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Home My WebLink AboutMINUTES - 01142003 - C49 TO: REDEVELOPMENT AGENCY FROM: Jahn Sweeten Executive Director DATE: January 14, 2003 SUBJECT: Audited Financial Report SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATIONS ACCEPT the Fiscal Year 2002 Audited Financial Report prepared by Macias, Gini, and Company; and on file with the Redevelopment Director. FISCAL IMPACT None. BACKGROUND The Agency is required to complete an annual independent audit of its financial statements. The independent auditor, Macias, Gini, and Company, has issued its report and an unqualified opinion on the Agency's compliance with generally accepted accounting standards. i CONTINUED ON ATTACHMENT: YES SIGNATURE: ---RECOMMENDATION OF EXECUTIVE DIRECTOR ECOM ATION OF GENCY COMMITTEE 4,,APPROVE OTHER SIGNATURE{ , ACTION OF A �Y ON January 14, 2003 APPROVED AS RECOMMENDED„x OTHER VOTE OF COMMISSIONERS I HEREBY CERTIFY THAT THIS IS A x UNANIMOUS (ABSENT Mane ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE REDEVELOPMENT AGENCY ON THE DATE SHOWN. Contact: Jim Kennedy 335-1255 ATTESTED January 14. 200 prig: Redevelopment cc: County Administrator's Office JOHN SWEETEN County Counsel AGENCY SECRETARY Auditor-Controller BY , DEPUTY Personal\boardorders\BOSRDA. 1 . 14 . 02 .auditedfinancial .rpt . CONTRA COSTA COUNTY REDEVELOPMENT AGENCY (A Component Unit of the County of Contra Costa, California) Independent Auditor's Reports, Management's Discussion and Analysis, Basic Financial Statements, and Supplementary Information For the Fiscal Year Ended Jane 30, 2002- --- - / CONTRA COSTA CO0NTY REDEVELOPMENT AGENCY For the Fiscal Year Ended June 30. 2002 Table mpContents Page(s) IndependentAuditor's Report ...................................................................................... l Management's Discussion and Analysis (Required Supplementary Information) .....................3 Basic Financial Statements: Government-wide Financial Statements: Statementof Net Assets........................................................................................6 Statementof Activities ........................................'................................................7 Fund Financial Statements Funds): Balance 8boeL..—......——..—.——....--.....~--..--..—..—....8 ' 9 Reconciliation of the Balance Sheet of Governmental Funds 0othe Statement ofNet Assets Of Governmental Activities ............................................. lU Statement ofRevenues, Expendituresand Changes io FundBalances ........................................................^.............,................1I - l2 Reconciliation of the Statement of Revenues, Expenditures, and Changes ioFund Balances o[Governmental'Funda-to the - Statement of Activities ofGov zeot ..... .........�.�`.......... ^._;..........'_.`'l ! - Fiduciary Fund Financial Statements Statement ofFiduciary Net Assets................—...'''..'.'........^...........,................... 14 Statement ofChanges in Fiduciary Net Assets ........................................................ 15 Notes to Basic I7bnunobd Statements........................................................................... 16 Supplementary Information (Combining and Individual Fund Statements and Schedules): Other GovczoozuentalFunds: CombiningBalance Sheet .......................'......^.....—............`..,.......,................ 27 Combining Statement of Revenues, Expenditures and Changes in FundB8]uooeG .'.................................................................,...................28 - 30 Independent Auditor's Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Basic Financial Statements Performed in Accordance with Government Auditing Standards ........................................................31 - 32 The Board of Directors Contra Costa County Redevelopment Agency Martinez, California INDEPENDENT AUDITOR'S REPORT We have audited the accompanying financial statements of the governmental activities, each major fund and the aggregate remaining fund information of the Contra Costa County Redevelopment Agency (the Agency), a component unit of the County of Contra Costa, California, as of and for the fiscal year ended June 30, 2002, which collectively comprise the Agency's basic financial statements as listed in the accompanying table of contents. These financial statements are the responsibility of the Agency's management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained ire 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 about whether the financial statements--are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial 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 opinions. In our opinion, the financial statements referred to in the first paragraph present fairly, in all material respects, the respective financial position of the governmental activities, each major fund and the aggregate remaining fund information of the Agency as of June 30, 2002, and the respective changes in financial position thereof for the fiscal year then ended in conformity with accounting principles generally accepted in the United States of America. As described in Note I to the basic financial statements, the Agency adopted the provisions of the Governmental Accounting Standards Board (GASB) Statement No, 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments; GASB Statement No. 37, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments. Omnibus; GASB Statement No. 38, Certain Financial Statement Note Disclosures; and GASB Interpretation No. 6, Recognition and Measurement of Certain Liabilities and Expenditures in Governmental Fund Financial Statements, as of July 1, 2001. 