Item CC/RA-1

Council Meeting: June 22, 1999

Santa Monica, California

 

TO: City Council and Redevelopment Agency

FROM: City and Agency Staff

SUBJECT: Extension Of Time For Outstanding Promissory Notes

Introduction

Currently, there are seven Promissory Notes for funds loaned by the City of Santa Monica to the Santa Monica Redevelopment Agency: two for the Downtown Redevelopment Project, three for the Ocean Park Redevelopment Project, and two for the Earthquake Recovery Redevelopment Project. These Promissory Notes need to be renewed for the period July 1, 1999 through June 30, 2000.

Background

The City has loaned the Agency funds for various administrative, operational and miscellaneous expenses. Until payment in full is received by the City, it is necessary that the Notes be renewed.

Attachment I details the financial history of each of the Promissory Notes, including amounts repaid to date, and presents the sources and uses of budgeted FY 1999-00 Redevelopment Agency income. To date, $7.5 million has been repaid on these Notes, an additional $0.4 million has been budgeted to be repaid in FY 1999-00, and Promissory Note #3 has been paid in full.

Budget/Financial Impact

There is no budgetary impact resulting from the renewal of these Promissory Notes. The financial impact is to increase the liability of the Agency by $794,965.63, which represents the net of accrued interest and repayments to the General Fund for the period July 1, 1998 through June 30, 1999 (see Attachment II). Continuing the policy adopted by Council, staff once again recommends that the interest rate for six Promissory Notes be one-half of one percentage point (.5%) more than the City's actual rate of investment earnings. The additional .5% is to reimburse the City for carrying this debt. As required in the original bond covenant, the seventh Promissory Note must continue at an equal rate of interest, 5.98%, as is being paid for the refunded Downtown Redevelopment Project Parking Lease Revenue Bonds.

Recommendation

It is recommended that: the City Council agree to renew the seven outstanding loans; and the Redevelopment Agency approve and authorize the Chairperson to execute the attached Promissory Notes between the Agency and the City.

 

Prepared by: Mike Dennis, Director of Finance

Bill Jias, Acting Accounts Payable Supervisor

 

Attachments:

  1. Status of Redevelopment Agency Promissory Notes

  2. FY 1998/99 Financial Activity on Outstanding Promissory Notes

  3. Promissory Notes #1, #2, #4, #5, #6, #7, and #8

ATTACHMENT I

STATUS OF REDEVELOPMENT AGENCY PROMISSORY NOTES

I. History of Promissory Notes

The following indicates the original debt amount of each of the eight promissory notes between the Redevelopment Agency and the City, and the total net accrued interest for each promissory note as of 6/30/99; the history of note payments by promissory note is footnoted:
 

Promissory Note
Number and Description

 

 

  

Original
Debt
Amount
(date)

 

Total Net
Accrued
Interest
Through
6/30/99

 

Promissory
Note Balance
at 7/1/99

Downtown Project

 

 

  

 

  

 

  

 

  

 

  

 

1

Downtown Redevelopment Project

$

871,840.00

$

1,117,525.26(g)

$

1,989,365.26

 

 

  

 

(6/30/81)(a)

 

 

  

 

  

 

6

Downtown Redevelopment Project

 

 

4,400,000.00

8,535,401.17(h)

12,935,401.17

 

 

  

 

  

 

(10/24/78)(f)

Subtotal

$

5,271,840.00

$

9,652,926.43

$

14,924,766.43

 

Ocean Park Project

 

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

2

Ocean Park Project

$

1,243,266.88

$

2,992,442.85(I)

$

4,235,709.73

 

 

  

 

  

 

(6/30/81)(b)

 

 

  

 

  

 

3

Ocean Park Project

 

 

824,449.00

(824,449.00)(j)

-0-

 

 

  

 

  

 

(1/1/82)(c)

 

 

  

 

  

 

  

 

  

 

4

Ocean Park Project

 

 

772,568.08

(61,471.86)(k)

711,096.22

 

 

  

 

  

 

(9/13/83)(d)

 

 

  

 

  

 

5

Ocean Park Project

 

 

280,837.00

202,980.63(l)

483,817.63

 

 

  

 

  

 

(9/14/83)(e)

 

 

