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HomeMy WebLinkAbout2002-10-23 IFC Regular Meeting Agenda Packet COMMITTEE MEETING WORKSHEET Meeting Description Investment Committee Meeting Date 10/23/02 Time 2:00 p.m. Location North Wino Conference Room Mailed Agenda 10/17/02 Posted Agenda 10/17/02 Time Convene Adjournment v Staff Members Attending Yes No Others Attending Yes No 1 Paul Gibson, Chairperson 11 Dennis Coleman 2 Council Member y� ✓ 12 Justin McCarthy 3 Council Member p 13 Rodney Young 4 Da ye Erwin, City Attorney 14 Recording Secretary 5 1 r. 6 Thomas Jeffrey Public Members Attendina Guests Attending 7 Russ Campbell 15 8 Murray Magloff VIII 16 9 Bill Veazie 17 10 Everett Wood 18 19 20 Follow-Ups/Tasks Assigned Person Responsible Due Date ' 1 2 3 4 5 P� 6 r 7 8 r oarTO ►1p n Cry YvL i� .. ®� MEETING NOTES 270 =�M A 's RAW ME ���Il�l►., �t7lrli'�� ��� � ► %,ter_- EARN' ME ��� 'CHI ,. ,�. , �, ► iz�WlWA �! IN M M__ _-�( �� � . . I y ► it ' ' I MAIA lw a JGr M' I ►f ._►MPIN �.I�MIJJftJ.f_YZ O c� �'�. .. . �- ��� _ , �• ORE. SMIMEMMIRMIM- MWAIRRIMMO �r�� ,L►_�. :: ...�i. �, . a�A�p�r �. I:I WA O 1; 41 , ' , � I"I , ice% / PL 1��� _►_..i.: MAR M M ' . l.I��.0 7 �el� Spoke Mtn (1) Mtn (2) MEETING NOTES V. . i- t 6 aIA C C rn C04,1 ULXW C Wco Ls Y �f i Flol Fyn o4.1,;' i�iR REMOVED[ • M�Miffld 1�i%� T,0W1m i ��M MWOMM POISON M. �iM .0 . i►u�[r� / .�. AM"i -WRAMI. 10 r IN foldollodr, i�i %.�1'i •. _'^r�7� =�iFm - Spoke Mtn (1) Mtn (2) MEETING NOTES c I 2 Tv— �n Ilia r G ct Spoke Mtn.(1) Mtn (2) VEETING NOTE , -j dl;-4- �O d441 1 III s CITY OF PALM DESERT INVESTMENT & FINANCE COMMITTEE AGENDA October 23, 2002, 2:00 p.m. North Wing Conference Room I. CALL TO ORDER II. ROLL CALL III. ORAL COMMUNICATIONS A. Any person wishing to discuss any item not on the agenda may address the Investment and Finance Committee at this point by giving his/her name and address for the record. Remarks shall be limited to a maximum of five minutes, unless the Investment and Finance Committee authorizes additional time. B. This is the time and place for any person who wishes to comment on agenda items. It should be noted that at the Investment and Finance Committee's discretion, these comments may be deferred until such time on the agenda as the item is discussed. Remarks shall be limited to a maximum of five minutes, unless the Investment and Finance Committee authorizes additional time. IV. COMMITTEE MEMBER REPORTS V. CONSENT CALENDAR ALL MATTERS LISTED ON THE CONSENT CALENDAR ARE CONSIDERED TO BE ROUTINE AND WILL BE ENACTED BY ONE ROLL CALL VOTE. THERE WILL BE NO SEPARATE DISCUSSION OF THESE ITEMS UNLESS MEMBERS OF THE INVESTMENT & FINANCE COMMITTEE OR AUDIENCE REQUEST ITEMS BE REMOVED FROM THE CONSENT CALENDAR FOR SEPARATE DISCUSSION AND ACTION UNDER SECTION V. CONSENT ITEMS HELD OVER, OF THE AGENDA. A. Approval of Minutes Rec: Approve minutes of the regular meeting of September 25, 2002, as submitted. Action: 1 102302.wpd INVESTMENT & FINANCE COMMITTEE AGENDA October 23,2002 VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for September 2002 (will be distributed at the meeting) Rec: Review and submit for the next City Council agenda. Review the presentation on the investment graphs. Review the investment activity for September 2002. Action: B. State of California Local Agency Investment Fund Balance for the month of September 2002 Rec: Informational item for the Committee to review. No action required C. California Asset Management Program (CAMP) September 2002 Statement Rec: Informational item for the Committee to review. No action required D. Annual Audit Policy and Audit Subcommittee Rec: Report and submit to City Council Action: E. City and Redevelopment Agency Monthly Financial Reports for City Council for September 2002 Rea Report and submit to City Council Action: 2 102302.w d INVESTMENT & FINANCE COMMITTEE AGENDA October 23, 2002 F. Parkview Professional Office Buildings - Financial Report for September 2002 Rec: Review and file report Action: G. Palm Desert Golf Course Facilities Corporation Financial Information for September 2002 (will be distributed at the meeting) Rec: Review and file report Action: Vlll. CONTINUED BUSINESS None. IX. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks Rec: Status report on background checks Action: B. Bond Issuance by Palm Desert Financing Authority Rec: Status report on issuing new bonds Action: X. NEXT MEETING - Wednesday, November 27, 2002 at 2:00 p.m. 3 f02302.wpd INVESTMENT & FINANCE COMMITTEE AGENDA October 23, 2002 XI. ADJOURNMENT I hereby certify under penalty of perjury under the laws of the State of California, that the foregoing agenda for the Investment and Finance Committee was posted on the City Hall bulletin board not less than 72 hours prior to the meeting. Dated this 17" day of October, 2002. i r J' D' a Ulal, Aa 'ng Secretary 4 102302.wptl CITY OF PALM DESERT INVESTMENT & FINANCE COMMITTEE Minutes September 25, 2002, 2:00 p.m. North Wing Conference Room I. CALL TO ORDER A regular meeting was called to order by Chairman Gibson on Wednesday, September 25, 2002 at 2:05 p.m. 11. ROLL CALL Present: Absent: Paul Gibson, Director of Finance Everett Wood Jean Benson, Mayor Pro-Tempore Bob Spiegel, Council Member Thomas Jeffrey, Investment Manager Carlos Ortega, City Manager David Erwin, City Attorney Murray Magloff Bill Veazie Russ Campbell Also Present: Dennis Coleman, Redevelopment Finance.Manager Rodney Young, General Manager Desert Willow Diana Leal, Recording Secretary Guests: None Ill. ORAL COMMUNICATIONS - Mr. Magloff asked for the status of the incident reported that the police of Palm Desert assailed a french couple. Mr. Ortega said that an internal investigation is being conducted and the Police Department cannot comment on the matter until the investigation is complete. The results of the investigation will determine if the officers acted appropriately. In any case, if a law suit is brought against the officers, the City is held harmless in accordance with the agreement between the City and the County. 1 92502.wpL INVESTMENT & FINANCE COMMITTEE MINUTES September25, 2002 Mr. Gibson said that the City contracts for police services with the Riverside County Sheriffs Department and they have the responsibility of hiring, firing and monitoring the police officers. IV. COMMITTEE MEMBER REPORTS Mr. Ortega said that there was a dispute the last time the City conducted the audit selection process. Therefore, Council directed staff to develop guidelines for selecting audit firms. Mr. Gibson distributed the draft Audit Policy to the committee for their review. The policy will be presented at the next committee meeting for any comments or changes. The policy suggests that a subcommittee comprised of the Investment and Finance Committee members be established. The Audit subcommittee will be responsible for interviewing the Audit firms and recommending the selection of a firm, reviewing auditor reports and any information relevant to the audit which requires review and approval. Mr. Gibson reminded the committee of the Committee/Commission Holiday Party and asked that the committee contact Pat Scully to inform her if they will be attending. Mr. Jeffrey distributed a memorandum regarding the enactment of the SB68 Bill which was sponsored by the City. He said that the bill has been signed into law and has been chaptered into the California Government Code. This bill amends state law which previously classified all local agency money received by the Local Agency Investment Fund (LAIF) as "state money" that was subject to appropriation by the state of California. This bill will change the California Government Code whereby local agency money will be classified as "non-state money" and the state will have no legal basis for appropriating this money. The state treasurer will hold all local agency money in trust and State officials and agencies will be expressly prohibited from seizing local agency money in LAIF if a state budget has not been adopted. V. CONSENT CALENDAR A. Approval of Minutes Motion was made by Mr. Spiegel and seconded by Ms. Benson to approve the Minutes of the July 24, 2002 meeting with the following corrections: Page 1: LA Department of War and Power (LA DOWAPS) to LA Department of Water and Power (LA DEWAPS) Page 2: As Ms. Benson did not attend the July 24 meeting, her name was replaced with Mr. Veazie which was the person who seconded the motion to approve the June 26, 2002 meeting minutes. Mr. Ortega abstained. 2 92502.w d INVESTMENT & FINANCE COMMITTEE MINUTES September 25,2002 VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. Informational 1. Understanding Public Investment (A Handbook for Local Elected Public Officials Mr. Gibson said that this report was given to the City by the California Debt Advisory Commission. Mr. Ortega said that this report explains what the different ratings mean. He felt it would assist the committee greatly. 2. Wall Street Journal Article Sour Energy Loans Hurt Smaller Banks, Too Mr. Gibson said that this article indicates that smaller banks such as our bank was affected by what is,happening with respect to loans, etc. B. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for July and August 2002 Mr. Jeffrey said that for the month ended July, 2002, the book value of the City Portfolio was approximately $189,400,000. The City earned approximately $462,000 in interest. The portfolio yield-to-maturity was 2.88%. For the month ended July, 2002, the book value of the RDA Portfolio was approximately $115,000,000. The RDA earned approximately $216,000 in interest. The portfolio yield-to-maturity was 2.23%. Mr. Jeffrey said that the economic picture statistics are not bad. However, there is concern with the war starting with Iraq that there will be a lot of money going into treasuries which will depress the yield. It is thought that if the economy does stabilize, and there is a strong economic recovery, a hike in the yield is expected in the first quarter of 2003. For the month ended August, 2002, the book value of the City Portfolio was approximately $180,700,000. The City earned approximately $428,000 in interest. The portfolio yield-to-maturity was 2.64%. For the month ended August, 2002, the book value of the RDA Portfolio was approximately $100,100,000. The RDA earned approximately $199,000 in interest. The portfolio yield-to-maturity was 2.27%. 3 92502.wp0 INVESTMENT & FINANCE COMMITTEE MINUTES September 25, 2002 a The City is continuing to purchase commercial paper. The City is only purchasing commercial paper from three companies (GE, Wells Fargo Bank and Harvard University). Mr. Jeffrey said that the gap between the City's portfolio and LAIF is due to the maturing of older securities with higher yields. C. State of California Local Agency Investment Fund Balance for the Month of August 2002 Mr. Gibson said that the accounts are maxed out. Ms. Benson asked if the same amount of money is being obtained on the money deposited. Mr. Gibson said that LAIF always earns more than CAMP. Mr. Gibson said that$7 million will be withdrawn tomorrow from CAMP to cover payments owed by the Redevelopment Agency. D. California Asset Management Program (CAMP) August 2002 The committee received a statement for the month of August, 2002. E. City and Redevelopment Agency Monthly Financial Reports for City Council for July and August 2002 Mr. Gibson said that the activity for July and August is accrual activity where they post prior year sales tax and transient occupancy tax. Mr. Gibson received a report from MRC, the City's sales tax consultant, which showed that the City was down another quarter (2.8%). Mr. Spiegel said that the City will get a better idea of what revenue to expect once the mall is fully operational. The mall will have the first garage completed by the 8'h of November and the second garage will be open by the end of November. He asked what was budgeted for revenue. Mr. Gibson said that it is about $13.3 million for sales tax which is $200,000 over last year with the expenditures expected to be the same. F. Parkview Professional Office Buildings - Financial Report for July and August 2002 Mr. Gibson said that the lease with Goodwill was renewed. The Chamber of Commerce has signed a one year lease. UCR has asked for space. Mr. Spiegel asked if there is any vacancy. Mr. Gibson said that they have a small area available which will be reserved for the Mountain Conservancy as they requested space prior to UCR. Mr. Gibson expects to have the Mountain Conservancy move in within the next three months. 