1 In accordance with Government Auditing Standards, we have also issued our report dated December 12, 2002, on our consideration of the Agency's internal control over financial reporting and on our tests of its compliance with certain provisions of Iaws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. The Management's Discussion and Analysis (MD&A) and the budgetary comparison information, as listed in the accompanying table of contents, are not a required part of the basic financial statements but are supplementary information required by the GASB. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Agency's basic financial statements. The supplementary information identified in the accompanying table of contents is presented for purposes of additional analysis and is not a required 'part of the basic financial statements of the Agency. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Certified Public Accountants Walnut Creek, California - December 12, 2002 2 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY STATEMENT OF NET ASSETS GOVERNMENTAL ACTIVITIES JUNE 30, 2002 ASSETS Cash and investments $ 46,866,500 Restricted cash and investments 4,442,970 Receivables, net 428,812 Prepaids and deposits 100,000 Notes receivable 1,739,660 Land held for resale 189,460 Nondepreciable capital assets - land 3,244,800 Total assets 57,012,202 LIABILITIES Accounts payable and accrued liabilities 428,919 Accrued interest 1,091,161 Noncurrent liabilities: Due within one year 805,000 ear y Due in more than one 51,323,064. Total liabilities 53,648,144 NET ASSETS (DEFICIT) Invested in capital assets 3,244,800 Restricted for: Housing projects 2,355,687 Debt service 5,838,670 Unrestricted (deficit) (8,075,099) Total net assets (deficit) $ 3,364,058 See accompanying notes to the basic financial statements. 6 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY STATEMENT OF ACTIVITIES GOVERNMENTAL ACTIVITIES FOR THE FISCAL YEAR ENDED JUNE 30, 2002 Capital Debt Total Projects Housing Service Expenses. General administration $ 939,885 $ 933,957 $ 5,928 $ - Fiscal agreement passthroughs 684,898 684,898 - County administration fee 74,453 59,562 14,891 - Operation and management of property 161,807 43,171 118,636 Project costs 2,766,194 1,515,926 1,250,268 Planning, survey and design 172,091 158,106 13,985 - Professional services 402,643 402,643 - Interest on debt 2,467,465 - - 2,467,465 Total expenses 7,669,436 3,798,263 1,403,708 2,467,465 Program revenues: Operating grants and contributions 588,394 588,394 - Net program expenses (7,081,042) $ (3,209,869) $ (1,403,708) $ (2,467,465) General.revenues: Taxes _ 7,371,581 Investment income -- 2,330,585 Other 26,194 Total general revenues 9,728,360 Change in net assets 2,647,318 Net assets, beginning of year 716,740 Net assets, end of year $ 3,364,058 See accompanying notes to the basic financial statements. 7 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2002 7 Pleasant Hill BART Housing Capital Projects Capital Projects Debt Service Fund Fund Fund ASSETS Cash and investments $ 29,687,889 $ 1,091,863 $ 1,611,684 Restricted cash and investments - - 2,757,010 Interest receivable - - 54,612 Accounts receivable - - - Due from Contra Costa County 109,018 26,590 - Due from other funds 16,637 - - Prepaids and deposits - 100,000 Notes receivable _ 350,000 Land held for resale - - - Total assets $ 29,813,544 $ 1,568,453 $ 4,423,306 LIABILITIES_ Accouats payable.and accrued 11abilities -$ 44,469 $ - $ - Due to Contra Costa County 71,878 281 59 Due to other funds - 16,637 - Accrued interest - - 673,033 Deferred revenue - 350,000 - Total liabilities 116,287 366,918 673,092 FUND BALANCES Reserved for: Encumbrances - - Prepaids and deposits - 100,000 - Land held for resale - - - Housing projects - 1,101,535 - Debt service - - 3,750,214 Unreserved, reported in Capital projects funds 29,697,257 - - Total fund balances 29,697,257 1,201,535 3,750,214 Total liabilities and fund balances $ 29,813,544 $ 1,568,453 $ 4,423,306 See accompanying notes to the basic financial statements. 8 North Richmond Bay Paint Housing Other Capital Projects Capital Projects Capital Projects Governmental Fund Fund Fund Funds Total $ 4,351,177 $ 2,778,838 $ 807,756 $ 6,537,293 $ 46,866,500 - - - 1,685,960 4,442,970 397 799 339 37,621 93,768 - - - 786 786 67,720 41,200 10,300 79,430 334,258 133,004 47,226 91,774 50,226 338,867 - - - - 100,000 - _ 1,314,660 75,000 1,739,660 - - - 189,460 189,460 $ 4,552,298 $ 2,868,063 $ 2,224,829 $ 8,655,776 $ 54,106,269 $ 57,934 $ -18,-680 $ - $ - -10,275 -$ 131,298 169,873 14,521 24 40,985 297,621 3,414 91,281 43,812 183,723 338,867 - - - 418,128 1,091,161 - - 1,314,660 75,000 1,739,660 231,221 124,482 1,358,496 728,111 3,598,607 - 28,851 - 7,893 36,744 - - - 100,000 - 189,460 189,460 866,333 2,617,235 4,585,103 - - - 2,178,130 5,928,344 4,321,077 2,714,730 - 2,934,947 39,668,011 4,321,077 2,743,581 866,333 7,927,665 50,507,662 $ 4,552,298 $ 2,868,063 $ 2,224,829 $ 8,655,776 $ 54,106,269 9 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS OF GOVERNMENTAL ACTIVITIES JUNE 30, 2002 Fund balances of all governmental funds (page 9) $ 50,507,662 Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. 3,244,800 Notes receivable are not available to pay for the current period expenditures and, therefore, are deferred on the modified accrual basis. 