1999 AGN FEB 09 I01 - Laserfiche WebLink

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Mid-Year Budget Review January 9, 1999 Page 2 0# 8 Far the low/mod housing fund, only a ten year cashflow and the debt schedule are applicable. The combined results for all project areas with respect to aggregate cashflows, t�x increment trends, and assessed values are also provided to give a global perspective of the Agency's changing financial position. The goal of this annual assessment is to help with budgeting decisions for the upcoming fiscal year, determine whether resources exist to undertake new or complete old projects, and identify any areas of concern so that remedial actions can be commenced immediately. ANALYSI� Major Issues The major issue confronting the Agency during this mid-year review is the low/mod housing fund and its existing obligations. Two projects consume an extraordinary amount of the Agency's financial resources: (1) Colton Palms and (2) Rancho Mediterrania. Workable strategies are needed for both of these projects before the Agency can move forwazd with a comprehensive agenda for the new millenium. The Agency expects to contribute approximately $622,564 toward the Colton Pa1ms project in 1998/99. T'he Agency pays for any operating losses and the debt service payments on the $6.5 million bond issue used for construction. The basic problem is that rents have remained well below forecasted levels due to market conditions and the income formulas established for determining individual rents. The Agency and CSI aze working on bncreasing project income by raising rents on future occupants. In addition, the Agency has submitted a request to the County of San Bernardino for acquiring the project from CSI and completing the rehabilitation program necessitated by faulty original con�truction. The goal of these efforts would be to significantly improve the project econ�mics with annual savings of roughly $325,000. Rancho Mediterrania also requires a$770,000 annual subsidy from the Agency during 1998/99. As the principal owner, the Agency absorbs the operating losses as well as the carry costs on the debt financing used to acquire the park (1996 Notes and the 1994 Street Assessment Bonds). The Agency's previous lot sales efforts have not succeeded. Agency stafghas prepared a comprehensive report for consideration by the Agency Boazd on February 1 l�' and the financial elements of these recommendations have been integrated into these cashflow forecasts. This project is expected to require g ant assistance ranging from $3-$4 million total by the time the Agency's obligations have ceased. The Agency also has committed to other low/mod funded projects such as graffiti abatement, t�e purchase of the LJ Snow Ford Site, MAP programs; and other smaller efforts. The combined result of all these obligations is to oversubscribe the low/mod funds. As a community program fund, the low/mod fund may borrow from other project areas and su�h bonowings aze essential for satisfying all of its current obligations. This