SAN RAMON REDEVELOPMENT AGENCY COMPONENT UNIT FINANCIAL STATEMENTS For

Document Sample
SAN RAMON REDEVELOPMENT AGENCY COMPONENT UNIT FINANCIAL STATEMENTS For Powered By Docstoc
					 SAN RAMON REDEVELOPMENT AGENCY
COMPONENT UNIT FINANCIAL STATEMENTS
      For the Year Ended June 30, 2004
                     SAN RAMON REDEVELOPMENT AGENCY
                        Component Unit Financial Statements
                          For The Year Ended June 30, 2004


                                TABLE OF CONTENTS

                                                                               Page

Independent Auditors’ Report                                                     1

Government-Wide Financial Statements
  Statement of Net Assets                                                        3
  Statement of Activities                                                        4

Fund Financial Statements of Governmental Funds:
   Balance Sheet                                                                 6
   Reconciliation of the Balance Sheet of Governmental Funds
       to the Statement of Net Assets                                            9
   Statement of Revenues, Expenditures and Changes in Fund Balances             10
   Reconciliation of the Statement of Revenues, Expenditures and Changes
       in Fund Balances of Governmental Funds to the Statement of Activities    12

   Notes to the Financial Statements                                            13

Required Supplementary Information
      Budgetary Comparison Schedules
          Low/Mod Housing Special Revenue Fund                                  27
          Redevelopment Special Revenue Fund                                    28

Note to Required Supplementary Information                                      29

Supplementary Schedules
   Major Fund Budgetary Comparison Schedules
             Redevelopment Capital Projects Fund                                31
            Redevelopment TA 1994/1998 Debt Service Fund                        32

Report on Compliance and on Internal Control Over Financial Reporting
   Based on an Audit of Financial Statements Performed in Accordance with
   Audit Guidelines for California Redevelopment Agencies and Government
   Auditing Standards                                                           33
October 29, 2004



The Board of Directors of the
  San Ramon Redevelopment Agency


                                          Independent Auditors’ Report

We have audited the accompanying financial statements of the governmental activities and each major fund of
the San Ramon Redevelopment Agency (Agency), a component unit of the City of San Ramon, California, as
of and for the year ended June 30, 2004, which collectively comprise the Agency’s basic financial statements
as listed in the table of contents. These financial statements are the responsibility of the Agency management.
Our responsibility is to express opinions on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of
American and the standards applicable to financial audits contained in Government Auditing Standards issued
by the Comptroller General of the United States. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinions.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities and each major fund of the Agency as of June 30, 2004, and
the respective changes in financial position thereof for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

In accordance with Government Auditing Standards, we have also issued our report dated October 29, 2004,
on our consideration of the Agency’s internal control over financial reporting and our tests of its compliance
with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in conjunction with this
report in considering the results of our audit.

The Agency has not presented the management’s discussion and analysis that the Governmental Accounting
Standards Board has determined is necessary to supplement, although not a required part of, the basic financial
statements. The other required supplementary information identified in the accompanying table of contents is
not a required part of the basic financial statements, but is supplementary information required by the
Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted
principally of inquiries of management regarding the methods of measurement and presentation of the required
supplementary information. However, we did not audit the information and express no opinion on it.

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Agency’s basic financial statements. The accompanying major fund budgetary comparison
schedules listed as supplementary information in the table of contents are presented for purposes of additional
analysis and are not a required part of the basic financial statements. The major fund budgetary comparison
schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, are fairly stated, in all material respects in relation to the basic financial statements taken
as a whole.
                                                         1
This page left blank intentionally.




                2
                           SAN RAMON REDEVELOPMENT AGENCY
                                  Statement of Net Assets
                                       June 30, 2004


                                                            Governmental
         Assets                                              Activities

Cash and investments                                        $    5,292,241
Receivables:
  Accounts                                                         367,065
  Interest                                                          48,017
  Notes                                                            705,000
Restricted cash and investments                                  3,675,559
Capital assets:
  Not being depreciated                                          5,677,408

       Total Assets                                             15,765,290


       Liabilities

Accounts payable and accrued liabilities                           121,624
Accrued payroll                                                     20,699
Interest payable                                                   755,730
Deposits payable                                                    74,345
Noncurrent liabilities:
   Due within one year                                             755,000
   Due in more than one year                                    31,860,000

       Total Liabilities                                        33,587,398

       Net Assets

Invested in capital assets                                       5,677,408
Restricted for:
  Housing set-aside                                               3,771,110
  Debt service                                                    3,839,416
Unrestricted                                                    (31,110,042)

       Total Net Assets                                     $ (17,822,108)




See Accompanying Notes to Financial Statements.

                                            3
                         SAN RAMON REDEVELOPMENT AGENCY
                                 Statement of Activities
                                      June 30, 2004


                                                     Program Revenues
                                                        Operating     Capital        Net
                                           Charges for Contribution Contribution Governmental
                               Expenses     Services    and Grants and Grants     Activities
Governmental Activities:
  Redevelopment activities $   2,601,218                  $ 705,000               $    (1,896,218)
  Debt service:
    Interest                   1,846,337                                               (1,846,337)

       Total Governmental
         Activities       $    4,447,555     $    -       $ 705,000     $     -        (3,742,555)

                          General Revenues:
                            Property tax, redevelopment agency tax increment           3,067,792
                            Investment income                                            489,829
                            Other                                                        374,971

                                   Total General Revenues                              3,932,592

                                   Change in Net Assets                                  190,037

                                   Net Assets at Beginning of Year, as restated       (18,012,145)

                                   Net Assets at End of Year                      $ (17,822,108)




See Accompanying Notes to Financial Statements.

