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Item 3b & d: Redevelopment Agency FY 2010-2011 Reports: Financial, Property Reports, Blight Removal Progress
i M II 1 Pi Pil 141 ii iii il STAFF REPORT Arcadia Redevelopment Agency DATE: December 6, 2011 TO: Mayor and City Council Chair and Members of the Agency Board FROM: Jason Kruckeberg, Assistant City Manager/Development Services Director.L3W- By: Jerry Schwartz, Economic Development Manager ii4 SUBJECT: FISCAL YEAR 2010-2011 REDEVELOPMENT AGENCY STATE CONTROLLER, AUDITED FINANCIAL, STATE HOUSING AND COMMUNITY DEVELOPMENT, BLIGHT REMOVAL PROGRESS, LOAN, AND PROPERTY REPORTS Recommendation: Receive and File SUMMARY The California Redevelopment Law (CRL) requires that the Agency prepare certain reports on its activities every year. These reports include the State Controller's Report, an Audited Financial Report, and the Housing and Community Development (HCD) Report. These three reports provide a detailed review of the Agency's financial transactions and low and moderate income housing activities during the 2010-2011 fiscal year. These three reports have been completed and will be transmitted to the State by the end of December 2011. The CRL (Section 33081.1 of the Health and Safety Code) also requires that three additional reports be prepared annually and presented to the Agency Board within six months of the end of the fiscal year (December 31, 2011). These reports are, Blight Removal Progress, Loan, and Property Reports. Staff is recommending that the City Council and Redevelopment Agency Board receive and file the State Controller's Report, Audited Financial Report, and HCD Report, and direct staff to file them with the appropriate State agencies; and receive and file the Blight Removal, Loan, and Property Reports. DISCUSSION The Agency's audit firm, Caporicci & Larson prepared the 2010-2011 Audited Financial Report. The Agency received an unqualified report, meaning that there were no audit exceptions for the past fiscal year. The Agency submits its annual report to the State Controller regarding its previous year's finances on forms that are provided by the State. Caporicci & Larson prepared the financial section of this report with City and Agency staff completing the program and projects portions. The State Controller's Report and HCD Report will be transmitted to the appropriate State agencies via the internet. Both reports are included in their entirety with this staff report as is mandated by a legal requirement that was added earlier this year. As previously noted, the CRL (Health and Safety Code Section 33080.1) also requires that the three additional reports (Blight Removal Progress, Property, and Loan reports) be presented to the Agency Board within six months after the end of the fiscal year. These reports are attached as Exhibit D to this staff report. The reports and their purpose are described below: 1. The Blight Removal Progress Report specifies the Agency's progress in alleviating blight during the prior fiscal year; 2. The Loan Report identifies any loans of $50,000 or more made by the Agency that are in default or not in compliance with the terms of the loan; and, 3. The Property Report describes properties owned by the Agency and any acquired during the previous fiscal year. The Property Report includes the four properties purchased during the 2010-2011 fiscal year, including 101-111 and 121-159 North Santa Anita Avenue, the vacant parcel on North Santa Clara Avenue adjacent to 21 Morlan Place (Dahlgren property), and 19 Lucile Street. As a reminder, while the Agency has provided a long term loan to the Campus Commons senior housing project, it was not involved in the purchase or sale of the project site. FISCAL IMPACT There is no fiscal impact to the submission of these reports. It is important that they are submitted by the December 31 deadline to avoid any potential financial penalties. RECOMMENDATION That the City Council and Redevelopment Agency Board receive and file the Redevelopment Agency State Controller, Audited Financial, Housing and Community Development, Blight Removal Progress, Loan, and Property Reports for FY 2010-2011 and direct staff to transmit the necessary reports to the State by December 31, 2011. Approved by: J ,.0 Donald Penman, City Manager/Executive Director Attachments:Exhibit A: State Audit Exhibit B: State Controller's Report Exhibit C: HCD Report Exhibit D: Blight Progress Report, Loan Report, Property Report FY 10-11 Redevelopment Reports December 6, 2011 Page 2 of 2 Exhibit A FY 2010-11 Arcadia Redevelopment Agency AGENCY AUDIT [DRAFT ] FK 11/28/2011 Arcadia Redevelopment Agency Arcadia, California Basic Financial Statements and Independent Auditors' Reports For the year ended June 30, 2011 Arcadia Redevelopment Agency Basic Financial Statements For the year ended June 30,2011 Table of Contents Page Independent Auditors'Report 1 Management's Discussion and Analysis (Required Supplementary Information) (Unaudited) 3 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Assets 12 Statement of Activities and Changes in Net Assets 13 Fund Financial Statements: Governmental Funds: Balance Sheet 16 Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets 17 Statement of Revenues,Expenditures and Changes in Fund Balances 18 Reconciliation of the Governmental Funds Statement of Revenues,Expenditures and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets 19 Notes to Basic Financial Statements 21 Required Supplementary Information (Unaudited): Budgetary Information 38 Supplementary Information: Schedule of Revenues,Expenditures and Changes in Fund Balance-Budget and Actual: Debt Service Fund-Tax Allocation Bonds 40 Schedule of Revenues,Expenditures and Changes in Fund Balance-Budget and Actual: Capital Projects Fund-Redevelopment Projects 41 Schedule of Revenues,Expenditures and Changes in Fund Balance-Budget and Actual: Capital Projects Fund-Low and Moderate Housing 42 Low and Moderate Income Housing Excess/Surplus Computations 43 Independent Auditors'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 45 Independent Auditors'Report on Compliance 47 INDEPENDENT AUDITORS'REPORT To the Members of the Governing Board of the Arcadia Redevelopment Agency Arcadia,California We have audited the accompanying financial statements of the governmental activities and each major fund of the Arcadia Redevelopment Agency (the "Agency"), a component unit of the City of Arcadia, California (the "City"), as of and for the year ended June 30, 2011, which collectively comprise the Agency's basic financial statements as listed in the foregoing table of contents. These financial statements are the responsibility of the Agency's management. Our responsibility is to express opinions 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstance, but not for the purpose of expressing an opinion on the effectiveness of internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining,on a test basis,evidence supporting the amounts and disclosures in the basic financial statements, 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 opinions. In our opinion, the basic financial statements referred to above present fairly, in all material respects,the respective financial position of the governmental activities and each major fund of the Agency as of June 30,2011,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. As explained further in Note 9 to the basic financial statements, the California State Legislature has enacted legislation that is intended to provide for the dissolution of redevelopment agencies in the State of California. The effects of this legislation are uncertain pending the result of certain lawsuits that have been initiated to challenge the constitutionality of this legislation. The Agency adopted the provisions of Governmental Accounting Standards Board ("GASB") Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, as of July 1, 2010. To the Members of the Governing Board of the Arcadia Redevelopment Agency Arcadia,California Page Two In accordance with Government Auditing Standards, we have also issued our report dated NEED DATE 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, 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 the 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 Information be presented to supplement the basic financial statements. Such 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency's financial statements as a whole. The accompanying supplementary information is presented for purposes of additional analysis and is not a required part of the financial statements.The supplementary information is the responsibility of management and is derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. Caporicci&Larson,Inc. A Subsidiary of Marcum LLP Certified Public Accountants Irvine, California NEED DATE 2 Management Discussion and Analysis The information presented in the "Management's Discussion and Analysis" is intended to be a narrative overview of the Redevelopment Agency of the City Of Arcadia's (Agency) financial activities for the fiscal year ended June 30, 2011. We encourage readers to consider this information in conjunction with the accompanying basic financial statements. FINANCIAL HIGHLIGHTS • The assets of the Agency exceeded its liabilities at the close of fiscal year June 30, 2011 by$1,093,332, including$11,998,687 of restricted net assets and$10,905,355 of deficit Unrestricted Net Assets. The Restricted Net Assets comprised bond reserve of$2,931,094 for the outstanding tax allocation bonds, $7,532,835 for the low and moderate housing projects and$1,534,758 of bond proceeds balance from the 2010 bond issuance. The Agency had a deficit Unrestricted Net Assets because of the outstanding long-term debt for redevelopment of assets of which the Agency does not own or subsequently contribute. (State law requires the Agency to operate only when in debt) • The Agency's total net assets decreased by $5,823,441 in fiscal year 2010-11 due to a one-time funding to the City for capital improvement projects and loan contributions for a low income senior housing project. • As of the close of fiscal year June 30, 2011, the Agency's governmental funds reported combined ending fund balances of$28,015,681,an increase of$5,834,315 from the prior year. The increase was mainly due to the issuance of 2010 Tax Allocation Bonds. OVERVIEW OF THE BASIC FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Redevelopment Agency of the City Of Arcadia's basic financial statements. The Agency's basic financial statements are comprised of three components: 1)government-wide financial statements, 2)fund financial statements, and 3)notes to the basic financial statements. In addition to the basic financial statements and required supplementary information, this report also contains a report on compliance and on internal control over financial reporting based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the Agency's finances. These statements include all assets and liabilities, using the full accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the fiscal year's revenues and expenses are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus assets, liabilities and expenses are reported in these statements for some items that will result in cash flows in future fiscal periods. • The Statement of Net Assets presents all of the Agency's assets and liabilities, with the difference reported as net assets. Over time,increases or decreases in net assets may serve as a useful indicator to determine whether the financial position of the Agency is improving or deteriorating. • The Statement of Activities presents information showing the Agency's revenues and expenses for the fiscal year. Functional activities are highlighted in this statement, whereby direct and indirect functional costs are shown net of related program revenue. This statement shows the extent to which the various functions depend on general taxes and non-program revenues for support. 