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Home My WebLink AboutED Redevelopment Agency Annual ReportCITY OF AGENDA ITEM NO.: 3 k. SAN RAFAEL MEETING DATE: December 19, 2011 SUBJECT: Acceptance of the Annual Report, including a blight progress, Agency owned property, loan compliance AB 987 reports for the San Rafael Redevelopment Agency. SUBMITTED BY,6Lt�/e6VAL, Stephanie Lovette, Acting Etonomic Development Director APPROVED Nancy Mackle, 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: Fiscal Report EXHIBIT D: Agency Audit EXHIBIT E: Statement of Indebtedness EXHIBIT F: Blight Progress, Agency loan and Agency owned property report EXHIBIT G: Affordable Housing Report EXHIBIT H: AB 987 Report FOR CITY CLERK ONLY File No.: j City Council Meeting: 1;1 H 1-1 C> I I Disposition: OL e-Lkj66-,-Ct ..r ,•, 3 ,,, ,r•w,n u.... st - d tY ��"+"l?. ,, .,��`'v 41��$�k'k§J '��k`�35. `aF; �,.,Y cf U�k,�x�6�YtX;,kt;;i3"Y%.dfj rt/,.4 ��C��,.,��GY�ri��,� �rl�,'r� .Tr qzi F 'Nt §•Y 1't >c. I Y,*s x'�?"3 is �Ut ..�C. FY .•a s!dt* Y t to :.,Y � kY. ,� .. ,,,.� Fiscal Year 011 Members, ofthe;Goverrting Body General Information _._. Last Name First Name Chairperson *ro (AI Member 1Levine [Marc Member Brockbank � Greg Member lHeiler lBarbara Member �Gonnoily I [Damon Member" CA7-1 Mernber -- -_---- Report Prepared By - Member Firm Name, Member " 'Tregner Member, -_ -_ _31 - --- General Information _._. Agency Officials ZIP Code Middle I Phone Last Name Initial. } Independent Auditoir, IJ Executive Director (Maekle _ Fiscal Officer lPendoley E- :1 Secretary Beirne --� CA7-1 g 2 - Report Prepared By - -� Firm Name, jLast " 'Tregner i -- First (Carl -� Middle Initial Street 11400 5th Avenue 1 City San Rafael Mail ng Address , Street 1 P.O. Box 151560 – ----- ---- Street 2 City San Rafael l State (CA Zip 194915-1560 Phone [415) 485-3065 Is Address Changed? General Information _.._ State' Com_ ZIP Code 194901- 1 I Phone J(415) 485-3054 Page 1 First Name Middle Initial ' — phone Nancy (�� L • 1(415) 485-3055 j -_I Janet 1(415) 458-5018 Esther —] C�� 1(415) 485-3065 J Independent Auditoir, (Maze and Associates 1Maze and Associates — f 13478 Buskirk Avenue, Suite 215 j Feasant Hill CA7-1 g 2 - (925)930-0902 12/12/2011 ✓7` Audit Information Fiscal Year 20711 Was the Report Prepared from Audited Financial Data, and Did You Submit a Copy of the Audit? Indicate Financial Audit Opinion unqualified If Financial Audit is not yet Completed, What is the Expected Completion Date? If the Audit Opinion was Other than Unqualified, State Briefly the Reason Given Was a Compliance Audit Performed in Accordance with Health and Safety Code Section 33080.1 and the State Controller's Guidelines for Compliance Audits, and Did You Submit a Copy of the Audit? Indicate Compliance Audit Opinion If Compliance Audit is not yet Completed, What is the Expected Completion Date? Yesl �Positive/Negative No Exceptions If compliance opinion includes exceptions, state the areas of non-compliance, and describe the agency's efforts to correct. Audit Information Page 1 12/12/2011 Fiscal Year 2011 ` Please Provide aBrief Description of the Activities for this Project Area During the Reporting Year. ltv"~=`� Project Area Report Project Area . . ~Project Area Name Forwarded from Prior Year ? Enter Code for Type ofProject Area Report p=Standard Project Area Report L=Low and Moderate Income Housing Fund O=Other Miscellaneous Funds u,Programs Does the Plan Include Tax Increment Provisions? Date Project Area was Established (MM-DD-Y�) Most Recent Date Project Area was Amended Did this Amendment Add New Territory? Most Recent Date Project Area was Merged � � A=Administrative Fund M=Mortgage Revenue Bond Program � Will this Project Area boCarried Forward k,Next Year? | Established Time Limit: Repayment o[Indebtedness (Year Only) { Effectiveness ofPlan (Year Only) | New Indebtedness (Year Only) | / Size o/Project Area inAcres | Percentage ofLand Vacant at the Inception o[the Project Area | Health and Safety Code Section J3328/ (xx,x9lo) Percentage ofLand Developed ot the Inception ofthe Project Area | Health and Safety Code Section 33320/ *x.xYQ Objectives n(the Project Area ooSet Forth inthe Project Area Plan | (Enter the Appropriate [ode(s) in Sequence aoShown) R=Residential |= Industrial C=Commercial P=Public 0=Otho Yos| ' 20231 20U3| —20031 1,7001 RCP Project Area Report Page 1 12/12/2011 Fiscal Year 2011 Project Area Name Frozen Base Assessed Valuation Increment Assessed Valuation Total Assessed Valuation Assessed Valuation Data Central Project Area -1-6-2-- L 545,22E, J 2,205,399,378 2,367,944,606 Assessed Valuation Data Page 1 12/12/2011 Pass -Through I School District Assistance Fiscal Year lgol I -- Project Area Name �Central Project Area Tax Increment Pass Through Detail Other Payments Amounts Paid To Taxing H & S Code H & S Code H & S Code Total H & S Code H & S Code Agencies Pursuant To: Section 33401 Section 33676 Section 33607 Section 33445 Section 33446.5 County 1,708,201 – — – �_1,7_08,201 ,M Md g i IS OR ME Cities $0 1 School Districts 179,0001 $179,000 Community College District Special Districts Total Paid to Taxing $1,887,2010 $0 $1,887,201 $0 J Agencies Net Amount to Agency $2,612,845 Gross Tax Increment 4,500,0461 Generated Pass -Through / School District Assistance Page 1 12/12/2011 "A Summary of the Statement of Indebtedness - Project Area Fiscal Year 2011 Project Area Name Tax Allocation Bond Debt Revenue Bonds Other Long Term Debt City/County Debt Low and Moderate Income Housing Fund Other Total Available Revenues Net Tax Increment Requirements Summary of the Statement of Indebtedness - Project Area 1-11,11,111,11:1- 42,785,768 317,7201 1,969,0001 $45:M,489— $45,6721489 Page 1 12/1272011 Agency Long -Term Dem Fiscal Year 12011 � Area Name !�qetjtral Project Area Forward from Prior Yeartflg Bond Type Other | Year nfAuthorization — 19721 Am Principal Amount Authorized 109.000| Principal Amount Issued | 169,0001 Purpose ofIssue Property � Maturity Date Beginning Year | —��66d Maturity Date Ending Year | ,nnn � _'_-/ Principal Amount Unmat red Beginning of Fiscal Year | $169,000' Adjustment Made During Year Adjustment Explanation | | Interest Added mPrincipal F---' ' Principal Amount Issued During Fiscal Year Principal Amount Matured During Fiscal Year / --1 Principal Amount DefeoaedDuring Fiscal Year / | Principal Amount Unmah,mdEnd vfFiscal Year � ^169.000 ' Principal Amount |nDefault | Interest |nDefault / | / Bond Types Allowed: Tax Allocation Bonds; Revenue Bonds; Certificates ofParticipation; Tax Allocation Notes; Financing Authority Bonds; City/County Debt; UO;Gtam; Loans; Lease Obligations; Notes; Defen�m adPaos�ughu;DoferredComp*nooUon; Other Agency Long -Term Deb """ Page 1202/2011 Agency Long -Term Debt Fiscal Year 1,20-11- -- - - ---- -- --,-] ' Project Area Name lCentral Proiect Area Forward from Prior Year Bond Type Tax Allocation Bonds Year of Authorization F 19991 Principal Amount Authorized 1 23,504,004 1 Principal Amount Issued 1 23,504,004 Purpose of Issue lProject Funding Maturity Date Beginning Year 20001 Maturity Date Ending Year 20221 Principal Amount Unmatured Beginning of Fiscal Year $4,362,803 Adjustment Made During Year Adjustment Explanation —1 Interest Added to Principal 247,371 Principal Amount Issued During Fiscal Year Principal Amount Matured During Fiscal Year 0 Principal Amount Defeased During Fiscal Year Principal Amount Unmatured End of Fiscal Year $4,610,174 Principal Amount In Default Interest In Default 11 Bond Types Allowed: Tax Allocation Bonds; Revenue Bonds; Certificates of Participation; Tax Allocation Notes; Financing Authority Bonds; City/County Debt; US;State; Loans; Lease Obligations; Notes; Deferred Pass-Throughs; Deferred Compensation; Other Agency Long -Term Debt Page 2 12/12t2oll Agency Long -Term Debt Fiscal Year Project Area Name [Centra|Proiaot Area � Forward from Prior Year Bond Type ITax Allocation Bonds Year nfAuthorization | 20021 Principal Amount Authorized 25,020,000 Principal Amount Issued | 25.020,000l Purpose of Issue |Refunding1992/95Bonds Maturity Date Beginning Year / 20021 Maturity Date Ending Year | 2021| / Principal Amount UnmamredBeginning ofFiscal Year $15,295,0 00 ` Adjustment Made During Year --] Adjustment Explanation ------' Interest Added mPrincipal | | . ' Principal Amount Issued During Fiscal Year �---- | ^ --� PrincipalAmount om�d � During Fiscal Year [ 1.350.000 | Principal AmountDefeuued During Fiscal Year[ ---- Principal Amount Unmatured End of Fiscal Year $13,945,000 Principal Amount In Default Interest In Default Bond Types Allowed: — - - - ----- TaxxllocmionBonds;nevenueBomds;Certificmes of' Lo�ns�LeoseOW�au�no�Nn��D*�nedpanm�� '="»pa«v» Tax '»mcan»om»e»; Fmanm»AAu�oh�Bonds; C�YCuumyDebt; US;G��; Agency LongqennDebt 12U2/2m1 ` Fiscal Year Project Area Name Forward from Prior Year Bond Type Year of Authorization Principal Amount Authorized Principal Amount Issued Purpose of Issue Agency Long -Term Debt 12011- - --- -_ ] I Central Pro[ect Area Maturity Date Beginning Year Maturity Date Ending Year Principal Amount Unmatured Beginning of Fiscal Year Adjustment Made During Year Adjustment Explanation Interest Added to Principal Principal Amount Issued During Fiscal Year Principal Amount Matured During Fiscal Year Principal Amount Defeased During Fiscal Year Principal Amount Unmatured End of Fiscal Year Principal Amount In Default Interest In Default g a , [Tax Allocation Bonds 20091 14,660,000 1 L 14,660,000 1-Defund 1999 Current Interest Portion bonds 2010 20231 $14,660,000 -1 Bond Types Allowed: Tax Allocation Bonds; Revenue Bonds; Certificates of Participation; Tax Allocation Notes; Financing Authority Bonds; City/County Debt; US;State; Loans; Lease Obligations; Notes; Deferred Pass-Throughs; Deferred Compensation; Other Agency Long -Term Debt Page 4 12M212011 Fiscal Year Project Area Name Forward from Prior Year Bond Type Year of Authorization Principal Amount Authorized Principal Amount Issued Purpose of Issue Non -Agency Long -Term Debt 12011 Central Project Area Maturity Date Beginning Year Maturity Date Ending Year Principal Amount Unmatured Beginning of Fiscal Year Adjustment Made During Year Adjustment Explanation Principal Amount Issued During Fiscal Year Principal Amount Matured During Fiscal Year Principal Amount Defeased During Fiscal Year Principal Amount Unmatured End of Fiscal Year Principal Amount in Default Interest in Default Mortgage Revenue Bonds L_ 20011 L 1,025,0001 1 1,025,0001 IMultifamily Housing Revenue Bond 2001B 200 20311 955,000 $955,000 Bond Types Allowed: Mortgage Revenue; Industrial Development; Commercial Revenue Bond; Certificate of Participation Non -Agency Long -Term Debt Page 1 12/12/2011 Fiscal Year Project Area Name Forward from Prior Year Bond Type Year nfAuthorization Principal Amount Authorized Principal Amount Issued Purpose ofIssue Non -Agency Long -Term Debt � 2011. -- Central Project Area _ Revenue Bonds | | 2VO1| | 1,855,0001 1.D55,0UV| Multifamily Housing Revenue Bond | 2001 | Maturity Date Beginning Year | 20011 Maturity Date Ending Year -- ------ Principal Amount Uomatured Beginning ofFiscal Year 1.805.000 p Adjustment Made During Year |—'--- | Adjustment Explanation | | Principal Amount Issued During Fiscal Year F-- | Principal Amount Matured During Fiscal Year | 20,0001 Principal Amount OefeasedDuring Fiscal Year | | Principal Amount Unmammd End nfFiscal Year ' $1.85.000 Principal Amount inDefault --- � � Interest inDefault Bond Types Allowed: Mortgage Revenue; Industrial Development; Commercial Revenue Bond; Certificate of Participation Non -Agency Long -Term Debt Page 2 12/12/2011 Non -Agency Long7-Terrn Debt Fiscal Year [2011 Project Area Name Fcentra'l Project Area Forward from Prior Year Is , �,VIMNA, Bond Type (Mortgage Revenue Bonds Year of Authorization 1 20011 Principal Amount Authorized j 3,590,5291 Principal Amount Issued 3,590,5291 Purpose of Issue [Multifamily Housing Revenue Bonds Maturity Date Beginning Year 2001 Maturity Date Ending Year I 20311 Principal Amount Unmatured Beginning of Fiscal Year 1,316,570 Adjustment Made During Year Adjustment Explanation Principal Amount Issued During Fiscal Year Principal Amount Matured During Fiscal Year 25,582 Principal Amount Defeased During Fiscal Year Principal Amount Unmatured End of Fiscal Year $1,1296,988 Principal Amount in Default Interest in Default Bond Types Allowed: Mortgage Revenue; Industrial Development; Commercial Revenue Bond; Certificate of Participation Non -Agency Long -Term Debt Page 3 12/12/2011 e. Non -Agency Long -Term Debt Fiscal Year 2011 Project Area Name Central Project Area Forward from Prior YearkDr{ r A z Bond Type Imortgage Revenue Bonds Year of Authorization 2001 Principal Amount Authorized ( 3,220,000 Principal Amount Issued I 3,220,000 Purpose of Issue Multifamily Housing Revenue Bonds- �2001 A Maturity Date Beginning Year 2001 Maturity Date Ending Year 2031 Principal Amount Unmatured Beginning of Fiscal Year 2,820,000 Adjustment Made During Year r I i Adjustment Explanation Principal Amount Issued During Fiscal Year Principal Amount Matured During Fiscal Year Principal Amount Defeased During Fiscal Year Principal Amount Unmatured End of Fiscal Year $2,820,000 Principal Amount in Default Interest in Default Band...-ow�-_u�.�... 1! Types Allowed: Mortgage Revenue; Industrial Development; Commercial Revenue Bond; Certificate of Participation k Non -Agency Lang -Term Debt Page 4 1211212011 Fiscal Year Project Area Name Forward from Prior Year Bond Type Year of Authorization Principal Amount Authorized Principal Amount Issued Purpose of Issue Non -Agency Long -Term Debt Fio 11 �Central Project Area (Mortgage Revenue Bonds 20011 —3,-0-00,0--061 F 3,000,0001 Variable Rate Demand Multifamily Housing Revenue Bonds Maturity Date Beginning Year 20011 Maturity Date Ending Year 2031 Principal Amount Unmatured Beginning of Fiscal Year 2,600,000' Adjustment Made During Year L Adjustment Explanation Principal Amount Issued During Fiscal Year Principal Amount Matured During Fiscal Year Principal Amount Defeased During Fiscal Year Principal Amount Unmatured End of Fiscal Year $2,600,000 Principal Amount in Default Interest in Default Bond Types Allowed: Mortgage Revenue; Industrial Development; Commercial Revenue Bond; Certificate of Participation Non -Agency Long -Term Debt Page 5 12/1212011 'Non.