4 92502.wpd INVESTMENT& FINANCE COMMITTEE MINUTES September 25, 2002 r-00 G. Palm Desert Golf Course Facilities Corporation Financial Information for Jul and August 2002 Mr. Young said that golf rounds were down in July. They had a transition in their greens which made an impact on their revenues to some extent. Overall everything was controlled well. The merchandise sales are down dramatically from previous year, however, the cost of goods is also down. August was a good month. They were over in revenues. There were some reoccurring effects as far as spending money on sod and labor to get the course in good condition. Repairs and maintenance continue to be high due to old equipment. They are out to bid. Once the equipment is in place the repairs and maintenance costs will diminish dramatically. Mr. Spiegel asked if the reseeding of the courses has begun and if Desert Willow (DW)was working with Rancho Mirage on an agreement for their residents to play at Desert Willow. Mr. Young said that the Fire Cliff Course goes down as early as the middle of September to prepare for the Prestige. By not hosting a prestige this year they are able to alternate the golf course and move it over to Mountain View. Mountain View will be the first course to shut down. The water went off on Monday. They'want to have a growing season for the Bermuda grass to get established causing less transition problems next year. Mr. Young said that they have a program with golf providers in town and from other areas where they offer special golf rates. The same type of program has been offered to the City of Rancho Mirage. If they chose to do so, they can offset their resident's rate of$120 by paying for part of the rate in order to provide a reduced rate to their residents. The City of Rancho Mirage has formed a committee which is conducting research on what programs are available. They have also approached the Westin Mission Hills. Mr. Young said that Mountain View will close on Sunday and will re-open November 1. Both courses will be open for about 10 days in November. Fire Cliff will be closed on the 1 V" or I Vh of November through Christmas. Ms. Benson said that resident golf was up in August from 47 to 290. Mr. Young said that DW had a harder transition especially at the Fire Cliff Golf Course as it tends to be the favorite of the two for the summer-time crowd this could be the reason for the increase. Ms. Benson asked if DW plans to be open for additional hours of operation. Mr. Young said that breakfast was started in January. They had some events which included performers. Their banquet business has done very well. They are sold out through Christmas for Saturday night events. 5 92502.wpd INVESTMENT & FINANCE COMMITTEE MINUTES September 25, 2002 i Mr. Ortega said that when the lights are in place, he expects that DW will do better, Mr. Young said that there is a retirement development behind the fire station on Portola. Their program includes a clubhouse and dinner for all their residents. Because they expect to have their clubhouse completed within 6 months to a year, they would like to have their residents use DW as their clubhouse and have lunch and dinner at DW. Mr. Young calls them every month to check on status. If they can guarantee that their residents will come to DW, Mr. Young can make arrangements to accommodate them. Mr. Spiegel asked if DW makes money when the Chamber holds the Mayor's Breakfast at DW. Mr. Young said that DW does make money. He said that there are certain groups that they negotiate with to secure revenue. Mr. Young said that he hopes to have blinds installed. He said that the blinds that will be installed are the same as the blinds located in the private dining room. They propose to place a heavier type of blinds on the outside of the far banquet room to make the room dark for presentations. Ms. Benson suggested that they upgrade their speaker system. Mr. Young said that the speaker system was purchased last year and that he will contact the company to see if they can upgrade the system. Mr. Young said that their sales person, Guy Morris, has resigned. They will be reviewing applications and will begin interviews next week. They will have someone in place by the end of October. Vlll, CONTINUED BUSINESS - None. IX. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks There being no business issues to report, discussion ensued to the next agenda item. 6 s25a2.wpd INVESTMENT & FINANCE COMMITTEE MINUTES September 25, 2002 B. Bond Issuance by Palm Desert Financing Authority Mr. Coleman provided the Committee with a handout which is the actual numbers from the housing bond. The final pricing of the bond was $12.1 million. It netted funds for construction and the acquisition of$11.6 million. He pointed out the way that they structured the insurance. Usually, they try to obtain the lowest coverage ratios they can in terms of leveraging cash flow. They took a slightly different approach with respect to housing because in doing the 40-year proforma they never really looked at the housing funds being leveraged as a lot of the projects they do they need cash, instead of tax exempt funds. They received two quotes from the insurance company, the bond insurers. One based on a 1.15 coverage and, one based on the 1.20 coverage. The difference in the basis of the premiums for the higher coverage were if they would have gone with the lower coverage of 1.15% they would be facing about 115 basis points to 125 in coverage. By looking at the 1.20 coverage they were able to get 75 basis points along with a cheaper surety. Instead of 4.50 they got it at 3.75. They opted to increase their coverage for the next set of additional bonds that they do and they will receive a cheaper basis points on their insurance. The yields that they received were fantastic as it is a good time to be issuing debt. The 30 year maturities were 5% discounted to yield 5.05. He said that they did overall better than they did on the first bond issue done in November for Project Area No. 4 where the yields were 4.9 and 4.8. The earlier yields were 1.4, 1.57, 1.9, 2.25. The earlier yields were about 3% when they did the bond issue in November. Overall, the arbitrage yield was 4.866, the net interest cost was 4.82 and at this time he doesn't have the all inclusive. However, they basically borrowed money overall at a rate of 5% for 30 years. The net (inclusive costs) was 4.8289. Mr. Coleman said that they are looking at a non-rated assessment district undergrounding of utilities. The Agency is paying half into the program and the residents are being assessed for the other half. It is expected to be a small bond. There are two candidates for refunding which are Merano and Sunterrace where they can save the residents money. They are looking at doing the two refundings, and one new money issues to share the cost of issuance and keep the cost down for all involved. They want to do a new money issue for Project Area No. 2, as an agreement has been reached with the Western Center, for the utilization of the money. They expect to close a bond at the end of January for Project Area No. 2 due to the requirements of the Housing Report. The Housing Report will be taken to Council sometime in November. It is expected to take 60 days for review and 1 day afterwards to price the bonds. They will do some capital financing in Project Area No. 3, where debt has not been issued, as they have the Canterra Apartments which are private apartments which will come on line. There will be two phases consisting of 300 apartments per phase. 7 92502.w d INVESTMENT & FINANCE COMMITTEE MINUTES September 25, 2002 9 Ms. Benson asked if there was sufficient room for 300 more apartments. Mr. Coleman said that he thought that they were not built out as of yet, however, they are not on the assessed valuation rolls. Mr. Ortega said that he thought they were built out. X. NEXT MEETING - Wednesday, October 23, 2002 at 2:00 p.m. XI. ADJOURNMENT There being no further business, the meeting was adjourned by Mr. Gibson at 2:47 p.m. Respectfully submitted, Diana Leal, Recording Secretary 8 92502.wpd STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER SACRAMENTO ' - - -- Local Agency Investment Fund PO Box 942809 Sacramento, CA 94209-0001 (916) 653-3001 September,2002 Statement CITY OF PALM DESERT Account Number : 98-33-621 Atm. CITY TREASURER 73510 FRED WARING DRIVE PALM DESERT CA 92260 Account Summary Total Deposit : 0.00 Beginning Balance : 39,999,864.33 Total Withdrawal : 0.00 Ending Balance : 39,999,864.33 Page : I of 1 STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER SACRAMENTO -- Local Agency Investment Fund PO Box 942809 Sacramento, CA 94209-0001 (916) 653-3001 September,2002 Statement PALM DESERT REDEVELOPMENT AGENCY Account Number : 65-33-015 Attn: TREASURER 73-5I0 FRED WARING DRIVE PALM DESERT CA 92260 Account Summary Total Deposit : 0.00 Beginning Balance : 39,999,746.22 Total Withdrawal : 0.00 Ending Balance : 39,999,746.22 I Page : 1 of 1 Y CALIFORNIA ASSET STATEMENT MANAGEMENT PROGRAM JOINT POWERS AUTHORITY - -j I 30 C'a LIFOANIA STR EET 33R0 FLOOR �. 9AN FRANCISCO CALIFORNIA 941 I 1 FOR ACCOUNT INFORMATION: 800-729-7665 STATEMENT DATE: 9/30/2002 CITY OF PALM DESERT ACCOUNT NUMBER: 653-00 OPERATING FUND 73-510 FRED WARING DRIVE FUND NAME: Cash Reserve Portfolio PALM DESERT,CA 92260 Page 1 of 1 Statement Income Dividends Capital Gains Total Shares Account Date Paid This Year Paid This Year Owned Value 9/3012002 $156,240.34 $0.00 20,427,267.380 $20,427,267.38 Beginning Balance Purchases Reinvestments Redemptions Ending Balance $27,390.838.85 $0.00 $36,428.63 $7,000,000.00 $20,427,267.38 fir. .;o =.. =�r. � ofr; � ���cT � ,-PR�id 09/01/02 09/01/02 Beginning Balance 27,390,838,850 09/26/02 09/26/02 Redemption-Wire Red. $7,000,000.00- $1.00 7,000,000.000- 20,390,838.850 09/30/02 09/30/02 Accrual Income Div Reinvestment-DIV $36,428.53 $1.00 36,428.530 20,427,267.380 Message Line: THE DIVIDEND YIELD FOR THE MONTH IS 1.690/a THE ANNUALIZED YIELD IS 1.70%. a„ t CITY OF PALM DESERT Accounting Policies and Procedures SUBJECT: ANNUAL AUDIT DATE: DRAFT -9101/02 POLICY The purpose of this document is to outline the policy and procedure on the annual outside audit. It is the policy of the City of Palm Desert, the Palm Desert Redevelopment Agency,the Palm Desert Financing Authority, the Palm Desert Housing Authority and the City of Palm Desert Golf Course Facilities Corporation (hereafter referred to as the"City")to retain a certified public accountant("Outside Auditor")who specializes in governmental auditing, to conduct an annual audit of the City's financial statements and of compliance with internal controls. The Outside Auditor shall commence an audit of the City's financial operations for each prior fiscal year(July 1 to June 30)by no later than September of the subsequent fiscal year. This audit shall be conducted in accordance with generally accepted auditing standards of the United States ('GAAS");Government Auditing Standards(1994 Revision), which is issued by the Comptroller General of the United States; and Circular No.A-133, "Audits of State and Local Government and Non-Profit Organizations,"which is issued by the U.S. Office of Management and Budget. Objectives of Audit The objectives of the audit shall be to: • Ensure that adequate