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REQUEST: RECEIVE AND FILE THE AUDITED FINANCY�L���C�'� —'���
DESERT REDEVELOrMENT AGENCY FO�r�iL�P��wY�' t� ' Uftice
JUNE 30, 2008
DATE: FEBRUARY 12, 2009
CONTENTS: PALM DESERT REDEVELOPMENT AGENCY AUDITED FINANCIAL
REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2008
Recommendation:
By Minute Motion, that the City Council receive and file the audited Component Unit
Financial Report for the Palm Desert Redevelopment Agency for fiscal year ending
June 30, 2008.
Backqround:
Diehl, Evans & Associates, LLP, performed and completed the annual independent audit for the
fiscal year ended June 30, 2008, for the Redevelopment Agency in November 2008, in accordance
with generally accepted auditing standards. In the auditor's opinion, the basic financial statements
present fairly, in all material respects, the financial position of the Redevelopment Agency as of June
30, 2008, and the results of its operations of the year then ended are in conformity with accounting
principles generally accepted in the United States of America.
The Audit, Investment and Finance Committee received the audited financial statements for the
Palm Desert Redevelopment Agency at their January 27, 2009 meeting, and it was recommended
that the statements for the fiscal year ended June 30, 2008 be received and filed by the City Council.
In prior years this report would have come to the Council for review in January following review by the
Audit, Investment and Finance Committee. However, due to the timing of the Council meeting, the
January meeting of the Audit, Investment and Finance Committee took place after the last Council
meeting in January.
Staff requests that the Council receive and file the audited Component Unit Financial Report for the
Palm Desert Redevelopment Agency for fiscal year ending June 30, 2008.
Submitted by: Approved by:
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G
Paul S. Gibson, Finance Director/City Treasurer Jo ohlmuth, City Mana r
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G:\Finance\Niamh Ortega\Staff ReportsWudit Staff Reports 2008\audit 2008 RDA CUFR.docx
PALM DESERT REDEVELOPMENT AGENCY
PALM DESERT, CALIFORNIA
ANNUAL FINANCIAL REPORT
WITH REPORT ON AUDIT
BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED JUNE 30,2008
PALM DESERT REDEVELOPMENT AGENCY
TABLE OF CONTENTS
JLTNE 30, 2008
Page
Number
1NDEPENDENT AUDITORS' REPORT 1
MANAGEMENT'S DISCUSSION AND ANALYSIS 3
BASIC FINANCIAL STATEMENTS:
Government-Wide Financial Statements:
Exhibit A - Statement of Net Assets 11
Exhibit B - Statement of Activities 13
Fund Financial Statements:
Exhibit C - Balance Sheet- Governmental Funds 14
Exhibit D - Reconciliation of Governmental Funds Balance Sheet
to the Statement of Net Assets 17
Exhibit E - Statement of Revenues, Expenditures and Changes in Fund
Balances - Governmental Funds 1 g
Exhibit F - Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 20
Notes to Basic Financial Statements 21
SUPPLEMENTARY INFORMATION:
Schedule 1 - Combining Balance Sheet- Other Governmental Funds 64
Schedule 2 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds 65
Schedule 3 - Balance Sheet- Other Governmental Funds - Special Revenue 66
Schedule 4 - Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds - Special Revenue 67
PALM DESERT REDEVELOPMENT AGENCY
TABLE OF CONTENTS
(CONTINUED)
JiJNE 30, 2008
Page
Number
SUPPLEMENTARY INFORMATION (CONTINUED):
Schedule 5 - Balance Sheet- Other Governmental Funds - Debt Service 68
Schedule 6 - Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds - Debt Service 69
Schedule 7 - Combining Balance Sheet- Other Governmental Funds - Capital Projects 70
Schedule 8 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds - Capital Projects 71
Schedule 9 - Combining Balance Sheet- Housing Authority Special Revenue Fund 72
Schedule 10 -Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Housing Authority Special Revenue Fund 74
Schedule 11 -Computation of Low and Moderate Housing Excess Surplus Funds 76
Independent Auditors' Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards 77
DIEHL, EVANS S� COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS dt CONSULTANTS
[vfICHAEL R.LUDIN,CPA
A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W.SPRAKER,CPA
MTIN P.PATEL,CPA
ROBERTJ.CALLANAN,CPA
S CORPORATE PARK,SUITE lOO •Ptm.�H.HOLTx.atvtr,CPA
*THOMAS M.PERLOWSKI,CPA �
IRVINE,CALIFORNIA 92606-5165 *HnxvEY J.scxi�oeDex,crn
(949)399-0600•FAX(949)399-0610 ��ETH x.nMEs,crn
*W II,L�AM C.PENTZ,CPA
www.diehlevans.com
'A PROFF:SSIONAL l'ORI'ORA'fION
October 21, 2008
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and
Members of the City Council
Palm Desert Redevelopment Agency
Palm Desert, California
We have audited the accompanying financial statements of the governmental activities, each major
fund and the aggregate remaining fund information of the Palm Desert Redevelopment Agency (the
Agency), (a component unit of the City of Palm Desert, California), as of and for the year ended
June 30, 2008, which collectively comprise the Agency's basic financial statements, as listed in the
table of contents. These basic financial statements are the responsibility of the Agency's management.
Our responsibility is to express opinions on these basic financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditin�
Standards issued by the Comptroller General of the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the basic financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall basic
financial statement presentation. We believe that our audit provides a reasonable basis for our
opinions.
In our opinion, the basic financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, each major fund and the aggregate
remaining fund information of the Palm Desert Redevelopment Agency as of June 30, 2008, and the
respective changes in financial position thereof for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
- 1 -
OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W.VALLEY PARKWAY,SUITE 330
CARLSBAD,CALIFORNIA 92008-2389 ESCONDIDO,CALIFORN[A 92025-2598
(760)729-2343�FAX(760)729-2234 (760)741-3141.FAX(760)741-9890
In accordance with Government Auditin� Standards, we have also issued our report dated
October 21,2008 on our consideration of the Palm Desert Redevelopment Agency's internal control
over financial reporting and our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the scope
of our testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audit.
The management's discussion and analysis, as listed in the table of contents, is not a required part of
the financial statements but is supplementary information required by the accounting principles
generally accepted in the United States of America. We have applied certain limited procedures, which
consisted principally of inquiries of management regarding the methods of ineasurement and
presentation of the required supplementary information. However, we did not audit the information
and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Palm Desert Redevelopment Agency's basic financial statements. The
combining and individual other governmental funds financial statements and the Computation of Low
and Moderate Housing Excess/Surplus Funds are presented for additional analysis and are not a
required part of the basic financial statements. The information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in
all material respects in relation to the basic financial statements taken as a whole.
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- 2 -
PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2008
Our discussion and analysis of the Palm Desert Redevelopment Agency's (Agency) financial performance for
the fiscal year ended June 30, 2008, provides a comparison of current year to prior year ending results based
on the government-wide statements, an analysis on the Agency's overall financial position and results of
operations to assist users in evaluating the Agency's financial position, and a discussion of significant changes
that occurred within each fund. In addition, it describes the activities during the year for capital assets and
long-term debt. We end our discussion and analysis with a description of currently known facts, decisions and
conditions that are expected to have a significant effect on the financial position or results of operations. Please
read it in conjunction with the Agency's financial statements.
FINANCIAL HIGHLIGHTS
• The Agency's governmental activities net assets deficit decreased $11.97 million, or 48.19 percent.
• During the year, the Agency had revenues that were $11.97 miflion more than the $97.78 million in
expenses recorded by the Agency in its governmental activities.
• The Agency's governmental activities program revenues and general revenues increased $7.06 million,
or 6.88 percent from the prior year, and program expenses increased $4.93 million, or 5.31 percent.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Assets and Statement of
Activities (on pages 11 and 13) provide information about the activities of the Agency as a whole and present a
long-term view of the Agency's finances. Fund financial statements start on page 14. For governmental
activities, these fund statements tell how these services were financed in the short term as well as what remains
for future spending. Fund financial statements also report the Agency's operation in more detail than the
government-wide statements by providing information about the Agency's most significant funds as well as the
other funds.
REPORTING THE AGENCY AS A WHOLE
The Statement of Net Assets and the Statement of Activities:
Our analysis of the Agency as a whole begins on page 11. One of the most important questions asked about
the Agency's finances is, "Is the Agency as a whole better off or worse off as a result of the year's activities?"
The Statement of Net Assets and the Statement of Activities report information about the Agency as a whole
and about its activities in a way to answer this question. These statements include all assets and liabilities of the
Agency using the accrual basis of accounting, which is similar to the accounting used by most private-sector
companies. All of the current year's revenues and expenses are taken into account regardless of when cash is
received or paid.
These two statements report the Agency's net assets and changes in them. Net assets are the difference
between assets and liabilities, which is one way to measure the Agency's financial health, or financial position.
Over time, increases or decreases in the Agency's net assets are an indication of whether its financial health is
improving or deteriorating.
In the Statement of Net Assets and the Statement of Activities, we separate the Agency into general
government, apartment complexes, public works, payments to other agencies and interest on long-term debt.
See independent auditors' report.
- 3 -
PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S D/SCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2008
REPORTING THE AGENCY`S MOST SIGNIFICANT FUNDS
Fund Financial Statements:
The fund financial statements provide detailed information about the most significant funds and other funds- not
the Agency as a whole. Some funds are required to be established by State law and by bond covenants.
However, management established many other funds to help it control and manage money for particular
purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and other resources.
The Agency only has governmental type funds.
Governmental Funds - Most of the Agency's basic services are reported in governmental funds, which focus
on how money flows in and out of those funds and the balances left at year-end that are available for spending.
These funds are reported using the modified accrual basis of accounting, which measures cash and all other
financial assets that can readily be converted to cash. The governmental fund statements provide a detailed
short-term view of the Agency's general government operations and the basic services it provides.
Governmental fund information helps determine whether there are more or fewer financial resources that can be
spent in the near future to finance the Agency's programs. The differences of results in the Governmental Fund
financial statements to those in the Government-Wide financial statements are explained in a reconciliation
following each Governmental Fund financial statement.
See independent auditors' report.
- 4 -
PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2008
THE AGENCY AS A WHOLE
The Agency's net assets deficit decreased $11.97 million from $(24.84) million to $(12.87) million. Our analysis
below focuses on the net deficit (Table 1) and changes in net deficit (Table 2) of the Agency's governmental
activities.
TABLE 1
NET ASSETS
(IN MILLIONS)
As of June 30, 2008 and 2007
Govemmental Activities
2008 2007
Currentand restricted assets $ 313.56 $ 327.67
Capital assets 169.12 164.78
TOTAL ASSETS 482.68 492.45
Long-term liabilities ouisianding 442.09 461.82
Other liabilities 53.46 55.47
TOTAL LIABILITIES 495.55 517.29
Net assets (deficit):
Invested in capital assets, net of
related debt 128.77 152.04
Restricted 41.13 38.03
Unrestricted (182.77) (214.91)
TOTAL NETASSETS(DEFICIT) $ (12.8� $ (24.84)
Compared to the prior year, net assets deficit of the Agency's governmental activities decreased by
$11.97 million. The Agency's Net Assets is made up of three components: Investment in Capital Assets, Net of
Related Debt, Restricted Net Assets and Unrestricted Net Deficit. Unrestricted deficit, the part of net deficit that
can be used to finance day-to-day operations, decreased from $(214.91) million to $(182.77) million, or 14.96
percent. The Agency currently has an unrestricted net deficit because of the debt it has issued. Proceeds from
the debt were used for capital improvements on behalf of the City or contributed to developers and is not offset
by investments in capital assets.
The net assets deficit of the Agency's governmental activities increased due to the acquisition of land, and
construction of various apartment complexes. This also has the effect of decreasing our cash available from
bonds, which is used to offset the cost of acquisitions and capital improvements.
Total liabilities decreased by $21.74 million, which represents the principal payment of long-term debt.
See independent auditors' report.
- 5 -
PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S D/SCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2008
THE AGENCY AS A WHOLE (CONTINUED)
TABLE 2
CHANGES IN NET ASSETS
(IN MILLIONS)
For the years ended June 30, 2008 and 2007
Governmental Activities
2008 2007
REVENUES:
Program Revenues:
Charges for services $ 5.03 $ 4.79
Operating Grants and Contributions 0.81 -
General Revenues:
Tax increment 89.93 82.87
Other income 2.65 2.35
Investment earnings 11.33 12.68
TOTAL REVENUES 109.75 102.69
EXPENSES:
General government 19.20 15.71
Apartment complexes 5.98 5.97
Public works 11.21 13.42
Payments to other agencies 38.99 35.72
Interest on long-term debt 22.40 22.03
TOTAL EXPENSES 97.78 92.85
INCREASE (DECREASE) IN NET
ASSETS 11.97 9.84
BEGINNING NET ASSETS (24.84) (34.06)
RESTATEMENT OF NET ASSETS - (0.62)
ENDING NET ASSETS $ (12.87) $ (24.84)
See independent auditors' report.
- 6 -
PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2008
Governmental Activities
Total revenues increased from $102.69 million to$109.75 million, a 6.88 percent increase. The major factor that
contributed to the increase was the following:
• Increase in property values provided additional tax increment.
The following schedule represents the net cost of providing services:
2008 2007
General Government $ (19.18) $ (15.71)
Apartment Complexes (0.95) (1.18)
Public Works (10.42) (13.42)
Payment to Other Agencies (38.99) (35.72)
Interest on Long-Term Debt (22.40) (22.03)
TOTAL $ (91.94) $ (88.06)
The major factor that contributed to the increase in expense was:
• Increase in additional tax increment resulted in additional pass-through payments to other agencies.
THE AGENCY'S FUNDS
On pages 14 and 15, the governmental funds balance sheet is shown. The combined fund balance of
$254.69 million decreased from $266.98 million, or 4.60 percent. The Agency has reserved $ 95.25 million for
encumbrances, continuing appropriations, loans, debt service, etc. More detailed information about the
combined fund balance reserves is presented in Note 9 to the financial statements.
Major funds balance changes are noted below:
• For the Low and Moderate Income Housing fund, fund balance decreased as the result of capital
projects expenditures.
• For the Redevelopment Agency Financing Authority Debt Service fund, fund balance decreased due to
the interest and principal payment of debt.
• The Redevelopment Agency Project Area 1 and 4 Debt Service funds, fund balance increased as a
result of an increase in tax increment.
• The Redevelopment Agency Project Area 2 Debt Service funds, fund balance decreased as a result of
repayment of a portion of a City Advance.
• The Redevelopment Agency Project Area 1 Capital Projects Funds, fund balance decreased as the
result of capital projects expenditures.
• The Redevelopment Agency Project Area 2 Capital Projects Funds, fund balance increased as the
result of timing of capital projects expenditures.
See independent auditors' report.
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PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2008
THE AGENCY'S FUNDS (CONTINUED)
In addition to the major funds, fund balances of other governmental funds had significant changes. The Housing
Authority Special Revenue fund had a decrease of$4.38 million from the prior year. This was due to the capital
expenditures for the improvement of the apartment complexes. Project Area 3 debt service fund balance
decreased due to repayment of the City Advance. Project Area 3 and 4 capital projects fund balance changes
were minimal. More detailed information on the fund financial statements balances is presented in the notes to
the financial statements.
