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HomeMy WebLinkAbout1994-04-19 - AGENDA REPORTS - FIN ADVISOR RPT CONCERING CLWA (2)NEW BUSINESS DATE: SUBJECT: DEPARTMENT: Background AGENDA REPORT 7-Z�� Executive Director Ap val Item to be ted by: D Duckworth April 19, 1994 FINANCIAL ADVISOR'S REPORT CONCERNING THE CASTAIC LAKE WATER AGENCY Community Recovery Agency In a report to the Castaic Lake Water Agency Board, the General Manager justified opposition to the City's Community Recovery Plan based on its alleged interference, or possible interference, with the Agency's ability to make debt service payments on outstanding indebtedness of approximately 132 million dollars. (The current year's debt service payment amounts to approximately 11.2 million dollars.) Following that report, several Castaic Lake Water Agency Board members appeared before the City Council to express that concern. Financial information is being evaluated by a financial advisor who has been retained to provide a report to the City Council. Mr. Jim Regan, a prominent financial advisor, will be present to provide a preliminary report at the City Council meeting of April 19, 1994. Attached is professional biographical information about Mr. Regan and his firm. Recommendation Receive and file report, and provide direction as appropriate. Attachments 1) Report Concerning Castaic Lake Water Agency 2) Professional Biographical Information DRD:II C...c Nredev2419 AgS"W'a Item:, . APR -14-94 THU 10;52 GRC-COPENHAVER, INC. FAX N0, 9093967913 P.04 19-COPENTIAVER,INC. Economlo Development. $pdevelopment - city planning. Renl Estate Consultauta JAMES P. REGAN PRINCIPAL Mr. Regan has more than 25 years of experience in land use economic analyses, real estate feasibility analysis and development evaluation. He has an extensive background in marketing and financial consulting for commercial office, industrial, retail, residential and numerous hotel and resort projects, He has held senior management positions at consulting and development companies, including Economic Research Associates and Linkletter Development Company, and most recently as a principal of Kotin, Regan & Mouchly, Inc., a real estate consulting firm specializing in economic and financial consulting services to public sector clients. At that firm, he provided due diligence consulting for private and institutional investment clients, and directed much of the public client work dealing with issues of development strategy, public/prlvate transactions, and economic and fiscal impacts, His counseling activities include property operating analysis and projections, valuation analysis, and assessment of alternative financing structures. He provides due diligence counseling on prospective developments, acquisitions/dispositions, and investment transactions in both acquisition/disposition and work-out situations, and in assisting public agencies with evaluating and negotiating development transactions, particularly on retail and housing development projects, Examples of work experience includes: • Financial analysis, feasibility and negotiation of numerous public/private projects including retail, housing, hotel and industrial developments (numerous public clients including Los Angeles CRA, Oxnard, Santa Clarita, Santa Monica, Santa Barbara, Paramount, Vista, Marin County and Redondo Beach). • Economic and fiscal impact analyses of specific projects such as retail centers and large- scale developments such as theme parks, focusing on defining and establishing criteria for measuring net incremental impacts (Fox Inc., MCA, Oxnard, Palmdale, Port of Long Beach). • Asset management strategies and disposition consulting for public agencies, school districts and institutional investors (The Carmack Grotlp, Salvation Army, Conejo Valley Unified School District, Manhattan Beach School District). Market and feasibility analyses of all types of urban land uses. EDUCATION Masters of Business University of Pennsylvania Bachelor of Science -Marquette University Certified Real Estate Counselor, American Society of Real Estate Counselors PROFESSIONAL ASSOCIATIONS Urban Land Institute (Member of Commercial Council) American Society of Real Estate Counselors AIA Rural/Urban Development Assistance Program APR -14-94 THU 10:52 GRC-COPENHAVER, INC; FAX N0, 9093967913 P.03 WCOPENRAVER, INC, Economia Development - Redevelopment . City Planning. - Real Estate Causultaute STEPHEN A. COPENHAVER PRESIDENT Mr. Stephen A. Copenhaver is the president and owner of GRC - Copenhaver, Inc. Mr. Copenhaver has over 26 years of management experience in the fields of municipal finance, engineering, economic development and redevelopment, His educational background and working familiarity with the various applicable laws and guidelines has resulted in the successful completion of a wide spectrum of public- and private -sector assignments. Mr. Copenhaver worked for the cities of Fullerton, Commerce and Garden Grove for over 16 years in capacities ranging from building and engineering assignments to the full range of planning and redevelopment positions, including the position of Director of Community Development and Redevelopment Agency/Executive Director. Mr, Copenhaver's broad experiences in all facets of municipal development include the development of over three million square feet of industrial park space, over one- and one-half million square feet of office development, over 55 shipping centers, numerous residential developments, auto dealerships, hotel developments, etc. Since leaving municipal employment, Mr. Copenhaver has built a development consulting business specializing in economic development, redevelopment, municipal finance, real estate and development strategies. Mr. Copenhaver has administered major economic development programs for several California cities. Mr. Copenhaver's experience is illustrated by the following; • A specific plan for the development of a 200 -acre residential and commercial area of Brea; a specific plan for the development of an auto center in the City of Corona; Downtown development plans and studies for the cities of Perris, San Jacinto and Monrovia. • Project -oriented assignments for a wide range of clients concerning statutory development agreements, municipal code amendments and development processing. • Financial analysis for redevelopnlont projects including the Brea Mall, Buena Park Mall, La Mirada Mall, Stonewood Mall in Downey and dozens of neighborhood, community and off-price shopping centers, low- and high-end housing projects, industrial and office projects and public projects including public buildings and parks. • The preparation of economic development programs for Brea, Hawaiian Gardens, Perris, San Dimas, Stanton and Upland. • Acting as fiscal consultant on numerous tax exempt financings. EDUCATION Bachelor of Science -Engineering California State University at Fullerton. PROFESSIONAL t,amornia redevelopment Association (served as a state board member for over two years) California Association for Local Economic Development National Association of Housing slid Redevelopment Officials APR -14-94 THU 10:51 GRC-COPENHAVER, INC. FAX NO. 9093967913 P.02 TO GRC-COPENHAVER, INC. of the Firm GRC - Copenhaver, Inc., has been offering comprehensive financing, economic development, housing, redevelopment and management services assistance to California cities and redevelopment agencies for over ten years. The firm occupies a unique niche as a company capable of making projects a reality and assisting cities and redevelopment agencies in achieving their full economic and physical development potentials. GRC - Copenhaver, Inc., has the in-house capability of performing the full realm of financing implementation activities that may be required of municipalities. GRC understands development from both the private and public perspectives and can address municipal and Agency projects from the marketing, economic feasibility, project negotiations, entitlement processing, environmental administration, project completion, and administration. The GRC - Co Inc. Team GRC - Copenhaver, Inc., is known in the field of economic development, redevelopment, project financial analysis, and city planning for being very