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AGENDA
REDEVELOPMENT AGENCY
CITY OF SOUTH SAN FRANCISCO
REGULAR MEETING
MUNICIPAL SERVICES BUILDING
COMMUNITY ROOM
WEDNESDAY FEBRUARY 11, 2009
6:30 P.M.
PEOPLE OF SOUTH SAN FRANCISCO
You are invited to offer your suggestions. In order that you may know our method of conducting
Agency business, we proceed as follows:
The regular meeting of the Redevelopment Agency is held on the second Wednesday of each
month at 6:30 p.m. in the Municipal Services Building, Community Room, 33 Arroyo Drive, South
San Francisco, California.
Public Comment: For those wishing to address the Board on any Agenda or non-Agendized item,
please complete a Speaker Card located at the entrance to the Community Room and submit it to
the Clerk. Please be sure to indicate the Agenda Item # you wish to address or the topic of your
public comment. California law prevents Redevelopment Agency from taking action on any item
not on the Agenda (except in emergency circumstances). Your question or problem may be
referred to staff for investigation and/or action where appropriate or the matter Inay be placed on a
future Agenda for more comprehensive action or a report. When your name is called, please come
to the podium, state your name and address for the Minutes. COMMENTS ARE LIMITED TO
THREE (3) MINUTES PER SPEAKER. Thank you for your cooperation.
The Clerk will read successively the items of business appearing on the Agenda. As she completes
reading an item, it will be ready for Board action.
KARYL MATSUMOTO
Chair
MARK N. ADDIEGO
Vice Chair
RICHARD A. GARBARINO
Boardmember
RICHARD BATTAGLIA
Investment Officer
BARRY M. NAGEL
Executive Director
PEDRO GONZALEZ
Boardmember
KEVIN MULLIN
Boardmember
KRISTA MARTINELLI-CARSON
Clerk
STEVEN T. MATTAS
Counsel
PLEASE SILENCE CELL PHONES AND PAGERS
HEARING ASSISTANCE EQUIPMENT IS AVAILABLE FOR USE BY THE HEARING-IMPAIRED AT REDEVELOPMENT AGENCY MEETINGS
In accordance with California Government Code Section 54957.5, any writing or document that is a public record, relates to an
open session agenda item, and is distributed less than 72 hours prior to a regular meeting will be made available for public
inspection in the City Clerk's Office located at City Hall. If, however, the document or writing is riot distributed until the regular
meeting to which it relates, then the document or writing will be made available to the public at the location of the meeting, as
listed on this agenda. The address of City Hall is 400 Grand Avenue, South San Francisco, California 94080.
CALL TO ORDER
ROLL CALL
AGENDA REVIEW
PUBLIC COMMENTS
CONSENT CALENDAR
1. Motion to approve the minutes of January 14, 2009 .and January 28, 2009.
2. Motion to approve the expense claims of February 1 1, 2009.
3. Resolution authorizing the execution of a Subordination Agreement with Willow
Gardens Housing Associates (an affiliate ofMid-Peninsula Housing Coalition) and
Union Bank for the Willow Gardens Revitalization Project and malting a finding
that an alternative method of refinancing in not reasonably available without
subordination.
PUBLIC HEARING
4. Hyatt Place Hotel
Vijay Patel/applicant
SRI Krishna Enterprises/owner
550 Gateway Blvd
P07-0073: PP07-0001, SIGN07-0047, VAR07-0004, TDM08-0003, DR07-0046 &
1VIND07-0003
Precise Plan, Type "C" Sign Permit, Design Review, Transportation Demand
Management Plan & Variance applications fora 166 room, eight-story Hyatt Place
Hotel, at 550 Gateway Boulevard, in the Gateway Specific Plan District in
accordance with SSFMC chapters 20.57, 20.85, 20.86 & 20.120.
Continued from regular meetings of November 12, 2008, December 10, 2008 and
January 14, 2009.
Motion to Continue to the regular meeting of March 11, 2009.
ADMINISTRATIVE BUSINESS
5. Annual Redevelopment Reporting Requirements.
ADJOURNMENT
REGULAR REDEVELOPMENT AGENCY MEETING FEBRUARY 11, 2009
AGENDA PAGE 2
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MINUTES ~A AGENDA ITEM # 1
DRAFT
REDEVELOPMENT AGENCY
CITY OF SOUTH SAN FRANCISCO
REGULAR MEETING
MUNICIPAL SERVICES BUILDING
COMMUNITY ROOM
WEDNESDAY, JANUARY 14, 2009
CALLED TO ORDER:
ROLL CALL
AGENDA REVIEW
None.
PUBLIC COMMENTS
None.
6:32 p.m.
Present: Boardmembers Garbarino, Gonzalez and
Mullin, Vice Chairman Addiego and
Chairwoman Matsumoto.
Absent: None.
CONSENT CALENDAR
1. Motion to approve the minutes of the meetings of December 10, 2008 and
December 17, 2008.
2. Motion to approve the expense claims of January 14, 2009 in the amount of
$854,255.50.
3 . Resolution No. 1-2009 approving a contract with Interstate Grading and Paving,
Inc., of South San Francisco, California, for building demolition of 212 and 216
Baden Avenue in an amount not to exceed $78,800.
Motion-Boardmember Garbarino/Vice Chairman Addiego: to approve consent Calendar
Items Nos. 1 & 2. Unanimously approved by voice vote.
Item No. 3: Boardmember Gonzalez observed that one of the buildings scheduled for
demolition was constructed of brick. He questioned whether the bricks could be saved and
reused by the City.
Director of Public Works White responded that consistent with the SSF Municipal Code,
the proposed agreement would require the Contractor to recycle the bricks. Accordingly,
the Contractor would likely take the bricks to a recycler who would resell or pulverize
them for another use.
Boardmember Gonzalez questioned whether there would be a way for the City to make use
of the bricks in future construction.
Director White responded that staff looked into whether the bricks could be reused by the
City and the initial indication was that they would not be worth saving given the type of
construction on the building.
Vice Chairman Addiego acknowledged that while saving the bricks was a wonderful
opportunity, economically the amount of labor to clean and reuse them might not have
been practical. He questioned the contingency on the project.
Director White responded the contingency was large because the project was small. He
further explained contingencies are graded up or down based on the job at issue.
Chairwoman Matsumoto advised she was pleased to see so many bidders on the project. In
the future she requested that a two (2) cost bid be utilized where brick preservation or
similar matters are at issue. However, she was satisfied that staff had looked into the cost
of preserving the bricks in this instance.
Boardmember Gonzalez questioned how plans for destruction of the building would affect
the nearby bakery.
Director White responded the bakery owner had been consulted and was pleased the
demolition would lead to additional parking in the area. He further added the demolition
would take place quickly and dust controls would be employed.
Motion -Boardmember Gonzalez/Second -Boardmember Garbarino: to approve
Resolution No. 1-2009. Unanimously approved by voice vote.
PUBLIC HEARING
4. Type "C" Sign -Banners
Boston Properties/Owner
Genentech, Inc./Applicant
P08-0079: PP08-0003 & SIGNS08-0048
Precise Plan to approve a Type C Sign Permit to allow installation of one employee
oriented banner sign at the Genentech Campus located at 651 Gateway Blvd. in
accordance with South San Francisco Municipal Code Sections 20.57, 20.76 and
20.86.
Public Hearing Opened: 6:41 p.m.
Senior Planner Beaudin presented the staff report recommending approval of an application
including a precise plan for a type C sign permit to permit one employee oriented sign at
651 Gateway Blvd. He explained that over the past year, Genentech had been moving
REGULAR REDEVELOPMENT AGENCY MEETING JANUARY 14, 2009
MINUTES PAGE 2
forward with its employee success program. He presented a visual of the Genentech
Campus that depicted locations previously approved for the sign program. The current
proposal had been reviewed by the Planning Commission and approval was pending based
upon the outcome of the sign ordinance text amendment that would be before Council For
second reading later in the evening.
Geraldine O'Connor of Genentech appeared before the Agency and thanked it for
consideration of the Company's request for review of one (1) new patient display location
on the Gateway Campus. She advised the patient success story program had succeeded at
reminding employees of the impact of their daily work. She presented a sampling of the
signs and remarked the Company designed them in accordance with artistic principles
reflecting the art of signs. She advised that Genentech continued to grow and was
proposing to expand the sign program accordingly. The proposed display location included
the glass facade near the cafeteria area.
Public Hearing closed: 6:47 p.m.
Boardmember Gonzalez questioned whether Genentech would propose additional sign
locations in the future.
Senior Planner Beaudin believed the sign program would be complete at this time, given
that all proposed spaces were occupied.
Boardmember Mullin questioned whether Genentech was enabled to update the signs with
new patient stories on an ongoing basis.
Senior Planner Beaudin stated proposed new signs would go through the Planning
Department for review pertinent to content updating.
Motion -Boardmember Gonzalez/Second -Boardmember Mullin: to approve a Type C
Sign Permit to allow installation of one employee oriented banner sign at the Genentech
Campus located at 651 Gateway Blvd. in accordance with South San Francisco Municipal
Code Sections 20.57, -20.76 and 20.86. Unanimously approved by voice vote.
5. Hyatt Place Hotel
Vijay Patel/applicant
SRI Krishna Enterprises/owner
550 Gateway Blvd
P07-0073: PP07-0001, SIGN07-0047,
MND07-0003
VAR07-0004, TDM08-0003, DR07-0046 &
Precise Plan, Type "C" Sign Permit, Design Review, Transportation Demand
Management Plan & Variance applications fora 16b room, eight-story Hyatt Place
Hotel, at 550 Gateway Boulevard, in the Gateway Specific Plan District in
accordance with SSFMC chapters 20.57, 20.85, 20.86 & 20.120.
Continued from Regular Meetings of November 12, 2008 and December 10, 2008.
Public Hearing opened: 6:50 p.m.
REGULAR REDEVELOPMENT AGENCY MEETING JANUARY 14, 2009
MINUTES PAGE 3
Senior Planner Beaudin advised the applicant requested a continuance to February 1 1.
2009, which would permit hiln to address the concerns the Agency raised at an earlier
public hearing on the matter.
Public Hearing closed: 6:51 p.m.
Motion -Boardmember Mullin/Second -Boardmember Garbarino: to continue the public
hearing of the matter to the Regular Meeting scheduled for February 11, 2009.
Unanimously approved by voice vote.
ADJOURNMENT
Being no further business, Chairwoman Matsumoto adjourned the meeting at 6:51 p.m.
Submitted by:,
Krista rtine i-Larson, Clerk
City of South n Francisco
Approved:
Karyl Matsumoto, Chairwoman
City of South San Francisco
REGULAR REDEVELOPMENT AGENCY MEETING
MINUTES
JANUARY 14, 2009
PAGE 4
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SPECIAL MEETING
o REDEVELOPMENT AGENCY
c'~LIFOR~1~ CITY OF SOUTH SAN FRANCISCO
CITY COUNCIL
OF THE
CITY OF SOUTH SAN FRANCISCO
MUNICIPAL BUILDING
COMMUNITY ROOM
33 ARROYO DRIVF,
SOUTH SAN FRANCISCO
WEDNESDAY, JANUARY 28, 2009
City Council Meeting Called to Order:
Redevelopment Agency Meeting Called to Order:
City Council and Redevelopment Agency
Roll Call:
* For reporting purposes,
participants are referred to by dleir
titles affiliated with the City
Council.
Public Comments -Comments were limited to items on the Special Meeting Agenda.
None.
2. Presentation - ROMA Design Group, regarding preliminary design concepts for the
potential redevelopment of Oyster Point in conjunction with ongoing discussions with
Oyster Point Ventures, LLC regarding redevelopment of the Oyster Point Business
Park.
Assistant City Manager Van Duyn presented the staff report introducing a presentation from
ROMA Design Group ("ROMA"). ROMA had presented a similar report to the Harbor
District Subcommittee. Assistant City Manager Van Duyn explained the presentation would
focus on the part of the plan that pertained to publicly held portions of site, which would be
planned to complement the SKS Shorenstein project and work towards revitalizing the Oyster
Point Marina. He requested that after listening to ROMA's presentation, Council advise as to
6:03 p.m.
6:03 p.m.
DRAFT
Present: Councilmen/Boardinembers
Garbarino, Gonzalez and Mullin,
Vice Mayor/Vice Chairman
Addiego and Mayor/Chairwoman
Matsumoto.
Absent: None.
whether the plan was moving in the right direction.
Mayor Matsumoto questioned timing of the plan and negotiations with SKS Shorenstein.
Assistant City Manager Van Duyn advised SKS had a window in which to purchase options
on the King Venture leases. However, SKS did not want to pursue the options until an MOU
with the City was finalized.
Boris Dramov of ROMA advised the firm had designed the Ferry Building and had taken a
look at the project proposed by SKS. He opined the opportunity brought to life by the
proposed life sciences campus was a step in the right direction that would strengthen the
market in the area and bring a significant population to the Marina. ROMA considered these
factors when putting the preliminary design together. Mr. Dramov advised the design called
for a phased approach to confrontation of infrastructure issues, which was permitted by the
timeline on the SKS project. During this time, multiple land use options were possible.
Mr. Dramov then presented a schematic map of the area, which highlighted the publicly
owned parcels in the Marina. He drew attention to the entrance to the site which faced the
waterfront and would create a sense of arrival. He then reviewed options for several of the
parcels, including recreational fields, a hotel site and parking. He emphasized that as the
market in the area unfolded, parcel uses could be redesignated and configurations could be
revisited. The present design allowed for such flexibility.
Councilman Gonzalez expressed concern about designating parcels for use as recreational
fields when the parcels may need to be adjusted for other uses in the future. He stressed the
difficulty of taking away a community field once established.
Mayor Matsumoto thanked ROMA for incorporating recreational uses into the design. She
expressed concern that the proposed hotel parcel was placed next to recreational playing
fields, which might not fit well with afour-star hotel concept. She also commented that the
proposed surface parking seemed like a waste of real estate on the Point.
Mr. Dramov responded the design concept should be viewed in a phased way. He further
noted that the referenced parking presently existed on the Point for the boat ramp and Marina.
The proposed hotel and playing field locations were suggestions, but it would be important to
make changes to the area that would allow the life sciences campus to move through the
several phases of development that would need to occur. He noted that the market for the
hotel was not yet in existence, and Council could revisit land uses at a point in time when the
market changed. The recreational fields would be an interim use of the parcels that would
allow flexibility for the future and accommodate the market for alternative uses.
Mayor Matsumoto requested more detail on proposed phases of development on the Point.
Assistant City Manager Van Duyn advised a lot was contingent upon timing and sequencing
of the adjacent SKS development. He believed the SKS project would create a market in the
area, which would allow staff to gauge interest from the Development Community. On the
subject of the recreation parcel, he advised the goal was to accommodate recreational use
interchangeably while leaving infrastructure options open. He further stated parcels could be
SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING JANUARY 28, 2009
MINUTES PAGE 2
designed for interim passive recreational uses.
Councilman Garbarino stated he realized plans would be market driven, but advised he would
be pleased to see a four (4) star hotel on one of the parcels with a nice restaurant on an
adjacent parcel. Accordingly, he advocated for a buffer zone between the proposed fiiture
hotel site and recreation field. He further stated he liked the plan a lot.
Councilman Mullin concurred that the hotel/recreation field proposal felt incongruous. He
also expressed concern about establishing a recreational field that may require conversion to
another use in the future. Accordingly, he advocated moving the proposed recreation site
down the road a bit with the expectation that it would have some kind of permanence. He
further added he would like to see the possibility of a baseball field entertained. He advised
he liked the general direction of the overall plan but noted it would need to be modified some
to determine how recreational fields might best fit with a future hotel site.
Councilman Gonzalez approved of the entrance to the Marina. He thought a tennis court
facility might work best next to the proposed hotel site.
Vice Mayor Addiego commented on the spectacular views in the area that would be more
accessible if SKS's plan to move the businesses in the village came to fruition. He opined the
Eastern most point should be kept open so that the public could enjoy the views. Accordingly,
he did not want to see the proposed hotel location move any further down the Point.
Mayor Matsumoto acknowledged the plan would be market driven, but questioned how much
time was projected for completion of the development.
Assistant City Manager Van Duyn advised SKS' project was at least five (5) years out, during
which time phasing demands would become clearer.
Mr. Dramov noted the design objective was to maintain exposure as one moved through the
site. The site plan could also move or reorganize easily. For example, the entire Eastern
portion could someday some day be reorganized and surface parking could perhaps be
eliminated.
3. Closed Session: Conference with Real Property Negotiator and Seifel Consulting.
(Pursuant to Government Code section 54956.8)
Property: Oyster Point Marina Area Properties know as Parcels A, B, C, D-l, D-2, El-
4 and I-4.