�Agency Long -Term Debt f� --| Fiscal Year ee°1 �Project Area Name !Central Project Area Forward from Prior Year Bond Type Year ofAuthorization Principal Amount Authorized Principal Amount Issued Purpose vfIssue Maturity Date Beginning Year Maturity Date Ending Year Principal Amount UnmmumdBeginning pfFiscal Year Adjustment Made During Year Adjustment Explanation Principal Amount Issued During Fiscal Year Principal Amount Matured During Fiscal Year Principal Amount DefeaoedDuring Fiscal Year Principal Amount Unmamrwd End ofFiscal Year Principal Amount in Default Imortgage Revenue Bonds | | 2OO7| | 6.000.0001 � 6,000,000/ �MultifamilynousingRevenueBonds- ` __/ [�— 20371 j 2,211770 | | [— � | | 32,071| $2,178,638 Interest in Default | | / Bond Types Allowed: Mortgage Revenue; Industrial Development; Commercial Revenue Bond; Certificate of Participation Non -Agency Long -Term Debt Page 12/1 ' Fiscal Year Project Area Name Forward from Prior Year Bond Type Year ufAuthorization Principal Amount Authorized Principal Amount Issued Purpose ofIssue Project Area Mortgage Revenue Bonds | | 2OO7| � | r 1,000,0001 | 1,000,0001 LMultifamily Housing Revenue 8onds- 2007713 Maturity Date Beginning Year 1, �� 2on7\ ` Maturity Date Ending Year F2O�7| � Principal Amount UnmaturedBeginning ofFiscal Year 288,668 Adjustment Made During Year ( / | Adjustment Explanation | Principal Amount Issued During Fiscal Year . � / | Principal Amount Matured During Fiscal Year | 8,904/ Principal Amount DafeasedDuring Fiscal Year [-- / | pdmcipdAmounoUnmammd End ofFiscal Year J' *278.7U4 Principal Amount inDefault F--- | Interest inDefault [ | Bond Types Allowed: Mortgage Revenue; Industrial Development; Commercial Revenue Bond; Certificate of Participation ---------- --------- ----- -- Non-Agency Long -Term Debt Page 7 ' 12/12/201. Statement of Income and Expenditures - Revenues Fiscal Year 2011 Project Area Name Central Project Area Low/Moderate Special Capital Project Debt Service Income Housing Revenue/Other Funds Funds Funds Funds Total Tax Increment Gross L 3,563,663 9 36,383 $4,500,046 (Include All Apportionments) Special Supplemental Subvention $0 Property Assessments $0 Sales and Use Tax Transient Occupancy Tax Interest Income 15,1741 1231 12,0501 $27,347 Rental Income 33,2401 $33,2140 Lease Income $0 Sale of Real Estate $0 Gain on Land Held for Resale $0 Federal Grants $0 Grants from Other Agencies Bond Administrative Fees $0 Other Revenues L 29,5251 109,0201 $1 1 38,545 Total Revenues $77,939 $3,563,786 $1,057,453 $0 $4,699,1-78 Statement of Income and Expenditures - Revenues Page 1 12/12/2011 Statement of Income and Expenditures - Expenditures Fiscal Year14-o-l- I Project Area Name �Ce--ntral Proiect Area Capital Project Debt Service Low/Moderate Special Funds Funds Income Housing Revenue/Other Total Administration Costs 614,5981 649,854] $12-64,452 Professional Services 378,086 141,908 $519,994 Planning, Survey, and Design $0 Real Estate Purchases Acquisition Expense "$O— Operation of Acquired Property $0 Relocation Costs Relocation Payments $0 Site Clearance Costs $0 Project Improvement !Construction Costs $0 Disposal Costs - - ------- $0 - Loss on Disposition of Land Held for L $ Resale Statement of Income and Expenditures - Expenditures Page 1 12/12/2011 Statement of Income and Expenditures - Expenditures Fiscal Year ,2011 Project Area Name Central. ---ProjectArea Capital Project Debt Service Low/Moderate Special Funds Funds Income Housing Revenue/Other Decline in Value of Land Held for Resale Rehabilitation Costs Rehabilitation Grants F Interest Expense Fixed Asset Acquisitions Subsidies to Low and Moderate Income Housing Debt Issuance Costs Other Expenditures Including Pass - Through Payment(s) Debt Principal Payments: Tax Allocation Bonds and Notes Revenue Bonds, Certificates of Participation, Financing Authority Bonds City/County Advances and Loans All Other Long -Term Debt Total Expenditures $992,684 Excess (Deficiency) Revenues over ($914,745) J (under) Expenditures Total $0 $0 80,0001 J $80,000 1,338,6631 1 $1,3138,663 $0 1 42,5001 $42,500 . . .. .. ..... .. i6— so 2,225,000 1 - ____ --1-$2,225,000 T- - - i $0 T $3,563,663 $914,262 $123 $143,191 $0 $o $o $5,470,6054 $0 ($771,431) Statement of Income and Expenditures - Expenditures Page 2 12/12/2011 Statement of Income and Expenditures - Other Financing Sources Fiscal Year 12011 Project Area Name Central Proiect Area Capital Project Debt Service Low/Moderate Special Funds Funds Income Housing Revenue/Other Total Proceeds of Long -Term Debt ------- $o,'' Proceeds of Refunding Bonds $0 Payment to Refunded Bond Escrow Agent —$ o Advances from City/County $0 Sale of Fixed Assets — _JF $o Miscellaneous Financing Sources (Uses) 141,379 $141,379,— Operating Transfers In L291,930 $291,1930 Tax Increment Transfers In $0 Operating Transfers Out 291,9301 $291,930 Tax Increment Transfers Out $0 (To the Low and Moderate Income Housing Fund) 7 Total Other Financing Sources (Uses) $433,309 $o ($291,930) $o J—$141,379 Statement of Income and Expenditures - Other Financing Sources Page 1 12/1212011 Statement of Income and Expenditures - Other Financing Sources Fiscal Year 12011 Project Area Name Central Proiect Area Capital Project Debt Service Low/Moderate Special Funds Funds Income Housing Revenue/Other Total Excess (Deficiency) of Revenues and ($481,436) $123 J ($148,739) $0 J ($630,052) Other Financing Sources over Expenditures and Other Financing Uses Equity, Beginning of Period $3,920,010 $44,707 $2,834,424 $0 $6,79 11 9,141 Prior Period Adjustments � �� 1 -1 $0 Residual Equity Transfers $0 Equity, End of Period $3,4381574 $44,831 $2,685,684 $0 J $6,169,089 Statement of Income and Expenditures - Other Financing Sources Page 2 12/12/2011 Balance Sheet - Assets and Other Debits Low/Moderate Special Fiscal Year 2011 Capital Projects Debt Service Income Housing Revenue/Other General Long- General Fixed Funds Funds Funds Funds Term Debt Assets Total Assets and Other Debits Cash and Imprest Cash 1,964,019 Cash with Fiscal Agent 420,9921 Tax Increments Receivable i Accounts Receivable 21,0001 Accrued Interest Receivable 2,9791 Loans Receivable i Contracts Receivable 26,6241 Lease Payments Receivable $95,57674,576 - 1 11 1 Unearned Finance Charge 1,6791 Due from Capital Projects Fund Due from Debt Service Fund 314,3221 Due from Low/Moderate $314,322 Income Housing Fund Due from Special $26,624 Revenue/Other Funds Balance Sheet - Assets and Other Debits 34,2131 1 10,5901 i 1 2,0241 -$2,024 1 All NEW- $95,57674,576 - 1 11 1 281 1,6791 NAM E,", 314,3221 'J"11whIffl QW, $314,322 ', 16JI &�' $26,624 $0 - - - ----- $0 $0 SEEM, $0 $0 Page 1 12/12/2011 Balance Sheet - Assets and Other Debits Low/Moderate Special Fiscal Year 2011 Capital Projects Debt Service Income Housing Revenue/Other General Long- General Fixed Funds Funds Funds Funds Term Debt Assets Total Investments 1,130,259 2,391,5771 a��y �, $3,521,836 Other Assets $0 Investments: Land Held for �� r� �,i� t� �b� •x� a��r� Resale��w;aw.� �, �, g.�.� $0 Allowance for Decline In,s -- 4�r'xc`'aru�"n $0 Value of Land Held for Resale ----- , Fixed Assets: Land, >�`��;' l 119,000 $119,000 Structures, and Improvements Equipment 5, �l t 9 $14, 80914,8091 Amount Available In Debt EARN` �:�� vN,� sort ,.,�r��, . ��t $0 Service Fund Amount to be Provided for Payment ONE } i,r4 � t ' fi,t,,sY �, �w ys"° 4 � � 1i ,� „r,s.�t e4 32,509,174 �? a� ¢ r3 � � $32,509,174 of Long -Term Debt - Total Assets and Other $3,565,873 $44,831 $2,784,178 $0 $32,509,174 $133,809 $39,037,865 Debits (Must Equal Total Liabilities, Other Credits, and Equities) Balance Sheet - Assets and Other Debits Page 2 12/12/2011 Balance Sheet - Liabilities and Other Credits Low/Moderate Special Fiscal Year 2011 Capital Projects Debt Service Income Housing Revenue/Other General Long- General Fixed Funds Funds Funds Funds Term Debt Assets Liabilities and Other Credits Total Accounts Payable 50,5481 981494 ' $149,042 Interest Payable $0 Tax Anticipation Notes Payable $p Loans Payable $0 Other Liabilities �- _ 76,751 WE ' , I $76,751 Due to Capital Projects Fund Due to Debt Service Fund ( ( $0 Due to Low/Moderate Income Housing Fund �__— ��io MEQ Due to Special Revenue/Other Funds Tax Allocation Bonds Payable Y n, ," 3 f 4 tt'.. 1` s3 .� „uv t 1 o f y �' t� _ n 32,340,174 t E . , $32,340,174 Lease Revenue, Certificates of Participation Payable, �& tz ,,• -. -- __ j �x. ,.µ , $0 Financing Authority Bonds All Other Long -Term Debt 169,000 t $169,000 Total Liabilities and Other Credits $127,299 $0$98,494 --- — $0 $32,509,174 EMEW—$32,734,967 Balance Sheet - Liabilities and Other Credits Page 1 12112/2011 Balance Sheet - Liabilities and Other Credits Page 2 12/12/2011 Balance Sheet - Liabilities and Other Credits Low/Moderate Special Fiscal Year 2011 Capital Projects Debt Service Income Housing Revenue/Other General Long- General Fixed Funds Funds Funds Funds Term Debt Assets Total Equities Investment In General Fixed d" 133,8091 $133,$09 Assets - - -- Fund Balance Reserved 3,438,574 44,831 2,685,684r s , k,gs,%gmii tr 4" 1kf $6,169,089_ Fund Balance - - — -- I - — - - — A $0 Unreserved -Designated ,y Fund Balance4. - ,.�., " fir N $0 Unreserved -Undesignated - Total Equities $3,438,574 $44,831 $2,685,684��' $p ....., ,,; �� $133,809 .. $6,302,898 Total Liabilities, Other Credits, and Equities $3,565,873 J $44,831 $2,784,178 $0 f_$32,509,174 $ 11 133,809 $39,037,865... Balance Sheet - Liabilities and Other Credits Page 2 12/12/2011 Statement of Income and Expenditures - Summary, Combined Transfers In/Out Fiscal Year I 1 1 2011 Operating Transfers In Tax Increment Transfers In Operating Transfers Out Tax Increment Transfers Out $291,930 $0 $291,930 Statement of Income and Expenditures - Summary, Page 1 12/12/2011 Combined Transfers In/Out San Rafael Redevelopment Agency Redevelopment Agencies Financial Transactions Report Statement of Income and Expenditures Revenues - Consolidated Fiscal Year 2011 Low/Moderate Special Captial Project Debt Service Income Housing Revenue/Other Funds Funds Funds Funds Total Tax Increment Gross $0 $3,563,663 $936,383 83 $0 $4,500,046 Special Supplemental Subvention $0so- 0 $0 $0 $0 Pro ertAssessments� Property $0 $ Sales and Use Tax $0 � $0 $0 ` , $0 $O Transient Occupancy Tax $o� $0,,,,_ _ $0 0 . $0 -- Interest Income $15,174 $123 $12,0 50 $0 $27,347 _ Rental Income $33,240 $0 $0 $0 $33,240 Lease Income $0 $0 $0 $0 $0 Sale of Real Estate 60 $0 $0 $�- . Gain on Land Held for Resale $0 $0 $0 $0 $0 Federal Grants $0 $0.. $0.... $0... $0 i. Grants from Other Agencies $0 $0 Bond Administrative Fees $0 - $0'.. so -- Other Revenues $29,525 $0 $109,020 $0 $138,545 Total Revenues $77939 1 $3,563786 $1,057,453 $0 $4,699,178 Revenues - Consolidated Page 1 12/12/2011 San Rafael Redevelopment Agency Redevelopment Agencies Financial Transactions Report Statement of Income and Expenditures Expenditures - Consolidated Fiscal Year 2011 Administration Costs Professional Services Planning, Survey, and Design Real Estate Purchases Acquisition Expense Operation of Acquired Property Relocation Costs Relocation Payments Site Clearance Costs Project Improvement/ Construction Costs Disposal Costs Loss on Disposition of Land Held for Resale Expenditures - Consolidated Page 1 12112/2011 Low/Moderate Special Capital Projects Debt Service Income Housing Revenue/Other Funds Funds Funds Funds Total 04,568—] $0 $649,854 $0 $1,264,452 M9,696 1 $041,908 $0 $519,994 $o $0 $0 $o $0 $0 so so so $0 $o $0 $o $o $o $o $o $0 $0 $0 $0 $o $0 $0 $0 $0 $o $0 $0 $0 $6 $ 0 $6 $0 $0 $0 $0 $oso $0 $0 $0 $0 $o $0 $0 Expenditures - Consolidated Page 1 12112/2011 San Rafael Redevelopment Agency Redevelopment Agencies Financial Transactions Report Statement of Income and Expenditures Expenditures - Consolidated Fiscal Year 2011 Decline in Value of Land Held for Resale Rehabilitation Costs Rehabilitation Grants Interest Expense Fixed Asset Acquisitions Subsidies to Low and Moderate Income Housing Fund Debt Issuance Costs Other Expenditures Including Pass Through Payment(s) Debt Principal Payments: Tax Allocation Bonds and Notes Revenue Bonds and Certificates of Participation Capital Projects Debt Service Low/Moderate Special Total Funds Funds Income Housing Revenue/Other $992,684 $3,563,663 J $914,262 $0 $5,470,609 Funds Funds $143J'9_1j A B C D E $0 $o $o $o $0 $P $0, $0 $6 $0 $80,000 $0 $80,000 $0 $1,338,663 $o $o $1,3318,663 $0 $0 $ 0 $o $0 $o $o $42,500 $0 $42,500 y. $0 J_ $o $0 so $o so-) $o $0 $0 $o$2,225,000 J $o $0 $2,225,000 1 _$0 $o $6 $6 City/County Advances and Loans $0 $o $0 $o $o U.S., State and Other Long -Term Debt $0 $0 $o Total Expenditures $992,684 $3,563,663 J $914,262 $0 $5,470,609 Excess (Deficiency) Revenues ($914,745) $123 J $143J'9_1j (j771,431) Over (Under) Expenditures Expenditures - Consolidated Page 2 12/12/2011 Fiscal Year 2011 San Rafael Redevelopment Agency Redevelopment Agencies Financial Transactions Report Statement of Income and Expenditures Other Financing Sources (Uses) - Consolidated Other Financing Sources (Uses) - Consolidated Page 1 12/12/2011 Low/Moderate Special Capital Projects Debt Service Income Housing Revenue/Other Funds Funds Funds Funds Total Proceeds of Long -Term Debt J $o $o $0 $0 Proceeds of Refunding Bonds $o $0 $o J $o $0 Payment to Refunded Bond Escrow $0 $0 $0 $o $0 Agent Advances from City/County J $0 $0 $0 $0 $0 Sale of Fixed Assets $5 $6 $0 $o Miscellaneous Financing Sources (Uses) $141,379 $0 $0 $0 $141'379 Operating Transfers In $291,930 J $0 J $o $0 $291,930 Tax Increment Transfers In $0 $0 Operating Transfers Out $o $o J $291,930 $0 $291,930 Tax Increment Transfers Out W. $0 J $0 le DUMB, 0 N 'N"IN IN $0 (To the Low and Moderate Income Housing Fund) Total Other Financing Sources (Uses) $433,309 $0 ($291,930) J $0 $141,379 Other Financing Sources (Uses) - Consolidated Page 1 12/12/2011 San Rafael Redevelopment Agency Redevelopment Agencies Financial Transactions Report Statement of Income and Expenditures Other Financing Sources (Uses) - Consolidated Other Financing Sources (Uses) - Consolidated Page 2 12/12/2011 Capital Projects Debt Service Low/Moderate Special Total Funds Funds Income Housing Revenue/Other Funds Funds A B C D E Excess (Deficiency) of Revenues and ( y) ($481,436 ) $123 $148,739 ( )� ,$0 $630 052 .-_. 