responsive to the needs of its clients. We have achieved this reputation through personalized service, a sensitivity to the demands on public bodies and employees, and tailoring products to the particular needs of the clients. All GRC staff members have worked in the public sector. GRC staff includes four senior professional staff members: Stephen Copenhaver, president; James Regan, Principal; Jennifer Thornberry and Deborah Linn as Senior Associates. e of the Firm GRC - Copenhaver, Inc., has worked for over 40 cities and redevelopment agencies throughout California. GRC's experience includes: market feasibility analysis; comprehensive housing strategies; negotiations with developers and other public entities; property acquisition and relocation services; preparing and analyzing economic development proformas; preparing specific plans; preparing environmental documents and entitlement documents; preparing grant applications; assisting redevelopment agencies in preparing budgets and financial plans, structuring public financings and preparing fiscal reports, planning and prioritizing capital improvement projects; preparing multi-year work programs and cash flow analysis; and preparing economic development strategies. ESTIMATED IMPACT OF COMMUNITY RECOVERYPROGRAM ON CASTAIC LAKE WATER AGENCY EXECUTIVE SUMMARY The Recovery Program This report prepared by GRC-Copenhaver, Inc. was will have limited impact commissioned to determine whether or not the City's on CLWA's debt adoption of a Community Recovery Plan will jeopardize repayment. repayment of existing Castaic Lake Water Agency (hereinafter "CLWA") financing. The property taxes to be captured by the Recovery Program will have a limited impact on the CLWA. Other conclusions of a preliminary review of the financial impact of the Recovery Program are reflected in this report's Summary Section. Principle sources of information used in this report include the Official Statement for the $132,000,000 Certificates of Participation issued by CLWA ("Certificates"), annual financial statements for the CLWA, Recovery Program estimates of base values and future revenues and miscellaneous reports of both the CLWA and the Recovery Program. Additionally, we spoke by telephone to Glenn Reiter, financial consultant to the CLWA. COMMUNITY RECOVERY PROGRAM REVENUES Background Recovery revenues are Community Recovery Program revenues are established established by State by State law which provides a fixed formula for sharing Law. property tax revenues between programs such as that established by the City of Santa Clarita and other taxing districts such as water agencies and counties. There is little or no flexibility with respect to negotiating pass- through agreements with the taxing districts beyond that established in law. Page -1 Community Recovery Program/Castaic Lake Water Agency Current assessed value The Recovery Program's estimate of future revenues is estimates will be updated based on the assumption that the initial assessed by the County within 60 valuation of the area included in the Recovery Program days. project boundaries will total approximately $4.5 billion. This estimate of assessed value, in place prior to the Recovery Program, was not calculated by reviewing the values in individual tax rate areas. In accordance with the law, Los Angeles County must provide a report within the next 60 days and this report will precisely establish the initial assessed valuation or "base year" valuation for fiscal year 1993-94. This figure is important because it establishes the amount of property tax that will continue to flow to the taxing districts and it defines the baseline for calculating future revenues of the Recovery Program. Tax Increment Revenue Projection CLWA will receive pass- The tax increment estimates prepared by the City's through payments, Recovery Program staff assumed a 4% growth in assessed value resulting from the annual inflationary increases typically experienced since Proposition 13 and re- assessment resulting from property transfers and improvements. State law establishes the property tax pass-throughs to other taxing districts at 20% of gross revenues for the first 10 years and increases this amount to 36.8% between years 11 through 30. The pass-through payments continue to increase after year thirty to over 49% of the incremental property tax revenue for the remaining life of the Recovery Program. CLWA and the City have The CLWA and the City of Santa Clarita have similar similar property tax rates. property tax rates with both entities receiving between 5% to 6% of the property tax assessment established pursuant to Proposition 13. CLWA, in addition to its share of the base property tax, also levies a tax override to service the debt on bonds issued in 1976 and collects property tax that pays for the State Water Project Contract. Tables Nos.: 1, 1(a), and 1(b), attached hereto, illustrate the total tax increment to the Recovery Program and the taxing districts over the fiscal years through 2014-15. These tables were prepared using growth rates of 2%, 4% Page -2 Community Recovery Program/Castaic Lake Water Agency and 5% to provide a range of financial scenarios to consider. • In summary, the City's Community Recovery Program will capture, for the first 10 years, 60% of the increase in property tax revenues above that level collected by all taxing districts in 1993-94. An additional 20% of the increase will be devoted to housing programs and the remaining 20% will be divided between the taxing agencies such as Los Angeles County, and the CLWA. After year 10, the percentage of revenues to the Recovery Program declines to 43.2% offset by an increase to 36.8% of revenues divided by other taxing agencies. • The only taxing district which does not receive a share of pass-throughs is the City which will have to forego all of its share of increases in property tax., .. no taxing district will The revenues which have historically been captured by experience a decline in the taxing districts prior to the adoption of the Program revenue. will continue to flow to the taxing districts; thus, no taxing district will experience a decline in revenue. One issue pointed out by the CLWA that is of equal concern to the City's Community Recovery Program is property assessment appeals. Mr. Reiter informed us that over 5,000 property owners have filed appeals seeking to lower their property taxes. It is possible that the projections will need a period of time to make up for a decline in property assessments before the Recovery Program will receive any "new" revenue because the Program is only eligible to receive its share of increased revenues. If this were the case, the Recovery Program will have no income and no impact on the revenues of other taxing districts until the decrease in assessments is reversed. The CLWA also informed us that it is preparing its own estimate of the base year valuation by matching the tax rate areas with the Recovery Area boundaries, a process similar to that undertaken by Los Angeles County. the present value of The tables illustrate the impact of growth rates on future dollars is revenues to be received by the Recovery Program. In year considerably lower. Page -3 Community Recovery Program/Castaic Lake Water Agency 20, the Recovery Program would receive $6.3 million at a 2% annual growth and slightly over $22 million annually at a 5% annual growth. In reviewing revenue projections that include inflation to the Recovery Program or to any tax district, it should be remembered that the present value of future dollars is considerably lower -- a $22 million payment in twenty years is worth $5.9 million today using a discount rate equal to current tax exempt financing rates (6.75%). CASTAIC LAKE WATER AGENCY COP -Pledged Revenues CLWA covenants to pay In issuing Certificates of Participation totaling debt. $132,000,000 in 1990 for the future expansion of the CLWA's water system, the CLWA pledged a wide range of revenues including property taxes not pledged to a 1976 general obligation bond issue and to payments under the State Water Project Contract. In addition to property taxes, the CLWA generally pledged all of its revenues including fees, rents, water sale