FINAL REPORT - San Bernardino Superior Court

Section 1: Financial Condition
SCLAA’s liabilities are primarily due to long-term liabilities, which totaled $329,562,038 as of
June 30, 2011 and consisted of bond indebtedness from various Tax Allocation Bonds, a liability
for compensated absences, and loan payables from the defunct EB-5 program. 5 The decrease in
net assets from FY 2008-09 to FY 2009-10 was caused by a $50,020,000 write off of a deposit to
General Electric for equipment for the proposed second power plant for SCLAA, or Victorville
#2. Plans for the power plant, the General Electric contract, and the subsequent settlement
litigation with General Electric are further discussed in Section 3 of this report.
In addition to bond indebtedness, SCLAA has borrowed funds from several City sources due to
its negative cash balances and other purposes. Table 1.6 below details the source of funds for
SCLAA’s $15,965,603 in inter-fund loans as of June 30, 2011.
Table 1.6
SCLAA Inter-fund Loans, Since FY 2007-08 6
Source of Loan
Original
Amount
Date of
Loan
Balance as
of 6/30/11 Term
Interest
Rate
Purpose
Redevelopment
Agency -
Project Area
Bear Valley $10,000,000 9/5/2009 $10,114,922 5 LAIF 7 Redevelopment activities on
SCLA, such as the fuel farm
Redevelopment
Agency - Low
and Moderate
Housing 1,700,000 10/12/2009 1,715,210 5 LAIF
General Fund 2,314,851 6/30/2011 2,314,851 N/A N/A
Victorville
Municipal
Utility Services 1,230,671 6/30/2011 1,230,671 N/A N/A
Wastewater
Enterprise Fund 589,949 6/30/2011 589,949 N/A N/A
Total 15,835,471 $15,965,603
Source: City of Victorville and Southern California Airport Authority Financial Statements
Redevelopment activities on
SCLA, prior years capital
improvements, and project
expenses
Inter-fund loan due to negative
cash balances
Inter-fund loan due to negative
cash balances
Inter-fund loan due to negative
cash balances
According to the Finance Department, the three loans made to SCLAA in FY 2010-11 due to
negative cash balances were never formalized. These loans were made at the end of the fiscal
year without documentation of loan terms or interest rates. The Finance Department noted that it
5 The EB-5 program was a part of a United States Customs and Immigration Services (USCIS) program. The
SCLAA was supposed to obtain loans from foreign investors for development projects in exchange for eligibility for
an immigration visa into the country. However, on October 20, 2010, the USCIS terminated the City’s participation
in the program.
6 The inter-fund loan to SCLAA from the Redevelopment Agency Project Area Bear Valley for $10,000,000 first
appeared in the FY 2007-08 financial statements. However, the loan was not approved by City Council until
September 15, 2009.
7 Interest rates for the two Redevelopment Agency loans are based on the annualized Local Agency Investment Fund
(LAIF) rate of return. As of December 2011, the LAIF rate of return was .38 percent.
1-9
Harvey M. Rose Associates, LLC