3 Both of the government-wide financial statements highlight functions of the Agency that are principally supported by property tax increment and interest earnings. Redevelopment activities, in general, include providing needed public improvements, assisting with development and rehabilitation of existing properties, and providing low and moderate-income housing to eliminate or alleviate blighting conditions. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Agency uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The Agency only has governmental fund types. Governmental funds - Government funds are used to account for essentially the same functions reported as governmental activities in the agency-wide financial statements. However, unlike the agency-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the agency's near-term financing requirements. Because the focus of governmental funds is narrower than that of the agency-wide financial statements,it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the agency-wide financial statements. By doing so, readers may better understand the long-term impact of the agency's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide reconciliation on pages 17 and 19 to facilitate this comparison between governmental funds and governmental activities. The Agency maintains three individual governmental funds, of which all three are considered major funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues,expenditures,and changes in fund balances,for each of these funds. Notes to Basic Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the agency-wide and fund financial statements. AGENCY-WIDE FINANCIAL ANALYSIS Our agency-wide analysis focuses on the net assets and changes in net assets for the Agency's governmental activities. 4 A summary of the Agency's net assets is as follows: Governmental Activities 30-Jun-11 30-Jun-10 Current assets $ 11,980,992 10,780,573 Other assets 16,331,027 11,459,836 Total assets 28,312,019 22,240,409 Non-current liabilities 25,446,839 14,335,000 Other liabilities 1,771,848 988,636 Total liabilities 27,218,687 15,323,636 Net assets: Restricted 11,998,687 11,965,821 Unrestricted (10,905,355) (5,049,048) Total net assets $ 1,093,332 6,916,773 As noted earlier, net assets may serve over time as a useful indicator of the agency's financial position. In the case of the Agency,it is$1,093,332 at June 30,2011,a decrease of$5,823,441 from the prior year. Other assets increased $4,871,191 for the additional land requisitions; the Agency has purchased four properties in fiscal year 2010-11 for redevelopment and housing projects. The increase of current assets is attributable to the bond proceeds balance from the 2010 issuance. By far the largest portion of the Agency's Liability reflects its bonded indebtedness. The Agency issued Tax Allocation Bonds in September of 2010 for $19,800,000, of which $7,527,852 were used to pay off the 200113 bonds and $4,045,715 were used to repay an existing deferred loan to the Low and Moderate Income Housing fund. The remaining balance of the bond proceeds has been used for land acquisitions and other development projects in the redevelopment project area. The Agency, operating under California Redevelopment Law, must maintain debt in excess of its available assets to legally receive tax increment revenue. Bond funds may be used to acquire properties, construct buildings and infrastructure, and to alleviate blight. These expenditures do not generally create assets to offset bonded debt. Future tax increment revenues must be used to liquidate noncurrent bond liabilities. 5 Governmental Activities Governmental activities decreased the Agency's net assets by $5,823,441. Key elements of this increase are as follows: Governmental Activities 30-Jun-11 30-Jun-10 Revenues: General revenues: Property taxes $ 5,086,591 4,438,668 Investment income 289,784 336,095 Other revenue 1,690 - Total general revenues 5,378,065 4,774,763 Expenses: Redevelopment activities 5,452,492 2,975,138 Interest on long term debt 1,700,014 929,362 Total expenses 7,152,506 3,904,500 Changes in net assets before transfers (1,774,441) 870,263 Transfer to City of Arcadia (4,049,000) - Change in net assets (5,823,441) 870,263 Net assets(deficit)-Beginning of year 6,916,773 6,046,510 Net assets(deficit)-End of year $ 1,093,332 6,916,773 Property tax increment revenues are the Agency's major revenue source. This revenue increased by $647,923 or 14.6% from the prior year. The property assessed value in the project area has increased by 2.41% comparing to the prior year. Additionally, the change of recording method on pass through payments has also contributed to the revenue increase: it was recorded as expense in fiscal year 2010-11 but as an offset of property tax revenue in the prior years. Investment earnings of$289,784 were received from investments of available funds, a decrease of $46,311 or 13.8% from the prior year due to the declining interest rate market. The expenditures include additional development activity costs incurred for the land acquisition,construction costs for the street rehabilitation projects in the central redevelopment area and an Education Revenue Augmentation Fund (ERAF) shift payment of$318,953 to Los Angeles County for K-12 schools. FINANCIAL ANALYSIS OF THE AGENCY'S FUNDS As noted earlier, the Agency uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental Funds The focus of the Agency's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Agency's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of June 30, 2011, the Agency's governmental funds reported combined ending fund balances of $28,015,681, $16,124,149 or 57.6% of the fund balance was invested in properties held for future development. The fund balance has increased by $5,834,315 from the prior year. It is mainly due to the issuance of 2010 Tax Allocation Bonds. 6 DEBT ADMINISTRATION Long-Term Liabilities At the end of the current fiscal year, the Agency had total bonded debt of$26,706,839 that is secured solely by property tax increment revenue,of which$1,260,000 is due within one year. The Agency's total debt increased by $11,591,839 during the current fiscal year, mainly due to the issuance of 2010 Tax Allocation Bonds. Standard & Poor rated A- for the Agency's 2001A Tax Allocation Bonds and A for the Agency's 2010 issuance. ECONOMIC FACTORS AND NEXT YEAR'S BUDGET 1. The Agency has eliminated its "incur debt limit," as permitted by Senate Bill 211, but the Agency must now pass through 25% of the growth in tax increment between FY2003-04 and future year's annual tax increment to various taxing entities. 2. The Agency's Termination and Debt Payoff dates have been extended for an additional two years to 1/25/2017 and 1/25/2027 respectively, pursuant to Section 33607.7 of the Health & Safety Code. 3. Combined with the new purchase at 19 Lucile Street and the property at 15 Lucile Street, the Agency owns a 13,842 sq. ft site for moderate and low income housing development. The Agency has issued a request for proposal and selected Gangi Development to development a housing project on this site. 4. The Agency completed the purchase of three more properties in fiscal year 2010-11,including 101- 111 and 121-159 North Santa Anita Avenue and a vacant property on Santa Clara Street adjacent to the Agency's site at 21 Morlan Place. This provides the Agency with a combined two acres of commercial property with frontage on Santa Anita Avenue. 5. The Agency Board has approved a 43-unit senior housing project that will be located at 16 Campus Drive and agreed to provide up to $6.9 million of low and moderate income set aside funds to make the project financially feasible. The Agency has funded $3.5 million for this project in fiscal year 2010-11 with the remainder to be provided in 2015. There was a groundbreaking ceremony on April 29, 2011, and construction started the first week in May. It is anticipated to be ready for occupancy in about 14 months. 6. As part of the 2011-2012 California state budget, the Agency Board has approved the Voluntary Alternative Redevelopment payments in order to permit the continued existence and operation of the Agency. The first year amount has been determined to be $1,402,446 and it is estimated to be approximately $350,000 for the 2nd year on. A few lawsuits have been initiated to challenge the constitutionality of this legislation. More detail information pertaining to this legislation is included in Note No. 9. 7 REQUEST FOR INFORMATION This financial report is designed to provide a general overview of the Agency's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Redevelopment Agency of the City of Arcadia, 240 W. Huntington Drive, Arcadia,California 91006. 8 BASIC FINANCIAL STATEMENTS 9 This page intentionally left blank. 10 GOVERNMENT-WIDE FINANCIAL STATEMENTS 11 Arcadia Redevelopment Agency Statement of Net Assets June 30,2011 Governmental Activities ASSETS Current assets: Cash and investments $ 8,980,955 Cash and investments with fiscal agents 2,931,094 Interest receivable 28,303 Due from County of Los Angeles 40,617 Prepaid items and deposits 23 Total current assets 11,980,992 Noncurrent assets: Property held for resale 16,124,149 Bond issuance costs 206,878 Total noncurrent assets 16,331,027 Total assets 28,312,019 LIABILITIES Current liabilities: Accounts payable 47,568 Accrued salaries payable 16,952 Interest payable 422,388 Deposits payable 24,940 Long-term debt-due within one year 1,260,000 Total current liabilities 1,771,848 Noncurrent liabilities: Long-term debt-due in more than one year 25,446,839 Total noncurrent liabilities 25,446,839 Total liabilities 27,218,687 NET ASSETS Restricted for: Debt service 2,931,094 Bond proceed for Central Project Area 1,534,758 Low and moderate housing 6,264,540 Housing fund nonexpendable 1,268,295 Unrestricted(deficit) (10,905,355) Total net assets $ 1,093,332 See accompanying Notes to Basic Financial Statements. 