proceeds, interest earnings, capacity charges etc. The pledge of revenue sources was further bolstered by a covenant of the CLWA to increase their revenues through the adjustment of charges and fees if the CLWA did not have revenues equal to 120% of debt service in any given year. This combination of revenues and the covenant allowed the CLWA to purchase bond insurance to further support the Certificates which resulted in AAA bond rating. Table No. 2 provides an overview of the outside revenue sources pledged to the Certificates and provides a comparison between the revenues projected to be received by the CLWA at the time of issuance and the revenues which were actually received over the period from 1990 to 1993. Property taxes pledged to the Certificates represent a major component of the pledged revenues. CLWA property tax . CLWA anticipated annual property taxes of $3.3 in revenues exceed 1990 and $3.9 million in 1993. Actual receipts were projections by 45%. $4.9 and $5.6 million respectively p y or approximately 45% higher than estimated by the CLWA. Page -4 Community Recovery Program/Castaic Lake Water Agency Water sales and fees . In 1993, water sales and capacity/connection fees were have not met projections. about 73% and 83% lower respectively than projected. This has caused the major shortfall in revenues pledged to the bond issue. Interest earnings will Interest earnings on unexpended capital improvement decline significantly, funds, reserve funds and operating funds accounted for the single largest revenue source during the period reviewed. However, the interest earnings will decline significantly now that the proceeds from the Certificates have been expended. TABLE 2 COMPARISON OF ACTUAL vs. PROJECTED REVENUES SELECTED SOURCES PLEDGED TO 1990 BOND ISSUE, CLWA ($000's) Projected 1 1990 1991 1992 1993 Property Taxes $3,380.0 $3,549.0 $3,726.5 $3,912.8 Water Sales 2,746.5 3,269.8 3,888.3 5,037.1 Facility Fees 4,400.00 5,174.1 7,606.6 7,226.8 Other 10.0 10.5 11.0 11.6 Total $10,536.5 $12,003.4 $15,232.4 $16,188.3 Actual 2 Property Taxes N/A $4,950.0 $5,753.2 $5,649.1 Water Sales 2,158.0 1,638.1 1,888.5 Facility Fees 1,763.7 6,886.7 1,225.7 Other 120.0 173.7 595.4 Total $8,991.7 $14,451.7 $9,358.7 (1) Official Bond Statement, June 20, 1990 (2) COP Pledged Revenue Fund N/A Not applicable (partial year) Impact of Community Recovery Program Property tax revenues are the focus of this initial review. To analyze the impact of the City's Community Recovery Program it is necessary to calculate the total property taxes collected by the CLWA and deduct those future taxes to be captured by the Recovery Program. The base year assessed valuation of the CLWA service area is that identified by the CLWA for FY1993-94 to be $10.64 billion. Tables Nos. 3, 3(a) and 3(b), attached hereto, estimate the property tax proceeds to the CLWA at different growth rates and deduct the projected Page -5 Community Recovery Program/Castaic Lake Water Agency property taxes to be collected by the Recovery Program. An assumed tax rate share of .0515 per $100 of assessed valuation was utilized to estimate the property tax revenues to the CLWA. Tables 4, 4(a) and 4(b), attached hereto, summarize the financial impact of the Recovery Program on the CLWA at different growth rates. These tables • present both the absolute dollar impact and the impact of the Recovery Program stated as a percentage of CLWA revenue given the assumptions discussed in this report. • At a growth rate of 2%, the City's Community Recovery Program will capture $37,000 of CLWA property tax revenues in the first year increasing to $474,000 per year by year 2014. • At a growth rate of 5%, the CLWA would experience a financial impact of $93,000 the first program year and $1.7 million per year in the 20th year of the Recovery Program. • This represents an average of less than 9% of their property tax revenues over the first twenty years. CLWA property taxes To put this revenue in perspective, this revenue loss is under Recovery Program equal to the property taxes on an additional 225 to 250 continue to exceed homes constructed annually in the CLWA area over the projected levels. next 20 years. Furthermore, while declining water sales and connection fees have adversely impacted CLWA revenues, it is important to note that GRC's estimated property tax revenues to CLWA net of the Recovery Program impact exceed the level generated by projecting base property tax revenues as estimated in the Certificates Official Statement. CLWA's debt payments The property tax captured by the Recovery Program from @ $11.2 million are very the CLWA is a small percentage of the water agency's large in comparison to annual debt. Assuming that assessed value increases 4%, Recovery Program the Recovery Program will capture $74,000, which would revenues captured from have otherwise gone to CLWA. In year 10 of the Recovery the CLWA. program, the loss to CLWA is $597,000. This captured revenue stream is dwarfed by CLWA's annual $11.2 million debt payment. Page -6 Community Recovery Program/Castaic Lake Water Agency CLWA plans $200 million In speaking with the Mr. Reiter, he pointed out that the in additional debt. proposed Recovery Program may not impair the ability to service the existing Certificate debt but that his agency was concerned with the ability to finance and implement the remaining $200,000,000 in improvements listed in the water master plan. This plan is based on the needs of servicing a population of approximately 270,000 in the year 2010. The population estimate is based on projections prepared by the regional planning agency, the Southern California Association of Governments ("SCAG"). To implement the plan to accommodate this population level, Mr. Reiter felt that the CLWA would need to capture its full share of the property tax. SUMMARY In summary, our preliminary review has determined that: ♦ The Recovery Program will address improvement needs in the community by reinvesting property tax proceeds within the Project Area and through helping to mitigate over $200 million in earthquake damage. ♦ The Recovery Program is anticipated to capture approximately 9% of the CLWA base property tax revenues over the next 20 years. Because property tax is only a portion of the total revenue received by CLWA, the captured tax increment is very small in comparison to the total revenues of the water agency. In the base year the captured funds amount to less than 1%. ♦ The City of Santa Clarita will experience a greater decline in property tax revenue than the CLWA in furtherance of the Recovery Program. ♦ The CLWA will continue to receive its full allocation of property tax revenues resulting from property tax overrides. In addition to property taxes, CLWA generates revenue from the sale of water to retail companies, charging builders capacity/connection fees, leasing property, earning interest on unused or reserved funds. Page -7 Community Recovery Program/Castaic Lake Water Agency ♦ The CLWA capital improvement plan calls for $200 million in new debt. ♦ The formula for sharing tax revenues between the Recovery Program and other taxing Agencies is established by State law and not the City of Santa Clarita. ♦ Water agencies such as the CLWA without retail sales were excluded from the tax shift (AB8) under which the State of California reduced municipal and special district revenues between 15% to over 50% to help solve the state budget crisis. ♦ The base year assessed value within the Recovery Program boundaries remains to be determined by Los Angeles County and fluctuations in the value from the estimated $4.5 billion will affect the results of this analysis. ♦ The CLWA has experienced a significant decline in anticipated revenues (as projected in the CLWA financing document) from water sales and connection fees. Property tax revenues have exceeded the estimates of the CLWA by over 40%. Water sales have declined due to reduced water purchases by retail water companies, choosing instead to pump water from the ground water table for economic and other reasons pertaining to water rights. The CLWA has expressed interest in purchasing a retail water company and if successful, it would be both the supplier and the purchaser of