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ED Annual Report for Redevelopment Agency 2010
CITY OF SAN RAFAEL 6 AGENDA rrEM NO.: MEETING DATE: December 21, 2009 REPORT TO MAYOR AND CITY COUNCIL SUBJECT: Acceptance of the Annual Report, including a blight progress,gency owned property, loan compliance AB 987 reports for the San Rafael Redevelopm t Agency. SUBMITTED BY: 814A APPROVED BY: Nancy Mackle, Economic Development Director Executive Director RECOMMENDATION: Accept the Annual Report for San Rafael Redevelopment Agency BACKGROUND: The purpose of the Annual Report is to provide uniform and comparable data for each California redevelopment agency to the State Legislature and other interested parties. The Controller's report addresses financial transactions and the Housing and Community Development Report addresses affordable housing activities and expenditures. Health and Safety Code Section 33080.1 requires redevelopment agencies to present an annual report containing specific information to its legislative body (City Council) within six months of the end of the fiscal year. FISCAL IMPACT: None. ACTION REQUIRED: Accept the Annual Report in substantially final form with changes approved by the Finance Director, and authorize transmission to the State Controllers office. EXHIBITS: EXHIBIT A: State Controllers Annual Report and Pass through Payments Report EXHIBIT B: Housing and Community Development Annual Report EXHIBIT C: Blight Progress, Agency loan and Agency owned property report EXHIBIT D: Agency Financial audit FOR CITY CLERK ONLY File No.: City Council Meeting: Disposition: v 0 w ca 3 3 3 3 3 3 3: '.3 3 3 0 3 W W n CM z N 3 3 3 3 3 3:. T. 3 .p CO "0 1 6 0. v O'. 4. A Z o O N N O N w a O �+ C4 _ < Q Z ID 3 N W 0) m N m O ry c l o D � GEE O m G7 D N Xa d N a 10 n A A A .p d (P N J N N A T 0 0 59. 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Plan Adoption: 1972 Plan Expiration Year: 2025 Gross Tax Calculated Amount Amount Amount Total % Cumulative Increment Deposit Allocated Exempted Deferred Deposited Def. $0 $ $973,704 $0 $0 $973,704 $0 Repayment $0 Cateaory Increment Deposit Interest Income $29,496 Other Revenue $18,851 Total Additional Revenue $48,347 Total Housing Fund Deposits for Project Area $1,022,051 Agency Totals For All Project Areas Gross Tax Calculated Amount Amount Amount Total Increment Deposit Allocated Exempted Deferred Deposited $0 $0 $973,704 $0 $0 $973,704 Total Additional Revenue from Project Areas: $46,347 Total Deferral Repayments: $0 Total Deposit to Housing Fund from Project Areas: $1,022,051 Page 1 of 1 12/15/09 % Cumulative Def. $0 Exhibit B r _ y \ a �\ \�\ ` » ;o» m to 7J \� // \ 0 CL ,0 / a� - %J0M C4 ;;l _ »E0 _ 2= >00 -- !( 0( ;=�7 �cn . §. [A£ ,2E to -n/ 2 § §§ ca c \ m \ 0CLCL \ �/{ California Redevelopment Agencies - Fiscal Year 2008/2009 Status of Low and Moderate Income Housing Funds Sch C Agency Financial and Program Detail SAN RAFAEL Beginning Balance $2,971,062 Adjustment to Beginning Balance $0 Adjusted Beginning Balance $2,971,062 Total Tax Increment From PA(s) $973,704 Total Receipts from PA(s) $1,022,051 Other Revenues not reported on Schedule A $0 Sum of Beginning Balance and Revenues $3,993,113 Expenditure Item Subitem Amount Remark Debt Service Debt Principal Payments Tax Allocation, Bonds & Notes $300,240 Subtotal of Debt Service $300,240 Housing Rehabilitation $18,179 Subtotal of Housing Rehabilitation $18,179 Planning and Administration Costs Administration Costs - $347,004 Subtotal of Planning and Administration Costs $347,004 Preservation of At -Risk Units $271,034 Subtotal of Preservation of At -Risk Units $271,034 Subsidies from the LMIHF Other $335,431 Ritter Center 60,000 Code Enforcement $97,623 Ownership BMR MHA &legal $100,843 50% of Econ Dev Page 1 of 3 12/15/09 Exhibit B(q) California Redevelopment Agencies - Fiscal Year 2008/2009 Status of Low and Moderate Income Housing Funds Sch C Agency Financial and Program Detail SAN RAFAEL Expenditure Item Subitem Subsidies from the LMIHF Rental Subsidies Subtotal of Subsidies from the LMIHF Total Expenditures Amount Remark $30,000 $365,431 $1,301,888 Net Resources Available $2,691,225 Indebtedness For Setasides Deferred $0 coor for ownership BMR $76,965 Category Amount Remark 2esidualReceipt Loans $300,789 Total Other Housing Fund Assets $300,789 Sum of Current and 3 Previous Years' Tax Increments $3,896,952 Adjusted Balance $2,561,225 Excess Surplus for next year $0 Net Resources Available $2,691,225 Unencumbered Designated $2,350,000 Unencumbered Undesignated $211,225 Total Encumbrances $130,000 Unencumbered Balance $2,561,225 Unencumbered Balance Adjusted for Debt Proceeds $0 Unencumbered Balance Adjusted for Land Sales $0 Page 2 of 3 12/15/09 Exhibit �Si Total Fund Equity $2,992,014 2004/2005 $1007366 2005/2006 $984314 sum of 4 Previous Years' Prior Year Ending Excess Surplus for 2006/2007 $974408 Tax Increment for 2008/2009 Unencumbered Balance 2008/2009 2007/2008 $964526 $3930614 $2,971,062 $0 Sum of Current and 3 Previous Years' Tax Increments $3,896,952 Adjusted Balance $2,561,225 Excess Surplus for next year $0 Net Resources Available $2,691,225 Unencumbered Designated $2,350,000 Unencumbered Undesignated $211,225 Total Encumbrances $130,000 Unencumbered Balance $2,561,225 Unencumbered Balance Adjusted for Debt Proceeds $0 Unencumbered Balance Adjusted for Land Sales $0 Page 2 of 3 12/15/09 Exhibit �Si California Redevelopment Agencies - Fiscal Year 2008/2009 Status of Low and Moderate Income Housing Funds Sch C Agency Financial and Program Detail SAN RAFAEL Excess Surplus Expenditure Plan No Excess Surplus Plan Adoption Date Site Improvement Activities Benefiting Households Income Level Low Very Low Moderate Total Land Held for Future Development Site Name Num Of Zoning Purchase Estimated Acres Date Start Date Remark Use of the Housing Fund to Assist Mortgagors Income Adjustment Factors F Requirements Completed Home F Hope $ Non Housing Redevelopment Funds Usage Resource Needs LMIHF Deposits/Withdrawls Document Document Custodian Custodian COPY Name Date Name Phone Source Agency Audit 30 -JUN -09 City Clerk (415) 485-3306 City Clerk Achievements Description Page 3 of 3 12/15/09 Exhibit B f 6i EXHIBIT C SAN RAFAEL RDA BLIGHT REPORT This report includes expenditures from all sources including Agency, City, State and Federal funds and bond proceeds. Fiscal Year End in 2009 Stagnant & Depressed Property Values _ PROGRAM: Traffic Circulation Medway -Canal Intersection $569,099 _ Subtotal $569,099 Downtown Substandard Design,incom atible Usos De reciated Values, High Vacancies & Low Lease Rates PROGRAM: Downtown Revitalization Downtown Promotions and Events (net) $252,175 Business Improvement District Support $13,000 Downtown Beautification $71,605 Subtotal $336,780 PROGRAM: Economic Development Coordination Economic Development Activities (2) $473,560 Chamber of Commerce Support $36,000 Subtotal $509,560 t3F#GHTkNG GQN.... ............................................................................:.....:..:........:..:..: Reduction or Lack of Proper Utilization of Property_ Constituting Economic Burden on Community PROGRAM: Public Facility Improvements High School Projects__ $179,000 Pickleweed FacilityEx ansion (1) City Storage Facility Subtotal $179,000 Sub -total Non -Housing Programs $1,594,439 Cacti of Affordable Housing ' PROGRAM: Housing Housing Support -Ritter House & Mediation $60,000 Administration & Professional Services $347,004 Rehabilitation Grants $18,179 First Time Homebu er Grants & Program Expenses $177,808 Bond Payments (Transfers Out) $300,240 _ Housing Inspections $97,623 Purchase of Affordability Covenants _ Rental subsidies $30,000 Preservation of at Risk Units $271,034 $271,034 Subtotal $1,301,888 Total Expenditures for 2008-09 (1) $2,896,327- M_Total RDA expenditures forthe_ r—oect including bond proceeds. 