                                                  4
This page left blank intentionally.




                5
                       SAN RAMON REDEVELOPMENT AGENCY
                               Governmental Funds
                                  Balance Sheet
                                  June 30, 2004


                                                       Special Revenue Funds
                                                     Low/Mod
                                                  Income Housing
              Assets                                 Set-Aside     Redevelopment

Cash and investments                              $   1,176,398   $   1,476,150
Restricted cash and investments
Receivables:
  Accounts                                               87,374         279,691
  Notes                                                 705,000
  Interest                                               10,892           6,923

       Total Assets                               $   1,979,664   $   1,762,764

  Liabilities and Fund Balances

Liabilities:
  Accounts payable                                $       1,572   $     117,433
  Salary and benefits payable                             5,401          15,298
  Deferred revenue                                      705,000
  Deposits payable                                                       74,345

       Total Liabilities                                711,973         207,076

Fund Balance:
  Reserved for:
    Housing set-aside                                 1,267,691
    Debt service
  Unreserved, reported in:
    Special revenue funds                                             1,555,688
    Capital projects funds
    Debt service

       Total Fund Balance                             1,267,691       1,555,688

       Total Liabilities and Fund Balances        $   1,979,664   $   1,762,764




See Accompanying Notes to Financial Statements.

                                             6
Capital Projects  Debt Service
                 Redevelopment
Redevelopment TA 1994/1998
Capital Projects  Debt Service         Totals

$    2,474,256     $     165,437   $   5,292,241
                       3,675,559       3,675,559

                                        367,065
                                        705,000
        29,163            1,039          48,017

$    2,503,419     $   3,842,035   $ 10,087,882




                   $      2,619    $    121,624
                                         20,699
                                        705,000
                                         74,345

                          2,619         921,668




$    2,503,419                         3,771,110
                       3,839,416       3,839,416

                                       1,555,688




     2,503,419         3,839,416       9,166,214

$    2,503,419     $   3,842,035   $ 10,087,882




                                            7
This page left blank intentionally.




                8
                     SAN RAMON REDEVELOPMENT AGENCY
                                    Governmental Funds
                Reconciliation of the Balance Sheet of Governmental Funds
                               to the Statement of Net Asset
                                       June 30, 2004


Fund Balances of Governmental Funds                                          $    9,166,214

Amounts reported for governmental activities in the statement of net
  assets are different because:

   Capital assets, net of depreciation, of governmental activities are not        5,677,408
      financial resources and, therefore, are not reported in the
      governmental funds.


   Long-term loan receivables are not a current financial resources, and
      therefore, they are deferred in the governmental funds.                       705,000

   Interest expenditures are recongnized when due, and therefore,
       interest payable is not recorded in the governmental funds.                 (755,730)

   Long-term liabilities are not due and payable in the current period
      and, therefore, are not reported in the governmental funds.                (32,615,000)

          Net Assets of Governmental Activities                              $ (17,822,108)




See Accompanying Notes to Financial Statements.

                                              9
                        SAN RAMON REDEVELOPMENT AGENCY
                                    Governmental Funds
              Statement of Revenues, Expenditures and Changes in Fund Balances
                                 Year Ended June 30, 2004


                                                                Special Revenue Funds
                                                            Low/Mod
                                                         Income Housing
                                                            Set-Aside      Redevelopment
Revenues:
  Property taxes                                          $ 1,198,530     $      3,603,564
  Use of money and property                                    11,726              363,711
  Other                                                       374,971              582,607

       Total Revenues                                         1,585,227          4,549,882

Expenditures:
  Current:
    Redevelopment activities                                  1,197,852          1,403,366
  Capital outlay
  Debt service:
    Principal retirement
    Interest and fees

       Total Expenditures                                     1,197,852          1,403,366

       Excess (Deficiency) of Revenues
         Over (Under) Expenditures                             387,375           3,146,516

Other Financing Sources (Uses):
  Transfers in
  Transfers out                                               (178,682)          (2,393,055)

       Total Other Financing Sources and Uses                 (178,682)          (2,393,055)

       Net Change in Fund Balances                             208,693             753,461

Fund Balances, Beginning of Year, as restated                 1,058,998            802,227

Fund Balances, End of Year                                $ 1,267,691     $      1,555,688




See Accompanying Notes to Financial Statements.



                                                10
Capital Projects  Debt Service
                 Redevelopment
Redevlopment TA 1994/1998
Capital Projects Debt Service             Totals

                                     $   4,802,094
$     127,703      $     (13,311)          489,829
                                           957,578

      127,703            (13,311)        6,249,501




                                         2,601,218
      930,800                              930,800

                         710,000           710,000
                       1,861,737         1,861,737

      930,800          2,571,737         6,103,755


     (803,097)         (2,585,048)         145,746


                       2,571,737          2,571,737
                                         (2,571,737)

                       2,571,737

     (803,097)           (13,311)          145,746

    3,306,516          3,852,727         9,020,468

$   2,503,419      $   3,839,416     $   9,166,214




                                                   11
                        SAN RAMON REDEVELOPMENT AGENCY
                  Reconciliation of the Statement of Revenues, Expenditures and
                       Changes in Fund Balances of Governmental Funds
                                   to the Statement of Activities
                                     Year Ended June 30, 2004


                                                                                      Governmental
                                                                                       Activities

Net Change in Fund Balances - Total Governmental Funds                            $        145,746

Amounts reported for governmental activities in the Statement of Activities
  differ from the amounts reported in the Statement of Revenues,
  Expenditures and Changes in Fund Balances because:

  Revenue from principal payment received from notes receivable is
     recorded as revenue in the governmental funds. However, principal
     payments from notes receivable are eliminated from the statement of
     activities. This amount represents the change in the note receivables
     for this fiscal year.                                                               (1,029,302)