water (wholesaler vs. retailer issue). Page -8 RECOVERY PROGRAM PROPERTY TAX REVENUES Tai!le No. 1 - 2% annual increase ($000'S) Year. Assessed Value (1y Tax Increment ' Housing (2)Other Districts Recovery Program base year $4,500,000 1994-95 $4,590,000 $900 (5) $180 $180 (6) $540 1995-96 $4,681,800 $1,818 $364 $364 $1,091 1996-97 $4,775,436 $2,754 $551 $551 $1,653 1997-98 $4,870,945 $3,709 $742 $742 $2,226 1998-99 $4,968,364 $4,684 $937 $937 $2,810 1999-00 $5,067,731 $5,677 $1,135 $1,135 $3,406 2000-01 $5,169,086 $6,691 $1,338 $1,338 $4,015 2001-02 $5,272,467 $7,725 $1,545 $1,545 $4,635 2002-03 $5,377,917 $8,779 $1,756 $1,756 $5,267 2003-04 $3,656,984 (3) $6,570 $1,314 $1,314 $3,942 2004-05 $3,730,124 $7,301 $1,460 $2,687 (7) $3,154 (4) 2005.06 $3,804,726 $8,047 $1,609 $2,961 $3,476 2006-07 $3,880,821 $8,808 $1,762 $3,241 $3,805 2007-08 $3,958,437 $9,584 $1,917 $3,527 $4,140 2008-09 $4,037,606 $10,376 $2,075 $3,818 $4,482 2009-10 $4,118,358 $11,184 $2,237 $4,116 $4,831 2010-11 $4,200,725 $12,007 $2,401 $4,419 $5,187 2011-12 $4,284,740 $12,847 $2,569 $4,728 $5,550 2012-13 $4,370,435 $13,704 $2,741 $5,043 $5,920 2013-14 $4,457,843 $14,578 $2,916 $5,365 $6,298 2014-15 $4,547,000 $15,470 $3,094 $5,693 $6,683 Notes: (1) Base Year Assessed Value determined by Recovery Program during adoption process - final determination to be made by Los Angeles County. (2) Housing payments equal to 20% of gross tax increment. (3) Decrease in assessed value due to the deletion of Valencia from Project Area after 91h Program year. (4) Recovery Program revenues decrease with change in Project Area boundaries and increase in pass-throughs to taxing districts. (5) Gross tax increment equal to 1% of increased assessed value after Project adoption. (6) AB1290 prescribes a 20% pass-through for first 10 Program years, followed by a 36.8% pass-through for years 11 through 30. (7) First year of 36.8% pass-through to lazing districts other than the City. RECOVERY PROGRAM PROPERTY TAX REVENUES Table No. 1 a - 4% annual increase Year Assessed Value(1) Tax In1.crement Housing (2) ,Other, DistrictsRecovery Program base year $4,500,000 1994-95 $4,680,000 $1,800(5) $360 $360 (6) $1,080 1995-96 $4,867,200 $3,672 $734 $734 $2,203 1996-97 $5,061,888 $5,619 $1,124 $1,124 $3,371 1997.98 $5,264,364 $7,644 $1,529 $1,529 $4,586 1998-99 $5,474,938 $9,749 $1,950 $1,950 $5,850 1999-00 $5,693,936 $11,939 $2,388 $2,388 $7,164 2000-01 $5,921,693 $14,217 $2,843 $2,843 $8,530 2001-02 $6,158,561 $16,586 $3,317 $3,317 $9,951 2002-03 $6,404,903 $19,049 $3,810 $3,810 $11,429 2003-04 $4,451,135 (3) $14,511 $2,902 $2,902 $8,707 2004-05 $4,629,180 $16,292 $3,258 $5,995 (7) $7,038 (4) 2005-06 $4,814,347 $18,143 $3,629 $6,677 $7,838 2006-07 $5,006,921 $20,069 $4,014 $7,385 $8,670 2007-08 $5,207,198 $22,072 $4,414 $8,122 $9,535 2008-09 $5,415,486 $24,155 $4,831 $8,889 $10,435 2009-10 $5,632,105 $26,321 $5,264 $9,686 $11,371 2010-11 $5,857,390 $28,574 $5,715 $10,515 $12,344 2011-12 $6,091,685 $30,917 $6,183 $11,377 $13,356 2012-13 $6,335,353 $33,354 $6,671 $12,274 $14,409 2013-14 $6,588,767 $35,888 $7,178 $13,207 $15,503 2014-15 $6,852,317 $38,523 $7,705 $14,177 $16,642 Nates: (1) Base Year Assessed Value determined by Recovery Program during adoption process - final determination to be made by Los Angeles County. (2) Housing payments equal to 20% of gross tax increment. (3) Decrease in assessed value due to the deletion of Valencia from Project Area after 9th Program year. (4) Recovery Program revenues decrease with change in Project Area boundaries and increase in pass-throughs to taxing districts. (5) Gross tax increment equal to 1% of increased assessed value after Project adoption. (6) AB1290 prescribes a 20% pass-through for first 10 Program years, followed by a 36.8% pass-through for years 11 through 30. (7) First year of 36.8% pass-through to taxing districts other than the City. RECOVERY PROGRAM PROPERTY TAX REVENUES Table No.1 b - 5% annual increase ($000's) Year AssessedValue(1) _:.Tax Increment Housing (2) Other Districts Recovery Program base year $4,500,000 1994-95 $4,725,000 $2,250 (5) $450 $450 (6) $1,350 1995-96 $4,961,250 $4,613 $923 $923 $2,768 1996-97 $5,209,313 $7,093 $1,419 $1,419 $4,256 1997-98 $5,469,778 $9,698 $1,940 $1,940 $5,819 1998-99 $5,743,267 $12,433 $2,487 $2,487 $7,460 1999-00 $6,030,430 $15,304 $3,061 $3,061 $9,183 2000-01 $6,331,952 $18,320 $3,664 $3,664 $10,992 2001-02 $6,648,549 $21,485 $4,297 $4,297 $12,891 2002-03 $6,980,977 $24,810 $4,962 $4,962 $14,886 2003-04 $5,003,033 (3) $20,030 $4,006 $4,006 $12,018 2004-05 $5,253,185 $22,532 $4,506 $8,292 (7) $9,734 (4) 2005-06 $5,515,844 $25,158 $5,032 $9,258 $10,868 2006-07 $5,791,636 $27,916 $5,583 $10,273 $12,060 2007.08 $6,081,218 $30,812 $6,162 $11,339 $13,311 2008-09 $6,385,279 $33,853 $6,771 $12,458 $14,624 2009-10 $6,704,543 $37,045 $7,409 $13,633 $16,004 2010-11 $7,039,770 $40,398 $8,080 $14,866 $17,452 2011-12 $7,391,758 $43,918 $8,784 $16,162 $18,972 2012-13 $7,761,346 $47,613 $9,523 $17,522 $20,569 2013-14 $8,149,414 $51,494 $10,299 $18,950 $22,245 2014-15 $8,556,884 $55,569 $11,114 $20,449 $24,006 Notes: (1) Base Year Assessed Value determined by Recovery Program during adoption process -final determination to be made by Las Angeles County. (2) Housing payments equal to 20% of gross tax increment. (3) Decrease in assessed value due to the deletion of Valencia from Project Area after 9th Program year, (4) Recovery Program revenues decrease with change in Project Area boundaries and increase in pass-throughs to taxing districts. (5) Gross tax increment equal to i % of increased assessed value after Project adoption. (6) AB1290 prescribes a 20% pass-through for first 10 Program years, followed by a 36.8% pass-through for years 11 through 30. (7) First year of 36.8% pass-through to taxing districts other than the City. CLWA PROPERTY TAX REVENUES CLWA Property Tax Revenues After Adoption of Santa Clarita Recovery Program Table No. 3 - 2% annual increase (! 'Year Assessed Value Property Tax 3b - 5% annual Increase Year CLWA base year $10,644,344 (1) 1994-95 $10,857,231 $5,554 (2) base year $11,074,375 $5,628 11995-96 1996-97 $11,295,863 $5,704 1997-98 $11,521,780 $5,781 1998-99 $11,752,216 $5,860 1999-00 $11,987,260 $5,940 2000-01 $12,227,005 $6,022 2001-02 $12,471,546 $6,105 2002-03 $12,720,976 $6,190 2003-04 $12,975,396 $6,412 12004-05 $13,234,904 $6,579 12005-06 $13,499,602 $6,691 2006-07 $13,769,594 $6,805 2007-08 $14,044,986 $6,922 2008.09 $14,325,886 $7,041 2009-10 $14,612,403 $7,162 12010-11 $14,904,651 $7,286 12011-12 $15,202,744 $7,412 2012-13 $15,506,799 $7,541 2013-14 $15,816,935 $7,672 ($000's) Table No, 3a - 4% annual increase Table No. 3b - 5% annual Increase Year Assessed Value Property Tax , Year 'Assessed Value " Property Tax base year $10,644,344 (1) CLWA - base year $10,644,344 (1) CLWA 1994-95 $11,070,118 $5,627(2) 1994-95 $11,176,561 $5,663 (2) 1995-96 $11,512,922 $5,778 1995-96 $11,735,389 $5,854 1996-97 $11,973,439 $5,935 1996-97 $12,322,159 $6,054 1997-98 $12,452,377 $6,098 1997-98 $12,938,267 $6,264 1998-99 $12,950,472 $6,268 1998-99 $13,585,180 $6,485 1999-00 $13,468,491 $6,445 1999-00 $14,264,439 $6,716 2000-01 $14,007,231 $6,629 2000-01 $14,977,661 $6,959 2001.02 $14,567,520 $6,820 2001-02 $15,726,544 $7,215 2002.03 $15,150,221 $7,018 12002-03 $16,512,871 $7,483 2003.04 $15,756,229 $7,517 j2003.04 $17,338,515 $8,105 2004-05 $16,386,479 $7,910 2004-05 $18,205,440 $8,644 2005-06 $17,041,938 $8,187 '2005-06 $19,115,713 $9,028 2006-07 $17,723,615 $8,476 2006-07 $20,071,498 $9,430 2007-08 $18,432,560 $8,776 2007-08 $21,075,073 $9,853 2008-09 $19,169,862 $9,088 '2008-09 $22,128,827 $10,297 2009-10 $19,936,657 $9,413 2009.10 $23,235,268 $10,763 2010-11 $20,734,123 $9,750 2010-11 $24,397,031 $11,253 2011-12 $21,563,488 $10,101 12011-12 $25,616,883 $11,766 2012.13 $22,426,027 $10,466 2012-13 $26,897,727 $12,306 2013-14 $23,323,068 $10,846 12013.14 $28,242,614 $12,873 2014-15 $24,255,991 $11,241 12014-15 $29,654,744 $13,468 Notes: (1) Base year calculation as determined by CLWA (2) Property tax rate assumed at .05151 and is net of Recovery Program's share FINANCIAL IMPACT OF RECOVERY PROGRAM ON CLWA Table No. 4.2% annual increase ($000,5) Yeat Assessed Value . `. Property Tax Property