Loading...
1992 RRA Financial ReportI 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Rosemead Redevelopment Agency Rosemead, California ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED JUNE 307 1992 a 1 1 .49■M~ ■■■■■L A■■■■■■■k MMMMMMMMM ■@19MEQ■ 1 0 u 1 1 11 1 I ROSEMEAD REDEVELOPMENT AGENCY COMPONENT UNIT FINANCIAL REPORT JUNE 30, 1992 1 1 1 t CONTENTS INDEPENDENT AUDITORS' REPORT 1 COMPONENT UNIT FINANCIAL STATEMENTS Combined balance sheet, all fund types and account groups 2 Combined statement of revenue, expenditures and changes in fund balances, all governmental fund types 3 Statement of revenue, expenditures and changes in fund balances - budget and actual - debt service fund 4 Notes to financial statements 5 - 13 1 McGLADREY & PULLEN Certified Public Accountants and Consultants INDEPENDENT AUDITORS' REPORT To the Governing Board Rosemead Redevelopment Agency ' Rosemead, California We have audited the accompanying component unit financial statements of Rosemead ' Redevelopment Agency, Rosemead, California, as of and for the year ended June 30, 1992, as listed in the table of contents. These 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 n I We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 component unit financial statements referred to above present fairly, in all material respects, the financial position of Rosemead Redevelopment Agency, Rosemead, California, as of June 30, 1992, and the results of its operations for the year then ended in conformity with generally accepted accounting principles. Pasadena, California October 23, 1992 %yl~zm~y. i ' - 1 - ROSEMEAD REDEVELOPMENT AGENCY COMBINED BALANCE SHEET ALL FUND TYPES AND ACCOUNT GROUPS June 30, 1992 ASSETS Cash and investments Cash and investments with fiscal agent Other investments Receivables Due from City of Rosemead Property and equipment Amount available in debt service fund Amount to be provided for retirement of general long-term debt Total assets LIABILITIES AND EQUITY LIABILITIES Accounts payable Due to City of Rosemead Tax allocation notes and bonds Total liabilities AGENCY EQUITY Investment in general fixed assets Fund balances: Reserved for debt service Reserved for low-moderate income housing Unreserved, designated for redevelopment projects Total equity Total liabilities and equity See Notes to Financial Statements. Governmental Fund Tvoes Special Revenue Debt Fund Service $ 3,259,300 $ - 4,006,652 4,050,905 - 84,443 106,027 6,762 - $ 7,401,410 $ 4,112,679 - 4,112,679 7,401,410 - $ 7,401,410 $ 4,112,679 7,401,410 $ 4,112,679 2- 1 1 1 t 1 Governmental Total Fund Types Account Groups (Memorandum Only) General General Capital Fixed Long-term Projects Assets Debt 1992 1991 $ 262,938 $ $ - $ 3,522,238 $ 3,157,519 - - 4,006,652 2,668,179 7,819,069 - 11,869,974 7,123,147 191,066 - 381,536 426,837 - - 6,762 - 4,161,928 - 41161,928 4,080,571 - 4,112,679 41112,679 2,774,206 - - 16,217,561 16,217,561 7,590,794 8,273,073 $ 4,161,928 $ 20,330,240 $ 44,279,330 $ 27,821,253 $ 584,432 $ $ $ 584,432 $ 992,225 933,559 933,559 169,934 - 20,330,240 20,330,240 10,365,000 $ 1,517,991 $ $ 20,330,240 $ 21,848,231 $ 11,527,159 $ - $ 4,161,928 $ $ 4,161,928 $ 4,080,571 - 4,112,679 2,774,206 - 7,401,410 - 6,755.082 6,755,082 9.439.317 6,755,082 $ 4,161.928 $ $ 22,431,099 $ 16,294,094 8,273,073 $ 4,161,928 $ 20,330.240 $ 44,279,330 $ 27.821.253 ROSEMEAD REDEVELOPMENT AGENCY COMBINED STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES ALL GOVERNMENTAL FUND TYPES Year Ended June 30, 1992 Special Revenue Debt Fund Service REVENUE Property tax increment $ - $ Use of money and property 485,942 271,285 Other 59,546 13,462 $ 545,488 $ 284,747 EXPENDITURES Current: Improvements to project area $ - $ - Professional fees - - City administrative services - - Issuance costs - - Capital outlay - - Debt service: Principal - 1,760,000 Interest 828,617 $ $ 2,588,617 Revenue over (under) expenditures $ 545,488 $ (2,303,870) OTHER FINANCING SOURCES (USES) Proceeds from sale of bonds, net of discounts of $156,884 - - Operating transfers: From other funds 6,855,922 3,767,795 (To) other funds (125.452) Revenue and other financing sources over (under) expenditures and other financing uses $ 7,401,410 $ 1,338,473 FUND BALANCE, BEGINNING - 2,774,206 FUND BALANCE, ENDING 7,401,410 $ 4,112,679 See Notes to Financial Statements. -3- i L 1 1 Total ' Capital (Memorandum Only) Projects 1992 1991 ' $ 3,746,398 $ 31746,398 $ 3,059,892 367,785 19125,012 1,085,387 155,066 228,074 108,632 ' $ 4 269 249 099 484 $ 5 253 911 $ 4 , , , , , , ' $ 6,798,037 $ 6,798,037 $ 4,585,062 125,282 125,282 33,867 980,747 980,747 522,158 65,382 65,382 54,127 54,127 - t - 1,760,000 1,630,000 - 828,617 972,350 ' $ 8 023 575 612 192 $ 10 $ 7 743 437 , , - , , , , $ (3,754,326) $ (5,512,708) $ (3,489,526) ' 11,568,356 11,568,356 - 415,939 11,039,656 2,015,617 (10,914,204) (11,039,656) (2,015,617) $ (2,684,235) $ 6,055,648 $ (3,489,526) ' 9,439,317 12,213,523 15,703,049 6,755,082 $ 18,269,171 $ 12,213,523 1 1 1 1 1 t 1 1 1 1 ROSEMEAD REDEVELOPMENT AGENCY STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - DEBT SERVICE FUND Year Ended June 30, 1992 REVENUE Use of money and property Other EXPENDITURES Debt service: Principal Interest Revenue over (under) expenditures OTHER FINANCING SOURCES Operating transfers from other funds Revenue and other financing sources over (under) expenditures FUND BALANCE, BEGINNING FUND BALANCE, ENDING See Notes to Financial Statements. Over (Under) Budget Actual Budget $ 225,000 $ 271,285 $ 46,285 13,462 13,462 $ 225,000 $ 284,747 $ 59,747 $ 1,760,000 $ 1,760,000 $ 828,617 828,617 $ 2,588,617 $ 2,588,617 $ $ (2,363,617) $ (2,303,870) $ 59,747 2,588,617 3,642,343 1,053,726 $ 225,000 $ 1,338,473 1-1,10 ,473 2,774,206 $ 4,112,679 -4- I ROSEMEAD REDEVELOPMENT AGENCY 1 1 1 I I H C NOTES TO FINANCIAL STATEMENTS Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups and Significant Accounting and Reporting Policies Reporting entity The criteria of oversight responsibility, special financing relationships and scope of public service were used in determining the agencies or entities which comprise the Rosemead Redevelopment Agency (the Agency) for financial reporting purposes. Oversight responsibility is determined by the extent of financial interdependency, control over the selection of the governing authority and management, ability to significantly influence operations and accountability for fiscal matters. Based on these criteria, the Agency is included in the combined financial statements of the City of Rosemead. The Agency has the same fiscal year as the City. These financial statements contain information for the Agency only. After due consideration of each criteria, especially the substance of the Agency's relationship with these organizations/entities, and using professional judgement, management has decided to exclude certain organizations and activities from the Agency's combined financial statements because significant oversight responsibility does not exist. The organizations excluded from the Agency's reporting entity are the Rosemead Housing Development Corporation, the Fire Protection District, the Library District and the County Flood Control District. Nature of operations The Agency finances street, park and utility improvements within the Rosemead Project Area No. 1. Description of funds and account groups ' The accounts of the Agency are organized on the basis of funds or groups of accounts, 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. The various funds and account groups are presented as follows: ' Governmental Fund Types ' Special Revenue Funds account for the proceeds of specific revenue resources (other than special assessments, expendable trusts and major capital projects) that are legally restricted to expenditures for specified purposes. The Special Revenue Fund and its purpose is as ' follows: 1 -5- NOTES TO FINANCIAL STATEMENTS I .1 F I 1 U I Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups and Significant Accounting and Reporting Policies, Continued The Low-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. The Debt Service Fund accounts for the accumulation of resources for the payment of general long-term debt principal, interest and related costs. The Capital Projects Fund accounts for the financial resources of the Agency to be used for the 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 except for public domain fixed assets (e.g., streets, bridges, sidewalks, curbs, gutters and storm drainage systems). 