2010120606 - Exhibit A - FY 2009/10 Redevelopment Agency Annual ReportREDEVELOPMENT AGENCY
BASIC FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2010
wrm INDEPENDENT AUDITORS' REPORTS
THEREON
EXHIBIT A
TOWN OF LOS GATOS
REDEVELOPMENT AGENCY
TABLE OF CONTENTS
FOR THE YEAR ENDED JUNE 30, 2010
PAGE
Independent Auditors' Report ....................
.. .... . ....................... I...................... 1-2
Management's Discussion and Analysis ....................................... ............................... 3-10
Basic Financial Statements:
Government -wide Financial Statements:
Statement of Net Assets ........................................................ ............................... 11
Statement of Activities .......................................................... ............................... 12
Fund Financial Statements:
Governmental Funds:
BalanceSheet ........................ ................... : ................ .:................................... 13
Reconciliation of the Balance Sheet — Statement of Net Assets .................... 14
Statement of Revenues, Expenditures, and Changes in Fund Balances ........ 15
Reconciliation of Statement of Revenues, Expenditures, and Changes
in Fund Balances — Statement of Activities .............. ............................... 16
Notes to the Financial Statements ............................................... ............................... 17-26
Supplementary Information:
Budgetary Comparison Schedules:
Schedule of Revenues, Expenditures, and Changes in
Fund Balance - Budget to Actual - Redevelopment Fund ............................. 27
Schedule of Revenues, Expenditures, and Changes in
Fund Balance - Budget to Actual - Housing Fund .......... ............................... 28
Schedule of Revenues, Expenditures, and Changes in
Fund Balance - Budget to Actual - Certificates of Participation Fund.......... 29
Independent Auditor's Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of
Financial Statements Performed in Accordance with
Government Auditing Standards ............................................... ............................... 30-31
Summary of Compliance Findings ................................................ ............................... 32
Summary of Prior Year Compliance Findings ............................ ............................... 33
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C. G.
CERTIFIED PUBLIC ACCOUNTANTS & CONS
INDEPENDENT AUDITORS' REPORT
Members of the Board of the
Town of Los Gatos Redevelopment Agency
Los Gatos, California
We have audited the accompanying financial statements of the governmental activities, each
major fund and the aggregate remaining fund information of the Town of Los Gatos
Redevelopment Agency (the "Agency "), a component unit of the Town of Los Gatos, California,
as of and for the year ended June 30, 2010, which collectively comprise the Agency's basic
financial statements, as listed in the table of contents. These financial statements are the
responsibility of the Agency's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the 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 financial statements referred to above present fairly, in all material respects,
the financial position of the governmental activities, each major fund and the aggregate
remaining fund information of the Town of Los Gatos Redevelopment Agency as of June 30,
2010, and the respective changes in financial position for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated
December 17, 2010, on our consideration of the Agency's internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the
scope of our testing of internal control over financial reporting and compliance and the results of
that testing, and not to provide an opinion on internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards and should be considered in assessing the results of our audit
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis and budgetary comparison information on pages 3
through 10 and 27 through 29 be presented to supplement the basic financial statements. Such
333 Twin Dolphin Drive, Suite 230 . Redwood City, CA 94065 . Phone (650) 802 -8668. Fax (650) 802 -0866
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information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board, who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or .
historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of
America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management's responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the
basic financial statements. We do not express an opinion or provide any assurance on the
information because the limited procedures do not provide us with sufficient evidence to express
an opinion or provide any assurance,
December 17, 2010
Redwood City, California
2
Management's Discussion and Analysis
THIS PAGE
INTENTIONALLY
DEFT BLANK
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
As a component unit of the Town of Los Gatos, the Redevelopment Agency ( "Agency") was
established in response to the need to rebuild existing infrastructure damaged in the 1989 Loma
Prieta Earthquake. The Redevelopment Agency area encompasses approximately 440 acres in
and around Downtown Los Gatos, which includes retail and residential areas, lodging, schools,
and main traffic thoroughfares. Projects such as street and utility reconstruction, parking,
streetscape and civic improvements were called out in the Redevelopment Plan. The Agency has
the power to condemn properties for this purpose and to issue debt payable out of the
incremental property taxes expected to be realized because of its redevelopment. activities. The
Agency may enter into development agreements with developers and others to further its
purposes.'
FISCAL 2010 FINANCIAL HIGHLIGHTS
Agency revenues. experienced continued growth in the project area as compared to the prior year.
Property tax increments, the Agency's primary revenue source, increased $582,836 from the
amounts received the prior year.
• The liabilities of the Agency exceeded its assets at June 30, 2010 by $3,811,483 (net assets).
Included in the determination of net assets is a negative (deficit) balance of ($17,359,912) in
unrestricted net assets due to a long term liability established as part of a reimbursement
agreement with the Town related to financing the new library project. The deficit in
unrestricted net assets is normal in California redevelopment agencies. All redevelopment
agencies leverage curr.ent tax increment revenues by issuing long -term debt to raise capital to
eliminate blight and promote economic growth within the Agency's project area.
• The Agency's total net assets decreased by $14.92 million from the prior year.
• As of June 30, 2010, the Agency's governmental funds reported combined ending fund
balances of $13,968,286; a decrease of $4,716,576 in comparison from the prior year's
combined fund balance of $18,864,862. The decrease is due primarily to a decrease in fund
balances in the Town's Low and Moderate Housing Fund and Debt Service Fund.
• At June 30, 2010 total unreserved fund balance in the Town's governmental funds of
$6,953,730 decreased $572,828 in comparison with the prior year's balances of $7,526,558.
OVERVIEW OF THE BASIC FINANCIAL STATEMENTS
This Report is in three parts:
1) Management's Discussion and Analysis (this part),
2) The Basic Financial Statements, which include the Agency -wide and the Fund financial
statements, along with the Notes to these financial statements, and
3) Budget/Actual Statements for budgeted Capital Projects Funds.
The Basic Financial Statements
The Basic Financial Statements comprise the Agency -wide Financial Statements and the Fund
Financial Statements: These two sets of financial statements provide two different views of the
Agency's financial activities and financial position long -term and short-term.
The Agency -wide Financial Statements provide a longer -term view of the Agency's activities as
a whole, and comprise the Statement of Net Assets and the Statement of Activities. The
9
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
Statement of Net Assets provides information about the financial position of the Agency as a
whole, including all its capital assets and long -term liabilities on the full accrual basis, similar to
that used by corporations. The Statement of Activities provides information about all the
Agency's revenues and all its expenses, also on the fall accrual basis, with the emphasis on
measuring net revenues or expenses of each of the Agency's programs.
