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HomeMy WebLinkAbout1991-01-22; Housing & Redevelopment Commission; 175; 1989-90 Annual Financial ReportMOUSING’AND “EDEVELQ’PMENT COMMIS-‘ON - AG * 1989/90 ANNUAL FINANCIAL REPORT RECOMMENDED ACTION: -. Accept the 1989-90 Carlsbad Redevelopment Agency Combined Financial Statements. ITEM EXPLANATION: The Carlsbad Redevelopment Agency is required by state law to prepare an annual financial statement for review by its legislative body. The report is also submitted to the California State Controller’s Office for inclusion in a state-wide report. The 1989-90 Carlsbad Redevelopment Agency Annual Financial Report provides an audited summary of the Agency’s fiscal affairs for the year, including revenues, expenditures, detailed assets and liabilities, cash and fund balances. Assessed valuation in the redevelopment area was $168 million in 1990 and increased to $183 rnillio n f or 1990-91. Tax increment revenue increased $600,000 over 1989, however, part of the increase is due to a late 1989 payment, while almost $400,000 is attributable to increased property assessed valuation. Interest income revenue decreased $300,000 from 1989 revenues, reflecting the $3.5 million withdrawal of bond funds for capital projects. Previous audits included administrative costs in capital expenditures. In the 1990 audit, capital outlay represents only expenditures for redevelopment capital projects. An adjusted comparison of 1989 and 1990 shows that capital expenditures decreased $80,000, bond interest charges increased slightly, and administrative costs increased $74,000. Two staff members were added in 1989- 90, bringing the approved staff level to 5.5.employees. . During 1990, the City loaned an additional $.6 million to the Carlsbad Redevelopment Agency to fund capital projects. Total City advances were $6.5 million at year end. A reserve of $1.1 million has been set aside to fund future low and moderate housing requirements. The report presents the current financial condition of the Carlsbad Redevelopment Agency. Revenues are sufficient to pay current debt service and administrative costs. Redevelopment area valuation increased 15% in 1990 and 9% in 1991. Page Two of Agenda Bill No. / 75 ExHIBrrs: Audit previously distributed to Council. Copies on file with City Clerk and *’ Finance Department. 1. Carlsbad Redevelopment Agency Combined Financial Statements for the fiscal year ending June 30, 1990 with comparative totals for June 30, 1989. Certified Public Accountants CARLSBAD REDJ3VELOPMENT AGENCY Combined Financial Statements CITY CLERK June 30, 1990 with Comparative Totals for June 30, 1989 (With Independent Auditors' Report Thereon) Certified Public Accountants 750 El Street San Diego, CA 92101 Indeoendent Auditors' ReDort The Board of Commissioners Carlsbad Redevelopment Agency Carlsbad, California: We have audited the combined balance sheet of the Carlsbad Redevelopment Agency (a component unit of the City of Carlsbad, California) as of June 30, 1990, the related combined statement of revenues, expenditures, and changes in fund balance, and the related combined statement of revenues, expenditures and changes in fund balance - budget and actual (budgetary basis) for the year then ended. These combined financial statements are the responsibility of the Agency's management. Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, 'evidence supporting the amounts and disclosures in the combined 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 combined financial statements referred to above present fairly, in all material respects, the financial position of the Carlsbad Redevelopment Agency at June 30, 1990 and the results of its operations for the year then ended in conformity with generally accepted accounting principles. October 19, 1990 *mmo-4 0 r4*nOoc? VI Nco”Orn f-. e . 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II ' 2 4 N z ‘3% I I Pi I-. hl d h ln-* hrncn z CoNr- m ” ” NNO ii N 2 s” 2 a d-4 u-l -4\ co do- c-4 0 I CJl E 742 / UC PZ zo EZ ,-I I -,” ,“u ..I .a i $0 ufkl aJ ” $ ‘2 a: ul G4 .rl c u>” csd” \o m 2 4 m m z 2 “II z 2 r. m N ” N 0 m v 4 I I I I 2 zk w 0 2 .,-I E r.4 if D e3 m v)*r( 0 al 0 :ul,c I, b I4 ma 1P)al>a O’uW-09 sz2qv, swa” .dOti$U ZOOM v1 ;deZZG$O . . .rlUUalh * 2 : fj .z LI al a, ov aJ aa& soon &J m u C a : 0 .r , c 3 u 2 : ; i “, c :; ii aI2 *45 fg5m qz; ‘C 0 > q 22 al “rag 2 al ,rCh azou avl -,:z;: -I ‘;: 3 v*“d a22 cn CI al j -0 2 I I I -4 m ” w .r( ru -0 s u z : : I : l-4 i?z a20 ” ^ \Dif &8 c; c.nG ha 030 ” ” aa 2s ” ” I I N 4 N I - \o h ,” N I \o” . . h I lu 0 2 z K .r( 2 w 0 .r( M w 2 z L) u 5-a a CARLSBAD REDEVELOPMENT AGENCY Notes to Combined Financial Statements June 30, 1990 (1) Organization and Summary of Significant Accounting Policies The Carlsbad Redevelopment Agency (the Agency) was established in July 1976 with the adoption of Ordinance No. 1191 by the Carlsbad City Council pursuant to the California Connnunity Redevelopment Law, now codified as Part 1, Division 24, of the state of California Health and Safety Code. The Agency has the broad authority to