AGENCY AGENDA ITEM NO. 6
Meeting Date: June 10, 2003
Subject/Title: Approve Resolution to Adopt the Redevelopment Agency of the City of Brentwood’s 2003/04 and 2004/05 Budget and Authorize Expenditures for Fiscal Years 2003/04 and 2004/05.
Submitted by: Pamela Ehler, Agency Treasurer
Approved by: John Stevenson, Executive Director
The 2002/03 annual budget was amended by the Agency on June 25, 2002, by Resolution No. RA-55.
The financial status of the Brentwood Redevelopment Agency is sound. The Redevelopment Agency’s projected Fund Balance as of June 30, 2003 is approximately $14,394,000. Of this amount, the Tax Allocation Bond Proceeds accounts for approximately $10,500,000, Administration Fund for $1.2M, Debt Service Fund for $900,000, and the Housing Fund accounts for $1,800,000 (refer to page 10 of the attached budget).
Due to financially merging the Redevelopment Project Areas in 2000, funds will be consolidated commencing July 1, 2003, effectively reducing 5 funds to 3 active funds for greater manageability. The Merged Administration Fund 301 is the fund from which the majority of Agency’s administrative, project, capital improvements, and general operational expenses are paid. The two remaining funds, Debt Service and Housing Fund, are reserved for those specific purposes.
The attached budget presents the Agency’s revenue forecast (pages 11 and 12). 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 anticipates an approximate 10% increase in tax increment for 2003/04, and almost 7% increase for 2004/05.Eighty percent of the tax increment revenues are deposited into the Debt Service Fund to first pay bond indebtedness; then, after bond debt is paid, remaining tax increment revenues can be transferred to the general operation/administration fund as needed throughout the year. This is identified as transfer from RDA Debt Service in the amounts of $412,000 and $436,000 in Fund 301.
Land sale proceeds for Agency projects, such as the Sunset Industrial Complex and Oak and Walnut Project, are anticipated during the two-year budget. The Agency used a portion of the Tax Allocation Bond Proceeds to fund the infrastructure improvements at Sunset Industrial Complex. As the parcels are sold, the Agency will be reimbursed its investment.
In summary, we expect total revenues of $8.4M in 2003/04 and $4.9M in 2004/05.
Debt Service (Fund 303) (80% of tax increment revenues)
As the Agency is aware, its first obligation is the annual debt service payments on its outstanding Tax Allocation Bonds issued in 2001, which runs about $1,370,000 yearly, and the Certificates of Participation (COPs). The COPs final payment of $80,000 is scheduled for 2003/04. The projected property tax increment revenue stream is 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 in 2003/04 due to a step-up in negotiated payments and initiation of statutory payments for both Project Areas. Pass-through payments are estimated at $530,000 for 2003/04 and $690,000 for 2004/05.
Furthermore, the State budget threat to redevelopment agencies continues. For 2002/03, the Governor imposed a $75M shift of revenues from redevelopment agencies to the Educational Revenue Allocation Fund (ERAF), thereby saving the State’s general fund a corresponding amount. This resulted in an ERAF payment of approximately $84,000 from the Brentwood Redevelopment Agency. As of this writing, the Governor’s proposed budget for next fiscal year would shift more than three times that amount, for a total of $280,000 in 2003/04.
In summary, forecasted Debt Service expenses, including transfers from RDA Debt Service, are $2.7M for 2003/04 and $2.8 for 2004/05. These expenses are reflected on page 22 of the Agency budget.
Non-Housing Programs and Projects (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.
Over $4.2 million of the two-year Agency budget is directly related to capital improvement projects identified by the Agency Board to be funded by Tax Allocation Bond Proceeds. These include O’Hara Avenue/Second Street realignment ($1M), improved water and sewer lines in the Downtown Area ($625,000), a portable stage for City Park events ($150,000), and financial support of the first phases of a potential parking structure project ($2.5M).
The Agency’s financial participation in public/private agreements to achieve non-housing redevelopment goals and objectives is estimated at $1.5 during the two-year budget period. These expenses are described as “contributions to other parties/agencies” in Fund 301 (page 16), and include such projects as Sand Creek Business Center, Gregory Ranch, and Business Relocation Assistance Program.
The upcoming redevelopment program objectives are to initiate planning for the eventual redevelopment of the Oak and Walnut Project; to implement a business assistance program for legal, non-conforming businesses along the Brentwood Boulevard to relocate to Sunset Industrial Park; to complete Phase 2 of the Downtown Parking Study and implement an approved parking structure redevelopment project; to fund the summer concert series; to negotiate a reimbursement agreement for roadway improvements at Central Business Park; and to formulate and implement long-term strategies to expand commercial, retail and industrial opportunities and growth in the Merged Project Areas.
Expenditures for the above-described projects and programs will include property appraisals, relocation assistance, environmental and geo-technical evaluations, financial feasibility studies, needs and market analyses, subsidy analyses, tax increment projections, policy and program design, re-use analyses and strategies, legal services, replacement and relocation plans, acquisition and relocation consultants, and escrow services.
Housing Programs and Projects 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 the Casitas Del Sol and Sycamore Place II projects; to continue to participate in affordable housing developments inside and outside the Project Areas such as First Street 8-plex, Habitat for Humanity, Villa Amador, and Sycamore Square; 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 $1.8M in support of affordable housing redevelopment goals and objectives. These expenses are described as “contributions to other parties/agencies” in Fund 302 (page 20).
Personnel costs are expected to increase with the addition of a full-time Housing Manager to plan, manage and coordinate the Agency’s housing finance assistance and housing development programs.
2004/05 revenues of $4,872,653 and usage of Tax Allocation Bond Proceeds will be sufficient to fund the project 2004/05 administrative, project, capital improvement, debt service and housing expenses of $7,526,678.
Attachments: Resolution No.
RESOLUTION NO. RA-
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD ADOPTING ITS 2003/04 and 2004/05 BUDGET AND AUTHORIZING EXPENDITURES FOR FISCAL YEAR 2003/04.
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 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 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 10, 2003.
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 2003/04 and 2004/05 Budget and authorizes expenditures for Fiscal Year 2003/04.
PASSED, APPROVED AND ADOPTED by the Redevelopment Agency of the City of Brentwood at a regular meeting held on the 10th day of June, 2003 by the following vote:
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
Fax (925) 516-5441