HomeMy WebLinkAboutFin RA Financial Audit 2007-08Agenda Item No: 2
Meeting r5' Date: January 5 2009
SAN RAFAEL REDEVELOPMENT AGENCY
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: FINANCE
Prepared by: Cindy Mosser ( Executive Director Approval:
Finance Director
SUBJECT: FINANCIAL AUDIT FOR THE REDEVELOPMENT AGENCY FOR
FISCAL YEAR 2007-2008
RECOMMENDATION: ACCEPT THE FINANCIAL AUDIT FOR THE
REDEVELOPMENT AGENCY FOR FISCAL YEAR 2007-
2008.
BACKGROUND:
As is required State law, the San Rafael Redevelopment Agency must complete an annual audit
of its financial activities. The auditing firm of Maze and Associates, Accountancy Corporation
conducted the audit for fiscal year 2007-2008. Their work was completed in accordance with
generally accepted auditing standards; Government Auditing Standards, issued by the
Comptroller General of the United States.
The Agency Board's approval and acceptance of fiscal year 2007-2008 audited financial report is
needed to remain in compliance with State and Federal law.
ANALYSIS:
The actual results of the Agency's financial activities are presented in the Government -Wide
Financial Statements. The liabilities of the Agency exceeded its assets at the close of the fiscal
year by $29.6 million. 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. Tax increment revenues are more
than sufficient to cover debt related expenses. A financial summary of expenditures and
revenues is shown in the Statement of Activities and Changes in Net Assets.
Supplementary explanatory information is provided with a Management's Discussion and
Analysis (MD&A) beginning on page 3. The MD&A provides key highlights and a summary
view of performance of financial activities for the year ended June 30, 2008.
FOR CITY CLERK ONLY
File No.:
Council Meeting:
Disposition:
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
FISCAL IMPACT:
No fiscal impact occurs by having the Agency Board accepts these reports. The fiscal year 2007-
2008 Annual Financial Audit Report is presented as the actual results of the Agency fmancial
activities for the year.
OPTIONS:
The Agency Board can choose to either:
1) Accept the Fiscal Year 2007-2008 Annual Financial Audit, as presented, or
2) Reject the report. The Agency Board is required under current law to accept the report
and file it with numerous County, State and Federal agencies. Rejecting this report would
leave the Agency out of compliance with applicable laws.
ACTION REQUIRED:
Staff recommends Agency Board accept the report as presented.
Attachment/Encl
W:\Management Services- WorkFile\Finance- WorkFile\Council Material\Staff Reports\2008\Agency\Audit report
fy2007-08-RDA.doc
CITY OF SAN RAFAEL
REDEVELOPMENT AGENCY
BASIC COMPONENT UNIT
FINANCIAL STATEMENTS
FOR TBE YEAR ENDED JUNE 30, 2008
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CITY OF SAN RAFAEL REDEVELOPMENT AGENCY
BASIC COMPONENT UNIT FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008
Table of Contents
Page.
