Loading...
Attachment 1MPROPOSED F - 1 Successor Agency to the Town of Los Gatos Redevelopment Agency FUND 942 AGENCY OVERVIEW The Los Gatos Town Council established the Los Gatos Redevelopment Agency on January 22, 1990, pursuant to the provisions of the California Community Redevelopment Law (Health and Safety Code, Section 33000 et seq.) and declared itself to constitute the Agency by Ordinance No. 1806 adopted on December 4, 1989. The Redevelopment Plan was pursued as a result of the Loma Prieta Earthquake in 1989 and the need to rebuild existing infrastructure. The Redevelopment Agency area encompassed approximately 440 acres in and around downtown Los Gatos, which included retail and residential areas, lodging, schools, and transportation thoroughfares. Projects completed in the Plan area, including street and utility reconstruction, parking, streetscape, and civic improvements, were funded through property “tax increment” revenue collected by the Redevelopment Agency. When the Redevelopment Agency was initially formed, the tax base for all properties within the redevelopment area was “frozen” to form a “base year.” When properties were reassessed, the tax base grew and the Agency received the majority of the difference in property taxes paid between the base year and the new level (known as “tax increment” revenue). BUDGET OVERVIEW On June 15, 2011, the California State Legislature adopted two budget “trailer” bills concerning redevelopment, ABx1 26 and ABx1 27 (hereafter AB 26 and AB 27). AB 26 (the “Dissolution Act”) eliminated redevelopment agencies as of October 1, 2011, and essentially restricted redevelopment agencies from entering into agreements, borrowing or lending funds, or acquiring or disposing of real property prior to dissolution. Whereas, AB 27 (the “Voluntary Program Act”) allowed redevelopment agencies to remain in existence and be exempt from AB 26 if certain “voluntary” payments were made to the State in FY 2012 and in each fiscal year thereafter. These bills were signed into law by the governor on July 28, 2011. The League of California Cities and the California Redevelopment Association (CRA) filed a petition with the California Supreme Court, challenging the constitutionality of AB 26 and AB 27. The California Supreme Court, in its decision in California Redevelopment Association v. Matosantos issued December 29, 2011 (the “Supreme Court Decision”), declared the Dissolution Act alone to be constitutional. Under PROPOSED F - 2  SUCCESSOR AGENCY TO THE LOS GATOS REDEVELOPMENT AGENCY  the Dissolution Act, all California redevelopment agencies were dissolved effective February 1, 2012. Following the provisions of the Dissolution Act, the Town Council of the Town of Los Gatos (the “Town Council”) adopted a resolution accepting for the Town the role of Successor Agency (the “Successor Agency”) to the Redevelopment Agency of the Town of Los Gatos (the “Redevelopment Agency”). An oversight board (the “Oversight Board”), consisting of members representing Santa Clara County, the Town, and various education and special districts was formed to approve and direct certain actions of the Town as Successor Agency. Prior to the dissolution of redevelopment agencies, redevelopment law required that 20 percent of tax increment revenue received by an agency must be set aside for affordable housing activities. Under the Dissolution Act, tax increment revenue received by the Successor Agency did not include funding for affordable housing. However, tax-sharing agreements negotiated with affected public educational entities, the Mid-Peninsula Open Space District, and Santa Clara County continue to be recognized. Nearly half of all Redevelopment Agency tax increment had been passed through to these taxing entities. Successor Agencies may also receive tax increment revenue to pay for enforceable obligations