Budgetary Highlights
During the year, with the recommendation from the Agency's staff, the Agency's Board revised the Agency
budget several times. Adjustments were made on a monthly basis as the Agency's staff requested additional
appropriations to cover the cost of projects that either had change orders for additional work, or the estimated
cost at the beginning of the project was underestimated. At mid-year, adjustments were made as department
heads requested increases or decreases to their budgets to maintain their current level of services. At year-end,
budgets were adjusted for unanticipated expenditures. The Agency's Board approves all amendments that
either increase or decrease appropriations.
Formal budgetary integration is employed as a management control device during the year for the special
revenue and capital project funds. Budgetary data for the special revenue and capital projects funds are not
presented herein, as the budgets for these funds are long-term in nature. More detailed information about the
Agency's budget is presented in Note 1 (L)to the financial statements.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of 2008, the Agency had $169.12 million invested in a broad range of capital assets, including land,
buildings and improvements, apartment complexes, vehicles and equipment (See Table 3). This amount
represents a net increase (including additions and deductions)of$4.34 million, or 2.63 percent over last year.
TABLE 3
CAPITAL ASSETS AT YEAR-END
(NET OF DEPRECIATION, IN MILLIONS)
For the Years Ended June 30, 2008 and 2007
Governmental Activities
2008 2007
Land $ 78.58 $ 77.16
Construction in progress 28.34 39.68
Buildingsand improvements 62.07 47.81
Equipmerit 0.13 0.13
TOTAL $ 169.12 $ 164.78
See independent auditors' report.
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PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSS/ON AND ANALYS/S
(CONTINUED)
June 30, 2008
CAPITAL ASSET AND DEBT ADMINISTRATION (CONTINUED)
Capital Assets (Continued)
This year's major additions included (in millions):
Property acquisitions $ 1.70
Construction of final phase at La Rocca Villas 1.68
Construction in progress for Entrada del Paseo 5.60
Construction in progress for Laguna Palms Apartments 6.04
$ 15.02
This year's major additions were offset by the transfer of Freedom Park from the Agency to the City in the
amount of$9.63 million.
The Agency's fiscal year 2009 capital budget calls for it to spend $15.68 miilion plus continuing projects of
$79.42 million. The majority being the reimbursement to other governments for capital projects, land
development, construction of a regional park, construction of low-income family housing, and the
undergrounding of utilities. More detailed information about the Agency's capital assets is presented in Note 1(g)
and Note 6 to the financial statements.
Debt
At year-end, the Agency's governmental activities had $442.09 million in bonds and notes versus
$461.82 miilion last year, a decrease of$19.73 million, or 4.27 percent as shown in Table 4.
TABLE 4
OUTSTANDING DEBT AT YEAR END
(IN MILLIONS)
For the Years Ended June 30, 2008 and 2007
Govemmerital Activities
2008 2007
Notes payable $ 0.49 $ 0.61
Adva nce s 22.66 32.79
Revenue bonds and notes (backed by
specific tax and fee revenues) 418.94 428.42
TOTALS $ 442.09 $ 461.82
The Agency was able to meet its current year debt obligation in a timely manner. In addition to the$9.49 million
dollars paid on bonds, the Agency repaid a portion of the City Advance in the amount of$10.13 million. Debts
issued in the prior years have been used to finance various capital projects. An example of this would be the
purchase of land, and construction of the City's municipal golf course.
See independent auditors' report.
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PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2008
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS
In preparing the budget for 2009, management looked at the following economic factors:
• In prior years, the City had unallocated reserves in its capital projects and special revenue funds that
could be used to start and complete Agency's projects in an effort to maximize the Agency's cash flow.
In the five-year capital improvement program, all restricted capital funds for the City have been allocated
to various projects. Any additional projects would require that the Agency fund their own projects.
• As the State of California attempts to balance their budget, Redevelopment Agency tax increment
revenues throughout the State have been captured to cover (at minimum) a $350 million shortfall,
resulting in an ERAF shift of$5,250,496 for the Palm Desert Redevelopment Agency. The effects of the
State's endeavors to balance their budget, has caused the Agency to cut projects essential to the
community and Redevelopment Plan. The uncertainty of future takes from Redevelopment will
determine the Agency's ability to complete such projects, as well as the ability to meet the needs of the
community.
The City of Palm Desert continues to grow with new hotels, commercial and residential development,
construction of a four-year university, street improvements, park construction, and various other improvement
projects. The 2009 capital improvement project budget is a reflection of the Agency's commitment to the
residents of Palm Desert. A copy of the City's 2008-2009 financial plan can be obtained by contacting the City
Finance Department (See below).
CONTACTING THE AGENCY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a
general overview of the Agency's finances and to show the Agency's accountability for the money it receives. If
you have questions about this report or need additional financial information, contact the City's Finance
Department at the City of Palm Desert, 73-510 Fred Waring Drive, Palm Desert, California 92260-2578, or
(760) 346-0611.
See independent auditors' report.
- 10 -
Exhibit A
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF NET ASSETS
June 30,2008
Governmental
Activities
ASSETS:
Cash and investments $ 129,152,938
Receivables 13,197,475
Property held for resale 25,000
Prepaid items and deposits 649,290
Deferred charges 10,710,272
Restricted assets:
Restricted cash with fiscal agent 159,834,315
Capital assets,not depreciated 106,919,798
Capital assets,being depreciated(net of accumulated depreciation) 62,195,905
TOTAL ASSETS 482,684,993
LIABILITIES:
Accounts payable 4,184,248
Accrued liabilities 147,066
Interest payable 5,297,365
Deposits payable 385,668
Unearned revenue 31,601
Amounts due under pass-through agreements 43,419,765
Noncurrent liabilities:
Due within one year 12,732,707
Due in more than one year 429,352,514
TOTAL LIABILITIES 495,550,934
NET ASSETS:
[nvested in capital assets,net of related debt 128,772,898
Restricted for:
Special projects 41,130,735
Unrestricted(deficit) (182,769,574)
TOTAL NET ASSETS(DEFICIT) $ (12,865,941)
See independent auditors'report and notes to basic financial statements.
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THIS PAGE INTENTIONALLY LEFT BLANK
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Exhibit B
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF ACTIVITIES
For the year ended June 30,2008
Net(Expense)
Revenue and
Changes in
Program Revenues Net Assets
Operating Capital
Charges for Grants and Grants and Governmental
Functions/Programs Expenses Services Contributions Contributions Activities
PRIMARY GOVERNMENT:
Governmental activities:
General administration $ 19,200,036 $ - $ 19,319 $ - $(19,180,717)
Apartmentcomplexes 5,976,878 5,031,121 - - (945,757)
Public works 11,207,757 - 786,655 - (10,421,102)
Payments to other agencies 38,993,445 - - - (38,993,445)
Interest on long-term debt 22,404,214 - - - (22,404,214)
Total Primary
Government $ 97,782,330 $ 5,031,121 $ 805,974 $ - (91,945,235)
GENERAL REVENUES:
TaYes:
Tax increment 89,927,687
Rental income 86,598
Other revenues 2,579,714
Investment earnings 11,329,292
Total general revenues 103,923,29]
CHANGE IN NET ASSETS 11,978,056
NET ASSETS(DEFICIT)-BEGINNING OF YEAR (24,843,997)
NET ASSETS(DEFICIT)-END OF YEAR $(12,865,941)
See independent auditors'report and notes to basic financial statements.
- 13-
PALM DESERT REDEVELOPMENT AGENCY
BALANCESHEET-GOVERNMENTALFUNDS
June 30,2008
Special
Revenue
Fund Debt Service Funds
Low and
Moderate
Income Project Project
Housing Area 1 Area 2
ASSETS:
Cash and investments $ 28,055,415 $ 57,784,216 $ 8,053,101
Restricted cash with fiscal agent 32,324,067 - -
Receivables 7,952,020 789,707 149,089
Due from other governmental agencies 340,074 - -
Property held for resale 25,000 - -
Prepaid costs and deposits 156 - -
TOTAL ASSETS $ 68,696,732 $ 58,573,923 $ 8,202,190
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts payable $ 311,808 $ 920 $ 450
Accrued liabilities 10,315 - -
Deposits payable 500 - -
Unearned revenue 1,925 - -
Amounts due pass-through agreement - 23,841,593 2,025,748
TOTAL LIABILITIES 324,548 23,842,513 2,026,198
FUND BALANCES:
Reserved 19,912,697 - -
Unreserved 48,459,487 34,731,410 6,175,992
TOTAL FLJND BALANCES 68,372,184 34,731,410 6,175,992
TOTAL LIABILITIES
AND FiJND BALANCES $ 68,696,732 $ 58,573,923 $ 8,202,190
See independent auditors'report and notes to basic financial statements.
- 14-
Exhibit C
Debt Service Funds(Continued) Capital Projects Funds
Other Total
Project Financing Project Project Governmental Governmental
Area 4 Authority Area 1 Area 2 Funds Funds
$ 18,712,123 $ - $ 3,905,196 $ 43,543 $ 12,599,344 $ 129,152,938
- 12,091,959 25,823,349 46,244,063 43,350,877 159,834,315
236,988 25,130 1,419,009 96,118 2,189,340 12,857,401
- - - - - 340,074
- - - - - 25,000
- - 649,134 - - 649,290
$ 18,949,111 $ 12,117,089 $ 31,796,688 $ 46,383,724 $ 58,139,561 $ 302,859,018
$ 450 $ - $ 2,033,409 $ 70,159 $ 1,767,052 $ 4,184,248
- - 42,170 - 94,581 147,066
- - - - 385,168 385,668
- - - - 29,676 31,601
14,764,474 - - - 2,787,950 43,419,765
14,764,924 - 2,075,579 70,159 5,064,427 48,168,348
- 630,500 21,884,878 19,714,734 33,103,176 95,245,985
4,184,187 11,486,589 7,836,231 26,598,83t 19,971,958 159,444,685
4,184,187 12,117,089 29,721,l09 46,313,565 53,075,134 254,690,670
$ 18,949,111 $ 12,117,089 $ 31,796,688 $ 46,383,724 $ 58,139,561 $ 302,859,018
- 15-
THIS PAGE INTENTIONALLY LEFT BLANK
- 16 -
Exhibit D
PALM DESERT REDEVELOPMENT AGENCY
RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
June 30,2008
Total fund balance for governmental funds $ 254,690,670
Amounts reported for governmental activities in the Statement of Net Assets are
different because:
When capital assets(land,buildings,equipment,etc.)that are to be used in
governmental activities are purchased or constructed,the costs of those assets
are reported as expenditures in governmental funds. However,the Statement
of Net Assets includes those capital assets among the assets of the Agency
as a whole:
Beginning Balance,net depreciation $ 164,778,115
Current year additions 17,947,567
Current year deletions/transfers (11,343,447)
Current year depreciation (2,266,532)
Ending Balance,net depreciation 169,115,703
Long-term liabilities applicable to the Agency's governmental activities are not
due and payable in the current period and,accordingly,are not reported as fund
liabilities. All liabilities,both current and long-term,are reported in the Statement
of Net Assets. (442,085,221)
Interest on long-term debt is not accrued in governmental funds,but rather is
recognized as an expenditure when due. (5,297,365)
The cost of issuing bonds is recognized as an expenditure in the period paid,
however,in the Statement of Net Assets,it is amortized over the life of the bonds. ]0,710,272
Net assets(deficit)of governmental activities $ (12,865,941)
See independent auditors'report and notes to basic financial statements.
- 17-
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-GOVERNMENTAL FUNDS
For the year ended June 30,2008
Special ,
Revenue
Fund Debt Service Funds
Low and
Moderate
Income Project Project
Housing Area 1 Area 2
REVENUES:
Taxes $ - $ 52,304,574 $ 18,819,502
Intergovernmental 19,319 - -
Investment earnings 2,656,604 1,988,298 386,210
Rental income 2,844 - -
Sale of inventory 15,295,000 - -
Otherrevenues 200,669 559,452 32,689
TOTAL REVENUES 18,174,436 54,852,324 19,238,401
EXPENDITURES:
Current:
General government 23,984,127 19,020 13,442
Payments to other agencies - 21,190,459 7,596,316
Capital outlay 1,829,895 - -
Debt service:
Interest and fiscal charges - 839,019 919,461
Principal retirement - 3,347,9U 5,122,707
TOTAL EXPENDITURES 25,814,022 25,396,415 13,651,926
EXCESS OF REVENUES OVER
(LJNDER)EXPENDITURES (7,639,586) 29,455,909 5,586,475
OTHER FINANCING SOURCES(USES):
Sale of property - - -
Capital accreation on bonds - - -
Transfers in 18,141,936 - -
Transfersout (13,021,024) (24,821,255) (8,608,894)
TOTAL OTHER FINANCING
SOURCES(USES) 5,120,912 (24,821,255) (8,608,894)
NET CHANGE IN FLJND BALANCES (2,518,674) 4,634,654 (3,022,4]9)
FLJND BALANCES-BEGINNING OF YEAR 70,890,858 30,096,756 9,198,411
FUND BALANCES-END OF YEAR $ 68,372,184 $ 34,731,410 $ 6,175,992
See independent auditors'report and notes to basic financial statements.
- 18-
Exhibit E
Debt Service Funds(Continued) Capital Projects Funds
Other Total
Project Financing Project Project Governmental Governmental
Area 4 Authority Area 1 Area 2 Funds Funds
$ 14,450,887 $ - $ - $ - $ 4,352,724 $ 89,927,687
- - - - 786,655 805,974
188,045 523,406 1,827,223 1,888,267 2,481,258 11,939,311
- - 1,000 - 4,670,189 4,674,033
- - - - - 15,295,000
24,821 - 1,754,883 - 122,588 2,695,102
14,663,753 523,406 3,583,106 1,888,267 12,413,414 125,337,107
10,642 - 5,355,052 507,821 8,226,588 38,116,692
8,032,775 - - - 2,173,895 38,993,445
- - 9,012,034 165,175 6,940,463 17,947,567
- 21,402,246 - - 78,081 23,238,807
- 10,610,000 - - 1,782,563 20,863,187
8,043,417 32,012,246 14,367,086 672,996 19,201,590 139,159,698
6,620,336 (31,488,840) (10,783,980) 1,215,271 (6,788,176) (13,822,591)
- - 47,000 - - 47,000
- 1,484,806 - - - 1,484,806
- 29,853,788 2,295,701 - 3,492,853 53,784,278
(4,997,439) - - (268,952) (2,066,714) (53,784,278)
(4,997,439) 31,338,594 2,342,701 (268,952) 1,426,139 1,531,806
1,622,897 (150,246) (8,441,279) 946,319 (5,362,037) (12,290,785)
2,561,290 12,267,335 38,162,388 45,367,246 58,437,171 266,981,455
$ 4,184,187 $ 12,117,089 $ 29,721,109 $ 46,313,565 $ 53,075,134 $ 254,690,670
- 19-
Exhibit F
PALM DESERT REDEVELOPMENT AGENCY
RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the year ended June 30,2008
Net change in fund balances-total governmental funds $ (12,290,785)
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report capital outlays as expenditures. However,in the
Statement of Activities,the costs of those assets are allocated over their
estimated useful lives as a depreciation expense. This is the amount by
which capital assets additions/deletions($6,875,500)exceeded depreciation
($2,266,532)in the current period. 4,337,588
The issuance of long-term debt provides current financial resources to
governmental funds,while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither
transaction,however,has any effect on net assets. Also,governmental funds
report the effect of issuance costs,premiums,discounts and similar items
when the debt is tirst issued,whereas these amounts are deferred and
amortized in the Statement of Activities. These amounts are the net effect of
theses differences in the treatment of long-term debt and related items:
Principal payments $ 20,863,187
Capital accretion (1,484,806)
19,378,381
Some expenses reported in the Statement of Activities do not require the use
of current tinancial resources and,therefore,are not reported as expenditures
in governmental funds:
Net change in accrued interest for the current period 988,128
The cost of issuing bonds is recognized as an expenditure in the period paid,
however,in the Statement of Net Assets,the defened charges are amortized
over the life of the bonds. (506,523)
Premium on bonds is recognized as an expenditure in the period paid,however
in the Statement of Net Assets it is amortized over the life of the bond. 475,703
Losses on defeased bonds are recorded in the Statement of Net Assets as a
reduction to long-term liabilities and amortized over the life of the bonds. (122,715)
Revenue will not be collected within 60 days of the Agency's fiscal year end
and,therefore,are not considered available in the governmental funds:
Interest not received on development disposition agreement. (2g1,'72i)
Change in net assets of governmental activities $ 11,978,056
See independent auditors'report and notes to basic financial statements.