Independent Auditor's
Management's Discussion and Analysis
Basic Component Unit Financial Statements:
Agency -wide Financial Statements:
Statementof Net Assets......................................................................................................10
Statementof Activities........................................................................................................11
Fund Financial Statements:
Major Governmental Funds
BalanceSheet..................................................................................................................14
Reconciliation of Governmental Funds -Fund Balances with the
Net Assets of Governmental Activities......................................................................16
Statement of Revenues, Expenditures, and Changes in Fund Balances ........................18
Reconciliation of the Net Change in Fund Balances —
Total Governmental Funds with the Statement of Activities......................................20
Notes to Component Unit Financial Statements........................................................................21
Supplemental Information:
Schedule of Revenues, Expenditures and Changes in Fund Balance — Budget and Actual
— Budgetary Basis:
Debt Service Funds:
1999 Agency Bonds
2002 Agency Bonds
Capital Project Funds:
.33
Capital Improvement Projects...................................................................................35
Low and Moderate Income Housing
SAN RAFAEL REDEVELOPMENT AGENCY
BASIC COMPONENT UNIT FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008
Table of Contents (Continued)
Page
Supplemental Information (Continued):
1999 Bonds Capital Projects
1985 Capital Projects and Administration................................................................38
Report on Internal Control over Financial Reporting and on Compliance
And Other Matters on an Audit of Financial Statements Performed in
Accordance with Government Auditing Standards............................................................39
Schedule of Prior Year Finding........................................................................................................41
MAZE &
ASSOCIATFlo
ACCOUNTANCY CORPORATION
3478 Buskirk Ave. -Suite 215
Pleasant Hill, California 94523
(925) 930-0902 • FAX (925) 930-0135
maze@mazeassociates.com
INDEPENDENT AUDITOR'S REPORT www.mazeassociates.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, 2008, 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, 2008 and the changes in financial position for the year
then ended, in conformity with generally accepted accounting principles in the United States of America.
hi accordance-withh Government Auditing Standards, we have also issued our report dated October 22,
2008 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.
r4CLOMA
October 22, 2008
A Professional f-poration
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REDEVELOPMENT AGENCY OF THE CITY OF SAN RAFAEL
MANAGEMENT'S DISCUSSION AND ANALYSIS
FOR THE FISCAL YEAR ENDED JUNE 30, 2008
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, 2008. 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 2007-2008
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 2007-2008 with comparative
totals for the previous four fiscal years:
Fiscal Year Receipt 2003-04 2004-05 2005-06 2006-07 2007-08
Total for the Year $4,574 447 $4,549,414 4 40 652 433 376
The liabilities of the Agency exceeded its assets at the close of the fiscal year by $29.6M (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 $5.96M, which is a decrease of $3.01M in comparison with the prior year. Approximately
$5.96M of this amount is available for spending at the Agency's discretion for the purposes of
redevelopment (reserved fund balance). Of this amount, $2.9M 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 designedto
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, 2008
Current assets $7.41\4
Noncurrent assets 1.5M
Total assets
8.9M
Current liabilities
2.8M
Noncurrent liabilities
35.7M
Total liabilities
38.5m
Net assets:
4,925,169
Restricted
2.9M
Unrestricted
(32.5)M
Total net assets
($29.6)M
There was a decrease of $7.6M 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 2007-08
General revenues:
Property tax (tax increments)
$ 4,533,376
Use of money and property
320,271
Miscellaneous
40,522
Transfers in from other city funds
31,000
Total general revenues and transfers
4,925,169
Net Expenses
12,518,102
Change in net assets (increase)
(7,592,933)
Net assets - beginning of year, as restated (22,008,323)
Net assets - end of year $(29,601,256)
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.
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 $.8M and a transfer for debt service payment of $0.3M. The expenditure includes
$100K for project improvements, and $101K for subsidies to Low and Moderate Income Housing. The
ending fund balance remained unchanged 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 $259K. The expenditures amounted to $3.9M. The fund balance decreased by $2.9M to
$2.9M 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. Interest earnings were $62K more
than estimated. The interest earnings are higher than the budget due to better than expected rates for
investments held in the Local Agency Investment Fund. The operating expenditures overall remained
within the budget.
VI. Capital Asset and Debt Administration
Capital Assets: As of June 30, 2008, the Agency's capital assets were $1.5M. Construction in progress
represents $1.4M 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
$39.4M. 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 2007-2008. 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 2008-2009 brings no new surprises. Sufficient funds have been set
aside to keep the Agency operations sustainable for several years. No new bonds are forecasted for the
next year. Nevertheless, Agency staff 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. The Agency will continue to receive funds for an existing capital project
with Regional Measure A funds and Non -motorized Transportation Pilot Program funds.
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.
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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.
