Item 8-B

Council Meeting: June 19, 2001                 Santa Monica, California

 

 

TO:                              City Council and Redevelopment Agency

FROM:                        City and Agency Staff

SUBJECT:                 Extension Of Time For Outstanding Promissory Notes

 

Introduction

There are six 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 one for the Low/Moderate Income Housing Fund. There is also one Promissory Note for a loan from the Earthquake Recovery Project to the City of Santa Monica. These Promissory Notes must be renewed for the period July 1, 2001 through June 30, 2002.

Background

The City has loaned the Agency funds for various administrative, operational and miscellaneous expenses, and the Agency has loaned funds to the City for housing projects. 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 2001-02 Redevelopment Agency income. To date, $9.7 million has been repaid on these Notes and an additional $2.6 million has been budgeted to be repaid in FY 2001-02.

  

Budget/Financial Impact

There is no budgetary impact resulting from the renewal of these Promissory Notes. The financial impact is to reduce the liability of the Agency by $180,386.28, which represents the net of accrued interest and repayments to the General Fund for the period July 1, 2000 through June 30, 2001 (see Attachment II). Continuing the policy adopted by Council, staff recommends that the interest rate for six Promissory Notes be continued at 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, Senior Accountant

Attachments:  I.          Status of Redevelopment Agency Promissory Notes
II.          FY 2000/01 Financial Activity on Outstanding Promissory Notes
III.         Redevelopment Agency Promissory Notes #1, #2, #4, #5, #6, and #9; and City of Santa Monica Promissory Note #10

 

ATTACHMENT I

 

STATUS OF REDEVELOPMENT AGENCY PROMISSORY NOTES

I. History of Promissory Notes

The following indicates the original debt amount of each of the currently outstanding seven promissory notes between the Redevelopment Agency and the City, and the total net accrued interest for each promissory note as of 6/30/01; the history of note payments by promissory note is footnoted:

 

                                                                                    Total Net

                                                            Original           Accrued

                                                            Debt    Interest            Promissory

Promissory Note                               Amount           Through          Note Balance

Number and Description (date) 6/30/01 at 7/1/01

Downtown Project

1          Downtown

            Redevelopment Project        $          871,840.00    $ 1,188,986.93(f)       $ 2,060,826.93

                        (6/30/81)(a)

  1. Downtown

            Redevelopment Project        4,400,000.00 9,453,993.23(g)          13,853,993.23

                        (10/24/78)(e)

                        ___________           ____________         ___________

            Subtotal          $ 5,271,840.00          $ 10,642,980.16                   $ 5,914,820.16

Ocean Park Project(I)

2          Ocean Park Project  $ 1,243,266.88          $ 3,533,009.93(h)       $          4,776,276.81

                        (6/30/81)(b)

4          Ocean Park Project  772,568.08    (153,144.63)(i)           619,423.45

                        (9/13/83)(c)

5          Ocean Park Project  280,837.00    264,726.09(j)  545,563.09

                        (9/14/83)(d)

                        ___________           ___________           ___________

            Subtotal          $ 2,296,671.96          $ 3,644,591.39                      $          5,941,263.35

 

 

 

 

 

 

 

 

 

                                                                                    Total

                                                                        Original           Accrued

                                                            Debt    Interest            Promissory

Promissory Note                               Amount           Through          Note Balance

Number and Description __(date) 6/30/01 at 7/1/01

Earthquake Recovery Project

7          Earthquake Recovery           $ 400,000.00 $ (400,000.00)          $ -0-

                        (6/28/94)(k)

8          Earthquake Recovery           600,000.00    (600,000.00)  -0-

                        (6/25/95)(k)

9          Low/Moderate Housing Funds        10,242,188.00(m)       226,517.91 10,468,705.91

                        (2/27/01)

                       

                        ___________           ___________           ____________

            Subtotal          $          11,242,188.00           $ (773,482.09)          $10,468,705.91

            Total Redevelopment Agency         $18,810,699.96        $ 13,514,089.46 $32,324,789.42

10        City of Santa Monica Gen Fd          $10,242,188.00(m)     $ 226,517.91 $10,468,705.91

 

 

 

 

 

 

 

 

 

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

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

(e)       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).

(f)         Reflects payments of $150,000 in FY1983/84, $347,548 in FY1986/87, $63,099 in FY1997/98, $45,646 in FY 1998/99, $74,000 in FY1999/00 and $98,100 in FY 2000/01.

(g)       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, $258,552.00 in FY 1998/99, $328,967.66 in FY1999/00 and $306,510.51 in FY 2000/01.

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

 

 

 

 

(i)         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, $45,646.00 in interest and principal in FY1998/99, $74,000 in interest and principal in FY1999/00 and $98,100 in interest and principal in FY 2000/01.

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

(k)        Represents General Fund funds advanced to the Agency for various administrative expenses associated with the Earthquake Recovery Project. Promissory Note #7 and Promissory Note #8 were fully repaid as of FY 1999/00.

(l)         Promissory Note #3 was fully repaid as of FY 1995/96.