12 Arcadia Redevelopment Agency Statement of Activities and Change in Net Assets For the year ended June 30,2011 Net(Expense) Revenue and Changes in Net Assets Governmental Functions/Programs Expenses Activities Primary government Governmental activities: Economic development $ 5,452,492 $ (5,452,492) Interest on long term debt 1,700,014 (1,700,014) Total government activities $ 7,152,506 (7,152,506) General revenues: Property tax increments 5,086,591 Investment income 289,784 Other revenue 1,690 Transfers to City of Arcadia (4,049,000) Total general revenues 1,329,065 Change in net assets (5,823,441) Net assets-beginning of year 6,916,773 Net assets-end of year $ 1,093,332 See accompanying Notes to Basic Financial Statements. 13 This page intentionally left blank 14 FUND FINANCIAL STATEMENTS 15 Arcadia Redevelopment Agency Balance Sheet Governmental Funds June 30,2011 Major Funds Debt Service Funds Capital Projects Funds Tax Low and Total Allocation Redevelopment Moderate Governmental Bonds Projects Housing Funds ASSETS Cash and investments $ - $ 2,741,632 $ 6,239,323 $ 8,980,955 Cash and investments with fiscal agents 2,931,094 - - 2,931,094 Interest receivable - 6,737 21,566 28,303 Due from County of Los Angeles - 22,687 17,930 40,617 Prepaid items and deposits - - 23 23 Property held for resale - 14,855,877 1,268,272 16,124,149 Total assets $ 2,931,094 $ 17,626,933 $ 7,547,114 $ 28,105,141 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ - $ 38,080 $ 9,488 $ 47,568 Accrued salaries payable - 12,161 4,791 16,952 Deposits - 24,940 - 24,940 Total liabilities - 75,181 14,279 89,460 Fund Balances: Nonspendable Prepaid items and deposits - - 23 23 Property held for resale - 14,855,877 1,268,272 16,124,149 Restricted Debt service 2,931,094 - - 2,931,094 Bond proceed for Central Project Area - 1,534,758 - 1,534,758 Low and moderate income housing - - 6,264,540 6,264,540 Committed Capital improvement - 1,161,117 - 1,161,117 Total fund balances 2,931,094 17,551,752 7,532,835 28,015,681 Total liabilities and fund balances $ 2,931,094 $ 17,626,933 $ 7,547,114 $ 28,105,141 See accompanying Notes to Basic Financial Statements. 16 Arcadia Redevelopment Agency Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets June 30,2011 Total Fund Balance-Total Governmental Funds $ 28,015,681 Amounts reported for governmental activities in the Statement of Net Assets were different because: Long-term liabilities were not due and payable in the current period. Therefore, they were not reported in the governmental fund: Long-term liabilities-due within one year (1,260,000) Long-term liabilities-due in more than one year (25,446,839) Interest payable on long-term debt did not require current financial resources. Therefore, interest payable was not reported as a liability in the governmental fund. (422,388) Deferred charges related to cost of issuance of long-term debt are recorded as expenditures in governmental fund statements 206,878 Net Assets of Governmental Activities $ 1,093,332 See accompanying Notes to Basic Financial Statements. 17 Arcadia Redevelopment Agency Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30,2011 Major Funds Debt Service Funds Capital Projects Funds Tax Low and Total Allocation Redevelopment Moderate Governmental Bonds Projects Housing Funds REVENUES: Taxes and assessments: Property taxes $ - $ 4,069,273 $ 1,017,318 $ 5,086,591 Use of money and property: Investment income 7,861 170,863 111,060 289,784 Other revenue - 1,690 - 1,690 Total revenues 7,861 4,241,826 1,128,378 5,378,065 EXPENDITURES: Current: Economic development - 1,731,407 3,721,085 5,452,492 Debt service: Principal retirements 7,835,000 - - 7,835,000 Interest and fiscal charges 1,114,769 280,000 1,394,769 Cost of issuance 217,793 - - 217,793 Total expenditures 9,167,562 2,011,407 3,721,085 14,900,054 REVENUES OVER(UNDER)EXPENDITURES (9,159,701) 2,230,419 (2,592,707) (9,521,989) OTHER FINANCING SOURCES(USES): Transfers in 508,155 - - 508,155 Transfers out - (508,155) - (508,155) Tranfers to City of Arcadia - (4,049,000) - (4,049,000) Proceed of bond issuance 10,167,057 9,662,943 - 19,830,000 Bond discount (424,696) - - (424,696) Total other financing sources(uses) 10,250,516 5,105,788 - 15,356,304 Net change in fund balance 1,090,815 7,336,207 (2,592,707) 5,834,315 FUND BALANCES: Beginning of year 1,840,279 10,215,545 10,125,542 22,181,366 End of year $ 2,931,094 $ 17,551,752 $ 7,532,835 $ 28,015,681 See accompanying Notes to Basic Financial Statements. 18 Arcadia Redevelopment Agency Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets For the year ended June 30,2011 Net Change in Fund Balances-Total Governmental Funds $ 5,834,315 Amounts reported for governmental activities in the Statement of Activities and Changes in Net Assets were different because: The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of the principal of long-term debt consumes the current financial resources of governmental funds. Also, governmental funds report the effect of issuance costs and discounts when debt is first issued,whereas these amounts are deferred and amortized in the statement of activities. This amount is the net effect of these difference in the treatment of long-term debt and related items. Repayment of bond principal 7,835,000 Issuance of long-term debt (19,830,000) Bond issuance costs 217,793 Bond discount 424,696 Total (11,352,511) Interest expense on long-term debt is reported in the Statement of Activities and Changes in Net Assets, but it did not require the use of current financial resources. Therefore,interest expense was not reported as an expenditure in the governmental funds. The reconciling amount is the change in accrued interest from the prior year. Accrued interest (272,795) Amortization of bond issuance costs (10,915) Amortization of bond discounts (21,535) Total (305,245) Change in Net Assets of Governmental Activities $ (5,823,441) See accompanying Notes to Basic Financial Statements. 19 This page intentionally left blank 20 NOTES TO BASIC FINANCIAL STATEMENTS 21 Arcadia Redevelopment Agency Notes to Basic Financial Statements For the year ended June 30,2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The basic financial statements of the Arcadia Redevelopment Agency (the "Agency"), a component unit of the City of Arcadia (the "City"), have been prepared in conformity with Accounting Principles Generally Accepted in the United States of America ("U.S. GAAP") as applies to government units. The Governmental Accounting Standards Board ("GASB") is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the Agency's accounting policies are described below. A. Financial Reporting Entity The Agency was created on December 17, 1968,by the City Council with the adoption of Ordinance No. 1396. The five members of the City Council serve as the governing body of the Agency and exercise all rights, powers, duties and privileges of the Agency. The Mayor serves as Chairperson of the Agency. The Redevelopment Plan for the Central Redevelopment Project was approved by Ordinance No. 1490 adopted by the Agency Board on December 26, 1973. The project area consists of approximately 252 acres. The Agency Board amended the Redevelopment Plan through Ordinance No. 1722 adopted May 19, 1981,adding a commercial planned development land use designation(Amendment No. 1). The Agency Board further amended the Redevelopment Plan through Ordinance No. 1847 adopted November 4,1986(Amendment No.2),which set an expiration date for the Redevelopment Plan of June 30, 2024; limited the amount of tax increment that the Agency can receive over the life of the Redevelopment Plan to $200 million; and established a time limit of 12 years, or until June 30, 1998, for commencement of eminent domain proceedings. The Agency Board amended the plan(Amendment No. 3) on November 1, 1994 by Ordinance No, 2025 by confirming the Plan to the time limits required by AB1290. The Agency Board in Ordinance No, 2102, dated June 4, 1999 (Amendment No. 4) extended the date for the commencement of eminent domain until December 30, 2010; and made the Redevelopment Plan Land Use Map consistent with the General Plan. The Agency Board adopted an ordinance (Amendment No. 5,Ordinance No. 2145;July 17,2001)adding 75 acres in South Arcadia to the Central Redevelopment Project Area. However, Los Angeles County filed a lawsuit to stop this amendment. The trial court(Superior Court Case BC258029)ruled in favor of the County and against the City. The Amendment is therefore not in effect. The Agency Board in Ordinance 2181, dated October 7, 2003 (Amendment No. 6) eliminated the Agency's"incur debt" limit per California Senate Bill 211. The Agency Board amended the Redevelopment Plan through Ordinance No. 2184,adopted November 18, 2003 to extend for one year the time limit on the effectiveness of the Redevelopment Plan and the time limit of the receipt of tax increment revenues (Amendment 7). 22 Arcadia Redevelopment Agency Notes to Basic Financial Statements, Continued For the year ended June 30,2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,Continued A. Financial Reporting Entity, Continued The Agency Board in Ordinance No. 2231, dated August 7, 2007 (Amendment No. 8) eliminated the eminent domain authority in the Central Redevelopment Project Area. The Agency Board amended the Redevelopment Plan through Ordinance No. 2239 (Amendment No. 9), adopted March 4, 2008 to extend for two years the time limit on the effectiveness of the Redevelopment Plan and the time limit of the receipt of tax increment revenues. The Agency Board adopted Ordinance No. ARA230 on December 1, 2009 to establish the Five Year Implementation Plan for fiscal years 2010-1015. B. Basis of Accounting and Measurement Focus The accounts of the Agency are organized on the basis of funds, each of which is considered a separate accounting entity with its own self-balancing set of accounts that comprise its assets, liabilities, fund balance, revenues and expenditures or expenses. These funds are established for the purpose of carrying out specific activities or certain objectives in accordance with specific regulations, restrictions or limitations. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. Government-Wide Financial Statements The Agency's Government-Wide Financial Statements include a Statement of Net Assets and a Statement of Activities and Changes in Net Assets. These statements present summaries of Governmental Activities for the Agency. The Government-Wide Financial Statements are presented on an "economic resources" measurement focus and the accrual basis of accounting. Accordingly, all of the Agency's assets and liabilities, including capital assets, and long-term liabilities, are included in the accompanying Statement of Net Assets. The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. 23 Arcadia Redevelopment Agency Notes to Basic Financial Statements, Continued For the year ended June 30,2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,Continued B. Basis of Accounting and Measurement Focus, Continued Government-Wide Financial Statements,Continued The Agency had no program revenues at June 30,2011. Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund activities, payables and receivables. The following interfund activities have been eliminated: • Transfers in/out Governmental Fund Financial Statements Governmental fund financial statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund Balances for all major governmental funds. The Agency has presented all of its funds as major funds. All governmental funds are accounted for on a spending or "current financial resources" measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Revenues are recorded when received in cash,except that revenues subject to accrual(generally 60 days after year-end) are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the Agency, are property taxes, taxpayer-assessed tax revenues, and earnings on investments. Expenditures are recorded in the accounting period in which the related fund liability is incurred. The reconciliations of the Fund Financial Statements to the Government-Wide Financial Statements are provided to explain the differences created by the integrated approach of GASB Statement No.34. The Agency reports the following funds as major. Tax Allocation Bonds Fund - established to accumulate monies for payment of Redevelopment Agency tax allocation notes and advances from the City. Debt service is financed via property tax revenues. Redevelopment Projects Capital Projects Fund - established to account for the acquisition, relocation, demolition and sale of land for those portions of Arcadia earmarked as in need of redevelopment related activities. Financing is provided by property tax increments, note proceeds and advances from the City. 24 Arcadia Redevelopment Agency Notes to Basic Financial Statements, Continued For the year ended June 30,2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,Continued B. Basis of Accounting and Measurement Focus, Continued Low and Moderate Income Housing Fund - established to account for the acquisition and development of low and moderate income housing. Financing is provided by property tax increments. C. Cash and Investments The Agency pools its cash with the City. The City pools cash resources from all funds in order to facilitate the management of cash and achieve the goal of obtaining the highest yield with the greatest safety and least risk. Cash in excess of current requirements is invested in various interest-bearing accounts and other investments for varying terms. In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, all investments are stated at fair value. Market value is used as fair value for those securities for which market quotations are readily available. The City participates in an investment pool managed by the State of California titled Local Agency Investment Fund ("LAIF") which has invested a portion of the pooled funds in structured notes and asset-backed securities. LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available. LAIF's investments are subject to credit risk with the full faith and credit of the State of California collateralizing these investments. In addition,these investments are subject to market risk as to change in interest rates. Cash equivalents are considered amounts in demand deposits and short-term investments with a maturity date within three months of the date acquired by the Agency and are presented as "Cash and Investments" in the accompanying component unit financial statements. Because the Agency pools its cash with the City, certain disclosure requirements in accordance with GASB Statement No. 40, Deposit and Investment Disclosure (An amendment of GASB Statement No.3), if applicable, for deposit and investment risks are specified in the City's financial statements for the following areas: • Interest Rate Risk • Credit Risk • Overall • Custodial Credit Risk • Concentration of Credit Risk • Foreign Currency Risk 25 Arcadia Redevelopment Agency Notes to Basic Financial Statements, Continued For the year ended June 30,2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,Continued D. Cash and Investments with Fiscal Agents Cash and investments with fiscal agents are restricted for the redemption of bonded debt and for acquisition and construction of capital projects. E. Property Held for Resale Property held for resale consists of land and project costs relating to property acquired or constructed which will be sold under terms of disposition and development agreements between the Agency and developers. The property held for resale is recorded at the lower of cost or estimated net realizable value. Reported amounts are fully reserved, which indicates that they do not constitute available spendable resources. F. Interest Payable In the Government-Wide Financial Statements, interest payable on long-term debt is recognized as the liability is incurred. In the fund financial statements,interest payable on long-term debt is not recognized as a liability since it does not require the use of current financial resources. G. Long-Term Debt Government-Wide Financial Statements - Long-term debt and other long-term obligations are reported as liabilities in the Government-Wide Financial Statements. Fund Financial Statements-The fund financial statements do not present long-term debt. H. Tax Increment Revenue The Agency has no power to levy and collect taxes, and any legislative property tax de-emphasis might necessarily reduce the amount of tax revenues that would otherwise be available to pay the principal of, and interest on, advances from the City. Additionally, broadened property tax exemptions could have a similar effect. Conversely, any increase in the tax rate or assessed valuation, or any reduction or elimination of present exemptions, would increase the amount of tax revenues that would be available to pay principal and interest on tax allocation bonds or loans and advances from the City. The following are key dates related to property taxes: Lien Date: January 1 Levy Date: June 30 Due Date: November 1 and February 1 Collection Date: December 10 and April 10 26 Arcadia Redevelopment Agency Notes to Basic Financial Statements, Continued For the year ended June 30,2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,Continued I. Net Assets In the Government-Wide Financial Statements,net assets are classified in the following categories: Restricted Net Assets - This amount is restricted by external creditors, grantors, contributors, or laws or regulations of governments. Unrestricted Net Assets (Deficit) - This amount is all net assets that do not meet the definition of "restricted net assets" as defined above. When expenses are incurred for purposes for which both restricted and unrestricted net assets are available,the Agency's policy is to apply restricted net assets first. J. Fund Balances In the governmental fund financial statements,fund balances are classified in the following categories: Nonspendable Fund Balance -This amount indicates the portion of funds balances which cannot be spent because they are either not in spendable form, such as prepaid items, inventories or loans receivable, or legally or contractually required to be maintained intact,such as the principal portion of an endowment. Restricted Fund Balance-This amount indicates the portion of fund balances which has been restricted a) externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or b) imposed by law through constitutional provisions or enabling legislation. Committed Fund Balance-This amount indicate the portion of fund balances which can only be used for specific purposes pursuant to formal resolution or ordinance of the City Council or Agency Board. Assigned Fund Balance - This amount indicates the portion of fund balances which is constrained by the Agency's intent to be used for specific purpose, but is neither restricted nor committed. The City Manager and Administrative Services Director are authorized to determine and define the amount of assigned fund balances. Unassigned Fund Balance - This amount indicates the portion of fund balance that do not fall into one of the above categories. When expenses are incurred for purposes for which both restricted and unrestricted fund balances are available, the Agency's policy is to apply restricted fund balances first, then unrestricted fund balances as they are needed. When expenditures are incurred for purposes where only unrestricted fund balances are available, the Agency uses the unrestricted resources in the following order:committed, assigned,and unassigned. 27 Arcadia Redevelopment Agency Notes to Basic Financial Statements, Continued For the year ended June 30,2011 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,Continued K. Use of Estimates The preparation of the basic financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. In addition, estimates affect the reported amount of expenses. Actual results could differ from these estimates and assumptions. 2. CASH AND INVESTMENTS Cash and investments consisted of the following at June 30,2011: Cash and investments $ 8,980,955 Cash and Investments with fiscal agent 2,931,094 Total cash and investments $ 11,912,049 The Agency pools cash from all sources and all funds within the City except Cash and Investments with Fiscal Agents. A. Deposits The California Government Code requires California banks and savings and loan associations to secure the City's cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor. Thus,collateral for cash deposits is considered to be held in the City's name. The market value of pledged securities must equal at least 110% of the City's cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City's total cash deposits. The City did may waive collateral requirements for cash deposits. Beginning December 31, 2010 through July 20, 2011, noninterest-bearing transaction accounts have unlimited coverage by Federal Depository Insurance corporation ("FDIC"). As a result, the City's cash deposits at June 30,2011 are fully insured by FDIC. The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances. Interest income from cash and investments with fiscal agents is credited directly to the related fund. 28 Arcadia Redevelopment Agency Notes to Basic Financial Statements, Continued For the year ended June 30,2011 2. CASH AND INVESTMENTS,Continued B. Investments Under the provisions of the City's investment policy, and in accordance with California Government Code,the following investments are authorized: • United States Treasury bills,notes or bonds • U.S. government sponsored enterprise securities • Repurchase agreements(30 days or less) • Prime Commercial paper(maximum 25% of the City's total portfolio) • Bank acceptances(maximum 15% of the City's total portfolio) • Medium term corporate notes(maximum 20% of the City's total portfolio) • Non-negotiable certificates of deposit and saving deposits (5 years or less) • Local agency investment fund ("LAIF") • Money Market Funds(maximum 20% of the City's total portfolio) • Municipal and State obligations C. Investments, Continued Interest Rate Risk - As a means of limiting its exposure to fair value losses arising from rising interest rates,the City's investment policy limits investments to a maximum maturity of five years. Credit Risk - State law limits investments in commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations (NRSROs). It is the City's policy to limit its investments in these investment types to the top rating issued by Standard & Poor's and Moody's Investors Service. Custodial Credit Risk - Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party.The California Government Code and the City's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker- dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. With respect to investments, custodial credit risk generally applies only to direct investments in marketable securities. Custodial credit risk does not apply to a local government's indirect investment in securities through the use of mutual funds or government investment pools(such as LAIF). 