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HomeMy WebLinkAboutCalifornia Statewide Communities Development Authority - Cal Page 1 of 1 Ferrera, Caren From Flynn Joan Sent Friday June 13 2008 9 44 PM To Ferrera Caren Esparza Patty Lugar Robin Subject Fw CSCDA 2007 financials reports Attachments California Communities Financials 07 pdf PI a coordinate receipt and filing of this document I am not sure w at if anything we need to do other than nd file It may take some investigation Thanks We may need to alert another dept too Joan L Flynn CIVIC Huntington Beach City Clerk From CSCDA Finance To James Hamill , Jeffrey S Ross , Spowhn, Wesley M Sent Fri Jun 13 18 15 112008 Subject CSCDA 2007 financials reports Dear California Communities Member Please find attached the annual financial report for the California Statewide Communities Development Authority( California Communities") This document is being filed with you as a public record in accordance with the California Communities Joint Exercise of Powers Agreement,of which your agency is a party If you have any questions about this filing you may address them to cafinance@cacommunities org You may also locate additional information about California Communities at www cacommunities org, including its • Community Benefit Report at www psacommunities org/fs/reports/Benefits/default aspx and its • Program Participants page at www cacommunities org/docs/members aspx?sid=200806100,which lists completed California Communities projects approved by your agency Sincerely CALIFORNIA COMMUNITIES 6/16/2008 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (CALIFORNIA COMMUNITIES) STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUNDS (see Note 2) June 30, 2007 ASSETS Cash and investments $ 7823,143 LIABILITIES Agency obligations $ 7823,143 The accompanying notes are an integral part of this financial statement 7 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (CALIFORNIA COMMUNITIES) NOTES TO THE FINANCIAL STATEMENT June 30, 2007 Note 1 - Nature of Organization The California Statewide Communities Development Authority ("California Communities" or "the Authority') is a conduit finance issuer only It has no revenues, expenses, assets, or liabilities of its own Debt obligations issued through the Authority are those of the governments, non-profit organizations, and private companies who use California Communities' own governmental status to access the tax exempt and taxable municipal finance marketplace Once a borrower uses the Authority to issue debt, financial servicing of that debt falls to a trustee, or potentially to the investor itself in certain private placements California Communities maintains no ongoing interest in bonds issued through its conduit and no debt servicing responsibility California Communities is a public agency established in 1988 as a Joint Powers Authority ("JPA") It is sponsored by the California State Association of Counties and the League of California Cities and is set up per the provisions of California's Joint Exercise of Powers Act Under this law, any two or more public agencies may by agreement jointly exercise powers common among them In this manner, through California Communities, local governments have a vehicle they control to complete public benefit projects that otherwise may not have been economic or practical to pursue were the local jurisdiction to have served as issuer California Communities is a cooperative repository of public benefit finance expertise that allows its members to use an array of tax-exempt programs without the burden of managing the associated set of issuance and ongoing administrative responsibilities directly themselves California Communities is governed by a seven-member Commission The Authority's Board of Commissioners is appointed by the California State Association of Counties ("CSAC") and the League of California Cities (`the League") (see Note 4—Related Parties), which together represent the interests of counties and cities throughout the state This Board :s required by the joint powers agreement to establish public benefit finance criteria and to evaluate every submitted project on the basis of benefit provided, after receiving the requisite local approval No project can proceed without the approval of commissioners from both CSAC and the League, the structure of which ensures the preservation of both city and county interests 8 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (CALIFORNIA COMMUNITIES) NOTES TO THE FINANCIAL STATEMENT (Continued) June 30, 2007 Note 2 — Summary of Significant Accounting Policies General The accompanying financial statement of California Communities has been prepared in conformity with Governmental Accounting Standards and generally accepted accounting principles as applied to governmental units The financial statement is presented using the accrual basis of accounting As discussed in Note 1, however, California Communities has no accounting activity to report for the periods covered Agency Funds—Bond Issuance and Ongomg Bond Administration While the Authority has no revenues of its own, CSAC, the League, and the Authority's designated Program Manager (see Note 4—Related Parties) assess bond issuance and ongoing bond administration fees to borrowers collectively in the Authority's name Such fees are published in California Communities' fee schedule and are generally assessed as percentages of bonds issued or bonds outstanding Fee collections, some of which are prepaid by borrowers, are deposited into one or more third party trusts where they are held until distributed to CSAC, the League, the Program Manager, or