1998 AGN JUN 09 I01 - Laserfiche WebLink

Browse Search

Santa Ana River Project Loan to Low/Mod Housing Fund Q — Why was the Santa Ana River Project chosen to fund the Low/Mod Housing Fund? A — The low/mod housing fund has a substantial deficit for the upcoming year and the original Agency budget shows a $1.5 million loan being made from Santa Ana River to the low/mod fund. The Santa Ana River Project Area was marked for the loan because it possesses the greatest resources and has fewer immediate project opportunities. Santa Ana River will retain sufficient funds to invest in projects should they arise. Figure I Q — Have we developed a repayment plan or schedule? A — This loan would be repaid from housing revenues, which become available for debt service. The Agency Board directed staff to develop a repayment plan, which burdens some of the other project areas with the cost of repaying the debt to Santa Ana River. The only project areas with near-term capacity to contribute towards the low/mod housing obligations are Mt. Vernon, West Valley, and possibly Cooley Ranch. Mt. Vernon is the strongest candidate from a financial perspective — West Valley has relatively low tax increment revenues today but with solid long-term potential while Cooley Ranch currently has negative cashflows, which may require utilization of reserve resources. A ten-year projection of cashflows into the low/mod-housing fund is illustrated in Figure 1. Basically, the chart shows that the low/mod-housing fund is expected to barely cover its obligations. This projection assumes the $1.5 million loan in the upcoming year and it also assumes a restructuring of Colton Palms and a successful three-year sell out of Rancho Mediterrania. It is quite possible that additional loans will need to be advanced to the low/mod housing fund in the future if tax increment revenues do not improve or if these projects continue to place extraordinary burdens on the Agency. One of the Agency's highest priorities is to minimize the effect of these two housing projects on Agency financial resources. Low/Mod Housing Fund Cashflows/Fund Balances $7.000,000 $6,000.000 $5.000.000 - $4.000.000 e $3.000.000. $2.000.000 - $1.000.000 - — so - — ($t,0oo.000) 98 99 0 1 2 3 4 5 6 7 Fiscal Year . Rerantiss ■ Expenses a surpk-06 cit —0_ Fund Balance Figure I Q — Have we developed a repayment plan or schedule? A — This loan would be repaid from housing revenues, which become available for debt service. The Agency Board directed staff to develop a repayment plan, which burdens some of the other project areas with the cost of repaying the debt to Santa Ana River. The only project areas with near-term capacity to contribute towards the low/mod housing obligations are Mt. Vernon, West Valley, and possibly Cooley Ranch. Mt. Vernon is the strongest candidate from a financial perspective — West Valley has relatively low tax increment revenues today but with solid long-term potential while Cooley Ranch currently has negative cashflows, which may require utilization of reserve resources. A ten-year projection of cashflows into the low/mod-housing fund is illustrated in Figure 1. Basically, the chart shows that the low/mod-housing fund is expected to barely cover its obligations. This projection assumes the $1.5 million loan in the upcoming year and it also assumes a restructuring of Colton Palms and a successful three-year sell out of Rancho Mediterrania. It is quite possible that additional loans will need to be advanced to the low/mod housing fund in the future if tax increment revenues do not improve or if these projects continue to place extraordinary burdens on the Agency. One of the Agency's highest priorities is to minimize the effect of these two housing projects on Agency financial resources.