HomeMy WebLinkAboutDEBT SERVICE - Administration - FINANCIAL STRATEGY PLAN - in REQUEST FOR CITY COUNCIL/
REDEVELOPMENT AGENCY ACTION ED92-31 $/S
Date August 3, 1992
Submitted to: Honorable Mayor/Chairman & City Council/Redevelopment Agency Member
Submitted by: w
Michael T. Uberuaga, City Administrator/Executive Dire
Prepared by: Barbara A. Kaiser, Deputy City Administrator/Economic evelopment
Subject: Approval of Financial Strategy Plan Including Debt Repayment for the
Redevelopment Agency
Consistent with Council Policy. [ ] Yes ( ] New Policy or Exception
Statement of Issue, Recommendation,Analysis, Funding Source,AlterpatA4WVzN18ftANtMWffieVvfi.
STATEMENT OF ISSUE: ng ,-- ......
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On September 16, 1991, Council approved Amendments to the Operative Agreements
between the Redevelopment Agency and the City for the five Redevelopment Project
Areas. As part of that action, staff was instructed to prepare a plan to repay the debt
of the Agency, including the $7 million in General Fund cash advances. Staff has
prepared a Financial Strategy Plan including debt repayment which is presented in this
staff report for Agency/City Council consideration.
RECOMMENDED COUNCIL/AGENCY ACTION:
1. Approve the Financial Strategy Plan as proposed, including repayment of City debt
by the Agency as provided in the attached summary.
2. Direct staff to prepare a new Operative Agreement incorporating the proposed
repayment plan for Fiscal Year 1991/92.
ANALYSIS:
Introduction
The Agency has incurred debt since 1982 in order to receive tax increment funds from
the County. Each year the City Council has approved changes in each project area's
debt by approving amendments to Operative Agreements between the City and Agency.
Staff is now in a position to recommend a Financial Strategy Plan including a debt
repayment plan that will repay all of the Agency's General Fund cash advances,
approximately $9 million, according to the following schedule:
Project Area Payoff Date
Main-Pier 2009/10
Yorktown-Lake 1999/00
Talbert-Beach 1992/93
Oakview 1995/96
Huntington Center 1993/94
PIO 4/84
4 `
In order to achieve the timetable above, Council will need to approve the proposed debt
repayment plan below. Any changes to said plan may lengthen the payback of General
Fund cash advances.
Exhibit I summarizes Agency Debt at June 30, 1991. Following this action, staff will
prepare a similar summary of Agency Debt at June 30, 1992 as part of the 91/92
Operative Agreement.
Proposed Debt Repayment Plan:
I. Approve the following repayments of Agency debt in fiscal year 1991/92:
a. Budgeted cash repayment of $972,500 to the General Fund. (APPROVED)
b. Parking Structure Transfer - Staff is proposing to transfer the
Main/Promenade Parking Structure from the Agency to the City and reduce
Agency parking structure fund debt by $18,040,780 plus accrued interest since
1989 and reduce Main/Pier land sales debt by $3,133,500 plus accrued interest
since 1989.
c. Koury Sales Proceeds - Transfer the proceeds (cash) from the $1,250,000 sale
of commercial space from the Main/Promenade Parking Structure to the
General Fund and reduce Agency debt by $1,250,000. (APPROVED)
d. General Plan Urban Design Element - The Agency transferred $50,000 to the
General Fund to assist with funding the General Plan Update. Reduce
Main/Pier debt by $50,000.
e. HB Conference and Visitors Bureau - At the end of 1990/91, the Agency
transferred $115,000 to the General Fund to cover a portion of the Bureau's
$150,000 General Fund grant. In 1991/92, the Agency transferred $30,000 to
the Bureau for services not covered in their 1991/92 grant. Reduce Agency
debt by $145,000.
f. Mayer Corporation Lease Waterfront) In 1991/92, the General Fund
received $165,000 in lease payments from the Robert Mayer Corporation,
which should have gone to the Agency, which is the property owner. Reduce
Main/Pier debt by $165,000.
