HomeMy WebLinkAboutAgenda Package - StudySession_Dec11_2025
PALM DESERT CITY COUNCIL
STUDY SESSION MEETING
AGENDA
Thursday, December 11, 2025
1:30 p.m.
Council Chamber, City Hall
73-510 Fred Waring Drive
Palm Desert, California
NOTICE IS HEREBY GIVEN that the purpose of the Study Session is to review the items listed on the
agenda. No action will be taken.
This is a joint meeting of the Palm Desert City Council, Successor Agency to the Palm Desert
Redevelopment Agency, Palm Desert Housing Authority, and Palm Desert Board of Library Trustees.
Pursuant to Assembly Bill 2449, this meeting may be conducted as a hybrid meeting allowing public
access via teleconference or in person, and up to two Councilmembers may attend remotely.
WATCH THE MEETING LIVE: Watch the City Council meeting live at the City’s website:
https://palmdesert.zoom.us/ or on the City's YouTube Channel.
OPTIONS FOR PARTICIPATING IN THIS MEETING:
Send your comments by email to: CityClerk@palmdesert.gov.
Emails received prior to 10:00 a.m. on the day of the City Council meeting will be made part of the
record and distributed to the City Council. Emails will not be read aloud at the meeting.
Pages
1.CALL TO ORDER - STUDY SESSION
2.STUDY SESSION TOPICS
2.a PROVIDE AN OVERVIEW OF THE RIVERSIDE COUNTY FIRE
DEPARTMENT WORKSHOP
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RECOMMENDATION:
Receive an update from the Riverside County Fire Department’s workshop.
2.b REPORT ON FISCAL RESERVES, RESERVE POLICY AND BEST
PRACTICES
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RECOMMENDATION:
Receive a report on fiscal reserves, reserve policy, and best practices.
Provide direction to staff regarding any desired updates to the policy.
2.c PROVIDE INPUT ON PURSUING LANDSCAPE AND LIGHTING
DISTRICTS ON CITYWIDE PRIVATELY MAINTAINED MEDIANS AND
SELECT PARKWAYS.
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RECOMMENDATION:
Provide input on pursuing landscape and lighting districts on citywide
privately maintained medians and select parkways.
2.d PROVIDE AN UPDATE ON THE CITY’S MARKETING PROGRAM 111
RECOMMENDATION:
Receive a presentation and provide guidance on future market targeting,
research topics, and destination positioning to shape the City’s tourism
marketing strategy for FY 2025–26 and FY 2026–27.
3.ADJOURNMENT
City Council Study Session
December 11, 2025
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4.PUBLIC NOTICES
NOTE: Pursuant to Assembly Bill 2449, this meeting may be conducted by
teleconference. Study Session is accessible in person or on the City’s website:
www.palmdesert.gov under the Council Agenda link at the top of the page.
Agenda Related Materials: Pursuant to Government Code §54957.5(b)(2) the
designated office for inspection of records in connection with this meeting is the
Office of the City Clerk, Palm Desert Civic Center, 73-510 Fred Waring Drive,
Palm Desert. Staff reports for all agenda items considered in open session, and
documents provided to a majority of the legislative bodies are available for
public inspection at City Hall and on the City’s website at www.palmdesert.gov
by clicking “Council Agenda” at the top of the page.
Americans with Disabilities Act: It is the intention of the City of Palm Desert to
comply with the Americans with Disabilities Act (ADA) in all respects. If, as an
attendee or a participant at this meeting, or in meetings on a regular basis, you
will need special assistance beyond what is normally provided, the City will
attempt to accommodate you in every reasonable manner. Please contact the
Office of the City Clerk, (760) 346-0611, at least 48 hours prior to the meeting to
inform us of your needs and to determine if accommodation is feasible.
AFFIDAVIT OF POSTING
I, Michelle Nance, Acting Assistant City Clerk of the City of Palm Desert, do
hereby certify, under penalty of perjury under the laws of the State of California,
that the foregoing agenda for the Palm Desert City Council, Successor Agency
for the Palm Desert Redevelopment Agency, and Housing Authority, was posted
on the City Hall bulletin board and City website www.palmdesert.gov no less
than 72 hours prior to the meeting.
/S/ Michelle Nance
Acting Assistant City Clerk
City Council Study Session
December 11, 2025
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CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: December 11, 2025
PREPARED BY: Deputy Chief Robert Fish
SUBJECT: STUDY SESSION: PROVIDE AN OVERVIEW OF THE RIVERSIDE
COUNTY FIRE DEPARTMENT WORKSHOP
RECOMMENDATION:
Receive an update from the Riverside County Fire Department’s workshop.
BACKGROUND/ANALYSIS:
Throughout October and November 2025, the Riverside County Fire Department conducted a
series of workshops for elected officials across Riverside County. One of these workshops was
held in the Palm Desert Council Chambers on November 19, 2025. The workshop s were
designed to provide elected officials and staff with an overview of how state, county, and local
jurisdictions benefit from participating in the Riverside County Fire Department’s regional service
model.
Topics included the structure and roles of the cooperative fire system, the benefits of integrated
emergency response, mutual aid coordination, staffing and training standards, and the
operational efficiencies gained through unified service delivery. The workshops also highlighted
how the regional framework enhances community safety, strengthens preparedness for major
incidents, and supports consistent service levels across jurisdictions.
FINANCIAL IMPACT:
There is no financial impact associated with this presentation.
ATTACHMENTS:
1. Riverside County Fire Department Workshop Presentation
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CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: December 11, 2025
PREPARED BY: Veronica Chavez, Director of Finance
SUBJECT: STUDY SESSION: REPORT ON FISCAL RESERVES, RESERVE POLICY
AND BEST PRACTICES
RECOMMENDATION:
Receive a report on fiscal reserves, reserve policy, and best practices. Provide direction to staff
regarding any desired updates to the policy.
EXECUTIVE SUMMARY
This report reviews the amount of financial reserves the City maintains —our savings—and
whether our current policy continues to meet the City’s needs. The goal is simple:
Keep the City financially safe.
Avoid over-saving when funds could help meet community needs.
Modernize the policy to match best practices.
Today, the City requires $77.7 million in reserves for FY 2025–26. However, long-term
projections indicate that these requirements will become increasingly difficult to meet once major
projects—such as parks, stormwater upgrades, and facilities—progress. To keep us stable and
flexible, staff recommends:
Combining Operating & Emergency Reserves into a single 25% reserve.
Using a simpler 4% replacement-value method for facility maintenance reserves.
Creating a stable Economic/Community Investment Reserve with ROI standards.
Planning to support a future 4% Affordable Housing facilities reserve.
Adding a Productivity Savings Reserve to reward efficiency.
These refinements lower the FY 2025–26 reserve requirement from $77.7 million to $66.1
million, freeing more than $ 11.6 million that can be prioritized to meet current community needs.
Financing tools, such as Lease Revenue Bonds, could further reduce pressure on cash balances
and help complete large projects without depleting reserves for upcoming projects.
BACKGROUND/ANALYSIS:
At the June 26, 2025, City Council meeting, staff presented a balanced FY 2025 -26 Operating
Budget and Five-Year CIP Plan. At that time, staff committed to providing a deeper review of the
City’s 10-Year General Fund Cash Flow Analysis, projected demands on fiscal resources, and
potential policy refinements aligned with Council priorities, community growth, and best
practices.
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Staff is currently working through the FY 2024 -25 Audit, which reflects approximately $116.7
million in Fund Balance after all required transactions and carryovers are considered. Within this
amount, $3.1M is non-spendable. As of the last City Council meeting, only $1.3 million in
additional appropriations have been reques ted this fiscal year from unobligated General Fund
reserves, which have been transferred to the Aquatic Facility Fund to support necessary capital
improvements. This leaves approximately $112.3 million available for reserves and/or to address
any unanticipated costs for the remainder of FY 2025-26 and future years.
Ten-Year Estimated Cash Flow Forecast as of November 2025
The cash flow forecasts depicted below will be included as an attachment to this report in a
clearer format; they are included here for quick reference. Cash flows represent a snapshot in
time and are updated as information becomes available.
Schedule 1 – Cash Flow Projections – Reserve Policy “As Is”
Why Reserves Matter
Fiscal reserves are essential for maintaining financial stability and flexibility in response to
unforeseen events. A good reserve policy provides for stability through uncertainty without
unnecessarily tying up funds that could be used to provide services to the community. In
Government Accounting, each fund functions as a separate accounting entity, with its own
operational and financial characteristics. Reserve levels should be tailored to those specific
needs.
Reserve funds are not intended for operational costs, except in limited circumstances, such as
an economic contraction that reduces tax revenues or an emergency event, like a natural
TEN-YEAR FORECAST FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Estimated Revenue
Property Tax 14,712,737 15,006,992 15,307,132 15,613,274 15,925,540 16,244,050 16,568,931 16,900,310 17,238,316 17,583,083
Sales Tax (General 1%)25,274,315 25,598,778 26,045,477 26,447,033 26,795,972 27,088,751 27,339,875 28,160,071 29,004,873 29,875,020
TOT & STR's 22,755,000 25,940,700 28,534,770 29,390,813 30,272,537 31,180,714 32,116,135 33,079,619 34,072,008 35,094,168
Measure G *25,887,322 26,416,518 26,929,837 27,394,342 27,805,342 28,462,695 29,031,949 29,612,588 30,500,966 31,415,994
All Other GF Revenue 23,059,380 23,566,686 24,085,153 24,615,027 25,156,557 25,710,002 26,275,622 26,853,685 27,444,466 28,048,245
Combined GF Revenue 111,688,754 116,529,674 120,902,369 123,460,489 125,955,949 128,686,212 131,332,512 134,606,274 138,260,629 142,016,509
Estimated Expenditures
Salaries & Benefits 26,853,063 27,792,920 28,765,672 29,772,471 30,814,507 31,893,015 33,009,271 34,164,595 35,360,356 36,597,968
Professional Services 11,208,344 11,768,761 12,357,199 12,975,059 13,623,812 14,305,003 15,020,253 15,771,266 16,559,829 17,387,820
Public Safety 28,547,236 29,689,125 30,876,690 32,111,758 33,396,228 34,732,078 36,121,361 37,566,215 39,068,864 40,631,618
Other Ops 6,775,484 7,182,013 7,612,934 8,069,710 8,553,892 9,067,126 9,611,154 10,187,823 10,799,092 11,447,038
Repair & Maintenance 6,269,023 6,707,855 7,177,404 7,679,823 8,217,410 8,792,629 9,408,113 10,066,681 10,771,349 11,525,343
Events & Outside Agency Funding 2,111,135 2,237,803 2,372,071 2,514,396 2,665,259 2,825,175 2,994,685 3,174,366 3,364,828 3,566,718
Transfers to Other Funds (Leaves/AD's)1,846,000 1,901,380 1,958,421 2,017,174 2,077,689 2,140,020 2,204,221 2,270,347 2,338,458 2,408,611
Transfer to Library Services 2,523,443 2,573,912 2,625,390 2,677,898 2,731,456 2,786,085 2,841,807 2,898,643 2,956,616 3,015,748
Transfer to Aquatic Facility Services 2,152,543 2,174,068 2,195,809 2,217,767 2,239,945 2,262,344 2,284,968 2,307,817 2,330,896 2,354,205
Transfer to Fire Services* 7,750,000 10,500,000 11,500,000 13,000,000 14,000,000 14,560,000 15,142,400 15,748,096 16,378,020 17,033,141
Total Operational Expenditures 96,036,271 102,527,838 107,441,592 113,036,056 118,320,200 123,363,475 128,638,231 134,155,849 139,928,307 145,968,210
CIP Related Transfers
Transfer to Projects*10,726,545 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Transfers for Facilities *3,847,482 3,885,957 3,924,816 3,964,065 4,003,705 4,043,742 4,084,180 4,125,021 4,166,272 4,207,934
Total GF Expenditures 110,610,298 118,444,356 122,871,429 118,964,793 124,288,578 135,045,504 140,818,995 146,863,250 153,191,900 159,819,306
Est. Beginning General Fund Balance 116,772,032 117,850,488 98,966,367 80,002,328 77,498,024 79,165,394 72,806,102 63,319,619 51,062,643 36,131,372
Revenue over (under) expenditures 1,078,456 (1,914,682) (1,969,060) 4,495,696 1,667,370 (6,359,292) (9,486,483) (12,256,976) (14,931,271) (17,802,797)
Unfunded Requests (from Reserve)
New Library ($30M) $20M RDA BOND PROCEEDS(6,000,000)
Station 33/71 Rehab/Rebuild $23.6M RDA BONDS(2,400,000)
North Sphere Community Park ($19M) (15,500,000) (3,500,000)
North Sphere Regional Park ($30M) (3,000,000) (20,000,000) (7,000,000)
North Sphere Stormwater - Channel Projects (1,000,000) (8,500,000) (5,000,000)
Henderson Trailhead Improvements (2,000,000)
Estimated Amount from Measure G 9,400,000 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Est. Ending General Fund Balance 117,850,488$ 98,966,367$ 80,002,328$ 77,498,024$ 79,165,394$ 72,806,102$ 63,319,619$ 51,062,643$ 36,131,372$ 18,328,575$
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Fiscal Reserves and Reserve Policy Report
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disaster. Historically, annual expenditures have outpaced revenues for various reasons, and the
ten-year forecast continues to reflect this pattern. By FY 2031-32, this trend is projected to be
driven primarily by increased public safety costs.
Staff is actively pursuing opportunities to identify and collect additional revenue sources. Staff is
also managing current resources to ensure all revenues are fully recogn ized and that available
funds are maximized in both practice and long-range forecasting.
Best Practices
The Government Finance Officers Association (GFOA) recommends that general-purpose
governments maintain an unrestricted fund balance equal to at least two months, or 16.7%,
percent, of General Fund operating revenues or expenditures. Fund Balance represents the
resources accumulated in governmental funds and is defined as the difference between a fund’s
assets and its liabilities.
The Governmental Accounting Standards Board (GASB) defines five classifications of Fund
Balance. These classifications distinguish whether portions of fund balance are available for
appropriation (“spendable”) or restricted by external or internal constraints (“reserved”). The five
Fund Balance classifications are:
Table A – Fund Balance Classifications
Classification Nature of restriction Example
Non-Spendable Cannot be readily converted to cash Leave balances, Developer deposits
Restricted Externally imposed restrictions Grant funds, escrowed monies
Committed City Council imposed commitment Emergency, Facilities, Equipment, etc.
Assigned City Manager assigned purpose/intent General Fund Operations
Unassigned Residual balance, not otherwise restricted Balance available for Goals, Projects, etc.
Originally adopted in 2008 and last updated in 2018, the City's Reserve Policy incorporates
GFOA best practices while tailoring reserve categories to the City’s operational and financial
structure. The policy establishes the following reserve categories:
General Fund Operating Reserve
Contingency/Emergency Reserve
Facilities Maintenance Reserve
Capital Improvement Projects Reserve
Liability Reserve
Employment Benefits Reserve
Other Fund Stability Reserve
Equipment Replacement Reserve
Economic Development/Land Acquisition Reserve
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Since 2018, GFOA has expanded its best practice recommendations for reserve policies. Key
concepts for cities to consider include:
Follow GFOA Guidelines: Maintain an unrestricted General Fund balance equal to at
least two months of operating revenues or expenditures (approximately 16.7%). percent).
Multiyear Forecasting: Integrate reserve targets into long-range financial plans to help
stabilize services during economic downturns.
Structured Use Policy: Clearly define the circumstances under which reserves may be
used, such as revenue shortfalls or natural disasters.
Transparent Reporting: Regularly disclose reserve levels and any drawdowns to
support accountability and public trust.
The City’s current Reserve Policy incorporates three of these four recommendations. The only
exception is the GFOA’s 16.7% minimum threshold, which is not used in the current policy.
For reference, below are examples of reserve thresholds used by other California cities:
Table B – Various California City Reserve Thresholds
City Total Reserve Requirement
Los Angeles 5% of General Fund Revenue
San Francisco 16.7% of General Fund Expenditures
Sacramento 10% of General Fund Revenue
San Diego 16.7% of General Fund Revenue
Fresno 25% of General Fund Expenditures
Santa Rosa 20-25% of General Fund Revenue
Long Beach 10% of General Fund Expenditures
Modesto 22.5% of General Fund Expenditures
La Quinta 33% of General Fund Expenditures
Rancho Mirage 84% of Estimated Fund Balance
The following table presents the FY 2025-26 reserve requirements established under the City’s
current Reserve Policy:
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Table C – Year 1 (FY 2025-26) Reserve Calculations per Current Policy
CATEGORY REQUIREMENT DESIGNATION FY 2025-
26
AMOUNT
GENERAL FUND
OPERATING RESERVE
Finance Director shall set aside
(25%) of the projected annual
General Fund expenditures.
Assigned – City Manager is
delegated to use for
operations.
21,691,071
CONTINGENCY/
EMERGENCY RESERVE
Finance Director shall reserve
an amount equal to (20%) of the
projected annual General Fund
revenues.
Committed - Requires
Council Action to use for
unexpected financial change
or public emergency.
22,337,751
FACILITIES MAINTENANCE
RESERVE
Finance Director is directed to
commit the amount identified in
the Replacement Reserve
Study. The policy designated
goal for funding this reserve, will
be between (60-100%) of the
‘Fully Funded’ amount in the
Study.
Committed - Requires
Council Action to use to
maintain existing City
buildings and infrastructure.