1,739,660 Long-term liabilities, including advances from Contra Costa County and bonds payable, are not due and payable in the current period and, therefore, are not reported in the governmental funds. Advances from Contra Costa County, reported in Pleasant Hill BART Special Revenue Fund (3,358,128) North Richmond Capital Projects Fund (824,314) North Richmond Special Revenue Fund (610,948) North Richmond Debt-Service-Fund-- - (89,574)- 1992 Tax Allocation Bonds (7,425,000) 1995A Tax Allocation Bonds (1,505,000) 1995B Tax Allocation Bonds (2,525,000) 1999 Tax Allocation Bonds (35,790,000) (52,128,064) Net assets of governmental activities (page 6) $ 3,364,058 See accompanying notes to the basic financial statements. 10 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2002 Pleasant dill BART Housing Capital Projects Capital Projects Debt Service Fund Fund Fund REVENUES Property tax increment $ 1,328,788 $ 853,516 $ 2,085,276 = Aid from other governmental agencies 567,605 - - Use of money and property 1,316,962 35,868 (29,203) Other revenue 23,966 - - Total revenues 3,237,321 889,384 2,056,073 EXPENDITURES Current: General administration 383,093 237 219 Fiscal agreement passthroughs 186,604 - - County administration fee 35,302 8,826 - Operation and management of property 38,221 100,000 Capital outlay: Project improvements 125,702 553,150 - Planning, survey, and.design -107,532 - -� Professional services 205,321 - Debt service: Principal repayment - - 380,000 Interest - - 1,454,023 Total expenditures 1,081,775 662,213 1,834,242 EXCESS (DEFICIENCY) OF REVENUES OVER(UNDER) EXPENDITURES 2,155,546 227,171 221,831 OTHER FINANCING SOURCES (USES) Transfers in - - - Transfers out Total other financing sources (uses) - _ - CHANGE IN FUND BALANCES 2,155,546 227,171 221,831 FUND BALANCES, BEGINNING OF YEAR. As previously reported 27,541,711 (2,319,954) 3,528,383 Restatement for change in accounting principles - , 3,294,318 - As restated n 27,541,711 974,364 3,528,383 FUND BALANCEOF YEAR $ 29,697,257 $ 1,201,535 $ 3,750,214 See accompanying notes to the basic financial statements. 11 North Richmond Other Bay Point housing Capital Projects Capital Projects Capital Projects Governmental Fund Fund Fund Funds Total $ 622,924/ $ 306,489 $ 151,720 $ 2,022,868 $ 7,371,581 - 5,000 - 15,789 588,394 255,681 123,615 31,451 596,211 2,330,585 - 2,228 26,194 878,605 435,104 183,171 2,637,096 10,316,754 211,289 173,859 4,286 166,902 939,885 278,190 - - 220,104 684,898 10,137 6,934 1,734 11,520 74,453 4,950 - 10,000 8,636 161,807 1,313,024 11,716 82,500 680,102 2,766,194 50,574 - - 13,985 172,091 - 136,313 32,758 - 28,251 402,643-- - - - 320,000 700,000 - - - 908,232 2,362,255 2,004,477 225,267 98,520 2,357,732 8,264,226 (1,125,872) 209,837 84,651 279,364 2,052,528 - - 348,974 348,974 (81,537) (267,437) (348,974) (81,537) 81,537 - (1,125,872) 209,837 3,114 360,901 2,052,528 5,446,949 1,733,439 267,271 7,479,481 43,677,280 - 800,305 595,948 87,283 4,777,854 5,446,949 2,533,744 863,219 7,566,764 48,455,134 $ 4,321,077 $ 2,743,581 $ 866,333 $ 7,927,665 $ 50,507,662 12 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVER.NIIENTAL FUNDS TO THE STATEMENT OF ACTIVITIES OF GOVERNMENTAL ACTIVITIES FOR THE FISCAL, YEAR ENDED JUNE 30, 2002 Net change in fund balances -total governmental funds (page 12) $ 2,052,528 Amounts reported for governmental activities in the statement of activities are different because. Interest accrued on advances from Contra Costa County are deferred until an undesignated time in the future and, therefore, does not represent an expenditure on the modified accrual basis of accounting. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net assets. Accrued interest on advances, but deferred (105,210) Principal repayments tax allocation bonds 700,000 Change in net assets of governmental activities (page 7) $ 2,647,318 See accompanying notes to the basic financial statements. 13 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY STATEMENT OF FIDUCIARY NET ASSETS OAKLEY PRIVATE-PURPOSE TRUST FUND JUNE 30, 2002 ASSETS Cash and investments $ 5,402,910 Restricted cash and investments 507,061 Interest receivable 14,643 Total assets 5,924,614 LIABILITIES Accounts payable 141,571 Due to the County of Contra Costa 1,133 Total liabilities 142,704 NET ASSETS $ 5,781,910 See accompanying notes to the basic financial statements. 14 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS OAKLEY PRIVATE-PURPOSE TRUST FUND FOR THE FISCAL YEAR. ENDED JUNE 30, 2002 ADDITIONS Intergovernmental revenue $ 193,463 Investment income 106,948 Other revenue 506,660 Total additions 807,071 DEDUCTIONS Debt service: Principal repayment 135,000 Interest 167,826 Intergovernmental 1,683,713 Total deductions 1,986,539 CHANGE IN NET ASSETS (1,179,468) NET ASSETS, BEGINNING OF THE YEAR 6,961,378 NET ASSETS, END OF YEAR $ 5,781,910 See accompanying notes to the basic financial statements. 15 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY Notes to the Basic Financial Statements For the Fiscal Year Ended June 30, 2002 (1) Reporting Entity The Contra Costa County Redevelopment Agency (Agency) was created on December 6, 1983, for the purpose of redeveloping certain areas of Contra Costa County (County), designated as project areas. Currently, the members of the County Board of Supervisors serve as the Agency directors. The County and Agency entered into a joint exercise of powers agreement dated April 7, 1992 establishing the County of Contra Costa Public Financing Authority (Authority). The Authority is also governed by the Board of Supervisors, and as such, is an integral part of the County and Agency. Accordingly, all of the Authority's debt activity relating to the Agency is blended within the accompanying basic financial statements. See the Long-Term Liabilities note for debt issued by the Authority. The accompanying basic financial statements are included as a blended component unit in the County's basic financial statements. The