEAD REDEVELOPMENT AGENCY
' YEAR 2000 COMPLIANCE
The Agency's accounting is performed by the City using the City's computer and application software.
The City's operations, like those of many governmental and business entities, may be affected by the
inability of certain computer programs and electronic systems with embedded microprocessor chips to
' recognize calendar dates beyond the year 1999. Unless such programs or microprocessors are modified
or replaced prior to the Year 2000, they may not function properly after December 31, 1999, causing
system failures or miscalculations that could disrupt the City's operations.
The following stages have been identified as necessary to implement a Year 2000 compliant system:
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Awareness Stage - Establishing a budget and project plan for dealing with the Year 2000
issue.
Assessment Stage - Identifying all of its mission-critical systems and individual components
of those systems.
Remediation Stage - Making changes to systems and equipment.
Validation/Testing Stage - Validating and testing the changes made during the conversion and
remediation process.
The City is in the process of completing comprehensive inventories of the City's software, hardware,
embedded systems and business relationships (Assessment Stage). Preliminary inventories have been
completed with the exception of potential embedded systems. The City's staff is currently developing
this inventory for their functional areas. The City plans to be Year 2000 compliant by December 1999.
As part of the ongoing, scheduled monitoring of progress, contingency plans will be initiated for any
systems that appear to be noncompliant at that time.
Because of the unprecedented nature of the Year 2000 issue, its effects and the success of related
remediation efforts will not be fully determinable until the year 2000 and thereafter. Management
cannot assure that the City is or will be Year 2000 ready, that the City's remediation efforts will be
successful in whole or in part, or that parties with whom the City business will be Year 2000 compliant.
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® Certified Public Accountants international
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1 INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE WITH AUDIT
GUIDELINES FOR CALIFORNIA REDEVELOPMENT AGENCIES
1
1 To the Governing Board
Rosemead Redevelopment Agency
Rosemead, California
1 We have audited the general purpose financial statements of the Redevelopment Agency of the City of
Rosemead, California (the Agency), a component unit of the City of Rosemead, California, as of and for
the year ended June 30, 1999 and have issued our report thereon, dated August 31, 1999. These
1 component unit financial statements are the responsibility of the Agency's management. Our
responsibility is to express an opinion on these component unit financial statements based on our audit.
1 In connection with our audit, we performed the procedures contained in the publication entitled
Guidelines for Compliance Audits of California Redevelopment Agencies, as promulgated by the
Controller of the State of California in connection with a review of the Agency's compliance with laws,
1 regulations and administrative requirements governing activities of the Agency as required by
Section 33080.1(a) of the Health and Safety Code of the State of California. The procedures we
performed would not necessarily disclose instances of noncompliance because they were based on
1 selective tests of accounting records and related data.
During the performance of the aforementioned procedures, nothing came to our attention that would lead
1 us to believe that the Agency did not comply with applicable laws, regulations and administrative
requirements governing its activities.
1 This report is to be used solely for filing with the State Controller's office, the Los Angeles County
Auditor/Controller and the Agency's fiscal agents and is not intended to be and should not be used by
anyone other than those specified parties.
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1 Pasadena, California
August 31, 1999
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McGLADREY& PULLEN, LL P
® Certified Public Accountants
INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON
INTERNAL CONTROL OVER FINANCIAL REPORTING BASED
ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Governing Board
Rosemead Redevelopment Agency
Rosemead, California
RSM
international
We have audited the general purpose financial statements of the Rosemead Redevelopment Agency (the
Agency), a component unit of the City of Rosemead, California, as of and for the year ended June 30,
1999, and have issued our report thereon dated August 31, 1999. We conducted our audit in accordance
with generally accepted auditing standards and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether the Agency's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts and grants, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. 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 no instances of noncompliance that are required to be reported under
Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Agency's internal control over financial
reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the
financial statements and not to provide assurance on internal control over financial reporting. Our
consideration of internal control over financial reporting would not necessarily disclose all matters in the
internal control over financial reporting that might be material weaknesses. A material weakness is a
condition in which the design or operation of one or more internal control component does not reduce to
a relatively low level the risk that misstatements in amounts that would be material in relation to the
financial statements being audited may occur and not be detected within a timely period by employees in
the normal course of performing their assigned functions. We noted no matters involving internal
control and its operations that we consider to be material weaknesses as defined above.
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1 This report is intended for the information of the Governing Board and management of the Agency and is
not intended to be and should not be used by anyone other than those specified parties.
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August 31, 1999
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