SAN RAFAEL REDEVELOPMENT AGENCY
STATEMENT OF NET ASSETS
JUNE 30, 2008
ASSETS
Cash and investments (Note 2)
Restricted cash and investments (Note 2)
Receivables:
Accounts
Taxes
Grants
Interest
Loans (Note 4)
Capital assets (Note 5):
Nondepreciable assets
Depreciable assets, net
Total Assets
LIABILTMS
Accounts payable
Interest payable
Developer bonds payable
Arbitrage payable
Long-term debt (Note 6):
Due in one year
Due in more than one year
Total liabilities
NET ASSETS (Note 1F)
Restricted for:
Debt service
Capital projects
Unrestricted
Total net assets
Governmental
Activities
$4,235,907
1,596,105
48,307
3,106
961,905
23,088
593,572
1,465,292
26,799
8,954,081
488,391
310,658
25,000
25,127
1,965,000
35,741,161
38,555,337
35,430
2,955,074
(32,591,760)
($29,601,256)
See accompanying notes to financial statements
10
SAN RAFAEL REDEVELOPMENT AGENCY
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2008
General revenues
Taxes
- 4,533,376
Investment earnings
320,271
Govemmental
40,522
Transfers in from the City, net (Note 3C)
31,000
Total general revenues and transfers
Activities Net
Change in Net Assets
(7,592,933)
Program Revenues
(Expenses)
Net Assets (Deficit) -Ending
($29,601,256)
Capital Grants
Revenues
Charges for
and
Governmental
Functions/Programs;
Expenses
Services
Contributions
Activities
Primary Government
Governmental Activities:
General government
$31,317
($31,317)
Public works and parks
137,530
(137,530)
Community development/redevelopment
11,813,783
$22,356
$1,339,270
(10,452,157)
Interest on long-term debt
1,897,098
(1,897,098)
Total Primary Government
$13,879,728
$22,356
$1,339,270
(12,518,102)
General revenues
Taxes
- 4,533,376
Investment earnings
320,271
Miscellaneous
40,522
Transfers in from the City, net (Note 3C)
31,000
Total general revenues and transfers
4,925,169
Change in Net Assets
(7,592,933)
Net Assets (Deficit) -Beginning
(22,008,323)
Net Assets (Deficit) -Ending
($29,601,256)
See accompanying notes to financial statements
11
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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 2008. 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
BALANCESBEET
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 3A)
Total Assets
LIABILITIES
Accounts payable
Due to other funds (Note 3A)
Developer bonds payable
Arbitrage payable
Deferred revenue
Total Liabilities
DEBT SERVICE FUNDS
CAPITAL PROJECTS FUNDS
Reserved for:
Low and
Capital
Moderate
1999 Agency 2002 Agency
Improvement
Income
Bonds Bonds
Projects
Housing
2,377,491
Debt service
$35,430
$33,622
$1,885,260
$198,858
1,808
Total Liabilities and Fund. Balances
$35,430 $1,897,846
$2,978,612
2,857
3,106
12,586
10,502
593,572
2,169,717
$35,430
$1,897,846
$2,978,612
$7,549
7,549
FUND BALANCES (Note 1G):
Reserved for:
Loans receivable
593,572
Improvement projects
$1,897,846
Housing -
2,377,491
Debt service
$35,430
Total Fund Balances
35,430 1,897,846
2,971,063
Total Liabilities and Fund. Balances
$35,430 $1,897,846
$2,978,612
See accompanying notes to financial statements
14
CAPITAL PROJECTS FUNDS
1985 Capital Total
Projects and Governmental
1999 Bonds Administration Funds
$472,642
$2,118,167 $4,235,907
$1,594,297
1,596,105
29,000
16,450 48,307
25,127
3,106
961,905
961,905
23,088
33,200 3,670,140
593,572
2,169,717
$2,585,202
$2,134,617 $9,631,707
$472,642
$8,200 $488,391
2,169,717
2,169,717
25,000 25,000
25,127
25,127
961,905
961,905
3,629,391
33,200 3,670,140
593,572
(1,044,189) 2,101,417 2,955,074
2,377,491
35,430
(1,044,189) 2,101,417 5,961,567
$2,585,202 $2,134,617 $9,631,707
15
SAN RAFAEL REDEVELOPMENT AGENCY
RECONCILIATION OF
GOVERNMENTAL FUNDS -FUND BALANCES
WITH THE NET ASSETS OF GOVERNMENTAL ACTIVITIES
JUNE 30, 2008
Total Fund Balances reported on the governmental funds balance sheet $5,961,567
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. 1,492,091