Redevelopment agency consists of four project areas as of June 30, 2002. They are Pleasant Hill BART, Bay Point, North Richmond, and Rodeo. Effective July 1, 2000, the City of Oakley Redevelopment Agency assumed the rights, powers, responsibility and obligations of the Oakley Project Area; which was previously a project area managed by the Agency. The Agency performs some,fiduciary responsibilities over the Oakley Project Area and, accordingly, reports the activity in a private-purpose trust-fund. (2) Summary of Significant Accounting Policies The significant accounting policies of the Agency used in preparation of the accompanying basic financial statements are as follows: (a) Implementation of New Accounting Principles Governmental Accounting Standards Board (GASB) Statement No. 34 - The Agency adopted the provisions of GASB Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis -for State and Local Governments. This statement affects the manner in which the Agency records transactions and presents financial information. State and local governments have traditionally used a financial reporting model substantially different from the one used to prepare private-sector financial reports. GASB Statement No. 34 establishes new requirements and a new reporting model for the annual financial reports of state and local governments. The statement was developed to make annual reports of state and local governments easier to understand and more useful to the people who use governmental financial information to make decisions. Management°s Discussion and Analysis m GASB Statement No. 34 requires that financial statements be accompanied by a narrative introduction and analytical overview of the Agency's financial activities in the form of "management's discussion and analysis" (MD&A). This analysis is similar to the analysis provided in the annual reports of private- sector organizations. 16 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) For the Fiscal Year Ended June 30, 2002 Government-wide Financial Statements — The reporting model includes financial statements prepared using full accrual accounting for all of the Agency's activities. This approach includes not just current assets and liabilities but also capital and other long-term assets as well as long-term liabilities. Accrual accounting also reports all of the revenues and costs of providing services each year, not just those received or paid in the current year or soon thereafter. Statement of Net Assets -- The statement of net assets is designed to display the financial position of the government. The Agency now reports all capital assets in the government-wide statement of net assets and reports depreciation expense — the cost of "using up" capital assets — in the statement of activities. The net assets of the Agency are broken down into three categories— 1) invested in capital assets, net of related debt; 2) restricted; and 3)unrestricted. Statement of Activities —The statement of activities reports expenses and revenues in a format that focuses on the cast of each of the Agency's functions. The expense of individual functions is compared to the revenue generated directly by the function. Accordingly, the Agency has recorded capital and certain other long-term assets and liabilities in the statement of net assets, and has reported all revenues and the cost of providing services under the accrual basis of accounting in the statement of activities. Governmental Accounting Standards Board.--Statement No. 37_ -The Agency-adopted the-.: provisions of GASB Statement No. 37, Basic Financial Statements - and Management's- Discussion and Analysis -for State and.Local Governments: Omnibus. This statement amends GASB Statement No. 34 to either 1) clarify certain provisions or 2) modify other provisions that GASB believes may have unintended consequences in some circumstances. Accordingly, the Agency considered the effects of this statement when adopting the provisions of GASB Statement No. 34, as previously described. Governmental Accounting Standards Board Statement No. 38 - The Agency adopted the provisions of GASB Statement No. 38, Certain Financial Statement Note Disclosures. This statement modifies, establishes and rescinds certain financial statement disclosure requirements. Accordingly, certain footnote disclosures have been revised to conform to the provisions of GASB Statement No. 38. (b) Government-wide Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on the Agency's activities. For the most part, the effect of interfund activity has been removed from these statements. The Agency is only engaged in governmental activities, which normally are supported by taxes and intergovernmental revenues. When both restricted and unrestricted net assets are available, unrestricted resources are used only after the restricted resources are depleted. 