2 Includes personnel and project ex enses. _ W:\Redevelopment- WorkFile\_RDA DEV SPECIALIST\annual report\2009\ EXHIBIT C (1) C) I -- Fn m 2 W } K d z a E W `o Q o H W O W 7 L o m J Cl) 0 co w O W J co LL 9 Z Q to E CD3 a) U C a) E 0 U Y w a) C: c 0 0 0 CLI U)(nU)m WWWW 0000 Z Z Z Z 0 0000 0 0 LO LO 0 �6 61) a)o (n> oY U a) J Amro CO CDCDM � I c c c c 0 0 0 0 J J J J V) _U 0 O Y O Y w E > co .Va3O O Q ._ w E U CO — T Q a) "= 0) : C 'f E 3 o c E O °c= EU acimQ@ 0UU"5 y .I C CL to 7 C c m EXHIBIT C SAN RAFAEL REDEVELOPMENT AGENCY PROPERTIES This Report was repared pursuant to a requirement of the Community Redevelopment La . The CRL requires an Agency's annual Report to include a list of properties owned b the A enc . The A enc is also required to report on an change in roe ownership. A P # I #P Property Street Description 10-09 032 06 50 Canal Street Pickleweed 2 009 032 07 50 Canal Street Pickleweed 3 009 032 08 50 Canal Street Pickleweed ---14-011 205 01 1317 Fifth Avenue 5th & D Parking Lot 5 011 205 15 D Street Sessi Alley Parking 6 011 224 05 813 Fifth Avenue Parking Lot 7 011 224 06 809 Fifth Avenue Parking Lot 8 011 252 10 1412 Second Street Parking Lot 9 011 254,19 C Street Centertown 10 011 255 10 1216 Third Street Parking Structure Transferred to City per RDA Reso. 2005-22-9/6/05 11 011 255 131 912 C Street Parking Lot Transferred to City per RDA Reso. 2005-22-9/6/05 12 011 255 14 918 C Street Parking Structure Transferred to City per RDA Reso. 2005-22-9/6/05 13 011 255 18 902 C Street Parking Lot Transferred to City per RDA Reso. 2005-22-9/6/05 14 011 256 16 1218 Second Street Lone Palm 15 011 256 21 Lone Palm 16,011 256 25 C Street Lone Palm 17 011 25627 C Street Lone Palm 18 011 25628 1221 Third Street Lone Palm 20 011 25629 Lone Palm 21 011 256 31 1290 Second Street Lone Palm 22 011 261 26 Part of A Street Structur Parking Structure Transferred to City per RDA Reso. 2005-22-9/6/05 23 011 261 30 Part of A Street Structun Parking Lot Transferred to City per RDA Reso. 2005-22-9/6/05 24 011 263 05 941 Fourth Street Alley to Parking 25 011 271 12 Third Street Walgreen's Parking Lot 26 011 271 13 840 Third Street Walgreen's Parking Lot 27 011 271 14 844 Third Street Walgreen's Parking Lot 28 011 271 16 914 Lootens Place Parking Lot 29 013 041 44 Rice Drive Leased parking lot 30014 123 06 519 Fourth Street Gara e 31 018 180,521 Andersen Drive Hillside next to PG&E ssua a aPoraona aabamaaaoreru� EXHIBIT C (3) ACCOUNTANCY CORPORATION 3478 Buskirk Ave. - Suite 215 Pleasant lilt, California 94523 (925) 934-0902 • FAX (925) 930-0186 maze @mazeassociates. com 01DEPENDENT AUDITOR'S REPORT wwwmazeassociates.com Members of the Board of the San Rafael Redevelopment Agency San Rafael, California We have audited the accompanying component unit financial statements of the governmental activities and each major fund of the San Rafael Redevelopment Agency, a component unit of the City of San Rafael, as of and for the year ended June 30, 2009, 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 financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States of America and the standards for financial audits contained in 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 as to whether the component unit financial statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures in the component unit financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion the component unit financial statements referred to above present fairly in all material respects the financial position of the governmental activities and each major fund of the San Rafael Redevelopment Agency for the year ended June 30, 2009 and the changes in financial position for the year then ended, in conformity with generally accepted accounting principles in the United States of America. In accordance with Government Auditing Standards, we have also issued our report dated October 30, 2009 on our consideration of the San Rafael 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 control over financial reporting and compliance and the results of that testing, and not to provide an 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 of our audit. Management's Discussion and Analysis is not a required part of the basic component unit 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 required supplementary information. However, we did not audit the information and we express no opinion on it. A Professional Corporation EXjjIBIT D Our audit was made for the purpose of forming an opinion on the component unit financial statements taken as a whole. The supplemental information listed in the Table of Contents is presented for purposes of additional analysis and is not a required part of the component unit financial statements of the San Rafael Redevelopment Agency. Such information has been subjected to the auditing procedures applied in our audit of the component unit financial statements, and in our opinion is fairly stated in all material respects in relation to the component unit financial statements taken as a whole. October 30, 2009 1 2 REDEVELOPMENT AGENCY OF THE CITY OF SAN RAFAEL MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 As management of the Redevelopment Agency (Agency) of the City of San Rafael, we offer readers of the Agency's Financial Statements this narrative overview and analysis of the financial activities of the Agency for the fiscal year ended June 30, 2009. This document has been prepared as required by the Statement No. 34 of Governmental Accounting Standards Board (GASB 34). I. Financial Highlights Tax increment revenues are more than sufficient to cover debt related expenses and provide funding for both housing and non -housing priorities. The Agency continues to deliver high quality projects that have been planned based on neighborhood and business needs and goals. Fiscal year 2008-2009 provided construction of the Medway Canal Intersection Improvements and some underground work. Program funding for housing improvements continued to have a positive effect on the overall quality of life of the area. The Agency's investment in projects has resulted in strong demand for housing and considerable investment in renovations and additions to the existing housing stock. The following are the amounts received from tax increments in fiscal year 2008-2009 with comparative totals for the previous four fiscal years: Fiscal Year Receipt 2004-05 2005-06 2006-07 2007-08 2008-09 Total for the Year $ 4,574,447 $ 4,549,414 $ 4,540,652 $ 4,533,376 $ 4,549,772 The liabilities of the Agency exceeded its assets at the close of the fiscal year by $28.2M (net assets). The Agency's investment in assets is primarily in City owned property, and other than land held for resale or development; it does not hold property in its own name. Therefore a negative net asset amount would be expected. As of the close of the fiscal year, the Agency's funds (all governmental) reported combined ending fund balances of $5.02M, which is a decrease of $0.94M in comparison with the prior year. Approximately $5.02M of this amount is available for spending at the Agency's discretion for the purposes of redevelopment (reserved fund balance). Of this amount, $2.3M has been reserved for capital projects. II. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the Agency's basic financial statements. The Redevelopment Agency basic financial statements comprise of three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government -wide Financial Statements: The Government -wide Financial Statements are designed to provide readers with a broad overview of the Agency's finances, in a manner similar to a private -sector business. The Statement of Net Assets presents information on all of the Agency's assets and liabilities, with the difference between the two reported as net assets. The Agency, while a separate legal entity, acts as a financial conduit for the City and as such does not hold title to the assets it helps construct. Therefore, its net assets are not any indication of its financial health. The statement of activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). Fund Financial Statements: A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Agency, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. All of the funds of the Agency can be divided into two categories: capital projects fund and debt service fund. The Agency adopts an annual appropriated budget for all of its funds. A budgetary comparison statement has been provided to demonstrate compliance with this budget. Capital Projects: Capital projects fund is used to account for resources available for land purchase and capital improvements made in the project area using bond proceeds. Housing set aside fund is used to account for the 20% of the tax increments that is required by State Law to be used for low and moderate income housing purposes. Debt Service: Debt service