-20-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Basis of Presentation:
Government-Wide Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement of
activities) report information on all of the activities of the Agency. For the most part, the effect
of interfund activity has been removed from these statements. Governmental activities, which
normally are supported by taxes and intergovernmental revenues, are reported separately from
business-type activities, which rely to a significant extent on fees and charges for support. The
Palm Desert Redevelopment Agency has no business-type activities.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include: 1) charges to
customers or applicants who purchase, use or directly benefit from goods, services or privileges
provided by a given function or segment, and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general
revenues.
Separate financial statements are provided for the governmental funds. Major individual
governmental funds are reported as separate columns in the fund financial statements.
Fund Financial Statements
The accounting system of the Agency is organized and operated on the basis of separate funds,
each of which is considered to be a separate accounting entity. Each fund is accounted for by
providing a separate set of self-balancing accounts that constitute its assets, liabilities, fund
equity, revenues and expenditures. An emphasis is placed on major funds within the
governmental category. A fund is considered major if total assets, liabilities, revenues or
expenditures of that individual governmental fund are at least 10% of the corresponding total
for all funds of that category or type.
See independent auditors' report.
- 21 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
a. Basis of Presentation (Continued):
Fund Financial Statements (Continued)
The funds of the Agency are described below:
Governmental Fund Types:
Special Revenue Funds - Special Revenue Funds are used to account far the proceeds of
specific revenue resources (other than major capital projects) that are legally restricted to
expenditures for specified purposes.
Debt Service Funds - Debt Service Funds are used to account for the accumulation of resources
for, and the payment of, general long-term obligation principal, interest and related costs.
Capital Projects Funds - Capital Projects Funds are used to account for financial resources to be
used for the acquisition or construction of major capital facilities.
The Agency's major governmental funds are as follows:
The Low and Moderate Income Housin� Special Revenue Fund is used to account for the tax
increment set-aside to be spent on projects that benefit low and moderate-income families.
Project Area 1 Debt Service Fund is used to account for the tax increment revenues and
expenditures of Project Area 1.
Project Area 2 Debt Service Fund is used to account for tax increment revenues and
expenditures of Project Area 2.
Project Area 4 Debt Service Fund is used to account for tax increment revenues and
expenditures of Project Area 4.
The Financing Authority Debt Service Fund is used to account for the resources and payment
of the debt issued by the Palm Desert Financing Authority and loaned to the Redevelopment
Agency.
See independent auditors' report.
- 22 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
a. Basis of Presentation (Continued):
Fund Financial Statements (Continued)
Major Governmental Funds (Continued)
Proiect Area 1 Capital Project Fund is used to account for financial resources to be used for the
acquisition or construction of major capital facilities in Project Area 1.
Project Area 2 Capital Project Fund is used to account for financial resources to be used for the
acquisition or construction of major capital facilities in Project Area 2.
b. Measurement Focus and Basis of Accounting:
Measurement Focus
Measurement focus is a term used to describe "which" transactions are recorded within the
various financial statements. Basis of accounting refers to "when" transactions are recorded
regardless of the measurement focus applied.
On the government-wide statement of net assets and the statement of activities, activities are
presented using the economic resources measurement focus. Under the economic resources
measurement focus, all (both current and long-term) economic resources and obligations of the
government are reported.
In the fund financial statements, all governmental funds are accounted for on a spending or
"financial flow" measurement focus. This means that only current assets and current liabilities
are generally included on their balance sheets. Their reported fund balances (net current assets)
are considered a measure of "available spendable resources." Governmental fund operating
statements present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets.
Noncurrent portions of long-term receivables due to governmental funds are reported on their
balance sheets, in spite of their spending measurement focus. Special reporting treatments are
used to indicate, however, that they should not be considered "available spendable resources"
since they do not represent net current assets. Noncurrent portions of long-term receivables are
offset by fund balance reserve accounts.
See independent auditors' report.
- 23 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
b. Measurement Focus and Basis of Accounting(Continued):
Basis of Accounting
In the government-wide statement of net assets and statement of activities, the governmental
activities are presented using the accrual basis of accounting. Under the accrual basis of
accounting, revenues are recognized when earned and expenses are recorded when the liability
is incurred or economic asset used. Revenues, expenses, gains, losses, assets and liabilities
resulting from exchange and exchange-like transactions are recognized when the exchange
takes place.
In the fund financial statements, governmental funds are presented on the modified accrual
basis of accounting. Under this modified accrual basis of accounting, revenues are recognized
when "measurable and available." Measurable means knowing or being able to reasonably
estimate the amount. Available means collectible within the current period or soon enough
thereafter to pay current liabilities. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expenditures are recorded only
when payment is due.
Revenues that are susceptible to accrual include property taxes that are levied for and due for
the fiscal year and collected within 60 days after year-end. Property taxes, rents and interest
associated with the current fiscal period are all considered to be susceptible to accrual and so
have been recognized as revenues of the current fiscal period. All other revenue items are
considered to be measurable and available only when cash is received by the government.
c. Investments:
Investments are stated at fair value (quoted market price or the best available estimate thereo�.
d. Property Held for Resale:
The Agency purchased land within the Agency's project area. The land held for resale is
recorded in the Redevelopment Agency Special Revenue Fund as property held for resale, at
the lower of acquisition cost or net realizable value. At June 30, 2008, the cost of the property
held for resale for various housing properties in Palm Desert totaled $25,000.
See independent auditors' report.
- 24 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
l. SUMMARY OF SIGNIFICANT ACCOLINTING POLICIES (CONTINUED):
e. Prepaid Items and Deposits:
Certain payments to vendors reflect costs applicable to future accounting periods are recorded
as prepaid items in the government-wide and fund financial statements.
The Agency has deposited $571,281 with Coachella Valley Water District for future sewer
connection charges at the Indian Springs Mobile Home Park and $50,000 deposits in escrow to
purchase property. An additional $28,009 of miscellaneous prepaid items is included in this
account.
f. Property Tax Calendar:
Property taxes are assessed and collected each fiscal year according to the following property
tax calendar:
Lien Date January 1
Levy Date July 1 to June 30
Due Date November 1 - 1 st Installment
March 1 - 2nd Installment
Delinquent Date December 10 - 1 st Installment
April 10 -2nd Installment
Under California law, property taxes are assessed and collected by the counties up to 1%of
assessed value, plus other increases approved by the voters. The property taxes go into a pool,
and are then allocated to the agencies based on complex formulas prescribed by the state
statutes.
g. Capital Assets and Depreciation:
Capital assets are reported in the government-wide financial statements. Capital assets are
defined by the Agency as assets with an initial cost of more than $500 and an estimated life in
excess of one year. Such assets are recorded at historical cost or estimated historical cost if
purchased or constructed. Donated capital assets are recorded at estimated fair market value at
the date of donation. The Agency had no infrastructure assets.
The cost of normal maintenance and repairs that do not add to the value of the asset or
materially extend asset lives are not capitalized.
See independent auditors' report.
- 25 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
g. Capital Assets and Depreciation (Continued):
Property,plant and equipment are depreciated using the straight-line method over the following
estimated useful lives:
Buildings 40 years
Improvements other than buildings 20 years
Machinery and equipment 5 to 8 years
h. Long-Term Obligations:
In the government-wide financial statements, long-term debt and other long-term obligations
are reported as liabilities. Bond premiums and discounts, as well as issuance costs, are deferred
and amortized over the life of the bonds using the effective interest method. Bonds payable are
reported net of the applicable bond premium or discount. Bond issuance costs are reported as
deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of debt
issued is reported as other financing sources. Premiums received on debt issuances are reported
as other financing sources while discounts on debt issuances are reported as other financing
uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are
reported as debt service expenditures.
i. Fund Equity:
In the fund financial statements, governmental funds report reservations of fund balance for
amounts that are not available for appropriation or are legally restricted by outside parties for
use for a specific purpose. Designations of fund balance represent tentative management plans
that are subject to change.
See independent auditors' report.
- 26 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
j. Explanation of differences between Governmental Funds Balance Sheets and the Statement of
Net Assets:
Long-Term Debt
Total Capital Transactions/ Reclassifications Statement
Governmental Related Interest and of Net
Funds Items Payable Eliminations Assets
Assets:
Cash and investments $ 129,152,938 $ - $ - $ - $ 129,152,938
Restricted cash with fiscal agent 159,834,315 - - - 159,834,315
Receivables 12,857,401 - - - 12,857,401
Due from other governmental -
agencies 340,074 - - - 340,074
Property held for resale 25,000 - - - 25,000
Prepaid items and deposits 649,290 - - - 649,290
Deferred charges - - 10,710,272 - ]0,710,272
Capital assets - 169,115,703 - - 169,115,703
Total Assets 302,859,018 169,115,703 10,710,272 - 482,684,993
Liabilities:
Accounts payable 4,184,248 - - - 4,184,248
Accrued liabilities 147,066 - - - 147,066
Interest payable - - 5,297,365 - 5,297,365
Deposits payable 385,668 - - - 385,668
Unearnedrevenue 31,601 - - - 31,601
Amounts due under -
pass-through agreements 43,419,765 - - - 43,419,765
Long-term liabilities-current - - 12,732,707 - 12,732,707
Long-term liabilities-noncurrent - - 429,352,514 - 429,352,514
Total Liabilities 48,168,348 - 447,382,586 - 495,550,934
Net Assets(Deficit) $ 254,690,670 $169,115,703 $(436,672,314) $ - $ (12,865,941)
See independent auditors' report.
- 27 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
k. Explanation of differences between Governmental Funds Operating Statements and the
Statement of Activities:
To[al Capital Long-Tenn Cos[of Reclassifications Statement
Govemmental Related Debt Accrued Issuance/ and of
Funds Items Transactioas Interest pevn amount Eliminations Activities
Revenues:
Taxes $ 89,927,687 $ - $ - $ - $ - $ - $ 89,927,687
Intergovernmental 805,974 - - - - - 805,974
Investrnent eainings 11,939,3ll - - - - (610,019) 11,329,292
Rentalincome 4,674,033 - - - - (4,587,435) H6,598
Saleofinventory 15,295,000 - - - - Q5,295,000) -
Apartmentcomplexes - - - - - 5,031,121 5,031,121
Otherreven�es 2,695,102 (1L5,388) 2,579,714
Total Revenues 125,337,107 (15,576,721) 109,760,386
Expendihves:
Cucrent:
Generalgovemme�t 38,116,692 2,266,532 - - - (21,183,188) 19,20Q036
Payments to other agencies 38,993,445 - - - - - 38,993,445
Apartment complexes - - - - - 5,976,878 5,976,878
Publicworks - L1,207,757 - - - - I1,207,757
Capitaloutlay 17,947,567 Q7,947,567) - - - - -
Debt service:
Interest and fiscal charges 23,238,807 - (352,988) (988,128) 506,523 - 22,404,214
Principal retirement 2Q863,187 (2Q863,187)
TotaLExpenditures 139,159,698 (4,473,278) (21,216,175) (988,128) 506,523 (15,206,310) 97,782,330
Other Financing Sources(Uses):
Sale ofproperty 47,000 (135,690) - - - 88,690 -
Long-term debtissued 1,484,806 - (1,484,806) - - - -
Transfers in 53,784,278 - - - - (53,784,278) -
Transfers out (53,784,278) 53,784,278
Total Other Financing
Soiuces(Uses) 1,531,806 (135,690) (1,484,806) 88,690
NetChangeinFundBalance $ (12,290,785) $ 4,337,588 $ 19,731,369 $ 988,128 $ (506,523) $ (281,721) $ 11,978,056
See independent auditors' report.
- 28 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
l. Budgetary Accounting:
The Agency uses the following procedures in establishing its budgetary data reported in the
financial statements:
1. Before the beginning of the fiscal year, the Executive Director submits to the Board of
Directors a proposed budget for the year commencing the following July l.
2. Public hearings are conducted to obtain taxpayer comments.
3. The Budget is subsequently adopted through passage of a resolution.
4. Original appropriations are modified by supplementary appropriations and transfers among
budget categories. The Board approves all significant changes. Annual appropriations lapse
at year-end.
5. Encumbrances and Gontinuing Appropriations are rebudgeted as of July 1 by Board action.
They are reported as reservations of fund balance in the fund-level financial statements.
6. Formal budgetary integration is employed as a management control device during the year
for the Special Revenue and Capital Projects Funds. Formal budgetary integration is not
employed for Debt Service Funds because effective budgetary control is alternatively
achieved through debt indenture provisions.
7. Budgets are adopted on a basis consistent with accounting principles generally accepted in
the United States of America. Budgetary data for the Special Revenue Funds and Capital
Projects Funds are not presented herein, as the budgets for these funds are long-term in
nature.
m. Relationship to the City of Palm Desert:
The Palm Desert Redevelopment Agency is an integral part of the reporting entity of the City
of Palm Desert, California. The funds and account groups of the Agency have been included
within the scope of the basic financial statements of the City because the City Council of the
City of Palm Desert exercises oversight responsibility over the operations of the Agency. Only
the funds and account groups of the Agency are included herein and these financial statements,
therefore, do not purport to represent the financial position or results of operations of the City
of Palm Desert.
See independent auditors' report.
- 29 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
n. Use of Estimates:
The financial statements are prepared in conformity with accounting principles generally
accepted in the United States of America and, accordingly, include amounts that are based on
management's best estimates and judgments. The financial statements include estimates for
depreciation expense and fair value of investments. Accordingly, actual results could differ
from the estimates.
2. ORGANIZATION AND TAX INCREMENT FINANCiNG:
The Agency is a separate governmental entity as prescribed in the California Community
Redevelopment law and as set forth in the Health and Safety Code of the State of California. The
Agency consists of Project Area 1, Project Area 2, Project Area 3 and Project Area 4.
In addition, the Agency and the City of Palm Desert (the City) have established the Palm Desert
Financing Authority as a joint power of authority between the Agency and the City for purposes of
financing and funding capital improvements. Transactions related to the joint power for the Agency
are recorded in a debt service fund.
The Palm Desert Housing Authority was established in January 1998, as a component unit of the
Agency and is partly responsible for the administration of providing affordable housing in the City
of Palm Desert. The apartment complexes owned by the Housing Authority are operated by a
management company. The transactions related to the Housing Authority are reported in a Special
Revenue Fund.