 Governmental funds report capital outlay as expenditures. This is the
    amount that capital outlay exceeds retirements in the current period.                  348,193

  Net change in accrued interest for the current period                                     15,400

  Principal repayments of long-term debt are expenditures in the
      governmental funds, but the repayments reduce long-term liabilities
      in the Statement of Net Assets. This is the amount by which the
      proceeds exceeded the repayments.                                                    710,000

  Change in Net Assets of Governmental Activities                                 $        190,037




See Accompanying Notes to Financial Statements.
                                                    12
                      SAN RAMON REDEVELOPMENT AGENCY
                            Notes to Financial Statements
                                    June 30, 2004


I.   Summary of Significant Accounting Policies

     A. Reporting Entity – San Ramon Redevelopment Agency

     The San Ramon Redevelopment Agency (Agency) was established in 1985 pursuant to
     the State of California Health and Safety Code, section 33000 entitled, “Community
     Redevelopment Law”. Its purpose is to finance long-term capital improvements
     designed to eliminate physical and economic blight in a project area. The Alcosta /
     Crow Canyon Project Area was approved in May 1987 and it approximately
     encompasses 605.7 acres.

     The actions of the Agency are binding, and business is routinely transacted in the
     Agency’s name by its appointed representatives. The City Council acts as the Agency’s
     governing board and exerts significant influence over its operations. The Agency is
     empowered to engage in the general economic revitalization and redevelopment of the
     City within the broad perspective of the project area redevelopment plan.

     The agency is a component unit of the City of San Ramon and, accordingly is included
     in the City’s basic financial statements. The Comprehensive Annual Financial Report
     of the City of San Ramon can be attained from the Finance Department at:

                            City of San Ramon
                            2228 Camino Ramon
                            San Ramon, CA 94583

     B. Government-wide and Fund Financial Statements

     The government-wide financial statements (i.e., the statement of net assets and the
     statement of activities) report information on all of the activities of the San Ramon
     Redevelopment Agency. For the most part, the effect of interfund activity has been
     removed from these statements.

     The statement of activities demonstrates the degree to which the direct expenses of a
     given function or segment is offset by program revenues. Direct expenses are those
     that are clearly identifiable with a specific function or segment. Program revenues
     include charges for services and grants and contributions that are restricted to meeting
     the operational or capital requirements of a particular function or segment. Taxes and
     other items not properly included among program revenues are reported instead as
     general revenues.

     Separate financial statements are provided for governmental funds. Major individual
     governmental funds are reported as separate columns in the fund financial statements.



                                             13
                 SAN RAMON REDEVELOPMENT AGENCY
                   Notes to Financial Statements (Continued)
                                 June 30, 2004


C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The government-wide fund financial statements are reported using the economic
resources measurement focus and the accrual basis of accounting. Revenues are
recorded when earned and expenses are when the liability is incurred, regardless of the
timing of the related cash flows. Property taxes are recognized as revenues in the year
for which they are levied. Grants and similar items are recognized as revenue as soon
as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial
resources measurement focus and the modified accrual basis of accounting. Under this
method, revenues are recognized when measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. Expenditures generally are
recorded when a liability is incurred, as under accrual accounting. However, debt
service expenditures and claims and judgments are recorded only when payment is due.

Property taxes, charges for services, and interest associated with the current fiscal
period are all considered to be susceptible to accrual and so have been recognized as
revenues of the current fiscal period. Only the portion of special assessments
receivable due within the current fiscal period is considered to be susceptible to accrual
as revenue of the current period. All other revenue items are considered to be
measurable and available only when cash is received by the government.

The Agency reports the following major funds:

The Low / Mod Income Housing Set-Aside Fund has been set up to account for the
20% set aside of property taxes to be used for low moderate income housing.

The Redevelopment Fund is used to account for revenue in the form of property tax
increments to be used for redevelopment related activities.

The Redevelopment Capital Projects Fund is used to account for acquisition, relocation,
demolition and sale of land for those portions of the City earmarked as in need of
redevelopment related activities.

The Redevelopment Tax Allocation 1994 /1998 Debt Service Fund is used to account
for the accumulation of resources for, and the payment of long term debt principal,
interest and related costs.




                                        14
                 SAN RAMON REDEVELOPMENT AGENCY
                   Notes to Financial Statements (Continued)
                                 June 30, 2004


D. Assets, Liabilities and Net Assets or Equity

   1. Cash, Cash Equivalents and Investments

   The Agency pools its investment funds with those of the City for maximum return.
   A substantial portion of these investments are held in the State Treasurer’s Local
   Agency Investment Pool, which is highly liquid.

   Investments are included within the financial statement classifications of “Cash and
   investments” and “Cash and investments – restricted” and are stated at fair value.

   The Agency has adopted the provisions of GASB Statement No. 31, “Accounting
   and Financial Reporting for Certain Investments and External Pools,” which require
   governmental entities to report certain investments at fair value in the balance sheet
   and recognize the corresponding change in the fair value of investments in the year
   in which the change occurred. In accordance with GASB Statement No. 31, the
   Agency has adjusted certain investments to fair value (when material).

   2. Receivables and Payables

   Activity between funds that are representative of lending/borrowing arrangements
   outstanding at the end of the fiscal year are referred to as either “due to/from other
   funds” (i.e., the current portion of interfund loans) or “advances to/from other
   funds” (i.e., the non-current portion of interfund loans). All other outstanding
   balances between funds are reported as “due to/from other funds.”

   3. Capital Assets

   Capital assets of the Agency are reported in the statement of net assets. Capital
   assets are defined by the Agency as all land and buildings; vehicles, and equipment
   with an initial individual cost of more than $5,000; and improvements and
   infrastructure assets with costs of more than $100,000. Such assets are recorded at
   historical cost or estimated historical cost if purchased or constructed. Donated or
   annexed capital assets are recorded at estimated market value at the date of donation
   or annexation.