that were incurred prior to the passage of the Dissolution Act. Under the Dissolution Act, Successor Agencies must approve and submit a Recognized Obligation Payment Schedule (ROPS) that reflects enforceable obligations over a six month period. Prior to the payment of any enforceable obligation, the ROPS must be certified by the County and subsequently approved by the Oversight Board. Successor Agencies must also approve and submit an administrative budget for operational expenses to the Oversight Board for approval. Successor Agencies may receive a minimum of up to $250,000 or up to 3 percent of tax increment revenues received by the Successor Agency per fiscal year for administrative expenses, which is significantly lower than the Successor Agency’s current administrative expenses. The Town has several existing enforceable obligations that must be paid over the remaining life of the debt service, or until the Successor Agency reaches the tax increment cap, which is the gross tax increment collected over the life of the Agency. The Town’s tax increment cap, which is anticipated to be reached by FY 2027/28, is approximately $250 million. The Successor Agency currently pays debt service on two Certificates of Participation (COPs): • 2002 COPs Payments for Redevelopment Agency Capital Projects: In 2002, the Town issued debt for approximately $10.8 million to fund RDA infrastructure projects in the project area. Annual debt service payments of approximately $680,000 will continue through FY 2031/32. • 2010 COPs Payments for Town Library: In 2010, the Town issued debt for approximately $15.7 million to fund the construction of the new library building. Annual debt service payments of approximately $1.2 million will continue through FY 2027/28. • Agency Administration: This pays for the day-to-day operations of the Successor Agency, including staff salary and benefits, supplies and materials, and consultant assistance. Annual budgeted expenditures are estimated to be approximately $22,000. The Town submitted the Last & Final ROPS to the State and it was approved by the State on April 6, 2016. The Town no longer needs to submit ROPS every six months and has scheduled the ROPS budget through FY 2031/32. At the end of FY 2031/32, the Town and the County will resolve any remaining balances. PROPOSED F - 3  SUCCESSOR AGENCY TO THE LOS GATOS REDEVELOPMENT AGENCY  2012/13 2013/14 2014/15 2015/16 2015/16 2016/17 Actuals Actuals Actuals Adopted Estimated Proposed SOURCES OF FUNDS Beginning Fund Balance Designated -$ -$ 2,260,068$ 2,001,533$ 2,001,533$ 1,963,327$ Undesignated 3,397,555 3,852,329 1,355,427 1,612,193 1,612,193 1,609,641 Total Beginning Fund Balance 3,397,555 3,852,329 3,615,495 3,613,726 3,613,726 3,572,968 Revenues Property Tax - - - - - - Other Taxes - - - - - - Lease Income - COP's 1,963,971 1,935,578 1,928,056 1,922,398 1,922,398 1,923,303 County RPTTF Reimbursement 2,207,878 2,067,063 2,067,483 2,025,918 2,013,716 1,947,986 Interest 1,083 224 3,544 - 1,660 1,650 Other Revenues - - - - - - Total Revenues 4,172,932 4,002,865 3,999,083 3,948,316 3,937,774 3,872,939 Transfers In Transfer from SA Administration - Transfer from RDA Debt Service - Transfer from SA Housing - Transfer from General Fund 1,277,063 21,687 - 41,163 - - Transfer from CIP - - - - - Total Transfers In 1,277,063 21,687 - 41,163 - - Total Revenues and Transfer Ins 5,449,995$ 4,024,552$ 3,999,083$ 3,989,479$ 3,937,774$ 3,872,939$ TOTAL SOURCE OF FUNDS 8,847,550$ 7,876,881$ 7,614,578$ 7,603,205$ 7,551,500$ 7,445,907$ USES OF FUNDS Expenditures Salaries and Benefits 24,105 12,032 13,455 14,122 14,125 1,435 Operating Expenditures 607,457 264,648 5,565 30,020 5,357 15,458 Grants - - - - - - Debt Service 4,064,111 3,871,156 3,856,111 3,844,796 3,844,796 3,846,606 Fixed Assets - - - - - - Internal Service Charges 3,635 2,915 552 541 - 56 Total