Negotiating Parties: City of South San Francisco, South San Francisco
Redevelopment Agency: and Oyster Point Ventures, LLC.
City/Agency Negotiator: Marty Van Duyn.
Under Negotiations: Terms and. Conditions for potential sale or lease of property
interests.
Closed Session opened: 6:44 p.m.
Open Session resumed: 7:10 p.m.
SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING JANUARY 28, 2009
MINUTES PAGE 3
Direction given.
Recess: 7:10 p.m.
Meeting resumed: 9:51 p.m.
4. Conference with Legal Counsel: Existing Litigation (Pursuant to Gov Code Section
54956.9 (a).) In Re Green Building Exchange, Inc.
Case No. 08-32161-TEC.
Closed Session opened: 9:51 p.m.
Open Session resumed: 10:53 p.m.
Report out of Closed Session: by a 5-0 vote, members authorized the Agency to file a
Statement ofNon-Opposition to the assumption of the Green Building Exchange lease to
Green V.
5. Adjournment of City Council Meeting and Redevelopment Meeting.
Being no further business, Mayor Matsumoto adjourned the meeting at 10:53 p.m.
Submitted by:
\~
Krist<a tinelli- arson, City Clerk
City of Sou ~n- Francisco M
Clerk, Redevelopment Agency
Approved:
Karyl Matsumoto, Mayor
City of South San Francisco
Chairwoman, Redevelopment Agency
SPECIAL REDEVELOPMENT AGENCY & CITY COUNCIL MEETING JANUARY 28, 2009
MINUTES PAGE 4
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I certify that the demands set forth on this payment register are
accurate and funds are available for payment.*
RDA AGENDA ITEM # 2
DATED: ~~~~
F CE RECTOR
*Note: Items below do not include payroll related payments
Checks:
Date Amount
01/14/09 $ 24,918.08
01/21/09 28,822.10
01/28/09 366,588.07
02/03/09 66,191.65
02/04/09 41,597.32
Electronic Payments:
Date Amount To Description
01/22/09 24,620.98 Deutsche Bank RDA Debt Service
01/22/09 41,934.70 Bank of New York RDA Debt Service
01/29/09 28,033.75 Union Bank Project Drawdown-Mid Peninsula
Total Payments $ 622,706.65
This is to certify that the above bills were confirmed at the regular meeting
of the Redevelopment Agency of South San Francisco held February 11, 2009.
DATED:
CHAIR
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IFOR RDA A GENDA ITEM # 3
DATE: February 11, 2009
TO: Redevelopment Agency Board
FROM: Marty Van Duyn, Assistant Executive Director
SUBJECT: A RESOLUTION APPROVING THE EXECUTION OF A SUBORDINATION
AGREEMENT WITH WILLOW GARDENS HOUSING ASSOCIATES AND
UNION BANK FOR THE WILLOW GARDENS REVITALIZATION PROJECT
AND MAKING A FINDING THAT AN ALTERNATIVE METHOD OF
REFINANCING IS NOT REASONABLY AVAILABLE WITHOUT
SUBORDINATION.
RECOMMENDATION
It is recommended that the Redevelopment Agency Board adopt a resolution authorizing
the execution of a subordination agreement with Willow Gardens Housing Associates (an
affiliate of Mid-Peninsula Housing Coalition), and Union Bank and making a finding that
an alternative method of refinancing is not reasonably available without subordination
BACKGROUND/DISCUSSION
On May 27, 1998, the Redevelopment Agency Board authorized the execution of a Loan
Agreement for the Development of Willow Gardens Affordable Housing ("Agency Loan
Agreement") with Willow Gardens Housing Associates ("Developer"), a California limited
partnership affiliated with Mid-Peninsula Housing Coalition, pursuant to which the Agency
agreed to provide a loan to the Developer in the amount of $3,500,000 ("Agency Loan") to
acquire and rehabilitate housing units in the Willow Gardens Planned Unit Development (the
"Project"). In addition, the City Council authorized execution of a Home Loan Agreement with
the Developer and provision of a HOME Program loan ("City Loan") to the Developer in the
amount of $619,055 for the Project. Subsequently, in 2002 the City approved an additional
$500,000 loan to the Developer to further pursue the Project.
In connection with the Agency and City Loans, the Developer executed Deeds of Trust securing
repayment of the loans, and Regulatory Agreements with the Agency and City which required the
Developer to purchase and rehabilitate up to 17multi-family buildings in the Project and make
them affordable to low-income families at 60% ofinedian-income.
With the Agency and City funds, the Developer acquired and rehabilitated nine (9) multi-family
buildings in the Willow Gardens neighborhood. The lower than expected number of acquisitions
was due to the increase in prices that occurred between 2000 and 2007. In 1999 the Developer
Staff Report
Subject: Subordination Agreement with Willow Gardens Associates and Union Bank
Page 2
purchased its first building for $376,000. Its final open market acquisitions occurred in 2002
when the Developer purchased four additional buildings for $750,000 per building. The last
acquisitions occurred in 2005 when the Developer purchased two rent restricted buildings from
two private developers that received off-site accommodations for their inclusionary housing
obligations. These final acquisitions exhausted the Agency's and City's loan funds. Upon
acquiring each building, the Developer used a line of credit totaling $700,000 to pay for the
rehabilitation of the buildings. Exterior repairs dramatically improved the building facades and
inspired several Willow Gardens owners to also repair their buildings.
The Agency Loan Agreement states the Agency would subordinate its Deed of Trust and
Regulatory Agreements to tax-exempt bond financing in an amount not to exceed $5.5 million.
The Developer, however, did not pursue tax-exempt bond financing because it was able to use its
line of credit at a lower cost to make the repairs. Presently, the Developer has the opportunity to
refinance its debt into a lower cost permanent loan from Union Bank in the amount of $2,000,000
("Bank Loan"). Therefore, staff recommends that the Agency and City Council approve the
subordination of the Agency and City Deeds of Trust and Regulatory Agreements to Union
Bank's Deed of Trust securing the Bank Loan.
FT TNT~TNC'1
There is no fiscal impact on the Agency by subordinating its deed of trust and regulatory agreements.
However, in the event the Developer defaults on its obligation it may be in the Agency's interest to
cure the default to preserve the affordable housing. The likelihood of a default is extremely low since
Mid-Peninsula Housing Coalition has an outstanding record of meeting its financial obligations.
CONCLUSION
It is recommended that the Redevelopment Agency Board adopt a resolution authorizing the
execution of a subordination agreement with Willow Gardens Housing Associates and Union Bank
pursuant to which the Agency Deed of Trust and Agency Regulatory Agreement would be
subordinated to Union Bank's Deed of Trust, and make a finding that an alternative method of
refinancing is not reasonably available without subordination.
By: - pprove : ' ~
Marry Van Duyn ~ M. Nag
Assistant Executive i ctor Executive Director
Attachments: Resolution
Subordination Agreements
BMN:MVD:NF:AFS
RESOLUTION NO.
REDEVELOPMENT AGENCY, CITY OF SOUTH SAN FRANCISCO
STATE OF CALIFORNIA
A RESOLUTION AUTHORIZING EXECUTION OF A
SUBORDINATION AGREEMENT WITH UNION BANK, N.A.
FOR THE WILLOW GARDENS PROJECT
WHEREAS, the Redevelopment Agency of the City of South San Francisco ("Agency")
provided a $3,500,000 loan ("Loan") to Willow Garden Housing Associates, a California limited
partnership affiliated with Mid-Peninsula Housing Corporation (the "Developer") to acquire and
rehabilitate housing units in the Willow Gardens planned unit development ("Project") pursuant to a
Loan Agreement dated January 4, 1999 ("Loan Agreement");
WHEREAS, in connection with the Loan, the Developer executed a Deed of Trust with
Assignment of Rents dated January 4, 1999 securing repayment of the Loan ("Deed of Trust"), and
the Developer and the Agency executed a Regulatory Agreement and Declaration of Restrictive
Covenants dated August 19, 1999 and a Regulatory Agreement and Declaration of Restrictive
Covenants dated January 4, 1999 (collectively, "Regulatory Agreements") pursuant to which the
Developer agreed to restrict the rents for 29 of the units in the Project to affordable levels. The Deed
of Trust and Regulatory Agreements are hereinafter collected referred to as the "Agency
Documents;"
WHEREAS, Developer used a line of credit to finance a portion of the Project;
WHEREAS, Developer now seeks to refinance its line of credit into a lower cost permanent
loan from Union Bank, N.A. ("Lender") in the amount of Two Million Dollars ($2,000,000) for the
Project (the "Lender Loan");
WHEREAS, Health and Safety Code Section 33334.14 permits subordination of
redevelopment agency affordability restrictions to a lien, encumbrance or regulatory agreement of a
lender other than the agency providing financing or refinancing of rental units where the agency (i)
makes a finding that an economically feasible alternative method of financing or refinancing on
substantially comparable terms and conditions is not reasonably available without subordination; and
(ii) the subordination agreement contains provisions reasonably designed to protect the agency's
investment in an event of default;
-1-
WHEREAS, Lender has indicated that it would be unwilling to provide the Lender Loan for
the Project without subordination of the Agency Documents; and
WHEREAS, the proposed Subordination Agreement provides the Agency with rights to
receive notice and to cure defaults arising under the Lender Loan documents.
NOW, THEREFORE, BE IT RESOLVED by the Redevelopment Agency of the City of
South San Francisco that the Agency hereby:
1. Finds that an economically feasible alternative method of refinancing on substantially
comparable terms and conditions is not reasonably available without subordination; and
2. Authorizes the Executive Director or his designee to execute a Subordination Agreement
substantially in the form on file with the Agency Secretary and to take such other actions reasonably
necessary to carry out the intent of this Resolution.
I hereby certify that the foregoing Resolution was regularly introduced and adopted by the
Redevelopment Agency of the City of South San Francisco at a meeting held on the 11th day of
February, 2009 by the following vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
ATTEST: '
Agency Secretary
1192628.1
-2-
RECORDING REQUESTED BY
UNION BANK, N.A.
AND WHEN RECORDED MAIL TO:
UNION BANK, N.A.
Commercial Real Estate Loan Administration
Attn: Manager
18300 Von Karman Avenue, Suite 200
Irvine, CA 92612
(Space Above This Line For Recorder's Use)
UNION BANK- WILLOW GARDENS
SUBORDINATION AGREEMENT
NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN YOUR RIGHTS UNDER
CERTAIN AGREEMENTS RELATING TO .CERTAIN REAL PROPERTY BECOMING
SUBJECT TO, AND OF LOWER PRIORITY THAN, THE LIEN OF A SECURITY
INTEREST.
THIS SUBORDINATION AGREEMENT (this "Agreement"), made as of the day of February,
2009, by and between REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO
("Agency"), whose address is 400 Grand Avenue, P.O. Box 711, South San Francisco, CA 94083, and UNION
BANK, N.A. ("Bank"), whose mailing address is c/o Union Bank, N.A., Commercial Real Estate Loan
Administration, Attn: Manager, 18300 Von Karman Avenue, Suite 200, Irvine, CA 92612, is made with
reference to the following facts:
A. Unless expressly defined herein, all capitalized terms used herein shall have the meanings
ascribed to them in the Loan Agreement (hereinafter defined).
B. Willow Gardens Housing Associates, a California Limited Partnership ("Borrower") is the
owner (or, concurrently with the recording of this Agreement, will be the owner) of the Property, which Property
is more particularly described in Exhibit "A" attached hereto and made a part hereof.
C. Agency has made a loan to Borrower in the amount of Three Million Five Hundred Thousand
Dollars ($3,500,000.00) ("Agency's Loan"), made pursuant to that certain Loan Agreement dated January 4,
1999 (as amended, restated, supplemented or modified, "Agency's Loan Agreement) by and between Agency
and Borrower and evidenced by a promissory note made by Borrower in favor of Agency (as amended,
restated, supplemented or modified, the "Agency's Note"), which is secured by, among other things, that
certain Deed of Trust with Assignment of Rents dated January 4, 1999 executed by Borrower for the benefit of
Agency and recorded on March 16, 1999 as Instrument No. 99045815 in the Official Records of the County of
San Mateo, State of California ("Official Records"), that certain Deed of Trust with Assignment of Rents
executed by Borrower for the benefit of Agency, and recorded September 1, 1999 as Instrument No. 1999-
150526 in the Official Records (collectively, as amended, restated, supplemented or modified "Agency's Deed
of Trust"), that certain Regulatory Agreement and Declaration of Restrictive Covenants dated August 19,1999
and recorded on March 16, 1999 as Instrument No. 99045816 in the Official Records, and that certain
Regulatory Agreement and Declaration of Restrictive Covenants recorded September 1, 1,999 as Instrument
No. 1999-150527 in the Official Records (collectively, as amended, restated, supplemented or modified, the
"Agency's Restrictions"), all of which encumber a portion of the Property. Agency's Loan Agreement,
Agency's Note, Agency's Deed of Trust, Agency's Restrictions and all other documents evidencing, securing
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or pertaining to Agency's Loan are hereinafter collectively referred to as "Agency's Loan Documents".
Agency's Deed of Trust and Agency's Restrictions are collectively referred to herein as °Agency's Security
Documents".
D. Concurrently herewith, Borrower has executed a Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing of even date herewith to UnionBanCal Mortgage Corporation, a
California corporation, as trustee, and to be recorded concurrently herewith in the Official Records ("First Deed
of Trust"), covering the Property and securing indebtedness (the "Loan") in the amount Two Million and
No/100 Dollars ($2,000,000) from Bank evidenced by a Promissory Note Secured by Deed of Trust ("Senior
Note") executed by Borrower in favor of Bank. The terms and conditions of the Loan are described in that
certain Loan Agreement of even date herewith ("Loan Agreement") by and between Bank and Borrower. The
Loan Agreement, Senior Note, the First Deed of Trust and all other documents evidencing, securing or
pertaining to the Loan are sometimes hereinafter collectively referred to as the "Loan Documents".
E. As a condition to the Loan, Bank requires that the First Deed of Trust shall unconditionally be
and remain at all times a lien or charge upon the Project which is prior and superior to the liens or charges of
Agency's Security Documents.
NOW, THEREFORE, in consideration of Bank's making of the Loan to Borrower, and in consideration
of the mutual promises and agreements hereinafter contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement do hereby agree as
follows:
1. SUBORDINATION OF AGENCY'S SECURITY DOCUMENTS/ NO RIGHTS TO
COLLATERAL.
The First Deed of Trust, and any and all renewals or extensions thereof and all amendments and
modifications hereafter made thereto, and any and all disbursements made by Bank to or for the account or
benefit of Borrower the repayment of which is secured thereunder, shall unconditionally be and remain at all
times a lien or charge against the Project that is prior and superior to the liens or charges of Agency's Security
Documents, to the same extent and purpose as though Agency's Security Documents had been executed and
recorded subsequent to the recording of the First Deed of Trust and the making of each disbursement or
advance made by Bank to Borrower the repayment of which is secured by the First Deed of Trust, regardless
of whether Borrower, at the time of any such disbursement or advance, may have been in default under the
Loan Agreement, the First Deed of Trust, or any of the other the Loan Documents and regardless of whether
Bank was obligated to make any such disbursement or advance. Agency shall have no right, lien or claim in
and to the Collateral (defined below) and the proceeds thereof, or any other property or assets of the Borrower
and any guarantor of the Loan (the "Guarantors") until such time as the Loan has been paid in full, the Bank
has no further obligation to fund any advances under the Loan and the Bank has released the First Deed of
Trust and the security interests in the Collateral. As used herein, the term "Collateral" shall mean all of the
real, personal and other property now or hereafter encumbered by the First Deed of Trust and any UCC-1
financing statement filed in connection therewith and all products and proceeds of the foregoing.
2. APPLICATION OF PAYMENTS UNDER AGENCY'S LOAN.
Notwithstanding anything stated to the contrary in any of Agency's Loan Documents, until such time as
all of Borrower's obligations under the Loan Agreement, the First Deed of Trust and any other Loan
Documents have been terminated, upon the occurrence of an event of default under the Loan Documents, all
amounts (including, without limitation, all insurance proceeds and condemnation awards) received by Agency
from, or for the account of, Borrower under Agency's Loan shall be immediately remitted to Bank at the
address set forth above to be applied by Bank in reduction of any amounts outstanding and owing to Bank
under the Loan Agreement, the First Deed of Trust or any other Loan Document, in such amounts and in such
order as Bank shall determine in Bank's sole and absolute discretion; provided that, Bank has provided
Agency with notice of the default in accordance with Paragraph 5. Borrower by executing the joinder attached
hereto specifically authorizes the Agency to endorse and remit such payments to the Bank, and specifically
waives any and all rights to have payments returned to Borrower or credited to the Agency's Loan. Borrower
and Bank acknowledge and agree that Agency's remittance of any payments to Bank under this Paragraph 2
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979024.04 - !~ -
shall not waive any event of default under the Agency's Loan Documents which may arise from the Agency's
inability to retain such payment or apply such payment to the Agency's Loan.