   The costs of normal maintenance and repairs that do not add to the value of the asset
   of materially extend assets lives are not capitalized. The Agency does not have any
   depreciable assets and therefore depreciation has not been recorded.

   4. Long-Term Obligations

   In the government-wide statements long-term obligations are recorded as liabilities
   in the statement of net assets.
                                        15
               SAN RAMON REDEVELOPMENT AGENCY
                 Notes to Financial Statements (Continued)
                               June 30, 2004


5. Property Taxes

The RDA receives incremental property taxes on property within its project area
over a base-assessed valuation on the date the project area was established.

The duties of assessing and collecting property taxes are performed by the County
of Contra Costa Assessor and Tax Collector, respectively. Under the County’s
“Teeter Plan,” the County remits the entire amount levied and handles all
delinquencies, retaining interest and penalties. Tax levies cover the period from
July 1 to June 30 of each year. All tax liens attach annually on the first day in
January preceding the fiscal year for which the taxes are levied. Taxes are levied on
both real and personal property, as it exists on that date.

Secured property taxes are levied against real property and are due and payable in
two equal installments. The first installment is due on November 1 and becomes
delinquent if not paid by December 10. The second installment is due on February
1 and becomes delinquent if not paid by April 10. Unsecured personal property
taxes are due on July 1 each year.

6. Allocation of Interest Income Among Funds

The City pools all nonrestricted cash for investment purchases and allocates interest
income based on month-end cash balances. Funds that have restricted cash record
interest income in the respective fund.

7. Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the Unites States of America requires management to make
estimates and assumptions that effect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.

8. Use of Restricted Resources

When both restricted and unrestricted resources are available for use, it is the City’s
policy to use restricted resources first, and then unrestricted resources as they are
needed.




                                     16
                         SAN RAMON REDEVELOPMENT AGENCY
                           Notes to Financial Statements (Continued)
                                         June 30, 2004


II.   Stewardship, Compliance and Accountability

      A. Budgetary Accounting

      In conjunction with the City’s budgeting process, the Agency is required to adopt an
      annual budget at the legal level of budgetary control, which is in accordance with
      generally accepted accounting principles, all of its funds on or before June 30 for the
      ensuing fiscal year.

      B. Expenditures in Excess of Appropriations

      The following funds had expenditures in excess of the budgets:

         RDA Capital Projects Fund                                          $930,800
         Redevelopment TA 1994/1998 Debt Service Fund                         65,023

III. Detailed Notes on All Funds

      A. Cash and Investments

      The Agency follows the practice of pooling cash and investments of all funds, except
      funds required to be held by outside fiscal agents under provisions of bond indentures.

      Cash and investments at June 30, 2004 consisted of the following:

      Pooled deposits and investments                       $ 5,292,241
      Investments held by trustee - restricted                3,675,559

              Total Cash and Investments                    $ 8,967,800

      Interest income earned on pooled cash and investments is allocated monthly to the
      funds based on average monthly cash and investment balances. Interest income from
      restricted cash is allocated directly to the related fund.

      Authorized Investment

         • Bonds issued by the City of San Ramon or other local agency of the State of
           California, provided that the obligations are rated “A” or higher categories by a
           nationally recognized rating service.
         • U.S. treasury notes, bonds, bills, or other obligations guaranteed as to principal
           and interest payments.
         • Other U.S. agency obligations which are guaranteed as to principal and interest
           payments.
         • State of California bonds, provided they are rated “A” or higher.
                                             17
                SAN RAMON REDEVELOPMENT AGENCY
                  Notes to Financial Statements (Continued)
                                June 30, 2004


   • Bankers’ acceptances issued by domestic or foreign banks, which are eligible for
     purchase by the Federal Reserve System, the short-term paper of which is rated
     in the highest category by Moody’s Investor Services or by Standard & Poor’s
     Corporation. Purchases of Bankers’ Acceptances may not exceed 180 days to
     maturity, or 40% of the City’s surplus funds, nor may the City invest more than
     10% of its surplus funds in the Bankers’ Acceptances of any one commercial
     bank.
   • Commercial paper having an A1/P1/F1 rating as provided for by Moody’s
     Investor Services, Standard and Poor’s Corporation, or Fitch Financial Services,
     Inc. Provided that the issuing corporation is organized and operating within the
     United States, has total assets in excess of $500,000,000 and has an A or higher
     rating for its long-term debt provided by Moody’s Investor Service, Standard
     and Poor’s Corporation, or Fitch Financial Services, Inc. Purchases of eligible
     Commercial Paper may not exceed 270 days to maturity nor represent more than
     10% of the outstanding paper of an issuing corporation, nor may the City’s
     investments in Commercial Paper exceed 25% for the City’s surplus funds.
   • Negotiable certificates of deposit limited in amount to 30% of surplus funds and
     to the net worth of the depository or $500,000, whichever is greater.
   • Repurchase agreements used solely as short-term investments not to exceed 30
     days and subject to required book entry, physical delivery, or third-party
     custodial agreement. In addition, specific collateral conditions must be met.
   • Medium-term corporate notes maturing in no more than five years and rated “A”
     or higher by a nationally recognized rating service, and limited in amount to no
     more than 30% of surplus funds.
   • State of California’s Local Agency Investment Fund (LAIF); investments may
     not exceed $40 million and limited to 10% of the City’s total investment
     portfolio.
   • Shares of beneficial interest issued by diversified management companies that
     are money market funds registered with the Securities and Exchange
     Commission under the Investment Advisory Company Act of 1940 (15 U.S.C.
     Sec 80a-1 et seq.). To be eligible for investment pursuant to this subdivision
     these companies shall either (1) attain the highest ranking letter or numerical
     rating provided by not less than two of the three largest nationally recognized
     rating services or (2) have an investment advisor registered or exempt from
     registration with the Securities and Exchange Commission with not less than
     five years experience investing in the securities and obligations listed above and
     with assets in excess of $500,000,000. The purchase price of the shares shall
     not exceed 15% of the City’s surplus funds.