fund is used to account for the repayment of principal and interest on debt. Notes to the Basic Financial Statements: The notes provide additional information that is essential to a full understanding of the data provided in the Government -Wide and Fund Financial Statements. Other Information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information relating to the Agency's budgetary principles. III. Government -wide Financial Analysis By far the largest portion of the Agency's net assets reflects amounts designated for capital projects (e.g., land, building, machinery, and equipment). Unlike most other type of governmental bodies who provide day-to-day services, the main purpose of the Agency is to provide capital funds for the development of a certain geographical area of the City. The following table shows the components of the net assets. Redevelopment Agency Net Assets At June 30, 2009 Current assets $5.9M Noncurrent assets 2.3M Total assets 8.2M Current liabilities 2.5M. Noncurrent liabilities 33.9M Total liabilities 36.4M Net assets: Restricted 2.3M Unrestricted (30.6)M Total net assets ($28.2)M There was an increase of $1.4M in the Agency's net assets during the fiscal year. Governmental Activities: All the activities of the agency are governmental and it has no business -type activities. Redevelopment Agency Changes in Net Assets Fiscal year ended 2008-09 General revenues: Property tax (tax increments) $ 4,549,772 Use of money and property 127,447 Miscellaneous 16,791 Total general revenues and transfers 4,694,010 Net Expenses 3,299,579 Change in net assets (increase) 1,394,431 Net assets - beginning of year, as restated (29,601,256) Net assets - end of year _ $(28,206,825) IV. Financial Analysis of the Agency's Funds As noted earlier, the Agency uses fund accounting to ensure and demonstrate compliance with finance - related legal requirements. Governmental Funds: The focus of the Agency's Governmental Funds is to provide information on near-term inflows, outflows, and balances of expendable resources. Such information is useful in assessing the Agency's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. It should, however, be noted that most of the unreserved amounts have been designated by the Agency for specific uses. G The Agency is required by State law to set aside 20% of the tax increment revenue in a separate fund for low and moderate -income housing purposes. This capital projects fund had total revenue of $1 -OM and expenditures of $1.OM and a transfer for debt service payment of $0.3M. The expenditure includes $101K for subsidies to Low and Moderate Income Housing. The ending fund balance decreased $300K from the prior year balance of $3M. The debt service fund accounts for the principal and interests payments on all bonds. The capital projects funds other than the Low and Moderate Income Housing fund, account for all bond proceeds available for capital improvements and the related interest income. The interest income for the year is $98K. The expenditures amounted to $1.6M. The fund balance decreased by $0.6M to $2.3M at the year-end. All of this amount has been reserved for capital improvements. V. Budgetary Highlights The tax increment revenue was on target with the budgeted amount. The operating expenditures overall remained within the budget. VI. Capital Asset and Debt Administration Capital Assets: As of June 30, 2009, the Agency's capital assets were $2.3M. Construction in progress represents $2.OM of the Agency's capital assets. As noted earlier the Agency acts as a financial conduit for the City of San Rafael therefore its investments in capital assets are recorded as City assets rather than Agency assets. Long-term Debt: At the end of the current fiscal year, the Agency had total bonded debt outstanding of $35.9M. The tax increments revenue of the Agency secures all bonded debt of the Agency. The Agency's debt decreased by $1.9M with the annual debt payments for the 1999 and 2002 Agency bonds. Additional information on the Agency long-term debt can be found in Note 6 of this report. VII. Economic Factors and Next Year's Budgets Since the Agency's primary source of revenue is tax increments, property values and new construction in the redevelopment area are the key economic factors that define the future resources of the agency. Tax increment revenue remained stable in fiscal year 2008-2009. It is reflective of the statutory increase permitted and the flat economy, which continues to suppress business activity in the commercial and industrial areas within the redevelopment project area. Although the housing market is weakening around the nation, the City on the other hand, has not seen the drastic decline in market value. The Agency's budget for fiscal year 2009-2010 brings no new surprises. Sufficient funds have been set aside to keep the Agency operations sustainable for several years. In November 2009 the Agency staff proposed to refund the 1999 bonds to take advantage of lower interest rates and to provide a loan to the City for street resurfacing, parking improvements and other capital improvements in the Redevelopment Project Area. Agency staff also continues to work with the County of Marin and other local agencies to see if a tax sharing restructuring can produce future revenues that can be pledged for new bonds. Bond issues not only pay for new projects, but provide revenue to pay for current staffing and operations. If a new bond measure is not achieved within the next five years, the Agency operations will be drastically reduced. VIII. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the Agency's finances and to demonstrate the Agency's accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City of San Rafael Finance Department at 1400 Fifth Ave. Room 204, San Rafael, California 94901. 11 This Page Left Intentionally Blank SAN RAFAEL REDEVELOPMENT AGENCY STATEMENT OF NET ASSETS AND STATEMENT OF ACTIVITIES The Statement of Net Assets reports the difference between the Agency's total assets and the Agency's total liabilities, including all the Agency's capital assets and all its long-term debt. The Statement of Net Assets focuses the reader on the composition of the Agency's net assets, by subtracting total liabilities from total assets. The Statement of Net Assets summarizes the financial position of all the Agency's Governmental Activities in a single column. The Statement of Activities reports increases and decreases in the Agency's net assets. It is also prepared on the full accrual basis, which means it includes all the Agency's revenues and all its expenses, regardless of when cash changes hands. This differs from the "modified accrual" basis used in the Fund financial statements, which reflect only current assets, current liabilities, available revenues and measurable expenditures. The Statement of Activities presents the Agency's expenses that are listed by program first. Program revenues— that is, revenues which are generated directly by these programs—are then deducted from program expenses to arrive at the net expense of each program. The Agency's general revenues are then listed and the Change in Net Assets is computed and reconciled with the Statement of Net Assets. 