NEW ISSUE – BOOK ENTRY ONLY RATING: S&P: “A-” See “CONCLUDING INFORMATION - Ratings” herein In the opinion of Aleshire & Wynder, LLP, Irvine, California, Bond Counsel to the Agency, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is exempt from State of California personal income taxes, and interest on the Series 2010A Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986. In the further opinion of Bond Counsel, interest on the Series 2010A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, nor is it included in adjusted current earnings in calculating corporate alternative minimum taxable income. INTEREST ON THE SERIES 2010A-T BONDS IS NOT INTENDED TO BE EXCLUDED PURSUANT TO SECTION 103(A) OF THE INTERNAL REVENUE CODE OF 1986 FROM THE GROSS INCOME OF THE OWNERS THEREOF FOR FEDERAL INCOME TAX PURPOSES. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. See “CONCLUDING INFORMATION – Tax Matters” herein. $40,560,000 CARSON REDEVELOPMENT AGENCY TAX ALLOCATION HOUSING BONDS $14,940,000 $25,620,000 Taxable Tax Allocation Housing Bonds 2010 Tax Allocation Housing Bonds Series A-T 2010 Series A Dated: Date of Delivery Due: As shown on the inside front cover
The Carson Redevelopment Agency (the “Agency”) will issue its Taxable Tax Allocation Housing Bonds, 2010 Series A-T (the “Series 2010A-T Bonds”) and its Tax Allocation Housing Bonds, 2010 Series A (the “Series 2010A Bonds,” and, together with the Series 2010A-T Bonds, collectively, the “Bonds”), pursuant to separate Indentures of Trust, each dated as of October 1, 2010 (the “Series 2010A-T Indenture” and the “Series 2010A Indenture,” and collectively, the “Indentures”), and by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee for the Bonds (the “Trustee”). The Bonds are special limited obligations of the Agency and are payable solely from and secured by a pledge of Housing Tax Revenues (as defined herein) receivable by the Agency with respect to the Redevelopment Project No. 1, Merged and Amended Project and Redevelopment Project No. 4 project areas (collectively, the “Project Areas”), and by a pledge of amounts in certain funds and accounts established under the Indentures, as further discussed herein. The Series 2010A-T Bonds and Series 2010A Bonds are payable from Housing Tax Revenues on a parity basis. See “SECURITY FOR THE BONDS” herein.
Proceeds of the Bonds will be used to (i) increase, improve, and preserve the supply of low and moderate income housing in the City of Carson (the “City”), (ii) fund a reserve account for the Bonds, (iii) fund capitalized interest on the Series 2010A Bonds through October 1, 2013 and (iv) pay the costs incurred in connection with the issuance, sale, and delivery of the Bonds. See “PLAN OF FINANCING” herein.
The Bonds will be sold to the Carson Public Financing Authority (the ‘‘Authority’’) for resale to the Underwriters.
The Bonds will be issued in fully registered form and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”) which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in book- entry form only, in multiples of $5,000. Principal of and interest on the Bonds will be paid directly to DTC by the Trustee. See “APPENDIX G - BOOK- ENTRY ONLY SYSTEM” herein Principal of the Bonds is payable on the dates set forth on the inside cover page hereof. Interest on the Bonds is payable on April 1 and October 1 of each year, commencing April 1, 2011 (each, an “Interest Payment Date”).
The Bonds are subject to optional and mandatory redemption as described herein. See “THE BONDS – Redemption” herein
Subject to certain conditions, additional obligations secured by a pledge and lien on the Housing Tax Revenues on a parity basis with the Series 2010A-T Bonds and the Series 2010A Bonds may be incurred in the future by the Agency.
THE BONDS ARE NOT A DEBT OF THE CITY OF CARSON (THE “CITY”), THE STATE OF CALIFORNIA (THE “STATE”), OR ANY OF ITS POLITICAL SUBDIVISIONS, AND NEITHER THE CITY, THE STATE, NOR ANY OF THEIR POLITICAL SUBDIVISIONS IS LIABLE THEREFOR, NOR IN ANY EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AGENCY AS SET FORTH IN THE INDENTURES. NEITHER THE MEMBERS OF THE AGENCY NOR ANY PERSONS EXECUTING THE BONDS ARE LIABLE PERSONALLY FOR THE BONDS. THE AGENCY HAS NO TAXING POWER. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.
This cover page contains information for quick reference only. It is not a summary of this issue. Potential purchasers must read the entire Official Statement to obtain information essential to making an informed investment decision.
The Bonds are offered when, as and if issued, subject to the approval as to their legality by Aleshire & Wynder, LLP, Irvine, California, Bond Counsel. Certain legal matters will be passed on for the Agency by Fulbright & Jaworski L.L.P., Los Angeles, California, as Disclosure Counsel, and for the Agency by Aleshire & Wynder, LLP, Irvine, California, as Agency Counsel. Certain legal matters will be passed upon for the Underwriters by Stradling Yocca Carlson & Rauth, A Profession Corporation, Newport Beach, California, as counsel to the Underwriters. It is anticipated that the Bonds will be available for delivery in book-entry form through the facilities of DTC on or about October 26, 2010. Citi
Dated: October 13, 2010 MATURITY SCHEDULE FOR THE SERIES 2010A-T BONDS
$2,660,000 Serial Bonds (Base CUSIP*: 145750)
Maturity Date Principal Interest (October 1) Amount Rate Yield Price CUSIP No.* 2011 $1,160,000 1.725% 1.725% 100.000 QB4 2012 950,000 2.475 2.475 100.000 QC2 2021 550,000 5.500 5.883 96.939 QF5
$5,460,000 4.511% Term Bonds due October 1, 2016 – Price: 100% to Yield: 4.511% CUSIP*: 145750 QD0
$6,820,000 5.500% Term Bonds due October 1, 2020 – Price: 98.621% to Yield: 5.683% CUSIP*: 145750 QE8
MATURITY SCHEDULE FOR THE SERIES 2010A BONDS
$9,510,000 Serial Bonds (Base CUSIP* : 145750)
Maturity Date Principal Interest (October 1) Amount Rate Yield Price CUSIP No.* 2021 $1,395,000 4.250% 4.500% 97.857 PU3 2022 2,035,000 5.000 4.640 102.835 C PV1 2023 2,135,000 5.000 4.740 102.037 C PW9 2024 2,245,000 5.000 4.820 101.403 C PX7 2025 1,700,000 5.000 4.900 100.775 C PY5 ______C Priced to optional redemption date of October 1, 2020 at par.
$6,700,000 5.000% Term Bonds due October 1, 2030 – Price: 98.754% to Yield: 5.100% CUSIP*: 145750 PZ2
$9,410,000 5.250% Term Bonds due October 1, 2036 – Price: 98.602% to Yield: 5.350% CUSIP*: 145750 QA6
______* CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by Standard & Poor’s Financial Services LLC on behalf of The American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. Neither the Underwriters, the Agency nor the Financial Advisor is responsible for the selection or correctness of the CUSIP numbers set forth herein. CARSON REDEVELOPMENT AGENCY CARSON, CALIFORNIA
AGENCY MEMBERS AND CITY COUNCIL
Jim Dear, Chair and Mayor Elito M. Santarina, Vice-Chair and Mayor Pro Tem Mike A. Gipson, Agency Member and Council Member Lula Davis-Holmes, Agency Member and Council Member Julie Ruiz-Raber, Agency Member and Council Member
AGENCY STAFF AND CITY STAFF
Jerome G. Groomes, Executive Director and City Manager Helen S. Kawagoe, Agency Secretary and City Clerk Karen Avilla, Agency Treasurer and City Treasurer Jacquelyn Acosta, Administrative Services General Manager Clifford Graves, Economic Development General Manager
* * * * * * *
SPECIAL SERVICES
Bond Counsel Disclosure Counsel Aleshire & Wynder, LLP Fulbright & Jaworski L.L.P. Irvine, California Los Angeles, California
Trustee Financial Advisor to the Agency The Bank of New York Mellon Trust Company, N.A. C.M. de Crinis & Co., Inc. Los Angeles, California Sherman Oaks, California
Fiscal Consultant Counsel to the Agency and Authority DHA Consulting Aleshire & Wynder, LLP Long Beach, California Irvine, California No dealer, broker, salesperson or other person has been authorized by the Carson Redevelopment Agency (the “Agency”) or the City of Carson (the “City”) to give any information or to make any representations other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy any Bonds by any person in any jurisdiction in which such offer of solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful for such person to make such an offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matter of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of fact. CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT
Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “budget,” or other similar words and include, but are not limited to, statements under the caption “THE REDEVELOPMENT PROJECT AREAS - Projected Taxable Valuation and Housing Tax Revenues; Debt Service Coverage.” The forward-looking statements are not guarantees of future performance. Actual results may vary materially from what is contained in a forward-looking statement. The Agency and the Authority assume no obligation to provide public updates of forward-looking statements.
The achievement of certain results or other expectations contained in such forward-looking statements involves known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. While the Agency has agreed to provide certain on going financial and operating data through the term of the Bonds (see “INTRODUCTION - Continuing Disclosure”), the Agency does not plan to issue any updates or revisions to those forward-looking statements if or when its expectations or events, conditions or circumstances on which such statements are based change.
The information set forth herein has been obtained from the City, the Agency and other sources that are believed to be reliable, but it is not guaranteed as to its accuracy or completeness. The information and expressions of opinions herein are subject to change without notice, and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Agency or the City since the date hereof. All summaries of the resolutions, the Indentures, laws and statutes or other documents are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions.
The Underwriters have provided the following sentence for inclusion in this Official Statement. The Underwriters have reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.
This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
The Bonds have not been registered under the Securities Act of 1933, as amended, nor have the Indentures been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon an exception from the registration requirements contained in such acts. The Bonds have not been registered or qualified under the securities laws of any state.
IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITERS MAY OFFER AND SELL BONDS TO CERTAIN DEALERS AND OTHERS AT A PRICE LOWER THAN THE OFFERING PRICE. THE OFFERING PRICE MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS. TABLE OF CONTENTS Page Page
INTRODUCTION ...... 1 Concentration of Taxpayers within Project Areas...... 46 The Bonds...... 1 Unsecured Property ...... 46 City and the Agency...... 1 Development Risk...... 46 The Redevelopment Plans...... 2 Varying Termination Dates for Tax Revenue Sources ..... 46 Tax Allocation Financing...... 3 Levy and Collection ...... 47 Security for the Bonds...... 4 State Budget Deficit ...... 47 Professionals Involved in the Offering...... 4 Bankruptcy and Foreclosures ...... 50 Summaries of Documents ...... 4 Additional Financing...... 50 Continuing Disclosure...... 5 Loss of Tax Exemption ...... 50 THE FINANCING PLAN ...... 6 Seismic Risk and Flood Risk...... 50 Use of Bond Proceeds...... 6 Property Tax Appeals...... 51 Sources and Uses of Funds ...... 6 Hazardous Substances ...... 51 Annual Debt Service ...... 7 Enforceability of Remedies ...... 52 THE BONDS ...... 8 Investment of Funds...... 52 Authority for Issuance...... 8 Assumptions and Projections ...... 52 Description of the Bonds...... 8 Real Estate and General Economic Risks...... 52 Redemption...... 9 Secondary Market ...... 53 Redemption Provisions ...... 11 LIMITATIONS ON TAX REVENUES...... 53 Registration, Transfer and Exchange ...... 12 Property Tax Limitations - Article XIIIA...... 53 Book-Entry Only System...... 12 Challenges to Article XIIIA ...... 54 SECURITY FOR THE BONDS ...... 12 Implementing Legislation...... 54 Tax Allocation Financing...... 12 Proposition 87 ...... 54 Allocation of Taxes...... 13 Property Tax Collection Procedures...... 54 Housing Tax Revenues ...... 13 Unitary Taxation of Utility Property ...... 56 Limited Liability ...... 14 Housing Set-Aside...... 56 Application of Housing Tax Revenues ...... 14 Appropriations Limitations: Article XIIIB of the Reserve Account ...... 15 California Constitution...... 57 Issuance of Parity Debt ...... 15 Tax Allocation Procedures of the County of Los Issuance of Subordinate Debt...... 15 Angeles...... 57 THE CARSON REDEVELOPMENT AGENCY...... 16 Certification of Agency Indebtedness ...... 58 Agency Members...... 16 Plan Limitations ...... 59 Agency Administration...... 16 CONCLUDING INFORMATION...... 59 Agency Powers ...... 17 Tax Matters ...... 59 Factors Affecting Redevelopment Agencies Financial Advisor ...... 61 Generally...... 18 Fiscal Consultant...... 61 Filing of Statement of Indebtedness...... 18 Ratings ...... 61 Financial Statements ...... 18 Underwriting ...... 61 Regulatory Issues...... 18 No Litigation ...... 62 THE REDEVELOPMENT PROJECT AREAS...... 21 Legal Matters ...... 62 Redevelopment Plans...... 21 Miscellaneous...... 62 Project No. 1 ...... 21 Merged Project...... 22 APPENDIX A - SUMMARY OF CERTAIN Project No. 4 ...... 23 PROVISIONS OF THE INDENTURES...... A-1 Merger of All project Areas into Single Project Area ...... 24 APPENDIX B - AUDITED FINANCIAL Assessed and Incremental Value; Land Use ...... 24 STATEMENTS OF THE CARSON Plan Limitations...... 25 REDEVELOPMENT AGENCY FOR THE FISCAL Base Year Assessed Valuation...... 28 YEAR ENDED JUNE 30, 2009...... B-1 Tax Rates ...... 28 APPENDIX C - GENERAL INFORMATION Major Taxpayers ...... 29 RELATING TO THE CITY OF CARSON...... C-1 Key Taxpayer Summary ...... 31 APPENDIX D - FISCAL CONSULTANT’S REPORT ...... D-1 Historic Assessed Valuation Growth and Debt APPENDIX E - FORMS OF BOND COUNSEL Service ...... 34 OPINION ...... E-1 Assessment Appeals...... 36 APPENDIX F - FORM OF CONTINUING Outstanding Indebtedness Secured by Housing Tax DISCLOSURE AGREEMENT...... F-1 Revenues...... 38 APPENDIX G - BOOK-ENTRY ONLY SYSTEM...... G-1 Projected Taxable Valuation and Housing Tax Revenues; Debt Service Coverage ...... 38 Agency Activity...... 41 BONDOWNERS’ RISKS...... 45 Bonds Are Limited Obligations and Not General Obligations...... 45 Reduction in Taxable Value; Plan Limitations...... 45 Reduction in Inflationary Rate and Changes in Legislation; Further Initiatives...... 45 -i- City of Carson Location Map
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INTRODUCTION
This introduction does not purport to be complete, and reference is made to the body of this Official Statement, appendices and the documents referred to herein for more complete information with respect to the Bonds. Potential investors are encouraged to read the entire Official Statement. Capitalized terms used and not defined in this Introduction shall have the meanings assigned to them elsewhere in this Official Statement.
The Bonds
This Official Statement, including the cover page and appendices, is provided to furnish information in connection with the sale by the Carson Redevelopment Agency (the “Agency”) of $14,940,000 aggregate principal amount of its Taxable Tax Allocation Housing Bonds, 2010 Series A-T (the “Series 2010A-T Bonds”), and $25,620,000 aggregate principal amount of its Tax Allocation Housing Bonds, 2010 Series A (the “Series 2010A Bonds,” and together with the Series 2010A-T Bonds, collectively, the “Bonds”).
The Bonds are being issued pursuant to the Constitution and the laws of the State of California (the “State”), including the California Community Redevelopment Law (codified in Part 1 of Division 24 of the California Health and Safety Code) (the “Redevelopment Law”), a resolution of the Agency adopted on October 5, 2010, and separate Indentures of Trust, each dated as of October 1, 2010 (the “Series 2010A-T Indenture” and the “Series 2010A Indenture,” and collectively, the “Indentures”), by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as the trustee (the “Trustee”).
Proceeds of the Bonds will be used to (i) fund projects to increase, improve, and preserve the supply of low and moderate income housing in the City of Carson (the “City”), (ii) fund a reserve account for the Bonds, (iii) fund capitalized interest on the Series 2010A Bonds through October 1, 2013 and (iv) pay the costs incurred in connection with the issuance, sale, and delivery of the Bonds.
The Bonds are payable from and secured by the Housing Tax Revenues as hereinafter defined and described in “INTRODUCTION - Security for the Bonds.” Subject to certain conditions, additional obligations secured by a pledge and lien on the Housing Tax Revenues on a parity basis with the Bonds may be incurred in the future by the Agency. See “SECURITY FOR THE BONDS – Issuance of Parity Debt” herein.
The Bonds are being issued for sale to the Carson Public Financing Authority (the “Authority”) for immediate resale to the Underwriters.
City and the Agency
The City of Carson (the “City”) is located in Los Angeles County (the “County”), California. Incorporated in 1968 as a general law city, the City encompasses an area of approximately 19.24 square miles. The City operates according to the Council/Manager form of government. The City Manager is appointed by the City Council to manage the City’s staff and generally implement policies established by the City Council. See “APPENDIX C - GENERAL INFORMATION RELATING TO THE CITY OF CARSON” for a more complete description of the City and the surrounding region.
The Agency was established pursuant to the Redevelopment Law and was activated by the City Council in September of 1971 by the adoption of Ordinance No. 71-196. The five members of the City Council serve as the governing body of the Agency, and exercise all rights, powers, duties and privileges of the Agency.
The Redevelopment Plans
The Agency has established four redevelopment project areas in the City.
On December 20, 1971, the City Council, pursuant to Ordinance No. 71-205 of the City, approved and adopted the Redevelopment Plan for Project Area No. 1. On February 4, 1974, the City Council, pursuant to Ordinance No. 74-288 of the City, approved and adopted an amendment to the Redevelopment Plan for Project No. 1 which deleted certain territory from such project area (the resulting area being referred to herein as the “Original Project No. 1”). On July 16, 1984, the City Council, pursuant to Ordinance No. 84-696 of the City, approved and adopted an amendment to the Redevelopment Plan for Project No. 1, as amended (the “1985 Amendment”) which added territory to the project area (the “1985 Annex”). The text of the 1985 Amendment did not affect and made no changes to the Redevelopment Plan for Project No. 1, as previously amended, with respect to the Original Project No. 1. On January 5, 1987, the City Council, pursuant to Ordinance No. 86-766 of the City, established limitations in connection with the Redevelopment Plan for Project No. 1, as amended, for the territory included within the Original Project No. 1 pursuant to Health and Safety Code Section 33333.4. On November 15, 1994, the City Council adopted Ordinance No. 94-1045, which implemented additional limitations required by Assembly Bill 1290, including a time limit to incur debt and receive tax increment revenues from the Original Project No. 1 and the 1985 Annex. On June 4, 1996, the City Council approved Ordinance No. 96-1090, which, among other things, amended the Redevelopment Plan for Project No. 1, as amended, to once again add territory to the project area (the “Project No. 1 1997 Annex”), and the plans for all three areas were updated and consolidated into one Plan document, the Amended and Restated Plan for Project No. 1 (the “Project No. 1 Redevelopment Plan”). The Original Project No. 1, the 1985 Annex and the Project No. 1 1997 Annex are collectively referred to herein as the “Project No. 1.” Project No. 1 consists of approximately 2,263 gross acres and includes retail, commercial, office, residential, industrial, recreation and public land uses. Major properties within Project No. 1 include the South Bay Pavilion, Doubletree Hotel, Carson Civic Center, Dunn Industrial Park, Don Kott Auto Complex, and the Carson Town Center, The Boulevards at South Bay and University Square.
The Carson Merged and Amended Project Area (the “Merged Project”) consists of two formerly independent redevelopment project areas that were merged together for financing purposes on July 16, 1996 pursuant to Ordinance No. 96-1095. The two merged project areas are Redevelopment Project Area No. 2 (“Project No. 2”) and Redevelopment Project Area No. 3 (“Project No. 3”). At the time of the merger, additional territory was also added to the Merged Project. On February 19, 1974, the City Council, pursuant to Ordinance No. 74-295 of the City, approved and adopted the Redevelopment Plan for Project Area No. 2 of the Agency, which was amended in 1975 by Ordinance No. 74-324 to add territory (collectively, the “Original Project No. 2”). On December 22, 1982, the City Council approved and adopted Ordinance No. 82-628, an amendment to the Redevelopment Plan for Project No. 2, as amended (the “1983 Amendment”) which added territory to the project area (the “1983 Annex”). On January 5, 1987, the City Council adopted Ordinance No. 86-767, which established limitations on the Redevelopment Plan for Project No. 2. as amended, as required by changes to the Redevelopment Law. The Original Project No. 2 and the 1983 Annex were subsequently amended to establish redevelopment plan limitations relating to AB 1290. On July 16, 1984, the City Council, pursuant to Ordinance No. 84-695 of the City, approved and adopted the Redevelopment Plan for Project No. 3 of the Agency (the “Original Project No. 3”). Original Project No. 3 was subsequently amended to establish limitations in connection with the Redevelopment Plan for Project No. 3 as required by changes to the Redevelopment Law. On July 16, 1996, the City Council approved Ordinance No. 96-1095, which merged Project No. 2 with Project No. 3 and added additional territory to the resulting project area (the “1997 Annex,” and together with Project No. 2 and Project No. 3, the “Merged Project”) resulting in a merged redevelopment plan (the “Merged Redevelopment Plan”). The Merged
2 Project consists of approximately 1,661 gross acres and includes retail, commercial, office, residential, industrial, recreation and public land uses.
The City Council of the City adopted Ordinance 02-1254 on July 16, 2002 officially adopted the Redevelopment Plan for Project Area No. 4 establishing Redevelopment Project Area No. 4 (“Project No. 4”). Project No. 4 is generally 11 non-contiguous areas totaling 942 gross acres located mostly in the center of the City. Over fifty percent (50%) of the Project No. 4 is in two (2) subareas: one in the northern section of the City, just south of Alondra Boulevard, and the other in the western portion of the City around Carson Street. Project No. 4 consists of a mix of land uses with more than fifty percent (50%) consisting of residential land uses based on assessed value. Project No. 4, when combined with Project No. 1, puts the entire Carson Street corridor into a redevelopment project area. The Carson Street Master Plan, which includes specific design guidelines for the Carson Street corridor, was adopted to facilitate, stimulate and direct growth and private sector investment in the City’s “downtown area.”
As a result of certain limitations contained or incorporated in the Redevelopment Plans governing the period of time for receiving tax increment revenues and repaying indebtedness, the ability to collect Housing Tax Revenues (as defined herein) derived from all Project Areas and subareas other than Project No. 4, will expire at various times prior to the final maturity of the Bonds. After December 20, 2024, these limitations result in a smaller number of properties generating Housing Tax Revenues as the limitations are reached for various subareas within the affected Project Areas. The projected Housing Tax Revenues have been calculated taking into consideration the estimated time and/or amounts which will trigger these limitations. See “APPENDIX D - FISCAL CONSULTANT’S REPORT,” “THE REDEVELOPMENT PROJECT AREAS – Plan Limitations” and “BONDOWNERS’ RISKS – Concentration of Taxpayers within the Project Areas.”
In July 2009, the Agency began the process to amend the existing Project Areas in 2010 to merge the Project Areas into a single project area. See ‘THE REDEVELOPMENT PLANS – Merger of All Project Areas into Single Project Area.”
The Agency’s audited financial statements for the fiscal year ended June 30, 2009, are included in “APPENDIX B” and should be read in their entirety. The Agency’s financial statements were audited by the independent accounting firm of Mayer Hoffman McCann P.C. (the “Auditor”). No post-audit review was requested or performed. The Agency’s audited financial statements for the year ended June 30, 2009, and prior years are on file for public inspection with the Secretary of the Agency. Copies can also be obtained from Jacquelyn Acosta, Administrative Services General Manager, at 701 E. Carson Street, Carson, CA 90745.
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based upon an allocation of tax increment revenues collected within a redevelopment project area. The taxable valuation of a redevelopment project area last equalized prior to adoption of the redevelopment plan (the base roll) is established and, except for any period during which the taxable valuation drops below the base year level, the taxing agencies thereafter receive the taxes produced by the levy of the then current tax rate upon the base roll. With limited exceptions, taxes collected upon any increase in taxable valuation over the base roll are allocated to a redevelopment agency and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment agencies themselves have no authority to levy property taxes and must look specifically to the allocation of tax increment revenues described above.
3 Security for the Bonds
The Bonds are special obligations of the Agency payable solely from “Housing Tax Revenues” (see “SECURITY FOR THE BONDS - Allocation of Taxes”) and other funds and accounts pledged pursuant to the Indentures. Housing Tax Revenues are defined generally as the portion of the taxes (including all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Agency pursuant to the Redevelopment Law in connection with all current and future project areas of the Agency, including the Project Areas as provided in the Redevelopment Plans, which are deposited by the Agency in the Low and Moderate Income Housing Fund pursuant to Section 33334.3 of the Redevelopment Law, as provided in the Redevelopment Plans.
For additional information regarding security for the Bonds, see “SECURITY FOR THE BONDS” herein. The Agency’s receipt of Housing Tax Revenues is subject to certain risks and limitations. See “BONDOWNERS’ RISKS,” “LIMITATIONS ON TAX REVENUES” and “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES” herein.
No other outstanding Agency bonded indebtedness is payable on a parity basis from the Housing Tax Revenues. The Agency has covenanted in the Indentures that it will not create or allow to exist any liens on Housing Tax Revenues senior to or on a parity with the Bonds except as provided in the Indentures. The Agency will not issue any obligation or security superior to or on a parity with the Bonds payable in whole or in part from the Housing Tax Revenues (other than Parity Debt, as described in “SECURITY FOR THE BONDS – Issuance of Parity Debt”).
A portion of the proceeds from the sale of the Bonds will be used to finance low and moderate income activities within the Project Areas. See “THE FINANCING PLAN.”
Professionals Involved in the Offering
The Bank of New York Mellon Trust Company, N.A., Los Angeles, California, will act as Trustee with respect to the Bonds. DHA Consulting has acted as Fiscal Consultant to the Agency and has prepared a report (set forth in “APPENDIX D” hereto) on projected taxable values and anticipated tax increment revenues in the Project Area. C.M. de Crinis & Co., Inc., Sherman Oaks, California, has served as Financial Advisor to the Agency in connection with the Bonds and has assisted the Agency in structuring the Bonds.
All proceedings in connection with the issuance of the Bonds are subject to the approval of Aleshire & Wynder, LLP, Irvine, California, Bond Counsel. Aleshire & Wynder, LLP, Irvine, California, currently serves as legal counsel to the Agency, and provides general legal services to the Agency with respect to redevelopment matters. Certain legal matters will be passed on for the Agency by Fulbright & Jaworski L.L.P., Los Angeles, California, Disclosure Counsel to the Agency. Certain legal matters will be passed on for the Underwriters by Stradling Yocca Carlson & Rauth, A Professional Corporation, Newport Beach, California, as Underwriters’ Counsel. The fees and expenses of Bond Counsel, Disclosure Counsel and the Financial Advisor are contingent upon the sale and delivery of the Bonds.
Summaries of Documents
This Official Statement includes descriptions of the Bonds, the Indentures, the Agency, the City, the Project Areas, the Redevelopment Law, and various agreements. The descriptions and summaries of documents do not purport to be comprehensive or definitive, and reference is made to each document for the complete details of all terms and conditions. All statements are qualified in their entirety by reference to each document and, with respect to certain rights and remedies, to laws and principles of equity relating to creditors’ rights generally. Undefined capitalized terms shall have the meanings set forth in the Indentures.
4 Copies of the Indentures are available for inspection during business hours at the corporate trust office of the Trustee in Los Angeles, California.
This Official Statement speaks only as of its date, as set forth on the cover, and the information and expressions of opinion are subject to change without notice. Neither the delivery of this Official Statement nor any sale of Bonds shall under any circumstances create any implication that there has been no change in the affairs of the Agency or the City or the Project Areas since the date set forth on the cover.
Continuing Disclosure
Pursuant to Rule 15c2-12 of the Securities and Exchange Commission (the “Rule”), the Agency has undertaken for the benefit of holders of the Bonds to provide certain financial information and operating data relating to the Agency by not later than February 1 after the end of each Fiscal Year commencing with February 1, 2011, commencing with the report for the 2009/10 fiscal year (the “Annual Report”), and to provide notices of the occurrence of certain enumerated events. The Annual Report will be filed by or on behalf of the Agency with the Municipal Securities Rulemaking Board (“MSRB”) in an electronic format prescribed by MSRB. Notices of material events will be filed by or on behalf of the Agency with MSRB. The nature of the information to be provided in the Annual Report and the notices of material events is set forth under the caption “APPENDIX F – FORM OF CONTINUING DISCLOSURE AGREEMENT.” The Agency has never failed to comply in all material respects with any previous undertakings with regard to said Rule to provide annual reports or notices of material events.
5 THE FINANCING PLAN
Use of Bond Proceeds
Proceeds from the sale of the Series 2010A-T Bonds will be used to (i) increase, improve, and preserve the supply of low and moderate income housing in the City, including grants, loans and land write- down assistance for multifamily and single family housing projects, (ii) fund a portion of the debt service reserve account and (iii) pay costs incurred in connection with the issuance, sale, and delivery of the Series 2010A-T Bonds.
Proceeds from the sale of the Series 2010A Bonds will be used to (i) increase, improve, and preserve the supply of low and moderate income housing in the City, including grants and land write-down assistance for multifamily and/or single family housing projects, (ii) fund a portion of the debt service reserve account (iii) fund capitalized interest on the Series 2010A Bonds through October 1, 2013 and (iv) pay costs incurred in connection with the issuance, sale, and delivery of the Series 2010A Bonds.
Sources and Uses of Funds
The following table shows the estimated sources and uses of the proceeds from the sale of the Bonds:
Sources and Uses of Funds
Series 2010A-T Bonds Series 2010A Bonds
Sources:
Par Amount $14,940,000.00 $25,620,000.00 Less: Net Original Issue Discount (110,883.30) (99,074.10) Underwriters’ Discount (82,955.50) (104,304.17)
Total Sources $14,746,161.20 $25,416,621.73
Uses:
Bond Proceeds Account $13,707,677.95 $19,000,000.00 Reserve Account(1) 895,729.55 2,376,573.51 Capitalized Interest Account(2) 0.00 3,792,322.05 Costs of Issuance(3) 142,753.70 247,726.17 Total Uses $14,746,161.20 $25,416,621.73 ______(1) Deposit equal to the initial Reserve Requirement with respect to the Bonds. (2) Represents capitalized interest on the Series 2010A Bonds through October 1, 2013. (3) Costs of Issuance include fees of Bond Counsel, Disclosure Counsel, Financial Advisor and the Fiscal Consultant, Trustee fees and expenses, rating agency fees, printing expenses and other costs related to the issuance of the Bonds.
6 Annual Debt Service
The following table shows the scheduled annual debt service for the Bonds.
ANNUAL DEBT SERVICE SCHEDULE
2010 Series A-T Bonds 2010 Series A Bonds Bonds Bond Year Ending Annual Debt Annual Debt Total Annual October 1 Principal Interest Service Principal Interest Service Debt Service
2011 $1,160,000.00 $646,897.19 $1,806,897.19 $1,204,197.05* $1,204,197.05 $3,011,094.24 2012 950,000.00 675,163.10 1,625,163.10 1,294,062.50* 1,294,062.50 2,919,225.60 2013 1,140,000.00 651,650.60 1,791,650.60 1,294,062.50* 1,294,062.50 3,085,713.10 2014 1,375,000.00 600,225.20 1,975,225.20 1,294,062.50 1,294,062.50 3,269,287.70 2015 1,440,000.00 538,198.96 1,978,198.96 1,294,062.50 1,294,062.50 3,272,261.46 2016 1,505,000.00 473,240.56 1,978,240.56 1,294,062.50 1,294,062.50 3,272,303.06 2017 1,570,000.00 405,350.00 1,975,350.00 1,294,062.50 1,294,062.50 3,269,412.50 2018 1,655,000.00 319,000.00 1,974,000.00 1,294,062.50 1,294,062.50 3,268,062.50 2019 1,750,000.00 227,975.00 1,977,975.00 1,294,062.50 1,294,062.50 3,272,037.50 2020 1,845,000.00 131,725.00 1,976,725.00 1,294,062.50 1,294,062.50 3,270,787.50 2021 550,000.00 30,250.00 580,250.00 $1,395,000.00 1,294,062.50 2,689,062.50 3,269,312.50 2022 2,035,000.00 1,234,775.00 3,269,775.00 3,269,775.00 2023 2,135,000.00 1,133,025.00 3,268,025.00 3,268,025.00 2024 2,245,000.00 1,026,275.00 3,271,275.00 3,271,275.00 2025 1,700,000.00 914,025.00 2,614,025.00 2,614,025.00 2026 1,785,000.00 829,025.00 2,614,025.00 2,614,025.00 2027 1,140,000.00 739,775.00 1,879,775.00 1,879,775.00 2028 1,200,000.00 682,775.00 1,882,775.00 1,882,775.00 2029 1,255,000.00 622,775.00 1,877,775.00 1,877,775.00 2030 1,320,000.00 560,025.00 1,880,025.00 1,880,025.00 2031 1,385,000.00 494,025.00 1,879,025.00 1,879,025.00 2032 1,460,000.00 421,312.50 1,881,312.50 1,881,312.50 2033 1,535,000.00 344,662.50 1,879,662.50 1,879,662.50 2034 1,615,000.00 264,075.00 1,879,075.00 1,879,075.00 2035 1,700,000.00 179,287.50 1,879,287.50 1,879,287.50 2036 1,715,000.00 90,037.50 1,805,037.50 1,805,037.50
Total $14,940,000.00 $4,699,675.61 $19,639,675.61 $25,620,000.00 $23,680,697.05 $49,300,697.05 $68,940,372.66
* Interest payments funded by amounts on deposit in the Capitalized Interest Account. 7 THE BONDS
Authority for Issuance
The Bonds are issued pursuant to the Constitution and laws of the State and under authority granted to the Agency by the Redevelopment Law constituting Part 1 of Division 24 of the California Heath and Safety Code, as amended, and a resolution of the Agency adopted on October 5, 2010. The Series 2010A-T Bonds are also issued pursuant to the Series 2010A-T Indenture. The Series 2010A Bonds are also issued pursuant to the Series 2010A Indenture.
The term “Bonds” herein shall mean the Series 2010A-T Bonds, the Series 2010A Bonds and any Parity Debt issued under the Indentures. Bonds in unlimited amount may be issued at any time under and subject to the terms of the Indentures. The Bonds are special limited obligations of the Agency and as such are not a debt of the City, the State, or any of their political subdivisions, and neither the City, the State, nor any of their political subdivisions is liable for their payment. In no event shall the Bonds be payable out of any funds or properties other than those of the Agency as set forth in the Indentures. The Bonds do not constitute an indebtedness in contravention of any constitutional or statutory debt limit or restriction. For a discussion of some of the risks associated with the purchase of the Bonds, see “BONDOWNERS’ RISKS” herein. The Agency has no taxing powers.
Description of the Bonds
The Bonds shall be issued as fully registered bonds in denominations of $5,000 and any integral multiple thereof and will be dated their date of delivery. The Series 2010A-T Bonds mature on the respective dates and bear interest at the respective rates per annum set forth on the inside cover page. The Series 2010A Bonds mature on the respective dates and bear interest at the respective rates per annum set forth on the inside cover page. Interest on the Bonds is payable on April 1 and October 1 of each year, commencing April 1, 2011 (collectively, the “Interest Payment Dates”).
Interest on the Bonds shall be computed on the basis of a 360 day year of twelve 30 day months. The Bonds shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event it will bear interest from such Interest Payment Date, (ii) a Bond is authenticated on or before the first Record Date, in which event interest thereon will be payable from the Closing Date, or (iii) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon will be payable from the date to which interest has been paid in full, payable on each Interest Payment Date. Interest will be paid on each Interest Payment Date to the persons in whose names the ownership of the Bonds is registered on the Registration Books at the close of business on the immediately preceding Record Date as provided in the Indentures. Interest on any Bond which is not punctually paid or duly provided for on any Interest Payment Date will be payable to the person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall be given to such Owner not less than ten (10) days prior to such special record date.
Interest on the Bonds will be paid by check or draft of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date; provided, however, that at the written request of the Owner of Bonds in an aggregate principal amount of at least $1,000,000, which written request is on file with the Trustee as of any Record Date, interest on such Bonds will be paid on each succeeding Interest Payment Date by wire transfer in immediately available funds to such account within the United States of America as specified in such written request. The principal of and premium, if any, on the Bonds will be payable in lawful money of the United States of America by check or draft of the Trustee upon presentation and surrender thereof at the Office of the Trustee
8 The Series 2010A-T Bonds will be issued as one fully registered Series 2010A-T Bond without coupons for each maturity and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (the “DTC”). The Series 2010A Bonds will be issued as one fully registered Series 2010A Bond without coupons for each maturity and, when issued, will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository of the Bonds. Individual purchases may be made in book-entry form only, in the principal multiples of $5,000. Purchasers will not receive certificates representing their interest in the Bonds purchased. Principal and interest will be paid to DTC, which will in turn remit such principal and interest to its participants for subsequent disbursement to the beneficial owners of the Bonds as described herein. See “APPENDIX G - BOOK-ENTRY ONLY SYSTEM” herein.
Redemption
Series 2010A-T Bonds.
No Optional Redemption. The Series 2010A-T Bonds are not subject to optional redemption prior to their maturity.
Mandatory Sinking Fund Redemption. The Series 2010A-T Bonds maturing October 1, 2016, and the Series 2010A-T Bonds maturing October 1, 2020 will also be subject to mandatory redemption in part by lot on October 1, 2013, and October 1, 2017, respectively, and on October 1 in each year thereafter as set forth below, from Sinking Account payments made by the Agency pursuant to the Series 2010A-T Indenture at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof will be purchased in whole or in part pursuant to the Series 2010A-T Indenture, in the aggregate respective principal amounts and on the respective dates as set forth in the following table.
Series 2010A-T Term Bonds Maturing October 1, 2016
Sinking Fund Sinking Fund Redemption Date Principal Amount Redemption Date Principal Amount (October 1) to be Redeemed (October 1) to be Redeemed 2013 $1,140,000 2015 $1,440,000 2014 1,375,000 2016* 1,505,000 ______*Maturity
Series 2010A-T Term Bonds Maturing October 1, 2020
Sinking Fund Sinking Fund Redemption Date Principal Amount Redemption Date Principal Amount (October 1) to be Redeemed (October 1) to be Redeemed 2017 $1,570,000 2019 $1,750,000 2018 1,655,000 2020* 1,845,000 ______*Maturity
9 Series 2010A Bonds.
Optional Redemption. The Series 2010A Bonds maturing on and after October 1, 2021, are subject to redemption, at the option of the Agency on any date on or after October 1, 2020, as a whole or in part, by such maturities as will be determined by the Agency, and by lot within a maturity, from any available source of funds, at a redemption price equal to the principal amount of the Series 2010A Bonds to be redeemed, together with accrued interest thereon to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption. The Series 2010A Bonds maturing October 1, 2030, and the Series 2010A Bonds maturing October 1, 2036, will also be subject to mandatory redemption in part by lot on October 1, 2026, and October 1, 2031, respectively, and on October 1 in each year thereafter as set forth below, from Sinking Account payments made by the Agency pursuant to the Series 2010A Indenture at a redemption price equal to the principal amount thereof to be redeemed together with accrued interest thereon to the redemption date, without premium, or in lieu thereof will be purchased in whole or in part pursuant to the Series 2010A Indenture, in the aggregate respective principal amounts and on the respective dates as set forth in the following table; provided, however, that if some but not all of the Series 2010A Bonds have been optionally redeemed, the total amount of all future applicable Sinking Account payments will be reduced by the aggregate principal amount of such Series 2010A Bonds so redeemed, to be allocated among the Sinking Account payments as are thereafter payable on a pro rata basis in integral multiples of $5,000 as determined by the Agency.
Series 2010A Term Bonds Maturing October 1, 2030
Sinking Fund Sinking Fund Redemption Date Principal Amount Redemption Date Principal Amount (October 1) to be Redeemed (October 1) to be Redeemed 2026 $1,785,000 2029 $1,255,000 2027 1,140,000 2030* 1,320,000 2028 1,200,000 ______*Maturity
Series 2010A Term Bonds Maturing October 1, 2036
Sinking Fund Sinking Fund Redemption Date Principal Amount Redemption Date Principal Amount (October 1) to be Redeemed (October 1) to be Redeemed 2031 $1,385,000 2034 $1,615,000 2032 1,460,000 2035 1,700,000 2033 1,535,000 2036* 1,715,000 ______*Maturity
10 Redemption Provisions
Purchase in Lieu of Redemption
In lieu of redemption of Term Bonds, amounts on deposit as Sinking Account payments may also be used and withdrawn by the Trustee, at the written direction of the Agency, at any time for the purchase of Term Bonds otherwise required to be redeemed on the following October 1 at public or private sale as and when and at such prices (including brokerage and other charges and including accrued interest) as the Agency may in its discretion determine. The par amount of any of the Term Bonds so purchased by the Agency and surrendered to the Trustee for cancellation in any twelve-month period ending on August 1 in any year shall be credited towards and shall reduce the par amount of the Term Bonds otherwise required to be redeemed on the following October 1.
Notice of Optional Redemption
The Trustee on behalf and at the expense of the Agency, will mail by first class mail notice of any redemption to the respective Owners of any Series 2010A Bonds designated for redemption at their respective addresses appearing on the Registration Books, and to the Securities Depositories and to one or more Information Services, at least thirty (30) but not more than sixty (60) days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein will affect the validity of the proceedings for the redemption of such Series 2010A Bonds or the cessation of the accrual of interest thereon. Such notice will state the date of the notice, the redemption date, the redemption place and the redemption price and shall designate the CUSIP numbers, the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of a series of such maturity or maturities in whole) of the Series 2010A Bonds to be redeemed, and shall require that such Series 2010A Bonds be then surrendered at the Office of the Trustee for redemption at the redemption price, giving notice also that further interest on such Series 2010A Bonds will not accrue from and after the redemption date. Neither the Agency nor the Trustee has any responsibility for any defect in the CUSIP number that appears on any Series 2010A Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Agency nor the Trustee is liable for any inaccuracy in such numbers.
The Agency has the right to rescind any optional redemption by written notice to the Trustee on or prior to the date fixed for redemption. Any such notice of optional redemption will be canceled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Series 2010A Bonds then called for redemption, and such cancellation will not constitute an Event of Default under the Series 2010A Indenture. The Agency and the Trustee have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Trustee will mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent.
Selection of Bonds for Redemption
If less than all Outstanding Bonds of a series maturing on any one date are to be redeemed at any one time, the Trustee will select the Bonds to be redeemed from all Bonds of a series not previously called for redemption, by lot in any manner which the Trustee in its sole discretion deems appropriate and fair. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 portions and such portions will be treated as separate Bonds which may be separately redeemed. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Agency will execute and the Trustee will authenticate and deliver to the Owner thereof, at the expense of the Agency, a new Bond or Bonds of the same series and maturity date, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed.
11 Effect of Redemption
From and after the date fixed for redemption, if funds available for the payment of the principal of and interest, and premium, if any, on the Bonds so called for redemption have been duly provided, such Bonds so called will cease to be entitled to any benefit under the respective Indenture other than the right to receive payment of the redemption price, and no interest will accrue thereon from and after the redemption date specified in such notice.
Registration, Transfer and Exchange
Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of the Indentures, by the person in whose name it is registered, in person or by his duly authorized attorney, upon presentation of such Bond to the Trustee at its trust office for cancellation, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. Whenever any Bond or Bonds is surrendered for transfer, the Agency will execute and the Trustee will authenticate and deliver a new Bond or Bonds for a like aggregate principal amount of like maturity and aggregate principal amount. The Trustee will require the payment by the Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer.
The Bonds may be exchanged at the principal corporate trust office of the Trustee for a like aggregate principal amount of Bonds of the same maturity of other authorized denominations. The Trustee will shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.
The Trustee is not obligated to issue, register the transfer of or exchange any Bond during the fifteen (15) days preceding any date established by the Trustee for selection of Bonds for redemption or any Bonds which have been selected for redemption.
Book-Entry Only System
The Depository Trust Company (“DTC”) will act as securities depository for the Bonds. The ownership of each such separate single fully registered Bond shall be registered in the bond register in the name of Cede & Co., as nominee of DTC. For further information regarding DTC, please refer to “APPENDIX G” hereto.
SECURITY FOR THE BONDS
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based upon an allocation of tax increment revenues collected within a project area. The taxable valuation of a project area last equalized prior to adoption of the redevelopment plan, or the base roll, is established and except for any period during which the taxable valuation drops below the base year level, the jurisdictions receiving property tax revenue or the taxing agencies thereafter receive the taxes produced by the levy of the current tax rate upon the base roll. With certain limited exceptions, taxes collected upon any increase in taxable valuation over the base roll are allocated to a redevelopment agency and may be pledged as security to a bond issue. Redevelopment agencies themselves have no authority to levy property taxes and must look specifically to the allocation of tax increment revenues as indicated above.
12 Allocation of Taxes
As provided in the Redevelopment Plans, and pursuant to Article 6 of Chapter 6 of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California, taxes levied upon taxable property in the Project Areas (or applicable portions) each year by or for the benefit of the State of California, any city, county, city and county, district or other public corporation (the “taxing agencies”) for fiscal years beginning after the effective date of the Project Areas (or applicable portions) are divided as follows:
(a) The portion equal to the amount of taxes produced by the current tax rate, applied to the assessed valuation of property in the Project Areas (or applicable portion) as shown on the applicable base year assessment roll as last equalized prior to the establishment of the applicable Project Area (or applicable portion thereof) will be, when collected, paid to those respective taxing agencies;
(b) Except for taxes which are attributable to a tax levy by a taxing agency for the purpose of producing revenues to repay bonded indebtedness approved by the voters of the taxing agency on or after January 1, 1989, which shall be allocated to and when collected shall be paid to the respective taxing agency, that portion of levied taxes each year in excess of such amount, including (to the extent permitted by law) all payments and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations, will be allocated to, and when collected, will be paid to the Agency to pay the principal of and interest on loans to, money advanced to, or indebtedness incurred by the Agency to finance redevelopment projects.
Revenues generated as set forth above and allocated to the Agency are generally referred to as tax increment revenues. Housing Tax Revenues which secure the Bonds are a portion of such tax increment revenues.
Housing Tax Revenues
In accordance with Section 33334.2 of the Redevelopment Law, not less than twenty percent (20%) of all taxes which are allocated to the Agency shall be deposited in a low and moderate income housing fund (unless the Agency makes certain findings) to be used by the Agency for purposes of improving, increasing and preserving the City’s supply of housing for persons and families of low or moderate income (including the payment of indebtedness issued or incurred for such purposes) (the “Housing Tax Revenues”).
Funds available from the twenty percent (20%) requirement may be used outside a redevelopment project area upon a finding by the Agency and the City Council that such use will be of benefit to such redevelopment project area. The Redevelopment Law also permits agencies with more than one project area to set aside less than twenty percent (20%) of the taxes allocated to the agency from one project area if the difference is made up from another project area in the same year and if the agency and the legislative body of the community find that such use of funds will benefit such other project area.
The Agency pledges in connection with the issuance of the Bonds that it will take no actions which will reduce the amount required to be deposited into the Low and Moderate Income Housing Fund of the Agency.
Housing Tax Revenues that secure the Bonds are generally the portion of tax increment revenues received by the Agency (including all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Agency pursuant to the Redevelopment Law in connection with all current and future project areas of the Agency, including the Project Areas as provided in the Redevelopment Plans, which are deposited by the Agency in the Low and Moderate Income Housing Fund pursuant to Section 33334.3 of the Redevelopment Law, as provided in the Redevelopment Plans.
13 Pursuant to the provisions of the Indentures, the Agency has pledged that portion of the tax increment revenues that constitute the Housing Tax Revenues to the Bonds. Except as provided in the Indentures, the Bonds, and any other additional bonds are equally secured by a first pledge of and lien on all of the Housing Tax Revenues and a first and exclusive pledge of and lien upon all of the moneys in the funds and accounts created pursuant to the Indentures, including all amounts derived from the investment of such moneys, subject to application in accordance with the Indentures, without preference or priority for series, issue, number, sale date, date of execution or date of delivery. Except for the Housing Tax Revenues, no funds or properties of the Agency are pledged to, or otherwise liable for, the payment of principal of or interest on the Bonds.
Limited Liability
THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE AGENCY AND AS SUCH ARE NOT A DEBT OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS (OTHER THAN THE AGENCY) AND NEITHER THE CITY, THE STATE, NOR ANY OF ITS POLITICAL SUBDIVISIONS (OTHER THAN THE AGENCY) IS LIABLE FOR THE PAYMENT THEREOF. IN NO EVENT SHALL THE BONDS BE PAYABLE OUT OF ANY FUNDS OR PROPERTIES OTHER THAN THOSE OF THE AGENCY SET FORTH IN THE INDENTURES.
Any future decrease in the taxable valuation of property in the Project Areas or in the applicable tax rates relating thereto will reduce the tax increment revenues allocated to the Agency from the Project Areas and correspondingly the Housing Tax Revenues may have an adverse impact on the ability of the Agency to pay the principal of and interest on the Bonds. The Agency has no power to levy and collect property taxes, and any property tax limitation, legislative measures, voter initiative or provisions or additional sources of income to taxing agencies having the effect of reducing the property tax could reduce the amount of Housing Tax Revenues that would otherwise be available to pay debt service on the Bonds. Likewise, broadened property tax exemptions could have a similar effect. See “BONDOWNERS’ RISKS” herein.
Application of Housing Tax Revenues
The Indentures provide that the Agency will deposit all of the Housing Tax Revenues received in any Bond Year in the Special Fund within the Low and Moderate Income Housing Fund (the “Special Fund”), until such time during such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be transferred to the Trustee for deposit into the Debt Service Fund in such Bond Year pursuant to the Indentures. Amounts in excess thereof will be released from the pledge and lien of the Indentures as provided in the Indentures. See “APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES.”
On or before four (4) Business Days preceding each Interest Payment Date, the Agency will transfer from the Special Fund to the Trustee for deposit in the Debt Service Fund an amount, when taking into consideration other available amounts then in the Debt Service Fund, equal to the amount required to be transferred by the Trustee from the Debt Service Fund to the Interest Account, Principal Account, Sinking Account, Redemption Account and Reserve Account pursuant to the Indentures. See “APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES.”
Any Housing Tax Revenues received following deposit in the Housing Special Fund in excess of the aggregate amount required to be transferred to the Interest Account, the Principal Account, the Sinking Account, the Redemption Account and the Reserve Account during such Bond Year pursuant to the Indentures will be released from the pledge and lien under the Indentures and thereafter, may be used for any lawful purpose of the Agency. See “APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES” contained herein.
14 In consideration of the acceptance of the Bonds by those who hold the same from time to time, the Indenture is deemed to be and constitutes a contract between the Agency and the Owners from time to time of the Bonds. The covenants and agreements set forth in the Indenture to be performed on behalf of the Agency will be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the other Bonds, by reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein.
Reserve Account
On the Closing Date, a deposit will be made into the Reserve Account in an amount equal to the Reserve Requirement amount pursuant to the Indentures. Such funds will be available only for payment of the Bonds and any other Parity Debt issued on a parity with the Bonds. “Reserve Requirement” means, as of any calculation date, an amount equal to the least of (i) 10% of the original principal amount of the Bonds and Parity Debt, (ii) 125% of average Annual Debt Service of the Bonds and Parity Debt, or (iii) Maximum Annual Debt Service with respect to the Bonds and Parity Debt.
The Reserve Account Requirement may be satisfied by crediting to the Reserve Account moneys or a Qualified Reserve Instrument or any combination thereof, which in the aggregate makes funds available in the Reserve Account in an amount equal to the Reserve Account Requirement. So long as the Agency is not in default under the Indentures, any amount in the Reserve Account in excess of the Reserve Account Requirement may, upon written request of the Agency, be withdrawn from the Reserve Account by the Trustee and transferred to the Agency. See “APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES.”
Issuance of Parity Debt
The Agency may at any time after the issuance and delivery of the Bonds issue tax allocation housing bonds authorized, issued and delivered pursuant to the Indentures and other parity debt (“Parity Debt”) payable from Housing Tax Revenues and secured by a lien and charge upon Housing Tax Revenues equal to and on a parity with the lien and charge securing the Outstanding Bonds theretofore issued under the Indentures, but only subject to specific conditions.
These conditions include the requirement that Housing Tax Revenues for each succeeding Fiscal Year (based upon (i) a 1.00% tax rate; (ii) the most recent assessed valuation of property in the Project Areas as evidenced in written documentation from an appropriate official of the Agency or a written report of an Independent Redevelopment Consultant, and (iii) taking into account all Tax Increment Limitations which could cause a reduction in Housing Tax Revenues in any future Fiscal Year), plus the Additional Allowance, shall be in an amount equal to at least 135% of the Annual Debt Service coming due and payable in the corresponding Bond Year on the Series 2010A-T Bonds, Series 2010A and such Parity Debt, which will be outstanding immediately following the issuance of such Parity Debt, as demonstrated to the Trustee in a certificate of the Agency.
Issuance of Subordinate Debt
The Agency may incur Subordinate Debt in the form of tax allocation bonds or other debt secured by a subordinate pledge of Housing Tax Revenues, provided that the payments with respect to which, together with the payments made or to be made with respect to all other obligations previously entered into by the Agency, will not exceed the then-effective limit on the amount of tax increment revenue which can be allocated to the Agency pursuant to the Redevelopment Law. See “REDEVELOPMENT PROJECT AREAS – Plan Limitations” and APPENDIX A – “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES” contained herein.
15 THE CARSON REDEVELOPMENT AGENCY
Agency Members
The Carson Redevelopment Agency was activated on September 20, 1971 by Ordinance No. 71-196, of the City Council pursuant to the Redevelopment Law. The five members of the City Council serve as the governing body of the Agency, and exercise all rights, powers, duties and privileges of the Agency. The elected Mayor is also Chairman of the Agency. The members of the governing body of the Agency are as follows:
Member Occupation Term Expires
Jim Dear Educator 2013 Chairman and Mayor
Elito Santarina Retired Educator 2011 Chairman Pro Tem and Mayor Pro Tem
Mike A. Gipson Education Union 2013 Agency Member and Council Member Representative
Lula Davis-Holmes Retired Park and 2011 Agency Member and Council Member Rec. Superintendent
Julie Ruiz-Raber Community Service 2013 Agency Member and Council Member Teacher
Agency Administration
The City has agreed to provide the Agency with staff, equipment and supplies and the Agency has agreed to reimburse the City for such services, supplies and equipment. The Agency and the City adopt an annual administrative budget delineating the costs of such services. The Agency reimburses the City out of available tax increment revenues. Such reimbursement is subordinate to any outstanding bonded indebtedness of the Agency, including the Bonds.
The City is a general law city and operates according to the Council/Manager form of government. The City Manager is appointed by the City Council to manage the City’s staff and generally implement policies established by the City Council. Current City staff assigned to administer the Agency activities are listed below:
Jerome G. (Jerry) Groomes, has served as the Executive Director of the Agency and City Manager for the City of Carson since September 1998. Under direction and control of the City Council, the City Manager is head of the City government. Mr. Groomes has been responsible for the efficient administration of all affairs of the City, including enforcement of all laws of the State and City ordinances. Prior to his tenure in Carson, he served in various managerial capacities including City Manager for East Palo Alto for five years. Before accepting the position in East Palo Alto, he served as airport manager for the City of San Diego and president of the Southeast Economic Development Corporation, a quasi-public organization established by the City of San Diego. Mr. Groomes holds a master’s degree in social work from the University of Pittsburgh and attended Yale University and Occidental College as a National Urban Fellow.
16 Helen S. Kawagoe, is the Agency Secretary and City Clerk. Ms. Kawagoe was appointed by the City Council to serve in this capacity in 1974, and has been re-elected to that office continuously since 1974. Ms. Kawagoe is only the second person to have held the position of Carson’s City Clerk since its incorporation in 1968, and it is believed that Ms. Kawagoe is the first woman of Japanese-American descent to be elected to local office in the United States. As City Clerk, Ms. Kawagoe oversees the conduct of local elections, serves as clerk to the City Council and the Agency, and maintains a multitude of vital official records. Ms. Kawagoe has a long history of community and professional involvement. She served on the Carson Planning Commission and has been active in such diverse activities as the Carson Chamber of Commerce, United Way Crusade, Red Cross, Los Angeles County Museum of Art, and the Japanese American Citizens League (JACL), where she served as the first female district governor.
Karen Avilla, is the Agency Treasurer and City Treasurer. Ms. Avilla was appointed to serve as Agency Treasurer in February, 2001. She holds the elected office of City Treasurer. She began her City service in 1982 and served as the Chief Deputy City Treasurer responsible for managing the City’s investment portfolio, preparation of the investment policy and management of the day-to-day treasury operations.
Jacquelyn Acosta, is the Administrative Services General Manager for the City and is responsible for managing 54 professional, technical and clerical employees in the day-to-day operations of the City’s Finance and Human Resources divisions, as well as the preparation of City and Agency budgets and financial statements. Ms. Acosta has been with the City since February, 1995. Ms. Acosta received her Bachelor of Science in Accounting from Loyola Marymount University and Master in Business Administration from California State University Long Beach.
Clifford Graves, FAICP, is the Economic Development General Manager for the City. Mr. Graves is responsible for the daily operations of the Redevelopment Agency, Business Development, Job Development and Housing and Community Development Block Grant programs. He has over 35 years of experience in managing redevelopment and economic development activities with various public agencies in California and Washington D.C., together with eight years of private sector experience in municipal finance and strategic planning. Mr. Graves holds a Bachelor of Arts and Master of City Planning Degrees from the University of California, Berkeley.
Agency Powers
All powers of the Agency are vested in its members. Pursuant to the Redevelopment Law, the Agency is a separate public body and exercises governmental functions, including planning and implementing redevelopment projects.
The Agency may exercise the right to issue bonds for authorized purposes and to expend their proceeds, and the right to acquire, sell, rehabilitate, develop, administer or lease property. The Agency may demolish buildings, clear land and cause to be constructed certain improvements, including streets, sidewalks, and utilities, and can further prepare for use as a building site any real property which it owns or administers.
The Agency may, from any funds made available to it for such purposes, pay for all or part of the value of land and the cost of buildings, facilities or other improvements to be publicly owned, provided that such improvements are expressly found to be of benefit to a redevelopment project and cannot be financed by any other reasonable method. The Agency may not construct or develop buildings, with the exception of public buildings and housing, and generally must sell or lease cleared property which it acquires within a redevelopment project for redevelopment in conformity with a particular redevelopment plan, and may further specify a period within which such redevelopment must begin and be completed.
17 The Agency has not yet adopted a budget for fiscal year 2010-11. Pending adoption of the Budget, the Agency has adopted Resolution No. 10-24, giving the Administrative Services General Manager limited and temporary authority to expend funds for ongoing Agency expenses, subject to the Board’s approval of the Registrar of Demands until a budget is adopted or October 31, 2010, whichever occurs first. The authorization is limited to fiscal year 2009-10 levels of appropriation and those items authorized by separate Board action.
Factors Affecting Redevelopment Agencies Generally
Other features of the Redevelopment Law that bear on redevelopment agencies include general provisions which require public agencies to award contracts for construction only after competitive bidding. The Redevelopment Law provides that construction in excess of a minimum amount undertaken by the agency shall be done only after competitive bidding. California statutes also provide for offenses punishable as felonies that involve direct or indirect interest of a public official in a contract made by such official in his official capacity. In addition, the Redevelopment Law generally prohibits any agency or city official or employee who, in the course of his duties, is required to participate in the formulation or approval of plans or policies, from acquiring any interest in property in the Project Areas.
Filing of Statement of Indebtedness
Section 33675 of the Redevelopment Law requires that the Agency file, not later than the first day of October of each year with the county auditor, a statement of indebtedness certified by the chief financial officer of the agency for each redevelopment project for which the redevelopment plan provides for the division of taxes pursuant to Section 33670 of the Redevelopment Law. The statement of indebtedness is required to contain, among other things, the date on which the bonds were delivered, the principal amount, term, purpose, interest rate and total interest of the bonds, the principal amount and the interest due in the fiscal year in which the statement of indebtedness is filed and the outstanding balance and amount due on the bonds. Similar information must be given for each loan, advance or indebtedness that the Agency has incurred or entered into which is payable from tax increment. The Agency filed its statement of indebtedness for fiscal year 2010-11 on or prior to its due date of October 1, 2010.
Financial Statements
Included in this Official Statement as “APPENDIX B” are the audited financial statements of the Agency for the year ended June 30, 2009, reproduced from the report thereon rendered by Mayer Hoffman McCann P.C., independent accountants for the Agency. The Agency has not requested nor did the Agency obtain permission from the Auditors to include the audited financial statements as an appendix to this Official Statement. Accordingly, the Auditors have not performed any post-audit review of the financial condition or operations of the Agency. The Agency will file its audited financial statements for Fiscal Year 2009-10 with the MSRB when available.
Regulatory Issues
All real property in the Project Areas is subject to the controls and restrictions of the Redevelopment Plans described herein. The Redevelopment Plans provide that all new construction in the Project Areas shall comply with all applicable State and local laws in effect, including the various codes of the County. The Redevelopment Plans specify particular land use areas. The Agency may permit an existing but nonconforming use to continue so long as the Agency determines that the use is generally compatible with other surrounding development uses.
18 Within the limits, restrictions and controls established in the Redevelopment Plans, the Agency is authorized to limit the number, type, size and height of buildings in the Project Areas, and to establish design criteria, traffic circulation, traffic access and other development and design controls necessary for proper development within the Project Areas.