Expenditures 4,699,308 4,150,751 3,875,683 3,889,479 3,864,278 3,863,555 Transfers Out Transfer to Capital Projects - - - - - - Transfer to General Funds 295,913 110,635 125,169 100,000 114,254 7,700 Total Transfers Out 295,913 110,635 125,169 100,000 114,254 7,700 Total Expenditures & Transfers Out 4,995,221 4,261,386 4,000,852 3,989,479 3,978,532 3,871,255 Ending Fund Balance Designated - 2,260,068 2,001,533 1,963,327 1,963,327 1,963,327 Undesignated 3,852,329 1,355,427 1,612,193 1,650,399 1,609,641 1,611,325 Total Ending Fund Balance 3,852,329 3,615,495 3,613,726 3,613,726 3,572,968 3,574,652 TOTAL USE OF FUNDS 8,551,637$ 7,876,881$ 7,614,578$ 7,603,205$ 7,551,500$ 7,445,907$ STATEMENT OF SOURCE AND USE OF FUNDS PROPOSED F - 4  SUCCESSOR AGENCY TO THE LOS GATOS REDEVELOPMENT AGENCY  Full Time Equivalent (FTE) 2012/13 2013/14 2014/15 2015/16 2016/17 Town Staff Funded Funded Funded Funded Funded Administrative Analyst 0.20 0.10 0.10 0.10 0.01 Total SA FTEs 0.20 0.10 0.10 0.10 0.01 SUCCESSOR AGENCY TO THE LOS GATOS RDA PROGRAM STAFFING PROPOSED F - 5 Successor Agency to the Town of Los Gatos Redevelopment Agency ADMINISTRATION P ROGRAM 9403 PROGRAM PURPOSE The Successor Agency’s Administration Fund encompasses administrative functions related to operational and fiscal matters of the Successor Agency, in conjunction with the Finance Department. Prior to the dissolution of the Redevelopment Agency, this fund also supported capital project development, management, and construction oversight; and economic vitality activities to enhance revenues through business promotion and retention. While there will be no future capital projects, with the exception of Almond Grove reconstruction project in the former Redevelopment Area, economic vitality efforts continue and are now supported by the General Fund. BUDGET OVERVIEW The FY 2016/17 Administration Fund budget reflects approximately $22,000 of tax increment revenue to cover the operational and fiscal reporting expenses of the Successor Agency. The Town’s last and final ROPS has now been approved by the State. The Town will no longer have to submit ROPS every six months. PROPOSED F - 6 PROPOSED F - 7 Successor Agency to the Town of Los Gatos Redevelopment Agency DEBT SERVICE P ROGRAMS 9 404 and 9 405 FUND PURPOSE Prior to the Dissolution Act, the Los Gatos Redevelopment Agency assumed the obligation of paying the debt service on the Town’s 2002 and 2010 Certificates of Participation (COPs) in return for the lease of Town property. The purpose of the COPs was to fund key capital infrastructure projects located in the former Redevelopment Area. Payments for this indebtedness were and will continue to be made from the Debt Service Fund. BUDGET OVERVIEW PROGRAM 9404 – 2002 CERTIFICATE OF PARTICIPATION The Town bears an obligation for the 30-year Certificates of Participation issued in the original amount of $10,725,000, dated August 1, 2002. The COPs were issued to finance infrastructure improvements in the downtown Redevelopment Area, including plaza reconstruction, streetscape improvements, street reconstruction, storm drainage, and alley improvements, as well as partially funding the reconstruction of the pool at Los Gatos High School. The COPs principal payments are due annually on August 1, with interest payments payable semi-annually on February 1 and August 1. The financing structure of the COPs includes two lease agreements between the Town of Los Gatos and the Successor Agency for the Town of Los Gatos Redevelopment Agency dated July 1, 2002. The first agreement leases five Town-owned parcels, commonly known as the Miles Avenue Corporation Yard, to the Successor Agency through August 1, 2031 for a one-time fee of $1. In the second lease, the Successor Agency subleases the same land back to the Town, effective the date of the original lease. The annual sub-lease