internal controls exist and have been followed so that the risk of defalcation is reduced. • Verify that historical financial transactions have been classified, recorded, and reported in accordance with generally accepted accounting principles of the United States. Scope of Audit The Outside Auditor shall review, among other things, the following control procedures: • Adequate separation of duties. • Proper authorization of transactions and activities. • Adequate documents and records. • Physical control over assets and records. • Independent checks on performance. • Reliability of financial reporting. • Compliance with applicable laws and regulations. • Review of cash and investments as required within investment policy. • Review and issuing special purpose reports for state and federal grants. • Special audits on transient occupancy tax and franchise fees. Audit Report and Management Letter The City shall prepare and disseminate a report containing the Outside Auditor's conclusions to the appropriate parties. This report will enable the City to: • Continue to qualify for insurance, bank credit, bond issuance, and trade credit. • Comply with the reporting requirements of State and Federal agencies. • Provide an independent opinion on financial reporting. The Outside Auditor shall communicate all reportable conditions, including material weaknesses, to City . management and to appropriate legislative or regulatory bodies. In"Yellow Book"audits, including Single Audits (audits required by State and Federal grants), this communication is the Outside Auditor's reports on internal controls and compliance and accompanying Schedule of Findings and Questioned Costs. Some government audits, however, are not subject to the Yellow Book standards. In that case, reportable conditions are reported to management in a separate"Management Letter". City management will request that the Outside Auditor forward a copy of its final findings.and Management Letter to the following persons and entities: • The Mayor. • The City Manager. • The Finance Director. • The Audit Subcommittee. Selection of Outside Auditor The quality of outside auditors, like that of other professionals,can vary substantially from one practitioner to another. Some audit firms perform high-quality audits of state and local governments,while others lack the specialized experience and expertise needed to complete such engagements successfully. Therefore, it is critical that the City select its Outside Auditor carefully in order to ensure that it obtains a high-quality audit. The following steps are necessary in order to achieve that goal. First, the City should make sure that the audit procurement process is open and competitive which is likely to encourage greater participation by high quality audit firms. This would include requesting local firms that do not have the specific governmental expertise to team up ijoint venture)with firms that do meet the qualifications. Second, the City should prepare a comprehensive Request For Proposals ("RFP"). A sound RFP process should provide all of the information needed to evaluate the technical qualifications of each candidate to perform the audit. The RFP should also provide each candidate with a detailed description of the City, its specific audit needs, and the City's audit procurement process. Third, the principal factor in selecting an Outside Auditor should be the auditor's technical qualifications. While fees are an important factor, they should not be allowed to dominate the auditor selection process. A poor-quality audit is no bargain at any price. Fourth, it is essential that the City enter into a written agreement with the Outside Auditor that outlines the rights, responsibilities, and obligations of both parties. This would include incorporating the terms of the RFP by reference into the contract. The selection of the Outside Auditor is ultimately the responsibility of the City Council/Board. The Finance and Investment Committee shall recommend a finalist to the City Council/Board, based upon the recommendations of the Audit Subcommittee. The Audit Subcommittee The Finance and Investment Committee shall create an Audit Subcommittee. The Audit Subcommittee shall consist of the following six members: • The Mayor(or other Council Member). • The City Manager. • The Finance Director. • A community member from the Finance and Investment Committee. • A Finance Director from another city within the Coachella Valley. • The Finance Operations Manager. The Finance Director shall chair the subcommittee. The Finance Operations Manager shall act as subcommittee secretary and shall be a non-voting subcommittee member. The Audit Subcommittee shall meet at least two times each fiscal year. The provisions of the"Brown Act"shall not apply to the Subcommittee's activities since they will focus on confidential documents and negotiations. Duties of The Audit Subcommittee The Audit Subcommittee shall have the following duties: • To interview qualified auditing firms and to recommend a finalist to the Finance and Investment Committee. • To receive and review the Outside Auditor's recommendations concerning internal accounting procedures, and to help ensure the usefulness and appropriateness of the City's internal controls and procedures • To meet with the Outside Auditor and review the proposed scope of the audit and its approach, prior to the initiation of the audit. A pre-audit meeting will provide Audit Subcommittee members with an understanding of what to expect from the Outside Auditor, including: (1) The Outside Auditor's approach to evaluating the internal control structure and how that evaluation will affect the scope of the audit. (2) The areas that will be emphasized in the audit and the approach that the auditor plans to take. (3) How major changes in the Chy's organizational structure will affect the approach of the audit. (4) How any new professional, technical, tax laws or regulatory pronouncements will affect the audit. (5) The City's financial reporting requirements and the outside auditor's timetable for meeting the City's reporting deadlines. • To conduct a post-audit meeting to review the financial statements, significant audit findings, the independent auditor's suggestions on how to improve the internal control structure, questions on the financial statements, the reporting process, accounting policies,and budget comparison to actual results. • To request special studies or investigations, such as an investigation of potential fraud or compliance review with federal and state laws and regulations. • To review the performance of the Outside Auditor and to recommend reappointment or termination. • To review the findings of any examinations by regulatory agencies(State Gas Tax, Sales Tax, Measure A, etc.). • To schedule separate, private meetings with City management. • To give an annual report on subcommittee activities to the Finance and Investment Committee and to the City Council/Board. Rotation of Auditors Outside auditors are required to gain and document an understanding of a government's internal control structure as part of the audit planning process. This process is especially costly in the first year of an audit since the auditors must become acquainted with and document the client's internal control structure for the first time. A multi-year audit contract allows the auditor to recover these and similar start-up costs over a longer period of time. This can lead to lower overall audit costs. Multi-year audit contracts can also provide needed continuity in the audit process. The U.S. General Accounting Office (GAO)recommends that"entities should consider using multi- year agreements, preferably of a five-year duration, due to the potential cost savings and continuity benefits over the long-term." The City will, therefore, require a five-year.contract for the outside auditor, with the provision that the Audit Subcommittee shall annually review work performed by the auditor and shall recommend either renewal or termination to the Finance and Investment Committee. The City shall reserve the right to terminate the multi- year contract should the auditor's performance prove unsatisfactory. The City may wish to retain an Outside Auditor for another term, following the expiration of its first multi-year contract. No Outside Auditor may work for the City for more than 10 consecutive years. After that, there must be at least one five-year break between multi-year contracts before the Outside Auditor can reapply for work at the City. If the City chooses to extend a five-year contract for an additional five years,then the City reserves the right to require that the Outside Auditor change key personnel who are assigned to the City's audit, such as the partner-in- charge of the engagement. G 30 00 All, $ - rL CL p 00 LQ N O N N l0 1p J O N N p Cam. 'O d x f o' O O a tWia y` N N f45 .W J`iN OG `. l N C O O O CCY tv IJ O 01 J N w tJ Oq t3 N ""�"�� ii id' qp i C41 1 0000A � Awm � � d {jp � m � m Z o a 11 m 3 � rn ao v: o �- o �- No vaoo= .,.d"'oc � N m m w o � wrn 'a6 �� � -I VI - a � m a r , � ^Jy 9 gI< y'G � Zp Ail r; 'F y 1 City of Palm Desert Parkview Office Complex Financial Statement for Fiscal Year 2002-2003 September-02 September-02 N % YTD YTD M Budget Actual Variance Variance Budget Actual Variance Variance Revenues Rental $ 68,500 $ 70,926 $ 2,426 103.54% $ 205,500 $ 211,898 $ 6,398 103.11% Dividends/Interest $ 4,375 $ 979 $ (3,396) 22.37% " $ 13,125 $ 3,034 $ (10,091) 23.12% Total Revenues $ 72,875 $ 71,904 $ (971) 98.67% $ 218,625 $ 214,932 $ (3,693) 98.31% Expenses Professional-Accounting&Auditing $ 7,000 $ 7,000 $ - 100.00% $ 21,000 $ 21,000 $ - 100.00% Professional-Consultants $ 6,000 $ 5,500 $ 500 91.67% - $ 18,000 $ 17,205 $ 795 95.58% Tenant Improvements $ 2,500 $ - $ 2,500 0.00% $ 7,500 $ 11,818 $ (4,318) 157,58% Repairs&Maintenance Building $ 8,000 $ 11,650 $ (3,650) 145.62% $ 24,000 $ 24,905 $ (905) 103.77% Repairs&Maintenance-landscaping $ Z300 $ - $ Z300 0.00% $ 6,900 $ - $ 6,900 0.00% Utilities-Water - $ 250 $ 120 $ 130 48.10% $ 750 $ 221 $ 529 29.47% Utilities-Gas/Electric $ 10,000 $ 11,866 $ (1,866) 118.66% ': $ 30,000 $ 24,423 $ 5,577 81.41% Utilities-Trash $ 700 $ 526 $ 174 75.14% $ 2,100 $ 526 $ 1,574 25.05% Telephone - $ 150 $ 122 $ 28 81.15% ` $ 450 $ 429 $ 21 95.32% Insurance $ 521 $ - $ 521 0.00% $ 1,561 $ - $ 1,561 0.00% Total Expenses $ 37,421 $ 36,784 $ 637 98.300/u $ 112,261 $ 100,527 $ 11,734 89.55% c. Q er llg7nea»ee $ 35,4$4 .