9 SAN RAFAEL REDEVELOPMENT AGENCY STATEMENT OF NET ASSETS RUNE 30, 2009 Governmental Activities ASSETS Cash and investments (Note 2) $3,228,330 Restricted cash and investments (Note 2) 1,604,471 Receivables: Accounts 11,028 Taxes 17,855 Grants 720,250 Interest 10,176 Loans (Note 4) 300,789 Capital assets (Note 5): Nondepreciable assets 2,280,807 Depreciable assets, net 24,171 Total Assets 8,197,877 LIABILITIES Accounts payable 97,657 Interest payable 316,726 Developer bonds payable 25,000 Arbitrage payable 25,127 Long-term debt (Note 6): Due in one year 2,055,000 Due in more than one year 33,907,692 Total liabilities 36,427,202 NET ASSETS (DEFICIT) (Note 1F) Restricted for: Debt service 35,826 Capital projects 2,297,814 - Unrestricted (30,562,965) Total net assets (deficit) ($28,229,325) See accompanying notes to financial statements 10 SAN RAFAEL REDEVELOPMENT AGENCY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2009 General revenues Taxes 4,549,772 Investment earnings 127,447 Governmental 16,791 Total general revenues and transfers 4,694,010 Change in Net Assets Activities Net Program Revenues (Expenses) Capital Grants Revenues Charges for and Governmental Functions/Programs Expenses services Contributions Activities Primary Government Governmental Activities: General government $30,660 ($30,660) Public works and parks 147,756 (147,756) Community development/redevelopment 1,652,346 $27,153 $312,904 (1,312,289) Interest on long-term debt 1,831,374 (1,831,374) Total Primary Government $3,662,136 $27,153 $312,904 (3,322,079) General revenues Taxes 4,549,772 Investment earnings 127,447 Miscellaneous 16,791 Total general revenues and transfers 4,694,010 Change in Net Assets 1,371,931 Net Assets (Deficit) -Beginning (29,601,256) Net Assets (Deficit) -Ending ($28,229,325) See accompanying notes to financial statements 11 This Page Left Intentionally Blank FUND FINANCIAL STATEMENTS Major funds are defined generally as having significant activities or balances in the current year. All Agency Funds were determined to be Major Funds in fiscal 2009. They are described below: The 1999 AGENCY BONDS DEBT SERVICE FUND is the debt service fund for the principal payments, interest payments, and related costs of the 1999 Project Tax Allocation Bonds. The 2002 AGENCY BONDS DEBT SERVICE FUND is the debt service fund for the principal payments, interest payments, and related costs of the 2002 Tax Allocation Refunding Bonds. The CAPITAL IMPROVEMENT PROJECTS CAPITAL PROJECTS FUND is the capital projects fund for the new resources received form the 2002 Agency Bonds that can be used for Agency operations, capital projects or payments to the San Rafael High School district under an established tax sharing agreement. The LOW AND MODERATE INCOME HOUSING CAPITAL PROJECTS FUND accounts for the 20% set- aside required by the State for low and moderate -income housing projects. The 1999 BONDS CAPITAL PROJECTS FUND is the capital projects fund of the Agency for the 1999 Project Tax Allocation Bonds. The 1985 CAPITAL PROJECTS AND ADMINISTRATION CAPITAL PROJECTS FUND is the general operating fund of the Agency. It is used to account for all financial resources except those required to be accounted for in the Low and Moderate Income Housing Fund and the debt service funds. 13 SAN RAFAEL REDEVELOPMENT AGENCY GOVERNMENTALFUNDS BALANCESHEET JUNE 30, 2009 ASSETS Cash and investments available for operations (Note 2) Restricted cash and investments (Note 2) Receivables: Accounts Taxes Grants Interest Loans (Note 4) Due from other funds (Note 3) Total Assets LIABILITIES Accounts payable Developer bonds payable Arbitrage payable Deferred revenue Due to other funds (Note 3) Total Liabilities FUND BALANCES (Note IG): Reserved for: Loans receivable Improvement projects Housing Debt service Total Fund Balances Total Liabilities and Fund Balances DEBT SERVICE FUNDS CAPITAL PROJECTS FUNDS Low and Capital Moderate 1999 Agency 2002 Agency Improvement Income Bonds Bonds Projects Housing $33,941 $1,386,160 $173,987 1,837 17,855 48 5,615 2,905 300,789 364,052 2,200,000 $35,826 $1,755,827 52,695,536 $4,311 4,311 300,789 $1,755,827 2,390,436 $35,826 35,826 1,755,827 2,691,225 $35,826 $1,755,827 $2,695,536 See accompanying notes to financial statements 14 CAPITAL PROJECTS FUNDS 1985 Capital Total Projects and Governmental 1999 Bonds Administration Funds $1,634,242 $3,228,330 $1,602,634 1,604,471 11,028 - 11,028 720,250 17,855 720,250 720,250 1,608 10,176 3,389,003 300,789 2,564,052 $2,322,884 $1,646,878$8,456,951 $79,574 $13,772 $97,657 25,000 25,000 25,127 25,127 720,250 720,250 2,564,052 2,564,052 3,389,003 38,772 3,432,086 $300,789 (1,066,119) 1,608,106 2,297,814 2,390,436 35,826 (1,066,119) 1,608,106 5,024,865 $2,322,884 $1,646,878 $8,456,951 15 SAN RAFAEL REDEVELOPMENT AGENCY RECONCILIATION OF GOVERNMENTAL FUNDS -FUND BALANCES WITH THE NET ASSETS OF GOVERNMENTAL ACTIVITIES JUNE 30, 2009 Total Fund Balances reported on the governmental funds balance sheet Amounts reported for Governmental Activities in the Statement of Net Assets are different from those reported in the Governmental Funds above because of the following: CAPITAL ASSETS Capital assets used in Governmental Activities are not current assets or financial resources and therefore are not reported in the Governmental Funds. ACCRUAL OF NON-CURRENT REVENUES AND EXPENSES Revenues which are deferred on the Fund Balance Sheets because they are not available currently are taken into revenue in the Statement of Activities. Deferred revenue LONG-TERM ASSETS AND LIABILITIES The assets and liabilities below are not due and payable in the current period and therefore are not reported in the Funds: Long-term debt Interest payable NET ASSETS OF GOVERNMENTAL ACTIVITIES See accompanying notes to financial statements Wo $5,024,865 2,304,978 720,250 (35,962,692) (316,726) ($28,229,325) This Page Left Intentionally Blank SAN RAFAEL REDEVELOPMENT AGENCY GOVERNMENTALFUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2009 REVENUES: Taxes and special assessments Use of money and property Intergovernmental Charges for services Other revenue Total Revenues EXPENDITURES: Current: General government Public works and parks Community development1redevelopment Capital outlay Capital improvement/special projects Debt service: Principal -Interest and fiscal charges Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDn URES OTHER FINANCING SOURCES (USES) Transfers in (Note 3A) Transfers (out) (Note 3A) Total other financing sources (uses) Net Change in Fund Balances FUND BALANCE, BEGINNING OF THE YEAR FUND BALANCE, END OF THE YEAR DEBT SERVICE FUNDS CAPITAL PROJECT FUNDS Low and Capital Moderate 1999 Agency 2002 Agency Improvement Income Bonds Bonds Projects Housing $1,498,625 $2,070,150 $980,997 396 $36,981 29,496 11,558 1,498,625 2,070,546 36,981 1,022,051 179,000 730,000 1,235,000 768,625 835,150 1,001,649 1,498,625 2,070,150 179,000 1,001,649 396 (142,019) 20,402 300,240 (300,240) (300,240) (300,240) 396 (142,019) (279,838) 35,430 1,897,846 2,971,063 $35,826 $1,755,827 $2,691,225 See accompanying notes to the financial statements. 18 CAPITAL PROJECT FUNDS 1985 Capital Total Projects and Governmental 1999 Bonds Administration Funds 30,660 $4,549,772 $8,352 $52,222 127,447 554,559 554,559 27,153 27,153 5,233 16,791 562,911 84,608 5,275,722 30,660 30,660 147,756 147,756 566,369 1,568,018 569,099 569,099 15,742 133,374 328,116 1,965,000 1,603,775 584,841 878,159 6,212,424 (21,930) (793,551) (936,702) 300,240 600,480 (600,480) 300,240 (21,930) (493,311) (936,702) . (1,044,189) 2,101,417 5,961,567 ($1,066,119) $1,608,106 $5,024,865 19 SAN RAFAEL REDEVELOPMENT AGENCY Reconciliation of the NET CHANGES IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS with the STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2009 The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances, which measures only changes in current assets and current liabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in the Statement of Activities, which is prepared on the full accrual basis. NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS ($936,702) Amounts reported for governmental activities in the Statement of Activities are different because of the following: CAPITAL ASSETS TRANSACTIONS Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is capitalized and allocated over their estimated useful lives and reported as depreciation expense. Capital outlay and other capitalized expenditures we added back to fund balance 815,515 Depreciation expense is deducted from the fund balance (2,628) ACCRUAL OF NON-CURRENT ITEMS The amounts below included in the Statement of Activities do not provide or (require) the use of current financial resources and therefore are not reported as revenue or expenditures in governmental funds (net change): Interest payable (6,068) Deferred revenue (241,655) LONG-TERM DEBT PAYMENTS Repayment of bond principal is an expenditure in the governmental funds, but in the Statement of Net Assets the repayment reduces long-term liabilities. Repayment of debt principal is added back to fund balance, net of accretion 1,743,469 CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES $1,371,931 F SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 1- SIGNIFICANT ACCOUNTING POLICIES A. Description of San Rafael Redevelopment Agency and Redevelopment Plan The San Rafael Redevelopment Agency (Agency) was established under the provisions of the Community Redevelopment Law (California Health and Safety Code, commencing with