Attachment 1MPROPOSED
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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
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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 $22,000.
The Town submitted the Last & Final ROPS to the State and it was approved by the State on April 6,
2016. The Town no longer needs to submit ROPS every six months and has scheduled the ROPS budget
through FY 2031/32. At the end of FY 2031/32, the Town and the County will resolve any remaining
balances.
PROPOSED
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SUCCESSOR AGENCY TO THE LOS GATOS REDEVELOPMENT AGENCY
2012/13 2013/14 2014/15 2015/16 2015/16 2016/17
Actuals Actuals Actuals Adopted Estimated Proposed
SOURCES OF FUNDS
Beginning Fund Balance
Designated -$ -$ 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
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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
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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
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PROPOSED
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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 $1. In the second lease, the
Successor Agency subleases the same land back to the Town, effective the date of the original lease. The
annual sub-lease payments are equal to the annual debt service for the COPs.
A reimbursement agreement between the Town and the Successor Agency, also dated July 1, 2002,
obligates the Agency to reimburse the Town in an amount equal to the annual lease payment the Town
pays to the Agency for the sub-lease of the Corporation Yard. This reimbursement is in consideration of
the Town’s cost of the acquisition and construction of the yard facilities.
PROPOSED
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SUCCESSOR AGENCY TO THE LOS GATOS REDEVELOPMENT AGENCY
Debt Service
While the annual impact of these agreements nets to zero, the lease and reimbursement payments are
included in both the Town’s and Successor Agency’s budgets each year to accurately reflect the terms of
these agreements. The Agency remains responsible for making the principal and interest payments.
The maturity schedule for the Successor Agency’s current Debt Service obligation under the 2002 COPs
is as follows:
Principal Interest Interest
Fiscal Maturing Due Due Total Principal
Year August 1st August 1st Feburary 1st Debt Service Balance
Issue Date: August 1, 2002 10,725,000$
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
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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 $1. In the second lease, the Successor Agency subleases the properties back to the Town,
effective the date of the original lease. The annual sub-lease payments are equal to the annual debt
service for the COPs.
A reimbursement agreement between the Town and Agency, also dated June 1, 2010, obligates the
Agency to reimburse the Town in an amount equal to the annual lease payment the Town pays to the
Agency for the sub-lease of the existing library, police administration building, and related properties.
This reimbursement is in consideration of the Town’s cost of the acquisition and construction of the
library and police facilities.
While the annual impact of these agreements nets to zero, the lease and reimbursement payments are
included in both the Town’s and Successor Agency’s budgets each year to accurately reflect the terms of
these agreements. The Agency remains responsible for making the principal and interest payments.
The maturity schedule for the Successor Agency’s current Debt Service obligation under the 2010 COPs
is as follows:
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SUCCESSOR AGENCY TO THE LOS GATOS REDEVELOPMENT AGENCY
Debt Service
Interest Principal Interest
Fiscal Due Maturing Due Total Principal
Year August 1st August 1st February 1st Debt Service Balance
Issue Date: June 1, 2010 15,675,000$
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
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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
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