Tax Financial . Percentage Notes: (1) Assessed value of entire CLWA service area as provided by the Agency, (2) Property tax accruing to CLWA with the Recovery Program in place. (3) Property tax which would accrue to CLWA without the Recovery Program. (4) Loss of property tax revenue to CLWA as a result of the Recovery Program. (5) Loss of revenue to CLWA stated as a percentage of entire revenue stream. Recovery Prog. (2)%W/0 RecoveryProg43) Impact ° (4) Change (5) base year $10,644,344 (1) 1994-95 $10,857,231 $5,554 $5,591 $37 -0.67% 1995-96 $11,074,375 $5,628 $5,703 $75 -1.32% 1996-97 $11,295,863 $5,704 $5,817 $113 -1.95% 1997-98 $11,521,780 $5,781 $5,934 $153 -2.57% 1998.99 $11,752,216 $5,860 $6,052 $192 -3.18% 1999-00 $11,987,260 $5,940 $6,173 $233 -3.78% 2000-01 $12,227,005 $6,022 $6,297 $275 -4.37% 2001-02 $12,471,546 $6,105 $6,423 $318 -4.95% 2002-03 $12,720,976 $6,190 $6,551 $361 -5.51% 2003-04 $12,975,396 $6,412 $6,682 $270 -4.05% 2004-05 $13,234,904 $6,579 $6,816 $237 -3.48% 2005-06 $13,499,602 $6,691 $6,952 $261 -3.76% 2006-07 $13,769,594 $6,805 $7,091 $286 -4.04% 2007.08 $14,044,986 $6,922 $7,233 $311 -4.30% 2008-09 $14,325,886 $7,041 $7,378 $337 -4.57% 2009-10 $14,612,403 $7,162 $7,525 $363 -4.83% 2010-11 $14,904,651 $7,286 $7,676 $390 -5.08% 2011-12 $15,202,744 $7,412 $7,829 $417 -5.33% 2012-13 $15,506,799 $7,541 $7,986 $445 -5.57% 2013-14 $15,816,935 $7,672 $8,146 $474 -5.82% 2014-15 $16,133,274 $7,806 $8,309 $503 -6.05% Notes: (1) Assessed value of entire CLWA service area as provided by the Agency, (2) Property tax accruing to CLWA with the Recovery Program in place. (3) Property tax which would accrue to CLWA without the Recovery Program. (4) Loss of property tax revenue to CLWA as a result of the Recovery Program. (5) Loss of revenue to CLWA stated as a percentage of entire revenue stream. FINANCIAL IMPACT OF RECOVERY PROGRAM ON CLWA Table No. 4a - 4% annual increase ($000's) Year Assessed Value +"Property Sax Property Tax - Pirt incial Percentage Recovery Prog. (2) W/C1 Recovery Prog3 Impact (4) Change (5) base year $10,644,344 (1) 1994-95 $11,070,118 $5,627 $5,701 $74 -1.30% 1995.96 $11,512,922 $5,778 $5,929 $151 -2.55% 1996-97 $11,973,439 $5,935 $6,166 $231 -3.75% 1997-98 $12,452,377 $6,098 $6,413 $315 -4.91% 1998-99 $12,950,472 $6,268 $6,669 $401 -6.02% 1999-00 $13,468,491 $6,445 $6,936 $491 -7.08% 2000-01 $14,007,231 $6,629 $7,214 $585 -8.11% 2001-02 $14,567,520 $6,820 $7,502 $682 -9.09% 2002-03 $15,150,221 $7,018 $7,802 $784 -10.05% 2003-04 $15,756,229 $7,517 $8,114 $597 -7.36% 2004-05 $16,386,479 $7,910 $8,439 $529 -6.27% 2005-06 $17,041,938 $8,187 $8,777 $590 -6.72% 2006-07 $17,723,615 $8,476 $9,128 $652 -7.14% 2007-08 $18,432,560 $8,776 $9,493 $717 -7.55% 2008-09 $19,169,862 $9,088 $9,872 $784 -7.95% 2009-10 $19,936,657 $9,413 $10,267 $854 -8.32% 2010-11 $20,734,123 $9,750 $10,678 $928 -8.69% 2011-12 $21,563,488 $10,101 $11,105 $1,004 -9.04% 2012-13 $22,426,027 $10,466 $11,549 $1,083 -9.38% 2013-14 $23,323,068 $10,846 $12,011 $1,165 -9.70% 2014-15 $24,255,991 $11,241 $12,492 $1,251 -10.01% Notes: (1) Assessed value of entire CLWA service area as provided by the Agency. (2) Property tax accruing to CLWA with the Recovery Program in place. (3) Property tax which would accrue to CLWA without the Recovery Program. (4) Loss of property tax revenue to CLWA as a result of the Recovery Program. (5) Loss of revenue to CLWA stated as a percentage of entire revenue stream. FINANCIAL IMPACT OF RECOVERY PROGRAM ON CLWA Table No. 4b-5% annual increase ($000's) base year $10,644,344 (1) .. . .. _. -.�-, 1994-95 $11,176,561 $5,663 $5,756 $93 -1.61% 1995-96 $11,735,389 $5,854 $6,044 $190 -3.14% 1996-97 $12,322,159 $6,054 $6,346 $292 -4.60% 1997-98 $12,938,267 $6,264 $6,663 $399 -5.99% 1998.99 $13,585,180 $6,485 $6,996 $511 -7.31% 1999-00 $14,264,439 $6,716 $7,346 $630 -8.58% 2000-01 $14,977,661 $6,959 $7,713 $754 -9.78% 2001-02 $15,726,544 $7,215 $8,099 $884 -10.92% 2002-03 $16,512,871 $7,483 $8,504 $1,021 -12.01% 2003.04 $17,338,515 $8,105 $8,929 $824 -9.23% 2004-05 $18,205,440 $8,644 $9,376 $732 -7.81% 2005-06 $19,115,713 $9,028 $9,845 $817 -8.29% 2006-07 $20,071,498 $9,430 $10,337 $907 -8.77% 2007-08 $21,075,073 $9,853 $10,854 $1,001 -9.22% 2008-09 $22,128,827 $10,297 $11,396 $1,099 -9.65% 2009-10 $23,235,268 $10,763 $11,966 $1,203 -10.05% 2010-11 $24,397,031 $11,253 $12,564 $1,311 -10.44%, 2011-12 $25,616,883 $11,766 $13,193 $1,427 -10.81% 2012-13 $26,897,727 $12,306 $13,852 $1,546 -11.16% 2013-14 $28,242,614 $12,873 $14,545 $1,672 -11.50% 2014-15 $29,654,744 $13,468 $15,272 $1,804 -11.81% Notes: (1) Assessed value of entire CLWA service area as provided by the Agency. (2) Property tax accruing to CLWA with the Recovery Program in place. (3) Property tax which would accrue to CLWA without the Recovery Program. (4) Loss of property tax revenue to CLWA as a result of the Recovery Program. (5) Loss of revenue to CLWA stated as a percentage of enure revenue stream. I ESTIMATED IMPACT OF COMMUNITY RECOVERY PROGRAM ON CASTAIC LAKE WATER AGENCY EXECUTIVE SUMMARY The Recovery Program This report prepared by GRC-Copenhaver, Inc. was will have limited impact commissioned to determine whether or not the City's on CLWA`s debt adoption of a Community Recovery Plan will jeopardize repayment. repayment of existing Castaic Lake Water Agency (hereinafter "CLWA") financing. The property taxes to be captured by the Recovery Program will have a limited impact on the CLWA. Other conclusions of a preliminary review of the financial impact of the Recovery Program are reflected in this report's Summary Section. Principle sources of information used in this report include the Official Statement for the $132,000,000 Certificates of Participation issued by CLWA ("Certificates"), annual financial statements for the CLWA, Recovery Program estimates of base values and future revenues and miscellaneous reports of both the CLWA and the Recovery Program. Additionally, we spoke by telephone to Glenn Reiter, financial consultant to the CLWA. COMMUNITY RECOVERY PROGRAM REVENUES Background Recovery revenues are Community Recovery Program revenues are established established by State by State law which provides a fixed formula for sharing Law. property tax revenues between programs such as that established by the City of Santa Clarita and other taxing districts such as water agencies and counties. There is little or no flexibility with respect to negotiating pass- through agreements with the taxing districts beyond that established in law. Page -1 a Community Recovery Program/Castaic Lake Water Agency Current assessed value The Recovery Program's estimate of future revenues is estimates will be updated based on the assumption that the initial assessed by the County within 60 valuation of the area included in the Recovery Program days. project boundaries will total approximately $4.5 billion. This estimate of assessed value, in place prior to the Recovery Program, was not calculated by reviewing the values in individual tax rate areas. In accordance with the law, Los Angeles County must provide a report within the next 60 days and this report will precisely establish the initial assessed valuation or "base year" valuation for fiscal year 1993-94. This figure is important because it establishes the amount of property tax that will continue to flow to the taxing districts and it defines the baseline for calculating future revenues of the Recovery Program. Tax Increment Revenue Projection CLWA will receive pass The tax increment estimates prepared by the City's through payments. Recovery Program staff assumed a 4% growth in assessed value resulting from the annual inflationary increases typically experienced since Proposition 13 and re- assessment resulting from property transfers and improvements. State law establishes the property tax pass-throughs to other taxing districts at 20% of gross revenues for the first 10 years and increases this amount to 36.8% between years 11 through 30. The pass-through payments continue to increase after year thirty to over 49% of the incremental property tax revenue for the remaining life of the Recovery Program. CLWA and the City have The CLWA and the City of Santa Clarita have similar similar property tax rates. property