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REDEVELOPMENT AGENCY AGENDA ITEM NO. 27



Meeting Date: June 26, 2007

Subject/Title: Adopt a Resolution to Adopt the Redevelopment Agency of the City of Brentwood’s 2007/08 and 2008/09 Budget and Authorize Expenditures for Fiscal Year 2007/08.

Prepared by: Gina Rozenski, Redevelopment Manager

Submitted by: Howard Sword, Community Development Director
Pam Ehler, Agency Treasurer
Donna Landeros, Executive Director


RECOMMENDATION
Adopt Resolution adopting the Redevelopment Agency of the City of Brentwood’s 2007/08 and 2008/09 Budget and authorizing expenditures for fiscal year 2007/08.

PREVIOUS ACTION
The 2005/06 and 2006/07 annual budgets for the Brentwood Redevelopment Agency were approved by the Agency on June 14, 2005, by Resolution No. RA-101.

The Agency’s 2006/07 budget was amended on June 26, 2006, by Resolution No. RA-112. Budgetary amendments included new capital improvement projects, continued support of Specific Plan preparation and funding for the new Health and Safety Grant Program.

BACKGROUND
Financial Status

The financial status of the Brentwood Redevelopment Agency is sound. The Redevelopment Agency’s projected Fund Balance as of June 30, 2007 is approximately $17,260,000. Of this amount, the Administration Fund accounts for $9,500,000, Debt Service Fund for $5,500,000, and the Housing Fund for $2,300,000.

The Administration Fund is the fund from which the majority of Agency’s administrative, project, capital improvements, and general operational expenses are paid. The two other funds, Debt Service and Housing Fund, are reserved for those specific purposes.

After revenues and expenses during the next two-year period, the Agency’s projected fund balance as of June 30, 2009, will be approximately $16,000,000.

Revenues

The attached budget presents the Agency’s revenue forecast. Property tax increment revenues are projected to increase due to inflationary increases of the Proposition 13-allowed 2% annual increase in property taxes, and due to reassessments of properties resulting from ownership changes, new construction and property improvements. Staff intentionally forecasted a conservative 2% increase of tax increment for both 2007/08 and 2008/09; $6,900,000 and $7,000,000 respectively. As mandated by Community Redevelopment Law, tax increment revenues are split by depositing 80% into the Agency’s Debt Service Fund and 20% deposited into the Agency’s Housing Fund.

The Agency anticipates raising approximately $15,000,000 in bonds to fund the potential development of three parking structures for the Downtown and Civic Center, and improving the aging infrastructure and installing new streetscape in the Downtown.

Land sale revenues from the 2nd and Central remnant parcel for a 16-unit apartment project is anticipated in 2007/08 in the amount of $116,000; and approximately $815,000 is expected from future land sales at Sunset Industrial Complex. Interest income is projected at $1,800,000 over the two-year period.

In summary, taking into account internal account transfers of $3,000,000, the Agency expects total revenues of approximately $9,900,000 in 2007/08 and $24,800,000 in 2008/09.


Debt Service (Fund 303) (80% of tax increment revenues)

Eighty percent of the tax increment revenues are deposited into the Debt Service Fund to first pay bond indebtedness, and pass-through payments.

The Agency’s first obligation is the annual debt service payments on its outstanding Tax Allocation Bonds issued in 2001, which runs about $1,370,000 yearly. The projected property tax increment revenue stream is more than sufficient to continue to make these debt service payments.

The Agency’s second obligation from the Debt Service Fund is our annual payments to other taxing agencies in accordance with our negotiated and statutory pass-through agreements. Pass-through payments will increase due to a step-up in negotiated payments and initiation of statutory payments for both Project Areas. Pass-through payments are estimated at $1,800,000 for 2007/08 and $2,100,000 for 2008/09.

After bond debt and pass-through payments are paid, remaining tax increment revenues are transferred to the Administration Fund as needed throughout the year for administration and operational costs, estimated at approximately $3,000,000 for the two-year budget period.

In summary, forecasted Debt Service expenses are $4,700,000 for 2007/08 and $6,100,000 for 2008/09.

Non-Housing Program and Project Expenses (Fund 301)

Funding of the Agency’s administrative, project, and capital improvement program expenses is dependent on excess property tax increment revenues, interest on investments and, most importantly, bond proceeds that are strictly used for redevelopment projects.