Subtotal

$

3,121,120.96

$

2,309,502.62


$


5,430,623.58

 
 

 

Earthquake Recovery Project

 

 

  

 

  

 

  

 

  

 

  

 

7

Earthquake Recovery

$


400,000.00
(6/28/94)(m)

$


49,477.64


$


449,477.64

8

Earthquake Recovery

 

600,000.00
(6/20/95)(m)

 

 

  

74,216.46

 

 

  

674,216.46

Sub total

$

1,000,000.00

$

123,694.10

$

1,123,694.10

Total

$

9,392,960.96

$

12,086,123.15

$

21,479,084.11

Notes:

(a) Represents General Fund funds advanced to the Agency for various administrative and other expenses as of 6/30/81 (per Agency Resolution 371, 1/12/82).

(b) Represents City CDBG funds advanced to the Agency for the payment of interest on outstanding Federal project notes (per Agency Resolution 371, 1/12/82).

(c) same as Aa@ above

(d) Represents General Fund funds advanced to the Agency to pay off the outstanding Federal Ocean Park Urban Renewal Grant Note.

(e) Represents City CDBG funds held by the Federal government and applied to pay off the outstanding Federal Ocean Park Urban Renewal Grant Note.

(f) Represents the value of various parcels of property transferred from the City to the Agency for the Downtown Redevelopment Project (per Agency Resolution 352, 10/24/78).

(g) Reflects payments of $150,000 in FY1983/84, $347,548 in FY1986/87, $63,099 in FY1997/98 and $45,646 in FY 1998/99.

(h) Reflects payments of $1,149,452 in FY1986/87, $200,000 in FY1990/91 (budgeted in FY1989/90), $428,425.52 in FY1992/93, $53,312.68 in FY1993/94, $129,199.25 in FY1994/95, $122,395.40 in FY1995/96, $132,473.84 in FY 1996/97, $289,397.89 in FY1997/98 and $258,552.00 in FY 1998/99.

(I) Reflects payments of $183,000 in FY1984/85 and $445,779 in interest in FY1987/88.

(j) Reflects payments of $365,000 of primarily interest in FY1987/88, $480,000 in interest in FY1990/91, $33,000 in interest in FY1991/92, $130,696 in interest in FY1992/93, payments of $1,095,456.60 in FY1994/95, and $139,897.38 in FY1995/96.

(k) Reflects payments of $563,975 in interest and principal in FY1987/88, $130,696 in interest in FY1992/93, $160,384.02 in interest and principal in FY1995/96, $102,203.24 in interest and principal in FY1996/97, $63,099.00 in interest and principal in FY1997/98 and $45,646.00 in interest and principal in FY 1998/99.

(l) Reflects payment of $205,011 in interest in FY1987/88.

(m) Represents General Fund funds advanced to the Agency for various administrative expenses associated with the Earthquake Recovery Project.

 

II. FY1999-00 Financial Ability of Redevelopment Agency to Repay Promissory Notes

The following table summarizes (in millions) the budgeted for sources and uses of Redevelopment Agency funds for FY1999/00.

Sources Downtown
Project		 Ocean Park
Project		 Earthquake
Recovery Project
Tax Increment $1.2 $1.6 $7.5
City Lease Payment for Parking Structures(1) 1.1 - -
Other     0.3      0.1     0.3

Total Sources

 $2.6 $1.7 $7.8
Uses Downtown
Project		 Ocean Park
Project		 Earthquake
Recovery Project
Operations (2) $2.2 $1.3 $2.2
Capital Projects  (3) 0.2 0.2 7.5
Total Uses $2.4 $1.5 $9.5
Net (4)$0.2 (4)$0.2 (5)$(1.7)

(1) This lease payment is made by the General Fund to the Redevelopment Agency. The General Fund payment is financed by: a) $.6 million payment from Santa Monica Place to offset lost property taxes due to Proposition 13 and sublease of parking structure from the City, and b) $.5 million payment from Redevelopment Agency for putting credit of the General Fund behind the 1992 bond issue.