Agency expenses include capital improvement projects and operating costs which include required
staff support and consultant services.
The Agency's primary source of revenue comes from properly taxes, referred to in the
accompanying financial statements as "tax increment revenue." The assessed valuation of all
property within each project area was determined on the date of adoption of the Project Area.
Except for certain amounts provided by specific agreement (see Note 7), property taxes related to
the incremental increase in assessed values after the adoption of the Project Area have been
allocated to the Agency, while all property taxes on the "frozen" assessed valuation as of the
adoption date have been allocated to the City and other districts.
See independent auditors' report.
- 30 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
3. CASH AND INVESTMENTS:
Cash and Investments
Cash and investments reported in the accompanying financial statements consisted of the
following:
Cash and investments pooled with the City $ 129,152,938
Restricted cash with fiscal agent 159,834,315
$ 288,987,253
Investments Authorized by the California Government Code and the Agency's Investment
Policy
Under provision of the City's investment policy and in accordance with the California Government
Code, the following investments are authorized:
• United States Treasury bills, notes, bonds or certificates of indebtedness
• United States government-sponsored enterprise obligations,participations or other instruments
• Banker's Acceptances issued by commercial banks
• Commercial Paper issued by general corporations
• Negotiable Certificates of Deposits, issued by a nationally or state-chartered bank, a savings
association, a federal association or by a state-licensed branch of a foreign bank
• Time Certificates of Deposit issued by qualified public depositories.
• Repurchase Agreements sold by authorized brokers
• Medium-Term Notes issued by corporations organized and operating in the United States, or by
depository institutions operating in the United States and licensed by the United States or by
any state
• Money Market Mutual Funds that are registered with the SEC under the Investment Act
of 1940
• State of California Local Agency Investment Fund (LAIF) that is managed by the State
Treasurer's Office
• Structured Notes in the form of callable securities or "STRIPS" issued by the United States
Treasury, Federal Agencies or government-sponsored enterprises
• Asset-Backed Commercial Paper issued by special purpose corporations, trusts or limited
liability companies
• Local Government Investment Pools
See independent auditors' report.
- 31 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
3. CASH AND INVESTMENTS (CONTINUED):
Investments Authorized by the California Government Code and the Agency's Investment
Policy (Continued)
The City's Investment policy imposes the following restrictions on the maximum percentage it can
invest in a single type of investment.
Portfolio Single Issuer
Issuer Maximum Maximum
United States Treasury Bills,Notes,Bonds 100% N/A
U.S. Government-Sponsored Enterprise Securities 100% 30%
Banker's Acceptances 40% 30%
Commercial Paper 25% 10%
Negotiable Certificates of Deposit 30% N/A
Time Certificates of Deposit 15% N/A
Repurchase Agreements 20% N/A
Medium-Term Corporate Notes 30% 15%
Money Market Mutual Funds 20% N/A
Local Agency Investment Fund (LAIF) $40M/Acct N/A
Structured Notes (STRIPS) 20% N/A
Asset-Backed Commercial Paper 25% N/A
Local Government Investment Pools 30% N/A
N/A -Not Applicable
The City's policy is more conservative than state law, which has no issuer concentration limits on
federal agency debt. The federal agency debt that the City purchases have implied credit ratings of
"AAA/Aaa".
Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustee are governed by provisions of the debt
agreements, rather than the general provisions of the California Government Code or the Agency's
investment policy.
See independent auditors' report.
- 32 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
3. CASH AND INVESTMENTS (CONTINUED):
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of
its fair value to changes in market interest rates. One of the ways that the Agency manages its
exposure to interest rate risk is by purchasing a combination of shorter term and longer term
investments and by timing cash flows from maturities so that a portion of the portfolio is maturing
or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity
needed for operations.
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. The Agency's investments held by bond trustee consist of money
market mutual funds, which is rated AAA by Standard and Poor's.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The custodial credit risk for
investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a
transaction, a government will not be able to recover the value of its investment or collateral
securities that are in the possession of another party. The California Government Code and the
Agency's investment policy do not contain legal or policy requirements that would limit the
exposure to custodial credit risk for deposits or investments, other than the following provision for
deposits: The California Government Code requires that a financial institution secure deposits
made by state or local governmental units by pledging securities in an undivided collateral pool
held by a depository regulated under state law (unless so waived by the governmental unit). The
market value of the pledged securities in the collateral pool must equal at least 110% of the total
amount deposited by the public agencies. California law also allows financial institutions to secure
the Agency deposits by pledging first trust deed mortgage notes having a value of 150% of the
secured public deposits.
Disclosures Related to Interest Rate Risk, Credit Risk and Custodial Credit Risk:
The Agency's cash and investments are pooled with the City of Palm Desert's cash and
investments. Additional disclosures regarding $129,152,938 pooled investments related to interest
rate risk, credit risk and custodial credit risk are available in the City of Palm Desert's
Comprehensive Annual Financial Report.
See independent auditors' report.
- 33 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
4. LOANS,NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES:
Receivables consisted of the following at June 30, 2008:
Special
Revenue
Fund
Low and
Moderate Debt Service Funds
[ncome Project Project Project Financing
Housing Area 1 Area 2 Area 4 Authoriry
Accounts $ 150,863 $ 789,707 $ 149,089 $ 236,988 $ -
Interest 105,789 - - - 25,130
C,oans 7,695,368 - - - -
7,952,020 789,707 149,089 236,988 25,130
Capital Projects Funds Other Total
Project Project Governmental Governmental
Area 1 Area 2 Funds Receivables
Accounts $ 1,683 $ - $ 104,464 $ 1,432,794
Interest 1,417,326 96,118 84,876 1,729,239
Loans - - 2,000,000 9,695,368
1,419,009 96,118 2,189,340 12,857,401
Loans Receivable
a. A loan receivable for the construction of a multi-family affordable housing development dated
June 14, 2001, with a balance of $7,659,437 is due from the Palm Desert Development
Company. The loan is secured by a Deed of Trust, with assignment to property, rent and
fixtures on the housing development located in Palm Desert. Interest is earned and due annually
at a rate of 1% per annum from the date on which the final certificate of occupancy is issued.
Principal on the loan is based on the applicable agency's percentage of positive net cash flow
derived from the operations of the Development.
b. The Agency has $35,931 in home improvement loans. Payments of interest and principal are
due monthly on these loans.
c. On April 21, 2003, the Agency entered into a loan agreement with The Regents of the
University of California, on behalf of its Riverside Campus, to loan various amounts over a
period of time, not to exceed an aggregate amount of$2,000,000. Proceeds of the loan are to be
used for capital improvements at the University's Riverside Campus. The outstanding principal
balance and interest on the note is due in five annual payments beginning on a future date yet to
be determined. As of June 30, 2008, the amount outstanding on the loan was $2,000,000.
See independent auditors' report.
- 34 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
4. LOANS,NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES
(CONTINUED):
Loans Receivable(Continued)
d. The Agency has issued loans for several other projects, all of which are secured by a deed of
trust. A valuation allowance equal to the loan balance has been recognized where there is a
significant possibility that these loans either become uncollectible or forgiven by the Agency at
a future date if all the terms of the loans have been met.
Detailed information for these loans is as follows:
Loan
Balance Interest Maturity
Project Name Outstanding Rate Date Secured By Special Provisions of Loan
Self-Help $ 429,000 7.25% 30 years Deed of Trust Loan balance and interest due upon maturity,
Housing Program or 2024 unpaid balance of loan or interest will bear
an interest rate of 12%.
Home Improvement 98,353 N/A N/A Deed of Trust Loan is payable upon change or transfer of
Loans title, refinancing or upon the death of the
borrower.
Portola Palms 176,965 3.00% 30 years Deed of Trust Loan balance and interest will be forgiven at
Mobilehome Park from date maturity if debtor does not breach the terms
of loan and conditions of either the unit regulatory
agreement or note.
Desert Rose 2,200,169 3.00% 30 years Deed of Trust Loan will be forgiven at maturity unless the
from date debtor is in violation of the unit regulatory
of loan agreement or the deed of trust.
Falcon Crest 3,204,094 3.00% 45 years Deed of Trust Loan is payable upon change or transfer of
from date title, refinancing or upon the death of the
of loan borrower.
Acquisition, 190,510 3.00% 30-45 years Deed of Trust Loan balance and interest will be forgiven at
Rehabilitation, from date Assignment maturity if debtor does not breach the terms
Resale of loan of Rent and conditions of either the unit regulatory
agreement or note.
See independent auditors' report.
- 35 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
5. INTERFUND TRANSFERS:
The composition of interfund transfers as of June 30, 2008, is as follows:
Transfers To
Special Revenue
Fund
Low and Debt Service Capital Projects
Moderate Fund Fund Other
Income Financing Project Governmental
Transfers From Housing Authority Area 1 Funds Total
Special Revenue Funds:
Low and Moderate
Income Housing $ - $ 9,021,007 $ 507,164 $ 3,492,853 $ 13,021,024
Debt Service Funds:
Project Area 1 10,551,988 13,081,575 1,187,692 - 24,821,255
Project Area 2 3,796,589 4,812,305 - - 8,608,894
Project Area 4 2,914,998 2,082,441 - - 4,997,439
Capital Projects Funds:
Project Area 2 - - 268,952 - 268,952
Other Governmental Funds 878,361 856,460 331,893 - 2,066,714
Totals $ 18,141,936 $ 29,853,788 $ 2,295,701 $ 3,492,853 $ 53,784,278
Transfers are used to:
1. move receipts restricted to debt service from the funds collecting the receipts to the debt service
funds as debt service payments become due,
2. transfer 20% of tax increments received by RDA Debt Service Funds to the Low and Moderate
Income Housing Special Revenue Fund,
3. transfer allocation of administrative expenses, and
4. transfer revenues to provide for capital projects.
See independent auditors' report.
- 36 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
6. CAPITAL ASSETS:
A summary of changes in capital assets for the year ended June 30, 2008, is as follows:
Bala�ce at Balance at Balance at
June 30,2007 Adjustrnents July 1,2007 Transfers Additions Deletions June 3Q 2008
Capital assets,�o[
being depreciated:
Land $ 77,163,161 $ - $ 77,163,161 $ - $ 1,SSQ000 $ (135,690) $ 7$577,471
Construction-i�-progress 39,672,908 - 39,672,908 (22,407,362) 12,745,121 (1,668,340) 28,342,327
Total capital assets,not
beingdepreciated ll6,836,069 - 116,836,069 (22,407,362 14,295,121
) (1,804,030) 106,919,798
Capital assets,being
depreciated:
Buildings 65,838,908 - 65,838,908 12,405,130 3,446,912 - 81,69Q950
[mprovements other
than buildings 7,232,558 - 7,232,558 462,815 162,448 - 7,857,821
MacMneryandeqwpment 263,969 - 263,969 - 43,086 (14,139) 292,916
Total capital assets,
being depreciated 73,335,435 - 73,335,435 12,867,945 3,652,446 (14,139) 89,841,687
Less accumulated
depreciation for:
Buildings (22,542,117) - (22,542,117) - (1,837,892 -
) (24,38Q009)
Improvements other
thanbuildings (2,719,011) - (2,719,011) - (387,680) - (3,106,691)
Machinery and equipment (132,261) - (132,261) - (40,960) 14,139 (159,082
)
Total accumulated
depreciation (25,393,389) - (25,393,389) - (2,266,532 14,139
) (27,645,782)
Capital assets,being
depreciated,net 47,942,046 - 47,942,046 12,867,945 1,385,914 - 62,195,905
Capital assets,net-
GoveramentalActivities $ 164,778,115 $ - $ 164,778,115 $ (9,539,417) $ 15,681,035 $ (1,804,030) $ 169,115,703
Depreciation expense of $2,266,532 is reported with general administration expense in the
Statement of Activities.
See independent auditors' report.
- 37 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
7. AMOUNTS DUE UNDER PASS-THROUGH AGREEMENTS:
Property taxes related to the incremental increase in assessed values after the adoption of the
Redevelopment Plan are, except where otherwise provided by specific agreement, allocated to the
Agency. The Agency has entered into various pass-through agreements with other agencies to
allocate its tax increment revenue.
At June 30, 2008, the Agency has an obligation of $43,419,765 to other agencies and entities
related to specific pass-through agreements as follows:
Balance at Balance at
Entity July 1,2007 Additions Payments June 30, 2008
Riverside County-
Capital Improvement $14,587,299 * $ 16,385,141 $18,046,062 $ 12,926,378
Riverside County-Schools 733,098 817,005 733,098 817,005
Riverside County-Library 5,684,682 * 2,039,240 - 7,723,922
Riverside County-Fire 2,990,357 3,248,130 2,990,357 3,248,130
Coachella Valley Mosquito
Abatement District 596,686 661,403 596,686 661,403
Coachella Valley Water District 6,649,250 1,554,953 - 8,204,203
Desert Community College District 1,263,533 * 1,410,834 1,263,533 1,410,834
Desert Sands Unified
School District 5,410,082 * 6,187,467 5,571,592 6,025,957
Coachella Valley Recreation
and Park District 467,479 511,218 467,479 511,218
Coachella Valley Resources District 4,475 4,926 4,475 4,926
Palm Springs Unified
School District 270,471 338,347 270,471 338,347
County Juvenile Health District 727,014 1,353,419 1,155,109 925,324
Other Deposits 579,234 263,877 220,993 622,118
$39,963,660 $34,775,960 $31,319,855 $ 43,419,765
* The Redevelopment Agency has used bond proceeds for the construction of capital
improvements, which benefit these entities. These entities have agreements with the
Redevelopment Agency, which will allow it to use a portion of these amounts to offset debt
service costs.
See independent auditors' report.