g. Appliances - Agency owned appliances were transferred to City departments
during 91/92. Reduce Agency debt by $1,587.
h. Lease of Agency-Owned Buildings for City Purposes - The City occupies, or
has directed the Agency to lease non-profit associations, including the Police
Department, a total of 4,000 sq. ft. of space in downtown buildings at 204 -
5th Street (Shank house) and 411 Olive Avenue (Surfing Museum). The space
could be leased at $1.00/sq. ft. and could therefore generate $4,000/month for
the Agency. Reduce Main/Pier debt by $48,000.
L Wind an Sea - Clean-up of hazardous materials in the amount of $50,000 for
property transferred from City to Agency. Reduce Main/Pier debt by $50,000.
II. Annual Repayment of debt by the Agency shall be scheduled in the following
priority (to be further defined in dollar amounts in the 1991/92 Operative
Agreement):
a. Contracts (including mortgages), and Bond (HBPFA) debt.
b. Any City debt under $100,000.
c. General Fund cash advances (principal and interest).
d. General Fund Deferred Development fees.
e. General Fund indirect costs (overhead costs determined by City).
f. General Fund land sales.
g. Other Fund Debt (i.e.: sewer, water, park acquisition and development, gas,
etc.)
III. Other Conditions:
a. The City will contract with the Redevelopment Agency (through the
Operative Agreement) to provide economic development services throughout
the City. Credit will be provided to the Agency for staff and operating costs,
(as approved annually in the Agency budget), used for economic development,
business development, and other general city services not considered part of
redevelopment or activities outside of redevelopment geographic boundaries.
This amount will be credited to city debt repayment. A monthly cost report
will be generated by Economic Development staff.
b. Credit against cash advances to be provided for programs and projects
undertaken by the Agency for benefit of the city (i.e., police substation, HB
Conference and Visitors Bureau, etc.).
c. The MSI report will be used to estimate indirect costs charged by other city
departments to the Agency. Direct costs charged by city departments will be
documented by the city at least annually.
d. Eliminate the entire CDBG debt by crediting the Agency for current
development programs provided for city benefit using CDBG funds (i.e.,
handicap ramps, skateboard parks, Oakview library, backstreet alley
improvements, etc.).
e. Land sales from the city to the Agency shall be done at appraised value less
any toxic/hazardous materials remediation costs.
f. Rent from Agency owned leased properties shall be deposited into Agency
accounts.
Additional Background Information:
The establishment of debt is important to Redevelopment Agencies since it is
required for the Agency to receive tax increment revenues. If a project area has
no debt, no tax increment revenues are received. It is therefore important to
document and maintain sufficient, adequate debt to recover tax increment
revenues.
Redevelopment Agency debt is incurred in a variety of ways such as the following:
1. General Fund Cash Advances - direct loans from the General Fund for Agency
operations and/or projects.
2. Indirect Charges - Work done for the Agency by General Fund operations.
This amount is computed annually based on a cost-allocation plan.
3. Tax Allocation Bonds - Bonds issued in 1988 and refinanced in 1992, pledging
future tax revenues in four project areas as security. These bonds have
"first-claim" on all tax increment revenues.
4. Deferred Development Fees - In some prior projects, the Agency has agreed
to pay the City fees that are normally paid at the start of project
construction. The fees will be repaid to the City from tax increment
revenues.
5. Debt to Outside Parties - The Agency has incurred mortgages for property
purchases.
6. Land Sales - The City has sold the Agency land to facilitate certain
Redevelopment projects.
FUNDING SOURCE:
None required by this action.
ALTERNATIVE ACTIONS:
Direct staff to make changes to the proposed plan.
ATTACHMENT:
Summary of Agency Debt, June 30, 1991.
