HomeMy WebLinkAboutAudited Component Unit Financial Report (CUFR) for RDA FYE 06-30-2011CITY OF PALM DESERT
FINANCE DEPARTMENT
Staff Report
REQUEST: RECEIVE AND FILE THE AUDITED FINANCIAL REPORTS FOR
THE PALM DESERT REDEVELOPMENT AGENCY FOR THE
FISCAL YEAR ENDED JUNE 30, 2011
DATE: January 26, 2012
SUBMITTED BY: Paul S. Gibson, Finance Director
CONTENTS: 1. Palm Desert Redevelopment Agency Audited Financial Report
for the Fiscal Year Ended June 30, 2011
2. Independent Auditors' Report on Internal Control over Financial
Reporting and on Compliance and Other Matters based on an
Audit of Financial Statements Performed in Accordance with
Government Auditing Standards
Recommendation
By Minute Motion, that the City Council receive and file the audited
Component Unit Financial Report for the Palm Desert Redevelopment
Agency for fiscal year ended June 30, 2011.
Committee Recommendation
The Audit, Investment and Finance Committee received the audited financial statements
for the Palm Desert Redevelopment Agency at their January 24, 2012 meeting, and it was
recommended that the statements for the fiscal year ended June 30, 2011 be received
and filed by the City Council.
Background
White Nelson Diehl Evans LLP performed and completed the annual independent audit
for the fiscal year ended June 30, 2011, for the Redevelopment Agency in accordance
with generally accepted auditing standards. In the auditor's opinion, the basic financial
statements present fairly, in all material respects, the financial position of the
Redevelopment Agency as of June 30, 2011, and the results of its operations of the year
then ended are in conformity with accounting principles generally accepted in the United
States of America.
G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2011\SR - Council audit 2011 CUFR.docx
Staff Report
Approval of CUFR for Fiscal Year ended June 30, 2011
January 26, 2012
Page 2 of 2
In conducting their audit, the auditors test the City's internal controls. Pages 85 and 86 of
the Annual Financial Report show the Independent Auditors' Report on Compliance and
on Internal Control over Compliance.
Staff requests that the Council receive and file the audited Component Unit Financial
Report for the Palm Desert Redevelopment Agency for fiscal year ended June 30, 2011.
Fiscal Impact
There is no fiscal impact associated with this action.
Submitted by:
Approved by:
Paul S. Gibson, Finance Director/City Treasurer John M. Wohlmuth, City Manager
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G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2011\SR - Council audit 2011 CUFR.docx
PALM DESERT REDEVELOPMENT AGENCY
PALM DESERT, CALIFORNIA
ANNUAL FINANCIAL REPORT
WITH REPORT ON AUDIT
BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED JUNE 30, 2011
PALM DESERT REDEVELOPMENT AGENCY
TABLE OF CONTENTS
JUNE 30, 2011
Page
Number
INDEPENDENT AUDITORS' REPORT 1
MANAGEMENT'S DISCUSSION AND ANALYSIS 3
BASIC FINANCIAL STATEMENTS:
Government -Wide Financial Statements:
Exhibit A - Statement of Net Assets 11
Exhibit B - Statement of Activities 13
Fund Financial Statements:
Exhibit C - Balance Sheet - Governmental Funds 14
Exhibit D - Reconciliation of Governmental Funds Balance Sheet
to the Statement of Net Assets
Exhibit E - Statement of Revenues, Expenditures and Changes in Fund
Balances - Governmental Funds
17
18
Exhibit F - Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 20
Notes to Basic Financial Statements 21
SUPPLEMENTARY INFORMATION: 71
Schedule 1 - Combining Balance Sheet - Other Governmental Funds 72
Schedule 2 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds 73
Schedule 3 - Balance Sheet - Other Governmental Fund - Special Revenue 74
Schedule 4 - Statement of Revenues, Expenditures and Changes
in Fund Balance - Other Governmental Fund - Special Revenue 75
PALM DESERT REDEVELOPMENT AGENCY
TABLE OF CONTENTS
(CONTINUED)
JUNE 30, 2011
SUPPLEMENTARY INFORMATION (CONTINUED):
Schedule 5 - Balance Sheet - Other Governmental Fund - Debt Service
Page
Number
76
Schedule 6 - Statement of Revenues, Expenditures and Changes
in Fund Balance - Other Governmental Fund - Debt Service 77
Schedule 7 - Combining Balance Sheet - Other Governmental Funds - Capital Projects 78
Schedule 8 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds - Capital Projects 79
Schedule 9 - Combining Balance Sheet - Housing Authority Special Revenue Fund 80
Schedule 10 -Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Housing Authority Special Revenue Fund 82
Schedule 11 -Computation of Low and Moderate Housing Excess Surplus Funds 84
Independent Auditors' Report on Compliance and on Internal Control Over Compliance 85
HITE NELSON DIEHL EVANS LLP
Certified PuHic Accxuctnrtnt.s & Consultants
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and
Members of the City Council
Palm Desert Redevelopment Agency
Palm Desert, California
We have audited the accompanying financial statements of the governmental activities, each major
fund and the aggregate remaining fund information of the Palm Desert Redevelopment Agency (the
Agency), (a component unit of the City of Palm Desert, California), as of and for the year ended
June 30, 2011, which collectively comprise the Agency's basic financial statements, as listed in the
table of contents. These basic financial statements are the responsibility of the Agency's management.
Our responsibility is to express opinions on these basic financial statements based on our audit.
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. 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 consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Palm Desert Redevelopment Agency's internal
control over financial reporting. Accordingly, we express no such opinion. 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 basic financial statement presentation. We believe that
our audit provides a reasonable basis for our opinions.
In our opinion, the basic financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, each major fund and the aggregate
remaining fund information of the Palm Desert Redevelopment Agency as of June 30, 2011, 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.
As described in Note 9 to the basic financial statements, the Agency has impleinented the provisions of
Governmental Accounting Standards Board Statement Number 54, "Fund Balance Reporting and
Governmental Fund Type Definitions", for the year ended June 30, 2011.
As explained further in Note 13, the California State Legislature has enacted legislation that is intended
to provide for the dissolution of redevelopment agencies in the State of California. The effects of this
legislation are uncertain pending the result of certain lawsuits that have been initiated to challenge the
constitutionality of this legislation.
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2875 Michelle Drive., Suite 300, Irvine. CA 92606 • Tel: 714,978.1300 • Fax: 714.978,7893
Of)(iceslocated in Orange and San Diego Counties
In accordance with Government Auditing Standards, we have also issued our report dated
December 9, 2011 on our consideration of the Palm Desert Redevelopment Agency's internal control
over financial reporting and our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the scope
of our testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audit.
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis, as identified in the accompanying table of contents, be
presented to supplement the basic financial statements. Such information, although not a part of the
basic financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited procedures to
the required supplementary information in accordance with auditing standards generally accepted in
the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we obtained during the
audit of the basic financial statements. We do not express an opinion or provide any assurance on the
information because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken
as a whole. The combining schedules and the Computation of Low and Moderate Housing
Excess/Surplus Funds are presented for additional analysis and are not a required part of the basic
financial statements. Such information is the responsibility of management and was derived from and
relates directly to the underlying accounting and other records used to prepare the financial statements.
The information has been subjected to the auditing procedures applied in the audit of the basic
financial statements and certain additional procedures, including comparing and reconciling such
information directly to the underlying accounting and other records used to prepare the basic financial
statements of the Palm Desert Redevelopment Agency or to the financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the United
States of America. In our opinion, the information is fairly stated in all material respects in relation to
the basic financial statements taken as a whole.
(c) ktb . Nelson- D u itt Eva.ns L_ uo
December 9, 2011
Irvine, California
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PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2011
Our discussion and analysis of the Palm Desert Redevelopment Agency's (Agency) financial
performance for the fiscal year ended June 30, 2011, provides a comparison of current year to prior
year ending results based on the government -wide statements, an analysis on the Agency's overall
financial position and results of operations to assist users in evaluating the Agency's financial position,
and a discussion of significant changes that occurred within each fund. In addition, it describes the
activities during the year for capital assets and long-term debt. We end our discussion and analysis
with a description of currently known facts, decisions and conditions that are expected to have a
significant effect on the financial position or results of operations. Please read it in conjunction with
the Agency's fmancial statements.
FINANCIAL HIGHLIGHTS
• The Agency's governmental activities net assets deficit increased $71.53 million, or
552 percent. The Agency's unrestricted net deficit is caused because of the debt issued by the
Agency not being offset by capital assets. Proceeds from the debt were used for capital
improvements on behalf of the City for public infrastructure, public safety facilities, public
recreation facilities, and affordable housing.
• During the year, the Agency had revenues that were $53.45 million less than the
$141.65 million in expenses recorded by the Agency in its governmental activities.
• The Agency's governmental activities program revenues and general revenues decreased
$7.75 million, or 8.08 percent from the prior year, and program expenses increased
$40.55 million, or 40.11 percent.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Assets and
Statement of Activities (on pages 11 and 13) provide information about the activities of the Agency as
a whole and present a long-term view of the Agency's finances. Fund financial statements start on
page 14. For governmental activities, these fund statements tell how these services were financed in
the short term as well as what remains for future spending. Fund financial statements also report the
Agency's operation in more detail than the government -wide statements by providing information
about the Agency's most significant funds as well as the other funds.
REPORTING ON THE AGENCY AS A WHOLE
The Statement of Net Assets and the Statement of Activities:
Our analysis of the Agency as a whole begins on page 11. One of the most important questions asked
about the Agency's finances is, "Is the Agency as a whole better off or worse off as a result of the
year's activities?" The Statement of Net Assets and the Statement of Activities report information
about the Agency as a whole and about its activities in a way to answer this question. These statements
include all assets and liabilities of the Agency using the accrual basis of accounting, which is similar
to the accounting used by most private -sector companies. All of the current year's revenues and
expenses are taken into account regardless of when cash is received or paid.
See independent auditors' report.
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REPORTING ON THE AGENCY AS A WHOLE (CONTINUED)
The Statement of Net Assets and the Statement of Activities (Continued):
These two statements report the Agency's net assets and changes in them. Net assets are the difference
between assets and liabilities, which is one way to measure the Agency's financial health, or financial
position. Over time, increases or decreases in the Agency's net assets are an indication of whether its
financial health is improving or deteriorating.
In the Statement of Net Assets and the Statement of Activities, we separate the Agency into general
government, affordable rental units, economic development, community improvements, housing
programs, payments to other agencies and interest on long-term debt.
REPORTING THE AGENCY'S MOST SIGNIFICANT FUNDS
Fund Financial Statements:
The fund financial statements provide detailed information about the most significant funds and other
funds - not the Agency as a whole. Some funds are required to be established by State law and by bond
covenants. However, management established many other funds to help it control and manage money
for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants
and other resources. The Agency only has governmental type funds.
Governmental Funds - Most of the Agency's basic services are reported in governmental funds,
which focus on how money flows in and out of those funds and the balances left at year-end that are
available for spending. These funds are reported using the modified accrual basis of accounting, which
measures cash and all other financial assets that can readily be converted to cash. The governmental
fund statements provide a detailed short-term view of the Agency's general government operations and
the basic services it provides. Governmental fund information helps determine whether there are more
or fewer financial resources that can be spent in the near future to finance the Agency's programs. The
differences of results in the Governmental Fund financial statements to those in the Government -Wide
financial statements are explained in a reconciliation following each Governmental Fund financial
statement.
See independent auditors' report.
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THE AGENCY AS A WHOLE
The Agency's net assets deficit increased $71.53 million from $(12.97) million to $(84.50) million.
Our analysis below focuses on the net deficit (Table 1) and changes in net deficit (Table 2) of the
Agency's governmental activities.
TABLE 1
NET ASSETS
(IN MILLIONS)
As of June 30, 2011 and 2010
Current and restricted assets
Capital assets
TOTAL ASSETS
Long-term liabilities outstanding
Other liabilities
TOTAL LIABILITIES
Governmental Activities
2011 2010
$ 271.01 $ 314.90
84.42 157.53
355.43 472.43
387.12 417.41
52.81 67.99
439.93 485.40
Net assets (deficit):
Invested in capital assets, net of
related debt 97.60 118.80
Restricted 62.75 56.26
Unrestricted (244.85) (188.03)
TOTAL NET ASSETS (DEFICIT) $ (84.50) $ (12.97)
Compared to the prior year, the Agency's net assets deficit of governmental activities increased by
$71.53 million. The Agency's Net Assets is made up of three components: Investment in Capital
Assets, Net of Related Debt, Restricted Net Assets and Unrestricted Net Deficit. Unrestricted deficit,
the part of net deficit that can be used to finance day-to-day operations, increased from
$(188.03) million to $(244.85) million, or 30.22 percent. The Agency currently has an unrestricted net
deficit because of the debt it has issued. Proceeds from the debt were used for public infrastructure,
public safety facilities, public recreation facilities, and affordable housing and are not offset by
investments in capital assets.
Total assets overall decreased by $117 million from the prior year. During the year, the Agency
transferred land, buildings and improvements totaling $76.63 million to the City. The decrease in
current and restricted assets was the payment for bond project expenditures.
Total liabilities overall decreased by $45.47 million. Long-term debt decreased by $30.29 which
represents the principal payments made during the year and the decrease in other liabilities of
$15.18 million was mainly pass -through payments due to other agencies that were paid out during the
current year.
See independent auditors' report.
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THE AGENCY AS A WHOLE (CONTINUED)
TABLE 2
CHANGES IN NET ASSETS
(IN MILLIONS)
As of June 30, 2011 and 2010
Governmental Activities
2011 2010
REVENUES:
Program Revenues:
Charges for services $ 5.35 $ 5.02
Capital grants and contributions 0.13 0.20
General Revenues:
Tax increment 80.98 88.07
Other income 0.44 1.40
Investment earnings 1.30 1.26
TOTAL REVENUES 88.20 95.95
EXPENSES:
General government 4.38 5.05
Affordable rental units 7.30 7.19
Economic development 0.58 0.23
Community improvements 67.62 3.85
Housing programs 3.16 1.00
Payments to other agencies 39.42 63.32
Interest on long-term debt 19.19 20.46
TOTAL EXPENSES 141.65 101.10
INCREASE (DECREASE) IN NET
ASSETS (53.45) (5.15)
BEGINNING NET ASSETS (12.97) (7.82)
RESTATEMENT OF NET ASSETS (18.08)
ENDING NET ASSETS $ (84.50) $ (12.97)
Governmental Activities
Total revenues decreased from $95.95 million to $88.20 million, an 8.07 percent decrease. The major
factors that contributed to the decrease were as follows:
• Decrease in tax increment due to declining assessed property values.
• Decrease in other revenues from fewer sales of inventory held for resale.
See independent auditors' report.
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THE AGENCY AS A WHOLE (CONTINUED)
Governmental Activities (Continued)
The following schedule represents the net cost of providing services:
General government
Affordable rental units
Economic development
Community improvements
Housing programs
Payment to other agencies
Interest on long-term debt
Government Activities
Net (Expense) Revenue
(In Millions)
2011 2010
$ (4.38) $ (5.05)
(2.36) (2.20)
(0.58) (0.23)
(67.50) (3.82)
(2.74) (0.79)
(39.42) (63.32)
(19.20) (20.46)
TOTAL $ (136.18) $ (95.87)
The major factors that contributed to the increases and decreases in expenditures were:
• Increase in the expenditures for community improvements was the cost of the property that was
transferred to the City.
• Increase in the expenditures for housing programs was the cost of rental units that were
demolished.
• Decrease in the expenditures for payment to other agencies was the SERAF payment to the
State. For the prior year, the Agency was required to pay $25.53 million compared to the
required payment of $5.26 million for the current year.
THE AGENCY'S FUNDS
On pages 14 and 15, the governmental funds balance sheet is shown. The combined fund balance of
$213.81 million decreased from $242.32 million, or 11.77 percent. More detailed information about
the combined fund balance is presented in Note 9 to the financial statements.
Major funds balance changes are noted below:
• For the Low and Moderate Income Housing fund, fund balance decreased due to acquisition of
property held for resale and the transfer to the Housing Authority fund for the replacement of
capital assets.
• For the Redevelopment Agency Financing Authority Debt Service fund, fund balance
decreased as a result of early repayment of outstanding debt. This was done to actively manage
the debt prior to termination of the project areas.
• The Redevelopment Agency Project Area 1 Debt Service fund, fund balance decreased as a
result of the payment for debt and the 2010-11 SERAF payment to the State of California.
• The Redevelopment Agency Project Area 2 Debt Service funds, fund balance decreased as a
result of the payment for debt and the 2010-11 SERAF payment to the State of California.
• The Redevelopment Agency Project Area 4 Debt Service funds, fund balance decreased as a
result of the 2010-11 SERAF payment to the State of California.
• The Redevelopment Agency Project Area 2 Capital Projects funds, fund balance decreased due
to the capital improvements paid for by the fund.
See independent auditors' report.
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THE AGENCY'S FUNDS (CONTINUED)
In addition to the major funds, fund balances of other governmental funds had significant changes. The
Housing Authority Special Revenue fund had an increase $7.46 million from the prior year. This was
due to the transfer from the Low and Moderate Income Housing fund for the future capital replacement
costs. Project Area 3 Debt Service fund balance had a minor increase. Project Area 1 Capital Projects
fund, fund balance decreased as a result of capital improvements paid for by the fund. Project Areas 3
and 4 Capital Projects fund balance changes were minimal. More detailed information on the fund
financial statements balances is presented Note 9 to the financial statements.