- 38 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES:
Schedule of Changes
The following is a schedule of changes in long-term liabilities of the Agency for the fiscal year
ended June 30, 2008:
Balance Repayments/ Balance Due Within
July 1,2007 Additions Reductions June 30,2008 One Year
Project Area No.1
2002A TARRBs,$22,070,000 $ 22,070,000 $ - $ - $ 22,070,000 $ -
2003 TARBs,$19,000,000 19,000,000 - - 19,000,000 -
2004A TARRBs,$24,945,000 22,655,000 - 850,000 21,805,000 1,030,000
2006 A&B TARBs,$62,320,000 60,105,000 - 1,965,000 58,140,000 2,075,000
2007A TARRBs,$32,600,000 32,600,000 - 2,130,000 30,470,000 2,410,000
1995A TARRBs,$6,305,000 1,235,000 - 600,000 635,000 635,000
Advances from City 10,011,857 - 3,347,917 6,663,940 -
Total $ 167,676,857 $ - $ 8,892,917 $ 158,783,940 $ 6,150,000
Project Area No.2
2002A TARRBs,$17,310,000 $ 14,680,000 $ - $ 650,000 $ 14,030,000 $ 675,000
2003 TARBs,$15,745,000 15,745,000 - - 15,745,000 -
2006 A-D TARBs,$67,618,213 68,554,280 1,024,695 940,000 68,638,975 1,320,000
Advances from City 20,991,060 - 5,000,000 15,991,060 -
County note payabie 613,535 - 122,707 490,828 122,707
Total $ 120,583,875 $ 1,024,695 $ 6,712,707 $ 114,895,863 $ 2,117,707
Project Area No.3
2003 TARBs,$4,745,000 $ 4,315,000 $ - $ 95,000 $ 4,220,000 $ 100,000
2006 A-C TABs,$15,059,526 15,191,608 194,507 - 15,386,ll5 25,000
Advances from City 1,782,563 - 1,782,563 - -
Total $ 21,289,171 $ 194,507 $ 1,877,563 $ 19,606,115 $ 125,000
Project Area No.4
1998 TARBs,$11,02,000 $ 8,355,000 $ - $ - $ 8,355,000 $ -
2001 TARBs,$15,695,000 14,795,000 - 285,000 14,510,000 310,000
2006ATARBs,$19,273,089 19,509,006 265,604 - 19,774,610 200,000
� Total $ 42,659,006 $ 265,604 $ 285,000 $ 42,639,610 $ 510,000
Combined Low and Moderate Housing
1998 TARBs,$48,760,000 $ 5,725,000 $ - $ 655,000 $ 5,070,000 $ 685,000
2002 TARBs,$L2,100,000 I1,130,000 - 255,000 10,875,000 265,000
2007 TARBs,$86,155,000 86,155,000 - 2,185,000 83,970,000 2,880,000
Total $ 103,010,000 $ - $ 3,095,000 $ 99,915,000 $ 3,830,000
Total-All Project Areas
Bonds payable $ 421,819,894 $ 1,484,806 $ 10,610,000 $ 412,694,700 $ 12,610,000
Advances from City 32,785,480 - 10,130,480 22,655,000 -
Counry note payable 613,535 - 122,707 490,828 122,707
Subtotal 455,218,909 1,484,806 20,863,187 435,840,528 12,732,707
Add:
Unamortized bond premium 8,326,646 - 475,703 7,850,943 -
Less:
Deferred amount on refunding 1,728,965 - 122,715 1,606,250 -
Total $ 461,816,590 $ 1,484,806 $ 21,216,175 $ 442,085,221 $ 12,732,707
See independent auditors' report.
- 39 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30,2008
8. LONG-TERM LIABILITIES (CONTINUED):
A description of long-term liabilities outstanding (excluding defeased debt) of the Agency as of
June 30, 2008, follows:
Tax Allocation Bonds
Tax Allocation bonds are special obligations of the Agency and the Financing Authority,
(a component unit of the Agency) and are secured by an irrevocable pledge of tax revenues and
other funds as provided under the Bond Resolution. The bonds, and any interest thereon, are not a
debt of the City, the State of California or any of its political subdivisions and neither the City, the
State of California nor any of its political subdivisions is liable on the bonds, nor in any event shall
the bonds, and interest thereon, be payable out of any funds or properties other than those provided
under the Bond Resolution. The Agency purchased insurance from Ambac Assurance Corporation
(Ambac) and MBIA Insurance Corporation (MBIA) for the purpose of enhancing the
creditworthiness of the bonds. Since the date of purchase,Ambac and MBIA's ratings by Moody's
Investors Services have been downgraded from "AAA" to Baal", and "AAA" to `Baal",
respectively.
Pursuant to California Health and Safety Code Section 33670, the total number of dollars of taxes
which may be divided and allocated to the Agency for Project Area No. 1 is $500,000,000, and it is
estimated that the cap will be reached in the year 2022. Project Area No. 4's total is $600,000,000,
and it is estimated that this cap will be reached in the year 2034. The result of reaching the cap
limits would preclude the Agency from receiving taxes and using the taxes to pay debt in these
project areas, thereby requiring the Agency to call bonds prior to those dates.
See independent auditors' report.
-40 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED): ,
Tax Allocation Bonds (Continued)
2002 Series A Tax Allocation Refundin�Revenue Bonds (Project Area No. 1 as Amended)
In March 2002, the Palm Desert Financing Authority issued $22,070,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 1 as Amended) 2002 Series A. The proceeds from the
bonds were loaned to the Palm Desert Redevelopment Agency. A portion of the proceeds of the
loan was used to prepay the prior loan, which effected the current refunding of a like portion of the
prior bonds. The remainder was used to fund various redevelopment capital projects of the Agency
in Project Area No. 1. The bonds consist of serial bonds of $10,905,000 at 5.00% due
April 1, 2025, and $11,165,000 in term bonds at 5.10% due April 1, 2030. Interest is payable
semi-annually on April 1 and October 1. Mandatory sinking fund redemptions begin April 1, 2024.
The future debt service requirements on the 2002 Series A Tax Allocation Refunding Revenue
Bonds (Project Area No. 1, as amended) are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ - $ 1,114,666 $ 1,114,666
2010 - 1,114,666 1,114,666
2011 - 1,114,666 1,114,666
2012 - 1,114,666 1,114,666
2013 - 1,114,666 1,114,666
2014- 2018 - 5,573,330 5,573,330
2019 - 2023 - 5,573,330 5,573,330
2024 -2028 17,270,000 3,384,928 20,654,928
2029 -2030 4,800,000 370,260 5,170,260
$ 22,070,000 $ 20,475,178 $ 42,545,178
See independent auditors' report.
- 41 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds(Continued)
Series 2003 Tax Allocation Revenue Bonds (Proiect Area No. 1)
In July 2003, the Financing Authority issued $19,000,000 Tax Allocation Revenue Bonds (Project
Area No. 1 as Amended) Series 2003. The proceeds of the bonds were disbursed to make a loan to
the Redevelopment Agency. The Agency will use the proceeds of the loan to fund various
redevelopment capital projects of the Agency and to finance costs of issuance of the bonds. The
bonds bear interest at 5.0%. They consist of$7,050,000 serial bonds with principal payments due
in 2026 and 2027, and $11,950,000 term bonds due in 2030. Interest will be payable on April 1 and
October 1, of each year, beginning April 1, 2004. Principal payments will be on April 1 of the
years stated above.
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project
Area No. 1) are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ - $ 950,000 $ 950,000
2010 - 950,000 950,000
2011 - 950,000 950,000
2012 - 950,000 950,000
2013 - 950,000 950,000
2014 - 2018 - 4,750,000 4,750,000
2019 - 2023 - 4,750,000 4,750,000
2024 - 2028 10,840,000 4,225,500 15,065,500
2029 - 2030 8,160,000 617,000 8,777,000
$ 19,000,000 $ 19,092,500 $ 38,092,500
See independent auditors' report.
- 42 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
2004 Series A Tax Allocation Refundin�Revenue Bonds (Project Area No. 1 as Amended)
In June 2004, the Palm Desert Financing Authority issued $24,945,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 1 as Amended)2004 Series A. The proceeds from the
bonds were loaned to the Palm Desert Redevelopment Agency to refinance a portion of the
Agency's obligations from 1995 and to fund various redevelopment capital projects within or of
benefit to the project area. Interest rates on the bonds vary from 3.0% to 5.0% per annum payable
semi-annually on April 1 and October 1. Principal payments will be made annually beginning
April 1, 2005.
The future debt service requirements on the 2004 Series A Tax Allocation Revenue Bonds (Project
Area No. 1, as amended) are as follows:
Year Ending
June 30, Principal InterEst Total
2009 $ 1,030,000 $ 1,025,813 $ 2,055,813
2010 945,000 974,313 1,919,313
2011 1,130,000 927,063 2,057,063
2012 1,050,000 876,213 1,926,213
2013 1,155,000 828,963 1,983,963
2014 - 2018 6,520,000 3,358,600 9,878,600
2019 - 2023 6,460,000 1,715,250 8,175,250
2024 - 2025 3,515,000 238,750 3,753,750
$ 21,805,000 $ 9,944,965 $ 31,749,965
See independent auditors' report.
- 43 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds(Continued)
Tax Allocation Revenue Bonds (Project Area No. l, as Amended) 2006 Series A and Series B
Taxable
On July 6, 2006, the Palm Desert Financing Authority issued $37,780,000 of Tax Allocation
Revenue Bonds (Project Area No. 1, as Amended) 2006 Series A and $24,540,000 of Tax
Allocation Refunding Revenue Bonds (Project Area No. 1, as Amended) 2006 Series B (Taxable).
The Palm Desert Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment
Agency. The proceeds of the Series A loan will be used to assist the Agency to fund various
redevelopment capital projects within or of benefit to Project Area No. 1, as Amended, pay costs of
issuance and pay the premium on a Reserve Fund surety bond. The proceeds of the Series B loan
will be used to refinance the Agency's obligations incurred under a loan agreement entered into in
1997, pay costs of issuance and pay the premium on a Reserve Fund surety bond. The Series A
bonds consist of $26,415,000 Serial Bonds with interest rates ranging from 4.70% to 5.25%
payable semiannually on October 1 and April 1. Bond maturities begin April 1, 2017, and continue
annually through 2030. Term bonds in the amount of$11,365,000 carry an interest rate of 5.00%
and mature April 1, 2022. The Series B bonds consist of$13,220,000 Serial Bonds with interest
rates ranging from 5.56% to 5.77% payable semiannually on October 1 and April 1. Bond
maturities begin April l, 2007, and continue annually through 2012. Term bonds in the amount of
$11,320,000 carry an interest rate of 5.82%and mature April 1, 2016.
The future debt service requirements on the 2006 Series A and Series B Tax Allocation Revenue
Bonds (Project Area No. 1, as amended) are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 2,075,000 $ 3,092,327 $ 5,167,327
2010 2,195,000 2,974,259 5,169,259
2011 2,320,000 2,848,266 5,168,266
2012 2,450,000 2,714,634 5,164,634
2013 2,595,000 2,573,269 5,168,269
2014 -2018 10,730,000 10,557,021 21,287,021
2019 - 2023 29,405,000 6,317,125 35,722,125
2024 - 2028 5,805,000 890,538 6,695,538
2029 - 2030 565,000 40,613 605,613
$ 58,140,000 $ 32,008,052 $ 90,148,052
See independent auditors' report.
- 44 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation Refunding Revenue Bonds (Pro�ect Area No. 1, as amended) 2007 Series A
On January 9, 2007, the Palm Desert Financing Authority issued $32,600,000 Tax Allocation
Refunding Revenue Bonds (Project Area No. 1, as amended) 2007 Series A. The Palm Desert
Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment Agency. The
proceeds of the 2007 Loan will be used to refinance a portion of the outstanding obligations of the
Redevelopment Agency, fund various redevelopment capital projects within the Palm Desert
Redevelopment Agency Project Area No. 1, as amended, and pay the costs associated with the
issuance of the bonds. The Series A bonds consist of$32,600,000 Serial Bonds with interest rates
ranging from 3.50% to 5.00% payable semiannually on October 1 and April 1. Bond maturities
begin April 1, 2008 and continue annually through 2018.
The future debt service requirements on the 2007 Series A Tax Allocation Refunding Revenue
Bonds (Project Area No. 1, as amended) are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 2,410,000 $ 1,416,825 $ 3,826,825
2010 2,640,000 1,320,425 3,960,425
2011 2,625,000 1,201,625 3,826,625
2012 2,870,000 1,083,500 3,953,500
2013 2,955,000 940,000 3,895,000
2014 - 2018 16,970,000 2,559,000 19,529,000
$ 30,470,000 $ 8,521,375 $ 38,991,375
See independent auditors' report.
- 45 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
1995 Series A Tax Allocation Revenue Refundin B� onds
In August 1995, the Palm Desert Financing Authority issued $6,305,000 in Tax Allocation
Revenue Refunding Bonds 1995 Series A. The proceeds ftom the bonds were loaned to the Palm
Desert Redevelopment Agency to provide funds to refund in advance $6,430,000 of the 1988 Tax
Allocation Bonds. Interest rates on the bonds vary from 3.80% to 5.55% with interest payable
semi-annually on March 1 and September 1,with principal maturing annually on September l.
The future debt service requirements on the 1995 Series A Tax Allocation Revenue Refunding
Bonds are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 635,000 $ 17,621 $ 652,621
2002 Series A Tax Allocation Refundin�Revenue Bonds (Project Area No. 2)
In July 2002, the Palm Desert Financing Authority issued $17,310,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 2). The Palm Desert Financing Authority loaned the
bond proceeds to the Palm Desert Redevelopment Agency to prepay outstanding indebtedness and
to fund various redevelopment capital projects within or of benefit to the project area. Interest rates
on the bonds vary from 3.0% to 5.0% per annum payable semi-annually on February 1 and
August 1.
The future debt service requirements on the 2002 Series A Tax Allocation Refunding Revenue
Bonds (Project Area No. 2)are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 675,000 $ 631,853 $ 1,306,853
2010 695,000 607,868 1,302,868
2011 720,000 581,498 1,301,498
2012 760,000 548,638 1,308,638
2013 795,000 509,763 1,304,763
2014 - 2018 4,565,000 1,971,064 6,536,064
2019 - 2023 5,820,000 752,388 6,572,388
$ 14,030,000 $ 5,603,072 $ 19,633,072
See independent auditors' report.
- 46 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Series 2003 Tax Allocation Revenue Bonds (Project Area No. 2)
In March 2003, the Palm Desert Financing Authority issued $15,745,000 of Tax Allocation
Revenue Bonds (Project Area No. 2) Series 2003. The Palm Desert Financing Authority loaned the
bond proceeds to the Palm Desert Redevelopment Agency to fund various redevelopment capital
projects of the Agency in Project Area No. 2. Interest rates on the bonds vary from 4.5% to 5.0%
per annum payable semi-annually on February 1 and August 1,with principal maturing as follows:
$ 875,000 Serial Bonds August 1, 2023
910,000 Serial Bonds August 1, 2024
2,485,000 Term Bonds August 1, 2026
11,475,000 Term Bonds August 1, 2033
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project
Area No. 2) are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ - $ 769,006 $ 769,006
2010 - 769,006 769,006
2011 - 769,006 769,006
2012 - 769,006 769,006
2013 - 769,006 769,006
2014 - 2018 - 3,845,030 3,845,030
2019 - 2023 - 3,845,030 3,845,030
2024 - 2028 5,675,000 3,264,041 8,939,041
2029 - 2033 8,175,000 1,536,875 9,711,875
2034 1,895,000 47,375 1,942,375
$ 15,745,000 $ 16,383,381 $ 32,128,381
See independent auditors' report.
-47 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds(Continued)
Pro�ect Area No. 2 Tax Allocation Refundin Revenue Bonds 2006 Series A Tax Allocation
Revenue Ca ital A reciation Bonds 2006 Series B Revenue Bonds 2006 Series C and
Subordinate Tax Allocation Revenue Ca�tal Appreciation Bonds 2006 Series D
On July 25, 2006, the Palm Desert Financing Authority issued its Project Area No. 2, $41,340,000
Tax Allocation Refunding Revenue Bonds 2006 Series A, $1,567,118 Tax Allocation Revenue
Capital Appreciation Bonds 2006 Series B, $7,775,000 Tax Allocation Revenue Bonds
2006 Series C and $16,936,095 Subordinate Tax Allocation Revenue Capital Appreciation Bonds
2006 Series D. The Palm Desert Financing Authority loaned the bond proceeds to the Palm Desert
Redevelopment Agency. The proceeds of the Series A, B and C Bonds will be used to make three
loans to refinance the Agency's obligations incurred under a loan agreement entered into in 1995,
fund various redevelopment capital projects within or of benefit to its Project Area No. 2, purchase
a Reserve Fund surety policy bond and pay costs of issuance of the bonds. The Agency will use
the proceeds of the Series D Bonds to fund various redevelopment capital projects within or of
benefit to the Project Area, fund a debt service reserve fund and pay cost of issuance of the bonds.