3. ALL DISBURSEMENTS UNDER THE LOAN DOCUMENTS SECURED BY THE FIRST
DEED OF TRUST.
Notwithstanding anything to the contrary set forth in the Loan Agreement or any other agreement
between Bank and Borrower with respect to any and all disbursements made by Bank to or for the account or
benefit of Borrower or the Project in connection with any sums advanced by Bank for the payment of real
estate taxes or assessments or insurance premiums, or any other sums advanced or obligations incurred by
Bank in connection with the protection or preservation of any security given to Bank with respect to the Loan or
otherwise permitted pursuant to the Loan Documents, shall be deemed to be, and in all events shall be,
secured by the First Deed of Trust and, as so secured, and regardless of whether Borrower at the time of any
such disbursements may have been in default under the Loan Agreement, the First Deed of Trust, or any of
the other Loan Documents and regardless of whether Bank was obligated to make any such disbursements,
shall be and remain a lien or charge against the Project that is unconditionally prior and superior to the lien
and effect of Agency's Security Documents.
4. RECEIPT AND APPLICATION OF INSURANCE PROCEEDS AND CONDEMNATION
AWARDS. Notwithstanding anything stated to the contrary in any of Agency's Loan Documents, so long as
the First Deed of Trust continues to encumber all or portions of the Project, all insurance proceeds that may
become available from time to time as a result of damage or destruction to all or portions of the Improvements
and all condemnation awards that may become available from time to time as a result of the condemnation of
all or portions of the Project shall be held by Bank, disbursed by Bank and applied by Bank in accordance with
the terms and conditions of the First Deed of Trust and the other Loan Documents and Agency shall have no
right to hold, disburse or apply any of such proceeds and/or awards. Agency shall execute such documents
as Bank may require from time to time in order to assure compliance with the provisions of this Paragraph 4.
5. AGENCY'S RIGHT TO CURE DEFAULTS. Upon the occurrence of an Event of Default,
Bank shall: (a) concurrently with notifying Borrower of the occurrence of such event of default, notify Agency at
its address set forth above of the occurrence of such event of default; (b) permit Agency to cure or correct
(provided that such event of default is curable) any such event of default within sixty (60) calendar days after
receipt of such notice ("Agency Cure Period"); provided, however, that Bank has the continuing right to
commence to pursue its remedies under the Loan Documents on account of such default during the Agency
Cure Period, including but not limited to the right to accelerate the Loan, record a notice of default and to
obtain a receiver; provided further, that if the cure is completed during the Agency Cure Period, Bank will
rescind any notice of default after reimbursement of all of its costs incurred in connection with the default,
including, without limitation, attorneys' fees and court costs; and (c) accept all payments and all acts done by
Agency on behalf of Borrower within the Agency's Cure Period as though the same had been timely done and
performed by Borrower, so that such acts and payments shall fully and totally cure and correct all such
defaults, breaches, failures or refusals for all purposes. In the event that an Event of Default occurs and Bank
has recorded a notice of default, then for the period from the date of recordation of the notice of default, until
the date of recordation of a notice of sale, so long as the noticed default continues, Agency shall have the
right, but not the obligation, in lieu of curing any default under the Loan Documents, to purchase the Loan.
Such purchase will be accomplished by Agency paying to Bank the outstanding principal amount of the Loan,
plus all- accrued and unpaid interest thereon, together with reasonable expenses incurred by Bank in
connection therewith (including reasonable attorneys' fees and costs), in exchange for the assignments of the
Loan Documents without recourse or warranty except that Bank will warrant that it owns and has all requisite
authority to transfer the Loan at the time of the transfer. Borrower acknowledges and agrees, by executing the
joinder attached hereto, that after the Loan has been assigned to Agency or its nominee, Bank shall be
relieved from all liability to Borrower under or in connection with the Loan Documents.
6. BANK'S RIGHT TO CURE DEFAULT UNDER AGENCY'S LOAN. Upon the occurrence of a
default under the Agency's Loan, Agency shall: (a) concurrently with notifying Borrower of the occurrence of
such event of default, notify Bank at its address set forth above of the occurrence of such default or event of
default; (b) permit Bank to cure or correct (provided that such event of default is curable) any such event of
default within sixty (60) calendar days after receipt of such notice ("Bank Cure Period"); provided, however,
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that Agency has the continuing right to commence to pursue its remedies under the Agency's Loan
Documents on account of such default during the Bank Cure Period, including but not limited to the right to
accelerate the Agency's Loan, record a notice of default and to obtain a receiver; provided further, that if the
cure is completed during the Bank Cure Period, Agency will rescind any notice of default after reimbursement
of all of its costs incurred in connection with the default, including, without limitation, attorneys fees and court
costs; and (c) accept all payments and all acts done by Bank on behalf of Borrower within the Bank Cure
Period as though the same had been timely done and performed by Borrower, so that such acts and payments
shall fully and totally cure and correct all such defaults, breaches, failures or refusals for all purposes.
7. BANK'S RELEASE OF SECURITY SHALL NOT AFFECT SUBORDINATION.
Bank's release of (a) any security for Borrower's obligations under the Loan Documents, including,
without limitation, the reconveyance of any portion(s) of the Project from the lien of the First Deed of Trust, or
(b) any security for any Additional Advance, shall not constitute a waiver or relinquishment of Agency's
unconditional subordination of the liens or charges of Agency's Security Documents against the Project to the
lien or charge of the First Deed of Trust.
Bank shall have the right at any and all times to determine the order in which, or whether, (i) recourse
is sought against Borrower or any Guarantor or any other obligor with respect to the indebtedness and
obligations under the First Deed of Trust and the other Loan Documents, or (ii) any or all of the collateral
security for the indebtedness and obligations under the Loan Documents in which a lien has been granted to
or obtained by Bank shall be enforced. Bank may forbear collection, release, compromise or settle the Loan,
or sell, take, exchange, surrender or release collateral or security therefor, consent to or waive any breach of,
or any act, omission or default under, any of the Loan Documents, apply any sums received by or realized
upon by Bank against liabilities of the Borrower and the Guarantors to Bank in such order as Bank shall
determine in its sole discretion, and otherwise deal with any and all parties and the Collateral or other property
or assets of the Borrower and the Guarantors as they deem appropriate. Bank shall have no liability to
Agency for any claim, right, action or cause of action which it may now or hereafter have against Bank arising
out of, any release of any of the Collateral or other property or assets of the Borrower or the Guarantors
securing such indebtedness and obligations, the failure to realize upon any Collateral or other property or
assets of the Borrower or the Guarantors, and the failure to exercise any rights or remedies of Bank under the
Loan Documents.
8. BANK'S RELIANCE.
Bank would not make the Loan to Borrower absent the execution of this Agreement by Agency.
WAIVERS BY AGENCY.
law,
Agency hereby waives and agrees not to assert or take advantage of, to the fullest extent permitted by
(a) any right to require Bank to proceed against Borrower or any other person or to
proceed against or exhaust any security held by Bank at any time or to pursue any other remedy in Bank's
power before exercising any right or remedy under the First Deed of Trust;
(b) any rights to require or request that the Bank marshal the Collateral in favor of
Agency or to equitably subordinate the rights, liens or security interests of Bank under the Loan Documents;
(c) any defense that may arise by reason of the incapacity, lack of authority, death, or
disability of, or attempted revocation hereof by, Borrower or by any other(s) or the failure of Bank to file or
enforce a claim against the estate or assets (either in administration, bankruptcy, or any other proceedings) of
Borrower or any other(s) having an interest in Borrower;
(d) demand, protest and notice of any kind, including without limitation notice of the
evidence, creation, or incurring of any new or additional indebtedness or obligation of or any action or non-
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action on the part of Borrower or Bank in connection with any obligation or evidence of indebtedness held by
Bank as collateral or in connection with any indebtedness of Borrower to Bank described in this Agreement;
(e) any claim, right, action or cause of action which Agency may now or hereafter have
against Bank arising out of, any release of any of the Collateral or other property or assets of the Borrower or
the Guarantors securing such indebtedness and obligations, the failure to realize upon any Collateral or other
property or assets of the Borrower or the Guarantors, and the failure to exercise any rights or remedies of
Bank under the Loan Documents;
(f) any defense based upon an election of remedies by Bank (including, without
limitation, an election by Bank to proceed by non judicial rather than judicial foreclosure) that destroys or
otherwise impairs the subrogation or other rights, if any, of Agency, or the right of Agency to proceed against
Borrower, or both; and
(g) any duty on the part of Bank to disclose to Agency any facts Bank may now know or
hereafter know about Borrower or the partners or successors of Borrower, regardless of whether (i) Bank has
reason to believe that any such facts may increase materially the risk beyond that which Agency intends to
assume, (ii) Bank may have reason to believe that such facts are unknown to Agency, or (iii) Bank has a
reasonable opportunity to communicate such facts to Agency, it being understood and agreed that Agency is
fully responsible for being and keeping informed of the financial condition of Borrower and/or any partners or
successors of Borrower and of all circumstances bearing on the risk of non-payment of any indebtedness of
Borrower to Bank described in this Agreement.
10. CERTAIN ACTIONS REGARDING SUBORDINATE LOAN. Until such time as the Loan shall
have been paid in full, the Bank has no further obligation to fund any advances under the Loan and the Bank
has released the First Deed of Trust and the security interests in the Collateral, Agency shall not take any of
the following actions with respect to the Agency's Loan without the prior written consent of Bank:
(a) Make demand under any guaranties for the Agency's Loan or take any action to
enforce any remedy under the Agency's Security Documents or otherwise exercise any remedies with respect
to the Collateral pursuant to the Agency's Security Documents or otherwise; provided, however, that Agency
may exercise its rights and/or remedies to obtain specific performance of the Agency's Restrictions at any time
without the consent of, but upon prior notice to, the Bank; or
(b) Commence any litigation or proceeding, complete any foreclosure sale, record a deed
or assignment in lieu of foreclosure, obtain a receiver or take any other enforcement action against, or take
possession or control of, or exercise any remedies with respect to the Borrower, any Guarantor or the
Collateral or any other property or assets of any Borrower, any Guarantor or any portion thereof (collectively
referred to herein as °Enforcement Actions"); provided, however, that Agency may exercise its rights and/or
remedies to obtain specific performance of the Agency's Restrictions at any time without the consent of, but
upon prior notice to, the Bank.
11. NOTICES.
Any notice, demand or request required or permitted to be delivered hereunder shall be deemed to
have been duly and properly given at the time of such delivery if personally delivered (which shall include
(i) delivery by means of professional overnight courier service which confirms receipt in writing and
(ii) transmission by telecopier or telefacsimile machine capable of confirming transmission and receipt), or if
mailed, forty-eight (48) hours after deposit in United States registered or certified mail, postage prepaid, return
receipt requested, addressed to Agency or Bank, as the case may be, at their addresses set forth above.
12. ENTIRE AGREEMENT.
This Agreement shall be the whole and only agreement with respect to the subordination of the effect
of Agency's Security Documents to the lien or charge of the First Deed of Trust, and all disbursements and
advances made thereunder, and shall supersede and cancel any prior agreements as to such subordination,
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- f -
including without limitation any provisions contained in Agency's Security Documents that provide for the
subordination of the effect thereof to one or more deeds of trust.
13. AGENCY'S ACKNOWLEDGEMENTS.
Agency hereby declares, agrees, and acknowledges as follows:
(a) For purposes of this Agreement, Agency consents to and approves all provisions of
the Loan Agreement, the First Deed of Trust and the Loan Documents;
(b) Agency agrees that it will not in any manner challenge, oppose, object to, interfere
with or delay Bank's security interest in, liens on and rights as to the Borrower or any Guarantor or the
Collateral or any other property or assets of the Borrower, of any Guarantor, or any Enforcement Actions of
Bank (including, without limitation, any efforts by Bank to obtain relief from the automatic stay in any
bankruptcy proceeding).
(c) Bank, in making disbursements pursuant to the Loan Agreement, is under no
obligation or duty to insure, nor has Bank represented that it will insure, the proper application of such
proceeds by the person(s) to whom Bank disburses such proceeds, and any application or use of such
proceeds for purposes other than as provided in any such agreement shall not defeat or render invalid, in
whole or in part, the subordination provided for in this Agreement;
(d) Agency intentionally and unconditionally subordinates the effect ofAgency's Security
Documents against the Project in favor of the liens or charges of the First Deed of Trust and Agency
understands that, in reliance upon and inconsideration of this subordination, specific loans and advances are
being and will be made and, as part and parcel thereof, specific monetary and other obligations are being and
will be entered into that would not be made or entered into absent said reliance upon this subordination;
(e) Bank has not made any warranty or representation of any kind or nature whatsoever
to Agency with respect to (i) the application of the proceeds being made by Bank to Borrower upon the
security of the First Deed of Trust, (ii) the value of the Property or the marketability thereof, or (iii) the ability of
Borrower to honor its covenants and agreements with Bank or Agency;
(f) Agency has made such independent legal and factual inquiries and examinations as
Agency deems necessary or desirable, and Agency has relied solely on said independent inquiries and
examinations in entering into this Agreement;
(g) The Agency's Loan Documents as described in Exhibit "B" attached hereto are all of
the documents evidencing, securing or pertaining to Agency's Loan, true, correct and complete copies thereof
have been delivered to Bank and the Agency's Loan Documents have not been amended or modified except
as reflected thereon;
(h) As of the date set forth above, the Agency has no offset, defense, deduction or claim
against Borrower under any of the Agency's Loan Documents, Borrower is not in default under any of the
Agency's Loan Documents and the Agency knows of no event that has occurred or is continuing which, with
the passage of time or the giving of notice, or both would constitute a default under any of the Agency's Loan
Documents;
(i) Each and every covenant, condition and obligation contained in the Agency's Loan
Documents required to be performed or satisfied as of the date hereof, and each and every matter required to
be approved the Agency as of the date hereof, has been satisfied and/or approved and/or waived as
applicable, as of the date set forth above;
(j) The Agency's Loan has been, or concurrently with the execution of this Agreement
will be, fully funded and Borrower's use of the Agency's Loan funds complies with the provisions of the
Agency's Loan Documents;
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(k) Notwithstanding anything stated to the contrary in the Agency's Loan Documents,
Agency's rights in and to the leases and rents of the Property shall be subject and subordinate to the rights of
Bank to same; and
(I) Notwithstanding anything stated to the contrary in the Agency's Loan Documents, if
an Event of Default occurs under the Deed of Trust or the other Loan Documents, which in and of itself does
not constitute a default or event of default under the Agency's Loan Documents and Bank accepts a cure of
such default by Borrower, then Agency shall accept such cure as a cure of the event of default under the
Agency's Loan Documents.
14. ATTORNEYS' FEES.
If either Agency or Bank shall bring an action against the other by reason of the breach of any
covenant, provision, or condition of this Agreement, or otherwise arising out of this Agreement, the
unsuccessful party shall pay to the prevailing party reasonable attorneys' fees, which fees shall be payable
whether or not any action is prosecuted to judgment. The term "prevailing party" shall include, without
limitation, a party who brings an action against the other by reason of the other's breach or default and obtains
substantially the relief sought, whether by compromise, settlement, or judgment.
15. NO WAIVER BY BANK.
It is understood by the parties to this Agreement that in no event shall Bank's permitting Agency's
Security Documents to continue to burden the Project be construed as a waiver of Bank's right to prohibit the
creation of any further liens or charges against the Project, nor shall the granting of such consent be
construed as a waiver of Borrower's obligation to obtain Bank's consent as a condition to creating any
additional liens or charges against the Project in the future.
16. GOVERNING JURISDICTION.
This Agreement shall be governed by the laws of the State of California and shall be binding upon,
and shall inure to the benefit of, the parties to this Agreement and their respective successors and assigns.
17. SEVERABILITY.
In case one or more of the provisions contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any
other provisions hereof and this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein unless the effect thereof would materially alter the benefits or
burdens hereof to the parties hereto.
18. COUNTERPARTS.
This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an
original but all of which together shall constitute but one and the same instrument.
[SIGNATURE PAGE FOLLOWS)
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WHEREAS, this Subordination Agreement has been executed by the parties as of the date first
written above.