payments are equal to the annual debt service for the COPs. A reimbursement agreement between the Town and the Successor Agency, also dated July 1, 2002, obligates the Agency to reimburse the Town in an amount equal to the annual lease payment the Town pays to the Agency for the sub-lease of the Corporation Yard. This reimbursement is in consideration of the Town’s cost of the acquisition and construction of the yard facilities. PROPOSED F - 8  SUCCESSOR AGENCY TO THE LOS GATOS REDEVELOPMENT AGENCY  Debt Service While the annual impact of these agreements nets to zero, the lease and reimbursement payments are included in both the Town’s and Successor Agency’s budgets each year to accurately reflect the terms of these agreements. The Agency remains responsible for making the principal and interest payments. The maturity schedule for the Successor Agency’s current Debt Service obligation under the 2002 COPs is as follows: Principal Interest Interest Fiscal Maturing Due Due Total Principal Year August 1st August 1st Feburary 1st Debt Service Balance Issue Date: August 1, 2002 10,725,000$ 2002/03 - - 237,164$ 237,164$ 10,725,000 2003/04 210,000$ 235,854$ 233,229 679,083 10,515,000 2004/05 215,000 233,229 230,541 678,770 10,300,000 2005/06 225,000 230,541 227,729 683,270 10,075,000 2006/07 230,000 227,729 224,854 682,583 9,845,000 2007/08 235,000 224,854 221,681 681,535 9,610,000 2008/09 240,000 221,681 218,081 679,763 9,370,000 2009/10 250,000 218,081 214,019 682,100 9,120,000 2010/11 255,000 214,019 209,556 678,575 8,865,000 2011/12 265,000 209,556 204,720 679,276 8,600,000 2012/13 275,000 204,720 199,426 679,146 8,325,000 2013/14 285,000 199,426 193,726 678,153 8,040,000 2014/15 295,000 193,726 187,679 676,405 7,745,000 2015/16 310,000 187,679 181,169 678,848 7,435,000 2016/17 320,000 181,169 174,209 675,378 7,115,000 2017/18 335,000 174,209 166,755 675,964 6,780,000 2018/19 350,000 166,755 158,793 675,548 6,430,000 2019/20 365,000 158,793 150,306 674,099 6,065,000 2020/21 385,000 150,306 141,163 676,469 5,680,000 2021/22 400,000 141,163 131,463 672,625 5,280,000 2022/23 420,000 131,463 121,225 672,688 4,860,000 2023/24 440,000 121,225 110,500 671,725 4,420,000 2024/25 465,000 110,500 98,875 674,375 3,955,000 2025/26 485,000 98,875 86,750 670,625 3,470,000 2026/27 510,000 86,750 74,000 670,750 2,960,000 2027/28 535,000 74,000 60,625 669,625 2,425,000 2028/29 565,000 60,625 46,500 672,125 1,860,000 2029/30 590,000 46,500 31,750 668,250 1,270,000 2030/31 620,000 31,750 16,250 668,000 650,000 2031/32 650,000 16,250 - 666,250 - TOTALS:10,725,000$ +4,551,426$ +4,552,737$ =19,829,163$ 2002 COP DEBT SERVICE PROPOSED F - 9  SUCCESSOR AGENCY TO THE LOS GATOS REDEVELOPMENT AGENCY  Debt Service PROGRAM 9405 – 2010 CERTIFICATES OF PARTICIPATION The 2010 Certificates of Participation financing structure parallels the 1992 and 2002 issues. The Town bears an obligation for the 18-year Certificates of Participation issued in the original amount of $15,675,000, dated June 1, 2010. The COPs were issued to finance the construction of the new Town library. The COPs principal payments are due annually on August 1, with interest payments payable semi-annually on February 1 and August 1. The financing structure of the COPs includes two lease agreements between the Town of Los Gatos and the Successor Agency for the Town of Los Gatos Redevelopment Agency dated June 1, 2010. The first agreement leases Town-owned parcels, including the existing library, police administration building, and related property located at the Civic Center, to the Successor Agency through August 1, 2028 for a one- time fee of $1. In the second lease, the Successor Agency subleases the properties back to the Town, effective the date of the original lease. The annual sub-lease payments are equal to the annual debt service for the COPs. A reimbursement agreement