The Series A bonds consist of$16,250,000 Serial Bonds with interest rates ranging from 4.00% to
5.00% payable semiannually on August 1 and February 1. Bond maturities begin August l, 2007,
and continue annually through 2026. Term bonds in the amount of $8,225,000 carry an interest
rate of 4.90% and mature August 1, 2031. Term bonds in the amount of $16,865,000 carry an
interest rate of 5.125°/a and mature August 1, 2036. The Series B bonds consist of $1,567,118
Capital Appreciation Bonds with a reoffering yield ranging from 3.85%to 4.08%. Bond maturities
begin April l, 2007, and continue annually through 2010. The Series C bonds consist of
$3,950,000 Serial Bonds with interest rates ranging from 3.90%to 4.90% payable semiannually on
August 1 and February 1. Bond maturities begin August 1, 2010, and continue annually through
2026. Term bonds in the amount of $1,910,000 carry an interest rate of 4.90% and mature
August 1, 2031. Term bonds in the amount of $1,915,000 carry an interest rate of 5.00% and
mature August 1, 2035. The Series D bonds consist of $16,936,095 Capital Appreciation Bonds
with a reoffering yield ranging from 4.65% to 6.10%. Bond maturities begin August l, 2007, and
continue annually through 2035. Each year the outstanding balance is increased for the accretion
of interest associated with the bonds. The accreted interest at June 30, 2008, is $1,928,200.
See independent auditors' report.
- 48 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Pro�ject Area No. 2 Tax Allocation Refundin� Revenue Bonds 2006 Series A, Tax Allocation
Revenue Capital Appreciation Bonds 2006 Series B, Revenue Bonds 2006 Series C and
Subordinate Tax Allocation Revenue Capital Appreciation Bonds 2006 Series D (Continued)
The debt service requirements schedules on the 2006 Series A Tax Allocation Refunding Revenue
Bonds, Series B Tax Allocation Revenue Capital Appreciation Bonds, Series C Revenue Bonds
and Series D Subordinate Tax Allocation Revenue Capital Appreciation Bonds (Project Area
No. 2) do not agree to the liability for those bonds shown in the schedule of changes. These bond
issues include capital appreciation bonds, which are issued at a discount. The carrying amount of
these bonds accretes, or increases each year. The amount shown in the schedule of changes include
the accreted value to date. The future debt service requirements are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 1,221,594 $ 2,463,783 $ 3,685,377
2010 1,777,789 2,595,139 4,372,928
2011 1,547,001 2,589,956 4,136,957
2012 1,647,818 2,561,720 4,209,538
2013 1,808,558 2,628,779 4,437,337
2014 - 2018 8,060,967 12,717,428 20,778,395
2019 - 2023 8,711,794 13,361,735 22,073,529
2024 - 2028 12,124,808 14,248,755 26,373,563
2029 - 2033 12,375,398 ll,123,708 23,499,106
2034 - 2037 17,435,048 6,252,386 23,687,434
$ 66,710,775 $ 70,543,389 $ 137,254,164
See independent auditors' report.
- 49 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Series 2003 Tax Allocation Revenue Bonds (Project Area No. 3)
In July 2003, the Financing Authority issued $4,745,000 Tax Allocation Revenue Bonds (Project
Area No. 3) Series 2003. The proceeds of the bonds were disbursed to make a loan to the
Redevelopment Agency. The Agency will use the proceeds of the loan to fund various
redevelopment capital projects within or of benefit to the project area and to finance costs of
issuance of the bonds. The bonds bear interest at rates ranging from 3.000% to 5.125%. Principal
maturities for the serial bonds of$2,475,000 began April 1, 2004, and continue through October 1,
2031. The term bonds in the amount of$2,270,000 are due in 2033.
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project
Area No. 3) are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 100,000 $ 195,898 $ 295,898
2010 100,000 193,048 293,048
2011 105,000 189,848 294,848
2012 110,000 186,225 296,225
2013 115,000 182,265 297,265
2014 -2018 635,000 840,932 1,475,932
2019 -2023 785,000 692,388 1,477,388
2024 - 2028 1,000,000 484,313 1,484,313
2029 - 2033 1,270,000 201,669 1,471,669
$ 4,220,000 $ 3,166,586 $ 7,386,586
See independent auditors' report.
- 50 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Project Area No. 3 Tax Allocation Revenue Bonds 2006 Series A, Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series B and Subordinate Tax Allocation Revenue Capital Appreciation
Bonds 2006 Series C
On July 25, 2006, the Palm Desert Financing Authority issued its Project Area No. 3, $11,915,000
Tax Allocation Revenue Bonds 2006 Series A, $383,660 Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series B and $2,760,866 Subordinate Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series C. The Palm Desert Financing Authority loaned the bond
proceeds to the Palm Desert Redevelopment Agency. The proceeds of the Series A and B Bonds
will be used to make two loans to fund various redevelopment capital projects within or of benefit
to its Project Area No. 3, purchase a Reserve Fund surety policy and pay the costs of issuance of
the bonds. The Agency will loan the proceeds of the Series C Bonds to fund various
redevelopment capital projects within or of benefit to the Project Area, fund a debt service reserve
fund and pay the costs of issuance of the bonds.
The Series A bonds consist of$2,980,000 Serial Bonds with interest rates ranging from 4.00% to
4.75% payable semiannually on April 1 and October 1. Bond maturities begin April 1, 2007, and
continue annually through 2025. Term bonds in the amount of$4,465,000 carry an interest rate of
4.75% and mature April 1, 2036. Term bonds in the amount of$4,470,000 carry an interest rate of
5.00% and mature April l, 2041. The Series B bonds consist of $383,660 Capital Appreciation
Bonds with a yield ranging from 5.31% to 5.54%. Bond maturities are April 1, 2020, 2021, 2027
and 2028. The Series C bonds consist of $2,760,866 Capital Appreciation Bonds with a yield
ranging from 4.80%to 6.10%. Bond maturities begin April 1, 2009, and continue annually through
2034. Each year the outstanding balance is increased for the accretion of interest associated with
the bonds. The accreted interest at June 30, 2008, is $366,589.
See independent auditors' report.
- 51 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Project Area No 3 Tax Allocation Revenue Bonds 2006 Series A Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series B and Subordinate Tax Allocation Revenue Capital Appreciation
Bonds 2006 Series C (Continued)
The debt service requirements schedules on the 2006 Series A Tax Allocation Revenue Bonds,
Series B Tax Allocation Revenue Capital Appreciation Bonds and Series C Subordinate Tax
Allocation Revenue Capital Appreciation Bonds (Project Area No. 3) do not agree to the liability
for those bonds shown in the schedule of changes. These bond issues include capital appreciation
bonds, which are issued at a discount. The carrying amount of these bonds accretes, or increases
each year. The amount shown in the schedule of changes includes the accreted value to date. The
future debt service requirements are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 22,012 $ 567,263 $ 589,275
2010 126,101 573,175 699,276
2011 160,871 570,204 731,075
2012 198,934 562,141 761,075
2013 228,133 565,742 793,875
2014 - 2018 1,524,953 2,954,028 4,478,981
2019 - 2023 1,701,040 3,668,229 5,369,269
2024 - 2028 1,866,831 4,042,744 5,909,575
2029 - 2033 2,398,858 3,990,717 6,389,575
2034 - 2038 3,981,793 1,768,244 5,750,037
2039 - 2041 2,810,000 285,750 3,095,750
$ 15,019,526 $ 19,548,237 $ 34,567,763
See independent auditors' report.
- 52 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
1998 Series Tax Allocation Revenue Bonds (Proiect Area No. 4)
On March l, 1998, the Palm Desert Financing Authority issued $11,020,000 of Tax Allocation
Revenue Bonds (Project Area No. 4) Series 1998. The proceeds from the bonds were loaned to the
Palm Desert Redevelopment Agency to fund various redevelopment capital projects of the Agency
in Project Area No. 4. Interest rates on the bonds vary from 4.0%to 5.2%per annum payable semi-
annually on April 1 and October 1, with principal maturing annually on October 1. In July 2006
$1,785,000 of the outstanding balance was advance refunded by the issuance of Tax Allocation
Refunding Revenue Bonds (Project Area No. 4) 2006 Series A.
The future debt service requirements on the 1998 Series Tax Allocation Revenue Bonds (Project
Area No. 4) (after defeasance) are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ - $ 429,590 $ 429,590
2010 - 429,590 429,590
2011 130,000 426,665 556,665
2012 135,000 420,635 555,635
2013 140,000 414,240 554,240
2014 - 2018 1,690,000 1,871,538 3,561,538
2019 - 2023 2,415,000 1,327,950 3,742,950
2024 - 2028 3,120,000 611,000 3,731,000
2029 725,000 18,850 743,850
$ 8,355,000 $ 5,950,058 $ 14,305,058
See independent auditors' report.
- 53 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
2001 Series Tax Allocation Revenue Bonds (Proiect Area No. 4)
In November 2001, the Palm Desert Financing Authority issued $15,695,000 of Tax Allocation
Revenue Bonds (Project Area No. 4) Series 2001. The proceeds from the bonds were loaned to the
Palm Desert Redevelopment Agency to fund various redevelopment capital projects of the Agency
in Project Area No. 4. Interest rates on the bonds vary from 3.5%to 4.9%per annum payable semi-
annually on April 1 and October 1,with principal maturing annually on October 1.
The future debt service requirements on the 2001 Series Tax Allocation Revenue Bonds (Project
Area No. 4) are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 310,000 $ 662,313 $ 972,313
2010 305,000 651,250 956,250
2011 320,000 639,909 959,909
2012 325,000 628,011 953,011
2013 345,000 614,805 959,805
2014 - 2018 1,965,000 2,832,166 4,797,166
2019 - 2023 2,455,000 2,331,840 4,786,840
2024 - 2028 3,055,000 1,683,240 4,738,240
2029 - 2032 5,430,000 590,880 6,020,880
$ 14,510,000 $ 10,634,414 $ 25,144,414
See independent auditors' report.
- 54 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation Refundin�Revenue Bonds (Project Area No 4) 2006 Series A and Tax Allocation
Revenue Capital A�preciation Bonds (Project Area No. 4) Series B
On July 25, 2006, the Palm Desert Financing Authority issued $14,610,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 4) 2006 Series A and $4,663,089 of Tax Allocation
Revenue Capital Appreciation Bonds (Project Area No. 4) 2006 Series B. The Palm Desert
Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment Agency.
The proceeds of the Series A and B Bonds will be used to make two loans to refinance a portion of
the outstanding obligations of the Redevelopment Agency under a loan agreement dated
March l, 1998, fund various redevelopment capital projects within or of benefit to its Project Area
No. 3, purchase a Reserve Fund surety policy and pay the costs of issuance of the bonds. The
Series A bonds consist of$8,155,000 Serial Bonds with interest rates ranging from 4.40%to 5.00%
payable semiannually on October 1 and April 1. Bond maturities begin October l, 2008, and
continue annually through 2026. Term bonds in the amount of$2,200,000 carry an interest rate of
5.00% and mature October 1, 2029. Term bonds in the amount of$4,255,000 carry an interest rate
of 5.00% and mature October 1, 2034. The Series B bonds consist of $4,663,089 Capital
Appreciation Bonds with a yield ranging from 4.14% to 5.56%. Bond maturities begin
October l, 2009 and continue annually through 2034. Each year the outstanding balance is
increased for the accretion of interest associated with the bonds. The accreted interest at
June 30, 2008, is $501,521.
See independent auditors' report.
- 55 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation Refundin� Revenue Bonds (Proiect Area No. 4)2006 Series A and Tax Allocation
Revenue Capital A�preciation Bonds (Proiect Area No. 4) Series B (Continued)
The debt service requirements schedules on the 2006 Series A Tax Allocation Refunding Bonds
and Series B Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 4) do not
agree to the liability for those bonds shown in the schedule of changes. These bond issues include
capital appreciation bonds, which are issued at a discount. The carrying amount of these bonds
accretes, or increases each year. The amount shown in the schedule of changes includes the
accreted value to date. The future debt service requirements are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 200,000 $ 694,945 $ 894,945
2010 439,496 686,949 1,126,445
2011 435,000 662,658 1,097,658
2012 554,233 657,612 1,211,845
2013 656,190 651,686 1,307,876
2014 - 2018 2,342,938 2,917,343 5,260,281
2019 - 2023 1,950,111 2,840,986 4,791,097
2024 - 2028 4,013,240 3,106,161 7,119,401
2029 - 2033 4,968,195 6,220,055 11,188,250
2034 - 2035 3,713,686 4,182,689 7,896,375
$ 19,273,089 $ 22,621,084 $ 41,894,173
See independent auditors' report.
- 56 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
1998 Series Tax Allocation(Housing Set-Aside) Revenue Bonds
In January 1998, the Palm Desert Financing Authority issued $48,760,000 in Tax Allocation
(Housing Set-Aside) Revenue Bonds. The proceeds from the bonds were loaned to the Palm Desert
Redevelopment Agency to finance the acquisition of seven apartment complexes consisting of 725
rental units from the Housing Authority of the County of Riverside. Interest rates on the bonds vary
from 4.0% to 5.1% per annum payable semi-annually on April 1 and October 1 with principal
maturing annually on October l. In February 2007 $38,740,000 of the outstanding balance was
advance refunded by the issuance of Tax Allocation (Housing Set-Aside) Refunding Revenue
Bonds Series 2007.
The future debt service requirements on the 1998 Series Tax Allocation (Housing Set-Aside)
Revenue Bonds (after defeasance) are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 685,000 $ 233,806 $ 918,806
2010 1,390,000 184,500 1,574,500
2011 1,460,000 113,250 1,573,250
2012 1,535,000 38,375 1,573,375
$ 5,070,000 $ 569,931 $ 5,639,931
See independent auditors' report.
- 57 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
2002 Series Tax Allocation (Housin� Set-Aside) Revenue Bonds
In August 2002, the Palm Desert Financing Authority issued $12,100,000 of Tax Allocation
(Housing Set-Aside) Revenue Bonds Series 2002. The Palm Desert Financing Authority loaned the
bond proceeds to the Palm Desert Redevelopment Agency to fund various low and moderate
housing capital projects of the Agency and to finance costs of issuance of the bonds. Interest rates
on the $6,555,000 serial bonds vary from 2.0% to 4.9% per annum payable semi-annually on
March 1 and October 1. Annual principal payments begin October l, 2003. The $5,545,000 term
bonds bear an interest rate of 5.0%per annum and mature October 1, 2031.
The future debt service requirements on the 2002 Series Tax Allocation (Housing Set-Aside)
Revenue Bonds are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 265,000 $ 500,572 $ 765,572
2010 275,000 491,454 766,454
2011 285,000 481,298 766,298
2012 295,000 470,201 765,201
2013 305,000 458,348 763,348
2014 - 2018 1,730,000 2,089,745 3,819,745
2019 - 2023 2,175,000 1,656,220 3,831,220
2024 - 2028 2,770,000 1,053,750 3,823,750
2029 -2032 2,775,000 285,875 3,060,875
$ 10,875,000 $ 7,487,463 $ 18,362,463
See independent auditors' report.