17 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) For the Fiscal Year Ended June 30, 2002 The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. program revenues include grants that are restricted to meeting the operational or capital requirements of a particular function. Taxes and otheritems not properly included among program revenues are reported instead as general revenues. (c) Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements and fiduciary funds are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available if they are collected within 60 days of the end of the current fiscal year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. Interest on long-term obligations is generally recognized when paid. However, where resources have been provided during the current year for payment of interest due early in-the following year, the-expenditure _ and related liability are accrued. Property taxes, intergovernmental revenues and interest associated with the current fiscal period are all considered being susceptible to accrual and so have been recognized as revenues of the current fiscal period. All other revenue items are considered to be measurable and available only when the Agency receives cash. The Agency reports the following major governmental funds: Capital Projects Funds for the Pleasant .Hill .FART, Bay Point and North Richmond Project Areas - These funds are used to account for financial resources designated for the acquisition or construction of land and capital facilities or significant repairs or improvements thereto. Housing Capital Projects Funds for the Pleasant Hill BART and North Richmond Project Areas - These funds are used to account for financial resources designated for increasing and improving the supply of housing for persons and families of low or moderate income. Pleasant Hill BART Debt Service Fund -- This fund is used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. The Oakley Private-Purpose Trust Fund (a Fiduciary Fund Type) is used to account for the assets held by the Agency in a trustee capacity for the City of Oakley Redevelopment Agency. 18 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) For the Fiscal Year Ended June 30, 2002 (d) Capital Assets and Expenditures Capital assets are recorded at historical cost or at estimated historical cost if actual historical cost is not available. Contributed capital assets are valued at their estimated fair market value on the date contributed. Capital expenditures for certain projects, including acquisition of real property, site clearance and project improvements, are charged to expenditures when incurred. Management of the Agency intends to donate such land and infrastructure and therefore these assets have not been capitalized in the Agency's financial statements. However, appropriate records are maintained by the Agency for both management and accountability purposes. (e) Property Tax Increment California Redevelopment Law provides a means for financing and refinancing redevelopment projects based upon the allocation of taxes collected within a project area. The assessed valuation of a project area prior to adoption of the redevelopment plan, or base roll, is established and, except for any period during which the assessed valuation drops below the base roll, the taxing authorities thereafter receive the taxes produced by the levy of the current tax rate upon the base roll. Property taxes collected upon an increase in assessed valuation over the base roll are called tax increments. Each year the redevelopment project area receives this incremental amount. The Agency has elected to pass through a portion of its annual tax - - increment to various special districts under agreements with those districts. The -annual tax increment may be pledged by a redevelopment agency for the repayment of indebtedness incurred in financing or refinancing the project area. incremental property taxes are recognized as revenue when claimed and available from local taxing authorities. Contra Costa County assesses, collects and apportions property taxes as follows: Secured Unsecured Lien dates January 1 January 1 Levy dates January 1 January 1' Due dates 50% on November 1 January 1 50% on February 1 Delinquent as of December 10 (for November) August 31 April 10 (for February) Taxes are secured by liens on the property being taxed. The term "unsecured" refers to taxes on personal property other than land and buildings. Supplemental property taxes are levied based on changes in assessed values between the date of real property sales and construction and the next normal assessment date. (f) Encumbrances Encumbrance accounting, under which purchase orders, contracts and othercommitments for the expenditures of monies are recorded in order to reserve that portion of the applicable appropriation, is employed by the Agency. Encumbrances outstanding at year-end are reported as a reservation of fund balance since they do not constitute expenditures or liabilities. 19 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) For the Fiscal Year Ended June 30, 2002 (g) Investments The Agency records investment transactions on the trade date. Investments in nonparticipating interest-earning investment contracts (guaranteed investment contracts) are reported at cost, and all other investments are at fair value. Fair value is defined as the amount that the Authority could reasonably expect to receive for an investment in a current sale between a willing buyer and seller and is generally measured by quoted market prices. (h) Land held far resale Land acquired by the Agency for fixture sale is capitalized at cost. Such land is carried at the lower of cost or estimated net realizable value and is offset by a reservation of fund balance to indicate that the assets do not constitute available spendable resources. {i) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the basic financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimates. (3) Cash and Investments The Agency's cash and investments consist of the following at June 30, 2002: Governmental Private- Activities/ Purpose Trust Funds Fund Total Cash and investments $ 46,866,500 $ 5,402,910 $ 52,269,410 Restricted cash and investments 4,442,970 507,061 4,950,031 Total cash and investments $ 51,309,470 $ 5,909,971 $ 57,219,441 As permitted by the Government Code, the Agency directs the County Treasurer to make specific investments separate from the County pool of investments. Statutes and bond indentures authorize the Agency to invest in the State Treasurer's Local Agency Investment Fund (LAIF); obligations of the U.S. Treasury or its agencies; negotiable certificates of deposit; bankers acceptances; commercial paper; mutual funds invested in U.S. Government securities; and investment agreements in form and substance approved by the Trustee (including certain guaranteed investment contracts). The County Treasurer's investment pool, which encompasses its cash pool, is subject to regulatory oversight by the Treasury Oversight Committee, as required by the California Government Code Section 27134. The fair value of the Agency's position in the cash pool is the same as the value of the cash pool shares. 