Restricted Cash and Investments

The Agency has monies held by trustees or fiscal agents pledged to the payment or
security of certain bonds. The California Government Code provides that these monies,
in the absence of specific statutory provisions governing the issuance of bond
                                        18
                 SAN RAMON REDEVELOPMENT AGENCY
                   Notes to Financial Statements (Continued)
                                 June 30, 2004


certificates, or leases, may be invested in accordance with the ordinance, resolutions, or
indentures specifying the types of investments its trustees or fiscal agents may make.

Classification of Deposits and Investments by Credit Risk

Statement No. 3 of the Governmental Accounting Standards Board requires that
deposits and investments be classified into three categories of credit risk. These
categories are as follows:

   Category 1:    Insured or collateralized with securities held by the Agency or its
                  agent in the Agency’s name.

   Category 2:    Collateralized with securities held by the pledging financial
                  institution’s trust department or agent in the Agency’s name.

   Category 3:    Uncollateralized. This includes any bank balance that is collateralized
                  with securities held by the pledging financial institution or by its trust
                  department or agent, but not in the Agency’s name.
Investments

   Category 1:    Insured or registered, with securities held by the Agency or its agent
                  in the Agency’s name.

   Category 2:    Uninsured and unregistered, with securities held by the counterparty’s
                  trust department or agent in the Agency’s name.

   Category 3:    Uninsured and unregistered, with securities held by the counterparty
                  or by its trust department or agent, but not in the Agency’s name.

Since the Agency pools its cash and investments with that of the City, a separate
categorization of its cash and investments is not required.

B. Interfund Transfers

Interfund transfers for the year ended June 30, 2004 consisted of the following:

                                                          Transfer From
                                         Low/Mod          Redevelopment
                                        Housing Fund          Fund           Total
Transfer To:
  1994/1998 Debt Service Fund          $        178,682   $ 2,393,055     $ 2,571,737

Transfers were primarily made for the purpose of making debt service payments.

                                           19
                  SAN RAMON REDEVELOPMENT AGENCY
                    Notes to Financial Statements (Continued)
                                  June 30, 2004


C. Loans Receivable

Loans receivable activity for the year ended June 30, 2004 is as follows:

                                            Beginning                                         Ending
                                             Balance       Increases       Decreases          Balance

Villa San Ramon Phase I & II            $        764,403               $     (664,403)    $    100,000
Braddock & Logan Group L.P.                      678,522                     (339,261)         339,261
Greystone Homes, Inc.                             30,000                      (10,000)          20,000
Bollinger Crest Apt. Investor, L.L.C.            240,703   $   5,036                           245,739
Casa Rehabilitation Loan                          20,674                       (20,674)

      Total Loans Receivable            $    1,734,302     $   5,036   $    (1,034,338)   $    705,000

   1. Villa San Ramon Phase I & II Loans

   In 1993, the RDA loaned Villa San Ramon Limited Partnership the amount of
   $585,000 to aid in the financing of the construction of Senior Housing within the
   Redevelopment Area. The principal and interest is due August 1, 2003 or upon sale
   of the property, whichever is sooner. The loan agreement specified that interest
   would be accrued and added to the loan balance until the 1998-99 fiscal year.
   During fiscal year 1998-99, the provision to accrue interest ended and now interest
   is paid when due. In August 2001, the agreement was amended to assist Phase II
   with a noncash subsidy of $3,852 each month, increasing annually by the current
   CPI. The loan was paid in full on September 3, 2003.

   In August 2001, the RDA loaned Villa San Ramon Limited Partnership the amount
   of $100,000 to aid in the financing of the construction of Phase II. The agreement
   specified that the loan will be repaid in 10 years, with interest only payments
   commencing after five years. The outstanding balance at June 30, 2004 was
   $100,000.

   2. Braddock & Logan Group, L.P. – Park Place

   In June 1996, the RDA entered into an Affordable Housing Agreement with
   Braddock & Logan Group, L.P. The agreement provides for various restrictions on
   the project to facilitate the rental of housing units to qualifying low and moderate-
   income residents. The agreement calls for the RDA to assist the Developer’s efforts
   to obtain tax-exempt financing for the 35-unit multi-family housing project to be
   known as Park Place. In addition, the RDA agreed to defer payment by refunding
   to the Developer 50% of all RDA fees that would otherwise be payable by the
   Developer to the extent that such fees are allocable to the low-income housing units
                                            20
              SAN RAMON REDEVELOPMENT AGENCY
                Notes to Financial Statements (Continued)
                              June 30, 2004


and not to exceed $40,000. The deferred fees are expected to become payable to the
RDA at the expiration of the term of the agreement, which is 15 years. As of June
30, 2004, the RDA has not refunded any fees under the deferral agreement and the
outstanding balance was $339,261.

3. Greystone Homes, Inc.

In January 1996, the RDA and the City entered into an Affordable Housing
Agreement with Greystone Homes, Inc. The agreement provides for various
restrictions on the project to facilitate the affordability of housing units to qualifying
low and moderate-income residents. The agreement calls for the reduction of the
purchase price of affordable units by $5,000. Upon initial sale of each affordable
unit, the homebuyer will execute a promissory note to the RDA for $9,925, accruing
annually compounded interest at 3 percent for a term not to exceed 30 years. The
homebuyer agrees to repay the note upon sale or transfer of the affordable unit.
(For each note, $4,925 represents the deferred payment of the San Ramon Valley
Boulevard Widening Fee to the City.) The amount of notes outstanding as of June
30, 2004 amount to $20,000.