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Y C.0 "00 Ln 00 Cn 00 CIO C) C) 0 C/) — CD =7 m U) 0 0 0 m m m CD 0) 0 x m X CD 0 X 0 0 (n C: 0 > CD CD CD -a CD -n E -r Er — CD 0 CD 0 CD C/) CD CA W 0 — \ / CD CL 0) c 0 0 Z 0 =3 0 CD -a < CD =r CD 0 0 0 0 Cf) CL > h CA) > W (D (a (o CA) 0 o CD 0 CD E co (D 3 0 CD 0 P. < 3 c =r l< * , a C: " 0 w 'a 2rQ 0 3 w w a cr 3 (D 0 CD a) co " UX) CD CO CA) CA) to 0 California Redevelopment Agencies - Fiscal Year 201012011 Status of Low and Moderate Income Housing Funds Sch C Agency Financial Summary SAN RAFAEL Adjusted Project Agency Net Other Total * Unen- Unen- Unen- Beginning Area Other Total Resources Housing Housing Encum- cumbered cumbered cumbered Balance Receipts Revenue Expenses Available Fund Assets Fund Assets brances Balance Designated Not Dsgntd $2,834,423 $1,057,453 $0 $1,206,192 $2,685,684 $0 $2,685,684 $1,120,000 $1,565,684 $0 $1,565,684 Expenses" Debt Service Housing Planning and Subsidies Total ----I I Rehabilitation Administration Costs -1 2010/2011 1---$-383,161 $71-06,_37-3-- $V4,858401,800 $1,206,192 *The Unencumbered Balance is equal to Net Resources Available minus Encumbrances Note: Print this report in Landscape Orientation (Use the Print Icon just above, then Properties then Landscape) Page 1 of 1 12110111 California Redevelopment Agencies - Fiscal Year 2010/2011 Status of Low and Moderate Income Housing Funds Sch C Agency Financial and Program Detail SAN RAFAEL Beginning Balance Adjustment to Beginning Balance Adjusted Beginning Balance Total Tax Increment From PAW $936,383 Total Receipts from PA(s) Other Revenues not reported on Schedule A Sum of Beginning Balance and Revenues Expenditure item Debt Service Debt Principal Payments Other i Housing Rehabilitation Subitem Tax Allocation, Bonds & Notes Subtotal of Debt Service Subtotal of Housing Rehabilitation Planning and Administration Costs Administration Costs Professional Services Subtotal of Planning and Administration Costs Subsidies from the LMJHF Other Subtotal of Subsidies from the LM1HF Page' 1 of 3 12110111 $2,834,423 $0 $2,834,423 $1,057,453 $0 $3,891,876 Amount Remark $291,930 $91,231 $383,161 $106,373 $106,373 $242,358 $2,500 $244,858 Centertown lease to bridge $471,800 Ritter 40,000, BMR ownership 157,159 rental 26,277, 33 north 25,612 elks 17,212 CE 120,587 SAP 66,636 HE 18,318 $471,800 California Redevelopment Agencies - Fiscal Year 201012011 Status of Low and Moderate Income Housing Funds Sch C Agency Financial and Program Detail SAN RAFAEL Expenditure Item Subitem Amount Remark Total Expenditures $1,206,192 Net Resources Available $2,685,684 Indebtedness For Setasides Deferred $0 Other Housing Fund Assets Cate Amount Remark ERA Total Receivable $0 _ Total Other Housing Fund Assets $0 Total Fund Equity $2,685,684 200612007 $974408 200712008 $964526 sum of 4 Previous Years' Tax Prior Year Ending Excess Surplus for 2008/2009 $973704 Increment for 201012011 Unencumbered Balance 2010/2011 200912010 $953833 $3866471 $2,613,894 $0 Sum of Current and 3 Previous Years' Tax Increments $3,828,446 Adjusted Balance $1,565,684 Excess Surplus for next year $0 Net Resources Available $2,685,684 Unencumbered Designated $0 Unencumbered Undesignated $1,565,684 Total Encumbrances $1,120,000 Unencumbered Balance $1,565,684 Unencumbered Balance Adjusted for Debt Proceeds $0 Unencumbered Balance Adjusted for Land Sales $0 Excess Surplus Expenditure Plan No Excess Surplus Plan Adoption Date Page 2 of 3 12110111 California Redevelopment Agencies - Fiscal Year 201012011 Status of Low and Moderate Income Housing Funds Sch C Agency Financial and Program Detail SAN RAFAEL Site Improvement Activities Benefiting Households Income Level Low Very Low Moderate Total Construction 0 0 0 0 Rehabilitation 0 0 0 0 Health and Safety Hazard 0 0 0 0 Land Held for Future Development Site Name Num Of Zo in4 Purchase Estimated Acres Date Start Date Remark Use of the Housing Fund to Assist Mortgagors Income Adjustment Factors I i Requirements Completed I Home Hope Non Housing Redevelopment Funds Usage Resource Needs LM1HF DepositslWithdrawis Document Document Custodian Custodian COPY Name Date Name Phone Source Agency audit 30 -JUN -11 City Clerk (415) 485-3306 City Clerk Achievements Description Page 3 of 3 12110111 / � In L 2 m, \ o (a§1 C �I � j i§ 2 ^ :tl EAS � a. I \ CL C i ~ iC4 ® i 12 k k 2 2 •0 )% � 2 ; a 3 /k�k �� c / § C4 a) i@ .\� ° .k / � 2 � i : � I rz m mU� mc zigym �2 ƒ ■mm k / K $. ° 2 0) CO i 2 k § /$:% ;® . Eli 2-c:c �2'/ i/ IZ-1 0 (4)k f / tr / C,A ct % '\ o. x�; o ® . C k \7Lo k � 't ^ ;m a j � ; a k \ 1 / � California Redevelopment Agencies- Fiscal Year 201012011 Project Area Contributions to Low and Moderate Income Housing Fund Sch A Project Area Financial Information Agency SAN RAFAEL Address 1313 Fifth Avenue PO BOX 151560 San Rafael CA 94915-1560 Project Area CENTRAL PROJECT Type: Inside Project Area Status: Active Plan Adoption: 1972 Plan Expiration Year: 2025 i Amount Gross Tax Calculated Amount Amount Suspended Total % Cumulative Increment Deposit Allocated Exempted and/or Deferred Deposited Def. $4,500,046 $900,009 $936,383 $0 $0 $936,383 20.81% $0 Repayment $0 Category Interest Income $12,050 OtherRevenuel $109,020 Total Additional Revenue $121,070 Total Housing Fund Deposits for Project Area $1,057,453 Agency Totals For All Project Areas: Amount Gross Tax Calculated Amount Amount Suspended Total % Cumulative Increment Deposit Allocated Exempted and/or DeferredDef. Deposited $4,500,046 $900,009.2 $936,383 $0 $0 $936,383 21% $0 Total Additional Revenue from ProjectAreas: $121,070 Total Deferral Repayments: $0 Total Deposit to Housing Fund from Project Areas: $1,057,453 Page 1 of 1 12110/11 RDA Reporting System - Sales of Owner Occupied Units Page 1 of 1 California Department of Housing and Community Development odevo o ent enc cortin System Sales of Owner -Occupied Units Prior to the Expiration of Land Use Controls Sch A, p6; Sch B, p2 You are Here: Select Year > Schedule Menu > Project Area Selector > Project Area Activity Menu > Sales of Owner Occupied Units << Previous Page • Admin Agency:SAN RAFAEL Fiscal Year :201012011 Prepared by: Stephanie Lovette • Select Year • FAQ For Project Area:OUTSIDE PROJECT AREA • User Info • Status 9. Sales of Owner Occupied Units Outside the Project Area Prior to the Expiration of Land Use • Print Controls • Logout Section 33413(c)(2)(A) specifies that pursuant to an adopted program, which includes but is not limited to an equity sharing program, agencies may permit the sales of owner -occupied units prior to the expiration of the period of the land use controls established by the agency. Agencies must deposit sale proceeds into the Low and Moderate Income Housing Fund and within three (3) years from the date of unit sales, expend funds to make affordable an equal number of units at the same income level as the units sold. a. Report any sales of owner -occupied units during the reporting year. Proceed $ VLF,� —I Total Number of units sold in 2010/201111$0 b. Report expended funds in the reporting year to make affordable an equal number of units sold over the last three years. __IC�OCO Exp ended $ VL L M Total Equivalent to offset unit 2010/2011 sales $0 Equivalent to offset unit 2009/2010 sales $15,000 Equivalent to offset unit 2008/2009 Equivalent to offset unit 2007/2008 sales $0 Save Redevelopment Agency Reporting System - Sales of Owner -Occupied Emits Prior to the Expiration of Land Use Controls California Department of Housing and Community Development https://sswl.hed.ca.gov/RDA/addEditSalesOwnerOccupied.is,p 12/10/2011 10.14 of I 10 V FISCAL REPORT FISCAL YEAR ENDING JUNE 30, 2011 SAN RAFAEL REDEVELOPMENT AGENCY CENTRAL SAN RAFAEL PROJECT AREA Annual Report Health and Safety Code Section 33080.1 requires all California Redevelopment Agencies to present an annual report to the legislative body and the State Controller's office within six months of the fiscal year end. The San Rafael Redevelopment Agency ("SRRDA") prepares the annual report and presents the report to the San Rafael City Council, their legislative body. The annual report must contain all of the following items: • Financial Transactions Report Filed with the State Controller ("FTR") (EXHIBIT A) • Description of housing activities and any housing displacement Housing and Community Development Report (HSC 33080.4 & 33080.7) (EXHIBIT B) • Independent audit report (EXHIBIT D) • Copy of the Agency's Statement of Indebtedness ("SOI") (EXHIBIT E) • Fiscal Statement (HSC 33080.5) (EXHIBIT Q • Blight progress report (HSC 33080.1 (d)) (EXHIBIT F) • List of Agency loans and status (HSC 33080.1 (e)) (EXHIBIT F) • Description of Agency owned property (EXHIBIT F ) Fiscal Statement The HSC lists specific items to be included in the Annual Report. The majority of these items are included in the State Controllers Report, the Housing and Community Development Report and the Agency's audit. The HSC does not provide any information regarding the contents of the Fiscal Statement. The State Controller provided a "sample fiscal statement" to redevelopment agencies in November 2011. The SRRDA Fiscal Statement follows the format provided by the State Controller. San Rafael Redevelopment Agency Plan adoption Plan Effectiveness Last date to receive Tax Increment Last Date for Property Acquisition (through Eminent Domain) Participation in Voluntary Alternative Redevelopment Program (AB x1 27) November 20, 1972 November 20, 2015 November 20, 2025 November 20, 2012 September 6, 2011 Ord. 1899 Fiscal Agreement and Agency Financing The Agency entered into a Fiscal Agreement with the County and K-14 Schools in 1984. This Fiscal Agreement limits the Agency's receipt of tax increment, allowing the County and Schools to annually receive additional property tax revenue generated by Agency activities in the Project Area. This is an unusual arrangement. Most redevelopment agencies receive tax increment from the Project Area which is reinvested in other projects to benefit the Project Area. The taxing entities share in the increased property taxes upon expiration of the Agency. The Fiscal Agreement has been very beneficial to the County and Schools but has severely constrained the activities of the SRRDA. The Fiscal Agreement provides that the County of Marin will receive 100% of the County share of all tax increment generated annually within the Project Area. The Agency is allowed to receive tax increment sufficient to pay debt service on tax increment bonds. The Agency must have the consent of the taxing entities before issuing any new bonds. The Agency last issued new bonds in 1999. The Agency also issued refunding bonds in 2002 and 2009 to take advantage of lower interest rates. The taxing entities allowed the SRRDA to refund the bonds and continue to receive tax increment in an amount equal to the original bond debt service. These two refunding bonds provided the SRRDA a small amount of capital and operational funding. Due to the restrictions imposed by the Fiscal Agreement, the Agency anticipates to run out of operational funds at the end of Fiscal Year 2012-13. The Agency also receives affordable housing funds in an amount equal to 20% of the funding allocated to the SRRDA for bond debt service. These affordable housing funds will continue until the Agency bonds are paid off in 2025. Therefore, the majority of Agency staff time in 2012 and beyond will be spent on activities related to affordable housing. San Rafael Redevelopment Agency Fiscal Statement This Fiscal Statement incorporates the following documents: Financial Transactions Report (Attachment I) Statement of Indebtedness (Attachment III) Amount of Outstanding Indebtedness $ 45,654,429 (Statement of Indebtedness FY 2010-11) Amount of Tax Increment Allocated to the $ 4,500,046 SRRDA (limited by the Fiscal Agreement) From FTR Total Debt as June 30, 1993 from $ 20,815,000 FY 1992-93 SOI (HSC 33682) Total Payments on Existing Debt $ 4,330,253 (FY ending June 30, 2011) from SOI Amount of tax increment paid to or spent $ 1,708,201 on behalf of a taxing entity, other than K- To Marin County. The Agency did not pay 14 schools for any capital improvements. From FTR Capital Improvement Detail & Pass Through/School District Assistance Amount allocated to K-14 Schools $179,000 From FTR Capital Improvement Detail & To SRHSD. The Agency did not pay for Pass Through/School District Assistance & any capital. improvements. This amount payments under HSC 33607 & 33681 does not take into account the tax increment that is allocated to the K-14 Schools pursuant to the Fiscal Agreement Amount required for AB xl 27 payment in $ 299,490 2010-I1. To be paid from affordable housing funds. EXHIBIT SAN RAFAEL REDEVELOPMENT AGENCY BASIC COMPONENT UNIT FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2011 This Page Left Intentionally Blank CITY OF SAN RAFAEL REDEVELOPMENT AGENCY BASIC COMPONENT UNIT FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2011 Table of Contents Page Independent Auditor's Report ..... ................ ............ ............... -- ..................................................... I Management's Discussion and Analysis...... .......................................... ........................ ....... ......... 3 Basic Component Unit Financial Statements: Agency -wide Financial Statements: C, Statement of Net Assets . ........................ ......... -- .... ----.................................................10 Statementof Activities ................................... ............. ............... ........................... I I Fund Financial Statements: Major Governmental Funds: BalanceSheet ... .................... ......................... .............. ................................................ 14 Reconciliation of Governmental Funds -Fund Balances with the Net Assets of Governmental Activities ......................................... ............................ 17 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: 2002 Agency Bonds ........ ... -- ...... ... --- ........ --- ........ ....... ..... ---- ...... - ...... 37 2009 Agency Bonds ... ......... ...... ............. ......... ---- ........... ---38 Capital Project Funds: Capital Improvement Projects .................. .................... .......................... -- ........ —.-319 Low and Moderate Income Housing ................. .... - .... ............. .......... 40 SAN RAFAEL REDEVELOPMENT AGENCY BASIC COMPONENT UNIT FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2011 Table of Contents (Continued) Page Supplemental Information (Continued): 1999 Bonds................................................................................................................41 1985 Capital Projects and Administration ................... .................... .................... ..... 42 2009 Capital Projects................................................................................................43 ExcessSurplus Calculation.......................................................................................44 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed In Accordance with Government Auditing Standards...... ......................................... .................... 45 Independent Auditor's Report On Compliance And On Internal Control Over Compliance In Accordance With The California Health And Safety Code As RequiredBy Section 33080.1.......................................................................................................47 Current Status of Prior Year Findings............................................................................... 