AGENCY:
REDEVELOPMENT AGENCY OF THE CITY OF
SOUTH SAN FRANCISCO, a public body, corporate
and politic
By:_
Name:
Title:
APPROVED AS TO FORM:
Assistant Agency Attorney
BANK:
UNION BANK OF CALIFORNIA, N.A.
By:
Jonathan Klein, Vice President
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JOINDER
Unless expressly defined herein, all capitalized terms used herein shall have the same meanings
ascribed to them in the Subordination Agreement (the "Subordination Agreement") to which this Joinder is
attached.
The undersigned hereby acknowledges receipt of a copy of the Subordination Agreement and, as fee
owner of the Property, hereby consents to, approves and agrees to be bound by all of the terms and
conditions set forth in the Subordination Agreement.
WILLOW GARDENS HOUSING ASSOCIATES,
A CALIFORNIA LIMITED PARTNERSHIP
By: Mid-Peninsula San Ramon Corporation,
a California nonprofit public benefit corporation,
its general partner
By:
Name: Sue Perkins
Its: Assistant Secretary
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ACKNOWLEDGMENT
State of California
County of
On ,before me, ,
(insert name and title of the officer)
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed
to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the forgoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature.
State of California
County of
On
ACKNOWLEDGMENT
before me,
(Seal)
(insert name and title of the officer)
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed
to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the forgoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature,
(Seal)
2219/014742-0504
979024.04 - 1 2 -
ACKNOWLEDGMENT
State of California
County of
On ,before me, ,
(insert name and title of the officer)
personally appeared
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed
to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity
upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the forgoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
2219/014742-0504
979024.04 - 1 3 -
EXHIBIT "A"
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN IS SITUATED IN THE STATE OF CALIFORNIA, THE COUNTY OF
SAN MATED, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
REAL PROPERTY IN THE CITY OF SOUTH SAN FRANCISCO, COUNTY OF SAN MATED, STATE OF
CALIFORNIA, DESCRIBED AS FOLLOWS:
LOTS 2 AND 16 OF BLOCK 1, LOTS 1, 2, 3, 8, 11, 21 AND 27 OF BLOCK 2 AS DELINEATED UPON
THAT CERTAIN MAP ENTITLED "WILLOW GARDENS; SOUTH SAN FRANCISCO, SAN MATED
COUNTY, CALIFORNIA", FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF THE
COUNTY OF SAN MATED, STATE OF CALIFORNIA, ON DECEMBER 29TH, 1964 IN BOOK 61 OF
MAPS, AT PAGES 24 AND 25.
EXCEPTING FROM LOT 2, BLOCK 1 AND LOT 11, BLOCK 2:
ALL WATER RIGHTS AS LIES BENEATH THE SURFACE OF THE EARTH, WITH NO RIGHT OF
SURFACE ENTRY, AS CONTAINED IN THAT QUITCLAIM DEED FROM PACIFIC STATES
CONSTRUCTION COMPANY, A CALIFORNIA CORPORATION, TO CALIFORNIA WATER SERVICE
COMPANY, A CALIFORNIA CORPORATION, DATED FEBRUARY 2, 1968 AND RECORDED
FEBRUARY 7, 1968 IN BOOK 5428 OFFICIAL RECORDS, PAGE 590 (17429-AB).
Subordination of Deed of Trust (Core Document(
(08/14/02)
2219/014742-0504
s7so24.o4 - 14 ~ cre_docs\misc\SUBREDOT.doc
EXHIBIT "B"
LIST OF AGENCY'S LOAN DOCUMENTS
1. Agency's Loan Agreement
2. Agency's Note
3. Agency's Deed of Trust
4. Agency's Restrictions
Subordination of Deed of Trust (Core Document(
(08/14/02)
2219/014742-0504
979024.04 - 15 - cre docs\misc\SUBREDOT.doc
°~~x~~s~"~~ Redevelo ment A enc
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'~LIFOR~ p RDA A GEN
DATE: February 11, 2009
TO: Redevelopment Agency Board
FROM: Marty Van Duyn, Assistant Executive Director
SUBJECT: PRECISE PLAN, TYPO "C" SIGN PERMIT, TRANSPORTATION DEMAND
MANAGEMENT PLAN, & VARIANCE APPLICATIONS FORA 166 ROOM
HOTEL AT' 550 GATEWAY BOULEVARD, IN THE GATEWAY SPECIFIC
PLAN DISTRICT IN ACCORDANCE WITH SSFMC CHAPTERS 20.57, 20.85,
20.86, & 20.120
Applicant: Vijay Patel, SRI Krishna Enterprise
Case Nos.: P07-0073: PP07-0001, ND07-0003, VAR07-0004, SIGNS07-
0047, TDM08-0003
RECOMMENDATION:
It is recommended that the Redevelopment Agency continue application P07-0073 fora 166
room hotel at 550 Gateway Boulevard to the March 11, 2009 Redevelopment Agency
meeting.
DISCUSSION:
On January 14, 2009 the RDA continued the subject application to allow the applicant more time
to address the issues outlined by the Redevelopment Agency during the December 10, 2008
meeting. The applicant has now requested a continuance until the March 11, 2009 meeting.
~ i ~~ `- «
B ~~-.---~ -Approve
Marty Van Duyn arry M. Na
Assistant Executive ~CtOr Executive Director
Attachments -Applicant Email Continuance Request
MVD/ghb
Page 1 of 1
Beaudin, Gerry
__.
From: Vijay Patel [[email protected]]
Sent: Thursday, February 05, 2009 7:13 PM
To: Beaudin, Gerry
Subject: SSF Hyatt Place
Gerry, I wanted to ask for a continuance of the February Meeting till March. We are still working with some our consultants to
get ready for our next meeting. Please advise me of when the meeting will be in March
Thank you
Vj
2/6/2009
r~zxs Redevelo meet A enc
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° Sta Re opt
c9LIFOR~~~
RDA AGENDA ITEM # S
DATE: February 11, 2009
TO: Redevelopment Agency Board
FROM: Jim Steele, Finance Officer
SUBJECT: ANNUAL REDEVELOPMENT REPORTING REQUIREMENTS
RECOlYIlVIENDATION
It is recommended that the Redevelopment Agency Board receive and accept the attached reports,
as required by Health and Safety Code 33080.1.
BACKGROUND/DISCUSSION
California Health & Safety Code 33080.1 requires local agencies to produce and submit to the State
Controller a series of annual reports related to the Redevelopment Agency's activities in the prior fiscal
year. Agencies are also required to present these reports, along with an annual update on blight progress ,
to its legislative body. The State reports have been submitted to the State Controller as required; the
Board also needs to receive and review them and the blight progress update. This Staff Report transmits
the reports for fiscal year 2007-08. Several of these routine reports provide for demographic reporting to
the State, are lengthy and contain very detailed numerical data. Consequently, it is not feasible to include
them as attachments. They can be viewed on the City's website in the Finance Department Homepage
(www.ssf.net/depts/finance), or by contacting the Finance Department at 877-8513. A binder is available
in the Council office.
The reports submitted annually to the State Controller's Office are listed here:
Property Report
Describes properties owned by the Agency, their uses, and those acquired in the previous fiscal year.
(Exhibit A)
Housing Activities Report
Describes housing activities and funding sources. (Not attached here, but available for viewing as
described above).
Loan Report
Identifies loans which equal or exceed $50,000 and were found by the Agency during the previous fiscal
year to have either defaulted or not complied with the terms of the agreements approved by the Agency.
Staff Report
Subject: Annual Redevelopment Reporting Requirements
Page 2
The Agency did not have any such loans in fiscal year 2007/08, so this statement, in lieu of a report, will
suffice for the reporting requirement.
The following report is not sent to the State, but is required to be presented to the legislative body:
Annual Bli hg t Progress Update
Describes the Agency's progress in eliminating blight over the past year, including goals and objectives
set and achieved. (Exhibit B)
Annual Report of Financial Transactions of Community Redevelopment Agencies
Presents detailed descriptions of the Agency's project areas and assessed valuations, including but not
limited to, the Agency's long-term debt and statement of income and expenditures. The entire report is
not included here, but is available for viewing as described above.
City of South San Francisco Redevelopment Agency Financial Statements-Exhibit C
CONCLUSION
Acceptance of these reports will facilitate the Agency's compliance with the State Health and Safety
Code.
r~ ~-~.
B y: ~` ~~~ APProv~d: 4c. L .
Jim eele ~ .Nagel
Fince Officer Executive Director
Attachments: Exhibit A -Property Report
Exhibit B -Blight Progress Report
Exhibit C -Annual Financial Statements
Exhibit A
City of South San Francisco
Redevelopment Agency Property Listing
As of June 30, 2008
Address
200 LINDEN AVE
IMPROVEMENT ON 200 LINDEN AVE
432 BADEN/429 THIRD LN
616 LINDEN AVE
700 LINDEN _
468 MILLER PARKING LOT
472 GRAND/306 SPRUCE
339-341 COMMERCIAL
905 LINDEN AVENUE
212 BADEN AVE
201 GRAND AVE
IMPROVEMENT ON 201 GRAND AVE
559 GATEWAY BLVD
480 NORTH CANAL
480 NORTH CANAL
;1312 MILLER AVE
'.310 MILLER AVE., SSF
380 ALTA VISTA, SSF
714 LINDEN AVE
323 MILLER AVENUE
80 CHESTNUT
314 MILLER AVENUE
216 BADEN
1 CHESTNUT
PUC PARCELS
Total
Description
IT building (former bank)
Parking lot
Parking lot (former Quonset hut)
Green lot
Parking lot for medical building
County medical clinic
Residential 4 units
Green lot
Warehouse (former Giorgi Bros)
Parking lot (former Copa Cobana)
Childcare Land (donation)
Fire Station 61
Fire Station 61 Training Tower
Residental 3 units
Residentail 4 units
Residential single family home
Residential 3 units
Residentail 2 units
Commercial (former CalWater)
Residentail single family home
Commercial (former Hot Shots Cafe)
Commercial (former Ron Price)
PUC Land
Date Purchased I Original Cost
1997 $ 535,000
2001 $ 50,000
1997 $ 336,229
1997 $ 341,016
1998 $ 317,006
1999 $ 111,219
1999 $ 1,579,729
1999 $ 804,086
2000 $ 507,269
2001 $ 942,083
2001 $ 564,000
2002 ~ $ 58,995
2003 $ -
2004 $ 5.007,603
2008 $ 1,596,947
2004 $ 717,183
2005 $ 586,309
2005 $ 683,080
2005 $ 859,717
2007 $ 700,655
2007 $ 1,103,284
2008 $ 681,019
2008 $ 784,000
2008 $ 6,523,640
2008 $ 21,051,162
$ 46,441,231
Exhibit B
Blight Progress Report
Redevelopment Agency of South San Francisco
During fiscal year 2007-08 the Redevelopment Agency efforts have been focused on the
alleviation of blight through the following activities:
Infrastructure improvements to major thoroughfares and residential streets to
capitalize on the opportunities resulting from the BART station development and
to open additional area to development and redevelopment.
Business attraction activities to eliminate blighting conditions and provide
additional employment opportunities for South San Francisco residents.
Construction and rehabilitation of public facilities such as parks and
recreational facilities.
Redevelopment of existing vacant and underutilized land to eliminate
blighting conditions and provide residents with additional housing, employment
a11d recreational opportunities.
Housing activities to provide new affordable housing opportunities for low- and
moderate-income families and to improve the City's existing housing stock.
Specific projects undertaken include but are not limited to the following:
• Completed construction and lease up of 43 new affordable rental units at Grand
and Oak Avenues.
• Completed construction and sale of four home owner units by Habitat for
Humanity.
• Completed acquisition of a single family home at 314 Miller Avenue and
r eiGCatloii of a tenant occupying illegally converted garage oii the property.
• Provision of 20 units of affordable for sale town homes at the City Lights project.
• Continuation of housing acquisition loan program for low and moderate income,
first-time home buyers. Six (6) Redevelopment loans were issued for the City
Lights project.
• Completed Phase I of the Linear Park development in the El Camino Corridor
Project Area and initiated Phase II.
• Acquired commercial property at 216 Baden Avenue assembling several
contiguous parcels for future redevelopment.
• Acquired 80 Chestnut Avenue administration building for public use.
• Completed design plans for new construction of parking structure in the
Downtown Business District.
• Completed renovations for Safe Harbor Homeless Shelter being undertaken by
San Mateo County.
• Acquired surplus lands in the Public Utilities Commission Right of Way for
future redevelopment.
• Acquired 1 Chestnut, former auto dealership for Land assembly and
redevelopment.
• Facilitated entitlements for development of new Lowe's store.
• Completed construction of new sewer pump station # 4 on Harbor Way.
Exhibit C
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clTx of soUTx sAN Fr~ANClsco
,~ REDEVELOPMCNT AGENCY
BASIC CQMPONENT UNIT
FINANCIAL STATEMENT5
FQR THC YEAR ENDED JUNE 30, 20fl8
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CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY
BASIC COMPONENT UNIT FINANCIAL STATEMCNTS
FOR THC YEAR ENDED JUNE 30, 20x8
Table of Contents
Pase
Independent Auditor's Report ............................................................................................................ 1
Management's Discussion And Analysis ................................................................... .........3
Basic Component Unit Financial Statements:
Agency-wide Financial Statements:
Statement of Net Assets ..................................................................................•-.................. 1 Q
Statement of Activities ........................................................................................................ 11
Fund Financial Statements:
Major Governmental Funds;
Balance Sheet .................................................................................................................. 14
Balance Sheet - Reconciliation of Governmental Fund Balances to Net`Assets
of Governmental Activities ........................................................................................... 15
Statement of Revenues, Expenditures, and Changes in Fund Balances ........................ 16
Reconciliation of the Ivet Change in Fund Balances -
Total Governmental Funds with the Statement of Activities ...................................... 17
Notes to Component Unit Financial Statements ........................................................................ 19
Supplemental Information:
Schedules of Revenues, Expenditures and Changes in Fund Balances -Budget and Actual
-Budgetary Basis:
Capital Projects Funds:
Merged RedevelapmentProject Area ...................................................................... .35
Low and Moderate Housing .................................................................................... .3b
CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY
BASIC COMPONENT UNTT FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2008
Table of Contents fContinuedl
Page
Debt Service Funds:
Merged Redevelopment Project Area .......................................................................37
Low and Moderate Hausing ....................................................................................38
Report on Internal Control aver Financial Reporting and an Compliance
And Other Matters on An Audit of Financial Statements Performed in
ACCOrdAnee with Governnrettt Auditing Sta~tdards ..:.................... ..39
~.
L_
Maze &
ASSOCIATES
ACCOUNTANCY CORPORATION
3478 Buskirk Ave. - Suife 2i5
Pleasant Hi11, California 94523
{925) 930-~9Q2 • FAX (925) 931J-Q735
~~ INDEPENAENT AUDITOR'S REPORT mazeC~mazeassociates.cam
virww.mazeassocrafes.com
Members of the Board of the '
City of South San Francisco Redevelopment Agency
South San Francisco, California
We have audited the accompanying basic component unit financial statements of the governmental activities, each
major fund, and the aggregate remaining fund information of the City of South San Francisco Redevelopment
Agency (Agency}, a component unit of the City of South San Francisco, as of and for the year ended June 30,
2008, as listed in the Table of Contents. These component unit financial statements are the responsibility of the
Agency's management. Uur responsibility is to express an opinion on these financial statements based on our
audit. ~ '
We conducted our audit in accordance with generally accepted auditing standards in the United States of America
and the standards for financial audits contained in Government Auditing StarTdrn•ds issued by the Comptroller
General of the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance as to whether the component unit financial statements are free of material misstatement. An
audit includes examining on a test basis evidence supporting the amounts and disclosures in the component unit
financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall f nancial statement presentation. We believe that our audit
provides a reasonable basis far our opinion.
--~ In our apinion the component unit financial statements referred to above present fairly in all material respects the
respective financial position of the governmental activities, each major funds, and the aggregate remaining fund
information of the Agency at June 30, 2008 and the results of its operations for the year then ended in conformity
with generally accepted accounting principles in the United States of America.
In accordance with Government Auditing Standards, we have also issued our report dated December 18, 2008 an
our consideration of the City of South San Francisco Redevelopment Agency's internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control
over financial reporting and compliance and the results of that testing, and not to provide an apinion on the
internal control over financial reporting or on compliance. That report is an integral part of an audit performed in
accordance with Governn:ent Auditing Standards and should be considered in assessing the results of our audit
Management s Biscussion and Analysis is supplementary information required by the Government Accounting
Standards Board, but is not part of the basic component unit financial statements. We have applied certain limited
., procedures to this information, principally inquiries of management regarding the methods of measwement and
presentation of this information, but we did not audit this information and we express no opinion on it.