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. 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. Available means collectible within the current period or soon enough thereafter to pay current liabilities. Property taxes that have been levied and are due on or before year end are recognized as revenue if they have been collected within sixty days after year end. In determining when to recognize intergovernmental revenues, the legal and contractual requirements of the individual programs are used as guidance. There are, however, essentially two bases for this revenue recognition. In one, monies must be expended on the specific purpose or project before any amounts will be paid to the Agency; therefore, revenues are recognized based upon the expenditures recorded. In the other, monies are virtually unrestricted as to purpose of expenditure and nearly irrevocable, i.e., revocable only for failure to comply with prescribed compliance requirements, e.g., equal employment opportunity. These resources are reflected as revenues at the time of receipt or earlier if they meet the criterion of availability. 6- NOTES TO FINANCIAL STATEMENTS I I Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups and Significant Accounting and Reporting Policies, Continued ' 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 paid. Cash, cash investments and other 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. Cash investments and other investments are accounted for at cost or amortized cost. No loss is recognized when market values decline below cost, since it is the policy of the Agency to hold such investments until they mature. Investment earnings are allocated based on the source of funds. ' Receivables Property taxes receivable represent the uncollected March 1, 1992 levy which is due to the Agency at June 30, 1992. Property taxes attach as an enforceable lien on property as of March 1 and are due and payable in two equal installments on the following November 1 ' and February 1. Unpaid taxes become delinquent on December 10 and April 10. An allowance based on historical collection experience is provided for uncollectible taxes. All other receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. I Property and equipment All property and equipment of the Agency are accounted for in the general fixed assets ' account group. Public domain (infrastructure) general fixed assets consisting of certain improvements other than buildings, such as roads, sidewalks and bridges, are not capitalized. Property and equipment acquired or constructed for general governmental operations are t 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. 1 -7- NOTES TO FINANCIAL STATEMENTS h 1 P I The components of cash and investments at June 30, 1992 are as follows: Note 1. Reporting Entity, Nature of Operations, Description of Funds and Account Groups and Significant Accounting and Reporting Policies, Continued 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 budgeting future operations. Memorandum totals Total columns on the combined statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results of operations in conformity with generally accepted accounting principles. Interfund transactions have not been eliminated in arriving at these amounts. 