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HomeMy WebLinkAboutStaff Report 107-10TO: HONORABLE REDEVELOPMENT AGENCY BOARD FROM: EXECUTIVE DIRECTOR DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT DATE: JANUARY 11, 2010 CMR: 107:10 TYPE OF REPORT: ACTION ITEM SUBJECT: 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 fiscal year ending June 30, 2009; and 2. Review and accept the Palo Alto Redevelopment Agency Annual Report (Attachment A). 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 Redevelopment 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 Office. DISCUSSION Currently, although there is a Redevelopment Agency, the City has not designated any Redevelopment Project Areas for revitalization. No tax increment revenues are available to the City for the funding of projects or activities, nor are any activities anticipated in the near future. As a result, no activities affecting housing and displacement according to Sections 33080.4 and 33080.7 have occurred. Redevelopment agencies can be an effective tool for development in blighted areas, but currently there is no area in Palo Alto that meets this criterion. CMR: 107:10 1 of 2 Since the annual cost of $6,000 for the annual required financial review and audit and minimal staff time are necessary to maintain the agency, staff recommends maintaining the redevelopment agency in the event that an area that meets the criteria would emerge. This could happen as a result of economic decline and/or a post disaster response to flooding or other natural disaster. Having the agency in place would provide a timely tool for the City to address impacted 'commercial and/or residential areas in a time of need. As a requirement of California State Law Section 33080.1, the annual report of the Palo Alto Redevelopment Agency is attached to this staff report for review and acceptance by the Agency board (Attachment A). The report includes: • Independent Financial Audit Report • Fiscal Statement of previous year's achievements RESOURCE IMPACT The existing cooperative agreement between the City and the Agency will be updated to include the $6,000 in expenditures for an annual audit for fiscal year 2008-09. Staff anticipates that the only recurring expense will be the annual $6,000 audit cost. POLICY IMPLICATIONS This report is consistent with current Council policy. ENVIRONMENTAL REVIEW This action by the City Council is not considered a project pursuant to Section 21065 of the California Environmental Quality Act. PREPARED BY: DEPARTMENT HEAD: EXECUTIVE DIRECTOR APPROVAL: S AN L. BA ES, Manager Economic Development/ Redevelopment CURTIS WILLIA1VIS, Director Planning and Community Environment JA � ENE Ex- e Director ATTACHMENTS Attachment A: Redevelopment Agency of the City of Palo Alto Component Unit Financial Statements CMR: 107:10 2 of 2 ATTACHMENT A REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO BASIC COMPONENT UNIT FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 This Page Left Intentionally Blank REDEVELOPMENT AGENCY OF 1'HE CITY OF PALO ALTO BASIC COMPONENT UNIT FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 TABLE OF CONTENTS Page FINANCIAL SECTION: Independent Auditor's Report 1 Management's Discussion and Analysis 3 Component Unit Financial Statements: Agency -wide Financial Statements: Statement of Net Assets 5 Statement of Activities 6 Fund Financial Statements: Balance Sheet 8 Statement of Revenues, Expenditures, and Changes in Fund Balance 9 Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 10 Notes to Basic Component Unit Financial Statements 11 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 15 This Page Left Intentionally Blank MAZE & ASSOCIATES ACCOUNTANCY CORPORATION 3478 Buskirk Ave. - Suite 215 Pleasant Hill, California 94523 (925) 930-0902 • FAX (925) 930-0135 maze@mazeassociates.com www.mazeassociates.com INDEPENDENT AUDITOR'S REPORT ON'1'HEE FINANCIAL STATEMENTS Board of Directors of the Redevelopment Agency of the City of Palo Alto Palo Alto, California We have audited the accompanying component unit fmancial statements of the governmental activities and major fund of the Redevelopment Agency of the City of Palo Alto, a component unit of the City of Palo Alto, as of and for the year ended June 30, 2009, 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 fmancial 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 fmancial statements are free of material misstatement. An audit includes examining on a test basis evidence supporting the amounts and disclosures in the component unit fmancial statements. An audit also includes 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 opinion. In accordance with Government Auditing Standards, we have also issued our report dated, October 23, 2009 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, and 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 fmancial 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. 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 major fund of the Redevelopment Agency of the City of Palo Alto for the year ended June 30, 2009 and the changes in financial position for the year then ended, in conformity 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 fmancial 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 23, 2009 A Professional Corporation 1 This Page Left Intentionally Blank MANAGEMENT'S DISCUSSION AND ANALYSIS The Redevelopment 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 2009 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 2009, the Agency incurred on -going costs in the amount of $6 thousand, the same as prior year. The Agency received a transfer from the City of Palo Alto in the amount $6 thousand to fund these costs, the same as prior year. As of June 30, 2009, 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 fmancial statements, along with the Notes to these fmancial 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 fmancial 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. 