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Home My WebLink AboutRDA Audited Financial Reports FYE 06-30-1992 and 06-30-1993 2he� or,BY RDA ON 1-Y INTEROFFICE MEMORANDUM VERIFIED BY TO: HONORABLE MAYOR AND CITY COUNCIL Original on file with City Clerk's Office FROM: PAUL GIBSON, FINANCE DIRECTOR/CITY TREASURER DATE: April 22 , 1993 SUBJECT: AUDITED FINANCIAL REPORTS FOR FISCAL YEAR ENDING JUNE 30, 1992 AND AUDIT SERVICES FOR FISCAL YEAR ENDING JUNE 30, 1993 WITH DIEHL, EVANS & COMPANY IN JOINT VENTURE WITH OSCAR ARMIJO, CPA FOR CITY OF PALM DESERT AND PALM DESERT REDEVELOPMENT AGENCY. Recommendations : That the City Council and Agency Board approve the following recommendations : 1) Receive and file the audited Financial Statements for the City of Palm Desert and the Palm Desert Redevelopment Agency for fiscal year ending June 30, 1992 and 2 ) Approve the extension of audit services for fiscal year ending June 30, 1993 with Diehl , Evans and Company in joint venture with Oscar Armijo, CPA for the City of Palm Desert and the Palm Desert Redevelopment Agency. 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 ending June 30, 1992 for the City and the Agency in October, 1992 . The printing of the financial statements was delayed to March, 1993 until information was available and an agreement was reached between the City Attorney and the City' s/Agency' s auditors on the treatment of the potential loss regarding the Wymer case. No loss was recognized for fiscal year 1991-1992 but the notes in the financial statements reflect the Wymer situation. The audited financial statements were presented to the Finance Committee at their April 7 , 1993 meeting and at which time, the committee also decided to make the recommendation to the City Council and the Agency Board to extend audit services with Diehl , Evans and Company in joint venture with Oscar Armijo, CPA for fiscal year ending June 30 , 1993 . The advantages of this recommendation are : 1 ) Current firm is already familiar with the City' s/Agency' s financial records and current situations . 2 ) To engage with another audit firm will require a process of RFP ' s and familiarizing the new selected firm with financial records . Both involve a time consuming process which is not practical at this time. 3 ) Staff of current audit firm has established an excellent working relationship with our staff and the continuity of this relationship is another practical aspect of this recommendation. 4 ) Current firm has performed quality audit services and produced comprehensive financial reports for fiscal year 1991-1992 . A brief presentation of the financial statements which includes a synopsis of the General Fund financial situation will be given by the Finance Director at the April 22, 1993 Council Meeting. Mr. Oscar Armijo, CPA and Engagement Partner from the local audit firm will be available for further questions . Prepared by: Reviewed and concurred by: 01/1 /a/i; Paul S. Gibson Bruce Altman Finance Director/ City Manager City Treasurer PSG:AGF:agf afltre\cc-audrec PALM DESERT REDEVELOPMENT AGENCY COMPONENT UNIT FINANCIAL STATEMENTS WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS JUNE 30, 1992 PALM DESERT REDEVELOPMENT AGENCY TABLE OF CONTENTS June 30, 1992 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 Notes to Financial Statements 5 - 18 Supplemental,Information: Combining Balance Sheet - All Debt Service Funds 19 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - All Debt Service Funds 20 Combining Balance Sheet - All Capital Projects Funds 21 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - All Capital Projects Funds 22 Independent Auditors' Report on Compliance with Audit Guidelines for California Redevelopment Agencies 23 - )CEi2L, EcTan.1. & eom/2any CERTIFIED PUBLIC ACCOUNTANTS (pleat 0. cAtm.i./o CERTIFIED PUBLIC ACCOUNTANT 18401 VON KARMAN,SUITE 200 a joint venture 74-133 EL PASEO,SUITE 8 IRVINE,CALIFORNIA 92715-1542 PALM DESERT, CALIFORNIA 92260 (714)757-7700 (619)773-4078 September 10, 1992 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, 1992, 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. 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, 1992, and the results of its operations for the year then ended in conformity with generally accepted accounting principles. As discussed in Note 11 to the financial statements, the ultimate realization of the Agency's investment in litigation is dependent on a favorable outcome of the litigation. The effect of the present uncertainties on the outcome and the amount of final adjustment to the net realizable value of the Agency's investment, if any, are not presently determinable. Accordingly, the financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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. C4/72-71-9-' 44' 677742‘'1 17/ GENERAL PURPOSE FINANCIAL STATEMENTS PALM DESERT REDEVELOPMENT AGENCY COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS June 30, 1992 Governmental Fund Types Special Debt Capital Revenue Service Projects ASSETS AND OTHER DEBITS ASSETS: Cash and investments (Notes 3 and 11) $ 1,303,905 $ 12,045,743 $ 6,236,172 Cash with fiscal agent (Notes 3 and 11) 3,359,159 13,953,239 37,805,045 Interest receivable 9,493 610 224,156 Due from other governmental agencies - 738,952 74,090 Accounts receivable - - 71,996 Loans receivable (Note 4) 498,452 5,899,000 - Deposits - - - Land held for resale (Note 1g) 3,065,000 - - Allowance for decline in value of land (3,064,999) - - General fixed assets (Note 5) - - - Amount available in debt service funds - - - Amount to be provided for payment of long-term debt - - - TOTAL ASSETS 5 171 010 $ 32,637,544 $ 44,411,459, LIABILITIES, EQUITY AND OTHER CREDITS LIABILITIES: Accounts payable $ - $ - $ 225,611 Accrued liabilities 94,834 - 85,363 Interest payable - 618,274 - Amounts due under pass-through agreements (Note 6) - - 6,086,892 General long-term debt (Note 7) - - - TOTAL LIABILITIES 94.834 618.274 6.397.866 EQUITY AND OTHER CREDITS: Investment in general fixed assets - - - Fund balances (Note 10): Reserved 5,076,176 17,073,405 31,755,178 Unreserved - designated - 14.945.865 6.258,415 TOTAL EQUITY AND OTHER CREDITS 5.076.176 32.019.270 38.013.593 TOTAL LIABILITIES, EQUITY AND OTHER CREDITS $ 5,171,010 $ 32,637,544 $ 44 411,459 See independent auditors' report and notes to financial statements. -2- Account Groups General General Tbtals Fixed Long Term (Memorandum Only) Assets Debt June 30, 1992 June 30. 