Section 33000) primarily to assist in the clearance and rehabilitation of areas determined to be in a declining condition in the City of San Rafael (City). Financial activity of the Agency commenced in July 1973. Under the Agency's Redevelopment Plan (Plan), approved in November 1972, the Agency will assist in the development of the property located in the central San Rafael business core and east San Rafael. The Plan was amended and restated in October 1998. The Agency receives incremental tax revenues on the developed property due to increases in assessed value. The Agency functions as an independent entity. The City Council serves as the governing board of the Agency. The Agency is authorized to finance the Redevelopment Plan from various sources, including assistance from the City, the State and Federal government, property tax increments, interest income and the issuance of Agency notes and bonds. Management and administrative support services are provided by the City. The City Manager serves as the Executive Director, City Clerk as Secretary, and the City Finance Director as the Finance Officer of the Agency. The Agency is an integral part of the City of San Rafael and, accordingly, the accompanying financial statements are included as a component of the basic financial statements prepared by the City. A component unit is a separate governmental unit, agency or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City's basic financial statements. B. Basis of Presentation The Agency's Basic Component Unit Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the U.S.A. These Statements require that the financial statements described below be presented. Government -wide Statements: The Statement of Net Assets and the Statement of Activities include the financial activities of the overall Agency government. Eliminations have been made to minimize the double counting of internal activities. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Agency's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include charges paid by the recipients of goods or services offered by the programs. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the Agency. Separate statements for each governmental fund are presented. The emphasis of fund financial statements is on major individual funds, each of which is displayed in a separate column. All remaining governmental funds are aggregated and reported as nonmajor funds. 21 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 1- SIGNIFICANT ACCOUNTING POLICIES (Continued) C. Major Funds Major funds are defined as funds that have either assets, liabilities, revenues or expenditures/expenses equal to ten percent of their fund -type total and five percent of the grand total. The Agency may also select other funds it believes should be presented as major funds. The Agency reported all of its governmental funds in the accompanying financial statements as major funds: The 1999 Agency Bonds Debt Service Fund is the debt service fund for the principal payments, interest payments, and related costs of the 1999 Project Tac Allocation Bonds. The 2002 Agency Bonds Debt Service Fund is the debt service fund for the principal payments, interest payments and related costs of the 2002 Tax Allocation Refunding Bonds. The Capital Improvement Projects Capital Projects Fund is the capital projects fund for the new resources received from the 2002 Agency Bonds that can be used for Agency operations, capital projects or payments to the San Rafael High School district under an established tax sharing agreement. The Low and Moderate Income Housing Capital Projects Fund accounts for the 20% set-aside required by the State for low and moderate -income housing projects. The 1999 Bonds Capital Projects Fund is the capital projects fund of the Agency for the 1999 Project Tax Allocation Bonds. The 1985 Capital Projects and Administrative Capital Projects Fund is the general operating fund of the Agency. It is used to account for all financial resources except those required to be accounted for in the Low and Moderate Income Housing Fund and debt service funds. D. Basis ofAccoun ling The government -wide financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The Agency considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. Capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of long-term debt and acquisitions under capital leases are reported as other financing sources. Non-exchange transactions, in which the Agency gives or receives value without directly receiving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. 22 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 1- SIGNIFICANT ACCOUNTING POLICIES (Continued) Other revenues susceptible to accrual include interest and charges for services: Under the terms of grant agreements, the Agency may fund certain programs with a combination of cost - reimbursement grants, categorical block grants, and unrestricted redevelopment revenues. Thus, both restricted and unrestricted net assets are available to finance program expenditures. The Agency's policy is to fust apply restricted grant resources to such programs, followed by unrestricted redevelopment revenues if necessary. E. Capital Assets All capital assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair market value on the date contributed. Capital assets excluding infrastructure are capitalized if costs exceed $5,000. The threshold for infrastructure is $25,000. The purpose of depreciation is to spread the cost of capital assets equitably among all users over the life of these assets. The amount charged to depreciation expense each year represents that year's pro rata share of the cost of capital assets. Depreciation of all capital assets is charged as an expense against operations each year and the total amount of depreciation taken over the years, called accumulated depreciation, is reported on the balance sheet as a reduction in the book value of capital assets. Depreciation is provided using the straight-line method which means the cost of the asset is divided by its expected useful life in years and the result is charged to expense each year until the asset is fully depreciated. The Agency has assigned the useful lives listed below to capital assets. Buildings and structures 50 years Machinery and equipment 5-20 years F. Net Assets Net Assets is the excess of all the Agency's assets over all its liabilities, regardless of fund. Net Assets are divided into three captions. These captions apply only to Net Assets, which is determined only at the Government -wide level, and are described below: Restricted describes the portion of Net Assets which is restricted to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which the Agency cannot unilaterally alter. These principally include resources received for debt service requirements; redevelopment funds restricted to low and moderate income purposes. Unrestricted describes the portion of Net Assets which is not restricted as to use. As of June 30, 2009, the Agency reported an unrestricted deficit of $30,562,965 representing debt used to finance the acquisition and construction of assets maintained by the City. These capital assets were constructed or acquired in prior years and transferred to the City upon completion. 