Budgetary Highlights
During the year, with the recommendation from the Agency's staff, the Agency's Board revised the
Agency budget several times. Adjustments were made on a monthly basis as the Agency's staff
requested additional appropriations to cover the cost of projects that either had change orders for
additional work required to complete the project as defined, or the estimated cost at the beginning of
the project was underestimated. At mid -year, adjustments were made as department heads requested
increases or decreases to their budgets to maintain their current level of services. At year-end, budgets
were adjusted for unanticipated expenditures. The Agency's Board approves all amendments that
either increase or decrease appropriations.
Formal budgetary integration is employed as a management control device during the year for the
special revenue and capital project funds. Budgetary data for the special revenue and capital projects
funds are not presented herein, as the budgets for these funds are long-term in nature. More detailed
information about the Agency's budget is presented in Note 1 (k) to the financial statements.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of 2011, the Agency had $84.42 million invested in a broad range of capital assets,
including land, buildings and improvements, apartment complexes, and equipment (See Table 3). This
amount represents a net decrease (including additions and deductions) of $73.11 million.
TABLE 3
CAPITAL ASSETS AT YEAR-END
(NET OF DEPRECIATION, IN MILLIONS)
For the Years Ended June 30, 2011 and 2010
Governmental Activities
2011 2010
Land $ 10.94 $ 77.14
Construction in progress 10.00 13.29
Buildings and improvements 63.44 67.02
Equipment 0.04 0.08
TOTAL $ 84.42 $ 157.53
See independent auditors' report.
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CAPITAL ASSET AND DEBT ADMINISTRATION (CONTINUED)
Capital Assets (Continued)
This year's major additions included (in millions):
Construction in progress for Aquatic Center $ 8.19
Purchase of hillside property 1.08
Construction in progress for Carlos Ortega Villas 0.29
Construction in progress for Sagecrest 0.09
Total $ 9.65
The Agency's fiscal year 2012 capital budget calls for it to spend $2.81 million plus continuing
projects of $85.39 million, the majority of which are attributable to the reimbursement to other
governments for capital projects, land development, economic development, construction and
preservation of low-income housing, and the undergrounding of utilities. More detailed information
about the Agency's capital assets is presented in Note 1(g) and Note 6 to the financial statements.
Debt
At year-end, the Agency's governmental activities had $387.12 million in bonds and notes versus
$417.41 million last year, a decrease of $30.29 million, or 7.25 percent as shown in Table 4.
TABLE 4.
OUTSTANDING DEBT AT YEAR END
(IN MILLIONS)
For the Years Ended June 30, 2011 and 2010
Governmental Activities
2011 2010
Notes payable $ 0.12 $ 0.24
Advances 13.56 22.66
Revenue bonds and notes (backed by
specific tax and fee revenues) 373.44 394,51
TOTALS $ 387.12 $ 417.41
The Agency was able to meet its current year debt obligations in a timely manner. The Agency repaid
$22.24 million dollars in outstanding bonds. Debt issued in the prior years has been used to finance
various capital projects. An example of this would be the purchase of land, and construction of the
various public safety facilities, recreation facilities, public infrastructure and affordable housing. More
detailed information about the Agency's debt is presented in Note 8 to the financial statements.
See independent auditors' report.
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ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS
In preparing the budget for 2012, management reviewed several existing factors that could affect the
successful completion of projects including:
• The continued expectation that the Agency will assist the City with funding for various capital
projects. In the five-year capital improvement program, all restricted capital funds for the City
have been allocated to various projects and there are no additional funds available to assist the
Agency with the Agency's planned projects, however, the Agency's continued participation is
essential to complete the City's capital improvement program.
• In previous years, as the State of California attempted to balance their budget, Redevelopment
Agency tax increment revenues throughout the State have been captured to cover (at minimum)
a $2.05 billion shortfall, resulting in a SERAF shift of $25,526,215 for the fiscal year 2009-10,
and an additional SERAF shift of $5,255,397 for 2010-11 for the Palm Desert Redevelopment
Agency. The constitutionality of both of these shifts are currently before an appellate court
following a decision made by the Sacramento Superior Court affirming their legality. The
effects of the State's endeavors to balance their budget, have caused the Agency to cut projects
essential to the community and Redevelopment Plan. Although the passage of Proposition 22
has thwarted future takes under this same method, the uncertainty of future State shortfalls and
their resourcefulness in retaining local taxes derived from property tax including
Redevelopment funds, will determine the Agency's ability to complete such projects, as well as
the ability to meet the needs of the community.
• The Agency also considered the possibility that the Governor may attempt to enact legislation
to eliminate redevelopment agencies across the State and how that would impact both the City
and the Agency's proposed projects and programs. NOTE: On June 29, 2011, the Governor
signed several bills related to the State's budget including ABX1 26 and ABX1 27 that further
thwart redevelopment funds. AB X1 26 immediately prohibited redevelopment agencies from
engaging in most activities (including, but not limited to, the incurrence of new debt, the
execution of new contracts and the modification of existing contracts). Furthermore, pursuant
to AB X1 26, a redevelopment agency would be dissolved on October 1, 2011, unless the city
(or the county, as the case may be) that activated the redevelopment agency timely enacted an
ordinance (an "AB X1 27 Ordinance") to opt into the "Alternative Voluntary Redevelopment
Program" ("AVRP") and agreed to make specified annual payments to the county auditor -
controller for allocation to special districts and educational entities. Pursuant to AB X1 27, so
long as the city is a participant in the AVRP, the redevelopment agency would be exempt from
most of the provisions of AB X1 26 and be permitted to continue and carry on redevelopment
activities. More detailed information about the City and the Agency's actions related to these
two budget bills is presented in Note 14 of the financial statements.
The City of Palm Desert continues to grow with new hotels, commercial and residential development,
construction of a four-year university, street improvements, park construction, and various other
improvement projects. The 2012 capital improvement project budget is a reflection of the Agency's
commitment to the residents of Palm Desert. A copy of the City's 2011-2012 financial plan can be
obtained by contacting the City Finance Department (See below).
CONTACTING THE AGENCY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors
with a general overview of the Agency's finances and to show the Agency's accountability for the
money it receives. If you have questions about this report or need additional financial information,
contact the City's Finance Department at the City of Palm Desert, 73-510 Fred Waring Drive,
Palm Desert, California 92260-2578, or (760) 346-0611.
See independent auditors' report.
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Exhibit A
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF NET ASSETS
June 30, 2011
Governmental
Activities
ASSETS:
Cash and investments $ 119,469,509
Receivables 9,180,471
Property held for resale 2,685,387
Prepaid items and deposits 177,320
Unamortized debt issuance costs 9,190,702
Restricted assets:
Restricted cash with fiscal agent 130,306,011
Capital assets, not depreciated 20,941,764
Capital assets, being depreciated (net of accumulated depreciation) 63,476,835
TOTAL ASSETS 355,427,999
LIABILITIES:
Accounts payable 3,068,147
Accrued liabilities 133,649
Interest payable 4,834,051
Deposits payable 409,371
Unearned revenue 20,010
Amounts due under pass -through agreements 44,341,716
Noncurrent liabilities:
Due within one year 15,412,707
Due in more than one year 371,712,096
TOTAL LIABILITIES 439,931,747
NET ASSETS:
Invested in capital assets, net of related debt 97,601,359
Restricted for:
Special projects 62,751,287
Unrestricted (deficit) (244,856,394)
TOTAL NET ASSETS (DEFICIT) $ (84,503,748)
See independent auditors' report and notes to basic financial statements.
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Functions/Programs
PRIMARY GOVERNMENT:
Governmental activities:
General administration
Affordable rental units
Economic development
Community improvements
Housing programs
Payments to other agencies
Interest on long-term debt
Total Primary
Government
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF ACTIVITIES
For the year ended June 30, 2011
Charges for
Expenses Services
Program Revenues
Operating
Grants and
Contributions
$ 4,380,918 $ - $
7,298,624 4,932,000
582,007
67,623,600
3,157,383 417,652
39,418,936
19,198,308
$ 141,659,776 $ 5,349,652 $
GENERAL REVENUES:
Taxes:
Tax increment
Rental income
Other revenues
Investment earnings
Capital
Grants and
Contributions
Exhibit B
Net (Expense)
Revenue and
Changes in
Net Assets
Governmental
Activities
$ $ (4,380,918)
(2,366,624)
(582,007)
131,451 (67,492,149)
(2,739,731)
(39,418,936)
(19,198,308)
$ 131,451 (136,178,673)
Total general revenues
CHANGE IN NET ASSETS
NET ASSETS (DEFICIT) - BEGINNING OF YEAR
RESTATEMENT
NET ASSETS (DEFICIT) - BEGINNING OF YEAR, AS RESTATED
NET ASSETS (DEFICIT) - END OF YEAR
See independent auditors' report and notes to basic financial statements.
- 13 -
80,977,560
128,586
312,342
1,302,495
82,720,983
(53,457,690)
(12,962,722)
(18,083,336)
(31,046,058)
$ (84,503,748)
PALM DESERT REDEVELOPMENT AGENCY
BALANCE SHEET - GOVERNMENTAL FUNDS
June 30, 2011
ASSETS:
Cash and investments
Restricted cash with fiscal agent
Receivables
Due from other funds
Advances to other funds
Property held for resale
Prepaid costs and deposits
TOTAL ASSETS
LIABILI11hS AND FUND BALANCES
LIABILITIES:
Accounts payable
Accrued liabilities
Deposits payable
Due to other funds
Advances from other funds
Unearned revenue
Deferred revenue
Amounts due pass -through agreement
TOTAL LIABILTI1hS
FUND BALANCES (DEFICIT):
Nonspendable
Restricted
Committed
Unassigned
TOTAL FUND BALANCES (DEFICIT)
TOTAL LIABILITIES
AND FUND BALANCES
Special
Revenue
Fund
Low and
Moderate
Income
Housing
Debt Service Funds
Project
Area 1
Project
Area 2
$ 23,896,294 $ 57,103,855 $ 1,803,817
24,647,938
7,441,439 84,295 25,044
584,461 3,395,278
17,821,288 -
2,685,387
130
$ 76,492,476 $ 57,772,611 $ 5,224,139
$ 17,368 $ 7,938 $
32,280 -
500
10,438,131 3,755,605
6,796 - -
36,493 -
27,541,155 1,803,817
93,437 37,987,224
27,831,397
48,567,642
19,785,387
76,3 99,039 19,785,3 87
5,559,422
(335,283)
(335,283)
$ 76,492,476 $ 57,772,611 $ 5,224,139
See independent auditors' report and notes to basic financial statements.
-14-
Capital
Debt Service Funds (Continued) Projects Fund
Project
Area 4
$ 13,583,016 $
8,233
Financing
Authority
8,295,750
7,761
Project
Area 2
$ -
37,552,210
45,112
Other
Governmental
Funds
$ 23,082,527
59,810,113
1,568,587
177,190
Total
Governmental
Funds
$ 119,469,509
130,306,011
9,180,471
3,979,739
17,821,288
2,685,387
177,320
$ 13,591,249 $ 8,303,511 $ 37,597,322 $ 84,638,417 $ 283,619,725
$
2,657,239
9,829,959
12,487,198
1,104,051
1,104,051
$
8,303,511
8,303,511
$ 2,480,872
3,979,739
6,460,611
31,136,711
31,136,711
$ 561,969
101,369
408,871
970,313
13,214
5,166,785
7,222,521
1,377,190
68,285,844
7,752,862
77,415,896
$ 13,591,249 $ 8,303,511 $ 37,597,322 $ 84,638,417
-15-
$ 3,068,147
133,649
409,371
4,950,052
16,850,975
20,010
36,493
44,341,716
69,810,413
29,208,587
177,183,146
7,752,862
(335,283)
213,809,312
$ 283,619,725
Exhibit C
THIS PAGE INTENTIONALLY LEFT BLANK
- 16 -
Exhibit D
PALM DESERT REDEVELOPMENT AGENCY
RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
June 30, 2011
Total fund balance for governmental funds $ 213,809,312
Amounts reported for governmental activities in the Statement of Net Assets are
different because:
When capital assets (land, buildings, equipment, etc.) that are to be used in
governmental activities are purchased or constructed, the costs of those assets
are reported as expenditures in governmental funds. However, the Statement
of Net Assets includes those capital assets among the assets of the Agency
as a whole:
Beginning Balance as restated, net depreciation $ 139,442,469
Current year additions 9,940,845
Transfer assets to city (58,522,089)
Current year deletions (3,625,306)
Current year depreciation (2,817,320)
Ending Balance, net depreciation
Because the focus of governmental funds is on short-term financing, some assets
will not be available to pay for current -period expenditures. Those assets (for
example, receivables) are offset by deferred revenues in the governmental funds
and, thus, are not included in fund balance:
Interest that was not paid at year-end
84,418,599
36,493
Long-term liabilities applicable to the Agency's governmental activities are not
due and payable in the current period and, accordingly, are not reported as fund
liabilities. All liabilities, both current and long-term, are reported in the Statement
of Net Assets. (387,124,803)
Interest on long-term debt is not accrued in governmental funds, but rather is
recognized as an expenditure when due. (4,834,051)
The cost of issuing bonds is recognized as an expenditure in the period paid,
however, in the Statement of Net Assets, it is amortized over the life of the bonds. 9,190,702
Net assets (deficit) of governmental activities $ (84,503,748)
See independent auditors' report and notes to basic financial statements.
- 17 -
REVENUES:
Taxes
Intergovernmental
Investment earnings
Rental income
Other revenues
TOTAL REVENUES
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
For the year ended June 30, 2011
Special
Revenue
Fund Debt Service Funds
Low and
Moderate
Income Project Project
Housing Area 1 Area 2
$ 49,506,489 $ 15,274,576
424,532 323,330 5,632
1,993
420,973 260,784
847,498 50,090,603 15,280,208
EXPENDITURES:
Current:
General government 1,218,343 22,028 10,834
Community improvements - -
Economic development -
Housing programs 415,531
Affordable rental units - -
Payments to other agencies 19,677,610 5,758,262
Supplemental Educational Revenue Augmentation Payment 4,274,306 -
Capital outlay 995 -
Debt service:
Interest and fiscal charges 199,863 378,767
Principal retirement 6,663,940 2,558,767
TOTAL EXPENDITURES 1,634,869 30,837,747 8,706,630
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (787,371) 19,252,856 6,573,578
OTHER FINANCING SOURCES (USES):
Transfers in 16,365,307 -
Transfers out (17,133,573) (26,036,092) (9,408,437)
TOTAL OTHER FINANCING
SOURCES (USES) (768,266) (26,036,092) (9,408,437)
NET CHANGE IN FUND BALANCES (1,555,637) (6,783,236) (2,834,859)
FUND BALANCES - BEGINNING OF YEAR 77,954,676 26,568,623 2,499,576
FUND BALANCES (DEFICIT) - END OF YEAR $ 76,399,039 $ 19,785,387 $ (335,283)
See independent auditors' report and notes to basic financial statements.
- 18 -
(5,086,158)
(628,419)
1,732,470
$ 1,104,051
Capital
Debt Service Funds (Continued) Projects Fund
Project
Area 4
Financing
Authority
$ 11,947,394 $ $
30,024 40,401
Project
Area 2
100,575
117,057
Other
Governmental
Funds
$ 4,249,101
21,394
415,851
4,855,025
206,955
11,977,418 40,401 217,632 9,748,326
7,785
6,744,173
767,721
17,237,994
22,240,000
7,519,679 39,477,994
4,457,739 (39,437,593)
31,591,763
(5,086,158) (5,097)
31,586,666
(7,850,927)
16,154,438
$ 8,303,511
443,649 2,714,273
6,745,784 1,182,424
13,928 568,079
4,735,159
1,983,494
213,370
8,188,748 1,751,102
15,392,109 13,147,901
(15,174,477) (3,399,575)
728,798 11,713,634
(535,271) (2,194,874)
193,527
(14,980,950)
46,117,661
$ 31,136,711
9,518,760
6,119,185
71,296,711
$ 77,415,896
- 19 -
Total
Governmental
Funds
$ 80,977,560
21,394
1,340,345
4,857,018
1,005,769
88,202,086
4,416,912
7,928,208
582,007
415,531
4,735,159
34,163,539
5,255,397
9,940,845
17,816,624
31,462,707
116,716,929
(28,514,843)
60,399,502
(60,399,502)
(28,514,843)
242,324,155
$ 213,809,312
Exhibit E
Exhibit F
PALM DESERT REDEVELOPMENT AGENCY
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the year ended June 30, 2011
Net change in fund balances - total governmental funds $ (28,514,843)
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities, the costs of those assets are allocated over their
estimated useful lives as a depreciation expense. This is the amount by
which capital assets deletions and depreciation ($64,964,715) exceeded
capital assets addition ($9,940,845) in the current period.
The issuance of long-term debt provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither
transaction, however, has any effect on net assets. Also, governmental funds
report the effect of issuance costs, premiums, discounts and similar items
when the debt is first issued, whereas these amounts are deferred and
amortized in the Statement of Activities. These amounts are the net effect of
theses differences in the treatment of long-term debt and related items:
Principal payments $ 31,462,707
Capital accretion (1,529,211)
Some expenses reported in the Statement of Activities do not require the use
of current financial resources and, therefore, are not reported as expenditures
in governmental funds:
Net change in accrued interest for the current period
The cost of issuing bonds is recognized as an expenditure in the period paid,
however, in the Statement of Net Assets, the deferred charges are amortized
over the life of the bonds.
