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Home My WebLink AboutAudited Fncl Rprts - CAFR - FYE 06/30/2009_v i�� .. � CITY OF PALM DESERT FINANCE DEPARTMENT Staff Report REQUEST: RECEIVE AND FILE THE CITY OF PALM DESERT AUDITED FINANCIAL REPORTS FOR THE FISCAL YEAR ENDED JUNE 30, 2009 DATE: February 11, 2010 SUBMITTED BY: Paul S. Gibson, Finance Director CONTENTS: 1. City of Palm Desert Audited Financial Report for Fiscal Year Ended June 30, 2009 2. Auditor's Letter to City Council 3. Report on Internal Controls and Compliance 4. Appropriations Limit Worksheet No. 6 Recommendation By Minute Motion, that the City Council receive and file the audited Comprehensive Annual Financial Report (CAFR) for the City of Palm Desert for the fiscal year ended June 30, 2009. Committee Recommendation The Audit, Investment and Finance Committee received the audited financial statements at their January 26, 2010 meeting, and it was recommended that the statements for the fiscal year ended June 30, 2009 be received and filed by the City Council. Backqround Diehl, Evans & Associates, LLP, performed and completed the annual independent audit for the fiscal year ended June 30, 2009, for the City of Palm Desert in November 2009, 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 City of Palm Desert as of June 30, 2009, and the results of its operations and the cash flows of its proprietary funds for the year then ended in conformity with accounting principles generally accepted in the United States of America. In conducting their audit, the auditors test the City's internal controls. Attached is the Report on Internal Controls over Financial Reporfina and on comaliance and other G:\Finance\Niamh Ortega\Staff ReportsWudit staff reportsWudit Staff Reports 2009\SR - Council audit CAFR 2009.docx Staff Report Receive and file CAFR for Fiscal Year ended June 30, 2009 February 11, 2010 Page 2 of 2 matters based on an audit of Financial Statements performed in accordance with Government Auditinq Standards. The CAFR will be submitted for the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements, as it has for the past twelve years. Staff requests that the Council receive and file the City of Palm Desert's audited financial reports for the fiscal year ended June 30, 2009. Fiscal Impact There is no fiscal impact as a result of this action. Submitted by: � Paul S. Gibson, Finance Director/City Treasurer Approved: / % n M. Wohlmuth, City Manager PSG:JLE:nmo CtTY COUNCIL A`'TiON APPROVF.D • nF,NIF.D RECEIVED � Fi I � OTHER MF.I:TING DATE ��-��"��`��' � AYf?S: ��'r)S^��CG��r'�� i�� r10E�• lv" �l/1P , AI3SF,NT: ti� � � , AI3�TAIN: l��''✓1 P � VERIFIED I3Y:� � Origina! on File with City C�'s Office G:\Finance\Niamh Ortega\Staff ReportsWudit staff reportsWudit Staff Reports 2009\SR - Council audit CAFR 2009.docx +_ DIEHL, EVANS � COMPANY, LLP CERTIFIED PUBllC ACCOUNTANTS 61 CONSULTANTS A PARTNERSFflP INCLUD[NG ACCOUNTANCY CORPORATtONS 5 CORPORATE PARK SU1TE ]00 IRVINE, CALffORN1A 92606-5165 (949) 399-0600 • FAX (949) 399-0610 W W W.dId11CVffi1S.COID MICHAEL R LUDIN.CPA CRAIG W.SPRAKER CPA NTI'RJ P. PATEL, CPA ROBERTJ.CALLANAN,CPA •PMLIP H. HOLTKAI�. CPA 'THOMAS M. PERLOWSKI. CP� •HARVEY 1. SC70tOEDER CPA KENNETH R AI�ffS. CPA •WILLIAM C. PEN7Z, CPA November 18� 2�09 •� rRo�ss�oH�L coRro�una+ The Honorable City Council of the City of Palm Desert Palm Desert, California We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of City of Palm Desert for the yeaz ended June 30, 2009. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standazds, as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our engagement letter dated March 23, 2009 and in our meeting on planning matters on July 28, 2009. Professional standazds also require that we communicate to you the following information related to our audit. Significant Audit Findings: Oualitative Asvects of Accounrine Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City of Palm Desert aze described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year ended June 30, 2009. We noted no transactions entered into by the City of Palm Desert during the year for which there is a lack of authoritative guidance or consensus. There are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. Accounting estimates are an integral part of the financial statements prepared by management and aze based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. -1- OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W. VALLEY PARKWAY. SUITE 330 CARLSBAD. CAUFORNIA 92008-2389 ESCONDIDO. CALIFORNIA 92025-2598 (760) 729-2343 • FAX (760) 729-2234 (760) 741-3141 • FAJC (7601 741-9890 � Sign�cant Audit Findings (Continues): Oualitative Asnects of Accountine Practices (Continuedl The most sensitive estimates affecting the financial statements were: a. Management's estimate of the fair market value of investments is based on mazket values provided by outside sources. b. Management's estimate of the value of the capital assets (infrastructure) is based on industry standards. c. The estimated useful lives of capital assets for depreciation purposes are based on industry standards. d. The funded sta.tus and funding progress of the public defined benefit plan with CaIPERS which is based on an actuarial valuation. e. The estimated net OPEB asset which is based on an actuarial valuation. We evaluated the key factors and assumptions used to develop these estimates in determining that they were reasonable in relation to the financial statements taken as a whole. The disclosures in the financial statements aze neutral, consistent, and cleaz. Certain financial statement disclosures are particularly sensitive because of their significance to financial statement users. The most sensitive disclosures affecting the financial statements were reported in Note 9 regarding the defined benefit pension plan and Note 13 regarding other post employment benefits. Difficulties Encountered in Performin� the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all l�own and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were material, either individually or in the aggregate, to the financial statements taken as a whole. Disasreements with Mana�ement For purposes of this letter, professional standards define a disagreement with management as a financial accounring, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditors' report. We aze pleased to report that no such disagreements arose during the course of our audit. -2- Significant Audit Findings (Continued): Mana�ement Representations We have requested certain representarions from management that aze included in the management representation letter dated November 18, 2009. Manasement Consultations with Other Indenendent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a"second opinion" on certain situations. If a consultation involves application of an accounting principle to the City of Palm Desert's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findin�s or Issues We generally discuss a vaziety of matters, including the application of accounting principles and auditing standards, with management each yeaz prior to retention as the City of Palm Desert's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. **** This information is intended solely for the use of the City Council and management of the City of Palm Desert and is not intended to be and should not be used by anyone other than these specified parties. � ��.�(./ �✓ c,�.� u►�, � L L � -3- � DIEHL, EVANS � COMPANY, LLP CERTIFIED PUBLIC ACCOUNTANTS 6T CONSULTANTS A PAR'TVERSFflP INCLUDMG ACCOUNTANCY CORPORAT70NS 5 CORPORATE PARK SUITE 100 IRVINE, CAL[FORNU 92606-5165 (949) 399-0600 • FAX (949) 399-0610 www.diehlevans.COm MICHAII, R LUDM. CPA CRAIG W.SPRAKER CPA NIT[N P. PA7EL. CPA ROBERTI.CALLANAN.CPA •PW[1P H. HOLTKAMP. CPA ''INOMAS M. PERLOWSKI. CPA •HARVEY 1. SCHItOEDER CPA KENNEI'Fi R AhffS. CPA •WILLIAM C. PENTZ, CPA November 18� 2��9 •��a+��coRrotunoN 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 The Honorable City Council City of Palm Desert Palm Desert, California We have audited the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Palm Desert, California as of and for the yeaz ended June 30, 2009, and have issued our report thereon dated November 18, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standazds applicable to financial audits contained in Government Auditin� Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Renorting In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the et�ectiveness of the City's internal control over financial reporting. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. -1- OTHER OFFICES AT: 2965 ROOSEVELT STREET 61? W. VALLEY PARKWAY. SUITE 330 CARLSBAD. CALIFORNIA 92008-3389 ESCONDIDO, CALIFORNIA 92025-2598 (760) 729-2343 • FAX (760) 729-2234 �760) 741-3141 • FAX (760) 741-9890 Internal Control Over Financial Renortin¢ (Continued) Our consideration of internal control over financial reporting was for the limited purpose described in the first pazagraph of this section and was not designed to identify all deficiencies in internal control over financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weal�esses, as defined above. Comnliance and Other Matters As part of obtaining reasonable assurance about whether the City of Palm Desert, California's financial statements are free of material misstatement, 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 ef�ect on the determination of financial statement amounts. 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 and other matters that aze required to be reported uttder Government Auditin� Standards. This report is intended solely for the information and use of the City Council, management of the City of Palm Desert, California and others within the City, and is not intended to be and should not be used by anyone other than these specified parties. k.J,��.� G vcc.�,y� u.v�. � �L� -2- � rl CITY OF PALM DESERT APPROPRIATIONS LIlVIIT WORKSHEET NO. 6 WITH INDEPENDENT ACCOUNTANTS' REPORT � ON AGREED-UPON PROCEDURES APPLIED TO APPROPRIATIONS LIMIT WORKSHEET �� LJ �� LJ � � J :_1 FOR THE YEAR ENDED JUNE 30, 2009 :_l r1 � � J � C' �� J U �l DIEHL, EVANS � COMPANY, LLP CERTiFIED PUBLIC ACCOUNTANTS 6t CONSULTANTS A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS 5 CORPORATE PARK, SU['i'E 100 IRVINE, CALIFORNIA 92606-5165 (949) 399-0600 • FAX (949) 399-0610 www.diehlevans.com November 18, 2009 INDEPENDENT ACCOUNTANTS' REPORT ON AGREED-UPON PROCEDURES APPLIED TO APPROPRIATIONS LIMIT WORKSHEET To the Honorable Mayor and Members of City Council City of Palm Desert Palm Desert, California MICHAEL R LUDM. CPA CRAIG W'. SPRAKER CPA Nil'IN P. PATEL. CPA ROBERTJ CALLANAN.CPA •PFIIllP H. HOLTKAI�. CPA 'TNOMAS M. PERLOWSKI. CPA •HARVEY J SCFOtOEDER CPA KENNE7N R AMFS. CPA •WILLIAM C, PENTL. CPA •� rieorEss�owu. cawo�unoN We have performed the procedures enumerated below to the accompanying Appropriations Limit Worksheet No. 6 of the City of Pa1m Desert, California for the year ended June 30, 2009. These procedures, which were agreed to by the City of Palm Desert, California and the League of California Cities (as presented in the League publication entitled "Article XIII-B Appropriations Limit Uniform Guidelines") were performed solely to assist the City of Palm Desert, Califomia in meeting the requirements of Section 1.5 of Article XIIIB of the California Constitution. The City of Palm Desert's management is responsible for the Appropriations Limit Worksheet No. 6. This agreed-upon procedures engagement was conducted in accordance with attestarion standards established by the American Institute of Certified Public Accountants. The sufficiency of the procedures is solely the responsibility of those parties specified in this report. Consequently, we make no representation regarding the sufficiency of the procedures described below either for the purpose for which this report has been requested or for any other purpose. The procedures performed and our findings were as follows: 1. We obtained the completed Worksheet No. 6 for the yeaz ended June 30, 2009, and compared the limit and annual adjustment factors included in that worksheet to the limit and annual adjustment factors that were adopted by resolution of the City Council. We also compazed the population and inflation options included in the aforementioned worksheet to those that were selected by a recorded vote of the City Council. No exceptions were noted as a result of this procedure. -1- OTHER OFFICES AT: 2965 ROOSEVELT STREET CARLSBAD. CALIFORMA 92008-�389 (760) 729-2?43 • FAX (760) 729-2234 613 W. VALLEY PARKWAY. SUITE 330 ESCONDIDO. CALIFORNIA 92025-2598 (7601 741-3141 • FAX (760) 741-9890 �J 2. For the accompanying Appropriations Limit Worksheet No. 6, we added last year's limit to the total adjustments, and compared the resulting amount to this year's limit. We also recalculated the adjustment factor and the adjustment for inflation and population, and compared the results to the amounts on Worksheet No. 6. �� No exceptions were noted as a result of this procedure. 3. We compared the prior year appropriations limit presented m the accompanymg Appropnations �� 1 Limit Worksheet No. 6 to the prior year appropriations limit adopted by the City Council for the � prior year. No exceptions were noted as a result of our performing this procedure. We were not engaged to, and did not, perform an audit, the objective of which would be the expression "�� of an opinion on the accompanying Appropriations Limit Worksheet No. 6. Accordingly, we do not �•� express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. No procedures have been performed with respect � to the determination of the appropriation limit for the base year, as defined by the League publication entitled "Article XIIIB Appropriations Limitation Uniform Guidelines". � This report is intended solely for the information and use of the City Council and management of the �` City of Palm Desert, California and is not intended to be, and should not be, used by anyone other than these specified parties. � r� J C�� :J :1 �� :J (� ��a,,t�.� �'��,,�, �,,�,,d, � �L� �� :.1 � CITY OF PALM DESERT APPROPRIATIONS LIMIT WORKSHEET NO. 6 For the yeaz ended June 30, 2009 Appropriations limit for fiscal yeaz ended June 30, 2008 (see Note 2) Adjustment factors for the fiscal year ended June 30, 2009 (see Note 2): Inflation Population Factor Factor Combined (Note 31 (Note 4) Factor 1.04290000 1.02710000 1.07116529 Adjustment for inflation and population Other adjustrnents (Note 5) Total adjustments Appropriations limit for fiscal year ended June 30, 2009 $ 83,369,804 x .07116529 5,932,811 � 5.932.811 $ 89.302.615 See accompanying independent accountants' report on agreed-upon procedures applied to appropriations limit worksheet and accompanying notes. -3- � CITY OF PALM DESERT NOTES TO APPROPRIATIONS LIMIT WORKSHEET NO. 6 For the year ended June 30, 2009 1. PUR.POSE OF LIMITED PROCEDURES REVIEW: Under Article XIIIB of the Califomia Constitution (the Gann Spending Limitation Initiarive), California goveinmental agencies aze restricted as to the amount of annual appropriations from proceeds of taxes. Ef%ctive for years beginning on or after July 1, 1990, under Section 1.5 of Article XIIIB, the annual calculation of the appropriations limit is subject to a limited procedures review in connection with the annual audit. � 2. METHOD OF CALCULATION: � Under Section 10.5 of Article XIIIB, for fiscal years beginning on or after July 1, 1990, the appropriations limit is required to be calculated based on the limit for the fiscal year 1986-87, � adjusted for the inflation and population factors discussed at Notes 3 and 4 below. fc�I�1�iI:�1�C�7��Ci�� A Califomia governmental agency may adjust its appropriations limit by either the annual percentage change in the 4th quarter per capita personal income (which percentages aze supplied by . the State Department of Finance), or the percentage change in the local assessment roll from the �, preceding year due to the change of local nonresidential construction. The factor adopted by the City of Palm Desert for the fiscal yeaz 2008-2009 represents the annual percentage change for per .� capita personal income. 4. POPULATION FACTORS: � A California governmental agency may adjust its appropriations limit by either the annual percentage change of the jurisdiction's own population, or the annual percentage change in � population in the County where the jurisdiction is located. The factor adopted by the City of Palm Desert for fiscal year 2008-2009 represents the annual percentage change in population for the County of Riverside. 5. OTHER ADNSTMENTS: `1 A Califomia government agency may be required to adjust its appropriations limit when certain 1 events occur, such as the transfer of responsibility for municipal services to, or from, another government agency or private entity. The City of Palm Desert had no such adjustments for the yeaz � ended June 30, 2009. � See accompanying independent accountants' report on agreed-upon procedures applied to � appropriations limit worksheet. -4- � COMPREHENSIVE ANNUAL FINANCIAL REPORT of the CITY OF PALM DESERT, CALIFORNIA For the Fiscal Year Ended JUNE 30, 2009 Prepared by the Finance Department City Treasurer/Director of Finance Paul S. Gibson Assistant Finance Director Jose Luis Espinoza, CPA Finance Staff (in alphabetical order by positions and names) Accounting Technician II James Bounds Accounting Technician II Horacio Celaya Accounting Technician II Sharon Christiansen Accounting Technician II Diana Leal Accounting Technician II Barbara Wright Administrative Secretary Niamh Ortega Business License Technician II Rob Bishop Deputy City Treasurer Thomas Jeffrey G.I.S. Coordinator Robert Riches G.I.S. Technician John Urkov Information Systems Manager Clay von Helf Information Systems Technician Troy Kulas Information Systems Technician Ray Santos Management Analyst II Jenny Barnes Office Assistant II Vedrana McKeever Office Assistant I Cherie Williams Senior Financial Analyst Anthony Hernandez Sr. Office Assistant Claudia Jaime i CITY OF PALM DESERT TABLE OF CONTENTS JUNE 30, 2009 Page Number INTRODUCTORY SECTION Table of Contents i Letter of Transmittal vii GFOA Certificate of Achievement for Excellence in Financial Reporting xii List of Principal Officials xiii Organization Chart xiv FINANCIAL SECTION AUDITORS' REPORT Independent Auditors' Report 1 MANAGEMENT’S DISCUSSION AND ANALYSIS 3 BASIC FINANCIAL STATEMENTS Exhibit A - Statement of Net Assets 15 Exhibit B - Statement of Activities 16 Exhibit C - Balance Sheet - Governmental Funds 20 Exhibit D - Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets 23 Exhibit E - Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 24 Exhibit F - Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 26 Exhibit G - Statement of Net Assets - Proprietary Funds 27 Exhibit H - Statement of Revenues, Expenses and Changes in Fund Net Assets - Proprietary Funds 28 ii CITY OF PALM DESERT TABLE OF CONTENTS (CONTINUED) JUNE 30, 2009 Page Number BASIC FINANCIAL STATEMENTS (CONTINUED): Exhibit I - Statement of Cash Flows - Proprietary Funds 29 Exhibit J - Statement of Fiduciary Assets and Liabilities – Agency Funds 31 Notes to Basic Financial Statements 33 REQUIRED SUPPLEMENTARY INFORMATION Schedule 1 - Schedules of Funding Progress: Cal PERS Defined Benefit Plan 109 Other Post-Employment Benefit Plan 109 Schedule 2 - Budgetary Comparison Schedule - General Fund 111 Schedule 3 - Budgetary Comparison Schedule - Prop A Fire Tax Special Revenue Fund 112 SUPPLEMENTARY SCHEDULES General Fund: 115 Schedule 4 - Budgetary Comparison Schedule by Department - General Fund 116 Other Governmental Funds - Combining Statements: 121 Schedule 5 - Combining Balance Sheet - Other Governmental Funds 122 Schedule 6 - Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Other Governmental Funds 123 Other Governmental Funds - Other Special Revenue: 125 Schedule 7 - Combining Balance Sheet - Other Special Revenue Funds 128 Schedule 8 - Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Other Special Revenue Funds 132 iii CITY OF PALM DESERT TABLE OF CONTENTS (CONTINUED) JUNE 30, 2009 Page Number SUPPLEMENTARY SCHEDULES (CONTINUED) Schedule 9 - Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Special Revenue Funds: A. Traffic Safety 136 B. Gas Tax 137 C. Housing Mitigation Fees 138 D. Community Development Block Grant 139 E. El Paseo Assessment District 140 F. City-Wide Business License 141 G. Landscape and Lighting Districts No. 1-17 142 Other Governmental Funds - Other Debt Service: 143 Schedule 10 - Combining Balance Sheet - Other Debt Service Fund 144 Schedule 11 - Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Other Debt Service Fund 145 Other Governmental Funds - Other Capital Projects: 147 Schedule 12 - Combining Balance Sheet - Other Capital Projects Funds 148 Schedule 13 - Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Other Capital Projects Funds 152 Agency Funds: 157 Schedule 14 - Combining Statement of Assets and Liabilities - All Agency Funds 158 Schedule 15 - Combining Statement of Changes in Assets and Liabilities - All Agency Funds 159 iv CITY OF PALM DESERT TABLE OF CONTENTS (CONTINUED) JUNE 30, 2009 Page Number STATISTICAL SECTION Description of Statistical Section 161 Financial Trends Net Assets by Component 162 Changes in Net Assets 163 Fund Balances of Governmental Funds 165 Changes in Fund Balances of Governmental Funds 166 Graphs - Changes in Fund Balances of Governmental Funds 167 Supplemental Historical General Fund Revenues 168 Supplemental Graph - Historical General Fund Revenues 169 Supplemental Historical General Fund Expenditures 170 Supplemental Graph - Historical General Fund Expenditures 171 Supplemental Historical General Revenue and Expenditures Per Capita 173 Revenue Capacity Assessed Value and Estimated Actual Value of Taxable Property 174 Historical Net Assessed Taxable Values Citywide and Graph - Assessed Valuation Growth 175 Supplemental FY 2009 and 2008 Breakdown of Basic 1% Property Tax Rate Not in Redevelopment Project Area 176 Property Tax Rates Direct and Overlapping Property Tax Rates 177 Principal Property Taxpayers 178 Property Tax Levies and Collections 179 Supplemental Top 25 Sales Tax Generators and Graph - Historical Sales Tax Trends 180 Supplemental Taxable Sales by Category 181 Supplemental Principal Sales Tax Remitters 182 Debt Capacity Ratios of Outstanding Debt by Type 183 Ratios of General Bonded Debt Outstanding 184 Supplemental Special Assessment Information 185 Direct and Overlapping Government Activities Debt 186 Legal Debt Margin Information 187 Pledged-Revenue Coverage 188 v CITY OF PALM DESERT TABLE OF CONTENTS (CONTINUED) JUNE 30, 2009 Page Number STATISTICAL SECTION (CONTINUED) Demographic and Economic Information Demographic and Economic Statistics 189 Principal Employers 190 Supplemental Miscellaneous Statistics 191 Operating Information Full-time Equivalent City Government Employee’s by Function/Program 192 Operating Indicators by Function/Program 193 Capital Asset Statistics by Function/Program 194 SUPPLEMENTAL REDEVELOPMENT AGENCY STATISTICAL SECTION Redevelopment Agency Project Area Map 197 FY 2009 Top Twenty Property Taxpayers: Project Area No. 1 and 1982 Annex 198 Project Area No. 2 199 Project Area No. 3 200 Project Area No. 4 201 Project Area Statistics 202 Tax Allocation Bond Issue Information 203 FY 2008/2009 Breakdown of Basic 1% Property Tax Levy Rates 204 Historical Tax Increment Summary: Redevelopment Project Area No. 1 - Original 205 Redevelopment Project Area No. 1 - Amended 206 Redevelopment Project Area No. 2 207 Redevelopment Project Area No. 3 208 Redevelopment Project Area No. 4 209 Historical Net Assessed Taxable Values: Redevelopment Project Area No. 1 - Original 210 Change in Taxable Values: Redevelopment Project Area No. 1 - Original 211 Historical Net Assessed Taxable Values: Redevelopment Project Area No. 1 - Amended 212 Change in Taxable Values: Redevelopment Project Area No. 1 - Amended 213 vi CITY OF PALM DESERT TABLE OF CONTENTS (CONTINUED) JUNE 30, 2009 Page Number SUPPLEMENTAL REDEVELOPMENT AGENCY STATISTICAL SECTION (CONTINUED) Historical Net Assessed Taxable Values: Redevelopment Project Area No. 2 214 Change in Taxable Values: Redevelopment Project Area No. 2 215 Historical Net Assessed Taxable Values: Redevelopment Project Area No. 3 216 Change in Taxable Values: Redevelopment Project Area No. 3 217 Historical Net Assessed Taxable Values: Redevelopment Project Area No. 4 218 Change in Taxable Values: Redevelopment Project Area No. 4 219 73-510 FRED WARING DRIVE PALM DESERT, CALIFORNIA 922C�0-2j�H TEL:760 346-06�� Fnx: �60 341-45�4 i n fo@palm-desert.org November 30, 2009 Citizens of the City of Palm Desert, Honorable Mayor and Members of the City Council The Comprehensive Annual Financial Report (CAFR) of the City of Palm Desert for the fiscal year ended June 30, 2009, is submitted herewith. This report was prepared by the City's Finance Department. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal control established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. It is the policy of the City of Palm Desert to have an annual audit performed by an independent certified public accountant. The independent audit of the City's fnancial statements for fiscal year ended June 30, 2009, was conducted by Diehl Evans & Company, LLP as appointed by the City Council. The auditor's unqualified ("clean") opinion on the basic financial statements is included in the Financial Section of this report. As part of the City's annual audit engagement, the auditors reviewed the City's internal control structure as well as compliance with applicable laws and regulations. The results of the City's annual audit for fiscal year ended June 30, 2009 provided no instances of material weaknesses in connection with the internal control structure or significant violations of applicable laws and regulations. As recipients of federal, state and county financial resources, the City of Palm Desert is required to undergo an annual single audit. When applicable, information related to this single audit, including the schedule of expenditures of federal awards, findings and recommendations, and auditor's reports on the internal control structure and compliance with applicable laws and regulations are included in a separately issued report. For the fiscal year ended June 30, 2009, the City is required to have a single audit performed. Management's discussion and analysis (MD&A) immediately follows the independent auditor's report and provides a narrative introduction, ovezview, and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it. vii Citizens of the City of Palm Desert, Honorable Mayor and Members of the City Council November 30, 2009 viii CAFR Structure The format and content of this report is presented in three sections: Introductory Section, provides the reader with the organizational structure of the City, its services and operating environment. This section includes a title page, table of contents, a letter of transmittal, an organizational chart, a list of the City of Palm Desert’s elected and appointed officials, and the certificates of award from the Government Finance Officers Association of the United States and Canada. Financial Section, presents the City’s independent auditor’s report on the Basic Financial Statements, the Management’s Discussion and Analysis (MD&A), the Basic Financial Statements, the notes to the financial statements, the Required Supplementary Information (RSI), and the non-major supplementary schedules. Statistical Section, provides the reader with additional historical financial data and other information concerning the City. PROFILE OF THE CITY OF PALM DESERT Located in Riverside County in the geographical center of the Coachella Valley, Palm Desert was incorporated on November 26, 1973, as a General Law City. Fourteen years later, on November 4, 1997, voters overwhelmingly approved Measure LL adopting a city charter. Under the provisions of the charter, the City of Palm Desert has full authority over its own municipal affairs including: bidding and contracting procedures; regulation of parks; libraries; and other facilities; certain fees; imposition of taxes; municipal zoning; salaries of officials and employees; municipal utilities; and municipal election procedures. The City of Palm Desert operates under a Council-Manager form of Government. The City Council consists of five members elected by the residents of the City. Council terms are four years, elected in November of even-numbered years. Each November, the City Council selects the Mayor from among its members for a one-year term. The City Council appoints the City Manager and the City Clerk. The City operates as a “contract city” utilizing, primarily, agreements with other governmental entities, private firms, and individuals to provide services. Contracted services include: police and fire protection through the County of Riverside; animal control; health services; legal services; and landscape maintenance. The City is a member of the California Joint Powers Insurance Authority that provides insurance coverage for the City. Waste and recycling services are provided under a franchise agreement to Burrtec Waste. The City provides traditional municipal, public enterprise, and redevelopment services as shown below: Citizens of the City of Palm Desert, Honorable Mayor an Members of the City Council November 30, 2009 ix Municipal Services Public Enterprise Services Public improvements, infrastructure and maintenance Golf Course Public art and community promotion Office Complex Planning, zoning, building and engineering Internal Service Housing and community development Code enforcement and inspections Blended & Discrete Component Economic development, business support and energy Units conservation PD Redevelopment Agency Legislative, city clerk, visitor center, public information PD Financing Authority General administration, fiscal services, human resources, PD Housing Authority and risk management PD Recreational Facilities Corp. The City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the General, Special Revenue, Debt Service, and Capital Project Funds are included in the annual appropriated budget. Budgetary amounts for Debt Service, Capital Projects, and Certain Special Revenue Funds are adopted annually; however, budgets are considered to be long-term in nature. The City also maintains an encumbrance accounting system of purchase orders and contracts at the fund level as a means of accomplishing budgetary control. Open encumbrances are reported as a reservation of fund balance at the end of the fiscal year. Purchase orders are reviewed to ensure that funds are available and that requests are properly authorized prior to being released to vendors. The adopted budget for fiscal year 2008-2009 was prepared in accordance with accounting principles generally accepted in the United States of America. As reflected in the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. LOCAL ECONOMY The City comprises an area of approximately 26 square miles and, as of January 1, 2009, has a population of 51,509, according to data provided by the California Department of Finance. In addition to permanent residents, approximately 15,000 seasonal residents make Palm Desert their home for three to six months each year. The City of Palm Desert has cultivated a sound foundation of general fund revenue including sales tax, transient occupancy tax, licenses and permits, property tax, and investment earnings. Tourism and sales tax are the City’s main revenue sources. Citizens of the City of Palm Desert, Honorable Mayor an Members of the City Council November 30, 2009 x A balanced community where economic, environmental, social, and cultural development flourishes, Palm Desert is a much sought-after destination as a place to visit and reside. The first city in Riverside County to create a public art program, Palm Desert is home to numerous cultural attractions including: the McCallum Theatre for the Performing Arts, a 1,127-seat theater which hosts some of the biggest names and well-known productions in show business; The Living Desert wildlife and botanical park, a 1,200-acre facility containing a wide array of plants and animals from desert regions around the world; and Palm Desert Art in Public Places, a museum without walls, featuring more than 100 works of art on permanent display throughout the City. Palm Desert’s active Chamber of Commerce has more than 1,500 members who work to promote, support, and enhance business prosperity, civic vitality, and the quality of life within their community. Noted for its extensive array of retail options, including the world famous upscale shopping destination of El Paseo, the City is home to a variety of malls and retail centers including Westfield Palm Desert, Desert Crossing, and The Gardens on El Paseo. The internationally acclaimed Desert Willow Golf Resort, one of the nation’s premier municipal courses, boasts 36 holes of championship golf and stunning scenery in close proximity to first- class hotel accommodations and fine dining. In addition to being the home of the Coachella Valley’s only community college, College of the Desert, Palm Desert is the location of two new recently opened satellite campuses for California State University, San Bernardino and the UCR, Palm Desert Graduate Center. Both of these institutions of higher learning offer multiple options for degree programs and continuing education. A balanced foundation of tourism, culture, and education has strengthened the City’s labor force making it as strong as the economy. The State of California Employment Development Department Labor Market Information Division reported that for the period ending June 30, 2009, the City of Palm Desert had an unemployment rate of 6.8% compared to Riverside County, which had a rate of 11.46%. LONG-TERM FINANCIAL PLANNING In June 2009, the City Council approved a total of $51.81 million in funding for various capital improvement projects for the fiscal year of 2009-2010. Projects include traffic signals, sidewalk repairs and construction, street widening, construction of new landscaping medians, improving drainage areas, and completion of the development called Entrada El Paseo. With all these projects slated for the coming fiscal year, it is evident that the City of Palm Desert is committed to promoting tourism, business, culture, and education in an effort to maintain the high quality of life that the entire community enjoys. Citi�etts r�j t{re C'it� ofPuGtt De.ce�7. Hr��7ot•uhle ifert�ur coi .tler:rhe�•.c uftht• C'itr C'otrrtcil ,�oremher 30. ?O119 Certificates of r�F� ards for Outstandin2 Financial Reportin� �he (io�ernment Finance Ofticers �lssociation of the llnited States an�l Canada (GI�'d1l) auarded a Certiticate of Achie�ement for E-�cellence in Financial Reporting tu the Citti of Palm Desert ti�r its comprehensic� annual tinancial report fbr the tiscal year ended .1une 30. ?008. This ��as the ttielith consecuti�e year that the goternment has achieced this prestigiuus a�rard. [n order to be a��arded a Certit3cate uf :lchiecement, the go� ernment had to puhlish an easily readable and efficientl} organized comprehensice annual financial report that satistied hath general aeeepted aceounting prineiples and applicable legal requirements. r� Certiticate of Achicvement is �alid for a period of one year only. �`e belie�e that our current comprehensice annual tinancial report continues to meet the Certifieate of Achieeement Prograni's requirements and �ve are submitting it to the C'�FOE1 to detennine its eligibilit� ior another certificate. Ackno�cled�ments The preparation of this report could not ha�'e been accumplished ��ithout the efticicnt and dedicated ser� ices of` the entire statt� uf the Finance departmeut tj hose names arc listed individually in the title paee. Due credit is given tu the �la}or and the City Council �lembcrs For their interest and support in planning and conducting the operatiuns of our C'ity in a responsible and progressive manner. Recognition is also given to all employees o£ the City of Palm Desert �iho continue to sene our cummunity ��ith commitment and dedication throughout the year, and to the citizens uf Palm Desert our greatest appreciation tor your continued support, input. and guidance in helping us serce you better, thus preser�ing aur City's quality of lifc and reputation 1'or inno�ation and teadership! Respectfull} submitted. � � �,- � - �� `�.�� L. =L-'`� - -L 2. � c,..��_�.r ' ::'�ohn \t. ��'ohlmuth ; � Cit} Nlanager r` ��j�� '�"�``'f ��z--�, Paul S. Gihson Director of Finance City "Treasurer .tLP:jle ti �er�l�cate of Achlevement for Excellence in Financial Reporting Presented ta City of Palm Desert California For its Comprehensive Annual Financia] Report for the Fiscal Year Ended June 30, 2008 A Certificate uf Achie� ement for Exeellence in Financial Reporting is presented by the Govemment Finance Officers Association of the tinited Statrs and Canada to government units and puhlic employee retirement systems whose comprehensive annual financial reports (CAFRs} achieve the highest standards in government accountmg and financial reporting. /�� `� �'"! e.±6aM t� �� z tyxuu '�� ta�ottra� �� :.�,� " , � ��r�-�' , President �� F.�ecutice Director .:ii xiii CITY OF PALM DESERT List of Principal Officials as of June 30, 2009 City Council - Manager Form of Government CITY COUNCIL ROBERT A. SPIEGEL Mayor CINDY FINERTY Mayor Pro-Tempore JEAN M. BENSON JIM FERGUSON RICHARD S. KELLY Council Member Council Member Council Member CITY ADMINISTRATION JOHN M. WOHLMUTH City Manager City Attorney - Best, Best & Krieger David J. Erwin Assistant City Manager for Community Services/City Clerk Sheila S. Gilligan Assistant City Manager for Development Services Homer Croy Assistant City Manager for Redevelopment Agency/Housing Justin McCarthy Director of Finance/City Treasurer Paul S. Gibson REDEVELOPMENT AGENCY Executive Director JOHN M. 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I I I I �' � 1 xvi THIS PAGE INTENTIONALLY LEFT BLANK 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 A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS 5 CORPORATE PARK, SUITE 100 IRVINE, CALIFORNIA 92606-5165 (949) 399-0600 • FAX (949) 399-0610 www.diehlevans.com November 18, 2009 INDEPENDENT AUDITORS' REPORT To the Honorable Mayor and Members of the City Council City of Palm Desert, California We have audited the accompanying financial statements of the governmental activities, the business- type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Palm Desert, California, as of and for the year ended June 30, 2009, which collectively comprise the City's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Palm Desert's management. Our responsibility is to express opinions on these 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 Auditing 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 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 financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Palm Desert as of June 30, 2009, and the respective changes in financial position and cash flows, where applicable thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. - 1 - MICHAEL R. LUDIN, CPA CRAIG W. SPRAKER, CPA NITIN P. PATEL, CPA ROBERT J. CALLANAN, CPA *PHILIP H. HOLTKAMP, CPA *THOMAS M. PERLOWSKI, CPA *HARVEY J. SCHROEDER, CPA KENNETH R. AMES, CPA WILLIAM C. PENTZ, CPA *A PROFESSIONAL CORPORATION - 2 - In accordance with Government Auditing Standards, we have also issued our report dated November 18, 2009, on our consideration of the City of Palm Desert's internal control over financial reporting and our tests of its compliance with certain laws, regulations, contracts, 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 and the required supplementary information identified in the accompanying table of contents are not a required part of the basic financial statements but are supplementary information required by the accounting principles generally accepted in the United States of America. We have applied certain limited procedures to the management’s discussion and analysis, which consisted principally of inquiries of management regarding the methods of measurement and presentation of this required supplementary information. However, we did not audit the management’s discussion and analysis and express no opinion on it. The schedules of funding progress, budgetary comparison schedules and related notes have 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying introductory section, the combining and individual fund statements, schedules and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying combining and individual other governmental funds financial statements have 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. The accompanying introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. See independent auditors’ report. - 3 - CITY OF PALM DESERT MANAGEMENT’S DISCUSSION AND ANALYSIS Our discussion and analysis of the City of Palm Desert’s financial performance for the fiscal year ended June 30, 2009 provides: a comparison of current year to prior year ending results based on the government-wide statements; an analysis of the City’s overall financial position and results of operations to assist users in evaluating the City’s financial position; a discussion of significant changes that occurred in funds; and significant budget variances. 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 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 transmittal letter and the City’s financial statements. FINANCIAL HIGHLIGHTS • The City’s governmental activities net assets increased $6.56 million, and the net assets of the business-type activities increased $4.92 million. • During the year, the City’s revenues were $6.56 million more than the $111.13 million in expenses recorded in its governmental activities. Compared to fiscal year 2008, revenues were $59.18 million greater than expenses. • In the City’s business-type activities, revenues exceeded expenditures by $4.92 million. The total revenue of $13.57 million generated in green fees, merchandise sales, rental income, capital contributions, other revenues, and transfers surpassed the $8.65 million in expenditures. Compared to the prior year, the business-type activities loss was $0.22 million. • The City’s governmental activities program revenues and general revenues decreased by $70.36 million, or 37 percent from prior year, while program expenses decreased $17.74 million, or 14 percent from prior year. • Business-type activities revenues increased by $4.97 million, from $8.6 million to $13.57 million. This was due to a contribution of $6.04 million for the newly constructed Henderson Building. Expenses decreased by $0.17 million from the prior year. • The revenues available for expenditures were $3.48 million less than budgeted in the General Fund. The City kept expenditures within spending limits by $2.80 million. 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 15, 16 and 17) provide information about the activities of the City as a whole and present a long-term view of the City’s finances. Fund financial statements start on page 20. 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 City’s operation in more detail than the government-wide statements by providing information about the City’s most significant funds and other funds. The remaining fiduciary fund statement provides financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government. REPORTING THE CITY AS A WHOLE The Statement of Net Assets and the Statement of Activities: Our analysis of the City as a whole begins on page 15. One of the most important question asked about the City’s finances is, “Is the City 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 City as a whole and about its activities in a way that answers this question. These statements include all assets and liabilities of the City 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. See independent auditors’ report. - 4 - These two statements report the City’s net assets and changes in them. Net assets are the difference between assets and liabilities, which is one way to measure the City’s financial health, or financial position. Over time, increases or decreases in the City’s net assets are an indication of whether its financial health is improving or deteriorating. Other non-financial factors should be considered, however, such as changes in the economy that could cause a decrease in consumer spending. In the Statement of Net Assets and the Statement of Activities, we separate City Activities as follows: Governmental activities – Most of the City’s basic services are reported in this category, including general administration (city manager, city clerk, finance, etc.), police and fire protection, public works, parks & recreation, and culture departments. Property taxes, sales tax, transient occupancy tax, user fees, interest income, franchise fees, state and federal grants, contributions from other agencies, and other revenues finance these activities. Business-type activities – The City charges a fee to customers to cover all or most of the cost of certain services it provides. The City’s municipal golf course, Desert Willow, and the City’s Parkview Office Complex activities are reported in this category. Component unit activities – The City includes one separate legal entity in its report – the Palm Desert Recreation Facilities Corporation. Although legally separate, this “component unit” is important because the City is financially accountable for it. REPORTING THE CITY’S MOST SIGNIFICANT FUNDS Fund Financial Statements: The fund financial statements provide detailed information about the most significant funds and other funds, not the City 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 City has two types of funds: governmental and proprietary. Governmental funds – Most of the City’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 an accounting method called modified accrual 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 City’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 City’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. Proprietary funds – When the City charges customers for the services it provides, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Assets and the Statement of Activities. The City’s enterprise funds are the same as the business-type activities we report in the government-wide statements, but provide more detail and information such as a statement of cash flows. See independent auditors’ report. - 5 - THE CITY AS TRUSTEE Reporting the City’s Fiduciary Responsibilities: The City is the trustee, or fiduciary, for certain funds held on behalf of developers and its employees’ retiree service stipend fund. The City’s fiduciary activities are reported in separate Statements of Fiduciary Assets and Liabilities. We exclude these activities from the City’s other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes. THE CITY AS A WHOLE The City’s combined net assets increased $11.48 million from $637.02 million to $648.50 million. A separate review of the net change in the governmental and business-type activities is provided for the reader. Our analysis focuses on the net assets (Table 1) and changes in net assets (Table 2) of the City’s governmental and business-type activities. 