The Statement of Activities explains in detail the change in Net Assets for the year. Generally,
net assets may serve over time as a useful indicator of a government's financial position. In the
case of a Redevelopment Agency, however, it can be expected that the cost of improving and
accumulating assets will exceed the book value of those assets. The Agency's liabilities
exceeded its assets by $3,811,483 at June 30, 2010 due to a $153M long term liability
established as part of a reimbursement agreement with the Town related to financing the new
library project. The condition of net liabilities is not .uncommon and is expected, for a
Redevelopment Agency. The Agency is established to borrow and expend funds for the purpose
of economic development. The borrowed funds are to be repaid with future tax increment
revenues generated by the increased economic activity within the project area.
The Fund Financial Statements report the Agency's operations in more detail than the Agency-
wide statements and focus primarily on the short-term activities of the Agency's Major Funds.
The Fund Financial Statements measure only current revenues and expenditures, current assets,
liabilities and fund balances; they exclude capital assets, long -term debt, and other long -term
amounts.
Major Funds account for the major financial. activities of the Agency and are presented
individually, while the activities of any Non -major Funds would be presented in summary, with
subordinate schedules presenting the detail for each of these other funds. The Agency does not
have any Non -major Funds. Major Funds are explained below.
Together, all these statements are now called the Basic Financial Statements; formerly they were
called the general - purpose financial statements.
The Agency -wide Financial Statements
All of the Agency's basic services are considered to be Governmental activities, including;
economic development, pass through agreements, and debt service. General Agency revenues
such as incremental property taxes and investment earnings support these services.
Agency -wide financial statements are prepared on the accrual basis, which means they measure
the flow of all economic resources of the Agency as a whole.
Fund Financial Statements
Governmental Fund financial statements are prepared on the modified accrual basis, which
means they measure only current financial resources and uses. Capital assets and other long -
lived assets, along with long -term liabilities, are presented only in the Agency -wide financial
statements.
4
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
which are Major Funds, was established by GASB Statement 34 and replaces the concept of
combining like funds and presenting .them in total. Instead, . each Major Fund is presented
individually, with all Non -major Funds summarized and presented only in a single column.
Subordinate schedules present the detail of these Non -major funds. Major Funds present the
major activities of the Agency for the year. The Agency's Major Funds may change from year to
year as a result of changes in the pattern of Agency's activities.
The Agency has three Major Governmental Funds in 2010. 'These are the Redevelopment Fund,
the Housing Set -Aside Fund, and the Certificate of Participation Fund, each of which is
discussed in detail below.
FINANCIAL ACTIVITIES OF THE AGENCY AS A WHOLE
This analysis focuses on the net assets and changes in net assets of the Agency as a whole.
Tables l; 2 and 3 focus on_ the Agency's Governmental Statement of Net Assets and Statement of
Activities.
Governmental Activities
Governmental Net Assets presents total program assets and liabilities and the resulting allocation
of the Agency's net assets.
Table 1
Governmental Net Assets at June 30, 2010
(In Millions)
June 30, 2010
Cash and Investments
Other Assets
Capital Assets
Total Assets
Long Term Debt Outstanding
Other Liabilities
Total Liabilities
Net Assets:
Invested in Net Assets
Restricted
Unrestricted
Total Net Assets:
$ 19.57
0.58
7.11
$ 27.26
5.80
25.27
$ 31.07
7.11
6.44
(17.36)
$ (3.81)
June 30, 2009
$ 24.05
0.72
2.68
$ 27.44
10.06
6.09
$ 16.14
1.99
11.36
(2:04)
$ 11.31
5
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Agency's govemmental net assets amounted to ($3.81) million at June 30, 2010. The
Agency's net assets at June 30, 2010 are comprised of the following:
Unrestricted cash and investments comprised $19.57 million of pooled cash and investments
available for operations. Substantially all of these amounts were held in the Town's cash and
investment pool as described in Note 3 to the financial statements. Restricted cash and
investments of $1.30 million are funds held by trustees as prescribed under the Certificate of
Participation issuances.
• Capital Assets of $7.11 million largely represents the value of the Parking Lot 94 parking
structure, the value of the property at 224 W. Main Street and the Dittos Lane, which are
considered infrastructure capital assets under the provisions of GASB 34.
• Short-term payables and pass - through obligations comprise $4.11 million of Agency
liabilities. As part of the Redevelopment Plan, the Agency entered into agreements with
other taxing agencies to pass - through portions of incremental property taxes and amounts due
are reflected at June 30, 2010.
• As of June 30, 2010 the Town of Los Gatos had advanced the Agency a total of $1.5 million
to partially fund ongoing Agency operations. This advance is repayable on demand.
• Long -term debt of $25.29 million, of which $24.8 million is due in future years and $.49
million, is due currently.
• The $7.11 million of `Investments in Capital Assets, Net of Related Debt' describes the
portion of Net Assets that represents the current net book value of the Agency's capital
assets, less the outstanding balance of any debt issued to finance these assets.
• Restricted net assets total $6.44 million, of which $.83 million may be used only for capital
projects, $5.14 million is restricted for low and moderate income housing purposes, and $.46
million may be used only for debt service. The restrictions on these funds were placed there
by outsiders and cannot be changed by the Agency.
• Unrestricted net assets are the part of net assets that can be used to finance day -to -day
operations without constraints established by debt covenants or other legal requirements or
restrictions. The Agency had ($17.36) million of unrestricted net assets at June 30, 2010.
This deficit is a result of long -term debt proceeds, which are deducted from fund balance.
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
Changes in Governmental Net Assets
The Statement of Activities presents program revenues and expenses and general revenues in
detail. All these are elements in the Changes in Governmental Net Assets summarized below:
Table 2
Changes in Governmental Net Assets
(In Millions)
Revenues
Program Revenues
Residential rental income
General Revenues
Property Tax Increments
Interest
Total Revenues
Expenses
Functions /Programs
Redevelopment Projects
Pass- through payments
Interest and Fees
Total Expenses
2010. 2009
$ 0.95 $
9.02
0.22 _
$ 10.19 $
2.22
6.21
0.61
$ 9.04 $
8.57
0.70
9.27
1.22
3:79
0.63
5.65
Increase (Decrease) in Net Assets Before Transfers 1.16 3.63
Transfers (0.59) (0.95)
Increase (Decrease) in Net Assets 0.56 2.68
Net Assets - Beginning 11.30 8.63
Decrease in net assets to record
2010 COPS related lease obligation (15.68) -
Net Assets - .Ending $ (3.81) $ 11.30
As Table 2 above shows, $10.19 million of the Agency's 2010 Governmental revenue is general
revenues such as taxes and interest. General revenues are not allocable to programs. General
revenues are used to pay for the net cost of governmental programs.