Premium on bonds is recognized as a revenue in the period received, however
in the Statement of Net Assets it is amortized over the life of the bond.
Losses on defeased bonds are recorded in the Statement of Net Assets as a
reduction to long-term liabilities and amortized over the life of the bonds.
(55,023,870)
29,933,496
301,062
(506,523)
475,703
(122,715)
Change in net assets of governmental activities $ (53,457,690)
See independent auditors' report and notes to basic financial statements.
- 20 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2011
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Basis of Presentation:
Government -Wide 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 Agency. For the most part, the effect
of interfund activity has been removed from these statements. Governmental activities, which
normally are supported by taxes and intergovernmental revenues, are reported separately from
business -type activities, which rely to a significant extent on fees and charges for support. The
Palm Desert Redevelopment Agency has no business -type activities.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include: 1) charges to
customers or applicants who purchase, use or directly benefit from goods, services or privileges
provided by a given function or segment, and 2) 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 the governmental funds. Major individual
governmental funds are reported as separate columns in the fund financial statements.
Fund Financial Statements
The accounting system of the Agency is organized and operated on the basis of separate funds,
each of which is considered to be a separate accounting entity. Each fund is accounted for by
providing a separate set of self -balancing accounts that constitute its assets, liabilities, fund
equity, revenues and expenditures. An emphasis is placed on major funds within the
governmental category. A fund is considered major if total assets, liabilities, revenues or
expenditures of that individual governmental fund are at least 10% of the corresponding total
for all funds of that category or type.
See independent auditors' report.
- 21 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
a. Basis of Presentation (Continued):
Fund Financial Statements (Continued)
The funds of the Agency are described below:
Governmental Fund Types:
Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of
specific revenue resources (other than major capital projects) that are legally restricted to
expenditures for specified purposes.
Debt Service Funds - Debt Service Funds are used to account for the accumulation of resources
for, and the payment of, general long-term obligation principal, interest and related costs.
Capital Projects Funds - Capital Projects Funds are used to account for financial resources to be
used for the acquisition or construction of major capital facilities.
The Agency's major governmental funds are as follows:
The Low and Moderate Income Housing Special Revenue Fund is used to account for the tax
increment set -aside to be spent on projects that benefit low and moderate -income families.
Project Area 1 Debt Service Fund is used to account for the tax increment revenues and
expenditures of Project Area 1.
Proiect Area 2 Debt Service Fund is used to account for tax increment revenues and
expenditures of Project Area 2.
Proiect Area 4 Debt Service Fund is used to account for tax increment revenues and
expenditures of Project Area 4.
The Financing Authority Debt Service Fund is used to account for the resources and payment
of the debt issued by the Palm Desert Financing Authority and loaned to the Redevelopment
Agency.
See independent auditors' report.
- 22 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
a. Basis of Presentation (Continued):
Fund Financial Statements (Continued)
Major Governmental Funds (Continued)
Proiect Area 2 Canital Proiect Fund is used to account for financial resources to be used for the
acquisition or construction of major capital facilities in Project Area 2.
b. Measurement Focus and Basis of Accounting:
Measurement Focus
Measurement focus is a term used to describe "which" transactions are recorded within the
various financial statements.
On the government -wide statement of net assets and the statement of activities, activities are
presented using the economic resources measurement focus. Under the economic resources
measurement focus, all (both current and long-term) economic resources and obligations of the
government are reported.
In the fund financial statements, all governmental funds are accounted for on a spending or
"financial flow" measurement focus. This means that only current assets and current liabilities
are generally included on their balance sheets. Their reported fund balances (net current assets)
are considered a measure of "available spendable resources." Governmental fund operating
statements present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets.
Noncurrent portions of long-term receivables due to governmental funds are reported on their
balance sheets, in spite of their spending measurement focus. Special reporting treatments are
used to indicate, however, that they should not be considered "available spendable resources"
since they do not represent net current assets.
See independent auditors' report.
- 23 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
b. Measurement Focus and Basis of Accounting (Continued):
Basis of Accounting
Basis of accounting refers to "when" transactions are recorded regardless of the measurement
focus applied.
In the government -wide statement of net assets and statement of activities, the governmental
activities are presented using the accrual basis of accounting. Under the accrual basis of
accounting, revenues are recognized when earned and expenses are recorded when the liability
is incurred or economic asset used. Revenues, expenses, gains, losses, assets and liabilities
resulting from exchange and exchange -like transactions are recognized when the exchange
takes place.
In the fund financial statements, governmental funds are presented on the modified accrual
basis of accounting. Under this modified accrual basis of accounting, revenues are recognized
when "measurable and available." Measurable means knowing or being able to reasonably
estimate the amount. Available means collectible within the current period or soon enough
thereafter to pay current liabilities. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expenditures are recorded only
when payment is due.
Revenues that are susceptible to accrual include property taxes that are levied for and due for
the fiscal year and collected within 60 days after year-end. Property taxes, rents 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. All other revenue items are
considered to be measurable and available only when cash is received by the government.
c. Investments:
Investments are stated at fair value (quoted market price or the best available estimate thereof).
d. Property Held for Resale:
The Agency purchased several residential properties within the Agency's project area to
preserve them as affordable. The properties were restricted as affordable at the time of the
Agency's purchase. The properties are recorded in the Redevelopment Agency Special
Revenue Fund as property held for resale, at the lower of acquisition cost or net realizable
value. At June 30, 2011, the cost of the property held for resale for various affordable housing
properties in Palm Desert totaled $2,685,387.
See independent auditors' report.
-24-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e. Prepaid Items and Deposits:
Certain payments to vendors reflect costs applicable to future accounting periods are recorded
as prepaid items in the government -wide and fund financial statements. The Agency has
$177,320 of miscellaneous prepaid items.
f. Property Tax Calendar:
g•
Property taxes are assessed and collected each fiscal year according to the following property
tax calendar:
Lien Date
Levy Date
Due Date
Delinquent Date
January 1
July 1 to June 30
November 1 - 1st Installment
March 1 - 2nd Installment
December 10 - 1st Installment
April 10 - 2nd Installment
Under California law, property taxes are assessed and collected by the counties up to 1% of
assessed value, plus other increases approved by the voters. The property taxes go into a pool,
and are then allocated to the agencies based on complex formulas prescribed by the state
statutes.
Capital Assets and Depreciation:
Capital assets are reported in the government -wide financial statements. Capital assets are
defined by the Agency as assets with an initial cost of more than $500 and an estimated life in
excess of one year. Such assets are recorded at historical cost or estimated historical cost if
purchased or constructed. Donated capital assets are recorded at estimated fair market value at
the date of donation. The Agency had no infrastructure assets.
The cost of normal maintenance and repairs that do not add to the value of the asset or
materially extend asset lives are not capitalized.
See independent auditors' report.
- 25 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
g. Capital Assets and Depreciation (Continued):
Property, plant and equipment are depreciated using the straight-line method over the following
estimated useful lives:
Buildings 40 years
Improvements other than buildings 20 years
Machinery and equipment 5 to 8 years
h. Long -Term Obligations:
In the government -wide financial statements, long-term debt and other long-term obligations
are reported as liabilities. Bond premiums and discounts, as well as issuance costs, are deferred
and amortized over the life of the bonds using the effective interest method. Bonds payable are
reported net of the applicable bond premium or discount. Bond issuance costs are reported as
deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of debt
issued is reported as other fmancing sources. Premiums received on debt issuances are reported
as other financing sources while discounts on debt issuances are reported as other financing
uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are
reported as debt service expenditures.
See independent auditors' report.
- 26 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
i. Explanation of differences between Governmental Funds Balance Sheets and the Statement of
Net Assets:
Long -Term Debt
Total Capital Transactions/ Reclassifications Statement
Governmental Related Interest and of Net
Funds Items Payable Eliminations Assets
Assets:
Cash and investments $ 119,469,509 $
Receivables 9,180,471
Advances to other funds 17,821,288
Due from other funds 3,979,739
Property held for resale 2,685,387
Prepaid items and deposits 177,320
Unamortized debt issuance costs
Restricted cash with fiscal agent 130,306,011
Capital assets
Total Assets
$
84,418,599
9,190,702
- $ 119,469,509
- 9,180,471
(17,821,288)
(3,979,739)
2,685,387
177,320
9,190,702
130,306,011
84,418,599
283,619,725 84,418,599 9,190,702 (21,801,027) 355,427,999
Liabilities:
Accounts payable 3,068,147 3,068,147
Accrued liabilities 133,649 133,649
Advances to other funds 17,821,288 (17,821,288) -
Due to other funds 3,979,739 (3,979,739) -
Interest payable - 4,834,051 4,834,051
Deposits payable 409,371 - 409,371
Uneamed revenue 20,010 20,010
Deferred revenue 36,493 (36,493) -
Amounts due under
pass -through agreements 44,341,716 - 44,341,716
Long-term liabilities - within one year - 15,412,707 15,412,707
Long-term liabilities - more than one year 371,712,096 371,712,096
Total Liabilities
69,810,413 - 391,958,854 (21,837,520) 439,931,747
Net Assets (Deficit) $ 213,809,312 $ 84,418,599 $ (382,768,152) $ 36,493 $ (84,503,748)
See independent auditors' report.
- 27 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
j. Explanation of differences between Governmental Funds Operating Statements and the
Statement of Activities:
Total Capital Long -Term Cost of Reclassifications Statement
Governmental Related Debt Accrued Issuance/ and of
Funds Items Transactions Interest _perm amount Eliminations Activities
Revenues:
Taxes $ 80,977,560 $ - $ - $ - $ - $ - $ 80,977,560
Intergovernmental 21,394 - (21,394)
Investment earnings 1,340,345 (37,850) 1,302,495
Charges for services - 417,652 417,652
Capital grants - - - 131,451 131,451
Rental income 4,857,018 (4,728,432) 128,586
Affordable rental units - 4,932,000 4,932,000
Other revenues 1,005,769 (693,427) 312,342
Total Revenues 88,202,086 - 88,202,086
Expenditures:
Current:
General government 4,416,912 (35,994) 4,380,918
Economic development 582,007 - 582,007
Payments to other agencies 39,418,936 39,418,936
Pass -through agreements 34,163,539 (34,163,539) -
Affordable rental units 4,735,159 2,527,471 35,994 7,298,624
Community improvements 7,928,208 59,695,392 - 67,623,600
Housing programs 415,531 2,741,852 - 3,157,383
Supplemental educational
revenue augmentation 5,255,397 - (5,255,397) -
Capital outlay 9,940,845 (9,940,845) - -
Debt service:
Principal retirement 31,462,707 (31,462,707) -
Interest and fiscal charges 17,816,624 1,529,211 (301,062) 153,535 19,198,308
Total Expenditures 116,716,929 55,023,870 (29,933,496) (301,062) 153,535 141,659,776
Other Financing Sources (Uses):
Transfers in 60,399,502 - (60,399,502)
Transfers out (60,399,502) 60,399,502
Total Other Financing
Sources (Uses) -
Net Change in
Fund Balances
$ (28,514,843) $ (55,023,870) $ 29,933,496 $ 301,062 $ (153,535) $ - $ (53,457,690)
See independent auditors' report.
- 28 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
k. Budgetary Accounting:
The Agency uses the following procedures in establishing its budgetary data reported in the
financial statements:
1. Before the beginning of the fiscal year, the Executive Director submits to the Board of
Directors a proposed budget for the year commencing the following July 1.
2. Public hearings are conducted to obtain taxpayer comments.
3. The Budget is subsequently adopted through passage of a resolution.
4. Original appropriations are modified by supplementary appropriations and transfers among
budget categories. The Board approves all significant changes. Annual appropriations lapse
at year-end.
5. Encumbrances and Continuing Appropriations are rebudgeted as of July 1 by Board action.
6. Formal budgetary integration is employed as a management control device during the year
for the Special Revenue and Capital Projects Funds. Formal budgetary integration is not
employed for Debt Service Funds because effective budgetary control is alternatively
achieved through debt indenture provisions.
7. Budgets are adopted on a basis consistent with accounting principles generally accepted in
the United States of America. Budgetary data for the Special Revenue Funds and Capital
Projects Funds are not presented herein, as the budgets for these funds are long-term in
nature.
1. Relationship to the City of Palm Desert:
The Palm Desert Redevelopment Agency is an integral part of the reporting entity of the City
of Palm Desert, California. The funds of the Agency have been included within the scope of the
basic financial statements of the City because the City Council, acting as the Redevelopment
Agency Board, of the City of Palm Desert exercises oversight responsibility over the operations
of the Agency. Only the funds of the Agency are included herein and these financial
statements, therefore, do not purport to represent the financial position or results of operations
of the City of Palm Desert.
See independent auditors' report.
-29-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
m. Use of Estimates:
The financial statements are prepared in conformity with accounting principles generally
accepted in the United States of America and, accordingly, include amounts that are based on
management's best estimates and judgments. The financial statements include estimates for
depreciation expense and fair value of investments. Accordingly, actual results could differ
from the estimates.
2. ORGANIZATION AND TAX INCREMENT FINANCING:
The Agency is a separate governmental entity as prescribed in the California Community
Redevelopment law and as set forth in the Health and Safety Code of the State of California. The
Agency consists of Project Area 1, Project Area 2, Project Area 3 and Project Area 4.
In addition, the Agency and the City of Palm Desert (the City) have established the Palm Desert
Financing Authority as a joint power of authority between the Agency and the City for purposes of
financing and funding capital improvements. Transactions related to the joint power for the Agency
are recorded in a debt service fund.
The Palm Desert Housing Authority was established in January 1998, as a component unit of the
Agency and is partly responsible for the administration of providing affordable housing in the City
of Palm Desert. The apartment complexes are operated by the Authority through a management
company. The transactions related to the Housing Authority are reported in a Special Revenue
Fund.
Agency expenses include capital improvement projects and operating costs which include required
staff support and consultant services.
The Agency's primary source of revenue comes from property taxes, referred to in the
accompanying financial statements as "tax increment revenue." The assessed valuation of all
property within each project area was determined on the date of adoption of the Project Area.
Except for certain amounts provided by specific agreement (see Note 7), property taxes related to
the incremental increase in assessed values after the adoption of the Project Area have been
allocated to the Agency, while all property taxes on the "frozen" assessed valuation as of the
adoption date have been allocated to the City and other districts.
See independent auditors' report.
-30-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
3. CASH AND INVESTMENTS:
Cash and Investments
Cash and investments reported in the accompanying financial statements consisted of the
following:
Cash and investments pooled with the City $ 12,004,224
Investments 104,675,285
Investment in Energy Bonds 2,790,000
Restricted cash with fiscal agent 130,306,011
$ 249,775,520
Investments Authorized by the California Government Code and the Agency's Investment
Policy
The Agency is subject to the City's investment policy. Under provision of the City's investment
policy and in accordance with the California Government Code, the following investments are
authorized:
• United States Treasury bills, notes, bonds or certificates of indebtedness
• United States government -sponsored agency securities, participations or other instruments
• Banker's Acceptances issued by commercial banks
• Commercial Paper issued by general corporations
• Negotiable Certificates of Deposits, issued by a nationally or state -chartered bank, a savings
association, a federal association or by a state -licensed branch of a foreign bank
• Time Certificates of Deposit issued by qualified public depositories
• Repurchase Agreements sold by authorized brokers
• Medium -Term Notes issued by corporations organized and operating in the United States, or by
depository institutions operating in the United States and licensed by the United States or by
any state
• Money Market Mutual Funds that are registered with the SEC under the Investment Act
of 1940
• State of California Local Agency Investment Fund (LAIF) that is managed by the State
Treasurer's Office
• Structured Notes in the form of callable securities or "STRIPS" issued by the United States
Treasury, Federal Agencies or government -sponsored enterprises
• Local Government Investment Pools
See independent auditors' report.
- 31 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
3. CASH AND INVESTMENTS (CONTINUED):
Investments Authorized by the California Government Code and the Agency's Investment
Policy (Continued)
The City's Investment policy imposes the following restrictions on the maximum percentage it can
invest in a single type of investment.
Portfolio Single Issuer
Issuer Maximum Maximum
United States Treasury Bills, Notes, Bonds 100% N/A
United States Government -Sponsored
Agency Securities 100% 30%
Banker's Acceptances 40% 30%
Commercial Paper 25% 10%
Negotiable Certificates of Deposit 30% N/A
Time Certificates of Deposit 15% N/A
Repurchase Agreements 20% N/A
Medium -Term Corporate Notes 30% 5%
Money Market Mutual Funds 20% N/A
Local Agency Investment Fund (LAIF) $50M/Acct N/A
Structured Notes (STRIPS) 20% N/A
Local Government Investment Pools 30% N/A
N/A - Not Applicable
The City's policy is more conservative than state law, which has no issuer concentration limits on
federal agency debt. The federal agency debt that the City purchases have implied credit ratings of
"AAA/Aaa". Subsequent to June 30, 2011, Federal agency debt has been downgraded to AA+
(Negative)/Aaa (Negative).
Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustee are governed by provisions of the debt
agreements, rather than the general provisions of the California Government Code or the Agency's
investment policy.
See independent auditors' report.
