AgdaPkt 2003-09-08 - Laserfiche WebLink

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q. A.4 = Fiscal Impact After the sale of the bonds, the Agency is expected to have sufficient funds to finance its obligations and redevelopment activities (public parking garage, old County Courthouse restoration and plaza, and other streetscape and public improvements). The Agency has incurred s6veral kinds of legal obligations to which it has pledged its principal source of income, tax increment. Obligations with a first claim on tax increment include tax refunds, County tax collection fees, and the County's share of tax increment associated with the original portion of the Downtown Project Area. Bonds issued by the Agency have a second claim on tax increment. The Agency's administrative expenses and its discretionary expenditures ( "Discretionary Budget Items ") have the lowest claim on tax increment revenues. The annual principal and interest payments on these bonds will begin at about $650,000 for FY 2003/04 through 2008/09. These payments will then increase to approximately $3.5 million annually from FY 2013/14 through FY 2031/32. The primary assumption driving these projections is a 2% annual growth in the Agency's assessed valuation base on which its tax increment is determined. To the extent the growth is less than 2% annually, the Agency may have to reduce its budget for discretionary budget items in order to pay obligations with a prior claim on tax increment revenues. It should be noted that the Agency's valuation grew 5.91% over the last ten years and 7.95% over the past six years, so staff feels a 2% estimate is a very comfortable and conservative estimate. Staff will need to be diligent in its monitoring of the Agency revenues and financial commitments to ensure that sufficient revenues exist to pay all of the Agency's commitments. Should revenues decline, staff will then need to advise the Council and the Agency Board and provide options to deal with any revenue shortfalls. After issuance of the 2003 Bonds, staff expects current revenues to exceed current expenditures by at least $400,000. There are two issues that could adversely affect the Agency's finances that staff will carefully monitor: • Appeals for reductions in assessed values that might reduce the Agency's property tax revenues and/or result in refunds of property taxes paid, and • The State of California taking Agency revenues through the Educational Revenue Augmentation Fund (ERAF) mechanism or a similar type of arrangement. With regard to the first issue, staff has estimated that the Agency will be required to refund $135,000 in FY 2003/04 and FY 2004/04. This estimate is based upon the appeals that are currently pending and the percentage reductions that have recently been granted for similar properties. To address the second issue, staff has estimated that the State will continue to take $450,000 of the Agency's revenues for each of the next three fiscal years even though a shift of future years' revenues for redevelopment agencies was not part of the most recently adopted State budget. M