4. Bollinger Crest Apartment Investors, L.L.C.

In March 1998, the RDA entered into an Affordable Housing Agreement with
Bollinger Crest Apartment Investors, LLC. The agreement provides for various
restrictions on the project to facilitate the rental of housing units to qualifying low
and moderate-income residents. The agreement calls for a subsidy grant of
$266,000 from the RDA to the 65 unit housing project along with a deferment of
development fees amounting to $40,000. The grant was recorded as an expenditure
of housing funds. The deferred fees are expected to become payable to the RDA at
the expiration of the term of the agreement which is 15 years.

In September 1998, the agreement was amended to include two loans which total
$225,000. The loans were made to finance the cost of construction improvements
on land that is partially RDA-owned. The loans of $125,000 and $100,000 accrue
interest of 2.5 percent per year and are payable in installments of $10,000 and
$8,000, respectively. As of June 30, 2004, the outstanding principal balances on the
loans were $86,796 and $108,872, outstanding interest was $50,071, and the amount
of development fees deferred was $40,000.

5. Casa Rehabilitation Loans

The RDA operates a rehabilitation loan program for the renovation of low-moderate
income housing. The loan was paid in full in fiscal year 2003-2004.



                                      21
                  SAN RAMON REDEVELOPMENT AGENCY
                    Notes to Financial Statements (Continued)
                                  June 30, 2004


D. Capital Assets

In accordance with GASB Statement No. 34, the Agency has reported all capital assets
in the statement of net assets. The following table presents the capital assets activity for
the year ended June 30, 2004.

                                               Beginning                                             Ending
                                               Balance           Increases        Decreases          Balance
 Capital Assets Not Being Depreciated:
    Land                               $ 5,329,215              $ 348,193         $        -       $ 5,677,408

E. Long-Term Liabilities

Long-term liability activity for the year ending June 30, 2004 is as follows:

                                  Beginning                                           Ending       Due Within
                                   Balance          Additions   Reductions            Balance      One Year
Tax Allocation Bonds
  1994 Tax Allocation Bonds   $    8,050,000                    $ (340,000)   $        7,710,000   $ 190,000
  1998 Tax Allocation Bonds       25,275,000                      (370,000)           24,905,000     565,000

                              $ 33,325,000          $    -      $ (710,000)   $ 32,615,000         $ 755,000


1. 1994 Tax Allocation Bonds

On May 27, 1994, tax allocation revenue bonds in the amount of $17,000,000 were
issued to advance refund the remaining $8,250,000 balance of the 1990 Tax Allocation
Revenue Bonds and to partially repay the long-term advance from the City to the RDA.
Interest on the bonds accrues at 5.75-6.30% and is payable semiannually on February 1
and August 1. Principal is payable each February 1. Bonds maturing on or after
August 1, 2004 are subject to call on any interest payment date at par plus a premium of
up to two percent. Term bonds maturing February 1, 2024 are subject to mandatory
sinking fund redemption at par commencing February 1, 2005. The Bonds are payable
solely from the RDA’s tax increment revenues.

The bonds are secured by all property tax increment revenues, which are deposited in
the debt service fund. Cash and investments in the custody of the fiscal agent are
restricted by the bond resolutions for payment of principal and interest on the tax
allocation bonds. In addition, the bond resolutions require retention of funds held by
the fiscal agent prior to use for other than debt service.




                                               22
                 SAN RAMON REDEVELOPMENT AGENCY
                   Notes to Financial Statements (Continued)
                                 June 30, 2004


The City is in compliance with the covenants contained in debt indentures, which
require the establishment of certain specific accounts for the tax allocation bonds.

Debt service payments on the 1994 Tax Allocation Revenue Bonds payable will be
made from the debt service fund. Annual debt service requirements to maturity are as
follows:

         Year Ending                               1994 Tax Allocation Bonds
          June 30                          Principal       Interest          Total

           2005                        $     190,000    $     531,990   $     721,990
           2006                              205,000          518,880         723,880
           2007                              220,000          504,735         724,735
           2008                              230,000          489,555         719,555
           2009                              250,000          473,685         723,685
         2010-2014                         1,520,000        2,086,215       3,606,215
         2015-2019                         2,130,000        1,510,410       3,640,410
         2020-2024                         2,965,000          852,496       3,817,496

              Total                    $ 7,710,000      $ 6,967,966     $ 14,677,966

2. 1998 Tax Allocation Bond

On April 1, 1998, tax allocation revenue bonds in the amount of $26,920,000 were
issued to partially advance refund the 1994 Tax Allocation Revenue Bonds, to repay the
long-term advance from the City and to finance capital projects. Interest on the bonds
accrues at 3.60-5.30% and is payable semiannually on February l and August 1.
Principal is payable each February 1.

The bonds are secured by all property tax increment revenues, which are deposited in
the debt service fund. Cash and investments in the custody of the fiscal agent are
restricted by the bond resolutions for payment of principal and interest on the tax
allocation bonds. In addition, the bonds resolutions require retention of funds held by
the fiscal agent prior to use for other than debt service.

The City is in compliance with the covenants contained in debt indentures, which
require the establishment of certain specific accounts for the bonds.