The Agency is in material compliance with the provisions of the California Environmental Quality Act, constituting Division 13 (commencing with Section 21000) of the California Public Resources Code, with respect to the Project Areas.
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City of Carson Redevelopment Project Areas
09/19/02 \\MAGELLAN\SHARE\GISPROJECTS\56\REDEVTIME.MXD (By Sub-Areas) THE REDEVELOPMENT PROJECT AREAS
Redevelopment Plans
Under the Redevelopment Law, every redevelopment agency is required to adopt, by ordinance, a redevelopment plan for each redevelopment project specifically authorized in the adopted redevelopment plan. A redevelopment plan is a legal document, the content of which is largely prescribed in the Redevelopment Law rather than a “plan” in the customary sense of the word.
Prior to the City’s incorporation in 1968, the Carson area was developed in an inconsistent pattern of agricultural, residential, commercial and industrial uses. A primary objective for incorporation was to facilitate the establishment and enforcement of zoning ordinances to upgrade and protect the community. The Carson Redevelopment Agency was created in 1971, with the mission of eliminating blighted conditions and preventing the further spread of blight through redevelopment as provided for in the Redevelopment Law.
The overall objectives of the Redevelopment Plans are to eliminate blighted conditions in the Project Areas by undertaking all appropriate projects pursuant to the Redevelopment Law. The general objective is to encourage investment in the Redevelopment Plans by the private sector, to eliminate blighted conditions and to upgrade the quality of the community. The Redevelopment Plans provide for the acquisition of property, the demolition of buildings and improvements, the relocation of any displaced occupants, and the construction of streets, parking facilities, utilities and other public improvements. The Redevelopment Plans also allow the redevelopment of land by private enterprise, the rehabilitation of structures, the rehabilitation or construction of low and moderate income housing, and participation by owners and the tenants of properties in the Project Areas. A map of the Project Areas is depicted on the previous page.
Project No. 1
The Original Project No. 1 was adopted in 1971, and as amended in 1975, covers approximately 762 acres (inclusive of streets and right-of-way) primarily in the center of the City. In 1985 and 1997, Project No. 1 was expanded by 967 and 534 acres to include the Carson Street corridor, refinery operations, and a portion of northwest Carson. Accordingly, Project No. 1 now covers approximately 2,263 gross acres. Project No. 1 is configured generally in the shape of an “L”, with its vertical extension bound by Alondra Boulevard on the north, Figueroa Street on the west, and Main Street on the east, and its horizontal extension bound by Del Amo Boulevard on the north, Carson Street on the south, Figueroa Street on the west, and Wilmington Avenue on the east.
The Agency’s first redevelopment area project became a reality with the adoption of the Redevelopment Plan for Project No. 1 in December 1971. Prior to redevelopment, Project No. 1 consisted mainly of large, unimproved lots with numerous auto salvage users and landfills.
Original Project 1. The Redevelopment Plan for the Original Project No. 1, was adopted in 1971 by the approval of Ordinance No. 71-205. This area was reduced by approval of Ordinance No. 74-288 adopted on February 4, 1974. The Original Project No. 1 encompasses approximately 762 acres of retail, commercial, office, recreation, and public facilities land uses. Major properties within the Original Project No. 1 include the South Bay Pavilion, Carson Civic Center, Dunn Industrial Park, environmental remediation of the 157-acre Boulevards at South Bay, as well as numerous other private developments. In January 1987, the City Council of the City in response to a change in the Redevelopment Law, adopted Ordinance 86-766 amending the Redevelopment Plan for the Original Project No. 1 setting the required limitations for the Original Project No. 1. Ordinance 86-766 established a 30-year time limit to issue debt. It also limited the total number of tax increment dollars that the Agency is allowed to collect from the Original Area to $352,188,117.
21 1985 Annex. In July of 1984, the City Council approved Ordinance No. 84-696, amending the Redevelopment Plan to add territory to the Original Project No. 1. The 1985 Annex added approximately 967 acres of primarily commercial and industrial uses to the Original Project No. 1. Key properties within the 1985 Annex includes the Carson Town Center. The 1985 Annex set a tax increment limitation of $500,000,000 (expressed in 1984 dollars, adjusted annually according to the Los Angeles-Long Beach Metropolitan Area Consumer Price Index LA-LBMA-CPI) as the amount of tax increment dollars that the Agency may collect from the 1985 Annex. The 1985 Annex also set the limitation on the amount of outstanding bonded debt for the 1985 Annex at $160,000,000 (expressed in 1984 dollars, adjusted annually according to the LA-LBMA-CPI).
1997 Annex. On June 4, 1996, the City Council approved Ordinance No. 96-1090 amending the Redevelopment Plan to once again add territory to the Original Project No. 1. The 1997 Annex added three non-contiguous areas totaling 534 acres to the already existing Project No. 1. This addition added more than 420 acres of industrial land use (78.6% of the added territory) and a small amount of commercial land use (5.5%). Using the newly added territory, the Agency facilitated development of the University Square retail center project and has implemented numerous public improvement projects in and around the civic core of the City, and is currently moving forward with facilitating and stimulating both public and private sector investment in the redevelopment of the Carson Street Corridor from the 405 (San Diego) Freeway on the east to the 110 (Harbor) Freeway on the west.
On November 4, 2003, the City Council adopted Ordinance No. 03-3 to extend the life of the plan for Original Project No. 1, 1985 Annex and 1997 Annex and the time period to collect tax increment revenues by one year. On May 1, 2007, the City Council adopted Ordinance No. 07-1379 pursuant to SB 211 and SB 1096 which eliminated the time limit to establish debt, and extended the duration of the Plan for Original Project No. 1, and 1985 Annex and its tax receipt deadlines by the maximum amounts permitted by law but also requires the Agency to pass-through certain revenues to the base year taxing entities beginning in fiscal year 2006-07.
The Agency’s ability to collect tax increment revenues from the Original Project No. 1 will cease on December 20, 2024, from the 1985 Annex will cease on July 16, 2036, and from the Project No. 1 1997 Annex will cease on August 16, 2037. See “Table 15 – Projected Housing Tax Revenues” herein.
Merged Project
The Merged Project consists of two formerly independent redevelopment project areas, Project No. 2 and Project No. 3, that were merged together on July 16, 1996 pursuant to Ordinance No. 96-1095. At the time of the merger, additional territory was also added to the project area, known as the “1997 Annex.”
The Merged Project is located mostly in central and southeastern portion of the City and is generally bordered by Carson Street on the north, Sepulveda Boulevard on the south, Avalon Boulevard to the west, and Alameda Boulevard on the east. The primary land uses in the Merged Project are industrial, and to a lesser extent, commercial. The Merged Project consists of approximately 1,661 acres of non-contiguous parcels.
Original Project No. 2. The Redevelopment Plan for the Original Project No. 2 was adopted in 1974 by the approval of Ordinance No. 74-295 and was amended by Ordinance No. 74-324 in 1975 to add territory. The Original Project No. 2 encompasses approximately 752 acres of industrial, residential, recreation, and public facilities land uses. The Watson Center South Industrial complex contains approximately 500 of the 752 acres, and represents numerous individual industrial research and development facilities leased to a number of different users. Other noteworthy projects in the Original Project No. 2 include the 9-acre Carson Toyota dealership, the 4-acre Carson Honda dealership and the 4.5-acre Carson Nissan dealership. In January 1987, the City Council in response to a change in the Redevelopment Law,
22 adopted Ordinance 86-767 amending the Redevelopment Plan for the Original Project No. 2 setting the required limitations for the Original Project No. 2. Ordinance 86-767 established a 30-year time limit to issue debt which was revised by AB 1290 to January 1, 2004. The Ordinance also limited the total number of tax increment dollars that the Agency is allowed to collect from the Original Project No. 2 to $534,307,874.
1983 Annex. On December 22, 1982, the City Council approved Ordinance No. 82-628, amending the Redevelopment Plan for Project No. 2 to add approximately 47 acres to the Original Project No. 2. Key properties within the 1983 Annex include the Avalon Green condominium development and the Village Shopping Center. The 1983 Annex set a limitation of $24,000,000 as the amount of tax increment dollars that the Agency may collect from the 1983 Annex. The 1983 Annex set the limitation on the amount of outstanding bonded debt for the 1983 Annex at $8,000,000. The Agency entered into the County Agreement to pass through certain tax increment revenue from the 1983 Annex to the County and the Fire District. The County Agreement further reduces the cumulative limit of $24,000,000 by providing that amounts of tax increment revenues in excess of $8,000,000 are to be used exclusively for County deferral payments under the County Agreement.
Original Project No. 3. The Redevelopment Plan for the Original Project No. 3 was adopted in 1984 by the approval of Ordinance No. 84-695. The Original Project No. 3 encompasses approximately 663 acres of heavy industrial uses. The Redevelopment Plan for the Original Project No. 3 set a limitation of $250,000,000 (expressed in 1984 dollars, adjusted annually according to a consumer price index) as the amount of tax increment dollars that the Agency may collect from the Original Project No. 3. The ordinance establishing the Original Project No. 3 also set the limitation on the amount of outstanding bonded debt for the Original Project No. 3 at $80,000,000 (expressed in 1984 dollars, adjusted annually according to a consumer price index).
1997 Annex. In July of 1996, the City Council approved Ordinance No. 96-1095, merging Project No. 2 (including the Original Project No. 2 and the 1983 Annex) with Project No. 3, and adding approximately an additional 192 acres of industrial and retail uses to Project Area No. 2 and Project Area No. 3. The limitation on the amount of outstanding bonded debt for the 1997 Annex at $35,000,000.
On November 4, 2003, the City Council adopted Ordinance No. 03-3 pursuant to SB 1045 to extend the life of the plans and the time periods of Original Project No. 2, 1983 Annex, Original Project No. 3 and 1997 Annex to collect tax increment revenues by one year. On May 1, 2007, the City Council adopted Ordinance No. 07-1379 pursuant to SB 211 and SB 1096 which eliminated the time limit to establish debt, and extended the duration of the Plan for Original Project No. 2, 1983 Annex and Original Project No. 3 and its tax receipt deadlines by the maximum amounts permitted by law but also requires the Agency to pass- through certain revenues to the base year taxing entities beginning in fiscal year 2006-07.
The Agency’s ability to collect tax increment revenues from Original Project No. 2 will cease on February 19, 2027, from 1983 Annex will cease on December 22, 2035, from Original Project No. 3 will cease on July 16, 2036 and from 1997 Annex will cease on August 16, 2037. See “Table 15 – Projected Housing Tax Revenues” herein.
Project No. 4
On July 16, 2002, the City Council, pursuant to Ordinance No. 02-1254 of the City, approved and adopted the Redevelopment Plan for the Project No. 4. Project No. 4 consists of approximately 942 acres located in eleven (11) separate noncontiguous subareas. Over fifty percent (50%) of the Project No. 4 is in two (2) subareas: one in the northern section of the City, just south of Alondra Boulevard, and the other in the western portion of the City around Carson Street. The Project No. 4 is a mix of land uses with more than fifty percent (50%) consisting of residential land uses.
23 Merger of All Project Areas into a Single Project Area
In July 2009, the Agency began the process to amend the existing Project Areas in 2010 to merge the Project Areas into a single project area (the “2010 Amendment”). The purpose of the 2010 Amendment is to: 1) merge the existing Project Areas for financial and administrative purposes; 2) extend and/or re-instate the Agency’s eminent domain authority, for a period of 12 years, for non-residentially zoned properties and; 3) add the rehabilitation of the Carson Sheriff’s Station to the approved list of capital improvements for Project No. 1. On September 21, 2010, the City Council introduced and conducted the first reading of the proposed ordinance adopting the 2010 Amendment. The ordinance was adopted by the City Council on October 11, 2010 and will become effective thirty days from adoption.
Adoption of the 2010 Amendment will not affect the use of Housing Tax Revenues or the Agency’s ability to pledge Housing Tax Revenues since Housing Tax Revenues from all project areas are already commingled into the Agency’s Low and Moderate Income Housing Fund and may be used in any Project Area for housing purposes upon the making of certain benefit findings.
Assessed and Incremental Value; Land Use
Table 1 shows a breakdown of the amount of gross acres, assessed valuation and incremental valuation for 2010-11 within Project No. 1, the subareas of the Merged Project and Project No. 4. The total fiscal year 2010-11 assessed value for the Project Areas is $4,037,643,462. Table 2 shows a breakdown of the different land uses within each Project Area. See “APPENDIX D – FISCAL CONSULTANT’S REPORT.”
TABLE 1 Carson Redevelopment Agency Acreage, Assessed Value and Incremental Value (000’s omitted for AV and IV)
Merged Project Total Project Project No. 4 Project No. 1 (Project No. 2) (Project No. 3) Areas Acreage 2,263 1,662 942 4,866 % of Total 46.5% 34.1% 19.4% 100.0% Assessed Value (10-11) $1,615,828 $784,841 $757,823 $879,152 $4,037,643 %of AV Total 40.0% 19.4% 18.8% 21.8% 100.0% Incremental Value (10-11) $1,224,844 $684,021 $618,343 $373,270 $2,900,478 %of IV Total 42.2% 23.6% 21.3% 12.9% 100.0% ______Source: Agency.
24 TABLE 2 Carson Redevelopment Agency Land Use Category Assessed Value Summary
Category Project No. 1 Merged Project Project No. 4 Total 2010-11 Value Percentage
Residential $ 57,737,987 $ 283,387,795 $558,735,461 $ 899,861,243 22.29% Commercial 503,739,445 159,500,998 90,380,422 753,620,865 18.66% Industrial 688,709,639 517,391,022 130,482,312 1,336,582,973 33.10% Recreational 13,998,866 980,152 381,128 15,360,146 0.38% Institutional 1,859,398 2,451,967 6,927,637 11,239,002 0.28% Vacant Land 92,935,405 59,187,075 14,170,168 166,292,648 4.12% SBE Non-Unitary -- 3,333,252 -- 3,333,252 0.08% Other 6,249,436 195,733,011 7,072,343 209,054,790 5.18% Unsecured 250,163,851 315,693,459 66,704,775 632,562,085 15.67% Miscellaneous 433,559 5,004,863 4,298,036 9,736,458 0.24% TOTAL $1,615,827,586 $1,542,663,594 $879,152,282 $4,037,643,462 100.00% ______Source: Los Angeles County Tax Records.
As shown in Table 2, industrial property is the most significant category of land uses within the Project Areas based on assessed value. Approximately 16% of the land use based on assessed value is unsecured comprised largely of fixture and equipment value for major industrial facilities. See “BONDOWNERS’ RISKS – Unsecured Property” herein. Detailed breakdown of land use, number of parcels and valuation for the Project Areas and their subareas are included in Tables 2.1 and 2.2 of the Fiscal Consultant Report. See “APPENDIX D – FISCAL CONSULTANT’S REPORT.” Plan Limitations
In 1976, the Legislature enacted AB 3674 (Statutes of 1976, Chapter 1337) that added Section 33333.2, 33334.1 and 33354.6 to the Redevelopment Law. Section 33333.2 requires redevelopment plans adopted on or after October 1, 1976, to contain a limit on the number of tax dollars which may be divided and allocated to a redevelopment agency pursuant to its redevelopment plan (except for plans or amendments adopted after 1994), a time limit on the establishing of loans, advances and indebtedness to finance, in whole or in part, the redevelopment project and a time limit not to exceed twelve years for the commencement of eminent domain proceedings to acquire property within the project area.
Section 33334.1 requires a redevelopment plan adopted on or after October 1, 1976, to contain a limit on the amount of bonded indebtedness that can be outstanding at one time. Section 33354.6 provides that with respect to any amendment of a redevelopment plan (which provides for the allocation of taxes) to add new territory to a project area, the agency must follow the procedures and be subject to the same restriction as provided in the adoption of a new redevelopment plan.
In 1993, the Legislature enacted Assembly Bill No. 1290, Chapter 942 (which is codified, in part, at Section 33333.6 of the Redevelopment Law), which established the following limits on plans adopted after 1994 and established additional limits on redevelopment plans adopted prior to 1994 and to amendments to such plans which add new territory: (1) the time limit for establishing indebtedness shall not exceed 20 years from the adoption of the redevelopment plan or plan amendment, or January 1, 2004, whichever is later; (2) the life of the existing redevelopment plan or amendment shall not exceed 40 years from the date of adoption or January 1, 2009, whichever is later; and (3) a redevelopment agency shall not pay indebtedness with tax increment beyond 10 years after its redevelopment plan or amendment expires except to fund deferred
25 housing set-aside requirements of the Redevelopment Law and to repay indebtedness incurred prior to January 1, 1994.
Senate Bill No. 211 (Statutes of 2001 Chapter 741) (“SB 211”) provides a procedure by which any redevelopment plan or amendment adopted prior to January 1, 1994 may extend the current time limit to incur indebtedness of its plan or amendment to the expiration date of the plan or amendment. The statute allows the legislative body the ability to adopt required ordinances without having to follow normal, lengthy procedures to amend its redevelopment plan or amendment. On May 1, 2007, the City Council adopted Ordinance No. 07-1379 pursuant to SB 211 to extend the time limits to incur indebtedness for Original Project No. 1, Annex 1985, Original Project No. 2, Original Project No. 3 and the 1983 Annex. As a consequence of this amendment, the Agency is required to pass through certain revenues to the taxing entities beginning in 2006-07. See “Tax Sharing Statutes” herein. The pass through revenues do not have any effect on the Housing Tax Revenues and consequently, this amendment does not affect the Housing Tax Revenues.
In 2002, Senate Bill 1045 (Chapter 260 of Statutes of 2003), requires for fiscal year 2003-04, that all redevelopment agencies allocate specified amounts of tax increment to the County Auditor Controller for deposit into the Educational Revenue Augmentation Fund (“ERAF”). In recognition of the loss of revenue, SB 1045 allows amendment to redevelopment plans to extend by one year the life of the redevelopment plan and the time period in which to collect tax increment revenues. A year later, Senate Bill 1096 was passed which allows all redevelopment agencies which make ERAF payment in fiscal years 2004-05 and 2005-06 to amend plans and time periods to collect tax increment revenues for up to an additional two years, depending on existing age of the project area and the status of the agency’s housing obligations. The legislative body of a redevelopment agency can adopt such ordinance without having to follow normal, lengthy procedures to amend their redevelopment plans. On November 4, 2003, the City adopted Ordinance No. 03-3 to amend Original Project No. 1, 1985 Annex, 1997 Annex, Original Project No. 2, 1983 Annex, Original Project 3, 1997 Annex and Project No. 4 with respect to SB 1045. On May 1, 2007, the City adopted Ordinance No. 07-1379 to amend Original Project No. 1, 1985 Annex, Original Project No. 2, 1983 Annex, and Original Project No. 3 Area with respect to SB 211 and SB 1096.
As a result of certain of these limitations contained or incorporated in the redevelopment plans governing the period of time for receiving tax increment revenues, issuing indebtedness and repaying indebtedness, the ability to collect Housing Tax Revenues (as defined herein) derived from all Project Areas and subareas other than Project No. 4, will expire at various times prior to the final maturity of the Bonds. After December 20, 2024, these limitations result in a smaller number of properties generating Housing Tax Revenues as the limitations are reached for various subareas within the affected Project Areas. Because the Bonds are payable solely from Housing Tax Revenues, the loss of parcels generating Housing Tax Revenues may adversely affect the amount of Housing Tax Revenues collected and/or the concentration of top taxpayers within the remaining Project Areas. See “APPENDIX D - FISCAL CONSULTANT’S REPORT.” If the Agency has not fulfilled its housing obligations under Redevelopment Law by the end of a particular plan’s effectiveness or at the time the Agency exceeds its maximum tax increment limits, the Agency may extend certain of these limitations, but only in order to fulfill these future remaining obligations, and not for the purpose of repayment on the Bonds.
The Plan Limits are summarized below as well as amounts of tax increment received by the Agency through August 2010 for each subarea:
26 TABLE 3 Carson Redevelopment Agency Redevelopment Plan Limit Summary
Last Date to Tax Limit on Time Limit Repay Debt with Increment Outstanding Plan Expiration to Incur Debt Tax Increment Limit Bond Debt
AB 1290 Limits The later of 40 The later of 20 years 10 years from N/A N/A years from adoption from adoption or termination of or January 1, 2009 January 1, 2004 Redevelopment Plan
SB 211 Eliminates time limit
SB 1045 One year extension One year extension
SB 1096 Up to 2 year Up to 2 year extension with extension with noticed public noticed public hearing and certain hearing and certain findings findings
Original Project December 20, 2014 Eliminated December 20, 2024 $352,118,117 None No. 1
1985 Annex July 16, 2026 Eliminated July 16, 2036 $500,000,000(1) $160,000,000(1)
1997 Annex August 16, 2027 August 16, 2016 August 16, 2037 None $50,000,000(1)
Original Project February 19, 2017 Eliminated February 19, 2027 $534,307,874 None No. 2* 1983 Annex December 22, 2025 Eliminated December 22, 2035 $24,000,000(2) $8,000,000 Original Project July 16, 2026 Eliminated July 16, 2036 $250,000,000(1) $80,000,000(1) No. 3 1997 Annex August 16, 2027 August 16, 2016 August 16, 2037 None $35,000,000(1) Project No. 4 July 16, 2033 July 16, 2022 July 16, 2048 None $85,000,000 ______Notes: * Includes the area added to Project Area No. 2 in 1975. (1) These limits are adjusted annually for changes in the consumer price index. The amounts shown above represent the original, unadjusted limits. A preliminary estimate is that such amounts will increase to over $800,000,000 for 1985 Annex and to over $400,000,000 for Original Project No. 3 by July 16, 2036. (2) A Tax Sharing Agreement with Los Angeles County effectively changes the tax increment limit for the 1983 Amendment from $24 million to $8 million. However, this restriction does not affect revenues required to be deposited into the Low and Moderate Income Housing Fund.
Cumulative Tax Receipts Cumulative Tax Receipts Subarea as of August 2010 Subarea as of August 2010
Project No. 1 Original $ 95,621,123 Project No. 2 1983 Annex $ 5,163,486 Project No. 1 1985 Annex 82,342,087 Project No. 3 Original 58,492,432 Project No. 1 1997 Annex 1,538,129 Project No. 2/3 1997 Annex 21,759,380 Project No. 2 Original 133,367,746 Project No. 4 21,850,382
______Source: Agency.
27 As shown in the table above, through August 2010, as reported by the County, tax increment revenues received are below the limitations set forth above. See “APPENDIX D - FISCAL CONSULTANT’S REPORT.” The Agency is of the opinion that these limitations will not impede its ability to develop the Project Areas in accordance with the Redevelopment Plans nor impair its ability in the future to repay any obligation or indebtedness, including the Bonds, incurred by the Agency in connection with the development of the Project Areas in accordance with the Redevelopment Plans.
The Agency has covenanted under the Indenture to manage its fiscal affairs in a manner which enables it to comply with the Plan Limitations, and not to issue any bonds, notes or other obligations which would cause the Plan Limitations to be exceeded or violated. See “APPENDIX A – SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE S – Plan Limit; Review of Housing Tax Revenues.”
Base Year Assessed Valuation
Based upon the County Auditor-Controller reports, the net assessed base year valuation for the Project Areas is as follows: TABLE 4 Carson Redevelopment Agency Base Year Values
Project No. 1
Original Project 1985 Annex 1997 Annex Total Project No. 1 Value Value Value Area Value
Base Year Value $14,428,460 $230,402,799 $146,153,182 $390,984,441
Merged Project
Original Project 1983 Annex Original Project 1997 Annex Total Project No. 2 Value Value No. 3 Value Area Value Area Value
Base Year Value $87,877,251 $12,942,570 $99,470,467 $40,009,213 $240,299,501
Project No. 4
Project No. 4 Area Value
Base Year Value $505,881,872 ______Source: Fiscal Consultant’s Report.
Tax Rates
Tax rates will vary from area to area within a State, as well as within a community and a project area. The tax rate for any particular parcel is based upon the jurisdictions levying the tax rate for the area where the parcel is located. The tax rate consists of the general levy rate of $1.00 per $100 of taxable values and the override tax rate, which is that portion of the tax rate that exceeds the general levy tax rate in order to pay voter approved indebtedness or contractual obligations that existed prior to the enactment of Proposition 13. The table below shows the components of the 2009-10 tax override rate. The override rate components shown exclude rates associated with indebtedness approved by the voters in 1989 or thereafter.
28 TABLE 5 Carson Redevelopment Agency 2009-10 Override Tax Rate
GENERAL LEVY 1.000000% OVERRIDE RATE Metropolitan Water District .004300% TOTAL TAX LEVY 1.004300% ______Source: Fiscal Consultant’s Report.
Tax rates for the fiscal year 2010-11 are not yet available. Revenues associated with the override tax rates have not been included in the projections of the net tax increment revenue. The projections are based on a 1.0% tax rate. See “APPENDIX D - FISCAL CONSULTANT’S REPORT.”
Major Taxpayers
Major taxpayers represent the largest assessees in a given Project Area for fiscal year 2010-11. Each Project Area has different types of major taxpayers and different concentration levels. The following table summarizes the relative concentration for the assessed value attributable to the ten largest assessees in each Project Area. The information has been gathered by the Agency, but the accuracy or completeness of such information is not guaranteed by the Agency. For a breakdown of the ten major assessees in each Project Area, see “APPENDIX D – FISCAL CONSULTANT’S REPORT – Tables 3.1 and 3.2.” Several of the major taxpayers have pending property tax appeals as indicated in footnote 3 of Table 7. TABLE 6 Carson Redevelopment Agency Taxpayer Concentration Summary
Total Project Area Major Taxpayers 2010-11 Value Percentage
Project No. 1 455,168,273 1,615,827,586 28.17% Merged Project 828,696,220 1,542,663,594 53.72% Project No. 4 108,880,977 879,152,282 12.38% TOTAL $1,392,745,470 $4,037,643,462 34.49% ______Source: Fiscal Consultant’s Report.
29 TABLE 7 Carson Redevelopment Agency Ten Major Taxpayers
No. of % of Total % of Incre. Assessee(1) Use Assmts Subarea 2009-10 Value Value Value
1) Watson Land Industrial Park, 117 2/3 $ 354,219,248 8.77% 12.21% Co.(3) Office Park, Other 2) Ineos Innovene Polypropylene 1 Orig 3 124,417,870 3.08 4.29 Polypropylene Plant LLC(2) (3) 3) BP West Coast Refinery, Land, 15 Orig 3 & 110,724,733 2.74 3.82 Products LLC(2) (3) Office, Other 1997 4) Air Products and Hydrogen 2 1997 90,527,858 2.24 3.12 Chemicals Inc. (3) Plant/Unsecured Merged 5) AMB Mar Carson Light 18 Project 1 & 86,565,448 2.14 2.98 LLC(3) Industrial/Office Project 2 6) Equilon Industrial/Petroleum 11 1997 74,868,967 1.85 2.58 Enterprises Project 1 7) VCG-Southbay Retail/Regional 6 Orig. 73,179,119 1.81 2.52 Pavillion LLC Project 1 8) Prime Wheel Manufacturing 3 1985 52,282,129 1.29 1.80 Corporation Project 1 9) Carson Market Vacant/Commercial 10 Orig. 45,971,115 1.14 1.58 Place Project 1 10) Shell Oil Industrial/Petroleum 3 1997 39,719,713 0.98 1.37 Company Project 1
Total 2010-11 Assessed Value TOTAL $4,037,643,462 VALUE(2) $1,032,145,404 26.07% 36.29% Total 2010-11 Incremental Value $2,900,477,648
______1) The values shown for each assessee as it exists within the indicated Project Area(s). 2) Excludes some assessed values for Watson Land and BP that exist in Project No. 1, but are not major taxpayers in that Project Area. 3) Owner has one or more property tax appeals currently pending with County.
Source: Los Angeles County Tax Records
The ten major taxpayers own properties whose combined assessed value accounts for approximately 26% of the equalized roll of the Project Areas. The reduction in assessed valuation of taxable property in the Project Areas caused by the complete or partial destruction of such properties would likely result in a reduction in Housing Tax Revenues which secure the Bonds. In such an event, the Agency’s ability to timely pay principal and interest on the Bonds may be adversely affected.
Additionally, as a result of certain limitations contained or incorporated in the Redevelopment Plans governing the period of time for receiving tax increment revenues and repaying indebtedness, the ability to collect Housing Tax Revenues (as defined herein) derived from all Project Areas and subareas other than Project No. 4, will expire at various times prior to the final maturity of the Bonds and affect the composition
30 and concentration of the top ten taxpayers within the Agency. See “THE REDEVELOPMENT PROJECT AREAS - Plan Limitations.”
Key Taxpayer Summary
The following is information about the key taxpayers in the Project Areas. The information has been gathered by the City and the Agency from various taxpayers and other sources believed to be reliable, but the accuracy or completeness of such information is not guaranteed by the Agency or the City.
Watson Land Company
The Watson Land Company’s legacy extends two centuries to the Rancho San Pedro Spanish Land Grant. Today, the company is among the largest developers of industrial centers in Los Angeles County, and among the largest industrial developers in the nation. Over the past 40 years, the company has master planned more than 1,000 acres of industrial and commercial property. In addition, the company has developed and now owns and manages approximately 14 million square feet of industrial, office and technology buildings and business centers. Watson Land Company’s holdings include primarily two industrial and office parks located in both Project No. 2 and Project No. 3. Tenants at both business park locations represent numerous individual industrial or research and development facilities leased to a number of different users. The $354 million in assessed value for 2010-11 is spread over 117 parcels. Tenants within the industrial park are varied and include Mercedes Benz USA, LLC, Bristol Farms corporate headquarters, and Herbalife of America, Inc.
INEOS Innovene Polypropylene LLC/BP West Coast Products LLC
The main activities of Atlantic Richfield Company are the exploration and production of crude oil and natural gas, and refining, marketing, supply and transportation, and manufacturing and marketing of petrochemicals. In the spring of 2000, Atlantic Richfield Company and British Petroleum merged, but kept the ARCO brand name. The merger is considered a change of ownership for property tax purposes. The resulting company, BP p.l.c. (BP), is traded on the New York Stock Exchange (NYSE), and is one of the world’s largest energy companies. BP West Coast Products LLC, is a Delaware limited liability company with its headquarters in Southern California, and is an indirect, wholly owned subsidiary of BP plc. In Carson, BP operates an oil refinery and other oil-related uses within Project No. 3 (only a portion of the oil refinery is located within Project No. 3; the balance is located outside the Agency but within the City). Additionally, BP recently completed a 125,000 square foot office building within the Merged Project.
In 1999, the Agency partnered with the ARCO to facilitate the construction of a 200,000 ton polypropylene plant located onsite at the Carson facility at 1801 Sepulveda Blvd. The plant started producing polypropylene in December 1999. Polypropylene is used in the automotive market and as shrink- film over wrap, capacitor and other electronic industry films, photo and graphic arts applications, soft-goods over wrap, and disposable diaper tabs and closures. In 2004, BP set up the majority of its petrochemical businesses a separate entity known as Innovene within the BP Group. In 2005 BP sold Innovene to INEOS, a private UK chemicals company. INEOS is the world’s third largest chemical company and manufactures petrochemicals, specialty and intermediate chemicals and polymers. The company was formed by a management buy out of a former BP petrochemicals asset. In 2006 INEOS formed INEOS Olefins & Polymers USA, which operates the polypropylene manufacturing facility in the Merged Project.
Air Products and Chemicals
Air Products and Chemicals (“Air Products”) is one of the world’s largest industrial gas producers, supplying to 100,000 customers around the world a broad range of industrial and specialty gases including oxygen, nitrogen, argon, hydrogen and helium. These gases are used in most industries, including food and metal processing, semiconductor manufacturing, medicine, aerospace and chemical production. Air Products
31 also supplies industrial gas-related equipment. Founded in 1940, Air Products has built leading positions in markets such as semiconductor materials, refinery hydrogen, home healthcare services, natural gas liquefaction, and advanced coatings and adhesives. The company’s Carson facility is a hydrogen plant, manufacturing and selling chemicals. The Air Products’ assessment is primarily unsecured fixtures and equipment located on a site owned by BP in Project No. 3.
AMB Mar/Carson LLC
AMB Mar/Carson LLC is a division of AMB Property Corporation (NYSE: AMB) (“AMB”), a leading owner, operator and developer of industrial real estate focused on major hub and gateway distribution markets in the Americas, Europe and Asia. AMB operates as a publicly traded real estate investment trust (“REIT”) and invests in properties located predominantly in the infill submarkets of its targeted markets. AMB serves approximately 2,600 customers in 48 markets in 15 countries with a portfolio of 156.1 million square feet (14.5 million square meters). AMB’s portfolio comprises High Throughput Distribution facilities—industrial properties built for speed located near key seaports, airports and major freeway interchanges. AMB’s business encompasses a blend of real estate, global logistics and infrastructure.
AMB Properties, a developer and owner of industrial properties, owns three separate industrial locations within Project No. 1. The first is the Carson Town Center, an industrial park constructed in 2002 and located at 21023-21175 S. Main Street and totaling approximately 330,000 square-feet of industrial manufacturing space. The second is the Carson Industrial Park, an older industrial park with multiple buildings and multiple tenants with multiple street addresses totaling approximately 420,000 square-feet of industrial manufacturing space. The third, located at 18620 S. Broadway Street/18601 S. Main Street contains several buildings totaling approximately 106,500 square-feet of industrial manufacturing space. AMSI, a manufacturer is the current tenant and occupies the full space.
Equilon Enterprises LLC
Equilon Enterprises LLC (“Equilon”) is a petroleum company that initially represented a joint venture between Shell Oil Company and Texaco, Inc. Equilon is now a wholly owned subsidiary of Shell Oil and controls a 190+/- acre site primarily used for petroleum storage and warehousing in above ground storage tanks. Equilon operates a branch location at 20945 S. Wilmington Avenue and is estimated to employ approximately 11 persons at this location. The Equilon facility is adjacent to the Shell Oil Company facility, with each located in the 1997 Annex of Project No. 1. Equilon refines and markets gasoline and other petroleum products under both the Shell and Texaco brand names in all or parts of 31 western states, providing product to 9,400 Shell and Texaco retail and wholesale outlets with an eventual rebranding to Shell brand names. Its headquarters is in Houston, Texas. The company’s assets include four refineries in the western United States; seven lubricants plants; ownership or partial interest in sixty-five terminals; and operation and/or ownership interest in thousands of miles of pipeline nationwide. The business units that comprise Equilon include aviation, lubricants, refining, sales, technology and transportation.
VCG-Southbay Pavilion LLC
In July 2009, Fred Sands invested an estimated $60 million in the purchase of SouthBay Pavilion, a 1.1-million square-foot shopping center just off the 405 Freeway located in Project No. 1. The seller, HREG Genesis of Carson, California, completed a $30 million remodeling of the property in 2007. Mr. Sands purchased the center through his Brentwood-based Vintage Real Estate, LLC (“VRE”), a wholly-owned division of Vintage Capital Group (“VCG”), an investment firm founded in 2000 by Mr. Sands. VRE acquires and redevelops underperforming malls and large shopping centers throughout the United States. VCG-Southbay Pavilion LLC, a related entity of VRE, is the record owner of the site.
32 The center is located at Avalon Boulevard and is anchored by Ikea, Target, Sears and JC Penney. There also are 54 specialty stores and restaurants including brands like Old Navy, Children’s Place, Foot Action, Panera Bread, Panda Express, Sansai Grill, Five Guy Burgers, Wing Stop and Jamba Juice.
Mr. Sands is Chairman of VRE, which is led by a team of senior executives formerly with Westfield, one of the largest mall owners in the world. Mr. Sands is the former Chairman and sole shareholder of the second largest real estate and financial services company in California, and the seventh largest in the United States, including owned and operated entities in title insurance, home warranty, mortgage banking, and escrow. After establishing and building Fred Sands Realtors into one of the largest real estate and financial services firms in the United States, Mr. Sands exited this business in a merger with Coldwell Banker and formed VCG. VCG has a capital base in excess of $150 million.
Prime Wheel Corporation
Founded in 1989, Prime Wheel Corporation (“Prime Wheel”) provides custom one- and two-piece aluminum alloy wheels worldwide from large-scale automobile corporations to local vendors. During the 1990s, Prime Wheel expanded its facilities to produce and build original equipment wheels including Mitsubishi’s Montero line. In 2000, Prime Wheel further expanded to supply original equipment wheels for the Daimler Chrysler Corporation, Ford Motors, General Motors, and Mitsubishi Motor America. With manufacturing facilities in Carson and Harbor City as well as Mexicali, Mexico, Prime Wheel produces 2.5 million wheels annually, of which 600,000 are chrome plated. The Prime Wheel facility in Carson is a major manufacturing enterprise with a significant amount of fixtures and equipment as well as business inventory. The company recently completed the construction of approximately 79,000 square-feet of additional warehousing capacity in a new tilt-up building located diagonally across an intersection and across the street from the main facility. The Carson facility consists of a major manufacturing facility located on a 5 acre site in the 1985 Annex of Project No. 1.
Carson Marketplace LLC
Carson Marketplace LLC (“Carson Marketplace”), is a Delaware limited liability company, liability company whose members include the LNR Carson, LLC and Hopkins Real Estate Group (“HREG”). Carson Marketplace was created for the limited purpose of developing the proposed Boulevards at South Bay or similar development. The proposed Boulevards at South Bay project is co-managed by LNR Commercial Property Group (“LNR CPG”) and HREG. LNR CPG is an operating division of LNR Property Corporation (“LNR”), a real estate investment, finance, development, and management company headquartered in Miami Beach, Florida. LNR invests in (i) real estate properties, (ii) loans on properties and (iii) securities backed by loans on properties. LNR CPG is responsible for the investment and development activities of the LNR CPI Fund and acts as its general partner. LNR CPG is responsible for the investment and development activities of the LNR CPI Fund and acts as the fund’s General Partner. The LNR CPI Fund has in excess of $1.1 billion in equity capitalization, of which approximately 45% is currently invested or committed to commercial development projects located in multiple states. HREG is a privately held company recognized nationwide as a respected leader in urban infill redevelopment, as well as in the development of new neighborhood and community shopping centers. HREG is headquartered in Orange County, California.
The proposed Boulevards at South Bay is located on a 157-acre landfill site, formerly known as the Carson Marketplace, within Project No. 1. Under a Specific Plan, development standards and guidelines allow for a potential mix of approximately 2 million square feet of commercial, restaurant and entertainment venues, big box retail stores, a 300-room hotel, and up to 1,150 residential units. Between 1959 and 1965, the site was used as a designated Class II landfill resulting in elevated levels of chemicals of concern found in the landfill and groundwater. While there is no immediate health risk, the site is currently being remediated under the oversight of the State of California Department of Toxic Substance Control. The
33 remediation plan has been designed to ensure that future site occupants and users are not exposed to the existing toxins at the site. See “BONDOWNERS’ RISKS – Hazardous Substances” herein.
Shell Oil Company
The site owned by Shell Oil Company in Project No. 1 is a 250+ acre site primarily used for petroleum operations. Much of the site is vacant and undergoing environmental remediation. The Shell Oil Company facility and the Equilon facility are each located in the 1997 Annex of Project No. 1. See “BONDOWNERS’ RISKS – Hazardous Substances” herein.
Historic Assessed Valuation Growth and Debt Service Coverage
The following tables are the actual assessed valuations and tax increment revenues for the Project Areas from Fiscal Year 2006-07 through Fiscal Year 2010-11, including the actual receipts of tax increment for each Project Area from Fiscal Year 2005-06 through Fiscal Year 2009-10. See Tables 8.1, 8.2 and 8.3 in “APPENDIX D – FISCAL CONSULTANT’S REPORT” for detailed information on historical assessed valuation and tax increment receipts for the subareas within the Project Areas.
TABLE 8 Carson Redevelopment Agency Historical Assessed Valuation Multiple Project Areas (000s omitted)
Project Area 2006-07 2007-08 2008-09 2009-10 2010-11
Project No. 1 $1,395,031 $1,406,231 $1,515,278 $1,647,717 $1,615,828 Project No. 2 715,302 762,056 771,185 791,114 784,841 Project No. 3 723,116 744,211 815,409 744,754 757,823 Project No. 4 804,315 875,015 927,192 902,450 879,152 Total Value $3,637,765 $3,787,514 $4,029,064 $4,086,035 $4,037,643 Percentage Change N/A 4.12% 6.38% 1.41% (1.18%) ______Source: Los Angeles County Auditor-Controller’s Office
As shown in Table 8, in general, increases in assessed values for the Project Areas have reduced significantly over the last two years after showing significant growth, and have even declined in certain Project Areas. A discussion concerning assessed values and tax receipts for each Project Area follows.
Project No. 1. The assessed value for Fiscal Year 2009-10 increased by $130 million or 8.7%, primarily as a result of new commercial development. Values for 2010-11 represent a decrease of $30 million over the previous year value, or -1.94%. The decline is primarily due to the cancelling of unsecured taxes of the Bottling Group property and subsequent refund to the property owner. The reason for the cancellation is unknown but is suspected to be the result of a filing error. The lower tax receipts for Fiscal Year 2009-10 is due in part to large tax refunds of resolved appeals.
34 TABLE 9 Carson Redevelopment Agency Historical Assessed Valuation and Tax Increment Receipts Project No. 1
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Total Valuation $1,283,368,231 $1,395,031,327 $1,406,231,092 $1,515,277,738 $1,647,717,409 $1,615,827,586 Less: Base Year Value 390,984,441 390,984,441 390,984,441 390,984,441 390,984,441 390,984,441 Incremental Valuation $ 892,383,790 $1,004,046,886 $1,015,246,651 $1,124,293,297 $1,256,732,968 $1,224,843,145
Percent Total N/A 8.70% 0.80% 7.75% 8.75% (1.94)% Valuation Change
Original Tax Charge (1) $9,122,144 $10,305,712 $10,484,392 $11,255,636 $12,785,887 N/A Actual Tax Receipts $9,772,626 $10,268,690 $10,645,567 $13,797,714 $11,779,627 N/A Percentage Tax 107% 100% 102% 123% 92% Receipts ______(1) The Original Tax Charge represents the tax increment revenue estimated at the beginning of a fiscal year and includes a tax override rate. ______Source: Los Angeles County Auditor-Controller’s Office and the City of Carson Finance Department
Merged Project. As discussed within the Fiscal Consultant Report, the assessed values for Project No. 2 increased by almost five percent (5%) over the last five years but the last three years has averaged less than two percent (2%). Assessed values for Project No. 3 do not show a consistent trend due to petroleum and polypropylene uses. The lower tax receipts for Merged Project for Fiscal Years 2005-06 and 2009-10 are due in part to tax refunds attributable to prior year appeals, primarily for BP and Ineos properties.
TABLE 10 Carson Redevelopment Agency Historical Assessed Valuation and Tax Increment Receipts Carson Merged and Amended Project Area
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Total Valuation $1,349,088,104 $1,438,418,034 $1,503,051,303 $1,586,594,811 $1,535,867,773 $1,542,663,594 Less: Base Year Value 240,299,501 240,299,501 240,299,501 240,299,501 240,299,501 240,299,501 Incremental Valuation $1,108,788,603 $1,198,118,533 $1,262,751,802 $1,346,295,310 $1,295,568,272 $1,301,364,093
Percent Total N/A 6.62% 4.72% 5.33% (3.20%) 0.44% Valuation Change
Original Tax Charge (1) $11,200,190 $12,280,809 $12,978,744 $13,825,953 $13,221,333 N/A Actual Tax Receipts $10,480,265 $11,933,941 $13,268,976 $14,692,328 $12,621,420 N/A Percentage Tax 93% 97% 102% 106% 95% Receipts ______(1) The Original Tax Charge represents the tax increment revenue estimated at the beginning of a fiscal year and includes a tax override rate. ______Source: Los Angeles County Auditor-Controller’s Office and the City of Carson Finance Department
35 Project No. 4. Project No. 4 assessed value growth has ranged from nearly six percent (6%) to nearly eleven percent (11%) annually from Fiscal Years 2005-06 through 2008-09 resulting from substantial residential value increases through sales and limited new construction. Assessed values for Fiscal Years 2009-10 and 2010-11, however, represent declines from the prior year of about two and half percent (2.5%), resulting from residential property transfers at reduced values and/or reductions by the County Assessor’s Office. Tax receipts for Fiscal Years 2005-06 through 2009-10 are above one hundred percent.
TABLE 11 Carson Redevelopment Agency Historical Assessed Valuation and Tax Increment Receipts Project No. 4
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Total Valuation $727,094,170 $804,315,307 $875,015,291 $927,191,851 $902,449,754 $879,152,282 Less: Base Year Value 505,881,872 505,881,872 505,881,872 505,881,872 505,881,872 505,881,872 Incremental Valuation $221,212,298 $298,433,435 $369,133,419 $421,309,979 $396,567,882 $373,270,410
Percent Total N/A 10.62% 8.79% 5.96% (2.67%) (2.58%) Valuation Change
Original Tax Charge (1) $2,134,074 $3,144,026 $3,870,038 $4,371,429 $4,150,631 N/A Actual Tax Receipts $2,638,182 $3,479,334 $3,941,943 $4,759,034 $4,305,509 N/A Percentage Tax 124% 111% 102% 109% 104% Receipts ______(1) The Original Tax Charge represents the tax increment revenue estimated at the beginning of a fiscal year and includes a tax override rate. ______Source: Los Angeles County Auditor-Controller’s Office and the City of Carson Finance Department
Tax Receipts. As shown above and in the Fiscal Consultant’s Report, tax receipts to the Agency have historically closely approximated or exceeded the amount of the original tax increment estimates. Taxes received from Fiscal Year 2009-10 are less, as a percentage of the amount estimated as due, than those received in most prior fiscal years. This is primarily because 1) taxes refunded to taxpayers because of resolved appeals and other factors were significant; and 2) the amounts of supplemental revenues received for the Project Areas have decreased from prior year levels and are in some instances, negative amounts. For Fiscal Year 2009-10, large tax refunds impacted tax receipts in Project No. 1 ($800,000) and Project No. 3 ($2.1 million). For Project No. 3, relatively large refunds were also issued during Fiscal Year 2005-06. The majority of the tax refunds that have occurred in the Merged Project , at least in terms of dollar impact, are the result of appeals on properties owned by BP and/or Ineos. The Agency will not begin to receive tax increment for Fiscal Year 2010-11 until November 2010. See “APPENDIX D – FISCAL CONSULTANT’S REPORT.”
Assessment Appeals
Assessment appeal information for the Project Areas for fiscal years 2001-02 through 2009-10 has been prepared from data provided by the Los Angeles County Assessors’ Office. Of the 569 appeals filed, 299 are still outstanding with current assessed values totaling $965,757,707. During this time period, the percentage of reduction of all resolved appeals was approximately 21% for Project No. 1, 26% for Merged Project and 14% for Project No. 4. Individual taxpayers have until December 31, 2010 to appeal their 2010 tax assessment. As such, information on the 2010-11 appeals will not be available until calendar year 2011.
36 See also “BONDOWNERS’ RISKS - Property Tax Appeals,” and the discussion of Assessment Appeals in “APPENDIX D - FISCAL CONSULTANT’S REPORT”, including Tables 5.1, 5.2, 5.3, 6.1, 6.2, 6.3, 7.1, 7.2 and 7.3.
Outstanding appeals are assumed to impact the Agency tax increment revenue in two ways: tax refunds and assessed valuation reductions. When analyzing the appeals, the Fiscal Consultant assumed that appeals would be resolved and refunds granted based on historical averages for all appeals in a Project Area. While outstanding appeals could be resolved during Fiscal Year 2010-11, it has been assumed that at least some of the appeals will be outstanding over several years and that the affect on future assessed values and revenues in the Project Areas will be more gradual. The use of those assumptions would result in a future drop in value as shown in the tables below.
TABLE 12 Carson Redevelopment Agency Summary of Estimated Tax Refunds From Filed Assessment Appeals (FY 2009-10 and Prior Years)
Year Project No. 1 Merged Project Project No. 4 Total
2010-11 $ 385,000 $3,554,000 $ 32,600 $3,971,600 2011-12 440,000 3,287,000 56,600 3,783,500 2012-13 214,000 1,295,000 26,500 1,535,000 2013-14 0 0 0 0 TOTAL $1,039,000 $8,136,000 $115,600 $9,290,600 ______Source: Fiscal Consultant Report.
TABLE 13 Carson Redevelopment Agency Summary of Estimated Assessed Value Impact From Filed Assessment Appeals (FY 2009-10 and Prior Years)
Year Project No. 1 Merged Project Project No. 4 Total
2010-11(1) $(11,518,999) $(16,887,406) $(1,246,687) $(29,653,092) 2011-12 (41,806,979) (71,893,569) (4,904,200) (118,604,748) 2012-13 (34,859,357) (57,514,855) (3,859,840) (96,234,052) TOTAL $(88,185,334) $(146,295,830) $(10,010,727) % of 2010-11 AV 5.5% 9.5% 1.0% ______1. Assumed included in reported 2010-11 values Source: Fiscal Consultant Report.
Assessed values reported by the County for 2010-11 reflect the County’s processing of automatic assessed value reductions. The Assessor’s office reviewed the value for single family homes and condominiums which are reported to have sold from January 1, 2003 through June 30, 2009. Additional automatic assessed value reductions for 2011-12 or thereafter have not been assumed, although reductions for filed appeals, as discussed above, have been calculated.
37 Outstanding Indebtedness Secured by Housing Tax Revenues
No other outstanding Agency bonded indebtedness is payable on a parity basis from the Housing Tax Revenues. The Agency has covenanted in the Indentures that it will not create or allow to exist any liens on Housing Tax Revenues senior to or on a parity with the Bonds except as provided in the Indentures. The Agency will not issue any obligation or security superior to or on a parity with the Bonds payable in whole or in part from the Housing Tax Revenues (other than Parity Debt, as described in “SECURITY FOR THE BONDS – Issuance of Parity Debt”).
Projected Taxable Valuation and Housing Tax Revenues; Debt Service Coverage
Table 15 shows the analysis of projected growth of assessed valuation in the Project Areas and the resulting Housing Tax Revenues, as estimated by the Fiscal Consultant. Table 16 depicts the projected Housing Tax Revenues available to pay debt service on the Bonds based on such growth of assessed valuation in the Project Areas, as estimated by the Fiscal Consultant. See “APPENDIX D – FISCAL CONSULTANT’S REPORT” for more information regarding these projections.
For 2010-11 the Proposition 13 inflation rate is actually a slight negative (-0.3%). Since Proposition 13 was enacted in 1979, the inflation factor has equaled 2% in all but 5 years. The 2010-11 negative factor represents the first time since Proposition 13 was enacted that the inflation rate has not at least equaled 1.0%. For Project Nos. 1, 2 and 4, the application of the Proposition inflationary factor is appropriate. In Project No. 3, however, the impact of the oil refinery and polypropylene assessments have, from time to time, tended to negate the inflationary factor. As a result the projections for Project No. 3, including 1997 Annex, have been prepared without the use of any inflationary trend. Rather the values are assumed to remain constant unless impacted by specific assumed future occurrences. For the purposes of the Housing Tax Revenue projection, the actual negative inflation rate was used for 2010-11. Thereafter, the inflation rate is assumed to return to 2% a year. In the Project Areas, the inflation rate is assumed only to apply to certain properties. Land and improvement values (real property) attributable to properties which are reported to have sold since January 2003 are held constant with no trend applied. The balance of real property values are assumed to increase 2% per year. This assumption continues throughout the term of the projections. The results in an effective trend of about 0.8% for Project Nos. 1 and 4, and 1.0% for Project No. 2. No inflation rate has been used for Project No. 3.
TABLE 14 Carson Redevelopment Agency Trended Taxable Value
Project Area Effective Trend
Project No. 1 0.8% Project No. 2 1.0% Project No. 3 0.0% Project No. 4 0.8% ______Source: Fiscal Consultant’s Report.
Receipt of projected Housing Tax Revenues in the amounts and at the time projected by the Fiscal Consultant depends on the realization of certain assumptions relating to the tax increment revenues. See “APPENDIX D – FISCAL CONSULTANT’S REPORT” for a discussion of the assumptions used in preparing the tax revenue projections. Based upon the projected tax increment revenues, the Agency expects
38 sufficient funds should be available to the Agency to pay principal of and interest on the Bonds. Although the Agency believes that the assumptions utilized by the Fiscal Consultant are reasonable, the Agency provides no assurance that the projected Housing Tax Revenues will be realized. To the extent that the assumptions are not actually realized, the Agency’s ability to timely pay principal and interest on the Bonds be adversely affected. Key assumptions include:
Tax rates have been estimated based on a 1.0% tax rate;
For determining projected gross tax increment revenues from the Project No. 1 and Project No. 4, both secured and unsecured real property values are increased at 0.8% per year; from the Project No. 2, both secured and unsecured real property assessed values are increased at 1.0% per year; and from the Project No. 3, both secured and unsecured real property assessed values have been held constant without an inflationary factor;
20% of the gross tax increment revenue to be allocated from the Project Areas to the Agency constitutes the Housing Tax Revenues;
The supplemental roll revenue has not been added to the projected gross tax increment revenue;
There have not been any deductions to the gross tax increment revenue to recognize the impact of future tax delinquencies;
Automatic assessed value reductions for 2011-12 or thereafter have not been assumed, although reductions for currently filed and pending appeals have been estimated. Reductions in assessed value totaling $244.5 million are estimated to result from the resolution of appeals that are currently outstanding for fiscal year 2009-10 and prior fiscal years. That reduction is assumed to occur in 2011-12 and 2012-13, although the major appeals could be outstanding for a number of additional years. In fiscal years beyond 2009-10, the additional filings of appeals is assumed not to impact assessed values;
Estimates of tax refunds resulting from existing appeals of approximately $9.3 million have been incorporated into the projected tax increment revenues and are assumed to commence in Fiscal Year 2010-11 and to continue through Fiscal Year 2012-13 as described in the Fiscal Consultant’s Report;
There have been deductions to the gross tax increment revenue to recognize the impact of potential refunds as described in the Fiscal Consultant’s Report;
Plan limitations of certain subareas of the Project Areas limit the receipt of Housing Tax Revenues commencing December 20, 2024, as described herein; and
Total anticipated valuation adjustments due to property transfers is approximately $700,000 increase for Project No. 1, approximately $330,000 increase for Merged Project and approximately $2,345,000 increase for Project 4 as described in the Fiscal Consultant’s Report. Total valuation adjustments due to new development is no impact for Project No. 1, approximately $28.3 million increase for Merged Project and approximately $7.95 million increase for Project No. 4, as described in the Fiscal Consultant’s Report.
39 TABLE 15 Carson Redevelopment Agency Projected Housing Tax Revenues
Project No. 1 Project No. 1 Project No. 1 Total Original Project No. 2 Original Project 2/3 Total Merged Housing Tax Fiscal Year Original 1985 Annex 1997 Annex Project No. 1 Project No. 2 1983 Annex Project No. 3 1997 Annex Project Project No. 4 Revenues
2010-11 $1,122,879 $1,186,884 $ 77,479 $2,387,241 $1,215,583 $129,149 $252,619 $311,693 $1,909,043 $ 740,768 $5,037,053 2011-12 1,103,208 1,138,921 75,897 2,318,027 1,216,082 130,694 220,757 287,463 1,854,996 759,987 4,933,011 2012-13 1,105,301 1,134,901 77,491 2,317,694 1,237,437 132,256 466,188 338,305 2,174,186 771,589 5,263,469 2013-14 1,127,379 1,174,273 82,563 2,384,215 1,263,277 133,832 660,388 390,105 2,447,603 790,404 5,622,221 2014-15 1,136,563 1,185,575 85,431 2,407,569 1,276,131 135,425 660,388 390,105 2,462,048 803,964 5,673,582 2015-16 1,145,821 1,196,967 88,321 2,431,109 1,289,113 137,033 660,388 390,105 2,476,639 817,634 5,725,382 2016-17 1,155,152 1,208,451 91,234 2,454,838 1,302,224 138,658 660,388 390,105 2,491,375 831,412 5,777,625 2017-18 1,164,559 1,220,026 94,171 2,478,756 1,315,467 140,298 660,388 390,105 2,506,259 845,301 5,830,316 2018-19 1,174,041 1,231,694 97,131 2,502,866 1,328,843 141,956 660,388 390,105 2,521,292 859,301 5,883,458 2019-20 1,183,598 1,243,455 100,115 2,527,169 1,342,352 143,629 660,388 390,105 2,536,474 873,413 5,937,056 2020-21 1,193,232 1,255,311 103,123 2,551,666 1,355,996 145,320 660,388 390,105 2,551,809 887,637 5,991,112 2021-22 1,202,943 1,267,261 106,155 2,576,359 1,369,777 147,027 660,388 390,105 2,567,297 901,976 6,045,632 2022-23 1,212,732 1,279,307 109,211 2,601,250 1,383,695 148,752 660,388 390,105 2,582,940 916,429 6,100,619 2023-24 1,222,599 1,291,449 112,291 2,626,339 1,397,753 150,493 660,388 390,105 2,598,739 930,998 6,156,077 2024-25 1,303,688 115,397 1,419,085 1,411,951 152,252 660,388 390,105 2,614,697 945,684 4,979,465 2025-26 1,316,025 118,527 1,434,552 1,426,291 154,029 660,388 390,105 2,630,814 960,487 5,025,852 2026-27 1,328,461 121,682 1,450,143 155,824 660,388 390,105 1,206,317 975,408 3,631,868 2027-28 1,340,997 124,862 1,465,859 157,636 660,388 390,105 1,208,129 990,449 3,664,437 2028-29 1,353,632 128,068 1,481,700 159,467 660,388 390,105 1,209,960 1,005,610 3,697,270 2029-30 1,366,369 131,299 1,497,668 161,315 660,388 390,105 1,211,809 1,020,892 3,730,369 2030-31 1,379,208 134,556 1,513,764 163,183 660,388 390,105 1,213,676 1,036,297 3,763,737 2031-32 1,392,149 137,839 1,529,989 165,069 660,388 390,105 1,215,562 1,051,825 3,797,375 2032-33 1,405,194 141,149 1,546,343 166,974 660,388 390,105 1,217,467 1,067,477 3,831,287 2033-34 1,418,343 144,485 1,562,828 168,897 660,388 390,105 1,219,391 1,083,254 3,865,473 2034-35 1,431,598 147,848 1,579,445 170,841 660,388 390,105 1,221,334 1,099,158 3,899,937 2035-36 1,444,958 151,237 1,596,196 660,388 390,105 1,050,493 1,115,189 3,761,877 2036-37 154,654 154,654 390,105 390,105 1,131,348 1,676,107 2037-38 1,147,636 1,147,636 2038-39 1,164,055 1,164,055 2039-40 1,180,604 1,180,604 2040-41 1,197,287 1,197,287 2041-42 1,214,103 1,214,103 ______
Source: Fiscal Consultant’s Report.
40 TABLE 16 Carson Redevelopment Agency Projected Housing Tax Revenues and Debt Service Coverage
Projected Debt Service Net Debt Service Year Ending Housing Series 2010A-T Series 2010A Total October 1 Tax Revenue(1) Bonds Bonds(2) Debt Service Coverage
2011 $5,037,053 $1,806,897 --- $1,806,897 279% 2012 4,933,011 1,625,163 --- 1,625,163 304 2013 5,263,469 1,791,651 --- 1,791,651 294 2014 5,622,221 1,975,225 $1,294,063 3,269,288 172 2015 5,673,582 1,978,199 1,294,063 3,272,261 173 2016 5,725,382 1,978,241 1,294,063 3,272,303 175 2017 5,777,625 1,975,350 1,294,063 3,269,413 177 2018 5,830,316 1,974,000 1,294,063 3,268,063 178 2019 5,883,458 1,977,975 1,294,063 3,272,038 180 2020 5,937,056 1,976,725 1,294,063 3,270,788 182 2021 5,991,112 580,250 2,689,063 3,269,313 183 2022 6,045,632 3,269,775 3,269,775 185 2023 6,100,619 3,268,025 3,268,025 187 2024 6,156,077 3,271,275 3,271,275 188 2025 4,979,465 2,614,025 2,614,025 190 2026 5,025,852 2,614,025 2,614,025 192 2027 3,631,868 1,879,775 1,879,775 193 2028 3,664,437 1,882,775 1,882,775 195 2029 3,697,270 1,877,775 1,877,775 197 2030 3,730,369 1,880,025 1,880,025 198 2031 3,763,737 1,879,025 1,879,025 200 2032 3,797,375 1,881,313 1,881,313 202 2033 3,831,287 1,879,663 1,879,663 204 2034 3,865,473 1,879,075 1,879,075 206 2035 3,899,937 1,879,288 1,879,288 208 2036 3,761,877 1,805,038 1,805,038 208
______(1) Housing Tax Revenue shown is as of end of preceding fiscal year and is based upon projections contained in the Fiscal Consultant’s Report. (2) Represents debt service net of capitalized interest through October 1, 2013.
Source: Fiscal Consultant, Financial Advisor and Underwriters.
Agency Activity
In July 2009, the Agency began the process of merging all Project Areas into a single project area. On September 21, 2010, the City Council introduced and conducted the first reading of the proposed ordinance adopting the 2010 Amendment. The ordinance was adopted by the City Council on October 11, 2010 and will become effective thirty days from adoption.
The following is a discussion of current and proposed activity of the Agency within the various project areas. No assurances can be given that such activities will occur or be completed in a timely manner or that the expectations or projections discussed herein will be achieved. The information herein has been included because it is considered relevant to an informed valuation of the Bonds.