' A Professional Corporation
Our audit was made for the purpose of forming an opinion on the basic f nancial statements taken as a whole. The
Supplemental Inf, rmation listed in the Table of Contents is presented for the purpose of additional analysis and is
not a required part of the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the government-wide and fiend financial statements, and in our opinion is fairly
stated in all material respects in relation to the basic financial statements taken as a whale.
~uu ~ R:~aXs
December 18, 20Q8
i.
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The discussion and analysis of the Redevelopment Agency of the City of South San Francisco
fznanciai performance provides an overview of the Agency's financial activities for the fiscal year
ended June 30, 2008. Please read it in conjunction with accompanying basic financial statements.
Management's discussion and analysis is designed to (a) assist the reader in focusing on
significant financial issues, (b} provide an overview of the Agency's financial activity, (c}
identify changes in the Agency's financial position (its ability to address the next and subsequent
year challenges), and (d} identify individual fund issues or eancems.
Since the Management's Discussion and Analysis (M~&A} is designed to focus on the current.
year's activities, resulting changes and currently known facts, it should be read in conjunction
with the Agency's f nancial statements.
FINANCIAL HIGHLIGHTS
Overall, property tax increment grew $1.6 million, or 6.1%. Significant growth in tax increment
occurred in the following project axeas:
Gateway, where tax increment grew $.5 million, or 6.3 %, reflecting new biotechnology
development.
c e t e million or 24° o also reflectin new
~ Shearwater, where tax in rem n gr w $.7 /, g
.~ biotechnology development
"j b El Camino, where tax increment grew $.6 million, or 19%, reflecting new housing adjacent
to the BART station.
Band Funds from the 2006 bond sale were used to make major capital improvements, described in
more detail below, which reduced balances held in restricted assets (and in the Reserve for
Restricted Assets}, correspondingly. These transcations also dramatically increased capital assets,
also described below.
;~ USING TFIIS Ali]NUAL REPORT
The primary focus of the report is on both the Agency as a whole (government-wide) and the
major individual funds {programs). Both perspectives {government~wide and major fund} allow
the user to address relevant questions, broaden a basis for comparison, and enhance the Agency's
accountability.
Government-'hide Financial Statements
The Stater~zent n ldet Assets which is similar to a Balance Sheet, re orts ail financial and capital
.f ~ P
resources for the Agency. The statement is presented in the format where assets minus liabilities,
`~ equals "Net Assets", formerly known as equity. Assets and liabilities are presented in order of
liquidity, and are classified as "Current" (convertible into cash within one year}, and `~on-
current".
~.,
I
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---
The focus of the Statement of Net Assets (the "Unrestricted Net Assets"} is designed to represent rF
the net available liquid (non-capital} assets, net of liabilities, for the entire Agency. Net Assets `
(formerly equity} are reported in three broad categories: ~-~-
Net .Assets, Invested in Capital Assets, Net of Related Debt: This component of Net Assets ~'
fists of all Ca ital Assets, reduced by the outstanding balances of any bands, mortgages, notes ~.-
cans P
ar other borrowings that are attributable to the acquisition, construction, or improvement of those
assets. !.~ -
Restricted Net Assets: This component of Net Assets consists of restricted assets, when constraints
are placed an +he asset by creditors {such as debt covenants), grantors, contributors, laws,
regulations, etc.
Unrestricted Net Assets: Consists of Net Assets that do not meet the definition of "Net Assets
Invested in Capital Assets, Net of Related Debt", or "Restricted Net Assets".
The Statement of Activities presents information shewingh o~swSe~ ~ o ~P~a ~ s on assthe
changed during the most recent fiscal year. All Chang
underlying event giving rise the change occurs, regardless or some i ms thatewill only r sultin
Thus, revenues and expenses are reported in this statement f ,
cash flows in future fiscal periods.
The focus of the Statement of Activities is the "Change in Net Assets", which is similar to Net
Income or Loss.
Fund Financial Statements
The fund financial statements provide detailed information about the mosantsgnifi ~VefiTi'nthe
d b bond coven
Some funds are requixed to be estabhshed by State law an y
Agency's Board establishes other Elands to help it control and manage money ar meet legal
responsibilities far using certain taxes, grants and other money. ,
~..
Governmental funds are used to account for essentially the same fiuactions report e the
governmental activities in the government-wide financial statements. However, uiallk
government-wide financial statements, governmental fiend financial statalannes of e oendable
term inflows and outflows of expendable resources, as well as on b XP
'able at the end of the fiscal year. Such information may be useful in evaluating a
resources avail
government's near-team financing requirements.
overnmental funds is narrower than that of the government-wide financial ~_
Because the focus of g
statements, it is useful to compare the i~o~atian presented for governmental fiznds with similar
information presented for governmental activities in the government-wide financial statements.
By doing sa, readers may better understand the long-term impact of the government's near-term ~,;
financing decisions. Both the governmental fund balance sheet and the governmental fund
statement of revenues, expenditures, and changes in fund balances provide a reconcilaatian to
~.~.
facilitate this comparison.
Statement of Net Assets
The following table reflects the condensed Statement of Net Assets:
TABLE 1
NET ASSETS
June 3U, 2008
Zoos 2407
Current and other assets $143,6b9,323 $121.,761,916
Capital assets 62,432,471 26,513,061
Total assets 166,101,794 148?74,977
Current and other liabilities 13,449,401 4,679,298
Long-term Iabilities 75,960,434 77,715,860
To#alIiabilities 89,369,835 82,395,158
Net assets:
Restricted 38,SQ-4,809 56,510,436
-~ Unrestricted 3 8,187,15 4 9,3 69,383
Total net assets $76,731,959 $65,879,819
Current and other assets decreased 18 million to a total of 1
$ $ 04 million, as the
Redevelopment Agency used band proceeds and cash to make several large capital
A~ aCqulslttanS. ThC3se were:
- the acquisition of several parcels from the Public Utilities' Commission at El Camino
and Chestnut for future development at the key corner of the City;
- the acquisition ofthe vacant site at One Chestnut adjacent to the Public Utilities' ,
Commission parcels at El Camino and Chestnut, also.for future development;
- the acquisition of a surplus site from Cal Water adjacent to Orange Memorial Park.
That site, along with improvements funded by the Agency, will be used by the South
San Francisco Historical Society as their museum.
Corresponding to the decline in current assets, capital assets increased for the purchases listed
above.
• Current and other liabilities increased $8.9 million, due rimaril to a court Tulin on A riI
P Y g P
1, 2008 that is described in detail in footnote 9 below. In staffs judgment, the ongoing
impact from this ruling will be minor. The Agency had already booked a liability in prior
years of $.5 million.
5
Change in Net Assets
Table 2 presents details on the change in Net Assets:
TABLE 2
CHANGE IN NET ASSETS
2007-0 s
Beginning net assets
Expenses:
Redevelopment
Interest an long-term d ebt
Total expenses
Reve Hues
Tax increment
Interest and rental
Other
Total revenues
Special item -Property Tax
2x06-07
$ 65,879,819 $ 44,823,607
(10,469,346) (8,148,108)
(3,791,730} {3,852,159)
(14,261,076) (12,000,277)
27,363,682
6,130,782
35,237
33,SZ9,701
(8,41b,485)
25,782,083
6,463 ,771
810,635
33,056,489
Ending net assets $ 76,731,459 $ 65,879,819
Redevelopment expenses increased due to the acquisition of the capital assets mentioned above.
'T'ic increffient revenue grew by 5.1% due to the continued success of new business development
in the project areas. Note that without the time property tax appeal item described above, ending
net assets would have grown by over $19 million.
ANALYSIS OF THE AGENCY' S MAJOR FUNDS
Merged Project Redevelaprttent Capital Project Frrrid
The Redevelopment Agency's (RDA} project areas were fiscally merged during 2005-06, allowing
the Agency to tap into a larger tax base with which to sell bands for redevelopment purposes. At
the end of 2007-08, $27 million remained in band funds to be used. Ail funds have been allocated
to capital projects, and are expected to be fiilly drawn down during 2008-09. During the year, the
largest project expenditures were for the site acquisitions discussed above, and for improvements to
the pump station in the Downtawn/Lindenville area, to improve the storm water system to prevent
flooding during rainy periods. As these major capital acquisitions and renovations were made, cash
has decreased.
Tax increment grew in Gateway, Shearwater, and in EI eamino areas reflecting new development.
Advances to Other Funds have increased over $7.0 million to $19.4 million. {The largest advances
are to the Oyster Point Developer Impact Fee Fund, until that fund has paid for the Oyster Point
Flyovez and I~oakramps freeway interchange). The largest advance booked during 2007-08 was to
the Sewer Fund to assist in completing a new pump station for the East of 101 area, to be
reimbursed to the Agency overtime from Sewer Impact Fees.
~~
~_
i~
I_
6
Merged Redevelopment ProjectArea Debt Service Fruzd
~ Activity in 2007-08 was very similar to that in 2006-07, as no new debt service obligations
were incurred. Fund balance reflects bond reserves on hand, as required by bond
covenants.
Lots grid Moderate ifircotrte Horrsir:g Capital Project Frrrrd
This fiend holds the 20°/a in annual Redevelopment Agency (RDA} property tax increment that must
be set aside for l.vw and moderate income housing needs. The fund received $5.6 million in such
revenues, up from $4.6 million last year. Major capital projects included the acquisition of the
_~ property at 314 Miller Ave, which will be renovated and preserved for affordable housing purposes.
`~ CAPITAL ASSETS AND DEBT ADMINISTRATION
..1
Capital Assets
As of year end, the Agency had $62.4 million invested in a variety of capital assets as reflected in
' the below Table 3, which represents a net addition of $35.9 million from the end of the prior
year. During 2007-08, the Agency made several Large Land acquisitions, as described above. The
growth in construction in progress reflects the Lindenville Pump Station worlc, still being
completed, and the acquisition of the site at One Chestnut Ave., mentioned above, which the
~ Agency was still improving at year end.
TABLE 3
CAPITAL ASSETS AT JUNE 30, 2008
(Net of Depreciation}
2008 2007
-- Land $ .43,825,478 ~ 15,674,697
Building & Improvements 8,097?45 6,104,162
Land Improvements 2,125,119 2,L5,1 I9
Infrastructure 188,297 18 8,Z 97
Machinery & Equipment 125,076 125,076
' Office Equipment 23,452 23,452
Furnih~re & Fixtures 21,506 21,506
Vehicles 105,645 69,139
:'~ Construction in progress 9,256,164 3,209,744
Less: Accumulated depreciation (1,335.511) (1A24.091)
'Total ~ 62,43?,471 $ 25,513,051
a
Debt Outstanding
As of year-end, the Agency had $77.7 million in debt outstanding compared to $79.4 million in
the prior year-end.
TABLE 4
OT3TSTANDING DEBT AT NNE 30, 2008
2ao8 2007
California HealthFacilitiesFinancing
(CHFFA) Revenue Bonds 1989
2006 Revenue Bonds
Tax Allocation B ands Series B 1999 {Housing}
Certificates of Participation 1999 (Conference Center)
HUD Section I08 Loan 2000
$153,860 $194,156
68,51,5,000 69,745,000
2,48 5,000 2,655,000
5,060,000 5,200,00 0
1,502,000 ~ 1,b14,000
Total
FINANCIAL CONTACT
577,715,860 579,408,156
Questions about this report or requests for additional financial information should be directed to
the City of South San Francisco Finance Department, P.O. Bax 711, South San Francisco, CA
94Q83, phone 1650} 877- 8513.
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CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY
.STATEMENT OF NET ASSETS AND
STATEMENT OF ACTXVITIES
'~ The Statement of I~et Assets reports the difference between the Agency's total assets and the Agency's total
liabilities, including all the Agency's capital assets and all its Long-term debt. The Statement of Net Assets focuses
the reader on the composition of the Agency's net assets, by subtracting total liabilities from total assets.
The Statement of Net Assets summarizes the financial position of all the Agency's Governmental Activities in a
single column.
The Statement of Activities reports increases and decreases in the Agency's net assets. Tt is also prepared on the full
accrual basis, which means it includes all the Agency's revenues and all its expenses, regardless of when cash
changes hands. This differs from the "modified accrual" basis used in the Fund financial statements, which reflect
only current assets, current liabilities, available revenues and measurable expenditures.
The Statement of Activities presents the Agency's expenses that are listed by program first. Program revenues-
that is, revenues which are generated directly by these programs-are then deducted from program expenses to
arrive at the net expense of each program. The Agency's general revenues are then listed and the Change in Net
Assets is computed and reconciled with the Statement of Net Assets.
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CiT~i' OF SOUTH SAN )EI2ANCISCO REIDE~LOPy1ENT AGENCY'
STATE?VIENT OF NET ASSETS
JU1dTE 30, 2008
Governmental
Activities
ASSETS
Cash and investments (Note 2) $40,217,73
Receivables:
Accounts 23,807
Accrued interest 501,467
Loans 4; 844, 846
Advance to the City (Note 3B) 19,409,727
Restricted cash and investments (Note 2} 38,671,723
Capital assets (Note ~):
Nondepreciable 53,081,642
Depreciable, net of accumulated depreciation 9,350;829
Total assets 166,101,794.
LIABILITIES
Current liabilities:
Accounts payable 918,538
Tax refund payable 8;966,48
Other payables '7,414
Deposits 27;»>
Due to the City 126,914
Advance from the City (Note 3A) 346,748
Interest payable 1,230,321
Current portion of long-term debt (Note 6) 1,755,426
Noncurrent portion of long-term debt (Note 6) 75.960,434
Total liabilities 89,369.83 ~
NET ASSETS (Note 1F)
Invested in capital assets, net of related debt 11,783,759
Restricted for:
Debt service 5,305,867
Capital projects 33,238.942
Total restricted net assets 38,544,809
Unrestricted 38,187;1 ~ 0
Total net assets $76,731,959
See accompanying notes to financial statements
10
CITY OF+ SOIJTiI SAN FRANCISCO t2EDEVELOI'IVIENT AG~:NC`d
STATEI~'iENT OF ACTIVITIES
FOR THE YEAR ENDED ,TU1VE 30, 2008
Expenses:
Redevelopment
Interest on long-term debt
Total Expenses
General revenues:
Charges for services
Tax allocation increment
Interest and rental
Other
Total general revenues
Special item -Property iax refund (Note 9)
Change in Net Assets
Net Assets-Beginning
Net assets-Ending
See accompanying notes to financial statements
Governmental
Activities
$10,469;346
3,791,730
14.''61.076
35,117
27.363.682
6,130,782
120
33,529,701
(8,416,485)
10.852.140
65.879,819
$76,731,959
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This Pale Left Intentionally Blanl:
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~ FUND FINANCIAL STATEMENTS
All Agency Funds were determined to be Major Funds in fisca12008. They are described below:
The MERGED REDEVELOPMENT PROJECT AREA CAPITAL PROJECTS FUND -This fund accounts
for property tax increment revenues used for capital projects connected with the Gateway, Downtown, Shearwater
and El Camino project areas.
The LOW AND MODERATE INCOME HOUSING CAPITAL PROJECTS FUND -This fund accounts for
the 20% share of property tax increment revenue directed toward low and moderate income housing projects.
The MERGED REDEVELOPMENT PROJECT AREA DEBT SERVICE FUND -This fund accounts for
principal and interest associated with the 1999 Revenue Bands, 1997 Downtown Tax Allocation Bonds, 2007A Tax
Allocation Bonds, and 1999 Certificates of Participation.
The LOW AND MODERATE INCOME HOUSING DEBT SERVICE FUND -This fund accounts for debt
repayments for the 1999 revemae bonds.