tax rates with both entities receiving between 5% to 6% of the property tax assessment established pursuant to Proposition 13. CLWA, in addition to its share of the base property tax, also levies a tax override to service the debt on bonds issued in 1976 and collects property tax that pays for the State Water Project Contract. Tables Nos. 1, 1(a), and 1(b), attached hereto, illustrate the total tax increment to the Recovery Program and the taxing districts over the fiscal years through 2014-15. These tables were prepared using growth rates of 2%, 4% Page -2 *4 Community Recovery Program/Castaic Lake Water Agency and 5% to provide a range of financial scenarios to consider. • In summary, the City's Community Recovery Program will capture, for the first 10 years, 60% of the increase in property tax revenues above that level collected by all taxing districts in 1993-94. An additional 20% of the increase will be devoted to housing programs and the remaining 20% will be divided between the taxing agencies such as Los Angeles County, and the CLWA. After year 10, the percentage of revenues to the Recovery Program declines to 43.2% offset by an increase to 36.8% of revenues divided by other taxing agencies. • The only taxing district which does not receive a share of pass-throughs is the City which will have to forego all of its share of increases in property tax. no taxing district will The revenues which have historically been captured by experience a decline in the taxing districts prior to the adoption of the Program revenue. will continue to flow to the taxing districts; thus, no taxing district will experience a decline in revenue. One issue pointed out by the CLWA that is of equal concern to the City's Community Recovery Program is property assessment appeals. Mr. Reiter informed us that over 5,000 property owners have filed appeals seeking to lower their property taxes. It is possible that the projections will need a period of time to make up for a decline in property assessments before the Recovery Program will receive any "new" revenue because the Program is only eligible to receive its share of increased revenues. If this were the case, the Recovery Program will have no income and no impact on the revenues of other taxing districts until the decrease in assessments is reversed. The CLWA also informed us that it is preparing its own estimate of the base year valuation by matching the tax rate areas with the Recovery Area boundaries, a process similar to that undertaken by Los Angeles County. the present value of The tables illustrate the impact of growth rates on future dollars is revenues to be received by the Recovery Program. In year considerably lower. Page -3 Community Recovery Program/Castaic Lake Water Agency 20, the Recovery Program would receive $6.3 million at a 2% annual growth and slightly over $22 million annually at a 5% annual growth. In reviewing revenue projections that include inflation to the Recovery Program or to any tax district, it should be remembered that the present value of future dollars is considerably lower -- a $22 million payment in twenty years is worth $5.9 million today using a discount rate equal to current tax exempt financing rates (6.75%). CASTAIC LAKE WATER AGENCY COP -Pledged Revenues CLWA covenants to pay In issuing Certificates of Participation totaling debt. $132,000,000 in 1990 for the future expansion of the CLWA's water system, the CLWA pledged a wide range of revenues including property taxes not pledged to a 1976 general obligation bond issue and to payments under the State Water Project Contract. In addition to property taxes, the CLWA generally pledged all of its revenues including fees, rents, water sale proceeds, interest earnings, capacity charges etc. The pledge of revenue sources was further bolstered by a covenant of the CLWA to increase their revenues through the adjustment of charges and fees if the CLWA did not have revenues equal to 120% of debt service in any given year. This combination of revenues and the covenant allowed the CLWA to purchase bond insurance to further support the Certificates which resulted in AAA bond rating. Table No. 2 provides an overview of the outside revenue sources pledged to the Certificates and provides a comparison between the revenues projected to be received by the CLWA at the time of issuance and the revenues which were actually received over the period from 1990 to 1993. Property taxes pledged to the Certificates represent a major component of the pledged revenues. CLWA property tax . CLWA anticipated annual property taxes of $3.3 in revenues exceed 1990 and $3.9 million in 1993. Actual receipts were projections by 45%. $4.9 and $5.6 million respectively or approximately 45% higher than estimated by the CLWA. Page -4 Community Recovery Program/Castac Lake Water Agency Water sales and fees . In 1993, water sales and capacity/connection fees were have not met projections_ about 73% and 83% lower respectively than projected. This has caused the major shortfall in revenues pledged to the bond issue. Interest earnings will Interest earnings on unexpended capital improvement decline significantly. funds, reserve funds and operating funds accounted for the single largest revenue source during the period reviewed. However, the interest earnings will decline significantly now that the proceeds from the Certificates have been expended. TABLE 2 COMPARISON OF ACTUAL vs. PROJECTED REVENUES SELECTED SOURCES PLEDGED TO 1990 BOND ISSUE, CLWA ($000's) Projected 1 1990 1991 1992 1993 Property Taxes $3,380.0 $3,549.0 $3,726.5 $3,912.8 Water Sales 2,746.5 3,269.8 3,888.3 5,037.1 Facility Fees 4,400.00 5,174.1 7,606.6 7,226.8 Other 10.0 10.5 11.0 11.6 Total $10,536.5 $12,003.4 $15,232.4 $16,188.3 Actual 2 Property Taxes NIA $4,950.0 $5,753.2 $5,649.1 Water Sales 2,158.0 1,638.1 1,888.5 Facility Fees 1,763.7 6,886.7 \1,225.7 Other 120.0 173.7 5954 Total $8,991.7 $14,451.7 $9,358.7 (1J Utticial Bond Statement, June 20, 1990 (2) COP Pledged Revenue Fund NIA Not applicable (partial year) Impact of Community Recovery Program Property tax revenues are the focus of this initial review. To analyze the impact of the City's Community Recovery Program it is necessary to calculate the total property taxes collected by the CLWA and deduct those future taxes to be captured by the Recovery Program. The base year assessed valuation of the CLWA service area is that identified by the CLWA for FY1993-94 to be $10.64 billion. Tables Nos. 3, 3(a) and 3(b), attached hereto, estimate theeproperty tax proceeds to the CLWA at different growth rates and deduct the projected Page -5 Community Recovery Program/Castaic Lake Water Agency property taxes to be collected by the Recovery Program. An assumed tax rate share of .0515 per $100 of assessed valuation was utilized to estimate the property tax revenues to the CLWA. Tables 4, 4(a) and 4(b), attached hereto, summarize the financial impact of the Recovery Program on the CLWA at different growth rates. These tables present both the absolute dollar impact and the impact of the Recovery Program stated as a percentage of CLWA revenue given the assumptions discussed in this report. • At a growth rate of 2%, the City's Community Recovery Program will capture $37,000 of CLWA property tax revenues in the first year increasing to $474,000 per year by year 2014. • At a growth rate of 5%, the CLWA would experience a financial impact of $93,000 the first program year and $1.7 million per year in the 20th year of the Recovery Program. • This represents an average of less than 9% of their property tax revenues over the first twenty years. CLWA property taxes To put this revenue in perspective, this revenue loss is under Recovery Program equal to the property taxes on an additional 225 to 250 continue to exceed homes constructed annually in the CLWA area over the projected levels. next 20 years, Furthermore, while declining water sales and connection fees have adversely impacted CLWA revenues, it is important to note that CRC's estimated property tax revenues to CLWA net of the Recovery Program impact exceed the level generated by projecting base property tax revenues as estimated in the Certificates Official Statement. CLWA's debt payments The