other designated payees The Authority recognizes no revenues or expenses related to i these trusteed fee collections and disbursements, all of which accrue to the financial statements of CSAC, the League, the Program Manager, and other third parties Funds held in third-party trusts related to bond issuance and ongoing bond administration activities, and reported within the Statement of Fiduciary Assets and Liabilities—Agency Funds, amounted to $7,261,698 at June 30, 2007 Agency Funds—General Administrative Activities CSAC, the League, and the Program Manager (see Note 4—Related Parties) allocate a portion of the trusteed fee distributions they receive to reserve accounts owned by CSAC and the League and held in trust for them These accounts are used to buy insurance for the Authority fund certain marketing activities, and support other general administrative activities engaged in by CSAC, the League, and the Program Manager as agents for the Authority Amounts held in reserve accounts are the property of CSAC and the League and are reported within the Statement of Fiduciary Assets and Liabilities—Agency Funds General and administrative activity agency funds owned by CSAC and the League and held in trust for them amounted to $561,445 at June 30, 2007 9 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (CALIFORNIA COMMUNITIES) NOTES TO THE FINANCIAL STATEMENT (Continued) June 30, 2007 Note 3 - Conduit Finance Activity California Communities' conduit finance activity for the year ended June 30 2007 appears as follows No of No of Private Activity Bonds Projects Finance Programs Issued Financed Debt Issued - Qualified 501(c)(3) Nonprofit 31 122 $ 2,966,480,800 - Qualified Residential Rental Program 52 68 853,188,796 - Qualified Manufacturing Facilities 3 3 20,953,000 - Solid Waste Disposal Facilities 2 3 181 985,000 Total Private Activity 88 196 4,022,607 596 No of No of Public Agency Program Debt Finance Proarams Participants Offerings Debt Issued Tax and Revenue Anticipation Notes 32 1 597,530,000 Statewide Community Infrastructure Program (SCIP) 8 2 44,560,000 - Pension Obligation Bonds 9 1 87,475,699 - Water/ Wastewater Bonds 3 2 45,480,000 Total Public Agency Activity 52 6 775,045,699 Total Debt Issued $ 4 797,653,295 10 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (CALIFORNIA COMMUNITIES) NOTES TO THE FINANCIAL STATEMENT (Continued) June 30, 2007 Mote 4 — Related Parties The Authority has entered into Program Administration Agreements with CSAC and the League (see Note 1—Nature of Organization) for promotion and marketing of the Authority's conduit finance programs In addition, per the provisions of the California Communities Joint Powers Agreement, CSAC and the League appoint individuals to serve on the Authority's seven-member commission, five seats of which are currently filled by CSAC and the League The Authority has also entered into Program Administration Agreements with subsidiaries of HB Capital Resources, Ltd (collectively "HB Capital") for the provision of comprehensive staff services for daily operational and marketing purposes Acting as the Authority's staff, HB Capital personnel implement the issuance policies established by the Authority's Board of Commissioners execute aspects of the deal qualification and structuring process analyze and present transactions to the Authority's Board of Commissioners for review and approval, and work with the financial and legal community, local agencies and regulatory bodies, and others to ensure that conduit bonds issued in the Authority's name remain in good standing Pursuant to the above Program Administration Agreements, CSAC, the League, and HB Capital each receive a set percentage of the bond issuance and ongoing bond administration fees assessed to borrowers in the Authority's name, with such percentages varying based upon deal type CSAC, the League, and HB Capital pay all their own expenses related to the provision of their respective services For the year ended June 30 2007, CSAC's enterprise services unit (CSAC Finance Corporation) and the League of California Cities together received $4,363,044 split equally between them HB Capital received revenues of $10,082,462 Note 5 —Cash and Investments Agency funds held in trust as cash and investments at June 30, 2007 consist of the following Deposits $ 33,074 Investments Money Market Funds 3341,224 US Treasury Obligations 4,448,845 Total Cash and Investments 7 823 143 11 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (CALIFORNIA COMMUNITIES) FINANCIAL STATEMENT AS OF JUNE 30, 2007 TABLE OF CONTENTS INDEPENDENT AUDITOR'S REPORT 1 MANAGEMENT'S DISCUSSION AND ANALYSIS (Required Supplementary Information) 3 FINANCIAL STATEMENT STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES —AGENCY FUNDS 7 NOTES TO THE FINANCIAL STATEMENT 8 SUPPLEMENTAL INFORMATION SCHEDULE OF FIDUCIARY FEE COLLECTIONS AND DISBURSEMENTS RELATED TO THE CONDUIT FINANCE ACTIVITIES —AGENCY FUNDS 15 3000 S Street,Suite 300 Sacramento CA 95816 9a 916 928 4600 2175 N California Boulevard Suite 645 rs.