2009 2008 2009 2008 2009 2008 Current and restricted assets 511.53$ 513.97$ 5.51$ 6.21$ 517.04$ 520.18$ Capital assets 547.94 543.81 69.22 64.40 617.16 608.21 TOTAL ASSETS 1,059.47 1,057.78 74.73 70.61 1,134.20 1,128.39 Long-term liabilities outstanding 416.12 425.50 0.95 1.58 417.07 427.08 Other liabilities 67.80 63.29 0.83 1.00 68.63 64.29 TOTAL LIABILITIES 483.92 488.79 1.78 2.58 485.70 491.37 Net assets: Invested in capital assets, net of related debt 298.11 287.54 68.26 62.82 366.37 350.36 Restricted 170.53 168.03 - - 170.53 168.03 Unrestricted 106.91 113.42 4.69 5.21 111.60 118.63 TOTAL NET ASSETS 575.55$ 568.99$ 72.95$ 68.03$ 648.50$ 637.02$ TABLE 1 NET ASSETS As of June 30, 2009 and 2008 TotalActivities Business-TypeGovernmental Activities (IN MILLIONS) See independent auditors’ report. - 6 - Compared to prior year, net assets of the City’s governmental activities increased by 1.15 percent, or $6.56 million. The City’s Net Assets are made up of three components: Investment in Capital Assets, Net of Related Debt; Restricted Net Assets; and Unrestricted Net Assets. For governmental activities, unrestricted net assets, which represent the part of net assets that can be used to finance day-to-day operations, accounted for 18.58 percent of the overall total net assets. Unrestricted net assets decreased $6.51 million from $113.42 million in 2008 to $106.91 million in 2009. This is an indication that the City’s Governmental Activities financial position recognized a decline from prior year. The City has $6.51 million less of unrestricted funds that can be used to finance its operations. The decrease is attributable to: 1) a 16.27 percent drop in sales tax revenue from $17.15 million to $14.36 million; 2) a decrease in investment earnings from $15.31 million to $6.16 million; 3) a fall of $1.57 million in transient occupancy tax; and 4) a decline in property tax and property transfer tax of $1.03 million. The increase in restricted net assets of $2.50 million was due to the following: restricted capital projects decreased by $12.20 million due to capital projects expenses; restricted special projects increased by $13.17 million due to the $6.75 million decrease in restricted bond cash from the RDA Low-Income Housing fund money that was used to acquire a low-income housing complex and construction- deconstruction of low- and moderate-income housing units; restricted debt projects increased $1.23 million due to an increase in tax increment; and $0.30 million increase in other post-employment benefits. Investment in capital assets, net of related debt increased $10.57 million. Major additions included land acquisitions for the improvement of an alley way and future RDA projects, infrastructure projects that include University Park area and Section 29 development; and construction of apartment complexes to be used for low- and moderate-income housing. The net assets of the business-type activities saw an increase of $4.92 million, from $68.03 million to $72.95 million. During the previous year, the business-type activities net assets recognized a decrease of $0.22 million. The major factor in the increase was the capital contribution of $6.04 million for the newly- constructed Henderson Building. Desert Willow Golf Resort recognized a decrease in their gross revenues and responded promptly to reduce overall expenditures, resulting in an $0.86 million net asset decrease. The Parkview Office Complex recognized a net asset increase of $5.78 million in which it saw minor increases in both gross revenues and expenditures. The major contributor was the capital asset contributions of the Henderson Building. The change in the City’s governmental activities total assets was the increase in capital assets. Total change in capital assets was $4.13 million which included $22.35 million in current year additions, $6.83 million in transfers and deletions and $11.27 million in depreciation. Total liabilities decreased by $4.87 million. There was a $9.38 million reduction due to retirement of debt, and an increase of $4.51 million in other liabilities. The increase in other liabilities represents the change in amounts due under pass-through agreements that increased from $43.42 million to $53.29 million. This was due to the increase in tax increment that the Redevelopment Agency receives (see note 8). See independent auditors’ report. - 7 - 2009 2008 2009 2008 2009 2008 REVENUES: Program Revenues: Charges for services 18.47$ 19.22$ 7.83$ 9.12$ 26.30$ 28.34$ Operating grants and contributions 5.58 5.84 - - 5.58 5.84 Capital grants and contributions 5.05 42.55 - 0.21 5.05 42.76 General Revenues: Property taxes 5.22 6.25 - - 5.22 6.25 Tax increment (net of pass-through)54.96 55.41 - - 54.96 55.41 Transient occupancy tax 7.03 8.60 - - 7.03 8.60 Sales tax 14.36 17.15 - - 14.36 17.15 Other taxes 3.00 3.11 - - 3.00 3.11 Investment earnings 6.16 15.31 0.08 0.27 6.24 15.58 Contribution not restricted for special purpose 0.61 7.24 - - 0.61 7.24 Other revenues 2.91 6.37 2.91 6.37 Transfer In/Out (5.66) 1.00 5.66 (1.00) - - TOTAL REVENUES 117.69 188.05 13.57 8.60 131.26 196.65 EXPENSES: General government 34.09 46.05 - - 34.09 46.05 Public safety 27.67 26.85 - - 27.67 26.85 Parks, recreation and culture 7.21 8.01 - - 7.21 8.01 Public works 22.04 27.25 - - 22.04 27.25 Interest on long-term debt 20.12 20.71 - - 20.12 20.71 Golf Course-Desert Willow - - 7.80 8.17 7.80 8.17 Office Complex-Parkview - - 0.85 0.65 0.85 0.65 TOTAL EXPENSES 111.13 128.87 8.65 8.82 119.78 137.69 INCREASE (DECREASE) IN NET ASSETS 6.56 59.18 4.92 (0.22) 11.48 58.96 BEGINNING NET ASSETS 568.99 498.41 68.03 68.25 637.02 566.66 RESTATEMENT OF NET ASSETS - 11.40 - - - 11.40 ENDING NET ASSETS 575.55$ 568.99$ 72.95$ 68.03$ 648.50$ 637.02$ TABLE 2 CHANGES IN NET ASSETS As of June 30, 2009 and 2008 TotalActivities Business-TypeGovernmental Activities (IN MILLIONS) See independent auditors’ report. - 8 - Table 2- Graph Changes in Net Assets Governmental Activities Total revenue decreased from $188.05 million to $117.69 million, a 37.41 percent decrease. The decrease is the result of an 88.13 percent decrease in capital grants and contributions of $37.50 million, a $2.79 million decrease in sales tax, a $9.15 million drop in investment earnings, and a reduction of $6.66 million in transfers. Factors that contributed to the changes in revenues are as follows: • Prior year capital grants and contributions included $30.20 million in contributions for property from other governments and zero for current year. In addition, the city received capital grants and contributions from the Coachella Valley Association of Governments and Riverside County Transportation Commission that also decreased due to projects being completed; • Reduction in gross taxable sales due to economic downturn; • Decrease in City’s earnings due to lower yields in investment; and • Governmental funds transferred capital assets to the enterprise fund that resulted in a negative transfer in the Statement of Activities. Total expenses decreased from $128.87 million to $111.13 million. Two factors contributed to the change in expenses. First, a decrease in the governmental activities category of general government was the result of the completion of Falcon Crest home sales in the prior year. There was no inventory expenditure to report in this fiscal year. Second, there was a decrease in public works expenses resulting from reduction in the completion of public improvements in CFD University Park and CFD Indian Ridge Funds in prior years. See independent auditors’ report. - 9 - The following schedule represents the net cost of providing services: Governmental Activities Net (Expense) Revenue (In Millions) 2009 2008 General government ($23.73) ($32.52) Public safety (18.04) (17.99) Parks, recreation and culture (6.40) (6.82) Public works (13.73) 16.77 Interest on long term debt (20.13) (20.71) Total ($82.03) ($61.27) Business-type Activities Business-type activities revenues, before transfers out and contributions, decreased by $1.47 million, a 15.76 percent decrease. However, the net effect of the transfer out and contributions increased the total revenues by $4.97 million, a 57.79% increase. At Desert Willow, a 10 percent decrease in total overall rounds with a change in the mix of play caused the average daily rate to decline by 5.90 percent. The loss of rounds was directly related to the loss in corporate outings resulting from the economic downturn. The loss of golf rounds and the lower average daily rate resulted in the $1.47 million decrease in the gross revenues, before transfers and contributions. In response to the economic downturn, both the Golf Resort and the Office Complex implemented cost-saving measures that resulted in lower overall expenditures when compared to prior years. Operating expenses for business-type activities decreased from $8.82 million to $8.65 million, a decrease of 1.92 percent. The majority of the decrease was directly related to the golf resort and the reduction in their variable labor costs in the restaurant. Other changes were normal for the business entities and their respective industries. See independent auditors’ report. - 10 - THE CITY’S FUNDS On page 20, the governmental funds balance sheet is shown. The combined fund balance of $422.41 million decreased from $429.45 million, or 1.64 percent. This total includes the General Fund balance of $74.35 million, which decreased by $5.47 million from prior year. The City’s General Fund balance has reserved $15.28 million for advances, encumbrances, loans and notes, debt service, inventory, and prepaid cost, compared to the prior year of $16.30 million. The change in the General fund’s balance was due to combined decreases in sales tax, transient occupancy tax, and investment earnings of $6.72 million. Other major fund balance changes are noted below: • The Prop A Fire Tax Fund: the fund balance decreased, but the figure came well within the projected decrease of $1.71 million that was forecasted. • The Redevelopment Agency Financing Authority Debt Service Fund: the fund balance increased due to the agency’s transfer of funds to actively manage debt service commitments prior to the termination of project areas. • The Redevelopment Agency Debt Service Funds: the fund balance increased due to an increase in tax increment. Development in project areas increased the tax increment the Agency received. • The Redevelopment Agency Capital Projects Funds: the fund balance decreased due to capital project expenditures. • The Redevelopment Low-income Housing Fund: the fund balance increased due to the decrease in required debt service payments and an increase in transferred tax increment. More detailed information about the combined fund balance reserves is presented in Note 10 to the financial statements. General Fund Budgetary Highlights Based upon recommendations from the City’s staff, the City Council revised the City budget several times, during the year. Adjustments were made on a monthly basis as City staff requested additional appropriations to cover the cost of projects that either had change orders for additional work, or were underestimated. At mid-year, adjustments were made as department heads were requested to decrease their budgets due to falling revenues. At year-end, budgets were adjusted for unanticipated expenditures. All amendments that either increase or decrease appropriations are approved by the City Council. For the City’s general fund, the actual ending revenues of $46.84 million were $3.48 million less than the final budgeted revenues of $50.32 million. The majority of the variance was due to a decrease in tax revenues. Sales and transient occupancy taxes accounted for $3.00 million of the variance. The General Fund actual ending expenditures of $52.31 million were $2.80 million less than the final budget of $55.11 million. There were changes in the original budget compared to the final budget during the year. The original expenditure budget was $53.23 million compared to the final budget of $55.11 million, a $1.88 million increase. The major change was due to the re-appropriations of prior year encumbrances that totaled $1.72 million and the $2.5 million transfer to create the new Energy Independence Loan Fund that is used to provide funding for the AB811 Energy Loans. The mid-year budget reduction totaled $3.13 million. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At the end of 2009, the City had $617.16 million invested in a broad range of capital assets, including land, streets, bridges, drainage systems, traffic lights, parks, buildings, art work, vehicles and equipment (See Table 3). This amount represents a net increase (including additions and deductions) of $8.95 million, or 1.47 percent over prior year. See independent auditors’ report. - 11 - 2009 2008 2009 2008 2009 2008 Land 125.34$ 118.35$ 52.62$ 52.60$ 177.96$ 170.95$ Construction-in-progress 16.90 31.80 - - 16.90 31.80 Buildings and improvements other than buildings 120.60 108.48 15.23 9.90 135.83 118.38 Machinery and equipment 3.60 3.26 1.37 1.90 4.97 5.16 Infrastructure 281.50 281.92 - - 281.50 281.92 TOTALS 547.94$ 543.81$ 69.22$ 64.40$ 617.16$ 608.21$ TABLE 3 CAPITAL ASSETS AT YEAR-END For the years ended June 30, 2009 and 2008 TotalActivities Business-TypeGovernmental Activities (NET OF DEPRECIATION, IN MILLIONS) This year’s major additions included (in millions): Land acquisitions $ 2.54 California Villas Apartment 3.10 University Infrastructure 6.53 Sage Crest Apartment Improvements 1.80 Entrada Del Paseo .87 I-10 interchange at Monterey .84 Section 29 1.80 $ 17.48 See independent auditors’ report. - 12 - The City’s fiscal year 2010 capital budget calls for it to spend an additional $51.81 million plus continuing capital projects spending of $109.57 million from prior year, with the majority being spent on street improvements. Projects will be funded with existing bond proceeds or funds that have been designated by an outside party for specific use. More detailed information about the City’s capital assets is presented in Note 1d and Note 5 to the financial statements. Debt At year-end, the City’s governmental activities had $416.12 million in bonds, notes, contracts, and compensated absences versus $425.50 million last year, a decrease of $9.38 million, or 2.2 percent as shown in Table 4. The major cause for the decrease was the re-payment of principal by the Agency. 2009 2008 2009 2008 2009 2008 Compensated absences payable 2.76$ 2.88$ -$ -$ 2.76$ 2.88$ Notes payable 0.37 0.49 - - 0.37 0.49 Capital leases - - 0.95 1.58 0.95 1.58 Claims and judgements payable 0.78 0.44 - - 0.78 0.44 Special assessments debt with government commitment 2.70 2.75 - - 2.70 2.75 Limited Obligation Improvement bonds 2.01 - - - 2.01 - Tax allocation bonds 407.50 418.94 - - 407.50 418.94 TOTALS 416.12$ 425.50$ 0.95$ 1.58$ 417.07$ 427.08$ TABLE 4 OUTSTANDING DEBT, AT YEAR-END For the years ended June 30, 2009 and 2008 TotalActivities Business-TypeGovernmental Activities (IN MILLIONS) The City was able to meet its current year debt obligation in a timely manner. Debts issued in the prior year have been used to finance various capital projects. An example of this would be the purchase of land and construction of the City’s golf course. The City’s business-type activities debt decreased $0.63 million from $1.58 million to $0.95 million. Debt in the business-type activities is for capital leasing of equipment. The City’s golf course uses leasing as an alternative to purchasing maintenance equipment to maintain a cash flow to operate the day-to-day activities. The decrease in the City’s business-type activities debt was directly related to the continued reduction in principal on the leases for golf course equipment, golf carts, and GPS tracking golf cart system. During the next few years, the debt for the business-type activities will be fully amortized. Within one and a half years, the golf resort will determine whether to replace the maintenance equipment and golf carts as they reach the end of their useful life, and as a result, the business-type activity liability may increase. More detailed information about the City’s long-term liabilities is presented in Note 6 to the financial statements. See independent auditors’ report. - 13 - ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS In preparing the budget for fiscal year 2010, management focused on three core principles; 1) Minimize the impact of budget cuts to key services and maintain the level of service expected by residents, businesses, and visitors, 2) Minimize the number of tax and fee adjustments required to maintain existing service levels, and 3) Minimize the impact on the City’s employees and avoid position reductions if possible. The following economic factors were looked at by management: • In prior years, the City had unallocated reserves in its capital projects and special revenue funds. In the five-year capital improvement program, all restricted capital funds have been allocated to various projects. Any additional projects would require a transfer from the general fund, which would mean that the City’s unobligated general fund reserve would start to decrease. • The State of California’s budget crisis has started to affect the pass-through revenues that the City receives from the State. In addition, the State is holding payments that belong to the City to meet their obligations. The uncertainty of how the State will balance their budget has caused the City to look at ways to cut costs. • National Economy: The City’s main revenue sources, sales tax (33.84%) and transient occupancy tax (17.03%), rely heavily on a strong national and local economy. With a strong national economy, the market demand for leisure activities such as travel, shopping, and dining is increased. However, in an economic downturn or a slowing of the economy, the typical trend is for consumers to reduce their disposable income spending for leisure activities. The City of Palm Desert does not know the impact that the current economic environment will have on the City’s main revenue sources, but since the City relies on tourism for revenue, a downturn in that industry will have a negative impact on the City. Compared to the 2008-09 budget, the City’s general fund expenditures are projected to decrease by $5.85 million. Staff salaries and benefits decreased due to employees who took advantage of early retirement offered by the City. In addition, the City’s contracts with the Riverside County Sheriff’s Department for police services and the contract with the Fire Department for fire protection have increased. Due to the decrease in estimated revenues, other levels of support were reduced by 11.69 percent. The City continues to develop, with new hotels, construction of a four-year university, street improvements, park construction, and various other commercial and residential projects. The 2010 budget is a reflection of the City’s commitment to the residents of Palm Desert. The City’s conservative approach has provided for a consistently high level of services. The City has made a commitment to allocate resources for public safety, cultural/social programs, and infrastructure improvements. A copy of the City’s 2009-2010 financial plan can be obtained by contacting the City’s Finance department or on the City’s website at www.cityofpalmdesert.org. CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City’s Finance Department at the City of Palm Desert, 73-510 Fred Waring Drive, Palm Desert, California 92260-2578, or (760) 346-0611. - 14 - THIS PAGE INTENTIONALLY LEFT BLANK Exhibit A Component Unit Palm Desert Recreational Governmental Business-type Facilities Activities Activities Total Corporation Current assets: Cash and investments 289,029,392$ 4,727,511$ 293,756,903$ 90,776$ Receivables: Accounts 2,227,280 94,582 2,321,862 3,890 Notes 3,702,000 - 3,702,000 - Interest 2,427,006 - 2,427,006 - Loans 12,425,681 - 12,425,681 - Internal balances - - - - Prepaid costs 732,638 17,831 750,469 1,297 Inventories 50,561 231,748 282,309 54,214 Due from other governments 4,924,128 - 4,924,128 - Property held for resale 465,834 - 465,834 - Due from component unit 285,000 441,798 726,798 - Unamortized debt issuance costs 10,292,357 - 10,292,357 - Net OPEB asset 6,970,610 - 6,970,610 - Restricted assets: Cash with fiscal agent 177,997,781 - 177,997,781 - Noncurrent assets: Capital assets, not being depreciated 262,746,367 52,616,189 315,362,556 - Capital assets, net of depreciation 285,189,008 16,602,671 301,791,679 - TOTAL ASSETS 1,059,465,643 74,732,330 1,134,197,973 150,177 Current liabilities: Accounts payable 7,202,828 537,926 7,740,754 83,182 Accrued liabilities 697,646 69,984 767,630 23,803 Interest payable 5,133,900 - 5,133,900 - Unearned revenues 951,341 191,574 1,142,915 13,777 Deposits payable 529,239 27,087 556,326 - Due to primary government - - - 726,798 Amounts due under pass-through agreement 53,285,469 - 53,285,469 - Noncurrent liabilities: Due within one year 15,335,707 636,295 15,972,002 - Due in more than one year 400,781,016 318,846 401,099,862 - TOTAL LIABILITIES 483,917,146 1,781,712 485,698,858 847,560 NET ASSETS: Invested in capital assets, net of related debt 298,107,225 68,263,719 366,370,944 - Restricted for: Special projects 71,189,719 - 71,189,719 - Debt service 21,456,334 - 21,456,334 - Capital projects 70,911,916 - 70,911,916 - Other Post Employment Benefit 6,970,610 - 6,970,610 - Unrestricted (deficit) 106,912,693 4,686,899 111,599,592 (697,383) TOTAL NET ASSETS (DEFICIT)575,548,497$ 72,950,618$ 648,499,115$ (697,383)$ See independent auditors' report and notes to basic financial statements. CITY OF PALM DESERT - 15 - Primary Government STATEMENT OF NET ASSETS June 30, 2009 ASSETS LIABILITIES AND NET ASSETS Charges Operating Capital for Grants and Grants and Expenses Services Contributions Contributions Primary Government: Governmental activities: General government 34,089,168$ 7,574,059$ 1,332,120$ 1,455,724$ Public safety 27,670,237 9,396,435 129,482 106,776 Parks, recreation and culture 7,210,706 803,218 - - Public works 22,036,017 701,125 4,120,868 3,486,166 Interest on long term debt 20,128,441 - - - Total governmental activities 111,134,569 18,474,837 5,582,470 5,048,666 Business-type activities: Desert Willow Golf Course 7,804,265 6,872,935 - - Office Complex - Parkview 852,746 958,942 - - Total business-type activities 8,657,011 7,831,877 - - Total primary government 119,791,580$ 26,306,714$ 5,582,470$ 5,048,666$ Component Unit: Palm Desert Recreational Facilities Corp. 2,248,146$ 2,002,810$ -$ -$ General revenues: Taxes: Property taxes, levied for general purpose Tax increment, net of pass-throughs Transient occupancy taxes Sales taxes Franchise taxes Motor vehicle in lieu Investment earnings Contribution not restricted for specific purpose Miscellaneous Transfers Total general revenues Change in net assets Net assets (deficit) - beginning of year Net assets (deficit) - end of year See independent auditors' report and notes to basic financial statements. CITY OF PALM DESERT - 16 - STATEMENT OF ACTIVITIES For the year ended June 30, 2009 Functions/Programs Program Revenue Exhibit B Component Unit Palm Desert Recreational Governmental Business-type Facilities Activities Activities Total Corporation (23,727,265)$ -$ (23,727,265)$ -$ (18,037,544) - (18,037,544) - (6,407,488) - (6,407,488) - (13,727,858) - (13,727,858) - (20,128,441) - (20,128,441) - (82,028,596) - (82,028,596) - - (931,330) (931,330) - - 106,196 106,196 - - (825,134) (825,134) - (82,028,596) (825,134) (82,853,730) - - - - (245,336) 5,220,680 - 5,220,680 - 54,959,749 - 54,959,749 - 7,030,048 - 7,030,048 - 14,362,293 - 14,362,293 - 2,818,729 - 2,818,729 - 173,448 - 173,448 - 6,161,309 87,590 6,248,899 - 613,648 613,648 - 2,912,180 - 2,912,180 - (5,661,521) 5,661,521 - - 88,590,563 5,749,111 94,339,674 - 6,561,967 4,923,977 11,485,944 (245,336) 568,986,530 68,026,641 637,013,171 (452,047) 575,548,497$ 72,950,618$ 648,499,115$ (697,383)$ - 17 - Primary Government Net (Expenses) Revenues and Changes in Net Assets - 18 - THIS PAGE INTENTIONALLY LEFT BLANK - 19 - FUND FINANCIAL STATEMENTS RDA Prop A Low Income General Fire Tax Housing ASSETS: Pooled cash and investments 62,831,685$ 2,787,003$ 37,480,007$ Receivables: Accounts 1,152,495 1,220 35,709 Assessments - - - Notes 3,702,000 - - Interest 1,155,883 - 67,863 Loans 175,813 - 7,475,884 Prepaid costs 695,823 - - Due from other governments 2,005,110 802,451 409 Due from other funds 8,870 - - Advances to other funds 9,236,000 - - Inventories 50,561 - - Property held for resale - - 465,834 Due from component unit 285,000 - - Restricted assets: Cash and investments with fiscal agent - - 25,571,421 TOTAL ASSETS 81,299,240$ 3,590,674$ 71,097,127$ LIABILITIES: Accounts payable 3,860,371$ 519,442$ 19,680$ Accrued liabilities 589,929 - 16,088 Due to other funds - - - Unearned revenues 7,500 - 8,856 Advances from other funds - - - Deferred revenue 2,490,768 - 37,216 Amounts due under pass-through agreements - - - Deposits payable - - 500 TOTAL LIABILITIES 6,948,568 519,442 82,340 FUND BALANCES: Reserved 15,283,684 101,175 10,642,230 Unreserved: Designated for, reported in: Special revenue purposes - 2,970,057 60,372,557 Debt service - - - Capital outlay - - - Undesignated, reported in: General fund 59,066,988 - - Special revenue funds - - - TOTAL FUND BALANCES 74,350,672 3,071,232 71,014,787 TOTAL LIABILITIES AND FUND BALANCES 81,299,240$ 3,590,674$ 71,097,127$ See independent auditors' report and notes to basic financial statements. CITY OF PALM DESERT Special Revenue Funds LIABILITIES AND FUND BALANCES - 20 - BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2009 Exhibit C RDA RDA RDA Other Total Financing Debt Capital Governmental Governmental Authority Service Projects Funds Funds -$ 102,957,619$ 6,676,993$ 71,335,515$ 284,068,822$ - 1,636 25,856 1,010,364 2,227,280 - - - 2,652,156 2,652,156 - - - - 3,702,000 6,032 - 1,087,316 109,912 2,427,006 - - 2,000,000 2,773,984 12,425,681 - - 35,789 1,026 732,638 - - 27,579 2,088,579 4,924,128 - - - 13,216 22,086 - - - 13,419,000 22,655,000 - - - - 50,561 - - - - 465,834 - - - - 285,000 17,231,420 - 108,970,484 26,224,456 177,997,781 17,237,452$ 102,959,255$ 118,824,017$ 119,628,208$ 514,635,973$ -$ 1,300$ 1,471,593$ 1,330,442$ 7,202,828$ - - 43,326 48,303 697,646 - - - 22,086 22,086 - - - 934,985 951,341 - 22,655,000 - - 22,655,000 - - - 4,358,557 6,886,541 - 53,285,469 - - 53,285,469 - - 15,000 513,739 529,239 - 75,941,769 1,529,919 7,208,112 92,230,150 - - 65,635,345 56,393,747 148,056,181 - - - 18,541,269 81,883,883 17,237,452 27,017,486 - 251,185 44,506,123 - - 51,658,753 38,021,436 89,680,189 - - - - 59,066,988 - - - (787,541) (787,541) 17,237,452 27,017,486 117,294,098 112,420,096 422,405,823 17,237,452$ 102,959,255$ 118,824,017$ 119,628,208$ 514,635,973$ Debt Service Funds - 21 - - 22 - THIS PAGE INTENTIONALLY LEFT BLANK Exhibit D Total fund balance for governmental funds 422,405,823$ 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 and contribution among the assets of the City as a whole: Beginning Balance, net depreciation 542,440,944$ Current year additions 22,348,953 Current year deletions (730,451) Current year depreciation (11,271,450) Transfer to enterprise funds (6,100,757) Ending Balance, net depreciation 546,687,239 Long-term debt activities and compensated absences have not been included in the governmental fund activities: Long-term debt (407,464,447) Bond premium (7,375,240) Unamortized loss on defeasance 1,483,535 Compensated absences (2,760,571) Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. (5,133,900) 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 bond. 10,292,357 Because the focus of governmental funds is on short-term financing, some assets will not be available to pay for current-period expenditures. Those assets (for example, receivables) are offset by deferred revenues in the governmental funds and, thus, are not included in fund balance: Palm Desert Recreational Facilities Corporation - relates to the amount of rent owed by component unit to City's General Fund 285,000 Community Development Block Grant - relates to loans given to low to moderate income families 17,010 Capital reimbursement from developer for work completed by the City on behalf of the developer 888,172 Interest that was not paid at year-end 286,843 Redevelopment Agency payable for City project 702,360 Redevelopment Agency land purchase from City 2,055,000 