41 Project No. 1. The Agency has been actively involved in the redevelopment of properties located within Project No. 1, including the following projects:
The Boulevards at South Bay - The City is continuing work on the proposed development, The Boulevards at South Bay, formerly known as the Carson Marketplace, located on a 157-acre landfill site, within Project Area No. 1. Under a Specific Plan, development standards and guidelines allow for a potential mix of approximately 2 million square feet of commercial, restaurant and entertainment venues, big box retail stores, a 300-room hotel, and up to 1,150 residential units. In connection with this development is a $22 million project to modify the Avalon/I-405 interchange. The plan is to reconfigure the existing on and off ramps to ease traffic and accessibility prior to completion of The Boulevards at South Bay. A portion of the proceeds of the Series 2010A Bonds is expected to assist in the development of the residential component.
Between 1959 and 1965, the site was used as a designated Class II landfill resulting in elevated levels of chemicals of concern found in the landfill and groundwater. While there is no immediate health risk, the site is currently being remediated under the oversight of the State of California Department of Toxic Substance Control. The remediation plan has been designed to ensure that future site occupants and users are not exposed to the existing toxins at the site. See “BONDOWNERS’ RISKS – Hazardous Substances” herein.
Merged Project. The Agency has been actively involved in the redevelopment of properties located within the Merged Project, including the following projects:
Auto Row - The City, working in conjunction with the Agency, recently designated a part of 223rd Street, a key east-west arterial in the Merged Project, as an Auto Row, and has adopted specific design guidelines in support of future development of related uses in this area. This area is fast becoming a key growth area for the City, and City staff members project that a fully built-out Auto Row would produce a contiguous 40-plus acre site with five brand new or newly redeveloped state-of-the-art auto dealerships. These dealerships will provide a large and consistent source of sales and property taxes for the City. The location of the Auto Row is key with new and current dealerships enjoying improved visibility from both the heavily-traveled Interstate 405 (San Diego Freeway) and from a major arterial (223rd Street). Southern California Edison will be undergrounding all power and utility lines along Auto Row. The Agency will be installing new street improvements, including all new landscaping, within the same area. The Agency’s plans and specifications for its portion of the street improvements are complete and will be implemented when SCE undergrounds the overhead utilities in 2011. Furthermore, a 10-acre Agency-owned property was split, and half was sold to BP, which BP combined with its own 10 adjacent acres, for development of BPs 15-acre business park and headquarters. BP optioned the remaining Agency-owned five acres for possible future expansion of the 15-acre business park. The Agency also purchased the Cormier Chevrolet property on E. 223rd Street and leased it back to Cormier Chevrolet to help ensure the existence and viability of the dealership during the difficult economic times. The projected result of all of these improvement activities will be a unique, updated, and expanded identity for the City, and significantly bolstered property and sales tax revenue streams. The following profiles the specific planned and implemented improvements on Auto Row.
Carson Toyota - Carson Toyota is an existing dealership in Carson and is one of the most successful Toyota franchises in the region. A new automobile dealership facility was completed in 2008. The facility is approximately 160,000 square feet of building area and was built on a site sold to the developer by the Agency in the Original Project No. 2. The design includes state-of-the-art showroom and service center and rooftop parking, which will provide maximum exposure to the Interstate 405. This dealership will be the largest in physical size along the City’s Auto Row. It acts as a major anchor, attracting other dealership franchises to the area.
42 Cormier Chevrolet - Cormier Chevrolet is an existing dealership and acts as an anchor to one end of Auto Row. Cormier Chevrolet specializes in the sale of Corvettes. Partnering with the Agency was key to Cormier Chevrolet’s recently completed expansion and rehabilitation of an older facility into a modern Chevrolet showroom. To assure that this project could move forward, the Agency provided Cormier with a rehabilitation loan package. The new improvements enhanced Cormier’s visual image from 223rd street and the Interstate 405. The Agency purchased the Cormier Chevrolet property in 2009, when GMAC required repayment of its entire line of credit, and leased it back to Cormier Chevrolet to help ensure the existence and viability of the dealership during the difficult economic times. Cormier Chevrolet expects to repurchase the property at or by the end of the lease period with the Agency.
Nissan – In February of 2003 the Agency sold the property located at 1505 E. 223rd Street to Superior Nissan to build a brand new state-of-the-art, approximately 74,000 square foot Nissan automobile dealership. The facility, which opened in 2004, is a two-story, new car dealership, with roof deck vehicle storage. The first floor consists of approximately 17,000 square feet of office, showroom, and parts storage and 30 service bays. The second floor consists of approximately 15,000 square feet of offices and parts storage. The roof deck contains approximately 25,000 square feet of vehicle storage area. The total cost of development was greater than $7 million, not including land. Although Superior Nissan went out of business in early 2009, as did many other dealerships around the county, another Nissan dealership, Carson Nissan, began operation at the property via a lease in late 2009. In May 2010, with assistance from the Agency, Carson Nissan’s real estate division purchased the property from the former owner making it one of a number of dealerships owned and operated by one of the most successful owner operators in southern California.
Honda - Sonic Automotive Inc., a nationally respected developer/owner of both Honda and other auto dealerships, purchased property from the Agency located at 1435 E. 223rd Street and relocated the Harbor City Honda dealership from a nearby location in the City of Los Angeles to the superior Carson Auto Row location. Sonic Automotive’s new Carson Honda was completed in 2004. The brand new dealership consists of a 40,000 square foot sales, parts, and service facility on a 4-acre parcel sold to it by the Agency. In addition to the Honda dealership, Sonic Automotive has increased its presence in Carson with its recent purchase of the Don Kott Auto Center operations, a long-time successful dealership located in Carson. The Carson Honda dealership is located between the Toyota and Nissan Dealerships completing the redevelopment of one entire block.
Carson Depot - Located at the corner of Main and Sepulveda in the southwest portion of the Merged Project, the Agency played an active role in the transformation of an old, environmentally-compromised cannery into a new state-of-the-art 237,341 square foot commercial/retail center. The Agency worked in partnership with the developer (Arnel Retail Group) and provided both financial incentives and technical assistance to assure this project became a reality. Now home to more than 20 new businesses, the Carson Depot provides the Carson community with large format retailers like Staples, Albertsons, and Home Depot, in addition to smaller retail shops and ethnic restaurants. The Carson Depot is regarded as a key sales and property tax generator for the City in the near and long-term.
The Arbors at Carson - The Merged Project also includes one of Carson’s newest residential housing developments. Located on a 15-acre site along Avalon Boulevard just north of Sepulveda Boulevard, this site was composed of two parcels under two different ownerships. One parcel was a vacant lot, the other held an unoccupied outdated and dilapidated strip center. The Agency successfully brought both owners together and assisted them in the preparation of a joint RFP for residential development. The ultimate result was the purchase of both parcels by Centex Homes and the development of one coordinated market-rate project. No Agency financial assistance was necessary. Centex Homes, one of the nation’s leading and largest homebuilders with operations in more than 90 markets in 25 states, completed the 147 unit single family project known as “The Arbors at Carson.”
43 British Petroleum Office - A 125,000 square foot office building was completed in May 2007 by the developer on property, a portion of which was owned by BP and a portion which was sold to BP by the Agency.
Project No. 4. The Agency has been actively involved in the redevelopment of properties located within the Project No. 4, including the following projects:
Carson Street Corridor - The City adopted a Master Plan for the Carson Street Corridor Mixed Use District. The Master Plan area is a 1.75-mile portion of the Carson Street corridor between the 405 San Diego Freeway at the Dominguez Channel and the 110 Harbor Freeway. The Master Plan is a comprehensive long-range revitalization strategy that effectively establishes a link between the implementing policies of the General Plan, the zoning ordinance, as well as goals within the redevelopment area boundaries for Project No. 1 and the Project No. 4. The Master Plan intends to implement the community’s goal of making Carson Street a vibrant, distinctive and economically viable corridor that combines places to work, shop, live and entertain. In particular, the Master Plan focuses on connecting public amenities such as the library, schools and Civic Center with residential and commercial development. The Master Plan also addresses rehabilitation of existing multiple-family housing stock, community buildings, and public/private funding of various infrastructure elements. Currently the agency is in negotiations with two housing developers for development of two major housing projects along the Carson Corridor, and has assisted another that is under construction.
Carson City Center – The Agency has facilitated development of an approximately 4.5-acre, $70 million, mixed use project at the SE corner of Carson St. and Avalon Blvd. The project is being developed in accordance with the Carson Street Master Plan guidelines and includes the following components: 86 affordable senior citizen apartment units, 150 market rate apartment units, 25,000 square feet of ground floor retail space and surface and underground parking. At present the project is approximately 30 percent complete.
Southbay Pavilion at Carson - The Hopkins Real Estate Group (HREG), along with Genesis Shamrock Holdings, purchased the Southbay Pavilion at Carson in April 2003. HREG went on to renovate the mall at it own expense, including addition of a new Target anchor store, a Chili’s restaurant, a new post office and Washington Mutual Bank, and a 24-Hour Fitness. Thereafter the Agency provided assistance to HREG to attract two national tenants, Old Navy and Children’s Place, and to construct interior mall common area improvements and tenant improvements. In July 2009, Fred Sands purchased SouthBay Pavilion through his Brentwood-based Vintage Real Estate, LLC, a wholly-owned division of Vintage Capital Group, an investment firm founded by Mr. Sands.
616 E. Carson Street – Located next to the Ralphs Center, the Agency is in negotiations with a developer for development of this 9.5- acre Agency-owned property as a mixed-use project. The project as currently proposed would include a total of approximately 154 market rate, for sale, residential units and 14,000 square feet of ground floor retail space. Fifteen percent of the total number of units would be for sale to moderate income households. The Agency will sell the property to the developer at fair market value.
44 BONDOWNERS’ RISKS
Investment in the Bonds involves elements of risk. The following section describes certain specific risk factors affecting the payment and security of the Bonds. The following discussion of risks is not meant to be an exhaustive list of the risks associated with the purchase of the Bonds and the order of discussion of such risks does not necessarily reflect the relative importance of the various risks. Potential investors are advised to consider the following factors along with all other information in this Official Statement in evaluating the Bonds. There can be no assurance that other risk factors not discussed under this caption will not become material in the future.
Bonds Are Limited Obligations and Not General Obligations
The Bonds and the interest thereon are special limited obligations of the Agency and do not constitute a general obligation of the Agency. See “SECURITY FOR THE BONDS” herein. No Owner of the Bonds may compel exercise of the taxing power of the State of California or any of its political subdivisions or agencies to pay the principal of, premium, if any, or interest due on the Bonds.
The Bonds do not evidence a debt of the Agency or the City within the meaning of any constitutional or statutory debt limitation provision.
Reduction in Taxable Value; Plan Limitations
Housing Tax Revenues allocated to the Agency are determined by the amount of incremental taxable value in the Project Areas and the current rate or rates at which property in the Project Areas are taxed. The reduction of taxable values of property in the Project Areas caused by economic factors beyond the Agency’s control, such as a relocation out of a Project Area by one or more major property owners, successful appeals by property owners for a reduction in property’s assessed value, blanket reductions in assessed value due to general reductions in property values or the complete or partial destruction of such property caused by, among other eventualities, an earthquake or other natural disaster, could cause a reduction in the Housing Tax Revenues securing the Bonds. These risks and risks of delinquent payments may generally be exacerbated by the relatively high concentration of ownership in some of the Project Areas. See “THE REDEVELOPMENT PROJECT AREAS - Major Taxpayers.” Such reduction of Housing Tax Revenues could have an adverse effect on the Agency’s ability to make timely payments of principal of and interest on the Bonds.
In addition, limitations on the Agency’s receipt and use of tax increment revenues also affect the availability of the Housing Tax Revenues. The ability to receive Housing Tax Revenues will expire prior to the final maturity date of the Bonds for all Project Areas and their subareas other than Project No. 4. See “LIMITATIONS ON TAX REVENUES - Housing Tax Revenues” and “THE REDEVELOPMENT PROJECT AREAS - Plan Limitations.”
Reduction in Inflationary Rate and Changes in Legislation; Further Initiatives
As described in greater detail below (see “LIMITATIONS ON TAX REVENUES”), Article XIIIA of the California Constitution provides that the full cash value base of real property used in determining taxable value may be adjusted from year to year to reflect the inflationary rate, not to exceed a two percent increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data. Such measure is computed on a calendar year basis.
Article XIIIA of the California Constitution, which significantly affected the rate of property taxation, was adopted pursuant to California’s constitutional initiative process. From time to time, other initiative measures could be adopted by California voters. The adoption of any such initiative might alter the calculation of tax increment revenues, reduce the property tax rate, or broaden property tax exemptions.
45 Future legislative reallocation of the 1% basic levy among the affected taxing entities could increase the taxes retained by certain taxing entities with a corresponding reduction in Housing Tax Revenues. See “LIMITATIONS ON TAX REVENUES - Property Tax Limitations - Article IIIA.”
Concentration of Taxpayers Within the Project Areas
The Project Areas include property owned by taxpayers whose assessed value accounts for a significant percentage of the secured and/or unsecured tax roll of a particular Project Area. See Table 3.0 in APPENDIX D – “FISCAL CONSULTANT’S REPORT.” Major assessees for each subarea are shown in Tables 3.1 and 3.2 of the Fiscal Consultant’s Report attached hereto as Appendix D. Concentration of ownership presents a risk in that if one or more of the largest property owners were to default on their taxes, or were to successfully appeal the tax assessments on property within the Project Areas, a decline in Housing Tax Revenues could result. In such event the Agency’s ability to make timely payments on the Bonds may be adversely affected. See “THE REDEVELOPMENT PROJECT AREAS – Major Taxpayers” herein.
Unsecured Property
Currently, approximate 16% of the net assessed property value in the Project Areas is unsecured property. Unsecured property in the Project Areas is comprised largely of fixture and equipment value for commercial/industrial uses. Such property is a transitory component of total assessed value and may be removed from a Project Area at any point in time and will be dependent upon the successful and continued operation of the businesses that own such unsecured parcels. Accordingly, unsecured property must be viewed as a volatile component of assessed value in such Project Area. See APPENDIX D – “FISCAL CONSULTANT’S REPORT.” While the Agency and the County have no way of predicting when or if such unsecured fixtures and equipment might be removed from a Project Area, the Agency believes the projection of such unsecured fixtures and equipment value for future fiscal years at current levels is reasonable. The removal of such unsecured fixtures and equipment from a Project Area, however, could have a significant impact on Housing Tax Revenues.
Development Risk
Generally, the Agency’s ability to pay debt service on the Bonds will be dependent upon the economic strength of the Project Areas. The general economy of the Project Areas will be subject, in part, to the development risks generally associated with real estate development projects. Projected development within the Project Areas may be subject to unexpected delays, disruptions and changes. For example, real estate development operations may be adversely affected by changes in general economic conditions, fluctuations in the real estate market, fluctuations in interest rates, unexpected increases in development costs and by other factors. Further, real estate development operations within the Project Areas could be adversely affected by future governmental policies, including governmental policies to restrict or control development. If projected development in the Project Areas is delayed or halted, the economy of the Project Areas could be adversely affected, causing a reduction of the Housing Tax Revenues available to pay debt service on the Bonds.
Varying Termination Dates for Housing Tax Revenue Sources
As described above under “THE REDEVELOPMENT PROJECT AREAS – Plan Limitations,” Housing Tax Revenues derived from all but Project No. 4 will cease to be collected prior to the final maturity of the Bonds. These limitations result in a smaller number of properties generating Housing Tax Revenues as the limitations are reached for various subareas within the Project Areas. Because the Bonds are payable solely from Housing Tax Revenues, the loss of parcels generating Housing Tax Revenues may adversely affect the amount of Housing Tax Revenues collected and/or the concentration of top taxpayers within the remaining Project Areas.
46 Levy and Collection
The Agency has no independent power to levy and collect property taxes. Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the Housing Tax Revenues, and accordingly, could have an adverse impact on the ability of the Agency to make debt service payments on the Bonds. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the Agency’s ability to make timely debt service payments on the Bonds. The County currently allocates tax increment revenues to the Agency based upon the tax increment actually collected.
The Housing Tax Revenue projections provided in Tables 12 and 13 present the amount of gross tax increment expected to be allocated from the Project Areas over the term of the projections. Tax increment revenue figures represented in these Tables do not include supplemental tax revenues and have not been reduced for delinquencies.
State Budget Uncertainties and ERAF
In connection with its approval of the budget for the 1992-93, 1993-94, 1994-95, 2002-03, 2003-04, 2004-05, 2005-06, and 2008-09 fiscal years, the State Legislature enacted legislation which, among other things, reallocated funds from redevelopment agencies to school districts by shifting a portion of each agency’s tax increment, net of amounts due to other taxing agencies, to school districts for such fiscal years for deposit in the Education Revenue Augmentation Fund (“ERAF”). The amount required to be paid by a redevelopment agency under such legislation was apportioned among all of its redevelopment project areas on a collective basis, and was not allocated separately to individual project areas.
In 2008, the State Legislature adopted, and the Governor of the State signed, legislation, Chapter 751, Statutes 2008 (AB 1389) (“AB 1389”), that among other things require redevelopment agencies to pay into ERAF in fiscal year 2008-09 prior to May 10, 2009, an aggregate amount of $350 million, of which the Agency was to pay approximately $2,000,000. AB 1389 provides that part of the ERAF obligation of the Agency is calculated based on the gross tax increment received by the Agency and the other part of the ERAF obligation of the Agency is calculated based on net tax increment revenues (after any pass-through payments to other taxing entities). AB 1389 provides that required transfers to ERAF are subordinate to payments on bonds secured by tax increment revenues. AB 1389 provides that in the event a redevelopment agency does not make the required ERAF payment, it shall be prohibited from issuing new bonds, notes, interim certificates, debentures, or other obligations. On April 30, 2009, a California superior court in California Redevelopment Association v. Genest (County of Sacramento) (Case No. 34-2008-00028334) held that the required payment by redevelopment agencies into ERAF in fiscal year 2008-09 pursuant to AB 1389 violated the California constitution and invalidated and enjoined the operation of the California Health and Safety Code section requiring such payment. On May 26, the State did file a notice that it would appeal the decision of the superior court but subsequently dropped its appeal.
In connection with various legislation related to the budget for the State for its Fiscal Year 2009-10, in late July 2009, the State legislature adopted, and the Governor of the State signed, Assembly Bill No. 26 (the “2009 SERAF Legislation”).
The 2009 SERAF Legislation mandates that redevelopment agencies in the State make deposits to the Supplemental Educational Revenue Augmentation Fund (“SERAF”) that is established in each county treasury throughout the State the aggregate amounts of $1.7 billion for Fiscal Year 2009-10, which were due prior to May 10, 2010, and $350 million for Fiscal Year 2010-11, which are due prior to May 10, 2011. The California Redevelopment Association along with certain other redevelopment agencies were not successful in challenging the constitutionality of the 2009 SERAF Legislation. The Agency has paid the total amount payable by it pursuant to the 2009 SERAF Legislation for all of its redevelopment project areas in the amount of $10,130,855 for Fiscal Year 2009-10 and estimates that the total amount payable by it pursuant to the 2009 SERAF Legislation for all of its redevelopment project areas will be $2,093,699 for fiscal year 47 2010-11. The fiscal year 2010-11 SERAF payment is due May 2011. Pursuant to the 2009 SERAF Legislation, redevelopment agencies may use any funds that are legally available and not legally obligated for other uses, including reserve funds, proceeds of land sales, proceeds of bonds or other indebtedness, lease revenues, interest and other earned income.
The Agency intends to fund the Fiscal Year 2010-11 SERAF payment with non-housing reserve funds. As the Agency approaches the time for the payment, this strategy could change.
The 2009 SERAF Legislation contains provisions that subordinate the obligation of redevelopment agencies to make the SERAF payments specified therein to certain indebtedness. Section 6 of AB 26, to be codified at Cal. Health and Safety Code, § 33690 (a) (3), states: “The obligation of any agency to make the payments required pursuant to this subdivision shall be subordinate to the lien of any pledge of collateral securing, directly or indirectly, the payment of the principal, or interest on any bonds of the agency including, without limitation, bonds secured by a pledge of taxes allocated to the agency pursuant to Section 33670 [of the California Health and Safety Code].”
The 2009 SERAF Legislation imposes various restrictions on redevelopment agencies that fail to timely make the required SERAF payments, including (i) a prohibition on adding or expanding project areas, (ii) a prohibition on the incurrence of additional debt, (iii) limitations on the encumbrance and expenditure of funds, including funds for operation and administration expenses, and (iv) commencing with the July 1 following the due date of a SERAF annual payment that is not timely made, a requirement that the applicable redevelopment agency allocate an additional five percent (5%) of all taxes that are allocated to the redevelopment agency under the Redevelopment Law for low and moderate income housing for the remainder of the time that the applicable redevelopment agency receives allocations of tax revenues under the Redevelopment Law. The five percent (5%) additional housing set-aside penalty provision referred to in the 2009 SERAF Legislation (the “Penalty Set-Aside Requirement”) would be in addition to the twenty percent (20%) of such tax revenues already required to be used for low and moderate income housing purposes. A redevelopment agency that borrows from amounts required to be allocated to its housing set- aside funds or that suspends its Fiscal Year 2009-10 housing set-aside payments to make required SERAF payments but does not timely repay the funds, may also be subject to the Penalty Set-Aside Requirement.
While the 2009 SERAF Legislation contains provisions that subordinate that obligation of redevelopment agencies to make the SERAF payments specified therein to certain indebtedness (which would include a subordination of the Agency’s obligations with respect to the new SERAF payments to the Agency’s obligation to pay debt service on the Bonds), there is no provision in the 2009 SERAF Legislation subordinating the Penalty Set-Aside Requirement to any indebtedness of a redevelopment agency that fails to timely make the SERAF payments mandated by the SERAF Legislation. As stated above, the Agency believes that it will be able to timely satisfy the requirements imposed on it by the 2009 SERAF Legislation and not be subject to such penalties or restrictions.
Final 2010-11 Budget. The 2010 Budget Act was signed by the Governor on October 8, 2010 and closed an estimated budget gap of $19.3 billion by a combination of expenditure reductions, federal funds and other solutions. The 2010 Budget Act holds General Fund spending essentially flat compared to the prior year ($86.6 billion in fiscal year 2010-1 compared to $86.3 billion in fiscal year 200910). In order to create a prudent reserve for economic uncertainties, the Governor exercised his lineitem veto authority to reduce General Fund spending by an additional $963 million, raising the reserve level from $375 million to $1.3 billion. The 2010 Budget Act also makes a number of reductions in health and human services programs, but does not eliminate CalWORKs, community mental health programs, Adult Day Health care, or reductions proposed to the In Home Supportive Services program.
The 2010 Budget Act includes: (i) savings of over $1.1 billion for corrections, from reduced inmate medical care costs ($820 million), cuts from inmate and parole population savings ($200 million), and delayed local assistance payments ($50 million); (ii) reduced spending for state employees by $1.5 billion, 48 including $547.7 million in savings through a five percent reduction to departmental personnel costs and by pre-funding other post employment benefit costs, as well as $2.5 billion in revenue solutions, comprising $1.4 billion from the Legislative Analyst’s revenue forecast, which was $1.4 billion higher than the Governor’s May Revision; (iii) the extension of the Net Operating Loss corporate tax benefit suspension for an additional two years, which results in increased tax revenue of about $1.2 billion in 2010-11 and revision to recent corporate tax law changes related to penalties assessed when a corporation underpays their tax liability by more than $1 million; and (iv) various changes to state pension laws for new state employees including those in bargaining units that do not currently have a Memorandum of Understanding with the State, as well as employees of the California State University, the judicial branch of government, and the Legislature.
A feature of the 2010 Budget Act affecting local governments includes a decrease of $11.9 million in the State’s General Fund by eliminating backfills for Vehicle License Fee revenues local governments lost when the state changed the manner in which fees are assessed for commercial truck trailers. There appear to be no provisions directly affecting redevelopment agencies in an adverse manner.
A complete copy of the 2010 Budget Act is posted by the California Department of Finance website at www.ebudget.ca.gov. This website is not incorporated herein by reference and neither the Agency nor the Underwriter make any representation as to the accuracy of the information provided therein.
Legislative Analyst’s Office Overview of 2010 Budget Act. The Legislative Analyst’s Office (“LAO”) Overview of the 2010 Budget Act (the “2010 LAO Overview’) released October 8, 2010, acknowledges the 2010 Budget Act’s attempt to address one of the most vexing state budget shortfalls in California’s history, the product of a continuing structural imbalance between state revenues and expenditures and a slow recovery from a severe recession that began in 2007 and ended in 2009. The 2010 LAO Overview notes that in May 2010, the Administration estimated that there would be a gap of $17.9 billion between General Fund resources and expenditures in 2010-11 under then-existing laws and policies. To address this projected gap, the Legislature opted for a package of budget actions (prior to vetoes) including $6.8 billion of expenditure-related solutions, $5.4 billion of new federal funding (most of it not yet approved by Congress), $3.3 billion of revenue actions, $2.7 billion of largely one-time loans, transfers, and funding shifts. The LAO also notes that the 2010 Budget Act does not include the Governor’s proposed elimination of the CalWORKs and subsidized childcare, and it does not include reductions in social services grant levels. The LAO believes that if all of the assumptions are met in the 2010 Budget Act and accompanying legislation, the State would be left with a $364 million General Fund reserve at the end of 2010-11, however, the LAO also notes that two-thirds of the 2010 Budget Act solutions are one-time or temporary in nature, such that California will continue to face sizable annual budget problems in 2011-12 and beyond.
A complete copy of the 2010 LAO Overview is posted by the Office of the Legislative Analyst at www.lao.ca.gov. This website is not incorporated herein by reference and neither the Agency nor the Underwriter make any representation as to the accuracy of the information provided therein.
The Agency cannot predict what actions will be taken in the future by the State Legislature and the Governor to deal with changing State revenues and expenditures and the repercussions they may have on the Fiscal Year 2010-11 State Budget and future State budgets. These developments at the State level may, in turn, affect local governments and agencies, including the Agency. The State Legislature may adopt other legislation requiring redevelopment agencies to make other payments to ERAF or SERAF or to make other payments. The impact that current and future State fiscal shortfalls will have on the Agency is unknown at this time. In prior years, the State has experienced budgetary difficulties and balanced its budget by requiring local political subdivisions, such as the County and the Agency, to fund certain costs theretofore borne by the State.
49 Information about the State budget and State spending is regularly available from various State offices, including the Department of Finance, the Office of the Legislative Analyst and the State Treasurer. However, none of such information is incorporated by such reference.
Bankruptcy and Foreclosure
On July 30, 1992, the United States court of Appeals for the Ninth Circuit issued an opinion in a bankruptcy case entitled In re Glasply Marine Industries holding that ad valorem property taxes levied by a county in the State of Washington after the date that a property owner filed a petition for bankruptcy would not be entitled to priority over the claims of a secured creditor with a prior lien on the property. Similar results were reached by several circuit courts in other circuits. Subsequently, however, Section 362(b)(18) of the Bankruptcy Code was enacted, effectively overturning this line of decisions and providing that local governments may rely on statutory property tax liens to secure payment of property taxes after the filing of a bankruptcy petition.
Additional Financing
Following the issuance of the Bonds, the Agency may issue one or more additional series of bonds and/or notes in an aggregate principal amount which (when added to the Bonds) do not exceed the limitations set forth in the Redevelopment Plans. See “THE FINANCING PLAN” and “LIMITATIONS ON TAX REVENUES.” Subject to compliance with the limitations of the Indentures, such obligations may be issued with a pledge and lien on Housing Tax Revenues on a parity with or subordinate to the Bonds. See “SECURITY FOR THE BONDS – Issuance of Parity Debt” and “-Issuance of Subordinated Debt.”
Loss of Tax Exemption
In order to maintain the exclusion from gross income for federal income tax purposes of the interest on the Series 2010A Bonds, the Agency has covenanted in the Series 2010A Indenture to comply with each applicable requirement of Section 103 and Sections 141 through 150 of the Internal Revenue Code of 1986, as amended, relative to arbitrage and avoidance of characterization as private activity bonds, among other things. The interest on the Series 2010A Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance of the Series 2010A Bonds as a result of acts or omissions of the Agency in violation of covenants in the Series 2010A Indenture. Should such an event of taxability occur, the Series 2010A Bonds are not subject to acceleration, redemption or any increase in interest rates and will remain Outstanding until maturity or until redeemed under one of the redemption provisions contained in the Series 2010A Indenture. See “CONCLUDING INFORMATION - Tax Matters” herein.
Seismic Risk and Flood Risk
The City, like all California communities, may be subject to unpredictable seismic activity. There is no evidence that a ground surface rupture will occur in the event of an earthquake, but there is significant potential for destructive ground-shaking during the occurrence of a major seismic event. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such an event. In the event of a severe earthquake, there may be significant damage to both property and infrastructure in the Project Areas. As a result, the value of taxable land in the Project Areas could be diminished in the aftermath of such an earthquake, through appeals, thereby reducing the amount of Housing Tax Revenues (see “Property Tax Appeals” herein). The City is located in a high impact seismic zone. The nearest active fault is the Newport-Inglewood-Rose Canyon zone, located off shore, but at least three of its tributaries are believed to run through the City. The City has adopted the Uniform Building Code and Uniform Building Code Standards adopted by the State of California. All new construction is required to comply with the highest earthquake resistance design standard presently in use in California.
50 The Project Areas are subject to very minimal flood risk. The sites in the Project Areas are located in a low risk flood zone.
Property Tax Appeals
Taxable values may be reduced as a result of a successful appeal of the taxable value determined by the County Assessor. An appeal may result in a reduction to the County Assessor’s original taxable value and a tax refund to the applicant property owner. A reduction in taxable values within the Project Areas and the refund of taxes which may arise out of successful appeals by property owners will affect the amount of Housing Tax Revenues. In California, there are two types of appeals: a Proposition 8 appeal and a base year appeal. A Proposition 8 appeal is based on Section 51 of the Revenue and Taxation Code and allows for temporary reductions in the taxes paid on properties because the assessed value of a property somehow becomes higher than its actual market value. This can be the result of the damage or removal of property, or general reductions in real estate values. Once the property damage is restored, or the real estate market improves, an assessment subject to Proposition 8 reduction can be returned to its pre-appeal value. The second type of appeal is a base year assessment appeal where owners challenge the original, or base year, valuation assigned by the County Assessor. Any reduction resulting from a base year assessment appeal is permanent and can only increase above the allowable inflationary adjustment if the property is sold or experiences new construction. There are also two methods for achieving a reduction in the valuation of property. One way is for the applicant to file an assessment appeal application; the other way is for the County Assessor’s office to process an “automatic” assessment reduction. Any automatic reduction would almost always be a Proposition 8 appeal, although filed appeals can be either Proposition 8 or base year appeals. The Agency has in the past experienced reductions in the growth of its tax increment revenues as a result of assessment appeals. The actual impact to tax increment is dependent upon the actual revised value of assessments resulting from values determined by the County Assessment Appeals Board or through litigation and the ultimate timing of successful appeals.
There are 299 assessment appeals filed by landowners within the Project Areas currently pending for the period commencing with the 2001-02 fiscal year and continuing to the 2009-10 fiscal year (inclusive). 21 assessment appeals were resolved with a reduction in value from fall 2009 to March 2010. Estimated reductions in assessed value have been taken into consideration in projecting future gross tax increment revenue and Housing Tax Revenues. Several of the major taxpayers within the Project Areas have pending appeals. See “THE REDEVELOPMENT PROJECT AREA – Assessment Appeals, Table 8” and “APPENDIX D - FISCAL CONSULTANT’S REPORT.”
Any reduction of assessed valuations could result in a reduction of the Housing Tax Revenues, which in turn could impair the ability of the Agency to make payments of principal of and/or interest on the Bonds when due.
Hazardous Substances
An environmental condition that may result in the reduction in the assessed value of parcels would be the discovery of a hazardous substance that would limit the beneficial use of a property within the Project Areas. In general, the owners and operators of a property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The owner may be required to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. Should any of the property within any of the Project Areas be affected by a hazardous substance the effect might be to reduce the marketability and value of the property by the costs of remedying the condition, thereby causing a reduction in the amount of the Housing Tax Revenues available to pay debt service on the Bonds. Significant portions of the Project Areas contain highly industrial uses, including refinery and chemical production facilities. Several properties in the Project Areas, including properties owned by the major taxpayers, are known to contain hazardous substances and are currently undergoing environmental remediation. The cost and/or outcome of such remediation may 51 effect the assessed value of such properties. See “THE REDEVELOPMENT PROJECT AREAS – Major Taxpayers” herein.
Enforceability of Remedies
The remedies available to the Trustee and the registered owners of the Bonds upon an event of default under the Indentures or any other document described herein are in many respects dependent upon regulatory and judicial actions which are often subject to discretion and delay. Under existing law and judicial decisions, the remedies provided for under such documents may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Bonds will be qualified to the extent that the enforceability of the legal documents with respect to the Bonds is subject to limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by equitable remedies and proceedings generally.
Investment of Funds
The Reserve Account and all other funds held under the Indentures are required to be invested in Authorized Investments as provided under the Indentures. See APPENDIX A - SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES.” All investments, including Permitted Investments, authorized by law from time to time for investments by redevelopment agencies contain a certain degree of risk. Such risks include, but are not limited to, a lower rate of return than expected, decline in market value and loss or delayed receipt of principal. The occurrence of these events with respect to amounts held under the Indentures, or the funds and accounts held by the Agency could have a material adverse effect on the security for the Bonds and/or the financial condition of the Agency.
Assumptions and Projections
Any reduction in Housing Tax Revenues, whether for any of the foregoing reasons or any other reason, could have an adverse effect on the Agency’s ability to make timely payments of principal of, premium, if any, and interest on the Bonds, which are secured by such Housing Tax Revenues. To estimate the total Housing Tax Revenues available to pay debt service on the Bonds, the Fiscal Consultant has made certain assumptions with regard to the assessed valuation in the Project Areas, future tax rates, the percentage of taxes collected, the amount of funds available for investment and the interest rate at which those funds will be invested. See “APPENDIX D – FISCAL CONSULTANT’S REPORT” for a full discussion of the assumptions underlying the projections set forth herein with respect to Housing Tax Revenues. The Agency believes these assumptions to be reasonable, but to the extent that the assessed valuations, the tax rates, the percentage of taxes collected or the interest rate at which funds are invested are less than the Agency’s assumptions, the total Housing Tax Revenues available will, in all likelihood, be less than those projected herein. See “THE REDEVELOPMENT PROJECT AREA – Projected Taxable Valuation and Housing Tax Revenues; Debt Service Coverage” herein.
Real Estate and General Economic Risks
The Agency’s ability to pay the principal of, and premium, if any, and interest due on the Bonds will be dependent upon its collection of ad valorem taxes and, more generally, upon the economic strength of the Project Areas, including those parcels under or anticipating development. The economic viability of such parcels will be subject to all the risks generally associated with real estate and real estate development. Future development of such parcels may be adversely affected by general market demands, preferences and consumer tastes, changes in general economic conditions, the availability of liquidity in general and construction lending in particular, fluctuations in the real estate market and interest rates, the impact of construction change orders, delays and difficulties, unexpected increases in development costs and by other similar factors.
52 Secondary Market
There can be no assurance that there will be a secondary market for the Bonds, or if a secondary market exists, that such Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, pricing of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could substantially differ from the original purchase price.
LIMITATIONS ON TAX REVENUES
Property Tax Limitations - Article XIIIA
California voters, on June 6, 1978, approved an amendment (commonly known as both Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment, which added Article XIIIA to the California Constitution, among other things, affects the valuation of real property for the purpose of taxation in that it defines the full cash value of property to mean “the county assessor’s valuation of real property as shown on the 1975/76 tax bill under full cash value, or thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or any reduction in the consumer price index or comparable local data, or any reduction in the event of declining property value caused by damage, destruction or other factors. See “APPENDIX D - FISCAL CONSULTANT’S REPORT.”
Article XIIIA further limits the amount of any ad valorem tax on real property to 1% of the full cash value except that additional taxes may be levied to pay debt service on indebtedness approved by the voters prior to July 1, 1978. In addition, an amendment to Article XIII was adopted in August 1986 by initiative that exempts any bonded indebtedness approved by two-thirds of the votes cast by voters for the acquisition or improvement of real property from the 1 percent limitation. On December 22, 1978, the California Supreme Court upheld the amendment over challenges on several state and federal constitutional grounds (Amador Valley Joint Union School District v. State Board of Equalization).
In the general election held November 4, 1986, voters of the State of California approved two measures, Propositions 58 and 60, which further amended Article XIIIA. Proposition 58 amended Article XIIIA to provide that the terms “purchased” and “change of ownership,” for purposes of determining full cash value of property under Article XIIIA, do not include the purchase or transfer of (1) real property between spouses and (2) the principal residence and the first $1,000,000 of other property between parents and children.
Proposition 60 amended Article XIIIA to permit the Legislature to allow persons over age 55 who sell their residence to buy or build another of equal or lesser value within two years in the same county, to transfer the old residence’s assessed value to the new residence. Pursuant to Proposition 60, the Legislature has enacted legislation permitting counties to implement the provisions of Proposition 60.
Article XIIIA has subsequently been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, to provide that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster and in certain other minor or technical ways. See “BONDOWNERS’ RISKS - Reduction in Taxable Value; Plan Limitations” herein.
53 Challenges to Article XIIIA
California trial and appellate courts have upheld the constitutionality of Article XIIIA’s assessment rules in three significant cases. The United States Supreme Court in an appeal to one of these cases upheld the constitutionality of Article XIIIA’s tax assessment system. The Agency cannot predict whether there will be any future challenges to California’s present system of property tax assessment and cannot evaluate the ultimate effect on the Agency’s receipt of Housing Tax Revenues should a future decision hold unconstitutional the method of assessing property.
Implementing Legislation
Legislation enacted by the California Legislature to implement Article XIIIA (Statutes of 1978, Chapter 292, as amended) provides that, notwithstanding any other law, local agencies may not levy any property tax, except to pay debt service on indebtedness approved by the voters prior to July 1, 1978, and that each county will levy the maximum tax permitted by Article XIIIA, $4.00 per $100 assessed valuation (based on the traditional practice in California of using 25% of full cash value as the assessed value for tax purposes).
The apportionment of property taxes in fiscal years after 1978-79 has been revised pursuant to Statutes of 1979, Chapter 282 which provides relief funds from State moneys beginning in fiscal year 1978- 79 and is designed to provide a permanent system for sharing State taxes and budget surplus funds with local agencies. Under Chapter 282, cities and countries receive about one-third more of the remaining property tax revenues collected under Proposition 13 instead of direct State aid. School districts receive a correspondingly reduced amount of property taxes, but receive compensation directly from the State and are given additional relief. Chapter 282 does not affect the derivation of the base levy ($1.00 per $100 taxable valuation) and the bonded debt tax rate.
Future assessed valuation growth allowed under Article XIIIA (new construction, change of ownership, 2% annual value growth) will be allocated on the basis of “situs” among the jurisdictions that serve the tax rate area within which the growth occurs except for certain utility property assessed by the State Board of Equalization which is allocated by a different method discussed herein.
Proposition 87
Under prior State law, if a taxing entity increased its tax rate to obtain revenues to repay voter approved general obligation bonds, any redevelopment project area which included property affected by the tax rate increase would realize a proportionate increase in tax increment.
Proposition 87, approved by the voters of the State on November 8, 1993, requires that all revenues produced by a tax rate increase (approved by the voters on or after January 1, 1989) go directly to the taxing entity which increases the tax rate to repay the general obligation bonded indebtedness. As a result, redevelopment agencies no longer receive an increase in tax increment when taxes on property in the project area are increased to repay voter approved general obligation debt.
Property Tax Collection Procedures
Classifications. In California, property that is subject to ad valorem taxes is classified as “secured” or “unsecured.” Secured and unsecured property is entered on separate parts of the assessment roll maintained by the county assessor. The secured classification includes property on which any property tax levied by the county becomes a lien on that property sufficient, in the opinion of the county assessor, to secure payment of the taxes. Every tax that becomes a lien on secured property has priority over all other liens on the secured property, regardless of the time of the creation of other liens. A tax levied on unsecured
54 property does not become a lien against the taxes on unsecured property, but may become a lien on certain other property owned by the taxpayer.
Collections. The method of collecting delinquent taxes is substantially different for the two classifications of property. The taxing authority has four ways of collecting unsecured property taxes in the absence of timely payment by the taxpayer: (1) a civil action against the taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to obtain a judgment lien on certain property of the taxpayer (3) filing a certificate of delinquency for recording in the county recorder’s office, in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of the personal property, improvements or possessory interests belonging or assessed to the assessee.
The exclusive means of enforcing the payment of delinquent taxes with respect to property on the secured roll is the sale of property securing the taxes to the State for the amount of taxes that are delinquent.
Current tax payment practices by the County provide for payment to the Agency of tax increment revenues monthly throughout the fiscal year, with the majority of tax increment revenues paid to the Agency in mid-December and mid-April. A final reconciliation is made after the close of the fiscal year to incorporate all adjustments to previously reported current year taxable values. The difference between the final reconciliation and tax increment revenues previously allocated to the Agency is allocated in late July.
Penalties. A 10% penalty is added to delinquent taxes that have been levied with respect to property on the secured roll. In addition, property on the secured roll on which taxes are delinquent is sold to the State on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a redemption penalty of 1% per month to the time of redemption. If taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the county tax collector. A 10% penalty also applies to the delinquent taxes on property on the unsecured roll, and further, an additional penalty of 1% per month accrues with respect to such taxes beginning the first day of the third month following the delinquency date.
Delinquencies. The valuation of property is determined as of January 1 each year and equal installments of taxes levied upon secured property become delinquent on the following December 10 and April 10. Taxes on unsecured property are due January 1 and become delinquent on the succeeding August 31.
Supplemental Revenue. A bill enacted in 1983, SB 813 (Statutes of 1983, Chapter 498), provides for the supplemental assessment and taxation of property as of the occurrence of a change in ownership or completion of new construction. Previously, statutes enabled the assessment of such changes only as of the next tax lien date (March 1 was used as the lien date as of the enactment of Chapter 498; however, as discussed below, the lien date was changed by legislation enacted in 1995) following the change and thus delayed the realization of increased property taxes from the new assessments for up to 14 months. As enacted, Chapter 498 provides increased revenue to redevelopment agencies to the extent that supplemental assessments as a result of new construction or changes of ownership occur within the boundaries of redevelopment projects subsequent to the lien date. To the extent such supplemental assessments occur within the Project Area, Housing Tax Revenues may increase. The receipt of supplemental tax increment revenues by taxing entities typically follow the change of ownership by a year or more. The Fiscal Consultant has not included revenues resulting from Supplemental Assessments in their projections.
Actual tax increment receipts presented in Table 7 include supplemental roll revenue. Supplemental roll revenue is generated by the tax increment revenue created when a sale takes place or construction project is completed after January 1 of a given year (the Assessor’s cut-off date for value to be attributed to next year’s assessment roll) but re-assessment occurs and the owner is issued a supplemental tax bill for the period between the sale or completion of the construction and the next regular tax bill. Because these revenues are unpredictable, they have not been projected. 55 Unitary Taxation of Utility Property
AB 2890 (Statutes of 1986, Chapter 1457) provides that, commencing with fiscal year 1988-89, assessed value derived from State-assessed unitary property (consisting mostly of operational property owned by certain railroad and utility companies) is to be allocated county-wide as follows: (i) each tax rate area will receive the same amount from each assessed utility received in the previous fiscal year unless the applicable county-wide values are insufficient to do so, in which case values will be allocated to each tax rate area on a pro rata basis; and (ii) if values to be allocated are greater than in the previous fiscal year, each tax rate area will receive a pro rata share of the increase from each assessed utility according to a specified formula. Additionally, the lien date on State-assessed property is changed from March 1 to January 1. AB 454 (Statutes of 1987, Chapter 921) further modifies Chapter 1457 regarding the distribution of tax revenues derived from property assessed by the State Board of Equalization. Chapter 921 provides for the consolidation of all State-assessed property, except for regulated railroad property, into a single tax rate area in each county. Chapter 921 further provides for a new method of establishing tax rates on State-assessed property and distribution of property tax revenues derived from State-assessed property to taxing jurisdictions within each county as follows: for revenues generated from the one percent tax rate, each jurisdiction, including redevelopment project areas, will receive a percentage up to 102% of its prior year State-assessed unitary revenue; and if county-wide revenues generated for unitary property are greater than 102% of the previous year’s unitary revenues, each jurisdiction will receive a percentage share of the excess unitary revenue generated from the application of the debt service tax rate to county wide unitary taxable value, further, each jurisdiction will receive a percentage share of revenue based on the jurisdiction’s annual debt service requirements and the percentage of property taxes received by each jurisdiction from unitary property taxes. Railroads will continue to be assessed and revenues allocated to all tax rate areas where railroad property is sited.
The intent of Chapters 1457 and 921 is to provide redevelopment agencies with their appropriate share of revenue generated from the property assessed by the State Board of Equalization. The County Auditor-Controller estimates that $152,089 in unitary revenue will be remitted to the Agency for the Project Areas during the 2010-11 fiscal year. The Fiscal Consultant has assumed that the utility tax revenue will remain constant in future years.
Housing Set-Aside
Chapter 1337, Statutes of 1976, added Sections 33334.2 and 33334.3 to the Redevelopment Law requiring redevelopment agencies to set-aside twenty percent of all tax increment derived from redevelopment project areas adopted after December 31, 1976 in a low and moderate income housing fund (such amounts are referred to herein as the “Housing Tax Revenues”). This low and moderate income housing requirement could be reduced or eliminated if a redevelopment agency finds that: 1) no need exists in the community to improve or increase the supply of low and moderate income housing; 2) that some stated percentage less than twenty percent of the tax increment is sufficient to meet the housing need; or 3) that other substantial efforts including the obligation of funds from state, local and federal sources for low and moderate income housing of equivalent impact are being provided for in the community.
Chapter 1135, Statutes of 1985 amended Section 33334.3 and added Section 33334.6 and 33334.7 imposing such requirements on project areas for which the redevelopment plan was adopted before January 1, 1977. Section 33334.6 expressly provides that, unless certain findings are made, a redevelopment agency must first, before providing for payments of its bonds, set aside 20% of all tax increment allocated to the agency in the Low and Moderate Income Housing Fund, unless such bonds are issued to finance or refinance, in whole or in part, any indebtedness or other obligations existing on, and created prior to, January 1, 1986, and contained in a statement of existing obligations adopted by resolution of the redevelopment agency. Such legislation also provided that an agency may deposit less than the full 20% amount in fiscal years prior to July 1, 1996, if necessary to provide for the completion of programs approved
56 prior to January 1, 1986, if such programs are contained on a statement of existing programs adopted by resolution of the Agency.
The provisions of the Redevelopment Law regarding the funding of low and moderate income housing funds have been frequently amended since their original adoption. In addition, the interpretations of these laws by the California Attorney General and redevelopment agency counsels throughout the State have at times been subject to variation and change. Section 33334.6 of the Redevelopment Law provides that, under certain circumstances, redevelopment agencies may defer, in whole or in part, Housing Tax Revenue payments. However, the projections of net tax increment revenues and Housing Tax Revenues assume that the Agency will not defer Housing Tax Revenue payments, and that amounts computed of the Housing Tax Revenues will be the only revenues available for payment on the Bonds. Such amounts are set forth as “Housing Set-Aside Revenues,” as indicated in Table 9.0 of “APPENDIX D - FISCAL CONSULTANT’S REPORT.” See “BONDOWNERS’ RISKS – State Budget Deficit” herein for a discussion of the potential impact of the current budget crisis on Housing Tax Revenues.
Appropriations Limitations: Article XIIIB of the California Constitution
On November 6, 1979, California voters approved Proposition 4, the so-called Gann Initiative, which added Article XIIIB to the California Constitution. The principal effect of Article XIIIB is to limit the annual appropriations of the State and any city, county, school district, authority or other political subdivision of the State to the level of appropriations for the prior fiscal year, as adjusted for changes in the cost of living, population and services rendered by the government entity.
The California Legislature has added Section 33678 to the Redevelopment Law which provides that the allocation of tax increment revenues to a redevelopment agency for the purpose of paying principal of, or interest on, loans, advances, or indebtedness shall not be deemed the receipt by such agency of proceeds of taxes levied by or on behalf of the agency within the meaning of Article XIIIB, nor shall such portion of taxes be deemed receipt of taxes by, or an appropriation subject to the limitation of, any other public body within the meaning or for the purpose of the Constitution and laws of the State of California, including Section 33678 of the Redevelopment Law. The constitutionality of Section 33678 has been upheld in two California appellate court decisions, Brown v. Redevelopment Agency of the City of Santa Ana and Bell Redevelopment Agency v. Woosley. The plaintiff in Brown petitioned the California Supreme Court for a hearing of this case. The California Supreme Court formally denied the petition and therefore the earlier court decisions are now final and binding. On the basis of these court decisions, the Agency does not believe it is subject to Article XIIIB and has not adopted an appropriations limit.
Tax Allocation Procedures of the County of Los Angeles
Tax Increment Revenue. Current tax payment practices by the County provide for payment to the Agency of tax increment revenues for the various redevelopment project areas on a monthly basis although the first payment to the Agency is not made until December for secured property. Except for property tax advances made by the County to the Agency in December and April, actual payments to the Agency are made on the basis of actual property tax collections in the project areas.
Tax Increment Revenue Receipts. Computed tax increment revenues, including Housing Tax Revenues, expected to be received by the Agency for the Project Areas in each fiscal year for 2010-11 through 2041-42 are shown in Tables 9.0 through 9.3 of “APPENDIX D - FISCAL CONSULTANT’S REPORT.”
It should be noted that any variation between receipts and computed tax increment revenues is not entirely attributable to delinquent unpaid taxes and/or impounded revenues. In addition, adjustments to property assessments are made by the County Assessor throughout the fiscal year, or as a result of potential
57 tax refunds. The tax increment revenue projections shown in Tables 9.0 through 9.3 of “APPENDIX D - FISCAL CONSULTANT’S REPORT” are not adjusted to reflect these types of variances.
Base Year Valuation Adjustments. The Redevelopment Law provides that the base assessment roll utilized for the allocation of tax increment revenues may be reduced by the taxable value, as shown on the base roll, of those properties acquired for public use of tax exempt public entities. The precedent for this action stems from the 1963 case of Redevelopment Agency of the City of Sacramento vs. Malaki, 216 Cal. App. 2d 480, and subsequent, related cases. The estimate of Housing Tax Revenues as shown in “APPENDIX D - FISCAL CONSULTANT’S REPORT” in Tables 9.0 through 9.3, incorporates the base year values for each Project Area and subarea as reported by the County. Future estimates are based on the assumption that the base year values remain at the levels reported by the County for such base years.
Certification of Agency Indebtedness
A significant provision of the Redevelopment Law, Section 33675, was added by the Legislature in 1976, providing for the filing not later than the first day of October of each year with the county auditor, a statement of indebtedness certified by the chief fiscal officer of the agency for each redevelopment project which receives tax increments. The statement of indebtedness is required to contain the date on which any bonds were delivered, the principal amount, term, purpose and interest rate of such bonds and the outstanding balance and amount due on such bonds. Similar information must be given for each loan, advance or indebtedness that the agency has incurred or entered into to be payable from tax increment.
As amended by Assembly Bill 1290 (Statutes of 1993, Chapter 942) (“AB 1290”), Section 33675 requires each redevelopment agency to file a reconciliation statement for each redevelopment project for which the redevelopment agency receives tax increment revenues pursuant to Section 33670. The reconciliation statement is to show, among other things, (i) for each loan, advance or indebtedness, for each redevelopment project the total debt service obligations of the redevelopment agency to be paid in the fiscal year for which the statement of indebtedness is filed; (ii) the total debt service remaining to be paid on such indebtedness, and (iii) the available revenues as of the end of that fiscal year. “Available revenues” consist of all tax increment revenues held by the redevelopment agency as cash or cash equivalents and all cash or cash equivalents held by the redevelopment agency that are irrevocably pledged or restricted to payment of a loan, advance or indebtedness that the redevelopment agency has listed on a statement of indebtedness. For purposes of Section 33675, amounts held in a redevelopment agency’s Low and Moderate Income Housing Fund do not constitute available revenues, however, an amount to be deposited by a redevelopment agency in its Low and Moderate Income Housing Fund does constitute indebtedness of the redevelopment agency.
Section 33675(g) has been amended by AB 1290 to provide that payments of tax increment revenues from the county auditor to a redevelopment agency may not exceed the redevelopment agency’s aggregate total outstanding debt service obligations minus the available revenues of the redevelopment agency, as shown on the reconciliation statement. Payments to a trustee under a bond resolution or indenture or payments to a public agency in connection with payments by such public agency pursuant to a bond issue shall not be disputed in any action under Section 33675.
The Agency has determined that the amendments to Section 33675 limiting the payment of tax increment revenues to an amount not greater than the difference between a redevelopment agency’s total outstanding debt obligations and total available revenues, as reported on the redevelopment agency’s reconciliation statement, will not have an adverse impact on the Agency’s ability to meet its debt service obligations.
58 Plan Limitations
The Redevelopment Law requires redevelopment plans to contain certain limitations, including limitations on the number of tax dollars which may be divided and allocated to a redevelopment agency, on the time to establish loans, advances and indebtedness, on the amount of bonded indebtedness that can be outstanding at one time, on the life of the redevelopment plan or amendment and on the time to repay indebtedness. See “THE REDEVELOPMENT PROJECT AREAS – Plan Limitations” herein.
The Agency is of the opinion that these limitations for the Project Areas will not impede its ability to develop the Project Areas in accordance with their Redevelopment Plans nor impair its ability in the future to repay any obligation or indebtedness, including the Bonds, incurred by the Agency in connection with the development of the Project Areas in accordance with their Redevelopment Plans.
CONCLUDING INFORMATION
Tax Matters
Series 2010A-T Bonds. As of the date of issuance, Aleshire & Wynder, LLP, Bond Counsel, will render an opinion that based upon an analysis of existing laws, regulations, rulings, and court decisions, interest on the Series 2010A-T Bonds is exempt from State of California personal income taxes. Bond Counsel expresses no opinion as to the exclusion from gross income for federal income taxes purposes of interest on the Series 2010A-T Bonds or regarding any other federal or State tax consequences relating to the accrual or receipt of interest on the Series 2010A-T Bonds. NO ATTEMPT HAS BEEN OR WILL BE MADE TO COMPLY WITH CERTAIN REQUIREMENTS RELATING TO THE EXCLUSION FROM GROSS INCOME FOR FEDERAL INCOME TAX PURPOSES OF INTEREST ON THE SERIES 2010A- T BONDS. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix E hereto.
Although Bond Counsel will render an opinion that interest on the Series 2010A-T Bonds is exempt from California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Series 2010A-T Bonds may otherwise affect an Owner’s federal or state tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the Owner or the Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.
Circular 230 Disclaimer. To ensure compliance with requirements imposed by the Internal Revenue Service, Bond Counsel informs Owners of the Series 2010A-T Bonds that any U.S. federal tax advice contained in this Official Statement (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this Official Statement.
Series 2010A Bonds. As of the date of issuance of the Bonds, Aleshire & Wynder, LLP, Bond Counsel, will render an opinion that based on existing statutes, regulations, rulings and court decisions, interest on the Series 2010A Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes. Bond Counsel expects to deliver an opinion at the time of issuance of the Series 2010A Bonds substantially in the form set forth in Appendix E hereto.
The Internal Revenue Code of 1986, as amended (the “Code”) imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2010A Bonds. The Agency has covenanted to comply with certain restrictions designed to assure that interest on the Series 2010A Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the Series 2010A Bonds being
59 included in federal gross income, possibly from the date of issuance of the Series 2010A Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Series 2010A Bonds may affect the value of, or the tax status of interest on the Series 2010A Bonds. Further, no assurance can be given that pending or future legislation or amendments to the Code, will not adversely affect the value of, or the tax status of interest on, the Series 2010A Bonds. Prospective owners are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax.
Bond Counsel is further of the opinion that interest on the Series 2010A Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes. Also interest on the Series 2010A Bonds is not included in adjusted current earnings in calculating corporate alternative minimum taxable income.
Prospective purchasers of the Series 2010A Bonds should be aware that (i) with respect to insurance companies, subject to the tax imposed by Section 831 of the Code, Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15% of the sum of certain items, including interest with respect to the Series 2010A Bonds, (ii) interest, with respect to the Series 2010A Bonds, earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code, (iii) passive investment income, including interest with respect to the Series 2010A Bonds, may be subject to federal income taxation under Section 1375 of the Code for subchapter S corporations having subchapter C earnings and profits at the close of the taxable year and gross receipts more than 25% of which constitute passive investment income, and (iv) Section 86 of the Code requires recipients of certain Social Security and certain Railroad Retirement benefits to take into account, in determining gross income, receipts or accruals of interest on the Series 2010A Bonds.
If the initial offering price to the public (excluding bond houses and brokers) at which a Series 2010A Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public (excluding bond houses and brokers) at which a Series 2010A Bond is sold is greater than the amount payable at maturity thereof, then the excess of the tax basis of a purchaser of such Series 2010A Bond (other than a purchaser who holds such Series 2010A Bond as inventory, stock in trade or for sale to customers in the ordinary course of business) over the principal amount of such Series 2010A Bond constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount is disregarded.
Under the Code, original issue discount is excludable from gross income for federal income tax purposes to the same extent as the interest on the Series 2010A Bonds. Further, such original issue discount accrues actuarially on a constant interest rate basis over the term of each such Series 2010A Bond and the basis of such Series 2010A Bond acquired at such initial offering price by an initial purchaser of each such Series 2010A Bond will be increased by the amount of such accrued discount. The Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the Series 2010A Bonds who purchase such Series 2010A Bonds after the initial offering of a substantial amount thereof. Owners who do not purchase such Series 2010A Bonds in the initial offering at the initial offering prices should consult their own tax advisors with respect to the tax consequences of ownership of such Series 2010A Bonds. All holders of such Series 2010A Bonds should consult their own tax advisors with respect to the allowance of a deduction for any loss on a sale or other disposition to the extent that calculation of such loss is based on accrued original issue discount.
Under the Code, original issue premium is amortized for federal income tax purposes over the term of such a Series 2010A Bond based on the purchaser’s yield to maturity in such Series 2010A Bonds, except that in the case of such a Series 2010A Bond callable prior to its stated maturity, the amortization period and the yield may be required to be determined on the basis of an earlier call date that results in the lowest yield 60 on such Series 2010A Bond. A purchaser of such a Series 2010A Bond is required to decrease his or her adjusted basis in such Series 2010A Bond by the amount of bond premium attributable to each taxable year in which such purchaser holds such Series 2010A Bond. The amount of bond premium attributable to a taxable year is not deductible for federal income tax purposes. Purchasers of such Series 2010A Bonds should consult their tax advisors with respect to the precise determination for federal income tax purposes of the amount of bond premium attributable to each taxable year and the effect of bond premium on the sale or other disposition of such a Series 2010A Bond, and with respect to the state and local tax consequences of owning and disposing of such a Series 2010A Bond.
Certain agreements, requirements and procedures contained or referred to in the Indenture and other relevant documents may be changed and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth in those documents, upon the advice or with the approving opinion of nationally recognized bond counsel. Bond Counsel expresses no opinion as to any Series 2010A Bond or the interest payable with respect thereto if any change occurs or action is taken or omitted upon the advice or approval of counsel other than Bond Counsel.
Although Bond Counsel will render an opinion that interest on the Series 2010A Bonds is excluded from federal gross income, and is exempt from current State of California personal income taxes, the ownership or disposition of the Series 2010A Bonds, and the accrual or receipt of interest on the Series 2010A Bonds may otherwise affect an Owner’s State or federal tax liability. The nature and extent of these other tax consequences will depend upon each Owner’s particular tax status and the Owner’s other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences
Financial Advisor
C.M. de Crinis & Co., Inc. has acted as financial advisor to the Agency concerning the Bonds. As financial advisor, C.M. de Crinis & Co., Inc. will receive compensation contingent upon the sale and delivery of the Bonds.
Fiscal Consultant
The Agency has retained the firm of DHA Consulting to act as fiscal consultant (the “Fiscal Consultant”) for the Agency on the Project Area. The full text of the Fiscal Consultant’s Report is attached hereto as “APPENDIX D.”
Ratings
Standard & Poor’s (“S&P”) has assigned a rating of “A-” to the Bonds based on its assessment of the Agency’s ability to make payments with respect to the Bonds without giving effect to the Policy. Such rating reflects only the views of such organization and any desired explanation of the significance of such ratings may be obtained from S&P. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. There is no assurance such rating will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of such rating agency, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Bonds.
Underwriting
The Agency will sell the Bonds to the Authority for resale to E. J. De La Rosa & Co., Inc. (the “Representative”), as representative of itself and Citigroup Global Markets Inc., Backstrom McCarley Berry & Co., LLC, and Stern Brothers & Co. (collectively, the “Underwriters”). The Series 2010A-T Bonds will be sold to the Underwriters, pursuant to that certain Bond Purchase Agreement, dated as of October 13, 2010,
61 by and among the Agency, the Authority and the Representative. The Underwriters expect to purchase the Series 2010A-T Bonds at a purchase price of $14,746,161.20, which includes an Underwriters’ discount of $82,955.50 and an original issue discount of $110,883.30. The Series 2010A Bonds will be sold to the Underwriters pursuant to that certain Bond Purchase Agreement, dated as of October 13, 2010, by and among the Agency, Authority and the Representative. The Underwriters expect to purchase the Series 2010A Bonds at a purchase price of $25,416,621.73, which includes an Underwriters’ discount of $104,304.17 and a net original issue discount of $99,074.10. The Underwriters intend to offer the Series 2010A-T Bonds and the Series 2010A Bonds to the public initially at the prices set forth on the inside cover page of this Official Statement, which prices may subsequently change without any requirement of prior notice.