-M) Walnut Creek.CA 94596 925 774 0170 MAC IAS GIN[ & OICO N N E LL LLP 515 S Figueroa Street.Suite 32S CA CERTIFIED PUBLIC ACCOUNTANTS S MANAGEMENT CONSULTANTS Los Angeles 2866401 213 ass 6aoa 402 West Broadway Suite 400 San Dim CA 92101 6l9 573 1112 Board of Commissioners California Statewide Communities Development Authority Sacramento, California Independent Auditor's Report We have audited the accompanying statement of fiduciary assets and liabilities — agency funds (financial statement) of the California Statewide Communities Development Authority (California Communities), as of June 30, 2007 This financial statement is the responsibility of California Communities' management Our responsibility is to express an opinion on this financial statement based on our audit We conducted our audit in accordance with auditing standards generally accepted in the United States of America Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of California Communities' internal control over financial reporting Accordingly, we express no such opinion An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, 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 financial statement referred to above presents fairly, in all material respects, the financial position of the agency funds of California Communities as of June 30, 2007 in conformity with accounting principles generally accepted in the United States of America The management's discussion and analysis on pages 3 through 6 is not a required part of the financial statement, but is supplementary information required by accounting principles generally accepted in the United States of America We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation on the required supplementary information However, we did not audit the information and express no opinion on it i www mgocpa com ��� An Independent Member of the $DO Seidman Alhonce Our audit was conducted for the purpose of forming an opinion on the financial statement The schedule of fiduciary fee collections and disbursements related to the conduit finance activities — agency funds is presented for purposes of additional analysis and is not a required part of the financial statement The schedule of fee collections and disbursements related to the conduit finance activities -- agency funds has been subjected to the auditing procedures applied in the audit of the financial statement and, in our opinion, is fairly stated in all material respects in relation to the financial statement taken as a whole r i AG1�GZ 6Idd 4 co 14 Vt—'tI Certified Public Accountants Sacramento, California January 23, 2008 2 MANAGEMENT'S DISCUSSION AND ANALYSIS The California Statewide Communities Development Authority ("California Communities' or the "Authority") was created in 1988, under California's Joint Exercise of Powers Act, to provide California's local governments with an effective tool for the timely financing of community based public benefit projects Although cities, counties and special districts are able to issue their own debt obligations or serve as a conduit issuer of private activity bonds that promote economic development and provide critical community services, many local agencies find stand- alone financings too costly or lack the necessary resources or experience to facilitate the bond issuance and perform post-issuance activities for the term of the bonds In response, local governments formed California Communities California Communities was created by and for local governments in California, and is sponsored by the California State Association of Counties (CSAC) and the League of California Cities (the League) Today, more then 470 cities, counties, and special districts have become Program Participants to California Communities — which serves as their conduit issuer and provides access to an efficient and effective mechanism to finance locally-approved public benefit projects California Communities helps local governments build community infrastructure, provide affordable housing, create jobs, make access available to quality healthcare and education, and more California Communities provides an important resource to our local government members by ensuring that local community projects get funded quickly and reliably Conduit Issuance Activity During the fiscal year ended June 30, 2007, California Communities served as issuer for $4 8 Billion in conduit revenue bonds related to its Private Activity and Public Agency Finance Programs Private Activity projects are those owned by the private sector, but which provide specific public benefits and are approved by the local City Council or County Board of Supervisors During the year ended June 30, 2007, California Communities provided financing for 196 Private Activity projects ranging from construction of affordable and senior housing apartments to erecting hospital and educational infrastructure to building new manufacturing and solid waste disposal facilities In total, California Communities provided conduit access to the tax-exempt and taxable municipal finance marketplace for approximately$4 Billion in Private Activity projects 3 i Public Agency Finance programs are those where California Communities serves as the conduit issuer for financings where a city, county and/or special district is the borrower California Communities frequently conducts these types of financings on a pooled basis with more than one government entity participating in a single financing, thereby spreading the costs of issuance across borrowers to produce a lower-cost transaction than each local government would enjoy on its own During the year ended June 30, 2007, California Communities conducted six Public Agency Finance conduit issuances totaling approximately $775 million and benefiting 52 of its public agency members Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to California Communities' financial statement The Authority s financial statement comprises two components 1) the statement of fiduciary assets and liabilities — agency funds and 2) notes to the financial statement Financial Statement California Communities has only one financial statement, the statement of fiduciary assets and liabilities--agency funds, which appears at