4,234,385 Other post employment benefit asset is not available to fund current expenditures for governmental funds and therefore is not reported as an asset in the governmental funds.6,970,610 Internal service funds are used by management to charge the costs of certain activities, such as equipment, management and self-insurance to individual funds. The assets and liabilities of the internal service funds must be added to the Statement of Net Assets.6,208,706 Net assets of governmental activities 575,548,497$ See independent auditors' report and notes to basic financial statements. CITY OF PALM DESERT June 30, 2009 - 23 - RECONCILIATION OF THE BLANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET ASSETS RDA Prop A Low Income General Fire Tax Housing REVENUES: Taxes 35,693,331$ 5,381,363$ -$ Special assessments collected - 1,628,841 - Licenses and permits 1,076,708 - - Intergovernmental revenues 3,497,068 755,975 - Rental income - - 2,965 Charges for services 803,218 - - Investment earnings 2,142,915 82,677 1,298,185 Fines and forfeitures 130,491 - - Miscellaneous 812,404 - 85,015 TOTAL REVENUES 44,156,135 7,848,856 1,386,165 EXPENDITURES: Current: General government 16,343,509 - 2,007,379 Pass-through agreement - - - Public safety 18,349,048 8,390,200 - Parks, recreation and culture 5,122,900 - - Public works 8,571,514 - - Capital outlay 309,350 59,714 2,831,366 Debt service: Principal retirement - - - Interest and fiscal charges - - - TOTAL EXPENDITURES 48,696,321 8,449,914 4,838,745 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (4,540,186) (601,058) (3,452,580) OTHER FINANCING SOURCES (USES): Transfers in 2,684,568 - 18,237,021 Transfers out (3,612,998) - (12,141,838) Issuance of bonds - - - TOTAL OTHER FINANCING SOURCES (USES) (928,430) - 6,095,183 NET CHANGE IN FUND BALANCES (5,468,616) (601,058) 2,642,603 FUND BALANCES - BEGINNING OF YEAR 79,819,288 3,672,290 68,372,184 FUND BALANCES - END OF YEAR 74,350,672$ 3,071,232$ 71,014,787$ See independent auditors' report and notes to basic financial statements. STATEMENT OF REVENUES, EXPENDITURES AND CITY OF PALM DESERT CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the year ended June 30, 2009 - 24 - Special Revenue Funds Exhibit E RDA RDA RDA Other Total Financing Debt Capital Governmental Governmental Authority Service Projects Funds Funds -$ 90,137,057$ -$ 2,848,930$ 134,060,681$ - - - 1,130,603 2,759,444 - - - 307,070 1,383,778 - - 27,579 5,262,929 9,543,551 - - 164,154 4,883,360 5,050,479 - - - - 803,218 115,413 1,225,821 1,142,707 2,315,090 8,322,808 - - - 184,793 315,284 - 512,170 567,271 1,502,510 3,479,370 115,413 91,875,048 1,901,711 18,435,285 165,718,613 - 44,666 6,682,267 8,232,194 33,310,015 - 39,085,941 - - 39,085,941 - - - 166,875 26,906,123 - - - - 5,122,900 - - - 7,670,449 16,241,963 - - 4,142,555 15,005,968 22,348,953 12,610,000 122,707 - 46,000 12,778,707 18,526,848 761,588 - 136,187 19,424,623 31,136,848 40,014,902 10,824,822 31,257,673 175,219,225 (31,021,435) 51,860,146 (8,923,111) (12,822,388) (9,500,612) 36,143,959 208,209 4,341,314 6,473,599 68,088,670 (2,161) (49,169,291) (469,463) (2,253,683) (67,649,434) - - - 2,015,000 2,015,000 36,141,798 (48,961,082) 3,871,851 6,234,916 2,454,236 5,120,363 2,899,064 (5,051,260) (6,587,472) (7,046,376) 12,117,089 24,118,422 122,345,358 119,007,568 429,452,199 17,237,452$ 27,017,486$ 117,294,098$ 112,420,096$ 422,405,823$ - 25 - Debt Service Funds RECONCILIATION OF THE STATEMENT OF "'-/.JLJA.LA-L .......JlA....lLJ IN AND $ in fund for go'renlml~nt;al ell",U \1'1.1,1\,,,,;) different because: Governmental funds report as in the Statement of Activities,the costs of those assets are allocated over their estimated useful lives is the amount exceeded in the current Repayment of debt an in the funds, therepayment reduces long-term liabilities in the Statement of Net Assets.12,778,707 (1,516,775) (2,015,000) as other in gO'1enlml~nt4al of debt increases liabilities in the Statement of of bonds are funds,however,the Net Assets. An increase in accreted interest on bonds increases the liabilities in the Statement of Net Assets,but does not provide resources for the fund financial statements. Costs of issuing bonds are as an expenditures in the period paid, however,in the Statement of Net Assets,it is amortized over the life of the bond.(509,785) Premium on bonds is recognized as interest in the period received,however, in the Statement of Net Assets it is amortized over the life of the bond. 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. 475,703 the use ofSomeexpensesreportedintheStatementofActivitiesdonot current financial resources and,therefore,are not as eXi)et1ldI1un~s In governmental funds: Net in absences the current Net change in accrued interest for the current period Net change in claims and judgments for the current period Collection of deferred revenues is reported as revenues in governmental funds and thus has the effect fund balances.For the City as a whole, however,the collection of these receipts reduces the net assets in the Statement of Net Assets and does not result in revenues in the Statement of Activities: Deferred loans Redevelopment expenditure offset by receivables 122,653 208,166 (336,538) (14,082) (1,017,241) Revenues will not be collected within 60 fiscal therefore,are not considered available in the gO'/en1ffi~ental funds: Capital reimbursement revenue related to construction cOlnpJlete~d on behalf of the de,'elo1oer Interest on note issued by the Sales tax true-up from the State Current year for other post emlpl()yrnerlt benefit asset. the and, 881,569 91,542 (112,640) 301,363 Internal service funds are used management to the costs of certain activities,such as The net revenues (expellse:S)of the internal service funds are reported with activities. in net assets go,renlffi1ental activities See Inclep1endellt auditors'and notes to basic financial statements. 26 - Exhibit G Major Other Fund Fund Governmental Desert Office Total Activities- Willow Complex Enterprise Internal Golf Course Parkview Funds Service Funds CURRENT ASSETS: Cash and investments 1,648,143$ 3,079,368$ 4,727,511$ 4,960,570$ Receivables: Accounts 60,048 34,534 94,582 - Prepaid costs 17,476 355 17,831 - Inventories 231,748 - 231,748 - Due from component unit (PDRFC) 441,798 - 441,798 - TOTAL CURRENT ASSETS 2,399,213 3,114,257 5,513,470 4,960,570 CAPITAL ASSETS: Nondepreciable 52,616,189 - 52,616,189 - Depreciable, net 7,687,702 8,914,969 16,602,671 1,248,136 CAPITAL ASSETS, NET 60,303,891 8,914,969 69,218,860 1,248,136 TOTAL ASSETS 62,703,104 12,029,226 74,732,330 6,208,706 CURRENT LIABILITIES: Accounts payable 512,167 25,759 537,926 - Accrued liabilities 69,984 - 69,984 - Deposits payable - 27,087 27,087 - Unearned revenues 182,006 9,568 191,574 - Current portion - capital leases 636,295 - 636,295 - TOTAL CURRENT LIABILITIES 1,400,452 62,414 1,462,866 - NONCURRENT LIABILITIES: Capital leases 318,846 - 318,846 - TOTAL NONCURRENT LIABILITIES 318,846 - 318,846 - TOTAL LIABILITIES 1,719,298 62,414 1,781,712 - Invested in capital assets, net of related debt 59,348,750 8,914,969 68,263,719 1,248,136 Unrestricted 1,635,056 3,051,843 4,686,899 4,960,570 TOTAL NET ASSETS 60,983,806$ 11,966,812$ 72,950,618$ 6,208,706$ See independent auditors' report and notes to basic financial statements. CITY OF PALM DESERT STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2009 - 27 - Enterprise Funds Business-type Activities- LIABILITIES NET ASSETS ASSETS Exhibit H Major Other Fund Fund Governmental Desert Office Total Activities- Willow Complex Enterprise Internal Golf Course Parkview Funds Service Funds OPERATING REVENUES: Fees and rentals 6,097,562$ 958,942$ 7,056,504$ 334,966$ Merchandise sales 775,373 - 775,373 - TOTAL OPERATING REVENUES 6,872,935 958,942 7,831,877 334,966 OPERATING EXPENSES: Maintenance and operations 4,307,508 298,200 4,605,708 - Cost of merchandise 382,559 - 382,559 - General and administrative 1,938,388 246,893 2,185,281 - Depreciation and amortization 1,130,268 307,653 1,437,921 334,966 TOTAL OPERATING EXPENSES 7,758,723 852,746 8,611,469 334,966 OPERATING INCOME (LOSS) (885,788) 106,196 (779,592) - NONOPERATING REVENUES (EXPENSES): Interest revenue 9,072 78,518 87,590 112,666 Interest expense (45,542) - (45,542) - TOTAL NONOPERATING REVENUES (EXPENSES) (36,470) 78,518 42,048 112,666 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS (922,258) 184,714 (737,544) 112,666 CAPITAL CONTRIBUTIONS 59,953 6,040,804 6,100,757 34,455 TRANSFERS OUT - (439,236) (439,236) - CHANGE IN NET ASSETS (862,305) 5,786,282 4,923,977 147,121 NET ASSETS - BEGINNING OF YEAR 61,846,111 6,180,530 68,026,641 6,061,585 NET ASSETS - END OF YEAR 60,983,806$ 11,966,812$ 72,950,618$ 6,208,706$ See independent auditors' report and notes to basic financial statements. For the year ended June 30, 2009 - 28 - CITY OF PALM DESERT STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS Enterprise Funds Business-type Activities- Exhibit I Major Other Fund Fund Governmental Desert Office Total Activities- Willow Complex Enterprise Internal Golf Course Parkview Funds Service Funds CASH FLOWS FROM OPERATING ACTIVITIES: Receipts from customers 6,889,474$ 980,934$ 7,870,408$ -$ Payments to suppliers (3,425,789) (538,942) (3,964,731) - Payments for contract (3,271,384) - (3,271,384) - Receipts from interfund services - - - 334,966 NET CASH PROVIDED BY OPERATING ACTIVITIES 192,301 441,992 634,293 334,966 CASH FLOWS FROM NONCAPITAL AND RELATED FINANCING ACTIVITIES: Cash received from other funds - - - - Cash paid to other funds (1,850) (439,236) (441,086) - NET CASH USED BY NONCAPITAL AND RELATED ACTIVITIES (1,850) (439,236) (441,086) - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Purchases of capital assets (37,303) (121,283) (158,586) (177,094) Principal paid on leases (627,641) - (627,641) - Interest paid on leases (45,542) - (45,542) - NET CASH USED BY CAPITAL AND RELATED FINANCING ACTIVITIES (710,486) (121,283) (831,769) (177,094) CASH FLOWS FROM INVESTING ACTIVITIES: Interest and dividends 9,072 78,518 87,590 112,666 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (510,963) (40,009) (550,972) 270,538 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 2,159,106 3,119,377 5,278,483 4,690,032 CASH AND CASH EQUIVALENTS - END OF YEAR 1,648,143$ 3,079,368$ 4,727,511$ 4,960,570$ (Continued) See independent auditors' report and notes to basic financial statements. CITY OF PALM DESERT STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the year ended June 30, 2009 Enterprise Funds Business-type Activities- - 29 - Exhibit I Major Other Fund Fund Governmental Desert Office Total Activities- Willow Complex Enterprise Internal Golf Course Parkview Funds Service Funds RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Operating income (loss) (885,788)$ 106,196$ (779,592)$ -$ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation and amortization 1,130,268 307,653 1,437,921 334,966 Changes in assets and liabilities: (Increase) decrease in receivables, net (6,542) 24,528 17,986 - (Increase) decrease in prepaid costs (6,604) 80 (6,524) - (Increase) decrease in inventories 9,021 - 9,021 - (Increase) decrease in due from component unit 128,630 - 128,630 - Increase (decrease) in accrued liabilities (199,765) 4,096 (195,669) - Increase (decrease) in deposits payable - 1,975 1,975 - Increase (decrease) in unearned revenues 23,081 (2,536) 20,545 - NET CASH PROVIDED BY OPERATING ACTIVITIES 192,301$ 441,992$ 634,293$ 334,966$ NONCASH ITEMS: Noncash items include $59,953, $6,040,804 and $ 34,455 (net value) of capital assets contributed by the City of Palm Desert to Desert Willow Golf Course, Office Complex Parkview and the internal service fund, respectively. See independent auditors' report and notes to basic financial statements. Enterprise Funds (CONTINUED) STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the year ended June 30, 2009 Business-type Activities- - 30 - CITY OF PALM DESERT Exhibit J Total Agency Funds Cash and investments 15,085,580$ Receivables (net of allowance for uncollectibles): Accounts 109,500,634 Interest 224 Restricted assets: Cash with fiscal agent 8,203,488 TOTAL ASSETS 132,789,926$ Deposits 132,789,926$ See independent auditors' report and notes to basic financial statements CITY OF PALM DESERT - 31 - ASSETS LIABILITIES STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES AGENCY FUNDS June 30, 2009 - 32 - THIS PAGE INTENTIONALLY LEFT BLANK See independent auditors’ report. - 33 - CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2009 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: a. Description of the Reporting Entity: The City of Palm Desert was originally incorporated on November 26, 1973, as a General Law City. In December 1997, the voters in the City passed Measure LL, which adopted a City Charter. The City operates under a Council-Manager form of government and provides the following services: public safety (police and fire), highways and streets, public improvements, community development (planning, building and zoning) and general administrative services. The City has defined its reporting entity in accordance with accounting principles generally accepted in the United States of America which provides guidance for determining which governmental activities, organizations and functions should be included in the reporting entity. The Basic Financial Statements present information on the activities of the reporting entity, which include the City of Palm Desert (the primary government) and its component units, entities for which the government is considered financially accountable. Accounting principles generally accepted in the United States of America require that the component units be separated into blended or discretely presented units for reporting purposes. The following criteria were used in determination of blended component units: appointment of the governing board and fiscal dependence. Although legally separate entities, blended component units are, in substance, part of the City's operations. Therefore, they are reported as part of the primary government. Discretely presented component units are reported in a separate column in the basic financial statements to emphasize that they are legally separate from the City. Blended Component Units Following are descriptions of legally separate component units for which the City is financially accountable that are blended with the Primary Government. The governing bodies of these component units are substantially the same as the City. The Palm Desert Redevelopment Agency (Agency) was established October 24, 1974, pursuant to California Health and Safety Code Section 33000 entitled "Community Redevelopment Law." The purpose of the Agency is to prepare and execute plans for the improvement, rehabilitation and redevelopment of blighted areas within the limits of the City. The Agency's transactions are reported in the governmental fund financial statements as special revenue, debt service, and capital projects funds. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 34 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): a. Description of the Reporting Entity (Continued): Blended Component Units (Continued) The Palm Desert Housing Authority (Housing Authority) was established by the City Council in January 1998, and is partly responsible for the administration of providing affordable housing in the City. The Housing Authority transactions are reported in the governmental fund financial statements under other governmental funds. The Palm Desert Financing Authority (Financing Authority) was formed on January 26, 1989. The purpose of the Financing Authority is to issue debt and loan the proceeds to the City and Agency. The Financing Authority's capital related transactions are reported in the governmental fund financial statements in the capital projects funds, and the collection of assessments and payments of debt service is recorded in the fiduciary funds. The City Council of Palm Desert is the governing body for the Agency, Housing Authority and Financing Authority. The financial statements of the Agency can be obtained at the administrative offices of the City. Separate financial statements are not issued for the Housing Authority and Financing Authority. Discretely Presented Component Unit The Palm Desert Recreational Facilities Corporation (Corporation) was incorporated on February 25, 1997. The purpose of the Corporation is to lease, operate and manage a restaurant and bar in the Desert Willow Golf Course in Palm Desert, California. The Board of Directors of the Corporation appoints an executive director to administer operations. The Corporation is in a separate column to emphasize that it is legally separate from the City and is financially accountable to the City. The two-member board governing the Corporation is appointed by the City Council, and the City has authority to control the Corporation's budget. Complete financial statements of the Component Unit can be obtained from the City's administrative offices. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 35 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): b. 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 nonfiduciary activities of the primary government and its component units. 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. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct and indirect 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. Expenses reported for functional activities include allocated indirect expenses. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Fund Financial Statements The accounting system of the City 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/expenses. Funds are organized into three major categories: governmental, proprietary and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 36 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): b. Basis of Presentation (Continued): Fund Financial Statements (Continued) A fund is considered major if it is the primary operation fund of the City or meets the following criteria: a. Total assets, liabilities, revenues or expenditures/expenses of that individual governmental or enterprise fund are at least 10% of the corresponding total for all funds of that category or type; and b. Total assets, liabilities, revenues or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5% of the corresponding total for all governmental and enterprise funds combined. c. The government has determined that a fund is important to the financial statement user. The funds of the financial reporting entity are described below: Governmental Fund Types General Fund - The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special Revenue Funds - Special Revenue Funds are used to account for 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. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 37 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): b. Basis of Presentation (Continued): Fund Financial Statements (Continued) The funds of the financial reporting entity are described below (Continued): Proprietary Fund Types Enterprise Funds - The Enterprise Funds account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the City Council is that the costs (expenses including depreciation) of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges. The Primary Government's Enterprise funds consist of the Parkview Office Complex and the Desert Willow Golf Course, which are operated by a management company. The Component Unit's Enterprise fund consists of the Palm Desert Recreational Facilities Corporation. Internal Service Funds - The Internal Service Fund accounts for financial transactions related to replacement of City-owned vehicles and equipment. These services are provided to other departments or agencies of the City on a cost reimbursement basis. Fiduciary Fund Types The Agency, Special Assessment and Treasurers 1911 Bond Act Funds are used to account for assets held by the City in a custodial capacity as a trustee or as an agent. These assets include deposits placed with the City by developers, individuals and groups to obtain future services, as well as deposits from assessment district’s property owners. These deposits are reduced by payments and/or refunds to individuals or entities at some future time. Agency funds are custodial in nature and do not involve measurement of results of operations. The City’s Retiree Service Stipend Fund is used to account for assets held to pay for the retiree service stipend. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 38 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): b. Basis of Presentation (Continued): Fund Financial Statements (Continued) The major funds are as follows: Governmental Funds The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The Prop A Fire Tax Special Revenue Fund is used to account for all revenues derived from tax collected within the City for upgrading fire protection and prevention. Its use is restricted to obtaining, furnishing, operating and maintaining fire protection and prevention services (currently under contract with Riverside County Fire Department) equipment or apparatus. This fund is reported as a major fund because the tax collected is a voter approved measure. The RDA Low Income Housing 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. The Redevelopment Agency 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. The Redevelopment Agency Debt Service Fund is used to account for resources and payments of debt issued by the Redevelopment Agency. The Redevelopment Agency Capital Projects Fund is used to account for the financial resources to be used for the acquisition or construction of major capital facilities in the Palm Desert Redevelopment Agency. Proprietary Fund The Desert Willow Golf Course Fund is used to account for the fees collected and expenses incurred in connection with operating the municipal golf course in the City of Palm Desert. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 39 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): c. Measurement Focus and Basis of Accounting: 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. Measurement Focus On the government-wide Statement of Net Assets and the Statement of Activities, both governmental and business-like activities are presented using the economic resources measurement focus. The accounting objectives of the economic measurement focus are the determination of operating income, changes in net assets (or cost recovery), financial position and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. In the fund financial statements, the "current financial resources" measurement focus or the "economic resources" measurement focus is used as appropriate: 1. All governmental funds utilize a "current financial resources" measurement focus. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. 2. The proprietary fund utilizes an "economic resources" measurement focus. Proprietary fund equity is classified as net assets. 3. Agency funds are not involved in the measurement of results of operations; therefore, measurement focus is not applicable to them. Basis of Accounting In the government-wide Statement of Net Assets and Statement of Activities, both governmental and business-like 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. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 40 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): c. Measurement Focus and Basis of Accounting (Continued): Basis of Accounting (Continued) 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. Revenues that are susceptible to accrual include property taxes and special assessments that are levied for and due for the fiscal year and collected within 60 days after year-end. Licenses, permits, fines, forfeits, charges for services and miscellaneous revenues are recorded as governmental fund type revenues when received in cash because they are not generally measurable until actually received. Revenue from taxpayer assessed taxes, such as sales taxes, are recognized in the accounting period in which they became both measurable and available to pay liabilities of the current period. Grants and similar items are recognized as soon as all eligibility requirements imposed by the provider have been met. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However debt service expenditures as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Interfund activity in the amount of $3,317,411 has been eliminated from the general government function for the government-wide financial statements except for charges between the government's Desert Willow Golf Course and Parkview Office Complex funds and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues for the various functions considered. The accrual basis of accounting is followed by the proprietary fund. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic assets are used. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing goods and services in connection with a proprietary fund's principal ongoing operations. The principal revenue of the Desert Willow Golf Course and Parkview Office Complex Enterprise Funds are charges to customers for use of the golf course and rental fees. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 41 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): c. Measurement Focus and Basis of Accounting (Continued): Basis of Accounting (Continued) Private-sector standards of accounting and financial reporting issued prior to December 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The government has elected not to follow subsequent private- sector guidance. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, and then unrestricted resources as they are needed. d. Capital Assets and Depreciation: Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, traffic signals, drainage systems and similar items), are reported in the applicable governmental or business-type activities column in the government-wide financial statements. Capital assets are defined by the City 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. In accordance with GASB Statement No. 34, the City has reported general infrastructure assets acquired in prior and current years. 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. Property, plant and equipment of the primary government, as well as the component units, 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 Infrastructure 20 to 75 years CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 42 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): e. Appropriations Limit: Under Article XIII-B of the California Constitution (the Gann Spending Limitation Initiative), the City is restricted as to the amount of annual appropriations from the proceeds of taxes, and if proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller or returned to the taxpayers through revised tax rates, revised fee schedules or other refund arrangements. For the fiscal year ended June 30, 2009, proceeds of taxes did not exceed appropriations. f. Investments: Investments are stated at fair value (quoted market price or the best available estimate thereof). g. Cash and Investments: For purposes of the statement of cash flows, the City has defined cash and investments to include cash on hand, demand deposits, investments held in various instruments, and investments held in the California Local Agency Investment Fund (LAIF) and California Asset Management Program (CAMP). h. Employee Compensated Absences: It is the government's policy to permit employees to accumulate earned but unused vacation and sick leave (compensated absences). Vacation pay and sick leave, which are expected to be liquidated with expendable available resources, are reported as expenditure and liability of the governmental fund that will pay it only if they have matured, for example, as a result of employee resignations or retirements. Compensated absences in the amount of $2,760,571, which are not expected to be liquidated with expendable available financial resources, are reported as long-term liabilities. i. 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 Low Income Housing Special Revenue Fund as property held for resale at the lower of acquisition cost or net realizable value. At June 30, 2009, the cost of the property held for resale for various housing properties in Palm Desert totaled $465,834. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 43 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): j. Inventories, Prepaid Costs and Deposits: Inventory in the amount of $231,748 and $54,214 for the Desert Willow Golf Course Enterprise Fund (Primary Government) and Palm Desert Recreational Facilities Corporation (Component Unit), respectively, are stated at lower of cost or market with cost determined using the weighted average cost method. Inventory in the amount of $50,561 in the general fund is stated at cost. Inventory is recorded as an expenditure when consumed rather than purchased. Certain payments to vendors that reflect costs applicable to future accounting periods are recorded as prepaid costs in the government-wide and fund financial statements. k. 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 - 1st Installment March 1 - 2nd Installment Delinquent date: December 10 - 1st Installment April 10 - 2nd Installment Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool and are then allocated to the cities based on complex formulas prescribed by state statutes. The City accrues only those taxes, which are received within 60 days after the year-end. The City is a participant in the Teeter Plan under the California Revenue and Taxation Code. The County of Riverside has responsibility for the collection of delinquent taxes and the City receives 100% of the levy. l. Restricted Assets: Certain proceeds of debt issues, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because they are maintained in separate trustee bank accounts and their use is limited to applicable bond covenants. In addition, funds have been restricted for future capital improvements by City resolution. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 44 - 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): m. 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 the value of the capital assets (infrastructure), depreciation expense, fair value of investments, for the amounts reported for the schedule of funding progress for the Defined Benefit Plan (Note 9) and actuarial accrued liability for the other post-employment benefits (Note 13). Accordingly, actual results could differ from the estimates. 2. CASH AND INVESTMENTS: As of June 30, 2009, cash and investments were reported in the accompanying financial statements as follows: Governmental activities $ 467,027,173 Business-type activities 4,727,511 Component unit 90,776 Fiduciary funds 23,289,068 Total Cash and Investments $ 495,134,528 Cash and investments at June 30, 2009 consisted of the following: Demand accounts $ 5,473,745 Petty cash 18,550 Investments 489,642,233 Total Cash and Investments $ 495,134,528 The City of Palm Desert maintains a cash and investment pool that is available for use for all funds. Each fund type's position in the pool is reported on the combined balance sheet as cash and investments. The City has adopted an investment policy, which authorizes it to invest in various investments. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 45 - 2. CASH AND INVESTMENTS (CONTINUED): Deposits At June 30, 2009, the carrying amount of the City’s deposits was $5,473,745, and the bank balance was $6,264,908. The $(791,163) difference represents outstanding checks and other reconciling items. The California Government Code requires California banks and savings and loan associations to secure an Entity's deposits by pledging government securities with a value of 110% of an Entity's deposits. California law also allows financial institutions to secure deposits by pledging first trust deed mortgage notes having a value of 150% of total deposits. The City Treasurer may waive the collateral requirement for deposits that are fully insured up to $100,000 by the FDIC. The collateral for deposits in federal and state chartered banks is held in safekeeping by an authorized Agent of Depository recognized by the State of California Department of Banking. The collateral for deposits with savings and loan associations is generally held in safekeeping by the Federal Home Loan Bank in San Francisco, California as an Agent of Depository. These securities are physically held in an undivided pool for all California public agency depositors. Under Government Code Section 53655, the placement of securities by a bank or savings and loan association with an Agent of Depository has the effect of perfecting the security interest in the name of the local governmental agency. Accordingly, all collateral held by California Agents of Depository are considered to be held for, and in the name of, the local governmental agency. Investments 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 CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 46 - 2. CASH AND INVESTMENTS (CONTINUED): Investments (Continued) • 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 GASB Statement No. 31 The City adopted GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, as of July 1, 1997. GASB Statement No. 31 establishes fair value standards for investments in participating interest earning investment contracts, external investment pools, equity securities, option contracts, stock warrants and stock rights that have readily determinable fair values. Credit Risk The City Treasurer is authorized under state and municipal law to invest in various types of securities that meet specified credit quality standards, based upon credit risk ratings assigned by Standard and Poors (S&P) or by Moody’s Investor Services (Moody’s). Permissible City investments include medium-term notes that are rated “A” or higher at time of purchase; commercial paper that is rated “A-1+” or the equivalent; money market mutual funds that are rated “AAA”; and United States Government and Federal Agency securities (the quality of United States Treasury securities is not analyzed since they are not deemed to have 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. Presented below is the minimum rating required, when applicable, by the California Government Code, the City’s investment policy, or debt agreements, and the Standard and Poor’s rating as of year-end for each investment type. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 47 - 2. CASH AND INVESTMENTS (CONTINUED): Credit Risk (Continued) Total Minimum as of Legal Investment Type June 30, 2009 Rating AAA Other Unrated California Local Agency Investment Fund $ 76,436,688 N/A $ - $ - $ 76,436,688 California Asset Management Program 71,216,055 N/A 71,216,055 - - Money market 48,015,922 AAA 48,015,922 - - United States Government Sponsored Enterprise Securities 56,082,037 N/A 56,082,037 - - Medium-term corporate notes 52,396,855 A - 52,396,855 - Investment in City Bonds 2,015,000 N/A - - 2,015,000 Held by Fiscal Agent: Money market mutual funds 133,005,913 AAA 133,005,913 - - California Local Agency Investment Fund 50,473,763 N/A - - 50,473,763 Total $ 489,642,233 $ 308,319,927 $ 52,396,855 $128,925,451 N/A - Not Applicable The actual ratings for the Medium Term Corporate Notes (MTN) are as follows: Other: AA $ 35,271,630 AA+ 10,235,814 A 6,889,411 $ 52,396,855 Custodial Credit Risk The 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 deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for the investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. As of June 30, 2009, none of the City’s deposits or investments were exposed to custodial credit risk. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 48 - 2. CASH AND INVESTMENTS (CONTINUED): Concentration of Credit Risk The City’s investment policy imposes restrictions on the percentage the City can invest in certain types of investments, which the City is in compliance. 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 United States 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”. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 49 - 2. CASH AND INVESTMENTS (CONTINUED): Interest Rate Risk The City's investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The City's investment policy states that the City shall not invest in securities with maturities exceeding five years and the weighted-average maturity of the City portfolio shall not exceed 540 days. The City has elected to use the segmented time distribution method of disclosure for its interest rate risk. As of June 30, 2009, the City had the following investments and maturities: Less Than 6 months - 1 year - Over Fair 6 Months 1 year 3 years 3 years Value California Local Agency Investment Fund $ 76,436,688 $ - $ - $ - $ 76,436,688 California Asset Management Program 71,216,055 - - - 71,216,055 Money market 48,015,922 - - - 48,015,922 United States Government Sponsored Enterprise Securities 30,100,840 6,215,628 19,765,569 - 56,082,037 Medium-term corporate notes 8,048,785 15,825,183 28,522,887 - 52,396,855 Investment in City Bonds - - 175,000 1,840,000 2,015,000 Held by Fiscal Agent: Money market mutual funds 133,005,913 - - - 133,005,913 California Local Agency Investment Fund 50,473,763 - - - 50,473,763 $ 417,297,966 $ 22,040,811 $ 48,463,456 $ 1,840,000 $489,642,233 Investment in State Investment Pool The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 50 - 2. CASH AND INVESTMENTS (CONTINUED): Investment in California Asset Management Program The California Asset Management Program (CAMP) is a public joint powers authority which provides California Public Agencies with investment management services for surplus funds and comprehensive investment management, accounting and arbitrage rebate calculation services for proceeds of tax-exempt financings. The CAMP currently offers the Cash Reserve Portfolio, a short-term investment portfolio, as a means for Public Agencies to invest these funds. Public Agencies that invest in the Pool (Participants) purchase shares of beneficial interest. Participants may also establish individual, professionally managed investment accounts (Individual Portfolios) by separate agreement with the Investment Advisor. Investments in the Pools and Individual Portfolios are made only in investments in which Public Agencies generally are permitted by California statute. The CAMP may reject any investment and may limit the size of a Participant’s account. The Pool seeks to maintain, but does not guarantee, a constant net asset value of $1.00 per share. A Participant may withdraw funds from its Pool accounts at any time by check or wire transfers. Requests for wire transfers must be made by 9:00 a.m. that day. Fair value of the Pool is determined by the fair value per share of the Pool’s underlying portfolio. 3. RECEIVABLES: Primary Government's Governmental Funds Notes and Loans Receivable: The City has a note for $1,000,000 to Friends of the Desert Mountains for the sale of land. Friends of the Desert Mountains agreed to repay the note within 36 months from the date of issue, January 9, 2007, with interest accruing at 5.0% per annum. As of June 30, 2009 the outstanding balance of the note was $1,000,000. On August 8, 2006, the City Palm Desert issued $3,165,000 of Limited Obligation Bonds. The proceeds of the Bonds will be used to finance the construction of the utility undergrounding and pay the cost of issuance. The debt service on the bonds is to be paid by assessments secured on the property tax rolls of those properties benefiting from the improvements. Bond maturities begin September 2, 2007, and continue annually through 2036. The interest rates of the bonds range from 3.85% to 5.15%. The City of Palm Desert is the only bondholder on record for the bonds and reports a receivable in the general fund that corresponds to the outstanding principal on the bonds. As of June 30, 2009, the receivable balance was $2,702,000. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 51 - 3. RECEIVABLES (CONTINUED): Primary Government's Governmental Funds (Continued) Notes and Loans Receivable (Continued): 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 July 15, 2009. As of June 30, 2009, the amount outstanding on the loan is $2,000,000. The City has $17,010 and the Agency has $32,646 in home improvement loans. Payments of interest and principal are due monthly on these loans. The City entered into several individual loan agreements with residents of the Highlands Utility Undergrounding Assessment District No. 04-01. The loans were issued by the City to pay off the principal of the respective properties assessment. In turn, the residents agreed to pay to the City the full cost of the loan amount plus any accrued interest at a rate of 5.35%. The full amount of the loan along with all accrued interest is due and payable at the earliest of September 2, 2036 or any change in ownership of the property. At June 30, 2009 the total receivable from the Highlands Deferral Loan Program is $175,813. A loan receivable for the construction of a multi-family affordable housing development dated June 14, 2001, with a balance of $7,443,238 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. On August 28, 2008 the City Council approved through resolution the Energy Independence Program (EIP), which is supported by Senate Bill AB811. The EIP program allowed the City to create the funding mechanism to assist the residents and businesses entering into a loan agreement with the City and providing the money for the borrowers to acquire and install energy efficient improvements. Senate Bill AB811 allows the City to lien the properties through annual property tax assessments for a period not to exceed 20 years. To date, 96 residents and business owners entered into loan agreements with the City and have completed their improvements through the EIP program. The loans are payable in two annual installments for a period of 5 years to 20 years at an interest rate of 7% annually. On June 30, 2009 the outstanding loans receivable through the EIP Program was $2,756,974. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 52 - 3. RECEIVABLES (CONTINUED): Primary Government's Governmental Funds (Continued) Notes and Loans Receivable (Continued): The Agency has issued loans for several other projects, all of which are secured by a deed of trust. A valuation allowance equal to the loan balance has been recognized where there is a significant possibility that these loans either become uncollectible or forgiven by the Agency at a future date if all the terms of the loans have been met. Detailed information for these loans is as follows: Loan Balance Interest Maturity Special Provisions Project Name Outstanding Rate Date Secured By of Loan Self-Help 429,000$ 7.25% 30 years Deed of Trust Housing Program or 2024 Home Improvement 171,488 N/A N/A Deed of Trust Loans Portola Palms 149,040 3.00% 30 years Deed of Trust Mobilehome Park from date of loan Desert Rose 2,240,734 3.00% 30 - 45 years* Deed of Trust from date of loan Loan balanceand interest due upon maturity, unpaid balance of loan or interest will bear an interest rate of 12%. Loan is payable upon change or transfer of title, refinancing orupon thedeath of the borrower. Restrictive covenants are placed against property to maintain affordability for up to 45 years in exchange for favorable loan terms. Loan balance and interest will be forgiven at maturity if debtor does not breach the terms and conditions of either the unit regulatory agreement or note. Loan will be forgiven at maturity unless the debtor is in violation of the unit regulatory agreement or the deed of trust. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 53 - 3. RECEIVABLES (CONTINUED): Primary Government's Governmental Funds (Continued) Notes and Loans Receivable (Continued): Detailed information for these loans (Continued): Loan Balance Interest Maturity Special Provisions Project Name Outstanding Rate Date Secured By of Loan Falcon Crest 3,191,864$ 3.00% 45 years Deed of Trust from date of loan Acquisition, 190,510 3.00% 30 - 45 Deed of Trust Rehabilitation, years Assignment Resale from date of Rent of loan * All properties acquired from the Redevelopment Agency after June 2009 will have a 45 year restrictive covenant. Loan is payable upon change or transfer of title, refinancing or upon the death of the borrower. Loan is payable upon change or transfer of title, refinancing or upon the death of the borrower. Restrictive covenants are placed against property to maintain affordability for up to 45 years in exchange for favorable loan terms. 4. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS: The composition of interfund balances as of June 30, 2009, was as follows: Due To/From Other Funds Due From Due To Amount General Fund Other Governmental Funds $ 8,870 Other Governmental Funds Other Governmental Funds 13,216 $ 22,086 CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 54 - 4. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (CONTINUED): Due To/From Other Funds (Continued) The General Fund receivable of $8,870 and the Arts in Public Places Capital Projects Fund receivable of $13,216 to Other Governmental Funds was to provide temporary funds for operations. The composition of interfund balances as of June 30, 2009, was as follows: Advances To/From Other Funds Advances From Advances To Amount General Fund RDA Debt Service Fund $ 9,236,000 Other Governmental Funds RDA Debt Service Fund 13,419,000 $ 22,655,000 The advances from the General Fund and Other Governmental Funds were made to the Redevelopment Agency for capital improvements. The advances earn interest at a rate equal to LAIF rates. Due To/From Component Unit Due From Component Unit Major Funds: General Fund $ 285,000 Desert Willow Golf Course 441,798 $ 726,798 The receivable by the General Fund is for rent owed by the Palm Desert Recreational Facilities Corporation (PDRFC), and the receivable by the Desert Willow Golf Course represents funds loaned to PDRFC for operations. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 55 - 4. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (CONTINUED): The composition of interfund balances as of June 30, 2009, was as follows: Interfund Transfers RDA Low Income RDA Hosing Financing RDA Special Authority RDA Capital Other General Revenue Debt Service Debt Service Projects Governmental Fund Fund Fund Fund Fund Funds Total General Fund -$ -$ -$ -$ -$ 3,612,998$ 3,612,998$ RDA Low Income Housing - - 8,434,328 208,209 647,051 2,852,250 12,141,838 RDA Financing Authority Debt Service - 1,401 - - 760 - 2,161 RDA Debt Service - 18,235,620 27,709,631 - 3,224,040 - 49,169,291 RDA Capital Projects - - - - 469,463 - 469,463 Other Governmental Funds 2,245,332 - - - - 8,351 2,253,683 Office Complex Parkview Enterprise Fund 439,236 - - - - - 439,236 Totals 2,684,568$ 18,237,021$ 36,143,959$ 208,209$ 4,341,314$ 6,473,599$ 68,088,670$ Transfers In Transfers Out: CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 56 - 4. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS (CONTINUED): Interfund Transfers (Continued) 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 increment received by RDA debt service funds to the low and moderate income housing special revenue fund. 3. Transfer allocation of administrative expenses. 4. Transfer revenues to provide for capital projects, and 5. Transfer revenues to provide for additional resources to pay for expenditures. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 57 - 5. CAPITAL ASSETS: A summary of changes in capital assets at June 30, 2009, was as follows: Primary Government - Governmental Activities Balance at Balance at June 30, 2008 Transfers Additions Deletions June 30, 2009 Capital assets, not being depreciated: Land 118,348,755$ 5,164,817$ 2,445,895$ (616,086)$ 125,343,381$ Right-of-way 119,884,310 526,516 94,973 - 120,505,799 Construction-in-progress 31,801,683 (22,454,550) 13,650,356 (6,100,302) 16,897,187 Total capital assets, not being depreciated 270,034,748 (16,763,217) 16,191,224 (6,716,388) 262,746,367 Capital assets, being depreciated: Buildings 108,316,837 7,498,500 3,335,233 - 119,150,570 Improvements other than buildings 46,577,823 6,192,838 488,340 (19,505) 53,239,496 Machinery and equipment 7,805,391 257,729 913,661 (286,910) 8,689,871 Infrastructure 217,677,498 2,814,150 1,420,495 - 221,912,143 Equipment - Internal service fund 4,813,306 - 211,549 - 5,024,855 Total capital assets, being depreciated 385,190,855 16,763,217 6,369,278 (306,415) 408,016,935 Less accumulated depreciation for: Buildings (33,287,012) - (2,905,194) - (36,192,206) Improvements other than buildings (13,127,453) - (2,468,893) - (15,596,346) Machinery and equipment (5,914,431) - (616,904) 191,595 (6,339,740) Infrastructure (55,642,457) - (5,280,459) - (60,922,916) Equipment - Internal service fund (3,441,753) - (334,966) - (3,776,719) Total accumulated depreciation (111,413,106) - (11,606,416) 191,595 (122,827,927) Capital assets, being depreciated, net 273,777,749 16,763,217 (5,237,138) (114,820) 285,189,008 Capital assets, net - Governmental Activities 543,812,497$ -$ 10,954,086$ (6,831,208)$ 547,935,375$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 58 - 5. CAPITAL ASSETS (CONTINUED): A summary of changes in capital assets at June 30, 2009, was as follows: Primary Government - Business-type Activities Balance at Balance at June 30, 2008 Transfers Additions Deletions June 30, 2009 Capital assets, not being depreciated: Land 52,599,522$ -$ 16,667$ -$ 52,616,189$ Total capital assets, not being depreciated 52,599,522 - 16,667 - 52,616,189 Capital assets, being being depreciated: Buildings and improvements 13,326,185 - 6,127,867 - 19,454,052 Machinery and equipment 5,800,520 - 114,809 - 5,915,329 Total capital assets, being depreciated 19,126,705 - 6,242,676 - 25,369,381 Less accumulated depreciation for: Buildings and improvements (3,427,874) - (796,956) - (4,224,830) Machinery and equipment (3,900,915) - (640,965) - (4,541,880) Total accumulated depreciation (7,328,789) - (1,437,921) - (8,766,710) Capital assets, being depreciated, net 11,797,916 - 4,804,755 - 16,602,671 Capital assets, net - Business-type Activities 64,397,438$ -$ 4,821,422$ -$ 69,218,860$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 59 - 5. CAPITAL ASSETS (CONTINUED): Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities: General government $ 3,159,021 Public safety 233,644 Public works 5,783,246 Parks, recreation and culture 2,095,539 Depreciation expenses for internal service funds is charged to various functions based on usage of capital assets 334,966 Total depreciation expense - governmental activities $ 11,606,416 Business-type Activities: Desert Willow Golf Course $ 1,130,268 Parkview Office complex 307,653 Total depreciation expense - business-type activities $ 1,437,921 CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 60 - 6. LONG-TERM LIABILITIES: The following is a summary of long-term liability transactions of the City for the year ended June 30, 2009: Primary Government - Governmental Activities Balance Balance Due Within July 1, 2008 Additions Reductions June 30, 2009 One Yea r Special assessment debt with government commitment 2,748,000$ -$ (46,000)$ 2,702,000$ 48,000$ Tax allocation bonds 412,694,700 1,516,775 (12,610,000) 401,601,475 14,145,000 Limited obligation improvement bonds - 2,015,000 - 2,015,000 - Notes pa yable 490,828 - (122,707) 368,121 122,707 Claims and judgments pa yable 441,313 766,110 (429,572) 777,851 320,000 Compensated absences pa yable 2,883,224 (122,653) 2,760,571 700,000 Subtotal 419,258,065 4,297,885 (13,330,932) 410,225,018 15,335,707 Add: Unamortize d bond premium 7,850,943 - (475,703) 7,375,240 - Less: Deferred amount on refunding (1,606,250) - 122,715 (1,483,535) - Total 425,502,758$ 4,297,885$ (13,683,920)$ 416,116,723$ 15,335,707$ Debt service payments for the special assessment debt with government commitment, tax allocation bonds and notes payable are made from debt service funds. Primary Government -Business-type Activities: Capital leases 1,582,782$ -$ (627,641)$ 955,141$ 636,295$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 61 - 6. LONG-TERM LIABILITIES (CONTINUED): Special Assessment Debt with Government Commitment Highlands Undergrounding Assessment District No. 04-01, Limited Obligation Improvement Bonds, Series 2006 On August 8, 2006, the City Palm Desert issued $3,165,000 of Limited Obligation Bonds. The proceeds of the Bonds will be used to finance the construction of the utility undergrounding and pay the cost of issuance. The debt service on the bonds is to be paid by assessments secured on the property tax rolls of those properties benefiting from the improvements. In the event that assessment collections are insufficient to pay the debt service, the City has a potential obligation to provide additional funds to pay the debt service, therefore these bonds are reported as special assessment debt with government commitment. Bond maturities begin September 2, 2007, and continue annually through 2036. The interest rates of the bonds range from 3.85% to 5.15%. The City of Palm Desert is the only bondholder on record of the bonds. The future debt service requirements on the Highlands Undergrounding Assessment District No. 04-01, Limited Obligation Improvement Bonds, Series 2006 are as follows: Year Ending June 30, Principa l Interest Total 2010 48,000$ 134,306$ 182,306$ 2011 50,000 132,259 182,259 2012 52,000 130,066 182,066 2013 55,000 127,711 182,711 2014 56,000 125,213 181,213 2015 - 2019 325,000 582,664 907,664 2020 - 2024 413,000 492,188 905,188 2025 - 2029 530,000 372,783 902,783 2030 - 2034 677,000 218,334 895,334 2035 - 2037 496,000 39,192 535,192 2,702,000$ 2,354,716$ 5,056,716$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 62 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds A summary of changes in tax allocation bonds at June 30, 2009, was as follows: Balance Additions/ Repayments/ Balance Due Within July 1, 2008 Accretion Reductions June 30, 2009 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 21,805,000 - (1,030,000) 20,775,000 945,000 2006 A & B TARBs, $62,320,000 58,140,000 - (2,075,000) 56,065,000 2,195,000 2007A TARRBs, $32,600,000 30,470,000 - (2,410,000) 28,060,000 2,640,000 1995A TARRBs, $6,305,000 635,000 - (635,000) - - Project Area No. 2 2002A TARRBs, $17,310,000 14,030,000 - (675,000) 13,355,000 695,000 2003 TARBs, $15,745,000 15,745,000 - - 15,745,000 - 2006 A-D TARBs, $67,618,213 68,638,975 1,031,046 (1,320,000) 68,350,021 2,015,000 Project Area No. 3 2003 TARBs, $4,745,000 4,220,000 - (100,000) 4,120,000 100,000 2006 A-C TABs, $15,059,526 15,386,115 205,661 (25,000) 15,566,776 135,000 Project Area No. 4 1998 TARBs, $11,02,000 8,355,000 - - 8,355,000 - 2001 TARBs, $15,695,000 14,510,000 - (310,000) 14,200,000 305,000 2006A TARBs, $19,273,089 19,774,610 280,068 (200,000) 19,854,678 445,000 Combined Low and Moderate Housing 1998 TARBs, $48,760,000 5,070,000 - (685,000) 4,385,000 1,390,000 2002 TARBs, $12,100,000 10,875,000 - (265,000) 10,610,000 275,000 2007 TARBs, $86,155,000 83,970,000 - (2,880,000) 81,090,000 3,005,000 Total 412,694,700$ 1,516,775$ (12,610,000)$ 401,601,475$ 14,145,000$ Tax Allocation bonds used for capital improvements 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 “Caa2”, and “AAA” to “B3”, respectively. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 63 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) 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. As of June 30, 2009, the Agency has transferred $6,243,228 to its trustee to cover debt payments. 2002 Series A Tax Allocation Refunding 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 affected 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 $10,905,000 term bonds at 5.00% due April 1, 2025, and $11,165,000 term bonds at 5.10% due April 1, 2030. Interest is payable semi-annually on April 1 and October 1. Mandatory sinking fund redemptions begin April 1, 2024. The future debt service requirements on the 2002 Series A Tax Allocation Refunding Revenue Bonds (Project Area No. 1, as amended) are as follows: Year Ending June 30, Principal Interest Total 2010 -$ 1,114,665$ 1,114,665$ 2011 - 1,114,665 1,114,665 2012 - 1,114,665 1,114,665 2013 - 1,114,665 1,114,665 2014 - 1,114,665 1,114,665 2015 - 2019 - 5,573,325 5,573,325 2020 - 2024 4,780,000 5,573,325 10,353,325 2025 - 2029 14,830,000 2,515,060 17,345,060 2030 2,460,000 125,460 2,585,460 22,070,000$ 19,360,495$ 41,430,495$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 64 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) 2003 Series Tax Allocation Revenue Bonds (Project Area No. 1) In July 2003, the Financing Authority issued $19,000,000 Tax Allocation Revenue Bonds (Project Area No. 1, as amended) 2003 Series. The proceeds of the bonds were disbursed to make a loan to the Redevelopment Agency. The Agency used 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 $11,950,000 term bonds due in 2030. Interest will be payable on April 1 and October 1 of each year beginning April 1, 2004. Principal payments will be on April 1 of the years stated above. The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project Area No. 1) are as follows: Year Ending June 30, Principal Interest Total 2010 -$ 950,000$ 950,000$ 2011 - 950,000 950,000 2012 - 950,000 950,000 2013 - 950,000 950,000 2014 - 950,000 950,000 2015 - 2019 - 4,750,000 4,750,000 2020 - 2024 - 4,750,000 4,750,000 2025 - 2029 14,820,000 3,683,500 18,503,500 2030 4,180,000 209,000 4,389,000 19,000,000$ 18,142,500$ 37,142,500$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 65 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) 2004 Series A Tax Allocation Refunding Revenue Bonds (Project Area No. 1, as amended) In June 2004, the Palm Desert Financing Authority issued $24,945,000 of Tax Allocation Refunding Revenue Bonds (Project Area No. 1, as amended) 2004 Series A. The proceeds from the bonds were loaned to the Palm Desert Redevelopment Agency to refinance a portion of the Agency’s obligations from 1995, and to fund various redevelopment capital projects within or of benefit to the project area. Interest rates on the bonds vary from 3.0% to 5.0% per annum payable semi-annually on April 1 and October 1. Principal payments will be made annually beginning April 1, 2005. The future debt service requirements on the 2004 Series A Tax Allocation Revenue Bonds (Project Area No. 1, as amended) are as follows: Year Ending June 30, Principal Interest Total 2010 945,000$ 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 1,210,000 776,988 1,986,988 2015 - 2019 6,730,000 3,072,513 9,802,513 2020 - 2024 7,295,000 1,400,100 8,695,100 2025 1,260,000 63,000 1,323,000 20,775,000$ 8,919,153$ 29,694,153$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 66 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) Tax Allocation Revenue Bonds (Project Area No. 1, 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 began April 1, 2007, and continue annually through 2012. Term bonds in the amount of $11,320,000 carry an interest rate of 5.82% and mature April 1, 2016. The future debt service requirements on the 2006 Series A and Series B Tax Allocation Revenue Bonds (Project Area No. 1, as amended) are as follows: Year Ending June 30, Principal Interest Total 2010 2,195,000$ 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 2,745,000 2,422,240 5,167,240 2015 - 2019 13,050,000 9,946,464 22,996,464 2020 - 2024 25,300,000 4,821,000 30,121,000 2025 - 2029 5,120,000 601,818 5,721,818 2030 290,000 13,775 303,775 56,065,000$ 28,915,725$ 84,980,725$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 67 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) Tax Allocation Refunding Revenue Bonds (Project 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 $32,600,000 Serial Bonds with interest rates ranging from 3.50% to 5.00% payable semiannually on October 1 and April 1. Bond maturities began April 1, 2008, and continue annually through 2018. The future debt service requirements on the 2007 Series A Tax Allocation Refunding Revenue Bonds (Project Area No. 1, as amended) are as follows: Year Ending June 30, Principal Interest Total 2010 2,640,000$ 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 3,100,000 794,500 3,894,500 2015 - 2018 13,870,000 1,764,500 15,634,500 28,060,000$ 7,104,550$ 35,164,550$ 1995 Series A Tax Allocation Revenue Refunding Bonds (Project Area No. 1) In August 1995, the Palm Desert Financing Authority issued $6,305,000 in Tax Allocation Revenue Refunding Bonds 1995 Series A. The proceeds from 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. The Bonds were paid off during the fiscal year. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 68 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) 2002 Series A Tax Allocation Refunding Revenue Bonds (Project Area No. 2) In July 2002, the Palm Desert Financing Authority issued $17,310,000 of Tax Allocation Refunding Revenue Bonds (Project Area No. 2) 2002 Series A. The Palm Desert Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment Agency to prepay outstanding indebtedness and to fund various redevelopment capital projects within or of benefit to the project area. Interest rates on the bonds vary from 3.0% to 5.0% per annum payable semi- annually on February 1 and August 1. The future debt service requirements on the 2002 Series A Tax Allocation Refunding Revenue Bonds (Project Area No. 2) are as follows: Year Ending June 30, Principal Interest Total 2010 695,000$ 607,867$ 1,302,867$ 2011 720,000 581,497 1,301,497 2012 760,000 548,638 1,308,638 2013 795,000 509,763 1,304,763 2014 835,000 472,353 1,307,353 2015 - 2019 4,780,000 1,759,947 6,539,947 2020 - 2023 4,770,000 491,150 5,261,150 13,355,000$ 4,971,215$ 18,326,215$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 69 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) 2003 Series 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) 2003 Series. 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 2010 -$ 769,006$ 769,006$ 2011 - 769,006 769,006 2012 - 769,006 769,006 2013 - 769,006 769,006 2014 - 769,006 769,006 2015 - 2019 - 3,845,031 3,845,031 2020 - 2024 875,000 3,825,344 4,700,344 2025 - 2029 6,275,000 2,981,347 9,256,347 2030 - 2034 8,595,000 1,117,625 9,712,625 15,745,000$ 15,614,377$ 31,359,377$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 70 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) Project Area No. 2 Tax Allocation Refunding 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 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 Reserve Fund surety 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 1, 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% 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 1, 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 began August 1, 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, 2009 is $2,860,841. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 71 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) Project Area No. 2 Tax Allocation Refunding Revenue Bonds 2006 Series A, Tax Allocation Revenue Capital Appreciation Bonds 2006 Series B, Revenue Bonds 2006 Series C and Subordinate Tax Allocation Revenue Capital Appreciation Bonds 2006 Series D (Continued) The future debt service requirements on the 2006 Series A Tax Allocation Refunding Revenue Bonds, Series B Tax Allocation Revenue Capital Appreciation Bonds, Series C Revenue Bonds and Series D Subordinate Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 2) are as follows: Year Ending June 30, Principal Interest Total 2010 1,777,789$ 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 1,880,353 2,681,585 4,561,938 2015 - 2019 7,767,793 12,577,044 20,344,837 2020 - 2024 9,570,330 13,693,667 23,263,997 2025 - 2029 11,989,204 13,730,253 25,719,457 2030 - 2034 12,855,785 10,851,033 23,706,818 2035 - 2037 14,644,549 4,170,432 18,814,981 65,489,180$ 68,079,608$ 133,568,788$ 2003 Series Tax Allocation Revenue Bonds (Project Area No. 3) In July 2003, the Financing Authority issued $4,745,000 of Tax Allocation Revenue Bonds (Project Area No. 3) 2003 Series. 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 $2,270,000 are due in 2033. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 72 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) 2003 Series Tax Allocation Revenue Bonds (Project Area No. 3) (Continued) The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project Area No. 3) are as follows: Year Ending June 30, Principal Interest Total 2010 100,000$ 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 120,000 177,953 297,953 2015 - 2019 660,000 814,847 1,474,847 2020 - 2024 820,000 656,858 1,476,858 2025 - 2029 1,050,000 433,063 1,483,063 2030 - 2033 1,040,000 136,581 1,176,581 4,120,000$ 2,970,688$ 7,090,688$ 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. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 73 - 6. 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 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 1, 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 began 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, 2009 is $569,262. The future debt service requirements on the 2006 Series A Tax Allocation Revenue Bonds, Series B Tax Allocation Revenue Capital Appreciation Bonds and Series C Subordinate Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 3) are as follows: Year Ending June 30, Principal Interest Total 2010 126,100$ 573,175$ 699,275$ 2011 160,871 570,204 731,075 2012 198,934 562,141 761,075 2013 228,133 565,742 793,875 2014 254,760 571,715 826,475 2015 - 2019 1,639,310 3,015,003 4,654,313 2020 - 2024 1,750,563 3,764,087 5,514,650 2025 - 2029 1,901,982 4,098,668 6,000,650 2030 - 2034 2,761,861 4,012,927 6,774,788 2035 - 2039 4,055,000 1,102,063 5,157,063 2040 - 2041 1,920,000 145,250 2,065,250 14,997,514$ 18,980,975$ 33,978,489$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 74 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) 1998 Series Tax Allocation Revenue Bonds (Project Area No. 4) On March 1, 1998, the Palm Desert Financing Authority issued $11,020,000 of Tax Allocation Revenue Bonds (Project Area No. 4) 1998 Series. 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, $1,785,000 of the outstanding balance was advance refunded by the issuance of Tax Allocation Refunding Revenue Bonds (Project Area No. 4) 2006 Series A. The future debt service requirements on the 1998 Series Tax Allocation Revenue Bonds (Project Area No. 4) (after defeasance) are as follows: Year Ending June 30, Principal Interest Total 2010 -$ 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 145,000 407,506 552,506 2015 - 2019 1,975,000 1,778,371 3,753,371 2020 - 2024 2,545,000 1,198,990 3,743,990 2025 - 2029 3,285,000 444,470 3,729,470 8,355,000$ 5,520,467$ 13,875,467$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 75 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) 2001 Series Tax Allocation Revenue Bonds (Project Area No. 4) In November 2001, the Palm Desert Financing Authority issued $15,695,000 of Tax Allocation Revenue Bonds (Project Area No. 4) 2001 Series. The proceeds from the bonds were loaned to the Palm Desert Redevelopment Agency to fund various redevelopment capital projects of the Agency in Project Area No. 4. Interest rates on the bonds vary from 3.5% to 4.9% per annum payable semi-annually on April 1 and October 1, with principal maturing annually on October 1. The future debt service requirements on the 2001 Series Tax Allocation Revenue Bonds (Project Area No. 4) are as follows: Year Ending June 30, Principal Interest Total 2010 305,000$ 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 365,000 599,909 964,909 2015 - 2019 2,050,000 2,743,198 4,793,198 2020 - 2024 2,565,000 2,214,740 4,779,740 2025 - 2029 3,200,000 1,533,120 4,733,120 2030 - 2032 4,725,000 347,160 5,072,160 14,200,000$ 9,972,102$ 24,172,102$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 76 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) Tax Allocation Refunding Revenue Bonds (Project Area No. 4) 2006 Series A and Tax Allocation Revenue Capital Appreciation 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 1, 1998, fund various redevelopment capital projects within or of benefit to its Project Area No. 4, 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 began October 1, 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 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, 2009 is $781,589. The future debt service requirements on the 2006 Series A Tax Allocation Refunding Bonds and Series B Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 4) are as follows: Year Ending June 30, Principal Interest Total 2010 439,497$ 686,949$ 1,126,446$ 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 779,182 635,195 1,414,377 2015 - 2019 1,833,756 2,786,779 4,620,535 2020 - 2024 2,367,037 2,891,481 5,258,518 2025 - 2029 4,290,643 3,288,956 7,579,599 2030 - 2034 5,816,888 7,561,987 13,378,875 2035 1,900,663 2,102,837 4,003,500 19,073,089$ 21,926,140$ 40,999,229$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 77 - 6. 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 1. In February 2007, $38,740,000 of the outstanding balance was advance refunded by the issuance of Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds Series 2007. The future debt service requirements on the 1998 Series Tax Allocation (Housing Set-Aside) Revenue Bonds (after defeasance) are as follows: Year Ending June 30, Principal Interest Total 2010 1,390,000$ 184,500$ 1,574,500$ 2011 1,460,000 113,250 1,573,250 2012 1,535,000 38,375 1,573,375 4,385,000$ 336,125$ 4,721,125$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 78 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) 2002 Series Tax Allocation (Housing Set-Aside) Revenue Bonds In August 2002, the Palm Desert Financing Authority issued $12,100,000 of Tax Allocation (Housing Set-Aside) Revenue Bonds 2002 Series. 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 began October 1, 2003. The $5,545,000 term bonds bear an interest rate of 5.0% per annum and mature October 1, 2031. The future debt service requirements on the 2002 Series Tax Allocation (Housing Set-Aside) Revenue Bonds are as follows: Year Ending June 30, Principal Interest Total 2010 275,000$ 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 320,000 445,848 765,848 2015 - 2019 1,805,000 2,014,791 3,819,791 2020 - 2024 2,280,000 1,550,077 3,830,077 2025 - 2029 2,915,000 911,625 3,826,625 2030 - 2032 2,130,000 163,250 2,293,250 10,610,000$ 6,986,892$ 17,596,892$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 79 - 6. LONG-TERM LIABILITIES (CONTINUED): Tax Allocation Bonds (Continued) Tax Allocation (Housing 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 $86,155,000 Serial Bonds with interest ranging from 4.00% to 5.00% payable semiannually on October 1 and April 1. Bond maturities began October 1, 2007, and continue annually through 2027. The future debt service requirements on the Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds Series 2007 are as follows: Year Ending June 30, Principal Interest Total 2010 3,005,000$ 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 5,235,000 3,082,063 8,317,063 2015 - 2019 30,490,000 11,096,688 41,586,688 2020 - 2024 17,905,000 4,549,031 22,454,031 2025 - 2028 13,050,000 1,139,000 14,189,000 81,090,000$ 34,001,446$ 115,091,446$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 80 - 6. LONG-TERM LIABILITIES (CONTINUED): Limited Obligation Bonds Limited Obligation Improvement Bonds Series 2009 On January 29, 2009, the City issued $2,015,000 Limited Obligation Improvement Bonds Series 2009. The proceeds of the Bonds were used to fund the City’s Energy Independence Program. Concurrent with the issuance of the Bonds, the City entered into a bond purchase agreement with the Agency whereby the Agency agreed to purchase the Bonds equal to par value. The Series 2009 bonds consist of $2,015,000 Serial Bonds with interest at 3% payable semiannually on September 2 and March 2. Bond maturities will commence September 2, 2010, and continue annually through September 2, 2029. The future debt service requirements on the Limited Obligation Improvement Bonds Series 2009 are as follows: Year Ending June 30, Principal Interest Total 2010 -$ 45,673$ 45,673$ 2011 80,000 59,250 139,250 2012 95,000 56,625 151,625 2013 100,000 53,700 153,700 2014 100,000 50,700 150,700 2015 - 2019 510,000 207,450 717,450 2020 - 2024 500,000 132,150 632,150 2025 - 2029 520,000 55,950 575,950 2030 110,000 1,650 111,650 2,015,000$ 663,148$ 2,678,148$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 81 - 6. LONG-TERM LIABILITIES (CONTINUED): Notes Payable County of Riverside The Agency entered into a cooperation agreement with the County of Riverside 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, 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, 2009, was $368,121. Annual payments on the note are $122,707. Future debt service payments are as follows: Year Ending June 30, Principa l Interest Total 2010 122,707$ -$ 122,707$ 2011 122,707 - 122,707 2012 122,707 - 122,707 368,121$ -$ 368,121$ Claims and Judgments Payable Estimates for all workers' compensation and general liabilities up to the self-insured levels have been recorded as long-term liabilities. At June 30, 2009, total estimated workers' compensation and general liability claims payable, including a provision for incurred but not reported claims, were $333,317 and $444,534, respectively. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 82 - 6. LONG-TERM LIABILITIES (CONTINUED): Claims and Judgments Payable (Continued) Changes in claims liabilities during the past two years are as follows: June 30, 2008 June 30, 2009 Claims payable - Beginning of Year 537,001$ 441,313$ Incurred claims (including IBNR) and changes in estimates 218,647 766,110 Claims payments (314,335) (429,572) Claims payable - End of Year 441,313$ 777,851$ Compensated Absences Payable There is no fixed payment schedule to pay the governmental fund types' outstanding liability of $2,760,571 for compensated absences earned at June 30, 2009. Compensated absences are generally liquidated by the General Fund. Business-type Activities - Capital Leases Obligations under capital leases are as follows: Pure Plant Water, Inc. - The present value of the minimum lease payment on water purification equipment was capitalized at $2,802 using an interest rate of 4.94%. Lease is payable in 60 monthly installments of $53 beginning May 15, 2005. $ 516 Pure Plant Water, Inc. - The present value of the minimum lease payment on water purification equipment was capitalized at $10,752 using an interest rate of 5.15%. Lease is payable in 60 monthly installments of $204 beginning September 1, 2005. 2,570 Commerca Leasing Corporation - The present value of the minimum lease payment on the Uplink GPS system was capitalized at $569,046 using an interest rate of 6.00%. Lease is payable in 48 monthly installments of 13,364 beginning September 15, 2006. 168,527 CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 83 - 6. LONG-TERM LIABILITIES (CONTINUED): Business-type Activities - Capital Leases (Continued) Citicapital Commercial Corporation - The present value of the minimum lease payment on the Club Car Golf Carts was capitalized at $663,256 using an interest rate of 5.220%. Lease is payable in 48 monthly installments of $12,249 beginning October 1, 2006. There is a balloon payment at the end of the lease of $165,300, which will be paid on October 1, 2010. $ 320,925 Wells Fargo Financial Leasing, Inc. - The present value of the minimum lease payment on the new golf course equipment was capitalized at $1,325,933 using an interest rate of 3.720%. Lease is payable in 48 monthly installments of $29,680 beginning December 15, 2006. 