Debt service payments on the 1998 Tax Allocation Revenue Bonds payable will be
made from the debt service fund. Annual debt service requirements to maturity are as
follows:


                                       23
                 SAN RAMON REDEVELOPMENT AGENCY
                   Notes to Financial Statements (Continued)
                                 June 30, 2004


       Year Ending                                 1998 Tax Allocation Bonds
        June 30                            Principal       Interest          Total

         2005                          $       565,000   $ 1,281,762    $ 1,846,762
         2006                                  590,000     1,257,750      1,847,750
         2007                                  615,000     1,232,379      1,847,379
         2008                                  645,000     1,205,321      1,850,321
         2009                                  670,000     1,176,295      1,846,295
       2010-2014                             3,870,000     5,370,605      9,240,605
       2015-2019                             4,985,000     4,255,635      9,240,635
       2020-2024                             6,455,000     2,786,740      9,241,740
       2025-2028                             6,510,000       884,570      7,394,570

             Total                     $ 24,905,000      $ 19,451,057   $ 44,356,057

Defeased Tax Allocation Bonds

On April 1, 1998 the Agency defeased a portion of the 1994 Tax Allocation Revenue
Bonds by placing the proceeds of the new bonds in an escrow account, with the 1998
Tax Allocation Refunding Bond’s trustee to provide for all further debt service
payments on the old bonds. Accordingly the trust account assets and the liability for the
defeased bond are not included in the Agency’s financial statements. The principal
amount outstanding on the defeased bond as of June 30, 2004 are $7,710,000.

F. Fund Equity

Fund Balance Reserves

In the Fund Financial Statements, the Agency has established reservations to segregate
portions of fund balance which are not appropriable for expenditure in future periods,
or which are legally set aside for a specific future use.

The Agency’s governmental funds reserves at June 30, 2004 are presented below,
followed by explanations of the nature and purpose of each reserve.




                                        24
                      SAN RAMON REDEVELOPMENT AGENCY
                        Notes to Financial Statements (Continued)
                                      June 30, 2004


                                  RDA             RDA           RDA
                                Low/Mod          Capital        Debt
                                 Housing         Projects      Service
                                  Fund            Fund          Fund
     Reserved:
       Housing set-aside     $ 1,267,691    $ 2,503,419
       Debt service                                         $ 3,839,416

            Total Reserved   $ 1,267,691    $ 2,503,419     $ 3,839,416

    Reserved for Debt Service

    These funds are reserved for restricted debt repayments.

    Reserved for Housing Set-Aside

    These funds are reserved for set aside tax increment used for low and moderate income
    housing.


IV. Other Information

    A. Development Agreements

    Home Depot OPA

    In March 1995, the RDA and Home Depot signed an Owner Participation Agreement
    (OPA) under which Home Depot developed a twenty-six acre site on Crow Canyon
    Road. Development includes the construction of a 129,000 square foot Home Depot
    store and garden center, approximately 20,000 square feet of other retail space, thirty-
    six condominium units, and parking for over seven hundred vehicles.

    Under the Agreement, the RDA passes through to Home Depot the RDA’s portion of
    the incremental property taxes it receives as a result of Home Depot’s development, as
    a reimbursement for grading costs incurred by Home Depot. The maximum which may
    be reimbursed over the term of the Agreement is $2,000,000. Annual reimbursements
    are limited to amounts actually received by the RDA and the Agreement terminates in
    fifteen years or when total reimbursements equal $2,000,000, whichever is sooner.




                                            25
                  SAN RAMON REDEVELOPMENT AGENCY
                    Notes to Financial Statements (Continued)
                                  June 30, 2004


Braddock & Logan Group, L.P.

In November 1998, the RDA entered into an affordable Housing Agreement with
Braddock & Logan Group, L.P. The agreement calls for various restrictions on the
Porter/Muir (renamed Cambria) project to facilitate the affordability of housing units to
moderate- and very low-income households. The agreement calls for the RDA to pay
$412,000 over five years to the developer in exchange for rental of two properties to
very low-income households. This obligation will be paid from the “Low/Moderate
Housing” fund.

In addition, the agreement calls for the reduction of the purchase price of eight units to
the level affordable by moderate-income households and the purchase price of three
units to be affordable to very low-income households. The homebuyer will execute a
promissory note to the RDA to be repaid upon the sale of the home to a nonqualified
individual for the difference between the “market price” and the sale price of the home.
Funds received from these homebuyer notes will be deposited in the “Low/Moderate
Housing” fund. After 30 years, the loans will be cancelled if a qualified household
owns the property.

B. Subsequent Events

On August 1, 2004 the outstanding principal amount of $7,710,000 of the 1994 Tax
Allocation Revenue Bonds issued by the San Ramon Public Financing Authority were
refunded by issue of $8,105,000 2004 Refunding Tax Allocation Revenue Bonds. The
proceeds of the new issue were used to pay in full the principal of and interest and
redemption premium on the 1994 Bonds. As a result of this, the 1994 Tax Allocation
Revenue Bonds were fully discharged as of August 1, 2004.

C. Restatements

The beginning fund balance of the Low Moderate Income Housing Set-Aside Fund and
the beginning net assets have been restated to record the balances of loans receivable
not recorded in fiscal year 2002-03.

                                                                 Fund
                                                                Balance       Net Assets

Beginning Balance at July 1, 2003, as previously reported   $    394,595    $ (18,676,548)
Restatement                                                      664,403          664,403

Beginning Fund Balance at July 1, 2003, as restated         $ 1,058,998     $ (18,012,145)




                                        26
Required Supplementary Information
                        SAN RAMON REDEVELOPMENT AGENCY
                             Budgetary Comparison Schedule
                          Low/Mod Housing Special Revenue Fund
                               Year Ended June 30, 2004


                                                                                         Variance
                                       Budgeted Amounts                 Actual           Positive
                                    Original       Final               Amounts          (Negative)
Revenues:
  Property taxes                  $ 1,255,603         $ 1,255,603    $ 1,198,530    $     (57,073)
  Use of money and property            71,486              71,486         11,726          (59,760)
  Other                                                                  374,971          374,971

       Total Revenues               1,327,089           1,327,089      1,585,227          258,138

Expenditures:
  Current:
    Redevelopment activities        1,051,589           1,051,589      1,197,852         (146,263)

       Excess of Revenues
         Over Expenditures            275,500             275,500        387,375          111,875

Other Financing Sources (Uses):
  Transfers out                      (178,682)           (178,682)      (178,682)

       Net Change in Fund Balance      96,818              96,818        208,693          111,875

Fund Balance, Beginning of Year
  as restated                       1,058,998           1,058,998      1,058,998

Fund Balance, End of Year         $ 1,155,816         $ 1,155,816    $ 1,267,691    $     111,875




See Accompanying Note to Required Supplemental Information.