property tax captured by the Recovery Program from @ $11.2 million are very the CLWA is a small percentage of the water agency's large in comparison to annual debt. Assuming that assessed value increases 4%, Recovery Program the Recovery Program will capture $74,000, which would revenues captured from have otherwise gone to CLWA In year 10 of the Recovery the CLWA. program, the loss to CLWA is $597,000. This captured revenue stream is dwarfed by CLWA's annual $11.2 million debt payment. Page -6 Community Recovery Program/Castaic Lake Water Agency CLWA plans $200 million In speaking with the Mr. Reiter, he pointed out that the in additional debt. proposed Recovery Program may not impair the ability to service the existing Certificate debt but that his agency was concerned with the ability to finance and implement the remaining $200,000,000 in improvements listed in the water master ,plan, This plan is based on the needs of servicing a population of approximately 270,000 in the year 2010. The population estimate is based on projections prepared by the regional planning agency, the Southern California Association of Governments ("SCAG). To implement the plan to accommodate this population level, Mr. Reiter felt that the CLWA would need to capture its full share of the property tax. SUMMARY In summary, our preliminary review has determined that: The Recovery Program will address improvement needs in the community by reinvesting property tax proceeds within the Project Area and through helping to mitigate over $200 million in earthquake damage. ♦ The Recovery Program is anticipated to capture approximately 9% of the CLWA base property tax revenues over the next 20 years. Because property tax is only a portion of the total revenue received by CLWA, the captured tax increment is very small in comparison to the total revenues of the water agency. In the base year the captured funds amount to less than 1%. ♦ The City of Santa Ciarita will experience a greater decline in property tax revenue than the CLWA in furtherance of the Recovery Program. ♦ The CLWA will continue to receive its full allocation of property tax revenues resulting from ,property tax overrides. In addition to ,property taxes, CLWA generates revenue from the sale of water to retail companies, charging builders capacity/connection fees, leasing property, earning interest on unused or reserved funds. Page - 7 Community Recovery Program/Castaic Lake Water Agency A ♦ The CLWA capital improvement plan calls for $200 million in new debt. ♦ The formula for sharing tax revenues between the Recovery Program and other taxing Agencies is established by State law and not the City of Santa Clarita. ♦ Water agencies such as the CLWA without retail sales were excluded from the tax shift (AB8) under which the State of California reduced municipal and special district revenues between 15% to over 50% to help solve the state budget crisis. ♦ The base year assessed value within the Recovery Program boundaries remains to be determined by Los Angeles County and fluctuations in the value from the estimated $4.5 billion will affect the results of this analysis. ♦ The CLWA has experienced a significant decline in anticipated revenues (as projected in the CLWA financing document) from water sales and connection fees. Property tax revenues have exceeded the estimates of the CLWA by over 40%. ♦ Water sales have declined due to reduced water purchases by retail water companies, choosing instead to pump water from the ground water table for economic and other reasons pertaining to water rights. The CLWA has expressed interest in purchasing a retail water company and if successful, it would be both the supplier and the purchaser of water (wholesaler vs, retailer issue). Page -8 RECOVERY PROGRAM PROPERTY TAX REVENUES Taille No. 1 -2% annual increase ($000's) Year Assessed ValUe(1) Tax Increment Housing (2) Other Districts Recovery Program base year $4,500,000 1994-95 $4,590,000 $900(5) $180 $180 (6) $540 1995.96 $4,681,800 $1,818 $364 $364 $1,091 1996-97 $4,775,436 $2,754 $551 $551 $1,653 1997-98 $4,870,945 $3,709 $742 $742 $2,226 1998-99 $4,968,364 $4,684 $937 $937 $2,810 1999-00 $5,067,731 $5,677 $1,135 $1,135 $3,406 2000-01 $5,169,086 $6,691 $1,338 $1,338 $4,015 2001-02 $5,272,467 $7,725 $1,545 $1,545 $4,635 2002-03 $5,377,917 $8,779 $1,756 $1,756 $5,267 2003-04 $3,656,984 (3) $6,570 $1,314 $1,314 $3,942 2004-05 $3,730,124 $7,301 $1,460 $2,687 (7) $3,154(4) 2005-06 $3,804,726 $8,047 $1,609 $2,961 $3,476 2006-07 $3,880,821 $8,808 $1,762 $3,241 $3,805 2007-08 $3,958,437 $9,584 $1,917 $3,527 $4,140 2008-09 $4,037,606 $10,376 $2,075 $3,818 $4,482 2009-10 $4,118,358 $11,184 $2,237 $4,116 $4,831 2010-11 $4,200,725 $12,007 $2,401 $4,419 $5,187 2011.12 $4,284,740 $12,847 $2,569 $4,728 $5,550 2012-13 $4,370,435 $13,704 $2,741 $5,043 $5,920 2013-14 $4,457,843 $14,578 $2,916 $5,365 $6,298 2014-15 $4,547,000 $15,470 $3,094 $5,693 $6,683 Notes: (1) Base Year Assessed Value determined by Recovery Program during adoption process - final determination to be made by Los Angeles County. (2) Housing payments equal to 20% of gross tax increment. (3) Decrease in assessed value due to the deletion of Valencia from Project Area atter 9th Program year. (4) Recovery Program revenues decrease with change in Project Area boundaries and increase in pass-throughs to taxing districts. (5) Gross tax increment equal to 11% of increased assessed value after Project adoption. (6) AB1290 prescribes a 20% pass-through for first 10 Program years, followed by a 36.8% pass-through for years 11 through 30. (n First year of 36.8% pass-through to taxing districts other than the City. RECOVERY PROGRAM PROPERTY TAX REVENUES Table No. 1 a - 4% annual increase Year. Assessed Value(1) Tax Increment Housing ' (2) Other Districts Recovery Program base year $4,500,000 1994-95 $4,680,000 $1,800(5) $360 $360 (6) $1,080 1995-96 $4,867,200 $3,672 $734 $734 $2,203 1996-97 $5,061,888 $5,619 $1,124 $1,124 $3,371 1997.98 $5,264,364 $7,644 $1,529 $1,529 $4,586 1998-99 $5,474,938 $9,749 $1,950 $1,950 $5,850 1999.00 $5,693,936 $11,939 $2,388 $2,388 $7,164 2000-01 $5,921,693 $14,217 $2,843 $2,843 $8,530 2001-02 $6,158,561 $16,586 $3,317 $3,317 $9,951 2002-03 $6,404,903 $19,049 $3,810 $3,810 $11,429 2003-04 $4,451,135(3) $14,511 $2,902 $2,902 $8,707 2004-05 $4,629,180 $16,292 $3,258 $5,995(7) $7,038(4) 2005-06 $4,814,347 $18,143 $3,629 $6,677 $7,838 2006.07 $5,006,921 $20,069 $4,014 $7,385 $8,670 2007-08 $5,207,198 $22,072 $4,414 $8,122 $9,535 2008-09 $5,415,486 $24,155 $4,831 $8,689 $10,435 2009-10 $5,632,105 $26,321 $5,264 $9,686 $11,371 2010-11 $5,857,390 $28,574 $5,715 $10,515 $12,344 2011-12 $6,091,685 $30,917 $6,183 $11,377 $13,356 2012-13 $6,335,353 $33,354 $6,671 $12,274 $14,409 2013-14 $6,588,767 $35,888 $7,178 $13,207 $15,503 2014-15 $6,852,317 $38,523 $7,705 $14,177 $16,642 Notes: (1) Base Year Assessed Value determined by Recovery Program during adoption process - final determination to be made by Los Angeles County. (2) Housing payments equal to 20% of gross tax increment. (3) Decrease in assessed value due to the deletion of Valencia from Project Area after 9th Program year. (4) Recovery Program revenues decrease with change in Project Area boundaries and increase in pass-throughs to taxing districts. (5) Gross tax increment equal to 1% of increased assessed value after Project adoption. (6) AB1290 prescribes a 20% pass-through for first 10 Program years, followed by a 36.8% pass-through for years 11 through 30- (7) First year of 36.6% pass-through to taxing districts other than the City, RECOVERY PROGRAM PROPERTY TAX REVENUES Table No. 1 b - 5% annual increase ($000's) Year .Assess :Value(-!). Tax Increment Housing (2) Met Districts Recovery, Program base year $4,500,000 11994-95 $4,725,000 $2,250 (5) $450 $450 (6) $1,350 1995-96 $4,961,250 $4,613 $923 $923 $2,768 1996-97 $5,209,313 $7,093 $1,419 $1,419 $4,256 1997-98 $5,469,778 $9,698 $1,940 $1,940 $5,819 1998.99 $5,743,267 $12,433 $2,487 $2,487 $7,460 1999-00 $6,030,430 $15,304 $3,061 $3,061 $9,183 2000-01 $6,331,952 $18,320 $3,664 $3,664 $10,992 2001-02 $6,648,549 $21,485 $4,297 $4,297 $12,891 2002-03 $6,960,977 $24,810 $4,962 $4,962 $14,886 2003-04 $5,003,033 (3) $20,030 $4,006 $4,006 $12,018 