1998-205 - Approve the 1997-98 Annual Report for the LG Redevelopment AgencyRESOLUTION 1998 - 205
RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS
APPROVING THE 1997 -98 ANNUAL REPORT FOR
THE LOS GATOS REDEVELOPMENT AGENCY
WHEREAS:
1. The California Community Redevelopment Law ( §33080.1) requires every
redevelopment agency to present a report on financial and housing activity to its legislative body
within six months of the end of the agency's fiscal year.
2. The Annual Report for the Redevelopment Agency consists of an independent
financial audit report for the previous fiscal year, a fiscal statement for the previous fiscal year,
and a report describing the agency's activities affecting housing and displacement.
The audit issued by Maze and Associates, attached hereto as Exhibit A, gives an
unqualified opinion of the Redevelopment Agency's financial activities includes the auditor's
opinion of the agency's operations and financial position, and the agency's compliance with laws,
regulations and administrative requirements governing activities of the agency, including all
financial activities involving low- and moderate- income housing funds.
4. The Annual Report of Financial Transactions of Community Redevelopment Agencies,
attached hereto as Exhibit B, consists of forms provided by the State Department of Housing and
Community Development and the completed forms describe the Agency's activities affecting
housing and displacement.
5. Approval of the 1997 -98 Annual Report for the Los Gatos Redevelopment Agency
does not constitute a project for purposes of the California Environmental Quality Act ( "CEQA ").
RESOLVED, that the Town Council hereby approves and adopts the 1997 -98 Annual
Report for the Los Gatos Redevelopment Agency, attached hereto as Exhibits A and B.
FURTHER RESOLVED, that the Town Council determines the planning and
administrative expenses from the Low and Moderate Income Housing Fund are necessary for the
production, improvement, or preservation of low- and moderate- income housing.
PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of
Los Gatos, California, held on the 21 stday of December, 1998 by the following vote:
COUNCIL MEMBERS:
AYES: Randy Reedy, Steven Blanton, Linda Lubeck, Joe Pirzynski,
Mayor Jan Hutchins
NAYS: None
ABSENT: None
ABSTAIN: None
SIGP
MAI
LOS
ATTEST:
'�� & vrk�
CLERK OF THE TOWN OF LO -OATOS
LOS GATOS, CALIFORNIA
REDEVELOPMENT AGENCY OF THE
TOWN OF LOS GATOS
COMPONENT UNIT FINANCIAL STATEMENTS
I FOR THE YEARS ENDED
JUNE 30,1998 AND 1997
EXHIBIT A
I
1
1
REDEVELOPMENT AGENCY OF THE
TOWN OF LOS GATOS
Component Unit Financial Statements
For The Years Ended
June 30, 1998 and 1997
TABLE OF CONTENTS
n Independent Auditor's Report ...............
J� Component Unit Financial Statements:
I
.I
Combining Balance Sheet - All Fund Types
and Account Groups .. ...............................
Page
................. I
2
Combining Statements of Revenues, Expenditures and
Changes in Fund Balances - All Governmental Fund Types .............. ............................... 3
Combining Statement of Revenues, Expenditures and Changes
in Fund Balance - Budget and Actual ................................................. ............................... 4
Notes to Component Unit Financial Statements ...................................... ............................... 6
Compliance Report of Certified Public Accountants on Management's Assertions ............... 9
Compliance Report of Certified Public Accountants ...................
11
11A ZE &
ASSOC/A TES
ACCOUNTANCY CORPORATION
1670 Riviera Avenue - Suite 100
Walnut Creek, California 94596
(925) 930 -0902 • FAX 930 -0135
INDEPENDENT AUDITOR'S REPORT
To the Governing Board of the Redevelopment Agency
of the Town of Los Gatos
We have audited the accompanying financial statements of the Redevelopment Agency of the Town of Los
Gatos, a component unit of the Town of Los Gatos, as of and for the years ended June 30, 1998 and 1997 as
listed in the table of contents. These component unit 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 generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance as to 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.
As discussed in Note 1, the component unit financial statements present only the Agency and are not
intended to present fairly the financial position and results of operations of the Town of Los Gatos in
conformity with generally accepted accounting principles.
In our opinion, the component unit financial statements referred to above present fairly in all material
respects the financial position of the Redevelopment Agency of the Town of Los Gatos as of June 30, 1998
and 1997 and the results of operations for the years then ended, in conformity with generally accepted
accounting principles.