49 MAZE & ASSOCIATES ACCOUNTANCY CORPORATION 3478 Buskirk Ave. a Stlite 215 Pleasant Hill, California ni -4523 ,925,E 930=0902 ° FAX (925) 930-0135 aze@Irx";_ soci tes.co INDEPENDENT AUDITOR'S REPORT WW vtt• rnazeassoci t s.co_ Members of the Board of the San Rafael Redevelopment Agency San Rafael, California We have audited the accompanying basic component unit financial statements of the governmental activities and each major fund of the San Rafael Redevelopment Agency (Agency), a component unit of the City of San Rafael, California, as of and for the year ended June 30, 2011, as listed in the Table of Contents. These basic 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 basic 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 basic 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, 2011, and the changes in financial position for the year then ended, in conformity with generally accepted accounting principles in the United States of America. As disclosed in Note 11, the State of California adopted ABx1 26 on June 28, 2011, which suspends all new redevelopment activities except for limited specified activities as of that date and dissolves redevelopment agencies effective October 1, 2011. The State simultaneously adopted ABx1 27 which allows redevelopment agencies to avoid dissolution by opting into an "alternative voluntary redevelopment program" requiring specified substantial annual contributions to local schools and special districts. These conditions raise substantial doubt about the Agency's ability to continue as a going concern. However, on August 11, 2011, the California Supreme Court issued a partial stay of ABx1 26 and a full stay of ABx1 27, but the partial stay did not include the section of ABx1 26 that suspends all new redevelopment activities. As a result, the accompanying fmancial statements have been prepared assuming that the Agency will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. A Prof-essional Corp;r; <ion As of July 1, 2010, the Agency adopted the provision of Governmental Accounting Standards Board Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions. As discussed in Note 1G to the financial statements, the provisions of this statement affect the classification of fund balances reported in the financial statements. In accordance with Government Auditing Standards, we have also issued our report dated November 23, 2011, 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. Our audit was made for the purpose of forming an opinion on the basic 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 basic 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 basic component unit financial statements, and in our opinion is fairly stated in all material respects in relation to the basic component unit financial statements taken as a whole. November 23, 2011 REDEVELOPMENT AGENCY OF THE CITY OF SAN RAFAEL MANAGEMENT'S DISCUSSION AND ANALYSIS FOR THE FISCAL YEAR ENDED JUNE 30, 2011 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, 2011. This document has been prepared as required by the Statement No. 34 of Governmental Accounting Standards Board (GASB 34). 1. 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 2010-2011 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 2010-2011 with comparative totals for the previous four fiscal years: Fiscal Year Receipt 2006-07 - 2007-08 2008-09 2009-10 2010-11 Total for the Year $ 4,540,652 $ 4,533,376 $ 4,549,772 $ 4,428,261 $ 4,500,046 The liabilities of the Agency exceeded its assets at the close of the fiscal year by $27.5M (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 $6.17-M, which is a decrease of $0.63M in comparison with the prior year. Approximately $6.17M of this amount is available for spending at the Agency's discretion for the purposes of redevelopment (reserved fund balance). Of this amount, $4.44M has been restricted and $1.42M has been committed for capital projects. 11. 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) 0 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. I 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. In February 2009, the Government Accounting Standards Board (GASB) issued Statement No. 54, "Fund Balance Reporting and Governmental Fund Type Definitions" that is applicable to the financial statements issued by governmental entities for the reporting period ended June 30, 2011. The objective of GASB statement No. 54 is to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. Before GASB 54, fund balances for the governmental funds were classified in three categories: reserved, unreserved designated and unreserved undesignated. Under GASB 54, fund balances are classified in five categories: nonspendable, restricted, committed, assigned, and unassigned based on hierarchy of constraint Further details on fund balance classifications can be found in Note 1G. 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 budgeta�ry, principles. M. 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. FJ Redevelopment Agency Net Assets At June 30, 2011 Current assets $6.4M Noncurrent assets 0.1m Total assets 6.5M Current liabilities 2.9M Noncurrent liabilities 31.1M Total liabilities 34.OM Net assets: Restricted 6.2M Unrestricted (33.7)M Total net assets ($27.5)M There was an increase of $1.4M in the Agency's net assets during the fiscal year due to repayment of debt service. 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 2010-11 General revenues: Property tax (tax increments) $ 4,500,046 Use of money and property 60,587 Miscellaneous R 135,644 Transfers in from the city 141,379 Total general revenues and transfers 4,837,656 Net Expenses 3,393,213 Change in net assets (increase) 1,444,443 Net assets (Deficits) - beginning of year, as restated (28,978,679) Net assets (Deficits) - end of year $(27,534,�6) N. 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 Govern -mental 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, unassigned fund balance may serve as a useful measure of agency's net resources available for spending at the end of the fiscal year. It should, however, be noted that all the fund balance amounts have been either restricted or committed by the Agency for specific uses_ I The debt service fund accounts for the principal and interests payments on all bonds. The Agency's capital projects fund had total revenue of $1.1M and expenditures of $1.9M and a transfer for debt service payment of $03M. The ending fund balance decreased $630K from the prior year balance of $6.7M. 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. The expenditure includes $264K for subsidies to Low and Moderate Income Housing. 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 $48K. The expenditures amounted to $1.0M. The fund balance decreased by $0.5M to $3.4M at the year-end. V. Budgetary Highlights The tax increment revenue was on target with the budgeted amount. The operating expenditures overall remained within the budget. V1. Capital Asset and Debt Administration Capital Assets: As of June 30, 2011, the Agency's capital assets were $58K 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 $33.5M. The tax increments revenue of the Agency secures all bonded debt of the Agency. The Agency's debt decreased by $2.OM due to the annual debt payments for the 2002 and 2009 Agency bonds. Additional information on the Agency long-term debt can be found in Note 6 of this report. V11. 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 2010-2011. 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. In an effort to balance its budget, the State of California adopted ABxl 26 on June 28, 2011, which suspends all new redevelopment agencies effective October 1, 2011. The State simultaneously adopted ABx1 27 which allows redevelopment agencies to avoid dissolution by opting into an "alternative voluntary redevelopment program" requiring substantial annual contributions to local school and special districts. On July 18, the California Redevelopment Association, the league of California Cities and others challenged the validity, and constitutionality of ABxI 26 and 27 to the California Supreme Court. On August 11, 2011, as modified on August 17, 2011, the California Supreme Court agreed to hear the case and issued a partial stay of ABxI 26 and a full stay of ABxl 27, but the stay did not 0 include the section of ABx1 26 that suspends all new redevelopment activities. It is anticipated that the Court will render its decision before January 15, 2012, the date the first voluntary program payment is due. San Rafael Redevelopment Agency Board has chosen to participate in the Voluntary Alternative Redevelopment Program pursuant to Part 1.9 of the California Community Redevelopment Law. The City Council's intention was verified by the passage of Ordinance 1899 on September 19, 2011. Please refer to Note 11 for further discussion on the potential consequences to the Agency from the decision of the Supreme Court 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. This Page Left Intentionally Blank SAN RAFAEL REDEVELOPMENT AGENCY ISTATEMENT OF NET ASSETS AND STATEMENT OF ACTIVITIES I 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, 2011 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 LIABILITIES 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 (DEFICIT) (Note 1F) Restricted for: Debt service Capital projects Unrestricted Total net assets (deficit) Governmental Activities $5,520,068 431,582 95,576 2,024 26,624 4,686 314,322 39,000 18,914 6,452,796 149,042 320,364 25,000 25,127 2,325,000 31,142,499 33,987,032 44,831 6,124,258 (33,703,325) ($27,534,236) See accompanying notes to financial statements 10 SAN RAFAEL REDEVELOPMENT AGENCY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED NNE 30, 2011 General revenues: Taxes Investment earnings ?vbscellaneous Transfer from City (Note 3B) Total general revenues and transfers Change in Net Assets Net Assets (Deficit) -Beginning Net Assets (Deficit) -Ending See accompanying notes to financial statements 11 Governmental Activities Net (Expenses) Revenues Governmental A ($40,481) (106,893) (1,732,675) (1,513,164) (3,393,213) 4,500,046 60,587 135,644 141,379 4,837,656 1,444,443 (28,978,679) ($27,534,236) Program Revenues Charges for Functions/Programs Expenses Services Primary Government Governmental Activities: General government $40,481 Public works and parks 106,893 Community development/redevelopment 1,762,200 $29,525 Interest on long-term debt 1,513,164 Total Primary Government $3,422,738 $29,525 General revenues: Taxes Investment earnings ?vbscellaneous Transfer from City (Note 3B) Total general revenues and transfers Change in Net Assets Net Assets (Deficit) -Beginning Net Assets (Deficit) -Ending See accompanying notes to financial statements 11 Governmental Activities Net (Expenses) Revenues Governmental A ($40,481) (106,893) (1,732,675) (1,513,164) (3,393,213) 4,500,046 60,587 135,644 141,379 4,837,656 1,444,443 (28,978,679) ($27,534,236) 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 2011. 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 2009 AGENCY BONDS DEBT SERVICE FUND is the debt service fund for the principle payments, interest payments, and related costs of the 2009 Tax Allocation Refunding Bonds. The CAPITAL BIEPROVEMENT 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. The 2009 CAPITAL PROJECTS FUNDS is the capital projects fund established to account for the capital projects activities funded by the 2009 Tax Allocation Refunding Bonds of San Rafael Redevelopment Agency. 13 SAN RAFAEL REDEVELOPMENT AGENCY GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2011 ASSETS Cash and investments available for operations (Note 2) Restricted cash and investments (Note 2) Receivables: Accounts Taxes Grants Interest Loans (Note 4) Total Assets LIABILITIES Accounts payable Developer bonds payable Arbitrage payable Deferred revenue Total Liabilities FUND BALANCES (Note IG): Nonspendable Restricted Committed Assigned Total Fund Balances DEBT SERVICE FUNDS 1999 Agency 2002 Agency 2009 Agency Bonds Bonds Bonds $34,213 1,837 $8,753 28 $36,078 $8,753 361.078 8,753 36,078 8,753 Total Liabilities and Fund Balances $36,078 $8,753 See accompanying notes to financial statements 14 15 CAPITAL PROJECT FUNDS Low and Capital Moderate 1985 Capital Total Improvement Income Projects and 2009 Governmental Projects Housing 1999 Bonds Administration Capital Projects Funds $1,414,374 $2,391,577 $1,096,174 $583,730 $5,520,068 $420,992 431,582 74,576 11,000 10,000 95,576 2,024 2,024 26,624 26,624 1,598 1,679 906 475 4,686 314,322 314,322 $1,415,972 $2,784,178 $458,616 $1,107,080 $584,205 $6,394,882 $98,494 $50,548 $149,042 25,000 25,000 $25,127 25,127 26,624 26,624 98,494 51,751 75,548 225,793 314,322 314,322 1,251,362 406,865 1,026,532 584,205 3,313,795 1,415,972 1,120,000 2,535,972 5,000 5,000 1,415,972 2,685,684 406,865 1,031,532 584,205 6,169,089 $1,415,972 $2,784,178 $458,616 $1,107,080 $584,205 $6,394,882 15 This Page Left Intentionally Blank SAN RAFAEL REDEVELOPMENT AGENCY RECONCILIATION OF GOVERNMENTAL FUNDS - FUND BALANCES WITH THE NET ASSETS OF GOVERNMENTAL ACTIVITIES JUNE 30, 2011 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, 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 Deferred revenue NET ASSETS (DEFICITS) OF GOVERNMENTAL ACTINITIES See accompanying notes to financial statements 17 $6,169,089 57,914 (33,467,499) (320,364) 26,624 ($27,534,236) SAN RAFAEL REDEVELOPMENT AGENCY GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN, FUND BALANCES FOR THE YEAR ENDED JUNE 30, 2011 REVENUES: Taxes and special assessments Use of money and properties Intergovernmental Charges for services Other revenue Total Revenues EXPENDITURES: Current: General government Public works and parks Community development/redevelopment Capital improvement/special projects Debt service: Principal Interest and fiscal charges Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES) Transfers in (Note 3A) Transfers (out) (Note 3A) Transfers in from the City (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 RJ'NDS 1999 Agency 2002 Agency 2009 Agency Bonds Bonds Bonds $2,068,938 $1.494,725 123 2,069,061 1,494,725 1,350,000 875,000 718,938 619,725 2,068,938 1,494,725 123 123 35,955 8,753 $36,078 $8,753 See accompanying notes to the financial statements. 