acquire, rehabilitate, develop, administer and sell or lease property. The principal objectives of the Agency are to eliminate blighted influences within the "Village Area" of the City of Carlsbad, stimulate and attract private investment, generate added employment through increased specialty goods and services and expand the City's sales tax revenue. The Agency is an integral part of the reporting entity of the City of Carlsbad (the City). The funds and account group of the Agency have been included within the scope of the general purpose financial statements of the City because the City Council exercises oversight responsibility over the operations of the Agency. Only the funds and account group of the Agency are included herein; therefore, these financial statements do not purport to represent the financial position or results of operations of the City of Carlsbad, California. The accounting policies of the Agency conform to generally accepted accounting principles as applicable to governmental units. The following is a summary of the more significant policies: (a) Basis of Presentation: The accounts of the Agency are organized on the basis of funds or account group, each of which is considered to be a separate accounting entity. The operations of each fund or account group are accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, fund balance, revenues, and expenditures. The various funds and account group are sutmzarized by type in the financial statements. The fund types and account groups used by the Agency are as follows: Governmental funds are used to account for the Agency's expendable financial resources and related liabilities. The measurement focus (Continued) 2 CARLSBAD REDEVELOPMENT AGENCY Notes to Combined Financial Statements, Continued (1) Organization and Summary of Sianificant Accounting Policies. Continued (a) Basis of Presentation. Continued : is upon determination of changes in financial position. The following are the Agency's governmental fund types: . SDecial Revenue Funds Special revenue funds are used to account for revenues derived from specific sources (other than major capital projects) that are restricted by law or administrative regulation to expenditures for specified purposes. Debt Service Fun& Debt service funds are used to account for the accumulation of resources for, and payment of general long-term debt principal, interest and related costs. Caoital Projects Funds Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities. GENERAL LONG-TERM DEBT ACCOUNT GROUP: This account group is used to establish accounting control and accountability for the Agency's general long-term debt. It is used to account for all long-term obligations of the Agency. . . (b) Measurement FOCUS and Basis for Acm : Governmental fund types are accounted for on a "spending" measurement focus. Accordingly, only current assets and current liabilities are included on their balance sheets, and the reported fund balance provides an indication of available, spendable resources. Operating statements for governmental fund types report increases (revenues) and decreases (expenditures) in available spendable resources. (Continued) 3 CARLSBAD REDEVELOPMENT AGENCY Notes to Combined Financial Statements, Continued (1) Organization and Summarv of Sisznificant Accounting Policies. Continued The modified accrual basis of accounting is utilised by the governmental fund types. Revenues are recognized when susceptible to accrual, i.e., both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Revenues that are accrued include the tax increment on real property taxes and interest income. Real property taxes are levied on October 15 against owners of record at March 1. The tax are due in two installments, on November 1 and February 1, and become delinquent after December 10 and April 10, respectively. Tax liens attach annually as of 12:Ol a.m. on the first day of March in the fiscal years for which the taxes are levied. Under the provisions of NCGA interpretation 3, property tax revenue is recognized in the fiscal year for which the taxes have been levied, provided it is collected within 60 days of the end of the fiscal year. Governmental fund expenditures are recognized when the liability is incurred, except for principal and interest on long-term debt which is recognized when due. (c) Encumbrances : Encumbrance accounting, under which purchase orders, contracts and other cosnnitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary control in the governmental funds. Encumbrances outstanding at year-end do not constitute expenditures or liabilities, but are reported as reservations of fund balance for subsequent-year expenditures. (d) j&h and Invesu : The Agency participates in the pooled cash and investment fund of the City of Carlabad. Pooled investments are stated at cost or amortised cost. The Agency's equity in the pooled cash is included in the financial statements as cash and investments. Interest earned as a result of the pooling is allocated to the Agency based on its average monthly balances. (Continued) 4 CARLSBAD REDEVELOPMENT AGENCY Notes to Combined