MTU/BAK/MJG:sar
0960r
EXHIBIT I
•-EXHIBIT I
SUMMARY OF AGENCY DEBT - -
JUNE 30, 1991 - LOW _
MAIN/PIER TALBERT/BCH OAKVIEW YKTN/LAKE HTG CTR INC HSG TOTAL
DIRECT ADVANCES S,Tsz-,svy- 0 1,U51,344 108,958
INTEREST ON DIRECT ADVANCES 1,157,176 0 336,095 80,072 43,340 1,616,683
TOTAL GEN FUND DIRECT ADV b,844,UbV u 1,J81,43V , , , ,
INDIRECT ADVANCES ,�,S J- 2 7U,100 11854,516 ,44J 115,22/
INTEREST ON INDIRECT ADVANCES 1,103,370 50,505 403,462 153,046 58,441 11768,824
TOTAL INDIRECT ADVANCES - 5,778,953 , , ,978 562,489 833,b68 , ,
LAND SALES
INTEREST ON LAND SALES 9,764,087 0 0 0 0 9,764,087
TOTAL LAND SALES ,
TRAN OF PFA BOND PROCEEDS (GEN FUND) 4,445,UUU 4,445,UUU
INTEREST ON BOND PROCEEDS 88,900 _ 88,900
TOTAL TRANSFER OF PFA BOND PROCEEDS 4,533,90U U 0 0 0 4,533,90
TOTAL GENERAL FUND 59,823,925 321,205 3,645,417 751,519 1,418,763 0 65,960,831
MAIN/PIER TALBERT/BCH OAKVIEW YKTN/LAKE HTG CTR L.I.H. TOTAL
SEWER FUND - 0
ADVANCES 175,000 0 0 0 0 0 175000
DEF DEV FEES 0 37,888 0 0 0 0 37,888
INTEREST 32,900 26,364 0 0 0 0 59,264
TOTAL SEWER FUND ,9UU b4,252ISZ-
DRAINAGE FUND
ADVANCES 250,000 0 0 0 0 0 250,000
DEF DEV FEES 0 53,650 0 0 0 0 53,650
INTEREST 109,370 39,666 0 0 0 0 149,036
TOTAL DRAINAGE FUND J59,370 93,3160 -5s86-
PARK A AND D FUND 0-
LAND SALES 0 1,740,834 0 0 0 0 1,740,834
DEF DEV FEES 0 247,664 0 0 0 0 247,664
INTEREST 0 490,397 0 0 0 0 490,397
TOTAL PARK A AND D FUND U 2,4/8,895
WATER FUND
ADVANCES - 1,138,000 0 0 0 0 0 1,138,000
DEF DEV FEES 0 19,680 0 0 0 0 19,680
INTEREST 507,771 15,807 0 0 0 0 523,578
TOTAL WATER FUND ,! ST
PARKING STR - 0
ADVANCES 14,819,024 0 0 0 0 0 14,819,024
INTEREST 3,221,756 0 0 0 0 0 3,221,756
TOTAL PARKING STR , , , ,
CDBG 108,094 1,048,845 15,638 0 0 0 1,172,577
HBPFA 6,654,855 ,358,397- 2,455,064 0 8, r , r 488 r 4-3'7
PRINCIPAL 95,108 19,467 35,103 0 118,961 268,639
INTEREST
TOTAL 6,749,963 1,377,864 2,490,167 0 8,444,594 4,698,488 23,761,076
CAPITAL IMPROVEMENT FUND -
PRINCIPAL 0 0 0 200,000 0 0 200,000
INTEREST 0 0 0 37,600 0 0 37,600
GAS TAX FUND - 0
PRINCIPAL 500,000 0 0 0 0 0 500,000
INTEREST 153,400 0 0 0 0 0 153,4400
TOTAL b5J,4UU U U -653 30T�
GRAND TOTAL //,bub,lbu 9,b98,bbU , , ,l7TIIS,Z9-S-
4 \
WPADSERT:866
REQUEST ECR CITE'' COUNCIL®
REDEVELOPMENT AGENCY ACTION
Deft May 4, 1992
Submitted to: Honorable Mayor and City Council .