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CITY OF SOUTH SAN FRANCISCO REDE«LOPlIIENT AGENCY
GOVERNA~NTAL FUNDS
BALANCE SHEET
JUlV~ 30, ?008
CAPITAL PROJECTS FUNDS DEBT SERVICE FLfi'DS
Merged Low/1~Iod iVlerged Low/Mod Total
Redevelopment Income Redevelopment Income Governmental
Project Area Housing Fund Project Area Housing Fund Funds
ASSETS
Cash and investments $25,033,944 $15,183,809 $40;217,753
Receivables:
Accounts 23,807 23,807
Accrued interest 338,081 163,386 501,467
Loans 255,908 4;588,938 4,844,846
Advance to the City 19,409,727 19,409,727
Restricted cash and investments 31,027,345 2,211,597 $5,125,533 $307,248 38,671,723
Total Assets $76,088,812 $22,147,730 $5,125,533 $307,248 $103,669,323
LIABILITIES
Accounts payable $897,061 $21,477 $918,538
Other payable 37,414 37,414
Deposits 500 27,055 27,555
Deferred revenue 500,000 50,000 550,000
Due to the City $126,914 126,914
Advance from the City 346,748 346,748
Total Liabilities 1,434,975 445,280 126,914 2,007,169
FUl~ i BALA1vCES:
Reserved for:
Encumbrances 2,337;825 27;035 2,364.860
Advances 19,409,727 19,409,727
Loans receivable 264,215 4,538,938 4,803,153
Future loan obligations 1;026,633 1,026,633
Debt service 4,998;619 $307,248 5,305,867
Restricted assets 31,084,676 2,211;597 33,296.273
Unreserved
Desi~ated 8,991,454 6,999,001 15,990,455
Undesignated 12,565,940 6,899,246 19,465.186
Total Fund Balances 74,653,837 21.702,450 4,998,619 307,248 101,662,154
Total Liabilities and Fund Balances $76,088,812 $22,147,730 $5,125,533 $307.248 $103,669.323
See accompanying notes to financial statements
14
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CITY OF SOUTH SAN FRANCISCO REDEVELOPA~IENT AGENCY
GOVERNMENTAL FUNDS
BALANCE SHEET - RECONCILL4TION OF GOVERNMENTAL
FUI~~ BALANCES TO NET ASSETS OF GOVERNMENTAL ACTIVITIES
NNE 30, ?008
.~
_~ Total Fund Balances reported on the governmental funds balance sheet ~101,662,1~4
Amounts reported for Governmental Activities in the Statement of
Net Assets are different from those reported in the Governmental Funds above because of the following:
CAPITAL, ASSETS
Capital assets used in Governmental Activities are not current assets
- or financial resources and therefore are not reported in the Governmental Funds. 62,432,471
ACCRUAL OF NON-CURRENT REVENUES AND EXPENSES
Revenues which are deferred on the Fund Balance Sheets because they are not available currently
are taken into revenue in the Statement of Activities.
Tax refund payable -Property tax refund (8,416,485)
Interest Payable (1,230,321)
LOi~iG-TERM ASSETS ANTD LIABILITIES
The assets and liabilities below are not due and payable in the current period and therefore
are not reported in the Funds:
Long-term debt (77,715,860)
NET ASSETS OF GOVERNMENTAL ACTIVITIES $76,731,99
See accompanying notes to financial statements
1S
CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY ~ _
GOVERNMENTAL FUNDS
STATEMENT OF REVENUES, EXPENDITURES ~
AND CHANGES IN FUND BALANCES I_
FOR THE YEAR ENDED JUNE 3D, 2008
CAPTTAL PROJECTS FUNDS DEBT SERVICE FUNDS
Merged Low/1VIad Merged Low/Mod Total k
Redevelopment Income Redevelopment Income Governmental
Project Arcn Hoasing Fund Project Arcn Iious_ in~Fund Funds "'
REVENUES:
Tax aIlacntion increment
$27,363,682
527,363,682 I
Interest and rental 5,020,510 $839,079 $255,495 $15,598 6,134,782
Charges for services 35,I 17 35,1 I7 ~
Others lzo 12o L
Totsil Revenues 32,419,429 839,079 255,495 15,698 33,529,701
rs
EXPENDITURES:
Economic and Community Development
8,229,135
1,345,776
9,574,911
Capital ovUay 35,624,484 681,019 36,305,503
Debt service:
Principal retirement
1,822,246
174,400
1,692,296 K
interest and fiscal charges l 1,705 3,670,580 124,328 3,806,613 L
TotalExpcnditures 43,865,324 2,026,795 5,192,876 294,328 51,379,323
EXCE55 (DEFIClENCV) OF REVENUES
OVER EXPENDITURES
(11,445,895)
(1,187,716) ti
(4,937,381)
(278,630)
(17,849,622)
:
OTHER FINANCING SOURCES (USES)
{548
342) t
~+
Transfer (out) to City for capital outlay (508,342)
435
2
619 842
561
5 4,853,913 276,877 ,
13,312,067
Transfers in (Note 4A)
Transfers (out} {Note 4A} ,
,
{10,415,755) ,
,
(2,896,312} (13,312,067)
(~
Total other l-inttncing sources {uses) (8,304,662) 2,665,534 4,853,9I3 276,877 (308,342)
CHANGE I3d FUND BALANCES (19,754,557} 1,477,814 {83,468) {1,753} {18,357,964)
Fund balance, July 1 94,404,394 20,224,636 5,082,487 309,401 120,420,118 "
Fund bnlaoee, June 30 $74,633,837 521,742,454 $4,998,619 $307,248 5101,662,154
See accompanying notes to the financial slatemeots.
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~-' CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY
Reconcilintion of the
NET CHANGE IN FUND BALANCES -TOTAL GOVERNMENTAL FUNDS
with the
STATEMENT OF ACTMTIES
FOR THE YEAR ENDED JUNE 30, 2008
The schedule below reconciles the Net Changes in Fund Balances reported on the Governmental Funds Statement
of Revenues, Expenditures and Changes in Fund Balance, which measures only changes in current assets and current
liabilities on the modified accrual basis, with the Change in Net Assets of Governmental Activities reported in the
Statement of Activities, which is prepared on the full accrual basis.
NET CHANGE IN FUND BALANCES -TOTAL GOVERNMENTAL FUNDS 018,357,964)
Amounts reported for governmental activities in the Statement of Activities
~ are different because of the following:
!I-
'~ CAPITAL ASSETS TRANSACTION5
Governmental Funds report capital outlays as expenditures. However,
in the Statement of Activities the cost of those assets is capitalized and atlocated over
their estimated useful Lives and reported as depreciation expense.
317,375
Depreciation expense is deducted from the fund balance (
• Capita] assets addition, net ~. 36,235,785
~ ACCRUAL OFNON-CURRENT ITEMS
~;
-~ The amounts below included in the Statement ofActivities do not provide or (require} the use of
current Snancial resources and therefore are not reported as revenue or expenditures in
`~ governmental funds {net change):
Special item -Property tax refund (Note 9) (8,416,485}
;~ Interest expenses 14,$83
'. LONG-TERM DEBT PAYMENTS
' Repayment of debt grineipal is added back to fund balance 1,692,296
CHANGE IN NET ASSETS OF GOVERNIvIENI'AL ACTNIT)ES $10,852,140
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See accompanying notes to financial statements
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CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY
Notes to Basic Component Uni# Financial Statements
NOTE 1-SIGNIFICANT ACCOUN'T`ING POLICIES
A. Description of Tlie City of Sotctlt Satt Frattcisca Redevelopment Agency artd Redevelopnterrt Plan -
The City of South San Francisco Redevelopment Agency (Agency) was established in 1981 under the
provisions of the Community Redevelopment Law (California Health and Safety Code}, for clearance and
rehabilitation of areas determined to be in a declining condition in ttie City of South San Francisco.
The Agency is authorized to finance the Redevelopment Plan from various sources, including assistance
from the City, the State and federal government, property tax increments, interest income and the
issuance of Agency notes and bonds. Management and administrative support services are provided by
the City. The City Manager serves as the Executive Director, the City Economic and Community
Development Director as the Assistant Director and Secretary, and the City Finance Director as the
Finance Officer of the Agency.
The Agency is an integral part of the City of South San Francisco and, accordingly, the accompanying
financial statements are included as a component of the basic financial statements prepared by the City. A
component unit is a separate governmental unit, agency or nonprofit corporation which, when combined
with aI1 other component units, constitutes the reporting entity as defined in the City's basic financial
statements.
The Agency is engaged in the redevelopment of four areas described below:
The Shearwater Redevelopment Project (Shearwater} consists of a privately owned land parcel, formerly
owned and operated by U.S. Steel. The Property is currently under development.
The Gateway Redevelopment Project (Gateway) consists of privately owned land parcels. The Iargest
property owner, Hines Development Company, has undertaken a large scale, phased development over a
multi year period provided in the amended and restated Qwner Participation and Development
Agreement dated August 20, 1992 between the Agency and Homart Development Company, the previous
land owner (the Homart Agreement).
The ~owntofvs Center Redevelops:ertt Project (Dowrttofvn} consists of various land parcels in the
downtown area and in other commercial and industrial areas within the City, which are primarily located
east of the Bayshore Freeway (U.S. 1 Q 1}. The Board has undertaken plans to upgrade these areas and to
encourage better Land use through public improvements.
The El Cantisv Corridor Redevelopment Project (EI Cmr:iso) consists primarily of undeveloped and
-- under developed parcels along the central arterial street west of U.S. 101. This area, which is bisected by
a creek and railroad tracks, is being developed in conjunction with the recent Bay Area Rapid Transit
(BART) railway extension to the San Francisco International Airport.
In fiscal year 2006, the Agency amended the existing four Redevelopment Plans in order to fiscally
merge the four project areas into one. The merger allows the Agency to unite financial resources and
,, facilitate its efforts to better implement its Redevelopment Program in order to alleviate blight and
adverse conditions in the four project areas. Each of the four project areas will continue to be governed
by its oven Redevelopment Plan with its respective set of redevelopment goals, and time and other fiscal
limits. Hotivever, the merger allows the Agency to combine tax increment collection and outstanding
indebtedness limits of the existing project areas.
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ISCO REDEVELOPMENT AGENCY
CITY OF SOUTH SAN FRANC
4-~
No#es #o Basic Component Unit Financial Statements
~
NOTE 1 SU1VIl~x.ARY OF SIGNITICANT ACCOUNT POLICIES {Continued)
..,.
Basis of Presentation -The Agency's Component Unit Financial Statements are prepared in conformity
B 7
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.
The Government
with accounting principles generally accepted in the United States of Amenca.
Accounting Standards Board is the acknowledged standard setting body for establishing accounting and
financial reporting standards followed by governmental entities in the U.S.A. ~_
These Statements require that tine financial statements described below be presented.
~
the Statement of Activities include the
Governr~ieut-WIdE S~aiC17t87ItS: The Statement of Net Assets and
-
financial activities of the overall Agency government. Eliminations have been made to minimize the
double counting of internal activities.
The Statement of Activities presents a comparison between direct expenses and program revenues for
each function of the Agency's goverrunental activities. Direct expenses are those that are specifically
~
,• function and therefore, are clearly identifiable to a particular function.
associated ~ rth a program ar
ues include (a) charges paid by the recipients of goods or services offered by the programs,
e _
n
Program rev
(b) grants and contributions that are restricted to meeting the operational needs of a particular program
~
ants and contributions that are restricted to financing the acquisition or construction of
and (c) fees, gT
are presented as
including alI taxes
ues
.
,
,
capital assets. Revenues that are not classified as grogram reven
general revenues.
Fund Financial Siaterr:eats: The fund financial statements provide information about ,the Agency.
The emphasis of fund financial statements
ted
d
~
.
are presen
Separate statements for each governmental fun
each of which is displayed in a separate column. All remaining
r individual funds
j
i ~
~~.
,
o
s an ma
governmental funds are aggregated and reported as nonmajor funds.
r ~ 1 dt the A enc- 's tna~Ur
C. Major Funds - CiA.Sli Statement 34 dermes major Tunas and requires ~h~ g ,~ ~"
governmental-type funds be identified and presented separately in the fund financial statements. ~:,
~,
Major funds are defined as funds that have either assets, liabilities, revenues or expenditureslexpenses
. The A enc ma also
e total and five percent of the grand total. g y Y
fund~t
f th
~~
yp
en
equal to ten percent o
select other funds it believes should be presented as major funds. The Agency reported all of its
d
f
s:
un
governmental funds in the accompanying financial statements as major
Merged Redevelopment Project Area Capital Projects Fund- This fund accounts far property tax
Downtown, Shearwater and El
ith the Gateway
d
t
,
w
e
increment revenues used far capital projects connec
Camino project areas.
Low And 11'Ioderate Income Housing Capital Projects Fund -This fund accounts for the 2Q% share of
property tax increment revenue directed toward low and moderate income housing projects.
f
n~~
Merged Redevelopment Project Area Debt Servi I
or ~~ ~A T
o u
x Allocation Bandse and 1999
s
B
d
a
t
1999 Revenue Bonds, 1997 Downtown Tax Allaca ,
Certificates of Participation.
ments far the
bt r
d
epay
e
ousin Debt Service Fund -This fund accounts far
Low and Moderate Income H g
1999 revenue bonds. .
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CITY OF SOIITH SAN FRANCISCO REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 1- SIfSVl1~IARY OF SIGNIFICANT ACCOUNT POLICIES (Continued)
D. Basis of Accounting -The government-wide financial statements are reported using the economic
resources meastrf•ement focus and the full accrual basis of accounting. Revenues are recorded when
ear•~red and expenses are recorded at the time liabilities are inctmred, regardless of when the related cash
flows take place.
Governmental funds are reported using the ctrrrer7t financial resources measurement focus and the
mod~ed accruttl basis of accounting. Under this method, revenues are recognized when measurable and
available. The Agency considers al] revenues reported in the governmental funds to be available if the
revenues axe collected within sixty days after year-end. Expenditures are recorded when the related fund
liability is incurred, except for principal and interest on general long term debt, claims and judgments,
and compensated absences, which are recognized as expenditures to the extent they have matured.
General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of
general long-term debt and acquisitions under capital leases are reported as other fr:alzcing sozrr•ces.
Non-exchange transactions, in which the Agency gives ar receives value without directly receiving or
giving equal value in exchange, include property taxes, grants, entitlements, and donations. On an
accrual basis, revenue from property taxes is recognized in the fiscal year far which the taxes are levied.
Revenue from grants, entitlements, and donations is recognized in the fiscal year in which all eligibility
requirements have been satisfied.
ti
Qther revenues susceptible to accrual include interest and charges for services.
Under the terms of grant agreements, the Agency may fund certain programs with a combination of cost-
reimbursement grants, categorical block grants, and unrestricted redevelopment revenues. Thus, both
restricted and unrestricted net assets are available to finance program expenditures. The Agency's policy
is to first apply restricted grant resources to such programs, followed by unrestricted redevelopment .
revenues if necessary.
E. Caprtal Assets -All capital assets are valued at historical cost or estimated historical cost if actual
historical cost is not available. Contributed fixed assets are valued at their estimated fair market value on
the date contributed. Capital assets excluding infrastructure are capitalized if costs exceed $5,Q00. The
similar threshold for infrastructure is $1QO,OQO.
With the implementation of GASB Statement 34, the Agency is required to record all its public domain
(infrastructure) capital assets, which include roads, bridges, curbs and gutters, streets and sidewalks and
drainage systems. Infrastructure assets are transferred to the City upon completion as the City will
maintain them. GASB 34 required such assets to be excluded from the Agency's financial statements and
included in the City's financial statements.
GASB Statement 34 requires that all capital assets with limited useful lives be depreciated over their
estimated useful lives. Alternatively, the "modified approach" maybe used for certain capital assets.
21
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+ PMENT AGENCY ~ --
CITY OF SOUTH SAN FRANCISCO REDZ;VELO
Notes to Basic Component Unit Financial Statements ::
~._..
NOTE 1- SUlVJ[MARY OF SIGNIFICANT ACCOUNT POLICIES (Continued)
De reciation is not provided under this approach, but all expenditures on these assets are expensed, ~.
P
unless they are additions or improvements.
The u ose of depreciation is to spread the cast of capital assets equitably among all users over the life l
iP at ear's ro rata ~~-
P
of these assets. The amount charged to depreciation expense each year represents y P
share of the cost of capital assets. ~ '
tions each ear and the total ~--
Depreciation of all capital assets is charged as an expense against opera Y
amount of depreciation taken over the years, called accumulated depreciation, is reported on the balance
sheet as a reduction in the book value of capital assets. ~.
Depreciation is provided using the straight Line method which mew s ~e Gb yea~tbuntil ewe ~1 s ded billy
expected usefiil life in years and the result is °e~'~ tded below to capital assets.
depreciated. The Agency has assigned the useful by
Buildings & Improvements SO years `
~..