7
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
Net Revenue (Expense) of Governmental Activities
Table 3 presents the net (expense) or revenue of each of the Agency's governmental activities,
including interest . on long -term debt. Net expense is defined as total program cost less the
revenues generated by those specific activities.
Table 3
Net Revenue (Expense) of Governmental Activities
(In Millions)
2010 2009
Redevelopment Projects $ (1.27) . $ (1.22)
Pass - through payments (6.21) (3.79).
Interest (0.61) (0.63)
Totals
$ (8.09) $ (5.65)
THE AGENCY'S FUND FINANCIAL STATEMENTS
Table 4 below summarizes Governmental Activity and balances at the fund level:
Table 4
Financial Highlights at Fund Level
(In Millions)
Governmental Fund
Total Assets
Total Liabilities
Total Fund Balances
Total Revenues
Total Expenditures
2010
2009
$ 19.58
$ 24.57
5.61
5.88
13.97
18.68
10.19
9.27
14.91
7.08
Analyses of Major Governmental Funds
Redevelopment Fund
Accounts for activities of the Redevelopment Agency of the Town and the related program tax
revenues. This fund encompasses three core functions: Redevelopment Agency administration,
Capital Project development and implementation, and the implementation of the Economic
Vitality Program.
3
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
Housing Set Aside Fund
Accounts for administering the housing component of the Redevelopment plan. The revenue
source for this program comes from the 20% State - mandated housing set -aside deducted from
incremental property taxes.
Certificates of Participation Fund
This Fund accounts for financial resources to be used for the payment of principal and interest in
long -term obligations. Each of the Agency's debt issues is discussed in detail in Note 6 to the
financial statements. Certificates of Participation are used to fund the key infrastructure projects
in the Downtown redevelopment area. At June 30, 2010, the Agency's debt comprised:
June 30, 2010 June 30, 2009
Balance Balance
Government Activity Debt
1992 Certificates of Participation
2002 Certificates of Participation
2010 Certificates of Participation
(In Millions) (In Millions)
$ 0.47 $ 0.69
9.12 9.37
15.68 -
Total Long Term Debt
$ 25.27 $ 10.06
ECONOMIC OUTLOOK AND MAJOR INITIATIVES
The economy of the Agency and its major initiatives are discussed in detail in the Letter of
Transmittal in the Town of Los Gatos' Comprehensive Annual Financial Report for the Fiscal
Year Ended June 30, 2010.
BUDGETARY HIGHLIGHTS
Comparing the FY 2009/10 original budget (or adopted) amount of $8,103,378 to the final
budget amount of $12,716,135 reflects a net increase of $4,612,757. This increase is mainly due
to the following:
Carry Forwards
Almond Grove Concrete Rehabilitation Project $ ( 78,080)
Pageant Park Enhancement Project (56,037)
Budget Adjustments
Dittos Lane Environmental Consultant 96,874
SCC Housing Trust 156,000
Purchase of Dittos Lane property 3,500,000
Purchase of 224 W. Main Street property 1,000,000
Total Increase $4,612,757
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
CONTACTING THE AGENCY'S FINANCIAL MANAGEMENT
These Financial Statements are intended to provide citizens, taxpayers, investors, and creditors
with a general overview of the Agency's finances: Questions about this Report should be
directed to the Finance Department,. at 110 East Main Street, Los Gatos, CA 95030.
10
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
STATEMENT OF NET ASSETS
JUNE 30.2010
ASSETS
Cash and investments
Restricted cash and investments
Accounts receivable
Long term notes receivables
Capital assets (net)
Total Assets
LIABILITIES
Accounts payable
Interest. payable
Passthrough obligations
Advance from Town of Los Gatos General Fund
Noncurrent liabilities:
Due within one year -
Due in more than one year
Total Liabilities
NET ASSETS
Invested in capital assets
Restricted for:
Redevelopment projects
Low income housing
Debt service
Unrestricted
Total Net Assets
See accompanying notes to financial statements
Governmental
Activities
$ .18,272,969
1,297,979
10,028
565,114
7,110,395
$ 27
$ 119,949
190,279
3,992,741
1,500,000
485,000
24,780,000
$ 31,067,968
$ 7,110,395
832,489
5,140,055
465,490
(17,359,912)
$ (3,811,483)
11
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2010
Program Expenses:
Redevelopment
Passthrough payment
Interest and fees
Total Program Expenses
Program Revenues:
Residential rental income
Total Program Revenues
Net Program Income (Expense)
General Revenues and Transfers: .
General Revenues:
Tax allocation increment
Interest income
Transfers to the Town of Los Gatos
Total General Revenues and Transfers
Change in Net Assets
Net Assets - Beginning
Prior period adjustments
Net Assets - Beginning - As Restated
Decrease in net assets to record
2010 COPS related lease obligation
Net Assets - Ending
See accompanying notes to financial statements
Governmental
Activities
$ 2,215,492
6,214,077
605,607
9,035,176
947,415
947,415
(8,087,761)
9,022,862
220,129
(594,635)
8,648,356
560,595
11,106,137
196,785
11,302,922
(15,675,000)
$ 3,811,483
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TOWN OF LOS GATOS REDEVELOPMENT AGENCY
GOVERNMENTALFUNDS
BALANCESHEET
JUNE 30, 2010
DEBT
SERVICE
CAPITAL PROJECT FUNDS FUND
ASSETS.