- 32 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
3. CASH AND INVESTMENTS (CONTINUED):
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of
its fair value to changes in market interest rates. One of the ways that the Agency manages its
exposure to interest rate risk is by purchasing a combination of shorter term and longer term
investments and by timing cash flows from maturities so that a portion of the portfolio is maturing
or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity
needed for operations. The Agency's investment of $2,790,000 in the City of Palm Desert Bonds
is due as follows: (1) within 12 months or less $131,000, (2) between 13 and 24 months $423,000,
and (3) over 24 months $2,236,000. The investment of $32,178,519 in Federal Agency Coupons is
due as follows: (1) within 12 months or less $12,045,834 and (2) between 13 and 24 months
$20,132,685. The investment in medium term notes of $6,720,057 is due as follows: (1) within
12 months or less $3,036,792 and (2) between 13 and 24 months $3,683,265. The restricted cash
and investments held by the bond trustee and Housing Authority consist of investments in money
market mutual funds, local government investment pools and demand deposits and are not subject
to interest rate risk.
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. The Agency's investment of $2,790,000 in City of Palm Desert
bonds is not rated. Investments held by the bond trustee of $126,963,662 consist of $2,948,743 in
money market mutual funds rated AAA by Standard and Poor's, and $124,014,919 in LAIF which
is not rated. The Agency deposited $625,100 into an escrow account that is not subject to credit
risk. The other investments include: $7,500,000 in the unrated Riverside County Treasurer's Pool;
$49,753,919 in Rabobank's Money Market accounts, rated AAA; $8,522,790 in CAMP (California
Asset Management Program), AAA -rated by Standard and Poor's; $32,178,519 in AAA -rated
Federal Agency Coupons; and $6,720,057 in Medium -Term Notes which are rated AA. For the
Housing Authority, $131 was invested in CAMP, rated AAA, $1,650,267 invested with unrated
LAIF and $1,066,851 in deposits which are not subject to credit risk.
See independent auditors' report.
-33-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
3. CASH AND INVESTMENTS (CONTINUED):
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The custodial credit risk for
investments is the risk that, in the event of the failure of the counterparty (e.g., broker -dealer) to a
transaction, a government will not be able to recover the value of its investment or collateral
securities that are in the possession of another party. The California Government Code and the
Agency's investment policy do not contain legal or policy requirements that would limit the
exposure to custodial credit risk for deposits or investments, other than the following provision for
deposits: The California Government Code requires that a financial institution secure deposits
made by state or local governmental units by pledging securities in an undivided collateral pool
held by a depository regulated under state law (unless so waived by the governmental unit). The
market value of the pledged securities in the collateral pool must equal at least 110% of the total
amount deposited by the public agencies.
California law also allows financial institutions to secure the Agency deposits by pledging first
trust deed mortgage notes having a value of 150% of the secured public deposits.
Disclosures Related to Interest Rate Risk, Credit Risk and Custodial Credit Risk:
The Agency's cash and investments are pooled with the City of Palm Desert's cash and
investments. Additional disclosures regarding $12,004,224 pooled investments related to interest
rate risk, credit risk and custodial credit risk are available in the City of Palm Desert's
Comprehensive Annual Financial Report.
See independent auditors' report.
-34-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
4. LOANS, NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES:
Receivables consisted of the following at June 30, 2011:
Special
Revenue
Fund
Low and
Moderate Debt Service Funds
Income Project Project Project Financing
Housing Area 1 Area 2 Area 4 Authority
Accounts $ 49,577 $ 84,295 $ 25,044 $ 8,233 $ -
Interest 67,270 - - 7,761
Loans 7,324,592 - - -
$ 7,441,439 $ 84,295 $ 25,044 $ 8,233 $ 7,761
Capital
Projects Fund Other Total
Project Governmental Governmental
Area 2 Funds Receivables
Accounts $ 446 $ 66,273 $ 233,868
Interest 44,666 302,314 422,011
Loans - 1,200,000 8,524,592
$ 45,112 $ 1,568,587 $ 9,180,471
See independent auditors' report.
-35-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
4. LOANS, NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES
(CONTINUED):
Loans Receivable
a. A loan receivable for the construction of a multi -family affordable housing development dated
June 14, 2001, with a balance of $7,298,547 is due from the Palm Desert Development
Company. The loan is secured by a Deed of Trust, with assignment to property, rent and
fixtures on the housing development located in Palm Desert. Interest is earned and due annually
at a rate of 1 % per annum from the date on which the final certificate of occupancy is issued.
Principal on the loan is based on the applicable agency's percentage of positive net cash flow
derived from the operations of the Development.
b. The Agency has $26,045 in home improvement loans. Payments of interest and principal are
due monthly on these loans.
c. On April 21, 2003, the Agency entered into a loan agreement with The Regents of the
University of California, on behalf of its Riverside Campus, to loan various amounts over a
period of time, not to exceed an aggregate amount of $2,000,000. Proceeds of the loan are to be
used for capital improvements at the University's Riverside Campus. The outstanding principal
balance and interest on the note is due in five annual payments beginning July 15, 2009. As of
June 30, 2011, the amount outstanding on the loan was $1,200,000.
d. The Agency has issued loans for several other projects, all of which are secured by a deed of
trust. A valuation allowance equal to the loan balance has been recognized where there is a
significant possibility that these loans either become uncollectible or forgiven by the Agency at
a future date if all the terms of the loans have been met.
See independent auditors' report.
-36-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
4. LOANS, NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES
(CONTINUED):
Detailed information for these loans is as follows:
Loans Receivable (Continued)
Project Name
Self -Help
Housing Program
Home Improvement
Loans
Portola Palms
Mobilehome Park
Desert Rose
Falcon Crest
Acquisition,
Rehabilitation,
Resale
Loan
Balance Interest
Outstanding Rate
$ 429,000 7.25%
318,304 N/A
113,640 3.00%
Maturity
Date Secured By
30 years Deed of Trust
or 2024
N/A Deed of Trust
30 years
from date
of loan
Deed of Trust
2,275,438 3.00% 30 - 45 years * Deed of Trust
from date
of loan
5,490,383 3.00% 30-45 years Deed of Trust
from date
of loan
190,510 3.00% 30 - 45 years Deed of Trust
from date Assignment
of loan of Rent
Special Provisions of Loan
Loan balance and interest due upon maturity,
unpaid balance of loan or interest will bear
an interest rate of 12%.
Loan is payable upon change or transfer of
title, refinancing or upon the death of the
borrower. Restrictive convenants are placed
against property to maintain affordability for
up to 45 years in exchange for favorable loan
terms.
Loan balance and interest will be forgiven at
maturity if debtor does not breach the terms
and conditions of either the unit regulatory
agreement or note.
Loan will be forgiven at maturity unless the
debtor is in violation of the unit regulatory
agreement or the deed of trust.
Loan is payable upon change or transfer of
title, refinancing or upon the death of the
borrower.
Loan is payable upon change or transfer of
title, refinancing or upon the death of the
borrower. Restrictive convenants are placed
against property to maintain affordability for
up to 45 years in exchange for favorable loan
terms.
* All properties acquired from the Redevelopment Agency after June 2009 will have a 45 year restrictive covenant.
See independent auditors' report.
-37-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
4. LOANS, NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES
(CONTINUED):
Advances To/From Other Funds
Advances From
Low and Moderate Income Housing
Low and Moderate Income Housing
Low and Moderate Income Housing
Low and Moderate Income Housing
Advances To
Debt Service Project Area #1
Debt Service Project Area #2
Debt Service Project Area #4
Other Governmental Funds
Amount
$ 10,438,131
3,755,605
2,657,239
970,313
$ 17.821.288
The advances from the Low and Moderate Income Housing Fund to the Debt Service Project Areas
Funds were made to cover the SERAF payment are due to be paid prior to June 30, 2015. The
advances have no interest rate.
Due from Others Due to Others Amount
Debt Service Project Area #1 Capital Project Area #2 $ 584,461
Debt Service Project Area #2 Capital Project Area #2 3,395.278
$ 3.979.739
The Debt Service Project Areas' receivable of $3,979,739 to Capital Project Area #2 was to provide
temporary funds for operations.
See independent auditors' report.
- 38 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
5. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS:
Transfers
The composition of interfund transfers as of June 30, 2011, is as follows:
Transfers From
Special Revenue Funds:
Low and Moderate
Income Housing
Debt Service Funds:
Project Area 1
Project Area 2
Project Area 4
Financing Authority
Capital Projects Fund:
Project Area 2
Other Governmental
Funds
Totals
Transfers are used to:
Transfers To
Special
Revenue
Fund
Low and
Moderate Debt Service Funds Capital Projects Fund Other
Income Financing Project Governmental
Housing Authority Area 2 Funds
$ 9,080,944 $
10,004,878
3,087,009
2,414,608
858,812
$ 16,365,307 $
13,116,577
5,754,192
2,614,220
1,025,830
31,591,763 $
Total
$ 8,052,629 $ 17,133,573
2,914,637 26,036,092
567,236 9,408,437
57,330 5,086,158
5,097 5,097
535,271 535,271
156,465 153,767 2,194,874
728,798 $ 11,713,634 $ 60,399,502
1. move receipts restricted to debt service from the funds collecting the receipts to the debt service
funds as debt service payments become due,
2. transfer 20% of tax increments received by RDA Debt Service Funds to the Low and Moderate
Income Housing Special Revenue Fund,
3. transfer allocation of administrative expenses, and
4. transfer revenues to provide for capital projects.
See independent auditors' report.
-39-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
6. CAPITAL ASSETS:
A summary of changes in capital assets for the year ended June 30, 2011, is as follows:
Balance at Balance as restated Balance at
July 1, 2010 Restatement at July 1, 2010 Transfers Additions Deletions June 30, 2011
Capital assets, not
being depreciated:
Land $ 77,137,913 $ (12,718,829) $ 64,419,084 S 293,538 $ 1,232,569 S (55,001,281) $ 10,943,910
Construction -in -progress 13,287,255 - 13,287,255 (10,707,184) 8.600,644 (1,182,861) 9.997.854
Total capital assets, not
being depreciated 90,425,168 (12,718,829) 77,706.339 (10,413,646) 9,833.213 (56,184,142) 20,941.764
Capital assets, being
depreciated:
Buildings 92,137,624 (6,318,939) 85,818,685 10,413,646 (6,368,646) 89,863,685
Improvements other
than buildings 7,312,141 7,312,141 47,292 (47,292) 7,312,141
Infrastructure 1,990 (5,128) (3,138)
Machinery and equipment 296,523 296,523 58.350 (58.350) 296,523
Total capital assets,
being depreciated 99,746.288 (6,318,939) 93,427,349 10,413,646 107,632 (6.479,416) 97,469,211
Less accumulated
depreciation for,
Buildings (28,755,149) 954,432 (27,800,717) - (2,415,103) 511,035 (29,704,785)
Improvements other
than buildings (3,669,654) (3,669,654) (365,607) (4,035,261)
Machinery and equipment (220.848) (220,848) - (36,610) 5,128 (252.330)
Total accumulated
depreciation (32,645,651) 954,432 (31,691.219) - (2.817.320) 516,163 (33,992.376)
Capital assets, being
depreciated, net 67,100,637 (5,364,507) 61,736,130 10,413,646 (2,709,688) (5,963,253) 63,476,835
Capital assets, net -
GovernmentalActivities $ 157,525,805 $ (18,083,336) $ 139,442,469 S - $ 7,123,525 S (62,147,395) $ 84,418,599
Depreciation expense of $2,527,472 is reported with Affordable rental units, $275,385 is reported
with Community improvements, and $14,463 is reported with Housing program expenses in the
Statement of Activities.
During the year, the Agency Board approved Resolution No. 581 transferring property to the City
of Palm Desert totaling $58,522,089.
See independent auditors' report.
-40-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
7. AMOUNTS DUE UNDER PASS -THROUGH AGREEMENTS:
Property taxes related to the incremental increase in assessed values after the adoption of the
Redevelopment Plan are, except where otherwise provided by specific agreement, allocated to the
Agency. All taxes on the "frozen" assessed valuation of the property are allocated to the City and
other taxing agencies. The Agency has entered into various pass -through agreements with other tax
agencies to allocate their tax increment resulting from the increase in assessed values after the
adoption of the Redevelopment Plan.
At June 30, 2011, the Agency has an obligation of $44,341,716 to other agencies and entities
related to specific pass -through agreements as follows:
Entity
Riverside County -
Capital Improvement
Riverside County - Schools
Riverside County - Library
Riverside County - Fire
Coachella Valley Mosquito
Abatement District
Coachella Valley Water District
Desert Community College District
Desert Sands Unified
School District
Coachella Valley Recreation
and Park District
Coachella Valley Resources District
Palm Springs Unified
School District
County Juvenile Health District
Other Deposits
Balance at
June 30, 2010
$ 23,906,863 *
783,603
11,614,230
3,177,488
643,269
10,972,460
1,344,005
5,657,267 *
485,547
4,938
376,618
1,049,915
661,977
$ 60,678,180
Additions
$ 23,796,976
696,662
1,710,496
2,944,289
561,173
1,095,835
1,205,279
5,276,147
440,674
4,114
282,543
1,037,566
171,612
$ 39,223,366
Payments
$ 26,610,498
783,603
3,548,864
3,177,488
643,269
11,421,798
1,344,005
5,834,227
485,547
4,938
376,618
1,032,507
296,468
$ 55,559,830
Balance at
June 30, 2011
$ 21,093,341
696,662
9,775,862
2,944,289
561,173
646,497
1,205,279
5,099,187
440,674
4,114
282,543
1,054,974
537,121
$ 44,341,716
* The Redevelopment Agency has used bond proceeds for the construction of capital
improvements, which benefit these entities. These entities have agreements with the
Redevelopment Agency, which will allow it to use a portion of these amounts to offset debt
service costs.
See independent auditors' report.
- 41 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES:
Schedule of Changes
The following is a schedule of changes in long-term liabilities of the Agency for the fiscal year
ended June 30, 2011:
Project Area No. 1
2002A TARRBs, $22,070,000
2003 TARBs, $19,000,000
2004A TARRBs, $24,945,000
2006 A & B TARBs, $62,320,000
2007A TARRBs, $32,600,000
Advances from City
Total
Project Area No. 2
2002A TARRBs, $17,310,000
2003 TARBs, $15,745,000
2006 A-D TARBs, $67,618,213
Advances from City
County note payable
Total
Project Area No. 3
2003 TARBs, $4,745,000
2006 A-C TABs, $15,059,526
Total
Project Area No. 4
1998 TARBs, $11,02,000
2001 TARBs, $15,695,000
2006A TARBs, $19,273,089
Total
Combined Low and Moderate Housing
1998 TARBs, $48,760,000
2002 TARBs, $12,100,000
2007 TARBs, $86,155,000
Total
Total - All Project Areas
Bonds payable
Advances from City
County note payable
Subtotal
Add: Unamortized bond premium
Less: Deferred amount on refunding
Total
See independent auditors' report.
Balance
July 1, 2010
$ 22,070,000 $
19,000,000
19,830,000
53,870,000
25,420,000
6,663,940
$ 146,853,940 $
$ 12,660,000
15,745,000
67,340,585
15,991,060
245,414
$ 111,981,09
$ 4,020,000
15,647,978
$ 19,66/,9'/8
Additions
993,362
$ 993,361
$
226,380
$ 226,380
$ 8,355,000 $
13,895,000
19,703,593
$ 41,93,593
309,469
$ 309,469
$ 2,995,000 $
10,335,000
78,085,000
$ 91,415,000
$ 388,972,156
22,655,000
245,414
411,872,570
6,899,537
1,360,820
$ 417,411,287
$ 1,529,211
1,529,211
$ 1,529,211
- 42 -
Repayments/
Reductions
$
1,130,000.00
2,320,000.00
2,625,000.00
6,663,940
$ 12,/38,94U
$ 720,000
9,405,000
2,436,060
122,707
$ 11,683,/b/
$ 105,000
170,000
1'/$,OUO
$ 130,000
320,000
435,000
$ 88S,000
$ 1,460,000
285,000
3,135,000
$ 4,880,000
$ 22,240,000
9,100,000
122,707
31,462,707
475,703
122,715
$ 31,815,695
Balance
June 30, 2011
$ 22,070,000 $
19,000,000
18,700,000
51,550,000
22,795,000
Due Within
One Year
1,050,000
2,450,000
2,870,000
$ 134,115,000 $ 6,3/0,000
$ 11,940,000
15,745,000
58,928,947
13,555,000
122,707
$ 100,291,654
$ 3,915,000
15,704,358
$ 19,619,3$8
$ 8,225,000
13,575,000
19,578,062
$ 41,3 /8,062
$ 1,535,000
10,050,000
74,950,000
$ 86,$35,000
$ 760,000
1,720,000
122,707
$ 2,602,/U/
$ 110,000
205,000
$ 30,0011
$ 135,000
325,000
570,000
$ 1,030,000
$ 1,535,000
295,000
3,265,000
$ 5,09S,000
$ 368,261,367 S 15,290,000
13,555,000
122,707 122,707
381,939,074 15,412,707
6,423,834
1,238,105
$ 387,124,803 $ 15,412,707
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
A description of long-term liabilities outstanding (excluding defeased debt) of the Agency as of
June 30, 2011, follows:
Tax Allocation Bonds
Tax Allocation bonds used for capital improvements are special obligations of the Agency and the
Financing Authority (a component unit of the Agency) and are secured by an irrevocable pledge of
tax revenues and other funds as provided under the Bond Resolution. The bonds and any interest
thereon are not a debt of the City, the State of California or any of its political subdivisions, and
neither the City, the State of California nor any of its political subdivisions is liable on the bonds,
nor in any event shall the bonds and interest thereon be payable out of any funds or properties other
than those provided under the Bond Resolution. The Agency purchased insurance from Ambac
Assurance Corporation (Ambac) and MBIA Insurance Corporation (MBIA) for the purpose of
enhancing the creditworthiness of the bonds.