Land Improvements 30 years
Infi-astructure 65 years
5-20 ears ~-
Machinery and Equipment y
Furniture and Fixtures 12 years
~:.:
F. Net Assets -GASB Statement 34 adds the concept of Net Assets, which is measured on the full accrual
basis, io thG cou~ept of Fund Balance, which i5 measu-red an the mod~ed accrual bas
Net Assets is the excess of all the Agency's assets aver all its liabilities, regaralels o ~ ~ NettA sets, -
are divided into three captions under GASB Statement 34. These captions pp y y
which is determined only at the Govec-nment-wide level, and are described below:
Invested in Capital Assets, fret of ]-elated debt describes the portion ofNet Assets which is represented by the -
f the A enc 's capital assets, less the outstanding balance of any debt issued to
current net book value a g y
finance these assets. 1
describes the ortion of Net Assets which is restricted as to use by the terms and conditions of
Restrtcted p `
agreements with outside parties, governmental regulations, laws, or other restrictions which the Agency
cannot unilaterally alter. These principally include resources received for debt service requirements;
edevelo ment funds restricted to low and moderate income purposes.
r p
Unrestt•icted describes the portion of Net Assets which is not restricted as to use. r
22
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CITY OIt' SUUTI3 SAN FRANCISCO REDEVELOPMENT' AGENCY
Notes to Basic Component Unit Financial Statements
NOTE I. - SUNIlVIARX OF SIGNIFXCANT' ACCOUNT POLICIES (Continued)
G. Ftrr:d Balartc~ Reserves mid Designatinns -Governmental fund balances represent the net current assets of
each fund. Net current assets generally represent a fund's cash and receivables, less its liabilities. Portions
of a fund's balance may be reserved or designated for future expenditure.
Reserves are restrictions placed by outside entities, such as other governments, wluch restrict the
expenditures of the reserved funds to the purpose intended by the entity which provided the funds. The
Agency has reserved fund balances as follows:
Reserve for Encumbrances - To account for assets set aside for goods and services to be received
Reserve for Advances - To account for advance payments received set aside to represent amounts that do
not represent available current resources.
Reserve for Loans Receivable - To account for assets that have been set aside to represent loans receivable
amounts that do not represent available current resources.
Reserve for Future Loan Obligations - To account far bond proceeds to be loaned for future redevelopment
projects.
Reserve far Debt Service - To account for assets that are restricted for future debt service payments.
Reserve for Restricted Assets - To account for assets that are restricted pursuant to the Agency' long term
. debt agreements.
Unreserved-designated - To reflect amounts specifically designated for projectslactivities by official action
,~ of the Agency.
Designations are imposed by the City of South San Francisco Redevelopment Agency to reflect future
spending plans or concerns about the availability of future resowces. Designations may be modified,
+ amended or removed by The City of South San Francisco Redevelopment Agency.
~~ H. Bctdgets mcd Brcdgetary Accorattutg -Prior to June 1, the City Manager submits to the City Council a
proposed operating and capital budget for the upcoming fiscal year. The proposed budget includes a
summary of proposed expenditures and forecasted revenues of the Agency's governmental funds. The City
Council adopts the budget by June 30 through passage of an adopted resolution.
a
The Agency Executive Director may transfer appropriations from one program, activity, or object to
another within the same fund. However, transfers of appropriations which increase total fund
-- appropriations must be approved by the Agency Board. All unexpended appropriations Iapse at the end of
the fiscal year.
2~
CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 1- SUNIlYIARY OF SIGNIFICANT ACCOUNT POLICIES (Continued}
I. Properfy Tax Increment -All property taxes are levied and collected by the County Auditor of the County
of San Mateo and paid to the various taxing entities including the Agency. Secured taxes are due on
November 1 and February 1 and become delinquent on December 10 and April 10, respectively. Unsecured
taxes are due on July 1 and become delinquent on August 31. The lien date far secured and unsecured
property taxes is January 1 of the preceding fiscal year. Property tax increment revenues include only
property taxes resulting from increased assessed, values and are recognized in the fiscal year far which the
taxes have been levied, provided they become available and measurable within the current period or soon
enough thereafter to be used to pay liabilities of the current period.
NOTE 2 -CASH AND INVESTMENTS
Agency cash not held by the Trustee is included in a Citywide cash and investment pool. The City's cash is
fully collateralized with securities held by an agent of the pledging financial institution in the City's name.
The Agency's goal is to invest at the maximum yield, consistent with safety and liquidity, while
individual funds can process payments for expenditures at any time- The Agency's investments are
carried at fair value, as required by generally accepted accounting principles. The Agency adjusts the
carrying value of its investments to reflect their fair value at each fiscal year end, and it includes the
effects of these adjustments in income for that fiscal year.
A. Classifreation
Cash and investments as of June 30, 2Q08 are classified in the financial statements as shown below, based
on whether or not their use is restricted under the terms of Agency debt instruments or Agency agreements.
Financial Statement Presentation:
Statement of net assets:
Cash and investments available for operations
Restricted cash and investments
Total cash and investments
$44,217,753
38,671,723
$78,889,476
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CITY OF SOUTH SAN FRANCISCO IZ~CDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 2 ~ CASH AND INVESTMENTS {Continued}
B. Investments Atttlrarized by Debt Agreements
The Agency must maintain required amounts of cash and investments with trustees or fiscal agents under
the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged as reserves to
be used if the Agency fails to meet its obligations under these debt issues. The California Government
Code requires these funds to be invested in accordance with Agency ordinance, bond indentures or State
statute. The table below identiftes the investment types that are authorized for investments held by fiscal
agents. The table also identifies certain provisions of these debt agreements:
Minimum Maximum
Maximum Credit Percentage
Authorized Investment Type Maturity _ Quality of Portfolio
U.S. Treasury Obligations NIA NIA No Limit
U.S. Agency Securities NIA NIA No Limit
Highest
Banker`s Acceptances 360 days Rating No Limit
Category
Highest
Camurercial Paper ?70 days Rating No Limit
Category 1
Highest
State and Local Investment Pool NlA Rating No Limit
Category
Guaranteed Investment Contracts
(fully collateralized} (A}
NIA AAA No Limit
Municipal Obligatians .
State Obligations
Highest
N/A Rating Na Limit
Category
Two Highest
NIA Rating No Limit
Categories
{A} Guaranteed Investment Contracts must be fully collateralized with U.S. Treasury Obligations or U.S.
Agency Obligations.
75
CITY OF SOUTH SAN FRANCISCO ItEDFV'' LOPNi~NT AGENCY
Notes to Basic Component Unit )Financial Statements
NOTE 2 -CASH AND INVESTNIFNTS (Continued)
C. I~xterest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Normally, the longer the maturity of an investment, the greater the sensitivity of its fair
value to changes in market interest rates. Qne 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 flaws from maturities so that a portion ash flowoandll~ uidity needed for operations.e to
maturity evenly over time as necessary to provide the 9
Remaining maturity
Local Agency lnvesiment Fund
Money Market Funds
Collateralized Investment Agreements
U.S. Agency Securities
Callable
City of South San Francisco Treasury {A)
Tota] Cash and Investments
Less than One to Five Mare than
1 year Years ^ Five Years
$22,624,153
? 12,686
?7,374,148
$3,955,550
Total
$22,624,153
212,686
31,325,698
$961,545 961,545
23,765,394
23,765,394 -
X73,972,381 $961,545 $3,95S,SS4 $78,889,476
(A) The Agency participates in the City of South San Francisco Cash and Investments pool, detail of
which is presented in the City's Comprehensive Annual Financial iceport.
The Agency is a voluntary participant in the Loca] Agency Investment Fund (LATE) that is regulated
by California Government Code Section 16429 under the oversight of the Treasurer of the State of
California. The Agency reports its investment in LAIF at the fair }able forowithdrawa] on demand,
which is the same as the value of the pool share. The balance is av
and is based on the accounting records maintained by LAIF, which are recorded on an amortized cost
basis. Included in LAIF's investment portfolio are collateralized mortgage obligations, mortgaSe-
baclced securities, other asset-backed securities, loans to certain state funds, and floating rate
securities issued by federal agencies, government-sponsored enterprises, United States Treasury Notes
and Bills, and corporations.
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CITY OF SOUTH SAN FRANCISCO REDEVELOPMCNT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 2 -CASH ANA INVESTMENTS (Continued}
D. Credit Risk
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 actual rating as of June 30, 2008 for each of the Agency's
investment types as provided by Standard and Poor's investment rating system:
Investment Type
AAA rated:
Money Market Funds $212,686
U.S. Agency Securities 961,545
IYot rated:
Collateralized Investment Agreements - 31,325,698
Local Agency Investment Fund 27,624=153
City of South San Francisco Treasury (A) 23,765,394
Total Cash and Investments $78,889,476
(A) The ,agency participates in the City of South San Francisco Cash and Investments pool, detail of
which is presented in the City's Comprehensive Annual Financial Report.
E. Concentration of Credit Risk
The Agency's investment policy contains no limitations on the amount that can be invested in any one
`+ issuer beyond that stipulated by the California Government Code. Tnves±`nen+.s uu any ore tssuer,
-~ other than U. S. Treasury securities, mutual funds, and external investment pools, that represent 5% or
mare of total Entity-wide investments are as follows at June 30, 2408:
:~ Reporting Investment
Unit Issuer Type Amount
Entity-wide Morgan Stanley Collateralized investment agreement ~31,325,69B
Investments in any one issuer that represent 5% or mare of total investments by major hand were as
=-~ follows at June 3Q, 2008:
Investment
Reporting Amount
--~ Unit Issuer _ TYPe
Major Funds:
Capital Project Funds Morgan Stanley Collateralized investment agreement $31,325,69B
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CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY _-~_
Notes to Basic Component Unit Financial Statements
._
NOTE 2 -CASH AND INyESTMENTS {Continued)
L.-
F. Subsegrrerrt event
Subsequent to June 30, 200$, the Agency was informed that management of the San Mateo County
vestment Poal removed certain investments issued by Lehman Broth ~ ~o he bank ptcy f led by ~..._
In
Brothers) from the Pool and classified them as non-perfarmmg assets u not be collectable.
Lehman Bothers. This write-down reflectbs}~ at this timet At September 30 52008, the Agency's share
Ultimate recovery, if any, is not determ ~___
of the loss is estimated to be around $20],421.
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1
CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 3 -ADVANCES WITH THE CITY OF SOUTH SAN FR_A.NCISCO
A. Advance from the City
As of June 30, 2008, the Low/Mod Income Housing Capital Projects Fund owed the City Community
Development Block Grant Fund in the amount of $34b,748. The advance bears no interest and the
outstanding balances will be paid off from the low and moderate rental revenues generated from the
Agency awned apartment complex located on 339-341 Commercial Avenue.
I
.~. Advance to flee City
As of June 30, 2008, the City Capital Improvement Capital Projects Fund owed the Merged
Redevelopment Project Area Capital Projects Fund for developer fees in the amount of $17,709,727 for
~ the Flyover and Hookramps Projects that were completed in prior years. The advance bears 4.585%
interest annually and the outstanding balance will be paid off from the future developer fees.
The City Sewer Rental Enterprise Fund owed the Merged Redevelopment Project Area Capital Projects
Fund for development of sewer infrastructures in the amount of $1,700,000. The advance bears no
~ interest and the outstanding balance will be paid off from future sewer fees.
NOTE 4 --INTER-FUND TRANSACTIONS
A. Transfers
~ Transfers between funds during the fiscal year ended June 30, 2008 were as follows:
Frtt3l-i FiJ'NI]:
T7 FL1i~1n:
Ai~D Jlti;
Redevelopment Agency Cnp[tnl
Project Funds:
Merged Redevelopment Low/Mod Income Housing Capital Project Fund $5,561,842 (A)
Merged Project ArEa Debt Service Fund $4,853,913 {$}
LowlMod Income Housing Merged Redevelopment Capital Project Fund 2,b 19,435 {C}
Low/Mod Housing Debt Service Fund 276,877 (B)
ToW $13,312,067
The reasons for these transfers are set forth below:
(A) Set aside ?0% of property trot increment for Law and Modernte Housing Capital Project Fund.
(B) Far debt service
{C) Far capital projects
~~
CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 5 -CAPITAL ASSETS
Changes in the Capital Assets consisted of the following:
_- ~-
Balance Adjustments Balance
Jvne 30, 2007 Additions & Retirements Trn_nsfers June 30, 2408 7.
Gavernmentnl activities
Capital assets not being deprecinted:
478
825
$43
Land $15,674,697 $28,150,78] ,
,
Construction in Progress 3,2D9,704 7,907,339 _ ($1,860,879) 9,256,164 a,.
~
Total capita] assets not being depreciated 18,884,401 36,D5B,120 _(1,860,879)
53 081 642
'
Capital assets being deprecinted:
t
162
100
6
135?04
1,860,879
8,047,245 3.
s
Buildings and Improvemen ,
, I9
2
125
Land Improvements 2,125,1 l9 ,;
,
..97
166
InfmstrUCture 188,297 ,
076
125 ,
Machinery and Equipment 125,076 ,
452
23 ~
Office Equipment 23,452 ,
506
21 '.
Furniture and Fixtures 21,506 ,
645
1 D5
Vehicles 69,139 36,506 ,
reciated
de
b
i
t
i
l 751
652
8 172,710 1,860,879 10,686,340 ~,,,_.
p
e
ng
asse
$
tn
Total ca
P ,
,
Less accumulated depreciation for.
435)
(471
(217,757}
$5,255
(683,437)
Buildings and Improvements ,
579)
(378 {70,837) (449,416)
Land Improvements ,
(28?44} {6,277) ~ (34,521}
Infrnsiructure
Machinery and Equipment (8D,448} (4,972) (9D,420)
Qffice Equipment (21,777) (1,b75} (73,452)
299}
(13
Furniture and Fixtures (11,507) {1,792} ,
466}
(40
Vehicles (32,101) (9,065) 70D ,
..
Total accumulntcd depreciation
(1,024,041)
(317,375)
5,955 x,335,5 i l
(~ ~
recinted
de
t
i
b
it
l 628,660
7 {144,665) 5,955 1,850,879 9.350,829
p
e
ng
asse
s
a
Nat arp ,
Governmental nttivity capital assets, net $26,513,061 $35,913,455 $5,955 $b2,432,471
Depreciation expense has been allocated to the Redevelopment activity on the statement of activiti es.
~....
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CITY OF SOUTH SAN FRANCISCO REDE'VELOP1YIIi;NT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 6 -LONG-TERM OBLIGATIONS
!' A summary of governmental activities long-term debt changes far the f seal year end ed June 30, 2008, follows:
Authorized Principal Principal
"! and Outstanding Outstanding Current
T c of Obli ution Issued Junc 34, 2047 Retirements June 34, 2008 Partian
200b Revenue Donds, 3.75 to 5.13%, due 9!1!35 (A} $70,675,000 $b9,745,Ox4 $1,230,000
000 $68,SIS,000
004
SD2
I $1,27~,Oxx
aaD
1 IZ
2000 HUD Section 108, 4.4 to 6.6°/p, due 8!1/23 (B) 1,750,OD0 1,G14,OOa
ODD 112,
00a
170 ,
,
000
485
2 ,
184,004
i 1499 Revenue Bonds, 3.3 to 5.0%, due 911/18 (C} 31,720,0x0 2,6SS, , ,
,
]999 Certificntes ofPnrticipntion, 3.2 to 5.4%,
D00
145
6
5,2DO,a00
140,x00
S,D60,a0D
14S,Qa0
,
,
due 4/1/29 (D)
•! 1989 Cnlifarnin Heufth Facilities Financing Authority
156
!
94
296
40
153,860
_43,426
.i (CHFPA} Revenue Bonds, 7.2%, due 9/23/11 (E) 563,OD0 _
, ,
.~ Totnl Redevelopment Agency $110,853,000 $79,408,156 $1,692?96 $77,715,86a $1,755,426
.~
{A) On April 19, 2006, the Agency issued $70,675,000 of Tax Allocation Revenue Bonds, Series 200bA to
~) advance refund and defease $9,920,000 of the 1997 Downtown Tax Allocation Bonds and $23,860,000 of the
~ 1999 Revenue Bonds, and to finance various redevelopment projects. Net proceeds of $9,364,974 and
$3,753,130 plus an additional $801,925 and $20,039,830 from the 1997 and 1999 bonds were used to purchase
'1 U.S. government securities for the 1997 Downtown Tax Allocation Bonds and 1999 Revenue Bonds,
~? respectively, Those securities were deposited in irrevocable trust with an escrow agent to provide for all future
debt service payments. The 1997 and 1999 bonds are considered to be defeased'and the liabilities for those
bonds have been removed. As of June 30, 2008, $9,405,000 and $21,420,000 of principal remained
outstanding on the defeased 1997 and 1999 bonds, respectively. Interest on the 2006 Bonds is payable an each
March 1 and September 1.