- 58 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
S. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation (Housin� Set-Aside) Refunding Revenue Bonds Series 2007
On February 7, 2007, the Palm Desert Financing Authority issued $86,155,000 Tax Allocation
(Housing Set-Aside) Refunding Revenue Bonds Series 2007. The Palm Desert Financing
Authority loaned the proceeds to the Palm Desert Redevelopment Agency. The proceeds of the
2007 Loan will be used to finance the development of low and moderate income housing by the
Redevelopment Agency, refinance a portion of the outstanding obligations of the Redevelopment
Agency , purchase a debt service surety bond for deposit in the Reserve Fund, and pay certain costs
associated with the issuance of the bonds. The Series 2007 bonds consist of $86,155,000 Serial
Bonds with interest rates ranging from 4.00°/a to 5.00% payable semiannually on October 1 and
April l. Bond maturities begin October l, 2007 and continue annually through 2027.
The future debt service requirements on the Tax Allocation (Housing Set-Aside) Refunding
Revenue Bonds Series 2007 are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 2,880,000 $ 3,861,963 $ 6,741,963
2010 3,005,000 3,736,750 6,741,750
2011 3,135,000 3,606,438 6,741,438
2012 3,265,000 3,478,438 6,743,438
2013 5,005,000 3,313,038 8,318,038
2014 -2018 29,005,000 12,584,063 41,589,063
2019 - 2023 21,720,000 5,516,469 27,236,469
2024 - 2028 15,955,000 1,766,250 17,721,250
$ 83,970,000 $ 37,863,409 $ 121,833,409
Advances from City
The City of Palm Desert has made advances to the Agency to finance capital projects in the
following amounts: (a) $6,663,940 for Project Area No. 1 and $15,991,060 for Project Area No. 2.
These advances do not have a fixed repayment schedule.
See independent auditors' report.
- 59 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30,2008
8. LONG-TERM LIABILITIES (CONTINUED):
Notes Payable
The Agency entered into a cooperation agreement with the County of Riverside (the County) on
December 15, 1987, regarding the adoption of the Agency's Project Area No. 2. The agreement
states that the Agency was to retain 50%of the County's share of tax increment. This was based on
the County's share of tax increment being what would be allocated to the County in the absence of
a redevelopment project area being adopted.
This agreement called for the Agency to retain 50%of the County's share until the gross increment
reached $3,500,000. The agreement further states that when gross increment reaches $10,000,000
that the Agency would repay the 50% of the retained County's share of increment in equal
payments over a 10-year period.
The gross increment reached the $3,500,000 limit in fiscal year 1991-1992. The Agency reached
the $10,000,000 limit in fiscal year 2002-2003. The total amount owed to the County at
June 30, 2008, was $490,828. Annual payments on the note are $122,707. The note is non-interest
bearing.
Future debt service payments are as follows:
Year Ending
June 30, Principal Interest Total
2009 $ 122,707 $ - $ 122,707
2010 122,707 - 122,707
2011 122,707 - 122,707
2012 122,707 - 122,707
$ 490,828 $ - $ 490,828
See independent auditors' report.
- 60 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
9. RESERVES OF FUND BALANCES:
Special
Revenue
Fund Debt
Low and Service
Moderate Fund Capital Projects Funds Other
Income Financing Project Project Governmental
Housing Authority Area 1 Area 2 Funds Total
Loans receivable $ 7,695,368 $ - $ - $ - $ 2>OOQ000 $ 9,695,368
Property held for resale 25,000 - - - - 25,000
Prepaid items and deposits 156 - 649,134 - - 649,290
Encumbrances 488,506 - 2,631,522 1,182,808 4,432,906 8,735,742
Continuing appropriations 11,703,667 - 18,604,222 18,531,926 26,651,783 75,491,598
Reserve requirement - - - - 18,487 18,487
Debt service - 630,500 - - 630,500
Totals $ 19,912,697 $ 630,500 $ 21,884,878 $ 19,714,734 $ 33,103,176 $ 95,245,985
Reserved for Loans Receivables - These reserves are set up to reflect the noncurrent portion
receivables so that they will not be considered as current funds available.
Reserved for Propertv Held for Resale - This reserve for property held for resale has been set aside
to indicate that it will not be considered as current funds available.
Reserved for Pre�aid Items and Deposits - These reserves are set up to reflect the noncurrent
portion of the deposits so that they will not be considered as current funds available.
Reserved for Encumbrances - These reserves represent the portion of purchase orders awarded for
which the goods or services had not yet been received at June 30, 2008. Although all
appropriations lapse at year-end, even if encumbered, the City intends either to honor the contracts
in progress or to cancel them. Encumbrances are rebudgeted on July 1, by Board action.
Reserved for Continuin�Appropriations - This reserve is for appropriations for capital projects that
are unexpended as of June 30, 2008, and are carried forward as continuing appropriations to be
expended in 2008-2009.
Reserved for Reserve Requirement - These reserves are set up for the maintenance requirements
for the housing apartments.
Reserved for Debt Service - These reserves for Debt Service represent reserves accumulated by the
Agency that are legally restricted to the payment of long-term debt principal and interest amounts
that mature in future years.
See independent auditors' report.
- 61 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2008
10. CONDUIT DEBT OBLIGATION:
2003 Series A-$22,310,000 Lease Revenue Bonds
In December 2003, the Palm Desert Financing Authority (Authority) issued $22,310,000 in Lease
Revenue Bonds. The proceeds of the Bonds were used to: a) finance the construction of a County
animal shelter and related facilities located in the unincorporated area of Thousand Palms,
California; b) finance construction of certain County medical clinic facilities located in Mecca,
California; c) refund the Palm Desert Financing Authority Lease Revenue Bonds Series 1996;
d) acquire a debt service reserve insurance policy; e) fund capitalized interest on the bonds; and
� pay costs of issuance of the bonds. The Authority will lease sites relating to each project from
the County of Riverside (County) pursuant to a Site Lease dated as of December l, 2003, and will
lease back to the County the Sites and the Facilities pursuant to a Facilities Lease dated
December l, 2003. Under the Lease, the County will pay to the Trustee Base Rental Payments in
the amount equal to the scheduled debt service of the Bonds. The Authority will assign its right to
receive the Base Rental Payments to the Trustee for the benefit of the owners of the bonds. The
debt service on the bonds is to be paid solely from lease payments made by the County. The
Authority has no obligation to make the debt service payments in the event that the County is not
able to make the required base rental payments. As of June 30, 2008, the outstanding amount was
$20,365,000.
11. INSURANCE:
The Agency is covered under the City of Palm Desert's insurance. For additional information, see
the City's financial statements.
12. COMMITMENTS:
The Agency has various disposition and development agreements and owner participation
agreements outstanding. All liabilities incurred to date have been accrued in the financial
statements. Construction commitments are reported as fund balances reserved for encumbrances
and are detailed in Note 9.
See independent auditors' report.
- 62 -
SUPPLEMENTARY INFORMATION
- 63 -
Schedule 1
PALM DESERT REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET-OTHER GOVERNMENTAL FUNDS
June 30,2008
Total
Special Debt Capital Other
Revenue Service Projects Governmental
Fund Fund Funds Funds
ASSETS:
Cash and investments $ 3,516,164 $ 4,370,467 $ 4,712,713 $ 12,599,344
Restricted cash with fiscal agent 3,415,635 - 39,935,242 43,350,877
Accounts receivable 4,848 99,616 - 104,464
Interest receivable 165 - 84,711 84,876
Loans receivable - - 2,000,000 2,000,000
TOTAL ASSETS $ 6,936,812 $ 4,470,083 $ 46,732,666 $ 58,139,561
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts payable $ 1,359,769 $ 301 $ 406,982 $ 1,767,052
Accrued liabilities 94,581 - - 94,581
Deposits payable 370,168 - 15,000 385,168
Unearned revenues 29,676 - - 29,676
Amounts due pass-through agreement - 2,787,950 - 2,787,950
TOTAL LIABILITIES 1,854,194 2,788,251 421,982 5,064,427
FUND BALANCES:
Reserved:
Encumbrances 3,342,904 - 1,090,002 4,432,906
Loans receivable - - 2,000,000 2,000,000
Continuing appropriations 1,721,227 - 24,930,556 26,651,783
Reserve requirement 18,487 - - 18,487
Unreserved:
Debt service - 1,681,832 - 1,681,832
Capital outlay - - 18,290,126 18,290,126
TOTAL FiJND BALANCES 5,082,618 1,681,832 46,310,684 53,075,134
TOTAL LIABILITIES
AND FLJND BALANCES $ 6,936,812 $ 4,470,083 $ 46,732,666 $ 58,139,561
See independent auditors'report.
-64-
Schedule 2
PALM DESERT REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUES,EXPENDITURES AND
CHANGESINFUND BALANCES-OTHER GOVERNMENTALFUNDS
For the year ended June 30,2008
Total
Special Debt Capital Other
Revenue Service Projects Governmental
Fund Fund Funds Funds
REVENUES:
TaYes $ - $ 4,352,724 $ - $ 4,352,724
Intergovernmental - - 786,655 786,655
Investment earnings 328,298 � 154,357 1,998,603 2,481,258
Rental income 4,587,435 - 82,754 4,670,189
Other revenues 115,388 7,200 - 122,5gg
TOTAL REVENUES 5,031,121 4,514,281 2,868,012 12,413,414
EXPENDITURES:
Current:
General government 5,976,878 7,230 2,242,480 8,226,588
Payments to other agencies - 2,173,895 - 2,173,895
Capital outlay 6,927,853 - 12,610 6,940,463
Debt service:
[nterest and fiscal charges - 78,081 - 78,081
Principal - 1,782,563 - 1,782,563
TOTAL EXPENDITURES 12,904,731 4,041,769 2,255,090 19,201,590
EXCESS OF REVENUES OVER
(iJNDER)EXPENDITURES (7,873,610) 472,512 612,922 (6,788,176)
OTHER FINANCING SOURCES(USES):
Transfers in 3,492,853 - - 3,492,853
Transfers out - (1,734,207) (332,507) (2,066,714)
TOTAL OTHER FINANCING
SOURCES(USES) 3,492,853 (1,734,207) (332,507) 1,426,139
NET CHANGE IN FLTND BALANCES (4,380,757) (1,261,695) 280,415 (5,362,037)
FLJND BALANCES-BEGINNING OF YEAR 9,463,375 2,943,527 46,030,269 58,437,171
FLTND BALANCES-END OF YEAR $ 5,082,618 $ 1,681,832 $ 46,310,684 $ 53,075,134
See independent auditors'report.
-65-
Schedule 3
PALM DESERT REDEVELOPMENT AGENCY
BALANCE SHEET-OTHER GOVERNMENTAL FUNDS
SPECIAL REVENUE
June 30,2008
Housing
Authority Totals
ASSETS:
Casli and investments $ 3,516,164 $ 3,516,164
Restricted cash with fiscal agent 3,415,635 3,415,635
Accounts receivable 4,848 4,848
Interest receivable 165 165
TOTAL ASSETS $ 6,936,812 $ 6,936,812
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts payable $ 1,359,769 $ 1,359,769
Accrued liabilities 94,581 94,581
Deposits payable 370,168 370,168
Unearned revenue 29,676 29,676
TOTAL LIABIL[TIES 1,854,194 1,854,194
FUND BALANCES:
Reserved for:
Encumbrances 3,342,904 3,342,904
Continuing appropriations 1,721,227 1,721,227
Reserve requirement fund 18,487 18,487
TOTAL FiJND BALANCES 5,082,618 5,082,618
TOTAL LIABILITIES
AND FLTND BALANCES $ 6,936,812 $ 6,936,812
See independent auditors'report. ,
-66-
Schedule 4
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-OTHER GOVERNMENTAL FUNDS
, SPECIAL REVENUE
For the year ended June 30,2008
Housing
Authority Totals
REVENUES:
Rental income $ 4,587,435 $ 4,587,435
Other revenues 115,388 115,388
Investment earnings 328,298 328,298
TOTAL REVENUES 5,031,121 5,031,121
EXPENDITURES:
Current:
General government 5,976,878 5,976,878
Capital outlay 6,927,853 6,927,853
TOTAL EXPENDITURES 12,904,731 12,904,731
EXCESS OF REVENUES OVER
(LTNDER)EXPENDITURES (7,873,610) (7,873,610)
OTHER FINANCING SOURCES:
Transfers in 3,492,853 3,492,853
TOTAL OTHER FINANCING SOURCES 3,492,853 3,492,853
NET CHANGE IN FiJND BALANCES (4,380,757) (4,380,757)
FiJND BALANCES-BEGINNING OF YEAR 9,463,375 9,463,375
FL1ND BALANCES-END OF YEAR $ 5,082,618 $ 5,082,618
See independent auditors'report. ,
-67-
Schedule 5
PALM DESERT REDEVELOPMENT AGENCY
BALANCE SHEET-OTHER GOVERNMENTAL FUNDS
DEBT SERVICE
June 30,2008
Project
Area 3 Totals
ASSETS:
Cash and investments $ 4,370,467 $ 4,370,467
Accounts receivable 99,616 99,616
TOTAL ASSETS $ 4,470,083 $ 4,470,083
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts payable $ 301 $ 301
Amounts due pass-through agreement 2,787,950 2,787,950
TOTAL LIABILITIES 2,788,251 2,788,251
FUND BALANCES:
Unreserved:
Debt service 1,681,832 1,681,832
TOTAL FiJND BALANCES 1,681,832 1,681,832
TOTAL LIABILITIES
AND FLJND BALANCES $ 4,470,083 $ 4,470,083
See independent auditors'report. ,
-68-
Schedule 6
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-OTHER GOVERNMENTAL FUNDS
, DEBT SERVICE
For the year ended June 30,2008
Project
Area 3 Totals
RE V ENUES:
• Taates $ 4,352,724 $ 4,352,724
Investment earnings 154,357 154,357
Other revenues 7,200 7,200
TOTAL REVENUES 4,514,281 4,514,281
EXPEND[TURES:
Current:
General government 7,230 7,230
Payments to other agencies 2,173,895 2,173,895
Debt service:
Interest and fiscal charges 78,081 78,081
Principal 1,782,563 1,782,563
TOTAL EXPENDITURES 4,041,769 4,041,769
EXCESS OF REVENUES OVER
([JNDER)EXPENDITURES 472,512 472,512
OTHER FINANCING SOURCES(USES):
Transfers out (1,734,207) (1,734,207)
TOTAL OTHER FINANCING
SOURCES(USES) (1,734,207) (1,734,207)
NET CHANGE IN FLTND BALANCES (1,261,695) (1,261,695)
FLJND BALANCES-BEGINNING OF YEAR 2,943,527 2,943,527
FiJND BALANCES-END OF YEAR $ 1,681,832 $ 1,681,832
See independent auditors'report. a
-69-
Schedule 7
PALM DESERT REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET-OTHER GOVERNMENTAL FUNDS
CAPITAL PROJECTS
June 30,2008
Project Project
Area 3 Area 4 Totals
ASSETS:
Cash and investments $ 2,837,805 $ 1,874,908 $ 4,712,713
Restricted cash with fiscal agent 18,206,419 21,728,823 39,935,242
Interest receivable 37,989 46,722 84,711
Loans receivable - 2,000,000 2,000,000
TOTAL ASSETS $ 21,082,213 $ 25,650,453 $ 46,732,666
LIABILITIES AND FIJND BALANCES
LIABILITIES:
Accounts payable $ 16,888 $ 390,094 $ 406,982
Deposits payable - 15,000 15,000
TOTAL LIABILITIES 16,888 405,094 421,982
FUND BALANCES:
Reserved:
Encumbrances 500,000 590,002 1,090,002
Loans receivable - 2,000,000 2,000,000
Continuing appropriations 11,159,171 13,771,385 24,930,556
Unreserved:
Capital outlay 9,406,154 8,883,972 18,290,126
TOTAL FLJND BALANCES 21,065,325 25,245,359 46,310,684
TOTAL LIABILITIES
AND FUND BALANCES $ 21,082,213 $ 25,650,453 $ 46,732,666
See independent auditors'report.
