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REDEVELOPMENT AGENCY AGENDA ITEM NO. 7

Meeting Date: June 14, 2005

Subject/Title: Approve Resolution to Adopt the Redevelopment Agency of the City of Brentwood’s 2005/06 and 2006/07 Budget and Authorize Expenditures for Fiscal Year 2005/06.

Prepared by: Gina Rozenski, Redevelopment Manager

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

RECOMMENDATION
Approve Resolution adopting the Redevelopment Agency of the City of Brentwood’s 2005/06 and 2006/07 Budget and authorizing expenditures for fiscal year 2005/06.

PREVIOUS ACTION
The 2003/04 and 2004/05 annual budgets for the Brentwood Redevelopment Agency were approved by the Agency on June 20, 2003, by Resolution No. RA-69.

The Agency’s 2004/05 budget was amended on June 8, 2004, by Resolution No. RA-83. Amendments included new capital improvement projects, a re-allocation of the Housing Manager between the Agency and City, and an increase in pass-through payments to taxing agencies.

On January 11, 2005, the Agency amended its 2004/05 budget for mid-year adjustments that included a re-allocation of the Community Development Director and Housing Manager, an increase for the Agency’s contribution to Mercy Housing’s Villa Amador housing project, and an increase for the ERAF payment.

BACKGROUND
Financial Status

The financial status of the Brentwood Redevelopment Agency is sound. The Redevelopment Agency’s projected Fund Balance as of June 30, 2005 is approximately $14,730,000. Of this amount, the Tax Allocation Bond Proceeds account for approximately $7,500,000, Administration Fund for $3,850,000, Debt Service Fund for $1,945,000, and the Housing Fund accounts for $1,436,000.

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, 2007 will be approximately $11M.

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 3% increase of tax increment for 2005/06, and anticipates a reasonable 15% increase for 2006/07.

Tax increment revenues are split by depositing 80% into the Agency’s Debt Service Fund and 20% deposited into the Agency’s Housing Fund.

Land sale revenues from 159 Sycamore Drive for a 9-unit housing project is anticipated in 2005/06.

In summary, the Agency expects total revenues of $6.1M in 2005/06 and $7M in 2006/07.

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, pass-through payments and ERAF payments. After bond debt is paid, remaining tax increment revenues are transferred to the Administration Fund as needed throughout the year for administration and operational costs.

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 $959,000 for 2005/06 and $1.1M for 2006/07.

The instability of the State budget continues to threaten redevelopment agencies state-wide. For 2002/03, the State 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. The ERAF shift increased to $150M in 2003/04 and $250M in 2004/05 and 2005/06. Our Agency’s share of this shift is $337,000 in 2005/06.

In summary, forecasted Debt Service expenses are $3.6M for 2005/06 and $3.4M for 2006/07.

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.

Approximately $4.3 million of the Agency’s $6.3M two-year budget is directly related to capital improvement projects identified by the Agency Board to be funded by Tax Allocation Bond Proceeds.

The upcoming redevelopment program objectives are to continue the preparation of Specific Plans and associated environmental studies; implement the recommendations from the Specific Plans including an entertainment venue, parking facility and other community facilities such as a community playhouse; initiate planning, solicitation of developers and negotiation of development agreements for three development opportunities in the Downtown Project Area; prepare the necessary analyses for an upcoming bond issuance to position the Agency for future catalyst projects; and to formulate and implement long-term strategies to expand commercial, retail and industrial opportunities and job growth in the Merged Project Areas.

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, Eden Housing Brentwood Commons, and Mercy Housing Villa Amador projects; to create a Health & Safety Grant Program for emergency home repairs; 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 $2,737,500 in support of affordable housing redevelopment goals and objectives during the next two years, from the total Housing Program budget of $3.3M.

FISCAL IMPACT
2005/06 revenues of $6.1M, usage of Tax Allocation Bond Proceeds of $3.3M for capital improvements, and using the Housing Fund’s reserves to fund the Agency’s significant contributions to affordable housing projects over the next two years will be sufficient to fund the projected 2005/06 administrative, project, capital improvement, debt service and housing expenses of $10.2M.

2006/07 revenues of $7.0M and usage of Tax Allocation Bond Proceeds of $1.0M will be sufficient to fund the project 2006/07 administrative, project, capital improvement, debt service and housing expenses of $6.5M.

The Redevelopment Agency’s projected Fund Balance as of June 30, 2005 is approximately $14,730,000, and the Fund Balance is projected at $11M as of June 30, 2007.


Attachments: Resolution
Budget for Fiscal Years 2005/06 – 2006/07

RESOLUTION NO. RA-

A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD ADOPTING ITS 2005/06 and 2006/07 BUDGET AND AUTHORIZING EXPENDITURES FOR FISCAL YEAR 2005/06.

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 14, 2005.

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 2005/06 and 2006/07 Budget and authorizes expenditures for Fiscal Year 2005/06.

PASSED, APPROVED AND ADOPTED by the Redevelopment Agency of the City of Brentwood at a regular meeting held on the 14th day of June 2005 by the following vote:

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