462,603 Present value of net minimum lease payments 955,141 Less: current portion (636,295) $ 318,846 The following is a schedule by year, of future minimum lease payments and present value of the net minimum lease payments for capital leases as of June 30, 2009: Year Ending Minimum June 30, Lease Payments 2010 666,498$ 2011 322,088 988,586 Less: amounts representing interest (33,445) Present value of net minimum lease payments 955,141$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 84 - 6. LONG-TERM LIABILITIES (CONTINUED): Business-type Activities - Capital Leases (Continued) The assets acquired through capital lease are as follows: Machinery and equipment $ 2,876,126 Less: accumulated depreciation (1,967,766) $ 908,360 7. DEFERRED COMPENSATION PLAN: The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. Pursuant to changes in August 1996, of IRC Section 457, in January 1997, the City established a trust in which all assets held by Nationwide Retirement Solutions, Inc. (NRS) and ICMA Retirement Corporation (ICMA) were placed. The City does not have fiduciary responsibility for the plan assets held by NRS and ICMA. The assets, all property and rights purchased with such amounts and all income attributable to such amounts are held in trust for the exclusive benefit of the participants and the beneficiaries. The assets are no longer the property of the City, and as such, are no longer subject to the claims of the City's general creditors. As a result, the assets in the amount of $8,641,454 held by NRS and ICMA of the 457 Plan are not reflected in the City’s financial statements. 8. AMOUNTS DUE UNDER REDEVELOPMENT AGENCY PASS-THROUGH AGREEMENTS: Property taxes related to the incremental increase in assessed values after the adoption of the Redevelopment Plan are, except where otherwise provided by specific agreement, allocated to the Agency. All taxes on the "frozen" assessed valuation of the property are allocated to the City and other taxing agencies. The Agency has entered into various pass-through agreements with other tax agencies to allocate their tax increment resulting from the increase in assessed values after the adoption of the Redevelopment Plan. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 85 - 8. AMOUNTS DUE UNDER REDEVELOPMENT AGENCY PASS-THROUGH AGREEMENTS (CONTINUED): At June 30, 2009, the Agency was holding $53,285,469 in trust on behalf of other taxing agencies related to specific pass-through agreements as detailed below: Balance at Balance at July 1, 2008 Additions Payments June 30, 2009 Riverside County Capital Improvement 12,926,378$ * 17,995,475$ 11,821,165$ 19,100,688$ Riverside County - Schools 817,005 834,791 831,004 820,792 Riverside County - Library 7,723,922 2,071,275 5,535 9,789,662 Riverside County - Fire 3,248,130 3,281,923 3,248,130 3,281,923 Coachella Valley Mosquito Abatement District 661,403 676,989 661,403 676,989 Coachella Valley Water District 8,204,203 1,522,832 13,552 9,713,483 Desert Community College District 1,410,834 1,446,977 1,436,566 1,421,245 Desert Sands Unified School District 6,025,957 * 6,305,131 6,326,402 6,004,686 Coachella Valley Recreation and Park District 511,218 511,403 511,218 511,403 Coachella Valley Resources District 4,926 4,743 4,926 4,743 Palm Springs Unified School District 338,347 377,837 338,347 377,837 County Juvenile Health District 925,324 1,110,901 1,055,414 980,811 Other Deposits 622,118 193,291 214,202 601,207 43,419,765$ 36,333,568$ 26,467,864$ 53,285,469$ Entity * 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. 9. PENSION PLAN: a. Plan Description: The City of Palm Desert contributes to the California Public Employees Retirement System (PERS), an agent multiple-employer public employee defined benefit pension plan. PERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits to plan members and beneficiaries. PERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by state statute and city ordinance. Copies of PERS' annual financial report may be obtained from their executive office: 400 Q Street, Sacramento, CA 95814. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 86 - 9. PENSION PLAN (CONTINUED): b. Funding Policy: Participants are required to contribute 8% of their annual covered salary. The City contributes 7% of the required employee contribution on their behalf and the employee contributes the remaining 1%. The City is required to contribute at an actuarially determined rate; the rate for fiscal year 2008-2009, was 19.021% for non-safety employees of annual covered payroll. The contribution requirements of plan members and the City are established and may be amended by PERS. c. Annual Pension Cost: For 2009, the City's annual pension cost of $4,106,308 for PERS was equal to the City's required and actual contributions. The required contribution was determined as part of the June 30, 2006, actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included: a) 7.75% investment rate of return (net of administrative expenses), b) projected annual salary increases of 3.25% to 14.45% depending on age, service and type of employment, and c) 3.25% per year cost-of-living adjustments. Both a) and b) included an inflation component of 3.00%. The actuarial value of PERS’ assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a three-year period (smoothed market value). PERS' unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis that depends on the plan's entry into PERS. The remaining amortization period was 20 years. d. Three-Year Trend Information for PERS: Fiscal Annual Pension Percentage Net Pension Year Cost (APC) APC Contributed Obligation 6/30/07 $ 3,321,061 100% $ - 6/30/08 3,680,511 100% - 6/30/09 4,106,308 100% - e. Schedule of Funding Progress for PERS: As of June 30, 2008, the most recent actuarial valuation date, the plan was 76.22% funded. The actuarial accrued liability for benefits was $67.98 million, and the actuarial value of assets was $51.81 million, resulting in an unfunded actuarial accrued liability (UAAL) of $16.17 million. The covered payroll (annual payroll of active employees covered by the plan) was $14.61 million, and the ratio of the UAAL to the covered payroll was 110.67%. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 87 - 9. PENSION PLAN (CONTINUED): e. Schedule of Funding Progress for PERS (Continued): The schedule of funding progress, presented as required supplementary information following the notes to basic financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. 10. FUND BALANCE: Reserves of Fund Balance In the fund financial statements, reserves segregate portions of fund balances that are either not available or have been earmarked for specific purposes. The various reserves established as of June 30, 2009, were as follows: RDA Prop A Low Income RDA Other General Fire Tax Hosing Capital Governmental Fund Special Revenue Special Revenue Projects Funds Total Encumbrances 893,729$ 101,175$ 153,401$ 3,670,840$ 4,952,916$ 9,772,061$ Inventory 50,561 - - - - 50,561 Continuing appropriations - - 2,547,111 59,928,716 35,236,546 97,712,373 Prepaid costs and deposits 695,823 - - 35,789 1,026 732,638 Reserve requirement - - - - 27,285 27,285 Property held for resale - - 465,834 - - 465,834 Debt service 2,760,571 - - - - 2,760,571 Loans and notes receivable 3,702,000 - 7,475,884 2,000,000 2,756,974 15,934,858 Advances 7,181,000 - - - 13,419,000 20,600,000 Totals 15,283,684$ 101,175$ 10,642,230$ 65,635,345$ 56,393,747$ 148,056,181$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 88 - 10. FUND BALANCE (CONTINUED): Reserves of Fund Balance (Continued) 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, 2009. Although all appropriations lapse at year-end, even if encumbered, the City intends either to honor the contracts in progress or to cancel them. Reserve for encumbrances is rebudgeted on July 1, by Council action. Reserved for Inventory - This reserve is to restrict fund balance so that it will not be considered as current funds available. Reserved for Continuing Appropriations - These reserves are for appropriations for capital projects, which are unexpended as of June 30, 2009, and are carried forward as continuing appropriations to be expended in 2008-2009. Reserved for Prepaid Costs and Deposits - These reserves represent contractual obligations for cash payments made before June 30, 2009, but not recognized as an expenditure until after July 1, 2009, and noncurrent portions of deposits. Reserved for Reserve Requirement - These reserves are set up for the maintenance requirements for the housing apartments. Reserved for Property Held for Resale - This reserve is for property held for resale and has been set aside to indicate that these funds are not available to finance current expenditures. Reserved for Debt Service - These reserves for Debt Service represent reserves accumulated by the City and the Redevelopment Agency that are legally restricted to the payment of long-term debt principal and interest amounts that mature in future years and for compensated absences. Reserved for Loans and Notes Receivables - These reserves are set up to reflect the noncurrent portion of receivables so that they will not be considered as current funds available. Reserved for Advances - These reserves are set up to reflect the advances to the Redevelopment Agency so that they will not be considered as current funds available. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 89 - 11. RISK MANAGEMENT: a. Description of Self-Insurance Pool Pursuant to Joint Powers Agreement: The City is a member of the California Joint Powers Insurance Authority (Insurance Authority). The Insurance Authority is composed of 122 California public entities and is organized under a joint powers agreement pursuant to California Government Code Section 6500 et. seq. The purpose of the Insurance Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other coverages. The Insurance Authority’s pool began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a 9-member Executive Committee. b. Self-Insurance Programs of the Authority: General Liability Each member government pays a primary deposit to cover estimated losses for a fiscal year (claims year). After the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Claims are pooled separately between police and non-police. Costs are allocated to members by the following methods within each of the four layers of coverage: (1) the first $30,000 of each occurrence is charged directly to the member’s primary deposit; (2) costs from $30,000 to $750,000 and the loss development reserves associated with losses up to $750,000 are pooled based on the member’s share of losses under $30,000; (3) losses from $750,000 to $2,000,000 and the associated loss development reserves are pooled based on payroll; (4a) costs of covered claims from $2,000,000 to $50,000,000 are paid under reinsurance and excess insurance policies; (4b) subject to a $3,000,000 annual aggregate deductible; (4c) and a quota-sharing agreement whereby the Insurance Authority is financially responsible for 40% of losses occurring within the $2,000,000 to $10,000,000 layer. The costs associated with 4a-c are estimated using actuarial models and pre-funded as part of the primary and retrospective deposits. The overall policy limit for each member including all layers of coverage is $50,000,000 per occurrence. Costs of covered claims for subsidence losses are paid by excess insurance with the following sub-limits per member: $25,000,000 per occurrence with a $15,000,000 annual aggregate. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 90 - 11. RISK MANAGEMENT (CONTINUED): b. Self-Insurance Programs of the Authority (Continued): Workers' Compensation The City also participates in the workers compensation pool administered by the Insurance Authority. Each member pays a primary deposit to cover estimated losses for a fiscal year (claims year). After the close of a fiscal year, outstanding claims are valued. A retrospective deposit computation is then made for each open claims year. Claims are pooled separately between public safety and non-public safety. Costs are allocated to members by the following methods within each of the four layers of coverage: (1) the first $50,000 of each loss is charged directly to the member’s primary deposit; (2) losses from $50,000 to $100,000 and the loss development reserve associated with losses up to $100,000 are pooled based on the member’s share of losses under $50,000; (3) losses from $100,000 to $2,000,000 and the loss development reserves associated with those losses are pooled based on payroll; (4) losses from $2,000,000 up to statutory limits are paid under an excess insurance policy. Protection is provided per statutory liability under California Workers’ Compensation law. Employer’s liability losses are pooled among members to $2,000,000, coverage from $2,000,000 to $4,000,000 is purchased as part of an excess insurance policy, and losses from $4,000,000 to $10,000,000 are pooled among members. c. Purchased Insurance: Property Insurance The City of Palm Desert participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. The City of Palm Desert property is currently insured according to a schedule of covered property submitted by the City of Palm Desert to the Authority. The City’s property currently has all-risk property insurance protection in the amount of $170,117,830. There is a $5,000 deductible per occurrence except for non-emergency vehicle insurance which has $1,000 deductible. Premiums for the coverage are paid annually and are not subject to retroactive adjustments. Crime Insurance The City of Palm Desert purchases crime insurance coverage in the amount of $10,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Insurance Authority. Premiums are paid annually and are not subject to retroactive adjustments. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 91 - 11. RISK MANAGEMENT (CONTINUED): c. Purchased Insurance (Continued): Special Event Tenant User Liability Insurance The City of Palm Desert further protects against liability damages by requiring tenant users of certain property to purchase low-cost tenant user liability insurance for certain activities on City property. The insurance premium is paid by the tenant user and is paid to the City of Palm Desert according to a schedule. The City of Palm Desert then pays for the insurance. The insurance is arranged by the Insurance Authority. d. Adequacy of Protection: During the past three fiscal (claims) years, none of the above programs of protection have had settlements or judgments that exceeded pooled or insured coverage. There have been no significant reductions in pooled or insured liability coverage from coverage in the prior year. 12. DEFERRED REVENUES AND UNEARNED REVENUES: Major Governmental Funds General Fund: On March 13, 1997, the Redevelopment Agency (Agency) purchased land from the City for the purpose of developing a second golf course financed by a note in the amount of $2,055,000. The note has no specific due date and carries an interest rate that equates the rate of return the City receives on its investment with the Local Agency Investment Fund (1.377% at June 30, 2009). Recognition of the revenue from the sale has been deferred until it becomes available. On March 13, 1997, the City entered into an agreement; along with amendments on June 4, 1997 and May 18, 2004; with the Palm Desert Recreational Facilities Corporation (Corporation) for the use of property at the City's Golf Resort (Desert Willow). Payment is due when the Corporation's revenues exceed its expenses. At June 30, 2009, the Corporation owed the City rent totaling $285,000, which will be recognized as revenue by the City when the rent is paid by the Corporation. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 92 - 12. DEFERRED REVENUES AND UNEARNED REVENUES (CONTINUED): Major Governmental Funds (Continued) General Fund (Continued): On January 9, 2007, a promissory note for $1,000,000 was issued from the City to the Friends of the Desert Mountains. Any unpaid principal accrues interest at a rate of 5% per annum. The entire balance of principal and accrued interest is due within thirty-six months of issuance. As of June 30, 2009, $124,658 in interest has been accrued. Recognition of the interest revenue has been deferred until it becomes due. The City entered into several individual loan agreements with residents of the Highlands Utility Undergrounding Assessment District No. 04-01. The residents agreed to pay to the City the full cost of the loan amount plus any accrued interest at a rate of 5.35%. The full amount of the loan along with all accrued interest is due and payable at the earliest of September 2, 2036, or any change in ownership of the property. As of June 30, 2009, $26,110 in interest has been accrued. Recognition of the interest revenue has been deferred until it becomes due. Other amounts reported as unearned revenues include $7,500 in funds collected from another governmental agency to pay for fire wokers. RDA Low Income Housing Special Revenue Fund: Uncollected interest of $37,216 due from the Palm Desert Development Company has been deferred. Other amounts reported as unearned revenues include $2,060 in miscellaneous rents and $6,796 for damages on purchased home. Other Governmental Funds: Special Revenue Funds: Gas Tax fund has $748,602 of unearned revenues representing Prop 1B funds received in advance. Measure A fund has $26,222 of unearned revenue representing a deposit from a developer for street improvements. $874,737 has been deferred for capital reimbursements due from developers and other agencies for work completed by the City on their behalf. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 93 - 12. DEFERRED REVENUES AND UNEARNED REVENUES (CONTINUED): Other Governmental Funds (Continued): Special Revenue Funds (Continued): Loans receivable in the amount of $17,010 for home improvement loans are recorded as deferred in the Community Development Block Grant Fund. $13,435 has been deferred for capital reimbursements due from developers and other agencies for work completed by the City on their behalf. $9,689 of grant funds are deemed unearned until expenditures are incurred in the Recycling Fund. Accrued interest of $98,859 on loans receivable through the City’s EIP Program (see Note 3). Prepaid rents in the amount of $21,505 from the eight apartment complexes operated by the Palm Desert Housing Authority will be recognized as revenue when earned. Debt Service Funds: Assessment receivables in the amount of $2,652,156 represent future assessments to be received from property owners in Highlands Undergrounding Assessment Districts 04-1 to pay for long- term obligations incurred in making capital improvements in the Assessment District. Recognition of the revenue from the assessments has been deferred until it becomes available. Once received, the monies will be used to make annual debt service payments. Capital Project Funds: $702,360 has been deferred for capital reimbursements due from developers and other agencies for work completed by the City on their behalf. $128,967 of unearned revenue represents deposits from developers for street improvements, which have not been spent as of June 30, 2009. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 94 - 12. DEFERRED REVENUES AND UNEARNED REVENUES (CONTINUED): Business-type Activities The balance of $191,574 represents the unused portions of prepaid golf fees, value of unredeemed gift certificates and unearned rent. Component Unit The balance of $13,777 represents the unused portions of prepaid banquets. 13. OTHER POST-EMPLOYMENT BENEFITS: a. Plan Description: This study analyzes the postretirement held benefit plans provided by the City. The City provides post-employment medical benefits to eligible employees at retirement through the “Retiree Service Stipend Program”. All full-time or part-time employees who meet the eligibility requirements for this program may continue their medical coverage through the CalPERS Health Plan and receive reimbursement from the City for a portion of the costs for the coverage. Employees Hired Prior to January 1, 2008 Eligibility for the stipend requires retirement simultaneously from the City and CalPERS on or after age 50 with at least 10 consecutive years of service with the City. Eligible employees must be covered under the CalPERS Health Plan at the time of retirement and elect to participate in the stipend program within 30 days of retirement. The City’s contribution towards the coverage is based on years of service as follows: Consecutive Years of Service City’s Contribution With the City at Retirement Percentage 10 years of service 50% 11 years of service 55% 12 years of service 60% 13 years of service 65% 14 years of service 70% 15 or more years of service 75% CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 95 - 13. OTHER POST-EMPLOYMENT BENEFITS (CONTINUED): a. Plan Description (Continued): Employees Hired On or After January 1, 2008 Eligibility for the stipend requires retirement simultaneously from the City and CalPERS on or after age 50 with at least 15 consecutive years of service with the City. Eligible employees must be covered under the CalPERS Health Plan at the time of retirement and elect to participate in the stipend program within 30 days of retirement. The stipend is discontinued when the retiree reaches Medicare eligibility age. The City’s contribution towards the coverage will be applied to the lowest cost plan and is based on age at retirement and consecutive years of service with the City as outlined in the following table: Age1516171819202122232425+ 50 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 51 10% 15% 20% 25% 30% 35% 40% 45% 50% 50% 50% 52 20% 25% 30% 35% 40% 45% 50% 50% 50% 50% 50% 53 30% 35% 40% 45% 50% 50% 50% 50% 50% 50% 50% 54 40% 45% 50% 50% 50% 50% 50% 50% 50% 50% 50% 55+ 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% Consecutive Years of Service at Retirement Employees with at least 5 years of service, not meeting the eligibility requirements for the stipend program, who retire simultaneously from the City and CalPERS are eligible to continue medical coverage through the CalPERS Health Plan. The City is required to pay the CalPERS minimum employer contribution ($80.80 in 2007 and $97.00 in 2008) for these employees. b. Funding Policy: The contribution requirements of plan members and the City are established and may be amended by the City, City Council, and/or the employee associations. Currently, contributions are not required from plan members. During the fiscal year ended June 30, 2009, the City contributed $613,648 to the plan, which included $406,245 of the annual required contribution and $207,403 pay-as-you-go premiums. The purpose of these contributions is to cover the required City contribution rate of 5.5% of annual covered payroll (annual payroll of active employees covered by the plan) and to prefund benefits. As a result, the City calculated and recorded a Net OPEB Asset, representing the difference between the Annual Required Contribution (ARC) and actual contributions, as presented below: CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 96 - 13. OTHER POST-EMPLOYMENT BENEFITS (CONTINUED): b. Funding Policy (Continued): Annual required contribution (ARC) 406,245$ Interest on Net OPEB obligation (asset) (516,867) Adjustment to ARC 422,907 Annual OPEB cos t 312,285 Contribution made (613,648) Increase in Net OPEB obligation (asset) (301,363) Net OPEB obligation (asset) at June 30, 2008 (6,669,247) Net OPEB obligation (asset) at June 30, 2009 (6,970,610)$ The contribution rate of 2.9% is based on the ARC of $406,245, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis is projected to cover the annual normal cost and the amortization of unfunded actuarial accrued liabilities (or funding excess) over a thirty year period. c. Annual OPEB Cost and Net OPEB Obligation (Asset): For fiscal year 2009, the City’s annual OPEB cost (expense) was $301,363. Information on the annual OPEB cost, percentage of Annual OPEB Cost contributed, and Net OPEB Obligation is available since the implementation of GASB 45, are presented below: Actual Percentage of Fiscal Annual Contribution Annual Net OPEB Year OPEB (Net of OPEB Cost Obligation Ended Cost Adjustments) Contributed (Asset) 6/30/2008 $ 759,139 $ 7,428,386 979% $ (6,669,247) 6/30/2009 312,285 613,648 197% (6,970,610) CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 97 - 13. OTHER POST-EMPLOYMENT BENEFITS (CONTINUED): d. Funded Status and Funding Progress: As of July 1, 2009, the most recent actuarial valuation date, the plan was 84.04% funded. The actuarial accrued liability for benefits was $8.23 million, and the actuarial value of assets was $6.92 million, resulting in an unfunded actuarial accrued liability (UAAL) of $1.31 million. The covered payroll (annual payroll of active employees covered by the plan) was $12.45 million, and the ratio of the UAAL to the covered payroll was 10.55%. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the City are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to basic financial statements, presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. e. Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes are based on the substantive plan and include the types of benefits provided at the time of each valuation. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets consistent with the long-term perspective of the calculations. In the July 1, 2007, actuarial valuation, the entry age normal actuarial cost method was used. The actuarial assumptions included a 7.75% investment rate of return (net of administrative expenses) and an initial annual healthcare cost trend rate of 10%, reduced by decrements to an ultimate rate of 5% after ten years. A 3.25% annual rate of increase in future salaries is also assumed in the valuation. The City’s unfunded actuarial accrued liability will be amortized as a level percentage of projected covered payroll on a closed basis. The amortization period at July 1, 2007, was thirty years. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 98 - 14. SPECIAL ASSESSMENT DEBT: Below is a summary of the changes in the special assessment bonds payable: Balance at Payments and Balance at July 1, 2008 Additions Reductions June 30, 2009 2003 Assessment Revenue Bonds 3,500,000$ -$ (190,000)$ 3,310,000$ AD 98-1 Limited Obligation Refunding Bonds 870,000 - (90,000) 780,000 CFD 2005-1 Special Tax Bonds Series 2006A 67,915,000 - (825,000) 67,090,000 AD 2004-2 Limited Obligation Improvement Bonds 29,430,000 - - 29,430,000 2008 Special Tax Refunding Bonds 10,935,000 - (1,665,000) 9,270,000 112,650,000$ -$ (2,770,000)$ 109,880,000$ The City has Special Assessment Bonds Payable issued under the 1911 and 1915, Special Improvement Acts and the 1982 Mello-Roos Community Facilities Act (1982 Bonds). The City has no liability to 1911 Act bondholders until assessments have been collected from the property owner. Such liability is then recorded in the Agency Funds. Therefore, the 1911 Bonds are not recorded as liabilities in the accompanying financial statements. The City also has no liability to the 1915 Act bondholders or the bondholders of bonds issued under the 1982 Mello-Roos Community Facilities Act until assessments are collected on the tax rolls. However, the City may take certain actions to assume secondary liability for all or part of 1915 Act Bonds and the 1982 Bonds until such time as foreclosure proceedings are consummated. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 99 - 14. SPECIAL ASSESSMENT DEBT (CONTINUED): Special assessment bonds payable, as described below, and are not recorded as long-term liabilities, as these obligations do not constitute a debt or obligation of the City. 2003 Assessment Revenue Bonds In June 2003, the Palm Desert Financing Authority issued $4,423,000 in 2003 Assessment Revenue Bonds. The proceeds were used to purchase three series of limited obligation improvement bonds issued by the City in connection with the financing and refinancing of certain improvements of benefit to property within the City’s Assessment District No. 94-2 (Sunterrace), Assessment District No. 94-3 (Merano) and Silver Spur Ranch Utility Undergrounding Assessment District No. 01-01. These bonds were issued under the 1915 Improvement Bond Act to provide funds for public improvements in the respective assessment districts. Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interest Tota l 2010 185,000$ 158,720$ 343,720$ 2011 190,000 151,220 341,220 2012 200,000 143,220 343,220 2013 210,000 134,295 344,295 2014 225,000 124,283 349,283 2015-2019 900,000 480,038 1,380,038 2020-2024 710,000 268,079 978,079 2025-2029 690,000 96,213 786,213 3,310,000$ 1,556,068$ 4,866,068$ As of June 30, 2009, the principal amounts to be repaid by each assessment district to pay off the loans from the Financing Authority are as follows: Assessment District 94-2 445,000$ Assessment District 94-3 905,000 Assessment District 01-1 1,965,000 3,315,000$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 100 - 14. SPECIAL ASSESSSMENT DEBT (CONTINUED): Assessment District 98-1 Limited Obligation Refunding Improvement Bonds The bonds were issued in an original amount of $2,955,000 in February 2004, to redeem and defease the outstanding limited obligation improvement bonds of Assessment District No. 98-1, which were issued in 1998. The bonds are secured by unpaid assessments on parcels within the District. Under the 1915 Act, annual assessments on the unpaid assessments sufficient to meet the scheduled debt service requirements are to be included on the regular county tax bills for the assessed parcels for which there are unpaid assessments. Interest rates vary from 1.5% to 5.1% with interest payable semi-annually on March 2 and September 2, with principal maturing annually on September 2. Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interest Tota l 2010 65,000$ 33,851$ 98,851$ 2011 65,000 31,495 96,495 2012 70,000 28,876 98,876 2013 75,000 25,901 100,901 2014 75,000 22,658 97,658 2015-2019 430,000 55,462 485,462 780,000$ 198,243$ 978,243$ Community Facilities District No. 2005-1 The bonds were issued in an original amount of $50,000,000 in May 2006, to construct and acquire certain public facilities of benefit to the District, provide for the establishment of a reserve account, provide capitalized interest, and pay the costs of issuance of the bonds. The bonds are secured by and payable from a pledge of net taxes derived from special taxes to be levied by the District on real properties within the boundaries of the District from the net proceeds of any foreclosure actions brought following delinquency in the payment of the special taxes, and from amounts held in certain funds under the indenture. Interest rates vary from 4.0% to 5.5% with interest payable semi-annually on March 1 and September 1, with principal maturing annually on September 1. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 101 - 14. SPECIAL ASSESSSMENT DEBT (CONTINUED): Community Facilities District No. 2005-1 (Continued) In May 2007, the 2007 Bonds were issued in the amount of $17,915,000 pursuant to the Bond Indenture in May 2006, as supplemented by a First supplemental Indenture in May 2007, to provide construct and acquire certain public facilities of benefit to the District, provide capitalized interest, and pay the costs of issuance of the 2007 Bonds. The bonds are secured by and payable, on parity with the bonds issued in May 2006 for $50,000,000, from a pledge of net taxes derived from special taxes to be levied by the District on real properties within the boundaries of the District from the net proceeds of any foreclosure actions brought following delinquency in the payment of the special taxes, and from amounts held in certain funds under the indenture. Interest rates vary from 3.875% to 5.20% with interest payable semi-annually on March 1 and September 1, with principal maturing annually on September 1. Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interes t Tota l 2010 1,165,000$ 3,422,219$ 4,587,219$ 2011 1,210,000 3,373,361 4,583,361 2012 1,260,000 3,320,818 4,580,818 2013 1,310,000 3,264,628 4,574,628 2014 1,370,000 3,204,685 4,574,685 2015-2019 7,870,000 14,974,199 22,844,199 2020-2024 10,000,000 12,786,836 22,786,836 2025-2029 12,845,000 9,846,109 22,691,109 2030-2034 16,640,000 5,952,230 22,592,230 2035-2038 13,420,000 1,229,833 14,649,833 67,090,000$ 61,374,918$ 128,464,918$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 102 - 14. SPECIAL ASSESSSMENT DEBT (CONTINUED): Section 29 Assessment District (No 2004-02), Limited Obligation Improvement Bonds, Series 2007 In March 2007, the City of Palm Desert issued $29,430,000 Limited Obligation Improvement Bonds. The proceeds of the Bonds will be used to finance certain infrastructure improvements within the City’s Section 29 Assessment District (No. 2004-02). The debt service on the bonds is to be paid by assessments secured on the property tax rolls of those properties benefiting from the improvements. The bonds consist of Serial Bonds in the amount of $6,870,000 with interest ranging from 4.00% to 4.70% payable semiannually on March 2 and September 2. Bond maturities begin September 2, 2009, and continue annually through 2019. Term bonds in the amount of $2,525,000 carry an interest rate of 4.75% and mature September 2, 2022. Term bonds in the amount of $5,110,000 carry an interest rate of 5.05% and mature September 2, 2027. Term bonds in the amount of $14,925,000 carry an interest rate of 5.10% and mature September 2, 2037. Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interes t Tota l 2010 505,000$ 1,427,760$ 1,932,760$ 2011 525,000 1,407,160 1,932,160 2012 545,000 1,385,760 1,930,760 2013 570,000 1,363,175 1,933,175 2014 590,000 1,339,100 1,929,100 2015-2019 3,365,000 6,274,454 9,639,454 2020-2024 4,220,000 5,394,295 9,614,295 2025-2029 5,365,000 4,211,474 9,576,474 2030-2034 6,870,000 2,663,985 9,533,985 2035-2038 6,875,000 723,308 7,598,308 29,430,000$ 26,190,471$ 55,620,471$ CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 103 - 14. SPECIAL ASSESSSMENT DEBT (CONTINUED): 2008 Special Tax Refunding Bonds In December 2007, the City of Palm Desert Communities Facilities District No. 91-1 (Indian Ridge Public Improvements) issued $10,935,000 of Special Tax Refunding Bonds, Series 2008 to refund and defease all the outstanding $16,260,000 principal amount of the Palm Desert Financing Authority 1997 Revenue Bonds. These bonds were issued pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California. Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interes t Tota l 2010 855,000$ 301,385$ 1,156,385$ 2011 880,000 274,920 1,154,920 2012 905,000 247,026 1,152,026 2013 935,000 217,813 1,152,813 2014 965,000 186,930 1,151,930 2015-2019 4,375,000 414,006 4,789,006 2020-2021 355,000 14,300 369,300 9,270,000$ 1,656,380$ 10,926,380$ Bond Reserve Requirements At June 30, 2009, the fund balance reserve requirements and actual reserve balances were as follows: Requirement Actual Assessment District 98-1 78,000$ 142,152$ 2003 Financing Authority Revenue Bonds 297,094 337,516 CFD 2005-1 Special Tax Bonds 4,587,219 4,611,842 Assessment District 29 1,933,175 1,945,358 2008 Special Tax Refunding Bonds 927,000 1,093,500 CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 104 - 15. CONDUIT DEBT OBLIGATIONS: 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 f) 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 1, 2003, and will lease back to the County the Sites and the Facilities pursuant to a Facilities Lease dated December 1, 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, 2009, the outstanding amount was $19,780,000. 2008 Series A - $72,445,000 Lease Revenue Bonds In November 2008, the Palm Desert Financing Authority (Authority) issued $72,445,000 in Lease Revenue Bonds. The proceeds of the Bonds were used to: a) finance the construction, installation, acquisition, development and rehabilitation of certain public capital improvements within the County, including the Palm Desert Sheriff’s Station Facilities (as described herein), community centers, a multi-service center, park improvements and other various infrastructure improvements; b) fund capitalized interest on the 2008 Series A Bonds related to the Palm Desert Sheriff Station Facilities through August 31, 2010 and with respect to the Multi-Service Center Facilities (as described herein) through December 31, 2009; c) fund a deposit into the Reserve Account as additional security for the 2008 Series A Bonds; and d) pay certain costs associated with the issuance and delivery of the 2008 Series A Bonds. 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, 2009, the outstanding amount was $72,445,000. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 105 - 16. OTHER DISCLOSURERS: The Palm Desert Recreational Facilities Corporation has a net asset deficit of $697,383, which will be eliminated by increasing revenues through banquet reservations. At June 30, 2009, the Community Development Block Grant Special Revenue Fund has a deficit fund balance of $387, which will be eliminated by future housing loan program interest and principal receipts. At June 30, 2009 the AIPP Maintenance Special Revenue Fund had deficit fund balance of $2,005, which will be eliminated by transfers from the Arts In Public Places Fund. 17. CONSTRUCTION AND OTHER SIGNIFICANT COMMITMENTS: Construction Commitments Current Year Spent Remaining Spent to Date Commitment Parks and recreation 428,268$ 428,268$ 569,792$ Low income housing 218,150 428,190 254,547 Street resurfacing 51,625 51,625 3,137,268 Building construction 31,793 74,980 69,579 Street improvements 686,305 815,206 996,824 Freeway on-ramp improvements 877,430 1,302,315 332,266 Bridge construction 79,083 116,192 15,460 Residential street construction 183,538 1,196,755 875,683 Sewer construction 2,190 114,532 58,020 Parking lot construction 5,771 5,771 100,143 2,564,153 4,533,834 6,409,582 Miscellaneous non construction 666,635 691,329 3,474,640 3,230,788$ 5,225,163$ 9,884,222$ Project 18. COMMITMENTS AND CONTINGENCIES: ERAF and SERAF Contingency: During the fiscal year 2008-2009, the State of California experienced a severe budgetary crisis. Various “budget trailer bills” were passed by the state legislature to balance the state’s budget, including bills that required California redevelopment agencies to transfer funds to the Educational Revenue Augmentation Fund (ERAF) and Supplemental Educational Revenue Augmentation Fund (SERAF) administered by the various county auditor-controllers. Noted below is a general explanation of the ERAF and SERAF legislation, together with the effect of this legislation on the Palm Desert Redevelopment Agency (the Agency). CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 106 - 18. COMMITMENTS AND CONTINGENCIES (CONTINUED): ERAF and SERAF Contingency (Continued): ERAF Contribution for the Fiscal Year 2008-2009 Pursuant to AB 1389, a budget trailer bill, California redevelopment agencies were required to make ERAF contributions totaling $350 million for the fiscal year 2008-2009. The contributions were due by May 10, 2009. The Agency’s required contribution for the fiscal year 2008-2009 was $5,250,496. In response to AB 1389, the California Redevelopment Association (CRA) filed a lawsuit against the State of California (California Redevelopment Association et al v. Genest), challenging the constitutionality of the required ERAF contributions. On April 30, 2009, the Sacramento Superior Court held in favor of CRA, ruling that AB 1389 was unconstitutional. On September 28, 2009, the State of California announced its decision not to appeal the decision in “Genest”. Accordingly, the Superior Court’s decision is now final and binding, and California redevelopment agencies will not be required to make the ERAF contributions pursuant to AB 1389. Accordingly, the Agency did not make the ERAF contribution of $5,250,496 for the fiscal year 2008-2009. SERAF Contributions for the Fiscal Years 2009-2010 and 2010-2011 Pursuant to AB 26 4x, a budget trailer bill, California redevelopment agencies were required to make SERAF contributions totaling $1.7 billion for the fiscal year 2009-2010 and $350 million for the fiscal year 2010-2011. Under AB 26 4x, agencies may borrow a portion of the required contributions from their low and moderate income housing fund. Alternatively, sponsoring governmental agencies (the cities or counties) may elect to pay the SERAF contributions on behalf of their redevelopment agencies. On October 20, 2009, the CRA filed a class action lawsuit in behalf of all California redevelopment agencies, again challenging the SERAF obligations as unconstitutional. The Agency’s estimated SERAF contributions are $25,502,408 for the fiscal year 2009-2010 and $5,276,438 for 2010-2011. However, it is the position of Agency officials that the SERAF contributions estimated by AB 26 4x are unconstitutional, and that the Agency is not obligated to make these contributions. Accordingly, the Agency intends to join as a Plaintiff in CRA’s class action lawsuit, to overturn the provisions of AB 26 4x. If the class action lawsuit is unsuccessful, and if the Agency is required to make these SERAF contributions, Agency officials have estimated that the Agency will have sufficient funds to make the required contributions. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 107 - 18. COMMITMENTS AND CONTINGENCIES (CONTINUED): Litigation: On July 13, 2009, the City received a Developer Claim (Claim) for monetary damages, attorneys’ fees and costs and litigation expenses in excess of $100 million. The Claim alleges, inter alia, that (i) the City breached the Development Agreement approved by the City Council and entered into by the City and Royce on or about February 25, 1998 in connection with the Villa Portofino development project (the Villa Portofino Project), (ii) the City violated claimants’ procedural and substantive due process rights and (iii) the City’s actions resulted in an unlawful taking, inverse condemnation and destruction of Claimants’ interest in real property without payment of just compensation in violation of the Fifth Amendment to the United States Constitution and Article I, Section 19 of the California Constitution. The Villa Portofino Project is a senior housing development project that was designed to be completed in multiple phases. The City believes that the Claim is based on various permitting matters relating to the Villa Portofino Project. The City intends to vigorously contest the Claim. At this stage, however, the City cannot determine the likelihood that the Claim will be successful. Contingencies: The City is a defendant in several pending lawsuits of a nature common to many similar jurisdictions. City management estimates that the potential claims against the City not covered by insurance resulting from such litigation would not materially affect the financial position of the City. The City incurs various costs under federal and state grant reimbursement programs and records the related revenue and receivables for grant claims. Such grant claims are subject to final audit by federal and state agencies. CITY OF PALM DESERT NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED) June 30, 2009 See independent auditors’ report. - 108 - 19. SUBSEQUENT EVENT: In August 2009, the Palm Desert Financing Authority issued $5,225,000 variable rate demand lease revenue bonds, Series 2009. The proceeds of the bonds will be used finance the acquisition and construction or installation of distributed generation renewable energy sources and energy efficiency improvements on or in the City, reimburse the City for certain expenditures made by the City and pay costs of issuance of the bonds. Interest on the Bonds is payable monthly commencing October 1, 2009 as long as the interest rate remains variable. Principal payments are due annually September 1, commencing September 1, 2010 with final principal payment due September 1, 2029. Principal and interest on the Bonds will be initially supported by an irrevocable letter of credit which will expire August 30, 2012, unless extended, terminated or a substitute letter of credit or other replacement meeting the requirements of the Indenture is provided. The Authority has established an interest rate floor and an interest rate cap in connection with the Bonds under a separate agreement. Schedule 1 Note 9e Entry Age Normal Accrued Actuarial Value Unfunded UAAL as a Actuarial Liability of Assets AAL Funded Covered % of Covered Valuation (AAL) (AVA) (UAAL) Ratio Payroll Payroll Date (a) (b) (a) - (b) (b)/(a) (c) [(a)-(b)]/(c) 06/30/06 52,739,452$ 40,523,105$ 12,216,347$ 76.84% 11,845,746$ 103.13% 06/30/07 61,535,809 46,180,367 15,355,442 75.05% 13,263,198 115.77% 06/30/08 67,979,926 51,813,257 16,166,669 76.22% 14,608,384 110.67% Note 13d Actuarial Accrued Actuarial Value Unfunded UAAL as a Actuarial Liability of Assets AAL Funded Covered % of Covered Valuation (AAL) (AVA) (UAAL) Ratio Payroll Payroll Date (a) (b) (a) - (b) (b)/(a) (c) [(a)-(b)]/(c) 07/01/07 6,481,631$ -$ 6,481,631$ 0.00% 13,800,864$ 46.97% 07/01/09 8,230,029 6,916,360 1,313,669 84.04% 12,449,000 10.55% See independent auditors' report and notes to basic financial statements. For the year ended June 30, 2009 - 109 - CalPERS DEFINED BENEFIT PLAN OTHER POST-EMPLOYMENT BENEFIT PLAN CITY OF PALM DESERT SCHEDULES OF FUNDING PROGRESS - 110 - THIS PAGE INTENTIONALLY LEFT BLANK Schedule 2 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Fund balance, July 1 79,819,288$ 79,819,288$ 79,819,288$ -$ Resources (inflows): Taxes 42,150,000 39,650,000 35,693,331 (3,956,669) Licenses and permits 1,045,000 1,045,000 1,076,708 31,708 Intergovernmental revenues 2,891,500 3,230,500 3,497,068 266,568 Charges of services 1,165,000 1,165,000 803,218 (361,782) Fines and forfeitures 110,000 110,000 130,491 20,491 Investment earnings 4,130,000 1,530,000 2,142,915 612,915 Miscellaneous 690,000 690,000 812,404 122,404 Transfers from other funds 1,250,000 2,900,000 2,684,568 (215,432) Total resources 53,431,500 50,320,500 46,840,703 (3,479,797) Charges to appropriations (outflows): Current: General government 16,945,154 17,030,812 16,343,509 687,303 Public safety 19,034,143 18,534,842 18,349,048 185,794 Public works 10,242,557 10,200,271 8,571,514 1,628,757 Parks, recreation and culture 6,388,852 5,424,847 5,122,900 301,947 Capital outlay - 309,350 309,350 - Transfers to other funds 620,000 3,614,035 3,612,998 1,037 Total charges to appropriations 53,230,706 55,114,157 52,309,319 2,804,838 Excess of resources over (under) charges to appropriations 200,794 (4,793,657) (5,468,616) (674,959) Fund balance, June 30 80,020,082$ 75,025,631$ 74,350,672$ (674,959)$ See independent auditors' report and note to required supplementary information. CITY OF PALM DESERT - 111 - For the year ended June 30, 2009 Budgeted Amounts BUDGETARY COMPARISON SCHEDULE GENERAL FUND Schedule 3 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Fund balance, July 1 3,672,290$ 3,672,290$ 3,672,290$ -$ Resources (inflows): Taxes 5,400,000 5,400,000 5,381,363 (18,637) Special assessments collected 1,500,000 1,500,000 1,628,841 128,841 Intergovernmental revenues 715,000 715,000 755,975 40,975 Investment earnings 100,000 100,000 82,677 (17,323) Total resources 7,715,000 7,715,000 7,848,856 133,856 Charges to appropriations (outflows): Current: Public safety 8,993,000 9,118,000 8,390,200 727,800 Capital outlay 200,000 302,675 59,714 242,961 Total charges to appropriations 9,193,000 9,420,675 8,449,914 970,761 Excess of resources over (under) charges to appropriations (1,478,000) (1,705,675) (601,058) 1,104,617 Fund balance, June 30 2,194,290$ 1,966,615$ 3,071,232$ 1,104,617$ See independent auditors' report and note to required supplementary information. CITY OF PALM DESERT - 112 - For the year ended June 30, 2009 Budgeted Amounts BUDGETARY COMPARISON SCHEDULE PROP A FIRE TAX SPECIAL REVENUE FUND See independent auditors’ report. - 113 - CITY OF PALM DESERT NOTE TO REQUIRED SUPPLEMENTARY INFORMATION June 30, 2009 BUDGETS AND BUDGETARY ACCOUNTING: The City used the following procedures in establishing the budgetary data reported in the financial statements: 1. Before the beginning of the fiscal year, the City Manager submits to the City Council a proposed budget for the year commencing the following July 1. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is subsequently adopted through passage of a resolution. 4. Expenditures for the General Fund cannot exceed amounts budgeted at the departmental level, which is the legal level of control. For other funds, expenditures cannot exceed the total amount budgeted for each fund, which is the legal level of control. The City Manager is authorized to transfer appropriations (without council approval) between an object of a General Fund Department. The City Council approves all other changes. Annual appropriation amounts lapse at year-end. 5. Encumbrances and continuing appropriations are rebudgeted as of July 1, by Council action. 6. Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for all governmental funds except for certain special revenue funds and capital projects funds, which adopt project length budgets and debt service funds that are not budgeted as effectively budgetary control is achieved through debt indenture provisions. The following special revenue funds had legally adopted budgets during the current fiscal year: Prop A Fire Tax Traffic Safety Gas Tax Housing Mitigation Fees Community Development Block Grant El Paseo Assessment District City-Wide Business License Landscape and Lighting District No. 1-17 - 114 - THIS PAGE INTENTIONALLY LEFT BLANK - 115 - GENERAL FUND The General Fund is used to account for all financial resources traditionally associated with government, except those required to be accounted for in another fund. It is the primary operating fund that includes the operating budgets for all the departments and the majority of the City’s tax revenues. Schedule 4 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Fund balance, July 1 79,819,288$ 79,819,288$ 79,819,288$ -$ Resources (inflows): Taxes: Property taxes 5,630,000 5,630,000 4,895,863 (734,137) Property transfer tax 680,000 680,000 324,817 (355,183) Property tax in lieu 3,680,000 3,680,000 3,881,054 201,054 Timeshare mitigation fee 900,000 900,000 949,871 49,871 Sales tax 18,500,000 16,000,000 14,474,933 (1,525,067) