HomeMy WebLinkAboutRDA Audit Report for FYE 06-30-1988 CITY OF PALM DESERT
INTEROFFICE MEMORANDUM
October 27, 1988
TO: Honorable Chairperson and Members of the Redevelopment
Agency Board
FROM: Paul S. Gibson, Director of Finance
SUBJECT: Audit Report for FY 87/88
RECOMMENDATION:
Staff recommends that the audited financial report for the
fiscal year ended June 30, 1988 be received and filed.
DISCUSSION:
The attached financial statements have been audited by the
firm of Thomas, Byrne and Smith . As in past years, this has
resulted in an unqualified favorable audit opinion for the
activity of the 1987/88 fiscal year.
The financial abilities of the Agency to provide needed
projects and programs of benefit to the project area continue to
be strong. By virtue of assessed value growth within the area
the Agency is able to finance projects related to drainage and
other infrastructure needs.
ACTION:
APPROVED a-. ._.._.
RECEIVED
Respectfully Submitted,
MEETING DATE
AYES6/1-4havn :
ABSENT:
ABSTAIN: __...._.Paul S . Gibson
VERIFIED BY'
Original on F 1 it' City Clerk's OfficE
Director of Finance
PSG:jm
Attachment
REDEVELOPMENT AGENCY OF THE
CITY OF PALM DESERT
ANNUAL AUDIT REPORT
Year Ended June 30, 1988
TABLE OF CONTENTS
Page Number
I. Independent Auditor's Report
II. Financial Statements
Exhibit 1 - Combined Balance Sheet - All Fund Types and Account Groups 1
Exhibit 2 - Combined Statement of Revenues, Expenditures and Changes in Fund Balances - All Governmental Fund Types 2
Exhibit 3 - Combined Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Capital Project
and Special Revenue Fund Types
3
Notes to Financial Statements 4 - 9
III. Supplemental Information
Schedule 1 - Combining Balance Sheet - All Capital Project Funds 10
Schedule 2 - Combining Statement of Revenues, Expenditures and Changes in Fund Balances - All Capital Project Funds 11
Schedule 3 - Combining Balance Sheet - All Debt Service Funds 12
Schedule 4 - Combining Statement of Revenues, Expenditures and Changes in Fund Balances - All Debt Service Funds 13
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THOMAS, BYRNE&SMITH
AN ACCOUNTANCY CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
lDonald L.Thomas,C.P.A. August 26, 1988
D.Richard Byrne,C.P.A. 4362 Orange Street
V.C.Smith,Jr.,C.P.A. Riverside,California 92501 1
Allen C.Harrison,C.P.A. (714)682-4851
Board of Directors
1 I Redevelopment Agency of the
City of Palm Desert, California
Palm Desert, California
1 I We have examined the financial statements of the Redevelopment Agency of the City of Palm
Desert, California as of June 30, 1988, as listed in the table of contents. Our examination
was made in accordance with generally accepted auditing standards and, accordingly, included
such tests of the accounting records and such other auditing procedures as we considered
1 necessary in the circumstances.
As described more fully in Note 1, the financial statements present only the Redevelopment
Agency of the City of Palm Desert and are not intended to present fairly the financial position
and results of operations of the City of Palm Desert in conformity with generally accepted
i accounting principles.
In our opinion, the financial statements referred to above present fairly the financial
position of the Redevelopment Agency of the City of Palm Desert, California at June 30, 1988,
1 and the results of its operations and changes in fund balances for the year then ended, in
conformity with generally accepted accounting principles as well as accounting systems
prescribed by the State Controller's Office and state regulations governing special districts
applied on a basis consistent with that of the preceding year.
Our examination was made for the purpose of forming an opinion on the financial statements
taken as a whole. The accompanying supplemental information listed in the table of contents
I is presented for purposes of additional analysis and is not a required part of the financial
statements of the Redevelopment Agency of the City of Palm Desert, California. This information
has been subjected to the auditing procedures applied in the examination of the financial
statements and, in our opinion, is fairly stated in all material respects in relation to the
financial statements taken as a whole.
In connection with our examination, we also performed tests of compliance as required by California
Health and Safety Code Section 33080.1 and the Guidelines for Compliance Audits of California
Redevelopment Agencies issued by the California State Controller's Office dated July, 1988.
Based on the auditing procedures in the aforementioned Compliance Audit Guidelines, we noted no
instance of noncompliance with the laws, regulations and administrative requirements governing
special activities of the Agency for the year ended June 30, 1988.