6,961,265
CAPITAL IMPROVEMENT
PROJECTS RESERVE
Finance Director shall set aside
(20%) of the total Capital
Improvement Program projects
for the next five years.
Committed - Requires
Council Action to use for
CIP. *May also be
"Restricted" depending on
project.
6,045,267
LIABILITY RESERVE
Finance Director shall commit at
least the pooled retention
requirement for both Liability and
Workers’ Compensation, which
is currently $4 million
Committed - Requires
Council Action to use for
costs not covered by
insurance including
deductibles.
4,000,000
EMPLOYMENT BENEFITS
RESERVE
Finance Director shall also set
aside fifty percent (50%) of a
one percent (1%) difference in
the Public Employees
Retirement System (PERS)
discount rate. Funds will also be
transferred to the appropriate
Internal Service Fund to cover all
leave balances and OPEB
annually as part of this
requirement.
Committed - Requires
Council Action to use for
impacts related to rate
changes from PERS.
10,697,122
OTHER FUND STABILITY
RESERVE
Finance Director shall adjust the
amount to be the projected
annual transfers to other funds.
This amount is immediately
transferred on July 1 to ensure
availability, so no additional
reserve is necessary.
Committed - Requires
Council Action to use for
transfers to other funds.
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EQUIPMENT
REPLACEMENT RESERVE
Finance Director shall adjust this
reserve to be at least 100% of
the total historical cost of
equipment assets as noted in
the ACFR.
Committed - Requires
Council Action to use for
equipment not in the
Replacement Reserve.
2,869,354
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ECONOMIC
DEVELOPMENT RESERVE
Finance Director shall commit
the City’s share of proceeds
from SARDA land sales to this
reserve.
Committed - Requires
Council Action to use for
partnerships, incentives, etc
to achieve economic goals.
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TOTAL FY 2025-26 RESERVE REQUIREMENT (INCLUDING $3.1M NON-SPENDABLE
FUNDS)
77,719,235
With an estimated Fund Balance of $117.8 million as of June 30, 2026, and after accounting for
the required reserves, the resulting unrestricted amount for FY 2025-26 is approximately
$40,131,253, inclusive of restricted funds.
Impacts of Anticipated Capital Improvements to Cash Flow
The City anticipates a significant volume of major capital improvements over the decade,
including the new library, a community park, a regional park, stormwater system upgrades,
median landscape improvements, and affordable housing initiatives. These needs are in addition
to ongoing major maintenance and replacement costs for existing City facilities. The strategic
use of reserves will be necessary to support these community priorities.
Beyond regular increases in operational costs, the City is currently in a construction and
development phase that requires substantial upfront cash. Based on current project schedules,
reserve usage is projected to reduce the Fund Balance to approximately $17.8 million by FY
2034-35, even after incorporating the additionally forecasted revenues from Measure G. This
projected balance does not meet the thresholds established in the City’s current Reserve Policy
The table below reflects the resulting distribution of Fund Balance based on anticipated
operations and capital improvements, indicating that the reserve may become underfunded as
early as FY 2031-32.
Schedule 1 – Cash Flow Projections – Reserve Policy “As Is”
For FY 2034-35, the required reserve is approximately $87.5 million. The projected Fund
Balance falls short of this requirement by roughly $69 million, or 79%.
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Est. General Fund Bal 117,850,488$ 98,966,367$ 80,002,328$ 77,498,024$ 79,165,394$ 72,806,102$ 63,319,619$ 51,062,643$ 36,131,372$ 18,328,575$
Annual Percentage Funded 152%125%95%101%100%86%76%53%40%21%
Non-Spendable (Leave Balances and Trust Accounts)3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405
Reserve Requirement - Per Current Policy
ASSIGNED
GF Operating Reserve (25% of Ops)21,691,071 22,341,803 23,012,057 23,702,419 24,413,492 25,145,897 25,900,273 26,677,282 27,477,600 28,301,928
COMMITTED
GF Emergency Reserve (20% of GF Revenue)22,337,751 23,305,935 24,180,474 24,692,098 25,191,190 25,737,242 26,266,502 26,921,255 27,652,126 28,403,302
Liability Reserve ($4M)4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Emplymnt Bene Reserve (50% for chg in
Disc Rate)10,697,122 10,804,093 10,912,134 11,021,255 11,131,468 11,242,783 11,355,211 11,468,763 11,583,450 11,699,285
Other Fund Stability Reserve (equal to 25% T-fer Out)
Facility Reserve (at 70% sensitivity)6,961,265 5,459,114 9,005,713 6,485,361 8,037,456 8,331,572 7,032,306 14,169,390 7,050,049 8,252,353
CIP Reserve (20% of CIP )6,045,267 7,319,615 6,792,935 392,935 392,935 3,657,538 2,387,729 7,319,615 6,792,935 392,935
Equip Replacement Reserve (100% cost
of assets)2,869,354 2,955,435 3,044,098 3,135,421 3,229,483 3,229,483 3,261,778 3,294,396 3,327,340 3,360,613
Total Required Reserve 77,719,235 79,303,399 84,064,816 76,546,894 79,513,428 84,461,920 83,321,206 96,968,106 91,000,908 87,527,825
Reserve Requirement Overfunded/(Underfunded)40,131,253 19,662,968 (4,062,488) 951,130 (348,034) (11,655,818) (20,001,587) (45,905,464) (54,869,536) (69,199,250)
This amount is included in Expenditures and Immediately Transferred
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Staff has evaluated multiple financial models and reviewed historical cost trends to identify an
appropriate reserve level and determine how excess funds can be strategically allocated to
benefit the community. The options outlined below aim to balance necessary reserve
requirements with targeted investments that support long-term growth, while maintaining
sufficient protection against unforeseen events such as economic downturns or housing
affordability pressures.
Policy Options to Consider Increasing Flexibility and Align with Best Practices
Options for consideration that may reduce self-imposed restrictions and better align the City’s
Reserve Policy with industry best practices include the following:
1. Combine Operating and Contingency/Emergency Reserves (Total: 25%)
The Operating Reserve is intended to ensure continuity of service, while the
Contingency/Emergency Reserve functions as the City’s rainy-day fund. Many cities
establish a combined minimum reserve target of 15 to 25% of General Fund operating
expenditures. Some use a range (e.g., 20–25%) percent) based on risk factors such as
revenue volatility, reliance on tourism, or exposure to natural disasters. Combining the
City’s two categories into a single 25% target is a common approach and would create
greater flexibility to address competing needs.
a. A few cities apply a combined reserve measurement that ensures the GFOA
minimum of 16.7% (two months of operations) for the Operating Reserve, with the
remainder—up to 25%—assigned to Contingency/Emergency needs. This
combined structure allows more flexibility when emergency needs exceed the
original allocations.
b. In recent years, City revenue losses during major economic disruptions, including
the Housing Crisis and COVID-19 pandemic, were less than the 25% threshold.
The costs associated with Storm Hillary totaled approximately 2% of the total Fund
Balance, remaining well within the existing reserve capacity.
c. Combining the reserves into a single 25% requirement would unencumber
approximately $21 million for immediate or future use on an annual basis.
d. Withdrawals from the combined Operations/Emergency Reserve would be
permitted only under two conditions:
i. An economic contraction, defined as two consecutive quarters of declining
“real Gross Domestic Product/GDP” (GDP adjusted for inflation); or
ii. A severe emergency, such as a natural disaster accompanied by significant,
unanticipated revenue loss or expenditure needs.
Withdrawals would need to commence within 12 months of the triggering event
and could continue until tax revenues exceed pre -contraction levels.
2. Simplify Facilities Reserve: Use 4% of Replacement Value
Reserving for facility maintenance ensures that City buildings remain in good condition to
meet community needs. Determining an appropriate reserve level is inherently subjective.
The City currently relies on a 2018 Replacement Reserve Study (RRS) prepared by a third
party.
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The existing RRS has limitations. Because it was produced by an external consultant
without detailed knowledge of Palm Desert-specific conditions, such as climate impacts,
visitor volumes, and staff experience, it no longer provides a reliable benchmark. The
study is now outdated and updating it would require a significant financial investment.
This method also fails to incorporate other relevant factors and can result in reserve levels
that are unrealistic and unnecessarily restrict available resources.
a. As an alternative, the City of Fort Collins, Colorado, uses a simple, cost-effective
method for determining facility reserve levels. Their policy allocates funds to
adequately maintain General Fund buildings without requiring comprehensive
reserve studies.
b. Under this approach, the target reserve is set at 4% of the Current Replacement
Value (CRV) of General Fund buildings. Funds in the Facility Maintenance
Reserve are available for expenditures as needed during the annual budget cycle.
Any unspent amounts from budgeted maintenance appropriat ions are retained in
the fund for future use. A 4% annual provision effectively supports a 25-year life
cycle for major facilities components and provides a predictable, stable funding
source for long-term replacement costs.
3. Strengthening the Economic/Community Investment Reserve (with ROI requirement)
While the City currently has Economic Development as a reserve category, the allocation
is finite and inconsistent. Currently, the only ongoing revenue source designated for this
purpose is the sale proceeds from former Redevelopment Agency (RDA) properties. With
only three remaining property areas (Alessandro, Desert Willow, and the 170-acre site),
total estimated revenue for economic development purposes is approximately $700,000,
which limits the City’s ability to pursue large-scale or catalytic economic projects.
Local governments increasingly face pressure to fund infrastructure and economic
development needs without relying on emergency debt issuance or unplanned reserve
drawdowns. Research from the Lincoln Institute of Land Policy shows that jurisdictions
that proactively set aside dedicated funds for development are better positioned to
capture high-impact investment opportunities and reduce long-term financial exposure.
Proactive reserves also support best practices by enabling cities to:
o Invest in job-creating or tax-base-expanding projects
o Avoid reactive or politicized use of special financing tools
o Provide matching funds for state/federal grants and public-private partnerships
o Accelerate redevelopment in priority areas following RDA dissolution
o Engage residents in identifying needs to ensure equitable and transparent
investment
Failing to invest in the community increases the risk of stagnation, reduced
competitiveness, and limited revenue growth over time. To address this, staff proposes
establishing a dedicated Economic/Community Investment Reserve supported by a
structured, measurable allocation of limited fund balance. All investments would be
governed by a standardized Return On Investment (ROI) requirement to maintain fiscal
responsibility and ensure that community benefits are measurable.
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As an example, the City could require that any use of funds meet or exceed the
benchmark currently used for City investments, the Five-Year Treasury Bill rate. Based
on the current rate of 3.49%, any project utilizing reserve funds would need to
demonstrate a minimum expected ROI within five years that exceeds this threshold.
Under this model, a hypothetical $5 million investment request would need to show
projected returns comparable to the following:
Table D – Economic Development Investment Expected ROI Measurement
4. Plan for an Affordable Housing Reserve
The City’s affordable housing portfolio was originally funded and developed through the
former RDA. With the dissolution of RDAs in 2012, cities statewide have struggled to
maintain aging housing assets and address growing community needs without a
dedicated revenue source. In response, some cities have begun incorporating Affordable
Housing reserves in their financial policies to help bridge funding gaps until long-term
solutions are identified.
a. The long-term capital replacement needs of the Palm Desert Housing Authority ’s
aging complexes are expected to consume all remaining housing cash balances
within the next few years.
b. Staff continues to work to identify opportunities to increase revenues, manage
operational costs, and pursue grants to support ongoing maintenance and
rehabilitation needs. However, an Affordable Housing Reserve, if established,
would serve only as one component of a broader funding strategy necessary to
maintain housing assets at acceptable standards.
c. A similar measurement to the Facilities Maintenance and Repairs approach (4%
of CRV) could be used to determine the annual reserve target, reduced for any
positive Net Operating Income (NOI) from the prior year. Based on the most recent
insurance property schedule, 4% of CRV equates to $10,062,041. With typical
annual NOI just under $1.5 million, the net reserve requirement would be
approximately $8.5 million per year.
5. Create a Productivity Savings/Innovation Reserve
Project:Hotel w/Restaurant & Gift Shop
Amount:$5 million
ROI Terms 5 yrs @ 3.49%
Year
Hotel
Sales
Taxable
Sales TOT Sales Tax
Property
Tax Total to City
2026-27 8,431,500 1,825,000 927,465 36,500 30,000 993,965
2027-28 8,684,445 1,879,750 955,289 37,595 30,900 1,023,784
2028-29 8,944,978 1,936,143 983,948 38,723 31,827 1,054,497
2029-30 9,213,328 1,994,227 1,013,466 39,885 32,782 1,086,132
2030-31 9,489,728 2,054,054 1,043,870 41,081 33,765 1,118,716
Total 44,763,979 9,689,173 4,924,038 193,783 159,274 5,277,095
Assumes: 110 rooms, 70% occupancy, $300/nt, $5,000/day in sales, 3% inc annually ROI 106%
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This reserve concept is a modern, incentive-based approach to support innovation and
operational efficiency across City departments. The reserve encourages continuous
improvement by allowing General Fund managers to retain and reinvest productivity -
related savings in long-term service enhancements.
Eligible productivity savings would be separately tracked by the department or division
that generated them. Requests for use of accumulated savings could be submitted to the
City Manager at any point during the fiscal year. Any savings not utilized or requested
would roll back into the General Fund balance at year-end.
Revised Reserve Requirements (if adopted)
Cities nationwide have evaluated various methods for establishing reserve levels and have
found that GFOA’s recommended best practices generally meet the essential standards for
maintaining effective “rainy day” funds. Balancing investments in the community with ensuring
sufficient reserves is a nuanced effort. The table below outlines key considerations and
measurable outcomes associated with both investing and saving strategies .
Table E – Reserve vs. Investment Comparison and Measurement Outcomes
METRIC FISCAL RESERVES
COMMUNITY
INVESTMENT
GFOA RECOMMENDED
MINIMUM 16.7% of operating expenditures Not standardized
MEDIAN RESERVE LEVEL
(SIMILAR SIZED CITIES) 25%–30% of expenditures Varies by strategic goals
ROI ON TARGETED
INCENTIVES**
$3–$7 per $1 invested
(depending on project type) High variance
RISK OF OVER-INVESTMENT Low financial flexibility
Budget shortfalls in
downturns
RISK OF UNDER-INVESTMENT
Infrastructure deficits, missed
growth Economic stagnation
If directed to update the policy and the proposed changes are approved, the Reserve
Requirement for FY 2025-26 would be adjusted as follows:
Table F – Revised Year 1 (FY 2025-26) Reserve Calculations per staff recommendations
Category
FY 2025-26 Revised
Amount
General Fund Operating/Emergency Reserve 27,922,189
Contingency/Emergency Reserve 0
Facilities Maintenance Reserve 6,441,035
Capital Improvement Projects Reserve 6,045,267
Liability Reserve 4,000,000
Employment Benefits Reserve 10,697,122
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Other Fund Stability Reserve N/A
Equipment Replacement Reserve 2,869,354
Economic Development Reserve 5,000,000
Total FY 2025-26 Revised Reserve Requirement (Including Non-Spendable
Funds)
66,092,372
These changes are expected to provide an estimated increase of more than $11.6 million in
available flexibility for FY 2025-26. The next table applies to the same adjustments across the
ten-year forecast and reflects additional flexibility added to maintain desired reserve levels while
investing in the community. It does not, however, fully resolve reserve deficiencies in year 7-10.
Schedule 2 – Cash Flow Projections – Reserve Policy “Staff Recommendations”
This approach does not eliminate the long-term need to identify additional revenue sources, but
it does help alleviate some of the immediate reserve pressures projected over the next several
years until those revenues are fully realized.