1991 $ - $ - $ 19,585,820 $ 21,806,224 - - 55,117,443 8,154,997 - - 234,259 308,489 - - 813,042 651,407 - - 71,996 68,983 - - 6,397,452 2,730,885 - - - 320,640 - - 3,065,000- (3,064,999) - 34,128,469 - 34,128,469 29,210,428 - 32,019,270 32,019,270 17,845,465 - 87.460,977 87,460.977 46,827,504 $ 34,128,469 $ 1191480,247 $ 235.828.729, $ 127,925,022 $ - $ - $ 225,611 $ 463,649 - - 180,197 184,326 - - 618,274- - 6,086,892 3,362,081 - 119,480.247 119,480.247 64,732.969 119.480.247 126.591.221 68.743.025 34,128,469 - 34,128,469 29,210,428 - - 53,904,759 24,003,051 - - 21,204,280 5.968.518 34,128,469 - 109.237.508 59.181.997 $_34,128469 $ 119,480247 $ 235,828,729. $ 127,925.022 -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, 1992 Totals (Memorandum Only) Special Debt Capital June 30, June 30, Revenue Service Projects 1992 1991 REVENUES: Taxes $ 3,890,425 $ 10,331,800 $ - $ 14,222,225 $ 13,619,492 Intergovernmental revenues - 1,293,383 116,392 1,409,775 - Use of money and property 155,435 - 167,662 323,097 2,430,736 Other revenues 494.351 - 122 494,473 123,517 TOTAL REVENUES 4,540,211 11.625,183 284,176 16,449,570 16.173.745 EXPENDITURES: Administrative costs 3,292 - 381,177 384,469 416,839 Professional services 1,557 - 263,186 264,743 425,411 Planning,survey and design - - 361,462 361,462 31,085 Capital outlay 26,851 - 2,804,719 2,831,570 9,563,059 Land purchases - - 2,564,821 2,564,821 - Allowance for decline in value of land 3,064,999 - - 3,064,999 128,000 Housing subsidies 2,965,637 - - 2,965,637 - Debt service: Bond discount - 1,559,079 - 1,559,079 - Bond issue costs - 1,340,634 - 1,340,634 - Interest and fiscal charges 528,483 3,003,472 - 3,531,955 7,695,786 Principal retirement 220.000 4.237,437 - 4,457,437 1.705.000 TOTAL EXPENDITURES 6.810.819 10.140.622 6,375,365 23,326,806 19,965,180 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (2,270,608) 1.484,561 (6,091,189) (6,877,236) (3,791,435) OTHER FINANCING SOURCES(USES): Proceeds from bonds(Note 7c) - 100,000,000 - 100,000,000 - Payment to refund bond escrow agent(Note 7c) - (48,105,294) - (48,105,294) - Operating transfer in 3,065,000 43,639,757 41,312,961 88,017,718 - Operating transfer out (12,592) (84,940,126) (3,065,000) (88,017,718) - Advance from City(Note 7b) - - 120,000 120,000 240,000 TOTAL OTHER FINANCING SOURCES(USES) 3.052.408 10.594.337 38,367,961 52.014.706 240,000 EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER) EXPENDITURES AND OTHER USES 781,800 12,078,898 32,276,772 45,137,470 (3,551,435) FUND BALANCES-BEGINNING OF YEAR 4.294.376 19,940,372 5,736,821 29.971.569 33.523.004 FUND BALANCES-END OF YEAR $ 5,076,176 $ 32,019,270 $ 38,013,593 $ 75`09,039 $ 29.971,569 See independent auditors' report and notes to financial statements. -4- NOTES TO FINANCIAL STATEMENTS PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS June 30, 1992 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: a. Description of Funds and Account Groups: The Agency utili7Ps 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. 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 Funds: 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. Debt Service Funds - Used to account for the payment of interest and principle on long-term obligations. Capital Projects Funds - Used to account for financial resources used for the acquisition or construction of redevelopment projects. Account Groups: The General Fixed Asset Account Group - Used to maintain control and cost information on capital assets owned by the Agency. General fixed assets are recorded as expenditures in the Capital Projects Fund at the time of purchase. These assets are capitalized at cost. No depreciation is provided on general fixed assets. The General Long Term Debt Account Group -Used to account for the Agency's liability for long-term indebtedness. 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 under the accrual basis of accounting 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. See independent auditors' report. -5- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): 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 balance (net current assets) is 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. 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) All appropriations are as originally adopted or as amended by the Board, and lapse at year end. 5) Encumbrances and Continuing Appropriations are rebudgeted on July 1 by Board action. 6) Original appropriations are modified by supplementary appropriations and transfers among budget categories. The Board approves all significant changes. See independent auditors' report. -6- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): d. Budgetary Accounting (Continued): 7) 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. 8) 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 do not constitute expenditures or liabilities. f. Investments: Investments are started 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. g. Land Held for Resale: Costs of project land held for resale are capitalized in the Special Revenue Fund as inventory at the lower of acquisition cost or net realizable value. As of June 30, 1992, an allowance for decline in value was recorded in the amount of $3,064,999. See independent auditors' report. -7- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): 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. i. Relationship to the City of Palm Desert: The Community Redevelopment Agency of the City of Palm Desert 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. See independent auditors' report. -8- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): k. Total Column on Combined Statements: Total column on the combined statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate fmancial 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: 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 and Project Area 3 (which was adopted in fiscal year 91-92). 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. Property taxes related to the incremental increase in assessed values after the adoption of the Project Area have been allocated to the Agency; all taxes on the "frozen" assessed valuation of the property 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 $ 15,373,676 Cash and investments with fiscal agent 55,117,443 Investments in litigation (Note 11) 4.212,144 $ 74,703,263 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 for the City. See independent auditors' report. -9- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 3. CASH AND INVESTMENTS (CONTINUED): Cash and investments held by fiscal agent consisted of the following: Market Cost Values Security Pacific National Bank $ 3,357,009 $ 3,357,009 Bank of America 51,758,283 52,776,024 Security Pacific National Bank - Housing Rehabilitation Program 2.151 2,151 $ 55,117,443 $ 56,135,184 Credit Risk Categories Under GASB 3: Deposits: Category 3: Deposits held by and in the names of the fiscal agent $ 2,151 Investments: Category 3: Investments held by and in the name of the trustee 55.115.292 $ 55 117,443, 4. LOANS RECEIVABLE: Included in loans receivable is a $5,899,000 loan to "The Brothers", a California partnership which developed a portion of the Civic Center Site. The Redevelopment Agency funded the loan by paying the Palm Desert National Bank the $5,899,000 to set up a construction loan to the Brothers. The note is payable to the Palm Desert National Bank but has been assigned to the Redevelopment Agency. Interest accrues on the unpaid principal balance at the rate of 10 percent per annum. Monthly payments of interest only are payable until June 1, 1996, or five years after the issuance of a certificate of completion at which time principal and interest shall be paid in equal monthly installments in an amount sufficient to apply all principal and interest in full within 25 years of the issuance of a certificate of completion. See independent auditors' report. -10- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 5. FIXED ASSETS: A summary of changes in General Fixed Assets for the year ended June 30, 1992 is as follows: Beginning Ending Balance Additions Deletions Balance Land $ 21,861,739 $ 2,564,822 $ - $ 24,426,561 Buildings and improvements 1,880,522 268,728 - 2,149,250 Work-in-Progress 5,468,167 2,339,659 255,168 7,552,658 $ 29,210,428 $ 5,173,209 1 225.168 $ 34,128,469. Certain land has been included in the general fixed assets account group until a determination is made on the use of the land. 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. 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, 1992, the Agency is holding $6,086,892 in trust on behalf of other taxing agencies related to specific pass-through agreements. See independent auditors' report. -11- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 7. GENERAL LONG-TERM DEBT: The changes in the General Long Term for the year ended June 30, 1992 were as follows: Balance at Balance at June 30, June 30, 1991 Additions Deletions 1992 Notes payable $ 2,802,437 $ - $ 2,802,437 $ - Advances from City 12,190,247 120,000 - 12,310,247 Tax Allocation Bonds 52.565.000 100.000.000 45.395.000 107.170.000 Total 1 67.557.684 $ 100,120,000 $ 48 197,437 $ 119.480.247, a. Notes Payable: Final payment of principal and interest owed to Oak Street Savings Bank and FDS Financial, Inc. in connection with purchase of land in Project Area 2 was paid off in December 1991. b. 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. As of July 1, 1991 a prior period adjustment was recorded in the amount of $2,884,715 to record interest to be paid on the advances which was not recorded in prior years. The interest payable of $618,274 for fiscal year 1991-92 has been recorded in the Capital Project Funds as the amount is going to be paid from current resources. Below is a summary of the activity for the advances from the City to the Redevelopment Agency: See independent auditors' report. -12- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 7. GENERAL LONG-TERM DEBT: b. Advances From City (Continued): Date of Rates of Amount Beginning Ending Issue Interest Authorized Balance Additions Retirements Balance 12/05/86 Varies $ 6,000,000 $ 6,000,000 $ - $ - $ 6,000,000 06/30/89 8% 3,055,532 3,055,532 - - 3,055,532 10/26/89 Varies 10,000 10,000 - - 10,000 08/23/90 Varies 240,000 240,000 - - 240,000 12/12/91 Varies 120,000 - 120,000 - 120,000 Principal Balance 9,305,532 120,000 - 9,425,532 Accrued Interest 2,884,715 - - 2,884.715 $12,190,247 $ 120,000 $ - $12,310,247 c. Tax Allocation Bonds: 1992 Series A Tax Allocation Revenue Bonds 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. $42,764,702 of the $100,000,000 was loaned to the Agency to advance refund the 1985 Tax Allocation Bonds, 1985 Tax Allocation Refunding Bonds and the 1989 Tax Allocation Bonds. $40,844,733 was loaned to the Redevelopment Agency to fund additional projects in the project area. Interest on the Current Interest Bonds (the "Current Interest Bonds") (which consist of the portion of the Bonds not constituting the Dutch Action Floating Securities and the Inverse Floating Securities, described later), varies from 4.00% to 6.625% and is payable on October 1, 1992, and semi-annually thereafter on April 1 and October 1. The Bonds maturing on April 1, 2022 consist of $39,350,000 Dutch Auction Floating Securities and $39,350,000 Inverse Floating Securities. Interest on the Dutch Auction Floating Securities and Inverse Floating Securities was initially paid on June 4, 1992 and is due generally every 35 days from that date. The Bonds are special obligations of the Agency and the Palm Desert Financing Authority, (a component unit of the Redevelopment 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. See independent auditors' report. -13- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 7. GENERAL LONG-TERM DEBT (CONTINUED): c. Tax Allocation Bonds (Continued): 1992 Series A Tax Allocation Revenue Bonds (Continued) The future estimated debt service requirements on the 1992 Series A Tax Allocation Revenue Bonds are as follows: Year Ending June 30. Principal Interest Total 1993 $ 1,250,000 $ 6,509,591 $ 7,759,591 1994 1,300,000 5,979,063 7,279,063 1995 1,360,000 6,401,091 7,761,091 1996 1,425,000 5,852,563 7,277,563 1997 1,580,000 5,777,751 7,357,751 Thereafter 93.085.000 94,797,234 187.882.234 $100,000,000 $125317,293 $225,317293 In accordance with GASB Statement 7, below is shown the difference between the aggregate debt service requirements of the old issue and the debt service requirements of the new issue discounted at 6.473% interest. Net present value of 1985 Tax Allocation, 1985 Tax Allocation Refunding Bonds and 1989 Tax Allocation Bonds, old issue $ 47,745,905 Net present value of portion of 1992 Series A Tax Allocation Revenue Bonds used to defease old debt (45.916,783) Gain on refunding of debt - difference in net present value of debt service requirements $ 1,829,122 The increase in cash flow from debt service requirements of the old issue and debt service requirements of the new issue is as follows: Cash flow requirements of 1985 Tax Allocation, 1985 Tax Allocation Refunding Bonds and 1989 Tax Allocation Bonds, old issue $ 74,703,707 Cash flow requirements of portion of 1992 Series A Tax Allocation Revenue Bonds used to defease old debt (101,690,238) (Increase) in cash flow requirements for debt retirement $ (26.986.531) See independent auditors' report. -14- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 7. GENERAL LONG-TERM DEBT' (CONTINUED): c. Tax Allocation Bonds (Continued): 1988 Tax Allocation Bonds The Bonds were issued in an original amount of $7,800,000 on September 1, 1988 to finance improvements in Project Area 1 as amended. Interest rates on the Bonds vary from 5.75% to 7.30% 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 1993 $ 235,000 $ 502,971 $ 737,971 1994 245,000 487,548 732,548 1995 260,000 471,005 731,005 1996 280,000 453,045 733,045 1997 295,000 433,635 728,635 1998 320,000 412,565 732,565 1999 340,000 389,625 729,625 2000 365,000 364,768 729,768 2001 390,000 337,965 727,965 2002 420,000 308,790 728,790 2003 455,000 276,853 731,853 2004 490,000 242,360 732,360 2005 525,000 205,313 730,313 2006 570,000 165,345 735,345 2007 610,000 122,275 732,275 2008 660,000 75,920 735,920 2009 710,000 25.915 735.915 1 7.170.000 $ 5,275,898 $ 12,445.898 Below is a summary of the changes in Tax Allocation Bonds: Balance at Balance at July 1. 1991 Additions Deletions June 30. 1992 1985 Tax Allocation Bonds $ 23,985,000 $ - $ 23,985,000 $ - 1985 Tax Allocation Refunding Bonds 15,520,000 - 15,520,000 - 1988 Tax Allocation Bonds 7,390,000 - 220,000 7,170,000 1989 Tax Allocation Bonds 5,670,000 - 5,670,000 - 1992 Tax Allocation Bonds - 100.000.000 - 100.000.000 $ 52.565.000 $ 100,000,000 $ 45,395,000 1 107,170.000 See independent auditors' report. -15- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 8. BOND REQUIREMENTS: At June 30, 1992 the fund balance requirements and actual balances are presented as follows: Requirement Actual 1988 Tax Allocation Bonds $ 717,000 $ 771,392 1992 Series A Tax Allocation Bonds 6,798,535 8,322,923 These amounts are included in the $11,174,405 Reserved for Debt Service (see Note 10). 9. DEFEASED OBLIGATIONS: The City 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. At June 30, 1992, the following obligations are considered defeased. Amount Issue Defeased 1982 Tax Allocation Bonds $ 9,055,000 1985 Refunding Tax Allocation Bonds 14,955,000 1985 Tax Allocation Bonds 23,115,000 1989 Tax Allocation 5,505,000 10. RESERVES AND DESIGNATIONS OF FUND EQUITY: Special Debt Capital Revenue Service Projects Reserves Fund Fund Fund Continuing appropriations $ 180,392 $ - $28,682,035 Encumbrances 116,855 - 2,927,057 Receivables 498,452 5,899,000 146,086 Debt service 771,093 11,174,405 - Low income purposes 3.509,384 - - $ 5,076,176 $ 17,073,405 $ 31,755i178, Designations Debt service $ 14,945,865 $ - Capital outlay - 6,258,415 $ 14,945,865 $ 6,258 415 See independent auditors' report. -16- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 10. RESERVES AND DESIGNATIONS OF FUND EQUITY (CONTINUED): Reserved for Continuing Appropriations - This reserve is for appropriations for capital projects which are unexpected as of June 30, 1992 and are carried forward as continuing appropriations to be expended in 1992-93. 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, 1992. 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 Council action. Reserved for 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 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. 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. 11. INVESTMENTS IN LITIGATION: In December 1991, it was learned that the Securities and Exchange Commission (SEC) was conducting an investigation of the Institutional Treasury Management (ITM) and had frozen certain assets administered by ITM including the Agency's. It was subsequently announced that ITM had somehow diverted funds and/or securities in the client accounts to other accounts without the client's knowledge. See independent auditors' report. -17- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1992 11. INVESTMENTS IN LITIGATION (CONTINUED): The Redevelopment Agency internal records identify $4,212,144 being invested with ITM but the investments have not been verified with a third party. At June 30, 1992, the financial statements reflects the amounts invested with ITM which have not been confirmed with a third party. The Agency has retained counsel to discover the facts in this case and to take appropriate legal action to protect the interests of the Agency. Management is confident that the actions legal counsel has taken to date will result in the best possible return of the funds. As of June 30, 1992, management does not know the amount of funds which can be recovered. The Agency will pursue recovery from third parties of any amounts not recovered. 12. SUBSEQUENT EVENT: In August 1992, the Palm Desert Financing Authority issued $17,505,000 of Tax Allocation Bonds, (Project Area No. 2) 1992 Series A. 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 2.7% to 6.125% per annum payable semi-annually on February 1 and August 1 with principal maturing annually on August 1 from 1993 to 2002. See independent auditors' report. -18- PALM DESERT REDEVELOPMENT AGENCY COMBINING BALANCE SHEET - ALL DEBT SERVICE FUNDS June 30, 1992 Project Project Financing Totals Area 1 Area 2 Authority 1992 1991 ASSETS Cash and investments $ 8,726,627 $ 3,319,116 $ - $12,045,743 $ 9,373,027 Cash with fiscal agent - - 13,953,239 13,953,239 7,237,132 Interest receivable - - 610 610 32,896 Due from other governmental agencies 588,312 150,640 - 738,952 572,317 Loan receivable 5.899.000 - 5.899,000 2.725.000 TOTAL ASSETS $15,213,939 $ 3.469,756 $13,953,849 $32,637,544 $ 19.940.372 LIABILITIES AND FUND BALANCES LIABILITIES: Interest payable $ - $ 618.274 $ - $ 618,274 $ - FUND BALANCES: Reserved for loan receivable 5,899,000 - - 5,899,000 2,850,000 Reserved for debt service - 2,851,482 8,322,923 11,174,405 17,090,372 Unreserved: Designed for debt service 9,314.939 - 5.630.926 14.945.865 - TOTAL FUND BALANCES 15.213.939 2.851.482 13.953.849 32,019,270 19.940.372 TOTAL LIABILITIES AND FUND BALANCES $15 $ 3,469,756 $.13,953,849 $32.637.544 $ 19,940 3 • -19- PALM DESERT REDEVELOPMENT AGENCY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL DEBT SERVICE FUNDS For the year ended June 30, 1992 Project Project Financing Totals Area 1 Area 2 Authority 1992 1991 REVENUES: Tax increment $ 8,046,017 $ 2,285,783 $ - $10,331,800 $ 10,346,117 Interest income 1.059.714 163.163 70.506 1.293.383 1.248.396 TOTAL REVENUES 9.105.731 2.448.946 70.506 11,625,183 11,594,513 EXPENDITURES: Interest and fiscal charges 1,777,215 756,284 469,973 3,003,472 7,163,483 Principal payments 1,435,000 2,802,437 - 4,237,437 1,495,000 Bond issuance costs - - 1,340,634 1,340,634 - Bond discount - - 1.559.079 1.559.079 - TOTAL EXPENDITURES 3.212,215 3,558.721 3.369.686 10,140.622 8,658,483 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 5,893.516 (1.109.775) (3.299.180) 1.484.561 2.936.030 OTHER FINANCING SOURCES (USES): Proceeds from bonds - - 100,000,000 100,000,000 - Payment to refund bond escrow agent (48,105,294) - - (48,105,294) - Operating transfers in 42,777,293 - 862,464 43,639,757 - Operating transfers out (917.378) (413.313) (83.609,435) (84.940.126) - TOTAL OTHER FINANCING SOURCES (USES) (6.245.379) (413.313) 17.253.029 10,594.337 EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES (351,863) (1,523,088) 13,953,849 12,078,898 2,936,030 FUND BALANCES - BEGINNING OF YEAR 15.565.802 4.374.570 - 19.940.372 17.004,342 FUND BALANCES - END OF YEAR $15,213,939 $ 2,851,482 $13,953,849. $32,019,270 $ 19,940,372 -20- PALM DESERT REDEVELOPMENT AGENCY COMBINING BALANCE SHEET - ALL CAPITAL PROJECTS FUNDS June 30, 1992 Project Project Project Totals Area 1 Area 2 Area 3 1992 1991 ASSETS Cash and investments $ 5,868,951 $ 217,941 $ 149,280 $ 6,236,172 $ 9,180,074 Cash with fiscal agent 37,805,045 - - 37,805,045 - Interest receivable 224,156 - - 224,156 260,055 Due from other governmental agencies 74,090 - - 74,090 79,090 Accounts receivable 71,996 - - 71,996 68,983 Deposits - - - - 20,640 TOTAL ASSETS $44.044,238, 217 941 $ 149,280 $44,411,459 1 9.608 842 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable $ 221,292 $ - $ 4,319 $ 225,611 $ 420,449 Accrued liabilities 85,363 - - 85,363 89,491 Amounts due under pass-through agreements 5.868.951 217.941 - 6,086.892 3.362.081 TOTAL LIABILITIES 6.175.606 217.941 4.319 6.397.866 3.872.021 FUND BALANCES: Reserved: Continuing appropriations 28,682,035 - - 28,682,035 1,439,106 Encumbrances 2,892,180 - 34,877 2,927,057 3,128,866 Receivables 146,086 - - 146,086 148,026 Unreserved: Designated for capital outlay 6,148.331 - 110.084 6.258.415 1.020.823 TOTAL FUND BALANCES 37.868.632 - 144.961 38.013,593 5.736.821 TOTAL LIABILITIES AND FUND BALANCES $ 44,044,238 $ 217,941 $ 149,280 $44,411,459 $ 9.608 842 -21- PALM DESERT REDEVELOPMENT AGENCY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - ALL CAPITAL PROJECTS FUNDS June 30, 1992 Project Project Project Totals Area 1 Area 2 Area 3 1992 1991 REVENUES: Intergovernmental $ 116,392 $ - $ - $ 116,392 $ - Interest income 142,872 16,381 8,409 167,662 932,548 Other income 122 - - 122 23.517 TOTAL REVENUES 259,386 16.381 8.409 284.176 956.065 EXPENDITURES: Administrative costs 381,177 - - 381,177 416,839 Professional services 168,994 84,120 10,072 263,186 418,408 Planning, survey and design 280,637 - 80,825 361,462 31,085 Capital outlay 2,562,494 242,225 - 2,804,719 9,031,075 Land purchases - 2.564.821 - 2.564.821 - TOTAL EXPENDITURES 3.393.302 2.891.166 90.897 6.375.365 9.897.407 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (3.133.916) (2.874.785) (82.488) (6,091,189) (8.941,342) OTHER FINANCING SOURCES (USES): Operating transfer in 40,899,648 413,313 - 41,312,961 - Operating transfer out (3,065,000) - - (3,065,000) - Proceeds from advance - - 120.000 120,000 240.000 TOTAL OTHER FINANCING SOURCES (USES) 37,834,648 413.313 120.000 38.367.961 240.000 EXCESS OF REVENUES AND OTHER SOURCES OVER (UNDER) EXPENDITURES AND OTHER USES 34,700,732 (2,461,472) 37,512 32,276,772 (8,701,342) FUND BALANCES - BEGINNING YEAR 3.167,900 2.461.472 107.449 5.736.821 14.438.163 FUND BALANCES - END OF YEAR $ 37,868,632 $ - $ 144,961 $ 38,013593 $ 5,736.821 -22- &Talzi & Comf2arzy CERTIFIED PUBLIC ACCOUNTANTS (Oica'z. c J'mi/o CERTIFIED PUBLIC ACCOUNTANT 18401 VON KARMAN, SUITE 200 a joint venture 74-133 EL PASEO,SUITE 8 IRVINE, CALIFORNIA 92715-1542 PALM DESERT,CALIFORNIA 92260 (714)757-7700 (619)773-4078 September 10, 1992 INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH AUDIT GUIDELINES FOR CALIFORNIA REDEVELOPMENT AGENCY Agency Members Palm Desert Redevelopment Agency Palm Desert, California In connection with our audit of the financial statements of the Palm Desert Redevelopment Agency as of and for the year ended June 30, 1992, we have performed, to the extent applicable, the tests of compliance as required by Health and Safety Code Section 33080.1 and Sections I through V of the "Guidelines for Compliance Audits of California Redevelopment Agencies" issued by the State Controller. Based on the above auditing procedures, we noted no instances of noncompliance with the laws, regulations and administrative requirements governing special activities of the Agency for the year ended June 30, 1992. Aati rctztwva- a-k-P °.,*74704.,y 23 PALM DESERT REDEVELOPMENT AGENCY COMPONENT UNIT FINANCIAL STATEMENTS WITH REPORT ON AUDIT BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS JUNE 30, 1993 PALM DESERT REDEVELOPMENT AGENCY TABLE OF CONTENTS June 30, 1993 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 Notes to Financial Statements 5 - 18 Supplemental Information: Combining Balance Sheet - All Debt Service Funds 19 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - All Debt Service Funds 20 Combining Balance Sheet - All Capital Projects Funds 21 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - All Capital Projects Funds 22 Supplemental Schedule - Tax Increment Shift to Educational Revenue Augmentation Fund 23 Independent Auditors' Compliance Opinion 24 Evan.i. & Com/2an y CERTIFIED PUBLIC ACCOUNTANTS COieat 4tmifo CERTIFIED PUBLIC ACCOUNTANT 18401 VON KARMAN,SUITE 200 a joint venture 74-133 EL PASEO, SUITE 8 IRVINE,CALIFORNIA 92715-1542 PALM DESERT,CALIFORNIA 92260 (714)757-7700 (619)773-4078 September 10, 1993 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, 1993, 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 statements presentation. We believe that our audit provides a reasonable basis for our opinion. 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, 1993, and the results of its operations for the year then ended in conformity with generally accepted accounting principles. As discussed in Note 11 to the financial statements, the ultimate realization of the Agency's investment in litigation is dependent on a favorable outcome of the litigation. The effect of the present uncertainties on the outcome and the amount of final adjustment to the net realizable value of the Agency's investment, if any, are not presently determinable. Accordingly, the financial statements do not include any adjustments that might result from the outcome of this uncertainty. 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. 6 nu 94:de .4 677 • • GENERAL PURPOSE FINANCIAL STATEMENTS • • • • • PALM DESERT REDEVELOPMENT AGENCY a COMBINED BALANCE SHEET-ALL FUND TYPES AND ACCOUNT GROUPS June 30, 1993 Governmental Fund Types • Special Debt Capital Revenue Service Projects ASSETS AND OTHER DEBITS ASSETS: M Cash and investments(Notes 3 and 11) $ 1,761,596 $ 8,972,580 $ 4,873,487 Cash with fiscal agent(Notes 3 and 11) 3,432,056 15,202,909 47,463,347 Interest receivable 7,295 47,912 227,286 Due from other governmental agencies - 271,513 150,411 Accounts receivable - - - • Due from other funds - 3,038,065 - Loans receivable(Note 4) 1,048,498 5,899,000 - Prepaid expenses and deposits 65,000 - - Land held for resale(Note 1g) 3,065,000 - - Allowance for decline in value of land (3,064,999) - - General fixed assets(Note 5) - - - Amount available in debt service funds - - - Amount to be provided for payment of long-term debt - - - TOTAL ASSETS AND OTHER DEBITS $ 6,314,446 $ 33,431,979 $ 52,714,531 a LIABILITIES,EQUITY AND OTHER CREDITS LIABILITIES: Accounts payable $ 492,281 $ 677 $ 1,024,711 Accrued liabilities - - 86,150 Interest payable - - - Due to other funds - - 3,038,065 Deferred revenue 600,000 Amounts due under pass-through agreements(Note 6) - - 4,501,000 General long-term debt (Note 7) - - - TOTAL LIABILITIES 1,092,281 677 8,649,926 EQUITY AND OTHER CREDITS: Investment in general fixed assets - - - F and balances(Note 10): ill Reserved 5,222,165 15,304,189 32,033,033 Unreserved-designated - _ 18,127,113 12,031,572 TOTAL EQUITY AND OTHER CREDITS 5,222,165 33,431,302 44,064,605 TOTAL LIABILITIES,EQUITY AND OTHER CREDITS $ 6,314,446 $ 33,431,979 $ 52,714,531 4111 See independent auditors' report and notes to financial statements. -2- il Account Groups Totals(Memorandum Only) General General Fixed Long—Term Assets Debt June 30, 1993 June 30, 1992 $ — $ — $ 15,607,663 $ 19,585,820 — — 66,098,312 55,117,443 — — 282,493 234,259 — — 421,924 813,042 — — — 71,996 — — 3,038,065 - - — 6,947,498 6,397,452 — — 65,000 - - — 3,065,000 3,065,000 — — (3,064,999) (3,064,999) 40,597,910 — 40,597,910 34,128,469 — 33,431,302 33,431,302 32,019,270 — 99,398,230 99,398,230 87,460,977 $ 40,597,910 $ 132,829,532 $ 265,888,398 $ 235,828,729 $ — $ — $ 1,517,669 $ 225,611 — — 86,150 180,197 — — — 618,274 — — 3,038,065 — 600,000 — — — 4,501,000 6,086,892 — 132,829,532 132,829,532 119,480,247 — 132,829,532 142,572,416 126,591,221 40,597,910 — 40,597,910 34,128,469 — — 52,559,387 53,904,759 — — 30,158,685 21,204,280 40,597,910 — 123,315,982 109,237,508 $ 40,597,910 $ 132,829,532 $ 26.5,888,398 $ 235,828,729 —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, 1993 . Totals (Memorandum Only) Special Debt Capital June 30, June 30, Revenue Service Projects 1993 1992 REVENUES: • Taxes $ 4,237,683 $ 10,165,372 $ - $ 14,403,055 $ 14,222,225 Intergovernmental revenues 312,521 - 51,825 364,346 1,409,775 Use of money and property 93,857 1,383,905 290,265 1,768,027 323,097 Reimbursement from other agencies - 1,154,925 - 1,154,925 - Other revenues 2,365 - - 2,365 494,473 TOTAL REVENUES 4,646,426 12,704,202 342,090 17,692,718 16,449,570 i EXPENDTIURES: Administrative costs 126,790 - 790,028 916,818 384,469 Professional services 1,699 - 127,820 129,519 264,743 Planning,survey and design - - 118,414 118,414 361,462 Capital outlay 505,380 - 5,373,146 5,878,526 2,831,570 Land purchases - - 2,620,762 2,620,762 2,564,821 • Allowance for decline in value of land - - - - 3,064,999 Housing subsidies 2,872,887 - - 2,872,887 2,965,637 Payment to other agencies - 2,856,279 - 2,856,279 - Debt service: Bond issuance costs - 434,992 - 434,992 1,340,634 Bond discount - 375,363 - 375,363 1,559,079 . Interest and fiscal changes 502,971 10,429,729 - 10,932,700 3,531,955 Principal retirement 235,000 1,250,000 - 1,485,000 4,457,437 TOTAL EXPENDITURES 4,244,727 15,346,363 9,030,170 28,621,260 23,326,806 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES 401,699 (2,642,161) (8,688,080) (10,928,542) (6,877,236) • OTHER FINANCING SOURCES(USES): Proceeds from bonds(Note 7c) - 17,505,000 - 17,505,000 100,000,000 Payment to refund bond escrow agent - - - - (48,105,294) Operating transfer in - 11,494,875 18,028,081 29,522,956 88,017,718 Operating transfer out (255,710) (25,764,257) (3,502,989) (29,522,956) (88,017,718) Advance from City(Note 7b) - - 214,000 214,000 120,000 TOTAL OTHER FINANCING SOURCES(USES) (255,710) 3,235,618 14,739,092 17,719,000 52,014,706 EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER) EXPENDITURES AND OTHER USES 145,989 593,457 6,051,012 6,790,458 45,137,470 • FUND BALANCES-BEGINNING OF YEAR 5,076,176 32,019,270 38,013,593 75,109,039 29,971,569 Prior period adjustment(Note 12) - 818,575 - 818,575 - FUND BALANCES-BEGINNING OF YEAR AS RESTATED 5,076,176 32,837,845 38,013,593 75,927,614 29,971,569 • FUND BALANCES-END OF YEAR $ 5,222.165 $ 33,431,302 $ 44,064,605 $ 82,718,072 $ 75,109,039 See independent auditors' report and notes to financial statements. -4- 0 • • NOTES TO FINANCIAL STATEMENTS • • • • • • * PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS June 30, 1993 0 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. 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. 41 The various funds and account groups are classified for reporting purposes as follows: Governmental Funds: Special Revenue Fund - Used to account for the proceeds of specific revenue sources or 41 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. Debt Service Funds - Used to account for the payment of interest and principal on long-term obligations. i Capital Projects Funds - Used to account for financial resources used for the acquisition or construction of redevelopment projects. Account Groups: 0 The General Fixed Asset Account Group - Used to maintain control and cost information on capital assets owned by the Agency. General fixed assets are recorded as expenditures in the Capital Projects Fund at the time of purchase. These assets are capitalized at cost. No depreciation is provided on general fixed assets. The General Long-Term Debt Account Group - Used to account for the Agency's liability for long-term indebtedness. 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 under the accrual basis of accounting when the related fund liability is 0 incurred. An exception to this general rule is principal and interest on general long-term debt, which are recognized when due. See independent auditors' report. -5- PALM DESERT REDEVELOPMENT AGENCY • NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): 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 balance (net current assets) is 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. 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. a 2) Public hearings are conducted to obtain taxpayer comments. 3) The Budget is subsequently adopted through passage of a resolution. 4) All appropriations are as originally adopted or as amended by the Board, and lapse at year end. 5) Encumbrances and Continuing Appropriations are rebudgeted on July 1 by Board action. 6) Original appropriations are modified by supplementary appropriations and transfers a among budget categories. The Board approves all significant changes. a See independent auditors' report. a -6- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): d. Budgetary Accounting (Continued): 7) 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. 8) 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 do not constitute expenditures or liabilities. f. Investments: Investments are started 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. g. Land Held for Resale: Costs of project land held for resale are capitalized in the Special Revenue Fund as inventory at the lower of acquisition cost or net realizable value. As of June 30, 1993, the cost of land held for resale was $3,065,000, with an allowance for decline in value in the amount of $3,064,999. See independent auditors' report. -7- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): 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. i. Relationship to the City of Palm Desert: The Community Redevelopment Agency of the City of Palm Desert 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. 4111 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. See independent auditors' report. -8- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): k. Total Column on Combined Statements: Total column 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: 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. 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. Property taxes related to the incremental increase in assessed values after the adoption of the Project Area have been allocated to the Agency; all taxes on the "frozen" assessed valuation of the property 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 $ 11,395,519 Investments in litigation (Note 11) 4,212,144 Cash and investments with fiscal agent 66,098,312 $ 81,705,975 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 for the City. See independent auditors' report. -9- PALM DESERT REDEVELOPMENT AGENCY • NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 3. CASH AND INVESTMENTS (CONTINUED): Cash and investments held by fiscal agent consisted of the following: • Market Cost Values Bank of America $ 66,045,812 $ 70,604,625 Bank of America - Housing 52,500 52,500 • $ 66,098,312 $ 70,657,125 Credit Risk Categories Under GASB 3: Deposits: • Category 3: Deposits held by and in the names of the fiscal agent $ 52,500 Investments: • Category 3: Investments held by and in the name of the trustee 66,045,812 $ 66,098,312 ` 4. LOANS RECEIVABLE: Included in loans receivable is a $5,899,000 loan to "The Brothers", a California partnership which developed a portion of the Civic Center Site. The Redevelopment Agency funded the loan by paying the Palm Desert National Bank the $5,899,000 to set up a construction loan to the Brothers. The note is payable to the Palm Desert National Bank but has been assigned to the Redevelopment Agency. Interest accrues on the unpaid principal balance at the rate of 10 percent per annum. Monthly payments of interest only are payable until June 1, 1996, or five years after the issuance of a certificate of completion at which time principal and interest shall be paid in equal monthly installments in an amount sufficient to apply all • principal and interest in full within 25 years of the issuance of a certificate of completion. • See independent auditors' report. • -10- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 5. FIXED ASSETS: A summary of changes in General Fixed Assets for the year ended June 30, 1993 is as follows: Beginning Ending Balance Additions Deletions Balance Land $ 24,426,561 $ 2,621,459 $ - $ 27,048,020 Buildings and improvements 2,149,250 8,176,953 - 10,326,203 Work-in-Progress 7,552,658 3,852,709 8,181,680 3,223,687 $ 34,128,469 $ 14,651,121 $ 8,181,680 $ 40,597,910 Certain land has been included in the general fixed assets account group until a determination is made on the use of the land. 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. 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, 1993, the Agency is holding $4,501,000 in trust on behalf of other taxing agencies related to r specific pass-through agreements. See independent auditors' report. -11- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 7. GENERAL LONG-TERM DEBT: The changes in the General Long-Term for the year ended June 30, 1993 were as follows: Balance at Balance at June 30, June 30, 1992 Additions Deletions 1993 Advances from City $ 12,310,247 $ 779,177 $ 3,449,892 $ 9,639,532 Tax Allocation Bonds 107,170,000 17,505,000 1,485,000 123,190,000 Total $ 119,480,247 $ 18,284,177 $ 4,934,892 $ 132,829,532 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 111 future years, the debt from the Agency to the City has been classified in the Long Term Debt account group. 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 Retirements Balance 12/05/86 Varies $ 6,000,000 $ 6,000,000 $ - $ - $ 6,000,000 06/30/89 8% 3,055,532 3,055,532 - - 3,055,532 10/26/89 Varies 10,000 10,000 - - 10,000 08/23/90 Varies 240,000 240,000 - - 240,000 12/12/91 Varies 120,000 120,000 - - 120,000 01/14/93 Varies 164,000 - 164,000 - 164,000 06/24/93 Varies 50,000 - 50,000 - 50,000 Principal Balance 9,425,532 214,000 - 9,639,532 Accrued Interest 2,884,715 565,177 3,449,892 - $12,310,247 $ 779,177 $ 3,449,892 $ 9,639,532 • See independent auditors' report. -12- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 7. GENERAL LONG-TERM DEBT: b. Tax Allocation Bonds: Tax allocation bonds are special obligations of the Agency and the Palm Desert Financing Authority, (a component unit of the Redevelopment 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. 1992 Series A Tax Allocation Revenue Bonds (Project Area 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. $42,764,702 of the $100,000,000 was loaned to the Agency to advance refund the 1985 Tax Allocation Bonds, 1985 Tax Allocation Refunding Bonds and the 1989 Tax Allocation Bonds. $40,844,733 was loaned to the Redevelopment Agency to fund additional projects in the project area. Interest on the Current Interest Bonds (the "Current Interest Bonds") (which consist of the portion of the Bonds not constituting the Dutch Action Floating Securities and the Inverse Floating Securities, described later), varies from 4.00% to 6.625% and is payable on October 1, 1992, and semi-annually thereafter on April 1 and October 1. The Bonds maturing on April 1, 2022 consist of $39,350,000 Dutch Auction Floating Securities and $39,350,000 Inverse Floating Securities. Interest on the Dutch Auction Floating Securities and Inverse Floating Securities was initially paid on June 4, 1992 and is due generally every 35 days from that date. See independent auditors' report. -13- PALM DESERT REDEVELOPMENT AGENCY • NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 7. GENERAL LONG-TERM DEBT (CONTINUED): b. Tax Allocation Bonds (Continued): 1992 Series A Tax Allocation Revenue Bonds (Project Area as Amended) (Continued) The future estimated debt service requirements on the 1992 Series A Tax Allocation Revenue Bonds (Project Area No. 1 as Amended) are as follows: • Year Ending June 30, Principal Interest Total 1994 $ 1,300,000 $ 5,979,063 $ 7,279,063 1995 1,360,000 6,401,091 7,761,091 1996 1,425,000 5,852,563 7,277,563 1997 1,580,000 5,777,751 7,357,751 1998 1,670,000 6,170,479 7,840,479 Thereafter 91,415,000 88,626,845 180,041,845 $ 98,750,000 $118,807,792 $217,557,792 • 1992 Series A Tax Allocation Revenue Bonds (Project Area 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 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 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 1994 $ 250,000 $ 1,021,393 $ 1,271,393 1995 260,000 1,013,563 1,273,563 • 1996 265,000 1,003,713 1,268,713 1997 280,000 992,462 1,272,462 1998 290,000 979,988 1,269,988 Thereafter 16,160,000 15,771,491 31,931,491 $ 17,505,000 $ 20,782,610 $ 38,287,610 • See independent auditors' report. -14- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 7. GENERAL LONG-TERM DEBT (CONTINUED): b. Tax Allocation Bonds (Continued): 1988 Tax Allocation Bonds The Bonds were issued in an original amount of $7,800,000 on September 1, 1988 to finance improvements in Project Area 1 as amended. Interest rates on the Bonds vary from 5.75% to 7.30% 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 1994 $ 245,000 $ 487,548 $ 732,548 1995 260,000 471,005 731,005 1996 280,000 453,045 733,045 1997 295,000 433,635 728,635 1998 320,000 412,565 732,565 1999 340,000 389,625 729,625 2000 365,000 364,768 729,768 2001 390,000 337,965 727,965 2002 420,000 308,790 728,790 2003 455,000 276,853 731,853 2004 490,000 242,360 732,360 2005 525,000 205,313 730,313 2006 570,000 165,345 735,345 2007 610,000 122,275 732,275 2008 660,000 75,920 735,920 2009 710,000 25,915 735,915 $ 6,935,000 $ 4,772,927 $ 11,707,927 Below is a summary of the changes in Tax Allocation Bonds: Balance at Balance at July 1, 1992 Additions Deletions June 30, 1993 1992 Tax Allocation Bonds (Project Area No.1 as Amended) $ 100,000,000 $ - $ 1,250,000 $ 98,750,000 1992 Tax Allocation Bonds (Project Area No. 2) - 17,505,000 - 17,505,000 1988 Tax Allocation Bonds 7,170,000 - 235,000 6,935,000 $ 107,170,000 $ 17,505,000 $ 1,485,000 $ 123,190,000 See independent auditors' report. -15- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 8. BOND REQUIREMENTS: At June 30, 1993 the reserve balance requirements and actual balances are presented as follows: Requirement Actual 1988 Tax Allocation Bonds $ 693,500 $ 732,600 1992 Series A Tax Allocation Bonds (Project Area No. 1 as Amended) 7,745,802 7,842,118 1992 Series A Tax Allocation Bonds (Project Area No. 2) 1,024,803 1,307,579 These actual amounts are included in the Fund Balance Reserved for Debt Service (see Note 10). 9. DEFEASED OBLIGATIONS: The City 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. The amount of defeased debts still outstanding at June 30, 1993 was as follows: Amount Defeased Issue Outstanding 1982 Tax Allocation Bonds $ 7,940,000 1985 Refunding Tax Allocation Bonds 14,350,000 1985 Tax Allocation Bonds 22,180,000 1989 Tax Allocation 5,325,000 See independent auditors' report. -16- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 10. RESERVES AND DESIGNATIONS OF FUND EQUITY: Special Debt Capital Revenue Service Projects Reserves Fund _ Fund Fund Continuing appropriations $ 651,000 $ - $ 30,224,480 Encumbrances 116,797 - 1,739,463 Receivables - 6,154,492 69,090 Prepaid expense 65,000 - - Debt service 732,600 9,149,697 - Low income purposes 3,656,768 - - $ 5,222,165 $ 15,304,189 $ 32,033,033 Designations Debt service $ - $ 18,127,113 $ - Capital outlay - 12,031,572 $ - $ 18,127,113 $ 12,031,572 Reserved for Continuing Appropriations - This reserve is for appropriations for capital projects which are unexpected as of June 30, 1993 and are carried forward as continuing appropriations to be expended in 1993-94. 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, 1993. 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 Council action. Reserved for 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, 1993, but not recognized as an expenditure until after July 1, 1993. 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. See independent auditors' report. -17- PALM DESERT REDEVELOPMENT AGENCY NOTES TO FINANCIAL STATEMENTS (Continued) June 30, 1993 10. RESERVES AND DESIGNATIONS OF FUND EQUITY (CONTINUED): 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. 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. 11. INVESTMENTS IN LITIGATION: In December 1991, it was learned that the Securities and Exchange Commission (SEC) was conducting an investigation of the Institutional Treasury Management (ITM) and had frozen certain assets administered by ITM including the Agency's. It was subsequently announced that ITM had diverted funds and/or securities in the client accounts to other accounts without the client's knowledge. The Redevelopment Agency internal records identify $4,212,144 being invested with ITM but the investments have not been verified with a third party. At June 30, 1993, the financial statements reflect the amounts invested with ITM which have not been confirmed with a third party. The Agency has retained counsel to discover the facts in this case and to take appropriate legal action to protect the interests of the Agency. Management is confident that the actions legal counsel has taken to date will result in the best possible return of the funds. As of June 30, 1993, management does not know the amount of funds the court may award from the investment principal of$4,212,144. The Agency will pursue recovery from third parties of any amounts not recovered. 