18 CAPITAL PROJECT -FUNDS $936,383 $8,473 12,050 1985 Capital Total Projects and 2009 Governmental 1999 Bonds Administration Capital Projects Funds $4,500,046 $14 $37,785 $2,142 60,587 Low and Capital Moderate Improvement Income Projects Housing $936,383 $8,473 12,050 1985 Capital Total Projects and 2009 Governmental 1999 Bonds Administration Capital Projects Funds $4,500,046 $14 $37,785 $2,142 60,587 29,525 29,525 109,020 109,020 8,473 1,057,453 14 67,310 2,142 43699,178 5,595 34,886 40,481 106,893 106,893 908,667 543,787 1,452,454 179,000 26,624 78,554 22,940 307,118 2,225,000 1,338,663 179,000 914,262 26,624 764,120 22,940 5,470,609 (170,527) 143,191 (26,610) (696,810) (20,798) (771,431) 291,930 291,930 (291,930) (291,930) 141,379 141,379 (291,930) 141,379 291,930 141,379 (170,527) (148,739) 114,769 (404,880) (20,798) (630,052) 1,586,499 2,834,423 292,096 1,436,412 605,003 6,799,141 $1,415,972 $2,685,684 $406,865 SL031,532 $584,205 $6,169,089 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, 2011 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 ($630,052) 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 is therefore added back to fund balance 307,118 Non -capitalized capital outlay expenditures were reclassified to various governmental activities (307,118) 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 (6,990) Deferred revenue 26,624 LONG-TERM DEBT PAYMENTS Bond proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of bond principal is an expenditure in the governmental funds, but in the Statement of Net Assets the repayment reduces long-term liabilities. Principal debt service payments are added back to fund balance 2.225,000 Bond interest accretion is deducted from fund balance (247,371) Bond premium amortization is added back to fund balance 79,860 CHANGE IN NET ASSETS OF CiMfERN'NIENTAL ACTIVITIES $1,444,443 20 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements I 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. W SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 1- SIGNIFICANT ACCOUNTING POLICIES (Continued) 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. 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 2009 Agency Bonds Debt Service Fund is the debt service fund for the principle payments, interest payments, and related costs of the 2009 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 Iow and Moderate Income Housing Fund and debt service funds. The 2009 Capital Projects Fund is the capital projects fund established to account for the capital projects activities funded by the 2009 Tax Allocation Refunding Bonds of San Rafael Redevelopment Agency. D. Basis of Accounting The government -wide financial statements are reported using the economic resources measurement focus and the fall 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. 22 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE - SIGNIFICANT ACCOUNTING POLICIES (C 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 govenimpntal 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. 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. 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. 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 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 5-15 years 23 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE - SIGNIFICANT ACCOUNTING POLICIES (Co 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, 2011, the Agency reported an unrestricted deficit of $33,703,325 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. G. Fund Balance The Agency's fund balances are classified in accordance with Governmental Accounting Standards Board Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which requires the Agency to classify its fund balances based on spending constraints imposed on the use of resources. For programs with multiple funding sources, the Agency prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint: Nonspendables represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes receivable, and land held for resale are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or ass ' igned, then Nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Encumbrances and nonspendable amounts subject to restrictions are included along with spendable resources. Committed fund balances have constraints imposed by formal action of the Agency Board which may be altered only by formal action of the Agency Board. Encumbrances and nonspendable amounts subject to council commitments are included along with spendable resources. 24 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements I NOTE 1- SIGNIFICANT ACCOUNTING POLICIES (Co Assigned fund balances are amounts constrained by the Agency's intent to be used for a specific purpose, but are neither restricted nor committed. Intent is expressed by the Agency Board or its designee and may be changed at the discretion ot-the Agency Board or its designee. This category includes encumbrances; Nonspendables, when it is the Agency's intent to use proceeds or collections for a specific purpose, and residual fund balances, if any, of Special Revenue, Capital Projects and Debt Service Funds which have not been restricted or committed. Unassigned fund balance represents residual amounts that have not been restricted, committed, or assigned. This includes the residual fund deficits, if any, of Debt Service or Capital Projects funds. Detailed classifications of the Agency's Fund Balances, as of June 30, 2011, are below: Fund balances: Nonspendable: Loan receivable Total Nonspendable Restricted for: 2002 agency bonds debt service 2009 agency bonds debt service Low and moderate income Housing 1999 agency bonds capital projects 1985 capital projects and administration 2009 agency bond capital projects Total Restricted Cortunitted to: Capital unprovernentproi I ects Total Committed Assigned to, Capital improvement projects Total Assigned Total fund balances Major Capital Project Funds Major Low and Debt Service Fund Capital Moderate 1985 Capital 1999 Agency 2002 Agency 2009 Agency Improvement Income projects and 2009 Bonds Bonds Bonds Project Housing 1999 Bonds Administration Capital Projects Total $36,078 $8,753 36,078 8,753 $314,322 314,322 $314,322 314,322 36,078 8,753 1,251,362 1,251,362 $406,865 406,865 $1,026,532 1,026,532 $584,205 584,205 1,251,362 406,865 1.026,532 584,205 3,313,795 S1,415,972 1,120,000 2.535,972 1,415,972 1,12U00 2,535,972 5,()00 5,000 5,()00 5,000 $16,078 $8,753 $1,415,972 $2,685,694 5406,865 $1,031,532 $584,205 $6,169,089 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 I 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. 25 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE I - SIGNIFICANT ACCOUNTLYG POLICIES (Continued) 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 fiends. 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. L 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 statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, Actual results could differ from those estimates. 26 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 2 - CASH AND INTVESTMENTS 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 Agemy's name. The Agency's goal is to invest at the maximum yield, consistent with safetytiand 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 lune 30, 2011, were 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 $5,520,068 Restricted cash and investments 431,582 Total cash and investments $5,951,650 27 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 2 - CASH AND L"iVESTMENTS (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. Authorized Investment Maximum Minimum Credit Maximum Percentage Type Maturity _ Quality of Portfolio 5 years to U.S. Treasury Obligations no N/A No Limit maximum U.S. Agency Securities 3- 5 years N/A No Limit U.S. Agency Instruments 5 years AAA No Limit Repurchase Agreements 1 year A-1 No limit Bankers' Acceptances 360 days Highest Category No Limit Rating Money Market Funds N/A Highest Category No Limit Rating Prime Commercial Paper 270 days Highest Category Limit RatingNo Guaranteed Investment Highest Category Contracts (fully N/A Rating No Limit collateralized) (A) Municipal Obligations N/A Two Highest No Limit Category Ratings Medium -Term Corporate Notes 5 Years A No Limit Non -Negotiable Certificates of Deposit 180 Days N/A No Limit Negotiable Certificates of Deposit 5 Years N/A No limit Local Agency Investment NA N/A NrA Fund (A) Guaranteed Investment Contracts must be fully collateralized with U.S. Treasury Obligations or U.S. Agency Obligations. 28 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 2 - CASH AND INVESTMENTS (Continued} C. 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 $431,582 Local Agency Investment Fund 4,656,598 Total Investments 5,088,180 Cash in banks and on hand 863,470 Total Cash and Investments $5,951,650 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, 2011, these investments matured in an average of 237 days. Money Market Mutual Funds are available for withdrawal on demand and at June 30, 2011, matured in an average of 19 days. Ii. 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 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, 2011, for the money market mutual funds was AAArn 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, 201 L K11 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 3 — INTER -FUND TRANSACTIONS, A. Transfers Transfers between funds during the fiscal year ended June 30, 2011 were as follows: From Fund To Fund Amount 2002 Agency Bonds 1985 Capital Projects and Administration Capital Projects Fund $291,930 (A) Debt Service Fund Low and Moderate Income Housing Capital Projects Fund 2002 Agency Bonds Debt Service Fund 291,930 (D) $583,860 (A) Transfer is for administrative support. (13) Transfer is for the housing portion of debt service. B. Transfers From the City During the fiscal year ended June 30, 2011, the City made cash transfers of $141,379 to reimburse the Agency for ongoing Agency projects. INOTE 4 - LOANS RECEIVABLE A. Centertown Associates The Agency loaned Centertown Associates, Ltd, $303,000 at 3% interest due semiannually. The loan was made for the construction of a 60 -unit affordable Centertown apartment complex and is fully secured by a deed of trust. The final payment is due on July 31, 2065. As of June 30, 2011, the balance of the loan was $314,322. 30 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 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 30,2010 Additions June 30, 2011 $39,000 39,000 80,000 14,809 94,809 $39,000 39,000 80,000 14,809 94,809 (60,000) ($1,600) (61,600) (13,267) (1,028) (14,295) (73,267) (2,628) (75,895) 21,542 (2,628) 18,914 $60,542 ($2,628) $57,914 Depreciation expense has been allocated to the Community development'redevelopment activity on the statement of activities. I NOTE 6 — LONG TERM DEBT I A summary of governmental activities long-term debt changes for the fiscal year ended June 30, 2011. follow: Governmental Activities: Capital Appreciation Bonds 5.580/,5,6%, due 121/2022 2002 Tax Allocation Bonds 2.00% 5.254'0, due 12/1/2021 2009 Tax Allocation Refunding Bonds 10M/ 5.000/'. due 12;112022 Add: deferred bond premium costs Total Tax Allocation Bonds Authorized Balance and Issued June 30, 2010 Additions 2,389,004 $4,362.803 $247,371 25,0203000 15,295,000 14,660,000 Note Payable, 8,00%, due 111112024 169,000 Total Governmental Long-term Debt Balance Current Retirements Jane 30, 2011 Portion $4.610.174 $1,350,000 13,945,000 $1,420,000 14,660.000 875,000 13,785M0 905,000 1,038,185 79,860 958,325 35,355,988 247,371 2-1041860 33,298,499 2,325,000 169,000 169,000 $35,524,988 $247,371 $2,304,860 $33,467,499 $2.3255,000 31 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 6 - LONG-TERM DEBT (Coq�inued). 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 I from 2000 to 2022, in amounts ranging from $560,000 to $1,460,000 and bear interest at rates ranging from 4.50% to 5.00%. Interest is payable semiannually on June I 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 rata 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%. In December 2009, the Agency exercised the redemption option. The outstanding balance of the Bonds were refunded, on a current basis, through the issuance of the 2009 Tax Allocation Refunding Bonds as discussed on Note 6C below. The Capital Appreciation Bonds mature annually after December I from 2018 to 2022, in amounts ranging from $1,440,000 to $2,070,000 and bear interest at rates 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 (refunded in 2002), by a pledge and a lien on tax revenues and amounts on deposit in certain funds and accounts held by the fiscal agent. 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 I 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 I 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. C. 2009 Tax Allocation Refunding Bonds On December 14, 2009, the Agency issued 2009 Tax Allocation Refundinc, Bonds in the amount of $14,660,000 bearing interest at rates from 3.00% to 5.00%. The proceeds of the Series 2009 Bonds were used to refund the Agency's 1999 Tax Allocation Current Interest Bonds, and to advance funds to the City to finance street and parking improvements for the benefit of the Agency's Central San Rafael Redevelopment Project. Principal payments are due annually on December '30 and interest payable semiannually on June 30 and December 30. 32 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 6 - LONGTERM DEBT (Continued) The Series 2009 Bonds maturing on or before December 1, 2019, are not subject to optional redemption prior to their respective stated maturities. The Series 2009 Bonds maturing on or after December 1, 2020, are subject to optional redemption as a whole or in part either on a pro rata basis among maturities or in inverse order of maturity, and by lot within any one maturity, prior to their respective maturity dates, at the option of the Agency, on any date on or after December 1, 2019, at a price equal to the principal amount of such Series 2009 Bonds called for redemption, together with interest accrued on the date fixed for redemption, without premium. The Agency has pledged all future tax increment revenues, less amounts required to be set aside in the Low and Moderate Income Housing Fund, for the repayment of the 1999 Capital Appreciation Bonds, and the 2002 and 2009 Tax Allocation Refunding Bonds. The pledge of all future tax increment revenues ends upon repayment of $43 million in remaining debt service on the Bonds, which is scheduled to occur in 2023. For fiscal year 2011 tax increment revenues amounted to $4.5 million and debt service also amounted to $3.6 million. D. Note Payable At June 30, 2011, Note Payable consisted of a $1.69,000 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. E. Future Debt Service As of June 30, 2011, future debt service is as follows: For the Year Ended June 30 2012 2013 2014 2015 2016 2017-2021 2022-2026 Totals Reconciliation of long-term debt: Less unaccreted discount Governmental Activities Principal Interest $2,325,000 $1,244,312 2,425,000 1,140,269 2,540,000 1,023,576 2,675,000 893,201 2,800,000 766,926 15,820,000 2,000,172 7,144,000 157,319 35,729,000 $7,225,775 (3,219,826) Add deferred bond premium costs 958,325 Net long-term debt $33,467,499 33 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 Outstanding Amount —June 30, 2011 San Rafael Redevelopment Agency Multifamily Housing Revenue Bonds $3,590,529 $1,290,988 San Rafael Redevelopment Agency C Variable Rate Demand Multifamily Housing Revenue Bonds 3,000,000 2,600,000 San Rafael Redevelopment Agency Multifamily Housing Revenue Bonds -2001 A 3,220,000 2,820,000 Multifamily Housing Revenue Bonds -2001B 1,025,000 955,000 Multifamily Housing Revenue Bonds -2001C 1,855,000 1,785,000 Multifamily Housing Revenue Bonds -2007A 6,000,000 2,179,699 Multifamily Housing Revenue Bands 200713 1,000,000 278,704 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 I I , 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, 3' )3 )34.3, 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. 