Submitted by: Michael T. Uberuaga, City Administr r
Prepared by: Robert J. Franz, Deputy City Administrator
Barbara A. Kaiser, Deputy City Administrator _ COUNCIL
Subject: PROVED Y GIT '
Redevelopment Agency Debt Repayment �- � ,191��
Consistent with Council Policy? [x] yes [ ] New Policy or Exception
g
Statement of Issue, Recommendation,Analysis, Funding Source,Alternative Act ons ---`�i
STATEMENT OF ISSUE: The Redevelopment Agency has received $1 ,226,673 from the sale
of the commercial portion of the Main Promenade Parking Structure. A determination
needs to be made on the use of these funds.
RECOMMENDATION:
Transfer $1 ,226,673 from the Redevelopment Agency to the City' s Capital Improvement
(CIP) Fund Reserve and reduce Agency debt to the City by $1 ,226,673
ANALYSIS:
The Robert Koury Disposition and Development Agreement dated November 21 , 1988
included a provision for the Agency to sell the condominium interest in the improved
commercial portion of the parking structure to Robert Koury. In July, 1991 the
proceeds of $1 ,226,673 were received by the Agency and deposited in the Main/Pier
Redevelopment Agency Capital Projects Fund. Since the parking structure project was
funded by Certificates of Participation (COP) debt that is being repaid by the
General Fund, staff is propos.ing that the proceeds from the sale to Koury be paid to
the City as debt repayment.
City Fiscal Policies (copy attached) require a 3-5% General Fund reserve and the
transfer to the Capital Improvement Projects ^(CIP) Fund of amounts in excess of 5%.
Current projections (4/20/92 Budget Status Report attached) are that the 6/30/92
fund balance will be $5,854,463 or 6.2% of the General Fund Budget. Therefore, in
accordance with the Fiscal Policies, staff recommends the Koury proceeds of
$1 ,226,673 be placed in the reserve account of the CIP Fund. These funds will be
available to allocate, in the 1992/93 budget, to high priority projects or to hold
in reserve pending subsequent review of general fund revenues compared. to expenses.
ALTERNATIVE ACTIONS
I . Do not approve the above recommendation.
2. Request staff to prepare modifications.
3. Repay the funds to the City' s General Fund and increase the estimated
6/30/92 reserve to $7,081 ,1.36 or 7.5%
ATTACHMENTS:
1 . Quarterly Budget Status Report.
2. Fiscal Policies
i
CITY OF HUNTING°1ON BEACH
INTER-DEPARTMENT COMMUNICATION
HUNTINGTON BEACH
TO: MICHAEL T. UBERUAGA, City Administrator
FROM: ROBERT J. FRANZ, Deputy City Administrator
SUBJECT: QUARTERLY REPORT 1991/92 GENERAL FUND BUDGET
DATE: APRIL 20, 1992
General Fund revenues and expenses for the first nine months (7/l /91 — 3/31/92) of the
fiscal year have been analyzed in comparison to budget estimates.. Attached are
detailed summaries which are summarized below:
SUMMARY
1991 /92
Adopted CURRENT
Budget Estimate
Expenditures 94,107,104 $ 91 ,407,537
Estimated Revenue $ 91 ,061 ,801 90,768,000
Budget Shortfall $ 3,045.303 $ 639,537
REVENUES
The reduced revenue estimate is a combination of changes to budget estimates as
summarized below:
General Fund 1991/92 Current
Revenue Source Budget Estimate Change
Property Tax $ 29,000,360 $ 29,815,000 $ +814,640
Sales Tax 17,600,000 16,600,000 —1 ,000,000
Fines/Forfeitures 2,374,500 1 ,520,000 —854,500
Use of Money & Property 5,738,500 5,326,000 —412,500
Revenue from Other Agencies 8,607,518 8,013,000 —594,518
Transfer from Parking Structure Fund 0 900,000 +900,000
Other Changes +853,077
Net Revenue Estimate Reduction $ —293,801
EXPLANATION OF CHANGES:
Property Tax (+ $ 814,640)
(Estimate unchanged from second quarter budget review)
Orange County submitted actual assessed valuation and property tax' levy data in August
and September. The revised revenue estimate is based on this "actual " data. The
original budget estimate was based on projections prepared in April of last year.
