Comprehensive Annual Financial Report - City of Santa Monica

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CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued For the fiscal year ended June 30, 2009 Fiscal year ended June 30 Rental revenue Lease payments 2010 $ 7,873,977 2,639,493 2011 6,786,241 2,547,348 2012 6,299,957 1,963,673 2013 5,289,806 1,451,192 2014 4,733,623 1,451,192 2015 - 2019 12,921,091 4,077,063 2020 - 2024 10,626,913 406,387 2025 - 2029 10,496,067 - 2030 - 2034 5,933,843 - 2035 - 2039 4,667,126 - 2040 - 2044 3,035,336 - 2045 - 2049 3,035,336 - 2050 - 2054 3,035,336 - 2055 - 2059 3,035,336 - 2060 - 2064 3,035,336 - 2065 - 2069 923,668 - 2070 - 2074 232,237 - 2075 - 2079 232,237 - 2080 - 2084 232,237 - 2085 - 2089 232,237 - 2090 - 2094 232,237 - 2095 - 2099 232,237 - 2100 - 2104 19,353 - The total long-term lease rental revenues and expenditures/expenses for the year ended June 30, 2009, were $6,525,755 and $2,351,597, respectively. Line of Credit On May 1, 2008, the Redevelopment Agency of the City entered into a line of credit agreement with Bank of America. The agreement calls for an initial line of credit up to $50 million which may be increased at the Agency’s request and the bank’s option to $75 million. The line is available through June 2013 and is subject to quarterly interest payments at LIBOR plus 1.25%. The line is secured by future property tax increment revenues of the Low-and Moderate-Income Housing Fund subordinating to the bonded indebtedness of the fund. As of June 30, 2009 the City has drawn $15,485,324 on the line. Property Tax Revenues When adopting its budget for fiscal 2009-10, the State of California reflected in that budget a shift of a significant portion of tax increment revenue from redevelopment agencies to school districts for fiscal years 2009-10 and 2010-11. The California Redevelopment Association (“CRA”) in conjunction with several members has filed a lawsuit challenging the legality of this tax shift. The outcome of that lawsuit is not certain at this time. The outcome of a similar budget shift from the 2008-09 budget year was that the courts ruled the shift unconstitutional after a successful CRA suit. The State declined to appeal the court ruling. 79
CITY OF SANTA MONICA, CALIFORNIA Notes to Basic Financial Statements, Continued For the fiscal year ended June 30, 2009 (15) SELF INSURANCE The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees and others; and natural disasters. The City has chosen to establish risk financing internal service funds where assets are set aside for claim settlements associated with such risks of loss up to certain limits and has obtained excess liability coverage through the Authority for California Cities Excess Liability (ACCEL), a joint powers authority of twelve medium-size California municipalities. ACCEL is a member of the California State Association of Counties Excess Insurance Authority for the purpose of providing access to excess workers’ compensation coverage for major employee injury risks through a program of pooled self insurance/reinsurance and insurance on a risk sharing basis. The City retains self-insurance up to $1,000,000 for general liability, automobile liability, and bus operations liability. ACCEL covers up to an additional $4,000,000 for all liabilities and arranges placement of excess of liability insurance over $5,000,000 up to $100,000,000. The City retains self insurance up to $750,000 for workers’ compensation. California State Association of Counties Excess Insurance Authority covers up to an additional $4,000,000 for workers’ compensation and arranges for excess of workers compensation over $5,000,000 and up to statutory limits. No claim settlements have exceeded insurance coverage in any of the past three years. In order to provide funds to pay claims, ACCEL collects premiums from each member. The premiums paid are credited with investment income at the rate earning on the Authority’s investments. Based on ACCEL’s June 30, 2009 audited financial statements, the City had deposits of $2,549,524 (17.1% of ACCEL’s total deposits) net of unpaid claims with ACCEL. Total assets of ACCEL at June 30, 2009 were $30,625,253. ACCEL has no capital contributions. The City’s unpaid claims liabilities are based on the results of actuarial studies. The unpaid claims liabilities are compiled by the Risk Manager of the City and include amounts for claims incurred but not reported as of year end. Claims liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. Net present values of the unpaid claims liabilities are estimated for the year ended June 30, 2009, based on interest rates of 4.45%. Revenues of the risk management funds, together with funds to be provided in the future, are expected to provide adequate resources to meet liabilities as they come due. Nonincremental claims expenses have not been included as part of the liability for claims. 80
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Comprehensive Annual Financial Report - City of Santa Monica

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