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. Unexpended budgeted amounts lapse at the end of the budget year. Budget-to-actual comparisons are not presented for the capital projects funds and the special revenue fund since the budgeted appropriations capital projects funds relate to all future appropriations as well as current year appropriations and there is no budget for the special revenue fund. Note 2. Cash and Investments ' Cash in bank Time certificates of deposit H 1 $ 442,839 3.079.399 3.522,238 1 - 8 - NOTES TO FINANCIAL STATEMENTS I Note 2. Cash and Investments, Continued At year end, the carrying amount of the Agency's deposits was $3,522,238 (cash and ' investments, above) and the bank balance was $3,527,098. A summary of collateralization of the bank balances is presented below: ' Insured or collateralized with securities held by the City or its agent in the City's name $ 307,448 ' Uncollateralized (in accordance with GASB 3), this category includes any bank balance that is collateralized with securities held by the pledging financial institution or ' by its trust department or agent but not in the City's name, although balances so collateralized meet the requirements of state law 1219.650 $ 3,527,098 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, repurchase agreements, commercial paper and bonds, registered warrants or treasury notes of the State of California and its local agencies. Cash and investments with fiscal agent as of June 30, 1992 consisted of $1,215,272 of money ' market funds (of which $101,602 were insured or collateralized with securities held by the City or its agent in the City's name) and $2,791,380 of U.S. government and government agency securities (with a market value of $2,796,400). The Agency's other investments are categorized in the following schedule to give an indication of the level of risk assumed by the entity at year end. Category Carrying Market Investment Type 1 2 3 Amount Value U.S. government and government agency securities $ $ $ 2,644,222 $ 2,644,222 $ 2,669,797 State and municipal bonds - - 193,300 193,300 207,681 ' Corporate bonds - - 3,830,173 3,830,173 3,823,449 $ - $ - $ 6.667,695 $ 6,667,695 $ 6,700,927 ' Investment in State Treasurer's Investment Pool 5,202,279 5,202,279 ' Total otber investments $11.869.974 $11,903.206 NOTES TO FINANCIAL STATEMENTS 1 I Note 3. Receivables Note 2. Cash and Investments, Continued The three preceding risk description categories are defined as follows: Cateeorv Description 1 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 financial institution's trust department or agent in the Agency's name. 3 Uninsured and unregistered investments for which the securities are held by the financial institution, broker or dealer, or by its trust department or agent but not in the Agency's name. ' Receivables as of June 30, 1992 consisted of the following: Special Revenue Debt Capital Fund Service Projects Total ' Property tax increment $ - $ - $ 43,640 $ 43,640 Accrued interest 84,443 106.027 147.426 337,896 1 $ 84,443 $ 106,027 $ 191,066 $ 381536 H I 1 Note 4. Reimbursement Agreements and Related Parry Transactions The Agency has entered into various reimbursement agreements with the City of Rosemead which require the City to install certain public improvements for the benefit of the Rosemead Redevelopment Agency Project Area No. 1. In addition, the City is to provide administrative services, facilities and other operating services for a nominal fee. The amount due to the City totaling $933,559 as of June 30, 1992 is noninterest bearing. I -10- NOTES TO FINANCIAL STATEMENTS U I Note 5. Property and Equipment During the year ended June 30, 1992, the changes in the general fixed asset were as follows: Land Buildings and improvements Furniture and fixtures H I Note 6. Long-Term Debt Tax Allocation Notes, Series 1987 Balance Balance June 30, June 30, 1991 Acquisitions 1992 $ 2,350,308 $ - $ 2,350,308 1,449,574 13,803 1,463,377 280.689 67.554 348,243 $ 4,080,571 $ 81,357 $ 4,161,928 In August 1987, $14,930,000 of bonds were issued by the Agency to finance public improvements within the Agency's Project Area No. 1. The bonds outstanding bear interest from 7.75% to 9.20% with interest payable semiannually on September 1 and March 1. Principal matures annually on September 1 through 1995. Payment of the bonds is collateralized by a pledge of tax revenues to be received by the Agency. Subordinate Lien Tax Allocation Bonds, Series 1991 In October 1991, the Agency issued $11,725,240 of Bonds to finance public improvements that benefit the Agency's Project Area No. 1. The