QUARTERLY REPORT 1991 /92 - GENERAL FUND BUGET
Sales Tax (- $ 1 ,000,000)
First nine months receipts were below last year' s. The revised estimate is based on
our sales tax consultant' s review and input. The current estimate is unchanged from
the second quarter budget review.
Fines Forfeitures (- $ 854,500)
(Estimate unchanged from second quarter budget review)
The State of California is taking 50% of our traffic citation (moving violations)
revenue to balance the State Budget, resulting in the revised estimates. Parking
fines revenue is also down significantly.
Use of M&nev and Property (- $ 412,500)
The original budget estimated a substantial increase based on increased beach parking
fees which will not be realized due to low beach attendance in the summer of 1991 and
lower than projected revenue in the new downtown parking structure.
Revenue From Other Agencies (- $594;518)
Vehicle License Fee revenue from the State is below projected levels for the first
nine months. A reconciliation/revised projection is expected by late April from the
State Controller' s Office.
Transfer from Parking Structure Fund (+ $900,000)
The City Council approved (in December) a $900,000 transfer from the Parking Structure
Fund to cover debt service costs on the $10.2 million unused C.O.P. ' s .
Other Changes (+ $ 853,077)
Business License receipts and construction related permits revenue are projected to be
higher than original projections as are various other revenues to a lesser degree.
EXPENDITURES
Current estimates for fiscal year 1991/92 are that General Fund expenses will be
$91 ,407,537 or $639,537 more than estimated revenues. Expenses are about $3 million
less than authorized levels, reflecting the estimated cost savings from the hiring
freeze, normal vacancies, and control of expenditures by departments. Following is a
comparison of actual expenses for salaries and benefits during the first six months of
1991 /92:
1990/91
1991/92 9 Months
9 Months Expenses
Expenditures Expenses (Last Year) Increase/Decrease
Salaries/Benefits $ 43,002,199 $ 41 ,283,984 $ 1 ,718,215 Increase (4.2%)
Overtime 2,484,948 2,701 ,851 - 216,903 DECREASE (8.0%)
Temporary Salaries 1 ,992,342 2,150,559 - 158,217 DECREASE (7.4%)
-2-
WPADSERT:863
QUARTERLY REPORT 19,91/92 — GENERAL FUND BUGET
The above summary shows a significant effort at cost control /reduction by
departments. 1991 /92 expenses include the salary increases implemented in the first
two years of the current MOU' s. with employees.
RESERVES
The. estimate of our General Fund reserve (fund balance) for the end of the current
fiscal year is summarized in the following chart:
Amount % Reserve
July 1 , 1991 Fund Balance (Audited) $ 3,894,000
P1us: y.,Estimated 1991 /92 PERS Refund 2,6010,000
Plus:,
Estimated
Total $ 6,494,000
Less: 1991/92 Estimated Budget Shortfall — 639,537
Estimated Fund Balance — June 30, 1992 $ 5,854.463 . 6.2%
In addition to the PERS refund listed above, a new PERS refund/credit of $6.8 million
is currently being received by the City and placed in a reserve account.
Lawsuits .against the State have been filed to attempt to invalidate the "New" PERS
credit/refund of $6.8 million. If the courts agree with the litigants, then the City
would have to return the money th the Retirement System. On the other hand, if the
courts sustain the State Legislative Action (AB 702) to implement this refund, the
$6.8 million will be available to the City. The State Court of Appeal upheld the
refund/credit in March of 1992. An appeal to the California Supreme Court is
anticipated.