(m)      Represents Earthquake Recovery Redevelopment Project Area loan to the General Fund for housing projects, and loan by the General Fund to the Redevelopment Low/Moderate Income Housing Projects fund to implement the housing projects.

II.          FY2001-02 Financial Ability of Redevelopment Agency to Repay Promissory Notes

The following table summarizes (in millions) the budgeted sources and uses of Redevelopment Agency funds for FY2001-02, including sources and uses budgeted in the Low/Moderate Income Fund but financed from each of the indicated funds.

 

 

Sources

Downtown

Project Fund

Ocean Park

Project Fund

Earthquake

Recovery Project Fund

Tax Increment

            $1.9

            $2.7

 

 

            $18.7

 

 

City Lease Payment for Parking Structures(1)

 

            1.2

 

                        -

 

 

 

 

-

 

 

Other

0.3

             0.1

 

 

             1.3

 

 

Total Sources

            $3.4

            $2.8

 

 

            $20.0

 

 

 

 

Uses

Downtown

Project

            Ocean Park

             Project

Earthquake

Recovery Project

Operations (2)

Loan Payment

            $ 2.4

                        -

            $1.3

                         -

 

            $10.6

            1.5

 

 

Capital - Proposed Budget (3)

0.4

            0.4

 

            10.6

 

 

Capital Projects-

Final Changes(3)

Total Uses                                         

             0.9

           

             $ 3.7              $3.7

 

           

             1.1

            $2.8

 

 

 

-

            $22.7

 

 

Net

            $(0.3)(4)

                        $ -

 

 

$(2.7)(4)

 

                   

(1)         This lease payment is made by the General Fund to the Redevelopment Agency. The General Fund payment is financed by: a) $.6 million available annually from settlement payment made by Santa Monica Place in October 1999 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) $1.2 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) $.7 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 $.4 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 interest payment on outstanding Promissory Notes and 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) $4.1 million payment to various government agencies for their share of tax increment revenue; b) $1.0 million payment to the General Fund for administrative support services; c) $.1 million payment to the Pier Fund for Economic Development Division staff support; d) $4.7 million debt service payment on 1999 tax allocation bonds; and e) $.7 million repayment of interest to the General Fund on outstanding promissory notes.

(3)         Consists of the following capital projects: a) Downtown Project - $1.3 million for housing projects of benefit to the project area, Ocean Park Project - $1.5 million for housing projects of benefit to the project area; and Earthquake Recovery Project - $.7 million for housing projects of benefit to the project area, $8.9 million for seismic retrofit of parking structure and $1.0 million for Palisades Bluff Project balance is being used.

(4)         Portions of current fund balances are being used to finance these uses.

ATTACHMENT II

FY 2000/01 FINANCIAL ACTIVITY ON OUTSTANDING PROMISSORY NOTES(1)

            Promissory    Accrued          Repayment To           Promissory

            Note    Interest            General Fund Note

Promissory    Balance          7/1/00-            7/1/00-            Balance

Note Number 7/1/00             6/30/01           6/30/01           7/1/01  

Downtown Projects

1.         Downtown Redevelopment  $          2.029,969.10 $          128,957.83    $          98,100.00      $            2,060,826.93

Project(2)

6.         Downtown Redevelopment  $          13,370,134.37           $          790,369.37    $          306,510.51    $            13,853,993.23

Project(5)

Subtotal Downtown Project  $          15,400,103.47           $          919,327.20    $          404,610.51    $            15,914,820.16

Ocean Park Project

2. Ocean Park Federal         $ 4,484,345.89                      $          291,930.92    $          -0-       $ 4,776,276.81

Allocation(2)

 

4.         Ocean Park Federal $          676,665.67    $          40,857.78      $          98,100.00      $          619,423.45

Allocation(3)

5.         Ocean Park Federal $          512,217.72   $          33,345.37      $          -0-       $          545,563.09

Allocation(4)  ______ ___________ ___________ ____________

Subtotal Ocean Park Project           $          5,673,229.28 $          366,134.07    $          98,100.00      $            5,941,263.35

Earthquake Recovery Project

7.         Earthquake Recovery

Project(6)         $          475,861.98    $ -0-                $          475,861.98   $          -0-

8.         Earthquake Recovery

Project(7)         $          713,792.96    $ -0-                $          713,792.97    -0-

9.         Low/Mod Housing Fund(8)

                $          10,242,188.00           $          226,517.91    $ -0- $ 10,468,705.91

Subtotal Earthquake

Recovery Project       $          11,431,842.95           $          226,517.91    $1,189,654.95                       $10,468,705.91

Total Redevelopment Agency         $          32,505,175.70           $          1,511,979.18 $1,692,365.46            $32,324,789.42

10. City of Santa Monica -

General Fund(8)             $          10,242,188.00           $          226,517.91    $ -0-                $10,468,705.91

1.      Effective July 1, 2001 Notes 1, 2, 4 , 5, 9 and 10 will carry an interest rate one half a percentage point (.5%) higher than the City's actual rate of investment earnings for fiscal year 2001-02. 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 of CDBG funds used to pay interest on outstanding Federal Urban Renewal Loan Note; owed to City's CDBG Fund.

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

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

(5) 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.