Schedule 2 – Cash Flow Projections – Reserve Policy “Staff Recommendations”
TEN-YEAR FORECAST FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Estimated Revenue
Property Tax 14,712,737 15,006,992 15,307,132 15,613,274 15,925,540 16,244,050 16,568,931 16,900,310 17,238,316 17,583,083
Sales Tax (General 1%)25,274,315 25,598,778 26,045,477 26,447,033 26,795,972 27,088,751 27,339,875 28,160,071 29,004,873 29,875,020
TOT & STR's 22,755,000 25,940,700 28,534,770 29,390,813 30,272,537 31,180,714 32,116,135 33,079,619 34,072,008 35,094,168
Measure G *25,887,322 26,416,518 26,929,837 27,394,342 27,805,342 28,462,695 29,031,949 29,612,588 30,500,966 31,415,994
All Other GF Revenue 23,059,380 23,566,686 24,085,153 24,615,027 25,156,557 25,710,002 26,275,622 26,853,685 27,444,466 28,048,245
Combined GF Revenue 111,688,754 116,529,674 120,902,369 123,460,489 125,955,949 128,686,212 131,332,512 134,606,274 138,260,629 142,016,509
Estimated Expenditures
Salaries & Benefits 26,853,063 27,792,920 28,765,672 29,772,471 30,814,507 31,893,015 33,009,271 34,164,595 35,360,356 36,597,968
Professional Services 11,208,344 11,768,761 12,357,199 12,975,059 13,623,812 14,305,003 15,020,253 15,771,266 16,559,829 17,387,820
Public Safety 28,547,236 29,689,125 30,876,690 32,111,758 33,396,228 34,732,078 36,121,361 37,566,215 39,068,864 40,631,618
Other Ops 6,775,484 7,182,013 7,612,934 8,069,710 8,553,892 9,067,126 9,611,154 10,187,823 10,799,092 11,447,038
Repair & Maintenance 6,269,023 6,707,855 7,177,404 7,679,823 8,217,410 8,792,629 9,408,113 10,066,681 10,771,349 11,525,343
Events & Outside Agency Funding 2,111,135 2,237,803 2,372,071 2,514,396 2,665,259 2,825,175 2,994,685 3,174,366 3,364,828 3,566,718
Transfers to Other Funds (Leaves/AD's)1,846,000 1,901,380 1,958,421 2,017,174 2,077,689 2,140,020 2,204,221 2,270,347 2,338,458 2,408,611
Transfer to Library Services 2,523,443 2,573,912 2,625,390 2,677,898 2,731,456 2,786,085 2,841,807 2,898,643 2,956,616 3,015,748
Transfer to Aquatic Facility Services 2,152,543 2,174,068 2,195,809 2,217,767 2,239,945 2,262,344 2,284,968 2,307,817 2,330,896 2,354,205
Transfer to Fire Services* 7,750,000 10,500,000 11,500,000 13,000,000 14,000,000 14,560,000 15,142,400 15,748,096 16,378,020 17,033,141
Total Operational Expenditures 96,036,271 102,527,838 107,441,592 113,036,056 118,320,200 123,363,475 128,638,231 134,155,849 139,928,307 145,968,210
CIP Related Transfers
Transfer to Projects*10,726,545 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Transfers for Facilities *3,847,482 3,885,957 3,924,816 3,964,065 4,003,705 4,043,742 4,084,180 4,125,021 4,166,272 4,207,934
Total GF Expenditures 110,610,298 118,444,356 122,871,429 118,964,793 124,288,578 135,045,504 140,818,995 146,863,250 153,191,900 159,819,306
Est. Beginning General Fund Balance 116,772,032 117,850,488 98,966,367 80,002,328 77,498,024 79,165,394 72,806,102 63,319,619 51,062,643 36,131,372
Revenue over (under) expenditures 1,078,456 (1,914,682) (1,969,060) 4,495,696 1,667,370 (6,359,292) (9,486,483) (12,256,976) (14,931,271) (17,802,797)
Unfunded Requests (from Reserve)
New Library ($30M) $20M RDA BOND PROCEEDS (6,000,000) - - - - - - - - -
Station 33/71 Rehab/Rebuild $23.6M RDA BONDS (2,400,000) - - - - - - - - -
North Sphere Community Park ($19M) - (15,500,000) (3,500,000) - - - - - - -
North Sphere Regional Park ($30M) - (3,000,000) (20,000,000) (7,000,000) - - - - - -
North Sphere Stormwater - Channel Projects (1,000,000) (8,500,000) (5,000,000) - - - - - - -
Henderson Trailhead Improvements - (2,000,000) - - - - - - - -
Estimated Amount from Measure G 9,400,000 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Est. Ending General Fund Balance 117,850,488$ 98,966,367$ 80,002,328$ 77,498,024$ 79,165,394$ 72,806,102$ 63,319,619$ 51,062,643$ 36,131,372$ 18,328,575$
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Long-Term Outlook with Policy Updates and Financing Options
Staff continues to evaluate additional revenue strategies to address funding gaps and meet long-
term community needs. A combination of approaches will likely be necessary to achieve major
goals that cannot be supported solely by the current revenue stream . Financing tools such as
Lease Revenue Bonds, Community Facility Districts (CFDs), Economic Infrastructure Financing
Districts (EIFDs), and other mechanisms may need to be considered to support large capital
projects until the resulting investment benefits are reflected in future City revenues. Staff will
present these options to the City Council at the Council’s direction and in alignment with
established goals.
A Lease Revenue Bond would allow the City to borrow against existing facilities to fund
significant capital improvements, such as parks and stormwater infrastructure upgrades. This
type of financing spreads project costs over 20 to 30 years, protects General Fund reserves,
and reduces the need to draw down large amounts of cash up front. The forecast below
illustrates how this financing approach can relieve future cash-flow pressures and further support
the City’s ability to remain within Reserve Policy requirements over time, while meeting
community needs.
Schedule 3 – Cash Flow Projections – Reserve Policy “Staff Rec and Bond Financing”
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Est. General Fund Bal 117,850,488$ 98,966,367$ 80,002,328$ 77,498,024$ 79,165,394$ 72,806,102$ 63,319,619$ 51,062,643$ 36,131,372$ 18,328,575$
Annual Percentage Funded 178%143%113%121%118%102%89%66%47%25%
Non-Spendable (Leave Balances and Trust Accounts)3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405
Reserve Requirement - Per Current Policy
ASSIGNED
GF Operating Reserve (Innovation) (15% of Rev)16,753,313 17,479,451 18,135,355 18,519,073 18,893,392 19,302,932 19,699,877 20,190,941 20,739,094 21,302,476
COMMITTED
GF Emergency Reserve (10% of Rev)11,168,875 11,652,967 12,090,237 12,346,049 12,595,595 12,868,621 13,133,251 13,460,627 13,826,063 14,201,651
Liability Reserve ($4M)4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Emplymnt Bene Reserve (50% for PERS chg 10,697,122 10,804,093 10,912,134 11,021,255 11,131,468 11,242,783 11,355,211 11,468,763 11,583,450 11,699,285
Other Fund Stability Reserve (equal to 25% T-fer Out)
Facility Reserve 6,441,035 7,001,035 7,841,035 6,485,361 8,759,446 8,847,040 8,935,511 9,024,866 9,115,114 9,206,266
CIP Reserve (20% of CIP )6,045,267 7,319,615 6,792,935 392,935 392,935 3,657,538 2,387,729 7,319,615 6,792,935 392,935
Equip Replacement Reserve (100% of hist 2,869,354 2,955,435 3,044,098 3,135,421 3,229,483 3,229,483 3,261,778 3,294,396 3,327,340 3,360,613
Econ Development/Community 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Total Required Reserve 66,092,372 69,330,001 70,933,199 64,017,499 67,119,724 71,265,802 70,890,761 76,876,612 77,501,401 72,280,630
Reserve Requirement Overfunded/(Underfunded)51,758,116 29,636,366 9,069,129 13,480,525 12,045,670 1,540,300 (7,571,142) (25,813,970) (41,370,030) (53,952,056)
This amount is included in Expenditures and Immediately Transferred
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Schedule 3 – Cash Flow Projections – Reserve Policy “Staff Recs and Bond Financing”
CONCLUSION
TEN-YEAR FORECAST FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Estimated Revenue
Property Tax 14,712,737 15,006,992 15,307,132 15,613,274 15,925,540 16,244,050 16,568,931 16,900,310 17,238,316 17,583,083
Sales Tax (General 1%)25,274,315 25,598,778 26,045,477 26,447,033 26,795,972 27,088,751 27,339,875 28,160,071 29,004,873 29,875,020
TOT & STR's 22,755,000 25,940,700 28,534,770 29,390,813 30,272,537 31,180,714 32,116,135 33,079,619 34,072,008 35,094,168
Measure G *25,887,322 26,416,518 26,929,837 27,394,342 27,805,342 28,462,695 29,031,949 29,612,588 30,500,966 31,415,994
All Other GF Revenue 23,059,380 23,566,686 24,085,153 24,615,027 25,156,557 25,710,002 26,275,622 26,853,685 27,444,466 28,048,245
Combined GF Revenue 111,688,754 116,529,674 120,902,369 123,460,489 125,955,949 128,686,212 131,332,512 134,606,274 138,260,629 142,016,509
Estimated Expenditures
Salaries & Benefits 26,853,063 27,792,920 28,765,672 29,772,471 30,814,507 31,893,015 33,009,271 34,164,595 35,360,356 36,597,968
Professional Services 11,208,344 11,768,761 12,357,199 12,975,059 13,623,812 14,305,003 15,020,253 15,771,266 16,559,829 17,387,820
Public Safety 28,547,236 29,689,125 30,876,690 32,111,758 33,396,228 34,732,078 36,121,361 37,566,215 39,068,864 40,631,618
Other Ops 6,775,484 7,182,013 7,612,934 8,069,710 8,553,892 9,067,126 9,611,154 10,187,823 10,799,092 11,447,038
Repair & Maintenance 6,269,023 6,707,855 7,177,404 7,679,823 8,217,410 8,792,629 9,408,113 10,066,681 10,771,349 11,525,343
Events & Outside Agency Funding 2,111,135 2,237,803 2,372,071 2,514,396 2,665,259 2,825,175 2,994,685 3,174,366 3,364,828 3,566,718
Transfers to Other Funds (Leaves/AD's)1,846,000 1,901,380 1,958,421 2,017,174 2,077,689 2,140,020 2,204,221 2,270,347 2,338,458 2,408,611
Transfer to Library Services 2,523,443 2,573,912 2,625,390 2,677,898 2,731,456 2,786,085 2,841,807 2,898,643 2,956,616 3,015,748
Transfer to Aquatic Facility Services 2,152,543 2,174,068 2,195,809 2,217,767 2,239,945 2,262,344 2,284,968 2,307,817 2,330,896 2,354,205
Transfer to Fire Services* 7,750,000 10,500,000 11,500,000 13,000,000 14,000,000 14,560,000 15,142,400 15,748,096 16,378,020 17,033,141
Total Operational Expenditures 96,036,271 102,527,838 107,441,592 113,036,056 118,320,200 123,363,475 128,638,231 134,155,849 139,928,307 145,968,210
CIP Related Transfers
Transfer to Projects*10,726,545 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Transfers for Facilities *3,847,482 3,885,957 3,924,816 3,964,065 4,003,705 4,043,742 4,084,180 4,125,021 4,166,272 4,207,934
Total GF Expenditures 110,610,298 118,444,356 122,871,429 118,964,793 124,288,578 135,045,504 140,818,995 146,863,250 153,191,900 159,819,306
Est. Beginning General Fund Balance 116,772,032 117,850,488 124,466,367 130,502,328 131,498,024 129,665,394 119,806,102 106,819,619 91,062,643 72,631,372
Revenue over (under) expenditures 1,078,456 (1,914,682) (1,969,060) 4,495,696 1,667,370 (6,359,292) (9,486,483) (12,256,976) (14,931,271) (17,802,797)
Unfunded Requests (from Reserve)
New Library ($30M) $20M RDA BOND PROCEEDS (6,000,000)
Station 33/71 Rehab/Rebuild $23.6M RDA BONDS (2,400,000)
North Sphere Community Park ($19M) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000)
North Sphere Regional Park ($30M)
North Sphere Stormwater - Channel Projects (1,000,000)
Henderson Trailhead Improvements
Estimated Amount from Measure G 9,400,000 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Est. Ending General Fund Balance 117,850,488$ 124,466,367$ 130,502,328$ 131,498,024$ 129,665,394$ 119,806,102$ 106,819,619$ 91,062,643$ 72,631,372$ 51,328,575$
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Est. General Fund Bal 117,850,488$ 124,466,367$ 130,502,328$ 131,498,024$ 129,665,394$ 119,806,102$ 106,819,619$ 91,062,643$ 72,631,372$ 51,328,575$
Annual Percentage Funded 178%180%184%205%193%168%151%118%94%71%
Non-Spendable (Leave Balances and Trust Accounts)3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405
Reserve Requirement - Per Current Policy
ASSIGNED
GF Operating Reserve (Innovation) (15% of Rev)16,753,313 17,479,451 18,135,355 18,519,073 18,893,392 19,302,932 19,699,877 20,190,941 20,739,094 21,302,476
COMMITTED
GF Emergency Reserve (10% of Rev)11,168,875 11,652,967 12,090,237 12,346,049 12,595,595 12,868,621 13,133,251 13,460,627 13,826,063 14,201,651
Liability Reserve ($4M)4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Emplymnt Bene Reserve (50% for PERS chg in
Disc Rate)10,697,122 10,804,093 10,912,134 11,021,255 11,131,468 11,242,783 11,355,211 11,468,763 11,583,450 11,699,285
Other Fund Stability Reserve (equal to 25% T-fer Out)
Facility Reserve 6,441,035 7,001,035 7,841,035 6,485,361 8,759,446 8,847,040 8,935,511 9,024,866 9,115,114 9,206,266
CIP Reserve (20% of CIP)6,045,267 7,319,615 6,792,935 392,935 392,935 3,657,538 2,387,729 7,319,615 6,792,935 392,935
Equip Replacement Reserve (100% of hist cost of
assets)2,869,354 2,955,435 3,044,098 3,135,421 3,229,483 3,229,483 3,261,778 3,294,396 3,327,340 3,360,613
Econ Development/Community Investment
w/ROI 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Total Required Reserve 66,092,372 69,330,001 70,933,199 64,017,499 67,119,724 71,265,802 70,890,761 76,876,612 77,501,401 72,280,630
Reserve Requirement Overfunded/(Underfunded)51,758,116 55,136,366 59,569,129 67,480,525 62,545,670 48,540,300 35,928,858 14,186,030 (4,870,030) (20,952,056)
This amount is included in Expenditures and Immediately Transferred
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Palm Desert remains financially strong; however, the current Reserve Policy is more restrictive
than necessary, limiting the City’s ability to address both immediate and long-term needs in an
efficient manner. Modernizing the policy would allow the City to:
Maintain strong financial stability
Align with GFOA best practices
Free resources for parks, infrastructure, housing, and community investment
Support sustainable long-term planning
Staff recommends that the City Council provide direction on whether to proceed with formal
policy updates to the Reserve Policy.
Legal Review:
This report has been reviewed by the City Attorney’s Office.
FINANCIAL IMPACT:
There is no immediate impact on the General Fund. Any future changes to the Reserve Policy
may adjust fund balance allocations. If directed, staff will return with proposed policy revisions
and associated fiscal impacts. The table below provides an at-a-glance comparison of each
recommendation and scenario presented.
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Table G – Year 1 and Year 10 Quick Comparison of Metrics
Year 1 - FY 2025-26 Current Policy Revised Policy Adding Financing
Est. GF Fund Balance $117,850,488 $117,850,488 $117,850,488
Required Reserve $77,719,235 $66,092,372 $66,092,372
Percent Funded 152% 178% 178%
Uncommitted (Available) Fund Balance $40,131,253 $51,758,116 $51,758,253
Table G – Year 1 and Year 10 Quick Comparison of Metrics Continued
Year 10 - FY 2034-35 Current Policy Revised Policy Adding Financing
Est. GF Fund Balance $18,328,575 $18,328,575 $51,328,575
Required Reserve $87,527,825 $72,2802630 $72,280,630
Percent Funded 21% 25% 71%
Uncommitted (Available) Fund Balance ($69,199,250) ($53.952,056) ($20,952,056)
Over the 10-year period, forecasts show positive fund balance throughout; however, they do
require the use of reserves to ensure all anticipated projects are completed.
The policy change recommendations proposed by staff introduce a modest adjustment resulting
in a 4% increase in funded reserves (21% to 25%) over the 10-year period, while preserving
flexibility to invest in the community and maintaining adequate reserves consistent with GFOA
best practices. The inclusion of a financing component for major capital projects offers a more
strategic approach to supporting sustainable long-term planning. Staff will continue to monitor
reserve levels and provide regular updates to the City Council as part of the ongoing discussion
regarding financial sustainability.
ATTACHMENTS:
1. FIN-003 Approved Reserve Policy
2a. Ten-Year Cash Flow Forecast – As Is
2b. Ten-Year Cash Flow Forecast – Revised per Staff’s Recommendation
2c. Ten-Year Cash Flow Forecast – Revised to Include Financing Tool for Capital Improvements
3. Reserve Analysis and Policy Study Presentation
39
40
EXHIBIT “1”
Subject Reserve Policy
Policy No. FIN - 003
Date Issued: September 27, 2018
Approved by Resolution No. 2018- ____ authorizing a
Reserve Policy
Authored by Finance Department
I. PURPOSE
To outline the policy and procedures for establishing reserves for long-term city
infrastructure needs, economic uncertainties, economic development, emergency
reserve, equipment replacement, pension and other post-employment obligations.
This Reserve Policy (“Policy”) will also set guidelines and priorities for the distribution of
excess revenue at the end of each fiscal year to assist in funding and replenishing the
identified reserve categories as well as ensuring that funds for current operating needs
are available. This Policy will help the City ensure stable service delivery.
II. SCOPE
The City utilizes a variety of government funds for reporting and budgeting revenues and
expenditures of the City that are separated broadly by three fund types: governmental
funds, proprietary funds and fiduciary funds. This Policy will pertain only to governmental
funds and proprietary funds since fiduciary funds are held in trust for others.
Governmental funds include the General Fund, Special Revenue funds, Debt Service
funds and Capital Project funds. Proprietary funds include Enterprise funds and Internal
Service funds.