Cash and investments available for operations
Restricted cash and investments
Accounts receivable
TOTAL ASSETS
LIABILITIES
Accounts payable
Advances from Town of Los Gatos General Fund
Passthrougb obligations
TOTAL LIABILITIES
FUND BALANCES
- Reserved for
Debt service
Redevelopment projects -
Low and moderate income housing
Unreserved, designated for:
Debt service
TOTAL FUND BALANCES
TOTAL LIABILITIES & FUND BALANCES
$ 1,427,538 $ 5,166,291 $ 12,987,147 $ 19,580,976
$ 18,527 $ 26,236 $- 75,186 $ 119,949
- 1,500,000 1,500,000
- 3,992,741 3,992,741
18,527 26,236 5,567,927 5,612,690
465,490 465,490
1,409,011 - - 1,409,011
- 5,140,055 5,140,055
6,953,730 6,953,730
1,409,011 5,140,055 7,419,220 13,968,286
$ 1,427,538 $ 5,166,291 $ 12,987,147 $ 19,580,976
See accompanying notes to financial statements
13
Total
Housing
Certificates of
Government
Redevelopment Set -Aside
Participation
Funds
$ 595,049 $ 5,164,285
$ 12,513,635
$ 18,272,969
832,489 -
465,490
1,297,979
- 2,006
8,022
10,028
$ 1,427,538 $ 5,166,291 $ 12,987,147 $ 19,580,976
$ 18,527 $ 26,236 $- 75,186 $ 119,949
- 1,500,000 1,500,000
- 3,992,741 3,992,741
18,527 26,236 5,567,927 5,612,690
465,490 465,490
1,409,011 - - 1,409,011
- 5,140,055 5,140,055
6,953,730 6,953,730
1,409,011 5,140,055 7,419,220 13,968,286
$ 1,427,538 $ 5,166,291 $ 12,987,147 $ 19,580,976
See accompanying notes to financial statements
13
TORN OF LOS GATOS REDEVELOPMENT AGENCY
RECONCILUTION OF THE BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
JUNE 30, 2010
Fund Balances - Governmental Funds
Amounts reported for governmental activities in the Statement of Net Assets are
different from those reported in the Governmental Funds because of the following:
Capital assets (net) used in governmental activities are not current assets or financial
resources and therefore, are not reported in the Governmental Funds Balance Sheet.
Capital assets
Accumulated depreciation
Long -term note receiables are not mature and receiveable in the current and,
therefore, are not reported in the Governament Funds Balance Sheet
Long term note receivables
$ 13,968,286
$ 8,737,479
(1,627,084) 7,110,395
Interest payable on long -term debt does not require the use of current financial
resources and, therefore, are not reported in the Governmental Funds Balance Sheet.
Long -term liabilities, including bonds payable, are not due and payable in the current
period and, therefore, are not reported in the Governmental Funds Balance Sheet
Certificates of participation
Net Assets of Governmental Activities
See accompanying notes to financial statements
565,114
(190,278)
(25,265,000)
$ (3.,811,483
14
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDS
FOR THE FISCAL YEAR ENDED JUNE 30, 2010
DEBT
SERVICE
CAPITAL PROJECT FUNDS FUND
Total
Housing Certificates of Government
Redevelopment Set -Aside Participation Funds
REVENUES
Tax allocation increment
Interest income
Rental income
Total Revenues
EXPENDITURES
Community development
Capital outlay
Passthrough payment
Debt service:
Principal payments
Interest and fiscal charges
Total Expenditures
$ - $ - $ 9,022,862 $ 9,022,862
5,952 50,647 163,530 220,129
16,044 931,371 947,415
5,952 66,691 10,117,763 10,190,406
642,930 827,564 1,011,634 2,482,128
594,635 4,534,771 - 5,129,406
- 6,214,077 6,214,077
465,000 465,000
616,371 616,371
1,237,565 5,362,335 8,307,082 14,906,982
Excess (Deficiency) of Revenues
over Expenditures
OTHER FINANCING SOURCES (USES)
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Change in Fund Balances
Beginning fund balances
Ending fund balances
(1,231,613) (5,295,644) 1,810,681 (4,716,576)
575,000 1,804,573 2,379,573
- (2,379,573) (2,379,573)
575,060 1,804,573 (2,379,573)
(656,613) (3,491,071) (568,892) (4,716,576)
2,065,624 8,631,126 - 7,988,112 18,684,862
$ 1,409,011 $ - 5,140,055 $ 7,419,220. $ .13,968,286
See accompanying notes to financial statements
15
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
RECONCILIATION OF THE STATEMENT OF REVENUE, EXPENDITURES
AND CHANGES IN FUND BALANCES
TO THE STATEMENT OF ACTIVITIES
FOR THE FISCAL YEAR ENDED JUNE 30, 2010
The schedule below reconciles the Net Changes in Fund Balances reported on the
Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund
Balances, which measures, only changes in current assets and current liabilities on
the modified accrual basis, with the Change in Net Assets of Governmental
Activities reported in the Statement of Activities, which is reported on the full
accrual basis.
Net Changes in Fund Balances - Total Governmental Funds
$ (4,716,576)
Amounts reported for governmental activities in the Statement of Activities are
different from those reported in the Statement of Revenues, Expenditures, and
Changes in Fund Balances because of the following:
Governmental funds report capital outlays as expenditures. However, in the
statement of activities the cost of those assets is capitalized and allocated over
their estimated useful lives and reported as depreciation expense. This is the
amount.by which capital outlays exceeded depreciation in the current period.
Depreciation expense is deducted from the fund balance
(101,693)
Capital assets to the Agency are reported in the Statement of Revenues,
Expenditures, and Changes in Fund Balances, however, they have no impact on
the Statement of Activities.
4,534,771
Long term note receivables and associated defer revenue to the Agency are
reported in the Statement of Revenues, Expenditures, and Changes in Fund
Balances, however, they have no impact on the Statement of Activities.
368,329
The issuance of long -term debt provides current financial resources to
governmental funds, while the repayment of the principal of long -term debt
consumes the current financial resources of governmental funds. This amount
is the net effect of these differences in the treatment of long -term debt.
Repayment of debt principle is added back to fund balance
465,000
The amounts below included in the Statement of Activities do not provide (or
require the use of) current financial resources and therefore are not reported as
revenue or expenditures in governmental funds (net change):
Interest payable
10,764
Government Wide Changes in Net Assets
$ 560
See accompanying notes to financial statements
16
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE AGENCY AND REDEVELOPMENT PROJECTS
The Town of Los Gatos Redevelopment Agency (the "Agency") is a public body
established and authorized to transact business under the provisions of the Community
Redevelopment Law of the State of California, including the power to issue bonds for any
of its corporate purposes. Its purposes are to stimulate and attract private investment and
eliminate physical, social, and/or economic blight.
The Redevelopment plan was established as a result of the Loma Prieta Earthquake in 1989
and the need to rebuild existing infrastructure. The Redevelopment Agency area
encompasses approximately 440 acres in and around Downtown Los Gatos, which includes
retail and residential areas, lodging, schools, and main traffic thoroughfares. Projects such
as street and utility reconstruction, parking, streetscape and civic improvements were called
out in the Plana
As part of the Redevelopment Plan, the Agency entered into agreements with various
taxing authorities, which required the Agency to pass through portions of incremental
property taxes to each taxing authorities. Expenditures for these pass - through agreements
amounted to $3,992,741 for the year ended June 30, 2010. The Agency also paid
$2,221,336 to "Supplemental" Educational Revenue Augmentation Funds ( SERAF) from
the Certificates of Participation Fund in fiscal year 2009 -2010. The SERAF would then be
paid to school districts and the county offices of education which have students residing in
redevelopment project areas, or residing irf affordable housing projects financially assisted
by a redevelopment agency,
As the Town of Los Gatos (the "Town ") is financially accountable for the Agency, the
Agency is considered a component unit of the Town. As such, the Agency is reported as
part of the Town in the basic financial statements of the Town.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Agency's Basic Component Unit Financial Statements are prepared in conformity with
accounting principles generally accepted in the United States of America. The Government
Accounting Standard Board (GASB) is the acknowledged standard setting body for
establishing accounting and financial reporting standards followed by governmental entities
in the U.S.A.