$ ,'1,2(} $ 1334, '9%06 Td, Equipment Replacement Reserve $ 13,000 $ 13,000 $ - 100.00% $ 39,000 $ 39,000 $ - 100.00 2003 Investment Reportlnv Report 2003 City of Palm Desert Parkview Office Complex Vacancy Rate Schedule by Suite September 2002 Suite Square No. Tenant Feet 73-710 Fred Waring Drive-Two (2) Story Building 100 Hanover 1,915 100A EPA 645 102 Bergren 1,360 103 Multiple Sclerosis 488 104 Arthritis Foundation 960 106 Coachella Valley Economic Partnership 928 108 Assemblyman Kelly 785 112 Senator Battin 1,406 114 Chamber of Commerce 1,478 118 Goodwill Industries 1,250 119 City/CVAG Conference Room 1,380 120 Duke Gerstal 1,750 200 CVAG 4,292 200A University of California Riverside 841 201 University of California Riverside 604 203 Vacant 480 205 Vacant 700 208 Alzheimer's Association 960 210 Wilson, Pesota&Pichardo 3,040 2003 Investment ReportVacancy Report City of Palm Desert Parkview Office Complex Vacancy Rate Schedule by Suite September 2002 211 State of California Department of Food&Agriculture 937 217 Joe B. McMillan,. Esq. 775 220 CA. State Dept. of Agriculture 1,607 222 Cove Commission-Fire Marshal 1,900 222 CITY Storage-Vacant 1,081 Total square footage(2 story Building) 31,562 Vacancy Rate-2,261/31,562= 7.16% 73-720 Fred Waring Drive- One Story Building 100 State of California-Water Resources 15,233 102 State of California-Rehabilitation Department 4,396 Total Square Footage 19,629 Vacancy Rate--0.00% 0.00% Overall Vacancy Rate for Both Buildings: Vacancy Rate--2,261/51,191 4.42% Occupancy Rate-48,930/51,191 95.58% 2003 Investment ReportVacancy Report Finance Department MEMORANDUM To: Gloria Martinez, Records Technician I From: Diana Leal, Administrative Secretary Subject: Investment and Finance Committee Date: October 29, 2002 Attached, for your records, is a copy of the October 23, 2002 Investment and Finance Committee meeting attendance register. Thank you for your assistance. Attachments (1) G1Finance\Diana Leal\Wpdocs\1nvestment Committee\2002 Memos\City Clerk\10-23-02attendancempd % \ 9 2 y » \ . a \ & \ � \/ $ Q, % ] / / ) ` > a ® ` / / % \ \ / m $ ( o ) / $ )) \ § ) » { 2 \ / ¢ \§ k tit � \ / k2 , 2 \ \ NO . \ , . . . , CITY OF PALM DESERT �•� INVESTMENT & FINANCE COMMITTEE AGENDA October 23, 2002, 2:00 p.m. North Wing Conference Room I. CALL TO ORDER II. ROLL CALL Ill. ORAL COMMUNICATIONS A. Any person wishing to discuss any item not on the agenda may address the Investment and Finance Committee at this point by giving his/her name and address for the record. Remarks shall be limited to a maximum of five minutes, unless the Investment and Finance Committee authorizes additional time. B. This is the time and place for any person who wishes to comment on agenda items. It should be noted that at the Investment and Finance Committee's discretion, these comments may be deferred until such time on the agenda as the item is discussed. Remarks shall be limited to a maximum of five minutes, unless the Investment and Finance Committee authorizes additional time. IV. COMMITTEE MEMBER REPORTS V. CONSENT CALENDAR ALL MATTERS LISTED ON THE CONSENT CALENDAR ARE CONSIDERED TO BE ROUTINE AND WILL BE ENACTED BY ONE ROLL CALL VOTE. THERE WILL BE NO SEPARATE DISCUSSION OF THESE ITEMS UNLESS MEMBERS OF THE INVESTMENT & FINANCE COMMITTEE OR AUDIENCE REQUEST ITEMS BE REMOVED FROM THE CONSENT CALENDAR FOR SEPARATE DISCUSSION AND ACTION UNDER SECTION V. CONSENT ITEMS HELD OVER, OF THE AGENDA. A. Approval of Minutes Rec: Approve minutes of the regular meeting of September 25, 2002, as submitted. Action:' 1 f0230Z. d INVESTMENT & FINANCE COMMITTEE AGENDA October 23, 2002 VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. City and Redevelopment Agency Investment Schedules and Summary of Cash Reports for September 2002 (will be distributed at the meeting) Rec: Review and submit for the next City Council agenda. Review the presentation on the investment graphs. Review the investment activity for September 2002. Action: B. State of California Local Agency Investment Fund Balance for the month of September 2002 Rec: Informational item for the Committee to review. No action required C. California Asset Management Program (CAMP) September 2002 Statement Rec: Informational item for the Committee to review. No action required D. Annual Audit Policy and Audit Subcommittee Rec: Report and submit to City Council Action: E. City and Redevelopment Agency Monthly Financial Reports for City Council for September 2002 Rec: Report and submit to City Council Action: 2 102s02..pe INVESTMENT & FINANCE COMMITTEE AGENDA October 23, 2002 F. Parkview Professional Office Buildings - Financial Report for September 2002 Rec: Review and file report Action: G. Palm Desert Golf Course Facilities Corporation Financial Information for September 2002 (will be distributed at the meeting) Rec: Review and file report Action: VIII. CONTINUED BUSINESS None. IX: OLD BUSINESS A. Status of Public and Private Partnerships Background Checks Rec: Status report on background checks Action: B. Bond Issuance by Palm Desert Financing Authority Rec: Status report on issuing new bonds Action: X. NEXT MEETING - Wednesday, November 27, 2002 at 2:00 p.m. 3 102302."d INVESTMENT & FINANCE COMMITTEE AGENDA October 23, 2002 XI. ADJOURNMENT I hereby certify under penalty of perjury under the laws of the State of California, that the foregoing agenda for the Investment and Finance Committee was posted on the City Hall bulletin board not less than 72 hours prior to the meeting. Dated this 17" day of October, 2002. t D' a al, a ng Secretary 4 102302.wpd y Finance Department MEMORANDUM To: Rachelle Klassen, Deputy City Clerk From: Diana Leal, Administrative Secretary l Subject: Investment and Finance Committee Date: November 21, 2002 Attached is a copy of the October 23, 2002 minutes of the Investment and Finance Committee approved by the Committee on November 20, 2002. Please place on the next City Council agenda for approval thereof. Thank you for your assistance. Attachments (1) GAFinance\Diana LeaMpdocs\Investment Committee\2002 Memos\City Clerk\I 1-20-03.wpd CITY OF PALM DESERT �•� INVESTMENT & FINANCE COMMITTEE Minutes October 23, 2002, 2:00 p.m. North Wing Conference Room I. CALL TO ORDER A regular meeting was called to order by Chairman Gibson on Wednesday, October 23, 2002 at 2:03 p.m. It. ROLL CALL Present: Absent: Paul Gibson, Director of Finance David Erwin, City Attorney Jean Benson, Mayor Pro-Tempore Bob Spiegel, Council Member Thomas Jeffrey, Investment Manager Steve Aryan, Assistant to the City Manager Everett Wood Murray Magloff Bill Veazie Russ Campbell Also Present: Justin McCarthy, ACM Redevelopment Dennis Coleman, Redevelopment Finance Manager Diana Leal, Recording Secretary Guests: None III. ORAL COMMUNICATIONS None. IV. COMMITTEE MEMBER REPORTS None. 1 102302.w d INVESTMENT & FINANCE COMMITTEE MINUTES October 23, 2002 V. CONSENT CALENDAR A. Approval of Minutes Motion was made by Mr. Spiegel and seconded by Mr. Campbell to approve the Minutes of the September 25, 2002 meeting as submitted. Motion carried. VI. CONSENT ITEMS HELD OVER None. VII. NEW BUSINESS A. City and Redevelopment Agengy Investment Schedules and Summa!Y of Cash Reports for September 2002 Mr. Jeffrey distributed an article from the International Harold Tribune on the new alignment of the Cal Pers Board of Directors. Mr. Jeffrey addressed a recent downgrade of General Motors Acceptance Corporation. He indicated that only one major credit rating agency (S&P) had done a downgrade, based upon GM's pension liabilities. This should not affect the repayment in March 2003 of a $4 million GM note that the City holds. For the month ended September 30, 2002, the book value of the City Portfolio was approximately $170.4 million. The City earned approximately $390,000 in interest. The portfolio yield-to-maturity was 2.22%. For the month ended September 30, 2002, the book value of the RDA Portfolio was approximately $99.2 million. The RDA earned approximately $191,000 in interest. The portfolio yield-to-maturity was 2.26%. Currently 76% of the City portfolio is liquid. Much of it is being held in CAMP or LAIF. When staff looks at commercial paper yield, it is very close to what they obtain from CAMP and below that of LAIF. At this time, staff is trying to keep the money in the highest-yielding assets based on a rather unusual market. The performance graph shows the impact of the maturing securities in the City Portfolio. For the first time in over a year, the City's yield has dropped below that of LAIF. This is reverting back to a more traditional pattern since historically, the City yield has been slightly lower than LAIF's. On the other hand, the California State Treasury, in the last year, has lost $800 million between WorldCom and Enron, while the City has not lost a penny. 2 102302.wpd INVESTMENT & FINANCE COMMITTEE MINUTES October 23, 2002 The Redevelopment portfolio remains the same, highly liquid, with the bulk of the securities split between money market funds and LAIF. Mr. Spiegel asked if the City would continue to remain liquid. Mr. Jeffrey said that the City would probably remain liquid, waiting for a projected economic recovery in 2003. B; State of California Local Agency Investment Fund Balance for the Month of September 2002 Mr. Gibson said that the accounts are maxed out. C. California Asset Management Program (CAMP) September 2002 Mr. Gibson said that a $4.2 million withdrawal was made. However, as monies have been reimbursed, this money will be re-deposited. D. Annual Audit Policy and Audit Subcommittee Mr. Gibson said that the Annual Audit Policy includes a proposal to have a subcommittee that will perform the bidding process, review annual reports from the auditors, and recommend changes to the auditors. He suggested that the mayor, city manager, finance director, finance operations manager and a member of the Investment Committee be assigned as the subcommittee. In addition, he recommended that when the actual bid is being conducted, the Annual Audit subcommittee invite a finance director from another city, who understands the audit procedures, to participate in the bid. Mr. Veazie asked why the City wanted a finance director from another city to participate. Mr. Gibson said that they suggest that a finance director from another city participate because they have the expertise on what is required of a City audit. The individual that he has in mind has worked with CVAG and is a certified public accountant which makes him very knowledgeable with City audits. Mr. Wood asked who was on the last audit subcommittee. Mr. Gibson said that there was a representative from the Redevelopment Agency, the finance director, and the finance operations manager. The draft policy proposes to have a member from the Investment Committee, a council member, and to add an outside finance director. 3 102302.wpd INVESTMENT & FINANCE COMMITTEE MINUTES October 23, 2002 Mr. Wood asked what the advantage would be of having a local firm merge with a large qualified firm that would handle the audit. He does not believe that there exists a local firm that is large enough or one that has the expertise to perform the task by itself. Mr. Gibson said that the local firms are not qualified to perform an audit for a governmental agency as they lack the expertise. With regard to a joint venture, the City, in the past, worked with Oscar Armijo and Diehl Evans. This was the City's first attempt to work with a joint venture. For the most part it worked well, however, there were some communication issues between.the two parties as far as who would be handling certain tasks, etc. Mr. Gibson felt that a joint venture should be excluded, however, the Council made known their desire to have local firms participate in this process. Because local firms lack governmental experience, a joint venture is the only way to include local firms. Mr. Wood asked if the City received any discounts for hiring a local firm. Mr. Gibson said that the City does not receive any discounts. Mr. McCarthy said that inefficiencies can be expected when a merging of two firms is forced. Mr. Wood said that the City Wants to obtain the most efficient and qualified firm to conduct its audit as the audit is an important task. Mr. Campbell asked how many qualified firms are in existence. Mr. Gibson said that there are five qualified firms. In the past, some firms were not considered as they tend to send inexperienced staff and the audit is not completed in a timely manner which in turn creates a greater cost to the City. Mr. McCarthy said that in the last agency where he was employed, they used a qualified firm, however, the basic audit services were conducted by new accountants which were being trained to conduct audits. He said that working with mid levels is what should be practiced. There are quite a few firms that have principals that the City can work with that have plenty of experience. Mr. Gibson said that in California there are approximately ten firms, however, they are in northern and southern California. Something that needs to be considered is travel expenses if the firm is located in northern California. This leaves about five medium size governmental audit firms available. Mr. Wood asked if travel expenses are included in the billing if a northern California firm is hired. Mr. Gibson said that mileage, hotel accommodations, etc. can be included in their bill. Mr. Gibson said that most of the Los Angeles firms that conduct business in the Coachella Valley have other clients in the valley making it feasible for their firms to travel to the valley to conduct audits. 