23 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 1- SIGNIFICANT ACCOUNTING POLICIES (Continued) G. Fund Balance Reserves Governmental fund balances represent the net current assets of each fund. Net current assets generally represent a fund's cash and receivables, less its liabilities. Portions of a fund balance may be reserved or designated for future expenditure. Reserves are restrictions placed by outside entities, such as other governments, which restrict the expenditures of the reserved funds to the purpose intended by the entity which provided the funds. The Agency has reserved fund balances as follows: Reserved for Loans Receivable — To account for assets that have been set aside to represent loans receivable amounts that do not represent available current resources. Reserved for Improvement Projects — To account for capital projects made in the project area. Reserved for Housing — To account for projects for low and moderate income housing purposes. Reserved for Debt Service — To account for assets that have been set aside to represent funds legally restricted for the payment of principal and interest on long term debt. H. Budgets and Budgetary Accounting The Agency operates under the general laws of the State of California and follows the budgetary process of the City. Bi -annually, the Agency Board adopts two one-year budgets effective July 1 for each ensuing fiscal year. From the effective date of the budget, which is adopted and controlled at the fund level, the amounts stated therein as proposed expenditures, become appropriations. The Board may amend the budget by resolution during the two fiscal years. All unencumbered appropriations lapse at year-end. Bi -annual budgets are adopted for the debt service funds on a basis consistent with generally accepted accounting principles. The budgets are reviewed at mid -year each fiscal year to determine if any revisions are necessary. The Agency also adopts budgets bi-annually for capital outlay expenditures for its capital projects funds. Such budgets are based on a project time frame rather than a fiscal year "operating" time frame, reappropriating unused appropriations from year to year until project completion. Encumbrance accounting, under which purchase orders, contracts and other commitments for expenditures are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of the budgetary process. I. Property Tax Increment The Agency's primary source of revenue, other than bond proceeds, is from property taxes. Property taxes allocated to the Agency are computed in the following manner: (1) the assessed valuation of all property within the project area is determined on the date of adoption of the Redevelopment Plan, and (2) 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. 24 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 1- SIGNIFICANT ACCOUNTING POLICIES (Continued) The Agency has no power to levy and collect taxes, and any legislative property tax de -emphasis might necessarily reduce the amount of tax increment revenues that would otherwise be available to pay the principal and interest on bonds or other debt of the Agency. 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 necessarily increase the amount of tax increment revenues that would be available to pay principal and interest on bonds or other debt of the Agency. All property taxes are levied and collected by the County Auditor of the County of Marin and paid to the various taxing entities including the Agency. Secured taxes are due on November 1 and February 1 and become delinquent on December 10 and April 10, respectively. 'Unsecured taxes are due on July 1 and become delinquent on August 31. The lien date for secured and unsecured property taxes is January 1 of the preceding fiscal year. J. Use of Estimates The preparation of financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumption which affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. NOTE 2 -CASH AND INVESTMENTS Agency cash not held by the Trustee is included in an Agency wide cash and investment pool. The Agency's cash is fully collateralized with securities held by an agent of the pledging financial institution in the Agency's name. The Agency's goal is to invest at the maximum yield, consistent with safety and liquidity, while individual funds can process payments for expenditures at any time. The Agency's investments are carred at fair value, as required by generally accepted accounting principles. The Agency adjusts the carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the effects of these adjustments in income for that fiscal year. A. Classtfication Cash and investments as of June 30, 2009 are classified in the financial statements as shown below, based on whether or not their use is restricted under the terms of Agency debt instruments or Agency agreements. Financial Statement Presentation: Statement of Net Assets: Cash and investments $3,228,330 Restricted cash and investments 1,604,471 Total cash and investments $4,832,801 25 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 2 - CASH AND INVESTMENTS (Continued) B. InvestmentsAutltorized by Debt Agreements The Agency must maintain required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to be used if the Agency fails to meet its obligations under these debt issues. The California Government Code requires these funds to be invested in accordance with Agency ordinance, bond indentures or State statute. The table below identifies the investment types that are authorized for investments held by fiscal agents. The table also identifies certain provisions of these debt agreements: Maximum Minimum Credit Authorized Investment Type Maturity Quality Maximum Percentage of Portfolio U.S. Treasury Obligations N/A N/A No Limit U.S. Agency Securities 3 years N/A No Limit Category Banker's Acceptances 360 days Highest No Limit Rating Category Money Market Funds N/A Highest No Limit Rating Category Commercial Paper 270 days Highest No Limit Rating Guaranteed Investment Contracts N/A Category Highest No Limit (fully collateralized) (A) Rating Municipal Obligations N/A Two Highest No Limit Category Ratings (A) Guaranteed Investment Contracts must be fully collateralized with U.S. Treasury Obligations or U.S. Agency Obligations. G Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the Agency manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations. 12 Months Type of Investment or Less Money Market Mutual Funds $1,604,471 Local Agency Investment Fund 3,228,330 Total Cash and Investments $4,832,801 26 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 2 - CASH AND INVESTMENTS (Continued) The Agency is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The Agency reports its investment in LAIF at the fair value amount provided by LAIF, which is the same as the value of the pool share. The balance is available for withdrawal on demand, and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. Tncluded in LAIF's investment portfolio are collateralized mortgage obligations, mortgage- backed securities, other asset-backed securities, loans to certain state funds, and floating rate securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes and Bills, and corporations. At June 30, 2009, these investments matured in an average of 235 days. Money Market Mutual Funds are available for withdrawal on demand and at June 30, 2009 matured in an average of 46 days. D. Credit Risk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. According to the Agency's investment policy, no more than $1,000,000 of the total portfolio may be invested in securities of any single issuer, other than the U.S. Government, its agencies and instrumentalities, and LAIR N a security is downgraded by either Moody's or Standard and Poor's to a level below the minimum quality required by the Agency, it shall be the Agency's policy to sell that security as soon as practical. The actual rating as of June 30, 2009 for the money market mutual funds was AAAm, as provided by Standard and Poor's Investment Rating System. As an external investment pool, the Local Agency Investment Fund was not rated as of June 30, 2009. NOTE 3 — INTER -FUND TRANSACTIONS A. Transfers Transfers between funds during the fiscal year ended June 30, 2009 were as follows: From Fund Low and Moderate Income Housing Capital Projects Fund 2002 Agency Bonds Debt Service Fund (A) Transfer is for the housing portion of debt service. (B) Transfer is for administrative support. B. Curren t In terfun d Balan ces To Fund Amount 2002 Agency Bonds Debt Service Fund $300,240 A 1985 Capital Projects and Administration Capital Projects Fund 300,240 B $600,480 Current interfund balances arise in the normal course of business and are expected to be repaid shortly after the end of fiscal year. As of June 30, 2009, the 1999 bonds capital project funds was owed capital improvement projects capital project funds and low and moderate income housing capital project funds $364,052 and $2,200,000 respectively. 