20 CONTRA COSTA COUNTY REDS` TLOPMENT AGENCY Votes to the Basic Financial Statements (Continued) For the Fiscal Year Ended June 30, 2002 The Local Investment Advisory Board (Board) has oversight responsibility for LAIF. The Board consists of five members as designated by State Statute. The value of the pool shares in LAIF that may be withdrawn is determined on the amortized cost basis, which is different from the fair value of the Agency's position in the pool. As of June 30, 2002, the Agency's proportionate share of structured notes and asset-backed securities held by the LAIF was $543,819 or 3.086% of the Agency's investment in LAIF. Information is not available on whether the various mutual funds in which the Agency has invested, used, held, or wrote derivative financial products during the year ended June 30, 2002. A summary of the Agency's investments at June 30, 2002 is shown below. For financial reporting purposes, investments are categorized to give an indication of the level of custodial credit risk assumed by the entity at year-end. Category 1 includes investments that are insured or registered, or with securities held by the Agency or its agent in the Agency's name. Investments not represented by marketable securities are not subject to custodial credit risk and, accordingly, are not required to be categorized Carrying Amount/Fair Value Uncategorized cash and investments: Guaranteed investment cont is _ $ 25,609,925 Mutual funds - 13,318,719 State Treasurer's Local Agency Investment Fund 17,622,120 County Treasurer's cash pool 668,677 Total cash and investments $ 57,219,441 Under the provisions of the tax allocation bond indentures, a portion of the proceeds were deposited in an amount required to be held in reserve accounts by the fiscal agent as trustee. These reserve accounts are reported in debt service funds. As of June 30, 2002, the amount held by the trustee was $4,950,031, which is equal to or in excess of the amount required at that date. (4) Notes Receivable A summary of notes receivable, by project, at June 30, 2002 is as follows: Coggins Square Apartments $ 350,000 Parkway Estates 733,000 North Richmond Senior Housing Project 581,660 Rodeo Senior Housing Project 75,000 $ 1,739,660 21 Tlq_ CONTRA COSTA COUNTY REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) For the Fiscal Year Ended June 30, 2002 Governmental funds report deferred revenues in connection with unearned revenue and receivables for revenues not considered available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At June 30, 2002, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows: Unavailable Housing Loans: North Richmond Special Revenue Fund $ 1,314,660 Pleasant Hill BART Special Revenue Fund 350,000 Cather governmental fund 75,000 Total $ 1,739,660 (5) Interfund Transactions Interfund Receivables/Payables -For the year ended June 30, 2002, the composition of Interfund balances reported in the governmental funds were as follows: Fund reporting receivable Fund reportingpav�able Amount Pleasant Hill BAR_T Capital Pleasant Hill BART Housing Project_Fund Capital Projects Fund _ $ 161637 Bay Point Capital Projects Fund Other governmental funds 133,004 North Richmond Capital Projects North Richmond Housing Capital Fund Projects Fund 43,812 North Richmond Capital Projects Bay Point Capital Projects Fund Fund 3,414 North Richmond Housing Capital North Richmond Capital Projects Projects Fund. Fund 41,281 North Richmond .Housing Capital Other governmental funds Projects Fund 493 Cather governmental funds Other governmental funds 50,226 Total $ 338,867 Interfund Transfers -For the year ended June 30, 2002, transfers between individual funds of the Agency reported in the governmental funds were as follows: Amount Receiving Fund Disbursin Fund Transferred Other governmental funds North Richmond Housing Capital Projects Fund $ 81,537 Other governmental funds Other governmental funds 267,437 Total $ 348,974 The transfers represent reimbursements of project costs and repayment of debt where the bond proceeds were used towards housing projects. 22 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY Motes to the Basic Financial Statements (Continued) For the Fiscal Year Ended June 30, 2002 (6) Lone-Term Debt The Agency's long-term debt payable at June 30, 2002 follows: Outstandin Annual Original g at Interest Principal Issue June 30, Maturity Rates Installments Amount 2002 (a) 1992 Tax Allocation Bonds: Redevelopment Project 2002-2022 5.25- 135,000-645,000 $29,315,000 7,425,000 7.20% (b) 1995 A Tax Allocation Bonds: Redevelopment Project 2002-2025 3.90- 20,000-- 115,000 1,645,000 1,505,000 6.00% (c) 1995 B Tax Allocation Bonds: Redevelopment Project 2002-2025 4.50- 40,000-200,000 2,735,000 2,525,000 7.25% (d) 1999 A Tax Allocation Bonds: Redevelopment Project 2002-2028 4.00- 450,000-3,250,000 44,615,000 35,790,000 5.13 Total Primary Government _ $47,245,OQ0 Debt service payments, as listed in the table on the