On November 8, 2010, Ambac Financial Group, Inc. ("Ambac Group"), whose principal operating
subsidiary, Ambac Assurance Corporation, is a guarantor of public finance and structured finance
obligations, announced that it filed for a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code ("Bankruptcy Code") in the United States Bankruptcy Court for
the Southern District of New York ("Bankruptcy Court"). Ambac Group will continue to operate in
the ordinary course of business as "debtor -in -possession" under the jurisdiction of the Bankruptcy
Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of
the Bankruptcy Court.
On February 18, 2009, MBIA announced the restructuring of its financial guaranty insurance
operations into two separately capitalized sister companies, with one entity (MBIA Illinois)
assuming the risk associated with its US municipal exposures, and the other (MBIA Corp) insuring
the remainder of the portfolio. Subsequent to the restructuring of MBIA, Moody's Ratings assigned
ratings to the reinsured municipal securities based on the higher of (a) the insurance financial
strength rating of MBIA Illinois, to `Baal'; or (b) the published underlying rating. Subsequent to
the restructuring of MBIA, S&P assigned its insurance financial strength rating of MBIA Illinois to
`AA -minus'. Effective March 19, 2009, MBIA Illinois was renamed National Public Finance
Guarantee Corporation ("NPFGC").
National Public Finance Guarantee Corporation (formerly MBIA Illinois), an insurance subsidiary
of MBIA, which assumes the risk associated with U.S. municipal exposures, has financial strength
credit ratings of "BBB (Developing)Baal (Developing)".
See independent auditors' report.
- 43 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Pursuant to California Health and Safety Code Section 33670, the total number of dollars of taxes
which may be divided and allocated to the Agency for Project Area No. 1 is $500,000,000, and it is
estimated that the cap will be reached in the year 2022. Project Area No. 4's total is $600,000,000,
and it is estimated that this cap will be reached in the year 2034. The result of reaching the cap
limits would preclude the Agency from receiving taxes and using the taxes to pay debt in these
project areas, thereby requiring the Agency to call bonds prior to those dates. As of June 30, 2011,
the Agency has transferred $6,298,846 to its trustee to cover debt payments.
Standard & Poor's Ratings Services ("Standard & Poor's") has lowered its underlying rating from
"A" to "A-" on the following issues of bonds issued by the Authority: (i) the Authority's Tax
Allocation Revenue Bonds (Project Area No. 1, as Amended), 2006 Series A (the "2006A
Authority Bonds"), (ii) the Authority's Tax Allocation Refunding Revenue Bonds (Project Area
No. 1, as Amended), 2006 Series B (Taxable) (the "2006B Authority Bonds", and together with the
2006A Authority Bonds, the "2006 Authority Bonds"), and (iii) the Authority's Tax Allocation
Refunding Revenue Bonds (Project Area No. 1, as Amended), 2007 Series A (the "2007 Authority
Bonds").
See independent auditors' report.
-44-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
2002 Series A Tax Allocation Refundinz Revenue Bonds (Project Area No. 1, as amended)
In March 2002, the Palm Desert Financing Authority issued $22,070,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 1, as amended) 2002 Series A. The proceeds from the
bonds were loaned to the Palm Desert Redevelopment Agency. A portion of the proceeds of the
loan was used to prepay the prior loan, which affected the current refunding of a like portion of the
prior bonds. The remainder was used to fund various redevelopment capital projects of the Agency
in Project Area No. 1. The bonds consist of $10,905,000 term bonds at 5.00% due April 1, 2025,
and $11,165,000 term bonds at 5.10% due April 1, 2030. Interest is payable semi-annually on
April 1 and October 1. Mandatory sinking fund redemptions begin April 1, 2024.
The future debt service requirements on the 2002 Series A Tax Allocation Refunding Revenue
Bonds (Project Area No. 1, as amended) are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2030
Principal
12,920,000
9,150,000
Interest
$ 1,114,665
1,114,665
1,114,665
1,114,665
1,114,665
5,573,325
4,789,075
1,195,440
$ 22,070,000 $
See independent auditors' report.
- 45 -
Total
$ 1,114,665
1,114,665
1,114,665
1,114,665
1,114,665
5,573,325
17,709,075
10,345,440
17,131,165 $ 39,201,165
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Series 2003 Tax Allocation Revenue Bonds (Proiect Area No. 11
In July 2003, the Financing Authority issued $19,000,000 Tax Allocation Revenue Bonds (Project
Area No. 1 as Amended) Series 2003. The proceeds of the bonds were disbursed to make a loan to
the Redevelopment Agency. The Agency used the proceeds of the loan to fund various
redevelopment capital projects of the Agency and to finance costs of issuance of the bonds. The
bonds bear interest at 5.0%. They consist of $7,050,000 serial bonds with principal payments due
in 2026 and 2027, and $11,950,000 term bonds due in 2030. Interest will be payable on April 1 and
October 1, of each year, beginning April 1, 2004. Principal payments will be on April 1 of the
years stated above.
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project
Area No. 1) are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2030
Principal
3,440,000
15,560,000
Interest
$ 950,000
950,000
950,000
950,000
950,000
4,750,000
4,750,000
1,992,500
$ 19,000,000 $
See independent auditors' report.
-46-
Total
$ 950,000
950,000
950,000
950,000
950,000
4,750,000
8,190,000
17,552,500
16,242,500 $
35,242,500
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
2004 Series A Tax Allocation Refunding Revenue Bonds (Project Area No. 1 as Amended)
In June 2004, the Palm Desert Financing Authority issued $24,945,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 1 as Amended) 2004 Series A. The proceeds from the
bonds were loaned to the Palm Desert Redevelopment Agency to refinance a portion of the
Agency's obligations from 1995 and to fund various redevelopment capital projects within or of
benefit to the project area. Interest rates on the bonds vary from 3.0% to 5.0% per annum payable
semi-annually on April 1 and October 1. Principal payments will be made annually beginning
April 1, 2005.
The future debt service requirements on the 2004 Series A Tax Allocation Revenue Bonds (Project
Area No. 1, as amended) are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2025
Principal
$ 1,050,000
1,155,000
1,210,000
1,235,000
1,280,000
7,355,000
5,415,000
Interest
$ 876,213
828,963
776,988
728,588
676,100
2,435,426
695,500
$ 18,700,000 $
See independent auditors' report.
-47-
Total
$ 1,926,213
1,983,963
1,986,988
1,963,588
1,956,100
9,790,426
6,110,500
7,017,778 $ 25,717,778
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation Revenue Bonds (Proiect Area No. 1. as Amended) 2006 Series A and Series B
(Taxable)
On July 6, 2006, the Palm Desert Financing Authority issued $37,780,000 of Tax Allocation
Revenue Bonds (Project Area No. 1, as Amended) 2006 Series A and $24,540,000 of Tax
Allocation Refunding Revenue Bonds (Project Area No. 1, as Amended) 2006 Series B (Taxable).
The Palm Desert Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment
Agency. The proceeds of the Series A loan will be used to assist the Agency to fund various
redevelopment capital projects within or of benefit to Project Area No. 1, as Amended, pay costs of
issuance and pay the premium on a Reserve Fund surety bond. The proceeds of the Series B loan
will be used to refinance the Agency's obligations incurred under a loan agreement entered into in
1997, pay costs of issuance and pay the premium on a Reserve Fund surety bond. The Series A
bonds consist of $26,415,000 Serial Bonds with interest rates ranging from 4.70% to 5.25%
payable semiannually on October 1 and April 1. Bond maturities begin April 1, 2017, and continue
annually through 2030. Term bonds in the amount of $11,365,000 carry an interest rate of 5.00%
and mature April 1, 2022. The Series B bonds consist of $13,220,000 Serial Bonds with interest
rates ranging from 5.56% to 5.77% payable semiannually on October 1 and April 1. Bond
maturities began April 1, 2007, and continue annually through 2012. Term bonds in the amount of
$11,320,000 carry an interest rate of 5.82% and mature April 1, 2016.
The future debt service requirements on the 2006 Series A and Series B Tax Allocation Revenue
Bonds (Project Area No. 1, as amended) are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2030
Principal
$ 2,450,000
2,595,000
2,745,000
2,905,000
3,075,000
17,895,000
18,810,000
1,075,000
Interest
$ 2,714,634
2,573,269
2,422,240
2,262,482
2,093,410
8,404,650
2,492,038
130,478
$ 51,550,000 $
See independent auditors' report.
-48-
Total
$ 5,164,634
5,168,269
5,167,240
5,167,482
5,168,410
26,299,650
21,302,038
1,205,478
23,093,201 $ 74,643,201
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation Refunding Revenue Bonds (Project Area No. 1, as amended) 2007 Series A
On January 9, 2007,. the Palm Desert Financing Authority issued $32,600,000 Tax Allocation
Refunding Revenue Bonds (Project Area No. 1, as amended) 2007 Series A. The Palm Desert
Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment Agency. The
proceeds of the 2007 Loan will be used to refinance a portion of the outstanding obligations of the
Redevelopment Agency, fund various redevelopment capital projects within the Palm Desert
Redevelopment Agency Project Area No. 1, as amended, and pay the costs associated with the
issuance of the bonds. The Series A bonds consist of $32,600,000 Serial Bonds with interest rates
ranging from 3.50% to 5.00% payable semiannually on October 1 and April 1. Bond maturities
began April 1, 2008 and continue annually through 2018.
The future debt service requirements on the 2007 Series A Tax Allocation Refunding Revenue
Bonds (Project Area No. 1, as amended) are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2018
Principal
$ 2,870,000
2,955,000
3,100,000
3,230,000
3,390,000
7,250,000
Interest
$ 1,083,500
940,000
794,500
686,000
532,000
546,500
$ 22,795,000 $
See independent auditors' report.
- 49 -
Total
$ 3,953,500
3,895,000
3,894,500
3,916,000
3,922,000
7,796,500
4,582,500 $ 27,377,500
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
2002 Series A Tax Allocation Refundine Revenue Bonds (Proiect Area No. 2)
In July 2002, the Palm Desert Financing Authority issued $17,310,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 2). The Palm Desert Financing Authority loaned the
bond proceeds to the Palm Desert Redevelopment Agency to prepay outstanding indebtedness and
to fund various redevelopment capital projects within or of benefit to the project area. Interest rates
on the bonds vary from 3.0% to 5.0% per annum payable semi-annually on February 1 and
August 1.
The future debt service requirements on the 2002 Series A Tax Allocation Refunding Revenue
Bonds (Project Area No. 2) are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2023
Principal
$ 760,000
795,000
835,000
870,000
910,000
5,260,000
2,510,000
Interest
$ 548,638
509,763
472,353
436,113
397,388
1,290,846
126,750
$ 11,940,000 $
See independent auditors' report.
-50-
Total
$ 1,308,638
1,304,763
1,307,353
1,306,113
1,307,388
6,550,846
2,636,750
3,781,851 $ 15,721,851
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Series 2003 Tax Allocation Revenue Bonds (Proiect Area No. 21
In March 2003, the Palm Desert Financing Authority issued $15,745,000 of Tax Allocation
Revenue Bonds (Project Area No. 2) Series 2003. The Palm Desert Financing Authority loaned the
bond proceeds to the Palm Desert Redevelopment Agency to fund various redevelopment capital
projects of the Agency in Project Area No. 2. Interest rates on the bonds vary from 4.5% to 5.0%
per annum payable semi-annually on February 1 and August 1, with principal maturing as follows:
$ 875,000 Serial Bonds
910,000 Serial Bonds
2,485,000 Term Bonds
11,475,000 Term Bonds
August 1, 2023
August 1, 2024
August 1, 2026
August 1, 2033
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project
Area No. 2) are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2031
2032 - 2034
Principal
2,930,000
7,400,000
5,415,000
Interest
$ 769,006
769,006
769,006
769,006
769,006
3,845,031
3,658,691
2,312,488
415,125
$ 15,745,000 $
See independent auditors' report.
- 51 -
Total
$ 769,006
769,006
769,006
769,006
769,006
3,845,031
6,588,691
9,712,488
5,830,125
14,076,365 $ 29,821,365
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Proiect Area No. 2 Tax Allocation Refunding Revenue Bonds 2006 Series A. Tax Allocation
Revenue Capital Appreciation Bonds 2006 Series B. Revenue Bonds 2006 Series C and
Subordinate Tax Allocation Revenue Capital Appreciation Bonds 2006 Series D
On July 25, 2006, the Palm Desert Financing Authority issued its Project Area No. 2, $41,340,000
Tax Allocation Refunding Revenue Bonds 2006 Series A, $1,567,118 Tax Allocation Revenue
Capital Appreciation Bonds 2006 Series B, $7,775,000 Tax Allocation Revenue Bonds
2006 Series C and $16,936,095 Subordinate Tax Allocation Revenue Capital Appreciation Bonds
2006 Series D. The Palm Desert Financing Authority loaned the bond proceeds to the Palm Desert
Redevelopment Agency. The proceeds of the Series A, B and C Bonds will be used to make three
loans to refinance the Agency's obligations incurred under a loan agreement entered into in 1995,
fund various redevelopment capital projects within or of benefit to its Project Area No. 2, purchase
a Reserve Fund surety policy bond and pay costs of issuance of the bonds. The Agency will use
the proceeds of the Series D Bonds to fund various redevelopment capital projects within or of
benefit to the Project Area, fund a debt service reserve fund and pay cost of issuance of the bonds.
The Series A bonds consist of $16,250,000 Serial Bonds with interest rates ranging from 4.00% to
5.00% payable semiannually on August 1 and February 1. Bond maturities begin August 1, 2007,
and continue annually through 2026. Term bonds in the amount of $8,225,000 carry an interest
rate of 4.90% and mature August 1, 2031. Term bonds in the amount of $16,865,000 carry an
interest rate of 5.125% and mature August 1, 2036. The Series B bonds consist of $1,567,118
Capital Appreciation Bonds with a reoffering yield ranging from 3.85% to 4.08%. Bond maturities
begin April 1, 2007, and continue annually through 2010. The Series C bonds were paid off during
the fiscal year. The Series D bonds consist of $16,936,095 Capital Appreciation Bonds with a
reoffering yield ranging from 4.65% to 6.10%. Bond maturities began August 1, 2007, and
continue annually through 2035. Each year the outstanding balance is increased for the accretion
of interest associated with the bonds. The accreted interest at June 30, 2011, is $4,379,557.
See independent auditors' report.
- 52 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Proiect Area No. 2 Tax Allocation Refundine Revenue Bonds 2006 Series A. Tax Allocation
Revenue Capital Appreciation Bonds 2006 Series B. Revenue Bonds 2006 Series C and.
Subordinate Tax Allocation Revenue Capital Appreciation Bonds 2006 Series D (Continued)
The debt service requirements schedules on the 2006 Series A Tax Allocation Refunding Revenue
Bonds, Series B Tax Allocation Revenue Capital Appreciation Bonds, Series C Revenue Bonds
and Series D Subordinate Tax Allocation Revenue Capital Appreciation Bonds (Project Area
No. 2) do not agree to the liability for those bonds shown in the schedule of changes. These bond
issues include capital appreciation bonds, which are issued at a discount. The carrying amount of
these bonds accretes, or increases each year. The amount shown in the schedule of changes include
the accreted value to date. The future debt service requirements are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2031
2032 - 2036
2037
Principal
$ 1,482,818
1,633,558
1,700,353
1,759,238
1,108,312
6,806,042
9,749,415
9,974,569
15,790,085
4,545,000
Interest
$ 2,200,570
2,274,429
2,334,447
2,394,399
2,059,088
11,211,420
13,123,694
11,466,626
10,142,454
116,466
$ 54,549,390 $
See independent auditors' report.
- 53 -
57,323,593
Total
$ 3,683,388
3,907,987
4,034,800
4,153,637
3,167,400
18,017,462
22,873,109
21,441,195
25,932,539
4,661,466
$ 111,872,983
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Series 2003 Tax Allocation Revenue Bonds (Project Area No. 3)
In July 2003, the Financing Authority issued $4,745,000 Tax Allocation Revenue Bonds (Project
Area No. 3) Series 2003. The proceeds of the bonds were disbursed to make a loan to the
Redevelopment Agency. The Agency will use the proceeds of the loan to fund various
redevelopment capital projects within or of benefit to the project area and to finance costs of
issuance of the bonds. The bonds bear interest at rates ranging from 3.000% to 5.125%. Principal
maturities for the serial bonds of $2,475,000 began April 1, 2004, and continue through
October 1, 2031. The term bonds in the amount of $2,270,000 are due in 2033.
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project
Area No. 3) are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2031
2032 - 2033
Principal
$ 110,000
115,000
120,000
120,000
125,000
720,000
905,000
1,155,000
545,000
Interest
$ 186,225
182,265
177,953
173,272
168,473
757,548
576,900
322,875
42,281
$ 3,915,000 $
See independent auditors' report.