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 961,905
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 (37,706,161)
Interest payable (310,658)
NET ASSETS OF GOVERNMENTAL ACTIVITIES ($29,601,256)
See accompanying notes to financial statements
16
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SAN RAFAEL REDEVELOPMENT AGENCY
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
FOR THE YEAR ENDED JUNE 30, 2008
REVENUES:
Taxes and special assessments
Use ofmoney and property
Intergovernmental
Charges for services
Other revenue
Total Revenues
EXPENDITURES:
Current:
General govemment
Public works and parks
Community development(redevelopment
Capital outlay
Capital improvement/special projects
Debt service:
Principal
Interest and fiscal charges
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVFREXPENDITURES
OTHER FINANCING SOURCES (USES)
Transfers in (Note 3B)
Transfers in from City (Note 3C)
Transfers (out) (Note 3B)
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 PROSECT FUNDS
Low and
Capital
Moderate
1999 Agency 2002 Agency Improvement
Income
Bonds Bonds Projects
Housing
$1,497,469 $2,071,381 $964,526
1,314 $75,851 60,628
11,522
1,497,469 2,072,695 75,851 1,036,676
822,400
179,000 60
695,000 1,195,000
802,469 876,381
1,497,469 2,071,381 179,000 822,460
1,314 (103,149) 214,216
300,240
(300,240) (300,240)
See accompanying notes to the financial statements.
18
(300,240)
1,314 (103,149) (86,024)
34,116 2,000,995 3,057,087
$35,430 $1,897,846 $2,971,063
CAPITAL PROJECT FUNDS
1985 Capital Total
Projects and Governmental
1999 Bands Administration Funds
31,317
$4,533,376
$92,666
$89,812 320,271
377,365
377,365
2,818,072
22,356 22,356
29,000
40,522
499,031
112,168 5,293,890
31,317
31,317
137,530
137,530
559,861
1,382,261
2,818,072
2,818,072
162,486 60,048
401,594
1,890,000
1,678,850
2,980,558 788,756 8,339,624
(2,481,527) (676,588) (3,045,734)
347,000
300,240
947,480
31,000
31,000
(347,000)
(947,480)
378,000
(46,760)
31,000
(2,103,527)
(723,348)
(3,014,734)
1,059,338
2,824,765
8,976,301
($1,044,189)
$2,101,417
$5,961,567
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, 2008
The schedule below reconciles the Net Changes in Fond 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 ($3,014,734)
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 are added back to fund balance 2,712,134
Net retirements of capital assets are deducted from fund balance (9,921,361)
Depreciation expense is deducted from the fund balance (2,629)
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 (8,588)
Deferred revenue 961,905
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 =action 1,680,340
CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES ($7,592,933)
20
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.
A 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 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 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 ofAccoundng
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 first 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.
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 land. 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:
Reserve for Loans Receivable — To account for assets that have been set aside to represent loans receivable
amounts that do not represent available current resources.
Reserve for Improvement Projects — To account for capital projects made in the project area.
Reserve for Housing — To account for projects for low and moderate income housing purposes.
Reserve 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 1985 Capital Project
and Administration Fund and three 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.
24
SAN RAFAEL REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 1- SIGNIFICANT ACCOUNTING POLICIES (Continued)
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.