The Underwriters reserve the right to join with dealers and other underwriters in offering the Bonds to the public. The Underwriters may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts) at prices lower than the public offering prices, and such dealers may reallow any such discounts on sales to other dealers.
Citigroup Inc., parent company of Citigroup Global Markets Inc., an underwriter of the Bonds, has entered into a retail brokerage joint venture with Morgan Stanley. As part of the joint venture, Citigroup Global Markets Inc. will distribute municipal securities to retail investors through the financial advisor network of a new broker-dealer, Morgan Stanley Smith Barney LLC. This distribution arrangement became effective on June 1, 2009. As part of this arrangement, Citigroup Global Markets Inc. will compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the Bonds.
No Litigation
There is no litigation pending or, to the Agency’s knowledge, threatened to restrain or enjoin the issuance, execution or delivery of the Bonds, to contest the validity of the Bonds, the Indentures or any proceedings of the Agency with respect thereto. In the opinion of the Agency, there are no lawsuits or claims pending against the Agency which will materially affect the Agency’s finances as to impair the ability to pay principal of an interest on the Bonds when due.
Legal Matters
The validity of the Bonds and certain other legal matters are subject to the approving opinions of Aleshire & Wynder, LLP, Bond Counsel to the Agency. A complete copy of the proposed forms of Bond Counsel opinion is contained in “APPENDIX E” hereto. Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement. Fulbright & Jaworski L.L.P., as Disclosure Counsel, will provide certain other legal services for the Agency. Aleshire & Wynder LLP currently serves as legal counsel to the Agency and the Authority. Certain legal matters will be passed upon for the Underwriters by Straddling Yocca Carlson & Rauth, A Professional Corporation, as counsel to the Underwriters. The fees and expenses of Bond Counsel, Disclosure Counsel and the Financial Advisor are contingent upon the sale and delivery of the Bonds.
Miscellaneous
All of the preceding summaries of the Redevelopment Law, other applicable legislation, the Redevelopment Plan for the Project Areas, agreements and other documents are made subject to the provisions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the Agency for further information in connection therewith.
62 Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized.
The execution and delivery of this Official Statement by its Executive Director has been duly authorized the Agency.
CARSON REDEVELOPMENT AGENCY
By: /s/ Jerome G. Groomes Executive Director
63 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX A
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURES
Certain provisions common to the Indentures are summarized below. In addition, certain tax covenants particular to the Series 2010A Bonds are summarized starting on page A-25. This summary does not purport to be complete or definitive and is qualified in its entirety by reference to the full terms of the Indentures. Terms not defined herein shall be given the meanings given to such terms in the Indenture.
Definitions
“Additional Revenues” means, as the date of calculation, the amount of Housing Tax Revenues which, as shown in a report of an Independent Redevelopment Consultant, are estimated to be receivable by the Agency within the Fiscal Year following the Fiscal Year in which such calculation is made as a result of increases in the assessed valuation of taxable property in the Project Area due to either (a) construction which has been completed and for which a certificate of occupancy has been issued by the City or other appropriate governmental entity but which is not then reflected on the tax rolls, or (b) transfer of ownership or any other interest in real property which has been recorded but which is not then reflected on the tax rolls. For purposes of this definition, the term “increases in the assessed valuation” means the amount by which the assessed valuation of taxable property in the Project Area is estimated to increase above the assessed valuation of taxable property in the Project Area (as evidenced in the written records of the Agency) as of the date on which such calculation is made.
“Annual Debt Service” means, for each Bond Year, the sum of (a) the interest payable on the Bonds in such Bond Year, and (b) the principal amount of the Outstanding Bonds scheduled to be paid in such Bond Year upon the maturity or mandatory sinking account redemption thereof. For purposes of such calculation, variable rate Parity Debt shall be deemed to bear interest at the maximum rate permitted by the Parity Debt Instrument pursuant to which such Parity Debt is issued. For purposes of such calculation, there shall be excluded debt service payments with respect to the Bonds or any Parity Debt to the extent that amounts due with respect to the Bonds or such Parity Debt are prepaid or other wise discharged in accordance with the Indentures or the relevant Parity Debt Instrument.
For the purposes of the issuance of Parity Debt, Annual Debt Service shall not include debt service on any bonds, the proceeds of which are deposited in an escrow fund held by the Trustee or an escrow agent (“Escrow Bonds”), provided that the Parity Debt instrument authorizing issuance of such Escrow Bonds shall provide that: (i) such proceeds shall be invested in (A) Defeasance Securities or (B) an investment agreement or guaranteed investment contract with a national or state chartered bank or savings and loan institution (including the Trustee or its affiliates) or other financial institution or insurance company, provided that, at the time of execution thereof, any such bank, institution, or company has unsecured debt obligations or claims paying ability rated in one of the two highest rating categories (without regard to any modifier) by S&P and/or Moody’s; provided further that such investments described in the preceding (A) or (B) bear interest at a rate which, together with amounts made available by the
A-1 Agency from bond proceeds or otherwise, is at least sufficient to pay annual debt service on the Escrow Bonds during the specified escrow period; (ii) moneys may be transferred from said escrow fund only if Housing Tax Revenues for the then current Fiscal Year, shall be at least equal to 1.35 times Annual Debt Service (computed using the criteria set forth above based on the then outstanding Bonds and Parity Debt, less that portion the Annual Debt Service of which will be supported by moneys on deposit in such escrow fund after such transfer); and (iii) such remaining Escrow Bonds shall be redeemed at par from moneys remaining on deposit in such escrow fund at the expiration of the specified escrow period. In addition, the Agency shall obtain an opinion of nationally recognized bond counsel on the delivery date of such Escrow Bonds to the effect that such escrow of proceeds will not affect the exclusion of the interest on the Series 2010A Bonds or any other outstanding Parity Debt, the interest on which is tax- exempt to the owners thereof under the Code from gross income for federal income tax purposes.
“Bond Counsel” means (a) Aleshire & Wynder, LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the Agency of nationally-recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Tax Code.
“Bonds” means the Series 2010A Bonds, the Series 2010A-T Bonds and, as applicable, any Parity Debt.
“Bond Year” means any twelve-month period beginning on October 2 in any year and extending to the next succeeding October 1, both dates inclusive; except that the first Bond Year shall begin on the Closing Date and end on October 1, 2011.
“Business Day” means a day of the year (other than a Saturday or Sunday) on which banks in the State or the state of New York are not required or permitted to be closed, and on which the New York Stock Exchange and the Trustee are open.
“Certificate of the Agency” means a certificate in writing signed by the Executive Director, Deputy Executive Director, Secretary or Treasurer of the Agency, or any other officer of the Agency duly authorized by the Agency for that purpose.
“City” means the City of Carson, California.
“Continuing Disclosure Agreement” means that certain Continuing Disclosure Agreement for the Bonds executed by the Agency, dated as of the Closing Date, as originally executed and as they may be amended from time to time in accordance with the terms thereof.
“Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the Agency relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to printing expenses, rating agency fees, filing and recording fees, initial fees, expenses and charges of the Trustee and its counsel, including the Trustee’s first annual administrative fee, acceptance fees, fees, charges and disbursements of attorneys, financial advisors, fiscal consultants, accounting firms, other consultants and other professionals, fees and charges for preparation, execution and safekeeping of the Bonds and any other cost, charge or fee in connection with the original issuance of the Bonds.
A-2 “Defeasance Obligations” means:
(a) cash;
(b) U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series);
(c) Direct obligations of the Treasury which have been stripped by the Treasury itself, CATS, TIGRS and similar securities;
(d) The interest component of Resolution Funding Corporation strips which have been stripped by request to the Federal Reserve Bank of New York in book entry form;
(e) Pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by S&P, provided that, if the issue is rated only by S&P (i.e., there is no Moody’s rating), then the pre-refunded municipal bonds must have been pre-refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre-refunded municipals; and
(f) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself): (i) direct obligations or fully guaranteed certificates of beneficial ownership of the U.S. Export-Import Bank; (ii) certificates of beneficial ownership of the Rural Economic Community Development Administration (formerly the Farmers Home Administration); (iii) obligations of the Federal Financing Bank; (iv) debentures of the Federal Housing Administration; (v) participation certificates of the General Services Administration; (vi) guaranteed Title XI financings of the U.S. Maritime Administration; (vii) project notes, local authority bonds, new communities debentures and U.S. public housing notes and bonds of the U.S. Department of Housing and Urban Development.
“Event of Default” means any of the events of default described in the Indentures.
“Federal Securities” means: (a) any direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), the payment of principal of and interest on which are unconditionally and fully guaranteed by the United States of America; (b) obligations of any agency or department of the United States of America which represent the full faith and credit of the United States of America or the timely payment of the principal of and interest on which are secured or guaranteed by the full faith and credit of the United States of America; and (c) any obligations issued by the State or any political subdivision thereof the payment of the principal of and interest and premium (if any) on which are fully secured by Federal Securities described in the preceding clauses (a) or (b).
“Fiscal Year” means any twelve-month period beginning on July 1 in any year and extending to the next succeeding June 30, both dates inclusive, or any other twelve month period selected and designated by the Agency to the Trustee in writing as its official fiscal year period.
A-3 “Housing Tax Revenues” means that portion of Tax Revenues required by Section 33334.3 of the Redevelopment Law to be deposited in the Agency’s Low and Moderate Income Housing Fund.
“Indentures” means the two Indentures of Trust, by and between the Agency and the Trustee, under which the Series 2010A Bonds and the Series 2010A-T Bonds are being issued, as originally entered into or as they may be amended or supplemented by any Supplemental Indentures entered into pursuant to the provisions thereof.
“Independent Accountant” means any accountant or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State, appointed by the Agency, and who, or each of whom: (a) is in fact independent and not under domination of the Agency; (b) does not have any substantial interest, direct or indirect, with the Agency; and (c) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency.
“Independent Redevelopment Consultant” means any consultant or firm of such consultants appointed by the Agency, and who, or each of whom: (a) is judged by the Agency to have experience in matters relating to the collection of Tax Revenues or otherwise with respect to the financing of redevelopment projects; (b) is in fact independent and not under domination of the Agency; (c) does not have any substantial interest, direct or indirect, with the Agency; and (d) is not connected with the Agency as an officer or employee of the Agency, but who may be regularly retained to make reports to the Agency.
“Low and Moderate Income Housing Fund” means the fund of the Agency heretofore established by the Agency pursuant to section 33334.3 of the Redevelopment Law.
“Maximum Annual Debt Service” means, as of the date of calculation, the largest amount of Annual Debt Service on all Outstanding Bonds for the current or any future Bond Year.
“Merged and Amended Redevelopment Project Area Redevelopment Plan” means (a) the Redevelopment Plan for Project Area No. 2 adopted pursuant to Ordinance No. 74-295 on February 19, 1974, as amended by Ordinance No. 74-324 on January 20, 1975, by Ordinance No. 81-580 on January 4, 1982, by Ordinance No. 82-628 on December 22, 1982, by Ordinance No. 86-767 on January 5, 1987, and by Ordinance No. 94-1046 on November 1, 1994; and (b) the Redevelopment Plan for Project Area No. 3 adopted by Ordinance No. 84-695 on July 16, 1984, as amended by Ordinance No. 94-1047 on November 1, 1994, by Ordinance No. 96-1091 on June 4, 1996; and (c) all as amended on July 16, 1996 by Ordinance No. 96- 1095 to merge the project areas to create the Carson Merged and Amended Project Area, as amended by Ordinance No. 03-1361 adopted on October 9, 2006, as amended by Ordinance No 07-1379 adopted on May 1, 2007, and Ordinance No. 10-1459 adopted on October 11, 2010, and as otherwise heretofore or hereafter amended pursuant to the Redevelopment Law.
“Moody’s” means Moody’s Investors Service, its successors and assigns.
“Outstanding” when used as of any particular time with reference to Bonds, means (subject to the provisions of the Indentures relating to disqualified Bonds) all Bonds except:
A-4 (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation;
(b) Bonds paid or deemed to have been paid; and
(c) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the Agency pursuant to the Indentures.
“Owner” or “Bond owner” means, with respect to any Bond, the person in whose name the ownership of such Bond shall be registered on the Registration Books.
“Parity Debt” means the Series 2010A Bonds, Series 2010A-T Bonds, and any notes, bonds, loans, advances or other indebtedness issued or incurred by the Agency on a parity with the Bonds pursuant to the Indentures.
“Parity Debt Instrument” means the resolution, trust indenture, installment sale agreement or other agreement adopted, entered into or executed and delivered by the Agency, and under which Parity Debt is issued pursuant to the Indentures.
“Participating Underwriter” has, with respect to each series of the Bonds, the meaning ascribed thereto in the Continuing Disclosure Agreement.
“Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein (provided that the Trustee shall be entitled to rely upon any investment direction from the Agency as conclusive certification to the Trustee that the investments described therein are so authorized under the laws of the State and constitute Permitted Investments):
(a) Federal Securities;
(b) obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America, including: Export-Import Bank, Farm Credit System Financial Assistance Corporation, Rural Economic Community Development Administration (formerly Farmers Home Administration), General Services Administration, U.S. Maritime Administration, Small Business Administration, Government National Mortgage Association, U.S. Department of Housing & Urban Development, Federal Housing Administration and Federal Financing Bank;
(c) direct obligations for any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations rated “Aaa” by Moody’s and “MA” by S&P issued by Fannie Mae or Federal Home Loan Mortgage Corporation (FHLMC); obligations of the Resolution Funding Corporation (REFCORP); senior debt obligations of the Federal Home Loan Bank System; and senior debt obligations of other Government Sponsored Agencies approved by the Trustee;
A-5 (d) U.S. dollar denominated deposit accounts, federal funds and banker’s acceptances with domestic commercial banks which have a rating on their short term certificates of deposit on the date of purchase of A-1 or A-1+ by S&P and P-1 by Moody’s, and maturing no more than 360 days after the date of purchase, including those of the Trustee or its affiliates; ,
(e) commercial paper which is rated at the time of purchase in the single highest classification, A-1+ by S&P and P-1 by Moody’s and which matures not more than 270 days after the date of purchase;
(f) investments in a money market fund rated AAAm or AAAm-G or better by S&P, including funds for which the Trustee or its affiliates provide investment advisory or other management services;
(g) any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based on the escrow, in the highest rating category of S&P and Moody’s or (ii)(A) which are fully secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or Federal Securities, which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, in such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (B) which fund is sufficient, as verified by an Independent Accountant and with the prior approval of S&P, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to above, as appropriate;
(h) Investment agreements (also referred to as guaranteed investment contracts) that meet the following criteria:
(1) A master agreement or specific written investment agreement governs the transaction.
(2) Acceptable providers of uncollateralized investment agreements shall consist of (i) domestic FDIC insured commercial banks, or U.S. branches of foreign banks, rated at least Aa2 by Moody’s and AA by S&P, (ii) domestic insurance companies rated Aaa by Moody’s and AA by S&P, and (iii) domestic structured investment companies approved by the Trustee and rated Aaa by Moody’s and AAA by S&P.
(3) Acceptable providers of collateralized investment agreements shall consist of (i) registered broker/dealers subject to SIPC jurisdiction, if such broker/dealer has an uninsured, unsecured and unguaranteed rating of A1 or better by Moody’s and A+ or better by S&P,
A-6 (ii) domestic FDIC-insured commercial banks or U.S. branches of foreign banks, rated at least A1 by Moody’s and A+ by S&P, (iii) domestic insurance companies rated at least A1 by Moody’s and A+ by S&P, and (iv) domestic structured investment companies approved by the Trustee and rated Aaa by Moody’s and AAA by S&P; required collateral levels shall be as set forth in (l)(6) below.
(4) The investment agreement shall provide that if the provider’s rating fall below Aa3 by Moody’s or Aa- by S&P, the provider shall within ten days either (i) repay the principal amount plus any accrued interest on the investment, or (ii) deliver Permitted Collateral as provided below.
(5) The investment agreement must provide for termination thereof if the provider’s ratings are suspended, withdrawn or fall below A3 from Moody’s or A- from S&P. Within ten days, the provider shall repay the principal amount plus any accrued interest on the agreement, without penalty to the Agency.
(6) The investment agreement shall provide for the delivery of collateral described as follows (“Permitted Collateral”) which shall be maintained at the following collateralization levels at each valuation date: (i) U.S. Government Securities at 104% of principal plus accrued interest, or (ii) obligations of GNMA, FNMA or FHLMC at 105% of principal and accrued interest.
(7) The investment agreement shall require the Trustee or Agent to determine the market value of the Permitted Collateral not less than weekly and notify the investment agreement provider on the valuation day of any deficiency. Permitted Collateral may be released by the Trustee to the provider only to the extent there are excess amounts over the required levels. Market value, with respect to the collateral, may be determined by any of the following methods: (i) the last quoted “bid” price as shown in Bloomberg, Interactive Data Systems, Inc., The Wall Street Journal or Reuters, (ii) valuation as performed by a nationally recognized pricing service, whereby the valuation method is based on a composite average of various bid prices, or (iii) the lower of two bid prices by nationally recognized dealers. Such dealers or their parent holding companies shall be rated investment grade and shall be market makers in the securities being values.
(8) Securities held as Permitted Collateral shall be free and clear of all liens and claims of third parties, held in a separate custodial account and registered in the name of the Trustee or the Agent.
(9) The provider shall grant the Trustee or the Agent a perfect first security interest in ay collateral delivered under an investment
A-7 agreement. For investment agreements collateralized initially and in connection with the delivery of Permitted Collateral under (l)(6) above, and the Trustee shall receive an opinion of counsel as to the perfection of the security interest in the collateral.
(10) The investment agreement shall provide than moneys invested under the agreement must be payable and putable at par to the Trustee without condition, breakage fee or other penalty, upon not more than two business days’ notice, or immediately on demand for any reason for which the funds invested may be withdrawn from the applicable fund or account established under the authorizing document, as well as the following: (i) in the event of a deficiency in the debt service account, (ii) upon acceleration after an event of default, (iii) upon refunding of the Bonds in whole or in part, (iv) reduction of the debt service reserve requirement for the Bonds, or (v) if a determination is later made by a nationally recognized bond counsel that investment must be yield- restricted. Notwithstanding the foregoing, the agreement may provide for a breakage fee or other penalty that is payable in arrears and not as a condition of a draw by the Trustee if the Agency’s obligation to pay such fee or penalty is subordinate to its obligation to pay debt service on the Bonds and to make deposits to the Reserve Account.
(11) The investment agreement shall establish the following as events of default, the occurrence of any of which shall require the immediate liquidation of the investment securities: (i) failure of the provider or the guarantor (if any) to make a payment when due or to deliver the Permitted Collateral of the character, at the times or in the amounts described above, (ii) insolvency of the provider or the guarantor (if any) under the investment agreement, (iii) failure by the provider to remedy any deficiency with respect to required Permitted Collateral, (iv) failure by the provider to make a payment or observe any covenant under the agreement, (v) the guaranty (if any) is terminated, repudiated or challenged, or (vi) any representation of warranty furnished to the Trustee or the Agency in connection with the agreement is false or misleading.
(12) The investment agreement must incorporate the following general criteria: (i) “cure periods” for payment default shall not exceed two business days, (ii) the agreement shall provide that the provider shall remain liable for any deficiency after application of the proceeds of the sale of any collateral, including costs and expenses incurred by the Trustee, (iii) neither the agreement or guaranty agreement, if applicable, may be assigned (except to a provider that would otherwise be acceptable under the guidelines) or amended without the prior consent of the Trustee, (iv) if the investment agreement is for the Reserve Fund, reinvestment of funds shall be required to bear interest at a rate at least equal to the original contract rate, (v) the provider shall be required to immediately notify the Trustee of any event of default or any suspension, withdrawal or
A-8 downgrade of the provider’s ratings, (vi) the agreement shall be unconditional and shall expressly disclaim any right of set-off or counterclaim, (vii) the agreement shall require the provider to submit information reasonably requested by the Trustee, including balance invested with the provider, type and market value of collateral and other pertinent information; and
(i) the Local Agency Investment Fund of the State, created pursuant to Section 11429.1 of the California Government Code but only, in the case of Trustee held funds, to the extent any monies invested by the Trustee are subject to deposit and withdrawal solely by the Trustee.
“Plan Limitations” means the limitations contained or incorporated in the Redevelopment Plan on (a) the aggregate principal amount of indebtedness payable from Tax Revenues derived under the Redevelopment Plan which may be outstanding at any time, (b) the aggregate amount of taxes which may be divided and allocated to the Agency pursuant to the Redevelopment Plan, and (c) the period of time for establishing, incurring or repaying indebtedness payable from Tax Revenues derived under the Redevelopment Plan.
“Project Area” means the territory within the Redevelopment Project, as described in the Redevelopment Plan.
“Qualified Reserve Account Credit Instrument” means an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Trustee pursuant to the Indentures, provided that all of the following requirements are met at the time of delivery thereof to the Trustee: (a) the long-term credit rating of such bank or insurance company is in one of the two highest rating categories by S&P and Moody’s at the time of issuance; (b) such letter of credit or surety bond has a term of at least twelve (12) months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released pursuant to the Indentures; (d) the Trustee is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Interest Account or the Principal Account for the purpose of making payments required pursuant to the Indentures; and (e) written notice of the posting of such Qualified Reserve Account Credit Instrument is given to S&P and Moody.
“Redevelopment Law” means the Community Redevelopment Law of the State, constituting Part 1 of Division 24 of the Health and Safety Code of the State, and the acts amendatory thereof and supplemental thereto, including Section 33334.3 and Chapter 6, Article 5 (commencing with Section 33640) thereof.
“Redevelopment Plan” means, collectively, the Redevelopment Project Area No. 1 Redevelopment Plan, the Merged and Amended Redevelopment Project Redevelopment Plan and the Redevelopment Project No. 4 Redevelopment Plan.
A-9 “Redevelopment Project” means the undertaking of the Agency pursuant to the Redevelopment Plan and the Redevelopment Law for the redevelopment of the areas subject to the Redevelopment Plan.
“Redevelopment Project Area No. 4 Redevelopment Plan” means the Redevelopment Plan for Redevelopment Project Area No. 4 adopted by the City Council by Ordinance 08-1254 on July 16, 2002, as amended by Ordinance No. 10-1459 adopted on October 11, 2010, and as may be amended from time to time pursuant to the Redevelopment Law.
“Redevelopment Project Area No. 1 Redevelopment Plan” means the Redevelopment Plan for Redevelopment Project Area No. 1 approved by Ordinance No. 71-205 adopted by the City Council of the City on December 20, 1971, as amended by Ordinance No. 74-288, adopted on February 4, 1974, Ordinance No. 84-696, adopted on July 16, 1984, Ordinance No. 86-766 adopted on January 5, 1987, Ordinance No. 94-1045 adopted on November 15, 1994, Ordinance No. 96-1090, adopted on June 4, 1996, Ordinance No. 96-1094 adopted on July 16, 1996, Ordinance No. 03-1299 adopted on November 4, 2003, Ordinance No. 06-1362 adopted on December 13, 2006, Ordinance Nos. 07-1377 and 07-1378 adopted on May 10, 2007, and Ordinance No. 10-1459, adopted on October 11, 2010, and as heretofore or hereafter amended pursuant to the Redevelopment Law.
“Report” means a document in writing signed by an Independent Accountant or an Independent Redevelopment Consultant and including: (a) a statement that the person or firm making or giving such Report has read the pertinent provisions of the Indentures to which such Report relates; (b) a brief statement as to the nature and scope of the examination or investigation upon which the Report is based; and (c) a statement that, in the opinion of such person or firm, sufficient examination or investigation was made as is necessary to enable said consultant to express an informed opinion with respect to the subject matter referred to in the Report.
“Request of the Agency” means a request in writing signed by the Executive Director, Deputy Executive Director, Secretary or Treasurer of the Agency, or any other officer of the Agency duly authorized by the Agency for that purpose.
“Reserve Requirement” means, with respect to the Series 2010A Bonds and the Series 2010A-T Bonds and Parity Debt, as of any calculation date, the least of (i) ten percent (10%) of the original principal amount of the Bonds and Parity Debt, (ii) Maximum Annual Debt Service with respect to the Bonds and Parity Debt, or (iii) 125% of average Annual Debt Service on the Bonds and Parity Debt. For purposes of calculating Maximum Annual Debt Service with respect to determining the Reserve Requirement, variable rate Parity Debt shall be deemed to bear interest rate at the maximum rate permitted by the Parity Debt Instrument.
In no event shall the amount contributed to the Reserve Requirement with respect to the Series 2010A Bonds and other tax-exempt Parity Debt exceed the lesser of (i) ten percent (10%) of the original principal amount of the Series 2010A Bonds and tax-exempt Parity Debt, (ii) Maximum Annual Debt Service with respect to the Series 2010A Bonds and tax-exempt Parity Debt, or (iii) 125% of average Annual Debt Service on the Series 2010A Bonds and tax-exempt Parity Debt as of the date of issuance.
A-10 “Serial Bonds” mean all Bonds other than Term Bonds.
“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., New York, New York, or its successors.
“State” means the State of California.
“Subordinate Debt” means any loans, advances or indebtedness issued or incurred by the Agency in accordance with the requirements of the Indentures, which are either: (i) payable from, but not secured by a pledge of or lien upon, the Housing Tax Revenues; or (ii) secured by a pledge of or lien upon the Housing Tax Revenues which is subordinate in all respects to the pledge of and lien upon the Housing Tax Revenues under the Indentures for the security of the Bonds.
“Supplemental Indenture” means any resolution, agreement or other instrument which has been duly adopted or entered into by the Agency, but only if and to the extent that such Supplemental Indenture is specifically authorized under the Indentures.
“Tax Code” means the Internal Revenue Code of 1986, as in effect on the date of issuance of the Series 2010A Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Series 2010A Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Tax Code (including the Tax Regulations).
“Tax Increment Limitations” means the final date on which each of the Redevelopment Plans or component portions thereof is permitted to receive tax increment or pay for indebtedness pursuant to Sections 33333.2 and 33333.6 of the Law.
“Tax Revenues” mean all taxes pledged and annually allocated within the Plan Limitations, following the Closing Date, and paid to the Agency with respect to the Project Area pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of the Constitution of the State, or pursuant to other applicable State laws, and as provided in the Redevelopment Plan, and all payments, subventions and reimbursements, if any, to the Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations, but excluding amounts payable by the State to the Agency under and pursuant to Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the California Government Code.
“Term Bonds” mean the Series 2010A Bonds maturing October 1, 2030 and October 1, 2036, and the Series 2010A-T Bonds maturing October 1, 2016 and October 1, 2020.
Costs of Issuance Funds
The moneys in the Costs of Issuance Funds shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Request of the Agency stating the person to whom payment is to be made, the amount to be paid, the purpose for which the obligation was incurred and that such payment is a proper charge against said fund. On the date that is one hundred twenty (120) days following the date of delivery of the Bonds or upon
A-11 the earlier Request of the Agency stating that all known Costs of Issuance have been paid, all amounts, if any, remaining in the respective Costs of Issuance Funds shall be withdrawn therefrom by the Trustee and deposited in the appropriate Bond Proceeds Account within the Low and Moderate Income Housing Fund pursuant to the Indentures.
Bond Proceeds Accounts
The Indentures require the Trustee to establish the Series 2010A Bond Proceeds Account and the Series 2010A-T Bond Proceeds Account (collectively referred to herein as the “Bond Proceeds Accounts) within the Low and Moderate Income Housing Fund. The moneys in the Bond Proceeds Accounts shall be used in the manner provided by the Law and the Agency by- laws solely for the purpose of aiding in financing activities which may be financed from the Low and Moderate Income Housing Fund (including, without limitation, the payment of any unpaid Costs of Issuance and interest on the Bonds). The Agency covenants that no funds on deposit in the Low and Moderate Income Housing Fund shall be applied for any purpose not authorized by the Law.
The Trustee shall disburse amounts on deposit in the Bond Proceeds Accounts promptly after receipt of, and in accordance with a Request of the Agency.
Security of Bonds; Equal Security
The Bonds and all Parity Debt shall be secured by a first pledge of and lien on all of the Housing Tax Revenues, and all of the moneys on deposit in the Special Fund. In addition, the Bonds shall be secured by a first and exclusive pledge of and lien upon all of the moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account, the Redemption Account and the Reserve Account. Such pledges and liens shall be for the equal security of the Outstanding Bonds without preference or priority for series, issue, number, dated date, sale date, date of execution or date of delivery. Except for the Housing Tax Revenues and such moneys, no funds or properties of the Agency shall be pledged to, or otherwise liable for, the payment of principal of or interest on the Bonds.
In consideration of the acceptance of the Bonds by those who shall hold the same from time to time, the Indentures shall be deemed to be and shall constitute contracts between the Agency and the Owners from time to time of the Bonds, and the covenants and agreements set forth in the Indenture to be performed on behalf of the Agency shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution and delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or in the Indentures.
Special Fund
There is established in the Indentures a special fund to be known as the “Special Fund”, which shall be held by the Agency, and which shall be established by the Agency as a separate restricted fund within the Low and Moderate Income Housing Fund. Amounts deposited to and held by the Agency in the Special Fund shall be at all times separately accounted for by the Agency from all other funds or accounts in the Low and Moderate Income Housing Fund, and
A-12 shall be used and applied solely as set forth in the Indentures and as required by any Parity Debt Instrument. The Agency shall not pledge or encumber any amounts in the Special Fund except as set forth in the Indentures.
The Agency shall deposit all of the Housing Revenues received in any Bond Year in the Special Fund promptly upon receipt thereof by the Agency, until such time during such Bond Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to be transferred to the Trustee for deposit into the Interest Account, the Principal Account and the Reserve Account in such Bond Year pursuant to the Indentures and for deposit in such Bond Year into the funds and accounts established with respect to Parity Debt, and as may be provided in any Parity Debt Instrument.
All Housing Tax Revenues received by the Agency during any Bond Year in excess of the amount required to be deposited in the Special Fund during such Bond Year pursuant to the preceding paragraph and any Parity Debt Instrument shall be released from the pledge and lien under the Indentures for the security of the Bonds, shall be deposited in the unrestricted accounts of the Low and Moderate Income Housing Fund and may be applied by the Agency for any lawful purpose of the Low and Moderate Income Housing Fund. Prior to the payment in full of the principal of and interest on the Bonds, and the payment in full of all other amounts payable under the Indentures and under any Parity Debt Instrument, the Agency shall not have any beneficial right or interest in the moneys on deposit in the Special Fund, except as may be provided in the Indentures. If the amount of Housing Tax Revenues available in any Bond Year is insufficient to make all of the transfers and deposits required above pursuant to the Indentures, then the Agency shall transfer and deposit such Housing Tax Revenues with respect to the Series Bonds and any Parity Debt ratably based on the full amounts required to be so transferred and deposited.
Capitalized Interest Account
The Series 2010A Indenture creates a separate account within the Debt Service Fund known as the "Capitalized Interest Account." Moneys deposited in the Capitalized Interest Account shall be held by the Trustee and withdrawn solely for the purpose of paying interest on the Series 2010A Bonds as it shall become due and payable. Moneys in the Capitalized Interest Account shall be transferred by the Trustee to the Interest Account with respect to the Series 2010A Bonds by the Trustee on or before the fifth (5th) Business Day preceding each Interest Payment Date.
Deposit of Amounts by Trustee
Moneys in the Special Fund created under each of the Indentures shall be transferred by the Agency to the Trustee in the following amounts, at the following times, and deposited by the Trustee in the following respective special accounts, which are established in each of the Debt Service Funds, and in the following order of priority:
(a) Interest Account. On or before the fourth (4th) Business Day preceding each Interest Payment Date, the Agency shall withdraw from the Special Fund and the and transfer to the Trustee, for deposit in the Interest Accounts an amount which when
A-13 added to the amount contained in the Interest Account on that date (taking into account any capitalized interest transferred from the Capitalized Interest Account with respect to the Series 2010A Bonds), will be equal to the aggregate amount of the interest becoming due and payable on the Outstanding Bonds on such Interest Payment Date. No such transfer and deposit need be made to the Interest Account if the amount contained therein is at least equal to the interest to become due on the next succeeding Interest Payment Date upon all of the Outstanding Bonds. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity pursuant to the Indentures).
(b) Principal Account. On or before the fourth (4th) Business Day preceding each date on which principal of the Bonds becomes due and payable at maturity, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Principal Account an amount which, when added to the amount then contained in the Principal Account, will be equal to the principal becoming due and payable on the Outstanding Serial Bonds and maturing Term Bonds. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Serial Bonds and maturing Term Bonds as it shall become due and payable.
(c) Sinking Account. No later than the fourth (4th) Business Day preceding each October 1 on which any Outstanding Term Bonds, including those issued as Parity Debt pursuant to a Supplemental Indenture, are subject to mandatory sinking account redemption, or otherwise for purchases of Term Bonds, the Agency shall withdraw from the Special Fund and transfer to the Trustee for deposit in the Sinking Account an amount which, when added to the amount then contained in the Sinking Account, will be equal to the aggregate principal amount of the Term Bonds required to be redeemed pursuant to mandatory sinking account redemption on such October 1. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sale purpose of paying the principal of the Term Bonds as it shall become due and payable upon redemption or the purchase thereof.
(d) Reserve Account. The Reserve Requirement for the Bonds shall initially be satisfied by a deposit to the Reserve Account with respect to the Indentures in the amount of the Reserve Requirement.
In the event that the amount on deposit in the Reserve Account at the time of the valuation becomes less than the Reserve Requirement, the Trustee shall promptly notify the Agency of such fact. Promptly upon receipt of any such notice, the Agency shall transfer to the Trustee an amount of available Housing Tax Revenues sufficient to maintain the Reserve Requirement on deposit in the Reserve Account. Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account and the Principal Account, in such order of priority, on any date which the principal of or interest on the Bonds becomes due and payable under the Indentures, in the event of any deficiency at any time in any of such accounts, or at any time for the retirement of all the Bonds then Outstanding. So long as
A-14 no Event of Default shall have occurred and be continuing, any amount in the Reserve Account in excess of the Reserve Requirement preceding each Interest Payment Date shall be withdrawn from the Reserve Account by the Trustee and deposited in the Interest Account on or before the Interest Payment Date.
The Agency shall have the right at any time to release funds from the Reserve Account, in whole or in part, by tendering to the Trustee: (i) a Qualified Reserve Account Credit Instrument, and (ii) in the case of Series 2010A Bonds, an opinion of Bond Counsel stating that neither the release of such funds nor the acceptance of such Qualified Reserve Account Credit Instrument will cause interest on the Series 2010A Bonds to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Trustee, and upon delivery by the Agency to the Trustee of written calculation of the amount permitted to be released from the Reserve Account (upon which calculation the Trustee may conclusively rely), the Trustee shall transfer such funds from the Reserve Account to the Agency free and clear of the lien of the Indentures. The Trustee shall comply with all documentation relating to a Qualified Reserve Account Credit Instrument as shall be required to maintain such Qualified Reserve Account Credit Instrument in full force and effect and as shall be required to receive payments thereunder in the event and to the extent required to make any payment when and as required under the Indenture.
At least fifteen (15) days prior to the expiration of any Qualified Reserve Account Credit Instrument, the Agency shall be obligated either (i) to replace such Qualified Reserve Account Credit Instrument with a new Qualified Reserve Account Credit Instrument, or (ii) to deposit or cause to be deposited with the Trustee an amount of funds such that the amount on deposit in the Reserve Account is equal to the Reserve Requirement (without taking into account such expiring Qualified Reserve Fund Credit Instrument). In the event that the Agency shall fail to take action as specified in clause (i) or (ii) of the preceding sentence, the Trustee shall, prior to the expiration thereof, draw upon the Qualified Reserve Account Credit Instrument in full and deposit the proceeds of such draw in the Reserve Account.
(e) Redemption Account. On or before the Business Day preceding any date on which Bonds are to be redeemed under the optional redemption provisions, if any, of the Indenture, the Trustee shall withdraw from the Debt Service Fund any amount transferred by the Agency to the Trustee for redemption and shall deposit such amount in the Redemption Account, such amount being the amount required to pay the principal of and premium, if any, on the Bonds to be redeemed on such date. All moneys in the Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of and premium, if any, on the Bonds to be redeemed pursuant to such Section on the date set for such redemption. Interest due on Bonds to be redeemed on the date set for redemption shall, if applicable, be paid from funds available therefor in the Interest Account. Notwithstanding the foregoing, at any time prior to giving notice of redemption of any such Bonds, the Trustee may, at the direction of the Agency, apply amounts deposited or otherwise to be deposited in the Redemption Fund to the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage
A-15 and other charges, but excluding accrued interest on Bonds, which is payable from the Interest Account) as shall be directed by the Agency.
(f) Surplus. All amounts on deposit in the Debt Service Fund on the first day following any Interest Payment Date, to the extent not required as provided in the Indentures or to pay any interest on or principal of any Outstanding Bonds then having come due and payable, or a proportionate amount of any principal payment coming due on the next succeeding Interest Payment Date shall be released from the lien hereunder and may be used for any lawful purposes of the Agency, including to the payment of any Subordinate Debt.
Issuance of Parity Debt. In addition to the Bonds, the Agency may issue or incur Parity Debt in such principal amount as shall be determined by the Agency, pursuant to a Parity Debt Instrument adopted or entered into by the Agency. The Agency may issue or incur such Parity Debt subject to the following specific conditions precedent:
(a) The Agency shall be in compliance with all covenants set forth in the Indenture and all Parity Debt Instruments, and no event of default shall have occurred and be continuing under the Indenture or any Parity Debt Instruments.
(b) The Housing Tax Revenues for each succeeding Fiscal Year plus Additional Revenues shall be at least equal to one hundred and thirty five percent (135%) of Annual Debt Service coming due and payable in the corresponding Bond Year on the Bonds and any Parity Debt which will be outstanding immediately following the issuance of such Parity Debt.
For the purposes of this calculation, Housing Tax Revenues shall be based on: (i) a 1.00% property tax rate, (ii) the most recent assessed valuation of property in the Project Area as evidenced in written documentation from an appropriate official of the Agency or a written report of an Independent Redevelopment Consultant, (iii) other than the Additional Revenues, no other future increases in assessed valuations, and (iv) taking into account all Tax Increment Limitations which would cause a reduction in Housing Tax Revenues in any future Fiscal Year.
(c) The Agency shall deliver to the Trustee a Certificate of the Agency certifying that the conditions precedent to the issuance of such Parity Debt set forth subsections (a) and (b) above have been satisfied.
Issuance of Senior Debt. The Agency shall not issue or incur additional indebtedness payable from Housing Tax Revenues that is senior to the Bonds and any Parity Debt.
Issuance of Subordinate Debt. In addition to the Bonds and any Parity Debt, from time to time the Agency may issue or incur additional Subordinate Debt in such principal amount as shall be determined by the Agency, provided that the issuance of such Subordinate Debt shall not cause the Agency to exceed any applicable Plan Limitations.
A-16 Covenants of the Agency
Punctual Payment. The Agency shall punctually pay or cause to be paid the principal and interest to become due in respect of all the Bonds together with the premium thereon, if any, in strict conformity with the terms of the Bonds and of the Indentures.
Limitation on Superior Debt. The Agency has covenanted that, so long as the Bonds remain unpaid, the Agency shall not issue any bonds or other obligations, enter into any agreement or otherwise incur any loans, advances or indebtedness, which is in any case secured by a lien on all or any part of the Housing Tax Revenues which is superior to the lien established under the Indentures for the security of the Bonds. Nothing in the Indentures is intended or shall be construed in any way to prohibit or impose any limitations upon the issuance or incurrence by the Agency of Parity Debt or Subordinate Debt, other than as expressly provided in the Indentures.
Payment of Claims. The Agency shall promptly pay and discharge, or cause to be paid and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the properties owned by the Agency or upon the Housing Tax Revenues or any part thereof or other amounts pledged to the payment of the Bonds, or any part thereof, or upon any funds in the hands of the Trustee, or which might impair the security of the Bonds. Nothing contained in the Indentures shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said claims.
Books and Accounts: Financial Statements. The Agency will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Agency and the County, in which complete and correct entries shall be made of all transactions relating to the Redevelopment Project, the Housing Tax Revenues, the Special Fund and the Low and Moderate Income Housing Fund. Such books of record and accounts shall at all times during business hours be subject, upon prior written request, to the reasonable inspection of the Agency, the Trustee and the Owners of any Bonds then Outstanding, or their representatives authorized in writing. The Trustee shall have no duty to review such books of record and account.
The Agency will cause to be prepared and sent to the Trustee annually, within one hundred and eighty (180) days after the close of each Fiscal Year so long as any of the Bonds are Outstanding, complete audited financial statements with respect to such Fiscal Year showing the Housing Tax Revenues, all disbursements from the Special Fund and the Low and Moderate Income Housing Fund and the financial condition of the Redevelopment Project, including the Low and Moderate Income Housing Fund, as of the end of such Fiscal Year. The Agency will furnish a copy of such statements, upon reasonable request, to any Bond Owner. The Trustee shall have no duty to review such statements.
Protection of Security and Rights of Owners. The Agency will preserve and protect the security of the Bonds and the rights of the Owners. From and after the Closing Date, the Bonds shall be incontestable by the Agency.
Payments of Taxes and Other Charges. The Agency will pay and discharge, or cause to be paid and discharged, all taxes, service charges, assessments and other governmental charges
A-17 which may hereafter be lawfully imposed upon the Agency or the properties then owned by the Agency in the Project Area, or upon the revenues therefrom when the same shall become due. Nothing contained in the Indentures shall require the Agency to make any such payment so long as the Agency in good faith shall contest the validity of said taxes, assessments or charges. The Agency will duly observe and conform with all valid requirements of any governmental authority relative to the Redevelopment Project or any part thereof.
Disposition of Property. The Agency will not participate in the disposition of any land or real property in the Project Area which will result in such property becoming exempt from taxation because of public ownership or use or otherwise (except property dedicated for public right-of-way) if such disposition, when taken together with other such dispositions, would either (a) aggregate more than 10% of the land area in the Project Area, (b) aggregate more than 10% of the assessed valuation of the property in the Project Area, or (c) cause the amount of Housing Tax Revenues to be received in the succeeding Fiscal Year to fall below 135% of Maximum Annual Debt Service.
Continuing Disclosure. The Agency has covenanted and agreed that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of the Indentures, failure of the Agency to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, the Trustee may (and at the request of any Participating Underwriter or the holders of at least 25% aggregate principal amount of Outstanding Bonds, shall) (but only to the extent the Trustee has been tendered funds in an amount satisfactory to it or it has been otherwise indemnified to its reasonable satisfaction from and against any loss, liability, cost or expense, including without limitation, fees and expense of its counsel and agents and additional fees and charges of the Trustee) or any holder or beneficial owner of the Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.
Maintenance of Housing Tax Revenues. The Agency shall comply with all requirements of the Redevelopment Law to insure the allocation and payment to it of the Housing Tax Revenues, including without limitation the timely filing of any necessary statements of indebtedness with appropriate officials of the County and, in the case of amounts payable by the State, appropriate officials of the State.
Redevelopment Plan Limitations. The Agency shall manage its fiscal affairs in a manner which ensures that it will have sufficient Housing Tax Revenues available under the Plan Limitations in the amounts and at the times required to enable the Agency to pay the principal of and interest and premium (if any) on the applicable portion of the Bonds and on any Parity Debt when due.
Additionally, the Agency covenants that it will annually review, no later than December 1 of each year, the total amount of Housing Tax Revenues remaining available to be received by the Agency under the Plan Limitations, as well as future cumulative Annual Debt Service, and payments on obligations that are subordinate to the Bonds and Parity Debt. If, based on such review, the allocation of Housing Tax Revenues to the Agency in any of the next three succeeding Fiscal Years will cause an amount equal to ninety-five (95%) of the amount of
A-18 Housing Tax Revenues remaining under the Plan Limitations to fall below the sum of (i) remaining cumulative Annual Debt Service, and (ii) payments on obligations that are subordinate to the Bonds, the Agency shall either (1) defease Bonds or Parity Debt by depositing an amount of Housing Tax Revenues equal to the amount that is required to ensure continuing compliance with the Indentures in a defeasance escrow to be held by the Trustee and to be pledged solely to the payment of debt service on the Bonds or Parity Debt, which escrow shall be invested in Defeasance Obligations and used for the payment of interest on and principal of and redemption premiums, if any, on the Bonds or Parity Debt or (2) adopt a plan approved by an Independent Redevelopment Consultant which demonstrates the Agency’s continuing ability to pay debt service on the Bonds and Parity Debt. In determining the amount to be deposited in escrow with the Trustee, the Agency may consider actual interest earnings on the amounts so deposited. In the event that the Agency elects to adopt a plan approved by an Independent Redevelopment Consultant, the Agency shall provide a copy of such plan to the Trustee, any municipal bond insurer rating any applicable bonds and any rating agency rating any applicable bonds.
The Trustee is not responsible for monitoring or enforcing these requirements.
Outstanding Bond Documents. The Agency covenants that it has not heretofore expended any portion of any outstanding bonds of the Agency which are secured by all or part of Tax Revenues to increase, preserve or improve the supply of low and moderate income housing in the City. The Agency hereby covenants that it shall not expend any proceeds of any outstanding bonds secured by Tax Revenues (or portions thereof) and parity debt relating thereto to increase, improve and preserve the supply of low and moderate income housing in the City to the extent said indebtedness shall be secured by Housing Tax Revenues unless debt service on such portion of the outstanding bonds applicable to said expenditure meets the Parity Debt requirements of the Indentures or constitutes Subordinate Debt.
Deposit and Investment of Moneys in Funds
Moneys in the Debt Service Fund, the Interest Account, the Principal Account, the Sinking Account, the Redemption Account, if any, the Reserve Account, the Bond Proceeds Account, the Capitalized Interest Account and the Costs of Issuance Fund shall be invested by the Trustee in Permitted Investments specified in the Request of the Agency delivered to the Trustee at least two (2) Business Days in advance of the making of such investments; provided, however, that in the absence of any such direction from the Agency, the Trustee shall either invest any such moneys solely in Permitted Investments described in clause (f) of the definition (provided the Trustee has received direction as to the money market fund) or shall hold such moneys uninvested. Moneys in the Special Fund shall be invested by the Agency in any obligations in which the Agency is legally authorized to invest funds within its control.
Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account. Whenever in the Indentures any moneys are required to be transferred by the Agency to the Trustee, such transfer may be accomplished by transferring a like amount of Permitted Investments. All interest or gain derived from the investment of amounts in any of the funds or accounts held by the Trustee shall be retained in the respective fund or account from which such investment was made; provided, however, that (i) all interest or gain from the investment of amounts in the Reserve Account shall be deposited by the Trustee in the Interest
A-19 Account to the extent not required to cause the balance in the Reserve Account to equal the Reserve Requirement, and (ii) so long as no Event of Default shall have occurred and be continuing, all interest or gain on investments of amounts in the Special Fund shall be released from the pledge of the Indentures and used by the Agency for any lawful purposes. For purposes of acquiring any investments, the Trustee may commingle funds held by it under the Indentures. The Trustee or an affiliate may act as principal or agent in the acquisition or disposition of any investment and may impose its customary charges therefor.
The Agency acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant Agency the right to receive brokerage confirmations of security transactions as they occur, the Agency specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the Agency periodic cash transaction statements which include detail for all investment transactions made by the Trustee under the Indenture.
Amendment Without Consent of Owners
The Indentures and the rights and obligations of the Agency and of the Owners may be modified or amended at any time by a Supplemental Indenture which shall become binding upon adoption, without the consent of any Owners to the extent permitted by law and only for any one or more of the following purposes-
(a) to add to the covenants and agreements of the Agency in the Indentures contained, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or powers in the Indentures reserved to or conferred upon the Agency; or
(b) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in the Indentures, or in any other respect whatsoever as the Agency may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not materially adversely affect the interests of the Owners in the opinion of Bond Counsel; or
(c) to provide for the issuance of Parity Debt in accordance with the Indentures; or
(d) to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from federal income taxation of interest on the Series 2010A Bonds.
Amendment With Consent of Owners
Except as described above, the Indentures and the rights and obligations of the Agency and of the Owners may be modified or amended at any time by a Supplemental Indenture which shall become binding when the written consent of the majority of Owners is delivered to the Trustee. No such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Agency to pay the principal or interest at the time and place and at the rate and in the currency provided therein of
A-20 any Bond without the express written consent of the Owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee.
Effect of Supplemental Indenture
From and after the time any Supplemental Indenture becomes effective pursuant to the Indentures, the Indentures shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties to the Indentures or thereto and all Owners, as the case may be, shall thereafter be determined, exercised and enforced under the Indentures subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Indenture shall be deemed to be part of the terms and conditions of the Indentures for any and all purposes.
Events of Default and Acceleration of Maturities
The following events shall constitute Events of Default under the Indentures:
(a) Failure to pay any installment of the principal of any Bonds when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for acceleration.
(b) Failure to pay any installment of interest on any Bonds when and as the same shall become due and payable.
(c) Failure by the Agency to observe and perform any of the other covenants, agreements or conditions on its part in the Indentures or in the Bonds contained, if such failure shall have continued for a period of sixty (60) days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the Agency by the Trustee; provided, however, if in the reasonable opinion of the Agency the failure stated in the notice can be corrected, but not within such sixty (60) day period, such failure shall not constitute an Event of Default if corrective action is instituted by the Agency within such sixty (60) day period and the Agency shall thereafter diligently and in good faith cure such failure in a reasonable period of time.
(d) The Agency shall commence a voluntary case under Title 11 of the United States Code or any substitute or successor statute.
If an Event of Default has occurred and is continuing, the Trustee may, and if requested in writing by the Owners of a majority in aggregate principal amount of the Bonds then Outstanding the Trustee shall (a) declare the principal of the Bonds, together with the accrued interest thereon, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything in the Indentures or in the Bonds to the contrary notwithstanding, and (b) upon being indemnified to is satisfaction, exercise any other remedies available to the Trustee and the Owners in law or at equity.
Immediately upon becoming aware of the occurrence of an Event of Default, the Trustee shall give notice of such Event of Default to the Agency by telephone confirmed in writing.
A-21 Such notice shall also state whether the principal of the Bonds shall have been declared to be or have immediately become due and payable. With respect to any Event of Default described in clauses (a) or (b) above the Trustee shall, and with respect to any Event of Default described in clause (c) above the Trustee in its sole discretion may, also give such notice to the Owners, which shall include the statement that interest on the Bonds shall cease to accrue from and after the date, if any, on which the Trustee shall have declared the Bonds to become due and payable pursuant to the preceding paragraph (but only to the extent that principal and any accrued, but unpaid, interest on the Bonds is actually paid on such date).
This provision, however, is subject to the condition that if, at any time after the principal of the Bonds shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered, the Agency shall deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest (if any) upon all the Bonds, with interest on such overdue installments of principal and interest (to the extent permitted by law) at the net effective rate then borne by the Outstanding Bonds, and the fees and expenses of the Trustee, including any fees and expenses of its attorneys, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding by written notice to the Agency and to the Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration and its consequences. However, no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.
Application of Funds Upon Acceleration
All of the Housing Tax Revenues and all sums in the funds and accounts established and held by the Trustee under the Indentures upon the date of the declaration of acceleration as described above, and all sums thereafter received by the Trustee under the Indentures, shall be applied by the Trustee as follows and in the following order:
(a) To the payment of any fees, costs and expenses incurred by the Trustee to protect the interests of the Owners of the Bonds and Parity Debt; payment of the reasonable fees, costs and expenses of the Trustee (including reasonable fees and expenses of its counsel) incurred in and about the performance of its powers and duties under the Indentures and the payment of all reasonable fees, costs and expenses owing to the Trustee;
(b) To the payment of the whole amount then owing and unpaid upon the Bonds for interest and principal with interest on such overdue amounts at the respective rates of interest borne by the Outstanding Bonds, and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the Bonds, then to the payment of such interest, principal and interest on overdue amounts without preference or priority among such interest, principal and interest on overdue amounts ratably to the aggregate of such interest, principal and interest on overdue amounts.
A-22 Power of Trustee to Control Proceedings
In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Indentures, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in principal amount of the Outstanding Bonds under the Indentures opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.
Limitation on Owner’s Right to Sue
No Owner of any Bond issued under the Indentures shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon the Indentures, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy under the Indentures; it being understood and intended that no one or more Owners shall have any right in any manner whatever by his or their action to enforce any right under the Indentures, except in the manner in the Indentures provided, and that all proceedings at law or in equity to enforce any provision of the Indentures shall be instituted, had and maintained in the manner in the Indentures provided and for the equal benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of (and premium, if any) and interest on such Bond as in the Indentures provided, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of the Indentures or any other provision of the Indentures.
Remedies Not Exclusive
No remedy in the Indentures conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given under the Indentures or now or hereafter existing, at law or in equity
A-23 or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Redevelopment Law or any other law.
Discharge of Indentures
If the Agency shall pay and discharge the entire indebtedness on all Bonds or any portion thereof in anyone or more of the following ways:
(a) by paying or causing to be paid the principal of and interest on such Bonds, as and when the same become due and payable;
(b) by irrevocably depositing with the Trustee or another fiduciary, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established pursuant to the Indentures, is fully sufficient to pay such Bonds, including all principal and interest;
(c) by irrevocably depositing with the Trustee or another fiduciary, in trust, Defeasance Securities in such amount as an Independent Accountant shall determine will, together with the interest to accrue thereon and available moneys then on deposit in any of the funds and accounts established pursuant to the Indentures, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal and interest) at or before maturity; or
(d) by purchasing such Bonds prior to maturity and tendering such Bonds to the Trustee for cancellation;
and, if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given pursuant to the Indentures or provision satisfactory to the Trustee shall have been made for the giving of such notice, then, at the election of the Agency, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Housing Tax Revenues and other funds provided for in the Indentures and all other obligations of the Trustee and the Agency under the shall cease and terminate with respect to all Outstanding Bonds or, if applicable, with respect to that portion of the Bonds which has been paid and discharged, except only (a) the covenants of the Agency under the Indentures with respect to the Tax Code, (b) the obligation of the Trustee to transfer and exchange Bonds under the Indentures, (c) the obligations of the Agency to compensate and indemnify the Trustee under the Indentures, and (d) the obligation of the Agency to pay or cause to be paid to the Owners, from the amounts so deposited with the Trustee, all sums due thereon and to pay the Trustee all fees, expenses and costs of the Trustee.
To accomplish defeasance the Agency shall cause to be delivered (i) a report of an Independent Accountant’s verifying the sufficiency of the escrow established to pay the Bonds in full on the maturity or earlier redemption date (“Verification”) if required above, (ii) an escrow deposit agreement, and (iii) an opinion of nationally recognized bond counsel to the effect that the Bonds are no longer “Outstanding” under the Indentures; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the Agency and the Trustee.
A-24 SUMMARY OF CERTAIN PROVISIONS RELATING TO THE INDENTURE RELATING TO THE SERIES 2010A BONDS
Certain provisions particular to the Indenture relating to the Series 2010A Bonds are summarized below. This summary does not purport to be complete or definitive and is qualified in its entirety by reference to the full terms of the Indenture relating to the Series 2010A Bonds.
Tax Covenants of the Agency in the Indenture Relating to the Series 2010A Bonds.
(a) Maintenance of Tax Exemption. The Agency shall take all actions necessary to assure the exclusion of interest on the Series 2010A Bonds from the gross income of the Owners of the Series 2010A Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Series 2010A Bonds.
(b) Federal Guarantee Prohibition. The Agency shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Series 2010A Bonds to be “federally guaranteed” within the meaning of section 149(b) of the Tax Code.
(c) Rebate Requirement. The Agency shall take any and all actions necessary to assure compliance with section 148(f) of the Tax Code, relating to the rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Series 2010A Bonds.
(d) No Arbitrage. The Agency shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the Series 2010A Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Series 2010A Bonds would have caused the Series 2010A Bonds to be “arbitrage bonds” within the meaning of section 148 of the Tax Code.
(e) Maintenance of Tax-Exemption. The Agency shall take all actions necessary to assure the exclusion of interest on the Series 2010A Bonds from the gross income of the owners of the Series 2010A Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Series 2010A Bonds.
(f) Private Activity Bond Limitation. The Agency shall assure that the proceeds of the Series 2010A Bonds are not so used as to cause the Series 2010A Bonds to satisfy the private business tests of section 141(b) of the Tax Code or the private loan financing test of section 141(c) of the Tax Code.
A-25 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX B
AUDITED FINANCIAL STATEMENTS OF THE CARSON REDEVELOPMENT AGENCY FOR THE FISCAL YEAR ENDED JUNE 30, 2009
B-1 (THIS PAGE INTENTIONALLY LEFT BLANK) CARSON REDEVELOPMENT AGENCY
BASIC FINANCIAL STATEMENTS
Year Ended June 30, 2009
(With Independent Auditors' Report Thereon) (This page intentionally left blank) CARSON REDEVELOPMENT AGENCY
BASIC FINANCIAL STATEMENTS
Year Ended June 30, 2009
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT 1
BASIC FINANCIAL STATEMENTS:
Government-wide Financial Statements: Statement of Net Assets 4 Statement of Activities 5
Fund Financial Statements: Governmental Funds: Balance Sheet 6 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 9 Statement of Revenues, Expenditures and Changes in Fund Balances 10 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 12
Notes to the Basic Financial Statements 13
SUPPLEMENTARY INFORMATION:
Debt Service Funds: Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Project Area 1 45
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Project Area 2 46
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Project Area 4 47
Capital Projects Funds: Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Project Area 1 48
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Project Area 2 49 CARSON REDEVELOPMENT AGENCY
Basic Financial Statements
Year Ended June 30, 2009
TABLE OF CONTENTS, (CONTINUED)
SUPPLEMENTARY INFORMATION, (CONTINUED):
Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Project Area 3 50
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Project Area 4 51
Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - Low-and Moderate-Income Housing 52
COMPLIANCE SECTION:
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 55 Mayer Hoffman McCann An Independent CPA Firm
2301 Dupont Drive, Suite 200 Irvine, California 92612 949-474-2020 ph 949-263-5520 fx www.mhm-pc.com
Board of Directors Carson Redevelopment Agency Carson, California
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying basic financial statements of the governmental activities and each major fund of the Carson Redevelopment Agency (Agency), a component unit of the City of Carson, California, as of and for the year ended June 30, 2009, which collectively comprise the Agency's basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the Agency's management. Our responsibility is to express opinions on these basic 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 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 about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic 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 above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Carson Redevelopment Agency as of June 30, 2009, and the respective changes in financial position of the Agency for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The Agency has not presented management's discussion and analysis that the Governmental Accounting Standards Board has determined is necessary to supplement, although not required to be part of the basic financial statements.
Our audit was conducted for the purpose of forming an opinion on the financial statements of the Carson Redevelopment Agency taken as a whole. The supplementary information listed in the accompanying table of contents is presented for purposes of additional analysis and are not a required part of the financial statements of the Carson Redevelopment 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.
- 1 - Board of Directors Carson Redevelopment Agency Page Two
In accordance with Government Auditing Standards, we have also issued our report dated February 22, 2010 on our consideration of the Agency's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, 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 internal control over financial reporting or on compliance. The 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.
Irvine, California February 22, 2010
- 2- BASIC FINANCIAL STATEMENTS
-3 CARSON REDEVELOPMENT AGENCY
Statement of Net Assets
June 30, 2009
Governmental Activities Assets Cash and investments (note 2) $ 130,941,614 Cash and investments with fiscal agent (note 2) 33,529,653 Receivables: Property tax 2,136,955 Accounts 30,459 Interest on loans 3,603,074 Other interest 256,865 Loans 30,808,763 Due from other governments 121,186 Due from the City of Carson 942,525 Prepaids and other assets 156,688 Land held for resale 49,891,732 Unamortized bond issuance costs 2,083,513 Capital assets, not being depreciated (note 3) 880,658 Capital assets, net of accumulated depreciation (note 3) 18,677,252
Total assets 274,060,937
Liabilities Current liabilities: Accounts payable and accrued liabilities 4,637,394 Accrued payroll 85,226 Accrued interest payable 1,763,484 Due to the City of Carson 4,951,675 Retentions payable 529,642 Refundable deposits 904,792 Noncurrent liabilities (notes 4 and 5): Due within one year 3,765,000 Due in more than one year 144,005,863
Total liabilities 160,643,076
Net assets Invested in capital assets 18,677,252 Restricted for: Low and moderate income housing 57,703,840 Economic development 37,036,769
Total net assets $ 113,417,861
See accompanying notes to basic financial statements.
-4- CARSON REDEVELOPMENT AGENCY
Statement of Activities
Year Ended June 30, 2009
Program Revenues Operating Charges for Contributions Capital Governmental Expenses Services and Grants Contributions Activities Governmental Activities: Low and moderate housing and economic development $ 75,226,529 912,573 (74,313,956) Interest and other charges 6,039,124 (6,039, 124)
Total governmental activities $ 81,265,653 912,573 (80,353,080)
General revenues: Property taxes 27,349,599 Use of money and property 8,301,621 Other 462,789
Total general revenues 36,114,009
Change in net assets (44,239,071)
Net assets at beginning of year, as restated (note 15) 157,656,932
Net assets at end of year $113,417,861
See accompanying notes to the basic financial statements.
- 5- CARSON REDEVELOPMENT AGENCY Governmental Funds Balance Sheet
June 30, 2009
Debt Service
Project Project Project Assets Area 1 Area 2 Area 4 Cash and investments (note 2) $ Cash and investments with fiscal agent (note 2) 6,411,490 4,435,035 Receivables: Property tax Accounts Interest on loans Other interest Loans Due from other funds (note 7) Due from the City of Carson Advances to other funds (note 7) Prepaids Other assets Land held for resale
Total assets $ 6,411,490 4,435,035
Liabilities and Fund Balances Liabilities: Accounts payable and accrued liabilities $ Accrued payroll Due to other funds (note 7) Due to City of Carson Retentions payable Advances from other funds (note 7) Deferred revenue Refundable deposits Total liabilities Fund balances: Reserved for: Encumbrances and continuing appropriations Advances to other funds Low- and moderate-income housing Prepaids and other assets Land held for resale Debt service 6,411,490 4,435,035 Unreserved: Designated for property tax refund Designated for capital projects Total fund balances 6,411 ,490 4,435,035 Total liabilities and fund balances $ 6,411,490 4,435,035
See accompanying notes to basic financial statements.