between the Town and Agency, also dated June 1, 2010, obligates the Agency to reimburse the Town in an amount equal to the annual lease payment the Town pays to the Agency for the sub-lease of the existing library, police administration building, and related properties. This reimbursement is in consideration of the Town’s cost of the acquisition and construction of the library and police facilities. While the annual impact of these agreements nets to zero, the lease and reimbursement payments are included in both the Town’s and Successor Agency’s budgets each year to accurately reflect the terms of these agreements. The Agency remains responsible for making the principal and interest payments. The maturity schedule for the Successor Agency’s current Debt Service obligation under the 2010 COPs is as follows: PROPOSED F - 10  SUCCESSOR AGENCY TO THE LOS GATOS REDEVELOPMENT AGENCY  Debt Service Interest Principal Interest Fiscal Due Maturing Due Total Principal Year August 1st August 1st February 1st Debt Service Balance Issue Date: June 1, 2010 15,675,000$ 2010/11 423,161 423,161 15,675,000 2011/12 320,038 530,000 313,413 1,163,450 15,145,000 2012/13 313,413 650,000 300,413 1,263,825 14,495,000 2013/14 300,413 670,000 287,013 1,257,425 13,825,000 2014/15 287,013 695,000 269,638 1,251,650 13,130,000 2015/16 269,638 715,000 258,913 1,243,550 12,415,000 2016/17 258,913 745,000 244,013 1,247,925 11,670,000 2017/18 244,013 770,000 224,763 1,238,775 10,900,000 2018/19 224,763 800,000 208,763 1,233,525 10,100,000 2019/20 208,763 830,000 192,163 1,230,925 9,270,000 2020/21 192,163 865,000 174,863 1,232,025 8,405,000 2021/22 174,863 900,000 152,363 1,227,225 7,505,000 2022/23 152,363 935,000 133,663 1,221,025 6,570,000 2023/24 133,663 975,000 114,163 1,222,825 5,595,000 2024/25 114,163 1,020,000 93,763 1,227,925 4,575,000 2025/26 93,763 1,065,000 72,463 1,231,225 3,510,000 2026/27 72,463 1,115,000 50,163 1,237,625 2,395,000 2027/28 50,163 1,170,000 26,031 1,246,194 1,225,000 2028/29 26,031 1,225,000 1,251,031 - TOTALS:3,436,594$ +15,675,000$ +3,539,717$ =22,651,311$ 2010 COP DEBT SERVICE PROPOSED F - 11  SUCCESSOR AGENCY TO THE LOS GATOS REDEVELOPMENT AGENCY  Debt Service California Government Code Section 43605 states: “A city shall not incur an indebtedness for public improvements which exceeds in the aggregate 15 percent of the assessed value of all real and personal property of the city. Within the meaning of this section indebtedness means bonded indebtedness of the city payable from the proceeds of taxes levied upon taxable property in the city.” This schedule calculates the Town’s legal debt margin by determining the 15% debt limit and comparing this limit to the Town’s outstanding debt at the end of the fiscal year to determine the difference between the two. Only certain types of outstanding debt are subject to the legal debt limit; therefore, while this schedule recognizes all debt, the total debt is reduced by that debt not subject to the legal debt limit, as well as amounts held in sinking funds for debt repayment. The Town’s debt structure currently includes only Certificates of Participation, which are not subject to the legal debt limit, and are therefore removed from the calculation. Assessed Secured Property Valuation for FY 2015/16 10,375,010,557$ Debt Limitation (15% of assessed value)15% Bonded Debt Limit 1,556,251,584$ Outstanding Bonded Debt at 6/30/16 2002 Certificates of Participation 7,435,000 2010 Certificates of Participation 12,415,000 TOTAL Outstanding Debt 19,850,000$ LESS Debt not subject to limit: Special Assessment Bonds - Special Revenue Bonds - Certificate of Participation Debt 19,850,000 Amounts held in Sinking Funds - TOTAL Debt not subject to limit: 19,850,000$ Amount of Debt Subject to Limit: -$ -$ LEGAL DEBT MARGIN 1,556,251,584$ LEGAL DEBT MARGIN COMPUTATION FY 2016/17 PROPOSED F - 12