To effectively utilize and maintain adequate reserves for both known and unknown
contingencies, this Policy establishes reserve categories based on the hierarchy of the
City’s needs and risks:
1. General Fund Operating Reserve
2. Contingency/Emergency Reserve
3. Facilities Maintenance Reserve
4. Capital Improvement Projects Reserve
5. Liability Reserve
6. Employment Benefits Reserve
7. Other Fund Stability Reserve
8. Equipment Replacement Reserve
9. Economic Development/Land Acquisition Reserve
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III. RESERVE CATEGORY DEFINITIONS (in alphabetical order)
a. Capital Improvement Projects Reserve – A reserve for major capital projects or
improvements to the City’s infrastructure including recreational facilities,
undergrounding, roadways, storm drains, parks and gardens, buildings, and
rights of way.
b. Contingency/Emergency Reserve – A reserve to sustain General Fund
operations, service delivery and budgetary stabilization in the event of an
unexpected change in financial condition1 or public emergency. This reserve is
not intended to serve as an alternative funding source for new programs.
c. Economic Development/Land Acquisition Reserve -- A reserve to facilitate
economic development partnerships, incentives and property acquisitions to
further the City’s economic development goals.
d. Employment Benefits Reserve – A reserve for accumulated compensated leave
balances, pension discount rate changes, pension obligations and other post-
employment benefits (OPEB) including unfunded pension liabilities.
e. Equipment Replacement Reserve -- A reserve for the replacement of equipment
not identified within the Facilities Maintenance Reserve including vehicles, office
furniture, information systems, printers, scanners, communication systems, etc.
f. Facilities Maintenance Reserve – A reserve to maintain existing City buildings
and infrastructure including recreational facilities, parks and gardens, and hiking
trails.
g. General Fund Operating Reserve – A reserve used to finance the daily
operations of the City such as public safety, streets maintenance, recreational
parks, and special events.
h. Liability Reserve – A reserve for costs not covered by the City’s insurance
programs including claim costs within the deductible amounts, certain types of
settlements and judgments, or any claims awarded in excess of $50 million. This
reserve may also be used for deductibles, to pay any amount that may be
considered a liability to the City consistent with this category, or to pay any
contribution or premium to the pool on behalf of the City.
i. Other Fund Stability Reserve – A reserve for transfers to funds from the General
Fund to cover expenses.
IV. ACCOUNTING GUIDANCE
The Government Finance Officers Association (GFOA) suggests that as a best practice,
cities should consider their own unique circumstances in order to determine adequate
reserves. This includes assessing the needs of the City as well as the uncertainties that
could impact the City’s revenues and fund balance.
1 An unexpected change in financial condition could include things such as the economic crisis in 2008, a loss or delay of a major
revenue source, a natural disaster, liabilities not covered by insurance, or change in the pension discount rate for the City’s unfunded
pension liability.
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Reserve Policy
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Government Accounting Standards Board Statement No. 54 defines five specific
classifications of fund balance. The five classifications are intended to identify whether
the specific components of fund balance are available for appropriation (or available to
reserve) and are therefore considered “spendable.” The classifications are also intended
to identify the extent to which fund balance is constrained by special restrictions. The
five classifications 2 of fund balance for governmental funds are as follows:
CLASSIFICATIONS NATURE OF RESTRICTION
Nonspendable Cannot be readily converted to cash
Restricted Externally imposed restrictions
Committed City Council imposed commitment
Assigned City Manager assigned purpose/intent
Unassigned Residual balance not otherwise restricted
This Policy is focused only on the reserve designations that will be Committed, Assigned
or identified in Unassigned. Nonspendable and Restricted classifications will be excluded
because they are subject to requirements outside the City’s control. The City will,
however, consider restricted fund balance as spent first when both restricted and
unrestricted fund balances are available.
V. RESERVE FUNDING POLICIES
The primary goal of the Policy is to identify and reserve, adequate resources for
operational liquidity, future needs and any uncertainties that might affect the City’s fund
balance. The Policy includes broad reserve categories that are meant to be as inclusive
as possible, yet flexible enough to address needs or risks as they arise. Each reserve
2 Nonspendable Fund Balance (inherently nonspendable) – Assets that cannot be converted to cash (i.e., prepaid items and
inventories of supplies) and assets that will not be converted to cash soon enough to affect the current period. Examples of
nonspendable fund balance are reserves for long term receivables and advances, prepaid assets, City’s financial assets which are
not due to be received for an extended period, so are not available for appropriation during the budget year.
Restricted Fund Balance (externally enforceable limitations on use) – Limitations imposed by creditors, grantors, contributors, or
laws and regulations of other governments and limitations imposed by law through constitutional provisions or enabling legislation.
Examples of restricted fund balance are reserves for debt service, developer impact fee, capital bonds and grants.
Committed Fund Balance (self-imposed limitations on use set in place prior to the end of the fiscal year) – Limitation imposed at
the highest level of decision making that requires formal action at the same level to remove (City Council). Examples of committed
fund balance are the aquatic center, energy loan programs and the housing authority capital asset replacement.
Assigned Fund Balance (limitation resulting from intended use) – Intended use is established by highest level of decision-
making, then may be implemented by an official designated for that purpose (delegated by the City Council to the City Manager).
Examples of assigned fund balance are the library fund, building maintenance fund, capital project reserve fund, and economic
development fund.
Unassigned Fund Balance (residual net resources) – Excess of nonspendable, restricted, committed, and assigned total fund
balance. Unassigned Fund Balance reserves are residual positive net resources in excess of what can properly be classified in one
of the other four components. Unassigned General Fund Balance (unobligated general fund reserves) and can be used for any lawful
purpose.
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category may include multiple funds some of which may have a restricted fund balance
component. At the discretion of the City Manager, monies held in reserve may be used in
any year when the General Fund is not balanced in order to offset operating costs
consistent with these reserve categories.
The identified reserve funding policies are as follows:
1. General Fund Operating Reserve – On June 30, the Finance Director shall set
aside twenty five percent (25%) of the projected annual General Fund
expenditures. This reserve will be adjusted at the end of each fiscal year to the
recommended level based on the next year’s projected expenditures. This reserve
will be classified in fund balance as ASSIGNED.
2. Contingency/Emergency Reserve – At the beginning of each fiscal year, the
Finance Director shall reserve an amount equal to twenty percent (20%)3 of the
projected annual General Fund revenues. This reserve will be adjusted at the
beginning of each fiscal year to the recommended level based on that year’s
projected revenues. This reserve will be classified in fund balance as
COMMITTED.
3. Facilities Maintenance Reserve – Upon the approval of this Policy, the Finance
Director is directed to commit the amount identified in the Capital Replacement
Reserve Study, as the initial deposit, less amounts available from other funding
sources to this reserve. The Policy-designated goal for funding this reserve, will
be between sixty and one hundred percent (60-100%) of the ‘Fully Funded’ amount
in the Capital Replacement Reserve Study. The annual recommended funding
amount identified in the Capital Replacement Reserve Study will be considered as
part of the annual budget. This reserve will be classified in fund balance as
COMMITTED.
4. Capital Improvement Projects Reserve – At the financial closing of each fiscal year,
the Finance Director shall set aside twenty percent (20%) of the total Capital
Improvement Program projects for the next five years. The Finance Director will
adjust this amount annually to the Policy-designated level plus any additional
amounts so directed by the City Council under Section VI of this Policy. This
reserve will be classified in fund balance as both RESTRICTED and COMMITTED
depending on the project funding. Unless otherwise specified, at such time as a
project or any portion thereof has been awarded the amount will be allocated
(committed) to the project and will not be available for other projects.
5. Liability Reserve -- The Finance Director shall commit at least the pooled retention
3 After the financial crisis in 2008 the fluctuation in the City’s revenue was approximately twenty percent (20%) of the 2007-08 budget
or $11 million dollars. While the City also reduced its budget at that time to offset the reduction in revenues to the extent possible, the
core services were still rising. It took approximately eight years to reestablish the revenue base to pre-2008 levels. Based on these
actual events staff believes that 20% of the annual operating revenue would be prudent as a reserve, with a consideration to review
from time to time as information becomes available to the City that might suggest the amount to be increased.
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requirement for both Liability and Workers’ Compensation, which is currently $4
million ($2 million each). This reserve will be classified in fund balance as
COMMITTED.
6. Employment Benefits Reserve – Internal Service Funds have been established for
the purpose of reserving monies for compensated balances and Other Post-
Employment Benefits (OPEB). On June 30 of each year, the Finance Director
shall set aside one hundred percent (100%) of the compensable accrued unused
vacation, sick leave, and compensatory time and the current year’s OPEB
requirements to the appropriate internal service funds. This amount will be
COMMITTED. The Finance Director shall also set aside fifty percent (50%) of a
one percent (1%) difference in the Public Employees Retirement System (PERS)
discount rate. This amount will be COMMITTED in the General Fund.
7. Other Fund Stability Reserve - Upon the approval of this Policy, the Finance
Director shall be directed to commit $3.3 million to this reserve. At the end of each
fiscal year, the Finance Director shall adjust the amount to be the projected annual
transfers to other funds. This reserve will be classified in fund balance as
COMMITTED.
8. Equipment Replacement Reserve – An Internal Service Fund has been
established for the purpose of equipment replacement. At the financial closing of
each fiscal year, the Finance Director shall adjust this reserve to be at least 100%
of the total historical cost of equipment assets as noted in the CAFR and may
include amounts set aside in excess of 100% for any approved one-time
expenditures. This reserve will be classified in fund balance as COMMITTED.
9. Economic Development/Land Acquisition Reserve -- Upon approval of this Policy,
the Director of Finance shall deposit an additional $4,000,000 as a reserve for
land/property acquisitions. In addition, within a reasonable amount of time from
when the City receives its share of the proceeds of the former redevelopment
agency’s land sales, from the County of Riverside, the Finance Director shall
commit the City’s share to this reserve. This reserve will be classified in fund
balance as COMMITTED.
VI. CITY COUNCIL DESIGNATION OF RESERVES
The City Council will take action to COMMIT fund balance and unless otherwise specified
in this Policy, hereby designates the City Manager or his/her designee to ASSIGN fund
balance when appropriate. The City Council may designate portions of General Fund
unassigned or unobligated fund balance for any other municipal purpose that the City
Council deems prudent or necessary.
VII. ANNUAL DISTRIBUTION OF EXCESS REVENUE
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The distribution of excess revenue at the end of each fiscal year will be according to the
following guidelines and priorities. Excess revenue, for purposes of this Policy, is the
difference between revenues and expenses in the General Fund at the end of a fiscal
year after all required transfers are made to other funds.
The priority for distributing or reserving excess revenue at year end is as follows:
1. All excess revenue shall first be used to replenish the General Fund Operating
Reserve until it reaches the Policy-designated level.
2. The amount necessary to reserve for continuing appropriations and encumbrances
that are not funded by other methods, if any.
3. The amount necessary to fund an adequate reserve for potential liabilities,
compensated absences, and other post-employment benefits to be paid during the
next fiscal year that are not funded by other methods, if any.
4. The amount necessary to fund the Contingency/Emergency Reserve to maintain
General Fund operations, service delivery and budgetary stabilization in the event
of an unexpected change in financial condition 4 or public emergency. Or, if there
is insufficient amounts available to fully fund the Contingency/Emergency Reserve,
an amount necessary to temporarily reserve for any known and/or anticipated
economic downturns during the next fiscal year that are expected to be more than
three percent (3%) of the previous year’s General Fund revenues.
5. Other considerations for the allocation of excess revenues will be at the discretion
of the City Manager after review of the City’s outstanding obligations, approved
goals, or level of reserves within each category.
VIII. REPLENISHMENT OF RESERVES
After consideration of the use of excess revenue in Section VI., the City Manager will
annually review the level of each approved reserve category, and after determining what
is reasonably necessary and appropriate for the City’s needs, may direct replenishment
of critical reserves (General Fund Operating Reserve and Contingency/Emergency
Reserve) from other reserves or may assign any remaining excess revenues accordingly.
If a transfer is required from one reserve to another, the City Manager shall notify the City
Council at the next regularly scheduled City Council meeting of such transfer.
When reserves are used for any intended purpose, or as allowed under this Policy, and
4 An unexpected change in financial condition could include things such as the economic crisis in 2008, a loss or delay of a major
revenue source, a natural disaster, liabilities not covered by insurance, or change in the pension discount rate for the City’s unfunded
pension liability.
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a replenishment source is not identified at the time of use, the City Manager will advise
the City Council during the annual budget process as to the status of reserves including
any recommendations for replenishment.
IX. COMPREHENSIVE ANNUAL FINANCIAL REPORT
In accordance with generally accepted accounting principles and practices, all
classifications of General Fund fund balance will appear in the Notes to Financial
Statements of the CAFR and be classified in accordance with GASB 54.
47
48
10-Year GF Cash Flow Analysis and Reserve Snap Shot
TEN-YEAR FORECAST FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Property Tax 14,712,737 15,006,992 15,307,132 15,613,274 15,925,540 16,244,050 16,568,931 16,900,310 17,238,316 17,583,083
Sales Tax (General 1%)25,274,315 25,598,778 26,045,477 26,447,033 26,795,972 27,088,751 27,339,875 28,160,071 29,004,873 29,875,020
TOT & STR's 22,755,000 25,940,700 28,534,770 29,390,813 30,272,537 31,180,714 32,116,135 33,079,619 34,072,008 35,094,168
Measure G *25,887,322 26,416,518 26,929,837 27,394,342 27,805,342 28,462,695 29,031,949 29,612,588 30,500,966 31,415,994
All Other GF Revenue 23,059,380 23,566,686 24,085,153 24,615,027 25,156,557 25,710,002 26,275,622 26,853,685 27,444,466 28,048,245
Combined GF Revenue 111,688,754 116,529,674 120,902,369 123,460,489 125,955,949 128,686,212 131,332,512 134,606,274 138,260,629 142,016,509