4 102302.w d INVESTMENT & FINANCE COMMITTEE MINUTES October 23, 2002 Mr. Wood said that he would not like to have the joint venture included as he does not see an advantage to hiring a joint venture. Mr. Spiegel said that he thinks that the constituents like to know that there is a local company who they can call if they have any questions. One of the reasons the auditors were changed was because of the stock market scandals and bad audits. The new audit policy will state that the City's auditors will not be able to conduct the City's audits for more than five years. Ms. Benson asked if criteria could be incorporated into the audit policy that states that a local agency, as part of a joint venture, will be required to be in operation for a specific number of years. Mr. Gibson said that once the subcommittee starts meeting, it can establish the criteria. Mr. McCarthy said that having joint ventures is common in many agencies. For various reasons, the community likes to have a local component. The real issue is ensuring that the criteria for selecting the local component, in terms of errors and omissions insurance, etc. are appropriate. Mr. Wood said that where he worked previously he and his staff spent many hours assisting the auditors. He felt it was not worth the time and money. He would not want a local firm to conduct the audit if the firm was only be considered because they were local. Mr. Gibson said that a local firm needs to find and merge with another firm that has governmental experience in order to be able conduct the City's audit. Mr. Coleman said that in terms of local participation there is a firm that will be in the position to team up with a joint venture. They can perform the testing, however, will not be able to solely handle an audit for an entity of this size. Mr. Gibson said that Diehl Evans and Oscar Armijo conducted the City's audit for ten years. The firm that was recently selected was Lance, Soll and Lunghard. The audit policy proposes the rotation of auditors every five years with the provision that if the subcommittee or the Investment and Finance Committee feels comfortable with allowing the auditor to continue to conduct the audit for 10 years, it may be done. Mr. Wood said that if there is a local firm that can conduct the audit, he believes that it would be wise to utilize this firm, however, if they are a joint venture and lack expertise, they should not be considered. Mr. Veazie said that the people voted for the Council and it is the responsibility of the Council to ensure the professional ability of the City's staff as they have the ability to hire and fire. He asked if the subcommittee would be making any actions. Mr. Gibson said that the audit policy was being brought to the committee to review and make recommendations to council. 5 102302..wan INVESTMENT& FINANCE COMMITTEE MINUTES October 23, 2002 Mr. Veazie recommended that Mr. Wood be a member of the audit subcommittee representing the Investment and Finance Committee as he feels Mr. Wood has the background and ability to serve. Mr. Wood said that he had some concerns on this issue as remarks were made on the subject at a previous meeting. He would like to see the audit procedure improve. He thinks that the audit is very important. He feels that if he hires a firm, he wants to be able to support that firm. Mr. Spiegel said that whatever action is taken to Council can be changed at a later date if the committee decides that the action is inappropriate. Mr. Gibson said that once the subcommittee is formed, they can review and establish the criteria for local firms. Mr. Gibson asked if the committee had an opportunity to review the scope of the subcommittee as well as the location of the auditors and if these sections were acceptable to the committee. Mr. Wood asked about the make up of the audit subcommittee. He asked if it was an appropriate time to involve the mayor. He also asked how many subcommittees the mayor participated in. Mr. Gibson said that review committees, in the past, did not include any council representation and committee meetings were considered more of a management function. Now, the mayor and/or a council member participates in the various committees. Mr. Wood said that he suggests that the policy be changed to reflect "a council member' instead of showing "the mayor" will participate in the subcommittee. Motion was made by Mr. Spiegel and seconded by Mr. Wood to approve the Audit Policy as submitted with a change to reflect "council member" instead of showing "mayor' will participate in the audit subcommittee. Motion carried. E. City and Redevelopment Agency Monthly Financial Resorts for City Council for September 2002 Mr. Gibson said that they are still going through the transition from last year's books to this years books. The timing when reversals occur from one year versus others sometimes changes depending on when the auditors complete certain tasks. The end of the fiscal year is June 30. More accurate numbers will be indicated in the October report. Mr. Campbell inquired about the Marriott transient occupancy tax (TOT). Mr. Gibson said that the Marriott is doing fine. They are on a 13 payment period and not on a monthly payment period. Depending on when the cycle happens each year, TOT can be received one month versus another month. 6 102302.wptl INVESTMENT & FINANCE COMMITTEE MINUTES October 23, 2002 Vacation Inn has not paid their fees for close to one year. Staff will bring this matter to council as Vacation Inn has not honored their promise to pay and staff will seek court action. F. Parkview Professional Office Buildings - Financial Report for September 2002 Mr. Gibson said that staff examined the roof at the Parkview building last week. Bids should be out in the next two weeks. He plans to have the same roofingmaterial laced on the Parkview building as is on the City hall buildings P 9 Y 9 because this roofing material has assisted in the decrease of the energy bill. Ms. Benson asked if there were any vacancies at Parkview. Mr. Gibson said that currently everything is taken. The Mountain Conservancy will be moving from the Portola building to Parkview as they require more space. G. Palm Desert Golf Course Facilities Corporation Financial Information for September 2002 Mr. Gibson said that July through September are typically not the best months for golf due to the heat. Mr. Spiegel said that Desert Willow should be doing better as they have changed their re-seeding practices. They have done one of the courses and plan to do the other course sometime in Christmas when golfing is slow. Ms. Benson asked when a report would be presented that showed if Desert Willow was making any money. When Desert Willow was first completed, it was said that it would take about five years for it to make money. Mr. Spiegel said that income obtained from Intrawest is not shown on the reports received by the council and without that figure, it is difficult to ascertain the amount. Mr. Gibson said that with the Intrawest figure and the figure for the replacement of equipment, there was a $600,000 positive figure for last year. Mr. McCarthy said that if one looks at the figures from the standpoint of the golf operations, there will be a negative. However, if one looks at it from a project perspective, as a redevelopment project, with the land sell, and proceeds from Intrawest and other hotels, there will be a positive outcome. Mr. Gibson said that as far as rounds, Indian Wells (IW) has had equal rounds as that of the City of Palm Desert. In the past, IW had 30,000 more rounds. He will ask the accounting technician to prepare a report that compares Indian Wells to the City of Palm Desert. Desert Willow has done a good job of keeping the play up even with all of the surrounding competition. 7 ro23o2.�d INVESTMENT & FINANCE COMMITTEE MINUTES October 23, 2002 Mr. Gibson said that Desert Willow will be purchasing new equipment (lawnmowers, etc.). One of the bids which will require re-bidding due to unequal bids is for 160 golf carts. Most of the improvements requested in the Capital Improvement Program have been completed. The restroom remodel has not gone out to bid as yet. Mr. Spiegel asked about the status of the sound system. Ms. Benson said that the system has been tested and has worked better when there is no one in the room. Perhaps a new system should be purchased. Vill. CONTINUED BUSINESS - None. IX. OLD BUSINESS A. Status of Public and Private Partnerships Background Checks There being no business issues to report, discussion ensued to the next agenda item. B. Bond Issuance by Palm Desert Financing_Authority Mr. Coleman said that they are on schedule to issue bonds at the end of January for Project Area No. 2. The low income housing bond is complete. They obtained favorable rates. The bond rates are not doing well at this time. Everyone is anticipating that the State will come to market with an $11 billion bond for the Department of Water and Power for the electricity. Thus, a lot of people will not finance. Mr. Coleman said that the Housing Report draft is complete and will be presented to the Council on November 14. The review period will be 61 days after the Council accepts the Housing Report. They are looking at the end of January. Mr. Coleman said that he does not know the status of the assessment districts. Mr. Gibson said that he has not received an update from the engineer. Mr. Coleman said that the preliminary engineer's report has not been completed for this neighborhood assessment which will be done for the placement of utilities underground. Mr. Gibson said that another authority which was recently created and approved by Council was a joint authority between the County of Riverside and the City. Monthly meetings will be held. This committee will review issues relative to the animal shelter. 8 102302.wpd INVESTMENT & FINANCE COMMITTEE MINUTES October 23, 2002 X. NEXT MEETING - Wednesday, November 20, 2002 at 2:00 p.m. XI. ADJOURNMENT There being no further business, the meeting was adjourned by Mr. Spiegel at 3:00 p.m. Respectfully submitted, 2 Di na L I, a ing ecretary S 102302.wW ,C A tymlu Redevelopme gency Portfolios " ,c= OMPLII�VGEANYSIS`AN111�Y �TMt�TR�EPQR� � � • � �SgPt mbe�� �,�. Paul S. Gibson, C.C.M.T., Treasurer Thomas W. Jeffrey, J.D., M.B.A., Deputy City Treasurer Treasurer's Commentary The City portfolio has a$4MM GMAC corporate note that matures on 14 March 2003. On 16 October, Standard and Poor's lowered GMAC's long-term corporate debt rating from "BBB+"to "BBB" due to GM's pension labilities-- not its market performance. The GM debt on the City's books is now two notches above junk-grade status. Although GM lost money in the third quarter (like many large American corporations), independent industry analysts contend that its cash flow and market share performance remain strong. GM's third-quarter loss was largely due to a$1.4MMM write-off of its partnership interest in Fiat Auto. Moody's has confirmed its GM credit ratings and will not be doing a credit downgrade based on GM's pension liabilities. Unlike Enron and WorldCom, GM is a well-established industrial company that produces a tangible product. It has an entrenched, traditional management culture that is dominated by mechanical engineers and that was the subject of a famous Peter Drucker study in the 1950s. In a recent J.D. Powers survey on manufacturing quality control, GM was tied with Nissan for third place, behind Toyota and Honda. Ford Motors, in contrast, ranked last (No. 8). In the long run, GM may well be the only American-owned survivor of the original "Big Three." Pis 6746$01.4 C..C..M r. Treasurer PORTFOLIO STATISTICS Dollars in Thousands SEP-02 AUG-02 JUL-02 JUN-02 MAY-02 APR-02 CITY Month-End Book Value"' $ 170,423 $ 180,743 $ 189,368 $ 195,867 $ 189,180 $ 164,638 Month-End Market Value- $ 170,723 $ 181,096 $ 191,228 $ 197,955 $ 191,365 $ 166,845 Paper Gain (Loss) $ 300 $ 353 $ 1,860 $ 2,088 $ 2,185 $ 2,207 Interest Earnings $ 390 $ 428 $ 462 $ 453 $ 440 $ 420 Yield-To-Maturity 2.22% 2.640% 2.88% 2.86% 2.92%, 3.18% Weighted Maturity(Days) 70 222 285 295 292 338 Effective Duration 0.04 0.06 0.08 0.11 0.13 0.17 RDA Month-End Book Value"' $ 99,221 $ 100,125 $ 115,066 $ 92,648 $ 99,197 $ 101,608 Month-End Market Value"` $ 101,468 $ 102,313 $ 119,206 $ 94,673 $ 101,214 $ 103,579 Paper Gain(Loss) $ 2,247 $ 2,188 $ 4,140 $ 2,025 $ 2,017 $ 1,971 Interest Earnings $ 191 $ 199 $ 216 $ 198 $ 214 $ 232 Yield-To-Maturity, 2.26% 2.27% 2.23% 2.37% 2.38%. 