-6- Low-and- Moderate- Project Project Project Project Income Area 3 Area 4 Housing Totals 34,104,670 47,271,311 10,445,601 5,645,921 33,474,111 130,941,614 30,020 22,653,108 33,529,653
1,097,491 339,061 503,499 196,904 2,136,955 30,459 30,459 104,333 93,716 5,793 3,399,232 3,603,074 152,551 83,501 20,813 256,865 3,803,659 4,434,802 3,010,000 19,560,302 30,808,763 113,242 3,148,526 18,765,196 3,124,730 2,106 25,153,800 912,574 121,186 29,951 1,063,711 6,152,234 6,152,234 420 780 1,037 2,237 154,451 154,451 6,762,468 7,803,482 14,147,425 7,549,221 13,629,136 49,891,732
47,081,428 69,327,413 46,898,327 39,445,521 70,126,334 283,725,548
1,672,933 1,360,038 220,925 1,243,596 139,902 4,637,394 27,971 36,629 4,109 16,517 85,226 14,371 9,792,502 62,453 3,449,719 11,834,755 25,153,800 1,759,753 2,402,963 357,639 431,320 4,951,675 176,414 109,222 244,006 529,642 6,152,234 6,152,234 3,907,992 4,528,518 3,015,793 22,959,534 34,411 ,837 374,822 435,443 21,513 73,014 904,792 7,934,256 18,665,315 3,320,684 11 35,382,028 76,826,600
910,254 574,960 801,669 118,443 2,405,326 6,152,234 6,152,234 20,995,690 20,995,690 420 780 154,451 1,037 156,688 6,762,468 7,803,482 14,147,425 7,549,221 13,629,136 49,891,732 10,846,525
6,050,714 6,050,714 31,474,030 30,079,928 29,430,218 19,415,863 110,400,039 39,147,172 50,662,098 43,577,643 34,744,306 206,898,948
47,081,428 69,327,413 46,898,327 39,445,521 70,126,334 283, 725,54~-
- 7- (This page intentionally left blank)
- 8- CARSON REDEVELOPMENT AGENCY Governmental Funds
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets
June 30, 2009
Fund balances of governmental funds $ 206,898,948
Amounts reported for governmental activities in the statement of net assets are different because:
Capital assets, net of depreciation, have not been included as financial resources in governmental fund activity. Cost of capital assets 30,189,433 Accumulated depreciation (10,631 ,523)
Long term liabilities that have not been included in the governmental fund activity: Bonds payable (147,770,863) Unamortized bond issuance costs 2,083,513
Accrued interest payable for the current portion of interest due on bonds payable has not been reported in the governmental funds. (1 ,763,484)
Revenues that are measurable but not available. Amounts are recorded as deferred revenue under the modified accrual basis of accounting. 34,411,837
Net assets of governmental activities $ 113,417,861
See accompanying notes to basic financial statements.
- 9 - CARSON REDEVELOPMENT AGENCY
Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances Year Ended June 30, 2009
Debt Service
Project Project Project Area 1 Area 2 Area 4 Revenues: Property taxes $ Use of money and property 128,993 20,991 Miscellaneous
Total revenues 128,993 20,991
Expenditures: Current: Economic development Pass-through expenditures Capital improvement programs Debt service: Principal payments 1,970,000 1,255,000 385,000 Bond interest 2,527,918 2,137,670 1,153,379 Bond issuance costs
Total expenditures 4,497,918 3,392,670 1,538,379
Excess (deficiency) of revenues over (under) expenditures (4,368,925) (3,371 ,679) (1 ,538,379)
Other financing sources (uses): Transfers in (note 7) 6,422,007 3,213,714 1,538,379 Transfers out (note 7) Transfers from the City of Carson Transfers to the City of Carson Issuance of bonds Discount on bonds
Total other financing sources (uses) 6,422,007 3,213,714 1,538,379
Net change in fund balances 2,053,082 (157,965)
Fund balances, July 1, 2008, as restated (note 15) 4,358,408 4,593,000
Fund balances, June 30, 2009 $ 6,411,490 4,435,035
See accompanying notes to basic financial statements. - 10 - Capital Projects Low-and- Moderate- Project Project Project Project Income Area 1 Area 2 Area 3 Area 4 Housing Totals
13,797,715 9,996,626 4,695,703 4,759,034 33,249,078 3,311,684 2,831,852 508,249 521,251 978,601 8,301,621 995 200,326 201,321
17,109,399 12,829,473 5,203,952 5,280,285 1,178,927 41,752,020
43,034,592 4,304,990 3,028,454 485,629 7,689,077 58,542,742 1,851,411 2,149,926 541,104 1,357,038 5,899,479 21,621,544 739,739 4,206,228 157,050 26,724,561
3,610,000 166,091 5,985,058 234,980 234,980
66,742,527 7,194,655 3,569,558 6,214,986 7,846,127 100,996,820
(49,633, 128) 5,634,818 1,634,394 (934,701) (6,667,200) (59,244,800)
1,752,823 3,100,953 6,860 7,371,629 23,406,365 (9,375, 183) (5, 731, 785) (989,141) (2,490, 186) (4,820,070) (23,406,365) 912,573 912,573 (121,186) (121,186) 22,810,000 22,810,000 (390,683) (390,683)
15,709,530 (2,630,832) (982,281) (2,611 ,372) 2,551,559 23,210,704
(33,923,598) 3,003,986 652,113 (3,546,073) (4,115,641) (36,034,096)
73,070,770 47,658,112 42,925,530 31,467,277 38,859,947 242,933,044
39,147,172 50,662,098 43,577,643 27,921,204 34,744,306 206,898,948
- 11 - CARSON REDEVELOPMENT AGENCY Governmental Funds
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities
Year Ended June 30, 2009
Net changes in fund balances - total governmental funds $ (36,034,096)
Amounts reported for governmental activities in the statement of activities are different because:
Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives as depreciation expense.
Capital asset additions 880,568 Depreciation expense (585,994)
The issuance of long-term debt (bonds) provides current fmancial resources to governmental funds, while the repayment of the principal of long-term debt consumes the current financial resources of governmental funds. Also, government funds report the effect of issuance costs when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities.
Proceeds from bonds (22,810,000) Principal payments on long-term debt 3,610,000 Bond issuance costs, net of amortization 173,676
Interest on noncurrent liabilities is not accrued in governmental funds, but rather is recognized as an expenditure when due. 7,238
Revenues that are measurable but not available. Amounts are recorded as deferred revenue under the modified accrual basis of accounting. 10,519,537
Changes in net assets of governmental activities $ (44,239,071)
See accompanying notes to basic financial statements.
- 12 - CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
Year Ended June 30, 2009
(1) Summary of Significant Accounting Policies
(a) Description of Reporting Entity
The Carson Redevelopment Agency (Agency) was activated by the City Council of the City of Carson, California (City) by Ordinance No. 71-196, adopted on September 20, 1971, under the provisions of the State of California Community Redevelopment Law. The Agency is a separate governmental entity pursuant to the Community Redevelopment Law of the State of California Health and Safety Code; however, the Agency's financial activities have been blended with the financial activities of the City for purposes of financial reporting. Accordingly, the accompanying combined financial statements of the Agency are also included in the Comprehensive Annual Financial Report of the City.
The Agency has authority to acquire, develop, administer and sell or lease property, including the right to eminent domain and the right to issue bonds and expend their proceeds, all in conformity with previously adopted formal redevelopment plans.
The Agency currently has designated four principal project areas, the highlights of which are as follows:
Project Area 1 - This Project Area which encompasses 635 acres was created shortly after the Agency was created. It includes the Civic Center, Carson Mall area and the former landfill site south of the San Diego Freeway. Improvements in these areas include construction of a storm drain, landscape medians, street lights and signals in the Carson Mall area and preparation of sites for proposed new commercial and industrial developments. The City of Carson City Hall and Community Center were built using Agency monies and were later deeded to the City.
Project Area 2 - This Project Area was created in 197 4 and encompasses approximately 700 acres. The Project Area includes two residential neighborhoods. Improvements made in these neighborhoods include construction of new streets, a storm drain, a park, improvements to public facilities and other street improvements. The Agency also used funds to relocate industrial firms and to develop new residential housing in the area.
- 13 - CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(1 l Summary of Significant Accounting Policies, (Continued)
(a) Description of Reporting Entity, (Continued)
Project Area 3 - This Project Area was created in 1984 and encompasses 620 acres in the southeastern section of the City. The numerous parcels that comprise this Project Area contain a variety of industrial and commercial structures with a very small number of residential uses. Development of Project Area 3 will serve to revitalize the Project Area and its environs by providing the necessary infrastructure improvements. In the current year, the Agency has continued consulting and planning studies related to reuse of the industrial land.
Project Area 4 - This Project Area was created in 2002 and encompasses 300 acres in the north, southwest and east section of the City. Development of Project Area 4 will serve to revitalize the Project Area and its environs by providing the necessary infrastructure improvements.
The Agency issued tax allocation bonds to fund development of Project Areas 1 2, and 4. These bonds are to be repaid from the property taxes collected in the Project Areas in excess of the areas' previously assessed valuations.
(b) Basis of Accounting and Measurement Focus
The basic financial statements of the Agency are composed of the following:
• Government-wide financial statements • Fund financial statements • Notes to the Basic Financial Statements
Government-Wide Financial Statements
Government-wide financial statements display information about the reporting government as a whole. These statements include the governmental activities of the primary government. Eliminations have been made in the Statement of Activities so that certain allocated expenses are recorded only once (by the function to which they were allocated).
- 14- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies, (Continued)
(b) Basis of Accounting and Measurement Focus, (Continued)
Government-Wide Financial Statements, (Continued)
Government-wide financial statements are presented using the economic resources measurement focus and the accrual basis of accounting. Under the economic resources measurement focus, all (both current and long-term) economic resources and obligations of the reporting government are reported in the government-wide financial statements. Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Under the accrual basis of accounting, revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Revenues, expenses, gains, losses, assets, and liabilities resulting from non exchange transaction are recognized in accordance with the requirements of GASB Statement No. 33.
Program revenues include charges for services and payments made by parties outside of the reporting government's citizenry if that money is restricted to a particular program. Program revenues are netted with program expenses in the statement of activities to present the net cost of each program.
Amounts paid to acquire capital assets are capitalized as assets in the government-wide financial statements, rather than reported as expenditures. Proceeds of long-term debt are recorded as a liability in the government-wide financial statements, rather than as other financing sources. Amounts paid to reduce long-term indebtedness of the reporting government are reported as a reduction of the related liability, rather than as expenditures.
Fund Financial Statements
The underlying accounting system of the Agency is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Governmental resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.
- 15 - CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies, (Continued)
(b) Basis of Accounting and Measurement Focus, (Continued)
Fund Financial Statements, (Continued)
Fund financial statements for the primary government's governmental funds are presented after the government-wide financial statements. These statements display information about the Agency's major funds individually.
Governmental Funds
In the fund financial statements, governmental funds and agency funds are presented using the modified-accrual basis of accounting. Their revenues are recognized when they become measurable and available as net current assets. Measurable means that the amounts can be estimated, or otherwise determined. Available means that the amounts were collected during the reporting period or soon enough thereafter to be available to finance the expenditures accrued for the reporting period. The Agency uses a sixty-day availability period.
Revenue recognition is subject to the measurable and availability criteria for the governmental funds in the fund financial statements. Exchange transactions are recognized as revenues in the period in which they are earned (i.e., the related goods or services are provided). Locally imposed derived tax revenues are recognized as revenues in the period in which the underlying exchange transaction upon which they are based takes place. Imposed non-exchange transactions are recognized as revenues in the period for which they were imposed. If the period of use is not specified, they are recognized as revenues when an enforceable legal claim to the revenues arises or when they are received, whichever occurs first Government-mandated and voluntary non exchange transactions are recognized as revenues when all applicable eligibility requirements have been met
In the fund financial statements, governmental funds are presented using the current financial resources measurement focus. This means that only current assets and current liabilities are generally included on their balance sheets. The reported fund balance (net current assets) is considered to be a measure of "available spendable resources." Governmental fund operating statements present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. Accordingly, they are said to present a summary of sources and uses of "available spendable resources" during a period.
- 16 - CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued}
(1) Summary of Significant Accounting Policies, (Continued)
(b) Basis of Accounting and Measurement Focus, (Continued)
Governmental Funds, (Continued)
Non-current portions of long-term receivables due to governmental funds are reported on their balance sheets in spite of their spending measurement focus. Special reporting treatments are used to indicate, however, that they should not be considered "available spendable resources," since they do not represent net current assets. Recognition of governmental fund type revenues represented by noncurrent receivables are deferred until they become current receivables. Noncurrent portions of other long-term receivables are offset by fund balance reserve accounts.
Because of their spending measurement focus, expenditure recognition for governmental fund types excludes amounts represented by noncurrent liabilities. Since they do not affect net current assets, such long-term amounts are not recognized as governmental fund type expenditures or fund liabilities.
Amounts expended to acquire capital assets are recorded as expenditures in the year that resources were expended, rather than as fund assets. The proceeds of long-term debt are recorded as other financing sources rather than as a fund liability. Amounts paid to reduce long-term indebtedness are reported as fund expenditures.
When both restricted and unrestricted resources are combined in a fund, expenses are considered to be paid first from restricted resources, and then frorn unrestricted resources.
(c) Fund Classificat'1ons
The following funds are presented as major funds in the accompanying basic financial statements:
Project Areas 1 and 2 Debt Service Funds: are used to account for the payment of interest and principal on the Agency's tax allocation bonds. The principal sources of revenue of these funds are incremental property taxes and investment income.
- 17 - CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies, (Continued)
(c) Fund Classifications. (Continued)
Project Areas 1. 2. 3 and 4 Capital Projects Funds: Capital Projects Funds are used to account for all revenues and costs of implementing the redevelopment projects in accordance with the California Community Redevelopment Law, including acquisition of properties, cost of site improvements and other costs that benefit the Project Areas as well as administrative expenses incurred in sustaining Agency activities.
Low-and-Moderate-Income Housing Capital Project Fund: was established to increase and improve the supply of low-and moderate-income housing within the community. The primary source of funds has been the contribution of 20% of incremental property tax revenues generated by the Redevelopment Project Areas.
(d) Cash and Investments
The City pools cash and investments of all funds, except for assets held by fiscal agents. Each fund's share in this pool is displayed in the accompanying financial statements as cash and investments.
Investments are reported in the accompanying balance sheet at fair value, except for certain certificates of deposit and investment contracts that are reported at cost. These investments are not transferable and they have terms that are not affected by changes in market interest rates.
Changes in fair value that occur during a fiscal year are recognized as uses of money and property reported for that fiscal year. Uses of money and property also reports interest earnings, rental income, and any gains or losses realized upon the liquidation, maturity, or sale of investments. Interest income earned by the pooled investments is allocated to the various funds based on each fund's average cash and investment balance.
- 18- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies, (Continued)
(e) Property Taxes
Incremental property tax revenues are established pursuant to California Community Redevelopment Law and result from the excess of taxes levied and collected each year in a designated project area over and above the amount which would have been produced, at current rates, by the assessed value as shown on the last equalized property tax assessment roll prior to the effective date of the ordinance of the City Council, acting as the Agency governing board, establishing the project area.
Incremental property taxes are considered as revenues of the project area when they become both measurable and available. The Agency considers property taxes available if they are collected within sixty days after year-end.
Under terms of the covenants of the project area's tax allocation bond agreements, all incremental property taxes arising from the project area are to be deposited, when collected, into a designated special account administered by an independent fiscal agent and pledged to the payment of the principal and interest on the bonds, subject to the terms of the Agency's bond agreements and resolutions.
(f) General Budget Policies
The Agency Board (Board) approves each year's budget submitted by the Executive Director prior to the beginning of the new fiscal year. Public hearings are conducted prior to its adoption by the Board. Supplemental appropriations, where required during the period, are also approved by the Board. In most cases, expenditures may not exceed appropriations at the fund level. It is the practice of the Board to give Finance staff some discretion with respect to budget amounts for year end purposes. All operating budget appropriations lapse at the end of the fiscal year. Budgets are adopted on a basis consistent with generally accepted accounting principles (GAAP).
(g) Land Held for Resale
Land held for resale represents land purchased by the Agency to further the Redevelopment Plan. Such land is recorded at the lower of acquisition cost or estimated net realizable value, once that amount becomes determinable by entering into a contract. Fund balance is reserved for such land held for resale at year-end as such recorded balances are not immediately subject to cash
- 19 - liquidation and therefore do not represent a readily expendable resource. CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(1) Summary of Significant Accounting Policies, (Continued)
(h) Use of Estimates
The preparation of the Agency's 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 financial statements and the reported amounts of revenue and expenditures during the reporting period. Actual results could differ from those estimates.
(2) Cash and Investments
Cash and investments as of June 30, 2009 are classified in the accompanying financial statements as follows:
Statement of net assets:
Cash and investments $130,941,614 Cash with fiscal agent 33,529,653
Total cash and investments $164 471 267
Cash and investments as of June 30, 2009 consist of the following:
Cash on hand $ 500 Deposits with financial institutions 53,280,442 Investments 111 190 325
Total cash and investments $164 471 267
- 20- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(2) Cash and Investments, (Continued)
Investments Authorized by the California Government Code and the City's Investment Policy
The table below identifies the investment types that are authorized for the City by the California Government Code and the City's investment policy. The table also identifies certain provisions of the California Government Code (or the City's investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by fiscal agent that are governed by the provisions of debt agreements of the Agency, rather than the general provisions of the California Government Code or the City's investment policy.
Authorized by Maximum Maximum Investment Types Investment Maximum Percentage Investment Authorized by State Law Policy Matur"1ty* of Portfolio* In One Issuer*
Local Agency Bonds No N/A N/A N/A U.S. Treasury Obligations Yes 5 years None None U.S. Agency Securities Yes 5 years None None Banker's Acceptances Yes 180 days 30% 30% Commercial Paper Yes 270 days 25% 10% Negotiable Certificates of Deposit Yes 5 years 30% None Repurchase Agreements No N/A N/A N/A Reverse Repurchase Agreements No N/A N/A N/A Medium-Term Notes No N/A N/A N/A Mutual Funds No N/A N/A N/A Money Market Mutual Funds No N/A N/A 10% Mortgage Pass-Through Securities No N/A N/A N/A County Pooled Investment Funds No N/A N/A N/A Local Agency Investment Fund Yes N/A None $40 million per account JPA Pools (other investment pools) No N/A N/A N/A
* Based on state law requirements or investment policy requirements, whichever is more restrictive.
- 21 - CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(2\ Cash and Investments, (Continued)
Investments Authorized by Debt Agreements
Investments of debt proceeds held by fiscal agent are governed by provisions of the debt agreements, rather than the general provisions of the California Government Code or the City's investment policy. The table below identifies the investment types that are authorized for investments held by fiscal agent. The table also identifies certain provisions of these debt agreements that address interest rate risk, credit risk, and concentration of credit risk.
Maximum Maximum Authorized Maximum Percentage Investment Investment Type Maturity Allowed In One Issuer
Local Agency Bonds None None None U S. Treasury Obligations None None None U.S. Agency Securities None None None Banker's Acceptances 1 year None None Commercial Paper 270 days None None Negotiable Certificates of Deposit None None None Repurchase Agreements 30 days None None Money Market Mutual Funds N/A None None Local Agency Investment Fund N/A None None Investment Agreements N/A None None
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. One of the ways that the Agency manages its exposure to interest rate risk is by purchasing a combination of shorter term and longer term investments and by timing cash flows from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity needed for operations.
- 22- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(2) Cash and Investments, (Continued)
Information about the sensitivity of the fair values of the Agency's investments (including investments held by fiscal agent) to market interest rate fluctuations is provided by the following table that shows the distribution of the Agency's investments by maturity:
Remaining Maturing (in Months) 12 Months 13 to 24 25 to 36 Investment Type Total Or Less Months Months
State investment pool $11,468,512 11 ,468,512 Federal agency securities 66,192,160 5,843,980 46,345,000 14,003,180 Held by fiscal agent: Federal agency securities 2,859,918 2,859,918 Money market funds 30,669,735 30,669,735
Total ~ 11 190 325 5Q 842 145 "16 345 OQQ 14003180
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the minimum rating required by (where applicable) the California Government Code, the Agency's investment policy, or debt agreements, and the actual rating as of year end for each investment type.
Rating as of Year End Minimum Legal Investment Type Total Rating AAA Not Rated
State investment pool $ 11,468,512 N/A 11,468,512 Federal agency securities 66,192,160 AAA 66,192,160 Held by fiscal agent: Federal agency securities 2,859,918 AAA 2,859,918 Money market funds 30,669,735 AAA 30,669,735
Total $111 190 325 99,721 813 11 468 512
- 23- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(2) Cash and Investments, (Continued)
Concentration of Credit Risk
The investment policy of the Agency contains no limitations on the amount that can be invested in any one issuer beyond that stipulated by the California Government Code. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of total Agency investments are as follows:
Investment Type Reported Amount
Federal Home Loan Bank Federal agency securities $29,188,980 Federal Home Mortgage Corp. Federal agency securities 19,003,180 Federal Farm Credit Bank Federal agency securities 14,000,000 Federal National Mortgage Assoc. Federal agency securities 4,000,000
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The California Government Code and the Agency's investment policy do not contain legal or policy requirements that would limit the exposure to custodial credit risk for deposits or investments, other than the following provision for deposits: The California Government Code requires that a financial institution secure deposits made by state or local governmental units by pledging securities in an undivided collateral pool held by a depository regulated under state law (unless so waived by the governmental unit). The market value of the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the public agencies. California law also allows financial institutions to secure Agency deposits by pledging first trust deed mortgage notes having a value of 150% of the secured public deposits. As of June 30, 2009, the Agency's investments in the following investments types were held by the same broker-dealer (counterparty) that was used by the Agency to buy the securities:
Investment Type Reported Amount
Federal agency securities $66,192,160
- 24- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(2) Cash and Investments, (Continued)
For investments identified herein as held by fiscal agent, the fiscal agent selects the investment under the terms of the applicable trust agreement, acquires the investment, and holds the investment on behalf of the reporting government.
Investment in State Investment Pool
The Agency is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by the California Government Code under the oversight of the Treasurer of the State of California. The fair value of the Agency's investment in this pool is reported in the accompanying financial statements at amounts based upon the Agency's pro-rata share of the fair value provided by LA IF for the entire LAI F portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.
- 25- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(3) Capital Assets
A summary of changes in capital assets during the year ended June 30, 2009 is as follows:
Balance at Balance at July 1, 2008 Additions Deletions June 30, 2009
Capital assets being depreciated: Building and improvements $29,17 4, 042 (90) 29,173,952 Machinery and equipment 134 823 134 823 Total capital assets being depreciated 29,308,865 29,308,775 Less accumulated depreciation for: Buildings and improvements (9,946,820) (583,479) (1 0,530,299) Machinery and equipment (98, 709) (2,515) (101,224) Total accumulated depreciation (10,045,529) (585,994) (1 0.631 ,523)
Total capital assets being depreciated, net 19,263,336 (585,994) @2) 18,677,252
Capital assets not being depreciated: Construction-in-progress 880,658 - - 880 658
Total capital assets, net ~19 263 336 294;664 (90) 1~1Q
Depreciation expense is charged to the following function: Low and moderate housing and economic development $585 994
Construction-in-progress as of June 30, 2009 consists of improvements to the Community Center.
- 26- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(4) Long-Term Liabilities
The following is a summary of changes in long-term liabilities for the year ended June 30, 2009:
Balance at Balance at Amount due Amount due July 1, 2008 Additions Retirements June 30 2009 within one year after one year
Bonded debt tax allocation bonds $128 570 863 22 810 000 3.610 000 147 770 863 3 765.000 144.005 863
Total bonds payable, net S128 51],863 ~Q_QQQ 3 _61 0 DOD 142 ll0.Jl6~ 3 765 000
Bonds payable at June 30, 2009 consisted of the following: Balance at June 30, 2009 Redevelopment Project Area 1:
2003B Tax Allocation Bonds
In December 2003, the Carson Redevelopment Agency issued $32,495,863 of Tax Allocation Bonds, Series 2003B for Redevelopment Area No. 1 to fund redevelopment projects within the project area. Principal installments are due October 1, 2004 and then begin on October 1, 2017 annually ranging from $466,575 to $3,940,000 plus interest at 2.0% to 5.25% through October 2034. As of June 30, 2009, the reserve requirement for the bonds was $3,359,380. The balance in the reserve account as of June 30, 2009 was $1 ,402,083. $ 32,260,863
2003 Tax Allocation Refunding Bonds
In January 2003, the Carson Redevelopment Agency issued $3,155,000 of Tax Allocation Refunding Bonds, Series 2003 for Redevelopment Area No. 1 to partially advance refund outstanding 1992 series tax allocation bonds. Principal installments are due annually ranging from $125,000 to $215,000 plus interest at 2.0% to 5.25% through October 2016. The reserve for the bonds was fully funded in the form of a surety bond as of June 30, 2009. 2,290,000
"27" CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(4) Long-Term Liabilities, (Continued) Balance at June 30, 2009 2001 Tax Allocation Refunding Bonds
In July 2001, the Carson Redevelopment Agency issued $28,625,000 of Tax Allocation Refunding Bonds, Series 2001 for Redevelopment Project Area No. 1 to advance refund $14,160,000 of the outstanding 1992 Tax Allocation Refunding Bonds and $15,000,000 of the outstanding Tax Allocation Bonds, Series 1993B, establish a reserve account for the bonds, and to pay the cost of issuing the bonds. Principal installments are due annually ranging in amounts from $780,000 to $2,775,000 plus interest at 2.7% to 5.5% through October 1, 2016.
Of the 2001 series proceeds, $31,17 4,303 were used to purchase U.S. Government securities to advance refund a portion of the 1992 series and advance refund in full the 1993B series. Those securities were placed in an irrevocable trust with an escrow agent to provide for all future debt service payments on $14,160,000 of the 1992 series and the entire outstanding balance of the 1993B series in the amount of $15,000,000. As a result, the portion of the 1992 series and the entire 1993B series tax allocation bonds are considered to be defeased. The corresponding liabilities for the $14,160,000 and $15,000,000, respectively, have been removed from the balance sheet.
The reserve for the bonds was fully funded in the form of a surety bond as of June 30, 2009. 18,585,000
- 28- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(4) Long-Term Liabilities, (Continued)
Balance at June 30 2009 2009A Tax Allocation Bonds
On June 23, 2009, the Carson Redevelopment Agency issued $22,810,000 of Tax Allocation Bonds, Series 2009A for Redevelopment Area No. 1 to fund redevelopment projects within the project area. Principal installments are due and begin October 1, 2010 annually ranging from $290,000 to $3,350,000 plus interest at 0.98% to 6.23% through October 2036. As of June 30, 2009, the reserve requirement for the bonds was $2,372,522. The balance in the reserve account as of June 30, 2009 was $1,774,320. 22,810.000
Subtotal Redevelopment Project Area 1 75,945,863
Redevelopment Project Area 2:
2003A Tax Allocation Refunding Bonds
In January 2003, the Carson Redevelopment Agency issued $18,500,000 of Tax Allocation Refunding Bonds, Series 2003A for Redevelopment Project Area No. 2 to advance refund a portion of outstanding 1993 Tax Allocation Refunding Bonds. Principal installments are due annually ranging from $470,000 to $7,015,000 plus interest at 2.0% to 5.25% through October 2020. The reserve for the bonds was fully funded in the form of a surety bond as of June 30, 2009. 14,625,000
2003B Tax Allocation Refunding Bonds
In July 2003, the Carson Redevelopment Agency issued $4,195,000 of Tax Allocation Refunding Bonds, Series 2003B for Redevelopment Area No. 2 to fully advance refund outstanding 1993 series tax allocation refunding bonds. Principal installments are due annually ranging from $125,000 to $290,000 plus interest at 2.5% through October 2023. The reserve for the bonds was fully funded in the form of a surety bond as of June 30, 2009. 3,395,000
- 29- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(4) Long-Term Liabilities, (Continued) Balance at June 30, 2009 2003C Tax Allocation Bonds
In December 2003, the Carson Redevelopment Agency issued $11,800,000 of Tax Allocation Bonds, Series 2003C for Redevelopment Area No. 2 to fund redevelopment activities within the project area. Principal installments are due annually ranging from $440,000 to $2,385,000 plus interest at 2.0% to 4.5% through October 2016. As of June 30, 2009, the reserve balance was $812,363. 9,935,000
2007A Tax Allocation Refunding Bonds
In October 2007, the Carson Redevelopment Agency issued $16,845,000 of Tax Allocation Refunding Bonds, Series 2007A for Redevelopment Project Area No. 2 to advance refund $14,925,000 of the outstanding 20030 Tax Allocation Refunding Bonds, establish a reserve account for the bonds and to pay the cost of issuing the bonds. Principal installments are due annually ranging in amounts from $105,000 to $1,655,000 plus interest at 0.5% to 5.3% through January 1, 2036.
Of the 2007 A series proceeds, $16,361,635 were used to purchase U.S. Government securities to advance refund in full the 20030 series. Those securities were placed in an irrevocable trust with an escrow agent to provide for all future debt service payments on the entire outstanding balance of $14,925,000. As a result, the entire 20030 series tax allocation bonds are considered to be defeased. The corresponding liabilities for the $14,925,000 have been removed from the balance sheet. The advance refunding resulted in an economic gain (difference between the present value of the debt service payments on the old and new debt) of $611,384 and a reduction of total debt service payments of $98,889.
As of June 30, 2009, the reserve requirement for the bonds was $1,459,134. The balance in the reserve account as of June 30, 2009 was $1,695,100. 16,845,000
Subtotal Redevelopment Project Area 2 44,800,000
- 30- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(4) Long-Term Liabilities, (Continued)
Balance at June 3D, 2D09
Redevelopment Project Area 4:
2DD6 Tax Allocation Bonds
In December 2DD6, the Carson Redevelopment Agency issued $28,000,000 of Tax Allocation Bonds, Series 2006 for Redevelopment Area No. 4 to fund redevelopment projects within the project area. Principal installments are due and begin October 1, 2D07 annually ranging from $385,DDD to $1 ,485,000 plus interest at 3.5% to 4.25% through October 2041. The reserve requirement for the bonds was satisfied in the form of a surety bond as of June 30, 2DD9. 27,025,DDO
Subtotal Redevelopment Project Area 4 27 025 DOD
Total Redevelopment Agency Tax Allocation Bonds Payable $147 770 863
- 31 - CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(5) Debt Service Requirements to Maturity
The following schedule summarizes the debt service to maturity requirements for bonds outstanding as of June 30, 2009:
Project Area 1 Project Area 1 Project Area 1 2003B Tax Allocation 2003 Tax Allocation 2001 Tax Allocation Year Ending Refunding Bonds Refunding Bonds Refunding Bonds June 30. Principal Interest Principal Interest Principal Interest
2010 1 ,392,213 140,000 92,038 1,930,000 994,026 2011 1,392,213 145,000 87,669 2,025,000 901,900 2012 1,392,213 150,000 82,687 2,130,000 804,650 2013 1,392,213 155,000 77,253 2,235,000 687,500 2014 1 ,392,213 160,000 71,444 2,365,000 564,576 2015-2019 9,080,000 6,500,377 895,000 252,070 7,900,000 884,676 2020-2024 12,286,075 5,845,938 645,000 45,672 2025-2029 4,649,268 8,136,233 2030-2034 6 245 520 6 548 481
$32 26Q 863 33 ,99_2,J!JM 2 29Q 000 ZillL8.3~ 18 585 QQQ 4 837 328
Project Area 1 2009A Tax Year Ending Allocation Bonds June 30. Principal Interest
2010 $ 411,613 2011 375,000 1,438,646 2012 380,000 1,426,459 2013 405,000 1 ,412,209 2014 415,000 1,396,009 2015-2019 2,505,000 6,670,388 2020-2024 5,425,000 5,869,198 2025-2029 4,265,000 3,657,188 2030-2034 2,275,000 2,860,313 2035-2036 6,765,000 1 141 763
$22 810 000 26.283~ll!ll
- 32- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(5) Debt Service Requirements to Maturity, (Continued)
Project Area 2 Project Area 2 Project Area 2 Year 2003A Tax Allocation 2003B Tax Allocation 2003C Tax Allocation Ending Refunding Bonds Refunding Bonds Refunding Bonds June 30 Principal Interest Principal Interest Principal Interest
2010 $ 730,000 643,769 180,000 126,669 380,000 422,019 2011 750,000 621,088 180,000 122,169 400,000 402,019 2012 775,000 593,400 185,000 117,219 415,000 388,324 2013 810,000 561,700 195,000 111,669 420,000 373,624 2014 840,000 529,750 200,000 15,331 435,000 356,224 2015-2019 4,730,000 2,105,873 1,110,000 415,002 2,470,000 1,497,245 2020-2024 4,802,000 817,125 1,345,000 176,096 5,415,000 893,275 2025-2029 1 188 000 66 000
:1>11,625 000 £,9:38 705 3 395 OOQ J 084J_55 ll.,Q,3Ji,QQ~ 4~,Lill
Project Area 2 Project Area 4 Year 2007 A Tax Allocation 2006 Tax Ending Refunding Bonds Allocation Bonds June 30 Principal Interest Principal Interest
2010 $ 765,100 405,000 1,127,985 2011 105,000 765,100 420,000 1,110,135 2012 115,000 760,900 435,000 1,091,648 2013 115,000 756,300 460,000 1,073,248 2014 125,000 751,700 475,000 1,054,248 2015-2019 685,000 3,681,300 2,665,000 4,978,688 2020-2024 835,000 3,531,431 3,200,000 4,414,063 2025-2029 4,720,000 7,812,973 3,905,000 3,670,378 2030-2034 6,910,000 1 ,762,335 4,825,000 2,705,875 2035-2039 3,235,000 232,274 5,975,000 1,503,625 2040-2041 4.260 000 197 325
$J(3,845J2QO .2JUJ1 9 4_13 27 025~000 2UZZ21ll
- 33- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(6) Pledged Revenue
The Agency has outstanding debt issuances that are collateralized by pledged tax increment revenue. The term of the commitment of pledged revenues and the purposes for which the proceeds of these debt issuances were utilized are disclosed in the debt descriptions provided herein. The amount of the remaining commitment of the pledge is equal to the amount of the remaining debt service to maturity of the related debt issuances as disclosed above. For the current year, debt service payments as a percentage of the pledged gross revenue is indicated in the table below.
Debt Service as Annual Debt a Percentage of Description of Annual Amount of Service Pledged Pledged Revenue Pledged Revenue Payments Revenue
Tax increment- Project Area 1 $10,315,387 $4,497,918 44% Tax increment- Project Area 2 10,189,972 3,392,670 33% Tax increment- Project Area 4 3,332,266 1,538,379 46%
(7) lnterfund Receivables, lnterfund Payables, and lnterfund Transfers
lnterfund advances
lnterfund advances, including interest, consisted of the following as of June 30, 2009:
Receivable Payable
Capital Projects Funds: Redevelopment Project Area 2 $6,152,234 Redevelopment Project Area 4 6,152,234 (1)
Total $6 152 234 6 152 234
(1) In July 2003, the Carson Public Financing Authority entered into a purchase agreement with the Agency in the amount of $5,110,000. The Authority purchased the note form Capital Projects Redevelopment Area 4 to finance the acquisition of property for the rehabilitation of a certain project located within the Project Area. The loan has an interest rate of 5.6% and matures on October 1, 2023.
- 34- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(7) lnterfund Receivables, lnterfund Payables, and lnterfund Transfers, (Continued)
Due From/Due To Other Funds
Amounts due from and due to other funds as of June 30, 2009 consisted of the following: Due From Capital Projects Funds Low and Moderate Project Project Project Project Income Due To Area 1 Area 2 Area 3 Area 4 Housing Total
Capital Projects Funds: Project Area 1 $ 12,265 2,106 14,371 Project Area 2 81,523 9,710,979 9,792,502 Project Area 3 1,462 36,261 24,730 62,453 Project Area 4 3,100,000 349,719 3,449,719 Low and Moderate Income Housing 30 257 8 704 498 3,100,000 --- 11 834 755
Total ~J.13 242 ~148,52Sl _1 ~ 765 196, 3 124 730 2.JOO. 2.5,15);~Jl.O,
Current interfund receivables and payables were (1) short-term borrowings for land acquisition, (2) reimbursement of certain administrative costs, and (3) short-term borrowings for cash and investments.
- 35- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(7) lnterfund Receivables, lnterfund Payables, and lnterfund Transfers, (Continued)
lnterfund transfers during the year ended June 30, 2009 were as follows:
Transfers Out: Ca[>ital Projects Funds Low and Moderate Project Project . Project Project Income Transfers In: Area 1 Area 2 Area 3 Area 4 Housing Total
Debt Service Funds: Project Area 1 $6,422,007 6,422,007 Project Area 2 3,213,714 3,213,714 Project Area 4 1,538,379 1,538,379 Capital Projects Funds: Project Area 1 38,204 1,714,619 1,752,823 Project Area 2 3,100,953 3,100,953 Project Area 3 2,362 4,498 6,860 Low and Moderate Income Housing 2 953 176 2 477 505 989 141 951 807 7 371 629
Total $9 375 183 ~,Z31..L85 lllliL14J 2All\l;i86 ~Jl20 07J) 2.3A06,~Jl5
lnterfund transfers were made: (1) to transfer 20% of tax ·Increment revenues to the Low and Moderate Income Housing Capital Projects Fund; (2) to transfer monies for debt service payments on outstanding bonds; (3) to correct prior transfers; (4) to correct loans receivable not pertaining to the low/mod funds, and (5) to transfer bond reserve cash to the Project Area 1 Debt Service Fund.
(8) Expenditures Exceeding Appropriations
Expenditures for the year ended June 30, 2009 exceeded the appropriations of the following funds of the City were as follows: Amount Final Exceeding Budget Appropriations
Capital Projects Fund: Project Area 3 $3,000,000 3,569,558 569,558
- 36- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(9) Retirement Plan
The Agency, as part of the City, contributes to the California Public Employees' Retirement System (CaiPERS), an agent multiple-employer retirement plan that acts as a common investment and administrative agent for cities in California. The Agency assumes its share of pension costs based upon rates established by CaiPERS for the City's general employees. No separate pension benefit obligation is calculated for the Agency; accordingly, no obligation is presented herein. Further information regarding the City's participation in CaiPERS may be found in the City's Comprehensive Annual Financial Report for the fiscal year ended June 30, 2009.
(10) Contingencies- Claims
In the ordinary course of business, there are outstanding various legal proceedings pending against the Agency. In the opinion of management, based upon the advice of counsel, liabilities arising from these proceedings, if any, will not have a material adverse effect on the financial condition of the Agency.
(11) Self-Insurance
In conjunction with the City, the Agency is self-insured for state unemployment insurance, dental insurance, and for long-term disability claims for the first 17 weeks of disability. Additionally, the Agency is self-insured for the first $250,000 for regular liability claims, the first $500,000 for Employment Practices Liability claims, and the first $1 ,000,000 for workers' compensation claims. The Agency carries insurance of individual general liability claims in excess of $250,000 to $15,000,000 ($250,001 - $10,000,000 with the Everest National Insurance Company and $10,000,001 to $15,000,000 with Clarendon American Insurance Company). The Agency carries insurance of individual workers' compensation claims in excess of $1,000,000 to the $25,000,000 limit with the Safety National Casualty Corporation. Information pertaining to the amounts accrued for claims payable including both reported claims and claims incurred but not reported may be found in the City's Comprehensive Annual Financial Report for the fiscal year ended June 30, 2009.
(12) Charges from the City of Carson
The Agency has entered into an agreement with the City for financial assistance, services, facilities and personnel support. The Agency reimburses the City based on full-time employees' gross salaries and benefits for all employees utilized by the Agency.
- 37- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(12) Charges from the City of Carson, (Continued)
Departmental overhead charges allocated by the City and other expenditures paid by the City on behalf of the Agency are based on actual cost.
For fiscal year ended June 30, 2009, the City and the Agency determined that $3,995,295 of City departmental overhead costs were applicable to the activities of the Agency. The Agency's allocable share has been recorded as a cost allocation from the City of Carson and has been included as economic development expenditures within the Capital Projects Funds.
(13) Low-and-Moderate-Income Housing
The Health and Safety Code Section 33334.2 requires a redevelopment agency to use at least 20% of tax increment revenues generated by a redevelopment project area to increase or improve the supply of low- and moderate-income housing in the community. As of June 30, 2009, the Agency has accumulated $21,114,133 of unexpended tax increment funds that have been reserved and set aside for future low-and moderate-income housing as shown in the accompanying statement of net assets.
(14) Commitments Under Development Agreements
Altmanshofer Family Trust On June 19, 2001, the Carson Redevelopment Agency entered into an agreement with David John Altmanshofer and Marlene Clare Altmanshofer, as trustees of the Altmanshofer Family Trust ("Developer") to fund the acquisition and construction of property in the amount of $1 ,685,000. Of the total amount, the forgivable loan of $635,000 bears interest at 6% and are due July 15, 2012, will be forgiven in an amount equal to 50% of incremental annual sales tax generated above the amount of $65,000. The non-forgivable amount of $1 ,050,000 bears annual interest of 6% and is due on July 15, 2009.
Carson Terrace, LP. In June 1999, the Carson Redevelopment Agency entered into an Owner Participation Agreement with Carson Terrace, LP., a California limited partnership ("Developer") to provide development of very low, lower, and moderate income senior housing on property located in Carson in the amount of $2,205,000. An amendment dated December 15, 2000 increased the amount to $2,243,587 with a simple interest of 3% over the term of the construction note. The amount of Developer loan repayments are equal to 50% of the positive cash flow generated by the project.
- 38- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(14) Commitments Under Development Agreements, (Continued)
Carson Mall Partners In December 1991, the Carson Redevelopment Agency entered into an owner participation agreement with Carson Mall Partners, a California general partnership ("Developer") and IKEA Property, Inc., a Delaware corporation to renovate, improve and expand the mall and replace the Broadway department store with an IKEA store. The Developer had entered into a lease arrangement with IKEA, and IKEA had entered into a sublease to the Agency. In consideration for the sublease, the Agency paid an initial rent payment in the sum of $1,000,000 and after the opening of the IKEA store on site, the Agency agreed to pay an annual rent which is the lesser of $478,187 or an amount equal to the portion of the local sales tax received by the City from the IKEA store. The term of the sublease expires 19 years after IKEA opened for business or November 2011.
BP West Coast Products LLC
On November 15, 2005, the Carson Redevelopment Agency (Agency) entered into an agreement with BP West Coast Products, LLC, a Delaware limited liability company (Developer), for improvements within the merged and amended project area. · The proposed project will result in development of a new office/business park campus of up to 280,000 square feet in a building area in potential of three different phases. The first phase will consist of an office building of approximately 125,000 square feet.
The Agency agreed to sell the 4.5 acre development parcel to the Developer for the sum of one dollar ($1.00) and a note amount equal to two million nine hundred sixty thousand dollars ($2,960,000). The performance promissory note is equal to the fair market value of the development parcel and the Agency's cash contribution of two hundred ten thousand dollars ($210,000) toward the required signal construction cost of the project. The term shall be for fifteen (15) years and simple interest shall accrue at two (2) percent. Each year seventy-five percent (75%) of the increased site tax increment will be credited against any amounts outstanding under the performance promissory note.
Tadashi Kajikawa and Misato Kajikawa
On June 7, 2006 the Carson Redevelopment Agency (Agency) entered into a disposition and development agreement with Tadashi Kajikawa and Misato Kajikawa (Owner), Trustees of the Kajikawa Trust, dated July 20, 1988, where the Agency has agreed to transfer a land parcel to the owner and the owner has agreed to lease both
- 39- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(14) Commitments Under Development Agreements, (Continued)
Tadashi Kaiikawa and Misato Kajikawa, (Continued)
parcels back to a developer, selected by the Agency, for a long term ground lease. The project will provide an approximately 6,000 square foot restaurant and 4,000 square foot retail use. On March 18, 2008, the Agency entered into an Exclusive Negotiation Agreement with La Plaza Properties, LLC for development of the site.
501 Albertoni, LLC
On May 16, 2006, the Carson Redevelopment Agency (Agency) entered into an agreement with 501 Albertoni, LLC, a Delaware limited liability company (Developer), for improvements within project area 1. The proposed project will result in the development of a new commercial retail center of approximately 40,000 square feet in building area including a 6,500 square foot freestanding El Pescador restaurant, and an additional 33,500 square feet of commercial space.
The Agency agrees to sell the land to Developer in the amount of $3,049,200. Upon the close of escrow the Developer will make a cash payment of $750,000 to the Agency. A promissory note and deed of trust will be issued for the remaining $2,299,200. After the completion of the project $799,000 will be forgiven. The remaining of $1 ,500,000 will be tied to the operation of the El Pescador restaurant - each year the restaurant is in operation the amount of the note will be reduced by 20%. On January 31, 2008, the Agency sold the property to 501 Albertoni, LLC.
Carson Real Estate Leasing, LLC
On May 18, 2004, the Carson Redevelopment Agency (Agency) entered into a disposition and development agreement with the Carson Real Estate Leasing, LLC, a California limited liability company (Developer) for the development of approximately 92,000 square foot new and used car sales facility in the merged and amended project area. The Agency agreed to sell the land to the Developer for a total purchase price of $8,581,718. The purchase price consists of a $4,666,848 cash payment and a promissory note of $3,914,870- the Agency's subsidy to the project. The term shall be for 20 years with an option to extend for an additional five years. Each year, an amount equal to 50% of the sales tax generated from the site is in excess of the average sales tax amount generated in year 2001-2003 shall be credited towards the payment of the principal amount and any interest accrued.
- 40- CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(14) Commitments Under Development Agreements, (Continued)
Carson Marketplace, LLC
On July 25, 2006, the Carson Redevelopment Agency (Agency) entered into the Owner Participation Agreement (OPA) with Carson Marketplace LLC, a Delaware limited liability company, to effectuate the redevelopment plan for Redevelopment Project Area No. 1 by providing for public improvements and the remediation of the 157 -acre portion of the total 168-acre property. Under the OPA, the Agency would commit to providing $110 million in public financial assistance. In addition, the Agency will finance the improvements to the 1-405/Avalon Boulevard on-off ramp system. Participant will contribute $25 million towards this project. During fiscal year 2008/2009, $59 million in financial assistance was granted to the developer.
HREG Genesis Carson LLC
On November 21, 2006, the Carson Redevelopment Agency (Agency) approved the Owner Participation Agreement (OPA) between the Agency and HREG Genesis Carson, LLC for the development of Phase II of the South Bay Pavilion Mall located in Project Area No. 1. Phase II includes the attraction of national tenants, renovation of tenant spaces, and modification of the facade. Pursuant to this the OPA, the Agency will provide $5.0 million financial assistance to the Participant in the form of a forgivable loan. Loan funds will be disbursed once the conditions precedent to the financial assistance have been satisfied or waived. Payments will be made based on the written draw request from the participant.
Thomas Safran
On March 18, 2008, the Carson Redevelopment Agency entered into three separate agreements with Thomas Safran, an individual, for a mixed use development with two major components: a senior component that includes 86 units of senior affordable housing with underground parking and a commercial component that includes 25,000 square feet of ground floor retail and restaurant space with surface parking and 150 units of for-sale housing with underground parking. This large scale development will be located on a 4.5 acre site at the southeast corner of Carson Street and Avalon Boulevard. The Agency has agreed to offer up to $13,900,000 in financial assistance in the form of a residual receipts loan for the senior housing component and $7,500,000 in financial assistance in the form of a grant for the commercial component. The Agency has agreed to sell at fair market value an agency owned property immediately adjacent to Mr. Safran's property. The Agency owned property and Mr. Safran's property together constitute the full developable site.
- 41 - CARSON REDEVELOPMENT AGENCY
Notes to the Basic Financial Statements
(Continued)
(15) Prior Period Adjustments
During fiscal year 2007, the Agency overstated the loss reflected for the sale of the property located at 2254 E. 223rd Street because the Agency recorded the sale of the entire parcel of property instead of just the portion of land that was actually sold.
In addition, a correction is reflected in the accompanying financial statements to treat loans due from developers consistently. In the prior years, the Agency has offset certain loans against deferred revenue while treating other loans with similar characteristics differently by not offsetting the receivable with a deferred revenue liability. Finally, as a result of an audit of the First-Time Homebuyers Program, the Agency recorded outstanding loans receivable for its First-Time Homebuyer loan program and accrued interest receivable on the Agency's outstanding loans receivable as of July 1, 2008.
The following is a summary of the effect of these adjustments:
Governmental Funds Project Project Project Low and Area 1 Area 2 Area 3 Moderate Governmental Capital Capital Capital Income [lctivities Projects Projects Projects Housing Beginning balance, as previously reported $149,613,437 76,065,578 48,758,112 39,695,531 41,814,947
Adjustment for land held for Resale 3,229,999 3,229,999
Adjustment for deferred revenue related to loans receivable and accrued interest on loans 4 813 496 (2 994 808) (1 ,100 000) (2 955 000)
Beginning balance, as restated $157 656 932 73 07Jlj'J'Q iU)58 112 12,925.5aQ :lli,8.59.,.9A.Z
{16} Subseguent Event
In July 2009, the Carson Public Financing Authority issued $12,165,000 of Revenue Bonds, Series 2009, The bonds were issued to fund redevelopment activities within the Project Area and to fund a portion of the costs of the remediation of toxic conditions at the Carson Marketplace property in order to permit future development of the site. Interest on the bonds will be due on April 1 and October 1 in each year, commencing October 1, 2009. The bonds are secured by revenues of the Authority consisting primarily of base rental payments to be received by the Authority from the City of Carson under facility lease dated June 1, 2009 and installment payments to be received from the Agency under an Installment Payment Contract dated June 1, 2009.
- 42- SUPPLEMENTARY INFORMATION
-43- (This page intentionally left blank)
-44- CARSON REDEVELOPMENT AGENCY Project Area 1 Debt Service Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Year Ended June 30, 2009
Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Use of money and property $ 128,900 128,993 93
Total revenues 128,900 128,993 93
Expenditures: Debt service: Bond principal 3,170,000 1,970,000 1,200,000 Bond interest 3,127,918 2,527,918 600,000
Total expenditures 6,297,918 4,497,918 1,800,000
Excess (deficiency) of revenues over (under) expenditures (6,169,018) (4,368,925) 1,800,093
Other financing sources: Transfers in 6,169,018 6,422,007 252,989
Total other financing sources 6,169,018 6,422,007 252,989
Net change in fund balance $ 2,053,082 2,053,082
Fund balance, July 1, 2008 4,358,408
Fund balance, June 30, 2009 6,411,490
- 45- CARSON REDEVELOPMENT AGENCY Project Area 2 Debt Service Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Year Ended June 30, 2009
Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Use of money and property $ 20,000 20,991 991
Total revenues 20,000 20,991 991
Expenditures: Debt service: Bond principal 1,335,000 1,255,000 80,000 Bond interest 2,108,715 2,137,670 (28,955)
Total expenditures 3,443, 715 3,392,670 51,045
Excess (deficiency) of revenues over (under) expenditures (3,423, 715) (3,371 ,679) 52,036
Other financing sources: Transfers in 3,423,715 3,213,714 (210,001)
Total other financing sources: 3,423,715 3,213,714 (210,001)
Net change in fund balance $ (157,965) (157,965)
Fund balance, July 1, 2008 4,593,000
Fund balance, June 30, 2009 4,435,035
- 46- CARSON REDEVELOPMENT AGENCY Project Area 4 Debt Service Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual
Year Ended June 30, 2009
Variance with Final Budget Final Positive Budget Actual (Negative) Revenues $
Expenditures: Debt service: Bond principal 385,000 385,000 Bond interest 1 '153,379 1,153,379
Total expenditures 1,538,379 1,538,379
Excess (deficiency) of revenues over (under) expenditures (1 ,538,379) (1 ,538,379)
Other financing sources: Transfers in 1,538,379 1,538,379
Total other financing sources: 1,538,379 1,538,379
Net change in fund balance $
Fund balance, July 1, 2008
Fund balance, June 30, 2009
-47- CARSON REDEVELOPMENT AGENCY Project Area 1 Capital Projects Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual
Year Ended June 30, 2009 Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Property taxes $ 12,350,176 13,797,715 1,447,539 Use of money and property 4,038,679 3,311,684 (726,995)
Total revenues 16,388,855 17,109,399 720,544
Expenditures: Current: Economic development 55,515,763 43,034,592 12,481,171 Pass-through expenditures 282,402 1,851,411 (1 ,569,009) Capital improvement programs 28,334,391 21,621,544 6,712,847 Debt service: Bond issuance costs 234,980 (234,980)
Total expenditures 84,132,556 66,742,527 17,390,029
Excess (deficiency) of revenues over (under) expenditures (67,743,701) (49,633, 128) 18,110,573
Other financing sources (uses): Transfers in 1,752,823 1,752,823 Transfers out (8,639,053) (9,375, 183) (736,130) Transfers from the City of Carson 912,573 912,573 Proceeds from sale of land 4,312,879 (4,312,879) Bond proceeds 90,000,000 22,810,000 (67,190,000) Discount on bonds (390,683) (390,683)
Total other financing sources (uses) 85,673,826 15,709,530 (69,964,296)
Net change in fund balance $ 17,930,125 (33,923,598) (51 ,853, 723)
Fund balance, July 1, 2008, as restated 73,070,770
Fund balance, June 30, 2009 39,147,172
-48- CARSON REDEVELOPMENT AGENCY Project Area 2 Capital Projects Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Year Ended June 30, 2009
Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Property taxes $ 6,000,000 9,996,626 3,996,626 Use of money and property 5,369,240 2,831,852 (2,537,388) Miscellaneous 1,500,000 995 (1 ,499,005)
Total revenues 12,869,240 12,829,473 (39,767)
Expenditures: Current: Economic development 4,419,049 4,304,990 114,059 Pass-through expenditures 1,291,500 2,149,926 (858,426) Capital improvement programs 7,277,323 739,739 6,537,584
Total expenditures 12,987,872 7,194,655 5,793,217
Excess (deficiency) of revenues over (under) expenditures (118,632) 5,634,818 5,753,450
Other financing sources (uses): Transfers in 3,100,953 3,100,953 Transfers out (4,623,715) (5,731 ,785) (1 '108,070)
Total other financing sources (uses) (4,623,715) (2,630,832) 1,992,883
Net change in fund balance $ (4,742,347) 3,003,986 7,746,333
Fund balance, July 1, 2008, as restated 47,658,112
Fund balance, June 30, 2009 50,662,098
- 49- CARSON REDEVELOPMENT AGENCY Project Area 3 Capital Projects Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Year Ended June 30, 2009
Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Property taxes $ 2,515,589 4,695,703 2,180,114 Use of money and property 508,249 508,249
Total revenues 2,515,589 5,203,952 2,688,363
Expenditures: Current: Economic development 2,500,000 3,028,454 (528,454) Pass-through expenditures 500,000 541,104 (41,104)
Total expenditures 3,000,000 3,569,558 (569,558)
Excess of revenues over expenditures (484,411) 1,634,394 2,118,805
Other financing sources (uses): Transfers in 6,860 6,860 Transfers out (503,118) (989,141) (486,023)
Total other financing sources (uses) (503,118) (982,281) (479, 163)
Net change in fund balance $ (987,529) 652,113 1,639,642
Fund balance, July 1, 2008, as restated 42,925,530
Fund balance, June 30, 2009 43,577,643
-50- CARSON REDEVELOPMENT AGENCY Project Area 4 Capital Projects Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance- Budget and Actual
Year Ended June 30, 2009
Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Property taxes $ 3,690,596 4,759,034 1,068,438 Use of money and property 1,401,211 521,251 (879,960)
Total revenues 5,091,807 5,280,285 188,478
Expenditures: Current: Economic development 9,194,947 485,629 8,709,318 Pass-through expenditures 810,387 1,357,038 (546,651) Capital improvement programs 18,617,069 4,206,228 14,410,841 Debt service: Principal payments 1,500,000 1,500,000 Interest and fiscal charges 130,000 166,091 (36,091)
Total expenditures 30,252,403 6,214,986 24,037,417
Excess (deficiency) of revenues over (under) expenditures (25, 160,596) (934,701) 24,225,895
Other financing sources (uses): Land sale proceeds 1,592,085 (1 ,592,085) Transfers out (2,276,498) (2,490, 186) (213,688) Transfers to the City of Carson (121,186) (121,186)
Total other financing sources (uses) (684,413) (2,611 ,372) (1 ,926,959)
Net change in fund balance $ (25,845,00~ (3,546,073) 22,298,936
Fund balance, July 1, 2008 31,467,277
Fund balance, June 30, 2009 27,921,204
- 51 - CARSON REDEVELOPMENT AGENCY Low and Moderate Income Housing Capital Projects Fund
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Year Ended June 30, 2009
Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Use of money and property $ 1,971,951 978,601 (993,350) Miscellaneous 250,000 200,326 (49,674)
Total revenues 2,221,951 1 '178,927 (1 ,043,024)
Expenditures: Current: Economic development 33,427,760 7,689,077 25,738,683 Capital improvement programs 11,944,500 157,050 11 '787,450
Total expenditures 45,372,260 7,846,127 37,526,133
Excess (deficiency) of revenues over (under) expenditures (43, 150,309) (6,667 ,200) 36,483,109
Other financing sources (uses): Transfers in 4,911,272 7,371,629 2,460,357 Transfers out (4,820,070) (4,820,070)
Total other financing sources (uses) 4,911,272 2,551,559 (2,359, 713)
Net change in fund balance $ (38,239,037) (4, 115,641) 34,123,396
Fund balance, July 1, 2008, as restated 38,859,947
Fund balance, June 30, 2009 34,744,306
-52- COMPLIANCE SECTION
-53- (This page intentionally left blank)
-54- 2301 Dupont Drive, Suite 200 Irvine, California 92612 949-474-2020 ph 949-263-5520 fx www.mhm-pc.com
Board of Directors Carson Redevelopment Agency Carson, California
REPORT ON COMPLIANCE AND OTHER MATTERS AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
We have audited the financial statements of the governmental activities, each major fund and the aggregate remaining fund information of the Carson Redevelopment Agency as of and for the year ended June 30, 2009, which collectively comprise the Carson Redevelopment Agency's basic financial statements and have issued our report thereon dated February 22, 2010. 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 and Other Matters
As part of obtaining reasonable assurance about whether the Carson Redevelopment Agency's (the Agency) 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. Such provisions included those provisions of laws and regulations identified in the Guidelines for Comptroller Audits of California Redevelopment Agencies, issued by the State Controller and as 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 or other matters that are required to be reported under Government Auditing Standards.
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.
-55- Board of Directors Carson Redevelopment Agency Page Two
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 the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily disclose all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above.
We noted certain other matters we reported to the management of the Agency in a separate letter.
This report is intended solely for the information and use of the Board of Directors, the Agency's management, and the California State Controller's Office and is not intended to be and should not be used by anyone other than these specified parties.
Irvine, California February 22, 2010
-56- APPENDIX C
GENERAL INFORMATION RELATING TO THE CITY OF CARSON
Information contained in this APPENDIX C is presented as general background data. The Bonds are payable solely from the Housing Tax Revenues and other sources as described herein. The taxing power of the City of Carson, the State of California, or any political subdivision thereof is not pledged to the payment of the Bonds.
History
Carson was part of a Spanish Land Grant known as Rancho San Pedro that was deeded to Juan Jose Dominguez over 200 years ago. During the incorporation process, the community chose the name of “Carson” in honor of George Henry Carson, a member of the Dominguez family. The name “Dominguez,” also considered as a name for the newly incorporated city, is found often in the City, labeling a street, a park, and, most notably, a California State University. The City was incorporated as a general law city on February 20, 1968.
General
The City is a culturally diverse community that is located less than 20 miles south of downtown Los Angeles and is considered part of the South Bay section of Los Angeles County. Carson has grown from a population of 66,000 in 1968 to over 98,000 in 2010. Three annexations have increased the City’s size to 19.24 square miles.
Government and Administration
The City of Carson has a Council-Manager form of government, with an elected Mayor serving a four-year term, a Mayor Pro Tem, three Council members, and a City Manager. The City has had a directly elected mayor since April 1992. Council members are elected to alternating four-year terms. Other elected City officials include the City Clerk and City Treasurer, both of whom also serve four-year terms. The City government is operated on a civil service system of merit appointments and promotions. The positions of City Manager and City Attorney are appointed by, and serve at the pleasure of, the City Council. The General Managers are appointed by, and serve at the will of, the City Manager. All other positions are filled by appointment, based on structured competitive examinations. Currently, the City has 356 authorized full- time positions, which provide a wide range of municipal services. Currently, the City has 5 departments and 4 workgroups, which include, respectively, City Council, City Attorney, City Clerk, City Treasurer, City Manager, Administrative Services, Economic Development, Development Services and Public Services. In late 2002, the Economic Development Workgroup, due to increased activity and capacity, outgrew its facilities at City Hall and relocated to One Civic Plaza Drive, adjacent to the Carson Community Center.
Climate
Carson normally has mild temperatures year round and is naturally air-conditioned by westerly ocean breezes.