Salaries & Benefits 26,853,063 27,792,920 28,765,672 29,772,471 30,814,507 31,893,015 33,009,271 34,164,595 35,360,356 36,597,968
Professional Services 11,208,344 11,768,761 12,357,199 12,975,059 13,623,812 14,305,003 15,020,253 15,771,266 16,559,829 17,387,820
Public Safety 28,547,236 29,689,125 30,876,690 32,111,758 33,396,228 34,732,078 36,121,361 37,566,215 39,068,864 40,631,618
Other Ops 6,775,484 7,182,013 7,612,934 8,069,710 8,553,892 9,067,126 9,611,154 10,187,823 10,799,092 11,447,038
Repair & Maintenance 6,269,023 6,707,855 7,177,404 7,679,823 8,217,410 8,792,629 9,408,113 10,066,681 10,771,349 11,525,343
Events & Outside Agency Funding 2,111,135 2,237,803 2,372,071 2,514,396 2,665,259 2,825,175 2,994,685 3,174,366 3,364,828 3,566,718
Transfers to Other Funds (Leaves/AD's)1,846,000 1,901,380 1,958,421 2,017,174 2,077,689 2,140,020 2,204,221 2,270,347 2,338,458 2,408,611
Transfer to Library Services 2,523,443 2,573,912 2,625,390 2,677,898 2,731,456 2,786,085 2,841,807 2,898,643 2,956,616 3,015,748
Transfer to Aquatic Facility Services 2,152,543 2,174,068 2,195,809 2,217,767 2,239,945 2,262,344 2,284,968 2,307,817 2,330,896 2,354,205
Transfer to Fire Services* 7,750,000 10,500,000 11,500,000 13,000,000 14,000,000 14,560,000 15,142,400 15,748,096 16,378,020 17,033,141
Total Operational Expenditures 96,036,271 102,527,838 107,441,592 113,036,056 118,320,200 123,363,475 128,638,231 134,155,849 139,928,307 145,968,210
Transfer to Projects*10,726,545 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Transfers for Facilities *3,847,482 3,885,957 3,924,816 3,964,065 4,003,705 4,043,742 4,084,180 4,125,021 4,166,272 4,207,934
Total GF Expenditures 110,610,298 118,444,356 122,871,429 118,964,793 124,288,578 135,045,504 140,818,995 146,863,250 153,191,900 159,819,306
Unfunded Requests (from Reserve)
New Library ($30M) $20M RDA BOND PRO (6,000,000)
Station 33/71 Rehab/Rebuild $23.6M RDA (2,400,000)
North Sphere Community Park ($19M) (15,500,000) (3,500,000)
North Sphere Regional Park ($30M) (3,000,000) (20,000,000) (7,000,000)
North Sphere Stormwater - Channel Projec (1,000,000) (8,500,000) (5,000,000)
Henderson Trailhead Improvements (2,000,000)
Estimated Amount from Measure G 9,400,000 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Sched 1 - 10Yr As Is
11/25/202549
10-Year GF Cash Flow Analysis and Reserve Snap Shot
Minimum Reserve per GFOA 18,652,022 19,460,456 20,190,696 20,617,902 21,034,643 21,490,597 21,932,530 22,479,248 23,089,525 23,716,757
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Est. General Fund Bal 117,850,488$ 98,966,367$ 80,002,328$ 77,498,024$ 79,165,394$ 72,806,102$ 63,319,619$ 51,062,643$ 36,131,372$ 18,328,575$
Annual Percentage Funded 152%125%95%101%100%86%76%53%40%21%
Non-Spendable (Leave Balances and Trust A 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405
Reserve Requirement - Per Current Policy
ASSIGNED
GF Operating Reserve (25% of Ops)21,691,071 22,341,803 23,012,057 23,702,419 24,413,492 25,145,897 25,900,273 26,677,282 27,477,600 28,301,928
COMMITTED
GF Emergency Reserve (20% of GF Revenue 22,337,751 23,305,935 24,180,474 24,692,098 25,191,190 25,737,242 26,266,502 26,921,255 27,652,126 28,403,302
Liability Reserve ($4M)4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Emplymnt Bene Reserve (50% for chg in
Disc Rate)10,697,122 10,804,093 10,912,134 11,021,255 11,131,468 11,242,783 11,355,211 11,468,763 11,583,450 11,699,285
20% of CIP )6,045,267 7,319,615 6,792,935 392,935 392,935 3,657,538 2,387,729 7,319,615 6,792,935 392,935
2,869,354 2,955,435 3,044,098 3,135,421 3,229,483 3,229,483 3,261,778 3,294,396 3,327,340 3,360,613
Total Required Reserve 77,719,235 79,303,399 84,064,816 76,546,894 79,513,428 84,461,920 83,321,206 96,968,106 91,000,908 87,527,825
Reserve Requirement Overfunded/(Under 40,131,253 19,662,968 (4,062,488) 951,130 (348,034) (11,655,818) (20,001,587) (45,905,464) (54,869,536) (69,199,250)
This amount is included in Expenditures and Immediately Transferred
Sched 1 - 10Yr As Is
11/25/202550
10-Year GF Cash Flow Analysis and Reserve Snap Shot (with Options)
TEN-YEAR FORECAST FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Estimated Revenue
Property Tax 14,712,737 15,006,992 15,307,132 15,613,274 15,925,540 16,244,050 16,568,931 16,900,310 17,238,316 17,583,083
Sales Tax (General 1%)25,274,315 25,598,778 26,045,477 26,447,033 26,795,972 27,088,751 27,339,875 28,160,071 29,004,873 29,875,020
TOT & STR's 22,755,000 25,940,700 28,534,770 29,390,813 30,272,537 31,180,714 32,116,135 33,079,619 34,072,008 35,094,168
Measure G *25,887,322 26,416,518 26,929,837 27,394,342 27,805,342 28,462,695 29,031,949 29,612,588 30,500,966 31,415,994
All Other GF Revenue 23,059,380 23,566,686 24,085,153 24,615,027 25,156,557 25,710,002 26,275,622 26,853,685 27,444,466 28,048,245
Combined GF Revenue 111,688,754 116,529,674 120,902,369 123,460,489 125,955,949 128,686,212 131,332,512 134,606,274 138,260,629 142,016,509
Estimated Expenditures
Salaries & Benefits 26,853,063 27,792,920 28,765,672 29,772,471 30,814,507 31,893,015 33,009,271 34,164,595 35,360,356 36,597,968
Professional Services 11,208,344 11,768,761 12,357,199 12,975,059 13,623,812 14,305,003 15,020,253 15,771,266 16,559,829 17,387,820
Public Safety 28,547,236 29,689,125 30,876,690 32,111,758 33,396,228 34,732,078 36,121,361 37,566,215 39,068,864 40,631,618
Other Ops 6,775,484 7,182,013 7,612,934 8,069,710 8,553,892 9,067,126 9,611,154 10,187,823 10,799,092 11,447,038
Repair & Maintenance 6,269,023 6,707,855 7,177,404 7,679,823 8,217,410 8,792,629 9,408,113 10,066,681 10,771,349 11,525,343
Events & Outside Agency Funding 2,111,135 2,237,803 2,372,071 2,514,396 2,665,259 2,825,175 2,994,685 3,174,366 3,364,828 3,566,718
Transfers to Other Funds (Leaves/AD's)1,846,000 1,901,380 1,958,421 2,017,174 2,077,689 2,140,020 2,204,221 2,270,347 2,338,458 2,408,611
Transfer to Library Services 2,523,443 2,573,912 2,625,390 2,677,898 2,731,456 2,786,085 2,841,807 2,898,643 2,956,616 3,015,748
Transfer to Aquatic Facility Services 2,152,543 2,174,068 2,195,809 2,217,767 2,239,945 2,262,344 2,284,968 2,307,817 2,330,896 2,354,205
Transfer to Fire Services* 7,750,000 10,500,000 11,500,000 13,000,000 14,000,000 14,560,000 15,142,400 15,748,096 16,378,020 17,033,141
Total Operational Expenditures 96,036,271 102,527,838 107,441,592 113,036,056 118,320,200 123,363,475 128,638,231 134,155,849 139,928,307 145,968,210
CIP Related Transfers
Transfer to Projects*10,726,545 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Transfers for Facilities *3,847,482 3,885,957 3,924,816 3,964,065 4,003,705 4,043,742 4,084,180 4,125,021 4,166,272 4,207,934
Total GF Expenditures 110,610,298 118,444,356 122,871,429 118,964,793 124,288,578 135,045,504 140,818,995 146,863,250 153,191,900 159,819,306
Est. Beginning General Fund Balance 116,772,032 117,850,488 98,966,367 80,002,328 77,498,024 79,165,394 72,806,102 63,319,619 51,062,643 36,131,372
Revenue over (under) expenditures 1,078,456 (1,914,682) (1,969,060) 4,495,696 1,667,370 (6,359,292) (9,486,483) (12,256,976) (14,931,271) (17,802,797)
Unfunded Requests (from Reserve)
New Library ($30M) $20M RDA BOND PROCEEDS (6,000,000) - - - - - - - - -
Station 33/71 Rehab/Rebuild $23.6M RDA BONDS (2,400,000) - - - - - - - - -
North Sphere Community Park ($19M) - (15,500,000) (3,500,000) - - - - - - -
North Sphere Regional Park ($30M) - (3,000,000) (20,000,000) (7,000,000) - - - - - -
North Sphere Stormwater - Channel Projects (1,000,000) (8,500,000) (5,000,000) - - - - - - -
Henderson Trailhead Improvements - (2,000,000) - - - - - - - -
Estimated Amount from Measure G 9,400,000 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Est. Ending General Fund Balance 117,850,488$ 98,966,367$ 80,002,328$ 77,498,024$ 79,165,394$ 72,806,102$ 63,319,619$ 51,062,643$ 36,131,372$ 18,328,575$
Sched 2 - 10Yr Recommended
11/25/202551
10-Year GF Cash Flow Analysis and Reserve Snap Shot (with Options)
Minimum Reserve per GFOA (16.7% of Rev)18,652,022 19,460,456 20,190,696 20,617,902 21,034,643 21,490,597 21,932,530 22,479,248 23,089,525 23,716,757
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Est. General Fund Bal 117,850,488$ 98,966,367$ 80,002,328$ 77,498,024$ 79,165,394$ 72,806,102$ 63,319,619$ 51,062,643$ 36,131,372$ 18,328,575$
Annual Percentage Funded 178%143%113%121%118%102%89%66%47%25%
Non-Spendable (Leave Balances and Trust Accounts)3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405
Reserve Requirement - Per Current Policy
ASSIGNED
COMMITTED
Liability Reserve ($4M)4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Emplymnt Bene Reserve (50% for PERS chg in Disc Rate)
Facility Reserve 6,441,035 7,001,035 7,841,035 6,485,361 8,759,446 8,847,040 8,935,511 9,024,866 9,115,114 9,206,266
CIP Reserve (20% of CIP )6,045,267 7,319,615 6,792,935 392,935 392,935 3,657,538 2,387,729 7,319,615 6,792,935 392,935
Equip Replacement Reserve (100% of hist cost of assets)2,869,354 2,955,435 3,044,098 3,135,421 3,229,483 3,229,483 3,261,778 3,294,396 3,327,340 3,360,613
Econ Development/Community Investment w/ROI 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Total Required Reserve 66,092,372 69,330,001 70,933,199 64,017,499 67,119,724 71,265,802 70,890,761 76,876,612 77,501,401 72,280,630
Reserve Requirement Overfunded/(Underfunded)51,758,116 29,636,366 9,069,129 13,480,525 12,045,670 1,540,300 (7,571,142) (25,813,970) (41,370,030) (53,952,056)
This amount is included in Expenditures and Immediately Transferred
Sched 2 - 10Yr Recommended
11/25/202552
10-Year GF Cash Flow Analysis and Reserve Snap Shot (with Options)
TEN-YEAR FORECAST FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Property Tax 14,712,737 15,006,992 15,307,132 15,613,274 15,925,540 16,244,050 16,568,931 16,900,310 17,238,316 17,583,083
Sales Tax (General 1%)25,274,315 25,598,778 26,045,477 26,447,033 26,795,972 27,088,751 27,339,875 28,160,071 29,004,873 29,875,020
TOT & STR's 22,755,000 25,940,700 28,534,770 29,390,813 30,272,537 31,180,714 32,116,135 33,079,619 34,072,008 35,094,168
Measure G *25,887,322 26,416,518 26,929,837 27,394,342 27,805,342 28,462,695 29,031,949 29,612,588 30,500,966 31,415,994
All Other GF Revenue 23,059,380 23,566,686 24,085,153 24,615,027 25,156,557 25,710,002 26,275,622 26,853,685 27,444,466 28,048,245
Combined GF Revenue 111,688,754 116,529,674 120,902,369 123,460,489 125,955,949 128,686,212 131,332,512 134,606,274 138,260,629 142,016,509
Salaries & Benefits 26,853,063 27,792,920 28,765,672 29,772,471 30,814,507 31,893,015 33,009,271 34,164,595 35,360,356 36,597,968
Professional Services 11,208,344 11,768,761 12,357,199 12,975,059 13,623,812 14,305,003 15,020,253 15,771,266 16,559,829 17,387,820
Public Safety 28,547,236 29,689,125 30,876,690 32,111,758 33,396,228 34,732,078 36,121,361 37,566,215 39,068,864 40,631,618
Other Ops 6,775,484 7,182,013 7,612,934 8,069,710 8,553,892 9,067,126 9,611,154 10,187,823 10,799,092 11,447,038
Repair & Maintenance 6,269,023 6,707,855 7,177,404 7,679,823 8,217,410 8,792,629 9,408,113 10,066,681 10,771,349 11,525,343
Events & Outside Agency Funding 2,111,135 2,237,803 2,372,071 2,514,396 2,665,259 2,825,175 2,994,685 3,174,366 3,364,828 3,566,718
Transfers to Other Funds (Leaves/AD's)1,846,000 1,901,380 1,958,421 2,017,174 2,077,689 2,140,020 2,204,221 2,270,347 2,338,458 2,408,611
Transfer to Library Services 2,523,443 2,573,912 2,625,390 2,677,898 2,731,456 2,786,085 2,841,807 2,898,643 2,956,616 3,015,748
Transfer to Aquatic Facility Services 2,152,543 2,174,068 2,195,809 2,217,767 2,239,945 2,262,344 2,284,968 2,307,817 2,330,896 2,354,205
Transfer to Fire Services* 7,750,000 10,500,000 11,500,000 13,000,000 14,000,000 14,560,000 15,142,400 15,748,096 16,378,020 17,033,141
Total Operational Expenditures 96,036,271 102,527,838 107,441,592 113,036,056 118,320,200 123,363,475 128,638,231 134,155,849 139,928,307 145,968,210
Transfer to Projects*10,726,545 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Transfers for Facilities *3,847,482 3,885,957 3,924,816 3,964,065 4,003,705 4,043,742 4,084,180 4,125,021 4,166,272 4,207,934
Total GF Expenditures 110,610,298 118,444,356 122,871,429 118,964,793 124,288,578 135,045,504 140,818,995 146,863,250 153,191,900 159,819,306
Unfunded Requests (from Reserve)
New Library ($30M) $20M RDA BOND PROCEEDS (6,000,000)
Station 33/71 Rehab/Rebuild $23.6M RDA BONDS (2,400,000)
North Sphere Community Park ($19M) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000)
North Sphere Regional Park ($30M)
North Sphere Stormwater - Channel Projects (1,000,000)
Henderson Trailhead Improvements
Estimated Amount from Measure G 9,400,000 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Sched 3 - 10Yr w Financing
11/25/202553
10-Year GF Cash Flow Analysis and Reserve Snap Shot (with Options)
Minimum Reserve per GFOA (16.7% of Rev)18,652,022 19,460,456 20,190,696 20,617,902 21,034,643 21,490,597 21,932,530 22,479,248 23,089,525 23,716,757
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Est. General Fund Bal 117,850,488$ 124,466,367$ 130,502,328$ 131,498,024$ 129,665,394$ 119,806,102$ 106,819,619$ 91,062,643$ 72,631,372$ 51,328,575$
Annual Percentage Funded 178%180%184%205%193%168%151%118%94%71%
Non-Spendable (Leave Balances and Trust Accounts)3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405
Reserve Requirement - Per Current Policy
ASSIGNED
GF Operating Reserve (Innovation) (15% of Rev)
(10% of Rev)
Liability Reserve ($4M)4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Emplymnt Bene Reserve (50% for PERS chg in Disc Rate)
Facility Reserve 6,441,035 7,001,035 7,841,035 6,485,361 8,759,446 8,847,040 8,935,511 9,024,866 9,115,114 9,206,266
20% of CIP )6,045,267 7,319,615 6,792,935 392,935 392,935 3,657,538 2,387,729 7,319,615 6,792,935 392,935
(100% of hist cost of assets)
Econ Development/Community Investment w/ROI 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Total Required Reserve 66,092,372 69,330,001 70,933,199 64,017,499 67,119,724 71,265,802 70,890,761 76,876,612 77,501,401 72,280,630
Reserve Requirement Overfunded/(Underfunded)51,758,116 55,136,366 59,569,129 67,480,525 62,545,670 48,540,300 35,928,858 14,186,030 (4,870,030) (20,952,056)
This amount is included in Expenditures and Immediately Transferred
Sched 3 - 10Yr w Financing
11/25/202554
Study Session:
Reserve Analysis
and Policy
Considerations
Presented by
Veronica Chavez
55
Agenda
1.Importance of Reserve
2.Projected 10 -Year Cash Flow
3.Reserve Analysis
4.Options to Consider
5.Long-Term Planning Solutions
6.Conclusion
56
Importance of Reserve Funds
1.Protecting Against Uncertainty
2.Ensuring Stability
3.Supporting Long -Term Planning
4.Right Sizing Expectations
5.Responsible Management of Public
Funds
57
Best Practices
The Government Finance Officers Association (GFOA)recommends that general-purpose
governments maintain an unrestricted fund balance equal to at least two months,or 16.7%,
percent,of General Fund operating revenues or expenditures.Fund Balance represents the
resources accumulated in governmental funds and is defined as the difference between a
fund’s assets and its liabilities.
Since 2018, GFOA has expanded its best practice recommendations for reserve policies. Key
concepts for cities to consider include:
•Follow GFOA Guidelines:Maintain an unrestricted General Fund balance equal to at least
two months of operating revenues or expenditures (approximately 16.7%). percent).
•Multiyear Forecasting:Integrate reserve targets into long-range financial plans to help
stabilize services during economic downturns.
•Structured Use Policy:Clearly define the circumstances under which reserves may be
used, such as revenue shortfalls or natural disasters.
•Transparent Reporting:Regularly disclose reserve levels and any drawdowns to support
accountability and public trust.
The City’s current Reserve Policy incorporates three of these four recommendations. The only
exception is the GFOA’s 16.7% minimum threshold, which is not used in the current policy. 58
Comparison Reserve Thresholds
City Total Reserve Requirement
Los Angeles 5% of General Fund Revenue
San Francisco 16.7% of General Fund Expenditures
Sacramento 10% of General Fund Revenue
San Diego 16.7% of General Fund Revenue
Fresno 25% of General Fund Expenditures
Santa Rosa 20-25% of General Fund Revenue
Long Beach 10% of General Fund Expenditures
Modesto 22.5% of General Fund Expenditures
La Quinta 33% of General Fund Expenditures
Rancho Mirage 84% of Estimated Fund Balance
59
Calculated Reserve Categories for FY 2025 -26
Category Requirement Designation FY 2025-26 Amount
General Fund Operating Reserve 25% of Projected GF Expenditures Assigned -CM is delegated to determine use.21,691,071
Contingency/Emergency Reserve 20% of Projected GF Revenue Committed -Requires Council Action to use.22,337,751
Facilities Maintenance Reserve Amount equal to 70% of 2018 Replacement
Reserve Study Annual Requirement.Committed -Requires Council Action to use.6,961,265
Capital Improvement Projects Reserve 20% of Total Five-Year CIP Plan
Committed -Requires Council Action to use.
*May also be "Restricted" depending on
project.