27 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 4- LOANS RECEIVABLE A. Centertown Associates The City loaned Centertown Associates, Ltd, $303,000 at 3% interest due semiannually. The loan was made for the construction of 60 -units affordable Centertown apartments and is fully secured by a deed of trust. The final payment is due on July 31, 2065. As of June 30, 2009 the balance of the loan was $300,789. A Marin Housing Authority On April 7, 2008 the Redevelopment Agency approved a loan in the amount of $333,000 to the Marin Housing Authority. This loan is funded by the Agency's Low and Moderate Income Housing Capital Projects Fund to assist the Authority in the acquisition of a housing unit so that the unit might remain in the City's Below Market Rate program. The Agency further approved a subsidy of up to $35,000 to reduce the sales price of the unit. This loan was repaid during Fiscal Year 2008-09. NOTE 5 — CAPTTAL ASSETS Capital Assets at June 30 comprise: Governmental Activities Capital assets not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets being depreciated: Buildings and structures Machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Buildings and structures Machinery and equipment Total accumulated depreciation Total net capital assets being depreciated Total governmental activity capital assets Balance at Balance at June 30, 2008 Additions Jane 30, 2009 $39,000 $246,431 $285,431 1,426,292 569,084 1,995,376 1,465,292 815,515 2,280,807 80,000 14,809 94,809 80,000 14,809 94,809 (56,800) (1,600) (58,400) (11,210) (1,028) (12,238) (68,010) (2,628) (70,638) 26,799 (2,628) 24,171 $1,492,091 $812,887 $2,304,978 Depreciation expense has been allocated to the Community development/redevelopment activity on the statement of activities. 28 SAN RAFAEL REDEVELOPMENT AGENCY l Notes to Basic Component Unit Financial Statements NOTE 6 - LONGTERM DEBT A summary of governmental activities long-term debt changes for the fiscal year ended June 30, 2009, follow: Governmental Activities: 1999 Tax Allocation Bonds Current Interest Bonds 4.5%-5.0%, due 12/1/2022 Capital Appreciation Bonds 5.58%-5.6%, due 12!12022 2002 Tax Allocation Bonds 2.00%-5.25%, due 12(12021 Total Tax Allocation Bonds Note Payable, 8.00%, due 11/12024 Total Governmental Long-term Debt Authorized Balance Balance Current and Issued June 30, 2008 Additions Retirements June 30, 2009 Portion $21,115,000 $15,810,000 2,389,004 3,907,161 $221,531 $730,000 $15,080,000 $765,000 4,128,692 25,020,000 17,820,000 1,235,000 16,585,000 1,290,000 37,537,161 221,531 1,965,000 35,793,692 2,055,000 169,000 169,000 169,000 $37,706,161 $221,531 $1,965,000$35,962,692 $2,055,000 A. 1999 Tax Allocation Bonds -Current Interest Bonds and Capital Appreciation Bonds On June 16, 1999, the Agency issued Tax Allocation Bonds in the amount of $23,504,004. The bonds were issued as Current Interest Bonds in the aggregate principal amount of $21,115,000 and as Capital Appreciation Bonds in the original amount of $2,389,004. The proceeds of the bonds were used to finance certain redevelopment activities of benefit to the Agency's Central San Rafael Redevelopment Project Area. The Current Interest Bonds mature annually each December 1 from 2000 to 2022, in amounts ranging from $560,000 to $1,460,000 and bear interest at rates from 4.50% to 5.00%. Interest is payable semiannually on June 1 and December 1. The Current Interest Bonds maturing on or after December 1, 2008, are subject to optional redemption prior to maturity, in whole or in part, either in inverse order of maturity or on a pro rate basis among maturities, on any date on or after December 1, 2007, at a price equal to the principal amount, plus accrued interest on the redemption date, plus a premium ranging from 0.00% to 2.00%. The Capital Appreciation Bonds mature annually after December 1 from 2018 to 2022, in amounts ranging from $1,440,000 to $2,070,000 and bear interest rates ranging from 5.58% to 5.60%. Interest on the Capital Appreciation Bonds will compound on each interest premium date and will be payable solely at maturity. The Bonds are secured, on parity with the 1992 and 1995 bonds, by a pledge and lien on tax revenues and amounts on deposit in certain funds and accounts held by the fiscal agent. The pledge of future tax increment revenues ends upon repayment of the $28.8 million in remaining debt service on the Redevelopment Agency's longterm debt which is scheduled to occur in 2022. For fiscal year 2009 tax increment revenues amounted to $1.5 million and debt service amounted to $1.5 million. 29 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 6 - LONGTERM DEBT (Continued) B. 2002 Tax Allocation Refunding Bonds On October 9, 2002, the Agency issued Tax Allocation Refunding Bonds in the amount of $25,020,000. The proceeds of the bonds were used to refund the 1992 Tax Allocation Refunding Bonds and the 1995 Tax Allocation Bonds. The Bonds mature annually each December 1 from 2002 to 2022, in amounts ranging from $540,000 to $1,920,000 and bear interest at rates ranging from 2.00% to 5.25%. Interest is payable semiannually on June 1 and December 1. The Bonds maturing on or after December 1, 2013, are subject to optional redemption prior to maturity, on any date on or after December 1, 2012, at a price equal to the principal amount, plus accrued interest on the redemption date. The bonds are payable from tax revenues to be derived from the redevelopment activities of the Agency related to the Central San Rafael Redevelopment Project Area. The pledge of future tax increment revenues ends upon repayment of the $21.1 million in remaining debt service on the Redevelopment Agency's long term debt which is scheduled to occur in 2021. For fiscal year 2009 tax increment revenues amounted to $2.1 million and debt service also amounted to $2.1 million. G Note Payable At June 30, 2007, Notes Payable consisted of a $169,000 promissory note bearing interest at 8% with principal and accrued interest due and payable in November 2024. The note was assumed to finance the purchase of certain property by the Agency. The outstanding balance of the loan at June 30, 2009 was $169,000 plus accrued interest of $185,394 which is recorded as interest payable. D. Future Debt Service As of June 30, 2009, future debt service is as follows: For the Year Governmental Activities Ended June 30 Principal Interest . 2010 $2,055,000 $1,511,456 2011 2,150,000 1,414,287 2012 2,265,000 1,305,912 2013 2,380,000 1,186,144 2014 2,505,000 1,062,151 2015-2019 14,549,946 3,284,730 2020-2024 13,590,054 674,713 2025-2029 169,000 Totals $39,664,000 $10,439,393 Reconciliation of long-term debt: Less unaccreted discount (3,701,308) $35,962,692 Net long-term debt 30 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 7 —NON -AGENCY OBLIGATIONS The following bond issues are not reported in the Agency's financial statements because these are special obligations payable solely from and secured by specific revenue sources described in the resolutions and official statements of the respective issues. Neither the faith and credit nor the taxing power of the City, the Redevelopment Agency, the State of California or any political subdivision thereof, is pledged for payment of these bonds. Original Amount San Rafael Redevelopment Agency Multifamily Housing Revenue Bonds $3,590,529 San Rafael Redevelopment Agency Variable Rate Demand Multifamily Housing Revenue Bonds 3,000,000 San Rafael Redevelopment Agency Multifamily Housing Revenue Bonds -2001A 3,220,000 Multifamily Housing Revenue Bonds -2001B 1,025,000 Multifamily Housing Revenue Bonds -2001C 1,855,000 Multifamily Housing Revenue Bonds -2007A 6,000,000 Outstanding June 30, 2009 $1,342,934 2,700,000 2,920,000 970,000 1,810,000 2,540,163 NOTE 8 — PASS-THROUGH PAYMENTS AND TAX INCREMENT SHIFT TO EDUCATIONAL REVENUE AUGMENTATION FUND (ERAF) In 1973, at the time of adoption of the Redevelopment Plan for the Redevelopment Project, the Agency entered into agreements with the County of Marin and with other taxing entities providing for limits on the amount of tax increment the Agency could receive pursuant to the Redevelopment Plan. These agreements were replaced by a Fiscal Agreement, dated September 11, 1984, by and between the Agency and the following taxing entities: County of Marin, City of San Rafael, San Rafael Elementary and High School Districts, and Marin Community College District. The Agreement has been amended from time to time concurrently with the issuance of bonds by the Agency. The Fiscal Agreement, as amended, contains limitations on the amount of tax increment revenues allocable annually to the Agency. This limits the amount of tax increment the Agency receives to the amount necessary to pay the debt service on the Agency's tax allocation bonds plus any amount necessary to make payments to the County of Marin pursuant to an agreement between the Agency and the County of Marin entitled Section 33401 Agreement (County) dated September 11, 1984, providing for the annual payment to the County of tax increment in an amount equal to the County's share of taxes that are attributable to the Agency's use of tax increment to pay debt service on the Bonds. In addition, the Agency also receives any amount it is required to set aside into the Housing Fund pursuant to Sections 33334.2, 33334.3, and 33334.6 of the Redevelopment Law to meet the Agency's low and moderate income housing obligation. On October 1, 2002 , the Agency entered into a second amendment to the Section 33401 Tax Sharing Agreement with the San Rafael High School District. This agreement provides for additional payments in the amount of $179,000 each fiscal year beginning with fiscal year 2002-03 through fiscal year 2021-22. 