34 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements NOTE 9 - TAX 1144CRENIENT SHIFT TO SUPPLEMENTAL EDUCATIONAL REVENUE AUGMENTATION FUND (SERAF) The State of California adopted AB26 4X in July 2009 which directs that a portion of the incremental property taxes received by redevelopment agencies, based on the property taxes received in fiscal year 2006- 07, be paid instead to the County supplemental educational revenue augmentation fund (SERAF) in fiscal years 2009-10 and 2010-11. The State Department of Finance determines each agency's SERAF payment by November 15 of each year, and payments are due by May 10 of the applicable year. The Agency made its second SERAF payment of $282,450 in fiscal year 2010-11. I NOTE lo - commrrmEws AND CONTINGENCIES I 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 C, sufficient to cover any potential losses should an unfavorable outcome materialize. I NOTE 11— SUBSEQUENT EVENT I In an effort to balance its budget, the State of California adopted A-BxI 26 on June 28, 2011, which suspends all new redevelopment activities except for limited specified activities as of that date and dissolves redevelopment agencies effective October 1, 2011. The State simultaneously adopted A.BxI 27 which allows redevelopment agencies to avoid dissolution by the City opting into an "alternative voluntary redevelopment program" requiring specified substantial annual contributions to local schools and special districts. Concurrently with these two measures, the State passed various budget and trailer bills that are related and collectively constitute the Redevelopment Restructuring Acts. If all sponsoring communities were to opt -in to the voluntary program, these contributions amount to an estimated $1.7 billion for fiscal year 2012 and an estimated $400 million in each succeeding year. If the City fails to make the voluntary program payment, the Agency would become subject to the dissolution provisions of ABxI 26. On July 18, 2011, the California Redevelopment Association, the League of California Cities and others challenged the validity and constitutionality of ABx1 26 and 27 to the California Supreme Court on numerous grounds, including that the acts violate certain provisions of the California Constitution. On August 11, 2011, as modified on August 17, 2011, the California Supreme Court agreed to hear the case and issued a partial stay of A-Bxl 26 and a full stay of ABxI 27., but the stay did not include the section of ABxI 26 that suspends all new redevelopment activities. It is anticipated that the Court will render its decision before January 15, 2012, the date the first voluntary program payment is due. The suspension provisions of ABx1 26 prohibit all redevelopment agencies from a wide range of activities, including incurring new indebtedness or obligations, entering into or modifying agreements or contracts, acquiring or disposing of real property, taking actions to adopt or amend redevelopment plans and other similar actions, except actions required by law or to carry out existing enforceable obligations, as defined in A.BxI 26. During the suspension period, an agency is required to prepare an Enforceable Obligation Payment Schedule no later than August 29, 2011, that allows it to continue to pay certain obligations. The Agency Board adopted its Enforceable Obligation Payment Schedule (FOPS) on September 6, 2011. The San Rafael City Council and San Rafael Redevelopment Agency Board have chosen to participate in the Voluntary Alternative Redevelopment Program pursuant to Part 1.9 of the California Community Redevelopment Law. The City Council's intention was verified by the passage of Ordinance 1899 on September 19, 2011. 35 SAN RAFAEL REDEVELOPMENT AGENCY Notes to Basic Component Unit Financial Statements I NOTE 11— SUBSEQUENT EVENT (Continued) In addition, the suspension provisions require the State Controller to review the activities of all redevelopment agencies to determine whether an asset transfer between an agency and any public agency occurred on or after January 1, 2011. If an asset transfer did occur and the public agency that received the asset is not contractually committed to a third party for the expenditure or encumbrance of the asset, the State Controller is required to order the asset returned to the redevelopment agency. The State Controller's Office has not yet provided any information about the timing or the process for this statewide asset transfer review. The Agency is currently subject to the suspension provisions as described above. These facts indicate that there is more than a remote possibility the Agency may not continue as a going concern beyond October 1, 2011. The continuation of the Agency beyond October 1, 2011 will initially depend upon whether the Supreme Court rules in favor of the petitioners. There are three possible consequences to the Agency from a decision of the Supreme Court, when it is rendered: 1. If the Supreme Court determines that both ABxI 26 and ABxI 27 are valid, then the City will consider whether it will enact an ordinance to opt -in to the alternative voluntary redevelopment program. If enacted, the City would be required to make annual payments to the County Auditor -Controller and the Agency would no longer be subject to the suspension provisions. The State Department of Finance calculated the City's Voluntary Program payment for fiscal year 2012 to be $299,490. 2. If the Supreme Court determines that both ABxI 26 and ABxI 27 are valid and the City decides not to participate in the alternative voluntary redevelopment program, or if the Supreme Court determines that ABxI 26 is valid, but ABxI 27 is not valid, the Agency will continue to be subject to the suspension provisions and would be dissolved in accordance with certain provisions of ABxI 26. Prior to dissolution, any transfers of Agency assets subsequent to January 1, 2011 to the City, that were not obligated to third parties or encumbered may be subject to the State Controller's review discussed above and required to be returned to the Agency. Upon dissolution, all assets and obligations of the Agency would be transferred to a successor agency. If the Supreme Court determines that both ABxl 26 and ABxI 27 are invalid, the Agency would no longer be subject to the suspension provisions and would continue in existence under California Redevelopment Law as it existed prior to the enactment of ABxI 26 and ABxI 27. As of November 23, 2011, the Supreme Court has not ruled on the case and the Agency is subject to the suspension provisions as discussed above. W 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, 2011 REVENUES: Taxes and special assessments Use of money and properties Total Revenues EXPENDITURES: Debt service: Principal Interest and fiscal charges Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (I jSES): Transfers in Transfers (out) Total other financing sources (uses) Net Change in Fund Balances FUND BALANCE, BEGINNING OF TIIE YEAR FUND BALANCE, END OF THE YEAR M Variance with Final Budget Actual Positive Budget Amounts (Negative) $2,068,940 $2,068,938 ($2) 329 123 (206) 2,069,269 2,069,061 (208) 1,350,000 1,350,000 718,940 718,938 2 2,068,940 2,068,938 2 329 123 (206) 291,930 (291,930) (291,930) 291,930 $329 123 ($206) 35,955 $36,078 SAN RAFAEL REDEVELOPMENT AGENCY 2009 AGENCY BONDS DEBT SERVICE FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2011 REVENUES: Taxes and special assessments Total Revenues EXPENDITURES: Debt service: Principal Interest and fiscal charges Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDIFURES Net Change in Fund Balances FUND BALANCE, BEGINNING OF THE YEAR FUND BALANCE, END OF THE YEAR 38 8,753 $8,753 Variance with Final Budget Actual Positive Budget Amounts (Negative) $1,495,000 $1,494,725 ($275) 1,495,000 1,494,725 (275) 875,000 875,000 620,000 619,725 275 1,495,000 1,494,725 275 8,753 $8,753 SAN RkFAEL. REDEVELOPMENT AGENCY CAPITAL IMPROVEMENT PROJECTS CAPITAL PROJECTS FUND SCHEDULE OF REVENUES, EXPENDITURES AND CHANGE N, FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2011 REVENUES: Use of money and properties Total Revenues EXPENDITURES: Capital improvement/special projects Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES Net Change in Fund Balances FUND BALANCE, BEGINNING OF THE YEAR FUND BALANCE, END OF TBE YEAR WE Variance with Final Budget Actual Positive Budget Amounts (Negative) $24,628 $8,473 (516,155) 24,628 8,473 (16,155) 179,000 179,000 179,000 179,000 (154,372) (170,527) (16,155). ($154,372) (170,527) ($16,155) 1,586,499 $1,415,972 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, 2011 REVENUES: Taxes and special assessments Use of money and properties Other revenue Total Revenues EXPENDITURES: Current: General government Community development/redevelopment Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers (out) Total other Imancing sources (uses) Net Change in Fund Balances FUND BALANCE, BEGINNING OF THE YEAR FUND BALANCE, END OF THE YEAR im 0 (291,930) (291,930) (291,930) (291,930) ($313,467) (148,739) $164,728 2,834,423 $2,685,684 Variance with Final Budget Actual Positive Budget Amounts (Negative) $900,000 $936,383 $36,383 27,512 12,050 (15,462) 109.020 109,020 927,512 1,057,453 129,941 5,595 5,595 943,454 908,667 34,787 949,049 914>2 34,787 (21,537) 143,191 164,728 (291,930) (291,930) (291,930) (291,930) ($313,467) (148,739) $164,728 2,834,423 $2,685,684 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, 2011 REVENUES: Use of money and properties Total Revenues EXPENDITURES: Capital improvement/special projects Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in from the City Total other financing sources (uses) Net Change in Fund Balances FUND BALANCE, BEGINNING OF THE YEAR FUND BALANCE, END OF THE YEAR 41 292,096 $406,865 Variance with Final Budget Actual Positive Budget Amounts (Negative) $250 $14 ($236) 250 14 (236) 250,000 26,624 223,376 250,000 26.624 223,376 (249,750) (26,610) 223,140 141,379 141,379 141,379 141,379 ($391,129) 114,769 $223,140 292,096 $406,865 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, 2011 REVENUES: Use of money and properties Charges for services Total Revenues EXPENDITURES: Current: General government Public works and parks Community developmentlredevelopment Capital improvement/special projects Total Expenditures EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES OTHER FINANCING SOURCES (USES): Transfers in Total other financing sources (uses) Net Change in Fund Balances NBT ASSETS, BEGINNING OF YEAR 1,436,412 FUND BALANCE, END OF THE YEAR $1,031,532 42 Variance with Final Budget Actual Positive Budget Amounts (Negative) $47,213 $37,785 ($9,428) 13,250 29,525 16,275 60,463 67,310 6,847 29,078 34,886 (5,808) 108,324 106,893 1,431 698,248 543,787 154,461 120,620 78,554 42,066 956,270 764,120 192,150 (895,807) (696,810) 198,997 291,930 291,930 291,930 291,930 ($603,877) (404,880) $198,997 1,436,412 FUND BALANCE, END OF THE YEAR $1,031,532 42 SAN RAFAEL REDEVELOPMENT AGENCY 2009 CAPITAL PROJECTS FUNDS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2011 REVENLES: Use of money and properties Intergoverruilental Total Revenues EXPENDITURES: Capital improvement/special projects Total Expenditures Net Change in Fund Balances NET ASSETS, BEGINNING OF YEAR FUND BALANCE, END OF THE YEAR 43 Variance with Final Budget Actual Positive Budget Amounts (Negative) $2,782 $2,142 ($640) 20,000 (20,000) 22,782 2,142 (20,640) 20,000 22,940 (2,940) 20,000 22,940 (2,940) (20,798) 605,003 $584,205 SAN RAFAEL REDEVELOPMENT AGENCY EXCESS SURPLUS CALCULATION Excess surplus is defined in Health and Safety Code Section 33334.12(b) as any unexpended and unencumbered amount in an Agency's Low and Moderate Income Housing Fund that exceeds the greater of $1,000,000 or the aggregate amount deposited into the Low and Moderate Income Housing Fund during the preceding four fiscal years, as of the beginning of the fiscal year. If excess surplus exists, the Agency must lawfully spend the excess or transfer it to a housing authority or other public agency in the following fisc,0 year, expend or encumber in the next two fiscal years or face sanctions. Essentially, agencies have a three-year window to expend, encumber, or transfer the excess surplus_ 44 Low and Moderate Income Housing Funds — All Project Areas July 1, 2010 Opening Fund Balance — July 1, 2010 $2,834,423 Less Unavailable Amounts: Encumbrances (Section 33334.12(g)(2)) ($235,000) Housing loans (307,555) (542,555) Available Low and Moderate Income Housing Funds 2,291,868 Limitation (greater of $1,000,000 or four years set-aside) Set -Aside for last four years - fiscal years ended: June 30, 2010 953,833 June 30, 2009 973,704 June 30, 2008 964,526 June 30, 2007 974,408 Total $3,866,471 Base limitation $1,000,000 Greater amount 3,866,471 Computed Excess Surplus - July 1, 2010 None 44 MAZE & ASSOCIATES ACCOUNTANCY CORPORATION 3418, 8-luskirk Ave, - Suite 215 Pleasant 14,111, California 945.23 (Y-25; 93-0-0902 - YX (925) 930-0135 maze (elz�n,, ze-associates, com IN -DEPENDENT AUDITOR'S REPORT ivWW'waz"eassociates,coo n ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Members of the Board of the San Rafael Redevelopment Agency San Rafael, California We have audited the financial statements of San Rafael Redevelopment Agency (Agency)as of and for the year ended June 30, 2011, and have issued our report thereon dated November 23, 2011. The report included a special emphasis paragraph concerning proposed redevelopment dissolution and paragraph discussing the implementation of Governmental Accounting Standards Board Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control over Financial Reporting Management of the Agency is responsible for establishing and maintaining effective 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 deficiency in internal control 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 and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the Agency's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Ps 4 co;po,,4 45 Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. 