THOMAS, BYRNE & SMIT
Ann Accorancy Cor ation
By: D. Richard me
REDEVELOPMENT AGENCY OF THE
CITY OF PALM DESERT
COMBINED STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - EXHIBIT 3
BUDGET AND ACTUAL - CAPITAL PROJECT AND SPECIAL REVENUE FUND TYPES
Year Ended June 30, 1988
Capital Project Fund Special Revenue Funds
Variance Variance
Favorable Favorable
Budget Actual (Unfavorable) Budget Actual (Unfavorable)
Revenues
Tax Increment $ $ $ $ 900,000 $ 847,675 $ (52,325)
Charges for Services 1,197,375 1,197,375 8,750,000 (8,750,000)
Interest Income 450,000 1,000,396 550,396 130,000 209,258 79,258
Other Income 251,000 (251,000)
Total Revenues 701,000 2,197,771 1,496,771 9,780,000 1,056,933 (8,723,067)
Expenditures
Administrative Costs 512,440 258,042 254,398 1,850 (1,850)
Professional Services 271,500 164,700 106,800 11,302 (11,302)
Planning, Survey and Design 13,667 189,225 (175,558) 737,992 517,096 220,896
Real Estate Purchases 19,323 (19,323)
Project Improvement Costs 17,108,293 3,275,902 13,832,391 6,742,946 3,200 6,739,746
Total Expenditures 17,905,900 3,907,192 13,998,708 7,480,938 533,448 6,947,490
Excess of Revenues Over
(Under) Expenditures (17,204,900) (1,709,421) 15,495,479 2,299,062 523,485 (1,775,577)
Other Financing Sources (Uses)
Operating Transfers In (Out) (350,305) (350,305)
Proceeds From Long-Term Obligations 4,200,000 (4,200,000) 7,570,000 (7,570,000)
Excess of Revenues and Other
Sources Over (Under)
Expenditures and Other Uses $(13,004,900) (2,059,726) $ 10,945,174 $9,869,062 523,485 $ (9,345,577)
Fund Balances - Beginning of Year 16,911,791 2,891,669
Fund Balances - End of Year $14,852,065 $3,415,154
The accompanying notes are an integral part of this statement.
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REDEVELOPMENT AGENCY OF THE
CITY OF PALM DESERT, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 1988
1) Summary of Significant Accounting Policies
The Redevelopment Agency of the City of Palm Desert, California was formed under Section 33,000 et. seq. of the California Health and Safety Code.
For the period under review the Agency consisted of Project Area 1 and Project Area 2.
The Agency office and records are located in the Palm Desert City Hall at 73-510 Fred Waring Drive, Palm Desert, California. Telephone number (619)
346-0611. Agency officers are as follows:
Name Title
Jean M. Benson Chairperson
S. Roy Wilson Vice Chairperson
Buford A. Crites Member
Richard Kelly Member
Walter H. Snyder Member
The Board of Directors is also the Palm Desert City Council. The Board of Directors meets the second and fourth Thursday of each month.
The Agency is a component unit of the City of Palm Desert and, accordingly, the financial statements of the Agency are included in the financial
statements of the City of Palm Desert.
The accounting policies of the Agency conform to generally accepted accounting principles as they are applicable to governmental units. The more
significant policies reflected in the financial statements are summarized as follows:
A) Description of Funds and Account Groups
The accounts of the Agency 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, 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 are grouped in the financial statements
in this report, into three generic fund types and one broad fund category as follows:
Governmental Funds
Capital Project Funds - Used to account for financial resources used for the acquisition of major capital facilities.
Special Revenue Funds - Used to account for the proceeds of specific revenue sources or to finance unspecified activities as required by law or
administrative regulation. The Special Revenue Funds consist solely of Project Area 1 Low and Moderate Income Housing Fund.
Debt Service Funds - Used to account for the payment of interest and principal on long-term obligations.
Fixed Assets and Long-Term Liabilities - The accounting and reporting treatment applied to the fixed assets and long-term liabilities associated
with a fund are determined by its 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 measurement 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. Accordingly, they are said
to present a summary of sources and uses of available spendable resources during a period.
Fixed assets used in governmental fund type operations (general fixed assets) are accounted for in the General Fixed Assets Account Group,
rather than in governmental funds. Public domain (infrastructure) general fixed assets consisting of roads, bridges, curbs and gutters, streets
and sidewalks, drainage systems, and lighting systems are not capitalized as general fixed assets. No deprecition has been provided on general
fixed assets.
All fixed assets are valued at historical cost or estimated historical cost if actual historical cost is not available. Donated fixed assets are
valued at their estimated fair value on the date donated.
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REDEVELOPMENT AGENCY OF THE
CITY OF PALM DESERT, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 1988
1) Summary of Significant Accounting Policies (Continued)
A) Description of Funds and Account Groups (Continued)
Fixed Assets and Long-Term Liabilities (Continued)
Long-Term Liabilities expected to be financed from Governmental Funds are accounted for in the General Long-Term Obligation Account Group, not in
the Governmental Funds.
The two account groups are not funds. They are concerned only with the measurement of financial position. They are not involved with the
measurement of results of operations.
Noncurrent portions of long-term receivables due to governmental funds are reported on their balance sheets, in spite of their spending measure-
ment 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.
Because of their spending measurement focus, expenditure recognition for governmental fund types is limited to exclude amounts represented by
noncurrent liabilities. Since they do not affect net current assets, such long-term accounts are not recognized as governmental fund type
expenditures or fund liabilities. They are instead reported as liabilities in the General Long-Term Obligation Account Group.
B) Basis of Accounting - The Capital Project, Special Revenue and Debt Service Funds are maintained on the modified accrual basis of accounting
wherein:
1) Revenues are recorded as received in cash except (1) revenues which are both measurable and available as a resource to finance operations
of the current year are accrued, and (2) revenues of a material amount not received at the normal time of receipt are accrued or deferred
as appropriate.
2) Expenditures are recorded on an accrual basis except (1) disbursements for inventory type items are considered expenditures at the time of
of purchase (2) expenditures are not divided between years by the recording of prepaid expenses and (3) interest on long-term obligations
is recorded as an expenditure on its due date.
C) Budgetary Accounting_
1) Estimated revenue is the original estimate with modifications for new programs which are anticipated to be received during the fiscal year.
2) Original appropriations are modified by supplementary appropriations and transfers among budget categories.
3) The Board of Directors approves all changes.
D) 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 in the Governmental
Fund Types. Encumbrances outstanding at year-end are reported as reservations of fund balances since they do not constitute expenditures or
liabilities.
E) Investments - Investments are stated at cost.
F) 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.
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REDEVELOPMENT AGENCY OF THE
CITY OF PALM DESERT, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 1988
1) Summary of Significant Accounting Policies (Continued)
G) Total Columns on Combined Statements - Overview - Total columns on the Combined Statements - Overview are captioned "Memorandum Only" to
indicate that they are presented only to facilitate financial analysis. Data in these columns do not present financial position or results
of operations in conformity with generally accepted accounting principles. Neither is such data comparable to a consolidation. Interfund
eliminations have not been made in the aggregation of this data.
2) Cash in City Treasury
Agency funds are pooled with the City of Palm Desert cash in order to generate optimum interest income. Investment policies and associated risk
factors applicable to Agency funds are those of the City of Palm Desert and are included in the City's Annual Financial Report.
3) Cash With Fiscal Agent - $5,614,100
The Trustee of Agency monies for the 1985 Tax Allocation Bonds and the 1985 Tax Allocation Refunding Bonds is Security Pacific National Bank,
Corporate Division, Los Angeles, California.
4) Due Form Other Governmental Agencies - $157,838
Due From Other Governmental Agencies consists of the following:
A) Coachella Valley Community College District - $94,090 - The Agency and the District entered into a public facilities agreement on February 1, 1986,
for the development of a 15 acre golf and related recreational facility on the College of the Desert campus located within Project Area 1, as
amended. The Agency has agreed to advance a total of $110,000 toward the facility's installation and construction costs. As of June 30, 1988,
these advances totaled $94,090.
B) County of Riverside - $63,748 - Tax Revenues received in 1988-89 attributable to 1987-88.
5) Changes in General Fixed Assets
A summary of Changes in General Fixed Assets for the year is as follows:
Balance Balance
Beginning of Year Additions Deletions End of Year
Land $12,168,128 $19,323 $35,000 $12,152,451
The deletions above represent the Portola Avenue Fire Station site which was transferred to the City of Palm Desert during 1987-88.