6,045,267
Liability Reserve Pooled retention requirement for Liability and
Workers’ Comp-currently $4 million Committed -Requires Council Action to use.4,000,000
Employment Benefits Reserve 50% of 1% Difference in the PERS discount rate Committed -Requires Council Action to use.10,697,122
Other Fund Stability Reserve This amount is immediately transferred on July 1 to
other funds so no reserve is necessary.Committed -Requires Council Action to use.-
Equipment Replacement Reserve 100% of Equpiment Assets as noted in ACFR Committed -Requires Council Action to use.2,869,354
Economic Development Reserve SARDA Land Sales -City Apportionment Committed -Requires Council Action to use.-
Leave Balance and Trust Funds These balances are considered General Fund in
Fund Balance but are not City Funds.Non Spendable 3,117,405
Total FY 2025-26 Reserve Requirement 77,719,235 60
Schedule 1 –Current 10 -Year Forecast
61
Schedule 1 -10-Year Cash Flow Analysis –Reserves
As Is
TEN-YEAR FORECAST FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Estimated Revenue
Property Tax 14,712,737 15,006,992 15,307,132 15,613,274 15,925,540 16,244,050 16,568,931 16,900,310 17,238,316 17,583,083
Sales Tax (General 1%)25,274,315 25,598,778 26,045,477 26,447,033 26,795,972 27,088,751 27,339,875 28,160,071 29,004,873 29,875,020
TOT & STR's 22,755,000 25,940,700 28,534,770 29,390,813 30,272,537 31,180,714 32,116,135 33,079,619 34,072,008 35,094,168
Measure G *25,887,322 26,416,518 26,929,837 27,394,342 27,805,342 28,462,695 29,031,949 29,612,588 30,500,966 31,415,994
All Other GF Revenue 23,059,380 23,566,686 24,085,153 24,615,027 25,156,557 25,710,002 26,275,622 26,853,685 27,444,466 28,048,245
Combined GF Revenue 111,688,754 116,529,674 120,902,369 123,460,489 125,955,949 128,686,212 131,332,512 134,606,274 138,260,629 142,016,509
Estimated Expenditures
Salaries & Benefits 26,853,063 27,792,920 28,765,672 29,772,471 30,814,507 31,893,015 33,009,271 34,164,595 35,360,356 36,597,968
Professional Services 11,208,344 11,768,761 12,357,199 12,975,059 13,623,812 14,305,003 15,020,253 15,771,266 16,559,829 17,387,820
Public Safety 28,547,236 29,689,125 30,876,690 32,111,758 33,396,228 34,732,078 36,121,361 37,566,215 39,068,864 40,631,618
Other Ops 6,775,484 7,182,013 7,612,934 8,069,710 8,553,892 9,067,126 9,611,154 10,187,823 10,799,092 11,447,038
Repair & Maintenance 6,269,023 6,707,855 7,177,404 7,679,823 8,217,410 8,792,629 9,408,113 10,066,681 10,771,349 11,525,343
Events & Outside Agency Funding 2,111,135 2,237,803 2,372,071 2,514,396 2,665,259 2,825,175 2,994,685 3,174,366 3,364,828 3,566,718
Transfers to Other Funds (Leaves/AD's)1,846,000 1,901,380 1,958,421 2,017,174 2,077,689 2,140,020 2,204,221 2,270,347 2,338,458 2,408,611
Transfer to Library Services 2,523,443 2,573,912 2,625,390 2,677,898 2,731,456 2,786,085 2,841,807 2,898,643 2,956,616 3,015,748
Transfer to Aquatic Facility Services 2,152,543 2,174,068 2,195,809 2,217,767 2,239,945 2,262,344 2,284,968 2,307,817 2,330,896 2,354,205
Transfer to Fire Services* 7,750,000 10,500,000 11,500,000 13,000,000 14,000,000 14,560,000 15,142,400 15,748,096 16,378,020 17,033,141
Total Operational Expenditures 96,036,271 102,527,838 107,441,592 113,036,056 118,320,200 123,363,475 128,638,231 134,155,849 139,928,307 145,968,210
CIP Related Transfers
Transfer to Projects*10,726,545 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Transfers for Facilities *3,847,482 3,885,957 3,924,816 3,964,065 4,003,705 4,043,742 4,084,180 4,125,021 4,166,272 4,207,934
Total GF Expenditures 110,610,298 118,444,356 122,871,429 118,964,793 124,288,578 135,045,504 140,818,995 146,863,250 153,191,900 159,819,306
Est. Beginning General Fund Balance 116,772,032 117,850,488 98,966,367 80,002,328 77,498,024 79,165,394 72,806,102 63,319,619 51,062,643 36,131,372
Revenue over (under) expenditures 1,078,456 (1,914,682) (1,969,060) 4,495,696 1,667,370 (6,359,292) (9,486,483) (12,256,976) (14,931,271) (17,802,797)
Unfunded Requests (from Reserve)
New Library ($30M) $20M RDA BOND PROCEEDS(6,000,000)
Station 33/71 Rehab/Rebuild $23.6M RDA BONDS(2,400,000)
North Sphere Community Park ($19M) (15,500,000) (3,500,000)
North Sphere Regional Park ($30M) (3,000,000) (20,000,000) (7,000,000)
North Sphere Stormwater - Channel Projects (1,000,000) (8,500,000) (5,000,000)
Henderson Trailhead Improvements (2,000,000)
Estimated Amount from Measure G 9,400,000 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Est. Ending General Fund Balance 117,850,488$ 98,966,367$ 80,002,328$ 77,498,024$ 79,165,394$ 72,806,102$ 63,319,619$ 51,062,643$ 36,131,372$ 18,328,575$
62
Projected 10 -Year Reserve Analysis
Minimum Reserve per GFOA 18,652,022 19,460,456 20,190,696 20,617,902 21,034,643 21,490,597 21,932,530 22,479,248 23,089,525 23,716,757
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Est. General Fund Bal 117,850,488$ 98,966,367$ 80,002,328$ 77,498,024$ 79,165,394$ 72,806,102$ 63,319,619$ 51,062,643$ 36,131,372$ 18,328,575$
Annual Percentage Funded 152%125%95%101%100%86%76%53%40%21%
Non-Spendable (Leave Balances and Trust Accounts)3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405
Reserve Requirement - Per Current Policy
ASSIGNED
GF Operating Reserve (25% of Ops)21,691,071 22,341,803 23,012,057 23,702,419 24,413,492 25,145,897 25,900,273 26,677,282 27,477,600 28,301,928
COMMITTED
GF Emergency Reserve (20% of GF Revenue)22,337,751 23,305,935 24,180,474 24,692,098 25,191,190 25,737,242 26,266,502 26,921,255 27,652,126 28,403,302
Liability Reserve ($4M)4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Emplymnt Bene Reserve (50% for chg in
Disc Rate)10,697,122 10,804,093 10,912,134 11,021,255 11,131,468 11,242,783 11,355,211 11,468,763 11,583,450 11,699,285
Other Fund Stability Reserve (equal to 25% T-fer Out)
Facility Reserve (at 70% sensitivity)6,961,265 5,459,114 9,005,713 6,485,361 8,037,456 8,331,572 7,032,306 14,169,390 7,050,049 8,252,353
CIP Reserve (20% of CIP )6,045,267 7,319,615 6,792,935 392,935 392,935 3,657,538 2,387,729 7,319,615 6,792,935 392,935
Equip Replacement Reserve (100% cost
of assets)2,869,354 2,955,435 3,044,098 3,135,421 3,229,483 3,229,483 3,261,778 3,294,396 3,327,340 3,360,613
Total Required Reserve 77,719,235 79,303,399 84,064,816 76,546,894 79,513,428 84,461,920 83,321,206 96,968,106 91,000,908 87,527,825
Reserve Requirement Overfunded/(Underfunded)40,131,253 19,662,968 (4,062,488) 951,130 (348,034) (11,655,818) (20,001,587) (45,905,464) (54,869,536) (69,199,250)
This amount is included in Expenditures and Immediately Transferred
As is 63
Staff Recommendations for Policy
Improvements
Combine Operating and Emergency Reserves (Totaling 25%).
Simplify Facilities Reserves: Use 4% of Replacement Value (25-Year Life)
Strengthen Economic/Community Investment Reserve ($5M/Yr w ROI Requirement to
Use).
Consider Housing Facility Reserve Upon Depletion of Housing Fund Balance (Currently
$40M): Use 4% of Replacement Value net of Annual NOI from ops
Create Productivity Savings/Innovation Reserve to support operational efficiency and
continuous improvement
64
Schedule 2 –Revised 10 -Year Forecast
65
Schedule 1 -10 -Year Cash Flow Analysis –Reserved with Recommended
Changes
TEN-YEAR FORECAST FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Estimated Revenue
Property Tax 14,712,737 15,006,992 15,307,132 15,613,274 15,925,540 16,244,050 16,568,931 16,900,310 17,238,316 17,583,083
Sales Tax (General 1%)25,274,315 25,598,778 26,045,477 26,447,033 26,795,972 27,088,751 27,339,875 28,160,071 29,004,873 29,875,020
TOT & STR's 22,755,000 25,940,700 28,534,770 29,390,813 30,272,537 31,180,714 32,116,135 33,079,619 34,072,008 35,094,168
Measure G *25,887,322 26,416,518 26,929,837 27,394,342 27,805,342 28,462,695 29,031,949 29,612,588 30,500,966 31,415,994
All Other GF Revenue 23,059,380 23,566,686 24,085,153 24,615,027 25,156,557 25,710,002 26,275,622 26,853,685 27,444,466 28,048,245
Combined GF Revenue 111,688,754 116,529,674 120,902,369 123,460,489 125,955,949 128,686,212 131,332,512 134,606,274 138,260,629 142,016,509
Estimated Expenditures
Salaries & Benefits 26,853,063 27,792,920 28,765,672 29,772,471 30,814,507 31,893,015 33,009,271 34,164,595 35,360,356 36,597,968
Professional Services 11,208,344 11,768,761 12,357,199 12,975,059 13,623,812 14,305,003 15,020,253 15,771,266 16,559,829 17,387,820
Public Safety 28,547,236 29,689,125 30,876,690 32,111,758 33,396,228 34,732,078 36,121,361 37,566,215 39,068,864 40,631,618
Other Ops 6,775,484 7,182,013 7,612,934 8,069,710 8,553,892 9,067,126 9,611,154 10,187,823 10,799,092 11,447,038
Repair & Maintenance 6,269,023 6,707,855 7,177,404 7,679,823 8,217,410 8,792,629 9,408,113 10,066,681 10,771,349 11,525,343
Events & Outside Agency Funding 2,111,135 2,237,803 2,372,071 2,514,396 2,665,259 2,825,175 2,994,685 3,174,366 3,364,828 3,566,718
Transfers to Other Funds (Leaves/AD's)1,846,000 1,901,380 1,958,421 2,017,174 2,077,689 2,140,020 2,204,221 2,270,347 2,338,458 2,408,611
Transfer to Library Services 2,523,443 2,573,912 2,625,390 2,677,898 2,731,456 2,786,085 2,841,807 2,898,643 2,956,616 3,015,748
Transfer to Aquatic Facility Services 2,152,543 2,174,068 2,195,809 2,217,767 2,239,945 2,262,344 2,284,968 2,307,817 2,330,896 2,354,205
Transfer to Fire Services* 7,750,000 10,500,000 11,500,000 13,000,000 14,000,000 14,560,000 15,142,400 15,748,096 16,378,020 17,033,141
Total Operational Expenditures 96,036,271 102,527,838 107,441,592 113,036,056 118,320,200 123,363,475 128,638,231 134,155,849 139,928,307 145,968,210
CIP Related Transfers
Transfer to Projects*10,726,545 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Transfers for Facilities *3,847,482 3,885,957 3,924,816 3,964,065 4,003,705 4,043,742 4,084,180 4,125,021 4,166,272 4,207,934
Total GF Expenditures 110,610,298 118,444,356 122,871,429 118,964,793 124,288,578 135,045,504 140,818,995 146,863,250 153,191,900 159,819,306
Est. Beginning General Fund Balance 116,772,032 117,850,488 98,966,367 80,002,328 77,498,024 79,165,394 72,806,102 63,319,619 51,062,643 36,131,372
Revenue over (under) expenditures 1,078,456 (1,914,682) (1,969,060) 4,495,696 1,667,370 (6,359,292) (9,486,483) (12,256,976) (14,931,271) (17,802,797)
Unfunded Requests (from Reserve)
New Library ($30M) $20M RDA BOND PROCEEDS (6,000,000) - - - - - - - - -
Station 33/71 Rehab/Rebuild $23.6M RDA BONDS (2,400,000) - - - - - - - - -
North Sphere Community Park ($19M) - (15,500,000) (3,500,000) - - - - - - -
North Sphere Regional Park ($30M) - (3,000,000) (20,000,000) (7,000,000) - - - - - -
North Sphere Stormwater - Channel Projects (1,000,000) (8,500,000) (5,000,000) - - - - - - -
Henderson Trailhead Improvements - (2,000,000) - - - - - - - -
Estimated Amount from Measure G 9,400,000 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Est. Ending General Fund Balance 117,850,488$ 98,966,367$ 80,002,328$ 77,498,024$ 79,165,394$ 72,806,102$ 63,319,619$ 51,062,643$ 36,131,372$ 18,328,575$
66
Projected 10 -Year Reserve Analysis
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Est. General Fund Bal 117,850,488$ 98,966,367$ 80,002,328$ 77,498,024$ 79,165,394$ 72,806,102$ 63,319,619$ 51,062,643$ 36,131,372$ 18,328,575$
Annual Percentage Funded 178%143%113%121%118%102%89%66%47%25%
Non-Spendable (Leave Balances and Trust Accounts)3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405
Reserve Requirement - Per Current Policy
ASSIGNED
GF Operating Reserve (Innovation) (15% of Rev)16,753,313 17,479,451 18,135,355 18,519,073 18,893,392 19,302,932 19,699,877 20,190,941 20,739,094 21,302,476
COMMITTED
GF Emergency Reserve (10% of Rev)11,168,875 11,652,967 12,090,237 12,346,049 12,595,595 12,868,621 13,133,251 13,460,627 13,826,063 14,201,651
Liability Reserve ($4M)4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Emplymnt Bene Reserve (50% for PERS chg in Disc Rate)10,697,122 10,804,093 10,912,134 11,021,255 11,131,468 11,242,783 11,355,211 11,468,763 11,583,450 11,699,285
Other Fund Stability Reserve (equal to 25% T-fer Out)
Facility Reserve 6,441,035 7,001,035 7,841,035 6,485,361 8,759,446 8,847,040 8,935,511 9,024,866 9,115,114 9,206,266
CIP Reserve (20% of CIP )6,045,267 7,319,615 6,792,935 392,935 392,935 3,657,538 2,387,729 7,319,615 6,792,935 392,935
Equip Replacement Reserve (100% of hist cost of assets)2,869,354 2,955,435 3,044,098 3,135,421 3,229,483 3,229,483 3,261,778 3,294,396 3,327,340 3,360,613
Econ Development/Community Investment w/ROI 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Total Required Reserve 66,092,372 69,330,001 70,933,199 64,017,499 67,119,724 71,265,802 70,890,761 76,876,612 77,501,401 72,280,630
Reserve Requirement Overfunded/(Underfunded)51,758,116 29,636,366 9,069,129 13,480,525 12,045,670 1,540,300 (7,571,142) (25,813,970) (41,370,030) (53,952,056)
This amount is included in Expenditures and Immediately Transferred
As Recommended 67
Schedule 3 –Revised w Financing
10-Year Forecast
68
Schedule 3 -10-Year Cash Flow Analysis –Revised with Financing Component
TEN-YEAR FORECAST FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Estimated Revenue
Property Tax 14,712,737 15,006,992 15,307,132 15,613,274 15,925,540 16,244,050 16,568,931 16,900,310 17,238,316 17,583,083
Sales Tax (General 1%)25,274,315 25,598,778 26,045,477 26,447,033 26,795,972 27,088,751 27,339,875 28,160,071 29,004,873 29,875,020
TOT & STR's 22,755,000 25,940,700 28,534,770 29,390,813 30,272,537 31,180,714 32,116,135 33,079,619 34,072,008 35,094,168
Measure G *25,887,322 26,416,518 26,929,837 27,394,342 27,805,342 28,462,695 29,031,949 29,612,588 30,500,966 31,415,994
All Other GF Revenue 23,059,380 23,566,686 24,085,153 24,615,027 25,156,557 25,710,002 26,275,622 26,853,685 27,444,466 28,048,245
Combined GF Revenue 111,688,754 116,529,674 120,902,369 123,460,489 125,955,949 128,686,212 131,332,512 134,606,274 138,260,629 142,016,509
Estimated Expenditures
Salaries & Benefits 26,853,063 27,792,920 28,765,672 29,772,471 30,814,507 31,893,015 33,009,271 34,164,595 35,360,356 36,597,968
Professional Services 11,208,344 11,768,761 12,357,199 12,975,059 13,623,812 14,305,003 15,020,253 15,771,266 16,559,829 17,387,820
Public Safety 28,547,236 29,689,125 30,876,690 32,111,758 33,396,228 34,732,078 36,121,361 37,566,215 39,068,864 40,631,618
Other Ops 6,775,484 7,182,013 7,612,934 8,069,710 8,553,892 9,067,126 9,611,154 10,187,823 10,799,092 11,447,038
Repair & Maintenance 6,269,023 6,707,855 7,177,404 7,679,823 8,217,410 8,792,629 9,408,113 10,066,681 10,771,349 11,525,343
Events & Outside Agency Funding 2,111,135 2,237,803 2,372,071 2,514,396 2,665,259 2,825,175 2,994,685 3,174,366 3,364,828 3,566,718
Transfers to Other Funds (Leaves/AD's)1,846,000 1,901,380 1,958,421 2,017,174 2,077,689 2,140,020 2,204,221 2,270,347 2,338,458 2,408,611
Transfer to Library Services 2,523,443 2,573,912 2,625,390 2,677,898 2,731,456 2,786,085 2,841,807 2,898,643 2,956,616 3,015,748
Transfer to Aquatic Facility Services 2,152,543 2,174,068 2,195,809 2,217,767 2,239,945 2,262,344 2,284,968 2,307,817 2,330,896 2,354,205
Transfer to Fire Services* 7,750,000 10,500,000 11,500,000 13,000,000 14,000,000 14,560,000 15,142,400 15,748,096 16,378,020 17,033,141
Total Operational Expenditures 96,036,271 102,527,838 107,441,592 113,036,056 118,320,200 123,363,475 128,638,231 134,155,849 139,928,307 145,968,210
CIP Related Transfers
Transfer to Projects*10,726,545 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Transfers for Facilities *3,847,482 3,885,957 3,924,816 3,964,065 4,003,705 4,043,742 4,084,180 4,125,021 4,166,272 4,207,934
Total GF Expenditures 110,610,298 118,444,356 122,871,429 118,964,793 124,288,578 135,045,504 140,818,995 146,863,250 153,191,900 159,819,306
Est. Beginning General Fund Balance 116,772,032 117,850,488 124,466,367 130,502,328 131,498,024 129,665,394 119,806,102 106,819,619 91,062,643 72,631,372
Revenue over (under) expenditures 1,078,456 (1,914,682) (1,969,060) 4,495,696 1,667,370 (6,359,292) (9,486,483) (12,256,976) (14,931,271) (17,802,797)
Unfunded Requests (from Reserve)
New Library ($30M) $20M RDA BOND PROCEEDS (6,000,000)
Station 33/71 Rehab/Rebuild $23.6M RDA BONDS (2,400,000)
North Sphere Community Park ($19M) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000) (3,500,000)
North Sphere Regional Park ($30M)
North Sphere Stormwater - Channel Projects (1,000,000)
Henderson Trailhead Improvements
Estimated Amount from Measure G 9,400,000 12,030,561 11,505,021 1,964,673 1,964,673 7,638,287 8,096,584 8,582,379 9,097,322 9,643,161
Est. Ending General Fund Balance 117,850,488$ 124,466,367$ 130,502,328$ 131,498,024$ 129,665,394$ 119,806,102$ 106,819,619$ 91,062,643$ 72,631,372$ 51,328,575$
69
Projected 10 -Year Reserve Analysis
Minimum Reserve per GFOA (16.7% of Rev)18,652,022 19,460,456 20,190,696 20,617,902 21,034,643 21,490,597 21,932,530 22,479,248 23,089,525 23,716,757
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29 FY 2029-30 FY 2030-31 FY 2031-32 FY 2032-33 FY 2033-34 FY 2034-35
Est. General Fund Bal 117,850,488$ 124,466,367$ 130,502,328$ 131,498,024$ 129,665,394$ 119,806,102$ 106,819,619$ 91,062,643$ 72,631,372$ 51,328,575$
Annual Percentage Funded 178%180%184%205%193%168%151%118%94%71%
Non-Spendable (Leave Balances and Trust Accounts)3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405 3,117,405
Reserve Requirement - Per Current Policy
ASSIGNED
GF Operating Reserve (Innovation) (15% of Rev)16,753,313 17,479,451 18,135,355 18,519,073 18,893,392 19,302,932 19,699,877 20,190,941 20,739,094 21,302,476
COMMITTED
GF Emergency Reserve (10% of Rev)11,168,875 11,652,967 12,090,237 12,346,049 12,595,595 12,868,621 13,133,251 13,460,627 13,826,063 14,201,651
Liability Reserve ($4M)4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Emplymnt Bene Reserve (50% for PERS chg in Disc Rate)10,697,122 10,804,093 10,912,134 11,021,255 11,131,468 11,242,783 11,355,211 11,468,763 11,583,450 11,699,285
Other Fund Stability Reserve (equal to 25% T-fer Out)
Facility Reserve 6,441,035 7,001,035 7,841,035 6,485,361 8,759,446 8,847,040 8,935,511 9,024,866 9,115,114 9,206,266
CIP Reserve (20% of CIP)6,045,267 7,319,615 6,792,935 392,935 392,935 3,657,538 2,387,729 7,319,615 6,792,935 392,935
Equip Replacement Reserve (100% of hist cost of assets)2,869,354 2,955,435 3,044,098 3,135,421 3,229,483 3,229,483 3,261,778 3,294,396 3,327,340 3,360,613
Econ Development/Community Investment w/ROI 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000 5,000,000
Total Required Reserve 66,092,372 69,330,001 70,933,199 64,017,499 67,119,724 71,265,802 70,890,761 76,876,612 77,501,401 72,280,630
Reserve Requirement Overfunded/(Underfunded)51,758,116 55,136,366 59,569,129 67,480,525 62,545,670 48,540,300 35,928,858 14,186,030 (4,870,030) (20,952,056)
This amount is included in Expenditures and Immediately Transferred
As Recommended –with bond issuance 70
Reserve Policy Questions
How much is enough or too much?