page 7 This statement reports assets held in an agency capacity for others and that are not the property of the Authority itself As an issuer which acts exclusively in a conduit capacity, California Communities has no assets, liabilities, revenues, or expenses of its own Because of this structure, in accordance with Generally Accepted Accounting Principles, California Communities does not report either a statement of net assets and governmental; fund balance sheet or a statement of activities and governmental fund revenues, expenditures, and changes in fund balance Notes to the Financial Statement The notes provide additional information that is essential to a full understanding of the data provided in the financial statement The notes to the financial statement can be found on pages 8 - 13 of this report Analysis of Fiduciary Assets and Liabilities--Agency Funds Agency funds reported by California Communities in the statement of fiduciary assets and liabilities—agency funds are the property of others These agency funds fall into one of three categories, each of which is reported in the schedule of fiduciary fee collections and disbursements, which appears at page 15 as information supplemental to the financial statement The categories are 1) bond issuance, 2) bond administration, and 3) general administrative activities Bond Issuance These agency funds represent amounts charged to borrowers by the California Communities' contract program administrator in the Authority's name to pay for the program administrators services as well as for the program governance sponsorship, and marketing services provided by CSAC and the League The program administrator bills the borrower in advance for bond issuance fees and then places the payment on deposit in trust with Wells Fargo Corporate Trust Services Amounts held in trust are invested in cash and cash equivalents 4 i i Once bonds are issued, the trustee distributes payments for services directly to the program administrator CSAC, the League, and any others For the year ended June 30, 2007, the program administrator collected into trust approximately $5 2 million for California Communities' bond issuance services At June 30, 2007 the trust held approximately$1 1 million for bond transactions pending issuance { Bond Administration These agency funds are assessed by the program administrator in the Authority's name for the performance of ongoing administration and compliance work to help keep long-term bond issues in good standing Bond administration fees are generally paid in advance by the borrower (sometimes several years in advance) and are remitted into various trust accounts with Wells Fargo Bank Corporate Trust Services until the associated ongoing administration services are performed These monies are invested either in cash and cash equivalents or in United States government treasury STRIPs Amounts held in trust are considered to be the property of the payer until such time as the ongoing administration services are carried out by the program administrator or others Such services are primarily performed by the program administrator, CSAC, and the League, each of which receives payments from the trust as services are rendered For the year ended ,tune 30, 2007, the program administrator collected into trust approximately $10 9 million in payments and prepayments for California Communities' ongoing bond administration activities At June 30, 2007 the related trust accounts held approximately $6 1 million for bond administration activities pending performance General Administrative Activities These agency funds are held in bank and trust accounts where they are owned jointly by CSAC and the League These accounts are funded by set-asides that CSAC, the League, and the program administrator would have otherwise earned for the performance of bond issuance and bond administration services Amounts held in these reserve accounts are used by CSAC, the League, and the program administrator for purposes such as shared marketing, funding public agency education programs, purchasing public official's insurance for the Commission, and paying accounting, legal, and other professional services expenses associated with use of the Authority's name For the year ended June 30, 2007 these CSAC and League owned accounts funded $373,498 in general administrative expenses At June 30, 2007 the amounts held in these agency accounts totaled $561,445, all of which were invested in cash and cash equivalents Related Parties California Communities maintains agreements with CSAC and the League for the provision of program governance, sponsorship, and marketing services In exchange for these services, both organizations receive percentage shares of the distributions made from agency funds collected for bond issuance and bond administration services performed by the program administrator For the year ended June 30, 2007, CSAC and 5 the League together earned $4,363,044, shared equally between them Program administration services are performed under contract with California Communities by various subsidiary companies of HB Capital Resources, Ltd For the year ended June 30, 2007, these companies collectively received revenues of$10,082,462 Requests for Information This financial report is designed to provide a general overview of the Authority's finances for all those interested Questions concerning any of the information provided in this report or requests for additional information should be addressed to California Statewide Communities Development Authority 1100 K Street Sacramento, CA 95814 6 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (CALIFORNIA COMMUNITIES) NOTES TO THE FINANCIAL STATEMENT (Continued) June 30, 2007 Note 5 — Cash and Investments (continued) Agency Fund Investments Authorized by the Authority's investment Policy The table below identifies the investment types authorized by the Authority for agency funds held in trust for the benefit of California Communities' conduit issuance activities (This table does not address investments of conduit bond proceeds held by bond trustees that are governed by the provisions of the associated conduit debt agreements ) Maximum Maximum % of Maximum Investment Authorized Investment Type Maturity Portfolio in one Issuer U S Treasury Obligations None None None Commercial Paper 1 Year None $100,000 Certificates of Deposit 5 Years None $100,000 Medium-Term Notes 5 Years None $100,000 Mutual Funds N/A None $100 000 Money Market Funds N/A None None Disclosures Relating to Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in interest rates One of the ways that the Authority manages the exposure of trusteed agency funds is by authorizing the purchase 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 over time as necessary to provide the cash flow and liquidity needed for conduit operations Information about the sensitivity of the fair values of agency fund investments to market rate fluctuations is provided by the following table that shows the distribution of investments by maturity Maturities 12 Months or 13 to 24 25 to 60 More than Investment Type Less Months Months 60 Months U S Treasury Obligations $ 428,558 $ 397,138 $ 1,088,293 $ 2,534 856 Money Market Funds 3,341 ,224 12 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (CALIFORNIA COMMUNITIES) NOTES TO THE FINANCIAL STATEMENT (Continued) June 30, 2007 Note 5 — Cash and Investments (continued) Disclosures Relating to Credit Risk Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment California Communities mitigates the credit risk of agency funds by limiting permitted investments to U S Treasury obligations (which are unrated) or money market funds or debt instruments that carry the assignment of a BBB or better rating by a nationally-recognized statistical rating organization At .tune 30, 2007, agency fund investments were held entirely in U S Treasury obligations (unrated) and in money market funds carrying ratings of AAA Concentration of Credit Risk The Authority's investment policy with respect to agency funds limits concentration of credit risk by restricting investments to U S Treasury obligations, money market funds, or to $100,000 in individual debt instruments of any other type or issuer The Authority's agency fund investment position at June 30, 2007 was in compliance with this investment policy Custodial Credit Risk The custodial credit risk for agency fund investments is the risk that, in the event of the failure of the counterparty to a transaction the beneficiaries of the agency funds will not be able to recover the value of their investments or collateral securities that are in the possession of another party California Communities' agency fund investments are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book entry form The Authority's agency fund deposits are not federally insured, and therefore may be subject to custodial credit risk 13 SUPPLEMENTAL INFORMATION The following page contains information that is supplemental to the operations of the California Statewide Communities Development Authority ("California Communities" or "the Authority') The information that appears shows the consolidated activity and balances of trust accounts used to collect issuance and administrative fees charged by others in the Authority's name Amounts collected in these trust accounts are the property of the California State Association of Counties Finance Corporation ("CSAC"), the League of California Cities ("the League"), and certain conduit borrowers for which services have not yet been performed, but who have deposited funds for the future payment of those services 14 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (CALIFORNIA COMMUNITIES) SCHEDULE OF FIDUCIARY FEE COLLECTIONS AND DISBURSEMENTS RELATED TO THE CONDUIT FINANCE ACTIVITIES -AGENCY FUNDS For the Year Ended June 30, 2007 General Bond Bond Administrative Issuance Administration Activities Total Amounts Collected in Benefit of Conduit Finance Activities of California Communities Bond Issuance Fees $ 5 161 932 $ $ $ 5 161 932 Bond Administrative Fees 10 937 244 10 937 244 Investment income Interest 43 191 91 782 15 950 150 923 Change in Fair Value of Investments 253 298 253 298 Total Amounts Collected in Benefit of Conduit Finance Activities of California Communities 5 205 123 11 282 324 15 950 16 503 397 Amounts Disbursed in Benefit of Conduit Finance Activities of California Communities Program Administration Subsidiaries of FIB Capital Resources Ltd 2 928 837 6 217 503 9 146 340 Program Governance and Marketing CSAC 863 785 1 317 737 2 181 522 Program Governance and Marketing the League 863 785 1 317 737 2 181 522 Legal Counsel 68 111 106 707 174 818 Compliance Monitoring Compliance Services LLC(a subsidiary of FIB Capital Resources Ltd) 936 122 936 122 General Administration 373 498 373 498 Total Amounts Disbursed in Benefit of Conduit Finance Activities of California Communities 4 724 518 9 895 806 373 498 14 993 822 Transfers (239 005) (497 767) 736 772 Change in Cash and Investments on Deposit in Trust 241 600 888 751 379 224 1 509 575 Cash and Investments on Deposit in Trust June 30 2006 900 353 5 230 994 182 221 6 313 568 Cash and Investments on Deposit in Trust June 30 2007 $ 1 141 953 $ 6 119 745 $ 561 445 $ 7823143 15