CONCLUSION
The recession's impact has caused reduction in ongoing City revenue estimates for
1991/92. While expenditures appear to be in control , cost cutting efforts need to be
sustained and economic trends must be monitored closely. The existence of a
potentially large fund balance (reserve) is due t one—time tirement System refunds.
LRO ERT J. FRANZ
Deputy City Administrator
RJF:skd
-3—
WPADSERT:863
QUARTERLY REVENUE SUMMARY
GENERAL FUND
Fiscal Year 1991/92
Nine Months Ending 3/31/92
1990/91
1991 /92 Received
Received First 1991/92
Adopted First % 9 Months Revised
Revenue Budget 9 Months Rcvd (Last Yr. ) Estimate
Property Tax $29,000,360 $17,992,000 62% $16,887,441 $29,815,000
Sales Tax 17,600,000 12,410,000 70% 12,954,000 16,600,000
Utility Tax 12,231 ,000 8,414,000 69% 7,486,000 12,281 ,000
Transient Occupancy Tax 1 , 100,000 713,000 65% 722,000 1 , 100,000
Other Local Taxes 4,611 ,250 2,823,000 61% 1 ,909,000 4,572,000
Licenses and Permits 3,204,845 2,616,585 81% 2,087,342 3,491 ,000
Fines/Forfeitures/Penalty 2,374,500 1 ,004,000 42% 1 ,331 ,000 1 ,520,000
Use of Money and Property 5,738,500 3,432,773 60% 3,193,434 5,326,000
Revenue from Other Agencies 8,607,518 5,335,490 62% 7,027,098 8,013,000
Charges for Current Service 4,365,113 3,609,295 83% 1 ,753,491 4,430,000
Other Revenue 593,715 424,000 71% 419,000 668,000
Transfers from Other Funds 1 ,635,000 1 ,992,322 122% 1 ,244,096 2,952,000
Sub Total $ 91 ,061 ,801 $ 60,766,465 67% $ 57,013,902 $ 90,768,000
PERS Refund 2,400,000 3,924,000 3,659,793 5,850,000
Grand Total $93,461 ,801 $64,690,465 $60,673,695 96,618,000
WPADSERT:863
a'
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--bgt/est92 4/15/92
QUARTERLY EXPENDITURE SUMMARY
GENERAL FUND
FISCAL YEAR 1991/92
--------------------------------
Nine months ending 3/31/92
1991/92 1990/91
APPROPRIATIONS 9 MONTHS % 9 MONTHS REVISED EST.
EXPENDITURES 1991/92 EXPENSES EXP. (LAST YEAR) EXP. 1991/92
- ----------------- -------------- ---------- ---- ----------- ------------
Salaries/Benefits $62,405,601 $43,002,199 69% $41,283,984 $60,877,107
Overtime 3,751,009 2,484,948 66% 2,701,851 3,234,493
Temporary Salaries 3,188,842 1,992,342 62% 2,150,559 2,680,909
Operating Expenses 21,250,517 13,831,323 65% 16,612,922 20,323,994
Transfers/Interest 3,877,254 4,030,124 104% 2,784,972 4,030,124
Capital Outlay 260,910 111,159 43% 14,802 260,910
Total 5 5 Z-9—% M,549,090 $91,407,53-7
Estimated % to be expended: 96.5%
CITY OF HUNTINGT N BEACH
FISCAL POLICIES
On-going expenditures should be supported by on-going revenues.
The General Fund reserves should be maintained at no less than 3%, with a 5% reserve being
desirable.
No new capital improvements should be approved until associated operating costs are funded
by recurring revenues.
Each enterprise fund should reflect the true cost of operation including direct and indirect
costs supported by the General Fund.
If the city's budget is balanced, General Fund reserves in excess of 5% should be transferred to
the Capital Improvement Projects Fund on an annual basis.
To implement the above fiscal policy statements, a phase-in period will be required.
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