Population
As of January 1, 2010, 98,047 people reside in Carson and a little less than 10.5 million people reside in the County. The following chart illustrates the historical growth in the City and the County’s population.
C-1 ANNUAL POPULATION
Year County of (January 1) City of Carson Los Angeles 1970 72,358 7,041,980 1980 81,221 7,477,421 1990 85,000 8,832,500 2000 89,730 9,519,330 2006 97,610 10,202,094 2007 97,649 10,231,000 2008 97,660 10,285,296 2009 97,795 10,355,053 2010 98,047 10,441,080 ______Source: State of California, Department of Finance.
Assessed Valuation
For assessment and collection purposes, property is classified either as “secured” or “unsecured,” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State assessed-property and property, the taxes on which are a lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll”. Shown below is a summary of assessed valuations in the City for the fiscal years 2004-05 through 2010-11. CITY OF CARSON ASSESSED VALUATIONS Fiscal Years 2004-05 through 2010-11 (000s)
Fiscal Year Secured Unsecured Less Exemptions Total 2004-05 $ 9,430,453 $1,456,328 $ (92,176) $10,794,605 2005-06 10,374,404 1,384,829 (75,908) 11,683,325 2006-07 10,643,990 1,449,467 (80,506) 12,012,951 2007-08 11,408,061 1,417,615 (96,195) 12,729,481 2008-09 12,139,790 1,545,006 (102,451) 13,582,345 2009-10 12,049,552 1,480,216 (100,574) 13,429,194 2010-11 12,002,959 1,440,015 (105,555) 13,337,419 ______Source: Los Angeles County Assessor's Office – County SV-13 reports.
C-2 Employment
The following table shows civilian employment and unemployment in the labor market.
CIVILIAN LABOR FORCE EMPLOYMENT, UNEMPLOYMENT, AND UNEMPLOYMENT RATE (Annual Average)
Unemployment Year Area Labor Force Employment Unemployment Rate
2005 City 44,900 42,400 2,400 5.4 County 4,771,400 4,516,000 25,400 5.4 2006 City 45,100 42,900 2,200 4.8 County 4,797,400 4,568,200 229,300 4.8 2007 City 45,700 43,400 2,300 5.1 County 4,863,800 4,617,100 246,700 5.1 2008 City 46,300 42,800 3,500 7.5 County 4,924,500 4,557,300 367,200 7.5 2009 City 46,100 40,700 5,400 11.4 County 4,896,100 4,328,600 567,500 11.6 ______Note: The unemployment rate is calculated using unrounded data. Not seasonally adjusted. Source: Employment Development Department, Labor Market Information Division.
Regional Employment
The following table sets forth the annual average employment by industry within the Los Angeles- Long Beach-Glendale metropolitan statistical area within the County for the fiscal years 2005 through 2009. LOS ANGELES-LONG BEACH-GLENDALE METROPOLITAN STATISTICAL AREA (LOS ANGELES COUNTY) Employment By Industry (Annual Averages)
INDUSTRY 2005 2006 2007 2008 2009
Agriculture 7,400 7,600 7,500 6,900 6,200 Nonagricultural Industries 4,024,200 4,092,500 4,122,100 4,070,700 3,829,400 Natural Resources and Mining 3,700 4,000 4,400 4,400 4,100 Construction 148,700 157,500 157,600 145,200 116,500 Manufacturing 471,700 461,700 449,200 434,500 389,200 Trade, Transport. & Utilities 795,400 814,100 818,500 803,300 742,500 Wholesale Trade 219,300 225,700 227,000 223,700 204,100 Retail Trade 414,400 423,300 426,000 416,500 386,600 Finance and Insurance 166,200 169,000 165,800 156,300 145,900 Real Estate 53,600 55,500 55,300 54,300 52,600 Service Providing 3,400,100 3,469,300 3,510,900 3,486,700 3,319,700 Government 583,700 589,400 595,700 603,700 599,500 Total All Industries 4,031,600 4,100,100 4,129,600 4,077,600 3,835,600 ______Source: Labor Market Information Division of the California State Employment Development Department.
C-3 The following table sets forth the major employers within the City for 2009. CITY OF CARSON MAJOR EMPLOYERS (2009)
Number of Percent of Total Rank Employer Name Employees City Employment
1 BP West Coast Products 1,207 2.77% 2 Northrop Grumman 1,126 2.59 3 Golden Wheel Corp. 899 2.07 4 Lakeshore Equipment Co. Inc. 765 1.76 5 See’s Candy Shops Inc. 522 1.20 6 Target Corporation 518 1.19 7 Leiner Health Products 440 1.01 8 Bottling Group LLC 408 0.94 9 Pacific Bell 388 0.89 10 Canon Enterprises 355 0.82
Total 6,628 15.24% ______Source: City of Carson and State of California Employment Development Department.
Commercial Activity
A five-year summary of taxable transactions in the City is set forth below.
CITY OF CARSON VALUATION OF TAXABLE TRANSACTIONS (in thousands)
Year Retail Stores Total All Outlets
2005 1,265,392 1,762,183 2006 1,303,119 1,820,998 2007 1,296,821 1,853,014 2008 1,137,593 1,821,000 2009* 452,362 718,907 ______*Includes first and second quarters only. ______Source: State of California, Board of Equalization
C-4 Construction
A summary of the number and value of building permits issued in the City from fiscal year 2005-06 to fiscal year 2009-10 is shown in the following tabulation:
CITY OF CARSON BUILDING CONSTRUCTION VALUATION Fiscal Years 2005-06 through 2009-10
Building No. of Residential Nonresidential Fiscal Year Permits Dwelling Units Valuation Valuation Total Valuation 2005-06 1,292 211 $145,307,760 $355,358,380 $500,666,140 2006-07 1,178 462 97,939,100 329,576,530 427,515,630 2007-08 925 153 66,009,930 225,391,770 291,401,700 2008-09 800 71 44,328,078 472,731,062 517,059,140 2009-10 809 49 47,947,350 124,532,079 172,479,429 ______Source: City of Carson Building Department
Development
There are large modern petro-chemical, electronics, automobile, aerospace, trucking and high-tech facilities located in Carson. A number of multinational companies have their corporate headquarters in town. The City has an active Chamber of Commerce that works with the City to retain and attract business. The emphases on quality developments - both commercial and residential - along with a citywide beautification effort, have had a positive impact on the City. In recent years, well-known builders have chosen Carson as a location for their projects. As a result, several new developments have recently been completed or are in the planning or construction phases.
The City has experienced activity in new residential construction. Home ownership is near 80% within the City compared to less than 50% in Los Angeles County. Recent developments include the Sea Country Villages of Brighton and Strathmore project. This project consists of 162 single-family homes within a gated community on a 20.2 acre property located at the corner of Main and 228th Streets. In addition, other completed projects are Carson Homes, a development comprised of 15 single-family homes on a 2.1 acre site; the Arbors at Avalon, a 147-unit detached condominium complex located on Avalon Boulevard between 228th and 231st Streets; and Dominguez Hills Village, a development of 650 single-family homes, 50,000 square feet of neighborhood commercial uses, a child care facility and 45,000 square feet of industrial uses, on the northwest corner of Victoria Street and Central Avenue. The Agency also assisted with the development of a number of residential projects, both affordable and market rate. The Carson Terrace project is a 61-unit senior housing complex on 219th Street. It was built and is currently managed by the non-profit Los Angeles Housing partnership. Vilagio is a mixed-use development with ground floor retail space and affordable residential apartments, just off the NW corner of Carson St. and Avalon Blvd. It was completed in 2000 by Thomas Safran and Associates, which is also developing the Carson City Center. The Carson City Center is another mixed-use project located at the SE corner of Carson St. and Avalon Blvd. It consists of 86 affordable senior apartment units, 150 market rate apartments, about 25,000 square feet of ground floor retail space and surface and underground parking. The project is currently about 30 percent complete. The Agency is currently negotiating with a number of residential developers, two of which would have projects sites within the Carson Street Master Plan area. If brought to fruition, the two projects would create a total of approximately 210 residential units.
The City has also experienced significant commercial development. The Carson Depot, an environmentally-compromised cannery, was redeveloped into a new, state-of-the-art 237,341 square foot commercial/retail center. Now home to more than 20 new businesses, the Carson Depot provides the Carson community with large format retailers like Staples, Albertsons, and Home Depot, in addition to smaller retail
C-5 shops and ethnic restaurants. The City is also actively redeveloping its Auto Row area and has assisted the attraction and retention of a number of state of the art automobile dealerships, including Carson Toyota, Carson Honda, Carson Nissan and Cormier Chevrolet. In addition to numerous other ongoing commercial development projects, new retail space, including a Starbucks coffee shop, a CVS pharmacy, and University Square, a 3.5-acre retail development with a dd’s dress store, an El Pescador restaurant, a Fat Burgers and more. The Hopkins Real Estate Group, along with Genesis Shamrock Holdings, purchased the Southbay Pavilion at Carson in April 2003. Construction of a new Target anchor store was completed and the store opened in October 2005. A Chili’s restaurant opened in September 2006 and in 2007, Old Navy and Children’s Place retail stores opened, as well as a 24-Hour Fitness and Washington Mutual Bank, and a new post office also recently opened. In July of 2009, the Vintage Real Estate company purchased the South Bay Pavilion from HREG. The Agency anticipates assisting Vintage Real Estate with the attraction of two new free-standing restaurants at some point in the future.
The Dominguez Hills Technology Center recently completed its third and final phase of construction. This project includes 4.7 million square feet of office, technology, light industrial, and commercial uses on 288 acres in the northeast section of the City. The Watson Land Company and The Carson Companies have developed the industrial properties that make up the Dominguez Hills Technology.
Besides the Dominguez Hills Technology Center, Watson Land has also completed construction of a 182,200 square foot concrete tilt-up industrial building on a 9.12 acre site located on the northwest corner of 220th Street and Westward Avenue, a 93,260 square foot concrete tilt-up industrial building on an 11.95 acre site on the Southeast corner of 220th and Westward Avenue, and a 110,500 square foot building on a 6.12 acre site currently occupied by Hellmann Worldwide Logistics. Additionally, Watson Land constructed a 242,900 square foot building at 18420 Harmon in Carson.
Numerous other recently completed and ongoing industrial developments are occurring throughout the City. The Carson Town Center, a master planned industrial/commercial development, was completed. This development provides 14 state-of-the-art buildings ranging from 17,000 to 190,000 square feet which total more than 900,000 square feet and cater to a range of uses: corporate headquarters, light industrial, warehouse/distribution, R&D, assembly, office, and manufacturing. Also in the City, Industrial Developments International (IDI) completed a 439,000 square foot development located on the northeast corner of Victoria and Central.
The Boulevards at South Bay, formerly the Carson Market place, will be a 168-acre development project, 157-acres of which represent a former landfill. The proposed Boulevards at South Bay project provides for a potential mix of approximately 2 million square feet of commercial, retail and entertainment uses, a 300-room hotel, and up to 1,550 residential units (1,150 for sale and 400 rental) Remediation of the 157-acre landfill is well under way and will be complete in 2011.
The City has drafted a Master Plan for the Carson Street Corridor Mixed Use District. The Master Plan area is a 1.75-mile portion of the Carson Street corridor between the I-405 at the Dominguez Channel and the 110 Harbor Freeway. The Master Plan is a comprehensive long-range revitalization strategy that effectively establishes a link between the implementing policies of the General Plan, the zoning ordinance, as well as goals within the redevelopment project areas. The Master Plan was adopted in July 2006 and implements the community’s goal of making Carson Street a vibrant, distinctive and economically viable corridor that combines places to work, shop, live and entertain. In particular, the Master Plan focuses on connecting public amenities such as the library, schools and Civic Center with residential and commercial development. The Master Plan will also address rehabilitation of existing multiple-family housing stock, community buildings, and public/private funding of various infrastructure elements.
Home Depot Center
The Home Depot Center is a 125-acre development in the City, featuring state-of-the-art stadiums and facilities for soccer, tennis, track & field, cycling, lacrosse, rugby, volleyball, baseball, softball,
C-6 basketball and other sports. Designated as an “Official U.S. Olympic Training Site,” The Home Depot Center is the nation’s most complete training facility for Olympic, amateur and professional athletes.
Created around a 27,000-seat soccer stadium, 8,000-seat tennis and boxing stadium, 10,000-seat track & field facility and a 2,450-seat indoor velodrome (The ADT Event Center), the complex is located on the campus of California State University, Dominguez Hills. The Home Depot Center is home to Major League Soccer’s Los Angeles Galaxy and Chivas USA. In addition, the site is the U.S. Soccer Federation’s (USSF) national team training headquarters and the location of the United States Tennis Association’s (USTA) USA High Performance National Training Center. The development is also designated as an official training site for USA Cycling and USA Track & Field.
Developed and operated by AEG, the $150 million Home Depot Center represented the largest investment up to that time made in amateur athletics. Whether competing or training, athletes have the use of amenities including a 3,000-square foot weight room, training and locker room facilities, as well as hospitality services.
Since opening on June 1, 2003, with the inaugural Home Depot Track & Field Invitational, The Home Depot Center has hosted some of the finest national and international competitions in the world. In the facility’s first year of operation, it hosted the 2003 MLS All-Star Game, 2003 MLS Cup game and the 2003 FIFA Women’s World Cup championship match. Since then, The Home Depot Center has hosted major soccer tournaments and matches, including the qualifying for the prestigious Copa Libertadores - InterLiga, SuperLiga, CONCACAF Men’s & Women’s Gold Cup matches, the World Series of Football and the annual Super Clásico, featuring Los Angeles’ intra-city rivalry, the Los Angeles Galaxy versus Chivas USA. The Home Depot Center hosted the LA Women’s Tennis Championships, a Tier II Sony Ericsson WTA Tour event, showcasing tennis’ most elite female athletes, from 2004 to 2009. The facility is also home to the nation’s premier indoor velodrome and hosted the UCI Track Cycling World Cup Classics 2005-2007, and, in 2005, hosted the World Championships. Across three disciplines (soccer, tennis, cycling), more than 45 U.S. athletes who competed in the 2008 Beijing Olympics trained at The Home Depot Center in preparation for the Games. Tennis courts, soccer training fields and a three-mile jogging trail with 12 fitness stations around the perimeter of the development is available to local residents as well as other facilities and amenities.
Community Facilities
The City operates many community facilities. The two major facilities, City Hall and the Community Center, are located in the Civic Center Plaza. The Community Center is a 73,000 square foot facility utilized as a meeting center for community and business sponsored events. An overall expansion and renovation of the Community Center, including a new Senior Citizens Center, was completed. The City Hall is where most City administration and operations are conducted. The Parks and Recreation division, which has moved to a new location at 2400 East Dominguez Street, where it joins the Public Works division, operates 12 parks, 3 mini-parks, and 8 sports/recreational facilities that include 3 swimming pools, a boxing center, 3 gymnasiums, a skate park at a state of the art sports complex and the Carson Community Center. The Agency will also be developing a 16,000 square foot “passive park” in the middle of an established residential neighborhood on Shearer Ave. in 2011.
The City of Carson provides a broad range of services, including construction and maintenance of highways, streets and infrastructure, planning and zoning activities, public transit, recreational activities and cultural events for all ages. Building and safety services are provided through a contract with the County of Los Angeles. Fire protection, sewer services and library services are provided by Special Districts of the County of Los Angeles. The City of Carson provides police protection through a contract with the County of Los Angeles, Sheriff’s Department. The Carson Sheriff’s station is located directly across the street from the Carson City Hall. The Sheriff’s station, as reported in the 2009 Year in Review report, is supported by 185 sworn personnel and 41 non-sworn professional staff members.
C-7 Within the City of Carson, there are 13 elementary schools, 3 middle schools, 2 high schools, 2 parochial schools, and one university. That university, California State University Dominguez Hills, is part of the Cal-State system. Also located within just a few miles of Carson are California State University Long Beach, El Camino College and Harbor College. Many other junior and four-year colleges are located within 30 miles of Carson. The City of Carson is also home to numerous churches/church organizations, banks and credit unions, and 2 libraries. The City is serviced by 2 cable companies and 2 regional newspapers and one community newspaper.
Transportation
The City is accessible by air, rail and freeway. The MTA Blue Line stops in Carson on its route between Los Angeles and Long Beach. The City’s own bus system, the Carson Circuit, provides convenient bus transportation within the City. Carson is close to the Los Angeles International Airport, the Long Beach Airport, the Port of Los Angeles, and the Port of Long Beach. Four freeways are adjacent to or run through the City. They are the Harbor (110), the San Diego (405), the Artesia (91), and the Long Beach (710) freeways.
Public Utilities
Water is supplied to the City by California Water Service Company and Southern California Water Company. Natural gas is provided by Southern California Gas. Electricity is provided by Southern California Edison.
Risk Management
The City is self-insured for state unemployment insurance, dental insurance, for the first $250,000 of general liability claims, for the first $500,000 for workers’ compensation claims and for long-term disability claims for the first 17 weeks of disability. In addition, the City carries insurance of individual general liability claims in excess of $250,000 to $15,000,000 ($250,000-$5,000,000 with Royal Indemnity Insurance Company and $5,000,001 to $15,000,000 with Rock River Insurance Company). The City carries insurance of individual workers’ compensation claims in excess of $500,000 to the statutory limit with the Employers Reinsurance Corporation.
C-8 APPENDIX D
FISCAL CONSULTANT’S REPORT
D-1 (THIS PAGE INTENTIONALLY LEFT BLANK) Carson Redevelopment Agency Multiple Redevelopment Project Areas
Fiscal Consultant Report
Dated June 18, 2010 Revised September 24, 2010
Prepared By:
DHA Consulting, LLC 110 Pine Avenue, Suite 340 Long Beach, CA 90802
FCR Report_Hsg.doc Carson Redevelopment Agency Multiple Redevelopment Project Areas Fiscal Consultant Report
Section A - Introduction
The Carson Redevelopment Agency is proposing to issue tax allocation bonds to be secured by tax increment revenues from all of its redevelopment project areas. The financing is to be secured by Housing Revenues from the following Redevelopment Project Areas: Redevelopment Project No. 1, the Merged and Amended Project, and Redevelopment Project No. 4, together “the Projects” or “Project Areas”. Housing Revenues are that portion of tax increment revenues which are legally required to be used for low and moderate income housing purposes, as discussed in more detail below. In connection with the proposed financing, the Agency has retained DHA Consulting to conduct a review of assessed values and prepare a projection of future tax increment revenues for the Project Areas.
The California Community Redevelopment Law (“CRL”) provides for the creation of a redevelopment agency for the purpose of eliminating blight. To achieve this purpose, the CRL, along with Article 16, Section 16 of the California Constitution, authorizes the Agency to receive that portion of property tax revenue generated from the increase of the current year project taxable values over the taxable values that existed at the time of the Project Area’s adoption. This portion of property tax revenue is referred to as tax increment revenue. An amount equal to 20 percent of all tax increment revenue annually generated by a redevelopment project area must be used for low and moderate income housing purposes. The CRL provides that tax increment revenues, including Housing Revenues, may be pledged by the Agency for the repayment of Project Area indebtedness. Because of the requirements of the CRL and certain prior actions of the Agency, the Housing Revenues from one redevelopment project area can support housing expenditures, including the payment of debt service, in another project area.
This Fiscal Consultant Report will present an examination of valuations and tax receipts and a projection of future tax increment revenues for the Project Areas. The projections are based on assumptions determined by a review of the taxable value history of the Project Areas; current new development activities; and the property tax assessment and property tax apportionment procedures of Los Angeles County (“County”). This Report was initially prepared in May 2010 and is largely based on information that was available at that time. In August 2010, assessed values for the 2010-11 fiscal year became available and the report was updated to reflect material changes
This report is organized into the following sections:
A. Introduction B. The Project Areas C. Historical Taxable Values D. Assessment Appeals E. Tax Allocation and Disbursement F. Tax Increment Projections G. Agency Obligations H. Other Issues Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 2
Section B – The Project Areas
As stated above, this Report covers the following Project Areas: Redevelopment Project No. 1 (“Project No. 1”), the Merged and Amended Project Area (“Merged Project”), and Redevelopment Project No. 4 (“Project No. 4”). Territory has been added to Project No. 1 and the Merged Project over time. As a result, each of these Project Areas has a number of added areas or subareas. Project No. 4 contains the same boundaries as when originally adopted; no territory has been added. The Merged Project consists of two previously separate redevelopment project areas: Project No. 2 and Project No. 3. The two Project Areas were merged in 1996/97 under allowable provisions of the CRL (Section 33486 et. seq.) The other two Project Areas involved in the proposed financing, Project No. 1 and Project No. 4 are individual Project Areas and are not currently part of any merged project. While the Agency is currently in the process of merging all existing project areas into a single merged area, this report does not assume the current merger efforts are completed. (Agency staff expect the merger to be completed in January, 2011.) The proposed merger will not affect the pledge of Housing Revenues under the proposed financing.
This Report may make reference to one or more of the various subareas based on the reporting categories used by Los Angeles County. A summary of the references used in this Report is as follows:
Report Reference Description
Project No. 1 Project Area with all subareas Project No. 1 Original Area originally adopted in 1971 Project No. 1 1985 Annex Area added in 1984/85 Project No. 1 1997 Annex Area added in 1996/97
Merged Project Project Area with all subareas Project No. 2 Original 1974 adoption and area added in 1974 Project No. 2 1983 Annex Area added in 1982/83 Project No. 3 Original 1984/85 adoption of Project No. 3 Project No. 2/3 1997 Annex Area added in 1996/97
Project No. 4 Project Area No subareas
Plan Limitations
Redevelopment Plans are required to contain certain time and revenue limits. Restrictions include limits on the amount of tax increment that can be received, limits as to the amount of time a redevelopment project area can be in existence and limits on the number of years tax increment revenue can be received. Because of redevelopment reform legislation which was adopted in 1994, each subarea of each Project Area is restricted as to the amount of time it may be in existence. The expiration dates for each subarea are based on each area’s original adoption date. The current time limits for each of the applicable components of the Project Areas are as shown below in Table 1.0. As shown in Table 1.0, the Original Areas for Project Nos. 1 and 2 expire in December 2014 and February 2017, respectively. Tax increment Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 3
revenues for the two areas can be received for an additional 10 years following the expiration of the Plans, or December 2024 and February 2027. The other subareas expire later and can receive tax increment revenues through as late as 2048 (Project No. 4). The current limits operative for the Project Areas are summarized below.
Table 1.0 Time and Revenue Limit Summary
Establish Duration of Deadline $$ Limit Tax Bonds Description Debt Plan (1) Receipt $$ Increment Outstanding
Project No. 1: Original Eliminated 12/20/2014 12/20/2024 352,118,117 1985 Annex (2) Eliminated 7/16/2026 7/16/2036 500,000,000 160,000,000 1997 Annex 8/16/2016 8/16/2027 8/16/2037 None 50,000,000
Merged and Amended: Project No. 2 Original Eliminated 2/19/2017 2/19/2027 534,307,874 None Project No. 2 - 1983 Annex (3) Eliminated 12/22/2025 12/22/2035 24,000,000 8,000,000 Project No. 3 - Original (2) Eliminated 7/16/2026 7/16/2036 250,000,000 80,000,000 Project No. 2/ 3 - 1997 Annex (2) 8/16/2016 8/16/2027 8/16/2037 None 35,000,000
Project No. 4 7/16/2022 7/16/2033 7/16/2048 None 85,000,000
1. Dates shown are deadlines following adoption of ordinances where applicable, in November 2003 and May 2007. 2. These dollar limits are to be adjusted annually for changes in the consumer price index. The amounts shown above represent the original, unadjusted limits. 3. A tax sharing agreement with Los Angeles County provides that all tax increment in excess of $200,000 annually or $8 million in aggregate, be used to repay amounts due the County which were previously deferred. This restriction, however, does not affect revenues required to be deposited into the Housing Fund.
In addition to time limits, certain Project Areas or subareas are subject to limitations on the amounts of tax increment revenue that can be received over the life of the Project Area. Those limits are shown above in Table 1.0 by area. Should any of the areas receive tax increment revenue equal to the tax increment limit shown above, the County will cease to allocate tax increment revenue to the area even if it has not yet passed its tax increment receipt deadline. The cumulative amount of tax increment revenue that has been received through August 2010 for each of the areas is as follows:
Subarea Tax Receipts Project No. 1 Original $ 95,621,123 Project No. 1 1985 Annex 82,342,087 Project No. 1 1997 Annex 1,538,129 Project No. 2 - Original 133,367,746 Project No. 2 - 1983 Annex 5,163,486 Project No. 3 - Original 58,492,432 Project No. 2/ 3 - 1997 Annex 21,759,380 Project No. 4 21,850,382 Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 4
Two of the areas, Project No. 1 1985 Annex and Project No. 3 Original Area have tax increment dollar limits that are subject to change over time. The limits for these two areas are subject to annual inflationary increases in accordance with a consumer price index. The amount of the escalated limits will be dependent on the consumer price index adjustments between now and the tax increment receipt deadline for each subarea. A preliminary estimate is that the $500 million tax increment limit in Project No. 1 Original will increase over time to over $800 million and that the limit in Project No. 3 Original will increase over time to over $400 million. The last year either area is eligible to receive tax increment revenue is 2035-36.
Assessed Value by Land Use
This report covers three separate Project Areas, in various locations within the City of Carson. Major uses include commercial, residential and industrial land uses. Many of the industrial uses, particularly in the Merged Project Area, represent heavy industrial uses with significant levels of taxable equipment and personal property. Residential uses are predominant in Project No. 4 and in certain subareas of the Merged Project. Overall, however, residential uses for the both Project No. 1 and the Merged Project represent less than 20 percent of each Project Area’s assessed value. A summary of the distribution of the assessed value among the various types of land uses for each Project Area is shown below in Table 2.0. Additional details are included in the attached Tables 2.1 to 2.3.
Table 2.0 Assessed Values by Land Use Fiscal Year 2010-11
Category Project No. 1 Merged Project Project No. 4 Total Value %
Residential 57,737,987 283,387,795 558,735,461 899,861,243 22.29% Commercial 503,739,445 159,500,998 90,380,422 753,620,865 18.66% Industrial 688,709,639 517,391,022 130,482,312 1,336,582,973 33.10% Recreational 13,998,866 980,152 381,128 15,360,146 0.38% Institutional 1,859,398 2,451,967 6,927,637 11,239,002 0.28% Vacant Land 92,935,405 59,187,075 14,170,168 166,292,648 4.12% SBE -- 3,333,252 -- 3,333,252 0.08% Other (1) 6,249,436 195,733,011 7,072,343 209,054,790 5.18% Unsecured 250,163,851 315,693,459 66,704,775 632,562,085 15.67% Miscellaneous 433,559 5,004,863 4,298,036 9,736,458 0.24% Total 1,615,827,586 1,542,663,594 879,152,282 4,037,643,462 100.00%
1. Includes values for possessory interest, mineral rights and other miscellaneous types of valuation.
Major Taxpayers
Major taxpayers represent the largest assessees in a given Project Area. Each Project Area has different types of major taxpayers and different concentration levels. The following table summarizes the relative concentration for the assessed value attributable to the ten largest assessees in each Project Area. Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 5
Table 3.0-A All Project Areas Taxpayer Concentration Summary
2010-11 Value - Major 2010-11 Value - Project Area Taxpayers Project Areas %
Project No. 1 455,168,273 1,615,827,586 28.17%
Merged Project 828,696,220 1,542,663,594 53.72% Project No. 4 108,880,977 879,152,282 12.38%
TOTAL 1,392,745,470 4,037,643,462 34.49%
The 10 largest assesses that exist in any of the three Project Areas are shown below.
Table 3.0-B All Project Areas Largest 10 Taxpayers Combined (1)
% of 2010-11 % of Total Incremental # Assessee Project Areas Value Value Value
1 Watson Land Company (2) Projects Nos. 2 & 3 354,219,248 8.77% 12.21% BP West Coast Products 2 (2) Project No. 3 124,417,870 3.08% 4.29% 3 Ineos Polypropylene LLC Project No. 3 110,724,733 2.74% 3.82% Air Products & Chemicals 4 Inc Project No. 3 90,527,858 2.24% 3.12% 5 AMB Mar Carson LLC Project Nos. 1 & 2 86,565,448 2.14% 2.98% 6 Equilon Enterprises Project No. 1/1997 74,868,967 1.85% 2.58% VCG-Southbay Pavilion 7 LLC Project No. 1 /Original 73,179,119 1.81% 2.52% 8 Prime Wheel Corporation Project No. 1/1985 52,282,129 1.29% 1.80% 9 Carson Market Place Project No. 1/Original 45,971,115 1.14% 1.58% 10 Shell Oil Company Project No. 1/1997 39,719,713 0.98% 1.37%
TOTAL (Memo Only) 1,052,476,200 26.07% 36.29% Total 2010-11 Assessed Value 4,037,643,462 Total 2010-11 Incremental Value 2,900,477,648
______(1) The values shown represent the value for each assessee as it exists within the indicated Project Area(s). (2) Excludes some assessed values for Watson Land and BP that exist in Project No. 1, but are not major taxpayers in that Project Area. Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 6
As shown above, the ten largest taxpayers own properties whose combined assessed value accounts for approximately 26 percent of the combined assessed values and 36 percent of the incremental values for all of the Project Areas combined. Over time, the assessed values of the Project Areas are likely to change as well as the identity and value of the 10 major taxpayers. The sale or removal of property as well as changes in land use can all affect the assessed values of properties in future fiscal years. In addition, because of the time limitations shown above in Table 1, the concentration for the Project Areas and the major assessees will change as certain areas cease to receive tax increment revenues years before other areas. (The Original Areas of Project No. 1 and Project No. 2 will cease to receive tax increment revenue after 2023-24 and 205-26 respectively, while the other areas will continue to receive tax increment revenue until at least 2035-36.) The subarea locations of the current major taxpayers are shown above in Table 3.0-B in the column entitled “Project Areas”.
The largest current assessee, Watson Land Company, is primarily comprised of two major industrial and office parks located in both the Project No. 2 and Project No. 3 subareas of the Merged Project. Both business park locations represent numerous individual industrial or research and development facilities leased to a number of different users. The $354 million in assessed value is spread over 115 parcels, for an average value of $3 million per parcel. Tenants within the industrial park are varied and include companies such as Mercedes Benz USA, LLC, Bristol Farms Corporate Headquarters, and Herbalife International of America, Inc.” The next three largest assessees in any Project Area represent heavy industrial uses located in the Project No. 3 subarea of the Merged Project: BP West Coasts Products (BP); Ineos Polypropylene LLC (“Ineos”); and Air Products and Chemicals, Inc. BP’s holdings in the Project Areas are comprised of an oil refinery and other oil-related uses. (Only a portion of the oil refinery is located within Project No. 3; the balance is located outside any Project Area but within the City of Carson.) The Ineos assessment is for a facility that produces polypropylene, which are generally plastic polymers used in many different settings both in industry and consumer goods. Air Products and Chemicals, Inc. is a company which manufactures industrial gases and specialty chemicals. The Air Products and Chemicals assessment is primarily unsecured fixtures and equipment located on a site owned by BP in Project No. 3.
Previously, BP owned both the oil refinery and the polypropylene facility. Effective in 2006-07, Ineos Innovene is the assessee of record for the polypropylene facility. Ineos was reportedly established in April 2004 to enable BP to set up its petrochemical businesses as a separate entity within the BP Group. In October 2005, British Petroleum announced that it had sold Innovene to Ineos, a United Kingdom-based private chemicals company.
The fifth largest assessee, AMB Mar Carson LLC, owns several industrial parks that are located both in Project No. 1 and Project No. 2. The sixth largest assessee in any Project Area is Equilon Enterprises located in Project No. 1. The site is large, at nearly 200 acres, and is located adjacent to the Shell Oil Company property (10th largest taxpayer) in the Project No. 2/3 1997 Annex. The facilities of both assessees are used primarily for petroleum storage and warehousing.
The 10 Larger Taxpayers in each Project Area are summarized on Tables 3.1 to 3.3. The taxpayers shown in the attached tables represent the largest taxpayers based on 2009-10 assessed values. Over time, it can change as major taxpayers relocate or divest of property. Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 7
Section C – Taxable Values and Historical Revenues
Property Taxation
Real property consists of land and improvements and can either appear on the secured or the unsecured tax roll. The secured roll includes property on which the property tax levied becomes a lien on the property to secure the payment of taxes. Unsecured property does not become a lien on such property, but may become a lien on other property of the taxpayer.
Locally assessed real property is subject to the provisions of Article XIII A of the California Constitution, commonly referred to as Proposition 13. Under Proposition 13, property is valued based either on its value in 1975-76 or, if newly constructed or sold after this date, then on the full cash value of the property at the time of the reassessment. Property values may only increase annually by an inflation factor of up to 2 percent annually. The Proposition 13 value of property is sometimes referred to as the factored base year value. Pursuant to Section 51 (b) of the Revenue and Taxation Code, assessors must enroll the lesser of the market value or the factored base year value of property.
Personal property values can be classified as either secured or unsecured property. Personal property is not subject to the provisions of Proposition 13. Such property is annually appraised at the full cash value of the property.
State-assessed property is also not subject to the provisions of Proposition 13. State-assessed property is categorized as secured and is either unitary or non-unitary property. Since 1987-88, the value of unitary property has been reported on a county-wide basis, with unitary revenues allocated to taxing entities and redevelopment projects pursuant to a formula contained in AB 454. State-assessed non-unitary values and railroad values are reported at the local situs level.
Assessed Values and the Real Estate Market
Assessed values are impacted, at least indirectly, by the generally economy and real estate market conditions. Because of the peculiarities of property tax assessment in California, only properties that sell or undergo new construction are qualified to be revalued for property tax purposes. As a result, it is only the assessed values of properties that were reappraised in the last few years that are usually vulnerable to reductions when market values decrease. In Projects No. 1 and No. 4, nearly 60 percent of the 2009-10 secured assessed values are the result of properties that have transferred ownership since January 1, 20031. For Project No. 2, the percentage is less at just over 50 percent. The percentage of assessed values attributable to sales for Project No. 3 is much less telling because of the predominance of the petroleum related uses.
The real estate market in southern California has experienced unprecedented declines in the values for residential properties as well as decreases in the value of commercial and other types of property. Indeed, the median sales prices for single family homes in Los Angeles County have declined by 35 percent from sales prices that were achieved in 2007. Declines in the City of Carson are similar with a 26 percent decline from 2007 levels.2 For a number of
1 The Los Angeles County Assessor reports that for the 2010-11 fiscal year, single family residences and condominiums which transferred ownership between January 1, 2003 and June 30, 2009 were reviewed for the potential that assessed values may exceed current market values. In those instances, the Assessor reportedly reduced the assessed values to market levels. See Section D, “Assessment Appeals” for additional information on Assessor reductions. 2 DQNews reports of the median price of single-family homes over the applicable time periods. Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 8 years prior to 2007, southern California, including the City of Carson, experienced unprecedented growth: new construction activity was prominent, residential property values increased at double digit rates and properties, particularly housing, sold frequently. The values for a number of residential properties in the Project Areas were reduced by the County Assessor in 2008-09 through 2010-11 to reflect the decline in residential market values. These reductions were offset, at least in part, by increases in other types of properties. See the “Project Area Trends” section of this Report below for additional information.
Recognized economists differ as to their opinion as to the future of the real estate market in general, and southern California in particular. Prices for single family residential properties in Los Angeles County, including the City of Carson, appear to be stabilizing: the median price for single family homes in January 2010 represents nearly a 3 percent increase above January 2009 price levels. A check of the median sales prices reported for sales activities in March, April and August 2010 shows that the median prices of homes in the area appear to be maintaining levels consistent with the median prices reported for January 2010. Problems are continuing, however, with sub-prime mortgages, foreclosures and slow residential sales.
A forecast of future economic and real estate conditions within the Project Areas is beyond the scope of this study. However, where measurable, current, as opposed to future, impacts from reduced residential real estate values have been considered. Value reductions for commercial and other types of property are assumed to be achieved through the assessment appeals process. See Section D, “Assessment Appeals” and Section F, “Current and Projected Revenues” below for additional information on the tax increment revenue projections enclosed with this Report.
Project Area Value Trends
The values reported by the County for the Project Areas in each of the last 5 years are summarized in Table 4.0 below. Additional details concerning taxable values for each Project Area are included on the attached Tables 4.1 through 4.3. Project Area values are reported by the County in August and are updated throughout the year. The amounts shown below represent the values as reported by the County in August of each fiscal year.
Table 4.0 Historical Taxable Values 000’s Omitted
Project Area 2006-07 2007-08 2008-09 2009-10 2010-11
Project No. 1 1,395,031 1,406,231 1,515,278 1,647,717 1,615,828 Project No. 2 715,302 762,056 771,185 791,114 784,841 Project No. 3 723,116 744,211 815,409 744,754 757,823 Project No. 4 804,315 875,015 927,192 902,450 879,152
TOTAL VALUE 3,637,765 3,787,514 4,029,064 4,086,035 4,037,643
% Change N/A 4.12% 6.38% 1.41% -1.18% Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 9
In general, increases in assessed values for the Project Areas have reduced significantly over the last two years after showing significant growth, and have even declined in certain Project Areas. A brief discussion of the valuation trends in each Project Area is included below.
Project No. 1: Since 2006-07, assessed values have held steady despite a challenging real estate market. In 2009-10, assessed values increased by about $130 million, or 8.7 percent, primarily as a result of a new commercial development project at 20700 Avalon Boulevard, improvements to a hotel at 2 Civic Plaza Drive, and assessed value increases for commercial and industrial properties which sold in 2007 and 2008. Values for 2010-11 represent a $30 million assessed value decrease over 2009-10 levels. The decline is primarily the result of reductions in unsecured fixtures and personal property. The reason for this decline, at least in part, is that the unsecured 2009-10 taxes for the Bottling Group property was canceled during 2009-10 and the taxes related to the assessment were refunded to the taxpayer and then deducted from Agency tax receipts. The exact reason for the cancelation of these taxes is unknown, but is suspected to be the result of the erroneous filing of tax documents on the part of the taxpayer. Neither the 2008-09 and 2009-10 assessments for this property include a large unsecured tax assessment.
Merged Project: The value for the Merged Project consists of Project No. 2 and Project No. 3. Because the nature of the two areas is significantly different, the assessed value changes are discussed below by Project Area.
Project No. 2: The values for Project No. 2 have increased by an average of almost 5 percent over the last 5 years although growth in the last three has averaged less than 2 percent. The primary reason for the slow growth is that commercial/industrial activity, both new construction and sales, has resulted in only moderate increases while the value for residential properties declined substantially.
Project No. 3: The values for Project No. 3 have not shown a consistent trend. In some years the value has increased substantially and in others it has shown growth of less than 2.0 percent or even declines. The major contributor to value changes in this Project Area, both positive and negative, is the value associated with petroleum and polypropylene uses, much of which is assessed to BP (British Petroleum) or Ineos (Ineos Polypropylene, LLC). See major taxpayers above for more information about BP.
Project No. 4: Project No. 4 is the newest redevelopment project area, adopted in 2002, which contains more residential uses than the other Project Areas. Growth ranged from nearly 6 percent to nearly 11 percent annually from 2005-06 through 2008-09. Assessed values for 2009-10 and 2010-11, however, represent declines from the prior year of about 2.5 percent. Both the robust increases as well as the declines in assessed values are primarily attributable to changes in the residential real estate market. The growth in assessed values resulted from substantial residential value increases through sales and limited new construction, while the reductions in the assessed values are primarily the result of additional residential property transfers, but at reduced values, and/or reductions by the County Assessor’s office. The value reductions for residential properties were offset, at least in part by increases in value for commercial and industrial properties which transferred ownership and resulted in increases in assessed values. For additional information on valuation reductions, see the “Automatic Assessment Appeals” section below. Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 10
Section D – Assessment Appeals
Taxpayers may dispute, or appeal, their property tax assessments. Depending on the outcome of the appeal, taxes paid in the current year may be either higher or lower than the initial assessment. (An appeal which results in a lower valuation is referred to in this Report as a successful appeal.) When an appeal is successfully resolved after the disputed taxes have already been paid, a refund with interest is subsequently issued to the taxpayer by the county.
In California, there are two types of appeals: a Proposition 8 appeal and a base year appeal. A Proposition 8 appeal is based on Section 51 of the Revenue and Taxation Code and allows for temporary reductions in the taxes paid on properties because the assessed value of a property somehow becomes higher than its actual market value. This can be the result of the damage or removal of property, or reductions in the market value of real estate. Once the property damage is restored, or the real estate market improves, an assessment subject to Proposition 8 reduction can be returned to its pre-appeal value. The second type of appeal is a base year assessment appeal where owners challenge the original, or base year, valuation assigned by the Assessor. Any reduction resulting from a base year assessment appeal is permanent and can only increase above the allowable inflationary adjustment if the property is sold or experiences new construction.
There are also two primary methods for achieving a reduction in the valuation of property. One way is for the applicant to file an assessment appeal application; the other way is for the Assessor’s office to process an “automatic” assessment reduction. Any automatic reduction would almost always be a Proposition 8 appeal, although filed appeals can be either Proposition 8 or base year appeals.
Automatic Assessment Appeals
In response to declining residential real estate values, Los Angeles County, like many other counties throughout California, processed temporary assessed value reductions for certain properties (Proposition 8 reductions). These reductions were made on properties where the assessed values exceeded the current market value of properties as of the tax lien date (January 1) without prompting from individual taxpayers. (This report refers to the Assessor’s office processing of assessment reductions without being requested by the taxpayers as automatic reductions.) For the reductions made for the 2010-11 fiscal year, the County reviewed single family homes and condominiums which transferred ownership from January 1, 2003 through June 30, 2009. Fiscal 2010-11 represents the third consecutive year that the Assessor’s office processed automatic reductions for single family homes and condominiums: reductions were made for the 2009-10 fiscal year and to a lesser extent, 2008-09.
The 2010-11 assessed values reflect the reduced values for the automatic reductions performed by the Assessor over the last three years. As it appears that residential values are stabilizing in the Carson area, additional value reductions from automatic reductions have not been assumed. (For additional information on the status of the local real estate market, see “Assessed Values and the Real Estate Market” in Section C of this Report.) Should the economy continue to be turbulent, however, additional automatic Proposition 8 appeals may be instituted by the Assessor in future fiscal years. The potential impact of additional declines in real estate values has not been factored into the enclosed revenue estimates. Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 11
Filed Assessment Appeals
When a taxpayer believes that the assessed value of his property is too high, he may appeal the property tax assessment through the filing of an appeal application. If the Assessor’s office believes the taxpayer is correct, it can reduce the value without a formal hearing process. If however, the Assessor’s office believes that the assessed value assigned to the property is not too high, the dispute is heard before an assessment appeals board which determines the appropriate value for a property. If the taxpayer is successful in getting the value of his property reduced, any previously paid taxes on the higher value are repaid to the taxpayer with interest. Generally, future allocations of taxes to the taxing entities that received the original taxes are then proportionately reduced by the county to reflect the refund and interest paid. In Los Angeles County, assessment appeals are often outstanding for 3 or more years resulting in the need for large refunds to the taxpayers if and when the appeals are finally successfully resolved.
Assessed values were equalized by the county in August 2010. Individual taxpayers have until December 31, 2010 to appeal their 2010-11 tax assessment. As such, information on 2010-11 appeals will not be available until calendar 2011. For the purpose of this analysis, successful appeals on the most recent tax assessments, generally 2009-10, are assumed to impact future assessed values.
Per County appeal records, appeals remain outstanding on various properties in the Project Areas for as long ago as 2001-02 through 2009-10. Impact estimates have been prepared for outstanding appeals covering the entire year period for which appeals are outstanding. For the 2009-10 fiscal year, the number of appeals filed and reported as outstanding as of April 9, 2010 in Project No. 1 and Project No. 4 increased from prior year levels by three or four times. The assessed valuation associated with the filed appeals also increased significantly. Appeals in the Merged Project do not appear to have been impacted so much by the economy; appeals in the Merged Project are mostly related to petroleum related companies that have been appealing their assessments every year, and which are discussed below.
BP and related companies have multi-year assessment appeals outstanding for every year since 2001-02 in the Merged Project Area. Appraisers in the Assessor’s office have advised that appeals outstanding for the 2001-02 through 2003-04 have been heard before the Assessment Appeals Board. Staff members are awaiting the Appeal Board’s findings, which are expected to be provided in a written report in early 2011. The timing of the resolution of the remaining appeals remains uncertain and is dependent, in part, on the findings of the Appeals Board. If the Assessor’s office and the applicant can agree to value reductions for subsequent years, the remaining refunds may be resolved fairly quickly. On the other hand, if the Assessor’s office and the taxpayer continue to disagree about the valuation, additional hearing by the Assessment Appeals Board will need to be scheduled. The need for additional hearings is likely to result in additional delays in resolving the remaining assessment appeals. As a result, the timing of the resolutions of the appeals is uncertain and could be resolved within the next 12 months or be outstanding for a number of additional years. To estimate impacts on tax increment revenues, midrange timing estimates have been employed, as discussed below.
Outstanding appeals are assumed to impact the Agency’s tax revenues in two ways: tax refunds and assessed value reductions. First, reductions to all outstanding appeals, assuming average reduction rates, were calculated for the purpose of computing tax refunds. If the outstanding appeals are in fact resolved in the taxpayer’s favor, tax refunds would be due for all excess taxes previously paid. In addition to the tax refunds, assessed values are likely to be Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 12 reduced in future fiscal years. In order to estimate the impact to assessed values, multi-year appeals by the same taxpayer are assumed to only impact assessed value once. For instance, for the Merged Project, BP has appeals outstanding for the 2001-02 through the 2009-10 fiscal years. If the appeals are resolved in BP’s favor, tax refunds would be due for all nine years, but only the 2009-10 appeal reduction is likely to affect future assessed values.
The computations for the tax refund estimates are shown for each Project Area in Tables 5.1 through 5.3. The estimated tax refund amounts are all based on appeals that were filed on assessments for 2009-10 and earlier fiscal years. The County could resolve all of the appeals during 2010-11 and process refunds accordingly. Based on past experience, however, the County often takes several years to resolve appeals and process the refunds. As a result, the enclosed tax increment revenue estimates assume that the appeals are resolved and the tax refunds are issued over the next several years. The tax refunds deducted from gross tax increment revenues are approximate and are shown in Table 5.0 below: Because Housing Revenues equal 20 percent of gross tax increment revenues, 20 percent of the amounts shown below would equal the impact to Housing Revenues.
Table 5.0 Tax Refunds From Filed Assessment Appeals for Fiscal 2009-10 and Prior Years (1)
Year Project No. 1 Merged Project Project No. 4 Total
2010-11 $ 385,000 $ 3,554,000 $ 32,600 $ 3,971,600 2011-12 440,000 3,287,000 56,600 3,783,500 2012-13 214,000 1,295,000 26,500 1,5355,00 2013-14 None Est. None Est. None Est. None Est. Total $1,039,000 $ 8,136,000 $ 115,600 $ 9,290,600
1. Amounts shown are estimates of the deductions from gross tax increment revenues otherwise due the Project Areas that may occur as the result of the resolution of at least some appeals in favor of the taxpayer. The impact to Housing Revenues would equal 20 percent of the above amounts.
Estimates for the assessed value impact for filed assessment appeals are summarized below in Table 6.0. For the purpose of estimating future tax increment revenues, the most recent assessment appeals that are outstanding (usually 2009-10) are assumed to proportionately reduce future assessed values. In practice, some types of assessment appeal reductions would not have an impact on future values for tax assessment purposes. An example of this type of reduction would be an assessment of an office building at full value when construction had not yet been completed. Additional details on the appeal calculations assumed in this Report are shown in the attached Tables 6.1 through 6.3. Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 13
Table 6.0 Summary of Assessed Value Impact From Filed Assessment Appeals for Fiscal 2009-10 and Prior Years (1)
Year Project No. 1 Merged Project Project No. 4
2010-11 (2) (11,518,999) (16,887,406) (1,246,687) 2011-12 (41,806,979) (71,893,569) (4,904,200) 2012-13 (34,859,357) (57,514,855) (3,859,840) Total (88,185,334) (146,295,830) (10,010,727) % AV (3) 5.5 % 9.5 % 1.0 %
1. While the reductions from appeals are assumed to occur over several years, all of the estimated reductions are estimated to occur from appeals filed for fiscal year 2009-10 and prior years. As a result, the reductions could potentially all occur during the 2010-11 fiscal year. 2. Estimated value reductions for 2010-11 are assumed included in the values reported by the County for 2010-11 in August 2010. 3. Expressed as a percentage of 2010-11 assessed values.
For the purpose of preparing the above estimates, it has been assumed that at least some of the appeals will be outstanding over several years and that the affect on future assessed values and revenues in the Project Areas will be fairly gradual. However, all of the appeals currently outstanding could be resolved this fiscal year. Tables 6.1 to 6.3 show information on outstanding assessment appeals that are estimated to have impacts on future assessed values, and detail that information by taxpayer for each assessment over $10 million in assessed value. The tax increment projections, which are discussed in the next section of this Report, include the appeal assumptions discussed above. Additional tables concerning the history of appeals in each Project Area is included in Tables 7.1 to 7.3 as background information.
Section E – Tax Allocation and Disbursement
Tax Rates
Tax increment revenues included in this analysis are computed based upon incremental assessed values for the Project Areas multiplied by a 1.0 percent tax rate. Actual taxes allocated by the County to the Project Areas, however, are based on tax rates that are in excess of 1.0 percent. The tax rates used by the County consists of the general tax levy of $1.00 per $100 of assessed value and the override tax rates which represent the debt service levies where indebtedness has been authorized by voter approval. An amendment to the Constitution prohibits redevelopment agencies from receiving taxes generated by override tax rates which were approved by the voters after December 31, 1988.
For the 2009-10 fiscal year, tax increment revenues are being allocated to the Project Areas based on a single tax rate: 1.0043 percent. Override tax rates typically decline each year for two reasons: 1) increasing property values reduce the override rate needed to be levied by the taxing entities to meet debt service; and 2) voter approved debt is eventually retired over time. Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 14
The table below shows the components of the prior year tax rate (2009-10), excluding any rates associated with indebtedness approved by the voters in 1989 or thereafter.
Taxing Entity 2009-10 Rate
Metropolitan Water District 0.00430 % General 1.00000 %
Total Tax Rate 1.00430 %
As mentioned above, tax increment revenue projections included herein are calculated without the inclusion of any override rates, i.e., the revenue projections are based on a 1.0 percent tax rate.
Property Tax Allocation Procedures
The method by which a county allocates property taxes and tax increment revenues can have a significant impact on the receipt of such revenues. Los Angeles County calculates tax increment to redevelopment project areas by applying the appropriate tax rate to secured and unsecured incremental taxable value. The County also allocates unitary revenues based on revenues received in 1987-88, adjusted by the actual growth or decline in unitary revenues on a countywide basis.
Assuming that debt levels as presented in the Statements of Indebtedness are sufficient, tax increment is allocated by the County based on the actual collections of revenue within a project area. Redevelopment projects can therefore be negatively impacted by delinquent property taxes. Delinquent property taxes can be offset, in whole or in part, by the distribution of paid delinquent property taxes, or redemption payments. The County also adjusts tax increment payments for roll corrections, such as refunds of property taxes due to successfully appealed assessments. Such adjustments occur after the initial value is reported and result in the adjustment to the County’s initial calculated levy.
Historical Tax Increment Revenues
Tables 8.1 through 8.3, which are attached to this Report, provide information on the historical receipt of tax increment revenues in the Project Areas. The amounts of tax receipts shown on the tables include supplemental revenues, revenue changes due to roll adjustments, and redemption payments. Table 8.1 shows taxes received for Project No. 1. Tax receipts information is shown separately for the 1997 Annex because that subarea has only been receiving tax increment revenue since 2005-06. In many prior fiscal years, the current year value was less than the base year value. Tax receipts for the Merged Project are shown in Table 8.2, which outlines a comparison of receipts to the amounts anticipated separately for Project No. 2 and Project No. 3. Tax receipts for Project No. 4 are shown in Table 8.3.
As shown in the tables, taxes received for 2009-10 are less, as a percentage of the amount estimated as due, than those received in most prior fiscal years. This is primarily because: 1) taxes refunded to taxpayers because of resolved appeals and other factors were significant; and 2) the amounts of supplemental revenues received for the Project Areas have decreased from prior year levels and are, in some cases, negative amounts. For the 2009-10 fiscal year, Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 15 large tax refunds impacted tax receipts in Project No. 1 ($800,000) and Project No. 3 ($2.1 million). The Agency will not begin to receive tax increment for the 2010-11 fiscal year until November, 2010.
For Project No. 3, relatively large tax refunds were also issued during the 2005-06 fiscal year. The majority of the tax refunds that have occurred in the Merged Project, at least in terms of dollar impact, are the result of appeals on properties owned by BP and/or Ineos.
Section F – Tax Increment Projections
Tax increment revenues are calculated by first subtracting the base year value of a project area from the current year taxable value in order to determine the incremental taxable value. Applicable tax rates are then applied to the incremental taxable value in order to determine tax increment revenues.
Unitary revenues are allocated by the County based on a formula, as specified by AB 454. The amount of unitary revenue each Project Area is entitled to receive varies from Project Area to Project Area. Over time, the amount of unitary revenue allocable to each Project Area has decreased in importance as the amount of unitary revenue has remained fairly constant and other property taxes have increased. The amount of unitary revenue estimated by the County as due each Project Area for 2010-11 is as follows:
2010-11 Project Area Unitary
Project No. 1 $ 72,775 Project No. 2 60,447 Project No. 3 15,129 Project No. 4 3,738
Total $152,089
The Agency also routinely receives supplemental property taxes for the Project Area. Due to the difficulty of estimating supplemental revenues, such revenues have not been included in the enclosed revenue projections. Supplemental property taxes can increase or decrease the amount of tax increment revenue actually received, and are based upon the difference in value of the sales price versus the existing taxable value. If the sales price is higher than the existing taxable value, additional revenues are due from the taxpayer. If, however, the sales price is lower than the existing taxable value, a refund would be due the taxpayer.
Housing Set-Aside
Redevelopment agencies are required to deposit not less than 20 percent of the tax increment generated in a project area into a special fund to be used for qualified low- and moderate- income housing programs. The proposed financing for which this Report was prepared involves the pledge of these revenues, referred to as the Housing Set-Aside or Housing Revenue. The CRL permits the Housing Set-Aside from one Project Area to be used in another Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 16
Project Area thus allowing for an aggregate pledge of the Housing Set-Aside from several different redevelopment project areas.
Current and Projected Revenues
This is a challenging time to prepare estimates of future revenues. The value of real estate market in southern California has been declining after escalating at double digit rates for a number of years. It is not known at the present time whether additional valuation declines will occur or what impact future valuation declines, if any, will have on assessed values in the Project Areas. Predicting future real estate trends and economic conditions and how those factors might affect taxable values in the Project Area is outside the scope of this study.
Estimates of future housing set-aside revenues have been prepared and are summarized in Table 10.0 for all Project Areas and detailed by Project Area in Table 10.1 to 10.3. The estimates are based on the assessed values reported by the County for the 2010-11 fiscal year. Estimates for revenues to be received in future years are based on the County-reported numbers, modified from the current levels only to incorporate current and clearly identified factors that will change values. Potential changes to values (positive or negative) as a result of future economic conditions or potential future real estate values have not been estimated. Unitary revenue and other property are assumed to remain at their reported levels for 2010-11 and thereafter. The other categories of assessed values are assumed to change in future fiscal years, but only on a limited basis: only currently demonstrable changes that can be quantified have been included. The following factors are assumed to change existing assessed values in future fiscal years:
Trended Growth New Development Property Transfers Filed Appeals Time Limitations Dollar Limitations
A description of each of these assumptions is included below.
Trended Taxable Value: In California, real property values (land and improvements) are subject to an annual inflationary increase, as allowed under Proposition 13. The maximum inflation factor that county assessors can use to increase assessed values is two percent. For the 2010-11 fiscal year the Proposition 13 inflation rate is actually a slight negative: - 0.3 percent. Since Proposition 13 was enacted in 1979, the inflation factor has equaled the 2.0 percent maximum in all but about 5 fiscal years. The 2010-11 negative factor represents the first time since Proposition 13 was enacted that the inflation rate has not at least equaled 1.0 percent.
In general, real property values are assumed to increase per an assumed inflation factor allowable under Proposition 13. For Projects Nos. 1, 2 and 4, the application of the Proposition 13 inflationary factor is appropriate. In Project No. 3, however, the impacts of the oil refinery and polypropylene assessments have, from time to time, tended to negate the inflationary factor. As a result, the projections for Project No. 3, including the 1997 Annex, have been prepared without the use of any inflationary trend. Rather, the values are assumed to remain Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 17
constant unless impacted by specific assumed future occurrences, e.g., appeals and new development.
For the purpose of the projection of revenues for 2011-12 and thereafter, the inflation rate is assumed to return to 2.0 percent a year. In the applicable Project Areas, the inflation rate is assumed to only apply to certain properties. Land and improvement values (real property) attributable to properties which were reported for the 2009-10 fiscal year to have sold since January 2003 are held constant with no trend applied. The balance of real property values are assumed to increase by 2.0% per year. This assumption continues throughout the term of the revenue projections. This results in an effective trend of about 0.8 percent for Projects No. 1 and 4, and 1.0 percent for Project No. 2. As stated above, no inflation rate has been used for Project No. 3. A summary of the inflation rates used for 2011-12 and thereafter is as follows:
Project Area Trend
Project No. 1 0.8% Project No. 2 1.0% Project No. 3 0.0% Project No. 4 0.8%
New Development: Future year tax increment revenue estimates have been increased for new construction projects that have been recently completed or that are currently under construction. Projects which may be planned, but have not yet started construction have not been included in the revenue estimates. All development activity was obtained from Agency staff and confirmed through site visits and/or secondary sources. Amounts estimated as added are summarized on Tables 9.1 to 9.3
Property Transfers: Future year tax increment revenue estimates have also been adjusted for property sales in the Project Areas. Actual reported sales from January 1, 2010 to July 30, 2010 have been extracted from real estate sources and the difference between the “adjusted” sales price and the current assessed value is added to the tax roll for 2011-12.3 Aggregate property transfer totals for 2010 to date resulted in minor increases or decreases in overall value. Sales during the previous year (calendar 2009) also resulted in minor differences, indicating that property sales are still sluggish in the Project Areas. The specific changes to future value added are shown with new development projects in Tables 9.1 to 9.3.
Appeals - Automatic Reductions: Assessed values reported by the County for 2010-11 reflect the County’s processing of automatic assessed value reductions for fiscal years 2008-09 through 2010-11. To process these declines, the County Assessor’s office reviewed the value for single family homes and condominiums which are reported to have sold from January 1, 2003 through June 30, 2009. Additional automatic assessed value reductions for 2011-12 or thereafter have not been assumed, although reductions for filed appeals, as discussed below, have been estimated.
Appeals - Taxpayer Initiated: Assumptions regarding the resolution of appeals that are utilized in the enclosed projections are as shown in the enclosed Tables 5 and 6 and are as presented in the above “Assessment Appeals” section. Valuation reductions resulting from the
3 Additional properties may have transferred ownership during the time period reviewed, but sales information was not available and taxable value changes could therefore not be calculated. Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 18 resolution of appeals are assumed to occur in 2011-12 and 2012-13. Refunds related to the resolution of these appeals have also been incorporated into the revenue projections and are assumed to commence in the current 2010-11 fiscal year and to continue through 2012-13. The actual timing for the resolution of the appeals could be significantly sooner or later than the three year time period assumed.
Time Limitations: The individual subareas of the redevelopment project areas are each entitled to receive tax increment revenues for different time durations. The tax increment projections included in this Report are based on the assumption that each subarea will cease to receive tax increment before it reaches its deadline to receive tax increment revenues. The specific assumption incorporated is that full revenues will be received by the Agency for a given subarea for the fiscal year preceding the fiscal year containing the applicable tax increment receipt deadline. The most current deadlines for the receipt of tax increment revenues for each subarea are outlined in Table 1.0. The impact that the varying tax increment receipt deadlines has on the overall revenue stream is illustrated in the attached Table 10.0.
Dollar Limitations: The individual subareas of the Project Areas that were adopted before 1997 all have individual dollar limitations on the amount of tax increment revenue that can be received on or before the time duration limitation is reached. Given the other assumptions incorporated into the revenue projections, none of the subareas are estimated to reach those tax increment limits before reaching its time limitation, discussed above. A comparison of the cumulative amount of tax increment revenue received and to be received is included in the revenue projections for each individual subarea in Tables 11.1 to 11.7.
The primary assumption that affects the aggregate amount of tax increment revenue estimated by be received over time for each area is the trend rate assumed. As outlined above, the rates incorporated into the enclosed projections range from 0.0 percent to 1.0 percent. If the actual assessed values in the Project subareas increase at rates higher than that assumed, one or more of the areas could reach its tax increment limit before it reaches the time when it is no longer eligible to receive tax increment revenue. Given the other assumptions included in the tax increment revenue projections, the following rates of growth would cause the subareas to reach its tax increment limit before its duration deadline:
Subarea Trended Growth Project No. 1 Original 17.0% Project No. 1 1985 Annex 13.0% Project No. 1 1997 Annex No $$ Limit Project No. 2 - Original 17.0% Project No. 2 - 1983 Annex 1.1% Project No. 3 - Original 12.0% Project No. 2/ 3 - 1997 Annex No $$ Limit Project No. 4 No $$ Limit
If the Project Areas were to grow at the rates outlined above, they would likely reach their tax increment dollar limit a year or two before they would otherwise no longer be able to receive tax increment revenue. The higher the rate of growth, the earlier the dollar tax increment limit is likely to be reached. As mentioned above, the Project No. 1 1985 Annex and Project No. 3 Original Area have tax increment limits that are subject to annual escalation based on increases in the Consumer Price Index. For the purpose of estimating whether or not these areas would hit their limit, an escalated limit was estimated. The final tax increment limit for Carson Redevelopment Agency Fiscal Consultant Report June 18, 2010 Page 19
both of these areas are likely to vary from the estimate prepared and will be dependent upon future increases in the Consumer Price Index and the specific type of index used.