The 2006 Bonds are special obligation of the Redevelopment Agency payable solely i~oiri and secured by a
~! pledge of tax revenues generated within the project area. Interest on the 2006A Bonds is payable on each
March 1 and September 1. Principal payments are due each September !.The pledge of future tax revenue
~~ ends upon repayment of the $125,713,511 in remaining debt service on the bonds which is scheduled to occur
in 2036. As disclosed in the originating offering documents, projected net revenues are expected to provide
coverage over debt service of 3.41 aver the life of the bonds. For fiscal year 2008, tax revenues available for
debt service amounted to $27.4 million which represented coverage of 6.1 over the $4.S.million in debt service
(B) In Inlay 2000, the City and Redevelopment Agency secured a "Contract far Loan Guarantee Assistance under
Section 108 of t11e Housing and Community Development Act of 1974, in the aggregate principal amount of
0 000 the 2000 HUD Section 108 Loan). The proceeds of the HUD Section 108 Loan were used to
$1,75 (
finance the acquisition of real property (and related relocation), rehabilitation of rental housing, and the
rehabilitation of a public facility, pursuant to 24 CFR Statute 570.703{a}, (d}, {h} and (1}.
" Under the Contract, the City and the Redevelopment Agency pledge: (a) all allocations or grants under Section
l Ob of Title I, or Section l 08 (q} of Title I; (b) program income, as defined at 24 CFR Section 570.500 {a); (c) tax
~~ increment revenues and receipts available to the Redevelopment Agency; {d) all proceeds from foregoing; and (e)
all fitnds or investments in accounts established by the Contract.
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31
CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY
Notes to Basic Component Unit Financial Statements
NOTE 6 -LONG-TERM OBLIGATIONS (Continued)
(C) On February 1, 1999, the City of South San Francisco Capital Improvements Financing Authority {CIFA)
issued $31,720,000 of 1999 Revenue Bonds to finance tax allocation bands of the Redevelopment Agency. The
1999 revenue bonds are obligations of the CIFA although the Redevelopment Agency is required to make bond
principal and interest payments from the Gateway increment tax and housing set-aside revenues. The 1999
Revenue Bands are, in substance, obligations of the Redevelopment Agency, and have therefore been recorded as
such in these financial statements. On April 16, 2006, the Gateway principal portion of the $23,860,000 was
refunded as discussed in (A) above. As of June 30, 2008, the Housing Set Aside's portion of the bonds
outstanding was $2,485,000.
The 1999 Revenue Bonds were issued to provide fiznds to pay loans {Homan Development), to finance
redevelopment activities and to refund the 1993 Gateway tax allocation bands, which were due in 2018. Net
proceeds of $9,614,978 plus an additional $956,470 of 1993 bond reserve funds were used to purchase U.S.
government securities. Those securities were deposited in an irrevocable trust with an escrow agent to
provide for all future debt service payments on the 1993 bonds. As a result, the 1'993 bonds are considered to
be defeased and the liability far those bonds has been removed. As of June 30, 2008, $6,940,000 of principal
remained outstanding an the defeased 1993 bonds.
(D) On February 1, 1999, the City issued $6,145,000 of 1999 Certificates of Participation (COPS} to finance
the acquisition of the land and improvements used and operated as the City of South San Francisco
Conference Center. During fiscal 2003/04, pursuant to a resolution of the Redevelopment Agency Board, tax
increment revenues were pledged to pay debt service on the 1999 COPS. The pledge of future tax increment
revenue ends upon repayment of the $8,283,714 in remaining debt service on the bonds which is scheduled to
occur in 2029. For fiscal year 2008, tax revenues available for debt service amounted to $27.4 million which
represented coverage of 69.1 over the $396,748 in debt service
{E) On April 6, 1989 the City received $563,000 from the California Health Facilities Financial puthoriry for
construction of the adult day care facility in the Magnolia Senior Center. Tax increment revenues were
pledged to pay debt service on the bonds.
As of June 30, 2008, future debt service is as follows:
Governmental Activities
Year >;ndin June 30 Principal Interest
- 7009 $1,755,426 3,708,561
2010 1,823,798 3,633,084
2011 1,892,429 3,555,950
2012 1,930,207 3,475,450.
2013 1,982,000 3,394,307
20 ] 4-2018 11,185,000 15,56b,3 46
2019-2023 12,400,000 12,754,570
2024-2028 14,977,000 9,434,617
2029-2033 17,385,000 5,324,000
2034-2035 12,385,000 948,875
Totals $77,715,860 $61,795,760
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CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY
~ Notes to Basic Component Unit Financial Statements
OTE 7 -PASS-THROUGH PAYMENTS
Pursuant to California Redevelopment Law (Health and Safety Code Section 33607.5), the Agency is
obligated to pass-through a portion of the gross tax increment received on the Project Area to jurisdictions
within the project area. In fiscal 2007-2008, the Agency calculated and remitted $4,655,621 in pass-
through payments to the affected jurisdictions.
The State also directed that the above amounts be included in the Agency's fatal incremental property tax
receipts far purposes of calculating the amounts to be set aside far Low and Moderate Income Housing.
NOTE S - COMIVIlTIVLENTS AND CONTINGENCIES
The Agency leases land to a private developer, Magnolia Plaza Associates, who built and operates low and
moderate income multi-family housing on the leased Land. At the end of the 75 year lease, May 1, 2062,
title to all improvements on the land shall vest to the Agency. Lease revenue is included in interest and
rental revenues. Future minimum payments to be received under the land as follows:
Year ending Land Lease
June 30, Payments
ZOOq $51,80D
2010 51,800
2011 51,800
2012 51,800
Therea$er 2,53 8,200
$2,745,400
In fiscal year ZOOS, the Agency approved a Settlement and Release Agreement with the County of San Mateo
to mitigate the County's financial losses due to the proposed plan amendments and the fiscal merger of the
four redevelopment project areas. The a~eement calls for the Agency to fund the cost of certain County
public improvements or rent waivers up to $S,OOD,DDO, with payments not to exceed $Z,DOO,D00 during fiscal
years 200b and 2007 and $3,OD0,000 during the period commencing with fiscal year 20D8. Durinb fiscal year
2008 the Agency made a payment of $1,573,872 to the County.
The Agency is involved in several legal proceedings arising from its normal operations. It is the opinion of
management that any obligations which may result from such legal proceedings will not have a material
effect on the financial position of the Agency.
NOTE 9 -SPECIAL ITEM
On April 1, ZODB, the San Mateo County Superior Court ruled that in a prior decision going back several
years for several parcels in South San Francisco, the San Mateo County Assessment Appeals Board (AAB}
"did not hear (the applicant's appeals case) within the time frame specified in California Revenue and
Taxation Code Section 1604(c)". As a result of the untimely hearing, the court ruled that the applicant "is
entitled to have enrolled its opinion of value (for affected parcels}" rather than the County's opinion of
value far the parcels and years in question. The applicant was a large biotechnology company based in
South San Francisco.
~3
OF SOUTg SAN FRANCISCO REDEVELOPMENT AGENCY ~_.'.
CITY
Notes to Basic Component Unit Financial S#atemeats
~__.
NOTE 9 -SPECIAL ITEM (Continued)
The difference between the applicant's opinion of value and the County's opinion of value totaled $18.1
e Court ruled that the ~-,
million for all affected prior tax years, including interest due to the applicant. Th
amount must be refunded to the large biotechnology firm. Money for that refund comes from two sources.
About half of the refund will come from the South San Francisco Redevelopment Agency, and the
remainder will come from all taxi-ng entities in San Mateo County.
Two of the parcels impacted by the April 1 ruling are in the Downtown Redevelopment Project Area, and fin' `,
the County will be deducting that refund amount directly from the Redevelopment Agency's December L
2048 property tax payment. The County applies all supplemental roll adjustments for Redevelopment area
parcels directly back to those areas. The County has indicated that the refund amount for these areas,
including interest, totals $8.9 million. The Agency has already identified sufficient funds in 2008-09 to
cover this refund, with no resulting impact on the Agency's debt service payments or other legal
obligations.
_.
The remaining parcels are in non-Redevelopment within the City limit. Those refunds will be deducted
from all the taxing entities in the County, as is the County's practice for all supplemental adjustments to the -~
roe tax rolls for non-Redevelopment parcels. The City's (General Fund) share of this refund is
P P rty
$124, 000.
The April Superior Court ruling covered numerous prior tax years, and the ruling further stated that it
would remain in effect "until the fiscal year in which the AAB holds a~ hearing and makes a final
determination an the" application. Since the AAB subsequently held a hearing and made a determ-ination .
prior to June 30, 2008 for the 2008 roll year, the County's assessment of value for the impacted parcels,
and not the applicant's, will be in effect for on an ongoing basis for tax years 200$ and beyond, absent any
future successful challenges. Therefore, the ruling on the untimely hearing by the County is a one time
event.
To reflect the large reduction to the Redevelopment Area, the Agency has designated X8.9 million of fund
balance on the Fund statements as of June 30, 2008 as Reserved for Pending Property Tax Refund. To ~,
reflect the financial statements on a full accrual basis, an expense has been recorded on the Statement of
Activities in current fiscal year for $8.4 million. $0.5 million was expensed in prior year.
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CITY OF 5OUTH SAN FRANCISCO REDEVELOPMENT AGENCY
MERGED REDEVELOPMENT PROJECT AREA CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND ACTUAL (NQN GAAP LEGAL BASIS)
FOR THE YEAR ENDED JUNE 30, ?008
REVENUES:
Tax allocation increment
Interest and rental
Charpe5 fDI 5erv1CC5
other
Total Revenues
EXPENDITURES:
Economic and Community Development
Capital outlay
Debt service:
Interest and fiscal charges
Total Expenditures
FXCrSS (DEPiCIENC~ OF REVENUES
OVER EXPENDI I U1tES
U'l~H!/lt )•1NAN(;1NU SUUltCES {U5L5)
Proceeds of debt and capital leases
Tr~;sfer In
Transfers out
Tatal afl~er financing sources (uses)
CHANGE TN FUND BALANCES
Fund balance, July 1
Fund balance, June 30
Variance with
Final Budget
Positive
Budget Actual Amounts (Negative)
$23,598,065 $27,363,682 $3,765,677
3,044,000 5,020,510 1,921,510
35,117 35,117
12a 120
26,697,065 32,419,429 5,722,364
8,846,002 8,229,135 616,867
43,944,217 35,624,484 8,319,733
11,705 (11,705)
219
790
52 43,865,324 8,924,895
,
,
{26,093,154) (11,445,895) 14,647,254
1,150,000 (1,150,000}
17,429,795 2,619,435 {14,810,360}
052)
{25
997 (]0,924,097) 15,072,955
,
,
(7,4I7,257) _ (8,304,b62) {887,405)
033,5]0,417) (19,750,557) $13,759,854
94,404,394
$74,653,837
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CISCO REDEVELOPMENT AGENCY
CIfiY OF SOUTH SAN FRAM
--
-
LOWlMOD TNCOME HOUSIl~IG CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL (NON GAAP LEGAL BASIS)
FOR THE YEAR ENDED JUNE 30, 20Q8
ariance with
V
Fins! Budget
Positive
Budget Actual Amounts (Negafiive}
REVENUES' 040
$610' $839,079 $229,079
Interest and rental .-
610,000 839,079 229,D79
Total Revenues
EXPENDITTJRES: 5
$42
87b 1,372,811 4,504,031
,
,
Economic and Community Development 5,131,224 681,019 4,450,205
Capital outlay
008,066
11 2,053,830 8,954,236
,
Total Expenditures
EXCESS (DEFICIENCY} OF REVENUES
398,066)
(10
(1,214,751) 183,315
9> ~ ..
,
pVEREXPENDITURES _
OTI'IERFINANCING SOURCES (USES} 5,005,757 5,561,84? 556 OBS
'T'ransfers in ~ 59i
(_,465, ) (2,896,312} 69,279
Transfers (out)
166
040
2 2,665,530 625,364
,
,
Total other financing sources (uses}
($8,357,900)
CI-IANGE IN FUND BALANCES
1,450,779
$9,80S,b79
~
basis:
Adjustment to budgetary
27,035 '
Encumbrance adjustments
20,224,536
Fund balance, July 1 , ,
$21,702,450
Fund balance, June 30
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CITY OF SOUTH 5AN FRANCISCO REDEVELOPMENT AGENCY
MERGED REDEVELOPMENT PROTECT AREA DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
BUDGET AND ACTUAL {NON GAA.P LEGAL BASIS)
FOR THE YEAR ENDED JUNE 30, 2008
Variance with
Final Budget
Positive
Budget Actual Amounts (Negative)
REVENUES:
$255,49a
$?55,49
Interest and rentals
255,495 255,495
Total Revenues
EXPENDITURES:
Current: $5,400 9,4b8 (4,Ob8)
Other
Debt service
1,692,296
1,52?,29b
170,000
Principal retirement 775
780
3 3,661,112 119,663
Interest and fiscal charges
,
,
471
478
5 5,192,876 285=5~5
Total Expenditures
,
,
EXCESS (DEFICIENCY} OF REVENUES (5
478,471) (4,g37,38I} _541,090
OVER EXPENDITURES , ~
OTHER FINANCING SOURCES (I7SES)
127,480
5 853,913
4, (273,567)
Transfers in ,
480
127
5 4,853,913 (?73,567)
Total other financing sources (uses}
,
,
CHANGE IN FUND BALANCES ($350,991) (83,468} $267,523
5,082,087
Fund balance, July 1
$4,998,619
Fund balance, Tune 30
~~
CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY
LOWtMOD INCOME HOUSING DEBT SERVICE FUND
SCHEDULE OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCE
BUDGET AND .ACTUAL (NON GAAP LEGAL BASIS)
FOR THE YEAR ENDED T[JNE 30, 2048
REVENUES
Interest and rentals
Total Revenues
EXPENDITURES
Debt service:
Principal repayments
Interest and fiscal charges
Total Expenditures
EXCESS (DEFICIENCY} OF REVENUES
OVER (UNDER} EXPENDITURES
OTHERF]NANCiNG 50URCES {USES)
Transfers in
CHANGE IN FUND BALANCES
Fund balance, July 1
Fund balance, June 30
Variance
Positive
Budget Actual (Negative)
X15,698 SI5,698
15,698 _ 15,698
$177,393 170,000 7,393
272,202 124,328 ~ _ 147,874
449,595 294,328 _ 155,267
(449,595) (278,630) 170,965
345,591 276,877 (68,714)
(104,004) (1,753) $102,251
309,001
$307,248
38
C
C
C
C
C
C
r
Maze &
ASSOCIATES
ACGOUN7ANCY C13RPQRATI~N
3478 Buskirk Ave. -Suite 215
Pleasanf Hill, California 94523
(925) 930-0902 • FAX (925} 930-Oi35
maze@mazeassociates. com
www. mazeasso cla tes. com
REPORT ON COMPLIANCE AND ON
INTERNAL CONTROL OVER. FINANCIAL
REPORTIPiG BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT A UDITIIVG STANDARDS
Members of the Governing Board of the
City of South San Francisco Redevelopment Agency
South San Francisco, California
We have audited the financial statements of the Redevelopment Agency of the City of South San Francisco
as of and for the year ended June 30, 2008, and have issued our report thereon dated December l 8, 2008.
We have conducted our audit in accordance with generally accepted auditing standards in the United States
of America and the standards applicable to financial audits contained in Gover-lxnaent Auditing Stcmdcrrds,
issued by the Comptroller General of the United States. ,~
I~~ternnl Control o>>er Financial Repor7irtg
In planning and performing our audit, we considered the Agency's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the
Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the Agency's internal control over financial reporting.
A control deficiency exists when the design or operation of a control does not allow management ar
employees, in the normal course of performing their assigned functions, to prevent ar detect
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of
control def ciencies, 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
mare than a remote likelil~ood that a material misstatement of the financial statements will not be
prevented ar detected by the Agency's internal control.
Our consideration of internal control aver financial reporting was for the limited purpose described in the
second paragraph and would not necessarily identify all deficiencies in internal control over financial
reporting that might be significant deficiencies or material weaknesses. We did not identify any
deficiencies in internal control over financial reporting that we consider to be material weaknesses, as
defined above.
' A Professional Gorporatlon
39
~" .;
Compliance and OtlrerA~atters ~~~
As part of obtaining reasonable assurance about whether the Agency's financial statements are free of
. fits cam liance with certain provisions of laws, regulations, ~__~_
material misstatement, we performed tests o p
contracts and grant agreements, noncompliance with which could tests of com liance withlprovisions of
determination of financial statement amounts. Our audit included ~ p rovidin an
the Guidelines or Corn lirn7ce Azrdits a Cali ornia Redevelo n:e~1af ourraudit and,vaccordingly, we do
opinion an compliance with those provisions was not an ob~ectiv
not express such an opinion. The results of our tests disclosed no instances of noncompliance that are
ed under Go>>ernment Auditing Standard. ~_.....
required to be report
This report is intended far the information of the Board, managementea b f an tone other than the abo e
i entities and is not intended to be and should not be u y Y ~, ,__.
pass-througl
parties. _
December I8, 2QQ8 ~~ -~
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