(2) Consists of the following costs: Downtown Project - a) $1.1 million debt service payment on 1992 refunded bonds; b) $.5 million payment to the General Fund for putting credit of the General Fund behind the Redevelopment Agency's 1992 bond issue; and c) $.6 million reimbursement to the General Fund consisting of $.1 million for earthquake insurance on Parking Structures, $.2 million for housing programs of benefit to the project area, and $.3 million repayment of interest to the General Fund on outstanding promissory notes; Ocean Park Project - a) $.9 million debt service on 1992 refunded bonds; and b) $.4 million reimbursement to the General Fund consisting of $.1 million for various administrative support services, $.1 million annual lease payment to Parking Authority for development of 175 Ocean Park Boulevard (paid through the Low/Moderate Income Housing Fund), and $.2 million reimbursement for Housing programs of benefit to the project area; and Earthquake Recovery Project - a) $1.2 million payment to various government agencies for their tax increment share; b) $.7 million payment to the General Fund for administrative support services; and c) $.1 million payment to the Pier Fund for Economic Development Division staff support.

(3) Consists of the following capital projects: a) Downtown Project - $.2 million for housing projects of benefit to the project area, Ocean Park Project - $.2 million for housing projects of benefit to the project area; and Earthquake Recovery Project - $1.5 million for housing projects of benefit to the project area, and $6.0 million for various other capital improvements. $1.7 million of existing fund balance is being used.

(4) Increases fund balance to ensure sufficient funds necessary for ongoing operations.

(5) These funds remain to be allocated to a reasonable operating fund balance and among various appropriated and/or planned capital improvement projects.

ATTACHMENT II

FY 1998/99 FINANCIAL ACTIVITY ON OUTSTANDING PROMISSORY NOTES(1)

 

Promissory
Note Number

Promissory
Note
Balance
7/1/98

Accrued
Interest
7/1/98-
6/30/99

Repayment To
General Fund
7/1/98-
6/30/99

Promissory
Note
Balance
7/1/99  
Downtown Projects
1.Downtown Redevelopment Project(2)

$ 1,929,936.08

$ 105,075.18

$ 45,646.00

$ 1,989,365.26
6.Downtown Redevelopment Project(6)

$12,503,829.41

$ 690,123.76

$258,552.00

$ 12,935,401.17
Subtotal Downtown Project

$14,433,765.49

$ 795,198.94

$304,198.00

$ 14,924,766.43
Ocean Park Project
2.Ocean Park Federal Allocation(3)

$ 4,008,811.03

$ 226,898.70

$ -0-

$ 4,235,709.73
3.Ocean Park Federal Allocation(2)

-0-

$ -0-

$ -0-

$ -0-
4. Ocean Park Federal Allocation(4)

$ 720,141.50

$ 36,600.72

$ 45,646.00

$ 711,096.22
5. Ocean Park Federal Allocation(5)

$ 457,900.46

$ 25,917.17

$ -0-

$ 483,817.63
Subtotal Ocean Park Project

$ 5,186,852.99

$ 289,416.59

$ 45,646.00

$ 5,430,623.58
Earthquake Recovery Project
7.Earthquake Recovery Project(7)

$ 425,400.00

$ 24,077.64

$ -0-

$ 449,477.64
8. Earthquake Recovery Project(8)

$ 638,100.00

$ 36,116.46

$ -0-

$ 674,216.46
Subtotal Earthquake Recovery Project

$ 1,063,500.00

$ 60,194.10

$ -0-

$ 1,123,694.10
Total

$20,684,118.48

$1,144,809.63

$349,844.00

$21,479,084.11

(1) Effective July 1, 1999 Notes 1, 2, 4 , 5, 7 and 8 will carry an interest rate one half a percentage point (.5%) higher than the City's actual rate of investment earnings for fiscal year 1999-00. However, Note 6 will continue to carry an interest rate of 5.98%. This is the same rate of interest on the refunded Downtown Redevelopment Project Parking Lease Revenue Bonds.

(2) Reimbursement for various administrative support and service costs; owed to City's General Fund.

(3) Reimbursement of CDBG funds used to pay interest on outstanding Federal Urban Renewal Loan Note; owed to City's CDBG Fund.

(4) Close out of Ocean Park Federal Urban Renewal Project; owed to the City's General Fund.

(5) Close out of Ocean Park Federal Urban Renewal Project; owed to the City's CDBG Fund.