-54-
Total
$ 296,225
297,265
297,953
293,272
293,473
1,477,548
1,481,900
1,477,875
587,281
2,587,792 $ 6,502,792
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Proiect Area No. 3 Tax Allocation Revenue Bonds 2006 Series A, Tax Allocation Revenue Capital,
Appreciation Bonds 2006 Series B and Subordinate Tax Allocation Revenue Capital Appreciation,
Bonds 2006 Series C
On July 25, 2006, the Palm Desert Financing Authority issued its Project Area No. 3, $11,915,000
Tax Allocation Revenue Bonds 2006 Series A, $383,660 Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series B and $2,760,866 Subordinate Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series C. The Palm Desert Financing Authority loaned the bond
proceeds to the Palm Desert Redevelopment Agency. The proceeds of the Series A and B Bonds
will be used to make two loans to fund various redevelopment capital projects within or of benefit
to its Project Area No. 3, purchase a Reserve Fund surety policy and pay the costs of issuance of
the bonds. The Agency will loan the proceeds of the Series C Bonds to fund various
redevelopment capital projects within or of benefit to the Project Area, fund a debt service reserve
fund and pay the costs of issuance of the bonds.
The Series A bonds consist of $2,980,000 Serial Bonds with interest rates ranging from 4.00% to
4.75% payable semiannually on April 1 and October 1. Bond maturities begin April 1, 2007, and
continue annually through 2025. Term bonds in the amount of $4,465,000 carry an interest rate of
4.75% and mature April 1, 2036. Term bonds in the amount of $4,470,000 carry an interest rate of
5.00% and mature April 1, 2041. The Series B bonds consist of $383,660 Capital Appreciation
Bonds with a yield ranging from 5.31% to 5.54%. Bond maturities are April 1, 2020, 2021, 2027
and 2028. The Series C bonds consist of $2,760,866 Capital Appreciation Bonds with a yield
ranging from 4.80% to 6.10%. Bond maturities began April 1, 2009, and continue annually
through 2034. Each year the outstanding balance is increased for the accretion of interest
associated with the bonds. The accreted interest at June 30, 2011, is $993,815.
See independent auditors' report.
- 55 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Proiect Area No. 3 Tax Allocation Revenue Bonds 2006 Series A. Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series B and Subordinate Tax Allocation Revenue Capital Appreciation
Bonds 2006 Series C (Continued)
The future debt service requirements on the 2006 Series A Tax Allocation Revenue Bonds,
Series B Tax Allocation Revenue Capital Appreciation Bonds and Series C Subordinate Tax
Allocation Revenue Capital Appreciation Bonds (Project Area No. 3) are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2031
2032 - 2036
2037 - 2041
Principal
$ 198,934
228,133
254,760
285,721
309,731
1,563,348
2,095,724
1,981,030
3,323,162
4,470,000
Interest
$ 562,141
565,742
571,715
578,154
585,687
3,448,684
3,646,626
4,209,408
2,977,189
692,250
$ 14,710,543 $
See independent auditors' report.
- 56 -
17,837,596
Total
$ 761,075
793,875
826,475
863,875
895,418
5,012,032
5,742,350
6,190,438
6,300,351
5,162,250
$ 32,548,139
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
1998 Series Tax Allocation Revenue Bonds (Project Area No. 4)
On March 1, 1998, the Palm Desert Financing Authority issued $11,020,000 of Tax Allocation
Revenue Bonds (Project Area No. 4) Series 1998. The proceeds from the bonds were loaned to the
Palm Desert Redevelopment Agency to fund various redevelopment capital projects of the Agency
in Project Area No. 4. Interest rates on the bonds vary from 4.0% to 5.2% per annum payable semi-
annually on April 1 and October 1, with principal maturing annually on October 1. In July 2006
$1,785,000 of the outstanding balance was advance refunded by the issuance of Tax Allocation
Refunding Revenue Bonds (Project Area No. 4) 2006 Series A.
The future debt service requirements on the 1998 Series Tax Allocation Revenue Bonds (Project
Area No. 4) (after defeasance) are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2029
Principal
$ 135,000
140,000
145,000
360,000
375,000
2,175,000
2,825,000
2,070,000
Interest
$ 420,635
414,240
407,506
394,973
376,375
1,565,373
920,010
165,100
$ 8,225,000 $
See independent auditors' report.
- 57 -
Total
$ 555,635
554,240
552,506
754,973
751,375
3,740,373
3,745,010
2,235,100
4,664,212 $ 12,889,212
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
2001 Series Tax Allocation Revenue Bonds (Project Area No. 4)
In November 2001, the Palm Desert Financing Authority issued $15,695,000 of Tax Allocation
Revenue Bonds (Project Area No. 4) Series 2001. The proceeds from the bonds were loaned to the
Palm Desert Redevelopment Agency to fund various redevelopment capital projects of the Agency
in Project Area No. 4. Interest rates on the bonds vary from 3.5% to 4.9% per annum payable semi-
annually on April 1 and October 1, with principal maturing annually on October 1.
The future debt service requirements on the 2001 Series Tax Allocation Revenue Bonds (Project
Area No. 4) are as follows:
Year Ending
June 30, Principal Interest Total
2012 $ 325,000 $ 628,011 $ 953,011
2013 345,000 614,805 959,805
2014 365,000 599,909 964,909
2015 375,000 584,038 959,038
2016 390,000 567,322 957,322
2017 - 2021 2,250,000 2,548,904 4,798,904
2022 - 2026 2,785,000 1,962,194 4,747,194
2027 - 2031 5,090,000 1,136,160 6,226,160
2032 1,650,000 39,600 1,689,600
$ 13,575,000 $ 8,680,943 $ 22,255,943
See independent auditors' report.
-58-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation Refundins Revenue Bonds (Proiect Area No. 412006 Series A and Tax Allocation
Revenue Capital Appreciation Bonds (Proiect Area No. 41 Series B
On July 25, 2006, the Palm Desert Financing Authority issued $14,610,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 4) 2006 Series A and $4,663,089 of Tax Allocation
Revenue Capital Appreciation Bonds (Project Area No. 4) 2006 Series B. The Palm Desert
Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment Agency. The
proceeds of the Series A and B Bonds will be used to make two loans to refinance a portion of the
outstanding obligations of the Redevelopment Agency under a loan agreement dated
March 1, 1998, fund various redevelopment capital projects within or of benefit to its Project Area
No. 3, purchase a Reserve Fund surety policy and pay the costs of issuance of the bonds. The
Series A bonds consist of $8,155,000 Serial Bonds with interest rates ranging from 4.40% to 5.00%
payable semiannually on October 1 and April 1. Bond maturities began October 1, 2008, and
continue annually through 2026. Term bonds in the amount of $2,200,000 carry an interest rate of
5.00% and mature October 1, 2029. Term bonds in the amount of $4,255,000 carry an interest rate
of 5.00% and mature October 1, 2034. The Series B bonds consist of $4,663,089 Capital
Appreciation Bonds with a yield ranging from 4.14% to 5.56%. Bond maturities begin
October 1, 2010 and continue annually through 2034. Each year the outstanding balance is
increased for the accretion of interest associated with the bonds. The accreted interest at
June 30, 2011, is $1,379,470.
See independent auditors' report.
- 59 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation Refunding Revenue Bonds (Proiect Area No. 4) 2006 Series A and Tax Allocation
Revenue Capital Appreciation Bonds (Proiect Area No. 4) Series B (Continued)
The future debt service requirements on the 2006 Series A Tax Allocation Refunding Bonds and
Series B Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 4) are as follows:
Year Ending
June 30, Principal Interest Total
2012 $ 554,233 $ 657,612 $ 1,211,845
2013 656,190 651,686 1,307,876
2014 779,182 635,195 1,414,377
2015 718,718 599,477 1,318,195
2016 672,930 543,641 1,216,571
2017 - 2021 1,073,328 2,837,240 3,910,568
2022 - 2026 3,290,862 2,901,973 6,192,835
2027 - 2031 4,339,748 4,177,361 8,517,109
2032 - 2035 6,113,401 7,572,349 13,685,750
$ 18,198,592 $ 20,576,534 $ 38,775,126
See independent auditors' report.
- 60 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
1998 Series Tax Allocation (Housing Set -Aside) Revenue Bonds
In January 1998, the Palm Desert Financing Authority issued $48,760,000 in Tax Allocation
(Housing Set -Aside) Revenue Bonds. The proceeds from the bonds were loaned to the Palm Desert
Redevelopment Agency to finance the acquisition of seven apartment complexes consisting of 725
rental units from the Housing Authority of the County of Riverside. Interest rates on the bonds vary
from 4.0% to 5.1% per annum payable semi-annually on April 1 and October 1 with principal
maturing annually on October 1. In February 2007 $38,740,000 of the outstanding balance was
advance refunded by the issuance of Tax Allocation (Housing Set -Aside) Refunding Revenue
Bonds Series 2007.
The future debt service requirements on the 1998 Series Tax Allocation (Housing Set -Aside)
Revenue Bonds (after defeasance) are as follows:
Year Ending
June 30, Principal Interest Total
2012 $ 1,535,000 $ 38,375 $ 1,573,375
See independent auditors' report.
- 61 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
2002 Series Tax Allocation (Housing Set -Aside) Revenue Bonds
In August 2002, the Palm Desert Financing Authority issued $12,100,000 of Tax Allocation
(Housing Set -Aside) Revenue Bonds Series 2002. The Palm Desert Financing Authority loaned the
bond proceeds to the Palm Desert Redevelopment Agency to fund various low and moderate
housing capital projects of the Agency and to finance costs of issuance of the bonds. Interest rates
on the $6,555,000 serial bonds vary from 2.0% to 4.9% per annum payable semi-annually on
March 1 and October 1. Annual principal payments begin October 1, 2003. The $5,545,000 term
bonds bear an interest rate of 5.0% per annum and mature October 1, 2031.
The future debt service requirements on the 2002 Series Tax Allocation (Housing Set -Aside)
Revenue Bonds are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2031
2032
Principal
$ 295,000
305,000
320,000
330,000
345,000
1,980,000
2,510,000
3,220,000
745,000
Interest
$ 470,201
458,348
445,848
432,848
419,004
1,847,932
1,316,334
605,000
18,625
$ 10,050,000 $
See independent auditors' report.
- 62 -
6,014,140
Total
$ 765,201
763,348
765,848
762,848
764,004
3,827,932
3,826,334
3,825,000
763,625
$ 16,064,140
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation (Housing Set -Aside) Refunding Revenue Bonds Series 2007
On February 7, 2007, the Palm Desert Financing Authority issued $86,155,000 Tax Allocation
(Housing Set -Aside) Refunding Revenue Bonds Series 2007. The Palm Desert Financing
Authority loaned the proceeds to the Palm Desert Redevelopment Agency. The proceeds of the
2007 Loan will be used to finance the development of low and moderate income housing by the
Redevelopment Agency, refinance a portion of the outstanding obligations of the Redevelopment
Agency, purchase a debt service surety bond for deposit in the Reserve Fund, and pay certain costs
associated with the issuance of the bonds. The Series 2007 bonds consist of $86,155,000 Serial
Bonds with interest rates ranging from 4.00% to 5.00% payable semiannually on October 1 and
April 1. Bond maturities began October 1, 2007 and continue annually through 2027.
The future debt service requirements on the Tax Allocation (Housing Set -Aside) Refunding
Revenue Bonds Series 2007 are as follows:
Year Ending
June 30,
2012
2013
2014
2015
2016
2017 - 2021
2022 - 2026
2027 - 2028
Advances from City
Principal
$ 3,265,000
5,005,000
5,235,000
5,505,000
5,785,000
28,790,000
14,560,000
6,805,000
Interest
$ 3,478,438
3,313,038
3,082,063
2,813,563
2,531,313
8,012,187
3,135,363
292,294
$ 74,950,000 $
26,658,259
Total
$ 6,743,438
8,318,038
8,317,063
8,318,563
8,316,313
36,802,187
17,695,363
7,097,294
$ 101,608,259
The City of Palm Desert has made advances to the Agency to finance capital projects in the
following amounts: (a) $6,663,940 for Project Area No. 1 and $15,991,060 for Project Area No. 2.
During the year, the Agency repaid all of the advances for Project Area No. 1, and $2,436,060 for
Project Area No. 2. At June 30, 2011, the outstanding advance balance is $13,555,000. These
advances do not have a fixed repayment schedule.
See independent auditors' report.
- 63 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
8. LONG-TERM LIABILITIES (CONTINUED):
Notes Payable
County of Riverside
The Agency entered into a cooperation agreement with the County of Riverside (the County) on
December 15, 1987, regarding the adoption of the Agency's Project Area No. 2. The agreement
states that the Agency was to retain 50% of the County's share of tax increment. This was based on
the County's share of tax increment being what would be allocated to the County in the absence of
a redevelopment project area being adopted.
This agreement called for the Agency to retain 50% of the County's share until the gross increment
reached $3,500,000. The agreement further states that when gross increment reaches $10,000,000
that the Agency would repay the 50% of the retained County's share of increment in equal
payments over a 10-year period.
The gross increment reached the $3,500,000 limit in fiscal year 1991-1992. The Agency reached
the $10,000,000 limit in fiscal year 2002-2003. The total amount owed to the County at
June 30, 2011, was $122,707.
Future debt service payments are as follows:
Year Ending
June 30,
Principal
Interest Total
2012 $ 122,707 $ - $ 122,707
See independent auditors' report.
- 64 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
9. FUND BALANCES:
Special Capital
Revenue Projects
Fund Debt Services Funds Fund
Low and
Moderate Other
Income Project Project Project Financing Project Governmental
Housing Areal Areal Area 4 Authority Areal Funds
Total
Nonspendable:
Prepaid cost $ 130 S $ - $ $ - S - $ 177,190 $ 177,320
Notes and loans 7,324,592 - 1,200,000 8,524,592
Advances to other funds 17,821,288 - - 17,821,288
Property held for resale 2,685,387 - - - 2,685,387
Restricted for:
Debt service 19,785,387 1,104,051 8,303,511 2,055,793 31,248,742
Low income housing 48,567,642 3,210,831 51,778,473
Capital projects - - 31,136,711 63,019,220 94,155,931
Committed to:
Replacement reserve - - 7,752,862 7,752,862
Unassigned (335,283) - (335,283)
Totals
$ 76,399,039 $ 19,785,387 $ (335,283) $ 1,104,051 $ 8,303,511 $ 31,136,711 $ 77,415,896 $ 213,809,312
Special Debt
Revenue Services
Fund Fund Capital Project Funds
Other
Housing Project Project Project Project Governmental
Authority Area 3 Area 1 Area 3 Area 4 Funds
Nonspendable:
Prepaid cost $ $ $ 177,190 $ - $ - $ 177,190
Notes and loans 1,200,000 1,200,000
Restricted for:
Debt service 2,055,793 2,055,793
Low income housing 3,210,831 3,210,831
Capital projects - 17,539,121 21,183,548 24,296,551 63,019,220
Committed to:
Replacement reserve 7,752,862 - 7,752,862
Totals $ 10,963,693 $ 2,055,793 $ 17,716,311 $ 21,183,548 $ 25,496,551 $ 77,415,896
See independent auditors' report.
- 65 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
9. RESERVES OF FUND BALANCES (CONTINUED):
The Agency has implemented Governmental Accounting Standards Board Statement No. 54,
"Fund Balance Reporting and Governmental Fund Type Definitions", for the year ended
June 30, 2011. The fund balances reported on the fund statements now consist of the following
categories:
Nonsnendable - This classification includes amounts that cannot be spent because they are either
(a) not in spendable form or (b) legally or contractually required to be maintained intact.
Restricted for - This classification includes amounts that can be spent only for specific purposes
stipulated by constitution, external resource providers or through enabling legislation.
Committed - This classification includes amounts that can be used only for the specific purposes
determined by a formal action of the government's highest level of decision -making authority.
Assigned - This classification includes amounts to be used by the government for specific purposes
but do not meet the criteria to be classified as restricted or committed. In governmental funds the
assigned fund balance represents the remaining amount that is not restricted or committed.
Unassigned - This classification includes the residual balance for the government's fund balance
and includes all spendable amounts not contained in other classifications. In other funds, the
unassigned classification is used only to report a deficit balance resulting from overspending for
specific purposes for which amounts had been restricted, committed or assigned.
When an expenditure is incurred for purposes for which both restricted and unrestricted fund
balances are available, the Agency's policy is to apply restricted fund balance first.
When an expenditure is incurred for purposes for which committed, assigned or unassigned fund
balances are available, the Agency's policy is to apply committed fund balance first, then assigned
fund balance, and finally unassigned fund balance.
See independent auditors' report.
- 66 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
10. CONDUIT DEBT OBLIGATION:
2003 Series A - $22,310,000 Lease Revenue Bonds
In December 2003, the Palm Desert Financing Authority (Authority) issued $22,310,000 in Lease
Revenue Bonds. The proceeds of the Bonds were used to: a) finance the construction of a County
animal shelter and related facilities located in the unincorporated area of Thousand Palms,
California; b) finance construction of certain County medical clinic facilities located in Mecca,
California; c) refund the Palm Desert Financing Authority Lease Revenue Bonds Series 1996;
d) acquire a debt service reserve insurance policy; e) fund capitalized interest on the bonds; and
f) pay costs of issuance of the bonds. The Authority will lease sites relating to each project from
the County of Riverside (County) pursuant to a Site Lease dated as of December 1, 2003, and will
lease back to the County the Sites and the Facilities pursuant to a Facilities Lease dated
December 1, 2003. Under the Lease, the County will pay to the Trustee Base Rental Payments in
the amount equal to the scheduled debt service of the Bonds. The Authority will assign its right to
receive the Base Rental Payments to the Trustee for the benefit of the owners of the bonds. The
debt service on the bonds is to be paid solely from lease payments made by the County. The
Authority has no obligation to make the debt service payments in the event that the County is not
able to make the required base rental payments. As of June 30, 2011, the outstanding amount was
$18,575,000.