                                                 27
                             SAN RAMON REDEVELOPMENT AGENCY
                                  Budgetary Comparison Schedule
                                Redevelopment Special Revenue Fund
                                     Year Ended June 30, 2004


                                                                                                  Variance
                                         Budgeted Amounts                       Actual            Positive
                                      Original        Final                    Amounts           (Negative)
Revenues:
  Property taxes                  $   3,641,959          $   3,641,959     $    3,603,564    $      (38,395)
  Use of money and property              50,949                 50,949            363,711           312,762
  Other                                                                           582,607           582,607

       Total Revenues                 3,692,908              3,692,908          4,549,882           856,974

Expenditures:
  Current:
    Redevelopment activities          1,741,581              1,741,581          1,403,366           338,215

       Excess of Revenues
         Over Expenditures            1,951,327              1,951,327          3,146,516         1,195,189

Other Financing Sources (Uses):
  Transfers out                       (2,328,032)            (2,328,032)       (2,393,055)          (65,023)

       Net Change in
        Fund Balance                   (376,705)              (376,705)          753,461          1,130,166

Fund Balance, Beginning of Year
  as restated                           802,227                802,227           802,227

Fund Balance, End of Year         $     425,522          $     425,522     $    1,555,688    $ 1,130,166




See Accompanying Note to Required Supplemental Information.




                                                    28
                      SAN RAMON REDEVELOPMENT AGENCY
                       Note to Required Supplementary Information
                                      June 30, 2004


A.   Budgetary Accounting

In conjunction with the City’s budgeting process, the Agency is required to adopt an annual
budget at the legal level of budgetary control, which is in accordance with generally accepted
accounting principles, for all of its funds on or before June 30 for the ensuing fiscal year.

B.   Expenditures in Excess of Appropriations

The Low/Mod Income Housing Set-Aside Fund had expenditures in excess of the budget of
$146,263.




                                             29
This page left blank intentionally.




                30
Supplementary Information
                     SAN RAMON REDEVELOPMENT AGENCY
                          Budgetary Comparison Schedule
                        Redevelopment Capital Projects Fund
                             Year Ended June 30, 2004


                                                                           Variance
                                             Final        Actual           Positive
                                            Budget       Amounts          (Negative)
Revenues:
  Use of money and property                          $    127,703     $     127,703

Expenditures:
  Current:
    Redevelopment activities                              930,800           (930,800)

      Net Change in Fund Balance                          (803,097)         (803,097)

Fund Balance, Beginning of Year        $ 3,306,516       3,306,516

Fund Balance, End of Year              $ 3,306,516   $ 2,503,419      $ (803,097)




                                       31
                     SAN RAMON REDEVELOPMENT AGENCY
                           Budgetary Comparison Schedule
               Redevelopment Tax Allocation 1994/1998 Debt Service Fund
                              Year Ended June 30, 2004


                                                                                 Variance
                                                   Final           Actual        Positive
                                                  Budget          Amounts       (Negative)
Revenues:
 Use of money and property                                    $      (13,311)   $ (13,311)

Expenditures:
 Current:
   Principal payments                    $          710,000          710,000
   Interest payments                              1,796,714        1,861,737       (65,023)

     Total Expenditures                           2,506,714        2,571,737       (65,023)

     Excess (Deficiency) of
      Revenues Over
      (Under) Expenditures                    (2,506,714)         (2,585,048)      (78,334)

Other Financing Sources (Uses):
   Transfers in                                   2,506,714        2,571,737       65,023

     Net Change in Fund Balance                                      (13,311)      (13,311)

Fund Balance, Beginning of Year                   3,852,727        3,852,727

Fund Balance, End of Year                $        3,852,727   $    3,839,416    $ (13,311)




                                             32
October 29, 2004



The Board of Directors of the
  San Ramon Redevelopment Agency


          Independent Auditors’ Report on Compliance (Including the Provisions
    Contained in the Guidelines for Compliance Audits of Redevelopment Agencies) and
       on Internal Control over Financial Reporting Based on an Audit of Financial
        Statements Performed in Accordance with Government Auditing Standards


We have audited the financial statements of the governmental activities and each major fund
of the San Ramon Redevelopment Agency, a component unit of the City of San Ramon,
California as of and for the year ended June 30, 2004, which collectively comprise the
Agency’s basic financial statements, as listed in the table of contents, and have issued our
report thereon dated October 29, 2004. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States.

Compliance

As part of obtaining reasonable assurance about whether the basic financial statements of the
San Ramon Redevelopment Agency are free of material misstatement, we performed tests of
its compliance with certain provisions of laws, regulations, contracts and grants,
noncompliance with which could have a direct and material effect on the determination of
financial statement amounts. Such provisions include those provisions of laws and
regulations identified in the Guidelines for Compliance Audits of California Redevelopment
Agencies issued by the State Controller’s Office, Division of Accounting and Reporting.
However, providing an opinion on compliance with those provisions was not an objective of
our audit and, accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance that are required to be reported under Government
Auditing Standards.


                                             33