(6) Represents the value of various parcels of property transferred from the City to the Agency for the Downtown Redevelopment Project (per Agency Resolution 352, 10/24/78). Owed to General Fund.

(7) and (8) Reimbursement for various administrative costs; owed the City=s General Fund.

ATTACHMENT III

PROMISSORY NOTES

PROMISSORY NOTE

 

Downtown Santa Monica, California

Redevelopment Project July 1, 1999

On June 30, 2000, for the value received, the undersigned promises to pay to the order of the City of Santa Monica, a municipal corporation, at Santa Monica, the sum of One Million, Nine Hundred Eighty-Nine Thousand, Three Hundred Sixty-Five Dollars and Twenty-Six Cents ($1,989,365.26), with interest from July 1, 1999, at the rate of one-half of one percentage point (.5%) more than the City's actual rate of investment earnings for fiscal year 1999-00 (July 1, 1999 - June 30, 2000). This total amount now owed represents the original June 30, 1981 debt less subsequent payments plus subsequently incurred interest. In no event shall the interest rate be more than 12% per annum. Principal and interest are payable in lawful money of the United States. If action be instituted on this note, the undersigned promises to pay all costs of collection, including reasonable attorney's fees.

The Redevelopment Agency of

the City of Santa Monica

ATTEST

 

BY: ______________________ BY: ______________________

Maria Stewart
Secretary

Pam O=Connor
Chairperson

 

APPROVED AS TO FORM:

BY: ______________________

Marsha Jones Moutrie
Agency Attorney

 

P.N. #1

PROMISSORY NOTE

Ocean Park Santa Monica, California

Federal Allocation July 1, 1999

On June 30, 2000, for the value received, the undersigned promises to pay to the order of the City of Santa Monica, a municipal corporation, at Santa Monica, the sum of Four Million, Two Hundred Thirty-Five Thousand, Seven Hundred Nine Dollars and Seventy-Three Cents ($4,235,709.73), with interest from July 1, 1999, at the rate of one-half of one percentage point (.5%) more than the City's actual rate of investment earnings for fiscal year 1999-00 (July 1, 1999 - June 30, 2000). This total amount now owed represents the original June 30, 1981 debt less subsequent payments plus subsequently incurred interest. In no event shall the interest rate be more than 12% per annum. Principal and interest are payable in lawful money of the United States. If action be instituted on this note, the undersigned promises to pay all costs of collection, including reasonable attorney's fees.

The Redevelopment Agency of the City of Santa Monica

ATTEST

BY: ______________________ BY: ______________________

Maria Stewart
Secretary

Pam O=Connor
Chairperson

 

APPROVED AS TO FORM:

 

BY: ______________________

Marsha Jones Moutrie
Agency Attorney

 

P.N. #2

PROMISSORY NOTE

 

Ocean Park Santa Monica, California

Federal Allocation July 1, 1999

On June 30, 2000, for the value received, the undersigned promises to pay to the order of the City of Santa Monica, a municipal corporation, at Santa Monica, the sum of Seven Hundred Eleven Thousand, Ninety-Six Dollars and Twenty-Two Cents ($711,096.22), with interest from July 1, 1999, at the rate of one-half of one percentage point (.5%) more than the City's actual rate of investment earnings for fiscal year 1999-00 (July 1, 1999 - June 30, 2000). This total amount now owed represents the original September 13, 1983 debt less subsequent payments plus subsequently incurred interest. In no event shall the interest rate be more than 12% per annum. Principal and interest are payable in lawful money of the United States. If action be instituted on this note, the undersigned promises to pay all costs of collection, including reasonable attorney's fees.

The Redevelopment Agency of

the City of Santa Monica

ATTEST

 

BY: ______________________ BY: ______________________

Maria Stewart
Secretary

Pam O=Connor
Chairperson

 

APPROVED AS TO FORM:

 

BY: ______________________

Marsha Jones Moutrie
Agency Attorney

 

P.N. #4

PROMISSORY NOTE

Ocean Park Santa Monica, California

Federal Allocation July 1, 1999

On June 30, 2000, for the value received, the undersigned promises to pay to the order of the City of Santa Monica, a municipal corporation, at Santa Monica, the sum of Four Hundred Eighty-Three Thousand, Eight Hundred Seventeen Dollars and Sixty-Three Cents ($483,817.63), with interest from July 1, 1999 at the rate of one-half of one percentage point (.5%) more than the City's actual rate of investment earnings for fiscal year 1999-00 (July 1, 1999 - June 30, 2000). This amount now owed represents the original September 14, 1983 debt less subsequent payments plus subsequently incurred interest. In no event shall the interest rate be more than 12% per annum. Principal and interest are payable in lawful money of the United States. If action be instituted on this note, the undersigned promises to pay all costs of collection, including reasonable attorney's fees.