October 8, 1998
A Professional Corporation
REDEVELOPMENT AGENCY OF THE TOWN OF LOS GATOS
COMBINING BALANCE SHEETS
AIL FUND TYPES AND ACCOUNT GROUPS
NNE 30, 1998
WITH COMPARATWE AMOUNTS FOR NNE 30, 1997
2
TOTALS
_(Memorandum Only)
Housing
Redevlon` Set Aside
1998
1
ASSETS
Cash and investments (Note 2)
Intergovernmental receivable
$1,161,153 $585,761
$1,746,914 $981,868
Total Assets
1,577 394
1,971 _ 91,229
$11 30
-- $586.155
- -�
$1748885 $1 O�97
LLABH.ITIES
Accounts payable
Accrued payroll
$24,531 $7,721
$32,252 $4,906
Due to other funds
200 140
340 7,070
Due to other governments
13,014
Pass through obligations
384,159
384,159 263,879
Advance from Town Los
531,379
531,379 356,344
of Gatos (Note 3)
Total Liabilities
_200,000
200,000 200,00o
_1,140,269 _ 7 g61
-
1,148,130 845,213
FUND EQUITY
Fund balances:
Reserved for:
Low income housing
.
Encumbrances
578,294
578,294 353,619
Unreserved, undesignated (deficit)
17,067
17,067 13,191
Total Fund Equity
- 5,394
5,394 138,926
22,461 _578,294 _600,755
227 884
Total Liabilities and Fund Equity
$1_ I_ 62,730 $586,155 1 748,885 $1 073 097
See accompanying notes
to component unit financial statements
2
I
I
I
I
I
_'1
I
I
'I
REDEVELOPMENT AGENCY OF THE TOWN OF LOS
COMBINING STATEMENTS OF REVENUES, EXPENDITURES
GATOS
AND CHANGES IN FUND BALANCES
ALL GOVERNMENTAL FUND TYPES
FOR THE FISCAL YEAR ENDED JUNE 30, 1998
WITH COMPARATIVE AMOUNTS FOR THE FISCAL YEAR ENDED
JUNE 30, 1997
TOTALS
(Memorandum Only)
Housing
Redevelopment Set Aside
1998
1997
REVENUES
Incremental property taxes
SI,132,807 5226,561
$1,359,368
$948,014
Interest
48.800 26,930
75,730
40,517
Total Revenues
1,181,607 253,491
1,435,098
988,531
EXPENDITURES
Capital outlay
Project costs
513,214 28,816
542,030
462,184
Pass through payments
248,201
248,201
176,570
Principal - Debt service (Note 4)
103,275
103,275
90,000
Interest (Notes 3 and 4)
168,719
168,719
181,303
Total Expenditures
1,033,409 28,816
1,062,225
910,057
EXCESS OF REVENUES
OVER EXPENDITURES
148,198 224,675
372,873
78,474
OTHER FINANCING (USES)
Operating transfers (out)
634)
EXCESS OF REVENUES OVER
EXPENDITURES AND OTHER
FINANCING USES
148,198 224,675
372,873
77,840
Fund balances (deficit) at beginning of
year _ (125,737) 353,619
227,882
150,042
Fund balance at end of yew
822 461 5578 294 _$600.755
$227.882
See accompanying notes to financial statements
3
REDEVELOPMENT AGENCY OF THE TOWN OF LOS GATOS
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
CAPITAL PROJECTS FUNDS
BUDGET AND ACTUAL
FOR THE YEAR ENDED JUNE 30, 1998
4
REDEVELOPMENT
HOUSING SET ASIDE
Variance
Favorable
Variance
Budget
Actual
Nnfavorable)
Bud et
g
Actual
Favorable
(Unfavorable)
REVENUES
Incremental property taxes
$825,590
$1,132,807
$307,217
$165,120
$226,561
561,441
Interest
51000
48,800
43,800
10,000
26,930
16,930
Total Revenues
830,590
1,181,607
351,017
175,120
253,491
78,771
EXPENDITURES
Capital outlay:
Project costs
584,781
513,214
71,567
57,520
28,816
28,704
Pass through payments
204,099
248,201
(44,102)
Debt service - principal
100,000
103,275
(3,275)
Debt service - interest
196,030
168,719
27,311
Total Expenditures
1,084,910
1,033,409
51,501
57,520
28,816
28,704
EXCESS (DEFICIENCY) OF REVENUES
OVER EXPENDITURES
($254,320)
148,198
$402,518
$117,600
224,675
$107,075
Fund balances (deficit) at beginning of
year
(125,737)
353,619
Fund balances at end of year
$22 461
$578,294
See accompanying notes to component
unit financial statements
4
i
i
5
TOTALS
vatiance
J
Favorable
Budget
Actual
(Unfavorable)
$990,710
51,359,368
$368,658
15,000
75,730
60,730
1,005,710
1,435,098
429,388
642,301
542,030
100,271
204,099
248,201
(44,102)
100,000
103,275
(3,275)
196,030
168.719
27,311
1,142,430
1,062,225
80,205
($136,720)
372,873
S509,593_
`
227,882
J5600.755
5
REDEVELOPMENT AGENCY OF THE
. TOWN OF LOS GATOS
Notes To Component Unit Financial Statements
NOTE I - SIGNIFICANT ACCOUNTING POLIC'fFc
A. Description of the Redevelopment Agency and Redevelopment Plan - The Redevelopment Agency
of the Town of Los Gatos (the Agency) was created on December 4, 1989 under the provisions of the
Redevelopment Law (California Health and Safety Code), for clearance and rehabilitation of areas
determined to be in a declining condition in the Project Area. A Redevelopment Plan was adopted on
November 25, 1991 to provide an improved physical, social and economic environm ent in the
Central Los Gatos Redevelopment Project Area.