Approximately $21,000,000 of the Agency’s $35,600,000 two-year budget is directly related to capital improvement projects identified by the Agency Board and which are coordinated and identified in the City’s 2007-2012 Capital Improvement Program.

The upcoming redevelopment program objectives are to continue the preparation of Brentwood Boulevard Specific Plan and associated environmental study; implement the recommendations from the Downtown Specific Plan including parking facilities, other community facilities, streetscape and infrastructure improvements; create a Façade Improvement Program for the Downtown; prepare the necessary analyses for an upcoming bond issuance to position the Agency for future capital improvement projects; pursue the development of the southeast corner of Oak Street and Walnut Boulevard as a gateway development to the Downtown; prepare and adopt the mid-term review of the Agency’s Implementation Plan; and to continue to formulate and implement long-term strategies to expand commercial, retail and industrial opportunities and job growth in the Merged Project Areas.

Housing Program and Project Expenses (Fund 302) (20% of tax increment revenues)

Twenty percent of the annual tax increment revenues are deposited directly into the Housing Fund. The Housing Program objectives are to complete Mercy Housing Villa Amador project; to implement the Health & Safety Grant Program for emergency home repairs; acquire a Davis Camp parcel to eliminate a serious declining condition and relocate the on-site tenants; and to identify and develop other housing programs and projects to improve, preserve and increase affordable housing inside the Redevelopment Project Areas while monitoring housing fund expenditures to comply with age and income target requirements.

The Agency anticipates financial participation of $3,000,000 in support of affordable housing redevelopment goals and objectives during the next two years, from the total Housing Program budget of $3,600,000.

FISCAL IMPACT
2007/08 revenues of approximately $9,500,000, usage of the existing bond proceeds of $2,200,000 and future bond proceeds of $460,000 for capital improvements, and using $100,000 of the Housing Fund’s reserves to fund the Agency’s significant contributions to affordable housing projects will be sufficient to fund the projected 2007/08 administrative, project, capital improvement, debt service and housing expenses of $10,800,000.

2008/09 revenues of approximately $10,400,000, usage of the existing bond proceeds of $1,000,000 and future bond proceeds of $14,400,000 for capital improvements, and using $100,000 of the Agency’s reserves will be sufficient to fund the projected 2008/09 administrative, project, capital improvement, debt service and housing expenses of $24,900,000.

The Redevelopment Agency’s projected Fund Balance as of June 30, 2007 is approximately $17,260,000; the Fund Balance is projected at $16,460,000 as of June 30, 2008, and $16,360,000 as of June 30, 2009.


Attachments: Resolution
Budget for Fiscal Years 2007/08 – 2008/09


RESOLUTION NO. RA-

A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD ADOPTING ITS 2007/08 and 2008/09 BUDGET AND AUTHORIZING EXPENDITURES FOR FISCAL YEAR 2007/08.


WHEREAS, the Redevelopment Agency of the City of Brentwood (“Agency”) has reviewed the financial condition of the Agency; and

WHEREAS, the Agency’s Merged Brentwood and North Brentwood Project Fund, Debt Service Fund, and Low/Moderate Housing Fund are financially stable and healthy; and

WHEREAS, the Agency desires to memorialize its expenditure approvals for redevelopment projects and activities that will facilitate commercial, retail, and industrial development programs, public improvements and community facilities programs, and the assistance and participation in the expansion and improvement of the supply of very low, low and moderate income housing, while investing tax increment receipts and bond proceeds in projects that will generate increased tax increment; and

WHEREAS, a duly noticed public hearing was held on June 26, 2007.

NOW, THEREFORE BE IT RESOLVED AS FOLLOWS:

Section 1. The Agency hereby finds and determines that the planning and administrative expenses in the Low/Moderate Housing Fund are necessary for the production, improvement, or preservation of very low, low and moderate income housing, and for programs and activities authorized under Health & Safety Code Section 33334.2.

Section 2. The Redevelopment Agency of the City of Brentwood hereby adopts its 2007/08 and 2008/09 Budget and authorizes expenditures for Fiscal Year 2007/08.

PASSED, APPROVED AND ADOPTED by the Redevelopment Agency of the City of Brentwood at a regular meeting held on the 26th day of June 2007 by the following vote:

 

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