The Redevelopment Agency of

the City of Santa Monica

ATTEST

 

BY: ______________________ BY: ______________________

 

Maria Stewart
Secretary

Pam O=Connor
Chairperson

 

APPROVED AS TO FORM:

 

BY: ______________________

Marsha Jones Moutrie
Agency Attorney

 

P.N. #5

PROMISSORY NOTE

 

Downtown Santa Monica, California

Redevelopment Project July 1, 1999

On June 30, 2000, for the value received, the undersigned promises to pay to the order of the City of Santa Monica, a municipal corporation, at Santa Monica, the sum of Twelve Million, Nine Hundred Thirty-Five Thousand, Four Hundred One Dollars and Seventeen Cents ($12,935,401.17), with interest from July 1, 1999, at the rate of five and ninety-eight one hundredths percent (5.98%) per annum. This amount now owed represents the original October 24, 1978 debt less subsequent payments plus subsequently incurred interest. Principal and interest are payable in lawful money of the United States. If action be instituted on this note, the undersigned promises to pay all costs of collection, including reasonable attorney's fees.

The Redevelopment Agency of

the City of Santa Monica

ATTEST

 

BY: ______________________ BY: ______________________

Maria Stewart
Secretary

Pam O=Connor
Chairperson

 

APPROVED AS TO FORM:

 

BY: ______________________

Marsha Jones Moutrie
Agency Attorney

 

P.N. #6

PROMISSORY NOTE

Earthquake Recovery Santa Monica, California

Redevelopment Project July 1, 1999

 

On June 30, 2000, for the value received, the undersigned promises to pay to the order of the City of Santa Monica, a municipal corporation, at Santa Monica, the sum of Four Hundred Forty-Nine Thousand, Four Hundred Seventy-Seven Dollars and Sixty Four Cents ($449,477.64), with interest from July 1, 1999, at the rate of one-half of one percentage point (.5%) more than the City=s actual rate of investment earnings for fiscal year 1999-00 (July 1, 1999 - June 30, 2000). This total amount now owed represents the original June 28, 1994 debt. In no event shall the interest rate be more than 12% per annum. Principal and interest are payable in lawful money of the United States. If action be instituted on this note, the undersigned promises to pay all costs of collection, including reasonable attorney=s fees.

The Redevelopment Agency of

the City of Santa Monica

ATTEST

BY: BY:

Maria Stewart
Secretary

Pam O=Connor
Chairperson

 

APPROVED AS TO FORM:

 

BY: ______________________

Marsha Jones Moutrie
Agency Attorney

 

P.N. #7

 

 

PROMISSORY NOTE

Earthquake Recovery Santa Monica, California

Redevelopment Project July 1, 1999

 

On June 30, 2000, for the value received, the undersigned promises to pay to the order of the City of Santa Monica, a municipal corporation, at Santa Monica, the sum of Six Hundred Seventy-Four Thousand, Two Hundred Sixteen Dollars and Forty-Six Cents ($674,216.46), with interest from July  1, 1999, at the rate of one-half of one percentage point (.5%) more than the City=s actual rate of investment earnings for fiscal year 1999-00 (July 1, 1999 - June 30, 2000). This total amount now owed represents the original June 20, 1995 debt. In no event shall the interest rate be more than 12% per annum. Principal and interest are payable in lawful money of the United States. If action be instituted on this note, the undersigned promises to pay all costs of collection, including reasonable attorney=s fees.

The Redevelopment Agency of

the City of Santa Monica

ATTEST

BY: BY:

Maria Stewart
Secretary

Pam O=Connor
Chairperson

 

APPROVED AS TO FORM:

 

BY: ______________________

Marsha Jones Moutrie
Agency Attorney

 

P.N. #8