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HomeMy WebLinkAboutStaff Report 122-07THE REDEVELOPMENT-AGENCY OF THE CITY OF PALO ALTO TO: FROM: DATE: . SUBJECT: HONORABLE REDEVELOPMENT AGENCY BOARD EXECUTIVE DIRECTOR JANUARY 22, 2007 EDR: 122:07 ANNUAL REDEVELOPMENT AGENCY MEETING AND APPROVAL OF REDEVELOPMENT AGENCY ANNUAL REPORT RECOMMENDATION Agency staff recommends that the Palo Alto Redevelopment Agency Board: 1. Hold the annual meeting of the Palo Alto Redevelopment Agency for the activities for the year ending June 30, 2006; and, 2. Approve the Palo Alto Redevelopment Agency Annual Report, which has been submitted to the California State Controller’s Office. .BACKGROUND On July 9, 2001, the Palo Alto City Council adopted an ordinance declaring the need.for a redevelopment agency to function in Palo Alto. The Council also declared the City Council to be the redevelopment agency and made the finding that the formation of a redevelopment agency "will serve the public interest and promote the public safety and welfare in an effective manner" in accordance with California State Health and Safety Code section 33200. California State Redevel@ment law requires that all redevelopment agencies, including the City of Palo Alto Redevelopment Agency (RDA), file an annual report with the California State Controller’s Offi.ce. DISCUSSION While the City has established a Redevelopment Agency, it has not established a project area. Consequently, the City does not conduct redevelopment activities. Staff, however, continues to EDR: 122:07 Page 1 of 2 250 Hamilton Avenue, PaloAlto, CA 94301 (650) 329-2392 review zones that would be appropriate and "right sized" project areas that meet the economic and physical Night requirements of redevelopment for possible inclusion as a redevelopment project area. .Staff will return to the City Council for future direction for the RDA or when an appropriate area is identified for further study. In addition to these activities, the annual report required by California State Law Section 33080.1 of the Palo Alto Redevelopment Agency is attached to this staff report for review and acceptance by the Agency board. The report includes: Independent Financial Audit Report Fiscal Statement of Previous Year’s Achievements Activities affecting Housing and Displacements RESOURCE IMPACT The existing cooperative agreement between the City and the Agency will be updated to include the $ 8,500 in expenditures incurred for fiscal year 2005-06. Staff does not anticipate incurring any new charges this fiscal year. POLICY IMPLICATIONS There are no policy implications at this time. ATTACHMENTS Attachment A: Redevelopment Agency Annual Report Attachment B: HCD Report on Low and Moderate Income Housing "Ec~onomic’D v~elo;ment/Red~velopmeit Manager EXECUTIVE DIRECTOR APPROVAL: F~r,~r~ D~zl,~zo 1 Executive Director EDR: 122:07 Page 2 of 2 ATTACHMENT A REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO COMPONENT UNIT FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30~ 2006 REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO COMPONENT UNIT FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2006 TABLE OF CONTENTS FINANCIAL SECTION: I Independent Auditor’s Report ...............................................................................................................................1 Management’s Discussion and Analysis ................................................................................................................3 Component Unit Financial Statements: Agency-wide Financial Statements: Statement of Net Assets ............................................................................................................................6 S~atement of Activities ..............................................................................................................................7 Fund Financial Statements: Agency Funds: Balance Sheet ................................................................................. .....................................~ ..................8 Statemems of Revenues, Expenditures, and Changes in Fund Balance ....: .........................................9 Statements of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual .........10 Notes to Component Unit Financial Statements ................................................................................11 Reporton Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Agency Auditing Standards .......................15 ASSOCIATES ACCOUNTANCY CORPORATION 347"8 Bustdrk Ave, ~ Suite 215 Pleasant Hill, California 94523 (925) 930.0902 o FAX (925) 930-0135 maze @ rnazeasso¢iates.corn www.rnazeassociates, corn INDEPENDENT AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS Board of Directors Redevelopment Agency of the City of Pale Alto Pale Alto, California We have audited the accompanying component unit financial statements of the governmental activities and major fund of the Redevelopment Agency of the City of Pale Alto, a component unit