2.42% Weighted Maturity(Days) 141 142 139 166 158 154 Effective Duration 0.13 0.14 0.13 0:16 0.15 0.16 City Treasurer's Office 73-510 Fred Waring Drive Palm Desert,CA 92260-2578 "' Omits SLGSs. 760.346.0611 City of Palm Desert-Portfolio Characteristics 30 September 2002 Dollars in Thousands Ageing Interval Market Value < 1M $ 71,166 General Fund Ageing <2M 2,007 76 <3M 2,012 <6M 18,101 ash<r <1YR a° so e.8" <2YR 0 40 c 3YR a° ? 19 <4YR 20 5 <5YR 2 2 0 0 >5YR 0 Total: $ 93,286 <1M <2M <3M <6M <1YR <2YR Ratings Market Value Credit Quality AA A AAA $ 48,377 v� AAA 2°i AA 2,001 28% O� AIIPt A 4,048 7% A1/P1 12,015 Unrated" 104,970 Unrated Total: $ 171,411 Sector Market Value Asset Allocation Comm Paper M U.S.Treasury $ - 7°� TNs5! Federal Agency 10,122 Money Market Money Market Funds 68,438 Funds Commercial Paper 12,015 40°i LAIF 23% MTNs 8,052 U.S.Treasury LAIF 40,000 0/ RDA Loan 32,784 DRDA Loan Total: $ 171,411 Fed Agency 6% 19% Month City Yield LAIF Yield Variance Performance Oct01 3.98 3.79 0.19 Nov 3.69 3.53 0.17 5.0 Dec 3.54 3.26 0.28 Jan02 3.27 3.07 0.20 4.0 Feb 3.27 2.97 0.31 Mar 3.17 2.86 0.31 Apr 3.18 2.85 0.34 s 3.0 May 3.06 2.74 0.32 t 4 Jun 2.86 2.69 0.18 2.0 Jul 2.88 2.71 0.17 Oct01 Nov Dec Jan02 Feb Mar Apr May Jun Jul Aug Sep Aug 2.64 2.59 0.04 Sep 2.22 2.60 -0.38 JE3 LAIF Yield M City Yield ' Standard and Poor's Credit Ratings " LAIF, HighMark, CAMP, and City Loan to RDA Page 2 of 7 City of Palm Desert Portfolio Holdings 30 September 2002 Market Ratings Par Value Issuer Coupon Maturity Cost YTM I Price I Value I Moody's S&P Medium-Term Notes $ 2,000,000 DU PONT 6.75 10/15/02 $ 1,999,953 6.81 100.16 $ 2,003,170 Aa3 AA- $ 2,000,000 GENERAL ELECTRIC 6.52 10/8/02 $ 1,999,900 6.80 100.06 $ 2,001,264 Aaa AAA $ 4,000,000 GENERAL MOTORS 5.95 3114/03 $ 3,999,932 5.94 101.20 $ 4,047,844 A3 BBB+ $ 8,000,000 Subtotals $ 7,999,785 6.37 $ 8,052,277 Commercial Paper-Unsecured $ 2,030,000 GENERAL ELECTRIC 2.08 1/15/03 $ 1,999,036 2.14 99.48 $ 2,019,441 Aaa AAA $ 6,000,000 GENERAL ELECTRIC 1.76 116/03 $ 5,943,387 1.81 99.52 $ 5,971,417 Aaa AAA $ 2,015,000 MERRILL LYNCH 1.95 11/25/02 $ 1,995,354 1.97 99.73 $ 2,009,483 Aa3 AA- $ 2,023,000 WELLS FARGO BANK 2.01 12/26/02 $ 1,999,167 2.07 99.58 $ 2,014,444 Aa2 A+ $ 12,068,000 Subtotals $ 11,936,944 1.96 $ 12,014,786 Agencies-Discount $ 2,048,000 FED HOME LOAN BANK 2.34 1017102 $ 2,000,077 2.42 99.97 $ 2,047,386 Aaa AAA $ 2,000,000 FED HOME LOAN MTG CORP 2.35 10/10/02 $ 1,952,608 2.43 99.96 $ 1,999,200 Aaa AAA $ 4,080,000 FED NATIONAL MTG ASSOC 2.21 3114103 $ 3,999,350 2.28 99.33 $ 4,052,664 Aaa AAA $ 2,034,000 SALLIE MAE 2.13 217/03 $ 1,999,461 2.19 99.43 $ 2,022,406 Aaa AAA $ 10,162,000 Subtotals $ 9,951,496 2.35 $ 10,121,656 LGIP $ 39,999,864 L.A.I.F. 0.00 10/1/02 $ 39,999,864 2.60 100.00 $ 39,999,864 NR NR $ 39,999,864 Subtotals $ 39,999,864 2.60 $ 39,999,864 LGIP $ 20,427,267 C.A.M.P. 0.00 10/1/02 $ 20,427,267 1.70 100.00 $ 20,427,267 NR AAA $ 20,427,267 Subtotals $ 20,427,267 1.70 $ 20,427,267 Pooled Funds-AIM $ 36,253,242 PRIME PORTFOLIO 0.00 10/1/02 $ 36,253,242 1.38 100.00 $ 36,253,242 Aaa AAA $ 36,253,242 Subtotals $ 36,253,242 1.38 $ 36,253,242 Pooled Funds-HighMark $ 9,753,312 CITY MAIN SWEEP 0.00 10/1/02 $ 9,753,312 0.71 100.00 $ 9,753,312 NR NR $ 0 DESERT WILLOW SWEEP 0.00 10/1/02 $ 0 0.71 100.00 $ 0 NR NR $ 386,850 GOLF COURSE SWEEP 0.00 10/1/02 $ 386,850 0.71 100.00 $ 386,850 NR NR $ 1,617,090 OFFICE COMPLEX SWEEP 0.00 10/1/02 $ 1,617,090 0.71 100.00 $ 1,617.090 NR NR $ 11,757,252 Subtotals $ 11,757,252 0.71 $ 11,757,252 City Loan to RDA $ 32,785,480 CITY OF PALM DESERT 0.00 10/1/32 $ 32,785,480 2.60 100.00 $ 32,785,480 NR NR $ 32,785,480 Subtotals $ 32,785,480 2.60 $ 32,785,480 NR=Not Rated Page 3 of 7 I, City of Palm Desert Portfolio Holdings 30 September 2002 Market Ratings Par Value Issuer Coupon Maturity Cost I YTM I Price I Value lmoody's S&P Total Investments $ 171,453,105 $ 171,111,330 2.22 $ 171,411,824 Cash $ 50,736 OFFICE COMPLEX CHKG 0.00 10/1/02 $ 50,736 0.00 100.00 $ 50,736 NR NR $ (675,320) CITY MAIN CHKG 0.00 10/1/02 $ (675,320) 0.00 100.00 $ (675,320) NR NR $ 80,140 DESERT WILLOW CHKG 0.00 10/1/02 $ 80,140 0.00 100.00 $ 80,140 NR NR $ (196,388) CPD GOLF COURSE 0.00 10/1/02 $ (196,388) 0.00 100.00 $ (196,388) NR NR $ 30,181 OFFICE COMPLEX TRUST 0.00 10/1/02 $ 30,181 0.00 100.00 $ 30,181 NR NR $ 21,835 RECREATIONAL FAC CHKG 0.00 10/1/02 $ 21,835 0.00 100.00 $ 21,835 NR NR $ - VACATION INN CHKG 0.00 10/1102 $ - 0.00 100.00 $ - NR NR $ (688,817) Sublotals $ (688,817) 0.00 $ (688,817) Total Cash and Investments $ 170,764,288 $ 170,422,513 $ 170,723,007 NR=Not Rated Page 4 of 7 Palm Desert Redevelopment Agency- Portfolio Characteristics 30 September 2002 Dollars in Thousands Ageing Interval Market Value Portfolio Ageing w/o SLGSs < 1 M $ 75,631 <2M - <3M - 100 90 <6M 197 80 < 1 YR 866 v 70 ZQ <2YR 7,034 0 60 so <3YR 40 s, <4YR 0! 30 <5YR 20 6 6 10 ,$ 0 0 0 1 0 0 >SYR 0 Total: $ 83,728 <1M <2M <3M <6M <1YR <2YR <3YR <4YR Quality Market Value Credit Quality A1/P1 AAA $ 41,005 / 0% AA - AAA A _ 40% Unrated" A1/P1 AA 60%< Unrated" 60,284 00/- A Total: $ 101,289 0,/0 Asset Allocation Federal Agency Sector Market Value of U.S. Treasury $ 8,168 Money Market Federal Agency Funds D Money Market Funds 38,820 36%= LAW 54,301 Commercial Paper - LAW Corporate Bonds - U.S.Treasury 54/6 Total: $ 101,289 8 Month RDA Yield LAW Yield Variance Performance Oct01 3.04 3.79 -0.74 Nov 2.83 3.53 -0.69 4.0 Dec 2.59 3.26 -0.67 Jan02 2.46 3.07 -0.61 _ Feb 2.51 2.97 -0.46 Mar 2.28 2.86 -0.59 3.0 Apr 2.42 2.85 -0.43 5: May 2.38 2.74 -0.36 Jun 2.37 2.69 -0.32 2.0 Jul 2.23 2.71 -0.48 Oct01 Nov Dec Jan02 Feb Mar Apr May Jun Jul Aug Sep Aug 2.27 2.59 -0.33 Sep 2.26 2.60 -0.35 O LAIF Yield O RDA Yield Standard and Poor's Credit Ratings " LAIF and HighMark Sweep Page 5 of 7 a i Palm Desert Redevelopment Agency Portfolio Holdings 30 September 2002 Market Ratings Par Value Issuer Coupon Maturity I Cost I YTM I Price I Value I Moody's I S&P U.S.Treasury-Discount $ 198,000 UNITED STATES TREASURY 4.70 2/15/03 $ 150,793 5.45 99.56 $ 197,127 Aaa AAA $ 181,000 UNITED STATES TREASURY 4.63 2/15/04 $ 130,168 5.51 98.09 $ 177,543 Aaa AAA $ 7,143,000 UNITED STATES TREASURY 4.59 8/15/04 $ 4,989,671 5.54 96.95 $ 6,925,281 Aaa AAA $ 532,400 UNITED STATES TREASURY 4.66 8/15/03 $ 394,279 5.47 98.95 $ 526.826 Aaa AAA $ 344,600 UNITED STATES TREASURY 4.66 8/15/03 $ 255,200 5.47 98.95 $ 340,992 Aaa AAA $ 8,399,000 Subtotals $ 5,920,112 5.529 $ 8,167,768 LGIP $ 39,999,746 L.A.I.F. 0.00 10/1/02 $ 39,999,746 2.60 100.00 $ 39,999,746 NR NR $ 4,862,648 L.A.I.F. BOND PROCEEDS 0.00 10/1/02 $ 4,862,648 2.60 100.00 $ 4,862,648 NR NR $ 9,438,375 L.A.I.F. BOND PROCEEDS 0.00 1011102 $ 9,438,375 2.60 100.00 $ 9,438,375 NR NR $ 54,300,769 Subtotals $ 54,300,769 2.60 111 54,300,769 Pooled Funds-AIM $ 32,837,223 PRIME PORTFOLIO 0.00 10/1/02 $ 32,837,223 1.38 100.00 $ 32,837,223 Aaa AAA $ 32,837,223 Subtotals $ 32,837,223 1.38 $ 32,837,223 • Pooled Funds-HighMark $ 5,719,350 HOUSING AUTH CHK SWEEP 0.00 10/1/02 $ 5,719,350 0.71 100.00 $ 5,719,350 NR NR $ 263,541 HOUSING AUTH TRT SWEEP 0.00 10/1/02 $ 263,541 0.71 100.00 $ 263,541 NR NR $ 5,982,892 Subtotals $ 5,982,892 0.71 $ 5,982,892 Total Investments $ 101,519,884 $ 99,040,996 2.26 $ 101,288,653 Cash $ 48,316 HOUSING AUTH CHKG 0.00 10/1/02 $ 48,316 0.00 100.00 $ 48,316 NR NR $ 131,386 HOUSING AUTH TRT 0.00 10/1/02 $ 131,386 0.00 100.00 $ 131.386 NR NR $ 179,702 Subtotals $ 179,702 0.00 $ 179,702 Total Cash and Investments $ 101,699,686 $ 99,220,698 $ 101,468,355 < NR=Not Rated Page 6 of 7 3 STATEMENT OF COMPLIANCE The investment portfolios of the City of Palm Desert ('City')and the Palm Desert Redevelopment Agency('RDA')are governed by federal, state, and local law. The City Treasurer's"Statement of Investment Policy' is more restrictive than the California Government Code. The Palm Desert Investment Committee and the Palm Desert City Council review the Statement of Investment Policy annually. For the month ended 30 September 2002,the City and the RDA investment portfolios were in compliance with all applicable federal,state, and local laws and regulations. The City Treasury continued to pursue conservative and prudent investment strategies, based upon the stated objectives Of safety, liquidity, and yield (in order of priority). Barring unforeseen events,the City Treasury should have sufficient cash to finance the operations of the City of Palm Desert and the Palm Desert Redevelopment Agency over the next six months. In addition, portions of either the City or the RDA portfolio could be liquidated in order to meet any significant, unexpected cash requirements. Bloomberg L.P. and Interactive Data Corporation provided the data and the analytical tools that were used to calculate the market value of all securities in the City and the RDA investment portfolios. State and Local Government Series securities are held in escrow accounts and are therefore not included in this report as assets. All balances are bank balances. Respecffully submitted on 23 October 2002, PauLS. 67d40s4 C.C.M T. ' City Treasurer SUMMARY OF AUTHORIZED INVESTMENTS California Government Code City Investment Policy CA Govt Maximum Maximum Quality Maximum Maximum Quality %of City %of RDA Code Investment Category Maturity Limit S&P/Mdys Maturity Limit S&P/Mdys Portfolio Portfolio 53601 a Palm Desert Bonds 5 Years No Limit Not Authorized 1 $3601 b%"_ rrU.$:tT(eaSUf16S " ^ „$xYearau. ;NO LIfr1114" ' ro , 't- N °".1; u?xw..... ,5`,Y e38rS a ;:Nq;Llmlt, ,h ,.5,r, ir,.:,�70%�,a, r60%}ac 53601 c CA State Debt " 5 Years No Limit Not Authorized 53601 d CA Local Agency Debt 5 Years No Limit Not Authorized 53601 e),'`a',. ^Feiieral`A riae E"w ,S,Years ;No,Liiriit ) ; rt ,S.Yea's if, 0% ° 4'1_ 11p,.5 80/o 53601 f , >Bankeis'a Acceptab a ;180:Da`"s '40%,. : u .,=; ,;180'.Da s, 40%<,° ,A 1`,&±P 1>n + ,,. �63601 Coniinarcial'Pa er�"� '2702.Da s 25% rA,1+`orP t> ;2701)a si A :25 ',:T I"g, O%xz` "53601 hv ? ,'Ne b4ialleCDs- ,,SYeara:;" '30%< ° zs ^, r,5Yeaw­� V30%1,1`8 AAwor:Aa3 rY .w, t tG., ? r 53601 i r300a s 20%r,04 AAA"&°'Aaa2a 53601 i Reverse Re os 92 Days 20% Not Authorized 15360,1 " Medium-,Term Notes;",'? 5 Years' , 30%-E'c .'.k �A; w3 Years ''"', $Oqe " w A .,� ;'.4r7"/olwt v 0.0%.1"",e 53601 k < A lv utuaI,EdhdsV',g.t_. „'90,Da s sA.20%,gam' AAA`&fAaai ,90'D4 s6 9?20%, : AAA?&"+Aaa �40:0%;� 139';2go;'h 53601 I Trust Indenture Debt Not Authorized 53601 m Secured Bank Deposits 5 Years No Limit Not Authorized 53601(n) Mortgage-Backed 5 Years 20% A(Issuer)& Not Authorized Securities 1AA(Security 1—r.164295 ,,",d_Gsf '�v, "� WLirrllt'; .