•GFOA minimum is 16.7% (or 2 months of revenue)
•Most city policies are anywhere from 15 -25%
•Current policy may be over restrictive, but forecast reflects potential
challenges in the future
What are some options and/or potential solutions?
•Revise policy in alignment with best practices
•Revise policy to provide flexibility to support community growth, innovation,
and leverage AI/automation to drive efficiency
•Identify other Revenue Sources
•Issue debt (Lease Revenue Bonds) to smooth out current capital needs
Risk mitigation (What is our absolute low?)
To safeguard any changes to the policy, establish a minimum threshold that
must be maintained annually (ie. emergency funds must be maintained at all
times) and other categories may be used as needed and/or available.
71
Big Picture/Bottom Line
Current Policy Year 1 Year 10
Reserve Required $77.7M $87.5M
Percent Funded 152%21%
Available Fund Balance $40.1M ($69.2M)
Revised Policy Year 1 Year 10
Reserve Required $66.1M $72.2M
Percent Funded 178%25%
Available Fund Balance $51.7M ($53.9M)
Revised Policy w/Bond Year 1 Year 10
Reserve Required $66.1M $72.2M
Percent Funded 178%71%
Available Fund Balance $51.7M ($20.9M)
72
Ultimate
Goal:
Move
forward
strategically
and with
confidence
Financial stability
We remain
committed to
strong financial
management.
Strategic investments
Our next steps
focus on long-
term value
creation.
Sustained growth
We’re positioned
to proactively
support growth in
the coming years.
73
Staff is seeking
direction and if
recommendations
are approved, staff
will return to the
January meeting
with a formal
request to revise the
reserve policy.
Questions?
74
Page 1 of 5
CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: December 11, 2025
PREPARED BY: Chris Gerry, Senior Project Manager
SUBJECT: STUDY SESSION: PROVIDE INPUT ON PURSUING LANDSCAPE AND
LIGHTING DISTRICTS ON CITYWIDE PRIVATELY MAINTAINED
MEDIANS AND SELECT PARKWAYS.
RECOMMENDATION:
Provide input on pursuing landscape and lighting districts on citywide privately maintained
medians and select parkways.
BACKGROUND/ANALYSIS:
Overview:
The City of Palm Desert (City) maintains a majority of landscaped medians citywide. However,
nine segments of the City’s medians remain subject to legacy developer-executed landscape
maintenance agreements or similar instruments that assign ongoing maintenance obligations to
private entities. These maintenance obligations create a fragmented system resulting in
inconsistent service levels, uneven reinvestment, and varying maintenance standards along the
same corridors. Staff is seeking direction on whether to pursue converting these privately
maintained medians into City-administered Lighting and Landscape District (LLD) zones.
The City also has 10 homeowner’s associations (HOAs) along two streets that provide limited
landscape maintenance. These HOAs are responsible for maintaining right-of-way areas that sit
directly beside segments already maintained through City LLDs, resulting in a checkerboard
pattern of responsibility along the same corridors. This patchwork creates inconsistent service
levels and places ongoing obligations on a small number of HOAs that neighboring communities
are not required to assume. Therefore, staff is requesting input on whether the City should
examine the viability of terminating these HOA landscape maintenance responsibilities and
transitioning those areas into LLD zones to align with adjacent segments on the same street.
Lighting and Landscape Districts (LLDs):
LLDs are assessment districts established under the Landscape and Lighting Act of 1972 to fund
the installation, operation, and maintenance of public landscaping, lighting, and related
improvements. This framework provides a standardized method for administering services within
public rights-of-way and differs from areas privately maintained under separate development
conditions. The City utilizes LLDs as a mechanism for maintaining landscaped medians,
parkways, and other streetscape features within defined geographic areas.
Formation of a new LLD must comply with Proposition 218, which involves the following steps:
Identify Improvements and District Boundary: Define the public improvements to be
funded and the parcels that will receive special benefit.
75
City of Palm Desert
Privately Maintained Medians and Select Parkways
Page 2 of 5
Engineer’s Report: A licensed engineer prepares a report describing the improvements,
identifying special benefits, and calculating proportional assessments.
Resolution of Intention: The City Council adopts a resolution initiating formation and
setting a public hearing.
Property Owner Notification: All affected property owners receive a Proposition 218
notice and assessment ballot.
Public Hearing and Ballot Tabulation: The City receives public comments and
tabulates all returned ballots.
Majority Protest Test: If weighted ballots submitted in opposition exceed those in
support (a majority protest), the district cannot be formed.
District Formation: The City Council adopts a Resolution Confirming the Assessment,
and the assessments are placed on the property tax roll.
Annual Levy: Assessments may be levied annually provided they do not exceed
previously approved maximum rates.
Each LLD includes a set of parcels that receive a proportional benefit from the maintained
improvements. Annual assessments are levied on those parcels based on the cost of providing
the required maintenance, with all calculations and apportionment methodologies documented
in the Engineer’s Report presented to City Council each fiscal year.
Existing Conditions:
Privately Maintained Medians (Developers):
As mentioned, several segments of landscaped medians throughout Palm Desert are currently
maintained by private entities under recorded maintenance agreements or conditions of approval
associated with past development projects. These agreements assign responsibility for long -
term maintenance to the developer or a successor property owner, rather than incorporating the
areas into a City-administered LLD. As a result, these segments are maintained independently
of the City’s system, creating varying service levels, uneven reinvestment, and a fragmented set
of maintenance responsibilities.
The City has identified multiple privately maintained medians throughout Palm Desert, as
outlined in Attachment 1. The characteristics of these privately maintained areas differ across
locations. Improvements range from standard landscaped treatments to medians that include
upgraded plant materials or decorative hardscape.
Maintenance responsibilities for these areas are held by nine private entities and cover
approximately 256,600 square feet of landscaped improvements. The table below provides a
breakdown of the street name, segment limits, and square footage of landscaped areas.
76
City of Palm Desert
Privately Maintained Medians and Select Parkways
Page 3 of 5
Privately Maintained Medians (Developers)
Street Segment Limits Square Feet
Silver Spur Trail Portola Avenue to Mesa View Drive 66,400
Country Club Drive & Portola East of Country Club Drive, South of Portola 34,800
Portola & Ironwood Iron Tree Drive to Buckboard Trail 34,600
Mesa View Drive Highway 74 to Prairie Drive 32,900
Dinah Shore Drive Monterey Avenue to Portola Road 32,600
Highway 74 Shadow Mountain Drive to Thrush Drive 22,100
Dinah Shore Drive Portola Road to Gerald Ford Drive 16,700
Julie Lane East of Potola Road to Roundabout 8,500
Hovley Lane East Beacon Hill to Water Way 8,000
Total: 256,600
Privately Maintained Parkways (HOAs):
Several residential tracts in Palm Desert – most notably the small, ungated HOAs along Hovley
Lane West and Shepherd Lane – include parkway areas that are privately maintained pursuant
to landscape maintenance agreements established during the orig inal development. These
HOAs, generally consisting of fewer than 20 households, were assigned responsibility for
maintaining frontage landscaping, irrigation infrastructure, and limited lighting within the public
right-of-way in lieu of being incorporated into a City-administered LLD.
These HOA-maintained segments create a patchwork of responsibilities along the same streets,
where some frontage areas are maintained by individual HOAs while adjacent segments are
maintained through City LLDs. This fragmented structure leads to inconsistent maintenance
standards, uneven reinvestment, and recurring obligations placed on small HOAs that
neighboring communities do not assume.
The City has identified multiple HOA-maintained parkway segments within these neighborhoods,
as outlined in Attachment 2. Maintenance responsibilities are held by 10 HOAs and cover an
estimated 68,900 square feet of right-of-way improvements. The table below summarizes the
years constructed, tract (HOA), locations, number of homes, and square footage of associated
landscaped areas.
Privately Maintained Parkways (HOAs)
Constructed Tract (HOA) Location Homes Square Feet
2001 Daisey Lane Shepherd Lane & Daisey Lane 15 16,800
2003 Olive Grove Shepherd Lane & Jeri Lane 16 2,800
2005 Corte Placitas Hovley Lane West 20 3,000
2006 Pele Place Shepherd Lane & Pele Place 14 13,700
2006 Portola Pointe Shepherd Lane & Portola Pointe Lane 16 3,000
2006 Terracina Shepherd Lane & Kokopelli Circle East 16 4,600
2010 – 2014 Kingston Court Shepherd Lane, Kingston Court E/W &
Imperial Court E/W 64 11,600
2013 University Pointe Shepherd Lane & University Pointe 16 3,800
2014 The Encore Shepherd Lane, Anastacia Lane &
Encore Lane 32 5,800
2014 Signature Series Shepherd Lane & Cosmopolitan Lane 16 3,800
Total: 225 68,900
77
City of Palm Desert
Privately Maintained Medians and Select Parkways
Page 4 of 5
One small HOA has previously approached the City to request relief from its existing landscape
maintenance agreement, noting that managing right-of-way landscaping has become difficult for
a small board with many part-time residents. Although the HOA will continue to retain a property
manager for other association functions, transitioning right-of-way landscape responsibilities to
an LLD would remove a recurring obligation that board members must currently oversee. The
HOA indicated that an LLD may provide a more consistent and sustainable approach.
Council Considerations:
Establishing new LLDs to assume responsibility for privately maintained medians and HOA -
maintained parkways involves several considerations.
Legal Framework and Authority:
While Proposition 218 outlines the procedural steps for forming or modifying an LLD,
transitioning areas currently governed by private maintenance agreements adds additional legal
layers. These include evaluating whether existing agreements can be amended or ter minated,
determining the City’s authority to assume maintenance of improvements located within the
public right-of-way, and confirming whether any recorded conditions of approval must be
modified. Staff would need to coordinate with the City Attorney’s Off ice to review these
documents and identify any procedural obligations.
Fiscal Impacts and Cost Allocation:
Transitioning these areas into City-administered LLDs would require determining all eligible
maintenance costs, establishing assessment methodologie s, and confirming that assessments
fully recover the cost of services to avoid General Fund exposure. For HOAs, this may also
involve analyzing potential impacts on existing HOA assessments and understanding how costs
shift between the HOA and the proposed LLD.
Operational Capacity and Service Level Consistency:
Bringing these areas under City management would create more uniform maintenance
standards, inspection routines, and reinvestment practices. However, it may also expand the
City’s operational responsibilities, requiring review of contractor capacity, staff oversight needs,
and long-term resource planning.
Conditions of Existing Infrastructure:
Privately maintained areas often include older landscaping, irrigation systems, and lighting
infrastructure. Before assuming responsibility, the City would need to assess the condition of
these assets to determine whether initial repairs or capital rehabilitation are required, and how
any such costs would be allocated under Proposition 218.
Community Engagement and Property-Owner Support:
Any transition would require early engagement with affected property owners to ensure they
understand the implications of forming or joining an LLD. Participation in an LLD results in a new
or modified annual assessment that must receive majority approval under Proposition 218.
Potential Opt-In Program for Interested Neighborhoods:
78
City of Palm Desert
Privately Maintained Medians and Select Parkways
Page 5 of 5
Because interest levels among HOAs and other private maintenance entities may vary, Council
may wish to consider whether the City should establish a structured “opt-in” evaluation process.
Such a program would allow eligible neighborhoods to formally express interest, after which staff
could conduct preliminary screening for legal feasibility, infrastructure condition, and potential
assessment impacts. This approach would provide a transparent and consistent pathway for
neighborhoods seeking relief from private maintenance obligations, while ensuring that the City
evaluates requests on a standardized basis.
Broader Policy Implications:
Transitioning individual neighborhoods into LLDs may increase consistency across similar
residential areas but could also set a precedent for other privately maintained communities to
request inclusion. Council may wish to consider the long-term implications of expanding City-
maintained rights-of-way on an incremental or case-by-case basis.
Conclusion:
Staff is seeking Council input on whether to further evaluate transitioning select privately
maintained medians and HOA-maintained parkways into City-administered LLD Zones. This
next phase would include: (1) confirming legal mechanisms for modifying or terminating existing
maintenance agreements and conditions of approval; (2) identifying rehabilitation and ongoing
maintenance costs; (3) assessing City operational capacity; and (4) evaluating through outreach
the likelihood of Proposition 218 support from affected property owners. Council direction will
determine whether staff proceeds with this detailed analysis.
Legal Review:
This report has been reviewed by the City Attorney’s Office.
FINANCIAL IMPACT:
There is no immediate fiscal impact associated with receiving Council input. Should Council direct
staff to pursue further evaluation of transitioning privately maintained medians or HOA-maintained
parkways into new or expanded LLDs, additional analysis will be required to identify maintenance
costs, assessment methodologies, and potential capital needs and resources.
ATTACHMENTS:
1. Median Map and Photos (Developers)
2. Parkway Map and Photos (HOAs)
3. PowerPoint Presentation
79
80
Attachment 1
Privately Maintained Median Map and Photos
81
Silver Spur Trail: Portola Avenue to Mesa View Drive (1 of 9)
82
Country Club Drive and Portola Avenue (2 of 9)
83
Portola Avenue and Mesa View Drive (3 of 9)
84
Mesa View Drive: Highway 74 to Prairie Drive (4 of 9)
85
Dinah Shore Drive: Monterey Avenue to Portola Road (5 of 9)
86
Highway 74: Shadow Mountain Drive to Thrush Drive (6 of 9)
87
Dinah Shore Drive: Portola Road to Gerald Ford Drive (7 of 9)
88
Julie Lane: Portola Road to Roundabout (8 of 9)
89
Hovley Lane East: Beacon Hill to Water Way (9 of 9)
90
Attachment 2
Privately Maintained Parkway Map and Photos
91
Daisey Lane: Shepherd Lane and Daisey Lane (1 of 10)
92
Landscape & Lighting Districts:
Medians & Select Parkways
City Council Study Session
December 11, 2025
93
Overview
•Landscape & Lighting District (LLD)
•Privately Maintained Medians
•Privately Maintained Parkways
•What We Know & What Remains Unclear
•Council Considerations
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What are LLDs?