of the City of Pale Alto, as of and for the year ended June 30, 2006, as listed in the Table of Contents. These component unit financial statements are the responsibility of the Agency’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the United States of America and the standards for 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 as to whether the component unit financial statements are free of material misstatement. An audit includes examining on a test basis evidence suppo1~ing the amounts and disclosures in the component unit financial statements. An audit also includes assessing the accounting principles used and ~ignifieant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion, In accordance with Government Auditing Standards, we have also issued reports October 19, 2006 on our consideration of the Agency’s internal control structure and on its compliance with laws and regulations. In our opinion the component unit financial statements referred to above present fairly in all material respects the financial position of the governmental activities and maj or fund of the Redevelopment Agency of the City of Pale Alto for the year ended June 30, 2006 and the changes in financial position for the year then ended, in confonrdty with generally accepted accounting principles in the United States of America. Management’s Discussion and Analysis is not a required part of the basic component unit financial statements but is supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of required supplementary information. However we did not audit the information and we express no opinion on it. October 19, 2006 A Professional Corporation 1 MANAGEMENT’S DISCUSSION AND ANALYSIS The Redeve!opment Agency (Agency) of the City of Palo Alto, a component unit of the City of Palo Alto is controlled by the City of Palo Alto and was formed on October 9, 2001. FISCAL 2006 FINANCIAL HIGHLIGHTS-AGENCY-WIDE BASIS AND FUND BASIS GASB 34 requires the issuance of Agency-wide financial statements as well as fund financial statements. During fiscal year 2006, the Agency incurred on-going costs in the amount of $9 thousand, no change from prior year. The Agency received a transfer from the City of Palo Alto in the amount $9 thousand to fund these costs, no change from prior year. As of June 30, 2006, the Agency had not yet adopted a project area nor received any tax increment revenues. OVERVIEW OF THE AGENCY’S BASIC FINANCIAL STATEMENTS The Basic Financial statements are in two parts: 1)Management’s Discussion and Analysis (this part), 2)The Basic Financial Statements, which include the Agency-wide and the Fund financial statements, along with the No’~es to these financial statements. The Basic Financial Statements The Basic Financial Statements comprise the Agency-wide Financial Statements and .the Fund Financial activities and financial position-long-term and short-term. The Agency-wide Financial Statements provide a longer-term view of the Agency’s activities as a whole, and comprise the Statement of Net Assets and the Statement of Activities. The Statement of Net Assets provides information about the financial position of the Agency as a whole, including all its long-term liabilities on the full accrual basis, similar to that used by corporations. The Statement of Activities provides information about all the Agency’s revenues and all its expenses, also on the full accrual basis, with the emphasis on measuring net revenues or expenses of the Agency’s program. The Statement of Activities explains in detail the change in Net Assets for the year. The Fund Financial Statements report the Agency’s operations in more detail that the Agency-wide statements and focus primarily on the short-term activities. The Fund Financial Statements measure only current assets, liabilities and fund balances. Together, all these statements are now called the Basic Financial Statements. ECONOMIC OUTLOOK AND MAJOR INITIATES The economy of the City of Palo Alto and its major initiatives for the coming year are discussed in detail in the City’s Comprehensive Annual Financial Report. CONTACTING THE AGENCY’S FINANCIAL MANAGEMENT These Basic Financial Statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of the Agency’s f’mances. Questions about these Statements should be directed to the Finance Department of the City of Palo Alto, 250 Hamilton Avenue, CA 94301. REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO FUND STATEMENTSFINANCIAL The Redevelopment Agency (Agency) of the City of Palo Alto only has one fund in fiscal 2006, REDEVELOPMENT AGENCY GENERAL FUND This fund accounts for the activities of establishing and administering the Agency. I THE REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO A COMPONENT UNIT OF THE CITY OF PALO ALTO STATEMENT OF NET ASSETS JUNE 30, 2006 Accounts payable Unrestricted LIABILITIES NET AS SETS See accompanying notes to financial statements THE REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO A COMPONENT UNIT OF THE CITY OF PALO ALTO STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2006 EXPENSES Planning and Community Reimbursements to the City Change in Net Assets GENERAL REVENUES Transfers from the City of Palo Alto Net assets at the beginning ofyem’ Net assets at the end of year See accompanying notes to financial statements 8,500 THE REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO A COMPONENT UNIT OF THE CITY OF PALO ALTO BALANCE SHEET JUNE 30, 2006 LIABILITIES Due to the City of Palo Alto FUND BALANCES Unreserved, undesignated Total Fund Balance Total Liabilities and Fund Balance See accompanying notes to financial statements General Fund THE REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO A COMPONENT UNIT OF THE CITY OF PALO ALTO STATEMENTS OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE FOR THE YEAR ENDED JUNE 30, 2006 OTHER. FINANCING SOURCES (USES) Transfers in from the City of Palo Alto (Note 2) Transfers (out) to the City of Palo Alto (Note 2) Fund balance at beginning of year Fund balance at end of year See accompanying notes to financial statements General Fund THE REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO A COMPONENT UNIT OF THE CITY OF PALO ALTO STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANcEs - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2006 Budgeted Amount Adopted Adjusted Variance with Final Budget Actual Amount Positive Budgetal),,Basis,(Negative) OTHER FINANCING SOURCES (USES) Transfers in from the City of Palo Alto Transfers out to the City of Palo Alto $8,500 (8,~ ,00). $8,500(8,500), Total Other Financing Sources (Uses) Fund balance at beginning of year Fund balance at end of year See accompanying notes to financial statements 10 NOTE A. THE REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO Notes to Component Unit Financial Statements For the Year Ended June 30, 2006 1 - SUMMARY OF SIGNIFICANT ACCOUNT POLICIES Organization and Purpose The Redevelopment Agency (Agency) of the City of Palo Alto was created on October 9, 2001 under the provisions of the Redevelopment Law (California Health and Safety Code). The City Council serves as the governing body of the Agency and the City Manager seiwes as the Executive Director. The Agency is an integral pm’t of the City of Pato Alto and, accordingly, the accompanying financial statements are included as a component unit of flae basic financial statements prepared by the City. A component unit is a separate governmental unit, agency or nonprofit corporation which, when combined with all other component units, constitutes the reporting entity as defined in the City’s basic financial statements. Basis of Presentation The Agency’s Basic Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America. The Government Accounting Standards Board is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America. These Standards require that the financial statements described below be presented. Agency-wide Statements: The Statement of Net Assets and the Statement of Activities include the financial activities of the overall Agency government. Eliminations have been made to minimize the double counting of internal activities. The Statement of Activities presents a comparison between direct expenses and program revenues for each function of the Agency’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by the recipients of goods or services offered by the programs, (b) grants and contributions that are restricted to meeting the operational needs of a particular prograan and (c) fees, grants and contributions that are restricted to financing the acquisition or construction of capital assets. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Fund Financial Statements: The fund financial statements provide information about the Agency. The Agency considers the Redevelopment Agency General Fund to be a major fund. Major Funds Major funds are defined as funds that have either assets, liabilities, revenues or expenditures/expenses equal to ten percent of their fund-type total and five percent of the grand total. Major funds are identified and presented separately in the fund financial statements. The Agency reported the following major governmental fund in the accompanying financial statements: 11 NOTE F. THE REDEVELOPMENT AGENCY OF THE CITY OF PALe ALTO Notes to Component Unit Financial Statements For the Year Ended June 30, 2006 1 - SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Continued) REDEVELOPMENT AGENCY GENERAL FUND This fund accounts for the activities of establishing and administering the Redevelopment Agency. Basis of Accounting The Agency-wide financial statements are reported using flae economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized whenmeasurable and available. The Agency considers all revenues reported in the governmental funds to be available if the revenues are collected within sixty days after year-end. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental fimds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources. Non-exchange transactions, in which the Agency gives or receives value without directly reeelving or giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Other revenues susceptible to accrual include taxes, intergovernmentat revenues, interest and charges for services. Budgets and Budgetary Accounting Budgets are adopted on a basis consistent with generally accepted accouming principles (GAAP). Budget amounts in the financial statements are as originally adopted, or as amended by the Board. Formal budgetary integration is employed as a mmaagement control device. Encumbrance accounting is employed as an extension of formal budgetary integration, in all funds. Under encumbrance accounting, purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation. Encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities and are reappropriated in the following year. Net Assets Net Assets is the excess of all the Agency’s assets over all its liabilities, regardless of fund. Net Assets, which is determined only at the Agency-wide level, and is described below: Unrestricted describes the portion of Net Assets which is not restricted as to use. 12 THE REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO Notes to Component Unit Financial Statements For the Year Ended June 30~ 2006 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNT POLICIES(Continued) G. I Fund Balances, Reserves and Designations In the fund financial statements, fund balances represent the net current assets of each fund. Net current assets generally represent a fund’s cash and receivables, less its liabilities. NOTE 2 - TRANSACTIONS WITH THE CITY During fiscal year 2001-02, the City established the Redevelopment Agency. The Agency and the City have an agreement whereby the City will advance funds to the Agency in support of start up and formation costs. However, the interfund advances have no specific repaymentdate. Generally accepted accounting principles require that such amounts be treated as transfers in the year made. 13 ASSOCIATES ACCOUNTANCY CORPORATION 3478 Buskirk Ave. - Suite 215 Pleasant Hill, California 94523 (925) 930-0902o FAX (925) 930-0t35 maze @mazeassociates.comREPORT ON COMPLIANCE AND ON INTERNAL CONTROLwww.mazeassociates.com OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GO VERNMENT A UDITING STANDARDS Members of the Redevelopment Agency &the City of Pale Alto Pale Alto, California We have audited the financial statements of the Redevelopment Agency of the City of Pale Alto as of and for the year ended June 30, 2006, and have issued our report thereon dated October 19, 2006. We have conducted our audit in accordance with generally accepted auditing standards in (he 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 finaneiaI reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide an opinion on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively tow level tlae risk that misstatements caused by error or fraud in amounts that ,would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses, however we did communicate other matters to City Council in our separate Memorandum on Internal Controls dated October 19, 2006. Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. Our audit included tests of compliance with provisions of the Guidelines for Compliance Audits of Cal!fornia Redevelopment Agencies. 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 that are required to be reported under Government Auditing Standards. This report is intended for the information of the Agency Board, management and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than the above parties. October 19, 2006. A Professional Corporation ATTACHMENT B ABAG Fair Housing Needs Table Income Level Need Approved 1999 - 2006 Built 1999-2006 Unmet Need Very Low 265 214 158 51 Low 116 116 .116 0 Moderate 343 132 .......40 ’ 211 Above Moderate 673 673 673 The City has actually approved 1,922 above moderate units and 129 low income units but only 673 and 116, respectively, contribute to the Regional Housing Needs Assessment (RHNA). Approved Built Very Low Page Mill Court, 2700 Ash 24 24 Oak Court 42 42 Opportunity Center 88 88 Sunrise Senior Housing 4 4 901 San Antonio 56 0 Low Stanford West Silverwood (435 Sheridan) Oak Court *Stanford West Apts (Hyatt Senior Housing) Opportunity Center Sunrise Senior Housing 2051 El Camino Real 63 63 3 3 11 11 42 42 1 1 8 8 1 0 Moderate Cottages 17 17 Classics 4 4 Wisteria Ln 1 1 4131 El Camino Real 8 8 800 High 10 10 940 E Meadow 12 0 1101 E Meadow 11 0 2051 El Camino 1 0 4219 El Camino Real (Hyatt Rickeys)34 0 3270-3290 West Bayshore (Classics)10 0 Above Moderate Glenbrook Sub 14 14 1865-1869 El Camino Real 3 3 Stanford West 523 523 SOFA 44 44 Silverwood (435 Sheridan)32 32 Classics 22 22 Wisteria Ln 5 5 Stanford West Senior Housing 454 454 515 -518 Georgia Ave 3 3 SOFA Condo 66 66 800 High 50 50 Sunrise Senior Housing 69 69 940 E Meadow 64 0 1101 E Meadow 64 0 4219 El Camino Real (Hyatt Rickeys)147 0 1805 El Camino Real 2 0 1795 El Camino Real 2 0 3270-3290 West Bayshore (Classics)86 0.