The URL can be used to link to this page

Home My WebLink AboutRDA Audited Financial Statements FYE 06-30-1997 • ............ ^ I N T E R : MEMO 9..• OF F ICE To: Honorable Chairperson and Members of the Redevelopment Agency Board From: Paul Gibson,Director of Finance/City Treasurer Subject: AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 1997 FOR THE CITY OF PALM DESERT AND THE REDEVELOPMENT AGENCY Date: January 22, 1998 Recommendations: Receive and file the audited Comprehensive Annual Financial Report for the City of Palm Desert and the Component Unit Financial Statements for the Palm Desert Redevelopment Agency for fiscal year ended June 30, 1997. Background: Diehl,Evans and Company in joint venture with a local firm,Oscar Armijo,CPA performed and completed the annual independent audit for fiscal year ended June 30, 1997 for the City of Palm Desert,including its Redevelopment Agency in September, 1997 except for the city's Desert Willow Golf Course which was delayed and completed in December, 1997 by Oscar Armijo's office. The audits were performed in accordance with generally accepted auditing standards. In the auditor's opinion,the general purpose fmancial statements in the Comprehensive Annual Financial Report(CAFR)for the City of Palm Desert and the Component Unit Financial Statements(CUFS)for the Palm Desert Redevelopment Agency present fairly,in all material respects,the financial positions of the City of Palm Desert and the Redevelopment Agency as of June 30, 1997,and the results of its operations for the year then ended in conformity with generally accepted accounting principles. The fmancial statements(the CAFR)of the City of Palm Desert includes the fmancial activities of the City the Palm Desert,Redevelopment Agency and the Palm Desert Financing Authority. The City has accounted for the Agency and the Authority as"blended"component units. Despite being legally separated,these activities are so intertwined with the City that they are,in substance part of the City's operations. The City is the primary government and the component units are those entities which are fmancially accountable to the primary government,either because the City appoints a voting majority of the component unit's board,or because the component unit will provide a fmancial benefit or impose a fmancial burden on the City. The Agency issues a separate fmancial report referred to as the CUFS. Both audited fmancial statements,the CAFR and the CUFS were presented to the Finance Committee at their January 21, 1998 meeting. Staff recommends to receive and file the audited Comprehensive Annual Financial Report for the City of Palm Desert and the Component Unit Financial Statements for the Palm Desert Redevelopment Agency for fiscal year ended June 30, 1997. Su 'tted by: Reviewed and concur: sQ2XOitega Paul S.Gibson Carlos Director of Finance/City Treasurer Executive Director Q • AGF:agf .Y RDA VERIFIED BY Original on file with City Clerk's Office COMPONENT UNIT FINANCIAL STATEMENTS .�-_m . • ' AT !� sac f b*' .*.:.,..,.:AJP?:":'"41):7":"'7-.'"-*.:''''''.4;,' :' — ''' ' ' ... .Rai. M . 'it- . r': ,.1 fir_ fi • r'. r •:,'^1'4* a r�} T' „.a% ...... •., °k•1t' s { .!sL [�L t 1 . ' 0 ;',.,,e,,,Ii. iy • y . . : i fi ‘‘ V : :•;-.. ';"'''''i:.: -r--74—Z t,s x .Y• p . : b 44y ._ ! _ '7,z. • PALM DESERT REDEVELOPMENT AGENCY CALIFORNIA FISCAL YEAR ENDED DUNE 30, 1997 • is • • • • PALM DESERT REDEVELOPMENT AGENCY COMPONENT UNIT FINANCIAL STATEMENTS WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS JUNE 30, 1997 9 RDA VERIFIED BY.026f-f`120., Original on file with City Clerk's Offirc PALM DESERT REDEVELOPMENT AGENCY TABLE OF CONTENTS June 30, 1997 Page Number Independent Auditors' Report 1 General Purpose Financial Statements: Combined Balance Sheet - All Fund Types and Account Groups 2 - 3 Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types 4 - 5 Statement of Revenues, Expenses and Changes in Retained Earnings - Enterprise Fund 6 Statement of Cash Flows - Enterprise Fund 7 Notes to Financial Statements 8 - 29 Supplemental Information: Combining Balance Sheet - All Debt Service Funds 30 - 31 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - All Debt Service Funds 32 - 33 Combining Balance Sheet - All Capital Projects Funds 34 - 35 Combining Statement of Revenues, Expenditures and tChanges in Fund Balances - All Capital Projects Funds 36 - 37 Independent Auditors' Compliance Report 38 . C I &Tani & Company, 221.1) CERTIFIED PUBLIC ACCOUNTANTS&CONSULTANTS CDiewt . o4'z1721:/o CERTIFIED PUBLIC ACCOUNTANT 18401 VON KARMAN, SUITE 200 a joint venture 74-133 EL PASEO,SUITE 8 IRVINE, CALIFORNIA 92612-1542 September 12, 1997 PALM DESERT,CALIFORNIA 92260 (714)757-7700 P (760)773-4078 INDEPENDENT AUDITORS' REPORT Agency Members Palm Desert Redevelopment Agency Palm Desert, California We have audited the general purpose financial statements of the Palm Desert Redevelopment Agency (a component unit of the City of Palm Desert), as of and for the year ended June 30, 1997 as listed in the table of contents. These financial statements are the responsibility of the Agency's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. 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 general purpose financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 111 In our opinion, the general purpose financial statements referred to above present fairly, in all material respects, the financial position of the Palm Desert Redevelopment Agency as of June 30, 1997, and the results of its operations and cash flows for its proprietary fund type for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the general purpose financial statements taken as a whole. The financial statements listed in the table of contents as supplementary information are presented for purposes of additional analysis and are not a required part of the general purpose financial statements of the Palm Desert Redevelopment Agency. The information has been subjected to the auditing procedures applied in the audit of the general purpose financial statements and, in our opinion, is fairly stated in all material respects in relation to the general purpose financial statements taken as a whole. -1- GENERAL PURPOSE FINANCIAL STATEMENTS p p C PALM DESERT REDEVELOPMENT AGENCY COMBINED BALANCE SHEET—ALL FUND TYPES AND ACCOUNT GROUPS June 30, 1997 Governmental Fund Types Special Debt Capital Revenue Service Projects ASSETS AND OTHER DEBITS ASSETS: Cash and investments (Notes 3 and 11) $ 1,639,778 $ 14,531,077 $ 2,443,509 Cash with fiscal agent (Notes 3 and 11) 10,591,312 30,608,451 22,523,363 Accounts receivable 1,318 — 1,843 Interest receivable 28,061 43,667 396,421 Due from other governmental agencies — 30,486 4,621,162 Due from other funds — 6,455,027 — Loans receivable (Note 4) 1,151,020 — — Prepaid expenses and deposits 45,072 466,799 485 Inventory held for resale (Notes ig and 7c) 5,329,000 — — Fixed assets (Note 5) — — — OTHER DEBITS: Amount available in debt service funds — — — Amount to be provided for payment of long—term debt — — — TOTAL ASSETS AND OTHER DEBITS $ 18,785,561 $ 52,135,507 $ 29,986,783 LIABILITIES, EQUITY AND OTHER CREDITS LIABILITIES: Accounts payable $ 226,696 $ 172,938 $ 1,732,933 Accrued liabilities — — 14,851 Deposits payable — — 1,209,597 II Deferred revenue — — 367,23.5 Due to other funds 1,963,276 466,799 4,024,952 Amounts due under pass—through agreements (Note 6) — 7,521,094 — General long—term debt(Notes 7 and 12) — — — TOTAL LIABILITIES 2,189,972 8,160,831 7,349,568 EQUITY AND OTHER CREDITS: Investment in general fixed assets — — — Contributed capital — — — Retained earnings: 4111 Unreserved — — — Fund balances (Note 10): Reserved 16,595,589 12,516,551 15,097,324 Unreserved—designated — 31,458,125 7,539,891 TOTAL EQUITY AND OTHER CREDITS 16,595,589 43,974,676 22,637,215 TOTAL LIABILITIES, EQUITY AND OTHER CREDITS $ 18,785,561 $ 52,135,507 $ 29,986,783 See independent auditors' report and notes to financial statements. —2— Proprietary Fund Type Account Groups Totals (Memorandum Only) - General General Fixed Long—Term Enterprise Assets Debt June 30, 1997 June 30, 1996 $ — $ — $ — $ 18,614,364 $ 18,461,630 — — — 63,723,126 68,865,991 — — — 3,161 604,860 — — — 468,149 716,884 — — — 4,651,648 6,059,179 — — — 6,455,027 5,401,360 — — — 1,151,020 1,568,365 — — — 512,356 277,716 — — — 5,329,000 10,950,000 — 68,732,436 — 68,732,436 81,346,348 — — 43,974,676 43,974,676 48,966,219 — — 138,736,010 138,736,010 130,948,781 $ — $ 68,732,436 $ 182,710,686 $ 352,350,973 $ 374,167,333 $ — $ — $ — $ 2,132,567 $ 2,309,718 — — — 14,851 14,864 D 1,209,597 25,600 — — — 367,235 1,499 — — — 6,455,027 5,401,360 — — — 7,521,094 9,236,868 — — 182,710,686 182,710,686 179,915,000 — — 182,710,686 200,411,057 196,904,909 — 68,732,436 — 68,732,436 77,666,089 — — — — 3,670,000 — — — — 282,050 — — — 44,209,464 40,244,756 — — — 38,998,016 55,399,529 — 68,732,436 — 151,939,916 177,262,424 C $ — $ 68,732,436 $ 182,710,686 $ 352,350,973 $ 374,167,333 —3— PALM DESERT REDEVELOPMENT AGENCY COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES—ALL GOVERNMENTAL FUND TYPES For the year ended June 30, 1997 Special Debt Capital Revenue Service Projects REVENUES: Tax increment $ — $ 23,890,922 $ — Use of money and property 477,576 3,027,145 1,552,004 Sale of property 6,433,296 — — Reimbursement from other agencies — 465,917 63,879 Other revenues 350,591 676,144 607,629 TOTAL REVENUES 7,261,463 28,060,128 2,223,512 EXPENDITURES: Administrative costs 71,905 — 777,707 Professional services 103,738 — 1,161,216 Property tax administrative fee — 428,359 — Loss on investment — — — Bad debt — — — Cost of inventory sold 5,621,000 — — Capital outlay 2,464,186 — 18,327,354 Land purchases — — 3,775,838 Housing subsidies 1,934,785 — — Decline in value on inventory held for resale 381,936 — — Payment to other governmental agencies — 6,628,034 — Debt service (Note 7): Bond issuance costs 460,492 — — Bond discount 293,575 — — Interest and fiscal charges 788,289 10,045,295 — Principal payments 3,915,000 2,370,000 — TOTAL EXPENDITURES 16,034,906 19,471,688 24,042,115 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (8,773,443) 8,588,440 (21,818,603) OTHER FINANCING SOURCES(USES): Operating transfers in 4,912,588 10,929,996 25,249,884 Operating transfers out (726,283) (24,996,094) (15,370,091) Advances from City(Note 7) — — 2,080,686 Proceeds from note payable (Note 7) — — 250,000 Proceeds from bonds (Note 7) 19,050,000 — — Payment to refund escrow agent (Note 7) (12,300,000) — — TOTAL OTHER FINANCING SOURCES(USES) 10,936,305 (14,066,098) 12,210,479 EXCESS OF REVENUES AND OTHER FINANCING 411 SOURCES OVER(UNDER) EXPENDITURES AND OTHER FINANCING USES 2,162,862 (5,477,658) (9,608,124) FUND BALANCES—BEGINNING OF YEAR 14,432,727 48,966,219 32,245,339 RESIDUAL EQUITY TRANSFER OUT(NOTE 5) — 486,115 — FUND BALANCES—END OF YEAR $ 16,595,589 S 43,974,676 $ 22,637,215 See independent auditors' report and notes to financial statements. —4— (Memorandum Only) June 30, June 30, 1997 1996 $ 23,890,922 $ 23,439,375 5,056,725 5,352,057 6,433,296 1,031,764 529,796 4,110,987 1,634,364 364,461 37,545,103 34,298,644 849,612 1,109,322 1,264,954 1,026,244 428,359 374,722 3,627,780 — 2,229,000 5,621,000 803,000 20,791,540 9,992,599 3,775,838 3,563,819 1,934,785 5,774,074 381,936 3,347,000 6,628,034 6,386,052 IIP 460,492 211,824 293,575 85,118 10,833,584 9,813,516 6,285,000 1,690,000 59,548,709 50,034,070 (22,003,606) (15,735,426) 41,092,468 24,129,004 (41,092,468) (24,129,004) 2,080,686 — 250,000 — 19,050,000 21,405,000 (12,300,000) (6,755,100) 9,080,686 14,649,900 (12,922,920) (1,085,526) 95,644,285 100,399,811 486,115 (3,670,000) $ 83,207,480 $ 95,644,285 —5— PALM DESERT REDEVELOPMENT AGENCY STATEMENT OF REVENUES,EXPENSES AND CHANGES IN RETAINED EARNINGS—ENTERPRISE FUND For the period ended February 13, 1997 OPERATING REVENUES: Rental income $ 440,500 OPERATING EXPENSES: Administrative 66,033 Insurance 4,280 Repairs and maintenance 58,593 Telephone 1,721 Trash disposal 3,911 Security 535 Utilities 37,085 Depreciation 67,001 TOTAL OPERATING EXPENSES 239,159 OPERATING INCOME 201,341 NONOPERATING REVENUES: Interest income 2,724 NET INCOME 204,065 RETAINED EARNINGS AT BEGINNING OF YEAR 282,050 RESIDUAL EQUITY TRANSFER OUT (486,115) RETAINED EARNINGS AT END OF YEAR $ — See independent auditors' report and notes to financial statements. —6— PALM DESERT REDEVELOPMENT AGENCY STATEMENT OF CASH FLOWS ENTERPRISE FUND For the period ended February 13, 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Operating income $ 201,341 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 67,001 Changes in operating assets and liabilities: Decrease in deferred revenue (1,498) Decrease in deposits payable (25,600) Total adjustments 39,903 NET CASH PROVIDED BY OPERATING ACTIVITIES 241,244 CASH FLOWS USED BY CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition of capital assets (56,742) CASH FLOWS FROM INVESTING ACTIVITIES: Interest income 2,724 • NET INCREASE IN CASH AND CASH EQUIVALENTS 187,226 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 298,889 RESIDUAL EQUITY TRANSFER OUT (486,115) CASH AND CASH EQUIVALENTS AT END OF YEAR $ — See independent auditors' report and notes to financial statements. I —7— NOTES TO FINANCIAL STATEMENTS 0 9 C PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS June 30, 1997 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: a. Description of Funds and Account Groups: The Agency utilizes fund accounting. Its accounts are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprises its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. Government resources are allocated and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The various funds and account groups are classified for reporting purposes as follows: Governmental Fund Types: Special Revenue Fund - Used to account for the proceeds of specific revenue sources or to finance specified activities as required by law or administrative regulation. The Special Revenue Fund consists solely of the Low and Moderate Income Housing Fund. 1P Debt Service Funds - Used to account for the payment of interest and principal on long-term obligations. Capital Projects Funds - Used to account for financial resources used for the acquisition or construction of redevelopment projects. Proprietary Fund Type: Enterprise Fund - Used to maintain accountability of assets, liabilities, revenues and expenses related to a commercial building owned by the Agency. The building was transferred to the City in February, 1997. Account Groups: C The General Fixed Asset Account Group - Used to maintain control and cost information on capital assets owned by the Agency, not accounted for in the Building Enterprise Fund. General fixed assets are recorded as expenditures in the Capital Projects Fund at the time of purchase or construction. These assets are capitalized at cost. No depreciation is provided on general fixed assets. CThe General Long-Term Debt Account Group - Used to account for the Agency's liability for long-term indebtedness. See independent auditors' report. 1 -8- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): b. Basis of Accounting: Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. All governmental funds are accounted for using the modified accrual basis of accounting. Revenues are recognized when they become measurable and available as net current assets. Expenditures generally are recognized when the related fund liability is incurred. An exception to this general rule is principal and interest on general long-term debt, which are recognized when due. The accrual basis of accounting is followed by the proprietary fund. Revenues are recognized when they are earned and expenses are recognized when the liability is incurred. c. Measurement Focus: 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. Noncurrent portions of long-term receivables are offset by fund balance reserve accounts. The proprietary fund is accounted for on a cost of services or "capital maintenance" measurement focus. This means that all assets and liabilities (whether current or noncurrent) associated with the activity are included on the balance sheet. Its reported fund equity represents total net assets. Proprietary fund operating statements presents increases (revenues) and decreases (expenses) in total net assets. See independent auditors' report. -9- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): d. Budgetary Accounting: The Agency uses the following procedures in establishing its budgetary data: 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 Project 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 generally accepted accounting principles. e. Encumbrances: Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of monies are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration. Encumbrances outstanding at year-end are reported as reservations of fund balances since they are commitments, but do not constitute expenditures or liabilities. • See independent auditors' report. , -10- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): f. Investments: Investments are stated at cost. No loss is recorded when market values decline below cost as such declines are considered temporary. The Agency intends to either hold the investments until maturity, or until market values equal or exceed cost. However, if the liquidity needs of the Agency were to require that investments be sold at a loss subsequent to year end, the decline in value would be recorded as a loss at year end. The Agency considers all highly liquid investments with a maturity of three months or less when purchased and all funds held in its commingled pool that are available to it and have the general characteristics of demand deposit accounts to be cash equivalents for purpose of the statement of cash flows. g. Inventory Held for Resale: Inventory held for resale is capitalized in the Special Revenue Fund at the lower of acquisition cost or net realizable value. As of June 30, 1997, the cost of inventory held for resale was $6,752,779, with an allowance for decline in value in the amount of $1,423,779, for a net amount of $5,329,000. h. Property Tax Calendar: Property taxes are assessed and collected each fiscal year according to the following property tax calendar: Lien Date March 1 Levy Date July 1 to June 30 Due Date November 1 - 1st Installment March 1 - 2nd Installment Delinquent Date 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. See independent auditors' report. -11- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): i. 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 and account groups of the Agency have been included within the scope of the general purpose financial statements of the City because the City Council of the City of Palm Desert exercises oversight responsibility over the operations of the Agency. Only the funds and account groups 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. j. Comparative Data: Comparative total data for the prior year have been presented in the accompanying financial statements in order to provide an understanding of changes in the Agency's financial position and operations. However, comparative (i.e., presentation of prior year totals by fund type) data have not been presented in each of the statements since their inclusion would make the statements unduly complex and difficult to read. k. Total Columns on Combined Statements: Total columns on the combined statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. Data in these columns is not comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data. 2. ORGANIZATION AND TAX INCREMENT FINANCING: 111 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. • Agency expenses include capital improvement projects and operating costs which include required staff support and consultant services. See independent auditors' report. i -12- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 2. ORGANIZATION AND TAX INCREMENT FINANCING (CONTINUED): 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 6), 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. 3. CASH AND INVESTMENTS: Cash and investments reported in the accompanying financial statements consisted of the following: Cash and investments pooled with the City $ 18,614,364 Cash and investments with fiscal agent 63,723,126 $ 82,337,490 The Agency's funds are pooled with the City of Palm Desert cash and investments in order to generate optimum interest income. The information required by GASB Statement No.3 related to authorized investments, credit risk, etc. is available in the annual report of the City. 4. LOANS RECEIVABLE: Special Revenue Fund Loans receivable include the following: a) A $925,000 loan receivable from Portola Palms Mobilehome Park Acquisition Association, Inc. (the Association). A loan of $1,701,500 was made to the Association to allow it to purchase the first trust deed note securing the property from Ring Financial, Inc. The Redevelopment Agency's loan is secured by a first trust deed and as of June 30 1997 $544,300 has been repaid to the Redevelopment Agency from the sale of individual lots by the Association and the loan has been reduced by a decline in value in the amount of $232,200. Subsequent to June 30, 1997, the Agency accepted a deed in lieu of foreclosure on the property. See independent auditors' report. -13- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 4. LOANS RECEIVABLE (CONTINUED): b) The Agency has loaned $193,868 in below market loans, secured by deeds of trust, to eligible low income households. Monthly payments of interest and principal are due over a period of 30 years unless the homes are sold, in which case the entire loan balance is due and payable. c) The Agency has $15,269 in home improvement loans. Payments of interest and principal are due monthly on these loans. d) The Agency has a $16,889 loan made to an individual. Other Loans: 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. Detailed information for these loans is as follows: Loan Balance Interest Maturity Project Name Outstanding Rate Date Secured By Special Provisions of Loan Self-Help Housing Program $ 429,000 7.25% 30 yrs. Deed of Trust Loan balance and interest or 2024 due upon maturity, unpaid balance of loan or interest will bear an interest rate of 12%. Home Improvement Loans 20,095 N/A N/A Deed of Trust Loan is payable upon change or transfer of title, refinancing or upon the death of the borrower. Portola Palms Mobilehome Park 484,925 5.00% 15 years Deed of Trust Loan balance and interest from date due upon maturity.If debtor of loan is not in default with the note, deed of trust, loan agreement or restrictive covenant, then the Agency will forgive 2%per annum of the interest. Desert Rose 942,903 3.00% Year 2026 Deed of Trust Loan will be forgiven at maturity unless the debtor is in violation of the unit regulatory agreement or the deed of trust. See independent auditors' report. -14- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 5. FIXED ASSETS: A summary of changes in Fixed Assets for the year ended June 30, 1997 is as follows: General Fixed Assets Beginning Ending Balance Additions Deletions Balance Land $ 47,396,343 $ 5,831,055 $ 11,236,029 $ 41,991,369 Buildings and improvements 25,275,500 18,643 - 25,294,143 Equipment 20,565 15,499 - 36,064 Work-in-Progress 4,973,681 14,685,756 18,248,577 1,410,860 $ 77,666,089 $ 20,550,953 $ 29,484,606 $ 68,732,436 Certain land has been included in the general fixed assets account group until a determination is made on the use of the land. Enterprise Fund Beginning Ending Balance Additions Deletions Balance Building $ 3,670,000 $ - $ 3,670,000 $ - Improvements 65,152 56,742 121,894 - Total 3,735,152 56,742 3,791,894 - 111 Less accumulated depreciation (54,893) - 54,893 - $ 3,680,259 $ 56,742 $ 3,737,001 $ - Fixed assets purchased by the Enterprise Fund are capitalized at cost, while contributed assets are recorded at fair market value on the date donated. Depreciation is charged to operations using a straight-line method, based on the useful life of the asset. The estimated useful life of the building and improvements is 40 years. The building was transferred to the City in February, 1997. t See independent auditors' report. -15- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 6. 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. The Agency has entered into various pass-through agreements with other agencies to allocate its tax increment revenue. At June 30, 1997, the Agency is holding $7,521,094 in trust on behalf of other agencies and entities related to specific pass-through agreements detailed as follows: Balance Balance at July 1, at June 30, Entity 1996 Additions Payments 1997 Riverside County - Capital Improvement $ 5,385,874 $ 3,161,099 $ 3,628,493 $ 4,918,480 * Riverside County - Schools 11,894 64,172 - 76,066 Riverside County - Library 666,255 213,532 755,085 124,702 * Riverside County - Fire 366,384 341,325 325,000 382,709 Coachella Valley Mosquito Abatement District 101,470 109,375 - 210,845 Coachella Valley Water District 313,100 130,234 - 443,334 Desert Community College District 142,047 108,788 168,388 82,447 * IP Desert Sands Unified School District 1,534,888 545,871 1,129,712 951,047 * Coachella Valley Recreation and Park District 40,680 39,112 40,680 39,112 Coachella Valley Resources District 3,183 521 - 3,704 Palm Springs Unified School District 5,504 321 - 5,825 County Juvenile Health District 249,571 631,620 598,368 282,823 Ahmanson Trust 416,018 - 416,018 - $ 9,236,868 $ 5,345,970 $ 7,061,744 $ 7,521,094 * The Redevelopment Agency has used bond proceeds for the construction of capital improvements which benefit these entity's. These entities have agreements with the Redevelopment Agency will allow it to use a portion of these amounts to offset debt service costs. See independent auditors' report. -16- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 7. GENERAL LONG-TERM DEBT: The changes in the General Long-Term for the year ended June 30, 1997 were as follows: Balance at Balance at July 1, June 30, 1996 Additions Deletions 1997 Advances from City $ 19,000,000 $ 2,080,686 $ - $ 21,080,686 Tax Allocation Bonds 145,815,000 19,050,000 3,485,000 161,380,000 1994 Multifamily Housing Revenue Bonds 15,100,000 - 15,100,000 - Note payable - 250,000 - 250,000 $179,915,000 $ 21,380,686 $ 18,585,000 $ 182,710,686 a. Advances from City: The Redevelopment Agency has received advances from the City which have been recorded as an "Other Financing Sources" in the Agency's Capital Project Funds. Since payment by the Agency back to the City will be made from tax increment revenues in future years, the debt from the Agency to the City has been classified in the Long-Term Debt account group. 4111 Below is a summary of the activity for the advances from the City to the Redevelopment Agency: Date of Rates of Amount Beginning Ending Issue Interest _ Authorized Balance Additions Payments Balance 12/05/86 Varies $ 6,000,000 $ 6,000,000 $ - $ - $ 6,000,000 09/23/93 Varies 5,000,000 5,000,000 - - 5,000,000 03/23/95 Varies 8,000,000 8,000,000 - - 8,000,000 03/13/97 Varies 2,055,000 - 2,055,000 - 2,055,000 06/30/97 Varies - - 25,686 - 25,686 Principal Balance 19,000,000 2,080,686 - 21,080,686 Accrued Interest - 1,063,659 1,063,659 - $19,000,000 $ 3,144,345 $ 1,063,659 $21,080,686 See independent auditors' report. -17- • PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 7. GENERAL LONG-TERM DEBT (CONTINUED): b. Tax Allocation Bonds: Tax allocation bonds are special obligations of the Agency and the Palm Desert 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. 1995 Series Tax Allocation Revenue Bonds (Project Area No. 1) In June 1995, the Palm Desert Financing Authority issued $24,025,000 of Tax Allocation Bonds, (Project Area No. 1) Series 1995. The Palm Desert Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment Agency to finance certain redevelopment activities of the Agency in Project Area No.1. Interest rates on the bonds vary from 4.0% to 5.2% per annum payable semiannually on April 1 and October 1 with principal maturing annually. The future debt service requirements on the 1995 Series Tax Allocation Revenue Bonds IP (Project Area No. 1) are as follows: Year Ending June 30, Principal Interest Total 1998 $ 170,000 $ 1,396,778 $ 1,566,778 1999 180,000 1,388,873 1,568,873 2000 185,000 1,380,323 1,565,323 2001 195,000 1,371,350 1,566,350 2002 205,000 1,361,698 1,566,698 Thereafter 22,930,000 19,763,967 42,693,967 r $ 23,865,000 $ 26,662,989 $ 50,527,989 See independent auditors' report. -18- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 7. GENERAL LONG-TERM DEBT (CONTINUED): b. Tax Allocation Bonds (Continued): 1995 Series Tax Allocation Revenue Bonds (Project Area No. 2) In June 1995, The Palm Desert Financing Authority issued $4,090,000 of Tax Allocation Bonds, (Project Area No. 2) Series 1995. The Palm Desert Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment Agency to finance certain redevelopment activities of the Agency in Project Area No. 2. Interest rates on the bonds vary from 4.75% to 5.2% per annum payable semiannually on February 1 and August 1 with principal maturing annually on August 1. The future debt service requirements on the 1995 Series Tax Allocation Revenues Bonds (Project Area No. 2) are as follows: Year Ending June 30, Principal Interest Total 1998 $ - $ 239,935 $ 239,935 1999 25,000 239,935 264,935 2000 30,000 239,342 269,342 2001 30,000 238,020 268,020 2002 30,000 236,550 266,550 Thereafter 3,975,000 3,534,886 7,509,886 $ 4,090,000 $ 4,728,668 $ 8,818,668 See independent auditors' report. -19-• PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 7. GENERAL LONG-TERM DEBT (CONTINUED): b. Tax Allocation Bonds (Continued): 1992 Series A Tax Allocation Revenue Bonds (Project Area No. 1 as Amended) In April 1992, the Palm Desert Financing Authority issued $100,000,000 in Palm Desert Financing Authority Tax Allocation Revenue Bonds (Project Area No. 1 as Amended) 1992 Series A. The Authority loaned $42,764,702 of the $100,000,000 to the Agency to advance refund the 1985 Tax Allocation Bonds, 1985 Tax Allocation Refunding Bonds and the 1989 Tax Allocation Bonds. The Authority also loaned $40,844,733 to the Redevelopment Agency to fund additional projects in the project area. The remaining bonds are comprised of$15,965,000 of "Current Interest" Bonds, $39,350,000 of Dutch Auction Floating Securities and $39,350,000 of Inverse Floating Securities. Principal maturities of the Current Interest Bonds occur annually on April 1. Interest on the Current Interest Bonds varies from 4.00% to 6.625% and is payable semi-annually on April 1 and October 1. The Dutch Auction Floating Securities and Inverse Floating Securities mature each April 1 through 2022. Interest on the Dutch Auction Floating Securities and Inverse Floating Securities is due generally every 35 days from that date. The future estimated debt service requirements on the 1992 Series A Tax Allocation Revenue Bonds (Project Area No. 1 as Amended) are as follows: p Year Ending June 30, Principal Interest Total 1998 $ 1,670,000 $ 6,170,479 $ 7,840,479 1999 1,760,000 5,595,557 7,355,557 2000 1,860,000 5,974,935 7,834,935 2001 1,975,000 5,385,743 7,360,743 2002 2,090,000 5,747,115 7,837,115 Thereafter 83,730,000 65,923,495 149,653,495 $ 93,085,000 $ 94,797,324 $187,882,324 See independent auditors' report. -20- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 7. GENERAL LONG-TERM DEBT (CONTINUED): b. Tax Allocation Bonds (Continued): 1992 Series A Tax Allocation Revenue Bonds (Project Area No. 2) In August 1992, the Palm Desert Financing Authority issued $17,505,000 of Tax Allocation Bonds, (Project Area No. 2) 1992 Series A. The Authority loaned the bond proceeds to the Agency to finance certain redevelopment activities of the Agency in Project Area No. 2. Interest rates on the bonds vary from 2.7% to 6.125% per annum payable semiannually on February 1 and August 1 with principal maturing annually on August 1 from 1993 to 2002. The future debt service requirements on the 1992 Series A Tax Allocation Revenue Bonds (Project Area No. 2) are as follows: Year Ending June 30, Principal Interest Total 1998 $ 290,000 $ 979,988 $ 1,269,988 1999 300,000 966,337 1,266,337 2000 315,000 951,338 1,266,338 2001 335,000 934,753 1,269,753 2002 350,000 916,768 1,266,76841 Thereafter 14,860,000 11,489,770 26,349,770 $ 16,450,000 $ 16,238,954 $ 32,688,954 3 See independent auditors' report. -21- 1 PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 7. GENERAL LONG-TERM DEBT (CONTINUED): b. Tax Allocation Bonds (Continued): 1995 Series A - Tax Allocation Revenue Refunding Bonds In August 1995, the Palm Desert Financing Authority issued $6,305,000 in Tax Allocation Revenue Refunding Bonds 1995 Series A. The proceeds from the tax allocation bonds were loaned to the Agency to provide funds to refund in advance $6,430,000 of the 1988 Tax Allocation Bonds. The advance refunding resulted in an economic gain of $907,760 (difference between the present value of the annual debt service payments between the old debt and new debt) and a decrease in aggregate debt service payments of $1,441,052. Interest rates on the Bonds vary from 3.80% to 5.55% with interest payable semi-annually on March 1 and September 1 with principal maturing annually on September 1. Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interest Total 1998 $ 385,000 $ 285,858 $ 670,858 1999 400,000 269,758 669,758 2000 420,000 252,223 672,223 2001 435,000 233,300 668,300 2002 450,000 218,938 668,938 Thereafter 3,865,000 759,033 4,624,033 $ 5,955,000 $ 2,019,110 $ 7,974,110 • C See independent auditors' report. 1 -22- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 7. GENERAL LONG-TERM DEBT (CONTINUED) b. Tax Allocation Bonds (Continued): 1996 Tax Allocation Revenue Bonds In September 1996, the Palm Desert Redevelopment Agency issued $19,050,000 Tax Allocation Revenue Bonds (1996 Series A in an initial aggregate amount of$10,880,000 and 1996 Series B in an initial aggregate amount of $8,170,000) to provide funds to (a) refinance the $15,100,000 Variable Rate Demand 1994 Multifamily Housing Revenue Bonds and (b) provide working capital. Interest rates on the bonds vary from 4.75% to 5.625% with interest payable semi-annually on March 1 and September 1 with principal maturing annually on September 1. Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interest Total 1998 $ - $ 1,089,748 $ 1,089,748 1999 - 1,089,748 1,089,748 2000 - 1,089,748 1,089,748 2001 - 1,089,748 1,089,748 2002 - 1,089,748 1,089,748 Thereafter 17,935,000 8,068,858 26,003,858 $ 17,935,000 $ 13,517,598 $ 31,452,598 t See independent auditors' report. -23- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 7. GENERAL LONG-TERM DEBT (CONTINUED) b. Tax Allocation Bonds (Continued): Below is a summary of the changes in tax allocation bonds: Balance at Balance at July 1, 1996 Additions Payments June 30, 1997 1995 Series Tax Allocation Revenue Bonds (Project Area No. 1) $ 24,025,000 $ - $ 160,000 $ 23,865,000 1995 Series Tax Allocation Revenue Bonds (Project Area No. 2) 4,090,000 - - 4,090,000 1992 Series A Tax Allocation Revenue Bonds (Project Area No. 1 as Amended) 94,665,000 - 1,580,000 93,085,000 1992 Series A Tax Allocation Revenue Bonds (Project Area No. 2) 16,730,000 - 280,000 16,450,000 1995 Series A Tax Allocation Revenue Refunding Bonds 6,305,000 - 350,000 5,955,000 1996 Tax Allocation Revenue Bonds - 19,050,000 1,115,000 17,935,000 $ 145,815,000 $ 19,050,000 $ 3,485,000, $ 161,380,000 c. 1994 Multifamily Housing Revenue Bonds: In August 1994, the Palm Desert Redevelopment Agency issued $15,100,000 in Variable Rate Demand 1994 Multifamily Housing Revenue Bonds (Bonds). The Agency issued the bonds to finance a loan to Civic Center Barrio Housing Corporation (Corporation), a California Non-Profit Public Benefit Corporation. Pursuant to a financing agreement between the Agency and the Corporation dated August 1, 1994, the Agency loaned funds to provide permanent financing for 161 newly constructed residences and related improvements in the City of Palm Desert to be owned by the Corporation and sold or leased, with an option to purchase, to low and moderate income persons and families. See independent auditors' report. -24- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 7. GENERAL LONG-TERM DEBT (CONTINUED): c. 1994 Multifamily Housing Revenue Bonds (Continued): At the time of the issuance of the Bonds, it was anticipated that approximately one-half of the residences would be sold within 24 months from the issuance of the bonds and that the proceeds of the sales would be used to redeem the Bonds. It was also anticipated that all homes would be sold within 6 years and that all the Bonds would be redeemed. The Bonds are secured by a letter of credit which expires six years from the date of the issuance of the Bonds with up to two one-year extensions exercisable by the borrower at the credit bank's sole and absolute discretion. The Bonds are issued in denominations of$100,000 or any integral multiple thereof for Bonds bearing interest at the variable rate, and in denominations of $5,000 or any integral multiple thereof for Bonds on which the interest is converted to a fixed rate. The Bonds mature on August 1, 2000, and are subject to prior redemption. Interest on the variable rate Bonds is payable on the second Tuesday of each month commencing September 13, 1994. Interest is payable February 1 and August 1 of each year on the Bonds, which convert to a fixed rate. In April 1996, the Agency acquired the assets (the 161 homes) and assumed liability for the $15,100,000 1994 Multifamily Housing Revenue Bonds as the project was not being administered properly. The bonds were refinanced with proceeds from the 1996 Tax Allocation Revenue Bonds. See independent auditors' report. -25- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 7. GENERAL LONG-TERM DEBT (CONTINUED): d. Note Payable: In January 1997, the Palm Desert Redevelopment Agency borrowed $250,000 to provide funds for land acquisition. The note bears interest at 6.5% per annum with annual payments of principal in the sum of $50,000 per year plus accrued interest commencing January 1, 1998 through January 31, 2002. Future debt service payments are as follows: Year Ending June 30 Principal Interest Total 1998 $ 50,000 $ 16,250 $ 66,250 1999 50,000 13,000 63,000 2000 50,000 9,750 59,750 2001 50,000 6,500 56,500 2002 50,000 3,250 53,250 $ 250,000 $ 48,750 $ 298,750 8. BOND RESERVE REQUIREMENTS: At June 30, 1997 the reserve balance requirements and actual balances were as follows: Issue Requirement Actual 1992 Series A Tax Allocation Bonds (Project Area No. 1 as Amended) $ 7,841,271 $ 8,645,525 1992 Series A Tax Allocation Bonds (Project Area No. 2) $ 1,278,556 $ 1,601,090 1995 Series Tax Allocation Bonds (Project Area No. 1 as Amended) $ 1,955,525 $ 16,963,070 1995 Series Tax Allocation Bonds (Project Area No. 2) $ 343,900 $ 2,795,254 1995 Refunding Tax Allocation Bonds $ 630,500 $ 647,179 1996 Tax Allocation Revenue Bonds $ 1,950,000 $ 1,950,000 1 These actual amounts are included in the Fund Balance reserved or designated for Debt Service (see Note 10). See independent auditors' report. 1 -26- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 9. DEFEASED OBLIGATIONS: The Agency defeased certain Redevelopment obligations by placing the proceeds of new obligations in an irrevocable trust to provide for all future debt service payments on the old obligations. Accordingly, the trust account assets and the liability for the defeased obligations are not included in the accompanying financial statements. Defeased Amount Issue Outstanding 1982 Tax Allocation Bonds $ 1,965,000 10. RESERVES AND DESIGNATIONS OF FUND BALANCE: Special Debt Capital Revenue Service Projects Reserves Fund Fund Fund Continuing appropriations $ - $ - $ 2,035,361 Encumbrances 153,615 - 13,061,478 Loans receivable 1,151,020 - - Prepaid expenses 45,073 466,799 485 Debt service 1,950,000 12,049,752 - Low income purposes 7,966,881 - - Inventory held for resale 5,329,000 - - $ 16,595,589 $ 12,516,551 $ 15,097,324 Designations Debt service $ - $ 31,458,125 $ - Capital outlay - - 7,539,891 $ - $ 31,458,125 $ 7,539,891 See independent auditors' report. -27- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 10. RESERVES AND DESIGNATIONS OF FUND BALANCE: Reserved for Continuing Appropriations - This reserve is for appropriations for capital projects which are unexpected as of June 30, 1997 and are carried forward as continuing appropriations to be expended in 1997-98. Reserved for Encumbrances - These reserves represent the portion of purchase orders awarded for which the goods or services had not yet been received at June 30, 1997. Although all appropriations lapse at year-end, even if encumbered, the City intends either to honor the contracts in progress or to cancel them. Reserve for encumbrances are rebudgeted on July 1, by Board action. Reserved for Loans Receivables - This reserve is set up to reflect the non-current portion receivables so that they will not be considered as current funds available. Reserved for Prepaid Expenses - This reserve represents contracted obligations for cash payments made before June 30, 1997, but not recognized as an expenditure until after July 1, 1997. 9 Reserved for Debt Service - These reserves for Debt Service represent reserves accumulated by the Agency that are legally restricted to the payment of long-term debt principal and interest amounts that mature in future years. Reserved for Low Income Purposes - This reserve is for amounts set aside from tax increment money received by the Agency and is to be spent on projects benefitting low income families. Reserved for Inventory Held for Resale - This reserve for inventory held for resale has been set aside to indicate that they will not be considered as current funds available. Designated for Debt Service - These funds are designated for payment of principal and interest on General Long-Term Debt. Designated for Capital Outlay - These funds are designed for capital outlay for future projects. See independent auditors' report. -28- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (CONTINUED) June 30, 1997 11. CONDUIT DEBT OBLIGATION: Series 1996 - $7,010,000 Lease Revenue Bonds In August 1996, the Palm Desert Financing Authority (the Authority) issued $7,010,000 in Lease Revenue Bonds. The proceeds of the Bonds will be used to finance the construction of a County Administrative Center and related facilities upon a site located in the City of Blythe, County of Riverside, fund a reserve account, fund approximately eight months of capitalized interest and pay costs of issuance of the Bonds. The Authority will lease the site from the County of Riverside (the County) pursuant to a site lease dated August 1, 1996, by and between the Authority and the County and will lease back to the Authority the site and the facilities (together "the Project") pursuant to a Lease Agreement dated as of August 1, 1996, by and between the Authority and County (the "Lease"). Under the Lease, the County will pay the Trustee Base Rental Payments to the trustee in an amount equal to the scheduled debt service payments on 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. 12. SUBSEQUENT EVENT: In July1997, the Palm Desert FinancingAuthorityissued $71 955 000 Tax Allocation > Refunding Revenue Bonds (Project Area No. 1, as Amended) Series 1997 to provide funds to advance refund a portion of the 1992 Series A Tax Allocation Revenue Bonds. Interest on the bonds varies from 4.10% to 5.20% with semi-annual interest payments payable April 1 and October 1 with principal maturing commencing April 1, 2000 through April 1, 2023. See independent auditors' report. -29- SUPPLEMENTAL INFORMATION 9 9 PALM DESERT REDEVELOPMENT AGENCY COMBINING BALANCE SHEET—ALL DEBT SERVICE FUNDS June 30, 1997 Project Project Project Project Area 1 Area 2 Area 3 Area 4 ASSETS Cash and investments $ 9,819,784 $ 1,882,360 $ 969,632 $ 1,859,301 Cash with fiscal agent — — — — Interest receivable — — — — Due from other governmental agencies 25,866 1,039 1,680 1,901 Due from other funds 6,455,027 — — — Prepaid expenses and deposits — — — — - TOTAL ASSETS $ 16,300,677 $ 1,883,399 $ 971,312 $ 1,861,202 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable $ 172,938 $ — $ — $ — Due to other funds — — — — Amounts due under pass—through agreements 5,256,338 407,596 621,668 1,235,492 i TOTAL LIABILITIES 5,429,276 407,596 621,668 1,235,492 FUND BALANCES: Reserved: Prepaid expenses — — — — Debt service — — — — Unreserved: Designated for debt service 10,871,401 1,475,803 349,644 625,710 TOTAL FUND BALANCES 10,871,401 1,47.5,803 349,644 625,7104111 TOTAL LIABILITIES AND FUND BALANCES $ 16,300,677 $ 1,883,399 $ 971,312 $ 1,861,202 —30— 1 Financing - Totals Authority 1997 1996 $ — $ 14,531,077 $ 16,942,468 30,608,451 30,608,451 35,873,065 43,667 43,667 20,561 30,486 7,826 6,455,027 5,401,360 466,799 466,799 2,375 $ 31,118,917 $ 52,135,507 $ 58,247,655 $ — $ 172,938 $ 44,568 466,799 466,799 — 7,521,094 9,236,868 466,799 8,160,831 9,281,436 466,799 466,799 2,375 12,049,752 12,049,752 12,049,572 18,135,567 31,458,125 36,914,272 30,652,118 43,974,676 48,966,219 S 31,118,917 $ 52,135,507 $ 58,247,655 I • —31— PALM DESERT REDEVELOPMENT AGENCY COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES—ALL DEBT SERVICE FUNDS For the year ended June 30, 1997 Project Project Project Project Area 1 Area 2 Area 3 Area 4 REVENUES: Tax increment $ 16,726,338 $ 5,459,805 $ 552,166 $ 1,152,613 Use of money and property 400,137 — 31,829 36,431 Reimbursement from other agencies 465,917 — — — Other revenues 676,144 — — — TOTAL REVENUES 18,268,536 5,459,805 583,995 1,189,044 EXPENDITURES: Property tax administrative fee 324,972 70,875 10,789 21,723 Loss on investment — — — — Bad debt — — — — Payment to other governmental agencies . 3,605,208 1,702,484 700,514 619,828 Bond issuance costs — — — — Bond discount — — — — Interest and fiscal charges 173,020 1,141,805 — — Principal payments — — — — TOTAL EXPENDITURES 4,103,200 2,915,164 711,303 641,551 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 14,165,336 2,544,641 (127,308) 547,493 OTHER FINANCING SOURCES(USES): Operating transfers in — — — — Operating transfers out (12,293,298) (2,603,374) (110,433) (230,523) Proceeds from bonds — — — — TOTAL OTHER FINANCING SOURCES(USES) (12,293,298) (2,603,374) (110,433) (230,523) EXCESS OF REVENUES AND OTHER FINANCING SOURCES II OVER(UNDER) EXPENDITURES AND OTHER FINANCING USES 1,872,038 (58,733) (237,741) 316,970 FUND BALANCES—BEGINNING OF YEAR 8,513.248 1,534,536 587,385 308,740 RESIDUAL EQUITY TRANSFER IN(OUT) 486,115 — — — FUND BALANCES—END OF YEAR $ 10,871,401 $ 1,475,803 $ 349,644 S 625,710 —32— 1 Financing Totals Authority 1997 1996 $ — S 23,890,922 5 23,439,375 2,558,748 3,027,145 2,315,975 465,917 461,827 676,144 227,795 2,558,748 28,060,128 26,444,972 428,359 374,722 3,627,780 2,229,000 — 6,628,034 6,386,052 211,824 85,118 8,730,470 10,045,295 9,634,785 2,370,000 2,370,000 1,690,000 11,100,470 19,471,688 24,239,281 (8,541,722) 8,588,440 2,205,691 10,929,996 10,929,996 9,986,555 (9,758,466) (24,996,094) (21,131,471) — 6,305,000 1,171,530 (14,066,098) (4,839,916) (7,370,192) (5,477,658) (2,634,225) 38,022,310 48,966,219 55,270,444 — 486,115 (3,670,000) S 30,652,118 S 43,974,676 $ 48,966,219 —33— i PALM DESERT REDEVELOPMENT AGENCY COMBINING BALANCE SHEET—ALL CAPITAL PROJECTS FUNDS June 30, 1997 Project Project Project Project Area 1 _ Area 2 Area 3 Area 4 ASSETS Cash and investments $ — $ 2,381,997 $ 56,035 $ 5,477 Cash with fiscal agent 19,235,867 3,287,496 — — Accounts receivable 1,843 — — — Interest receivable 387,786 8,63.5 — — Due from other governmental agencies 4,618,659 2,503 — — Deposits — — — — Prepaid expenses 485 — — — TOTAL ASSETS $ 24,244,640 $ 5,680,631 $ 56,035 $ 5,477 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable $ 174,188 $ 1,553,268 $ — $ 5,477 Accrued liabilities 14,851 — — — Deferred revenue 367,235 — — — Deposits payable — 1,209,597 — — Due to other funds 4,024,952 — — — TOTAL LIABILITIES 4,581,226 2,762,865 — 5,477 FUND BALANCES: Reserved: Deposits — — — — Prepaid expenses 485 — — — Continuing appropriations 13,061,478 — — — 1 Encumbrances 269,715 1,751,736 13,910 — Unreserved: Designated for capital outlay 6,331,736 1,166,030 42,125 — TOTAL FUND BALANCES 19,663,414 2,917,766 56,035 — It TOTAL LIABILITIES AND FUND BALANCES $ 24,244,640 $ 5,680,631 $ 56,035 $ 5,477 I/ —34— Tot als 1997 1996 $ 2,443,509 $ 579,872 22,523,363 31,882,163 1,843 34,934 396,421 694,754 4,621,162 6,051,353 275,000 485 341 $ 29,986,783 $ 39,518,417 $ 1,732,933 $ 1,856,854 14,851 14,864 367,235 — 1,209,597 — 4,024,952 5,401,360 7,349,568 7,273,078 — 275,000 485 341 13,061,478 9,127,723 i 2,035,361 4,357,018 7,539,891 18,485,257 22,637,215 32,245,339 $ 29,986,783 $ 39,518,417 4111 —35— PALM DESERT REDEVELOPMENT AGENCY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES—ALL CAPITAL PROJECTS FUNDS For the year ended June 30, 1997 Project Project Project Project Area 1 Area 2 Area 3 Area 4 REVENUES: Use of money and property $ 1,251,726 $ 292,657 $ 4,194 $ 3,427 Reimbursement from other agencies 63,879 — — — Other revenues 494,520 113,109 — — TOTAL REVENUES 1,810,125 405,766 4,194 3,427 EXPENDITURES: Administrative costs 777,707 — — — Professional services 750,141 371,164 12,854 27,057 Capital outlay 1,251,502 17,051,192 — 24,660 Land purchases 3,501,055 274,783 — — TOTAL EXPENDITURES 6,280,405 17,697,139 12,854 51,717 EXCESS OF REVENUES (UNDER) EXPENDITURES (4,470,280) (17,291,373) (8,660) (48,290) 11/ OTHER FINANCING SOURCES(USES): Operating transfers in 10,061,424 15,188,460 — — Operating transfers out (15,114,799) (191,469) (12,765) (51,058) Advances from City — 2,055,000 — 25,686 Proceeds from note payable 250,000 — — — TOTAL OTHER FINANCING SOURCES (USES) (4,803,375) 17,051,991 (12,765) (25,372) EXCESS OF REVENUES AND OTHER FINANCING SOURCES 2 (UNDER) EXPENDITURES AND OTHER FINANCING USES (9,273,655) (239,382) (21,425) (73,662) FUND BALANCES411 — BEGINNING OF YEAR 28,937,069 3,157,148 77,460 73,662 FUND BALANCES—END OF YEAR $ 19,663,414 $ 2,917,766 $ 56,035 $ — —36— 1 Totals 1997 1996 $ 1,552,004 $ 2,862,941 63,879 2,736,964 607,629 134,646 2,223,512 5,734,551 777,707 836,114 1,161,216 962,117 18,327,354 9,828,412 3,775,838 3,563,819 24,042,115 15,190,462 (21,818,603) (9,455,911) 25,249,884 2,879,018 (15,370,091) (2,818,533) 2,080,686 — 250,000 — 12,210,479 60,485 (9,608,124) (9,395,426) JP32,245,339 41,640,765 $ 22,637,215 $ 32,245,339 9 —37— . 1.EfiL, &vani & eomiiarzy, 1' ? CERTIFIED PUBLIC ACCOUNTANTS&CONSULTANTS CDi,ea't og'.ml/o CERTIFIED PUBLIC ACCOUNTANT 18401 VON KARMAN,SUITE 200 a Joint venture 74-133 EL PASEO,SUITE 8 IRVINE,CALIFORNIA 92612-1542 $e tember 12, 1997 PALM DESERT,CALIFORNIA 92260 (714)757-7700 p (760)773-4078 INDEPENDENT AUDITORS' COMPLIANCE REPORT Agency Members Palm Desert Redevelopment Agency Palm Desert, California We have audited the financial statements of the Palm Desert Redevelopment Agency (a component unit of the City of Palm Desert), as of and for the year ended June 30, 1997, and have issued our opinion thereon dated September 12, 1997. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. Compliance with laws and regulations applicable to the Palm Desert Redevelopment Agency is the responsibility of the Palm Desert Redevelopment Agency's management. As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of compliance with provisions of laws and regulations contained in the Guidelines For Compliance Audits of California Redevelopment Agencies issued by the State Controller's Office, Division of Local Governmental Fiscal Affairs. The result of our tests indicted that, with respect to the items tested, the Palm Desert Redevelopment Agency complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to out attention that caused us to believe that the Palm Desert Redevelopment Agency had not complied, in all material respects, with those provisions. This report is intended for the information of the Palm Desert Redevelopment Agency, and the State Controller's Office. However, this report is a matter of public record and its distribution is not limited. DC v a nn avv-tirj, Ct,- Pcnn,i t L f) 10 -38-