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. 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 or other matters that are required to be reported under Government Auditing Standards. As part of our audit, we prepared and issued our separate Memorandum on Internal Control dated November 23, 2011, which is an integral part of our audit and should be read in conjunction with this report. This report is intended solely for the information and use of management, Agency Board, others within the Agency, the State Controller's Office, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. LA M�(Aq_ 44, November 23, 2011 46 MAZE & ASSOCIATES INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON " INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH THE CALIFORNIA HEALTH AND SAFETY CODE AS REQUIRED BY SECTION 33080.1 Members of the Board of the San Rafael Redevelopment Agency San Rafael, California Compliance ACCOUNTANCY CORPORATION 34'7b Su., kirk Ave. - SU"fle 21�L,, P'a. sarit Hill, California 9452 -` z),20 -09U2 FAX (925) f3, 0-0 -135 WVVW,'- OteS,COM We have audited the San Rafael Redevelopment Agency's (Agency's) compliance with the California Health and Safety Code as required by Section 33080.1 for the year ended June 30, 2011. Compliance with the requirements referred to above is the responsibility of the Agency's management. Our responsibility is to express an opinion on the Agency's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Guidelines for Compliance Audits of California Redevelopment Agencies, June 2011, issued by the State Controller. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a material effect on the Agency has occurred. An audit includes examining, on a test basis, evidence about the Agency's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the Agency's compliance with those requirements. In our opinion, the Agency complied, in all material respects, with the compliance requirements referred to above that are applicable for the year ended June 30, 2011. Internal Control Over Compliance Management of the Agency is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit we considered the Agency's internal control over compliance to determine the auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control over compliance. 47 A deficiency in internal control over compliance 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 and correct, noncompliance on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies, significant deficiencies, or material weaknesses in internal control over compliance. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of management, Agency Board, others within the Agency, the State Controller's Office, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. November 23, 2011 48 SAN RAFAEL REDEVELOPMENT AGENCY CURRENT STATUS OF PRIOR YEAR FINDING Finding 2010-01 Compliance on Procedure of Sale of Agency Property Criteria: California Health & Safety Code (HSC) Sections 33431 and 33433 (c) (1) states that , "the agency may sell or lease a small housing project pursuant to this subdivision if, prior to the sale or lease, the agency holds a public hearing pursuant to Section 33431. Any agency that has sold or leased a small housing project pursuant to this subdivision shall, within 30 days after the end of the agency's fiscal year in which the sale or lease occurred, file a report with the legislative body which discloses the name of the buyer, the legal description or street address of the property, the date of the sale or lease, the consideration for which the property was sold or leased by the agency to the buyer or lessee, and the date on which the agency held its public hearing for the sale or lease, pursuant to Section 33431. Condition: On May 9, 2010, the Agency sold a Below Market Rate unit. However, the Agency did not conduct a public hearing prior to the sale of the property nor file a report with the Agency Board after the sale occurred. Effect: The Agency did not comply with the above requirement stated. 0 Cause: HSC 33433 (c) (1) was set up to address the sale of a small housing project. Agency staff was not aware of its applicability to the sale of one condominium unit which was encumbered by a Resale Restriction. The Agency believes that it complied with the significant provisions in HSC 33433 (c) (1) but did not hold a public hearing when the unit was resold to a buyer, who was chosen and qualified by Marin Housing and subject to the Resale Restrictions previously approved by the Agency. This oversight was due to the Agency's belief that the terms and conditions of the Resale Restriction had been publically discussed and approved by the Agency Board. The unit in question is a condominium unit that was provided pursuant to the City's inclusionary housing requirement. The initial buyer notified Marin Housing of their desire to sell, pursuant to the Resale Restriction recorded on the property. Marin Housing could not find another income -qualified buyer within the time period allowed in the Resale Restriction and requested the Agency to take possession of the unit until another income -qualified buyer could be identified and the unit resold. Had the Agency not purchased the unit, the owner could have sold the unit at the current unencumbered market price; reducing the City's stock of affordable ownership housing. HSC 33433 (c) (1) provides for public notification regarding the terms of the sale and the description of the property. The Agency staff reports on the purchase of the unit clearly stated that the Agency's acquisition of the unit and its subsequent sale was subject to Resale Restrictions that limited both the price and the potential purchaser. The Agency believes that the terms of the sale were well known to the public as Marin Housing, the Agency's contractor for the affordable ownership program, conducted substantial public outreach to notify potential eligible purchasers. The 2009 Agency staff reports and Board Resolutions also contained the assessors parcel number, which provided public notification of the unit location. The terms of the Resale Restrictions severely limited the pool of potential purchasers and it took over a year for Marin Housing to find a qualified purchaser - C, The Agency believes that it also complied with the provision in HSC 33433 (c) (1) that requires disclosure of the name of the purchaser through the recordation of a Notice of Affordability Restrictions. This Notice includes the buyers name, assessors parcel number, street address and the date of the sale. Information regarding the Notice of Affordability Restrictions was posted on the Agency's website as required by HSC 3313343. Ms SAN RAFAEL REDEVELOPMENT AGENCY CURRENT STATUS OF PRIOR YEAR FINDING Recommendation: We recommend that the Agency follow the applicable compliance requirements in the future. Corrective Action Plan: The Agency will comply with the provision of HSC 33431 and 33433 (c) (1) if the Agency is ever again in the position of purchasing an affordable unit and reselling it to an income qualified purchaser. Name of Contact Peron: Stephanie Lovette, ED Coordinator Current Year Status The Agency did not purchase or sell any affordable units in fiscal year 2010-11. IN eu rc cc a. 0 0 U) U) LU z 0 ui z d. ul ui _j U) LL C14 W LLJ LU z 0 UJ 1�— 0 m U. W 0 0UJ Z U. 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E 0 CALCULATION OF AVAILABLE REVENUES AGENCYNAME San Rafael PROJECT AREA Central TAX YEAR 2011-2012 RECONCILIATION DATES: JULY 1.2O1OTOJUNE 30.2O11 Beginning Balance, Available Revenues (See Instructions) Tax/ncren)mntRecmived-Grnns All Tax Increment Revenues, toinclude and Tax Increment passed through toother local taxing agencies 2, 6578983 All other Available Revenues Received (See Instructions) 3. O Revenues from any other onuroe.|nc|uded inColumn Eofthe Reconciliation Statement, but not included in(1`3)above 4. 178000 Sum ofLines 1 through 4 5. 6,757,983 Total amounts paid against indebtedness inprevious year- (D+EonReconciliation Statement) G 6,757,983 Available Revenues, End ofYear (5'6) FORWARD THIS AK8OU0TTOSTATEMENT DFINDEBTEDNESS COVER PAGE, LINE 4. 7� O Tax Increment Revenues: The only amount(s) to be excluded as Tax Increment Revenue are any amounts passed through to other local taxing agencies pursuant to Health and Safety code Section 33678. Tax Increment Revenue set-aside in the Low and Moderate Income Housing Fund will be washed inthe about calculation, and therefore omitted form Available Revenues atyear end. Item 4above: This represents any payments from any source other than Tax Increment OR available revenues, For instance, an agency funds a project with a bond issue. The previous 8D| included a Disposition Development Agreement 0JD/V as fully vepokj under the ^othe/' column (Col E). but with funds that were neither Tax |ncrammrd. or "Available Revenues" as defined. The amounts used to satisfy this DDA would be included on line above in order toaccurately determine ending "Available Revonuem^ (Revised 09m2f05) W:xmanaqemunt8orwcen vvumponkFinanun WorkFile\Debt xummistrqounwmonoy+RoxNSuntn(Indebtedness Template 2U11'12.mn EXHIBIT F W:1Redevelopment- WorkFileLRDA DEV SPECIAi3S'Nnnual reportt20111Exh F blight report 201Lxls SAN RAFAEL RDA BLIGHT REPORT _ This re ort includes expenditures from all sources including Agency, City, State and Federal funds and bond roceeds. Ptscal Year Ending 2011 Sta nant & De ressed Pro ert Values L PROGRAM: Traffic Circulation Sonoma Marin Area Rapid Transit Coordination $18,590 Subtotal $18,590 7Iits�ItD .. Downtown Substandard Design, Incompatible Uses— _ I De reciated Values, High Vacancies &Low Lease Rates PROGRAM: Downtown Revitalization Plaza — Downtown Promotions and Events (net) $241,158; Business Im rovement District Su ort ( $13,000 _ Downtown Beautification $34,0231 i i Subtotal $288,181 PROGRAM: Economic Develo ment Coordination_ ' 3 Economic Develo ment Activities (1) 1 $385,671 Chamber of Commerce Support $36,000 Subtotal $421,071 Subtotal non ca ital I3LII f+i1ll (it1i Reduction or Lack of Proper Utilization of Provertv $728,442( Constituting Economic Burden on Community � i PROGRAM: Public Facility Improvements Hi h School Projects $179,000 A euc Storage Facility I Subtotal $179,0001 Sub -total Non -Ho usin Pra rams $907,4421 Lack of Affordable Housing— PROGRAM: Housing Housin Su ort -Ritter Center $40,0001 Housin Support -Rental BMR O ep ration of Acquired Property (BMR unit} $26,2771 $0, Administration & Professional Services$244,8581 - r — Rehabilitation Grants First Time Homebuyer Grants &Program Expenses Band Pa ents (Transfers Out) Housin Inspections Purchase of Affordability Covenants i — - — $76.373 $182,771 $383,161; $120,5871 $O — — Rental subsidies $30,000 Preservation of at Risk Units _ Technical Assistance -specific projects SMART Station Area Plans — —1 Subtotal $0 j $35.5301 — $66,6361 _ $1,206,1931 1 — Total Expenditures for 2010-11 (1) t -- $2,113,635; (l) Includes personneland projectexpenses. W:1Redevelopment- WorkFileLRDA DEV SPECIAi3S'Nnnual reportt20111Exh F blight report 201Lxls EXHIBIT F SAN RAFAEL REDEVELOPMENU AGENCY PROPERTIES This Report was prepared pursuant to a requirement of the Community Redevelopment Law. _ JThe CRL requires an Agency`s annual Report to include a list of properties owned by the Agency. The Agency is also required to report on any change in roperty ownership. —j — �- - A P # —4P+Prope y Street Description 1 009 50 Canal Street Pickleweed 2 032 07 50 Canat Street Pickleweed {_ 51032116 3 '032 08 50!Canal Street Pickleweed 011'205 01 I 1317 Fifth Avenue 5th & D Parking Lot 5 011 ]205 15 '224 1D Street �Sessi Alley Parking _ 6 011 05 ( r84 813 Fifth Avenue Parking Lot 7 011 224 06 809 Fifth Avenue Parking Lot 011 1252 =10 _ 1412Second Street Parking Lot �- 9 011 254 19 1 C Street Centertown 10 0111255 110 1 12161hird'Street Parking Structure Transferred to City per RDA Reso. 2005-22-9/6/05 11 011 (255 13 912!C Street )Parking Lot Transferred to City per RDA Reso. 2005-22-9/6/05 120 1255 14 9� 18 C Street_ Parking Structure Transferred to City per RDA Reso. 2005-22-9/6/05 13 011 255 18 902 C Street Parking Lot ITransferred to City per RDA Reso. 2005-22-9/6/05 14 011 _256 i16 1218jSeco_n_d Street Lone Palm 15 011 256 21 Lone Palm i ! 16 011 256 25 C Street Lone Palm 17 011 1256 27 1 C Street Lone Palm 18 011 !256128R, 1221 Third Street Lone Palm _ ! 20 011 256 29� Lone Palm ( -- 21 011 256 31 1 ( 1290 Second Street Lone Palm 22 011 1261 126 Part of A Street Structure Parking Structure !Transferred to City per RDA Reso. 2005-22-9/6/05 23 011 261 3O ;Part of A Street Structure I Parking Lot (Transferred to City per RDA Reso. 2005-22-9/6/05 24011 011 X263SOS 941 Fourth Street _ -- !Alley to Parking (- -- 25 011 1271 (12, (Third Street Walgraen's Parking Lot 26 ;271 13 840 Third Street Walgreen's Parking Lot �611 27 l '271 14 844 Third Street Walgreen's Parking Lot 28 011 ;271 16 914 Lootens Place 29 013 !041 ,44 Rice Drive �arkmgLot asng lot30 014 123 061 519 Fourth Street arage 31 018 180 52 Andersen Drive !Hillside next to PG&E l I SSL/annualmporvRDAandCigOwnedPropenies Rev. 12/12/2011 F W vti V s. a CDCD W � o C:)00 rn M w a � o 44 4: z W" ;:3I w U W, i O 0 .