-70-
Schedule 8
PALM DESERT REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FIJND BALANCES-OTHER GOVERNMENTAL FUNDS
CAPITAL PROJECTS
For the year ended June 30,2008
Project Project
Area 3 Area 4 Totals
REVENUES:
Intergovernmental $ - $ 786,655 $ 786,655
Investment earnings 870,595 1,128,008 1,998,603
Rental income - 82,754 82,754
TOTAL REVENUES 870,595 1,997,4U 2,868,012
EXPENDITURES:
Current:
General government 180,133 2,062,347 2,242,480
Capital outlay - 12,610 12,610
TOTAL EXPENDITURES 180,133 2,074,957 2,255,090
EXCESS OF REVENUES OVER
(iJNDER)EXPENDITURES 690,462 (77,540) 612,922
OTHER FINANCING USES:
Transfers out (70,485) (262,022) (332,507)
TOTAL OTHER FINANCING USES (70,485) (262,022) (332,507)
NET CHANGE[N FUND BALANCES 619,977 (339,562) 280,415
FiJND BALANCES-BEGINNING OF YEAR 20,445,348 25,584,921 46,030,269
FL1ND BALANCES-END OF YEAR $ 21,065,325 $ 25,245,359 $ 46,310,684
See independent auditors'report. ,
-71 -
PALM DESERT REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET
HOUSING AUTHORITY SPECIAL REVENUE FUND
June 3Q 2008
Complexes
Laguna Catalina Desert Las One
Capital Palms Gardens Pointe Serenas Neighbors Quail Pueblos
ASSETS:
Cash and investments $ 3,516,164 $ - $ - $ - $ - $ - $ - $ - �
Restrictedcashwithfiscalagent 2,094,543 4,623 23,612 21,772 897,108 7,728 265,169 5,595
Accountsreceivable �� - 3 74 70 484 25 1,607 -
Interest receivable l65 - - - - - - -
Due from other apartrnent 5,475,694 - �
TOTAL ASSETS $ 5,610,872 $ 4,626 $ 23,686 $ 21,842 $ 897,592 $ 7,753 $ 5,742,470 $ 5,595
LIABILITIES AND
FUND BALANCES
LIABILITIES:
Accounts payable $ 1,246,379 $ 4,682 $ 8,512 $ 2,489 $ 9,104 $ 6,209 $ 21,399 $ 1,855
Management fee payable - 238 2,346 2,040 4,998 748 13,022 646
Accruedpayroll - 3,518 5,619 6,284 11,091 2,360 42,779 1,563
Securiry deposits payable - 4,423 23,462 21,622 46,901 7,678 165,942 5,595
Uneamedrevenue - 847 706 1,906 1,569 12 23,121 638
Duetootherapartmeot - 1,025,312 76,548 172,706 - 67,153 - 248,998
TOTALLIABILITIES 1,246,379 1,039,020 117,193 207,047 73,663 84,160 266,263 25Q295
FUND BALANCES(DEFICITS):
Reserved:
Encumbrances 3,342,904 - - - - - - - �
Continuing appropriations 1,721,227 - - - - - - -
Reserve requirement fund - - - - - - - -
Low income purposes (699,638) (],034,394) (93,507) (185,205) 823,929 (76,407) 5,476,207 (253,700)
TOTALFUND
BALANCES(DEFICITS) 4,364,493 (1,034,394) (93,507) (185,205) 823,929 (76,407) 5,476,207 (253,700)
TOTAL LIABILITIES
, AND FUND BALANCES $ 5,61Q872 $ 4,626 $ 23,686 $ 21,842 $ 897,592 $ 7,753 $ 5,742,470 $ 5,595
See independent auditors'report. ,
_72_
Schedule 9
Complexes(Con[inued)
Califomia Country Palm To[al Combined Combined
Villas Taos Village Village Ca��ewood La Rocca Sage Crest Complexes Total Reclassificatiou Total
$ - $ - $ - $ - $ - $ - $ - $ - $ 3,516,164 $ - $ 3,516,164 -
51,201 5,024 2,850 15,170 7,940 7,900 5,400 1,32t,092 3,415,635 - 3,415,635
38 - . - 25 522 - 2,000 4,848 4.848 - 4,848
- - - - - - - - t65 - 165
' - - - - - - 5,475,694 5,475,694 (5,475,694)
$ 51,239 $ 5,024 $ 2,850 $ 15,195 $ 8,462 $ 7,900 $ 7,400 $ 6,801,634 $ 12,412,506 $ (5,475,694) $ 6,936,812
$ 7,404 $ 2,302 $ 6,IO2 $ 3,025 $ 2,980 $ 442 $ 1,333 $ 77,838 $ 1,324,217 $ - $ 1,324,217
4,794 544 2,606 1,224 986 884 476 35,552 35,552 - 35,552
IQ119 1,463 430 3,132 3,011 1,722 1,490 94,581 94,581 - 94,581
SQ951 4,974 2,700 14,680 7,940 7,900 5,400 37Q168 37Q168 - 370,168
297 146 - 164 75 195 - 29,676 29,676 - 29,676
2,874,251 194,674 312,079 154,711 273,023 7Q477 5,762 5,475,694 5,475,694 (5,475,694) -
2,947,816 204,103 323,917 176,936 288,015 81,620 14,461 6,083,509 7,329,888 (5,475,694) 1,854,194
- ' - - - - - - 3,342,904 - 3,342,904 �
- - - - - - - - 1,721,227 - 1,72I,227
- - - 18,487 - - - 18,487 18,487 - 18.487
(2,896,577) (199,079) (321,067) (18Q228) (279,553) (73,720) (7,061) 699,638 - _
(2,896,577) (199,079) (321,067) (161,741) (279,553) (73,720) (7,061) 718,125 5,082,618 - 5,082,618
$ 51,239 $ 5,024 $ 2,850 $ 15,195 $ 8,462 $ 7,900 $ 7,400 $ 6,801,634 $ 12,412,506 $ (5,475,694) $ 6,936,812
-73-
PALM DESERT REDEVELOPMENT AGENCY
COMBIN[NG STATEMENT OF REVENUES,EXPEND[TURES
AND CHANGES IN FUND BALANCES
HOUSING AUTHORITY SPECIAL REVENUE FUND
June 30,2008
Complexes
Laguna Catalina Desert Las One
Capital Palms Gazdens Pointe Serenas Neighbors Quail Pueblos .
REVENUES:
Rentalincome $ - $ 1,832 $ 26Q002 $ 253,078 $ 657,628 $ ll5,865 $ 2,296,O16 $ 6L,708
O[herrevenues - 322 3,448 8,083 5,801 4,686 72,546 I,566
Investrnent earnings 328,298 - - - - - - _
TOTAL REVENUES 328,298 2,154 263,450 261,161 663,429 120,551 2,368,562 63,274
EXPENDITURES:
Curzen[:
Payroll - 58,594 115,823 103,736 164,398 36,186 753,963 29,349
Administrative 46,513 1OQ059 249,281 225,899 365,509 I10,147 1,SOI,577 111,210
Management - 16,728 28,900 25,500 6Q894 9,622 156,094 6,868
Maintenance - 26,883 2,601 - - 7,825 81,095 -
Capital outlay 6,927,853 - - - - _
TOTAL EXPENDITURES 6,974,366 202,264 396,605 355,135 59Q801 I63,780 2,492,729 147,427
EXCESSOFREVENUES
OVER(UNDER)
EXPENDITURES (6,646,068) (20Q110) (133,155) (93,974) 72,628 (43,229) (124,167) (84,153)
OTHER FINANCING SOURCES
(USES):
Transfers in 3,492,853 - - - - - 2,000,000 -
Transfers out (2,OOQ000) - - - - - - .
TOTAL OTHER FINANCING
SOURCES(USES) 1,492,853 - - - - - 2,000,000 -
NET CHANGE IN
FUNDBALANCES (S,L53,215) (20Q110) (133,155) (93,974) 72,628 (43,229) 1,875,833
, (84,153)
FiJND BALANCES(DEFICITS)-
BEGINNINGOFYEAR 9,517,708 (834,284) 39,648 (91,231) 751,301 � (33,178) 3,600,374 (169,547)
FiIND BALANCES(DEFICITS)-
END OF YEAR $ 4,364,493 � (1,034,394) S (93,507) $ (185,205) $ 823,929 $ (76,407) $ 5,476,207 $ (253,700)
See independent auditors'repoR. ,
-74-
Schedule 10
Complexes(Continued)
Califomia Counky Palm Total Combined Combined
Villas Taos Village Village Candlewood La Rocca Sage Crest Complexes Total Reciassification Total
$ S17,418 $ 78,421 $ 8Q616 $ 68,071 $ 107,896 $ 53,712 $ 35,t72 $ 4,587,435 $ 4,587,435 $ - $ 4,587,435
9,435 2,U9 248 2,280 2,735 1,180 879 115,388 115,388 - 115,388
- - - - - - - - 328,298 - 328,298
526,853 SQ600 8Q864 70,351 ll0,631 54,892 36,051 4,702,823 5,031,121 - 5,031,121
158,554 22,784 45,037 6Q971 53,270 36,520 12,123 1,651,308 1,651,308 - 1,651,308
297,249 112,316 152,861 85,546 (IQ306 46,933 29,085 3,497,978 3,544,491 - 3,544,491
57,528 6,086 3Q106 11,232 12,002 8,254 1,904 431,718 431,718 - 431,718
100,769 41,441 1,060 12,102 38,680 36,905 - 349,361 349,361 - 349,361
- - - - - 6,927,853 - 6,927,853
614,100 182,627 229,064 169,851 214,258 128,612 43,112 5,930,365 12,904,731 - 12,904,731
(87,247) (102,027) (148,200) (99,500) (L03,627) (73,720) (7,061) (1,227,542) (7,873,6t0) - (7,873,610)
- - - - - - - 2,OOQ000 5,492,853 (2,OOQ000) 3,492,853
- - - - - - - - (2,OOQ000) 2,OOQ000 -
- - - - - - - 2,OOQ000 3,492,853 - 3,492,853
(87,247) (102,027) (148,200) (99,500) (103,627) (73,720) (7,061) 772,458 (4,380,757) - (4,38Q757)
(2,809,330) (97,052) (172,867) (62,241) (175,926) - - (54,333) 9,463,375 - 9,463,375
$ (2,896,577) $ (199,079) $ (321,067) $ (161,741) $ (279,553) $ (73,720) $ (7,06]) $ 718,125 � 5,082,618 $ - $ 5,082,618
-75-
Schedule 11
PALM DESERT REDEVELOPMENT AGENCY
COMPUTATION OF LOW AND MODERATE
HOUSING EXCESS SURPLUS FUNDS
July 1,2007
Excess Surplus in the Low and Moderate Income Housing Fund is any unexpended or unencumbered amount that exceeds
the greater of either$1,000,000 or the aggregate amount deposited in the Low and Moderate Income Housing Fund during
the preceding four fiscal years. It is computed at the beginning of the fiscal year to which it relates.
Tax Increment
Deposits to
Housing Fund
OPENING FUND BALANCE-JULY 1,2007 $ 80,354,233
LESS UNAVAILABLE AMOUNTS:
Encumbrances 5,503,224
Loans and notes receivable 7,699,606
Property held for resale 11,799,806
Prepaid items and deposits 3,557
Unspent bond proceeds 42,608,268
AVAILABLE LOW/MODERATE INCOME HOUSING FUNDS 12,739,772
LIMITATION(GREATER OF$1,000,000 OR FOUR YEARS SET-ASIDE):
Set-aside for last four years:
2006-2007 $ 16,573,467
2005-2006 15,404,798
2004-2005 12,402,800
2003-2004 11,198,956
TOTAL SET-ASIDE FOR LAST FOUR YEARS $ 55,580,021
Base limitation $ 1,000,000
GREATER AMOUNT 55,580,021
COMPUTED EXCESS SURPLUS-JULY 1,2007 $ '
See independent auditors'report.
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DIEHL, EVANS � COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS&CONSULTANTS
M[CHABL R.LUDIN,CPA
A PARTNERSHIP INCLUDING ACCOUN'I'ANCY CORPORATIONS CRAIG W.SPRAKER,CPA "
- NTTIN P.PATEL,CPA
ROBERTi CALLANAN,CPA
5 CORPORATE PARK,SUITE]00 'P�-�x.tto[.ncnn�v,cra
*THOMAS M.PERLOWSHI,CPA
IRVINE,CALIFORN[A 92606-5165 *xnRvev J.sc�oEueR crn
(949)399-0600•FAX(949)399-0610 �Nt�'Erti x nn�s,Crn
www.diehlevans.com
*WII,LIAM C.PENTZ,CPA
'A PROFF.SSIONAL CORPORATION
October 21, 2008
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and
Members of the City Council
Palm Desert Redevelopment Agency
Palm Desert, California
We have audited the accompanying financial statements of the governmental activities, each major
fund and the aggregate remaining fund information of the Palm Desert Redevelopment Agency (the
Agency) as of and for the year ended June 30, 2008, which collectively comprise the Agency's basic
financial statements and have issued our report thereon dated October 21, 2008. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Internal Control Over Financial Reporting
• In planning and performing our audit, we considered the Agency's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the
Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the Agency's internal control over financial reporting.
A control deficiency exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent or detect
misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of
control deficiencies, that adversely affects the Agency's ability to initiate, authorize, record,process, or
report financial data reliably in accordance with generally accepted accounting principles such that
there is more than a remote likelihood that a misstatement of the Ag�ncy's financial statements that is
more than inconsequential will not be prevented or detected by the Agency's internal control.
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OTHER OFFICES AT: 2965 ROOSEVELT STREET , 613 W.VALLEY PARKWAY,SUITE 330
CARLSBAD,CALIFORNIA 92008-2389 ESCONDIDO,CALIFORNIA 92025-2598
(760)729-2343•FAX(760)729-2234 (760)741-3141•FAX(760)741-9890
Internal Control Over Financial Reportin� (Continued)
A material weakness is a significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the financial statements will not be
prevented or detected by the Agency's internal control.
Our consideration of the internal control over financial reporting was for the limited purpose described
in the first paragraph of this section and would not necessarily identify all deficiencies in internal
control that might be significant deficiencies over material weaknesses. We did not identify any
deficiencies in internal control over financial reporting that we consider to be material weaknesses, as
defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Agency's financial statements are free of
material misstatements, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. Such provisions included those
provisions of laws and regulations identified in the Guidelines For Com�liance Audits of California
Redevelopment A e� ncies, issued by the State Controller and as interpreted in the Suggested Auditin�
Procedures for Accomplishing Compliance Audits of California Redevelopment A�encies, issued by
the Governmental Accounting and Auditing Committee of the California Society of Certified Public
Accountants. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
This report is intended solely for the information and use of the Palm Desert Redevelopment Agency
Directors and management of the Palm Desert Redevelopment Agency and the State Controller's
Office, Division of Accounting and Reporting and is not intended to be and should not be used by
anyone other than these specific parties.
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