29 Arcadia Redevelopment Agency Notes to Basic Financial Statements, Continued For the year ended June 30,2011 3. CASH AND INVESTMENTS WITH FISCAL AGENTS Cash and investments with fiscal agents in the amount of $2,931,094 include amounts which are held by fiscal agents to be used only for payment of long term debt. These funds have been invested as permitted by applicable City ordinance and resolutions. 4. INTERFUND TRANSACTIONS Transfers At June 30, 2011, the Agency had the following transfers in/out which were made for the purposes of debt service requirements: Transfers In Governmental Funds Tax Allocation Bonds Debt ITransfers Out I Service Fund Governmental Fund: Redevelopment Projects Capital Projects Fund $ 508,155 Total $ 508,155 During the year ended June 30, 2011, the Agency made transfers in amount of $4,049,000 from the Redevelopment Project Capital Projects Fund to the City pursuant to Cooperative Agreement between the Agency and the City approved by Agency resolution 242 and 243. The Agency transferred the tax increment funds to the City for conducting public improvements within the project area, including 1) pedestrian and transit plaza improvements to the area adjacent to the Metro Gold Line station ("Gold Line Improvements"), 2) sidewalk repair, landscaping, tree maintenance and lighting in Arcadia's downtown and Huntington Drive Capacity Improvements ("Downtown improvements"), 3) construction of a public safety training facility for the Police,Fire and Public Works Services Departments ("Training Facility"), and 4) a public parking lot improvement project included as part of an earlier project area action ("Public Parking Lot Facility"). 30 Arcadia Redevelopment Agency Notes to Basic Financial Statements,Continued For the year ended June 30,2011 5. LONG-TERM DEBT The following is a summary of long-term debt transactions for the year ended June 30,2011: Balance Balance Due within Due in more July 1,2010, Additions Deletions June 30,2011 One Year than One Year 2001A Tax Allocation Bonds $ 7,795,000 $ - $ (515,000) $ 7,280,000 $ 545,000 $ 6,735,000 2001B Tax Allocation Bonds 7,320,000 - (7,320,000) - - - 2010 Tax Allocation Bonds - 19,830,000 19,830,000 715,000 19,115,000 Subtotal 15,115,000 19,830,000 (7,835,000) 27,110,000 1,260,000 25,850,000 Less deferred amounts: Bond discount - (424,696) 21,535 (403,161) - (403,161) Total $ 15,115,000 $ 19,405,304 $ (7,813,465) $ 26,706,839 $ 1,260,000 $ 25,446,839 2001 A Tax Allocation Bonds-Original Issue$11,655,000 In June 2001, the Agency issued tax allocation bonds, Series 2001 A in the amount of $11,655,000. The purpose of the bonds was to finance public capital improvements including part of the cost of a police station, a fire station, other public capital improvements, repayment of a City loan, and to refund the 1989 Redevelopment Agency Tax Allocation Refunding Bonds. The bonds consisted of $9,500,000 of serial bonds and $2,155,000 of term bonds. The serial bonds accrue interest at rates between 4.25% and 5.125% and mature between May 1, 2002 and May 1, 2020. The term bonds accrue interest at a rate of 5.25% and mature on May 1, 2023. Serial bonds maturing on or after May 1, 2009, shall be subject to redemption, at the option of the Agency, on any date on or after May 1, 2009 at redemption prices ranging from 100% to 101%. Term bonds maturing on May 1, 2023 are subject to mandatory redemption in whole or in part by lot, without premium, commencing May 1, 2021, from sinking fund payments made by the Agency. The Bond Agreement for the 2001 A Tax Allocation Bonds requires the Agency to pledge its annual tax revenues in an amount equal to at least 125% of the annual debt service requirement each fiscal year, through final maturity of the Bonds on May 1,2023 or early retirement of the Bonds,whichever first occurs. Tax increment money to be received by the Agency, excluding all amounts of such taxes required to be deposited into the Redevelopment Agency Capital Projects Fund, has been pledged for the payment of principal and interest on these bonds. Principal and interest paid for the current year and total net revenues were $900,046 and $3,649,357 respectively. The bonds required approximately 25% of the property tax increment revenues. The amount of bonds outstanding at June 30,2011 totaled$7,280,000. 31 Arcadia Redevelopment Agency Notes to Basic Financial Statements,Continued For the year ended June 30,2011 5. LONG-TERM DEBT,Continued 2001 A Tax Allocation Bonds-Original Issue$11,655,000,Continued The annual debt service requirements on these bonds are as follows: Year Ending June 30, Principal Interest Total 2012 $ 545,000 $ 362,386 $ 907,386 2013 565,000 337,862 902,862 2014 590,000 311,588 901,588 2015 500,000 283,268 783,268 2016 525,000 258,269 783,269 2017-2021 3,080,000 865,248 3,945,248 2022-2023 1,475,000 114,287 1,589,287 TOTAL $ 7,280,000 $ 2,532,908 $ 9,812,908 2001 B Tax Allocation Bonds-Original Issue$9,240,000 In June 2001,the Agency issued tax allocation bonds,Series 2001 B in an amount of$9,240,000. The purpose of the bonds was to finance private business incentive programs, including a commercial facade rehabilitation program,and a business attraction and retention program. The bonds consisted of $5,255,000 of serial bonds and $3,985,000 of term bonds. The serial bonds accrue interest at rates between 6.75% and 7.00% and mature between May 1, 2002 and May 1, 2018. The first portion of term bonds with principal of$1,430,000 accrues interest at a rate of 7.10% and matures on May 1, 2020. The second portion of term bonds with principal of$2,555,000 accrues interest at a rate of 7.125% and matures on May 1, 2023. Serial bonds maturing on or after May 1, 2009, shall be subject to redemption, at the option of the Agency on any date on or after May 1, 2009 at redemption prices ranging from 100% to 101%. Term bonds maturing on May 1, 2020 and May 1, 2023 are subject to mandatory redemption in whole or in part by lot, without premium, commencing May 1, 2019 and May 1, 2021, respectively, from sinking fund payments made by the Agency. The Bond Agreement for the 2001 B Tax Allocation Bonds requires the Agency to pledge its annual tax revenues in an amount equal to at least 125% of the annual debt service requirement each fiscal year, through final maturity of the Bonds on May 1,2023 or early retirement of the Bonds,whichever first occurs. In September 2010, the Agency issued 2010 Tax Allocation Bonds and fully refunded the 2001 B Tax Allocation Bonds. There was no economic gain or loss resulting from the current refunding. 32 Arcadia Redevelopment Agency Notes to Basic Financial Statements,Continued For the year ended June 30,2011 5. LONG-TERM DEBT, Continued 2010 Tax Allocation Bonds-Original Issue$19,800,000 In September 2010, the Agency issued tax allocation bonds, Series 2011 in the amount of$19,830,000. The purpose of the bonds was to finance the redevelopment project including land acquisition, land improvements,business rehabilitation,capital improvements and repayment of an existing obligation to the Agency's low and moderate Income Housing fund, and to refund the 2001B Redevelopment Agency Tax Allocation Bonds. The bonds consisted of all serial bonds with maturity between September 1, 2011 to September 1, 2026 at accrue interest rates between 1.999% and 6.625%. Serial bonds maturing on or after September 1, 2020, shall be subject to redemption, at the option of the Agency on any date on or after September 1, 2020, as a whole or in part,at redemption prices equal to the principal amount. The Bond Agreement for the 2010 Tax Allocation Bonds requires the Agency to pledge its annual tax revenues in an amount equal to at least 125% of the annual debt service requirement each fiscal year, through final maturity of the Bonds on May 1,2026 or early retirement of the Bonds,whichever first occurs. At June 30, 2011, the ratio of Net Revenues to the debt service payments due during Fiscal Year 2011 was 6.99(699%). Tax increment money to be received by the Agency, excluding the pass through payments, has been pledged for the payment of principal and interest on these bonds. Principal and interest paid for the current year and total tax revenues were$521,869 and$3,649,357 respectively The amount of bonds outstanding at June 30,2011 totaled$19,830,000. The annual debt service requirements on these bonds are as follows: Year Ending June 30, Principal Interest Total 2012 $ 715,000 $ 1,078,825 $ 1,793,825 2013 700,000 1,062,064 1,762,064 2014 725,000 1,040,802 1,765,802 2015 750,000 1,014,812 1,764,812 2016 895,000 981,113 1,876,113 2017-2021 5,145,000 4,182,627 9,327,627 2022-2026 8,385,000 2,377,206 10,762,206 2027 2,515,000 83,309 2,598,309 TOTAL $ 19,830,000 $ 11,820,758 $ 31,650,758 33 Arcadia Redevelopment Agency Notes to Basic Financial Statements, Continued For the year ended June 30,2011 6. DEFICIT NET ASSETS AND FUND BALANCES Deficit Unrestricted Net Assets At June 30, 2011, the Agency had a deficit balance in its government-wide unrestricted net assets in the amount of $(10,905,355) because long-term debt is in excess of capital assets owned by the Agency. The Agency issues debt for construction and/or acquisition of assets. Upon completion, the assets are then turned over to the City or to private parties within the redevelopment project area. The debt is planned to be repaid with future property tax increment revenue. 7. COMMITMENTS AND CONTINGENCIES Lawsuits The Agency is presently involved in certain matters of litigation that have arisen in the normal course of conducting Agency business. Agency management believes, based upon consultation with the Agency Attorney,that these cases, in the aggregate, are not expected to result in a material adverse financial impact on the Agency. Additionally, Agency management believes that the Agency's insurance programs are sufficient to cover any potential losses should an unfavorable outcome materialize. 