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 carried 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. Classification
Cash and investments as of June 30, 2008 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 $4,235,907
Restricted cash and investments 1,596,105
Total cash and investments $5,832,012
25
SAN RAFAEL REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 2 - CASH AND INVESTMENTS (Continued)
B. Investments Authorized 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:
26
Maximum
Maximum
Minimum Credit
Percentage of
Authorized Investment Type
Maturity
Quality
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.
26
SAN RAFAEL REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 2 - CASH AND INVESTMENTS (Continued)
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 $1,596,105
Local Agency Investment Fund 4,235,907
Total Cash and Investments $5,832,012
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. Included 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, 2008, these investments matured in an average of 212 days.
Money Market Mutual Funds are available for withdrawal on demand and at June 30, 2008 matured in
an average of 55 days.
D. Credit Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the bolder 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 LAIF. If 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, 2008 for the 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, 2008.
27
SAN RAFAEL REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 3 — INTER -FUND TRANSACTIONS
A. Inter fund Receivables and Payables
Amounts due to or due from other funds reflect inter -fund balances for services rendered or short-term
loans expected to be repaid in the next fiscal year.
As of June 30, 2008, the 1999 Bonds Capital Project Fund owed the Low and Moderate Income Housing
Capital Project Funds $2,169,717.
B. Transfers
Transfers between funds during the fiscal year ended June 30, 2008 were as follows:
From
Low and Moderate Income Housing
Capital Projects Fund
2002 Agency Bonds Debt Service Fund
To Fund Amount
2002 Agency Bonds Debt Service Fund
1985 Capital Projects and Administration
Capital Projects Fund
1985 Capital Projects and Administration Capital Projects 1999 Bonds Capital Projects Fund
(A) Transfer is for the housing portion of debt service.
(B) Transfer is for administrative support.
C. Transfer from the City
$300,240 A
300,240 B
347,000 B
$947,480
During fiscal year 2008 the Agency received transfers from the City in amount of $31,000 for
administration support.
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, 2008 the balance of the loan was
$294,023.
B. 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. As of June 30, 2008 the balance of the loan was $299,549.
28
SAN RAFAEL REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 5 — CAPITAL ASSETS
Capital Assets at June 30 comprise:
Governmental Activities
Capital assets not being depreciated:
Land
Construction in progress
Balance at Balance at
June 30, 2007 Additions Retirements June 30, 2008
$39,000 $39,000
8,635,519 $2,712,134 ($9,921,361) 1,426,292
Total capital assets not being depreciate 8,674,519 2,712,134 (9,921,361) 1,465,292
Capital assets being depreciated:
Buildings and structures 80,000 80,000
Machinery and equipment 14,809 14,809
Total capital assets being depreciates 94,809
94,809
Less accumulated depreciation for:
Buildings and structures (55,200) (1,600) (56,800)
Machinery and equipment (10,181) (1,029) (11,210)
Total accumulated depreciation (65,381) (2,629) (68,010)
Total net capital assets being depreci 29,428 (2,629) 26,799
Total governmental activity capital a $8,703,947 $2,709,505 ($9,921,361) $1,492,091
Depreciation expense.has been allocated to the Community development/redevelopment activity on the
statement of activities.
NOTE 6 - LONG-TERM DEBT
A summary of governmental activities long-term debt changes for the fiscal year ended June 30, 2008,
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 12/1/2022
2002 Tax Allocation Bonds
2.00%-5.25%, due 12/1/2021
Total Tax Allocation Bonds
Authorized Balance Balance Current
and Issued June 30, 2007 Additions Retirements June 30, 2008 Portion
$21,115,000 $16,505,000
2,389,004 3,697,501 $209,660
$695,000 $15,810,000
3,907,161
$730,000
25,020,000 19,015,000 1,195,000 17 820,000 1,235,000
39,217,501 209,660 1,890,000 37,537,161 1,965,000
Note Payable, 8.000A, due 11/1/2024 169,000 169,000 169,000
Total Governmental Long-term Debt $39,386,501 $209,660 $1,890,000 $37,706,161 $1,965,000
F
SAN RAFAEL REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 6 - LONG-TERM DEBT (Continued)
A. 7999 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 $19.7 million in remaining debt
service on the Redevelopment Agency's long term debt which is scheduled to occur in 2022. For fiscal
year 2008 tax increment revenues amounted to $1.5 million and debt service amounted to $1.5 million.