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 authority. Expenditures for these pass - through agreements amounted to $248,201 for the year
ended June 30, 1998.
The Agency is authorized to finance the Plan from various sources, including assistance from the
Town, the state and federal governments, property tax increments interest income and the issuance
of Agency debt.
The Agency is an integral part of the Town of Los Gatos and, accordingly, the accompanying
financial statements are included as a component of the general purpose financial statements
Prepared by the Town. A component unit is a separate governmental unit agency or nonprofit
corporation which, when combined with all other component units, constitutes the reporting entity as
defined in the Town's general purpose financial statements.
B. Description of Funds - The accounts of the Agency are organized on the basis of funds, each of
which is considered a separate accounting entity. The operations of each fund are accounted for with
a separate set of self - balancing accounts which comprise its assets, liabilities, fund equity, revenues
and expenditures. The Agency uses a capital projects fund, which is used to account for all resources
used in the acquisition and construction of capital facilities and other fixed assets under the
Redevelopment Plan.
C. Basis of Accounting - refers to when revenues and expenditures are recognized in the accounts and
reported in the component unit financial statements. Basis of accounting relates to the tinting of the
measurements made, regardless of the measurement focus applied.
Governmental fund types are accounted for using the modified accrual basis of accounting, under
which revenues are recognized when received, or accrued when they become available and
measurable as net current assets. Expenditures are recognized when the related fund liability is
incurred. Revenues susceptible to accrual consist principally of intergovernmental revenues.
D. Budgets and Budgetary Accounting - The Agency adopts a budget effective July I for the capital
projects fund. During the year ended June 30, 1998 the Agency incurred encumbrances which are
reported as budgetary expenditures. However, since encumbrances represent commitments on open
purchase orders, they are not included as expenditures reported in conformity with generally accepted
accounting principles.
0
REDEVELOPMENT AGENCY OF THE
TOWN OF LOS GATOS
Notes To Component Unit Financial Statements
NOTE 2 - CASH AND INVESTMENTS
Agency cash is included in a Town -wide cash and investment pool. Details of the Town's cash and
investment pool are presented in the Town's general purpose financial statements.
The Town's investment policy and the California Government Code permit investments in
obligations of the U.S. Treasury and its agencies, commercial paper, banker's acceptances, repurchase
agreements, certificates of deposit, medium term notes, passbook savings account deman
mutual funds and the State of California Local Agency Investment Fund. d deposits,
Marking Investments to Fair Market Value (GASB 31)
In fiscal 1998 the Agency adopted Government Accounting Standards Board Statement 31, which
requires that the Agency's investments be carried at fair market value instead of cost. Under GASB
31, the Agency must adjust the carrying value of its investments to reflect their fair market value at
each fiscal year end, and it must include the effects of these adjustments in income for that fiscal year.
GASB 31 applies to all the Agency's investments, even if they are held to maturity and redeemed at
full face value. Since the Agency's policy is to hold all investments to maturity, the fair market value
adjustments required by GASB 31 result in accounting gains or losses (called "recognized" gains or
` losses) which do not reflect actual sales of the investments (called "realized" gains or losses). Thus,
Jc� recognized gains or losses on an investment purchased at par will now reflect changes in its market
value at each succeeding fiscal year end, but these recognized gains or losses will net to zero if the
investment is held to maturity. By following the requirements of GASB 31, the Agency
the amount of resources which would actually have been available if it had been required to liquidate
all its investments at any fiscal year end.
GASB 31 requires the Agency to restate June 30, 1997 fund balances for fair market adjustments, if
material. The Agency has determined that the amounts of any such adjustments would not be
material.