previous page, are generally made from Property tax increment allocated to the Redevelopment Capital Projects Fund. The following is a summary of changes to long-term debt for the year ended June 30, 2002: Amount Due Balance Balance Within July 1, 2001 Additions Retirements :June 30,2002 One Year Governmental activities: Tax Allocation bonds 1992 $ 7,580,000 $ - $(155,000) $ 7,425,000 $ 165,000 1995A 1,530,000 - (25,000) 1,505,000 30,000 1995B 2,570,000 - (45,000) 2,525,000 50,000 1999 36,265,000 - (475,000) 35,790,000 560,000 Total debt 47,945,000 - (700,000) 47,245,000 805,000 Advances from the County Pleasant Hill BART Housing aital Projects Fund 3,294,318 63,810 - 3,358,128 - 800,305 24,009 - 824,314 - 595,948 15,000 - 610,948 87,283 2,391 - 89,674 - $52,722,854 $ 105,210 $(700,000) $52,128,064 $805,000- 23 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY Notes to the Basic Financial Statements(Continued) For the Fiscal Year Ended June 30, 2002 The outstanding advance of $3,358,128 in the Pleasant Hill BART Special Revenue Fund was made for the purchase of land and subsequent repayment of a note payable related to that land. The advance bears interest at 3% per annum. Interest as reported in the government-wide financial statements was $63,810 for the current year. Repayment of these advances will be made when sufficient tax increment funds become available. The outstanding advance of$610,948 in the North Richmond Special Revenue Fund was originaIIy made for specific project costs related to the North Richmond Senior Center. The advance bears interest at 3% per annum. Interest as reported in the government-wide financial statements was $15,000 for the current year. Repayment of this advance will be made when sufficient tax increment funds become available. The outstanding advance of$824,314 in advances the North Richmond Capital Projects Fund was originally made for specific project costs related to the North Richmond Commercial Center Project. The advance bears interest at 3% per annum. Interest as reported in the government-wide financial statements was $24,009 for the current year. Repayment of this advance will be made when sufficient tax increment funds become available. Advances from the County previously recorded in the General Long-Term Obligations Account Group at June 30, 2000 have been restated and subsequently moved to the North Richmond Capital Projects Fund. The advance represents $89,674 received to finance operations and improvements not associated with specific projects. The advance bears interest at 3% per-annum. Interest as reported on the government-wide financial statements was $2,391 for the current year. Repayment - of these advances will be made when sufficient tax increment funds become available. The pledge of tax increment funds to the County is subordinated to any such pledge of funds that the Agency makes in connection with the sale of bonds, notes or similar Agency obligations. Future bond debt service requirements (principal and interest) are as follows: Year ending Tax Allocation Bonds June 30: Principal Interest 2003 $ 805,000 $ 2,597,829 2004 850,000 2,557,568 2005 890,000 2,513,969 2006 920,000 2,468,198 2007 975,000 2,420,139 2008 - 2012 5,720,000 11,229,505 2013 - 2017 7,535,000 9,363,290 2018 - 2022 9,995,000 6,829,584 2023 - 2027 13,215,000 3,515,709 2028 - 2032 6,340,000 338,135 Total $ 47,245,000 $ 43,834,120 24 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY Notes to the Basic Financial Statements (Continued) For the Fiscal Year Ended June 30, 2002 (7) Relationship with Contra Costa County The Agency and the County are closely related but separate legal entities. The,Agency does not have any employees and does not have facilities separate from the County. Therefore, a portion of the Agency's expenditures represents services provided to the Agency by the County. In addition, the County performs project improvements and provides administrative services for projects. For the year ended June 30, 2002, the Agency paid approximately $1,954,983 to the County for project improvements and administrative services incurred by the Agency. (8) Fiscal agreement pass-through The Agency has property tax pass-through agreements with various taxing agencies in existence when the Agency was formed. Under these agreements, the Agency passes through to these various taxing agencies, a portion of the property tax increments it would otherwise have received. In fiscal year 2001(02, the County passed through increments totaling $684,898 directly to these agencies. (9) Commitments and Contingencies The Agency is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters. The Agency is included as part of the County's self-insurance program for public liability. As such, the Agency _is obligated to reimburse the County for the unfavorable outcome of any claims paid on behalf cif-the Agency. At- June 30, 2002, there are no significant claims outstanding in the self-insurance program for which the Agency is obligated. There have been no claims during the past three years that have exceeded excess insurance coverage. 