Section G – Agency Obligations
The revenue projections contained in the enclosed tables include a calculation of the gross Housing Set- Aside. Deductions to account for prior liens on these funds have not been included in this analysis.
Section H – Other Issues
Current Legislative Requirements
Due to shortfalls in the state budget, from time to time the state has required that redevelopment agencies pay a certain portion of tax increment revenues into a state fund for schools, known as the Educational Revenue Augmentation Fund (ERAF). The required redevelopment payments offset the need for a similar amount of state aid to education. The Agency was required to make ERAF contributions in the following fiscal years: 1993-94; 1994- 95; 2002-03; 2003-04; 2004-05; 2005-06. No payments were required for the 2006-07 or 2007- 08 fiscal years.
When the state sought to impose an additional payment from redevelopment agencies in 2008- 09 the state redevelopment agency association sued and won. As a result the Agency did not have to make an ERAF payment for the 2008-09 fiscal year. For 2009-10 and 2010-11 the state once again sought to obtain payments from redevelopment agency for school funding. In order to withstand potential legal challenges, the state modified the ERAF payment requirements, now referred to as the Supplemental Education Revenue Augmentation Fund, or SERAF. The state’s ability to extract SERAF payments from redevelopment agencies was upheld at the appellate level and redevelopment agencies are/will be required to make payments for the 2009-10 and 2010-11 fiscal year. The SERAF payment required from the Agency equals $10.1 million for 2009-10 and $2.1 million for 2010-11. The Agency made the 2009-10 SERAF payment just prior to the May 1, 2010 due date from non-housing revenues generated by the Merged Project Area. The 2010-11 payment is not due until May 2011.
Caveats
The value and revenue estimates contained in this Report are based upon information, data and assumptions believed to be reasonable and accurate. The assessment practices and county allocation procedures discussed in this Report are based on information provided by representatives of Los Angeles County. Assessment practices and allocation procedures are set, in part, administratively and can be changed. Nothing came to the fiscal consultant’s attention during this review to indicate that any changes are imminent. To a certain extent, the estimates of revenue are based on assumptions that are subject to a degree of uncertainty and variation and therefore are not represented as results that will actually be achieved. This is particularly true in the 2010 real estate environment when the future of home prices and certain other factors cannot be determined. The analyses presented herein, however, have been conscientiously prepared on the basis of the fiscal consultant’s experience in the field of financial analysis for redevelopment agencies. Table 2.1 Carson Redevelopment Agency Assessed Values by Land Use Fiscal Year 2010-11
Project No. 1 (1)
Category of Value # of Parcels 2010-11 Value Percentage Residential 196 57,737,987 3.57% Commercial 216 503,739,445 31.18% Industrial 448 688,709,639 42.62% Recreational 0 13,998,866 0.87% Institutional/Government 89 1,859,398 0.12% Vacant Land 145 92,935,405 5.75% SBE (2) - - 0.00% Other (2) (3) 112 6,249,436 0.39% Unsecured (2) 1,100 250,163,851 15.48% Miscellaneous 6 433,559 0.03%
Total 1,100 1,615,827,586 100.00%
(1) Includes all subareas of the Project Area. (2) Indicates the number of assessments in this category but actually represent a duplicate parcel count, and so are not included in the total parcel count. (3) Includes values for possessory interest, mineral rights and other miscellaneous types of valuation.
Project No. 4
Category of Value # of Parcels 2010-11 Value Percentage Residential 2,433 558,735,461 63.55% Commercial 92 90,380,422 10.28% Industrial 115 130,482,312 14.84% Recreational 1 381,128 0.04% Institutional/Government 110 6,927,637 0.79% Vacant Land 49 14,170,168 1.61% SBE (1) - - 0.00% Other (1) (2) 201 7,072,343 0.80% Unsecured (1) 398 66,704,775 7.59% Miscellaneous 2 4,298,036 0.49%
Total 2,802 879,152,282 100.00%
(1) Indicates the number of assessments in this category but actually represent a duplicate parcel count, and so are not included in the total parcel count. (2) Includes values for possessory interest, mineral rights and other miscellaneous types of valuation.
Source: Los Angeles County Assessment Records
DHA Consulting Page 20 FCR Tables - All Projects.xls Land Use Table 2.1 2010-11 9/23/2010 Table 2.2 Carson Redevelopment Agency Land Use Category Summary Fiscal Year 2010-11
Merged and Amended Project Area
Project No. 2 (1)
Category of Value # of Parcels 2010-11 Value Percentage Residential 1,082 197,450,954 25.16% Commercial 37 60,160,808 7.67% Industrial 94 391,420,561 49.87% Recreational 2 956,453 0.12% Institutional/Government 70 2,329,122 0.30% Vacant Land 44 12,167,352 1.55% SBE (2) 6 1,072,611 0.14% Other (2) (3) 5 44,829 0.01% Unsecured (2) 278 119,238,128 15.19% Miscellaneous - 0.00%
Total 1,329 784,840,818 100.00%
(1) Includes the Project No. 2 Original and Project No. 2 1983 Annex. (2) Indicates the number of assessments in this category but actually represent a duplicate parcel count, and so are not included in the total parcel count. (3) Includes values for possessory interest, mineral rights and other miscellaneous types of valuation.
Project No. 3 (1)
Category of Value # of Parcels 2010-11 Value Percentage Residential 269 85,936,841 11.34% Commercial 58 99,340,190 13.11% Industrial 51 125,970,461 16.62% Recreational 1 23,699 0.00% Institutional/Government 100 122,845 0.02% Vacant Land 38 47,019,723 6.20% SBE (2) 4 2,260,641 0.30% Other (2) (3) 21 195,688,182 25.82% Unsecured (2) 207 196,455,331 25.92% Miscellaneous 3 5,004,863 0.66%
Total 520 757,822,776 100.00%
(1) Includes the Project No. 3 Original and Project No. 2/3 1997 Annex. (2) Indicates the number of assessments in this category but actually represent a duplicate parcel count, and so are not included in the total parcel count. (3) Includes values for possessory interest, mineral rights and other miscellaneous types of valuation.
Source: Los Angeles County Assessment Records
DHA Consulting FCR Tables - All Projects.xls Land Use Table 2 .2 2010-11 Page 21 9/23/2010 Table 3.1 Carson Redevelopment Agency 10 Larger Taxpayers - Secured and Unsecured Fiscal Year 2010-11
Project No. 1 (1) # of 2010-11 Total Incremental No Assessee Name Subarea Primary Uses Parcels Total AV Value Value
1 Equilon Enterprises 1997 Annex Industrial/Petroleum 11 74,868,967 4.63% 6.11% 2 VCG-Southbay Pavilion LLC (3) Original Area Retail/Regional 6 73,179,119 4.53% 5.97% 3 AMB Mar Carson LLC (2) Original & 1985 Light Industrial/Office 15 60,330,851 3.73% 4.93% 4 Prime Wheel Corporation 1985 Annex Manufacturing 3 52,282,129 3.24% 4.27% 5 Carson Marketplace LLC Original Area Vacant/Commercial 10 45,971,115 2.85% 3.75% 6 Shell Oil Company 1997 Annex Industrial/Petroleum 3 39,719,713 2.46% 3.24% 7 Bottling Group LLC 1985 Annex Manufacturing 3 30,754,042 1.90% 2.51% 8 Seacliff Centre Pointe LLC (2) 1985 Annex Office/ R & D 2 27,212,637 1.68% 2.22% 9 Carson Hotel LLC Original Area Hotel and Parking 2 25,800,000 1.60% 2.11% 10 Charles J. Carlson Trust 1985 Annex Retail Center (Kmart) 4 25,049,700 1.55% 2.05%
TOTAL MAJORS 59 455,168,273 28.17% 37.16% TOTAL 2010-11 PROJECT VALUES 1,615,827,586 1,224,843,145
Project No. 4 # of 2010-11 Total Incremental No Assessee Name Subarea Primary Uses Parcels Total AV Value Value
1 NYK Distribution Systems, Inc. N/A Industrial 3 20,659,468 2.35% 5.53% 2 AHF Ducommun Inc N/A Industrial 1 14,242,535 1.62% 3.82% 3 Ducommun Aerostructures Inc N/A Unsecured 1 13,972,219 1.59% 3.74% 4 DEJ Family LP N/A Industrial 4 12,379,356 1.41% 3.32% 5 642 Alondra Properties LLC N/A Industrial/Office/Vacant 5 9,031,043 1.03% 2.42% 6 Evergreen American Corporation (2) N/A Industrial/Vacant Land 7 8,696,505 0.99% 2.33% 7 Imperial Estates Inc (2) N/A Mobile/Mfg Home Parks 1 7,743,802 0.88% 2.07% 8 Goodyear Tire and Rubber Company N/A Miscellaneous/Unsecured 3 7,670,677 0.87% 2.05% 9 Paramount Scaffold Inc N/A Unsecured 1 7,586,365 0.86% 2.03% 10 Rolls Scaffold and Equipment Inc N/A Unsecured 1 6,899,007 0.78% 1.85%
TOTAL MAJORS 27 108,880,977 12.38% 29.17% TOTAL 2010-11 PROJECT VALUES 879,152,282 373,270,410
(1) Includes all subareas of Project No. 1. (2) These taxpayers have assessment appeals currently outstanding on at least a portion of their holdings. See "Assessment Appeals" section in the Report. (3) Previous taxpayer was HREG Genesis.
DHA Consulting FCR Tables - All Projects.xls Top 10 Project 1 and 4 2010-11 Page 22 9/23/2010 Table 3.2 Carson Redevelopment Agency 10 Larger Taxpayers - Secured and Unsecured Fiscal Year 2010-11
Merged Project # of 2010-11 Total Incremental No Assessee Name Subarea Primary Uses Parcels Total AV Value Value
1 Watson Land Company (1) Projects 2 & 3 Industrial / Office Parks 115 354,219,248 22.96% 27.20% 2 BP West Coast Products (1) Project 3 & 1997 Industrial/Petroleum 15 124,417,870 8.07% 9.55% 3 Ineos Polypropylene LLC (1) Project 3 Original Polypropylene Plant 1 110,724,733 7.18% 8.50% 4 Air Products and Chemicals Inc (1) 1997 Annex Hydrogen Plant/Unsecured 2 90,527,858 5.87% 6.95% 5 CCL Tube Inc Project 3 Original Unsecured/Industrial 1 29,544,398 1.92% 2.27% 6 AMB Property LP (1) Project 2 Original Industrial & Commercial 3 26,234,597 1.70% 2.01% 7 Carson Real Estate Leasing Project 2 Original Automotive Uses 5 25,694,263 1.67% 1.97% 8 Atlantic Richfield Company 1997 Annex Industrial/Petroleum 5 23,433,368 1.52% 1.80% 9 1118 LLC (1) Project 2 Original Industrial 1 22,184,317 1.44% 1.70% 10 International Paper Company (1) Project 2 Original Industrial 2 21,715,568 1.41% 1.67%
TOTAL MAJORS 150 828,696,220 53.72% 63.63%
TOTAL 2010-11 PROJECT VALUES 1,542,663,594 1,302,364,093
(1) These taxpayers have assessment appeals currently outstanding on at least a portion of their holdings. See "Assessment Appeals" section in the Report. The total value under appeal for Watson Land Company is approximately $45 million.
Source: Los Angeles County Assessment Records
DHA Consulting FCR Tables - All Projects.xls Top 10 Merged 2010-11 Page 23 9/23/2010 Table 4.1 Carson Redevelopment Agency Historical Taxable Values
Various Projects
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
PROJECT NO. 1 Secured 1,024,916,051 1,106,346,236 1,159,616,203 1,216,523,027 1,364,430,227 1,365,663,735 SBE ------Unsecured 258,452,180 288,685,091 246,614,889 298,754,711 283,287,182 250,163,851
TOTAL VALUE 1,283,368,231 1,395,031,327 1,406,231,092 1,515,277,738 1,647,717,409 1,615,827,586 % Change 8.70% 0.80% 7.75% 8.74% -1.94%
Total $$ Change 332,459,355 Total % Change 25.91% Average $$ Change 66,491,871 Average % Change 5.18%
MERGED PROJECT Secured 1,084,896,315 1,152,363,006 1,241,163,138 1,294,609,393 1,226,547,375 1,223,636,883 SBE 6,330,772 5,891,608 3,215,909 3,186,925 3,132,616 3,333,252 Unsecured 257,861,017 280,163,420 261,888,165 288,798,493 306,187,782 315,693,459
TOTAL VALUE 1,349,088,104 1,438,418,034 1,506,267,212 1,586,594,811 1,535,867,773 1,542,663,594 % Change 6.62% 4.72% 5.33% -3.20% 0.44%
Total $$ Change 193,575,490 Total % Change 14.35% Average $$ Change 38,715,098 Average % Change 2.87%
PROJECT NO. 4 Secured 680,420,772 763,587,467 826,047,640 872,214,285 842,676,730 812,447,507 SBE 1,097,911 1,004,586 - - - - Unsecured 45,575,487 39,723,254 48,967,651 54,977,566 59,773,024 66,704,775
TOTAL VALUE 727,094,170 804,315,307 875,015,291 927,191,851 902,449,754 879,152,282 % Change 10.62% 8.79% 5.96% -2.67% -2.58%
Total $$ Change 152,058,112 Total % Change 20.91% Average $$ Change 30,411,622 Average % Change 4.18%
Source: Los Angeles County Auditor-Controller
DHA Consulting FCR Tables - All Projects.xls Hist TV_All Page 24 9/23/2010 Table 4.2 Carson Redevelopment Agency Historical Taxable Values
Merged Project Breakdown
2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
MERGED TOTAL Secured 1,084,896,315 1,152,363,006 1,241,163,138 1,294,609,393 1,226,547,375 1,223,636,883 SBE 6,330,772 5,891,608 3,215,909 3,186,925 3,132,616 3,333,252 Unsecured 257,861,017 280,163,420 261,888,165 288,798,493 306,187,782 315,693,459
TOTAL VALUE 1,349,088,104 1,438,418,034 1,506,267,212 1,586,594,811 1,535,867,773 1,542,663,594 % Change 6.62% 4.72% 5.33% -3.20% 0.44%
Total $$ Change 193,575,490 Total % Change 14.35% Average $$ Change 38,715,098 Average % Change 2.87%
PROJECT NO. 2 Secured 531,086,180 593,264,876 639,467,840 658,276,453 667,530,374 664,530,079 SBE 1,533,252 1,364,242 1,072,611 1,072,611 1,072,611 1,072,611 Unsecured 106,434,106 120,672,702 121,515,736 111,836,335 122,510,731 119,238,128
TOTAL VALUE 639,053,538 715,301,820 762,056,187 771,185,399 791,113,716 784,840,818 % Change 11.93% 6.54% 1.20% 2.58% -0.79%
Total $$ Change 145,787,280 Total % Change 22.81% Average $$ Change 29,157,456 Average % Change 4.56%
PROJECT NO. 3 Secured 553,810,135 559,098,130 601,695,298 636,332,940 559,017,001 559,106,804 SBE 4,797,520 4,527,366 2,143,298 2,114,314 2,060,005 2,260,641 Unsecured 151,426,911 159,490,718 140,372,429 176,962,158 183,677,051 196,455,331
TOTAL VALUE 710,034,566 723,116,214 744,211,025 815,409,412 744,754,057 757,822,776 % Change 1.84% 2.92% 9.57% -8.67% 1.75%
Total $$ Change 47,788,210 Total % Change 6.73% Average $$ Change 9,557,642 Average % Change 1.35%
Source: Los Angeles County Auditor-Controller
DHA Consulting FCR Tables - All Projects.xls Hist TV Merged Bkdwn Page 25 9/23/2010 Table 5.1 Carson Redevelopment Agency Redevelopment Project No. 1 - All Subareas Assessment Appeals Information Estimated Tax Refunds from Appeals
AV of Disputed Add Total ----- Timing Estimate ----- (4) Appeals Outstanding Revenue @ Estimated Estimated Est. Total Future Year Pending (1) Appeals (1) 0.01 Reduction (2) Tax Refund Interest (3) Refund 2010-11 (5) 2011-12 2012-13
RESOLVED APPEALS Bottling Group (6) 550,000 (251,000) (6,285) - JC Penney (7) 1,130,000 (410,000) (70,000) - All Years (8) 216,000 -30.6% (66,000) (12,000) (78,000) (78,000)
PENDING APPEALS 2001-02 5 1,182,063 11,821 -21% (2,000) (1,000) (3,000) (3,000) - 2002-03 2 830,465 8,305 -21% (2,000) (1,000) (3,000) (3,000) - 2003-04 5 13,461,908 134,619 -21% (28,000) (13,000) (41,000) (41,000) - 2004-05 - - - -21% - - - - 2005-06 0 - - -21% - - - - - 2006-07 2 8,006,491 80,065 -21% (17,000) (5,000) (22,000) (22,000) - 2007-08 1 4,526,448 45,264 -21% (10,000) (2,000) (12,000) (12,000) - 2008-09 4 9,072,604 90,726 -21% (19,000) (5,000) (24,000) (12,000) (12,000) - 2009-10 53 345,234,527 3,452,345 -21% (725,000) (131,000) (856,000) (214,000) (428,000) (214,000)
TOTAL PENDING 72 382,314,506 3,823,145 (803,000) (158,000) (961,000) (307,000) (440,000) (214,000)
TOTAL ESTIMATED REFUNDS (1,039,000) (385,000) (440,000) (214,000)
(1) Includes all outstanding appeals, without adjustments for multi-year appeals for a single property. (2) The reduction assumed is equal to the average decline actually experienced in the Project Area from 2001-02 through June 2010. Also see Table 7.1. (3) Estimated based on a 6 percent interest rate and an assumption as to the number of years the appeal will have been outstanding when it is resolved. (4) Some appeals remain outstanding for multiple years in Los Angeles County. Timing shown above is just one of many possible scenarios. (5) Estimated changes shown for 2010-11 are assumed to reduce revenues otherwise calculated as due based on the 2010-11 assessed values reported by the County. (6) This refund was processed during the 2009-10 fiscal year but the County's appeal database does not contain information concerning an appeal for this assessee. Preliminary data suggests that the refund is associated with the cancelation of a portion of the 2009-10 taxes paid because of a taxpayer filing error. (7) Mullti-year appeals for the JC Penney property and were resolved and were deducted from the Agency's tax receipts for the Project Area during 2009-10 (8) Total of all appeals that were resolved with assessed value reductions during calendar 2010. Reduction amounts shown represent actual assessed value reductions, not estimates.
______Source: Los Angeles County Assessor's Appeal Database, updated through July 14, 2010.
DHA Consulting Page 26 Appeal History Update 9.18.10.xls Sum Appeal Refunds_Project 1 9/23/2010 Table 5.2 Carson Redevelopment Agency Merged and Amended Project - All Subareas Assessment Appeals Information Estimated Tax Refunds from Appeals
AV of Disputed Add Total ----- Timing Estimate ----- (4) Appeals Outstanding Revenue @ Estimated Estimated Est. Total Future Year Pending (1) Appeals (1) 0.01 Reduction (2) Tax Refund Interest (3) Refund 2010-11 (5) 2011-12 2012-13
RESOLVED APPEALS Ineos Polypropylene (6) 3,550,000 (1,447,000) (347,000) Others - All Years (7) 341,000 -7% (25,000) (3,000) (28,000) (28,000)
PENDING APPEALS 2001-02 15 391,830,904 3,918,309 -27% (1,058,000) (635,000) (1,693,000) (1,693,000) - 2002-03 14 259,183,548 2,591,835 -27% (700,000) (378,000) (1,078,000) (1,078,000) - 2003-04 15 188,801,980 1,888,020 -27% (510,000) (245,000) (755,000) (755,000) - 2004-05 17 182,107,387 1,821,074 -27% (492,000) (236,000) (728,000) (728,000) - 2005-06 15 89,992,948 899,929 -27% (243,000) (102,000) (345,000) (345,000) - 2006-07 12 81,028,555 810,286 -27% (219,000) (79,000) (298,000) (298,000) - 2007-08 13 177,006,252 1,770,063 -27% (478,000) (143,000) (621,000) (621,000) - 2008-09 18 403,649,905 4,036,499 -27% (1,090,000) (262,000) (1,352,000) (676,000) (676,000) 2009-10 52 388,586,452 3,885,865 -27% (1,049,000) (189,000) (1,238,000) (619,000) (619,000)
TOTAL PENDING 171 2,162,187,931 21,621,879 (5,839,000) (2,269,000) (8,108,000) (3,526,000) (3,287,000) (1,295,000)
TOTAL ESTIMATED REFUNDS (8,136,000) (3,554,000) (3,287,000) (1,295,000)
(1) Includes all outstanding appeals, without adjustments for multi-year appeals for a single property. (2) The reduction assumed is equal to the average decline actually experienced in the Project Area from 2001-02 through June 2010. Also see Table 7.2. (3) Estimated based on a 6 percent interest rate and an assumption as to the number of years the appeal will have been outstanding when it is resolved. (4) Some appeals remain outstanding for multiple years in Los Angeles County. Timing shown above is just one of many possible scenarios. (5) Estimated changes shown for 2010-11 are assumed to reduce revenues otherwise calculated as due based on the 2010-11 assessed values reported by the County. (6) Appeals for the polypropylene plant for 2006-07 and 2007-08 were resolved in June 2009 and were apparently deducted from the Agency's tax receipts for the Project Area during 2009-10. (7) Total of all appeals that were resolved with assessed value reductions during calendar 2010. Reduction amounts shown represent actual assessed value reductions, not estimates.
______Source: Los Angeles County Assessor's Appeal Database, updated through July 14, 2010.
DHA Consulting Appeal History Update 9.18.10.xls Sum Appeal Refunds_Merged Page 27 9/23/2010 Table 5.3 Carson Redevelopment Agency Redevelopment Project No. 4 Assessment Appeals Information Estimated Tax Refunds from Appeals
AV of Disputed Add Total ----- Timing Estimate ----- (4) Appeals Outstanding Revenue @ Estimated Estimated Est. Total Future Year Pending (1) Appeals (1) 0.01 Reduction (2) Tax Refund Interest (3) Refund 2010-11 (5) 2011-12 2012-13
RESOLVED APPEALS (6) All Years 9,824 -10% (1,000) (100) (1,100) (1,100)
PENDING APPEALS 2003-04 2 996,336 9,963 -15% (1,500) (1,000) (2,500) (2,500) - 2004-05 2 455,345 4,553 -15% (700) (300) (1,000) (1,000) - 2005-06 0 - - -15% - - - - - 2006-07 0 - - -15% - - - - - 2007-08 2 561,743 5,617 -15% (800) (200) (1,000) (1,000) - 2008-09 5 1,971,737 19,717 -15% (3,000) (500) (3,500) (3,500) - 2009-10 45 60,345,507 603,455 -15% (90,500) (16,000) (106,500) (27,000) (53,000) (26,500)
TOTAL PENDING 56 64,330,668 643,307 (96,500) (18,000) (114,500) (31,500) (56,500) (26,500)
TOTAL ESTIMATED REFUNDS (115,600) (32,600) (56,500) (26,500)
(1) Includes all outstanding appeals, without adjustments for multi-year appeals for a single property. (2) The reduction assumed is equal to the average decline actually experienced in the Project Area from 2001-02 through June 2010. Also see Table 7.3. (3) Estimated based on a 6 percent interest rate and an assumption as to the number of years the appeal will have been outstanding when it is resolved. (4) Some appeals remain outstanding for multiple years in Los Angeles County. Timing shown above is just one of many possible scenarios. (5) Estimated changes shown for 2010-11 are assumed to reduce revenues otherwise calculated as due based on the 2010-11 assessed values reported by the County. (6) Total of all appeals that were resolved with assessed value reductions during calendar 2010. Reduction amounts shown represent actual assessed value reductions, not estimates.
______Source: Los Angeles County Assessor's Appeal Database, updated through July 14, 2010.
DHA Consulting Appeal History Update 9.18.10.xls Sum Appeal Refunds_Project 4 Page 28 9/23/2010 Table 6.1 Carson Redevelopment Agency Redevelopment Project No. 1 - All Subareas Appeals Projected to Impact Assessed Values
Estimated Value Change by Year Years No. of Applicants Contested Reduction Resolved Total Value 2010-11 (5) 2011-12 2012-13 APPLICANT Outstanding Assmts. Opinion (1) Value (2) Assumed (3) Value Chg Estimate Memo Only Estimated Estimated
RESOLVED APPEALS (4) Project No. 1 Cbs Outdoor Inc 2008 to 2009 1 N/A 1,307,416 -31% 901,012 (406,404) (406,404) Jobar International Inc 2008 1 N/A 3,246,373 -10% 2,918,000 (328,373) (328,373) Chesley Houske 2008 1 N/A 910,350 -18% 750,000 (160,350) (160,350) 21136 South Figueroa Llc 2009 1 N/A 5,839,500 -33% 3,941,000 (1,898,500) (1,898,500) 18010 Figueroa llc 2009 1 N/A 4,653,750 -38% 2,876,000 (1,777,750) (1,777,750) Other Resolved Appeals 2009 6 N/A 14,637,000 -21% 11,562,640 (3,074,360) (3,074,360)
TOTAL RESOLVED 11 30,594,389 -25% 22,948,652 (7,645,737) (7,645,737) (3,074,360) -
OUTSTANDING APPEALS (6) Project No. 1 24 Hour Fitness As Lessee 2009 1 8,033,000 11,475,000 Amb/Mar Carson Llc 2009 2 23,810,000 27,987,058 Amsi Real Estate Llc 2009 1 4,900,000 12,023,902 Bottling Group Llc 2009 1 24,196,000 32,262,176 Esa P Portfolio L.L.C. 2009 1 10,592,000 17,655,588 Hreg Genesis Carson, Llc 2009 3 13,600,000 27,867,572 K Mart Corp. 2009 4 17,606,945 25,109,212 One Civic Plaza Dr. Llc 2009 2 13,926,000 19,400,000 Rm 190Th Lp And Ej 190Th Lp 2009 1 11,000,000 23,299,860 Seacliff Centre Pointe Llc 2009 2 17,500,000 27,277,286 Sears 2009 1 13,146,137 18,780,196 Tiaa-Cref - Centerpointe 2009 1 7,273,659 11,479,191 Appeals Under $10 Million 2000 to 2009 62 63,925,324 114,265,041
TOTAL OUTSTANDING 82 229,509,065 368,882,082 -21% 291,416,845 (77,465,237) (3,873,262) (38,732,619) (34,859,357)
GRAND TOTAL AV REDUCTION N/A N/A N/A N/A N/A (85,110,974) (11,518,999) (41,806,979) (34,859,357)
ESTIMATED TAX REFUNDS (7) (5)
(1) The applicant's opinion of value is input by the County from the appeal applications, when provided. Not all applications include an opinion of value. (2) Where appeals are outstanding for more than one year, only the most recent assessed value is included to calculate future assessed value reductions, although the tax refunds may apply to all years should the taxpayer be granted an assessment reduction. (3) The reduction assumed is equal to the average decline actually experienced in the Project Area from 2001-02 through June 2010. Also see Table 7.1. (4) Includes appeals resolved since July 2009, if successful, and/or appeals estimated to have an impact on assessed values in 2010-11 and thereafter. (5) Estimated changes shown for 2010-11 have been assumed to have been already incorporated in the reported 2010-11 assessed values used as the basis of the tax revenue projections and are therefore not deducted from County-reported values for 2010-11 in Tables 10.0 and 10.1. (6) Includes appeals filed for 2009-10 and prior fiscal years. (7) See Table 5.1 for estimated tax refunds.
Source: Los Angeles County Assessor's Appeal Database, updated through April 9, 2010
DHA Consulting Pending Appeals for AV Reduction Update 9.18.10.xls Appeals by Appl_#1 Page 29 9/23/2010 Table 6.2 Carson Redevelopment Agency Merged and Amended Project - All Subareas Appeals Projected to Impact Assessed Values
Estimated Value Change by Year Years No. of Applicants Contested Reduction Resolved Total Value 2010-11 (7) 2011-12 2012-13 APPLICANT Outstanding Assmts. Opinion (1) Value (2) Assumed (3) Value Chg Estimate Memo Only Estimated Estimated
RESOLVED APPEALS (4) Merged Project Ineos Polypropylene Llc. (5) 2006 to 2007 1 N/A - - C/O Cvs Realty Co. Amity Del Llc 2008 1 N/A 4,982,371 -10% 4,500,000 (482,371) Janine L. Thomas 2008 1 N/A 515,100 -18% 420,000 (95,100) Jaime Vasquez 2008 1 N/A 260,000 -12% 230,000 (30,000) Angel Jimenez 2008 1 N/A 238,770 -12% 210,000 (28,770) 1118, Llc 2009 1 N/A 22,237,020 -4% 21,300,000 (937,020) Sonic Automotive 2009 1 N/A 5,868,944 -16% 4,933,513 (935,431)
TOTAL RESOLVED 7 34,102,205 -7% 31,593,513 (2,508,692) (2,508,692) - -
OUTSTANDING APPEALS (6) Merged Project Air Products 2001 to 2008 5 Not Available 125,827,108 Bp West Coast Products Llc 2001 to 2009 16 37,922,500 127,733,358 Carson Nissan 2009 2 9,950,709 19,950,709 Ggf Carson Llc 2009 4 11,367,000 15,780,591 Huck International, Inc. 2007 1 5,256,489 10,512,978 Ineos Polypropylene Inc. 2008 to 2009 1 50,000,000 116,298,608 International Paper Company 2001 to 2002 1 6,600,000 19,213,884 Koll / Per Coral Tree, Llc 2009 1 10,999,000 14,467,367 Sheldon & Erwin & Essie Appel 2009 1 Not Available 17,802,825 Watson Land Company -114 2009 3 37,800,000 45,000,000 Appeals Under $10 Million 2004 to 2009 20 Not Available 19,957,529
TOTAL OUTSTANDING 55 N/A 532,544,957 -27% 388,757,819 (143,787,138) (14,378,714) (71,893,569) (57,514,855)
GRAND TOTAL AV REDUCTION N/A N/A N/A N/A N/A (146,295,830) (16,887,406) (71,893,569) (57,514,855)
ESTIMATED TAX REFUNDS (8) (7)
(1) The applicant's opinion of value is input by the County from the appeal applications, when provided. Not all applications include an opinion of value. (2) Where appeals are outstanding for more than one year, only the most recent assessed value is included to calculate future assessed value reductions, although the tax refunds may apply to all years should the taxpayer be granted an assessment reduction. (3) The reduction assumed is equal to the average decline actually experienced in the Project Area from 2001-02 through June 2010. Also see Table 7.2. (4) Includes appeals resolved since July 2009, if successful, and/or appeals estimated to have an impact on assessed values in 2010-11 and thereafter. (5) The reductions granted for these appeals are not expected to impact future assessed values; tax refunds only. See Table 5.2. (6) Includes appeals filed for 2009-10 and prior fiscal years. (7) Estimated changes shown for 2010-11 have been assumed to have been already incorporated in the reported 2010-11 assessed values used as the basis of the tax revenue projections and are therefore not deducted from County-reported values for 2010-11 in Tables 10.0 and 10.2. (8) See Table 5.2 for estimated tax refunds. ______Source: Los Angeles County Assessor's Appeal Database, updated through April 9, 2010
DHA Consulting Pending Appeals for AV Reduction Update 9.18.10.xls Appeals by Appl_Merged Page 30 9/23/2010 Table 6.3 Carson Redevelopment Agency Redevelopment Project No. 4 Appeals Projected to Impact Assessed Values
Estimated Value Change by Year Years No. of Applicants Contested Reduction Resolved Total Value 2010-11 (6) 2011-12 2012-13 APPLICANT Outstanding Assmts. Opinion (1) Value (2) Assumed (3) Value Chg Estimate Memo Only Estimated Estimated
RESOLVED APPEALS (4) Project No. 4 Michael E. Montoya 2009 1 478,583 -22% 372,000 (106,583) (106,583) Rosemary o Mckinney 2009 1 379,800 -21% 300,000 (79,800) (79,800) Enrico & Luz B. Diwa 2009 1 620,300 -11% 550,000 (70,300) (70,300) Alodia Penas 2009 1 305,044 280,000 (25,044) -25,044 Benjamin Franklin 2009 1 257,400 230,000 (27,400) (27,400) Joseph Babalola 2009 1 420,000 -12% 368,000 (52,000) (52,000)
TOTAL RESOLVED 6 2,461,127 -15% 2,100,000 (361,127) (281,727) (79,400) -
OUTSTANDING APPEALS (5) Project No. 4 Evergreen Shipping Agency 2009 7 2,350,000 8,717,170 Imperial Estates 2009 3 3,651,000 9,129,000 Rosecrans Group Llc 2009 2 2,696,000 6,742,298 Appeals Under $6 Million 2004 to 2009 46 14,300,498 39,742,200
TOTAL OUTSTANDING 58 22,997,498 64,330,668 -15% 54,681,068 (9,649,600) (964,960) (4,824,800) (3,859,840)
GRAND TOTAL AV REDUCTION N/A N/A N/A N/A N/A (10,010,727) (1,246,687) (4,904,200) (3,859,840)
ESTIMATED TAX REFUNDS (7) (6)
(1) The applicant's opinion of value is input by the County from the appeal applications, when provided. Not all applications include an opinion of value. (2) Where appeals are outstanding for more than one year, only the most recent assessed value is included to calculate future assessed value reductions, although the tax refunds may apply to all years should the taxpayer be granted an assessment reduction. (3) The reduction assumed is equal to the average decline actually experienced in the Project Area from 2001-02 through June 2010. Also see Table 7.3. (4) Includes appeals resolved since July 2009, if successful, and/or appeals estimated to have an impact on assessed values in 2010-11 and thereafter. (5) Includes appeals filed for 2009-10 and prior fiscal years. (6) Estimated changes shown for 2010-11 have been assumed to have been already incorporated in the reported 2010-11 assessed values used as the basis of the tax revenue projections and are therefore not deducted from County-reported values for 2010-11 in Tables 10.0 and 10.3. (7) See Table 5.3 for estimated tax refunds. ______Source: Los Angeles County Assessor's Appeal Database, updated through July 14, 2010
DHA Consulting Pending Appeals for AV Reduction Update 9.18.10.xls Appeals by Appl_#4 Page 31 9/23/2010 Table 7.1 Carson Redevelopment Agency Redevelopment Project No. 1 - All Subareas Historical Appeal Summary
------Resolved Appeal Summary ------Taxpayers Opinions of Value -----
# # Total Total Value Total Value Decline % Decline/ # Total Value Reduction Project Area Filed Resolved Value Filed Denied Allowed in Value All Resolved Pending Pending Requested
APPEALS (1)
2001-02 51 46 134,007,626 32,723,964 100,101,599 (21,826,512) -16% 5 1,182,063 (826,932) 2002-03 37 35 119,960,017 429,460 118,700,092 (21,710,282) -18% 2 830,465 (698,068) 2003-04 25 20 58,048,926 2,958,764 41,628,254 (8,251,865) -19% 5 13,461,908 Not Available 2004-05 22 22 51,665,126 23,381,575 28,283,551 (3,782,575) -7% 0 - - 2005-06 9 9 58,746,756 1,874,055 58,872,701 (16,910,803) -28% 0 - - 2006-07 9 7 38,517,042 271,463 30,239,099 (10,448,754) -34% 2 8,006,491 (4,112,491) 2007-08 10 9 34,539,120 3,762,115 26,250,557 (10,589,397) -35% 1 4,526,448 (2,263,224) 2008-09 14 10 49,553,316 11,716,769 28,763,943 (10,628,556) -26% 4 9,072,604 (7,299,571) 2009-10 (2) 67 14 402,525,255 6,790,140 50,500,588 (17,022,036) -30% 53 345,234,527 (137,941,079)
TOTAL APPEALS 244 172 947,563,184 83,908,305 483,340,384 (121,170,780) -21% 72 382,314,506 (153,141,365)
(1) Includes historical information on both resolved (denied and successful) and outstanding appeals. (2) Excludes any data concerning a $251,000 tax refund was processed during the 2009-10 fiscal year for the Pepsi Bottling property. The County's appeal database does not contain information concerning an appeal for this assessee. Preliminary data suggests that the refund is associated with the cancelation of a portion of the 2009-10 taxes paid because of a taxpayer filing error.
Source: Los Angeles County Appeal Database through July 14, 2010
DHA Consulting Appeal History Update 9.18.10.xls Project 1 DH Appeal History Page 32 9/23/2010 Table 7.2 Carson Redevelopment Agency Merged and Amended Project - All Subareas Historical Appeal Summary
------Resolved Appeal Summary ------Taxpayers Opinions of Value -----
# # Total Total Value Total Value Decline % Decline/ # Total Value Reduction Project Area Filed Resolved Value Filed Denied Allowed in Value All Resolved Pending Pending Requested
APPEALS (1)
2001-02 25 10 457,309,456 42,529,961 22,948,591 (9,513,960) -15% 15 391,830,904 (140,195,104) 2002-03 26 12 494,324,097 36,716,451 198,424,098 (73,570,037) -31% 14 259,183,548 (219,183,548) 2003-04 17 2 387,758,840 - 198,956,860 (44,036,860) -22% 15 188,801,980 (117,588,980) 2004-05 26 9 411,251,127 4,824,839 224,318,901 (44,309,584) -19% 17 182,107,387 (112,399,887) 2005-06 20 5 290,410,210 19,356,866 181,060,396 (27,060,396) -14% 15 89,992,948 (58,230,448) 2006-07 (2) 15 3 259,677,831 1,200,466 177,448,810 (72,448,810) -41% 12 81,028,555 (51,516,055) 2007-08 (2) 15 2 354,928,488 298,197 177,624,039 (72,280,209) -41% 13 177,006,252 (140,587,263) 2008-09 30 12 412,448,623 2,802,477 5,996,241 (636,241) -7% 18 403,649,905 (305,755,362) 2009-10 58 6 421,592,703 28,105,964 4,900,287 (935,431) -3% 52 388,586,452 (205,753,535)
TOTAL APPEALS 232 61 3,489,701,375 135,835,221 1,191,678,223 (344,791,528) -26% 171 2,162,187,931 (1,351,210,182)
(1) Includes historical information on both resolved (denied and successful) and outstanding appeals. (2) One hundred percent of the decline in values shown for 2006-07 and 2007-08 are attributable to reductions for the polypropylene plant which is currently owned by Ineos Propylene, LLC. The after appeal value for those years equals about $105 million. The 2010-11 value for the property is $110.7 million.
Source: Los Angeles County Appeal Database through July 14, 2010
DHA Consulting Appeal History Update 9.18.10.xls Merged DH Appeal History Page 33 9/23/2010 Table 7.3 Carson Redevelopment Agency Redevelopment Project No. 4 Historical Appeal Summary
------Resolved Appeal Summary ------Taxpayers Opinions of Value -----
# # Total Total Value Total Value Decline % Decline/ # Total Value Reduction Project Area Filed Resolved Value Filed Denied Allowed in Value All Resolved Pending Pending Requested
APPEALS (1)
2003-04 6 4 15,878,294 509,336 14,372,622 (3,442,622) -23% 2 996,336 (376,336) 2004-05 4 2 1,631,547 529,752 646,450 (161,450) -14% 2 455,345 631,055 2005-06 2 2 13,949,151 - 13,949,151 (4,242,593) -30% - - - 2006-07 3 3 21,117,183 10,725,612 10,391,571 (591,571) -3% - - - 2007-08 3 1 710,709 148,966 - - 0% 2 561,743 (17,283) 2008-09 (2) 24 19 11,415,593 7,436,786 2,007,070 (280,070) -3% 5 1,971,737 (1,477,257) 2009-10 51 6 62,956,352 1,628,401 982,444 (52,000) -2% 45 60,345,507 (40,093,349)
TOTAL APPEALS 93 37 127,658,829 20,978,853 42,349,308 (8,770,306) -14% 56 64,330,668 (41,333,170)
(1) Includes historical information on both resolved (denied and successful) and outstanding appeals.
Source: Los Angeles County Appeal Database through July 14, 2010
DHA Consulting Appeal History Update 9.18.10.xls Project 4 DH Appeal History Page 34 9/23/2010 Table 8.1 Carson Redevelopment Agency Project No. 1 - All Subareas Historical Tax Receipts
Description 2005-06 2006-07 2007-08 2008-09 2009-10 (1)
ORIGINAL & 1985 Total Value (2) 1,132,708,530 1,234,544,824 1,237,742,161 1,340,025,012 1,460,632,273 Base Year Valuation 244,831,259 244,831,259 244,831,259 244,831,259 244,831,259 Incremental AV 887,877,271 989,713,565 992,910,902 1,095,193,753 1,215,801,014 Original Tax Charge (3) 9,116,348 10,155,078 10,251,334 10,935,283 12,350,255
Actual Tax Receipts (4) 9,665,940 10,079,426 10,325,245 13,422,285 11,233,219 Percentage Tax Receipts 106% 99% 101% 123% 91%
1997 Total Value (5) 150,659,701 160,486,503 168,488,931 175,252,726 187,085,136 Base Year Valuation 146,153,182 146,153,182 146,153,182 146,153,182 146,153,182 Incremental AV 4,506,519 14,333,321 22,335,749 29,099,544 40,931,954 Original Tax Charge (3) 5,796 150,633 233,058 320,353 435,631
Actual Tax Receipts (4) 106,706 189,264 320,322 375,429 546,408 Percentage Tax Receipts 1841% 126% 137% 117% 125%
PROJECT NO. 1 TOTAL Total Value 1,283,368,231 1,395,031,327 1,406,231,092 1,515,277,738 1,647,717,409 Base Year Valuation 390,984,441 390,984,441 390,984,441 390,984,441 390,984,441 Incremental AV 892,383,790 1,004,046,886 1,015,246,651 1,124,293,297 1,256,732,968 Original Tax Charge (3) 9,122,144 10,305,712 10,484,392 11,255,636 12,785,887
Actual Tax Receipts (4) 9,772,646 10,268,690 10,645,567 13,797,714 11,779,627 Percentage Tax Receipts 107% 100% 102% 123% 92% (6)
(1) Tax receipts shown for 2009-10 are for the entire fiscal year. No taxes will be received for the 2010-11 fiscal year until November 2010. (2) Includes the Project No. 1 Original Area and the 1997 Annex. (3) The Original Tax Charge represents the tax increment revenue estimated by the County at the beginning of a fiscal year and includes a tax override rate. (4) Amounts shown equal actual tax receipts, including supplemental and miscellaneous revenues. (5) Includes the area added to Project No. 1 by the 1996-97 amendment (1997 Annex), which is shown separately because tax receipts in the subarea have varied significantly from the original tax charge amounts.
DHA Consulting FCR Tables - All Projects.xls Tax Receipts - Project 1 Page 35 9/23/2010 Table 8.2 Carson Redevelopment Agency Merged and Amended Project Area Historical Tax Receipts
Description 2005-06 2006-07 2007-08 2008-09 2009-10 (1)
PROJECT NO. 2 Total Value (2) 639,053,538 715,301,820 762,056,187 771,185,399 791,113,716 Base Year Valuation 100,819,821 100,819,821 100,819,821 100,819,821 100,819,821 Incremental AV 538,233,717 614,481,999 661,236,366 670,365,578 690,293,895 Original Tax Charge (3) 5,438,489 6,318,716 6,644,716 6,768,089 6,967,499
Actual Tax Receipts (4) 6,221,252 6,504,963 6,614,633 7,144,623 7,157,763 Percentage Tax Receipts 114% 103% 100% 106% 103%
PROJECT NO.3 Total Value (5) 710,034,566 723,116,214 744,211,025 815,409,412 744,754,057 Base Year Valuation 139,479,680 139,479,680 139,479,680 139,479,680 139,479,680 Incremental AV 570,554,886 583,636,534 604,731,345 675,929,732 605,274,377 Original Tax Charge (3) 5,761,701 5,962,093 6,334,029 7,057,864 6,253,834
Actual Tax Receipts (4) 4,187,013 5,428,978 6,654,343 7,547,705 5,463,657 Percentage Tax Receipts 73% 91% 105% 107% 87% (6) (6)
MERGED TOTAL Total Value 1,349,088,104 1,438,418,034 1,506,267,212 1,586,594,811 1,535,867,773 Base Year Valuation 240,299,501 240,299,501 240,299,501 240,299,501 240,299,501 Incremental AV 1,108,788,603 1,198,118,533 1,265,967,711 1,346,295,310 1,295,568,272 Original Tax Charge (3) 11,200,190 12,280,809 12,978,744 13,825,953 13,221,333
Actual Tax Receipts (4) 10,408,265 11,933,941 13,268,976 14,692,328 12,621,420 Percentage Tax Receipts 93% 97% 102% 106% 95% (6) (6)
(1) Tax receipts shown for 2009-10 are for the entire fiscal year. No taxes will be received for the 2010-11 fiscal year until November 2010. (2) Includes the Project No. 2 Original Area and the 1983 Annex. (3) The Original Tax Charge represents the tax increment revenue estimated by the County at the beginning of a fiscal year and includes a tax override rate. (4) Amount shown equals actual tax receipts, including supplemental and miscellaneous revenues. (5) Includes the Project 3 Original Area and the 1997 Annex. (6) A number of tax refunds attributable to prior year appeals, primarily for the BP/Ineos properties, were issued by the County during the 2005-06 and 2009-10 fiscal years.
DHA Consulting FCR Tables - All Projects.xls Tax Receipts - Merged Page 36 9/23/2010 Table 8.3 Carson Redevelopment Agency Project No. 4 Historical Tax Receipts
Description 2005-06 2006-07 2007-08 2008-09 2009-10 (1)
PROJECT NO. 4 Total Value 727,094,170 804,315,307 875,015,291 927,191,851 902,449,754 Base Year Valuation 505,881,872 505,881,872 505,881,872 505,881,872 505,881,872 Incremental AV 221,212,298 298,433,435 369,133,419 421,309,979 396,567,882 Original Tax Charge (2) 2,134,074 3,144,026 3,870,038 4,371,429 4,150,631
Actual Tax Receipts (3) 2,638,182 3,479,334 3,941,943 4,759,034 4,305,509 Percentage Tax Receipts 124% 111% 102% 109% 104%
(1) Tax receipts shown for 2009-10 are for the entire fiscal year. No taxes will be received for the 2010-11 fiscal year until November 2010. (2) The Original Tax Charge represents the tax increment revenue estimated by the County at the beginning of a fiscal year and includes a tax override rate. (3) Amount shown equals actual tax receipts, including supplemental and miscellaneous revenues.
DHA Consulting FCR Tables - All Projects.xls Tax Receipts - Project 4 Page 37 9/23/2010 Table 9.1 Carson Redevelopment Agency Redevelopment Project No. 1 - All Subareas Schedule of Taxable Value Changes
Units / Future ------Taxable Value Changes ------(1) Project Sq. Ft. Value Changes 2011-12 2012-13 2013-14
Project 1/Original No Development Identified (4) - - Property Transfers (2) (360,021) (360,021) Appeals (3) (22,999,901) (12,542,094) (10,457,807) - Total Original (23,359,922) (12,902,115) (10,457,807) - - Project 1/1985 - - No Development Identified (4) - - - Property Transfers (2) 891,914 891,914 Appeals (3) (49,833,118) (27,174,536) (22,658,582) - Total 1985 (48,941,204) (26,282,622) (22,658,582) - - Project 1/1997 - No Development Identified (4) - Property Transfers (2) 171,003 171,003 Appeals (3) (3,833,317) (2,090,349) (1,742,968) - Total 1997 (3,662,314) (1,919,346) (1,742,968) -
GRAND TOTAL (75,963,439) (41,104,083) (34,859,357) -
-
(1) Represents the estimated taxable value estimated to be added to (or deducted from) the tax rolls and does not necessarily represent the total market value of the development. (2) Taxable value changes from property transfers that occurred between January 1, 2010 and July 30, 2010. (3) From Table 6.1. (4) Several projects were recently completed or are planned for the Project Area, but none are under construction and estimated to add value to 2011-12.
Prepared by Agency Staff Tax Value Chgs_Project 1 TI Projection_FCR_2010-11.xls Page 38 9/23/2010 Table 9.2 Carson Redevelopment Agency Merged and Amended Project - All Subareas Schedule of Taxable Value Changes
Units / Future ------Taxable Value Changes ------(1) Project Sq. Ft. Value Changes 2011-12 2012-13 2013-14
Project 2/All No Development Identified (4) - - Property Transfers (2) (126,140) (126,140) Appeals (3) (12,940,842) (7,189,357) (5,751,486) - Total Project 2 (13,066,982) (7,315,497) (5,751,486) -
Project 3/Original Industrial/Mfg 2250 220th 102,000 6,900,000 - Industrial/Lt Mfg 2116 220th 340,000 21,400,000 10,700,000 10,700,000 Property Transfers (2) - Appeals (3) (84,115,476) (46,730,820) (37,384,656) - Total Project 3 (62,715,476) (36,030,820) (26,684,656) - - Project 3/1997 -
No Development Identified (4) - Property Transfers (2) 458,149 458,149 Appeals (3) (32,352,106) (17,973,392) (14,378,714) - Total 1997 (31,893,957) (17,515,243) (14,378,714) -
GRAND TOTAL (107,676,416) (60,861,560) (46,814,855) -
(1) Represents the estimated taxable value estimated to be added to (or deducted from) the tax rolls and does not necessarily represent the total market value of the development. (2) Taxable value changes from property transfers that occurred between January 1, 2010 and July 30, 2010. (3) From Table 6.2. (4) Several projects were recently completed or are planned for the Project Area, but none are under construction and estimated to add value to 2011-12.
Prepared by Agency Staff Tax Value Chgs_Merged Project TI Projection_FCR_2010-11.xls Page 39 9/23/2010 Table 9.3 Carson Redevelopment Agency Redevelopment Project No. 4 Schedule of Taxable Value Changes
Units / Future ------Taxable Value Changes ------(1) Project Sq. Ft. Value Changes 2011-12 2012-13 2013-14
Project 4/All
Residential Condominiums (4) 30 7,950,000 7,950,000 Property Transfers (2) 2,345,778 2,345,778 Appeals (3) (8,764,040) (4,904,200) (3,859,840) Total Project 4 1,531,738 5,391,578 (3,859,840) -
GRAND TOTAL 1,531,738 5,391,578 (3,859,840) -
(1) Represents the estimated taxable value estimated to be added to (or deducted from) the tax rolls and does not necessarily represent the total market value of the development. (2) Taxable value changes from property transfers that occurred between January 1, 2010 and July 30, 2010. (3) From Table 6.3. (4) Several other projects were recently completed or are planned for the Project Area, but none are under construction and estimated to add value to 2011-12.
Prepared by Agency Staff Tax Value Chgs_Project 4 TI Projection_FCR_2010-11.xls Page 40 9/23/2010 Table 10.0 Carson Redevelopment Agency Multiple Redevelopment Project Areas Housing Set-Aside Revenues (1)
Original 85 Annex 97 Annex Total Original 83 Annex Original 97 Annex Total Original (2) GRAND Fiscal Year Project No. 1 Project No. 1 Project No. 1 Project No. 1 Project No. 2 Project No. 2 Project No. 3 Project 2/3 Merged Project No. 4 TOTAL
2010-11 (3) 1,122,879 1,186,884 77,479 2,387,241 1,215,583 129,149 252,619 311,693 1,909,043 740,768 5,037,053 2011-12 1,103,208 1,138,921 75,897 2,318,027 1,216,082 130,694 220,757 287,463 1,854,996 759,987 4,933,011 2012-13 1,105,301 1,134,901 77,491 2,317,694 1,237,437 132,256 466,188 338,305 2,174,186 771,589 5,263,469 2013-14 1,127,379 1,174,273 82,563 2,384,215 1,263,277 133,832 660,388 390,105 2,447,603 790,404 5,622,221 2014-15 1,136,563 1,185,575 85,431 2,407,569 1,276,131 135,425 660,388 390,105 2,462,048 803,964 5,673,582 2015-16 1,145,821 1,196,967 88,321 2,431,109 1,289,113 137,033 660,388 390,105 2,476,639 817,634 5,725,382 2016-17 1,155,152 1,208,451 91,234 2,454,838 1,302,224 138,658 660,388 390,105 2,491,375 831,412 5,777,625 2017-18 1,164,559 1,220,026 94,171 2,478,756 1,315,467 140,298 660,388 390,105 2,506,259 845,301 5,830,316 2018-19 1,174,041 1,231,694 97,131 2,502,866 1,328,843 141,956 660,388 390,105 2,521,292 859,301 5,883,458 2019-20 1,183,598 1,243,455 100,115 2,527,169 1,342,352 143,629 660,388 390,105 2,536,474 873,413 5,937,056 2020-21 1,193,232 1,255,311 103,123 2,551,666 1,355,996 145,320 660,388 390,105 2,551,809 887,637 5,991,112 2021-22 1,202,943 1,267,261 106,155 2,576,359 1,369,777 147,027 660,388 390,105 2,567,297 901,976 6,045,632 2022-23 1,212,732 1,279,307 109,211 2,601,250 1,383,695 148,752 660,388 390,105 2,582,940 916,429 6,100,619 2023-24 1,222,599 1,291,449 112,291 2,626,339 1,397,753 150,493 660,388 390,105 2,598,739 930,998 6,156,077 2024-25 - 1,303,688 115,397 1,419,085 1,411,951 152,252 660,388 390,105 2,614,697 945,684 4,979,465 2025-26 - 1,316,025 118,527 1,434,552 1,426,291 154,029 660,388 390,105 2,630,814 960,487 5,025,852 2026-27 - 1,328,461 121,682 1,450,143 - 155,824 660,388 390,105 1,206,317 975,408 3,631,868 2027-28 - 1,340,997 124,862 1,465,859 - 157,636 660,388 390,105 1,208,129 990,449 3,664,437 2028-29 - 1,353,632 128,068 1,481,700 - 159,467 660,388 390,105 1,209,960 1,005,610 3,697,270 2029-30 - 1,366,369 131,299 1,497,668 - 161,315 660,388 390,105 1,211,809 1,020,892 3,730,369 2030-31 - 1,379,208 134,556 1,513,764 - 163,183 660,388 390,105 1,213,676 1,036,297 3,763,737 2031-32 - 1,392,149 137,839 1,529,989 - 165,069 660,388 390,105 1,215,562 1,051,825 3,797,375 2032-33 - 1,405,194 141,149 1,546,343 - 166,974 660,388 390,105 1,217,467 1,067,477 3,831,287 2033-34 - 1,418,343 144,485 1,562,828 - 168,897 660,388 390,105 1,219,391 1,083,254 3,865,473 2034-35 - 1,431,598 147,848 1,579,445 - 170,841 660,388 390,105 1,221,334 1,099,158 3,899,937 2035-36 - 1,444,958 151,237 1,596,196 - - 660,388 390,105 1,050,493 1,115,189 3,761,877 2036-37 - 154,654 154,654 - - - 390,105 390,105 1,131,348 1,676,107 2037-38 ------1,147,636 1,147,636 2038-39 - - - - - 1,164,055 1,164,055 2039-40 - - - - - 1,180,604 1,180,604 2040-41 - - - - - 1,197,287 1,197,287 2041-42 - - - - - 1,214,103 1,214,103
(1) See Tables 10.1 to 10.3 for details and assumptions. (2) Project No. 4 is eligible to receive tax increment revenue through the 2047-48 fiscal year. (3) Estimates for these fiscal years are based on actual assessed values reported for the Project Areas by Los Angeles County.
DHA Consulting TI Projection_FCR_2010-11.xls TI Combining_Hsg Page 41 9/23/2010/8:17 AM Table 10.1 Carson Redevelopment Agency Redevelopment Project No. 1 - All Subareas Tax Increment Projection
TI Limit: n/a (5)
Real (1) Other (1) Tax Value Total Less Base Gross Tax 20% Hsg Cumulative Fiscal Year Property Property Changes (2) Value 390,984,441 Tax Refunds (3) Revenue Set-Aside (4) Gross Revenue
Prior Yrs 179,501,339 2010-11 (6) 1,464,148,191 151,679,395 - 1,615,827,586 1,224,843,145 (385,000) 11,936,207 2,387,241 191,437,546 2011-12 1,475,861,377 151,963,056 (41,104,083) 1,586,720,349 1,195,735,908 (440,000) 11,590,135 2,318,027 203,027,680 2012-13 1,446,564,185 152,248,985 (34,859,357) 1,563,953,814 1,172,969,373 (214,000) 11,588,469 2,317,694 214,616,150 2013-14 1,423,277,342 152,537,203 - 1,575,814,544 1,184,830,103 - 11,921,077 2,384,215 226,537,226 2014-15 1,434,663,560 152,827,726 - 1,587,491,286 1,196,506,845 - 12,037,844 2,407,569 238,575,070 2015-16 1,446,140,869 153,120,573 - 1,599,261,442 1,208,277,001 - 12,155,545 2,431,109 250,730,616 2016-17 1,457,709,996 153,415,763 - 1,611,125,758 1,220,141,317 - 12,274,189 2,454,838 263,004,804 2017-18 1,469,371,676 153,713,314 - 1,623,084,990 1,232,100,549 - 12,393,781 2,478,756 275,398,585 2018-19 1,481,126,649 154,013,246 - 1,635,139,895 1,244,155,454 - 12,514,330 2,502,866 287,912,915 2019-20 1,492,975,662 154,315,577 - 1,647,291,240 1,256,306,799 - 12,635,843 2,527,169 300,548,759 2020-21 1,504,919,468 154,620,327 - 1,659,539,795 1,268,555,354 - 12,758,329 2,551,666 313,307,088 2021-22 1,516,958,823 154,927,515 - 1,671,886,339 1,280,901,898 - 12,881,794 2,576,359 326,188,882 2022-23 1,529,094,494 155,237,161 - 1,684,331,655 1,293,347,214 - 13,006,248 2,601,250 339,195,130 2023-24 1,541,327,250 155,549,283 - 1,696,876,533 1,305,892,092 - 13,131,696 2,626,339 352,326,826 2024-25 966,700,619 116,221,830 - 1,082,922,449 706,366,468 - 7,095,424 1,419,085 359,422,250 2025-26 974,434,224 116,221,830 - 1,090,656,054 714,100,073 - 7,172,760 1,434,552 366,595,010 2026-27 982,229,698 116,221,830 - 1,098,451,528 721,895,547 - 7,250,714 1,450,143 373,845,724 2027-28 990,087,535 116,221,830 - 1,106,309,365 729,753,384 - 7,329,293 1,465,859 381,175,017 2028-29 998,008,236 116,221,830 - 1,114,230,066 737,674,085 - 7,408,500 1,481,700 388,583,516 2029-30 1,005,992,301 116,221,830 - 1,122,214,131 745,658,150 - 7,488,340 1,497,668 396,071,857 2030-31 1,014,040,240 116,221,830 - 1,130,262,070 753,706,089 - 7,568,820 1,513,764 403,640,677 2031-32 1,022,152,562 116,221,830 - 1,138,374,392 761,818,411 - 7,649,943 1,529,989 411,290,620 2032-33 1,030,329,782 116,221,830 - 1,146,551,612 769,995,631 - 7,731,715 1,546,343 419,022,335 2033-34 1,038,572,421 116,221,830 - 1,154,794,251 778,238,270 - 7,814,142 1,562,828 426,836,477 2034-35 1,046,881,000 116,221,830 - 1,163,102,830 786,546,849 - 7,897,227 1,579,445 434,733,704 2035-36 1,055,256,048 116,221,830 - 1,171,477,878 794,921,897 - 7,980,978 1,596,196 442,714,682 2036-37 215,253,756 8,205,643 - 223,459,399 77,306,217 - 773,270 154,654 443,487,952 2037-38 ------2038-39 ------2039-40 ------2040-41 ------2041-42 (7) ------
(1) Assessed values for properties which transferred ownership prior to January 1, 2003 are assumed to increase annually by an annual inflation rate of 2.0%. This equates to an effective escalation rate of 0.8%. Other property, which is primarily personal property is assumed to remain constant at 2010-11 levels. (2) Includes changes from appeals, new construction projects and property transfers. See Tables 6.1 and 9.1 for additional information. (3) Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.1 for additional information. Amount shown for 2009-10 is the total of actual 2009-10 refunds (through July 2010), less actual supplemental receipts. (4) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (5) Each subarea has a different limitation on the amount of tax increment revenue that can be received. (6) Estimates for these fiscal years are based on actual assessed values reported by the County. (7) Each subarea has a different length of time during which it can receive tax increment revenue. See Table 1.0 for specific dates.