bonds outstanding bear interest ranging from 5.80% to 6.75% with interest compounded on each October 1 and April 1 and payable at maturity. Principal matures annually on October 1, 1996 through 2002. Payment of the bonds is collateralized by a pledge of tax revenues to be received by the Agency. I - 11 - NOTES TO FINANCIAL STATEMENTS 1 I Note 7. Commitments and Contingent Liabilities Note 6. Long-Term Debt, Continued The following is a summary of the general long-term debt transactions for the year ended June 30, 1992. Tax Tax Allocation Allocation Bonds Notes Series 1991 Series 1987 Total Balance, June 30, 1991 $ - $ 10,365,000 $ 10,365,000 Proceeds of long-term debt 11,725,240 - 11,725,240 (Payments) of principal - (1,760,000) (1,760,000) Balance, June 30, 1992 $ 11325,240 $ 8,605,000 $20330,240 The annual requirements, principal and interest, to amortize the outstanding debt as of June 30, 1992 are as follows: Tax Tax Allocation Allocation Years Ending Bonds Notes June 30, Series 1991 Series 1987 Interest Totals 1993 $ - $ 1,900,000 $ 669,813 $ 2,569,813 1994 - 2,055,000 496,781 2,551,781 1995 - 2,230,000 309,312 2,539,312 1996 - 2,420,000 105,875 2,525,875 1997 2,065,091 - 679,909 2,745,000 Years thereafter 9,660,149 6,809,851 16,470,000 $11,725,240 $ 8,605,000 $ 9,071,541 $ 29,401,781 I Low and Moderate Income Housing Set-Aside Fund Under state law, the Agency is required to set aside a portion of its property tax increment ' revenues for low and moderate income housing. The Agency has made findings that, for the year ended June 30, 1991, it was allowed to defer funding any of the required 2001o set aside. As of June 30, 1992, the accumulated set aside amount not yet funded was approximately $3,650,000. The law requires the Agency to devise a plan to fund the accumulating amount and to begin funding it by 1996. 1 I -12- NOTES TO FINANCIAL STATEMENTS L ' Note 7. Commitments and Contingent Liabilities, Continued In October 1991, the Agency funded its Low-Moderate Income Housing Set-Aside Fund ' with $6,855,922 of proceeds from the Tax Allocation Notes, Series 1987. This amount was deposited in the Low-Moderate Income Housing Set-Aside Fund to satisfy set-aside requirements for fiscal year 1991-1992 through 2002-2003. While the law in California is f not specific on the issue, the Agency takes the position that the Housing Fund set-aside requirement may be prepaid in this manner. ' As a result of such deposit, the $870,700, otherwise required to be deposited in the Low- Moderate Income Housing Fund in each such year, will be made available as tax revenues. Rosemead Housing Redevelopment Corporation ' On March 16, 1992, the Agency established the Rosemead Housing Redevelopment Corporation (RHDC), a local nonprofit housing development corporation organized under section 501(c)(3) of the Internal Revenue Code of 1986. The corporation was established ' to develop, construct, finance and assist with low and moderate income housing and to assist the Agency with redevelopment purposes related to housing. ' The RHDC will be financed by the Agency and managed by City personnel. Construction projects will be managed by a contracted management company. The corporation's year end is June 30. ' As of June 30, 1992, the RHDC is not considered a component unit of the Agency; however, starting with the fiscal year 1993-1994, the RHDC will be considered a component unit of the Agency according to Governmental Accounting Standard No. 14, which takes effect for fiscal years beginning after December 15, 1992. 1 Note 8. Subsequent Event ' In September 1992, the State of California passed its annual budget for the period July 1, 1992 through June 30, 1993. Included in the budget were substantial cuts in funding to cities, including Redevelopment Agencies, to help offset the cost of education in California. The funding cuts are expected to equal approximately 16% of gross property tax increment of the 1990-1991 fiscal year, which equate to approximately $581,000 for the Agency. This ' amount is required to be paid by May 10, 1993. J i I - 13 - 1 1 I I 1 I I S 0 I I A 0 1