12. PRIOR PERIOD ADJUSTMENT: An adjustment was made in the Capital Projects Fund for Area No. 1 to reduce amounts due under pass-through agreements as of July 1, 1992 in the amount of $818,575. See independent auditors' report. -18- SUPPLEMENTAL INFORMATION PALM DESERT REDEVELOPMENT AGENCY COMBINING BALANCE SHEET—ALL DEBT SERVICE FUNDS June 30, 1993 Project Project Project Financing Totals Area 1 Area 2 Area 3 Authority 1993 1992 ASSETS Cash and investments S 7,265,617 $ 1,467,139 $ 239,824 $ — S 8,972,580 $ 12,045,743 Cash with fiscal agent 47,983 — — 15,154,926 15,202,909 13,953,239 Interest receivable 40,088 — 3,474 4,350 47,912 610 Due from other governmental agencies 255,492 16,021 — — 271,513 738,952 Due from other funds 3,038,065 — — — 3,038,065 — Loan receivable 5,899,000 — — — 5,899,000 5,899,000 TOTAL ASSETS $ 16,546,245 $ 1,483,160 $ 243,298 $ 15,159,276 $ 33,431,979 $ 32,637,544 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable $ 314 S — $ — $ 363 $ 677 $ — Interest payable — — — — — 618,274 TOTAL LIABILITIES 314 — — 363 677 618,274 FUND BALANCES: Reserved for loan receivable 5,899,000 — — — 5,899,000 5,899,000 Reserved for accounts receivable 255,492 — — — 255,492 — Reserved for debt service — — — 9,149,697 9,149,697 11,174,405 Unreserved: Designated for debt service 10,391,439 1,483,160 243,298 6,009,216 18,127,113 14,945,865 TOTAL FUND BALANCT S 16,545,931 1,483,160 243,298 15,158,913 33,431,302 32,019,270 TOTAL LIABILITIES AND FUND BALANCES $ 16,546,245 $ 1,483,160 $ 243,298 $ 15,159,276 $ 33,431,979 $ 32,637,544 —19— PALM DESERT REDEVELOPMENT AGENCY • COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES—ALL DEBT SERVICE FUNDS For the year ended June 30, 1993 • Project Project Project Financing Totals Area 1 Area 2 Area 3 Authority 1993 1992 REVENUES: Tax increment $ 7,680,764 $ 2,211,564 $ 273,044 $ 0 $ 10,165,372 $ 10,331,800 Interest income 870,463 89,621 4,783 419,038 1,383,905 1,293,383 0 Reimbursement from other agencies 1,154,925 0 0 0 1,154,925 0 TOTAL REVENUES 9,706,152 2,301,185 277,827 419,038 12,704,202 11,625,183 EXPENDITURES: • Payment to other agencies 2,164,271 692,008 0 0 2,856,279 3,003,472 Bond issuance costs 0 0 0 434,992 434,992 4,237,437 Bond discount 0 0 0 375,363 375,363 1,340,634 Interest and fiscal charges 8,625 3,411,861 34,529 6,974,714 10,429,729 1,559,079 Principal payments 0 0 0 1,250,000 1,250,000 0 TOTAL ` EXPENDITURES 2,172,896 4,103,869 34,529 9,035,069 15,346,363 10,140,622 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES 7,533,256 (1,802,684) _ 243,298 (8,616,031) (2,642,161) 1,484,561 OTHER FINANCING SOURCES(USES): Proceeds from bonds 0 0 0 17,505,000 17,505,000 100,000,000 Payment to refund bond escrow agent 0 0 0 0 0 (48,105,294) ` Operating transfer in 255,710 3,502,989 0 7,736,176 11,494,875 43,639,757 Operating transfer out (7,275,549) (3,068,627) 0 (15,420,081) (25,764,257) (84,940,126) TOTAL OTHER FINANCING SOURCES(USES) (7,019,839) 434,362 0 9,821,095 3,235,618 10,594,337 EXCESS OF REVENUES AND OTHER SOURCES OVER(UNDER) EXPENDITURES AND OTHER USES 513,417 (1,368,322) 243,298 1,205,064 593,457 12,078,898 FUND BALANCES • — BEGINNING OF YEAR 15,213,939 2,851,482 0 13,953,849 32,019,270 19,940,372 Prior period adjustment 818,575 0 0 0 818,575 0 FUND BALANCES— BEGINNING OF YEAR AS RESTATED 16,032,514 2,851,482 0 13,953,849 32,837,845 19,940,372 • FUND BALANCES— END OF YEAR $ 16,545,931 $ 1,483,160 $ 243,298 $ 15,158,913 $ 33,431,302 $ 32,019,270 —20 • — PALM DESERT REDEVELOPMENT AGENCY COMBINING BALANCE SHEET-ALL CAPITAL PROJECTS FUNDS June 30, 1993 Project Project Project Project Totals Area 1 Area 2 Area 3 Area 4 1993 1992 ASSETS Cash and investments $ 4,158,211 $ 436,636 $ 162,510 $ 116,130 $ 4,873,487 $ 6,236,172 Cash with fiscal agent 35,475,654 11,987,693 - - 47,463,347 37,805,045 Interest receivable 222,213 5,073 - - 227,286 224,156 Due from other governmental agencies 150,411 - - - 150,411 146,086 Accounts receivable - - - - - - Deposits - - - - - - TOTAL ASSETS $ 40,006,489 $ 12,429,402 $ 162,510 $ 116.130 $ 52.714,531 $ 44,411,459 LIABILITIES AND FUND BALANCES LIABILITIES: Accounts payable $ 755,409 $ 237,554 $ 3,106 $ 28,642 $ 1,024,711 $ 225,611 Accrued liabilities 86,150 - - - 86,150 85,363 Due to other funds 3,038,065 - - - 3,038,065 - Amounts due under pass-through agreements 4,155,344 287,533 58,123 - 4,501,000 6,086,892 TOTAL LIABILITIES 8,034,968 525,087 61,229 28,642 8,649,926 6.397,866 FUND BALANCES: Reserved: Continuing appropriations 30,224,480 - - - 30,224,480 28,682,035 Encumbrances 1,677,951 - 13,700 47,812 1,739,463 2,927,057 Receivables 69,090 - - - 69,090 146,086 Unreserved: Designated for capital outlay - 11,904,315 87,581 39,676 12,031,572 6,258,415 TOTAL F?JND BALANCES 31,971,521 11,904,315 101.281 87,488 44,064,605 38,013,593 TOTAL LIABILITIES AND FUND BALANCES $ 40.006.489 $ 12,429,402 $ 162,510 $ 116,130 $ 52.714,531 $ 44,411,459 -21- PALM DESERT REDEVELOPMENT AGENCY • COMBINING STATEMENT OF REVENUES,EXPENDITURES AND CHANGES IN FUND BALANCES-ALL CAPITAL PROJECTS FUNDS For the year ended June 30, 1993 • Project Project Project Project Totals Area 1 Area 2 Area 3 Area 4 1993 1992 REVENUES: Intergovernmental $ 51,825 $ - $ - $ - $ 51,825 $ 116,392 Interest income 196,608 89,567 3,597 493 290,265 167,662 Other income - - - - - 122 TOTAL REVENUES 248,433 89,567 3,597 493 342,090 284,176 EXPENDITURES: • Administrative costs 574,137 88,886 - 127,005 790,028 381,177 Professional services 127,820 - - - 127,820 263,186 Planning,survey and design 71,137 - 47,277 - 118,414 361,462 Capital outlay 5,372,450 696 - - 5,373,146 2,804,719 Land purchases - 2,620,762 - - 2,620,762 2,564,821 • TOTAL EXPENDITURES 6,145,544 2,710,344 47,277 127,005 9,030,170 6,375,365 EXCESS OF REVENUES OVER(UNDER) EXPENDITURES (5,897,111) (2,620,777) (43,680) (126,512) (8,688,080) (6,091,189) OTHER FINANCING SOURCES(USES): Orperating transfer in - 18,028,081 - - 18,028,081 41,312,961 • Operating transfer out - (3,502,989) - - (3,502,989) (3,065,000) Advance from City - - - 214,000 214,000 120,000 TOTAL OTHER FINANCING SOURCES(USES) - 14,525,092 - 214,000 14,739,092 38,367,961 EXCESS OF REVENUES AND OTHER SOURCT~S OVER(UNDER) EXPENDITURES • AND OTHER USES (5,897,111) 11,904,315 (43,680) 87,488 6,051,012 32,276,772 FUND BALANCES- BEGINNING OF YEAR 37,868,632 - 144,961 - 38,013,593 5,736,821 FUND BALANCES • - END OF YEAR $ 31,971,521 $ 11,904,315 $ 101,281 $ 87,488 $ 44,064,605 $ 38,013,593 -22- • PALM DESERT REDEVELOPMENT AGENCY SUPPLEMENTAL SCHEDULE TAX INCREMENT SHIFT TO EDUCATIONAL REVENUE AUGMENTATION FUND June 30, 1993 Total Tax Increment to be shifted to the Educational Revenue Augmentation Fund (ERAF) per State Department of Finance (DOF) letter dated October 1, 1993 $ 2,856,279 Funding Sources: Redevelopment Agency: Agency tax increment $ 2,856,279 Other agency funds - Total Agency Funds $ 2,856,279 Agency Borrowing: From current 20% Low & Moderate Income Housing Funds $ - From legislative body - Total Borrowed Funds $ - Total Tax Increment Shift to ERAF $ 2,856,272 I. See independent auditors' compliance opinion. -23- i,zfi.f, Evans & £omh.any CERTIFIED PUBLIC ACCOUNTANTS (Di,caz �. Jlvmi/o CERTIFIED PUBLIC ACCOUNTANT 18401 VON KARMAN,SUITE 200 a joint venture 74-133 EL PASEO,SUITE 8 IRVINE, CALIFORNIA 92715-1542 PALM DESERT, CALIFORNIA 92260 (714)757-7700 (619)773-4078 September 10, 1993 INDEPENDENT AUDITORS' COMPLIANCE OPINION Agency Members Palm Desert Redevelopment Agency Palm Desert, California We have audited the financial statements of the Palm Desert Redevelopment Agency as of and for the year ended June 30, 1993, and have issued our opinion thereon dated September 10, 1993. 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 our 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. egi.eke fo-v--A4) 24