8. SUBSEQUENT EVENTS Campus Commons Housing Project The development team of Ashwood Construction and Davila Properties is building a 43-unit low income senior housing development at 16 Campus Drive. The Agency approved an Owner Participation Agreement in which the Agency would loan the project up to $6.9 million from low/mod housing funds depending on the final construction costs. The first $3.5 million would be provided when the project received its Building Permit, and the remainder in 2015. That payment could be lowered based on the actual construction costs. The remainder of the funding came from tax credits and 4% tax exempt bonds. In December 2010, the Agency approved a First Amendment to the Owner Participation Agreement that involved the Agency providing approximately $1.8 million of its first $3.5 million upfront to help the developers close on the property, which occurred in late December. The remainder of the $3.5 million was provided in April 2011. There was a groundbreaking ceremony on April 29, 2011, and construction started the first week in May. It is anticipated to be ready for occupancy in about 14 months. 34 Arcadia Redevelopment Agency Notes to Basic Financial Statements, Continued For the year ended June 30,2011 8. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT AGENCIES On June 29, 2011,the Governor of the State of California signed Assembly Bills X1 26 and 27 as part of the State's budget package. Assembly Bill X1 26 requires each California redevelopment agency to suspend nearly all activities except to implement existing contracts, meet already-incurred obligations, preserve its assets and prepare for the impending dissolution of the agency. Assembly Bill Xl 27 provides a means for redevelopment agencies to continue to exist and operate by means of a Voluntary Alternative Redevelopment Program. Under this program, each city would adopt an ordinance agreeing to make certain payments to the County Auditor Controller in fiscal year 2011-12 and annual payments each fiscal year thereafter. Assembly Bill X1 26 indicates that the city "may use any available funds not otherwise obligated for other uses" to make this payment. The City of Arcadia intends to use available monies of its redevelopment agency for this purpose and the City and Agency have approved a reimbursement agreement to accomplish that objective. The amounts to be paid after fiscal year 2012-13 have yet to be determined by the state legislature. Assembly Bill X1 26 directs the State Controller of the State of California to review the propriety of any transfers of assets between redevelopment agencies and other public bodies that occurred after January 1, 2011. If the public body that received such transfers is not contractually committed to a third party for the expenditure or encumbrance of those assets, the State Controller is required to order the available assets to be transferred to the public body designated as the successor agency by Assembly Bill X1 26. In the event that Assembly Bill X1 26 is upheld, the interagency receivable recognized by funds of the City that had previously loaned or advanced funds to the redevelopment agency may become uncollectible resulting in a loss recognized by such funds. The City might additionally be impacted if reimbursements previously paid by the redevelopment agency to the City for shared administrative services are reduced or eliminated. The League of California Cities and the California Redevelopment Association (the "CRA") filed a lawsuit on July 18, 2011 on behalf of cities,counties and redevelopment agencies petitioning the California Supreme Court to overturn Assembly Bills X1 26 and 27 on the grounds that these bills violate the California Constitution. On August 11, 2011, the California Supreme Court issued a stay of all of Assembly Bill Xl 27 and most of Assembly Bill Xl 26. The California Supreme Court stated in its order that "the briefing schedule is designed to facilitate oral argument as early as possible in 2011, and a decision before January 15,2012." A second order issued by the California Supreme Court on August 17, 2011 indicated that certain provisions of Assembly Bills X1 26 and 27 were still in effect and not affected by its previous stay,including requirements to file an appeal of the determination of the community remittance payment by August 15, the requirement to adopt an Enforceable Obligations Payment Schedule ("EOPS") by August 29, 2011, and the requirement to prepare a preliminary draft of the initial Recognized Obligation Payment Schedule ("ROPS")by September 30,2011. 35 Arcadia Redevelopment Agency Notes to Basic Financial Statements, Continued For the year ended June 30,2011 9. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT AGENCIES,CONTINUED Because the stay provided by Assembly Bill X1 26 only affects enforcement, each agency must adopt an Enforceable Obligation Payment Schedule and draft Recognized Obligation Payment Schedule prior to September 30, as required by the statute. Enforceable obligations include bonds, loans and payments required by the federal or State government; legally enforceable payments required in connection with agency employees such as pension payments and unemployment payments, judgments or settlements; legally binding and enforceable agreements or contracts; and contracts or agreements necessary for the continued administration or operation of the agency that are permitted for purposes set forth in AB1X 26. On August 2, 2011, City Ordinance No. 2286 was adopted, indicating that the City will comply with the Voluntary Alternative Redevelopment Program in order to permit the continued existence and operation of the agency, in the event Assembly Bills X1 26 and/or 27 are upheld as constitutional. The initial payment by the City is estimated to be$1,402,446 for the year ended June 30,2012. Thereafter, an estimated$350,000 will be due annually. The amounts to be paid after fiscal year 2012-13 have yet to be determined by the State Legislature. The semi-annual payments will be due on January 15 and May 15 of each year and would increase or decrease with changes in tax increment. Additionally, an increased amount would be due to schools if any "new debt" is incurred. Assembly Bill X1 27 allows a one-year reprieve on the agency's obligation to contribute 20% of tax increment to the low-and-moderate-income housing fund so as to permit the Agency to assemble sufficient funds to make its initial payments. Failure to make these payments would require agencies to be terminated under the provisions of ABX1 26. Management believes that the Agency will have sufficient funds to pay its obligations as they become due during the fiscal year ending June 30, 2012. The nature and extent of the operation of redevelopment agencies in the State of California beyond that time frame are dependent upon the outcome of litigation surrounding the actions of the state. In the event that Assembly Bills Xl 26 and/or 27 are specifically found by the courts to be unconstitutional, there is a possibility that future legislative acts may create new challenges to the ability of redevelopment agencies in the State of California to continue in view of the California State Legislature's stated intent to eliminate California redevelopment agencies and to reduce their funding 36 REQUIRED SUPPLEMENTARY INFORMATION 37 Arcadia Redevelopment Agency Required Supplementary Information For the year ended June 30,2011 1. BUDGETARY INFORMATION A. General Budget Policies All governmental funds have legally adopted budgets. The Agency Board approves each year's budget submitted by the Agency's Executive Director prior to the beginning of the new fiscal year. Public hearings are conducted prior to its adoption by the Board. Supplemental appropriations, where required during the period are also approved by the Board. Several supplemental appropriations were made during the year. Intrafund budget changes are approved by the Director. The level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the fund level. At fiscal year-end all unencumbered operating budget appropriations lapse with the exception of continuing appropriations. B. Continuing Appropriations At fiscal year-end all unencumbered appropriations lapse, however, certain unexpended capital funds are carried over to the next fiscal year's budget. C. Encumbrances Encumbrances are estimations of costs related to unperformed contracts for goods and services. These commitments are recorded for budgetary control purposes. Encumbrances outstanding at year-end are reported as a reservation of fund balance. They represent the estimated amount of the expenditure that will result if unperformed contracts in-process at year-end are completed. They do not constitute expenditures or estimated liabilities. 38 SUPPLEMENTAL INFORMATION 39 Arcadia Redevelopment Agency Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual Debt Service Fund-Tax Allocation Bonds For the year ended June 30,2011 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) REVENUES: Investment income $ 36,000 $ 36,000 $ 7,861 $ (28,139) Total revenues 36,000 36,000 7,861 (28,139) EXPENDITURES: Debt Service: Principal retirement 780,000 780,000 7,835,000 (7,055,000) Interest and fiscal charges 897,560 897,560 1,114,769 (217,209) Cost of issuance - - 217,793 (217,793) Total expenditures 1,677,560 1,677,560 9,167,562 (7,490,002) REVENUES OVER(UNDER)EXPENDITURES (1,641,560) (1,641,560) (9,159,701) (7,518,141) OTHER FINANCING SOURCES(USES): Transfers in 1,641,560 1,641,560 508,155 (1,133,405) Procees of bond issuance - - 10,167,057 10,167,057 Bond discount - - (424,696) (424,696) Total other financing sources(uses) 1,641,560 1,641,560 10,250,516 8,608,956 Net change in fund balance $ - $ - 1,090,815 $ 1,090,815 FUND BALANCE: Beginning of year 1,840,279 End of year $ 2,931,094 40 Arcadia Redevelopment Agency Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual Capital Projects Fund-Redevelopment Projects For the year ended June 30,2011 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) REVENUES: Property taxes $ 3,520,000 $ 3,201,357 $ 4,069,273 $ 867,916 Investment income 250,000 250,000 170,863 (79,137) Other revenues - - 1,690 1,690 Total revenues 3,770,000 3,451,357 4,241,826 790,469 EXPENDITURES: Current: Economic development 2,255,323 1,952,217 1,731,407 220,810 Debt service: - Interest and fiscal charges 280,000 280,000 280,000 - Total expenditures 2,535,323 2,232,217 2,011,407 220,810 REVENUES OVER(UNDER)EXPENDITURES 1,234,677 1,219,140 2,230,419 1,011,279 OTHER FINANCING SOURCES(USES): Transfers out (1,641,560) (1,641,560) (508,155) 1,133,405 Transfers to City of Arcadia - - (4,049,000) (4,049,000) Proceed of bond issuance - - 9,662,943 9,662,943 Total other financing sources(uses) (1,641,560) (1,641,560) 5,105,788 6,747,348 Net change in fund balance $ (406,883) $ (422,420) 7,336,207 $ 7,758,627 FUND BALANCE: Beginning of year 10,215,545 End of year $ 17,551,752 41 Arcadia Redevelopment Agency Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual Capital Projects Fund-Low and Moderate Housing For the year ended June 30,2011 Variance with Final Budget Budget Amounts Actual Positive Original Final Amounts (Negative) REVENUES: Property taxes $ 892,032 $ 892,032 $ 1,017,318 $ 125,286 Investment income 180,000 180,000 111,060 (68,940) Total revenues 1,072,032 1,072,032 1,128,378 56,346 EXPENDITURES: Current: Economic development 232,940 271,766 3,721,085 (3,449,319) Total expenditures 232,940 271,766 3,721,085 (3,449,319) REVENUES OVER(UNDER)EXPENDITURES $ 839,092 $ 800,266 (2,592,707) $ (3,392,973) FUND BALANCE: Beginning of year 10,125,542 End of year $ 7,532,835 42 Arcadia Redevelopment Agency Low and Moderate Income Housing Excess/Surplus Computations For the year ended June 30,2011 Low and Moderate Housing Fund Opening Fund Balance-July 1,2010 $ 10,125,542 Less Unavailable Amounts: Land held for resale $ (551,091) Deferred loans (4,045,715) Encumbrances(Section 33334.12(g)(2)) (699,858) (5,296,664) Available Low and Moderate Income Housing Funds 4,828,878 Limitation(greater of$1,000,000 or four years set-aside) Set-Aside for last four years: Prior Year 1-2010 932,606 Prior Year 2-2009 870,355 Prior Year 3-2008 821,753 Prior Year 4-2007 779,028 $ 3,403,742 Base limitation $ 1,000,000 Greater amount $ 3,403,742 Computed Excess/Surplus $ 1,425,136 Note: On July 6,2010,the City Council,acting as the Redevelopment Agency,gave approval to provide up to$6.9 million of low and moderate income set aside funds to make the Campus Common project financially feasible. The project will increase the supply of affordable housing in the community focusing on low and very low income seniors. 