25 Nq� CONTRA COSTA COUNTY REDEVELOPMENT AGENCY COMB ML NG BALANCE SHEET OTHER GOVERNMENTAL FUNDS JUNE 30, 2002 Bay Point North Housing Richmond Capital Projects Debt Service Debt Service ASSETS Fund Fund Fund Cash and investments $ 1,924,570 $ 535,160 $ 245,813 Restricted cash and investments - 950,508 510,751 Interest receivable - 13,531 18,627 Accounts receivable 786 - - Due from Contra Costa County 16,930 - Due from other funds - Notes receivable _ Land held for resale 189,460 - Total assets $ 2,131,746 $ 1,499,199 $ 775,191 LIABILITIES = Accounts payable and accrued liabilities $ - $ _ $ _ Due to Contra Costa County 662 47 62 Due to other funds 133,497 - - Accrued interest - 231,842 119,552 Deferred revenue - Total liabilities 134,159 231,889 119,614 FUND BALANCES Reserved for: Encumbrances - Land held for resale 189,460 Housing projects 1,808,127 - - Debt service - 1,267,310 655,577 Unreserved: Capital project funds - - _ Total fund balances 1,997,587 1,267,310 655,577 Total liabilities and fund balances $ 2,131,746 $ 1,499,199 $ 775,191 26 Rodeo Housing Capital Projects Capital Projects Debt Service Fund Fund Fund Total $ 2,893,034 $ 846,882 $ 91,834 $ 6,537,293 - - 224,701 1,685,960 5,463 37,621 - - - 786 50,000 12,500 - 79,430 50,226 - - 50,226 - 75,000 - 75,000 - - - 189,460 $ 2,993,260 $ 934,382 $ 321,998 $ 8,655,776 $ 10;275 $ - $ - $ 10,275 40,145 48 21 40,985 - 50,226 - 183,723 - 66,734 418,128 - 75,000 - 75,000 50,420 125,274 66,755 728,111 7,893 - - 7,893 - - - 189,460 809,108 - 2,617,235 - - 255,243 2,178,130 2,934,947 - - 2,934,947 2,942,840 809,108 255,243 7,927,665 $ 2,993,260 $ 934,382 $ 321,998 $ 8,655,776 27 CONTRA COSTA COUNTY REDEVELOPMENT AGENCY COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS FOR.THE FISCAL YEAR ENDED JUNE 30, 2002 Bay Point North Housing Richmond Capital Projects Debt Service Debt Service Fund Fund Fund REVENUES Property tax increment $ 289,039 $ 533,233 $ 300,389 Aid from other governmental agencies - - - Use of money and property 188,384 55,837 10,288 Other revenue - - - Total revenues 477,423 589,070 310,677 EXPENDITURES Current: General administration 1,242 134 132 Fiscal agreement passthroughs - - - County administration fee 2,534 - Operation-and management of property 8,636 - - Capital outlay; _ Project improvements - 42,900 - - Planning, survey and design 13,985 - - Professional services - - - Debt service: Principal repayment - 170,000 90,000 Interest - 503,683 258,718 Total expenditures 69,297 673,817 348,850 EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 408,126 (84,747) (38,173) OTHER FINANCING SOURCES (USES) Transfers in - 199,187 81,537 Transfers out (199,187) - - Total other financing sources (uses) (199,187) 199,187 81,537 CHANGE IN FUND BALANCES 208,939 114,440 43,364 FUND BALANCES, BEGINNING OF YEAR As previously reported 1,788,648 1,152,870 524,930 Restatement for change in accounting principles - - 87,283 As restated 1,788,648 1,152,870 612,213 FUND BALANCES, END OF YEAR $ 1,997,587 $ 1,267,310 $ 655,577 28 Rodeo Mousing Capital Projects Capital Projects Debt Service Fund Fund Fund Total $ 568,253 $ 180,041 $ 151,913 $ 2,022,868 15,789 - 15,789 136,460 203,905,1 1,337 596,211 21228 - - 2,228 722,730 383,946 153,250 2,637,096 165,185 163 46 166,902- 220,104 66,902220,104 - - 220,104 7,189 1,797 - 11,520 - 8,636 65,484 571,718 680,162 - - - 13,985 28,251 - - 28,251 - - 60,000 320,000 - 145,831 908,232 486,213 573,678 205,877 2,357,732 236,517 (189,732) (52,627) 279,364 68,250 348,974 (68,250) - (267,437) - (68,250) 68,250 81,537 236,517 (257,982) 15,623 360,901 2,706,323 1,067,090 239,620 7,479,481 - - - 87,283 2,706,323 1,067,090 239,620 7,566,764 $ 2,942,840 $ 809,108 $ 255,243 $ 7,927,665 29 TYkfl- The Board of Directors Contra Costa County Redevelopment Agency Martinez, California INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER.FINANCIAL REPORTING BASED ON AN AUDIT OF BASIC FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS We have audited the financial statements of the governmental activities and each major fund of the Contra Costa County Redevelopment Agency (the Agency), a component unit of the County of Contra Costa, California, as of and for the fiscal year ended June 30, 2002, which collectively comprise the Agency's basic financial statements and have issued our report thereon dated December 12, 2002, which includes an explanatory paragraph on the implementation of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments; GASB_ Statement_No. 37, Basic_ Financial Statements- - and Management's Discussion anrt_Analysis --for State and Local Governments:.Omnibus;sand GASB Statement No. 38, Certain Financial Statement Note Disclosures. We conducted- our audit -in accordance with auditing standards generally accepted 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. Compliance As part of obtaining reasonable assurance about whether the Agency's basic financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of basic financial statement amounts. Such provisions include those provisions of laws and regulations identified in the Guidelines for Compliance Audits of California Redevelopment Agencies, issued by the State Controller and is interpreted in the Suggested Auditing procedures for Accomplishing Compliance .Audits of California Redevelopment Agencies, issued by the Governmental Accounting and Auditing Committee of the California Society of Certified Public Accountants. 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. 30 Internal Control Over Financial Reporting In planning and performing our audit, we considered the Agency's internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the basic financial statements and not to provide assurance 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 low level the risk that misstatements in amounts that would be material in relation to the basic 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. This report is intended solely for the information and use of the members of the Agency's Board of .Directors, management, and the State Controller and is not intended to be and should not be used by anyone other than these specified parties. Certified Public Accountants Walnut Creek, California December 12, 2002