DHA Consulting TI Projection_FCR_2010-11.xls Project 1 Sum Page 42 9/23/2010/8:17 AM Table 10.2 Carson Redevelopment Agency Merged and Amended Project - All Subareas Tax Increment Projection
TI Limit: n/a (5)
Real (1) Other (1) Tax Value Total Less Base Gross Tax 20% Hsg Cumulative Fiscal Year Property Property Changes (2) Value 240,299,501 Tax Refunds (3) Revenue Set-Aside (4) Gross Revenue
Prior Yrs 218,783,044 2010-11 (6) 1,390,874,580 151,789,014 - 1,542,663,594 1,302,364,093 (3,554,000) 9,545,217 1,909,043 228,328,261 2011-12 1,398,012,679 151,789,014 (60,861,560) 1,488,940,133 1,248,640,632 (3,287,000) 9,274,982 1,854,996 237,603,243 2012-13 1,344,360,599 151,789,014 (46,814,855) 1,449,334,757 1,209,035,256 (1,295,000) 10,870,928 2,174,186 248,474,171 2013-14 1,304,754,163 151,789,014 - 1,456,543,177 1,216,243,676 - 12,238,013 2,447,603 260,712,184 2014-15 1,311,977,152 151,789,014 - 1,463,766,166 1,223,466,665 - 12,310,242 2,462,048 273,022,426 2015-16 1,319,272,372 151,789,014 - 1,471,061,386 1,230,761,885 - 12,383,195 2,476,639 285,405,621 2016-17 1,326,640,543 151,789,014 - 1,478,429,557 1,238,130,056 - 12,456,876 2,491,375 297,862,497 2017-18 1,334,082,396 151,789,014 - 1,485,871,410 1,245,571,909 - 12,531,295 2,506,259 310,393,792 2018-19 1,341,598,667 151,789,014 - 1,493,387,681 1,253,088,180 - 12,606,458 2,521,292 323,000,249 2019-20 1,349,190,101 151,789,014 - 1,500,979,115 1,260,679,614 - 12,682,372 2,536,474 335,682,621 2020-21 1,356,857,450 151,789,014 - 1,508,646,464 1,268,346,963 - 12,759,045 2,551,809 348,441,667 2021-22 1,364,601,472 151,789,014 - 1,516,390,486 1,276,090,985 - 12,836,486 2,567,297 361,278,152 2022-23 1,372,422,934 151,789,014 - 1,524,211,948 1,283,912,447 - 12,914,700 2,582,940 374,192,853 2023-24 1,380,322,611 151,789,014 - 1,532,111,625 1,291,812,124 - 12,993,697 2,598,739 387,186,550 2024-25 1,388,301,285 151,789,014 - 1,540,090,299 1,299,790,798 - 13,073,484 2,614,697 400,260,033 2025-26 1,396,359,745 151,789,014 - 1,548,148,759 1,307,849,258 - 13,154,068 2,630,814 413,414,102 2026-27 673,075,689 80,782,606 - 753,858,295 601,436,045 - 6,031,584 1,206,317 419,445,686 2027-28 673,981,894 80,782,606 - 754,764,500 602,342,250 - 6,040,646 1,208,129 425,486,331 2028-29 674,897,160 80,782,606 - 755,679,766 603,257,516 - 6,049,799 1,209,960 431,536,130 2029-30 675,821,579 80,782,606 - 756,604,185 604,181,935 - 6,059,043 1,211,809 437,595,173 2030-31 676,755,243 80,782,606 - 757,537,849 605,115,599 - 6,068,379 1,213,676 443,663,552 2031-32 677,698,243 80,782,606 - 758,480,849 606,058,599 - 6,077,809 1,215,562 449,741,361 2032-33 678,650,673 80,782,606 - 759,433,279 607,011,029 - 6,087,334 1,217,467 455,828,695 2033-34 679,612,627 80,782,606 - 760,395,233 607,972,983 - 6,096,953 1,219,391 461,925,648 2034-35 680,584,201 80,782,606 - 761,366,807 608,944,557 - 6,106,669 1,221,334 468,032,317 2035-36 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 473,284,783 2036-37 210,059,986 24,771,165 - 234,831,151 194,821,938 - 1,950,527 390,105 475,235,310 2037-38 ------2038-39 ------2039-40 ------2040-41 ------2041-42 (6) ------
(1) See Tables 10.2.1 and 10.2.2 for details on inflation rates used for Projects No. 2 and No. 3. (2) Includes changes from appeals, new construction projects and property transfers. See Tables 6.2 and 9.2 for additional information. (3) Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.2 for additional information. Amount shown for 2009-10 is the total of actual 2009-10 refunds (through July 2010), less actual supplemental receipts. (4) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (5) Each subarea has a different limitation on the amount of tax increment revenue that can be received. (6) Estimates for these fiscal years are based on actual assessed values reported by the County. (7) Each subarea has a different length of time during which it can receive tax increment revenue. See Table 1.0 for specific dates.
DHA Consulting TI Projection_FCR_2010-11.xls Merged Sum Page 43 9/23/2010/8:17 AM Table 10.2.1 Carson Redevelopment Agency Redevelopment Project No. 2 - All Subareas (1) Tax Increment Projection
TI Limit: n/a (6)
Real (2) Other (2) Tax Value Total Less Base Gross Tax 20% Hsg Cumulative Fiscal Year Property Property Changes (3) Value 100,819,821 Tax Refunds (4) Revenue Set-Aside (5) Gross Revenue
Prior Yrs 138,531,232 2010-11 (7) 713,809,901 71,030,917 - 784,840,818 684,020,997 (177,000) 6,723,657 1,344,731 145,254,889 2011-12 720,948,000 71,030,917 (7,315,497) 784,663,420 683,843,599 (165,000) 6,733,883 1,346,777 151,988,771 2012-13 720,841,983 71,030,917 (5,751,486) 786,121,415 685,301,594 (65,000) 6,848,463 1,369,693 158,837,234 2013-14 722,298,917 71,030,917 - 793,329,834 692,510,013 - 6,985,547 1,397,109 165,822,780 2014-15 729,521,907 71,030,917 - 800,552,824 699,733,003 - 7,057,777 1,411,555 172,880,557 2015-16 736,817,126 71,030,917 - 807,848,043 707,028,222 - 7,130,729 1,426,146 180,011,286 2016-17 744,185,297 71,030,917 - 815,216,214 714,396,393 - 7,204,411 1,440,882 187,215,696 2017-18 751,627,150 71,030,917 - 822,658,067 721,838,246 - 7,278,829 1,455,766 194,494,525 2018-19 759,143,421 71,030,917 - 830,174,338 729,354,517 - 7,353,992 1,470,798 201,848,517 2019-20 766,734,856 71,030,917 - 837,765,773 736,945,952 - 7,429,906 1,485,981 209,278,423 2020-21 774,402,204 71,030,917 - 845,433,121 744,613,300 - 7,506,580 1,501,316 216,785,003 2021-22 782,146,226 71,030,917 - 853,177,143 752,357,322 - 7,584,020 1,516,804 224,369,023 2022-23 789,967,688 71,030,917 - 860,998,605 760,178,784 - 7,662,234 1,532,447 232,031,257 2023-24 797,867,365 71,030,917 - 868,898,282 768,078,461 - 7,741,231 1,548,246 239,772,488 2024-25 805,846,039 71,030,917 - 876,876,956 776,057,135 - 7,821,018 1,564,204 247,593,506 2025-26 813,904,499 71,030,917 - 884,935,416 784,115,595 - 7,901,603 1,580,321 255,495,109 2026-27 90,620,443 24,509 - 90,644,952 77,702,382 - 779,118 155,824 256,274,227 2027-28 91,526,648 24,509 - 91,551,157 78,608,587 - 788,180 157,636 257,062,407 2028-29 92,441,914 24,509 - 92,466,423 79,523,853 - 797,333 159,467 257,859,739 2029-30 93,366,334 24,509 - 93,390,843 80,448,273 - 806,577 161,315 258,666,316 2030-31 94,299,997 24,509 - 94,324,506 81,381,936 - 815,914 163,183 259,482,230 2031-32 95,242,997 24,509 - 95,267,506 82,324,936 - 825,344 165,069 260,307,573 2032-33 96,195,427 24,509 - 96,219,936 83,277,366 - 834,868 166,974 261,142,441 2033-34 97,157,381 24,509 - 97,181,890 84,239,320 - 844,487 168,897 261,986,929 2034-35 98,128,955 24,509 - 98,153,464 85,210,894 - 854,203 170,841 262,841,132 2035-36 ------2036-37 ------2037-38 ------2038-39 ------2039-40 ------2040-41 ------2041-42 (8) ------
(1) Includes Project No. 2 Original Area and the Project No. 2 1983 Annex. The Project No. 2/3 1997 Annex is included with Project No. 3. (2) Assessed values for properties which transferred ownership prior to January 1, 2003 are assumed to increase annually by an annual inflation rate of 2.0%. This equates to an effective escalation rate of 1.0%. Other property, which is primarily personal property is assumed to remain constant at 2010-11 levels. (3) Includes changes from appeals, new construction projects and property transfers. See Tables 6.2 and 9.2 for additional information. (4) Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.2 for additional information. Amount shown for 2009-10 is the total of actual 2009-10 refunds (through July 2010), less actual supplemental receipts. (5) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (6) Each subarea has a different limitation on the amount of tax increment revenue that can be received. (7) Estimates for these fiscal years are based on actual assessed values reported by the County. (8) Each subarea has a different length of time during which it can receive tax increment revenue. See Table 1.0 for specific dates.
DHA Consulting TI Projection_FCR_2010-11.xls Project 2 Sum Page 44 9/23/2010/8:17 AM Table 10.2.2 Carson Redevelopment Agency Redevelopment Project No. 3 - All Subareas (1) Tax Increment Projection
TI Limit: n/a (6)
Real (2) Other (2) Tax Value Total Less Base Gross Tax 20% Hsg Cumulative Fiscal Year Property Property Changes (3) Value 139,479,680 Tax Refunds (4) Revenue Set-Aside (5) Gross Revenue
Prior Yrs 80,251,812 2010-11 (7) 677,064,679 80,758,097 - 757,822,776 618,343,096 (3,377,000) 2,821,560 564,312 83,073,372 2011-12 677,064,679 80,758,097 (53,546,063) 704,276,713 564,797,033 (3,122,000) 2,541,100 508,220 85,614,472 2012-13 623,518,616 80,758,097 (41,063,370) 663,213,343 523,733,663 (1,230,000) 4,022,466 804,493 89,636,937 2013-14 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 94,889,403 2014-15 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 100,141,869 2015-16 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 105,394,335 2016-17 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 110,646,801 2017-18 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 115,899,267 2018-19 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 121,151,732 2019-20 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 126,404,198 2020-21 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 131,656,664 2021-22 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 136,909,130 2022-23 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 142,161,596 2023-24 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 147,414,061 2024-25 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 152,666,527 2025-26 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 157,918,993 2026-27 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 163,171,459 2027-28 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 168,423,925 2028-29 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 173,676,391 2029-30 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 178,928,856 2030-31 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 184,181,322 2031-32 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 189,433,788 2032-33 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 194,686,254 2033-34 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 199,938,720 2034-35 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 205,191,186 2035-36 582,455,246 80,758,097 - 663,213,343 523,733,663 - 5,252,466 1,050,493 210,443,651 2036-37 210,059,986 24,771,165 - 234,831,151 194,821,938 - 1,950,527 390,105 212,394,178 2037-38 ------2038-39 ------2039-40 ------2040-41 ------2041-42 (8) ------
(1) Includes Project No. 3 Original Area and the Project No. 2/3 1997 Annex. The Project No. 2 1983 Annex is included with Project No. 2 (2) An annual escalation factor has not been assumed for Project No. 3 Original or 1997 Amendment Area. (3) Includes changes from appeals, new construction projects and property transfers. See Tables 6.2 and 9.2 for additional information. (4) Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.2 for additional information. Amount shown for 2009-10 is the total of the actual refunds (through July 2010), less actual supplemental receipts. (5) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (6) Each subarea has a different limitation on the amount of tax increment revenue that can be received. (7) Estimates for these fiscal years are based on actual assessed values reported by the County. (8) Each subarea has a different length of time during which it can receive tax increment revenue. See Table 1.0 for specific dates.
DHA Consulting TI Projection_FCR_2010-11.xls Project 3 Sum Page 45 9/23/2010/8:17 AM Table 10.3 Carson Redevelopment Agency Redevelopment Project No. 4 Tax Increment Projection
TI Limit: (5) None
Real (1) Other (1) Tax Value Total Less Base Gross Tax 20% Hsg Cumulative Fiscal Year Property Property Changes (2) Value 505,881,872 Tax Refunds (3) Revenue Set-Aside (4) Gross Revenue
Prior Years 21,850,382 2010-11 825,987,910 53,164,372 879,152,282 373,270,410 (32,600) 3,703,842 740,768 25,554,224 2011-12 832,595,813 53,164,372 5,391,578 891,151,763 385,269,891 (56,500) 3,799,937 759,987 29,354,161 2012-13 844,648,158 53,164,372 (3,859,840) 893,952,690 388,070,818 (26,500) 3,857,946 771,589 33,212,107 2013-14 847,545,503 53,164,372 - 900,709,875 394,828,003 - 3,952,018 790,404 37,164,124 2014-15 854,325,867 53,164,372 907,490,239 401,608,367 4,019,821 803,964 41,183,946 2015-16 861,160,474 53,164,372 914,324,846 408,442,974 4,088,168 817,634 45,272,114 2016-17 868,049,758 53,164,372 921,214,130 415,332,258 4,157,060 831,412 49,429,174 2017-18 874,994,156 53,164,372 928,158,528 422,276,656 4,226,504 845,301 53,655,678 2018-19 881,994,109 53,164,372 935,158,481 429,276,609 4,296,504 859,301 57,952,182 2019-20 889,050,062 53,164,372 942,214,434 436,332,562 4,367,063 873,413 62,319,246 2020-21 896,162,462 53,164,372 949,326,834 443,444,962 4,438,187 887,637 66,757,433 2021-22 903,331,762 53,164,372 956,496,134 450,614,262 4,509,880 901,976 71,267,314 2022-23 910,558,416 53,164,372 963,722,788 457,840,916 4,582,147 916,429 75,849,461 2023-24 917,842,883 53,164,372 971,007,255 465,125,383 4,654,992 930,998 80,504,452 2024-25 925,185,626 53,164,372 978,349,998 472,468,126 4,728,419 945,684 85,232,871 2025-26 932,587,111 53,164,372 985,751,483 479,869,611 4,802,434 960,487 90,035,305 2026-27 940,047,808 53,164,372 993,212,180 487,330,308 4,877,041 975,408 94,912,346 2027-28 947,568,191 53,164,372 1,000,732,563 494,850,691 4,952,245 990,449 99,864,591 2028-29 955,148,736 53,164,372 1,008,313,108 502,431,236 5,028,050 1,005,610 104,892,641 2029-30 962,789,926 53,164,372 1,015,954,298 510,072,426 5,104,462 1,020,892 109,997,103 2030-31 970,492,246 53,164,372 1,023,656,618 517,774,746 5,181,485 1,036,297 115,178,588 2031-32 978,256,184 53,164,372 1,031,420,556 525,538,684 5,259,125 1,051,825 120,437,713 2032-33 986,082,233 53,164,372 1,039,246,605 533,364,733 5,337,385 1,067,477 125,775,098 2033-34 993,970,891 53,164,372 1,047,135,263 541,253,391 5,416,272 1,083,254 131,191,370 2034-35 1,001,922,658 53,164,372 1,055,087,030 549,205,158 5,495,789 1,099,158 136,687,159 2035-36 1,009,938,039 53,164,372 1,063,102,411 557,220,539 5,575,943 1,115,189 142,263,103 2036-37 1,018,017,544 53,164,372 1,071,181,916 565,300,044 5,656,738 1,131,348 147,919,841 2037-38 1,026,161,684 53,164,372 1,079,326,056 573,444,184 5,738,180 1,147,636 153,658,020 2038-39 1,034,370,978 53,164,372 1,087,535,350 581,653,478 5,820,273 1,164,055 159,478,293 2039-40 1,042,645,945 53,164,372 1,095,810,317 589,928,445 5,903,022 1,180,604 165,381,315 2040-41 1,050,987,113 53,164,372 1,104,151,485 598,269,613 5,986,434 1,197,287 171,367,749 2041-42 (6) 1,059,395,010 53,164,372 1,112,559,382 606,677,510 6,070,513 1,214,103 177,438,262
(1) Assessed values for properties which transferred ownership prior to January 1, 2003 are assumed to increase annually by an annual inflation rate of 2.0%. This equates to an effective escalation rate of 0.8%. Other property, which is primarily personal property is assumed to remain constant at 2010-11 levels. (2) Includes changes from appeals, new construction projects and property transfers. See Tables 6.3 and 9.3 for additional information. (3) Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.3 for additional information. Amount shown for 2009-10 is the total of the actual refunds (through July 2010), less actual supplemental receipts. (4) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (5) Areas added after 1994 are not required to have a tax increment dollar limitation. (6) This subarea will be able to continue receive tax increment revenue until July 16, 2048, or 2047-48.
DHA Consulting TI Projection_FCR_2010-11.xls Project 4 Page 46 9/23/2010/8:17 AM Table 11.1 Carson Redevelopment Agency Redevelopment Project No. 1 - Original Area Tax Increment Projection
Real (1) Other (1) Tax Value Total Less Base Gross Tax 20% Hsg Tax Increment Cumulative Fiscal Year Property Property Changes (2) Value 14,428,460 Tax Refunds (3) Revenue Set-Aside (4) Limit (5) Gross Revenue
Prior Years 95,621,123 2010-11 547,908,573 35,457,565 583,366,138 568,937,678 (116,000) 5,614,393 1,122,879 352,188,117 101,235,516 2011-12 552,291,842 35,741,226 (12,902,115) 575,130,953 560,702,493 (132,000) 5,516,041 1,103,208 352,188,117 106,751,558 2012-13 543,808,062 36,027,155 (10,457,807) 569,377,410 554,948,950 (64,000) 5,526,506 1,105,301 352,188,117 112,278,064 2013-14 537,700,719 36,315,373 - 574,016,092 559,587,632 - 5,636,893 1,127,379 352,188,117 117,914,957 2014-15 542,002,325 36,605,896 578,608,221 564,179,761 5,682,814 1,136,563 352,188,117 123,597,771 2015-16 546,338,344 36,898,743 583,237,086 568,808,626 5,729,103 1,145,821 352,188,117 129,326,874 2016-17 550,709,050 37,193,933 587,902,983 573,474,523 5,775,762 1,155,152 352,188,117 135,102,635 2017-18 555,114,723 37,491,484 592,606,207 578,177,747 5,822,794 1,164,559 352,188,117 140,925,429 2018-19 559,555,640 37,791,416 597,347,056 582,918,596 5,870,203 1,174,041 352,188,117 146,795,632 2019-20 564,032,086 38,093,747 602,125,833 587,697,373 5,917,990 1,183,598 352,188,117 152,713,622 2020-21 568,544,342 38,398,497 606,942,840 592,514,380 5,966,160 1,193,232 352,188,117 158,679,783 2021-22 573,092,697 38,705,685 611,798,382 597,369,922 6,014,716 1,202,943 352,188,117 164,694,498 2022-23 577,677,439 39,015,331 616,692,769 602,264,309 6,063,660 1,212,732 352,188,117 170,758,158 2023-24 582,298,858 39,327,453 621,626,312 607,197,852 6,112,995 1,222,599 352,188,117 176,871,153 2024-25 (6) 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 2032-33 2033-34 2034-35 2035-36 2036-37 2037-38 2038-39 2039-40 2040-41 2041-42
(1) Assessed values for properties which transferred ownership prior to January 1, 2003 are assumed to increase annually by an annual inflation rate of 2.0%. This equates to an effective escalation rate of 0.8%. Other property, which is primarily personal property is assumed to remain constant at 2010-11 levels. (2) Includes changes from appeals, new construction projects and property transfers. See Tables 6.1 and 9.1 for additional information. (3) Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.1 for additional information. Amount shown for 2009-10 is the total of the actual refunds (through July 2010), less actual supplemental receipts. (4) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (5) This subarea cannot receive more tax increment revenue than the amount shown. (6) This subarea cannot receive tax increment revenue after December 20, 2024. Taxes are assumed received through the end of the fiscal year prior to the deadline.
DHA Consulting TI Projection_FCR_2010-11.xls Project 1 - Orig Page 47 9/23/2010/8:17 AM Table 11.2 Carson Redevelopment Agency Redevelopment Project No. 1 - 1985 Amendment Tax Increment Projection
Real (1) Other (1) Tax Value Total Less Base Gross Tax 20% Hsg Tax Increment Cumulative Fiscal Year Property Property Changes (2) Value 230,402,799 Tax Refunds (3) Revenue Set-Aside (4) Limit (5) Gross Revenue
Prior Years 500,000,000 82,342,087 2010-11 737,673,457 108,016,187 845,689,644 615,286,845 (250,000) 5,934,419 1,186,884 88,276,506 2011-12 743,574,845 108,016,187 (26,282,622) 825,308,410 594,905,611 (286,000) 5,694,607 1,138,921 93,971,113 2012-13 723,240,821 108,016,187 (22,658,582) 808,598,426 578,195,627 (139,000) 5,674,507 1,134,901 99,645,620 2013-14 706,368,166 108,016,187 - 814,384,353 583,981,554 - 5,871,366 1,174,273 105,516,987 2014-15 712,019,111 108,016,187 820,035,298 589,632,499 5,927,876 1,185,575 111,444,863 2015-16 717,715,264 108,016,187 825,731,451 595,328,652 5,984,837 1,196,967 117,429,700 2016-17 723,456,986 108,016,187 831,473,173 601,070,374 6,042,255 1,208,451 123,471,955 2017-18 729,244,642 108,016,187 837,260,829 606,858,030 6,100,131 1,220,026 129,572,086 2018-19 735,078,599 108,016,187 843,094,786 612,691,987 6,158,471 1,231,694 135,730,557 2019-20 740,959,228 108,016,187 848,975,415 618,572,616 6,217,277 1,243,455 141,947,834 2020-21 746,886,902 108,016,187 854,903,089 624,500,290 6,276,554 1,255,311 148,224,387 2021-22 752,861,997 108,016,187 860,878,184 630,475,385 6,336,305 1,267,261 154,560,692 2022-23 758,884,893 108,016,187 866,901,080 636,498,281 6,396,534 1,279,307 160,957,226 2023-24 764,955,972 108,016,187 872,972,159 642,569,360 6,457,244 1,291,449 167,414,470 2024-25 771,075,620 108,016,187 879,091,807 648,689,008 6,518,441 1,303,688 173,932,911 2025-26 777,244,225 108,016,187 885,260,412 654,857,613 6,580,127 1,316,025 180,513,038 2026-27 783,462,179 108,016,187 891,478,366 661,075,567 6,642,307 1,328,461 187,155,345 2027-28 789,729,876 108,016,187 897,746,063 667,343,264 6,704,984 1,340,997 193,860,328 2028-29 796,047,715 108,016,187 904,063,902 673,661,103 6,768,162 1,353,632 200,628,490 2029-30 802,416,097 108,016,187 910,432,284 680,029,485 6,831,846 1,366,369 207,460,336 2030-31 808,835,426 108,016,187 916,851,613 686,448,814 6,896,039 1,379,208 214,356,375 2031-32 815,306,109 108,016,187 923,322,296 692,919,497 6,960,746 1,392,149 221,317,121 2032-33 821,828,558 108,016,187 929,844,745 699,441,946 7,025,970 1,405,194 228,343,091 2033-34 828,403,187 108,016,187 936,419,374 706,016,575 7,091,717 1,418,343 235,434,808 2034-35 835,030,412 108,016,187 943,046,599 712,643,800 7,157,989 1,431,598 242,592,797 2035-36 841,710,655 108,016,187 949,726,842 719,324,043 7,224,791 1,444,958 249,817,588 2036-37 (6) 2037-38 2038-39 2039-40 2040-41 2041-42
(1) Assessed values for properties which transferred ownership prior to January 1, 2003 are assumed to increase annually by an annual inflation rate of 2.0%. This equates to an effective escalation rate of 0.8%. Other property, which is primarily personal property is assumed to remain constant at 2010-11 levels. (2) Includes changes from appeals, new construction projects and property transfers. See Tables 6.1 and 9.1 for additional information. (3) Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.1 for additional information. Amount shown for 2009-10 is the total of the actual refunds (through July 2010), less actual supplemental receipts. (4) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (5) The tax increment limit for this subarea is to increase annually by an amount equal to inflation. Amount shown is the un-escalated rate. (6) This subarea cannot receive tax increment revenue after July 16, 2036. Taxes are assumed received through the end of the fiscal year prior to the deadline.
DHA Consulting TI Projection_FCR_2010-11.xls Project 1 - 85 Page 48 9/23/2010/8:17 AM Table 11.3 Carson Redevelopment Agency Redevelopment Project No. 1 - 1997 Amendment Tax Increment Projection
Real (1) Other (1) Tax Value Total Less Base Gross Tax 20% Hsg Tax Increment Cumulative Fiscal Year Property Property Changes (2) Value 146,153,182 Tax Refunds (3) Revenue Set-Aside (4) Limit (5) Gross Revenue
Prior Years 1,538,129 2010-11 178,566,161 8,205,643 186,771,804 40,618,622 (19,000) 387,394 77,479 None 1,925,523 2011-12 179,994,690 8,205,643 (1,919,346) 186,280,987 40,127,805 (22,000) 379,486 75,897 None 2,305,009 2012-13 179,515,302 8,205,643 (1,742,968) 185,977,977 39,824,795 (11,000) 387,456 77,491 None 2,692,465 2013-14 179,208,456 8,205,643 - 187,414,099 41,260,917 - 412,817 82,563 None 3,105,283 2014-15 180,642,124 8,205,643 188,847,767 42,694,585 427,154 85,431 None 3,532,437 2015-16 182,087,261 8,205,643 190,292,904 44,139,722 441,605 88,321 None 3,974,042 2016-17 183,543,959 8,205,643 191,749,602 45,596,420 456,172 91,234 None 4,430,214 2017-18 185,012,311 8,205,643 193,217,954 47,064,772 470,856 94,171 None 4,901,070 2018-19 186,492,409 8,205,643 194,698,052 48,544,870 485,657 97,131 None 5,386,727 2019-20 187,984,349 8,205,643 196,189,992 50,036,810 500,576 100,115 None 5,887,303 2020-21 189,488,223 8,205,643 197,693,866 51,540,684 515,615 103,123 None 6,402,918 2021-22 191,004,129 8,205,643 199,209,772 53,056,590 530,774 106,155 None 6,933,692 2022-23 192,532,162 8,205,643 200,737,805 54,584,623 546,054 109,211 None 7,479,746 2023-24 194,072,420 8,205,643 202,278,063 56,124,881 561,457 112,291 None 8,041,203 2024-25 195,624,999 8,205,643 203,830,642 57,677,460 576,983 115,397 None 8,618,185 2025-26 197,189,999 8,205,643 205,395,642 59,242,460 592,633 118,527 None 9,210,818 2026-27 198,767,519 8,205,643 206,973,162 60,819,980 608,408 121,682 None 9,819,226 2027-28 200,357,659 8,205,643 208,563,302 62,410,120 624,309 124,862 None 10,443,535 2028-29 201,960,520 8,205,643 210,166,163 64,012,981 640,338 128,068 None 11,083,873 2029-30 203,576,204 8,205,643 211,781,847 65,628,665 656,495 131,299 None 11,740,368 2030-31 205,204,814 8,205,643 213,410,457 67,257,275 672,781 134,556 None 12,413,149 2031-32 206,846,453 8,205,643 215,052,096 68,898,914 689,197 137,839 None 13,102,346 2032-33 208,501,224 8,205,643 216,706,867 70,553,685 705,745 141,149 None 13,808,091 2033-34 210,169,234 8,205,643 218,374,877 72,221,695 722,425 144,485 None 14,530,516 2034-35 211,850,588 8,205,643 220,056,231 73,903,049 739,239 147,848 None 15,269,754 2035-36 213,545,393 8,205,643 221,751,036 75,597,854 756,187 151,237 None 16,025,941 2036-37 215,253,756 8,205,643 223,459,399 77,306,217 773,270 154,654 None 16,799,211 2037-38 (6) 2038-39 2039-40 2040-41 2041-42
(1) Assessed values for properties which transferred ownership prior to January 1, 2003 are assumed to increase annually by an annual inflation rate of 2.0%. This equates to an effective escalation rate of 0.8%. Other property, which is primarily personal property is assumed to remain constant at 2010-11 levels. (2) Includes changes from appeals, new construction projects and property transfers. See Tables 6.1 and 9.1 for additional information. (3) Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.1 for additional information. Amount shown for 2009-10 is the total of the actual refunds (through July 2010), less actual supplemental receipts. (4) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (5) Areas added after 1994 are not required to have a tax increment dollar limitation. (6) This subarea cannot receive tax increment revenue after August 16, 2037. Taxes are assumed received through the end of the fiscal year prior to the deadline.
DHA Consulting TI Projection_FCR_2010-11.xls Project 1 - 97 Page 49 9/23/2010/8:17 AM Table 11.4 Carson Redevelopment Agency Redevelopment Project No. 2 - Original Area Tax Increment Projection
Real (1) Other (1) Tax Value Total Less Base Gross Tax 20% Hsg Tax Increment Cumulative Fiscal Year Property Property Changes (2) Value 87,877,251 Tax Refunds (3) Revenue Set-Aside (4) Limit (5) Gross Revenue
Prior Years 133,367,746 2010-11 636,526,860 71,006,408 707,533,268 619,656,017 (177,000) 6,077,913 1,215,583 534,307,874 139,445,659 2011-12 642,892,129 71,006,408 (7,315,497) 706,583,040 618,705,789 (165,000) 6,080,410 1,216,082 534,307,874 145,526,069 2012-13 642,005,553 71,006,408 (5,751,486) 707,260,475 619,383,224 (65,000) 6,187,185 1,237,437 534,307,874 151,713,253 2013-14 642,674,123 71,006,408 - 713,680,531 625,803,280 - 6,316,385 1,263,277 534,307,874 158,029,639 2014-15 649,100,864 71,006,408 720,107,272 632,230,021 6,380,653 1,276,131 534,307,874 164,410,291 2015-16 655,591,873 71,006,408 726,598,281 638,721,030 6,445,563 1,289,113 534,307,874 170,855,854 2016-17 662,147,792 71,006,408 733,154,200 645,276,949 6,511,122 1,302,224 534,307,874 177,366,976 2017-18 668,769,269 71,006,408 739,775,677 651,898,426 6,577,337 1,315,467 534,307,874 183,944,312 2018-19 675,456,962 71,006,408 746,463,370 658,586,119 6,644,214 1,328,843 534,307,874 190,588,526 2019-20 682,211,532 71,006,408 753,217,940 665,340,689 6,711,759 1,342,352 534,307,874 197,300,285 2020-21 689,033,647 71,006,408 760,040,055 672,162,804 6,779,980 1,355,996 534,307,874 204,080,266 2021-22 695,923,984 71,006,408 766,930,392 679,053,141 6,848,884 1,369,777 534,307,874 210,929,150 2022-23 702,883,223 71,006,408 773,889,631 686,012,380 6,918,476 1,383,695 534,307,874 217,847,626 2023-24 709,912,056 71,006,408 780,918,464 693,041,213 6,988,765 1,397,753 534,307,874 224,836,390 2024-25 717,011,176 71,006,408 788,017,584 700,140,333 7,059,756 1,411,951 534,307,874 231,896,146 2025-26 724,181,288 71,006,408 795,187,696 707,310,445 7,131,457 1,426,291 534,307,874 239,027,603 2026-27 (6) 2027-28 2028-29 2029-30 2030-31 2031-32 2032-33 2033-34 2034-35 2035-36 2036-37 2037-38 2038-39 2039-40 2040-41 2041-42
(1) Assessed values for properties which transferred ownership prior to January 1, 2003 are assumed to increase annually by an annual inflation rate of 2.0%. This equates to an effective escalation rate of 1.0%. Other property, which is primarily personal property is assumed to remain constant at 2010-11 levels. (2) Includes changes from appeals, new construction projects and property transfers. See Tables 6.2 and 9.2 for additional information. (3) Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.2 for additional information. Amount shown for 2009-10 is the total of the actual refunds (through July 2010), less actual supplemental receipts. (4) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (5) This subarea cannot receive more tax increment revenue than the amount shown. (6) This subarea cannot receive tax increment revenue after February 19, 2027. Taxes are assumed received through the end of the fiscal year prior to the deadline.
DHA Consulting TI Projection_FCR_2010-11.xls Project 2 - Orig Page 50 9/23/2010/8:17 AM Table 11.5 Carson Redevelopment Agency Redevelopment Project No. 2 - 1983 Amendment Tax Increment Projection
Real (1) Other (1) Tax Value Total Less Base Gross Tax 20% Hsg Tax Increment Cumulative Fiscal Year Property Property Changes (2) Value 12,942,570 Tax Refunds (3) Revenue Set-Aside (4) Limit (5) Gross Revenue
Prior Years 5,163,486 2010-11 77,283,041 24,509 77,307,550 64,364,980 645,744 129,149 24,000,000 5,809,230 2011-12 78,055,871 24,509 78,080,380 65,137,810 653,472 130,694 24,000,000 6,462,702 2012-13 78,836,430 24,509 78,860,939 65,918,369 661,278 132,256 24,000,000 7,123,980 2013-14 79,624,794 24,509 79,649,303 66,706,733 669,162 133,832 24,000,000 7,793,142 2014-15 80,421,042 24,509 80,445,551 67,502,981 677,124 135,425 24,000,000 8,470,266 2015-16 81,225,253 24,509 81,249,762 68,307,192 685,166 137,033 24,000,000 9,155,432 2016-17 82,037,505 24,509 82,062,014 69,119,444 693,289 138,658 24,000,000 9,848,720 2017-18 82,857,880 24,509 82,882,389 69,939,819 701,492 140,298 24,000,000 10,550,213 2018-19 83,686,459 24,509 83,710,968 70,768,398 709,778 141,956 24,000,000 11,259,991 2019-20 84,523,324 24,509 84,547,833 71,605,263 718,147 143,629 24,000,000 11,978,138 2020-21 85,368,557 24,509 85,393,066 72,450,496 726,599 145,320 24,000,000 12,704,737 2021-22 86,222,243 24,509 86,246,752 73,304,182 735,136 147,027 24,000,000 13,439,873 2022-23 87,084,465 24,509 87,108,974 74,166,404 743,758 148,752 24,000,000 14,183,631 2023-24 87,955,310 24,509 87,979,819 75,037,249 752,467 150,493 24,000,000 14,936,098 2024-25 88,834,863 24,509 88,859,372 75,916,802 761,262 152,252 24,000,000 15,697,360 2025-26 89,723,211 24,509 89,747,720 76,805,150 770,146 154,029 24,000,000 16,467,506 2026-27 90,620,443 24,509 90,644,952 77,702,382 779,118 155,824 24,000,000 17,246,624 2027-28 91,526,648 24,509 91,551,157 78,608,587 788,180 157,636 24,000,000 18,034,804 2028-29 92,441,914 24,509 92,466,423 79,523,853 797,333 159,467 24,000,000 18,832,137 2029-30 93,366,334 24,509 93,390,843 80,448,273 806,577 161,315 24,000,000 19,638,713 2030-31 94,299,997 24,509 94,324,506 81,381,936 815,914 163,183 24,000,000 20,454,627 2031-32 95,242,997 24,509 95,267,506 82,324,936 825,344 165,069 24,000,000 21,279,971 2032-33 96,195,427 24,509 96,219,936 83,277,366 834,868 166,974 24,000,000 22,114,838 2033-34 97,157,381 24,509 97,181,890 84,239,320 844,487 168,897 24,000,000 22,959,326 2034-35 98,128,955 24,509 98,153,464 85,210,894 854,203 170,841 24,000,000 23,813,529 2035-36 (6) 2036-37 2037-38 2038-39 2039-40 2040-41 2041-42
(1) Assessed values for properties which transferred ownership prior to January 1, 2003 are assumed to increase annually by an annual inflation rate of 2.0%. This equates to an effective escalation rate of 1.0%. Other property, which is primarily personal property is assumed to remain constant at 2010-11 levels. (2) Includes changes from appeals, new construction projects and property transfers. See Tables 6.2 and 9.2 for additional information. Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.2 for additional information. Amount shown for 2009-10 is the total of the actual (3) refunds (through July 2010), less actual supplemental receipts. (4) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (5) All non-housing tax increment received in excess of $200,000 annually or $8 million in aggregate must be used to repay the County per the terms of a tax sharing agreement. (6) This subarea cannot receive tax increment revenue after December 22, 2035. Taxes are assumed received through the end of the fiscal year prior to the deadline.
DHA Consulting TI Projection_FCR_2010-11.xls Project 2 - 83 Page 51 9/23/2010/8:17 AM Table 11.6 Carson Redevelopment Agency Redevelopment Project No. 3 - Original Area Tax Increment Projection
Real (1) Other (1) Tax Value Total Less Base Gross Tax 20% Hsg Tax Increment Cumulative Fiscal Year Property Property Changes (2) Value 99,470,467 Tax Refunds (3) Revenue Set-Aside (4) Limit (5) Gross Revenue
Prior Years 250,000,000 58,492,432 2010-11 435,110,736 55,986,932 491,097,668 391,627,201 (2,666,000) 1,263,094 252,619 59,755,526 2011-12 435,110,736 55,986,932 (36,030,820) 455,066,848 355,596,381 (2,465,000) 1,103,785 220,757 60,859,311 2012-13 399,079,916 55,986,932 (26,684,656) 428,382,192 328,911,725 (971,000) 2,330,939 466,188 63,190,250 2013-14 372,395,260 55,986,932 - 428,382,192 328,911,725 - 3,301,939 660,388 66,492,189 2014-15 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 69,794,128 2015-16 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 73,096,067 2016-17 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 76,398,006 2017-18 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 79,699,945 2018-19 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 83,001,884 2019-20 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 86,303,822 2020-21 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 89,605,761 2021-22 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 92,907,700 2022-23 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 96,209,639 2023-24 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 99,511,578 2024-25 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 102,813,517 2025-26 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 106,115,456 2026-27 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 109,417,395 2027-28 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 112,719,334 2028-29 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 116,021,273 2029-30 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 119,323,212 2030-31 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 122,625,150 2031-32 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 125,927,089 2032-33 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 129,229,028 2033-34 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 132,530,967 2034-35 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 135,832,906 2035-36 372,395,260 55,986,932 428,382,192 328,911,725 3,301,939 660,388 139,134,845 2036-37 2037-38 (6) 2038-39 2039-40 2040-41 2041-42
(1) An annual escalation factor has not been assumed for Project No. 3 Original or 1997 Amendment Area. (2) Includes changes from appeals, new construction projects and property transfers. See Tables 6.2 and 9.2 for additional information. (3) Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.2 for additional information. Amount shown for 2009-10 is the total of the actual refunds (through July 2010), less actual supplemental receipts. (4) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (5) The tax increment limit for this subarea is to increase annually by an amount equal to inflation. Amount shown is the un-escalated rate. (6) This subarea cannot receive tax increment revenue after July 16, 2036. Taxes are assumed received through the end of the fiscal year prior to the deadline.
DHA Consulting TI Projection_FCR_2010-11.xls Project 3 - Orig Page 52 9/23/2010/8:17 AM Table 11.7 Carson Redevelopment Agency Redevelopment Project Nos. 2 and 3 - 1997 Amendment Tax Increment Projection
Real (1) Other (1) Tax Value Total Less Base Gross Tax 20% Hsg Tax Increment Cumulative Fiscal Year Property Property Changes (2) Value 40,009,213 Tax Refunds (3) Revenue Set-Aside (4) Limit (5) Gross Revenue
Prior Years 21,759,380 2010-11 241,953,943 24,771,165 266,725,108 226,715,895 (711,000) 1,558,466 311,693 None 23,317,846 2011-12 241,953,943 24,771,165 (17,515,243) 249,209,865 209,200,652 (657,000) 1,437,314 287,463 None 24,755,161 2012-13 224,438,700 24,771,165 (14,378,714) 234,831,151 194,821,938 (259,000) 1,691,527 338,305 None 26,446,687 2013-14 210,059,986 24,771,165 - 234,831,151 194,821,938 - 1,950,527 390,105 None 28,397,214 2014-15 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 30,347,741 2015-16 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 32,298,268 2016-17 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 34,248,795 2017-18 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 36,199,322 2018-19 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 38,149,849 2019-20 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 40,100,376 2020-21 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 42,050,903 2021-22 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 44,001,430 2022-23 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 45,951,957 2023-24 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 47,902,483 2024-25 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 49,853,010 2025-26 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 51,803,537 2026-27 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 53,754,064 2027-28 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 55,704,591 2028-29 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 57,655,118 2029-30 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 59,605,645 2030-31 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 61,556,172 2031-32 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 63,506,699 2032-33 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 65,457,226 2033-34 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 67,407,753 2034-35 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 69,358,279 2035-36 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 71,308,806 2036-37 210,059,986 24,771,165 234,831,151 194,821,938 1,950,527 390,105 None 73,259,333 2037-38 (6) 2038-39 2039-40 2040-41 2041-42
(1) An annual escalation factor has not been assumed for Project No. 3 Original or 1997 Amendment Area. (2) Includes changes from appeals, new construction projects and property transfers. See Tables 6.2 and 9.2 for additional information. (3) Includes estimated property tax refunds due taxpayers as a result of assessment appeals. See Tables 5.2 for additional information. Amount shown for 2009-10 is the total of the actual refunds (through July 2010), less actual supplemental receipts. (4) The amount deposited to the Housing Set-Aside Fund. Equals 20% of gross tax increment revenue. (5) Areas added after 1994 are not required to have a tax increment dollar limitation. (6) This subarea cannot receive tax increment revenue after August 16, 2037. Taxes are assumed received through the end of the fiscal year prior to the deadline.
DHA Consulting TI Projection_FCR_2010-11.xls Project 3 - 97 Page 53 9/23/2010/8:17 AM APPENDIX E
FORMS OF BOND COUNSEL OPINION
Upon delivery of the Bonds, Aleshire & Wynder, LLP, Bond Counsel to the Agency, proposes to render its final approving opinions with respect to the Series 2010A-T Bonds and the Series 2010A Bonds in substantially the following forms:
E-1 (THIS PAGE INTENTIONALLY LEFT BLANK) FORM OF OPINION OF BOND COUNSEL
Date of Delivery
Carson Redevelopment Agency One Civic Plaza, Suite 500 Carson, California 90745
Re: Carson Redevelopment Agency Taxable Tax Allocation Housing Bonds, 2010 Series A-T
Ladies and Gentlemen:
We have served as bond counsel to the Carson Redevelopment Agency (the “Agency”) in connection with the issuance by the Agency of its Taxable Tax Allocation Housing Bonds, 2010 Series A-T (the “Series 2010A-T Bonds”). The Series 2010A-T Bonds are being issued pursuant to pursuant to the Community Redevelopment Law, constituting Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code of the State of California (the “Law”), a resolution of the Board of Directors of the Agency adopted on October 5, 2010 (the “Resolution”) and an Indenture of Trust, dated as of October 1, 2010 (the “Series 2010A-T Indenture”), by and between the Agency and the Bank of New York Mellon Trust Company, N.A. (the “Trustee”). The Series 2010A-T Bonds are being issued for the purpose of funding certain low and moderate income housing projects. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Series 2010A-T Indenture.
In our capacity as Bond Counsel, we have reviewed the Law, the Series 2010A-T Indenture, certifications of the Agency, the Resolution, certifications of the Trustee and others, and such other documents, opinions and instruments as we deemed necessary to render the opinions set forth herein. We have assumed the genuineness of all documents and signatures presented to us. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents. We have assumed compliance with all covenants and agreements contained in the Series 2010A-T Indenture.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:
1. The Series 2010A-T Bonds have been duly authorized, executed and delivered by the Agency and constitute the valid and binding limited obligations of the Agency payable solely from the sources provided therefor in the Series 2010A-T Indenture.
2. The Series 2010A-T Indenture has been duly executed and delivered by the Agency and, assuming due authorization, execution and delivery by the Trustee, constitutes a valid and binding obligation of the Agency. The Series 2010A-T Indenture creates a valid
E-2 pledge of Housing Tax Revenues to secure the payment of the principal of and interest on the Series 2010A-T Bonds, the Series 2010A Bonds and any Parity Debt hereafter issued pursuant to the Series 2010A-T Indenture.
3. The interest on the Series 2010A-T Bonds is not excluded from gross income for federal income tax purposes, and is subject to all applicable federal income taxation.
4. Interest on the Series 2010A-T Bonds is exempt from current personal income taxes imposed by the State of California.
Except as stated in the foregoing paragraph 3 and 4 with respect to the Series 2010A-T Bonds, we express no opinion as to any federal or state tax consequences of the ownership or disposition of the Series 2010A-T Bonds.
The opinions expressed herein are based on an analysis of existing law and cover certain matters not directly addressed thereby. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof, and we have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur.
To ensure compliance with the requirements imposed by the Internal Revenue Service, we inform owners of the Series 2010A-T Bonds that any U.S. federal tax advice contained in this opinion is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.
The foregoing opinions are qualified to the extent that the enforceability of the Series 2010A-T Indenture, and the Series 2010A-T Bonds may be limited by any applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors’ rights generally or as to the availability of any particular remedy, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against government entities in the State of California. We express no opinion with respect to any indemnification, choice of law or forum or waiver provisions contained in the foregoing documents.
We express no opinion with respect to laws becoming effective after the date hereof or the effect or applicability of the laws of other jurisdictions. Our engagement as Bond Counsel in connection with this matter terminates as of the date hereof. This opinion relates only to matters as of the date hereof, and we express no opinion with respect to any transaction, transfer, conveyance, obligation or performance occurring after the date hereof. We disclaim any obligation to advise you of any events occurring or coming to our attention or any developments in areas covered by this opinion that occur after the date of this opinion.
Respectfully submitted,
E-3 FORM OF OPINION OF BOND COUNSEL
Date of Delivery
Carson Redevelopment Agency One Civic Plaza, Suite 500 Carson, California 90745
Re: Carson Redevelopment Agency Tax Allocation Housing Bonds, 2010 Series A
Ladies and Gentlemen:
We have served as bond counsel to the Carson Redevelopment Agency (the “Agency”) in connection with the issuance by the Agency of its Tax Allocation Housing Bonds, 2010 Series A (the “Series 2010A Bonds”). The Series 2010A Bonds are being issued pursuant to pursuant to the Community Redevelopment Law, constituting Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code of the State of California (the “Law”), a resolution of the Board of Directors of the Agency adopted on October 5, 2010 (the “Resolution”) and an Indenture of Trust, dated as of October 1, 2010 (the “Series 2010A Indenture”), by and between the Agency and the Bank of New York Mellon Trust Company, N. A. (the “Trustee”). The Series 2010A Bonds are being issued for the purpose of funding certain low and moderate income housing projects. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Series 2010A Indenture.
In our capacity as Bond Counsel, we have reviewed the Law, the Series 2010A Indenture, certifications of the Agency, the Resolution, certifications of the Trustee and others, and such other documents, opinions and instruments as we deemed necessary to render the opinions set forth herein. We have assumed the genuineness of all documents and signatures presented to us. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents. We have assumed compliance with all covenants and agreements contained in the Series 2010A Indenture, and Tax and Non- Arbitrage Certificate, dated the date hereof (the “Tax Certificate”), including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the 2010A Bonds to be included in gross income for federal income tax purposes.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:
1. The Series 2010A Bonds have been duly authorized, executed and delivered by the Agency and constitute the valid and binding limited obligations of the Agency payable solely from the sources provided therefor in the Series 2010A Indenture.
E-4 2. The Series 2010A Indenture has been duly executed and delivered by the Agency and, assuming due authorization, execution and delivery by the Trustee, constitutes a valid and binding obligation of the Agency. The Series 2010A Indenture creates a valid pledge of Housing Tax Revenues to secure the payment of the principal of and interest on the Series 2010A Bonds, the Series 2010A-T Bonds and any Parity Debt hereafter issued pursuant to the Series 2010A Indenture.
3. Based on existing statutes, regulations, rulings and judicial decisions and assuming compliance with certain covenants in the Series 2010A Indenture and requirements of the Internal Revenue Code of 1986, as amended (the “Code”), including the covenants discussed below, interest on the Series 2010A Bonds is excluded from gross income for federal income tax purposes. The Series 2010A Bonds are not “specified private activity bonds” within the meaning of Section 57(a)(5) of the Code and, therefore, the interest on the Series 2010A Bonds will not be treated as a preference item for purposes of computing the alternative minimum tax imposed by Section 55 of the Code. In addition, interest on the Series 2010A Bonds is not included as an adjustment in calculating federal corporate alternative minimum taxable income for the purposes of determining a corporation’s federal alternative minimum tax.
The Code sets forth certain requirements which must be met subsequent to the issuance of the Series 2010A Bonds for interest thereon to be and remain excluded from gross income for federal income tax purposes. Noncompliance with such requirements could cause the interest on the Series 2010A Bonds to be included in gross income retroactive to the date of issuance of the Series 2010A Bonds. The Agency has covenanted in the Series 2010A Indenture to satisfy, or take such actions as may be necessary to cause to be satisfied, each provision of the Code necessary to maintain the exclusion of the interest on the Series 2010A Bonds from gross income for federal income tax purposes pursuant to Section 103(a) of the Code.
Certain requirements and procedures contained or referred to in the Series 2010A Indenture may be changed and certain actions may be taken or omitted under the circumstances and subject to the terms and conditions set forth therein and in the Tax and NonArbitrage Certificate, upon the advice or with the approving opinion of nationally recognized bond counsel, and no opinion is expressed herein as to any Series 2010A Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of any counsel other than ourselves.
4. Interest on the Series 2010A Bonds is exempt from current personal income taxes imposed by the State of California.
Except as stated in the foregoing paragraph 3 and 4 with respect to the Series 2010A Bonds, we express no opinion as to any federal or state tax consequences of the ownership or disposition of the Series 2010A Bonds.
The opinions expressed herein are based on an analysis of existing law and cover certain matters not directly addressed thereby. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof, and we have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur.
E-5 The foregoing opinions are qualified to the extent that the enforceability of the Series 2010A Indenture, and the Series 2010A Bonds may be limited by any applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors’ rights generally or as to the availability of any particular remedy, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against government entities in the State of California. We express no opinion with respect to any indemnification, choice of law or forum or waiver provisions contained in the foregoing documents.
We express no opinion with respect to laws becoming effective after the date hereof or the effect or applicability of the laws of other jurisdictions. Our engagement as Bond Counsel in connection with this matter terminates as of the date hereof. This opinion relates only to matters as of the date hereof, and we express no opinion with respect to any transaction, transfer, conveyance, obligation or performance occurring after the date hereof. We disclaim any obligation to advise you of any events occurring or coming to our attention or any developments in areas covered by this opinion that occur after the date of this opinion.
Respectfully submitted,
E-6 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX F
FORM OF CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”) is made and entered into by and between the Carson Redevelopment Agency (the “Agency”) and The Bank of New York Mellon Trust Company, N.A., as Dissemination Agent (the “Dissemination Agent”), in connection with the issuance of $14,940,000 Carson Redevelopment Agency Taxable Tax Allocation Housing Bonds, 2010 Series A-T (the “Series 2010A-T Bonds”), and its $25,620,000 Carson Redevelopment Agency Tax Allocation Housing Bonds, 2010 Series A (the “Series 2010A Bonds,” and together with the Series 2010A-T Bonds, collectively, the “Bonds”). The Bonds are being issued pursuant to an Indenture, dated as of October 1, 2010 (the “Indenture”), by and between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The Agency and the Dissemination Agent covenant and agree as follows:
SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Agency and the Dissemination Agent for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriters in complying with the Rule (as defined below).
SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the Agency pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.
“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes.
“Disclosure Representative” shall mean the Administrative Services General Manager of the Agency or his or her designee, or such other officer or employee as the Agency shall designate in writing to the Dissemination Agent from time to time.
“Dissemination Agent” shall mean The Bank of New York Mellon Trust Company, N.A., acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Agency and which has filed with the Agency a written acceptance of such designation.
“Listed Event” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.
“MSRB” shall mean the Municipal Securities Rulemaking Board established pursuant to Section 15B(b)(1) of the Securities Exchange Act of 1934 or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Marketplace Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
“Official Statement” shall mean the Official Statement relating to the Bonds, dated October 13, 2010.
“Participating Underwriters” shall mean any or all of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds.
F-1 “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
“Trustee” means The Bank of New York Mellon Trust Company, N.A., as Trustee with respect to the Bonds, and any successor thereto.
SECTION 3. Provision of Annual Reports.
(a) The Agency shall, or shall cause the Dissemination Agent to, not later than February 1 of each year, commencing February 1, 2011, provide to the MSRB and the Participating Underwriters an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the Agency may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. If the Agency’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(f).
(b) Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to the MSRB, the Agency shall provide the Annual Report to the Dissemination Agent and the Trustee (if the Trustee is not the Dissemination Agent). If by such date, the Trustee has not received a copy of the Annual Report, the Trustee shall contact the Agency and the Dissemination Agent to determine if the Agency is in compliance with the first sentence of this subsection (b). The Agency shall provide a written certification with each Annual Report furnished to the Dissemination Agent and the Trustee to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent and Trustee may conclusively rely upon such certification of the Agency and shall have no duty or obligation to review such Annual Report.
(c) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the MSRB by the date required in subsection (a), the Dissemination Agent shall send a notice to the MSRB in substantially the form attached as Exhibit A.
(d) If the Dissemination Agent is other than the Agency, the Dissemination Agent shall, to the extent information is known to it, file a report with the Agency certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided.
SECTION 4. Content of Annual Reports. The Agency’s Annual Report shall contain or include by reference the following:
1. The audited financial statements of the Agency for the prior fiscal year, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Agency’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3 (a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
2. An update for the last fiscal year of the financial information in “Table 7 – Ten Major Taxpayers,” and “Tables 9, 10 and 11 – Historical Assessed Valuation and Actual Receipts” located in the Official Statement, along with a supplemental table that aggregates the information from Tables 9, 10 and 11 for such fiscal year, and includes components for such fiscal year for (i) estimated amount of Housing Tax Revenues, (ii) actual receipts of Housing Tax Revenues, (iii) debt service on the Bonds and (iv) coverage ratio of actual receipts to debt service.
F-2 Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the Agency or related public entities, which are available to the public on the MSRB’s Internet Web site or filed with the Securities and Exchange Commission.
SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section 5, the Agency shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material:
(1) principal and interest payment delinquencies;
(2) non-payment related defaults;
(3) modifications to rights of Beneficial Owner;
(4) optional, contingent or unscheduled bond calls;
(5) defeasances;
(6) rating changes;
(7) adverse tax opinions or events adversely affecting the tax-exempt status of the Bonds, if applicable;
(8) unscheduled draws on the debt service reserves reflecting financial difficulties;
(9) unscheduled draws on credit enhancements reflecting financial difficulties;
(10) substitution of credit or liquidity providers, or their failure to perform; and
(11) release, substitution or sale of property securing repayment of the Bonds.
(b) The Dissemination Agent shall, within seven (7) Business Days or as soon as reasonably practicable after obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Disclosure Representative, inform such person of the event, and request that the Agency promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f) and promptly direct the Dissemination Agent whether or not to report such event to the Beneficial Owners. In the absence of such direction, the Dissemination Agent shall not report such event unless otherwise required to be reported by the Trustee to the Beneficial Owners under the Indenture. The Dissemination Agent may conclusively rely upon such direction (or lack thereof). For purposes of this Disclosure Agreement, “actual knowledge” of the occurrence of such Listed Events shall mean actual knowledge by the officer at the corporate office of the Dissemination Agent with regular responsibility for the administration of matters related to the Indenture. The Dissemination Agent shall have no responsibility to determine the materiality of any of the Listed Events.
(c) Whenever the Agency obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Dissemination Agent pursuant to subsection (b) or otherwise, the Agency shall as soon as possible determine if such event would be material under applicable federal securities laws.
(d) If the Agency has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Agency shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (f).
F-3 (e) If in response to a request under subsection (b), the Agency determines that the Listed Event would not be material under applicable federal securities laws, the Agency shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f).
(f) If the Dissemination Agent has been instructed by the Agency to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(4) and (5) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Beneficial Owners of affected Bonds pursuant to the Indenture.
SECTION 6. Termination of Reporting Obligation. The Agency’s obligations under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the Agency shall give notice of such termination in the same manner as for a Listed Event under Section 5(f).
SECTION 7. Dissemination Agent. The Agency hereby appoints The Bank of New York Mellon Trust Company, N.A. as the initial Dissemination Agent and may, from time to time, discharge, appoint or engage any other Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the form or content of any notice or report prepared by the Agency pursuant to this Disclosure Agreement. The Dissemination Agent may resign by providing thirty days written notice to the Agency and the Trustee. The Dissemination Agent shall not be responsible for the content of any report or notice prepared by the Agency. The Dissemination Agent shall have no duty to prepare any information report nor shall the Dissemination Agent be responsible for filing any report not provided to it by the Agency in a timely manner and in a form suitable for filing.
SECTION 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Agency may amend this Disclosure Agreement, (and the Trustee and Dissemination Agent shall agree to any amendment so requested by the Agency), provided, neither the Trustee nor the Dissemination Agent shall be obligated to enter into any such amendment that modifies or increases its duties or obligations hereunder and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or the type of business conducted;
(b) The undertaking, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) The amendment or waiver either (i) is approved by the Beneficial Owners in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Beneficial Owners, or (ii) does not, in the opinion of the Trustee or nationally recognized bond counsel, materially impair the interests of the Beneficial Owners.
In the event of any amendment or waiver of a provision of this Disclosure Agreement, the Agency shall describe such amendment in the next Annual Report, and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the Agency. In addition, if the amendment relates to the accounting principles to be followed in preparing
F-4 financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(c), and (ii) the Annual Report for the year in which the change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles.
SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Agency from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Agency chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Agency shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 10. Default. In the event of a failure of the Agency or the Trustee to comply with any provision of this Disclosure Agreement, the Dissemination Agent may (and, at the request of any Participating Underwriter or the Holders of at least 25% aggregate principal amount of Outstanding Bonds, shall but only to the extent funds in an amount satisfactory to the Trustee have been provided to it or it has been otherwise indemnified to its satisfaction from any cost, liability, expense or additional charges and fees of the Trustee whatsoever, including, without limitation, fees and expenses of its attorneys), or any Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Agency or Dissemination Agent, as the case may be, to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement by the Agency or the Dissemination Agent shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Agency or the Trustee to comply with this Disclosure Agreement shall be an action to compel performance. No Bondholder or Beneficial Owner may institute such action, suit or proceeding to compel performance unless they shall have first delivered to the Agency satisfactory written evidence of their status as such, and a written notice of and request to cure such failure, and the Agency shall have refused to comply therewith within a reasonable time.
SECTION 11. Duties, Immunities and Liabilities of the Trustee and Dissemination Agent. Article IX of the Indenture pertaining to the Trustee is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture and the Trustee and Dissemination Agent shall be entitled to the protections, limitations from liability and indemnities afforded the Trustee thereunder. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Agency agrees to indemnify and save the Dissemination Agent, and the Trustee and their officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s or the Trustee’s respective negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Agency for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent and the Trustee shall have no duty or obligation to review any information provided to them hereunder and shall not be deemed to be acting in any fiduciary capacity for the Agency, the Bondholders, or any other party. The Dissemination Agent may rely and shall be protected in acting or refraining from acting upon and directions from the Agency or an opinion of nationally recognized bond counsel. Neither the Trustee or the Dissemination Agent shall have any liability to the Bondholders or any other party for any monetary damages or financial liability of any kind whatsoever related to or arising from this Agreement. No person shall have any right to commence any action against the Trustee or Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure
F-5 Agreement. Any company succeeding to all or substantially all of the Dissemination Agent’s corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act. The obligations of the Agency under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Agency, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 13. Filings with the MSRB. All financial information, operating data, financial statements, notices, and other documents provided to the MSRB in accordance with this Disclosure Agreement shall be provided in an electronic format prescribed by the MSRB and shall be accompanied by identifying information as prescribed by the MSRB.
SECTION 14. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:
To the Agency: Carson Redevelopment Agency 701 E. Carson Street Car son, California 90745 Attention: Jacquelyn Acosta, Administrative Services General Manager
To the Dissemination Agent: The Bank of New York Mellon Trust Company, N.A. 700 South Flower Street, Suite 500 Los Angeles, California 90017 Attention: Corporate Trust Department
Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent.
F-6 IN WITNESS WHEREOF, the parties hereto have caused this Continuing Disclosure Agreement to be duly executed and delivered by their respective officers as of the date first above written.
CARSON REDEVELOPMENT AGENCY
Executive Director
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
Authorized Officer
F-7 EXHIBIT A
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Name of Obligated Person: Carson Redevelopment Agency Name of Issue: $25,620,000 Carson Redevelopment Agency, Tax Allocation Housing Bonds, 2010 Series A $14,940,000 Carson Redevelopment Agency, Tax Allocation Housing Bonds, 2010 Series A-T
Date of Issuance: October 26, 2010
NOTICE IS HEREBY GIVEN that the Agency has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement executed by the Agency on the date of issuance of the Bonds. [The Agency anticipates that the Annual Report will be filed by______].
Dated: ______THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., on behalf of the Carson Redevelopment Agency
By:
F-8 EXHIBIT B
NAME AND CUSIP NUMBERS OF BONDS
Name of Issuer: Carson Redevelopment Agency Name of Obligated Person: Carson Redevelopment Agency Name of Issue: $25,620,000 Carson Redevelopment Agency, Tax Allocation Housing Bonds, 2010 Series A $14,940,000 Carson Redevelopment Agency, Tax Allocation Housing Bonds, 2010 Series A-T
Date of Issuance: October 26, 2010 Date of Official Statement: October 13, 2010
CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number: CUSIP Number:
F-9 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX G
BOOK-ENTRY ONLY SYSTEM
The information in this section concerning DTC; and DTC’s book-entry system has been obtained from sources that the Agency believes to be reliable, but the Agency takes no responsibility for the accuracy thereof.
The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for the each issue of the Bonds, each in the aggregate principal amount of such issue, and will be deposited with DTC.
DTC, the world’s largest depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds: DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial
G-1 Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners well be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Agency as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, interest payments and redemption proceeds on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Agency or the Trustee, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Agency or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, premium, if any, interest payments and redemption proceeds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Agency or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Agency or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered.
The Agency may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered.
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