2008 Series A - $72,445,000 Lease Revenue Bonds
In November 2008, the Palm Desert Financing Authority (Authority) issued $72,445,000 in Lease
Revenue Bonds. The proceeds of the Bonds were used to: a) finance the construction, installation,
acquisition, development and rehabilitation of certain public capital improvements within the
County, including the Palm Desert Sheriff's Station Facilities (as described herein), community
centers, a multi -service center, park improvements and other various infrastructure improvements;
b) fund capitalized interest on the 2008 Series A Bonds related to the Palm Desert Sheriff Station
Facilities through August 31, 2010 and with respect to the Multi -Service Center Facilities (as
described herein) through December 31, 2009; c) fund a deposit into the Reserve Account as
additional security for the 2008 Series A Bonds; and d) pay certain costs associated with the
issuance and delivery of the 2008 Series A Bonds. Under the Lease, the County will pay to the
Trustee Base Rental Payments in the amount equal to the scheduled debt service of the Bonds. The
Authority will assign its right to receive the Base Rental Payments to the Trustee for the benefit of
the owners of the bonds. The debt service on the bonds is to be paid solely from lease payments
made by the County. The Authority has no obligation to make the debt service payments in the
event that the County is not able to make the required base rental payments. As of June 30, 2011,
the outstanding amount was $66,090,000.
11. OTHER DISCLOSURES:
The Debt Service Project Area#2 Fund has a net fund balance deficit of $335,283, which was
caused by early debt payoff. The deficit will be funded through future tax increments.
See independent auditors' report.
- 67 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
12. INSURANCE:
The Agency is covered under the City of Palm Desert's insurance. For additional information, see
the City's financial statements.
13. COMMITMENTS AND CONTINGENCIES:
SERAF Contingency:
SERAF Contributions for the Fiscal Years 2009-2010 and 2010-2011
Pursuant to AB 26 4x, a budget trailer bill, California redevelopment agencies were required to
make SERAF contributions totaling $1.7 billion for the fiscal year 2009-2010 and $350 million for
the fiscal year 2010-2011. Under AB 26 4x, agencies may borrow a portion of the required
contributions from their low and moderate income housing fund. Alternatively, sponsoring
governmental agencies (the cities or counties) may elect to pay the SERAF contributions on behalf
of their redevelopment agencies. On October 20, 2009, the CRA filed a class action lawsuit in
behalf of all California redevelopment agencies, again challenging the SERAF obligations as
unconstitutional. On May 13, 2010, the Superior Court found in favor of the State relative to the
class action suit.
The Agency's SERAF contributions for fiscal year 2009-2010 was $25,526,215. The Agency
borrowed funds from the low and moderate income housing fund to make this payment. The
SERAF contribution for fiscal year 2010-2011 made by the Agency totaled $5,255,397.
14. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT
AGENCIES:
As part of the State Budget for fiscal year 2011-12, Governor Brown signed two bills, AB X1 26
and AB X1 27, on June 29, 2011, affecting redevelopment agencies throughout the State of
California. Upon its effectiveness on June 29, 2011, AB X1 26 immediately prohibited
redevelopment agencies from engaging in most activities (including, but not limited to, the
incurrence of new debt, the execution of new contracts and the modification of existing contracts).
Furthermore, pursuant to AB X1 26, a redevelopment agency would be dissolved on
October 1, 2011, unless the city (or the county, as the case may be) that activated the
redevelopment agency timely enacted an ordinance (an "AB X1 27 Ordinance") to opt into the
"Alternative Voluntary Redevelopment Program" ("AVRP") and agreed to make specified annual
payments to the county auditor -controller for allocation to special districts and educational entities.
Pursuant to AB X1 27, so long as the city is a participant in the AVRP, the redevelopment agency
would be exempt from most of the provisions of AB X1 26 and be permitted to continue and carry
on redevelopment activities.
See independent auditors' report.
- 68 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
14. RECENT CHANGES 1N LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT
AGENCIES (CONTINUED):
On July 18, 2011, the California Redevelopment Association (the "CRA") and the League of
California Cities (the "League") filed a petition with the California Supreme Court, requesting the
Court to review the constitutionality of AB X1 26 and AB X1 27 (California Redevelopment Assn.
v. Matosantos, S194861) (the "CRA Lawsuit"). The CRA and the League also requested the
Supreme Court to issue a stay of the implementation of AB X1 26 and AB X1 27, pending the
Court's disposition of the CRA Lawsuit. On August 11, 2011, the Supreme Court issued a stay
order (the "Stay Order"), which was modified on August 17, 2011. The Supreme Court granted a
stay of portions of AB X1 26 and AB X1 27. The provisions that allow a redevelopment agency to
continue carrying on redevelopment activities, if the city has adopted an AB X1 27 Ordinance, are
subject to the stay.
The City Council of the City of Palm Desert adopted Ordinance No. 1227 on September 8, 2011,
opting into the AVRP in order to provide for the continuation of the Palm Desert Redevelopment
Agency. However, because of the effect of the Stay Order, the authority for the Agency to engage
in most activities, as of the date of this report, continues to be in suspension. The initial payment by
the City is estimated to be $20.5 million with one half due on January 15, 2012 and the other half
due May 15, 2012. The amounts to be paid for the fiscal year 2012-13 and succeeding years have
yet to be determined. The semi-annual payments will be due on January 15 and May 15 of each
year and would increase or decrease with changes in tax increment. Additionally, an increased
amount would be due to schools if any "new debt" is incurred. Assembly Bill X1 27 allows a
one-year reprieve on the Agency's obligation to contribute 20% of tax increment to the
low -and -moderate -income housing fund. The City and Agency have entered into a reimbursement
agreement and the reprieve on the Agency's obligation to contribute to housing will assist the
Agency to assemble sufficient funds to reimburse the City for the initial payments. Failure to make
these payments would require agencies to be terminated under the provisions of ABXI 26.
The Supreme Court heard oral arguments on November 10, 2011, but has not issued its decision as
of the date of this report. It is uncertain whether the Supreme Court will strike down, uphold or
modify some or all of the provisions of AB X1 26 and AB X1 27. If AB X1 26 and AB X1 27 are
upheld in whole or in part, it may take some time to ascertain the mechanics and practical effects of
the implementation of the upheld provisions. For example, under AB X1 26, if a redevelopment
agency is dissolved, a successor agency to the redevelopment agency will be required to make
payments for enforceable obligations, including previously issued agency bonds, listed in
Recognized Obligation Payment Schedules. However, AB X1 26 establishes a flow of revenues to
repay bonds that is different from the flow of tax increment currently provided in the Community
Redevelopment Law.
See independent auditors' report.
- 69 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2011
14. RECENT CHANGES IN LEGISLATION AFFECTING CALIFORNIA REDEVELOPMENT
AGENCIES (CONTINUED):
Further, under AB X1 26, if the Agency is dissolved, the State Controller of the State of California
is directed to review the propriety of any transfers of assets between redevelopment agencies and
other public bodies that occurred after January 1, 2011. If the public body that received such
transfers is not contractually committed to a third party for the expenditure or encumbrance of
those assets, the State Controller is required to order the available assets to be transferred to the
public body designated as the successor agency by AB X1 26, if a successor agency is established
but only to such extent that such order for return is not prohibited by state or federal law.
In addition, under AB X1 26, if the Agency is dissolved, the interagency receivable recognized by
funds of the City that had previously loaned or advanced funds to the Agency may become
uncollectible resulting in a loss recognized by such funds. The City may also be impacted if
reimbursements previously paid by the Agency to the City for shared administrative services are
reduced or eliminated.
Management believes that the Agency will have sufficient funds to pay its obligations as they
become due during the fiscal year ending June 30, 2012. The nature and extent of the operation of
redevelopment agencies in the State of California beyond that time frame cannot be determined at
this time and are dependent upon the outcome of many factors related to the constitutionality of
AB X1 26 and AB X1 27. There is always a possibility that future legislative acts may create new
challenges to the ability of redevelopment agencies to operate in the State of California in light of
the California State Legislature's continued taking of redevelopment agencies funding to balance
the state's budget.
The full text of AB X1 26 and AB X1 27 may be obtained from the "Official California Legislative
Information" website maintained by the Legislative Counsel of the State of California, at the
following webpage: http://www.leinfo.ca.wov/bilinfo.html. Docket information for the CRA
Lawsuit can be found at the California Appellate Courts Case Information System website, at the
following webpage: httv://avvellatecases.courtinfo.ca.zov/. None of the websites or webpages
referenced above are in any way incorporated into this Annual Report. They are cited for
informational purposes only. The Agency makes no representation whatsoever as to the accuracy
or completeness of any of the information on such websites.
15. NET ASSET RESTATEMENTS
Net assets, July 1, 2010, as previously reported $ (12,962,722)
To adjust capital assets inadvertently not transferred
in prior year to the City of Palm Desert (18,083,336)
Net assets, July 1, 2010, as restated _(31,046..0581
See independent auditors' report.
- 70 -
SUPPLEMENTARY INFORMATION
- 71 -
PALM DESERT REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET - OTHER GOVERNMENTAL FUNDS
June 30, 2011
ASSETS:
Cash and investments
Restricted cash with fiscal agent
Accounts receivable
Interest receivable
Notes receivable
Prepaid costs and deposits
TOTAL ASSETS
LIABILU1hS AND FUND BALANCES
LIABILITIES:
Accounts payable
Accrued liabilities
Deposits payable
Unearned revenues
Advances due to other funds
Amounts due pass -through agreement
TOTAL LIABILITIES
FUND BALANCES:
Nonspendable
Restricted
Committed
TOTAL FUND BALANCES
TOTAL LIABILITIES
AND FUND BALANCES
See independent auditors' report.
Special
Revenue
Fund
$ 8,911,859
2,717,249
2,706
1,957
Debt
Service
Fund
Capital
Projects
Funds
$ 8,186,462 $ 5,984,206
57,092,864
6,429 57,138
300,357
1,200,000
177,190
$ 11,633,771 $ 8,192,891
$ 215,117 $
47,876
393,871
13,214
670,078
3,210,831
7,752,862
10,963,693
970,313
5,166,785
6,137,098
2,055,793
2,055,793
Schedule 1
Total
Other
Governmental
Funds
$ 23,082,527
59,810,113
66,273
302,314
1,200,000
177,190
$ 64,811,755 $ 84,638,417
$ 346,852
53,493
15,000
$ 561,969
101,369
408,871
13,214
970,313
5,166,785
415,345 7,222,521
1,377,190 1,377,190
63,019,220 68,285,844
7,752,862
64,396,410 77,415,896
$ 11,633,771 $ 8,192,891 $ 64,811,755 $ 84,638,417
- 72 -
Schedule 2
PALM DESERT REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS
REVENUES:
Taxes
Intergovernmental
Investment earnings
Rental income
Other revenues
TOTAL REVENUES
For the year ended June 30, 2011
Total
Special Debt Capital Other
Revenue Service Projects Governmental
Fund Fund Funds Funds
$ $ 4,249,101 $ - $ 4,249,101
21,394 21,394
37,850 25,551 352,450 415,851
4,728,432 126,593 4,855,025
165,718 41,237 206,955
4,932,000 4,274,652 541,674 9,748,326
EXPENDITURES:
Current:
General government 35,993 7,656 2,670,624 2,714,273
Community improvements - - 1,182,424 1,182,424
Economic development - 568,079 568,079
Affordable rental units 4,735,159 - 4,735,159
Payments to other agencies - 1,983,494 1,983,494
Supplemental Educational Revenue
Augmentation Payment - 213,370 - 213,370
Capital outlay 381,388 1,369,714 1,751,102
TOTAL EXPENDITURES 5,152,540 2,204,520 5,790,841 13,147,901
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES (220,540) 2,070,132 (5,249,167) (3,399,575)
OTHER FINANCING SOURCES (USES):
Transfers in 7,716,495 3,997,139 11,713,634
Transfers out - (1,884,643) (310,231) (2,194,874)
TOTAL OTHER FINANCING
SOURCES (USES) 7,716,495 (1,884,643) 3,686,908 9,518,760
NET CHANGE IN FUND BALANCES 7,495,955 185,489 (1,562,259) 6,119,185
FUND BALANCES - BEGINNING OF YEAR 3,467,738 1,870,304 65,958,669 71,296,711
FUND BALANCES - END OF YEAR $ 10,963,693 $ 2,055,793 $ 64,396,410 $ 77,415,896
See independent auditors' report.
- 73 -
PALM DESERT REDEVELOPMENT AGENCY
BALANCE SHEET - OTHER GOVERNMENTAL FUND
SPECIAL REVENUE
ASSETS:
Cash and investments
Restricted cash with fiscal agent
Accounts receivable
Interest receivable
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts payable
Accrued liabilities
Deposits payable
Unearned revenue
TOTAL LIABIL111ES
FUND BALANCES:
Restricted
Committed
TOTAL FUND BALANCES
TOTAL LIABILITIES
AND FUND BALANCES
See independent auditors' report.
June 30, 2011
-74-
Housing
Authority
$ 8,911,859
2,717,249
2,706
1,957
$ 11,633,771
Schedule 3
Totals
$ 8,911,859
2,717,249
2,706
1,957
$ 11,633,771
$ 215,117 $ 215,117
47,876 47,876
393,871 393,871
13,214 13,214
670,078 670,078
3,210,831
7,752,862
10,963,693
3,210,831
7,752,862
10,963,693
$ 11,633,771 $ 11,633,771
Schedule 4
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUND
SPECIAL REVENUE
For the year ended June 30, 2011
Housing
Authority Totals
REVENUES:
Investment earnings $ 37,850 $ 37,850
Rental income 4,728,432 4,728,432
Other revenues 165,718 165,718
TOTAL REVENUES 4,932,000 4,932,000
EXPENDITURES:
Current:
General government 35,993 35,993
Affordable rental units 4,735,159 4,735,159
Capital outlay 381,388 381,388
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES:
Transfers in
5,152,540 5,152,540
(220,540) (220,540)
7,716,495 7,716,495
TOTAL OTHER FINANCING SOURCES 7,716,495 7,716,495
NET CHANGE IN FUND BALANCES 7,495,955 7,495,955
FUND BALANCES - BEGINNING OF YEAR 3,467,738 3,467,738
FUND BALANCES - END OF YEAR $ 10,963,693 $ 10,963,693
See independent auditors' report.
- 75 -
PALM DESERT REDEVELOPMENT AGENCY
BALANCE SHEET - OTHER GOVERNMENTAL FUND
DEBT SERVICE
June 30, 2011
Project
Area 3
Schedule 5
Totals
ASSETS:
Cash and investments $ 8,186,462 $ 8,186,462
Accounts receivable 6,429 6,429
TOTAL ASSETS $ 8,192,891 $ 8,192,891
LIABILITIES AND FUND BALANCES
LIABILITIES:
Advances due to other funds $ 970,313 $ 970,313
Amounts due pass -through agreement 5,166,785 5,166,785
TOTAL LIABILITIES
FUND BALANCES:
Restricted
TOTAL FUND BALANCES
6,137,098 6,137,098
2,055,793 2,055,793
2,055,793 2,055,793
TOTAL LIABILITIES
AND FUND BALANCES $ 8,192,891 $ 8,192,891
See independent auditors' report.
- 76 -
Schedule 6
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUND
DEBT SERVICE
For the year ended June 30, 2011
Project
Area 3 Totals
REVENUES:
Taxes $ 4,249,101 $ 4,249,101
Investment earnings 25,551 25,551
TOTAL REVENUES 4,274,652 4,274,652
EXPENDITURES:
Current:
General government 7,656 7,656
Payments to other agencies 1,983,494 1,983,494
Supplemental Educational Revenue Augmentation Payment 213,370 213,370
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING USES:
Transfers out
2,204,520 2,204,520
2,070,132 2,070,132
(1,884,643) (1,884,643)
TOTAL OTHER FINANCING USES (1,884,643) (1,884,643)
NET CHANGE IN FUND BALANCES 185,489 185,489
FUND BALANCES - BEGINNING OF YEAR 1,870,304 1,870,304
FUND BALANCES - END OF YEAR $ 2,055,793 $ 2,055,793
See independent auditors' report.