2004.05 $5,253,185 $22,532 $4,506 $8,292 (7) $9,734 (4) 2005-06 $5,515,844 $25,158 $5,032 $9,258 $10,868 2006-07 $5,791,636 $27,916 $5,583 $10,273 $12,060 2007-08 $6,081,218 $30,812 $6,162 $11,339 $13,311 2008-09 $6,385,279 $33,853 $6,771 $12,458 $14,624 2009-10 $6,704,543 $37,045 $7,409 $13,633 $16,004 2010-11 $7,039,770 $40,398 $8,080 $14,866 $17,452 2011-12 $7,391,758 $43,918 $8,784 $16,162 $18,972 2012-13 $7,761,346 $47,613 $9,523 $17,522 $20,569 2013-14 $8,149,414 $51,494 $10,299 $18,950 $22,245 2014-15 $8,556,884 $55,569 $11,114 $20,449 $24,006 Notes: (1) Base Year Assessed Value determined by Recovery Program during adoption process • final determination to be made by Los Angeles County. (2) Housing payments equal to 20% of gross tax increment. (3) Decrease in assessed value due to the deletion of Valencia from Project Area after 9th Program year. (4) Recovery Program revenues decrease with change in Project Area boundaries and increase in pass-throughs to taxing districts. (5) Gross lax increment equal to 1 % of increased assessed value after Project adoption. (6) AB1290 prescribes a 20% pass-through for first 10 Program years, followed by a 36.8% pass-through for years 11 through 30. M First year of 36.8% pass-through to taxing districts other than the City. CLWA PROPERTY TAX REVENUES CLWA Property Tax Revenues After Adoption of Santa Clarita Recovery Program ($000's) Table No. 3 - 2% annual increase Table No. 3a - 4%, annual increase Table No. 3b - 5% annual increase Year Assessed Value Property. Tax Year Assessed Value PropertyTax Year ,'. Assessed Value Property Tax CLWA.. CLWA CLWA base year $10,644,344 (1) base year $10,644,344 (1) base year $10,644,344 (1) 1994-95 $10,857,231 $5,554 (2) 1994-95 $11,070,118 $5,627(2) 11994-95 $11,176,561 $5,663 (2) 1995-96 $11,074,375 $5,628 1995-96 $11,512,922 $5,778 1995-96 $11,735,389 $5,854 1996-97 $11,295,863 $5,704 1996.97 $11,973,439 $5,935 1996-97 $12,322,159 $6,054 1997-98 $11,521,780 $5,781 1997-98 $12,452,377 $6,098 1997-98 $12,938,267 $6,264 1998.99 $11,752,216 $5,860 1998-99 $12,950,472 $6,268 1998-99 $13,585,180 $6,485 1999-00 $11,987,260 $5,940 1999-00 $13,468,491 $6,445 1999-00 $14,264,439 $6,716 2000-01 $12,227,005 $6,022 2000-01 $14,007,231 $6,629 12000-01 $14,977,661 $6,959 2001-02 $12,471,546 $6,105 2001-02 $14,567,520 $6,820 12001-02 $15,726,544 $7,215 2002-03 $12,720,976 $6,190 2002-03 $15,150,221 $7,018 12002-03 $16,512,871 $7,483 2003-04 $12,975,396 $6,412 2003-04 $15,756,229 $7,517 12003-04 $17,338,515 $8,105 2004-05 $13,234,904 $6,579 2004-05 $16,386,479 $7,910 :2004-05 $18,205,440 $8,644 2005-06 $13,499,602 $6,691 2005-06 $17,041,938 $8,187 2005-06 $19,115,713 $9,028 2006-07 $13,769,594 $6,805 2006-07 $17,723,615 $8,476 2006-07 $20,071,498 $9,430 2007.08 $14,044,986 $6,922 2007-08 $18,432,560 $8,776 2007-08 $21,075,073 $9,853 2008.09 $14,325,886 $7,041 2008-09 $19,169,862 $9,088 '2008-09 $22,128,827 $10,297 2009-10 $14,612,403 $7,162 2009-10 $19,936,657 $9,413 2009.10 $23,235,268 $10,763 2010-11 $14,904,651 $7,286 2010-11 $20,734,123 $9,750 2010-11 $24,397,031 $11,253 2011-12 $15,202,744 $7,412 2011-12 $21,563,488 $10,101 12011-12 $25,616,883 $11,766 2012-13 $15,506,799 $7,541 2012-13 $22,426,027 $10,466 12012-13 $26,897,727 $12,306 2013-14 $15,816,935 $7,672 2013.14 $23,323,068 $10,846 12013-14 $28,242,614 $12,873 2014-15 $16,133,274_ $7,806---- 2014-15 $24,255,991 $11,241 2014-15 $29,654 744 $13,468 Notes: (1) Base year calculation as determined by CLWA (2) Property tax rate assumed at .05151 and is net of Recovery Program's share FINANCIAL IMPACT OF RECOVERY PROGRAM ON CLWA Table No. 4 - 2% annual increase ($000's) Year Assessed Value . Property Tax `Property Tax Financial Percentage Recovery Prog. (2) W/O Recovery Prog j3) Impact ' (4) Change base year $10,644,344 (1) 1994-95 $10,857,231 $5,554 $5,591 $37 -0.67% 1995-96 $11,074,375 $5,628 $5,703 $75 -1.32% 1996-97 $11,295,863 $5,704 $5,817 $113 -1.95% 1997-98 $11,521,780 $5,781 $5,934 $153 -2.57% 1998-99 $11,752,216 $5,860 $6,052 $192 -3.18% 1999-00 $11,987,260 $5,940 $6,173 $233 -3.78% 2000-01 $12,227,005 $6,022 $6,297 $275 -4.37% 2001-02 $12,471,546 $6,105 $6,423 $318 -4.95% 2002-03 $12,720,976 $6,190 $6,551 $361 -5.51% 2003-04 $12,975,396 $6,412 $6,682 $270 -4.05% 2004-05 $13,234,904 $6,579 $6,816 $237 -3.48% 2005.06 $13,499,602 $6,691 $6,952 $261 -3.76% 2006-07 $13,769,594 $6,805 $7,091 $286 •4.04% 2007.08 $14,044,986 $6,922 $7,233 $311 -4.30% 2008-09 $14,325,886 $7,041 $7,378 $337 -4.57% 2009-10 $14,612,403 $7,162 $7,525 $363 -4.83% 2010-11 $14,904,651 $7,286 $7,676 $390 -5.08% 2011-12 $15,202,744 $7,412 $7,829 $417 -5.33% 2012-13 $15,506,799 $7,541 $7,986 $445 -5.57% 2013-14 $15,816,935 $7,672 $8,146 $474 -5.82% 2014-15 $16,133,274 $7,806 $8,309 $503 -6.05% Notes: (1) Assessed value of entire CLWA service area as provided by the Agency, (2) Property tax accruing to CLWA with the Recovery Program in place. (3) Property tax which would accrue to CLWA without the Recovery Program. (4) Loss of property lax revenue to CLWA as a result of the Recovery Program. (5) Loss of revenue to CLWA stated as a percentage of entire revenue stream. (5) FINANCIAL IMPACT OF RECOVERY PROGRAM ON CLWA Table No. 4a - 4% annual increase ($000's) Year Assessed Value Property Tax . Property Tax , Financial Percentage - , Recovery Prog. (2) W/O Recovery Prog(3) " Impact (4) Change (5) base year $10,644,344 (1) 1994.95 $11,070,118 $5,627 $5,701 $74 -1.30% 1995.96 $11,512,922 $5,778 $5,929 $151 -2.55% 1996.97 $11,973,439 $5,935 $6,166 $231 -3.75% 1997-98 $12,452,377 $6,098 $6,413 $315 -4.91% 1998-99 $12,950,472 $6,268 $6,669 $401 -6.02% 1999-00 $13,468,491 $6,445 $6,936 $491 -7.08% 2000-01 $14,007,231 $6,629 $7,214 $585 -8.11% 2001-02 $14,567,520 $6,820 $7,502 $682 -9.09% 2002.03 $15,150,221 $7,018 $7,802 $784 -10.05% 2003.04 $15,756,229 $7,517 $8,114 $597 -7.36% 2004.05 $16,386,479 $7,910 $8,439 $529 -6.27% 2005-06 $17,041,938 $8,187 $8,777 $590 -6.72%a 2006-07 $17,723,615 $8,476 $9,128 $652 -7.14% 2007-08 $18,432,560 $8,776 $9,493 $717 -7.55% 2008-09 $19,169,862 $9,088 $9,872 $784 -7.95% 2009-10 $19,936,657 $9,413 $10,267 $854 -8.32% 2010-11 $20,734,123 $9,750 $10,678 $928 -8.69% 2011-12 $21,563,488 $10,101 $11,105 $1,004 -9.04% 2012-13 $22,426,027 $10,466 $11,549 $1,083 -9.38% 2013-14 $23,323,068 $10,846 $12,011 $1,165 -9.70% 2014-15 $24,255,991 $11,241 $12,492 $1,251 -10.01% Notes: (1) Assessed value of entire CLWA service area as provided by the Agency. (2) Property tax accruing to CLWA with the Recovery Program in place. (3) Property tax which would accrue to CLWA without the Recovery Program. (4) Loss of property tax revenue to CLWA as a result of the Recovery Program. (5) Loss of revenue to CLWA slated as a percentage of entire revenue stream. J FINANCIAL IMPACT OF RECOVERY PROGRAM ON CLWA Table No. 4b-5% annual increase ($000,5) base year $10,644,344 (1) 1994-95 $11,176,561 $5,663 $5,756 $93 -1.61% 1995-96 $11,735,389 $5,854 $6,044 $190 •3.14% 1996-97 $12,322,159 $6,054 $6,346 $292 -4.60% 1997-98 $12,938,267 $6,264 $6,663 $399 -5.99% 1998-99 $13,585,180 $6,485 $6,996 $511 -7.31% 1999-00 $14,264,439 $6,716 $7,346 $630 -8.58% 2000-01 $14,977,661 $6,959 $7,713 $754 -9.76% 2001-02 $15,726,544 $7,215 $8,099 $884 -10.92% 2002-03 $16,512,871 $7,483 $8,504 $1,021 -12.01% 2003-04 $17,338,515 $8,105 $8,929 $824 -9.23% 2004-05 $18,205,440 $8,644 $9,376 $732 -7.81% 2005-06 $19,115,713 $9,028 $9,845 $817 -8.29% 2006-07 $20,071,498 $9,430 $10,337 $907 -8.77% 2007-08 $21,075,073 $9,853 $10,854 $1,001 -9.22% 2008-09 $22,128,827 $10,297 $11,396 $1,099 -9.65% 2009-10 $23,235,268 $10,763 $11,966 $1,203 -10.05% 2010-11 $24,397,031 $11,253 $12,564 $1,311 -10.44% 2011.12 $25,616,883 $11,766 $13,193 $1,427 -10.81% 2012-13 $26,897,727 $12,306 $13,852 $1,546 -11.16% 2013-14 $28,242,614 $12,873 $14,545 $1,672 -11.50% 2014-15 $29,654,744 $13,468 $15,272 $1,804 -11.81% Nates: (1) Assessed value of entire CLWA service area as provided by the Agency, (2) Property tax accruing to CLWA with the Recovery Program in place. (3) Property tax which would accrue to CLWA without the Recovery Program. (4) Loss of property tax revenue to CLWA as a result of the Recovery Program. (5) Loss of revenue to CLWA stated as a percentage of entire revenue stream.