GASB requires that the financial statements described below be presented.
Government -wide Statements - The Statement of Net Assets and the Statement of Activities
include the financial activities of the overall Agency. Eliminations have been made to
minimize the effect of interfund of activities. Governmental activities are generally
financed through taxes, intergovernmental revenues, and other nonexchange transactions.
17
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
The Statement of Activities presents a comparison between direct expenses and program
revenues for each function of the Agency's activities. Direct expenses are those that are
specifically associated with a program or function and, therefore, are clearly identifiable to
a particular function. Program revenues include (a) charges paid by the recipients of goods
or services offered by the programs, (b) grants and .contributions that are restricted to
meeting the operational needs of a particular program and (c) fees, grants and contributions
that are restricted to financing the acquisition or construction of capital assets. Revenues
that are not classified as program revenues, including all taxes, are presented as general
revenues.
Fund Financial Statements - The fund financial statements provide information about the
Agency's funds. The emphasis of fund financial statements is on major individual
governmental funds, each of which is displayed in a separate column. All remaining
governmental funds are aggregated and reported as nonmajor funds.
Maior Funds
GASB Statement 34 defines major fiords and requires the Agency's major governmental
funds to be identified and presented separately in the fund financial statements. All other
funds, called nonmajor funds, are combined, and reported in a single column, regardless of
their fund -type:
Major. funds are defined as funds that have assets, liabilities, revenues or
expenditures /expenses equal to ten percent of their fund -type total and five percent of the
grand total. The General Fund is always a major fund. The Agency may also select other
funds it believes should be presented as major funds.
The Agency reported the following major governmental fends in the accompanying
financial statements:
Redevelopment Fund — This fund is used to account for financial resources used for the
acquisition or construction of major capital facilities.
Housing Set Aside Fund — This fund is used to account for twenty percent housing set aside
from the tax increment proceeds.
Certificates of Participation Fund — This fund is used to account for the accumulation of
financial resources and the payment of general long -term obligation principal, interest, and
related costs.
Basis of Accounting
The government -wide financial statements are reported using the economic resources
measurement focus and the full accrual basis of accounting. Revenues are recorded when
I
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
- NOTES TO FINANCIAL STATEMENTS
earned and expenses are recorded at the time liabilities are incurred, regardless of when the
related cash flows take place.
Governmental funds are reported using the current financial resources measurement focus
and the modified accrual basis of accounting. Under this method, revenues are recognized
when measurable and available. The Town considers property tax revenues reported in the
governmental funds to be available if the revenues are collected or are reasonably expected
to be collected within sixty days after year -end. For revenues other than property taxes, the
Town generally applies the sixty-day period rule but would make exceptions considering
the measurable and available criteria. Expenditures are recorded when the related fund
liability is incurred, except for principal and interest on general long -term debt, which is
recognized upon becoming due and payable; and except for claims, judgments and
compensated absences, which are recognized when estimable and probable. Governmental
capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of
governmental long -term debt and acquisitions under capital leases are reported as other
financing sources.
Non - exchange transactions, in which the Agency gives or receives value without directly,
receiving or giving equal value in exchange, include taxes, grants, entitlements, and
donations. On the accrual basis, revenue from taxes is recognized in the fiscal year for
which the taxes are levied or assessed. Revenue from grants, entitlements, and donations is
recognized in the fiscal year in which all eligibility requirements have been satisfied. Other
revenues susceptible to accrual include other taxes, intergovernmental revenue, interest,
and charges for services.
The Agency may fund programs with a combination of cost - reimbursement grants,
categorical block grants, and general revenues. Thus, both restricted and unrestricted net
assets may be available to finance program expenditures. The Agency's policy is to first
apply restricted grant resources to such programs followed by general revenues as
necessary.
Cash and Investments
The Agency's_ cash and cash equivalents are considered to be cash on hand, demand
deposits, and short-term investments if they are liquid.
The Town's investment policy and California Government Code permit investments in
obligations of U.S. Treasury and its agencies, commercial paper, banker's acceptances,
repurchase agreements, certificates of deposit, medium term notes, passbook savings
account demand deposits, mutual funds and the State of California Local Agency
Investment Fund.
Investments for the Agency are reported at fair value. The value is determined based upon
market closing prices.
19
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Interfund Receivables and Pavables
Balances representing lending/borrowing transactions between funds outstanding at the end
of the fiscal year are reported as either "due to /due from other funds" (amounts due within
one year), . "advances to /from other funds" (non - current portions of interfund
lending/borrowing transactions), or "loans to /from other funds" (long -term
lending/borrowing transactions as evidenced by loan agreements). Advances and loans to
other funds are offset by a fund balance reserve in applicable Governmental Funds to
indicate they are not available for appropriation, and are not expendable available financial
resources.
Capital Assets
Capital Assets are valued at historical cos t
cost is not available. Contributed capital
value on the date contributed. Capital as
or estimated historical cost if actual historical
assets are valued at their estimated fair market
sets are recorded if acquisition or constriction
costs exceed $10,000.
As required. by GASB Statement 34, the Agency depreciates capital assets with limited
useful lives over their estimated useful lives. The purpose of depreciation is to spread the
cost of capital assets equitably among all users over the life of these assets. The amount
charged to depreciation expense each year represents that year's pro rata share of the cost
of capital assets. The Agency depreciates using the straight line method which means the
cost of the asset is divided by its expected useful life in years and the result is charged to
expense each year until the asset is fully depreciated.
The Agency has assigned the useful lives listed below to capital assets:
Buildings 25 -40 years
Improvements 25 -40 years
Machinery and equipment 2 -20 years
Furniture and fixtures 5 -12 years
Major capital outlay for capital assets and improvements are capitalized as projects are
constructed.
Capital assets may be . acquired using federal and state grants, contributions from
developers, and contributions or grants from other governments. GASB 34 requires that
these contributed assets be accounted for as revenue at the time they are contributed.
Lone -Term Oblisations
In the . government -wide financial statements long -term debt and other long -term
obligations are reported as liabilities in the Statement of Net Assets.