Financial Statements, Continued (1) Organization and Summary of Significant Accounting Policies. Continued (e) ComDensated Absences: Vacation pay is payable to employees at the time used or upon termination of employment. Sick leave accrued but unused is cumulative from year to year. The cost of accumulated vacation and sick leave expected to be paid in the next 12 months is recorded as a fund liability and amounts expected to be paid after 12 months (if any) is recorded in the general long-term debt account group. (f) Total Columns: Total columns on the accompanying combined financial statements are captioned "Totals (Memorandum Only)" to indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position, results of operations, or changes in fund balances in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. (2) Budgetary Date The budget for the Agency is established by the City of Carlsbad. The City's Manager is authorized to make transfers of appropriated amounts within a fund and function for up to $15,000. Revisions that alter the total appropriations of any fund or function must be approved by the City Council. A mid-year budget review is conducted each year. Any major changes to the adopted budget are approved by the City Council at that time. Budgets are adopted on the modified accrual basis, except that encumbrances are treated as budgeted expenditures in the year purchases are committed. Expenditures may not exceed budgeted appropriations at the departmental level. Unencumbered appropriations lapse at year-end. Annual budgets are adopted for the special revenue and debt service funds. There were no encumbrances outstanding for the debt service or the special revenue funds as of June 30, 1990. (Continued) 5 CARLSBAD REDEVELOPMENT AGENCY Notes to Combined Financial Statements, Continued c (3) Cash and Investments The Agency participates in the pooled cash fund of the City. In addition, some deposits are held separately by several of the Agency's funds. Authority for DeDosits and Investments: The Agency's investment policy and state statutes authorize the Agency to invest in demand and time deposits, obligations of the U.S. Treasury, its agencies and instrumentalities, cormnercial paper rated A-l by Standard and Poor's Corporation or P-l by Moody's Commercial Paper record, banker's acceptances with a maximum maturity of 270 days, repurchase and reverse repurchase agreements, certificates of deposit with national and state licensed or chartered banks or federal or state savings and loan associations, money market and mutual funds whose portfolios consist of one or more of the foregoing investments, and the State Treasurer's investment pool. State statutes require that all deposits be insured or collateralized. Depositories holding public funds on deposit are required to maintain collateral in the form of a pool of securities with the agent of the depository having a market value of at least 10 to 50 percent in excess of the total amount of all public funds on deposit. Deposits: The following sumnary presents the amount of the Agency deposits which are fully insured or collateralised with securities held by the Agency or its agent in the Agency's name (Category One), those deposits which are collateralized with securities held by the pledging financial institution's trust department or agent Two), and those deposits which are in the Agency's name (Category not collateralised or are by the pledging financial agent but not in the Agency's collateralised with - securities held institution or its trust department or name (Category Three) at June 30, 1990. Category Qne CatE!ry Cash on deposit with financial institution $ - Cash on deposit with trustee & 995.372 $ A 995-w Total Bank Carrying 680,498 680,498 680,498 2.851.165 3.846.537 3.846.537 3.531.663 4.527.0354.527.035 (Continued) 6 CARLSBAD REDEVELOPMENT AGENCY Notes to Combined Financial Statements, Continued (3) Cash and Investments. Continued Investments: At June 30, 1990, the Agency had $3,393,694 invested in the pooled cash fund of the City. As securities are not used as evidence of the Agency's investment in this fund, these amounts cannot be classified according to the level of risk assumed by the Agency. (4) Pension Plan The Agency's employees are included in the City's pension plan which is administered by the California Public Employees Retirement System (PERS). PERS is an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for participating public entities within the state of California. All full-time employees are eligible to participate as members of the PERS. Benefits vest after an employee has been a member of the plan for five years. Employees are eligible to retire after the age of 50 with 5 years of credited service. Annual retirement benefits are determined based on age at retirement, the length of membership service and the amount of earnings based on the highest twelve consecutive months average. The PERS also provides death and disability benefits. These benefit provisions and all other requirements are established by state statute. Employees are required to make contributions