Comprehensive Annual Financial Report - City of Cerritos

City of Cerritos
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
14. COMMITMENTS AND CONTINGENCIES, Continued
C. $5,640,000 Tax Allocation Bonds arrangement with Commonwealth Cousins I, LLC
In October 1998, the City Council authorized the Agency to issue bonds relating to specific development
within the Los Coyotes Project Area. Then, in November 1998, the Agency entered into an agreement to
issue $5,640,000 of Tax Allocation Bonds to Commonwealth Cousins I, LLC, in relation to the construction
of a shared parking structure in the Cerritos Towne Center. The parking structure serves both the retail
complex and tenants within an adjacent office building. In 2001, $3,760,000 of the bonds were issued. The
remaining balance of $1,880,000 remained unissued as of June 30, 2010. Interest will not accrue prior to the
issuance date. The Agency will repay the bonds by pledging a portion of the tax increment generated from
the adjacent office building.
D. Electric Utility
The City’s Electric Utility is a member of the Magnolia Power Project that is financed and owned by the
Southern California Public Power Authority (SCPPA). Member cities of the Magnolia Power Project
include Anaheim, Burbank, Colton, Glendale and Pasadena (the Project “A” Participants) and the City of
Cerritos (the Project “B” Participant). All Magnolia Participants have a “Take or Pay” contract with SCPPA
and are obligated to pay their share of the indebtedness regardless of the ability of the contracting agency to
provide electricity. The City’s share of these payments are reported as long-term debt (see Notes 9D and
9J). Payment for these obligations will be made from operating revenues. This contract provides for
generating capacity of 4.2% of the output generated from the plant.
15. LEASE INCOME UNDER OPERATING LEASES
Land in the amount of $69,098,912 is owned by the City and Agency and is held for lease. In connection
with certain ground leases of the Cerritos Towne Center property, the Lincoln Station Property and the
Jaguar/Land Rover property, the Agency and City have entered into cooperation agreements. Under the
terms of the cooperation agreements, 75% of the lease income is paid to the City and 25% is paid to the
Agency. For the year ended June 30, 2010, the Agency’s 25% portion of the lease income was $1,295,930
while the City’s 75% portion was $4,535,134.
Projected minimum lease payments to be received by the City and Agency as of June 30, 2010 are as
follows:
Year Ending
June 30, City Agency Total
2011 $ 4,160,593 $ 1,716,514 $ 5,877,107
2012 4,377,043 1,802,344 6,179,387
2013 4,402,985 1,824,962 6,227,947
2014 4,418,552 1,843,791 6,262,343
2015 4,424,320 1,536,973 5,961,293
2016-2088 273,342,523 91,114,174 364,456,697
Total $ 295,126,016 $ 99,838,758 $ 394,964,774
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