31 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 9 - COMMITMENTS AND CONTINGENCIES The Agency is presently involved in certain matters of litigation that have arisen in the normal course of conducting Agency business. Agency management believes, based upon consultation with the Agency Attorney, that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the Agency. Additionally, Agency management believes that the Agency's insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize. NOTE 10 — SUBSEQUENT EVENT The State of California adopted AB26 4X in July 2009 which directs that a portion of the incremental property taxes received by redevelopment agencies be paid to the County supplemental educational revenue augmentation fund (SERAF) in fiscal years 2009-10 and 2010-11. The State Department of Finance will determine each agency's SERAF payment by November 15 of each year, and payments are due by May 10 of the applicable year. Based on the calculations in AB26 4X, the Agency's SERAF's are estimated to be $1,370,626 in fiscal year 2009-10 and $282,188 in fiscal year 2010-11. The Agency can use any legally available funds to make the SERAF payments. The payment due in fiscal year 2009-10 represents 42% of the Agency's cash and investments available for operations at June 30, 2009. The obligation to make the SERAF payment is subordinate to obligations to repay bonds, however if the Agency fails to make the SERAF payment the Agency may not encumber or expend future funds other than to pay pre-existing indebtedness, contractual obligations and 75% of the amount expended on Agency administration for the preceding fiscal year until the SERAF is paid in full. The Agency's obligation is in addition to amounts due pursuant to the Fiscal Agreement as discussed above in Note 6. 32 SAN RAFAEL REDEVELOPMENT AGENCY 1999 AGENCY BONDS DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2009 REVENUES: Taxes and special assessments Total Revenues EXPENDITURES: Debt service: Principal Interest and fiscal charges Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES Net Change in Fund Balances FUND BALANCE, BEGINNING OF THE YEAR FUND BALANCE, END OF THE YEAR 33 Variance with Final Budget Actual Positive Budget Amounts (Negative) $1,498,630 $1,498,625 ($5) 1,498,630 1,498,625 (5) 730,000 730,000 768,630 768,625 5 $1,498,630 $1,498,625 $5 SAN RAFAEL REDEVELOPMENT AGENCY 2002 AGENCY BONDS DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2009 REVENUES: Taxes and special assessments Use of money and property Total Revenues EXPENDITURES: Debt service: Principal Interest and fiscal charges Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Transfers (out) Total other financing sources (uses) Net Change in Fund Balances FUND BALANCE, BEGINNING OF THE YEAR FUND BALANCE, END OF THE YEAR 34 Variance with Final Budget .Actual Positive Budget Amounts (Negative) $2,070,150 $2,070,150 396 $396 2,070,150 2,070,546 396 1,235,000 1,235,000 835,150 835,150 2,070,150 2,070,150 396 396 300,240 300,240 ($300,240) (300,240) 396 $396 35,430 $35,826 SAN RAFAEL REDEVELOPMENT AGENCY CAPITAL IMPROVEMENT PROJECTS CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2009 REVENUES: Use of money and property Total Revenues EXPENDITURES: Capital improvement/special projects Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES Net Change in Fund Balances FUND BALANCE, BEGINNING OF TEE YEAR FUND BALANCE, END OF TEE YEAR 35 Variance with Final Budget Actual Positive Budget Amounts (Negative) $80,000 $36,981 ($43,019) 80,000 36,981 (43,019) 179,000 179,000 179,000 179,000 (99,000) (142,019) (43,019) ($99,000) (142,019) ($43,019) 1,897,846 $1,755,827 SAN RAFAEL REDEVELOPMENT AGENCY LOW AND MODERATE INCOME HOUSING CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2009 REVENUES: Taxes and special assessments Use of money and property Other revenue Total Revenues EXPENDITURES: Current: Community developmenUredevelopment Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers (out) Total other financing sources (uses) Net Change in Fund Balances FUND BALANCE, BEGINNING OF THE YEAR FUND BALANCE, END OF THE YEAR 36 Variance with Final Budget Actual Positive Budget Amounts (Negative) $900,000 $980,997 $80,997 150,000 29,496 (120,504) 11,558 11,558 1,050,000 1,022,051 (27,949) 959,830 1,001,649 (41,819) 959,830 1,001,649 (41,819) 90,170 20,402 (69,768) (300,240) (300,240) (300,240) (300,240) ($210,070) (279,838) ($69,768) 2,971,063 $2,691,225 SAN RAFAEL REDEVELOPMENT AGENCY 1985 CAPITAL PROTECTS AND ADMINISTRATION CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2009 REVENUES: Use of money and property Charges for services Other revenue Total Revenues EXPENDITURES: Current: General government Public works and parks Community development/redevelopment Capital improvement/special projects Total Expenditures EXCESS (DEFICIENCY) OF REVENUES SOURCES (USES): Transfers in Total other financing sources (uses) Net Change in Fund Balances NET ASSETS, BEGDR41NG OF YEAR Variance with Final Budget Actual Positive Budget Amounts (Negative) $33,240 $52,222 $18,982 13,580 27,153 13,573 5,233 5,233 46,820 84,608 37,788 21,650 30,660 (9,010) 163,910 147,756 16,154 677,450 566,369 111,081 143,470 133,374 10,096 1,006,480 878,159 128,321 (959,660) (793,551) 166,109 300,240 300,240 300,240 300,240 ($659,420) (493,311) $166,109 2,101,417 FUND BALANCE, END OF THE YEAR $1,608,106 37 This Page Left Intentionally Blank Maze & assocIares ACCOUNTANCY CORPORATION 3478 Buskirk Ave. -Suite 215 Pleasant Hill, California 94523 (925) 930-0902 • FAX (925) 930-0795 maze @mazeasso cla tes. com www.n?azeassociates.com REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTBER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VEAANENTAUDPTINGSTANDARDS Members of the Redevelopment Agency of the City of San Rafael, California We have audited the financial statements of the San Rafael Redevelopment Agency as of and for the year ended June 30, 2009, and have issued our report thereon dated October 30, 2009. We have conducted our audit in accordance with generally accepted auditing standards 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 Agency's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control over financial reporting. 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 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 Agency's financial statements that is more than inconsequential will not be prevented or detected by the Agency's internal control. 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 Agency's internal control. We did not identify any deficiencies in internal control that we consider to be material weakness, as defined above. Our consideration of internal control over financial reporting was for the limited purpose described in the second paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. As part of our audits, we prepared and issued our separate Memorandum on Internal Control dated October 30, 2009. A Pratessionat Corporation 39 Compliance and Other Matters 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 grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. Our audit included tests of compliance with provisions of the Guidelines for Compliance Audits of California Redevelopment Agencies. 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. This report is intended for the information of the Board, management and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than the above parties. 6a?� -fo October 30, 2009 40