43 This page intentionally left blank. 44 INDEPENDENT AUDITORS'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 To the Members of the Governing Board of the Arcadia Redevelopment Agency Arcadia,California We have audited the basic financial statements of the Arcadia Redevelopment Agency (the "Agency"), a component unit of the City of Arcadia, California (the "City") as of and for the year ended June 30, 2011 and have issued our report thereon dated NEED DATE. 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 our auditing procedures for the purpose of expressing our opinions on the 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 combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the Agency's financial statements will not be prevented,or detected and corrected on a timely basis. Our consideration of the 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 weakness,as defined above. To the Members of the Governing Board of the Arcadia Redevelopment Agency Arcadia,California Page 2 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency's basic financial statements are free of material misstatements, we performed tests of its compliance with certain provision of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of basic 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 for the information and use of the management, the Agency Board, others within the entity, and the California State Controller's Office, Division of Accounting and Reporting and is not intended to be and should not be used by anyone other than these specified parties. Caporicci&Larson,Inc. A Subsidiary of Marcum LLP Certified Public Accountants Irvine,California NEED DATE • 46 INDEPENDENT AUDITORS'REPORT ON COMPLIANCE To the Members of the Governing Board of the Arcadia Redevelopment Agency Arcadia,California Compliance and Other Matters We have audited the Arcadia Redevelopment Agency's (the "Agency") compliance with the California Health and Safety Code as required by Section 33080.1 for the year ended June 30, 2011. Compliance with the requirement referred to above is the responsibility of the Agency's management. Our responsibility is to express an opinion on the Agency's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and Guidelines for Compliance Audits of California Redevelopment Agencies,June 2011, issued by the State Controller and as interpreted in the Auditing Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies, August 2011, issued by the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the compliance requirements referred to above that could have a material effect on the Agency has occurred. An audit includes examining, on a test basis, evidence about the Agency's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the Agency's compliance with those requirements. In our opinion,the Agency complied,in all material respects,with the compliance requirements referred to above that are applicable for the year ended June 30,2011. Internal Control Over Compliance Management of the Agency is responsible for establishing and maintaining effective internal control over compliance with the compliance requirements referred to above. In planning and performing our audit,we considered the Agency's internal control over compliance to determine the auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the Agency's internal control over compliance. A deficiency in internal control over compliance 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,noncompliance on a timely basis.A material weakness in internal control over compliance is a deficiency,or combination of deficiencies in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a compliance requirement will not be prevented, or detected and corrected,on a timely basis. To the Members of the Governing Board of the Arcadia Redevelopment Agency Arcadia,California Page 2 Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be deficiencies,significant deficiencies,or material weaknesses in internal control over compliance. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses,as defined above. This report is intended solely for the information and use of management, the Board of Directors, others within the entity, and the State Controller's Office, Division of Accounting and Reporting and is not intended to be and should not be used by anyone other than these specified parties. Caporicci&Larson,Inc. A Subsidiary of Marcum LLP Certified Public Accountants Irvine,California NEED DATE 48 Exhibit B FY 2010-11 Arcadia Redevelopment Agency STATE CONTROLLER'S REPORT REDEVELOPMENT AGENCIES FINANCIAL TRANSACTIONS REPORT COVER PAGE Arcadia Redevelopment Agency • Fiscal Year: 2011 ID Number: 13981902300 Certification: I hereby certify that,to the best of my knowledge and belief, the report forms fairly reflect the financial transactions of the agency in accordance with the requirements as prescribed by the California State Controller. Fiscal Officer Signature Title Aug C. Gu.401 1112q/11 Name(Please Print) Date Per Health and Safety Code section 33080, this report is due within six months after the end of the fiscal year. The report is to include two(2)copies of the agency's component unit audited financial statements and the report on the Status and Use of the Low and Moderate Income Housing Fund (HCD report). To meet the filing requirements, all portions must be received by the California State Please complete, sign, and mail this cover page to either address below. Mailing Address: Express Mailing Address: State Controller's Office State Controller's Office Division of Accounting and Reporting Division of Accounting and Reporting Local Government Reporting Section Local Government Reporting Section P. O. Box 942850 3301 C Street, Suite 700 Sacramento, CA 94250 Sacramento, CA 95816 Supplement to the Annual Report of Community Redevelopment Agencies Redevelopment Agency ID Number: 13981902300 Name of Redevelopment Agency: Arcadia Redevelopment Agency Mark the appropriate box below to indicate the ending date of your agency's fiscal year. Report data for that period only. r Pc September 2010 r December 2010 June 2011 Return this form to the California State Controller's Office. 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U C O e y 7 O O) m O y m C m 0 C C N 0 a C yh— 17 7 TA C C V ) — I�_ .a m C ` O m 0 J C m a C w C O C cn C C O u- m m m C � w0 0 .- C m a) O) m G d m C m LL W C m C m w C TO m m m w C O f g U ` C `O 0 CO E 0 LL d ji C. a` a Q Q Uj 2 0 11O O Fm- ° E 0 © co 0 a 0$ O ® 03 o w $ ..- 4 I- 2 Q m 69 CO - 0 2 2 2 0 0 0. )gf ci � u)@� C• a W © © ■ / ~ a a a m N.Q ® 'a 2 k . 2 < § a 0 $i2 $ .- G _ . §� k ° 69 • 2 $ , k _ � \ .... _ _ _ _ § © $ . in rs 2 2 o a CD O ■ 0 K 1 CI \ / cm 0 2 12 0 ni • C 0 c 2 • « § _ _ _ _ RI § 2 R a a a ty « m• k « / \iri / 2 . 4, k ■ © '0 _ _ _ ■ mi cc 0 2 0 0 t k § § ` � 0 » E $ ©� 0 e f Ct § ■ g a a \ 6"a§ ) k 1 • 0 c _ s 2 A ) k) ; 2 2 11 .0 cn 0" 3 S % W w § £ u= = L. 2 i X a w I a C § w / 0 Arcadia Redevelopment Agency Redevelopment Agencies Financial Transactions Report Detailed Summary of Footnotes For Fiscal Year 2010-11 Forms Column Additional Details Footnotes Project Areas Report New Indebtedness A PROJECT AREA = The Agency's Termination 'Central Project Area and Debt Payoff dates have been extended for an additional two years to 1/25/2017 and 1/25/2027 respectively,pursuant to Section 33607.7 of the Health&Safety Code. Footnotes Page 1 11/28/2011 Exhibit C FY 2010-11 Arcadia Redevelopment Agency HCD REPORT 1Wt1.1N.Gpoluu aysww111 - L-1geuey 1111V11114UV11 rage 1 of 1 California Department of Housing and Community Development ,. Redevelopment Agency Reporting System �., Agency Information • You are Here:Select Year>Schedule Menu>Agency Information «Previous Page • Admin Agency:ARCADIA Fiscal Year:2010!2011 Prepared by: Don Penman • Select Year Please use this form to provide current information about ARCADIA • FAQ • User Info Address: PO BOX 60021 • Status • Print City: ARCADIA • Logout County: LOS ANGELES State: CA Zip: 91066-6021 Telephone: (626)574-5415 Extension: 0 Fax: (626)447-3309 E-Mail: dpenman @ci.arcadia.ca.us Description: Built out community that is working on infill affordable housing se Update Redevelopment Agency Reporting System -Agency Information California Department of Housing and Community Development https://ssw1.hcd.ca.gov/RDA/editAgencyInfoj j sp 11/29/2011 2 in / �• 426 N w ' o § IS § NZ # t o $ § ,- $ t kk 22 % 2 a � k d co est k 2 � % 2 U - ■ A' It ® $ 0 W k j� c\ 44\ k \ � k �• 0cx 09Q 6, � E I I � � k0 k 6. % ■ % c .e is % ` 22g ka $ 0 � � � 22 - ' © % � � 2 1-0.) $ ' � § � J k2 � )2 k . tcvl a � • � it - t 2 4L § v- 2 Z ✓ 0 22 � § _ il k� % 0. ow to 0 - % 0• Co a • # ® $ 2 a a 4 § 6 \ \ . 