Risk Matrix
Redevelopment Agency
Revenue Forecasting Model

"A" = Actual Control "P" = Proposed Control

              CONTROLS                                                                      
    C-1 C-2 C-3 C-4 C-5 C-6 C-7 C-8 C-9 C-10 C-11 C-12 C-13 C-14 C-15 C-16 C-17 C-18 C-19 C-20 C-21 C-22 C-23 C-24 C-25 C-26 C-27 C-28 C-29 C-30 C-31 C-32 C-33 C-34 C-35 C-36 C-37 C-38 C-39 C-40 C-41
    The Agency does not commit funds until the funds are available. The Agency updates its revenue forecast annually or more often as needed, using the expertise of outside consult The Agency adjusts for changing economic conditions in revising its forecast at least once each year. The forecast is developed using a computer based model which has been refined and tested over several years. The forecast is prepared following release of the County's actual tax increment figures. The report of the actual tax increment for the year establishes the level of tax increment to be received. The tax increment forecast is reviewed and approved by various levels of management, up to and including the Executive Director. The time lag between initiation of development activity and receipt of tax revenues. The Agency updates its revenue forecast model annually using the expertise of staff and outside consultants. The model has been developed over a period of several years. The inputs to the model, the structure of the model have been tested over time. Agency staff reports to the Board the results of the annual revenue forecast, generally by the time of the Mid-Year review. The revenue forecast results are incorporated into the Annual Budget and five-Year CIP, which receives extensive management review. Agency staff reports to the Board and actual tax increment to be received, upon certification by the County. The Agency's financial auditors review the amount of tax increment received and report the actual amount in the financial statements. The County reports actual tax increment to Agency Management at the tax rate area level, including assessed valuation. Several months prior to receipt of the County report, the Agency obtains a computer tape copy of the tax roll. Agency staff has experience in the fixed income financial market and receives reports on interest rate trends. Expenditures in the budget can be adjusted in the event of significant fluctuations in interest income. In the event of a drop in interest rates, bond rates tend to drop as well, offsetting interest reductions. The Agency uses an interest revenue formula to budget interest revenues. The formula incorporates beginning and ending balances. Investment activity is controlled by the City's Finance Department. The Agency receives and reviews weekly investment reports. Tax allocation bonds payments have first call on Agency tax increment revenues, after the 20% housing set-aside. After exhaustive review, Standard and Poor's has awarded the Agency's bonds the highest rating given to redevelopment agencies. All Agency bonds and certificates of participation are protected by reserves equal to one year's debt service. Most Agency bonds are insured. If the Agency is unable to make debt service payments, the reserves are available. All tax increment revenues flow to the fiscal agent upon receipt by the Agency. Amounts required to service bonds are withheld. The Agency's capital budget model allows for Operating Expenditures and the County Agreement. The Agency prepares cash flow forecasts, and receives monthly cash reports generated by the Financial Management System. The Agency's tax increment revenue is certified by the County and is Teeterized (that is, not subject to the fluctuation and uncertainty). The County agreement includes specific language which allows the Agency to forego payment if sufficient funds are not available. Sizing of Agency Bond issues is based on current revenues, not prospective growth. The Agency is prevented by safeguards in its bond indentures and agreements from issuing additional debt without additional revenue. Budgeted expenditures are adjusted in the event of variations from forecast bond rates. The Agency's budget model is frequently reviewed by economic consultants, financial advisors, fiscal advisors, and staff. All assumptions and estimates in the Agency's budget model are reviewed at least annually, and more frequently as necessary. The timing and amount of future bond issues is determined by available tax increment and financial market condition. The Agency updates its revenue forecast and bonding program assumptions at least annually. The bonding assumptions are developed using a computer based model which has been refined and tested over several years. The Agency has the ability to reschedule projects in response to revenue changes. Bonds are issued on confirmed revenue levels, not on revenue forecasts. Revenue sources for bonding are documented by County tax increment certification reports, reviews by independent auditors and consultants.
T-1 Current tax increment receipts may be significantly less than Agency forecasts. A A A A A A A A                                                                  
T-2 The revenue forecasting model may be inaccurate or incomplete. A           A   A A                                                              
T-3 Management and the Board may not have timely and adequate information on revenue forecasts and actual receipts.                     A A A A A A                                                  
T-4 Interest income from investments may be significantly less than Agency Projections.                                 A A A A A                                        
T-5 The Agency may not be able to make the Tax Allocation Bond and/or Certificate of Participation payments. A                                         A A A A A                              
T-6 Insufficient annual cash flow may result in Agency being unable to make the County payment and/or cover annual operating expenses.                                                     A A A A                      
T-7 The Agency's inability to meet bond debt service coverage requirements as set forth in the Indenture, the Reimbursement Agreement, and/or the Agency's budget model may preclude the Agency from issuing additional debt. A                                         A A A A A         A                    
T-8 Bond interest rates in Agency budget model for future bond issues may not be appropriately estimated. A                                                             A A A A            
T-9 The timing and/or amount of future bond issues may not be appropriately estimated. A                                                                     A A        
T-10 The Agency may overcommit funds to capital projects because of incorrect revenue forecasts or the inability to issue additional bonds.                                                                           A A    
T-11 The Agency may underutilize bonding capacity because of incorrect revenue forecasts.                                                                               A A

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