5 At June 30, 1998 the fair market value of the Agency's investments was $8,117 higher than the
carrying value, resulting in a recognized gain for accounting purposes which was not realized in cash.
The Agency's portion of this gain has been included in fiscal 1998 income.
NOTE 3 - ADVANCE FROM'Iq� TOWN
Agency operations have been partially funded by advances from the Town, which bear interest at
10% and are repayable on demand, provided that sufficient tax increment revenue funds are available.
These advances are not expected to be repaid in the current fiscal year. For fiscal year ended June 30,
i 1998 the Agency paid interest in the amount of $20,000.
REDEVELOPMENT AGENCY OF THE
TOWN OF LOS GATOS
Notes To Component Unit Financial Statements
NOTE 4 - REIlI�URSEMENT AGREEMENT
The Town issued Certificates of Participation (COPS) in the original principal amount of
$2,960,000 dated August 1, 1992 to finance certain construction costs of the Town's Parldng Lot 4
Project, which was constructed on land within the Central Los Gatos Project Area. The COPS are
similar to debt; they allow investors to participate in a share of guaranteed payments which are made
by the Town. Because they are similar to debt, the present value of the total of the payments to be
made by the Town is recorded as long -term debt. Principal payments are due annually on August 1,
with interest payments payable semi - annually on February 1 and August 1. The Town has pledged
motor vehicle license fee revenues as collateral for the repayment of the Certificates.
Is
1A ZE &
ASSOC /AYES
ACCOUNTANCY CORPORATION
1670 Riviera Avenue - Suite 100
Walnut Creek, California 94596
(925) 930 -0902 • FAX (925) 930 -0135
COMPLIANCE REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
ON MANAGEMENT'S ASSERTIONS
To the Governing Board of the
Redevelopment Agency of the Town of Los Gatos
We have examined the Redevelopment Agency of the Town Los Gatos management's assertion, included in
its representation letter dated October 8, 1998 that the Agency complied with laws, regulations and
administrative requirements of the State of California, based on the criteria set forth in Guidelines For
Compliance Audits of California Redevelopment Agencies issued by the State Controller's Office, Division
of Local Government Fiscal Affairs, during the fiscal year ended June 30, 1998. As discussed in the
representation letter, Agency management is responsible for the Agency's compliance with those
requirements. Our responsibility is to express an opinion on the Agency's management's assertion as to the
Agency's compliance based on our examination.
Our examination was made in accordance with standards established by the American Institute of Certified
Public Accountants and included examining on a test basis evidence as to the Agency's compliance with the
State's requirements and perforating such other procedures as we considered necessary in the
circumstances. We believe that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination of the Agency's compliance with specific requirements.
In our opinion, the assertion of Agency management that the Agency has complied with laws, regulations
and administrative requirements of Section 33080.1 of the Health and Safety Code of the State of California
during the fiscal year ended June 30, 1998 is correct in all material respects, based on the criteria set forth in
the Q
Luidelines for Compliance Audits of California Redevelopment Agencies issued by the State
Controllers Office, Division of Local Government Fiscal Affairs.
f
October 8, 1998
9
A Profession / Corporation
l .
AfAZE &
ASSOCIATES
ACCOUNTANCY CORPORATION
1670 Riviera Avenue - Suite 100
Walnut Creek, California 94596
(925) 930 -0902 • FAX (925) 930 -0135
r� COMPLIANCE REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
To the Governing Board of the
Redevelopment Agency of the Town of Los Gatos
r� Los Gatos, California
We have audited the financial statements of the Redevelopment Agency of the Town of Los Gatos as of and
for the year ended June 30, 1998, and have issued our opinion thereon dated October 8, 1998. We
conducted our audit in accordance with generally accepted auditing stan
we plan and perform the audit to obtain reasonable dards. Those standards require that
assurance as to whether the financial statements are free
of material misstatements.
Compliance with laws and regulations applicable to the Agency is the responsibility of management. As
part of obtaining reasonable assurance as to whether the financial statements are free of material
misstatement, we performed tests of the Agency's compliance with provisions of laws and regulations
contained in the Guidelines For Com Hance Audits of California Redevelo meet A encies issued by the
State Controller's Office, Division of Local Government Fiscal Affairs.
The results of our tests indicated that with respect to the items tested the Agency complied in all material
respects with the provisions referred to on the preceding paragraph. With respect to items not tested,
nothing came to our attention that caused us to believe that the Agency had not complied in all material
respects with those provisions.
October 8, 1998
A Professio a %Corporation
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