�,1.wf. 80.9% 100.00/0 1 The City loan to RDA, which is not a bond, has been aeRaved by the Palm Desert City Council. Certified California Municipal Treasurer Page 7 of 7 d STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER SACRAMENTO Local Agency Investment Fund PO Box 942809 Sacramento, CA 94209-0001 " t (916) 653-3001 September, 2002 Statement CITY OF PALM DESERT Account Number : 98-33-621 Attn: CITY TREASURER 73510 FRED WARING DRIVE PALM DESERT CA 92260 Account Summary Total Deposit : 0.00 Beginning Balance : 39,999,864.33 Total Withdrawal : 0.00 Ending Balance : 39,999,864.33 Page : 1 of 1 /, STATE OF CALIFORNIA PHILIP ANGELIDES, Treasurer OFFICE OF THE TREASURER SACRAMENTO Local Agency Investment Fund PO Box 942909 Sacramento, CA 94209-0001 (916)653-3001 September, 2002 Statement PALM DESERT REDEVELOPMENT AGENCY Account Number : 65-33-015 Attn. TREASURER 73-5 10 FRED WARING DRIVE PALM DESERT CA 92260 Account Summary Total Deposit : 0.00 Beginning Balance : 39,999,746.22 Total Withdrawal : 0.00 Ending Balance : 39,999,746.22 Page : 1 of 1 CALIFORNIA ASSET `f STATEMENT MANAGEMENT PROGRAM JOINT POWERS AIITNORITY _ . ��/ 50 CALLFORNIA STREET 23RD FLCX R ?," - SAN FRANCLSCO CALIFORNIA 94111 FOR ACCOUNT INFORMATION: 800-729-7665 STATEMENT DATE: 9/30/2002 CITY OF PALM DESERT ACCOUNT NUMBER: 553-00 OPERATING FUND 73-510 FRED WARING DRIVE FUND NAME: Cash Reserve Portfolio PALM DESERT,CA 92260 Page 1 of 1 A J.unt'S I,I_mR1 of:_�/30/20Q Y g ,. ;e . '3�`+' ,A 7 .c ` ' ,�..,' =Yhf.- .. �- Statement Income Dividends Capital Gains Total Shares Account Date Paid This Year Paid This Year Owned Value 9/30/2002 $156,240.34 $0.00 20,427,267.380 $20,427,267A8 [ri�ar�sa ti r mmai�for91YC?002���9�80/20 ,Y � Beginning Balance Purchases Reinvestments Redemptions Ending Balance $27,390,838.85 $0.00 $36,428,53 $7,000,000.00 $20,427,267.38 E ,,. #f - !lOL Ott" ARC'^ THI `: Tr;ST . .,'! D., E : z,x , azTa�t.t0-*: x, Q ....¢ i.'PRIOE" y TRIIS.i�fF01 ' SHARESIQWNEDs.. ,. ,.r w . .x _. , 09/01/02 09/01/02 Beginning Balance 27,390,838.850 09/26/02 09/26/02 Redemption-Wire Red. $7,000,000.00- $1.00 7,000,000.000. 20,390,838.850 09/30/02 09/30/02 Accrual Income Div Reinvestment-DIV $36,428.53 $1.00 36,428.530 20,427,267.380 Message Line: THE DIVIDEND YIELD FOR THE MONTH IS 1.69016. THE ANNUALIZED YIELD IS 1.70%. CITY OF PALM DESERT Accounting Policies and Procedures SUBJECT: ANNUAL AUDIT DATE: DRAFT -9/01/02 POLICY The purpose of this document is to outline the policy and procedure on the annual outside audit. It is the policy of the City of Palm Desert, the Palm Desert Redevelopment Agency, the Palm Desert Financing Authority,the Palm Desert Housing Authority and the City of Palm Desert Golf Course Facilities Corporation (hereafter referred to as the"City')to retain a certified public accountant ("Outside Auditor")who specializes in governmental auditing, to conduct an annual audit of the City's financial statements and of compliance with internal controls. The Outside Auditor shall commence an audit of the City's financial operations for each prior fiscal year(July 1 to June 30)by no later than September of the subsequent fiscal year. This audit shall be conducted in accordance with generally accepted auditing standards of the United States ('GAAS"); Government Auditing Standards (1994 Revision), which is issued by the Comptroller General of the United States; and Circular No.A-133, "Audits of State and Local Government and Non-Profit Organizations,"which is issued by the U.S. Office of Management and Budget. Objectives of Audit The objectives of the audit shall be to: • Ensure that adequate internal controls exist and have been followed so that the risk of defalcation is reduced. • Verify that historical financial transactions have been classified, recorded, and reported in accordance with generally accepted accounting principles of the United States. Scope of Audit The Outside Auditor shall review, among other things, the following control procedures: • Adequate separation of duties. • Proper authorization of transactions and activities. • Adequate documents and records. • Physical control over assets and records. • Independent checks on performance. • Reliability of financial reporting. • Compliance with applicable laws and regulations. • Review of cash and investments as required within investment policy. • Review and issuing special purpose reports for state and federal grants. • Special audits on transient occupancy tax and franchise fees. Audit Report and Management Letter The City shall prepare and disseminate a report containing the Outside Auditor's conclusions to the appropriate parties. This report will enable the City to: • Continue to qualify for insurance, bank credit, bond issuance, and trade credit. • Comply with the reporting requirements of State and Federal agencies. • Provide an independent opinion on financial reporting. The Outside Auditor shall communicate all reportable conditions, including material weaknesses, to City management and to appropriate legislative or regulatory bodies. In"Yellow Book"audits, including Single Audits (audits required by State and Federal grants), this communication is the Outside Auditor's reports on internal controls and compliance and accompanying Schedule of Findings and Questioned Costs. Some government audits, however, are not subject to the Yellow Book standards. In that case, reportable conditions are reported to management in a separate"Management Letter". City management will request that the Outside Auditor forward a copy of its final findings and Management Letter to the following persons and entities: • The Mayor. • The City Manager. • The Finance Director. • The Audit Subcommittee. Selection of Outside Auditor The quality of outside auditors, like that of other professionals, can vary substantially from one practitioner to another. Some audit firms perform high-quality audits of state and local governments,while others lack the specialized experience and expertise needed to complete such engagements successfully. Therefore, it is critical that the City select its Outside Auditor carefully in order to ensure that it obtains a high-quality audit. The following steps are necessary in order to achieve that goal. First, the City should make sure that the audit procurement process is open and competitive which is likely to encourage greater participation by high quality audit firms. This would include requesting local firms that do not have the specific governmental expertise to team up ljoint venture)with firms that do meet the qualifications. Second,the City should prepare a comprehensive Request For Proposals ("UP"). A sound RFP process should provide all of the information needed to evaluate the technical qualifications of each candidate to perform the audit. The UP should also provide each candidate with a detailed description of the City, its specific audit needs, and the City's audit procurement process. i Third, the principal factor in selecting an Outside Auditor should be the auditor's technical qualifications. While fees are an important factor, they should not be allowed to dominate the auditor selection process. A poor-quality audit is no bargain at any price. Fourth, it is essential that the City enter into a written agreement with the Outside Auditor that outlines the rights, responsibilities, and obligations of both parties. This would include incorporating the terms of the RFP by reference into the contract. The selection of the Outside Auditor is ultimately the responsibility of the City Council/Board. The Finance and Investment Committee shall recommend a finalist to the City Council/Board, based upon the recommendations of the Audit Subcommittee. The Audit Subcommittee The Finance and Investment Committee shall create an Audit Subcommittee. The Audit Subcommittee shall consist of the following six members: • The Mayor(or other Council Member). • The City Manager. • The Finance Director. • A community member from the Finance and Investment Committee. • A Finance Director from another city within the Coachella Valley. • The Finance Operations Manager. The Finance Director shall chair the subcommittee. The Finance Operations Manager shall act as subcommittee secretary and shall be a non-voting subcommittee member. The Audit Subcommittee shall meet at least two times each fiscal year. The provisions of the"Brown Act"shall not apply to the Subcommittee's activities since they will focus on confidential documents and negotiations. Duties of The Audit Subcommittee The Audit Subcommittee shall have the following duties: • To interview qualified auditing firms and to recommend a finalist to the Finance and Investment Committee. • To receive and review the Outside Auditor's recommendations concerning internal accounting procedures, and to help ensure the usefulness and appropriateness of the City's internal controls and procedures • To meet with the Outside Auditor and review the proposed scope of the audit and its approach, prior to the initiation of the audit. A pre-audit meeting will provide Audit Subcommittee members with an understanding of what to expect from the Outside Auditor, including: (1) The Outside Auditor's approach to evaluating the internal control structure and how that evaluation will affect the scope of the audit. (2) The areas that will be emphasized in the audit and the approach that the auditor plans to take. (3) How major changes in the Citys organizational structure will affect the approach of the audit. (4) How any new professional, technical, tax laws or regulatory pronouncements will affect the audit. (5) The City's financial reporting requirements and the outside auditor's timetable for meeting the City's reporting deadlines. • To conduct a post-audit meeting to review the financial statements, significant audit findings,the independent auditor's suggestions on how to improve the internal control structure, questions on the financial statements, the reporting process, accounting policies,and budget comparison to actual results. • To request special studies or investigations, such as an investigation of potential fraud or compliance review with federal and state laws and regulations. • To review the performance of the Outside Auditor and to recommend reappointment or termination. • To review the findings of any examinations by regulatory agencies(State Gas Tax, Sales Tax, Measure A, etc.). • To schedule separate, private meetings with City management. • To give an annual report on subcommittee activities to the Finance and Investment Committee and to the City Council/Board. Rotation of Auditors Outside auditors are required to gain and document an understanding of a government's internal control structure as part of the audit planning process. This process is especially costly in the first year of an audit since the auditors must become acquainted with and document the client's internal control structure for the first time. A multi-year audit contract allows the auditor to recover these and similar start-up costs over a longer period of time. This can lead to lower overall audit costs. Multi-year audit contracts can also provide needed continuity in the audit process. The U.S. General Accounting Office (GAO)recommends that"entities should consider using multi- year agreements, preferably of a five-year duration, due to the potential cost savings and continuity benefits over the long-term" The City will, therefore, require a five-year contract for the outside auditor,-with the provision that the Audit Subcommittee shall annually review work performed by the auditor and shall recommend either renewal or termination to the Finance and Investment Committee. The City shall reserve the right to terminate the multi- year contract should the auditor's performance prove unsatisfactory. The City may wish to retain an Outside Auditor for another term,following the expiration of its first multi-year contract. No Outside Auditor may work for the City for more than 10 consecutive years. After that,there must be at least one five-year break between multi-year contracts before the Outside Auditor can reapply for work at the City. If the City chooses to extend a five-year contract for an additional five years,then the City reserves the right to require that the Outside Auditor change key personnel who are assigned to the City's audit, such as the partner-in- charge of the engagement. a o o z z, p z G->� O N A a c 0 0 0 0 0 0 0 o e e e o 0 0 O 1D /-0 C1 LL! b '^ � t i� -It O 7 O l� �D M v1 �O l� O h O A Cl) Z m O\ O O\ o M M a\ N N M O N O y Wc N --� O O O O C> O �n O N --� O O �/t O 7 QG G W U Ri Ri Q .1t rn c o 0 '0 . LL a m p 7 00M000 V) y LL a cxw a. p Z UJ U- 6. ja 0000oo0oci E o 00 0 v 0 .0 A A E L) ♦+ O O �O O O h M m_ O e> �O h 7 O_ O oo O p UO 0 7 v5. O W N �O iV N. bG N M N h �D O N > O O N O o ,O w m O.7 vi vt SO � N 0 0. 