� rA a 1• • • r m co ct m a as a° a� U 4-. w Q O U E N > C�7 i O o E U u u u 0 n. c� O 7G Z C m EXHIBIT G City of San Rafael Affordable Housing Report 2010-11 This Affordable Housing Report is intended to provide information on the City and Redevelopment Agency's affordable housing programs. This information is intended to supplement the reporting required by the California Community Redevelopment Law. The Report covers Agency housing activities in between July 1, 2010 and December 1, 2011. Affordable Housing Inventory ❖ Restricted units include all known units with affordability restrictions including BMR units (H-19), RDA restrictions, CDBG & HOME or tax credits. Location of Affordable Units Downtown 50% East San Rafael 12% North San Rafael 38% 2010-11 Affordable Housing Activities During the reporting period, Agency staff spent a great deal of time working the Community Development staff on the update to our 2005 Housing Element. The 2009 Housing Element was initially submitted to the CA Housing and Community Development Department ("HCD") in May 2010. City staff completed several revisions as requested by HCD staff. The updated Housing Element received final approval from HCD in November 2011. The next housing element update will be due in 2014. It should be noted that all previous San Rafael housing elements have also been certified by the State. This continual certification has enabled the City to apply for MTC planning grants and other State funding. The majority of State housing and infrastructure funding programs require a locality to maintain a certified housing element. Agency staff continues to update the economic development website to be more useful to housing developers and to persons seeking affordable housing. The website now includes a listing of housing sites that have been approved for development but are not under construction. In addition to the information on the website, Agency staff also spends a considerable amount of time explaining the City requirements to potential developers. Agency staff provides predevelopment assistance on many of the sites that have major issues or site development costs that can preclude housing development and/or redevelopment. Examples of predevelopment activities include the Salute site, and the industrial areas in East and North San Rafael. In 2010 and 2011, Agency staff has also been providing technical assistance for developments that are under construction but have not been completed due to the economy. June 30, 2011 Total restricted units' 1,679 Rental (Inc. Senior) 1,563 Ownership 115 ❖ Restricted units include all known units with affordability restrictions including BMR units (H-19), RDA restrictions, CDBG & HOME or tax credits. Location of Affordable Units Downtown 50% East San Rafael 12% North San Rafael 38% 2010-11 Affordable Housing Activities During the reporting period, Agency staff spent a great deal of time working the Community Development staff on the update to our 2005 Housing Element. The 2009 Housing Element was initially submitted to the CA Housing and Community Development Department ("HCD") in May 2010. City staff completed several revisions as requested by HCD staff. The updated Housing Element received final approval from HCD in November 2011. The next housing element update will be due in 2014. It should be noted that all previous San Rafael housing elements have also been certified by the State. This continual certification has enabled the City to apply for MTC planning grants and other State funding. The majority of State housing and infrastructure funding programs require a locality to maintain a certified housing element. Agency staff continues to update the economic development website to be more useful to housing developers and to persons seeking affordable housing. The website now includes a listing of housing sites that have been approved for development but are not under construction. In addition to the information on the website, Agency staff also spends a considerable amount of time explaining the City requirements to potential developers. Agency staff provides predevelopment assistance on many of the sites that have major issues or site development costs that can preclude housing development and/or redevelopment. Examples of predevelopment activities include the Salute site, and the industrial areas in East and North San Rafael. In 2010 and 2011, Agency staff has also been providing technical assistance for developments that are under construction but have not been completed due to the economy. The Downtown SMART station is located within the Redevelopment Project Area. The Citizens Advisory Committee has been acting as the public advisory committee for the SMART Station Area Plan ("SAP") for Downtown. Agency staff had been assisting Community Development staff with the Downtown SAP. In November 2011, Agency staff assumed project management responsibility of both the Downtown and the Civic Center SAP. Requirement for Below Market Rate Units ("H-19") One of the City's main affordable housing programs is General Plan Policy H-19, first adopted in 1986. General Plan 2020 increased the number of housing developments subject to H-19 and increased the number of affordable units required. New housing developments are now required to provide between 10%-20% of the total units affordable to very low, low and moderate -income persons. There are exemptions for 1-4 unit developments and single-family homes under 1,800 square feet. The General Plan policy requires BMR units in both rental and ownership developments. However, a subsequent court decision has voided the ability of the City to require below market rate units in new rental developments. H-19 Inventory as of June 2011: Total H-19 units Rental H-19 units Ownership H-19 Units 305 189(62%) 115(38%) Below Market Rate Ownership Housing Program The Below Market Rate ("BMR") housing program is administered by Marin Housing Authority ("MHA") with assistance and policy direction from Agency staff. San Rafael has 115 homes in the program. Since the inception of the program, over 150 households have participated in the program. There have been no sales of new units this year because there have not been any new subdivisions. The program continues to have BMR resales. The Agency spent $157,000 this year on the ownership BMR program. These costs include $7-7,000 to Marin Housing for program administration, Agency staff time, attorney's fees to respond to issues at 33 North, and legal fees to address situations where owners are behind on their mortgage payments or homeowners' dues. We anticipate continuing to expend legal fees to protect the BMR resources as homeowners struggle in the current recession. The majority of these legal fees will eventually be recouped when the unit is resold to another income eligible purchaser. There were four BMR resales during the reporting period. Two units in Redwood Village are currently in the marketing phase. BMR resales are challenging due to: a) the continuing decline of sales prices of market rate homes, b) the continuing instability in the lending market, and c) new Federal regulations affecting mortgage lending. San Rafael BMR units continue to be priced under current market value but the spread between BMR units and market rate units is narrowing. 2 The decreasing gap between market rate housing and the BMR units is reducing the number of moderate -income buyers interested in the program. Moderate -income buyers would rather pay more and purchase a non -restricted unit. Lower income buyers continue to be interested in the program but have trouble obtaining financing due to their lower income, potential credit issues, and the reluctance of banks to lend on resale restricted units. FHA is the preferred financing for first time homebuyers due to lower down payment requirements and broader underwriting guidelines. FHA has recently changed their underwriting standards for attached housing and most Marin County condominium developments are unable or unwilling to undertake the daunting FHA certification process. MHA is exploring other lending programs to address the loss of FHA financing as discussed below. Ownership Assistance Many low-income households are unable to enjoy the advantages of homeownership due to financial constraints. These families often pay monthly rent that exceeds the monthly cost for a BMR unit. MHA has three Federal programs to assist low income households with home ownership; the mortgage credit certificate program ("MCC"), the American Dream Downpayment Initiative ("ADDI") program and the WISH program of the Federal Home Loan Bank. The funding for all of these programs is competitive, with a lengthy application process and a requirement to show a track record of fully utilizing the funding. MHA has an excellent record of accomplishment on the MCC program. Every eligible BMR buyer for the past 10 years has received a MCC. MHA has also fully utilized their ADDI allocation. MRA's first ADDI loan was completed in 2008 on a unit in San Rafael. . MHA is currently preparing an application for the California Housing Finance Authority for CalHome funding. MHA would use CalHome funds to provide second mortgages to BMR buyers. These seconds would assist in filling the 20% gap between conventional 80% financing and the purchase price. The CalHome mortgage program would provide a strong alternative to FHA financing. CalHome financing can be combined with other programs such as WISH, to allow as many eligible buyers as possible be eligible to purchase BMR units. The San Rafael Redevelopment Agency also provides funding for an ownership assistance program for low income buyers whose incomes do not exceed 80% of County median income. The grants range in size from $2,500 to $7,500. The Agency has not made any grants under this program since 2009. In 2010-11, the majority of BMR buyers received ADDI or WISH funds instead of the Agency's program. Since the inception of the program in 2002, the Agency has assisted thirty-one low-income households including City, County and County Court employees and people working in retail establishments in Marin County. Below Market Rate Rental Housing Program Agency staff is responsible for administering the rental properties subject to General Plan Policy H- 19. Thirty-six properties are required to provide annual tenant income and rent certifications to the City or Agency. Agency staff provides annual notification to the property owners regarding the allowable rent levels, receives and verifies the annual certification and responds to property owner and tenant questions. The administration of the program has been difficult due to decreased Agency staff and changes in property management at several large properties. Community Development Block Grants ("CDBG") and HOME CDBG funds are allocated on a population basis. Agency staff works with the County Federal Grants division to allocate housing funds in the San Rafael Planning Area pursuant to the cooperative agreement. In Fiscal Year 2010-11, CDBG funds were allocated to the housing rehabilitation program at Marin Housing and to Fair Housing of Marin. Other San Rafael recipients of CDBG funds were Buckelew and Lifehouse for the Sunrise II and Monticello properties. Federal HOME funds are allocated by the County Federal Grants staff for specific developments. San Rafael has successfully utilized HOME funds on several affordable housing acquisitions. Potential changes to the County's priorities for Federal housing funds may negatively affect San Rafael's ability to compete for future HOME funding. At the request of the Federal Department of Housing and Community Development ("HUD"), the County recently completed an Analysis of Impediments to Fair Housing Choice (Al). This comprehensive planning document was commissioned by the County as part of its mandate to affirmatively further fair housing. The Al identifies barriers to fair housing choices in Marin County and provides recommendations for addressing those barriers. Some of the recommendations in the Al may result in Federal housing funds being shifted from areas of the County with a larger proportion of minority inhabitants to areas of the County with a Less diverse populace. This shift may negatively affect San Rafael's ability to use Federal funds to address affordable housing needs in our community. Non -Profits Grants for Acquisition and Rehabilitation The Agency continues to assist non-profit organizations to acquire existing properties. All buildings receiving Agency assistance have a Regulatory Agreement for property management and long-term rental restrictions. There were no acquisitions in 2010-11 due to the cost of units and the lack of public funding. Rental developments are commanding premium prices in the current real estate market, making it difficult for non-profit housing managers to acquire units due to their restricted rental revenue. Federal, State and local funding is usually required to assist non-profit groups to acquire units. The main programs are CDBG, HOME and tax credits. Marin County is not competitive for many Federal and State affordable housing funds due to our high cost of living and smaller buildings. Local funding from the SRRDA is not adequate to close the funding gap. In 2010, the Agency made a $50,000 grant to Habitat for Humanity for the acquisition and rehabilitation of 21 Stephens Place. The unit was rehabilitated with community assistance and sold to a low-income family. Rehabilitation Grants The Agency continued to provide funds for low interest loans and grants to low income homeowners for rehabilitation and handicapped accessibility improvements. The program is administered by Marin Housing and is only available to single family homeowners. The majority of the loans are made to low-income seniors. 4 Canal Area Housing Improvement Program ("CAHIP") BRIDGE Housing owns and manages 55 Fairfax (40 units) and 162-172 Belvedere (28 units). These buildings were acquired and rehabilitated with assistance from the Agency, Marin Community Foundation, Cowell Foundation and Federal HOME funds. All of the units will remain affordable for sixty years. BRIDGE continues to pursue acquisition of additional properties and the Agency has designated $1,250,000 for this program. The CAHIP program may be negatively affected by the potential change in the priorities for HOME funding discussed above. Code Enforcement The City's apartment inspection program is funded by apartment inspections fees. In 2010-11, the Agency provided additional funding for a housing inspector position in the Code Enforcement division assigned to inspect buildings with a large number of low-income residents, in keeping with the requirement under State Law to use housing funds to increase improve or preserve affordable housing and the Agency's mission to improve housing conditions for low-income residents of the City. The Agency's contribution to the code enforcement program has been reduced to one-quarter of a position in Fiscal Year 2011-12. The apartment inspection program will continue utilizing the apartment inspection fee revenue and the Agency will reallocate those funds to other low-income housing initiatives. Housing Support Services The Agency continues to provide funding to Ritter Center for housing support programs serving very low and low-income persons. Use of Affordable Housing Funds (CRL 33334.3 (d) and 33334.4) Agency housing funds have not been used to fund offsite improvements. Agency funds are not used for land acquisition, construction or rehabilitation of developments for moderate -income households; funding is targeted to assist very low and low-income persons. The Agency does expend some funds on the Below Market Rate ownership program that serves both low and moderate -income households. In 2010-2011, planning and administrative expenses of $242,348 represented approximately 27% of the annual housing expenditures, excluding the $291,840 of bond debt service paid by the housing fund. 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