10A Action 2008 0602 Attach - Preliminary Official Statement

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The 2004-05 State Budget included a transfer by redevelopment agencies to the applicable ERAFs of $250 million in each of fiscal years 2004-05 and 2005-06. The Agency's share of the annual $250 million shift for fiscal years 2004-05 was $893,601 and the share for fiscal year 2005-06 was $975,619. The Agency paid its ERAF payments for fiscal years 2004- 05 and 2005-06 on a timely basis. The Agency was not required to make an ERAF payment in 2006-07 and the Governor's budget for fiscal year 2007-08 and proposed budget for 2008-09 do not require an ERAF transfer of tax increment revenues by redevelopment agencies. Although the State's voters approved a constitutional amendment on the November 2004 ballot (the "Local Government Initiative"), which purports to prohibit any further transfers of non-education local government property taxes for the benefit of the State, the Local Government Initiative does not purport to change existing law with respect to the State's ability to transfer redevelopment agencies' property tax revenues. See "RISK FACTORS -State Budget Deficit" herein. Assessed Valuation Tax Revenues are generated from increases in the total assessed value above the base year value. In or about August of each year, the County Auditor-Controller provides a report of the current year and base year values for the Project Area. The base year assessed valuation for the Project Area was established as the assessed valuation in the constituent sub-areas comprising the Project Area in the year prior to the first year of the redevelopment plans for each sub-area. Between 2003-04 and 2007-08, total assessed valuation increased in the Project Area by about 35%, or approximately 8% per year. Annual roll growth has been driven principally by the sales of single-family residential properties, the predominate property type in the Project Area. Single-family residential sales have contributed between 35°I° and 85% of yearly valuation gains since 2003-04 while other residential properties, including apartments and condominiums, contributed between 13% and 31 %. Commercial and industrial properties have accounted for around 30% of annual valuation growth. In 2005-06, the San Leandro Hospital transferred ownership to an exempt public agency; the assessed valuation of the property was reduced to zero from $47 million. The secured roll accounted for 93% of the total valuation in the Project Area in 2007-08 and the unsecured roll accounted for around 7% of the total. Utility valuations account for less than 1 % of total valuation. In addition to tax revenue from the incremental secured, unsecured and utility roll values the Agency receives revenue from interest and supplemental assessments, shown on the following table. Supplemental assessments are assessments of properties for which new construction or sales occurred during a tax year. The assessments are for the pro-rated portion of the remaining tax year and, if the construction or sale occurs after the January 1 lien date, for full value of the property during the subsequent tax year. Supplemental revenue is a variable revenue source and is not included in the calculation of tax increment shown herein. However, supplemental revenue received annually by the Agency has ranged from $694,100 to $1,088,865 since 2003-04. The following table summarizes the assessed valuation of property in the Project Area and corresponding tax increment during fiscal years 2003-04 through 2007-08. -21-