20
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Tax Increment
The Agency has no direct taxing power and does not have the power to pledge the general .
credit or taxing power of the Town, the State of California or any political subdivision
thereof. However, California's Health and Safety Code allows redevelopment agencies
with appropriate approvals of the local legislative bodies to recover costs of financing
public improvements from increased tax, revenues (tax increment) associated with increased
property values of individual project areas. Property tax increment is recorded as revenue
when it becomes both measurable and available to finance expenditures.
Property Held for Resale
Property held for resale is acquired as part of the Agency's redevelopment program. All of
these properties are residential. Costs of developing and administering Agency projects are
charged to capital outlay expenditures as incurred.
The Agency does not maintain cost records by parcel,. as there is no relationship between
costs incurred and the final disposition value, which is significantly affected by various use
restrictions. For financial statement presentation, this property is stated at the lower of
estimated cost or net realizable value.
Use of Restricted[Unrestricted Net Assets
When an expense is incurred for purposes for which both . restricted and unrestricted net
assets are available, the Agency's policy is to apply restricted net assets first.
Budgets and Budsetary Accounting
Prior to June 1, the Town Manager submits to the Town Council a proposed operating
budget for the upcoming fiscal year. The proposed budget includes a summary of proposed
expenditures and forecasted revenues of the Agency's governmental funds.
The Town Council adopts the budget by June 30 through passage of an adopting ordinance.
All appropriated amounts, as originally adopted or as amended by the Town, lapse at year-
end or are subject to reappropriation in the following fiscal year. The budget is adopted on
a cash basis, which is not consistent with generally accepted accounting principles.
The actual results of operations are presented in the combined statement of revenues and
expenditures — budget and actual in accordance with the budget basis to provide a
meaningful comparison of actual results to the budget.
41
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
Expenditures over Appropriation
For the current fiscal year, actual expenditures exceeded budgeted amounts for are as
follows:
Fund
Expenditure Category
Excess
Expenditure
Explanation _
Housing Set - Aside
Community
$ 319,210
The additional
Fund
development
expenditures amount
had been recorded as
deferred revenue for
the project match notes
receivable that was not
ca tared in the budget.
Certificates of
Pass through
$ 2,581,381
The additional pass
Participation Fund
payment, and interest
through payments due
and fiscal charges
to increase in pass
through receipts and
payment to SERAF.
The additional interest,
payment due to interest
expenses being
budgeted on cash basis.
Use of Estimates
The Agency's management has made certain estimates and assumptions relating to the
reporting of assets and liabilities and the disclosure of contingent assets and liabilities to
prepare these financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
3. CASH AND INVESTMENTS
Cash and Investment
The Agency has pooled its cash investments with the Town in order to achieve a higher
return on investment. Certain restricted funds, which are held and invested by independent
outside custodians through contractual agreements, are not pooled. These restricted funds
include cash with fiscal agents.
22
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS -
The investments made by the Town are limited to those allowable under State statutes and
include the following types of investments:
• Bankers Acceptances
■ State of California Local Agency Investment Fund (LAIF)
• Certificate of Deposit
■ Commercial Paper
Government Agency Securities
■ Money Market Certificates
■ U.S. Treasury Obligations
■ Repurchase Agreements
■ Revise Repurchase Agreements
All cash and investment are stated at fair value: Pooled investment earnings are allocated
monthly based on the average cash and investment balances of the various funds and
related entities of the Town. Cash and investments available for operations amounted to
$18,272,969 as of June 30, 2010. Restricted cash and investments at June 30, 2010
amounted to- $1,297,981.
See The Town's Comprehensive Annual Financial Report for disclosures related to cash
and investments and the related custodial risk categorization.
4. LONG - TERM NOTES RECEIVABLE
The Agency had the following long -term notes receivable as of June 30, 2010:
Description Interest Rate Maturi Balance
Project Match Various Various $ 470,449
Dittos Lane Family Housing, L.P. 3% Various 94,665
Total Long -Term Notes Receivable $ 565
Project Match _= The Agency entered into a loan agreement with Project Match, a
nonprofit benefit corporation to acquire and rehabilitate four or five bedroom single family
homes. The property is to provide affordable housing rental to very low income senior
households. The loan receivable is evidenced by a promissory note and secured by a deed
of trust. Since inception of the loan till June 30, 2010, no interest or principal payment has
been made.
Dittos Predevelonment Loan — During the year ended June 30, 2010, the Town entered
into a loan agreement with Dittos Lane Family Housing, L.P., a California limited
partnership, in the principal amount of $94,665. The loan is used to redevelop the
.affordable housing rental property, a maximum of 32 townhouse style apartments, and
secured by the property. In addition, the loan repayments including principal, interest, late
22
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
TO FINANCIAL STATEMENTS
charges, prepayment fees, reasonable costs, and etc. are guaranteed by ROEM
Development Corporation, a company affiliated with the borrower.
CAPITAL ASSETS
The following is a summary of the Agency's capital assets:
Balance - Deletions / - Balance
Capital Assets June 30, 2009 Additions Adjustments June 30, 2010
Capital Assets not being depreciated:
Land
Capital Assets being depreciated:
Buildings
Total capital assets
Less accumulated depreciation:
Buildings
Total capital assets - net depreciation
$ 135,000 $ 4,534,771 $ - $ 4,669,771
4,067,708 - 4,067,708
4,202,708 4,534,771 - 8,737,479
1,525,391 101,693 - 1,627,084
$ 2,677,317 $ 4,433,078 $ $ 7,110,395
Depreciation expense was $101,693 for the fiscal year ended June 30, 2010.
6.
INTERFUND TRANSACTIONS
Advances from the Town - The Town advanced $1,500,000 to the Agency to partially fund
operations. The advance bears interest at 10% and is repayable on demand, provided that
sufficient tax increment funds are available. For the fiscal year ended June 30, 2010, the
Agency paid the Town $150,000 in interest on the advance.
7. TRANSFER TO TOWN
With Council approval, resources may be. transferred from one fund to another. Transfers
routinely reimburse funds that have made an expenditure on behalf of another fund.
Transfers may also be made to pay for capital projects or capital outlays, lease or debt
service payments, operating expenses and low and moderate - income housing projects.
23
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
8. LONG-TERM OBLIGATIONS
1992 Certificates of Participation (1992 CON
The Town issued 1992 COPS in the original principal amount of $2,960,000 dated August 1,
1992 to finance certain construction costs of the Town's Parking Lot 4 Project, which was
constructed on land located in the Los Gatos Central Redevelopment Project Area. The
COPS are similar to bond debt as they allow investors to participate in a share of guaranteed
payments. Because they are similar to debt, the present value of the total of the payments to
be made is recorded as long -term debt. Principal payments are due annually on August 1st,
which interest payments payable semi - annually on February 1st and August,lst. The Town
has pledged motor vehicle license fee revenues as collateral for the repayment of the
Certificates.