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REDEVELOPMENT AGENCY OF THE
CITY OF PALM DESERT, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 1988
6) General Long-Term Obligations
Activities related to General Long-Term Obligations are presented as follows:
Date of Years of Rates of Amount Outstanding New Retired Outstanding
Description Issue Maturity Interest Authorized Beginning of Year Indebtedness During Year End of Year
Notes Payable - $2,802,437 (Note 7)
Hinton Financial Services, Inc. 12-05-86 10% $ 2,241,950 $ 2,241,950 $ $ $ 2,241,950
OBED Enterprises, Inc. 12-05-86 10% 560,487 560,487 560,487
Total Notes Payble $ 2,802,437 $ 2,802,437 $ - 0 - $ - 0 - $ 2,802,437
Loans Payable - $6,110,000 (Note 8)
Project Area 1
Coachella Valley Water District 04-10-86 0% $ 2,500,000 $ 2,500,000 $ $ 2,500,000 $ - 0 -
Portola Stormwater Channel Improvement Costs
City of Palm Desert 02-01-86 8% 110,000 110,000 110,000
Recreation Facilities Advances
Total Project Area 1 2,610,000 2,610,000 - 0 - 2,500,000 110,000
Project Area 2 City
City of Palm Desert 12-05-86 Earnings
North Sphere Land Acquisition Rate 2,000,000 6,000,000 6,000,000
Total Loans Payable 1.8,610,000 $ 8,610,000 $ - 0 - $ 2,500,000 $ 6,110,000
Tax Allocation Bonds Payable - $43,280,000 (Note 9)
1985 Tax Allocation Bonds 12-01-85 1988 - 1994 7.6% $ 6,180,000 $ 6,180,000 $ $ $ 6,180,000
r
1995 - 2005 7.9% 20,095,000 20,095,000 20,095,000
Total 26,275,000 26,275,000 - 0 - - 0 - 26,275,000
1985 Tax Allocation Refunding Bonds 12-01-85 1986 - 1995 7.6% 5,615,000 5,200,000 440,000 4,760,000
1996 7.8% 820,000 820,000 820,000
1997 - 2005 7.9% 11,425,000 11,425,000 11,425,000
Total 17,860,000 17,445,000 - 0 - 440,000 17,005,000
Total Tax Allocation Bonds Payable $44,135,000 $ 43,720,000 $ - 0 - $ 440,000 $43,280,Q00
Total General Long-Term Obligations $ 55,132,437 $
- Q - $ 2,940,000 $52,19Z.437
Annual debt service requirements to maturity for the Tax Allocation Bonds are as follows:
1985 Tax Allocation Bonds 1985 Tax Allocation Refunding Bonds
Year Ended June 30, Principal Interest Principal Interest
1989 $ 715,000 $ 2,030,015 $ 465,000 $ 1,310,625
1990 760,000 1,973,965 495,000 1,274,145
1991 815,000 1,914,115 525,000 1,235,385
1992 870,000 1,850,085 565,000 1,193,965
1993 935,000 1,781,495 605,000 1,149,505
Thereafter 22,180,000 13,387,687 14,350,000 8,651,273
Total $26,275,000 $22,937,362 $17,005,000 $14,814,898
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REDEVELOPMENT AGENCY OF THE
CITY OF PALM DESERT, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 1988
7) Notes Payable - $2,802,437
On December 5, 1986 the Agency issued the following notes in connection with the purchase of land within the boundaries of Project Area 2:
Hinton Financial Services, Inc. $2,241,950
OBED Enterprises, Inc. 560,487
Total $2,802,437
These notes, bearing 10% interest, payable quarterly, are due December 8, 1996 and are secured by Deeds of Trust to California Land Title Company.
8) Loans Payable - $6,110,000
The Agency is indebted to the City of Palm Desert for this amount. These loans will be repaid as tax revenues become available.
9) Tax Allocation Bonds Payable - $43,280,000
The Bonds are special obligations 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 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.
10) Tax Allocation Bond Requirements
At June 30, 1988 the Bond Funds are presented as follows:
1985 Tax 1985 Tax
Allocation Bonds Allocation Refunding Bonds
Requirement Actual Requirement Actual
Bond and Interest Payment Fund $ - 0 - $ 1,603 $ - 0 - $ 1,327
Reserve Fund $ 2,913,300 $3,407,897 $ 1,882,855 $2,202,925
These amounts are included in the $9,773,290 Reserved for Debt Service in Exhibit 1.
11) Unfunded Pension Costs
The Agency, through the City, is a participant in the Public Employees' Retirement System of the State of California covering all of its permanent
employees. The excess, if any, of the actuarially computed value of vested benefits over the amounts available in the pension fund would be a
liability of the City and not the Agency.
12) Vacation and Sick Pay Benefits
The accompanying financial statements do not include any accrual for vacation and sick pay benefits due employees at June 30, 1988. These amounts
are recorded as obligations in the records of the City of Palm Desert as all employees are employed by the City.
•
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REDEVELOPMENT AGENCY OF THE
CITY OF PALM DESERT, CALIFORNIA
NOTES TO FINANCIAL STATEMENTS
Year Ended June 30, 1988
13) Other Matters
On July 15, 1987 the Project Area 2 Redevelopment Plan was approved and adopted by the Palm Desert City Council. Suits have been filed, and are now
pending, challenging the validity of the redevelopment purpose of Project Area 2.
14) Subsequent Events
On September 8, 1988 the Agency issued the following indebtedness:
$7,800,000 Palm Desert Redevelpoment Agency Project No. 1, as amended (added territory), Tax Allocation Bonds, Series 1988.
These bonds were issued to provide certain improvements in the Palma Village Subdivision.
15) Contingencies
As of June 30, 1988, in the opinion of the Agency Administration, there are no outstanding matters which would have a significant effect on the
financial position of the funds of the Agency.
I
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