- 77 -
Schedule 7
PALM DESERT REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET - OTHER GOVERNMENTAL FUNDS
CAPITAL PROJECTS
June 30, 2011
Project Project Project
Area 1 Area 3 Area 4 Totals
ASSETS:
Cash and investments $ 882,679 $ 2,812,216 $ 2,289,311 $ 5,984,206
Restricted cash with fiscal agent 16,665,559 18,462,293 21,965,012 57,092,864
Accounts receivable 57,138 57,138
Interest receivable 206,915 21,601 71,841 300,357
Notes receivable - 1,200,000 1,200,000
Prepaid costs and deposits 177,190 - 177,190
TOTAL ASSETS $ 17,989,481 $ 21,296,110 $ 25,526,164 $ 64,811,755
LIABILII IES AND FUND BALANCES
LIABILl'1'IES:
Accounts payable $ 219,677 $ 112,562 $ 14,613 $ 346,852
Accrued liabilities 53,493 - 53,493
Deposits payable - 15,000 15,000
TOTAL LIABILI1'1ES 273,170 112,562 29,613 415,345
FUND BALANCES:
Nonspendable 177,190 - 1,200,000 1,377,190
Restricted 17,539,121 21,183,548 24,296,551 63,019,220
TOTAL FUND BALANCES 17,716,311 21,183,548 25,496,551 64,396,410
TOTAL LIABILITIES
AND FUND BALANCES $ 17,989,481 $ 21,296,110 $ 25,526,164 $ 64,811,755
See independent auditors' report.
-78-
PALM DESERT REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS
CAPITAL PROJECTS
For the year ended June 30, 2011
REVENUES:
Intergovernmental
Investment earnings
Rental income
Other revenues
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Community improvements
Economic development
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
TOTAL OTHER FINANCING
SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING OF YEAR
FUND BALANCES - END OF YEAR
See independent auditors' report.
Project
Area 1
$ 21,394
70,209
63,819
41,237
196,659
2,601,619
1,057,640
568,079
1,311,364
5,538,702
(5,342,043)
3,939,809
(156,464)
3,783,345
(1,558,698)
19,275,009
$ 17,716,311
-79-
Project
Area 3
111,099
111,099
5,414
113,061
118,475
(7,376)
(18,819)
(18,819)
(26,195)
21,209,743
$ 21,183,548
Schedule 8
Project
Area 4 Totals
$ 21,394
171,142 352,450
62,774 126,593
41,237
233,916 541,674
63,591
11,723
58,350
133,664
2,670,624
1,182,424
568,079
1,369,714
5,790,841
100,252 (5,249,167)
57,330
(134,948)
(77,618)
22,634
25,473,917
$ 25,496,551
3,997,139
(310,231)
3,686,908
(1,562,259)
65,958,669
$ 64,396,410
PALM DESERT REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET
HOUSING AUTHORITY SPECIAL REVENUE FUND
lune 30, 2011
Compkaes
Laguna Catalina Desert Lao One
Capital Palms Gardens Pointe Serena Neighbors Quail
Pueblos
ASSETS:
Cash and investments $ 8,911,859 S - $ - $ - S - $ • $ - S
Restricted ash with fiscal agent 1,650,398 21,453 24,800 19,615 48,963 9,400 836,925 4,713
Accounts receivable 48 25 1,737 21 59 238 30
Interest receivable 1,957 - - -
Due from other apartment - 1,121,691 - 5,629,457
TOTAL ASSETS $ 10,564,214 S 21.501 $ 24,825 $ 21,352 $ 1.170.675 5 9,459 S 6466,620 S 4.743
LIABILITIES AND
FUND BALANCES
LIABILITIES:
Accounts payable S 87,175 S 3,347 S 9,829 $ 14,964 $ 13,493 $ 1,021 S 25501 $ 1,046
Maagemeat fee payable 1,680 2,520 2,190 5,215 840 13,300 605
Accrued payroll - 2,629 3,311 2,854 4,845 900 21,685 798
Security deposits payable - 21,253 24,500 19,465 48,613 9,350 165,395 4,713
Unearned revenue - 606 375 1,937 997 80 6,702 -
Due to other apartment 1,013,403 330,698 556,847 246.481 372.905
TOTAL LIABILITIES 87,175 1,042,918 371,733 598157 73.163 258,672 232,583 380,067
FUND BALANCES (DEFICITS):
Restricted 10,477,039 3,089,037 -
Committed 128,945 743,800 396,800 1,137,980 372,250 3,145,000 231,500
Unassigned - (1,150362) (1.090,708) (973.705) (411,468) (621,463) (606.824)
TOTAL FUND
BALANCES (DEFICITS) 10,477,039 (1,021,417) (346908) (576,905) 1,097,512 (249213) 6,234.037 (375,324)
TOTAL LIABILITIES
AND FUND BALANCES S 10564214 S 21.501 $ 24,825 $ 21,352 S 1,170,675 $ 9,459 S 6.466.620 S 4,743
See independent auditors' report.
California
Villas
Taos
Schedule 9
Complexes (Continued)
Country Palm Total Combined Combined
Village Village Candlcwood La Rocca Sage Crest Complexes Total Reclassification Total
S - S - $ - $ - $ - $ - $ - S - $ 13,911,859 $ - $ 8,911,859
53,799 6.550 - 17,900 8,483 10,000 4,250 1,066,851 2,717,249 2,717,249
500 47 - - 1 2,706 2,706 2,706
1,957 1,957
12.563 - 6,763,711 6.763.711 (6,763,711)
$ 54,299 $ 6,597 S - S 30,463 $ 8,483 $ 10,001 $ 4,250 S 7,833,268 $ 18397,482 $ (6,763,711) S 11,631771
$ 9,462 $ 1,078 S $ 2,104 $ 7,222 $ 1.219 $ 2,066 $ 92,352 $ 179527 $ - $ 179,527
4,935 560 1,260 1,050 945 490 35,590 35,590 - 35,590
5,592 702 - 1,447 1560 1205 348 47,876 47,876 - 47,876
53,549 6,500 17.850 8,483 10.000 4,200 393,871 393,871 393,871
900 495 181 227 32 182 13,214 13,214 13,214
2,783,960 346,124 365,436 526,233 14.512 207,112 6.763,711 6.763.711 (6,763,711)
2,858.398 355,459 365,436 22,842 544,775 27,913 214,398 7,346,614 7,433,789 (6,763,711) 670,078
- - 3,089,037 13566,076 (10,355,245) 3210,831
461,250 96,996 - 193,191 793,150 52.000 - 7,752,862 7,752,862 - 7,752,862
(3,265,349) (445,858) (365,436) (185.570) (1,329,442) (69.912) (210,148) (10355,245) (10,355,245) 10.355.245
(2.804,099) (348.862) (365,436) 7.621 (536,292) (17,912) (210,148) 486,654 10,963,693 - 10,963,693
$ 54,299 $ 6,597 $ - $ 30,463 $ 8.483 $ 10,001 $ 4,250 $ 7,833,268 $ 18,397,482 $ (6,763,711) $ 11,633,771
- 81 -
PALM DESERT REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
HOUSING AUTHORITY SPECIAL REVENUE FUND
Capital
REVENUES.
Rental income S S
Other revenues 34,686
Investment earnings 37.850
TOTAL REVENUES 72,536
June 30, 2011
Complexes
Laguna Catalina Desert Las One
Palms Gardens Pointe Saunas Neighbors Quail Pueblos
206,347 S 255,088 S 241,406 S 699,022 S 102,648 S 2,091,898 S 54,118
7,677 2,584 6,973 8,655 6,058 73,967 882
214,024 257,672 248,379 707,677 108,706 2,165.865 55,000
EXPENDITURES:
Current:
Payroll 87,192 112,567 91,124 145,568 31,822 731,704 28,084
Administrative 35,994 82,463 164,670 209,917 279,592 54,324 800,961 41,271
Management 20,125 30,170 26.325 62,670 9,940 161,105 7,340
Maintenance 22,995 30,240 39,661 75,881 16,835 295,949 14,288
Capital outlay 381,388
TOTAL EXPENDITURES 417,382 212,775 337,647 367,027 563,711 112,921 1,989,719 90.983
EXCESS OF REVENUES
OVER (UNDER)
EXPENDITURES (344,846) 1,249 (79.975) (118.6481 143,966 (4,215) 176.146 (35.983)
OTHER FINANCING SOURCES (USES):
Transfers in 7,716,495 - - 500,000
Transfers out (500,000) - - - -
TOTAL OTHER
FINANCING SOURCES (USES) 7,216.495 - - - 500.000
NET CHANGE IN
FUND BALANCES 6,871,649 1,249 (79,975) (118,648) 143,966 (4,215) 676,146 (35,983)
FUND BALANCES (DEFICITS) -
BEGINNING OF YEAR 3,605390 (1,022,6661 (266,933) (458.257) 953,546 (244,998) 5557.891 (339,341)
FUND BALANCES (DEFICITS) -
ENDOFYEAR S 10,477,039 S (1,021,417) S (346,908) S (576,905) S 1,097,512 S (249,213) S 6,234,037 S (375,324)
See independent auditors' report.
- 82 -
Schedule 10
Complexes (Continued)
California Country Palm Total Combined Combined
Villas Taos Village Village Candlewood LaRocca Sage Crest Complexes Total Reclassification Total
$ 547,487 $ 66,500 $ S 182,957 $ 110,107 $ 116,323 S 54,531 S 4,728,432 $ 4,728,432 $ - $ 4,728,432
12,647 818 6,588 2,562 1,217 404 131,032 165,718 165,718
37,850 - 37,850
560,134 67,318 189,545 112,669 117,540 54,935 4,859,464 4,932,000 4,932,000
185,854 25,344 - 49,300 52,739 34,859 28,799 1,604,956 1,604,956 1,604,956
218,212 34,527 - 53,598 83,194 49,454 28,935 2,101,118 2,137,112 2,137,112
58,940 6,125 - 15,050 12,600 11,270 8,700 430,360 430,360 430,360
49,004 9,572 - 12,309 19,831 8,162 3,997 598,724 598,724 598,724
381,388 381.388
512,010 75,568 - 130,257 168,364 103,745 70,431 4,735,158 5,152,540 - 5,152,540
48,124 (8250) - 59,288 (55,695) 13,795 (15,496) 124,306 (220,540) (220,540)
500,000 8,216,495 (500.000) 7,716,495
(500,000) 500,000
500.000 7,716,495 - 7,716,495
48,124 (8,250) 59,288 (55,695) 13,795 (15,496) 624,306 7,495,955 7,495,955
(2,852,223) (340,612) (365,436) (51,667) (480,597) (31,707) (194,652) (137,652) 3,467,738 - 3,467,738
$ '2,804,099) $ (348,862) $ (365,436) S 7,621 $ (536,292) $ (17,912) $ (210,148) $ 486,654 $ 10,963,693 S - $ 10.963,693
- 83 -
Schedule 11
PALM DESERT REDEVELOPMENT AGENCY
COMPUTATION OF LOW AND MODERATE
HOUSING EXCESS SURPLUS FUNDS
July 1, 2010
Excess Surplus in the Low and Moderate Income Housing Fund is any unexpended or unencumbered amount that exceeds
the greater of either $1,000,000 or the aggregate amount deposited in the Low and Moderate Income Housing Fund during
the preceding four fiscal years. It is computed at the beginning of the fiscal year to which it relates.
OPENING FUND BALANCE - JULY 1, 2010
Tax Increment
Deposits to
Housing Fund
$ 81,422,414
LESS UNAVAILABLE AMOUNTS:
Encumbrances 322,421
Loans and notes receivable 7,328,010
Property held for resale 855,224
Reserve requirement 36,366
Prepaid items and deposits -
Unspent bond proceeds 25,195,523
AVAILABLE LOW/MODERATE INCOME HOUSING FUNDS 47,684,870
LIMITATION (GREATER OF $1,000,000 OR FOUR YEARS SET -ASIDE):
Set -aside for last four years:
2009 - 2010 $ 17,821,288
2008 - 2009 18,235,620
2007 - 2008 18,141,322
2006 - 2007 16,573,467
TOTAL SET -ASIDE FOR LAST FOUR YEARS $ 70,771,697
Base limitation $ 1,000,000
GREATER AMOUNT
COMPUTED EXCESS SURPLUS - JULY 1, 2010
See independent auditors' report.
- 84 -
70,771,697
WHITE NELSON DIEHL EVANS LLP
(:ettified Publiccc<ntt�tatlt t'c>ilsttttatlts
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE
AND ON INTERNAL CONTROL OVER COMPLIANCE
To the Honorable Mayor and
Members of the City Council
Palm Desert Redevelopment Agency
Palm Desert, California
Compliance
We have audited the Palm Desert Redevelopment Agency's (the Agency) compliance with the
California Health and Safety Code as required by Section 33080.1 for the year ended June 30, 2011.
Compliance with the requirements referred to above is the responsibility of the Agency's management.
Our responsibility is to express an opinion on the Agency's compliance based on our audit,
We conducted our audit of compliance in accordance with auditing standards generally accepted in the
United States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; and Guidelines for
Compliance Audits of California Redevelopment Agencies, June 2011, issued by the State Controller
and as interpreted in the Auditing Procedures for Accomplishing Compliance Audits of California
Redevelopment Agencies, August 2011, issued by the Governmental Accounting and Auditing
Committee of the California Society of Certified Public Accountants.
Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether noncompliance with the compliance requirements referred to above that could have a material
effect on the Agency has occurred. An audit includes examining, on a test basis, evidence about the
Agency's compliance with those requirements and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Our audit does not provide a legal determination of the Agency's compliance with the requirements
referred to in the first paragraph.
As described below, the Agency did not comply with the California Health and Safety Code as
required by Section 33080.1. Compliance with such requirements is necessary, in our opinion, for the
Agency to comply with therequirements referred to above,
Health and Safety Code Section 33080.1(b) requires Redevelopment Agencies to submit, to its
legislative body within 6 months of the end of the Agency's fiscal year, a fiscal statement for
the previous fiscal year that contains the information required pursuant to Section 33080,5.
The Agency submitted the fiscal statement to the legislative body on May 26, 2011.
-85-
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1 00 • Fax: 714.978.7893
Offices located in Orange and San Diego Counties
Compliance (Continued)
Management's Response
The information required to be included in the Agency's Fiscal Statement (H & S
Section 33080.5) can be found in various reports contained in the Annual Report to the
Legislative Body which was filed in December 2010. The Agency was notified in March 2011
by the State Controller (SCO) that the information required in the Fiscal Statement must be
compiled in one cohesive report and filed as a part of the Annual Report. The Agency's
Annual Report did not include a separate Fiscal Statement and the SCO noted it as a "finding".
Staff prepared the separate Fiscal Statement for the year ended June 30, 2010, as soon as the
Agency was made aware of the requirement, and submitted it to the legislative body in May
of 2011. The only noted recommendation of the SCO was to train staff better on reporting
requirements. This report is now a routine inclusion in the Annual Report.
In our opinion, except for the noncompliance described in the preceding paragraph, the Agency
complied, in all material respects, with the compliance requirements referred to above that are
applicable for the year ended June, 30, 2011.
Internal Control Over Compliance
Management of the Agency is responsible for establishing and maintaining effective internal control
over compliance with the compliance requirements referred to above. In planning and performing our
audit, we considered the Agency's internal control over compliance to determine the auditing
procedures for the purpose of expressing our opinion on compliance, but not for the purpose of
expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not
express an opinion on the effectiveness of the Agency's intemal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control does
not allow management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct, noncompliance on a timely basis. A material weakness in internal
control over compliance is a deficiency, or combination of deficiencies in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a compliance
requirement will not be prevented, or detected and corrected, on a timely basis.
Our consideration of internal control over compliance was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control that might
be deficiencies, significant deficiencies, or material weaknesses in internal control over compliance.
We did not identify any deficiencies in internal control over compliance that we consider to be material
weaknesses, as defined above.
The Agency's response to the noncompliance identified in our audit is described above. We did not
audit the Agency's response, and, accordingly we express no opinion on the response.
This report is intended solely for the information and use of management, the Board of Directors,
others within the Agency and the State Controller's Office, Division of Accounting and Reporting and
is not intended to be and should not be used by anyone other than these specific parties.
1A)1 . Ne,Ls 6n- c tstit Evans L, u°
December 9, 2011
Irvine, California
- 86 -
WHITE NELSON DIEHL EVANS LLP
Certified l'uHie ,Aicuunt.mts
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
The Board of Directors
Palm Desert Redevelopment Agency
Palm Desert, California
We have audited the accompanying financial statements of the governmental activities and each major
fund of the Palm Desert Redevelopment Agency (the Agency), (a component unit of the City of Palm
Desert), as of and for the year ended June 30, 2011, which collectively comprise the Agency's basic
financial statements and have issued our report thereon dated December 9, 2011. 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.
Internal Control Over Financial Reporting
Management of the Agency is responsible for establishing and maintaining effective internal control
over financial reporting. In planning and performing our audit, we considered the Agency's internal
control over financial reporting as a basis for designing our auditing procedures for the purpose of
expressing our opinions on the financial statements, but not for the purpose of expressing an opinion
on the effectiveness of the Agency's internal control over financial reporting. Accordingly, we do not
express an opinion on the effectiveness of the Agency's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the Agency's financial statements will not be prevented, or detected and corrected on a
timely basis.
Our consideration of internal control over financial reporting was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal control
over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We
did not identify any deficiencies in internal control over financial reporting that we consider to be
material weaknesses, as defined above.
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2875 Michelle Drive, Suite 300, Irvine, CA 92606 • Tel: 714.978.1300 • Fax: '714'978.7893
Offices located in Orange and San Diego Counties
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Agency's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. 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 or other matters that
are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of the management, Board of Directors and
others within the Agency, and is not intended to be, and should not be, used by anyone other than these
specified parties.
w i�.t. Nelson.-1 t thL tE v c*nS L uo
December 9, 2011
Irvine, California
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