0 0 0 0 0 O O u O O D O O 0 0 PC M O G O N N O N � � � O d .•� r � N vi .. � M ti , O 00 G O — p O U u L ^ co � Un ❑ 00 % c7W�.... p ow Gi 0 W d o � Fw eb • FO- li �'n 0 o d m m ti L :a' y jo, c > a s s. k e � � O' K P° C7a' aU � O z eta Ci �. H r7 CL W K � City of Palm Desert Parkview Office Complex Financial Statement for Fiscal Year 2002-2003 September-02 September-02 # % YTD YTD # Budget Actual Variance Variance Budget Actual Variance Variance Revenues Rental $ 68,500 $ 70,926 $ 2,426 103.54% ` $ 205,500 $ 211,898 $ 6,398 103.11% Dividends/Interest $ 4,375 $ 979 $ (3,396) 22.37% $ 13,125 $ 3,034 $ (10,091) 23.12% Total Revenues $ 72,875 $ 71,904 $ (971) 98.67% $ 218,625 $ 214,932 $ (3,693) 98.31% Expenses Professional-Accounting&Auditing $ 7,000 $ 7,000 $ - 100.00% $ 21,000 $ 21,000 $ - MOM% Professional-Consultants $ 6,000 $ 5,500 $ 500 91.67% ` $ 18,000 $ 17,205 $ 795 95.58% Tenant Improvements $ 2,500 $ - $ 2,500 0.00% $ 7,500 $ 11,818 $ (4,318) 157.58% Repairs&Maintenance Building $ 8,000 $ 11,650 $ (3,650) 145.62% < - - $ 24,000 $ 24,905 $ (905) 103.77% Repairs&Maintenance-landscaping $ 2,300 $ - $ Z300 0.00% $ 6,900 $ - $ 6,900 0.00% Utilities-Water $ 250 $ 120 $ 130 48.10% ' $ 750 $ 221 $ 529 29.47% Utilities-Gas/Electric $ 10,000 $ 11,866 $ (1,866) 118.66% '' $ 30,000 $ 24,423 $ 5,577 81.41% Utilities-Trash $ 700 $ 526 $ 174 75.14% $ 2,100 $ 526 $ 1,574 25.05% Telephone - $ 150 $ 122 $ 28 81.15% ' $ 450 $ 429 $ 21 95.32% Insurance $ 521 $ - $ 521 0.00% $ 1,561 $ - $ 1,561 0.00% Total Expenses $ 37,421 $ 36,784 $ 637 98.30% f. $ 112,261 $ 100,527 $ 11,734 89.551% tQper'dtvrg7ucoate B_ _ 35,954 S 3;120 S ( ¢} 9,067.`` $'106, 64 14 , 0.4 - 8,041, 2U7.56%, Equipment Replacement Reserve $ 13,000 $ 13,000 $ - 100.001y. $ 39,000 $ 39,000 $ - 100.00% 'Veeinone r ,ry_44j n �t _. ,gy ' ,"6�,3 _ s,4aS. _ 2003 Investment Reportlnv Report 2003 City of Palm Desert Parkview Office Complex Vacancy Rate Schedule by Suite September 2002 Suite Square No. Tenant Feet 73-710 Fred Waring Drive-Two (2) Story Building 100 Hanover 1,915 100A EPA 645 102 Bergren 1,360 103 Multiple Sclerosis 488 104 Arthritis Foundation 960 106 Coachella Valley Economic Partnership 928 .108 Assemblyman Kelly 785 112 Senator Battin 1,406 114 Chamber of Commerce 1,478 118 Goodwill Industries 1,250 119 City/CVAG Conference Room 1,380 120 Duke Gerstal 1,750 200 CVAG 4,292 200A University of California Riverside 841 201 University of California Riverside 604 203 Vacant 480 205 Vacant 700 208 Alzheimer's Association 960 210 Wilson, Pesota&Pichardo 3,040 2003 Investment ReportVacancy Report City of Palm Desert Parkview Office Complex Vacancy Rate Schedule by Suite September 2002 211 State of California Department of Food&Agriculture 937 217 Joe B. McMillan,. Esq. 775 220 CA.State Dept. of Agriculture 1,607 222 Cove Commission-Fire Marshal 1,900 222 CITY Storage-Vacant 1,081 Total square footage(2 story Building) 31,562 Vacancy Rate--2,261/31,562= 7.16% 73-720 Fred Waring Drive- One Story Building 100 State of California-Water Resources 15,233 102 State of California-Rehabilitation Department 4,396 Total Square Footage 19,629 Vacancy Rate--0.W/o 0.00% Overall Vacancy Rate for Both Buildings: Vacancy Rate--2,261/51,191 4.42% Occupancy Rate-48,930/51,191 95.58% 2003 Investment ReportVacancy Report . ^ City of Palm Desert Desert Willow ` Budget Vs Actual For the month of September 2002 Budgeted Actual Budgeted Actual September September $ Percentage Year to Year to S Percentage Revenue 2002 2002 Variance Variance Date Date Variance Variance Course&Ground S 192,343 $ 176,428 S (15,915) 91.73% $ 395,776 S 361,959 S (33,817) 91.46% Cans S 20,212 S 19,800 S (412) 97.96% $ 50,501 S 49.105 S (1.396) 97,24% Golf Shop $ 52,255 S 36,874 S (15,381) 70.57% $ 100,703 $ 74,806 S (25,897) 74.28% Range S 600 $ 465 $ (135) 77.50% $ 1,650 $ 1,575 S (75) 95.45% Food&Beverage $ 71,809 S 95,052 S 23,243 132.37% $ 172,821 S 191,453 S 18,632 110.78% Interest Income S 600 $ 189 $ (411) 31,50% $ 2,600 S 864 $ (1,736) 33,23% Total Revenues S 337 819 328 808 9 01 i 97.33yS S 724.051 S 679 762 44 289 93.88% Pavroll Proshop $ 816 S (157) $ 973 -19.24% $ 816 S 1,961 S (1,145) 240,32% Can $ 19,555 $ 17,273 $ 2,282 88.33% $ 56,722 $ 50,144 S 6,578 88.40% Course&Ground S 121.446 S 116,287 $ 5,159 95.75% $ 36&541 $ 370.506 $ (1,965) 100,53% Golf Operations $ 23,386 $ 22,920 $ 466 98.01% $ 68.738 $ 70,929 S (2,191) 103.19% General&Administration S 40,037 $ 37,799 $ 2,238 94.41% $ 120,967 $ 115,032 S 5.935 95.09% Food&Beverage $ 44,950 $ 51,497 $ (6,547) 114,57% $ 130,826 S 148,488 $ (17.662) 113,50% 'Ibtal Payroll S 250.190 S 245.619 S 4.571 98.17% S 746.610 S 757.060 (10.4501 101.40% Other Expenditures Perimeter Landscaping S - S - $ - 0.00% $ - $ - $ - 0.00% PToshop S 1,930 $ 1,202 $ 728 62.28% $ 3,370 S 2,841 S 529 S4.30% Proshop-COGS $ 30,123 S 19,079 S 11,0" 63.34% $ 57,302 $ 41,588 $ 15,714 72.58% Can - $ 12.995 $ 12,382 $ 613 95.28% $ 38,985 $ 41,249 $ (2,264) 105.81% Course&Ground-North Course $ 45,567 $ 59,447 $ (13,880) 130.46% $ 174,266 S 178,978 S (4,712) 102.70% Course&Ground-South Course $ 149,476 $ 146,398 $ 3,078 97,94% $ 256,456 $ 255,819 $ 637 99.75% Course&Ground-Desert Pallet-N S 950 $ 469 $ 481 49.37% S 3,430 S 1,919 $ 1,511 55,95% Course&Ground-Desert Pallet-S $ 1,540 S 881 $ 659 57.21% $ 4,740 $ 2,528 $ 2,212 53.33% Gol f Operations $ 175 S - $ 175 0.00% S 840 S 5,118 S (4,278) 609.29% General&Administration $ 74,492 $ 78,647 $ (4,155) 105.58% $ 187,357 $ 201,967 S (14,610) 107.80% Range $ 200 S - $ 200 0.00/ $ 500 S 297 $ 203 59.40% Food&Beverage $ 17,583 $ 11,158 $ 6,425 63.46% $ 33,849 S 26,603 S 7,246 78.59% Food&Beverage COGS S 22.619 $ 28,599 $ (5,980) 126.44% $ 54,792 $ 63,754 $ (8,962) 116.36% Management Fee $ 25.000 S 25,000 $ - 100.00% $ 75,000 $ 75,000 $ - 100,00% Financing/Lease S 412 $ 1,851 $ (1,439) 449.27% $ 1,491 S 6,863 $ (5.372) 460,30% Total Other Ex enditures S 383.062 385,113 2 051 i 0.54% S 892.378 S 904.524 S f12.1461101.36 Desert Willow Golf Academy Desert Willow Golf Academy S 5,000 $ 5,203 $ 203 104.06% S 14,700 $ 17,718 $ 3,018 120.53% COGS-Merchandise S (5,639) S (3,947) S 1,692 69.99% S (17,261) S (14,770) $ 2,491 85.57% Other Expenditures S (1,588) $ (1,409) $ 179 W73% $ (6,288) S (7,555) $ (1,267) 120.15% S Learning Center Income(Loss) $ (2,227) $ (153) S 2,074 6.87% $ (8,849) S (4,607) S 4,242 52.06% Operating Income(Loss) S (297,660) S (302,077) $ (4,417) 101.48% $ (921786) S (986,429) S (62,643) 106.78% Equipment Reserve Replacement $ 71,955 $ 66,734 S (5,221) 92.74% $ 215.865 S 200,202 $ (15,663) 92.74% Net Income Loss (369.6151 368 811 804 99.781, 1 139 651 1 186 631 (46.980) 104.12% Snapshot of Golf Rounds Budgeted mo Actual(me) Variance Variance% Bud etedlent) Actual td Variance Variance% Resident 290 447 157 154% 1,615 1,331 (284) 82% Non Resident 2,345 2,659 314 113% 8,017 8,081 64 101% Other - 91 91 100% - 177 177 100% Com limentary 400 233 167 59% 1205 900 405 66% Total 3,035 3,430 395 113% 10,837 10,389 (448) 96% Folder:Desert Willow 2001'Dw2003;Financial Statement Page 1 ® ^ 7 $ 7D ] \ i � 93 ® ■ � ] � ■ § § _ ■ � § t \ \ ®) kj ! ) ) \ }! 3 ƒ ; do62) , ! 2 a j ƒ on ) a ! to § . / § | ° \ K . ! cq � © « \ f ] 3 0 t ƒ /! ) k § V M a y 6 j — _ w> > $ gib 4 ------ ----«w ----««------ --- - - a Q ° 4 - 6 y d � i'ry n n v ry er T Q N F a U U g6 wwwwww »»w««« »»»w«««wwww« www w w a Env_ _ _ _ i> C wwwwww » -«www- w w----«wwwwww - www w w » » — - - 6 W N C a c E y a E A55 L E e o e O e U o o 2 2 § 2 � ❑ . , § , f S A \. 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Z � )! ƒ - 2 - a _ ; f fa ON § / ! ) § ! ) � \ Desert Willow Breakdown of Rounds per point of sale system DESERT WILLOW - COMBINED ANALYSIS- SEPTEMBER 2002 Resident 576 $ 24,990 $ 43.39 13.46% Non-Resident 3,369 $ 1_68,765 $ 50.09 78.73% Other 28 . $ 280 $ 10.00 0.65% Complimentary 306 $ 725 $ 2.37 7.15% Desert Willow Totals 4,279 194,760 45.52 100.00% Dw2003;POS AVG RD Page 9 Desert Willow Breakdown of Rounds per point of sale system FIRECLIFF COURSE- SEPTEMBER 2002 Description No. Of Revenue Avg. Per Pet to Rounds Per POS Round Total Resident Rounds Resident Fee- Weekend 45 $ 2,025 $ 45.00 1.65% Resident Fee-Weekday _ 211 $ _ 9,49_5 $ 45.00_ 7.74% Resident Twilight/ResidentStamp 67 $ 2,345 $ 35.00 2.46% Total Resident 323 13,865 42.93 11.85% Non Resident Posted Weekend 83 $ 7,164 $ 86.31 3,05% Posted Weekday _ 172 $ 11,928 $ 69.35 6.31% IROC Des. PRTY - Weekday J 24 $ 1,065 $ 44.38 0.88% IROC Des. P_RT_Y -Weekend 226 $ 11,3_78 _$ 50.35 8.29% IROC MBR. / Guest Weekend 6 $ 456 $ 76.00 0.22% IROC MBR. / Guest Weekend 23 $ 1,264 $ 54.96 0.84% Wholesale Weekend 4 $ 220 $ 55.00 0 159% Wholesale Weekday 198 , $ 9,535 $ 48.16 7.27% Twilight 693 $ 26,155 . $ 37.74 25.43% Posted Replay _ _ 7 $ 175 $ 25.0_0 0.26% Passbook Weekday 59 $ 2,660 $ 45.08 2.17% Passbook Weekend 85 $ 4,770 $ 56.12 3.12% Fee Special Event Variable 607 $ 33,282 $ 54.83 22.28% Total Non Resident Rounds 2,187 110,052 50.32 80:26% Other Rounds Junior Walking 18 $ 180 $ 10.00 0.66% Total Other 18 180 10.00 0.66% Complimentary PGA Member 32 $ 200 $ 6.25 VIP - - - -- ----- ---- 39 $ --$ -- 1.43% Donation 28 $ 300 $ 10.71 1.03% COD/PDHS 48 $ - $ - 1.76%° Employee/Guest -- - - --- -- 5o $ — - -- $ ----- -L83% Total Complimentary 197 500 2.54 7.23% Total Round (FireCliff) 2,725 $ 124,597 $ 45.72 100.00% Dw2003;POS AVG RD Page 10 Desert Willow Breakdown of Rounds per point of sale system MOUNTAINVIEW COURSE- SEPTEMBER 2002 Description No. Of Revenue Avg. Per Pct to Rounds Per POS Round Total Resident Rounds Resident Fee- Weekend 47 $ 2,115_ $ 45.00_ 3.02% Resident Fee-Weekday 180 $ _ 8,100 $ 45.00 11.58% Resident Twilight - - _ 26 $ 910 $ 35.00 1.67% Total Resident 253 11,125 43.97 16.28% Non Resident Posted Weekend _ 29 $ 2,610 $ 90.00 1.87% Posted Weekday _ 123 $ 8,355 $ 67.93 7.92% IROC MBR Guest-Weekend 28 $ 1,576 $_ 56.29 1.80% IROC MBR Guest-Weekday 3 $ 216 $ 72.00 0.19% IROC Des. PRTY- Weekday 23 $ 1,035 $ 45.00 _1.48% IROC Des. PRTY- Weekend 92 $ 3,983 $ 43.29 5.92% Wholesale Weekend 18 $ 960 $ 53.33 1.16% Wholesale Weekday 23 $ 1,065 $ 46.30 1.48% Posted Replay 18 $ 500 $ 27.78 1.16% --- ---- 1-- --- 50 - - -- Twilight 358 $ 2,9 $ 36.17 23.04% Passbook Weekday 34 $ 1,540 $ 45.29 2.19% Passbook Weekend 31 , $ 1,725 $ 55.65 1.99% Fee Special Event Variable 402 $ 22,198 $ 55.22 25.87% Total Non Resident Rounds 1,182 58,713 49.67 76.06% Other Rounds Junior Walking 10 $ 100 $ 10.00 0.64% Total Other 10 100 10.00 0.64% Complimentary VIP ---- - -- --- -12—$- _---.._....$--- - 0.77% PGA Member 14 $ 50 $ 3.57 0.90% COD/PDHS 38 $ -- - -- $ _ 2.45% Donation 13 $ 175 $ 13.46 0.84% Employee/Employee Guest 32 : $ $ 2.06% Total Complimentary 109 225 2.06 7.01% Total Round (Mountainview) 1,554 $ 70,163 $ 45.15 100% Dw2003;POS AVG RD Page 11 City of Palm Desert Desert Willow Cash Reserve Analysis for the month of September 2002 Cash Reserve Analysis One Month Required Reserve 1 $ 500,000.00 Cash on Hand $ 501,005.29 Variance- Favorable ( Unfavorable $ 1,005.29 Page 12 PalmDesert Recreation Facilities Corporation Income Statement Sep-02 Sep-02 ✓< % Budget Actual Variance Variance Food & Beverage Revenues $71,809 $95,052 $23,243 132.37% Total Revenues $71,809 $95,052 $23,243 132.37% Salaries $44,950 $51,497 ($6,547) 114.57% Cost of Goods Sold-F&B $22,619 $28,599 ($5,980) 126.44% Food & Beverage Expense $17,583 $11,158 $6,425 63.46% Total Expenses $85,152 $91,254 ($6,102) 107.17% Net Income (Loss) ($13,343) $3,798 $17,141 -28.46% Note.The above revenues and expenditures are also included in the Desert Willow analysis. Dw2003;PDRFC Budget Page 1