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 $17.8 million in remaining debt
service on the Redevelopment Agency's longterm debt which is scheduled to occur in 2021. For fiscal
year 2008 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, 2008 was
$169,000 plus accrued interest of $171,874 which is recorded as interest payable.
till
SAN RAFAEL REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 6 - LONGTERM DEBT (Continued)
D. Future Debt Service
As of June 30, 2008, future debt service is as follows:
For the Year
Governmental Activities
Ended June 30
Principal
Interest
2009
$1,965,000
$1,603,776
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
2014-2018
13,879,946
3,958,130
2019-2023
16,765,054
1,063,464
2024-2025
169,000
1,025,000
Totals
$41,629,000
$12,043,169_
Reconciliation of long-term debt:
Less unaccreted disccur (3,922,839)
Net long-term debt $37,706,161
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 taking power of the City, the
Redevelopment Agency, the State of California or any political subdivision thereof, is pledged for payment
of these bonds.
31
Original
Outstanding
Amount
June 30,2008
San Rafael Redevelopment Agency
Multifamily Housing Revenue Bonds
$3,590,529
$1,367,780
San Rafael Redevelopment Agency
Variable Rate Demand Multifamily
Housing Revenue Bonds
3,000,000
2,700,000
San Rafael Redevelopment Agency
-
Multifamily Housing Revenue Bonds-:
3,220,000
2,920,000
Multifamily Housing Revenue Bonds-:
1,025,000
985,000
Multifamily Housing Revenue Bonds-'
1,855,000
1,815,000
Multifamily Housing Revenue Bonds-'
6,000,000
5,745,338
31
SAN RAFAEL REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
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.
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.
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 .TUNE 30, 2008
REVENUES:
Taxes and special assessments
Total Revenues
EXPENDITURES:
Debt service:
Principal
Interest and fiscal obarges
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
Net Change in Fond Balances
FUND BALANCE, BEGINNING OF THE YEAR
FUND BALANCE, END OF THE YEAR
Variance with
Final Budget
Actual Positive
Budget Amounts (Negative)
$1,497,470 $1,497,469 ($1)
1,497,470 1,497,469 (1)
695,000
802,470
695,000
802,469 I
1,497,470
1,497,469 1
33
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, 2008
REVENUES:
Taxes and special assessments
Use ofmoney 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)
$2,071,380 $2,071,381 - $1
1,314 1,314
2,071,380 2,072,695 1,315
1,195,000 1,195,000
876,380 876,381 (1)
2,071,380 2,071,381 (I)
1,314 1,314
300,240 300,240
(300,240) (300,240)
1,314 $1,314
34,116
$35,430
SAN RAFAEL REDEVELOPMENT AGENCY
CAPITAL RAPROVEMENT PROJECTS CAPITAL PROTECTS FUND
SCHEDULE OF REVENUES, EXPENDFFURES AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2008
REVENUES:
Use of money andproperty
Total Revenues
EXPENDITURES:
Capital impmvemenUspecial projects
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
35
Variance with
Final Budget
Actual Positive
Budget Amounts (Negative)
$80,000 $75,851 ($4,149)
80,000 75,851 (4,149)
179,000 179,000
179,000 179,000
(99,000) (103,149) (4,149)
($99,000) (103,149) ($4,149)
2,000,995
$1,897,846
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, 2008
REVENUES:
Taxes and special assessments
Use ofmoney and property
Other revenue
Total Revenues
EXPENDITURES:
Current:
Community development/redevelopment
Capital improvement1special projects
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
IHER FINANCING SOURCES (USES):
Transfers (out)
Told other th ancing sources (uses)
Net Change in Fond Balances
FUND BALANCE, BEGINNING OF THE YEAR
FUND BALANCE, END OF THE YEAR
Variancewith
Final Budget
Actual Positive
Budget Amounts (Negative)
$900,000 $964,526
$64,526
150,000 60,628
(89,372)
11,522
11,522
1,050,000 1,036,676
(13,324)
911,160 822,400 88,760
60 (60)
911,160 822,460 88,700
138,840 214,216 75,376
(300,240)
(300,240)
(300,240)
(300,240)
($161,400)
(86,024) $75,376
36
3,057,087
$2,971,063
SAN RAFAEL REDEVELOPMENT AGENCY
1999 BONDS CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 2008
REVENUES:
Use of money and property
Intergovernmental
Other revenue
Total Revenues
EXPENDITURES:
Capital outlay
Capital improvement/special projects
Total Expenditures
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
OTHER FINANCING SOURCES (USES):
Tmusfers in
Transfers in from City
Total other financing sources (uses)
FUND BALANCE, BEGINNING OF THE YEAR
FUND BALANCE, END OF THE YEAR
37
Variance with
Final Budget
Actual Positive
Budget Amounts (Negative)
$92,666
$92,666
$900,000 377,365
(522,635)
29,000
29,000
378,000
378,000
900,000 499,031
(400,969)
900,000 2,818,072 (1,918,072)
162,486 (162,486)
900,000 2,980,558 (2,080,558)
(2,481,527) (2,481,527)
347,000
347,000
31,000
31,000
378,000
378,000
(2,103,527)
($2,481,527)
1,059,338
($1,044,189)
SAN RAFAEL REDEVELOPMENT AGENCY
1985 CAPITAL PROJECTS AND ADMINISTRATION CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE
BUDGET AND ACTUAL -.
FOR THE YEAR ENDED JUNE 30, 2008
REVENUES:
Use of money and property
Charges for services
Total Revenues
EXPENDITURES:
Current:
General government
Public works and parks
Community development/redevelopment
Capital improvement/special projects
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
NET ASSETS, BEGINNING OF YEAR
Variance with
Final Budget
Actual Positive
Budget Amounts (Negad-)
$33,240 $89,812 $56,572
13,570 22,356 8,786
46,810 112,168 65,358
28,590
31,317
(2,727)
154,740
137,530
17,210
653,300
559,861
93,439
78,950
60,048
18,902
915,580 788,756 126,824
(868,770) (676,588) 192,182
300,240 300,240
(347,000) (347,000)
300,240 (46,760) (347,000)
($568,530) (723,348) ($154,818)
2,824,765
FUND BALANCE, END OF THE YEAR $2,101,417
38
MAZE &
ASSOCIATES
ACCOUNTANCY CORPORATION
3478 Buskirk Ave. -Suite 215
Pleasant Hill, California 94523
(925) 930-0902 • FAX (925) 930-0135
maze@mazeassociates.com
www.mazeassociates.com
REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN
ACCORDANCE WITH GOVERNMENTAMTING STANDARDS
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, 2008, and have issued our report thereon dated October 22, 2008. 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.
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 22, 2008.
A Professiona3 Corporation
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 oflaws, 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.
October 22, 2008" JJ
STATUS OF PRIOR YEAR FINDING
Prepared by Management
Finding 07-01: Blight Progress, Loan, and Property Reports
Health and Safety Code Section 33080.1 requires Agencies to submit their Blight Progress, Loan, and
Property reports to the State Controller's Office within six months of the fiscal year end. However, the
Agency did not submit these reports to the State Controller's Office for fiscal 2006. The Agency should
ensure that it submits all reports required by the Health and Safety Code.
Current Year Status:
The Blight Progress, Loan and Property reports for fiscal year 2007 were submitted to the State
Controller's office on December 17, 2007, within six months of the fiscal year end.
41