2002 Certificates of Participation (2002 COPs)
On July 18, 2002, the Town and the Los Gatos Redevelopment Agency issued $10,725,000
in 2002 COPs, Series A, to finance the acquisition, construction, rehabilitation, equipping
and improvement of several capital improvement projects. The Town has pledged lease
payments of real property and facilities comprised of the Parks and Public Works Service
Center and Baseball Field, as well as Parking Lot No. 1, 2, and 3, as collateral for the
repayment of the Certificates. Principal payments are due annually on August 1st, with
interest payments due semi - annually on February 1st and August 1st.
2010 Certificates of Participation (2010 COPS)
On June 1, 2010, The Town and the Town and the Los Gatos Redevelopment Agency
issued $15,675,000 in 2010 COPS, to finance the acquisition, construction, and
improvement of a library on the Town's Civic Center campus to be owned and operated by
the Town: Principal payments are due annually on August 1st, with interest payments due
semi - annually on February 1 st and August 1 st.
To assist the Town in paying the cost of acquisition and construction of various projects,
the Town and its Redevelopment Agency entered into three reimbursement agreements in
1992, 2002 and 2010. Under the agreements, the Agency will use available net tax
increment revenues resulting from the projects' effect on land values to repay the Town for
all lease payments made by the Town to the Agency under the lease agreements for the
projects. Net tax increment revenues are all taxes allocated to and paid into the
Redevelopment Agency Capital Projects Fund for the Project Area.
24
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
A summary of general long -term obligations account group transactions for the year ended
June 30, 2010 follows:
Original
Issue Balance Balance Current
Amount . June 30, 2009 Addifions Refiroments June 30, 2010 Portion
1992 COPS, 5 -9 %, due 811/2012 $ 2,960,000 $ 685,000 $ - $ 215,0 0.0 $ 470,000- $ 230,000
2002 COPS, 2.5 -5 %, due 8/112031 10,725,000 9,370,000 - 250,000 9,120,000 255,000
2010 COPS, 2,54.25 %, due 8/1/2028 15,675,000 15,675,000. - 15,675,000 -
Total Long -Term Debt - . $ . 29,360,000 $ 10,055;000 $15,675,000 $ 465,000 $ 25,265,00 $ 485,000
Interest expense was $467,204 for the fiscal year ended June 30, 2010.
Future debt service requirements for general long -term debt with stated maturities are as
follows at June 30, 2010:
For the Year
Governmental Activities
Ending June 30 2010
Principal
Interest
2011
485,000
864,486
2012
1,035,000
1,053,726
2013
925,000
1,017,971
2014
955,000
980,577
2015
990,000
938,055
2016 -2020
5,540,000
4,034,537
2021 -2025
6,805,000
2,693,908 -
2026 -2031
7,260,000
1,057,451
2031 -2032
1,270,000
64,250
Total
$ 25,265,000
$ 12,704,961
The, Agency must maintain required amount of cash and investments with the trustee under
the terms of the 1992 COPs and 2002 COPS issue (collectively, the "COPS "). These funds
are pledged as reserves to be used if the Town• fails to meet its obligations under the COPs
issue: These reserves totaled $940,387 at June 30, 2010.
The California Government Code requires these funds to be invested in accordance with
Town ordinance, bond indentures, or State statues, All these funds have been invested as
permitted under the Code.
9. NET ASSETS AND FUND BALANCES
Net. Assets are the excess of all the Agency's assets over all its liabilities, regardless of
fund. The Agency's liabilities exceeded its assets by $3,811,483 at June 30 2010 due to a
longterm liability established as part of a reimbursement agreement with the Town related
25
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
NOTES TO FINANCIAL STATEMENTS
to financing the new library project. The condition of net liabilities is not uncommon and is
expected for a. redevelopment agency. The Agency is established to borrow and expend
funds for the purpose of economic development. The borrowed funds are to be repaid with
future. .
Net Assets are divided into three captions under GASB Statement 34. These captions
apply only. to Net Assets, which is determined at the Government -wide level, and are
described below:
Invested in Capital Assets, net of related debt describes the portion of Net Assets which is
represented by the current net book value of the Agency's capital assets, less the
outstanding balance of any debt issued to finance these assets.
Restricted describes the portion of Net Assets which are restricted as to use by the terms
and conditions of agreements with outside parties, governmental regulations, laws, or other
restrictions which the Agency cannot unilaterally alter. These principally include debt
service requirements, and redevelopment funds restricted to low and moderate income
purposes.
Unrestricted describes the portion of Net Assets which is not restricted to use
Reservations of Fund Balances - Fund balance consists of reserved and unreserved
amounts. Reserved fund balance represents that portion of fund balance that has been
appropriated for expenditure or is legally segregated for a specific future use. As of June
30, 2010, portions of fund balance had been reserved because of the following:
Capital Outlay and Redevelopment Projects reserves are funded from storm drain fees,
construction taxes and debt proceeds that are legally restricted for major capital projects.
Debt Service reserves reflect the cash balances in the debt service funds that are restricted
for debt service payments.
Low and Moderate Income Housing reserves reflect the cash balances restricted for low
and moderate housing activities.
10. PRIOR PERIOD ADJUSTMENT
During the current year, it was determined that prior year long term receivables totaling
$196,785 were incorrectly recorded in the Statement of Net Assets. To correct this error,
the beginning net assets for governmental activities of $11,106,137, as originally reported,
has been increased to $11,302,922.