3 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 finances. Questions about these Statements should be directed to the Finance Department of the City of Palo Alto, 250 Hamilton Avenue, CA 94301. 4 THE REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO A COMPONENT UNIT OF THE CITY OF PALO ALTO STATEMENT OF NET ASSETS JUNE 30, 2009 Accounts payable Unrestricted LIABILITIES NET ASSETS See accompanying notes to financial statements 5 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, 2009 EXPENSES Planning and Community Reimbursements to the City ($6,000) Change in Net Assets GENERAL REVENUES Transfer from the City of Palo Alto Net assets at the beginning of year Net assets at the end of year See accompanying notes to financial statements (6,000) 6,000 6 REDEVELOPMENT AGENCY OF 1HE CITY OF PALO ALTO 1 FUND FINANCIAL STATEMENTS 1 The Redevelopment Agency (Agency) of the City of Palo Alto only has one fund in fiscal 2009. REDEVELOPMENT AGENCY GENERAL FUND This fund accounts for the activities of establishing and administering the Agency. 7 THE REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO A COMPONENT UNIT OF THE CITY OF PALO ALTO BALANCE SHEET JUNE 30, 2009 General Fund LIABILITIES Due to the City of Palo Alto FUND BALANCE Unreserved, undesignated Total Fund Balance Total Liabilities and Fund Balance See accompanying notes to financial statements 8 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 BALANCE FOR THE YEAR ENDED JUNE 30, 2009 General Fund OTHER FINANCING SOURCES (USES) Transfer in from the City of Palo Alto (Note 2) Transfer (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 $6,000 (6,000) 9 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 BALANCE - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2009 Variance with Budgeted Amount Final Budget Actual Amount Positive Adopted Adjusted Budgetary Basis (Negative) OTHER FINANCING SOURCES (USES) Transfer in from the City of Palo Alto $9,000 $9,000 $6,000 ($3,000) Transfer out to the City of Palo Alto (9,000) (9,000) (6,000) 3,000 Total Other Financing Sources (Uses) Fund balance at beginning of year Fund balance at end of year See accompanying notes to financial statements 10 THE REDEVELOPMENT AGENCY OF THE CITY OF PALO ALTO Notes to Basic Component Unit Financial Statements For the Year Ended June 30, 2009 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Agency reported the following major governmental fund in the accompanying financial statements: REDEVELOPMENT AGENCY GENERAL FUND This fund accounts for the activities of establishing and administering the Redevelopment Agency. D. Basis of Accounting The Agency -wide financial statements are reported using the 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 when measurable 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 funds. 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 receiving 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, intergovernmental revenues, interest and charges for services. E. Budgets and Budgetary Accounting Budgets are adopted on a basis consistent with generally accepted accounting 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 management 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. F. 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 1 H CITY OF PALO ALTO Notes to Basic Component Unit Financial Statements For the Year Ended June 30, 2009 NOTE 1- SUMMARY OF SIGNIFICANT ACCOUNT POLICIES (Continued) G. Fund Balances, Reserves and Designations In the fund fmancial 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 1HE 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 startup and formation costs. However, the interfund advances have no specific repayment date. Generally accepted accounting principles require that such amounts be treated as transfers in the year made. 13 This Page Left Intentionally Blank MAZE & ASSOCIATES ACCOUNTANCY CORPORATION 3478 Buskirk Ave. - Suite 215 Pleasant Hill, California 94523 (925) 930-0902 • FAX (925) 930-0135 maze@mazeassociates.com www.mazeassociates.com 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 Board of Directors of the Redevelopment Agency of the City of Palo Alto Palo Alto, California We have audited the financial statements of the Redevelopment Agency of the City of Palo Alto as of and for the year ended June 30, 2009, and have issued our report thereon dated October 23, 2009. We have conducted our audit in accordance with generally accepted auditing standards 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 control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the Agency's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the Agency's financial statements that is more than inconsequential will not be prevented or detected by the Agency's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the Agency's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the second paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. As part of our audit, we prepared and issued our separate Memorandum on Internal Control dated October 23, 2009. A Professional Corporation 15 Compliance and Other Matters As part of obtaining reasonable assurance about whether the Agency's fmancial 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 California 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 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. `mom- 444 October 23, 2009 16