0. !IC C.) 0 O ° • §Et § California Redevelopment Agencies-Fiscal Year 2010/2011 Project Area Contributions to Low and Moderate Income Housing Fund Sch A Project Area Financial Information Agency ARCADIA Address PO BOX 60021 ARCADIA CA 91066-6021 Project Area CENTRAL REDEVELOPMENT PROJECT Type: Inside Project Area Status: Active Plan Adoption: 1974 Plan Expiration Year: 2017 Amount Gross Tax Calculated Amount Amount Suspended Total % Cumulative Increment Deposit Allocated Exempted and/or Deferred Deposited Def. $5,086,592 $1,017,318 $1,017,318 $0 $0 $1,017,318 20.00% $4,045,715 Repayment $0 Category Interest Income $111,060 Total Additional Revenue $111,060 Total Housing Fund Deposits for Project Area $1,128,378 Agency Totals For All Project Areas: Amount Gross Tax Calculated Amount Amount Suspended Total / Cumulative Increment Deposit Allocated Exempted and/or Deferred Def. Deposited $5,086,592 $1,017,318.4 $1,017,318 $0 $0 $1,017,318 20% $4,045,715 Total Additional Revenue from Project Areas: $111,060 Total Deferral Repayments: $0 Total Deposit to Housing Fund from Project Areas: $1,128,378 Page 1 of 1 11/29/11 California Redevelopment Agencies-Fiscal Year 2010/2011 Sch A/B Project Area Program Information ARCADIA Project Area: OUTSIDE PROJECT AREA UNITS LOST Very Low Low Moderate Above Total Moderate Reporting Period: Current Other Category Households Permanently Displaced-Non Elderly 1 4 2 0 7 REPLACEMENT HOUSING PLAN Report Period Custodian Name Adoption Date Current Jerry Schwartz 07-DEC-10 Jerry Schwartz 05-OCT-10 FUTURE UNIT CONSTRUCTION Estimated Execution Completion Contract Name Date Date Very Low Low Moderate Total Campus Commons 12/10/10 06/01/12 0 43 0 43 Gangi Development 04/01/12 10/01/13 9 0 0 9 Page 1 of 1 11/29/11 4 ■ti t § . Q + § a $ © Z " d i 2 o, g © Q # e▪ ' G 822 22 7 k ; 2 co k % k C $ UI . t1 & \ � E a2• \ c � fE I § 2 a � ' � u. 2 to S 2 � ■ a &� f. k 6. ,s @ ct � 2 � � 0 "0 r••• Z C F. k %k & ® o o m � 4 2 NB ■ ; Z Q v) t % � Z0k + a a § a) k & § ` ® 4 $ k - # . O B (0 e § a g 4 2 ( ; . Is 0 et v. ' k I 3 k § 2 § 2 k § a a • &• & N �a . o g g c � � 4" 0)0 0 _ a ® • 2 % 1 o et § . s I. � ci , cl k e a 722f 1.' IIU _ 2 \ a. $ § s O k 2 . Q ' 2 ° a IV��a k § I' i California Redevelopment Agencies- Fiscal Year 2010/2011 Status of Low and Moderate Income Housing Funds Sch C Agency Financial and Program Detail ARCADIA Beginning Balance $5,528,736 Adjustment to Beginning Balance $0 Adjusted Beginning Balance $5,528,736 Total Tax Increment From PA(s) $1,017,318 Total Receipts from PA(s) $1,128,378 Other Revenues not reported on Schedule A $4,045,715 Sum of Beginning Balance and Revenues $10,702,829 Expenditure Item Subitem Amount Remark Planning and Administration Costs Administration Costs $114,074 Professional Services $62,377 Subtotal of Planning and Administration Costs $176,451 Property Acquisition Operation of Acquired Property $199 Other $717,181 purchase of the property at 19 Lucille Real Estate Purchases $3,544,435 Subtotal of Property Acquisition $4,261,815 Total Expenditures $4,438,266 Net Resources Available $6,264,563 Indebtedness For Setasides Deferred $4,045,715 Other Housing Fund Assets Category Amount Remark SERAF Total Receivable $0 Other -$4,045,715 Deferred loan has been repaid by the Redevelopment Fund. Residual Receipt Loans $6,104,435 Value of Land Purchased with Housing Funds $1,268,272 Total Other Housing Fund Assets $3,326,992 Total Fund Equity $13,637,270 11/29/11 Page 1 of 3 California Redevelopment Agencies- Fiscal Year 2010/2011 Status of Low and Moderate Income Housing Funds Sch C Agency Financial and Program Detail ARCADIA 2006/2007 $779028 Prior Year Ending Excess Surplus for 2007/2008 $821753 sum of 4 Previous Years'Tax Unencumbered Balance 2010/2011 2008/2009 $870355 Increment for 2010/2011 $4,828,878 $1,425,138 2009/2010 $932604 $3403740 Sum of Current and 3 Previous Years'Tax Increments $3,642,030 Adjusted Balance $2,864,563 Excess Surplus for next year $0 Net Resources Available $6,264,563 Unencumbered Designated $1,400,000 Unencumbered Undesignated $1,464,563 Total Encumbrances $3,400,000 Unencumbered Balance $2,864,563 Unencumbered Balance Adjusted for Debt Proceeds $0 Unencumbered Balance Adjusted for Land Sales $0 Excess Surplus Expenditure Plan No Excess Surplus Plan Adoption Date Site Improvement Activities Benefiting Households Income Level Low Very Low Moderate Total Land Held for Future Development Site Name Num Of Zoning Purchase Estimated Acres Date Start Date Remark Use of the Housing Fund to Assist Mortgagors Income Adjustment Factors Requirements Completed Home $ Hope $ Non Housing Redevelopment Funds Usage Resource Needs 11/29/11 Page 2 of 3 California Redevelopment Agencies- Fiscal Year 2010/2011 Status of Low and Moderate Income Housing Funds Sch C Agency Financial and Program Detail ARCADIA LMIHF Deposits/Withdrawls Document Document Custodian Custodian Copy Name Date Name Phone Source Achievements Description 11/29/11 Page 3 of 3 California Redevelopment Agencies-Fiscal Year 2010/2011 Sch D General Project Information ARCADIA Project Area Name: OUTSIDE PROJECT AREA Project Name: 15 819 Lucile Street Address: 15& 19 Lucile Street Arcadia 91066 Owner Name: Arcadia Redevelopment Agency UNIT INVENTORY Very Low Low Moderate Above Mod Became Total Ineligible Other Provided with LMIHF Unit New Construction Agency Rental Non-Elderly 9 0 0 0 0 9 Unit Total 9 0 0 0 0 9 Project Name: Campus Commons Senior Housing Address: 19 Campus Drive Arcadia 91066 Owner Name: Arcadia Commons Associates L.P. UNIT INVENTORY Very Low Low Moderate Above Mod Became Total Ineligible, Other Provided with LMIHF Unit New Construction Agency Rental Elderly 0 43 0 0 0 43 Unit Total 0 43 0 0 0 43 PROJECT FUNDING SOURCE Funding Source Amount Redevelopment Funds $6,900,000 Private Funds $2,212,550 Owner Equity $261,273 TCAC/Federal Award $3,088,548 Page 1 of 1 11/29/11 SCHEDULE HCD E CALCULATION OF INCREASE IN AGENCY'S INCLUSIONARY OBLIGATION FOR ACTIVITIES (This Form is Information Only:Actual Obligation is based on Implementation Plan) Report Year: 2010/2011 Agency: ARCADIA NOTE: This form is a summary of the totals of all new construction or substantial rehabilitation units from forms HCD-D7 which are developed in a project area by any entity(agency or non-agency). PART I [H&SC Section 33413(b)(1)] AGENCY DEVELOPED 1. New Units 0 2.Substantially Rehabilitated Units 0 3.Subtotal- Baseline of Units(add line 1 &2) 0 4.Subtotal of Inclusionary Obligation Accrued this Year for Units(line 3 x30%) 0 5.Subtotal of Inclusionary Oblig ation Accrued this year for Very-Low Income Units(line 4 x 50%) 0 PART II [H&SC Section 33413(b)(2)] NON-AGENCY DEVELOPED UNITS 6.New Units 0 7.Substantially Rehabilitated Units 0 8.Subtotal-Baseline of Units(add lines 6&7) 0 9. Subtotal of InclusionaryObligation Accrued this year for Units(line 8 x 15%) 0 10. Subtotal of InclusionaryObligation Accrued this year for Very Low Income Units(line 9 x40%) 0 PART III TOTALS 11.Total Increase in InclusionaryObligations During This Fiscal Year(add line 4&9) 0 12.Total Increase in Very Low Income Units Inclusionary Obligations During This Fiscal Year(add line 5&10) 0 California Redevelopment Agencies-Fiscal Year 2010/2011 11/29/2011 Schedule E(11/01) 'Totals maybe Impacted by rounding Page 1 of 1 SCHEDULE HCD El CALCULATION OF INCREASE IN AGENCY'S INCLUSIONARY OBLIGATION FOR ACTIVITIES (This Form is Information Only:Actual Obligation is based on Implementation Plan) Report Year: 2010/2011 Agency: ARCADIA Project Area: CENTRAL REDEVELOPMENT PROJECT Project: 07-08-ALTA STREET TOWNHOMES NOTE: This form is a summary of the totals of all new construction or substantial rehabilitation units from forms HCD-D7 which are developed in a project area by any entity(agency or non-agency). PART [H&SC Section 33413(b)(1)] AGENCY DEVELOPED 1. New Units 0 2.Substantially Rehabilitated Units 0 3. Subtotal-Baseline of Units(add line 1 &2) 0 4. Subtotal of Inclusionary Obligation Accrued this Year for Units(line 3 x 30%) 0 5. Subtotal of Inclusionary Obligation Accrued this year for Very-Low Income Units(line 4 x 50%) 0 PART II [H&SC Section 33413(b)(2)] NON-AGENCY DEVELOPED UNITS 6. New Units 0 7. Substantially Rehabilitated Units 0 8. Subtotal-Baseline of Units(add lines 6&7) 0 9. Subtotal of Inclusionary Obligation Accrued this year for Units(line 8 x 15%) 0 10. Subtotal of InclusionaryObligation Accrued this year for Very Law Income Units(line 9 x40%) 0 PART III TOTALS 11.Total Increase in Inclusionary Obligations During This Fiscal Year(add line 4&9) 0 12.Total Increase in Very Low Income Units Inclusionary Obligations During This Fiscal Year(add line 5&10) 0 Celltorrra Rodeeelopnrent Agencies-Fiscal Year 2010/2011 11/29/2011 Schedule E(11/01) 'Totals may be inpacted by rounding Page 1 of 1 Exhibit D FY 2010-11 Arcadia Redevelopment Agency HEALTH AND SAFETY CODE §33080. 1 o ALLEVIATION OF BLIGHT o LOAN DEFAULT REPORT o PROPERTY LISTING I. HEALTH AND SAFETY CODE§33080.1(d) ALLEVIATION OF BLIGHT For FY 2010-11, the Arcadia Redevelopment Agency worked on the following programs/projects to assist in the alleviation of blight in the Central Downtown Project Area: 1. Worked with the Arcadia Downtown Business Association (ADBA) on its efforts to organize a downtown business district. One of the goals of the ADBA is to help recruit new businesses to the downtown area which would counteract blighting influences on First Avenue. 2. Closed escrow on the acquisition of a small residential rental property at 19 Lucille Street, relocated the tenant, and demolished the building and cleared the site. Issued a Request for Proposals for an affordable family rental project at 15 & 19 Lucile Street. Selected Gangi Developers to build a nine unit project for low income families. The project received its entitlements in May 2011. 3. Completed the purchase of the commercial properties at 101-111 and 121-159 North Santa Anita Avenue. The Agency hired Overland, Pacific & Cutler (OPC) to work with the tenants to relocate them to other locations. 4. Completed a Façade Improvement Program project at 25-29, 31-35 South First Avenue and 61-63 Alta Street that involved painting this multi-tenant commercial property. 5. Worked with the developers of Campus Commons at 16 Campus Drive on the relocation of the tenants from the existing poorly maintained units and demolished the structures to make way for a 43 unit affordable senior housing project. 6. Acquisition of the vacant former Dahlgren property on Santa Clara Street adjacent to 21 Morlan Place for use in the expansion of Rusnak Mercedes Benz or as part of larger commercial site. II HEALTH AND SAFETY CODE ¢'33080.1(e) REPORT ON ALL LOANS IN DEFAULT The Arcadia Redevelopment Agency has no loans in excess of$50,000 that are in default from the previous fiscal year or that are not in compliance with the terms of any loan approved by the Agency. HI HEALTH AND SAFETY CODE§33080.10 PROPERTY LISTING The Arcadia Redevelopment Agency owns five parcels of land in the downtown area and two residential parcels. The Agency completed the acquisition of the properties at 101- 111 and 121-159 North Santa Anita Avenue, 19 Lucile Street, and the vacant parcel along Santa Clara Street during FY 2010-11. Property List: APN Address City, State Current Use 1 5775-025-030 35 W. Huntington Dr. Arcadia, CA Self Storage Facility 2 5775-025-026 21 Morlan Place Arcadia, CA Vacant (was site of Church in Arcadia) 3 5779-014-006 15 Lucile Street Arcadia, CA Vacant two unit residential property 4 5775-025-004 101- 111 North Santa Arcadia, CA Occupied 5775-025-005 Anita Avenue Commercial Building 5 5775-025-002 121-159 North Santa Arcadia, CA Occupied 5775-025-003 Anita Avenue Commercial 5775-025-018 Building 6 5779-014-007 19 Lucile Street Arcadia, CA Vacant single family residential property 7 5775-025-025 Santa Clara Street (no Arcadia, CA Vacant formal address) Commercial Property