W
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL (GAAP)
REDEVELOPMENT FUND CAPrrAL PROJECTS FUND
FOR THE FISCAL YEARENDED JU 30, 2010
REVENUES
Interests
Total Revenues
EXPENDITURES
Current:
Community development
Capital outlay
Total Expenditures
Variance
Budgeted Amounts Favorable
Original Final Actual (Unfavorable)
$ 60,000 $ 60,000 $ 5,952 $ (54,048)
60,000 .60,000 5,952 (54,048)
696,519
696,519
642,930
53,589
728,205
594,088_
594,635
(547)
1,424,724
1,290,607
1,237,565
53,042
Excess (Deficiency) of Revenues Over Expenditures (1,364,724) (1,230,607) (1,231,613) (1,006)
OTHER FINANCING SOURCES (USES)
575,000 575,000
Transfers in
Total Other Financing Sources (Uses)
Net Change in Fund Balance
Fund Balance - Beginning
Fund Balance - Ending
575,000 575,000
$ (1,364,724) $ (1,230,607)
(656,613) $ 573,994
2,065,624
$ 1,409,011
27
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL (GAAP)
HOUSING SET -ASIDE FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2010
REVENUES
Interest
Rental Income
Total Revenues
EXPENDITURES
Current:
Community development
Capital outlay
Total Expenditures
Budgeted Amounts -
Original Final
Variance
Favorable
Actual (Unfavorable)
$ 200,000 $ 200,000 $ 50,647 $ (149,353)
16,044 16,044
200,000 200,000 66,691 (133,309)
383,354 508,354 827,564 (319,210)
- 4,621,874 4,534,771 87,103
383,354 5,130,228 5,362,335 (232,107)
Excess (Deficiency) of Revenues Over Expenditures (183,354) (4 (5,295,644) (365,416)
OTHER FINANCING SOURCES (USES)
Transfers in 1,571,430 1,571,430 1,804,573 233,143
Total Other Financing Sources (Uses) 1,571,430 1,571,430 1,804,573 233,143
Net Change in Fund Balance $ 1,388,076 $ (3,358,798). (3,491,071) $ (132,273)
Fund Balance -. Beginning
Fund Balance - Ending
8,631,126
$ 5,140,055
RE
TOWN OF LOS GATOS REDEVELOPMENT AGENCY
SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCE - BUDGET AND ACTUAL (GAAP)
CERTIFICATES OF PARTICIPATION FUND
FOR THE FISCAL YEAR ENDED JUNE 30, 2010
EXPENDITURES
Community development
Pass through payment
Debt service:
Principal
Interest and fiscal charges
1,024,250 1,024,250 1,011,634 12,616
3,620,080 3,620,080 6,214,077 (2,593;997) .
465,000 465,000 465,000
610,970 610,970 616,371 _ (5,401)
Total Expenditures
5,720,300
5,720,300
Variance
(2,586,782)
Budgeted Amounts
1,024,190
Favorable
1,810,681
Original Final
Actual
(Unfavorable)
REVENUES
Transfers out
Property tax
$ 5,815,120 $ 6,000,120
$ 9,022,862
$ 3,022,742
Interest
3,400 3,400
163,530
160,130
Rental Income
925,970 925,970
931,371
5,401
Total Revenues
6,744;490 6,929,490
10,117,763
3,188,273
EXPENDITURES
Community development
Pass through payment
Debt service:
Principal
Interest and fiscal charges
1,024,250 1,024,250 1,011,634 12,616
3,620,080 3,620,080 6,214,077 (2,593;997) .
465,000 465,000 465,000
610,970 610,970 616,371 _ (5,401)
Total Expenditures
5,720,300
5,720,300
8,307,082
(2,586,782)
Excess (Deficiency) of Revenues Over Expenditures
1,024,190
1,209,190
1,810,681
601,491
OTHER FINANCING SOURCES (USES)
Transfers out
(575,000)
(575,000)
(2,379,573)
(1,804;573)
Total Other Financing Sources (Uses)
(575,000)
(575,000)
(2,379,573)
(1,804,573)
Net Change in Fund Balance
$ 449,190
$ 634,190
(568,892)
Fund Balance - Beginning .
7,988,112
Fund Balance - Ending
$ 7,419,220
29
Other Independent Auditor's Reports
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INTENTIONALLY
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H im
C. G. UHLENBERG LLP
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON
COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL
STATEMENTS PERFORMED IN ACCORDANCE WITH
. GOVERNMENTA UDITING STANDARDS
Members of the Board of the
Town of Los Gatos Redevelopment Agency
Los Gatos, California
We have audited the "basic financial statements of the Town of Los Gatos Redevelopment
Agency (the "Agency ") as of and for the year ended June 30, 2010, and have issued our report
thereon dated December 17, 2010. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General
of the United States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the Agency's internal control over financial
reporting as a basis for designing out auditing procedures for the purpose of expressing our
opinion on the basic financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the Agency's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the Agency's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course. of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be prevented,
or detected and corrected on a timely basis.
Our consideration of internal control over financial reporting was for the limited purpose
described in the first paragraph of this section and was not designed to identify all deficiencies in
internal control over financial reporting that might be deficiencies, significant deficiencies, or
material weaknesses. We did not identify any deficiencies in internal control over financial
reporting that we consider to be material weaknesses, as defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Agency's financial statements are
free of material misstatement, we performed tests of its compliance with certain provisions of
laws, regulations, contracts, and grant agreements, noncompliance with which could have a
333 Twin Dolphin Drive, Suite 230 9 Redwood City, CA 94065 . phone (650) 802 -8668 -. Fax (650) 802 -0866
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direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit and,
accordingly, we do not express such an opinion The results of our tests disclosed no instances of
noncompliance or other, matters that are required to be reported under Government Auditing
Standards.
This report is intended solely for the information and use of the Mayor, members of the Agency
board members, and the State Controller's office, is not intended to be, and should not be used
by anyone other than these specified parties.
December 17, 2010 .
Redwood City, California
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FINDINGS AND RECOMMENDATIONS
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TOWN OF LOS GATOS REDEVELOPMENT AGENCY
SUMMARY OF COMPLIANCE FINDINGS
YEAR ENDED JUNE 30, 2010
No current year finding.
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TOWN OF LOS GATOS REDEVELOPMENT AGENCY
SUMMARY OF PRIOR YEAR COMPLIANCE FINDINGS
YEAR ENDED JUNE 30, 2010
09 -1
Pursuant to Health and Safety Code Section 33334.12(g), "excess surplus" means any
unexpended and unencumbered amount in an agency's Low and Moderate Income
Housing Fund that exceeds the greater of: one million dollars ($1,000,000), or the
aggregate amount of tax increment deposited into the Low and Moderate Income
Housing Fund. during the agency's preceding four fiscal years (pursuant to Sections
33334.2 and 33334.6).. It was determined that the Los Gatos Redevelopment Agency
retained an excess surplus of approximately $1,830,971 for the fiscal year ended June 30,
2009, based on the aggregate amount of tax increment deposited in the Low and
Moderate Income Housing Fund.
Recommendation: Pursuant to Health and Safety Code Section 33334.12(a) (1) (E), we
recommend that the Los Gatos Redevelopment Agency encumbers or expends the excess
surplus. The funds should be encumbered to carry out activities consistent with a
redevelopment agency as defined in Health and Safety Code Sections 33334.2 and
33334.3.
Status: The Agency is in compliance this year.
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