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Authorized under the Landscape & Lighting Act of 1972.
Typically established in development conditions & formed through Prop 218 ballot process.
Funds landscaping, streetlighting, irrigation, & streetscape maintenance.
Levied annually & collected through property tax bill.
Provide a consistent & City-managed maintenance structure.
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LLDs in Palm Desert
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•Single consolidated district covering the City’s
formal LLD maintenance areas.
•Comprised of 33 separate benefit Zones, each tied
to specific neighborhoods or developments.
•Funds parkway landscape maintenance in 33 Zones.
•Areas outside the 33 Zones are publicly or privately
maintained or are non-assessable parcels.
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Privately
Maintained
Medians
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Privately
Maintained
Medians
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WHAT ARE THEY?
•City maintains all medians, except
for an estimated 9 segments.
•Assigned during development as
conditions of approval.
•Placed under maintenance
agreements or equivalent.
•Maintenance levels vary.
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Privately Maintained Medians
WHERE ARE THEY?SQUARE FEET
1.Silver Spur Trail (Portola to Mesa View) 66,400
2.Country Club (west) & Portola (south)34,800
3.Portola/Mesa View (Alamo to Reserve) 34,600
4.Mesa View (Hwy 74 to Prairie)32,900
5.Dinah Shore (Monterey to Portola)32,600
6.Highway 74 (Shadow Mountain to Thrush)22,100
7.Dinah Shore (Portola to Gerald Ford)16,700
8.Julie Lane (Portola to Roundabout)8,500
9.Hovley Lane East (Beacon Hill to Water Way)8,000
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Silver Spur Trail
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100
Hovley Lane East
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Country Club Drive & Portola Avenue
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Privately
Maintained
Parkways
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Privately
Maintained
Parkways
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PARKWAYS UNDER DISCUSSION
•Estimated 10 HOAs in ungated tracts
maintain their own parkways.
•Shepherd Lane (9)
•Hovley Lane West (1)
•Assigned during development as
conditions of approval.
•Placed under maintenance
agreements or equivalent.
•HOA parkways are contiguous with
City-maintained LLDs.
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Privately Maintained Parkways
WHERE ARE THEY? HOUSEHOLDS SQUARE FEET
1.Daisey Lane 15 16,800
2.Pele Place 14 13,700
3.Kingston Court 64 11,600
4.The Encore 32 5,800
5.Corte Placitas 20 3,000
6.Terracina 16 4,600
7.Signature Series 16 3,800
8.University Pointe 16 3,800
9.Portola Pointe 16 3,000
10.Olive Grove 16 2,800
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1 2
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Kingston Court
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Portola Pointe
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Background: What We Know & What Remains Unclear
•Identified areas are privately maintained due to
past conditions of approval & landscape
maintenance agreements.
•The rationale for inconsistent past practices is
unclear & likely reflected prior Council, staff or
developer preferences.
•An LLD may offer a consistent mechanism to
resolve these legacy discrepancies.
•HOA Example: Corte Placitas has already
requested relief, demonstrating the need for a
standardized approach.
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Council Considerations
Is the City willing to assume responsibility for new LLDs?
Taking over medians or parkways places permanent
operational responsibility on the City.
Are affected property owners supportive of new LLDs?
A new LLD Zones requires Proposition 218 approval
from affected property owners; without their support,
formation cannot proceed.
Are medians & parkways in acceptable conditions to
assume responsibility?
Some segments may require upfront rehabilitation. If so,
the improvements would be included in the LLD &
recovered through property-owner assessments.
Does inclusion of these areas create policy precedent?
Accepting these segments may prompt additional
neighborhoods to request inclusion.
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Questions
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Page 1 of 6
CITY OF PALM DESERT
STAFF REPORT
MEETING DATE: December 11, 2025
PREPARED BY: Thomas Soule, Public Affairs Manager
SUBJECT: STUDY SESSION: PROVIDE AN UPDATE ON THE CITY’S MARKETING
PROGRAM
RECOMMENDATION:
Receive a presentation and provide guidance on future market targeting, research topics, and
destination positioning to shape the City’s tourism marketing strategy for FY 2025 –26 and FY
2026–27.
BACKGROUND/ANALYSIS:
Purpose of the Program
The City’s marketing and communications program serves two primary functions:
1. Attract tourism that drives economic revenue through Transient Occupancy Tax (TOT)
and sales tax
2. Promote civic engagement by providing clear, accessible, and timely information about
City services, programs, and events.
These two functions are structurally distinct but strategically aligned, with each reinforcing Palm
Desert’s identity as both a destination and a vibrant community.
Tourism marketing is managed through the City’s contracted agency, Idea Peddler, which
executes regional advertising and brand campaigns in key out -of-market areas. Local and
regional promotions are handled in-house by City staff, with a focus on community events and
resident engagement.
This report outlines the program’s structure, target audiences, marketing channels, budget
allocation, performance outcomes, and planned strategic development through market research.
Economic Importance of Tourism to Palm Desert
Tourism remains one of Palm Desert’s largest and most influential economic sectors. According
to the attached 2024 Economic Impact of Visitors to Palm Desert report published in June 2025
by Tourism Economics, an Oxford Economics Company, tourism in Palm Desert accounts for:
$1.7 billion in visitor spending (+0.9% vs. 2023)
$2.1 billion in total economic impact
11,000 jobs supported (one in four jobs in the city)
$188 million in state and local tax revenue
$7,800 in annual tax offset per household
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$307 million in total government revenues
These findings reinforce that tourism activity directly supports the City’s fiscal stability. In FY
2024-25, Palm Desert received $23,693,069 in transient occupancy tax (TOT) and $31,379,892
in sales tax, together supporting 53.7 percent of General Fund Operations. A competitive tourism
position is therefore essential to maintaining the quality of services Palm Desert provides.
Operating Realities
The communications and tourism marketing landscape continues to evolve, necessitating that
the City remains responsive and forward-looking.
Major travel trends identified in the tourism marketing industry show:
Significant growth in AI-based travel planning, with half of leisure travelers planning
to use generative AI tools next year.
High travel intention, with 67 percent of travelers stating they do not need a specific
reason to travel.
Resurgence in road trips, driven by flexibility and spontaneity.
Growth in experiential and immersive travel, comprising 63 percent of bookings.
Demand for meaningful luxury, emphasizing authenticity and local experience.
Increased interest in relaxation-focused trips (91 percent).
Rise of slow travel, with longer stays and fewer destination switches.
Increases in hotel budgets and strong growth in family travel.
These shifts support the need for updated research, intentional creative assets, and continual
optimization—elements reflected in the City’s 18-month tourism strategy.
Program Strategy: A Unified Communications System
Palm Desert uses a dual communication model that aligns work with the expertise for each
function:
1. In-House Resident Communications
City staff develop and manage all resident -facing content to ensure clarity, consistency, and
accessibility. Channels include BrightSide (print and digital), an events newsletter,
PalmDesert.gov homepage news items, DiscoverPalmDesert.com, social media, local media
relations, e-mail signature banners, and local advertising (radio, digital, print, social media) to
support City-run events, and economic development.
Year-to-date performance continues to show strong resident engagement:
BrightSide print newsletter: mailed bi-monthly to 40,000 addresses at a cost of
$9,200
BrightSide digital newsletter: delivered monthly to 8,869 subscribers; 61.4% open
rate (industry benchmark: 28.4%)
DiscoverPalmDesert.com: 345,000 website users (+20% year over year)
Discover Palm Desert events newsletter: 9,604 subscribers; 48.3% open rate
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Facebook: 3.96M views; 27,023 page visits; +1,961 followers
Instagram: 795,257 views; +1,975 followers
These metrics reflect growing reliance on City channels for time ly updates, event information,
and emergency messaging.
2. Agency-Managed Tourism Marketing and Public Relations
Tourism marketing requires specialized technical skills—multi-market media buying, creative
production at scale, attribution modeling, and PR outreach—that are not cost effective to build
in-house.
Paid Media Performance (FYE25)
4.1:1 return on ad spend (industry norm: 2.1–3.1)
$2.2 million in attributable revenue
62 million paid media impressions
$75,000 in negotiated added-value media
Public Relations (FYE26)
29.4 million unique monthly visitors across publisher sites
500+ journalist outreach points
Writers hosted from TimeOut, Los Angeles Magazine, and TravelAge West
Discover Palm Desert Instagram Channel (FYE26)
208 Instagram feed posts
52 Instagram story posts
+18% increases in shares
+31% increases in comments
+582 followers
Creative Production (FYE 22–FYE26)
Over 1,000 content assets delivered
96 Pocket Guide videos and 700+ images
25 videos for the Desert Song campaign
Awards:
o Desert Ad Fed Gold Desert Addy – Pocket Guide
o Desert Ad Fed Silver Desert Addy – Desert Song
o ESTO Advocacy & Grassroots Award – Unite Palm Desert
Marketing and Communications Program Budget
1. In-House Resident Communications Budget
$ 62,600 – Local advertising and community promotions
$105,000 – BrightSide design, printing, and postage
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This budget supports BrightSide print distribution, event promotions, targeted local ads, and
other community-facing outreach.
2. Agency-Managed Tourism Marketing and Public Relations Budget:
MARKETING EFFORT
DESCRIPTION
AMOUNT
ALLOCATED
MEDIA BUY Digital display, video, social, streaming, search, sponsored
content, and market-specific planning. This is a pass-through
cost.
$525,455
PUBLIC RELATIONS Press outreach, media hosting, journalist engagement, story
development
$44,000
TOURISM SOCIAL
MEDIA
Content planning, posting, follower engagement, and analytics $29,000
STRATEGY &
ACCOUNT
MANAGEMENT
Ongoing campaign oversight, performance monitoring, reporting,
optimization
$105,545
CREATIVE SERVICES Qualitative research, photography, video production, editing,
graphic design, social media content development, and Palm
Desert annual calendar.
$186,000
Total Annual Budget $890,000
This structure allows Palm Desert to remain competitive with regional destinations while
maintaining flexibility and cost efficiency.
Results: Strengthening Resident Trust and Delivering Measurable Economic Return
Resident Communications: A Trusted Source of Local Information
Engagement with City channels continues to rise, indicating that residents rely on BrightSide,
the City website, and social platforms for timely updates, event information, and emergency
messaging. This trust helps reduce misinformation, promotes civic participation, and ensures
that residents can quickly access accurate information when they need it most.
Tourism Marketing: Verified Impact That Protects the General Fund
Independent data confirms that Palm Desert’s tourism marketing program continues to
contribute meaningfully to the City’s economic vitality. The City’s advertising is influencing real
traveler behavior, driving measurable visitor spending, and supporting the broader $1.7 billion
visitor economy documented in the regional economic impact study.
The reported attributable revenue reflects only the portion of traveler bookings that can be
directly verified through participating travel platforms, meaning it reflects a minimum return
generated by the City’s advertising. This conservative measure ensures the City reports only
verifiable outcomes.
Staff and vendors remain mindful that these are public funds. Rising advertising costs require
constant optimization and negotiation to protect the City’s purchasing power ; added-value
placements are used to extend the reach of the existing budget. Ongoing oversight, performance
review, and real-time adjustments ensure the program remains accountable and efficient.
Looking Ahead: 18-Month Tourism Marketing Strategy
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City Marketing Update
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The following plan outlines the major steps in deve loping Palm Desert’s next-generation tourism
campaign. This plan pertains only to the tourism marketing program; all in -house resident
communications will continue their established track.
1. Qualitative Research (December 2025 – March 2026)
Stakeholder Interviews (Palm Desert, 2-day session)
Hotel partners, attractions, retailers, restaurateurs, event producers, and others will
provide insights into evolving visitor expectations, local opportunities, and market
challenges.
Market Focus Groups (Four outbound markets)
Focus groups in Seattle, Los Angeles, Orange County, and the San Francisco Bay Area —
the City’s highest-value visitor markets—will provide qualitative insights into traveler
motivations, decision-making, and perceptions of Palm Desert.
This will be the City’s first major research effort since 2018, aligning with significant
changes in travel behavior and planning tools.
The research initiative will help reconnect Palm Desert’s destination identity with both
traveler motivations and local sentiment. As outlined in the attached Tourism Qualitative
Research Framework (2025), the work is designed to uncover the emotional and
behavioral drivers behind visitation, clarify differentiators among competing destinations,
and ensure that future campaign development aligns with both community values and
visitor expectations.
2. New Brand Campaign Strategy (July – September 2026)
Following research, the City and its agency will develop:
Creative Strategy
Campaign Architecture (messaging framework, visual direction, concept hierarchy)
This will define Palm Desert’s next multi-year tourism brand platform.
3. Campaign Production (November 2026)
Video and photo shoot
Hero video
Social cuts
Still photography for print, digital, and PR
4. New Campaign Launch (January 2027)
Launching at the beginning of the calendar year aligns with peak trip -planning season
and maximizes the City’s visibility during high-yield tourism months.
5. PR Momentum (Summer 2026)
Public relations activity will increase during Summer 2026 to support Desert Surf and to
begin building interest and earned media momentum ahead of the fall/winter travel
season. This includes:
Press previews
Influencer visits
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Early storytelling aligned with campaign themes
City Council Guidance Requested
To ensure the next phases of the City’s tourism marketing work continue to reflect Council’s
long-range priorities, staff requests input on the following areas:
Market Priorities:
Would Council like staff to use the upcoming research to also determine whether
additional geographic markets may be appropriate to consider in future years, based
on data-driven indicators such as visitor propensity, travel behavior, and media cost
efficiency?
Research Considerations:
Are their specific topics, emerging visitor trends, or community priorities that Council
would like staff to ensure are incorporated into the upcoming research initiative?
Strategic Emphasis:
Are there regional, economic, or destination-industry factors on the horizon that
Council believes should inform long-term messaging and positioning?
Legal Review:
This report has been reviewed by the City Attorney’s Office.
FINANCIAL IMPACT:
There is no financial impact associated with this item. All program activities are supported by the
approved FY 2025-26 Annual Budget; any future funding needs will be evaluated through the
City’s normal budget process.
ATTACHMENTS:
1. 2024 Economic Impact of Visitors to Palm Desert
2. Tourism Qualitative Research Framework (2025)
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Qualitative
Research
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Part 1 Overview
Executive Summary
Goals & Rationale
Part 2 Approach
Stakeholder Interviews
Origin Market Focus
Groups
Part 3 Outcome
Table of
Contents
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Overview
Part 1
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Through qualitative research, we’re uncovering the deeper “why” behind visitation;
linking traveler motivations with Palm Desert’s evolving identity. This work will
build a human-centered foundation for a refreshed brand that reflects the true
value and connection behind fly and drive audiences, respectively .
Why Palm Desert?
the question we’re in pursuit
to answer
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Goals & Rationale
Reconnect identity
with traveler and
local sentiment.
Uncover emotional and behavioral
drivers of visitation to clarify brand
differentiators within travel.
Ensure brand evolution aligns
with community values and
visitor expectations.
1.
Establish an
insight base to
inform creative,
messaging and
experience design.
4.2.
3.
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Approach
Part 2
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To assess and evolve an authentic brand positioning for Palm
Desert, we’ll look both internally and externally to uncover
emotional drivers, shape authentic storytelling, identify
trends/behaviors and fuel strategic work that resonates
with the respective values in fly and drive audiences.
Our Objective
Who We’re Speaking To
Stakeholder Interviews
Origin Market Focus Groups
Understand how locals perceive tourism’s impact on community,
culture, and identity. Ensures marketing strategies align with
local pride and sustainability goals, while addressing tensions.
Understand perceptions, motivations, and barriers among
potential visitors before they arrive. Reveals how the destination
is positioned in travelers’ minds compared to competitors, and
what emotional/functional triggers drive consideration.
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Why do travelers
choose Palm Desert?
The Central Question
Perceptions of authenticity, pace and sophisticationTravel tradeoffs:accessibility v. exclusivity
Market Specific:values and culture
Moments that make the trip Sources of friction or disconnect
Behavioral & emotional layers (motivation → meaning → memory)
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Outcome
Part 3:
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All of this information culminates into one ownable positioning for the
City of Palm Desert’s Travel & Tourism.
A Short-form Video that brings research to life in a visceral,
emotional way. Humanizes findings by showing real voices and
faces. Helps stakeholders internalize the passion, concerns, and
experiences of visitors and residents alike and creates a tangible
tool for information sharing/alignment.
A Report that synthesizes qualitative insights into a digestible, strategic
framework. Translates anecdotes into actionable insights for committees,
boards, and partners. Serves as the north star document for aligning
decision-makers on positioning, priorities, and next steps.
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Building Strength Through Truth
Need States/Key Drivers
Competitive Advantages &
Differentiators
Bonus: Reassess the competitive set
for local getaways and flights based
on origin market behaviors
Current perceptions of Palm Desert
Ownable
Positioning
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thank you thank
you thank you
thank you thank
you thank you
|2025
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