equaling 7 percent of gross pay l This is paid by the City for the benefit of the employees in lieu of salary. The City is also required to contribute the remaining amounts necessary to fund the benefits for its members, using the actuarial basis recosssended by the PERS actuaries and actuarial consultants and adopted by the PERS Board of Administration. Additional disclosures required by Governmental Accounting Standards Board Statement No. 5 are not available for the Agency as a separate entity. This information for the City's reporting entity is presented in the Comprehensive Annual Financial Report of the City of Carlsbad. (Continued) 7 CARLSBAD REDEVELOPMENT AGENCY Notes to Combined Financial Statements, Continued (5) Lona-term Debt The following is a summary of changes in long-term debt for the year ended June 30, 1990: Principal Principal Balance Balance July 1, Additional June 30, lp8e Advances from the City of Carlsbad Bonds payable $ 5,852,139 636,512 6,488,651 12,000.OOQ i2.000.000 $ 17.852.139 636.512 18.488.651 Since activation of the Redevelopment Agency in July 1976, the City has advanced the Agency monies for approved expenditures. Advances from the City require interest at 10% per year. There is no stated maturity date. The Bonds payable consist of $12,000,000 in 1988 Carlsbad Housing and Redevelopment Commission Tax Allocation Bonds. Principal is due in amounts ranging from $255,000 to $595,000 on April 1 of each year through 2003, a principal payment of $2,890,000 on April 1, 2007, and a principal payment of $3,950,000 on April 1, 2011. The principal payments of $2,890,000 and $3,950,000 are subject to mandatory sinking fund redemption which amounts are reflected in the debt service requirements below. Interest is payable on October 1 and April 1 of each year at rates varying from 5.5% to 7.55% per annum. (Continued) 8 CARLSBAD REDEVELOPMENT AGENCY Notes to Combined Financial Statements, Continued (5) Long-term Debt. Continued Debt service requirements to maturity for the bonds, including sinking fund payments, are as follows: 1991 $ 1,132,352 1992 1,133,328 1993 1,137,938 1994 1,135,828 1995 1,142,222 1996-2000 5,757,618 2001-2005 5,828,458 2006-2010 5,915,410 Thereafter 1.191.190 Less amounts representing interest Bonds payable $12.000.000 24,374,344 12.374.344 At June 30, 1990, the Agency was in compliance with all significant debt covenants. (6) Obliaations Under Operating Lew In June 1988, the Agency entered into an agreement to lease a parking lot from a private party. The lease requires annual rental payments of $37,020. Rent expense was $37,020 for the year ended June 30, 1990. In May 1990, the Agency entered into an agreement to lease a parking lot on Carlsbad Village Drive from a private party. The lease requires monthly rental payments of $4,350 commencing July 1, 1990 for five years. Total annual rent expense is $52,200. (Continued) 9 CARLSBAD REDEVELOPMENT AGENCY Notes to Combined Financial Statements, Continued . (6) Obligations Under Onerating Leases. Continued The following is a schedule by year of future minimum rental payments required under the operating lease at June 30, 1990: Year endinn June 30 , Annual Rental FxDenses 1991 $ 89,220 1992 89,220 1993 89,220 1994 89,220 1995 89,220 Thereafter 481.26Q Total minimum lease payments QZZZAQ (7) Fund Reserve for debt service represents resources legally restricted to the payment of general long-term debt principal and interest maturing in future years. Reserves for loan receivable and low and moderate income housing are established to show that certain assets are already conrmitted to other purposes and are not available for discretionary expenditures. Reserve for encumbrances represent commitments related to unperformed contracts for services and undelivered goods. Unreserved-undesignated balances represent the fund balance (deficit) remaining after reduction for reserved and designated fund balances. Certified Public Accountants 750 6 Street San Diego, CA 92101 Independent Auditors' Report The Board of Commissioners Carlsbad Redevelopment Agency Carlsbad, California: We have audited the combined financial statements of the Carlsbad Redevelopment Agency (a component unit of the City of Carlsbad, California) as of and for the year ended June 30, 1990, and have issued our report thereon dated October 19, 1990. These combined financial statements are the responsibility of the Agency's management. Our responsibility is to express an opinion on these combined financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined 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 connection with our audit of the combined financial statements of the Carlsbad Redevelopment Agency for the year ended June 30, 1990, we also performed tests of compliance as required by the "Guidelines for Compliance Audits of California Redevelopment Agencies" issued by the State Controller's office of the state of California. Based on these procedures, we noted no instances of noncompliance with the Controller's Office guidelines referred to above for the year ended June 30, 1990. October 19, 1990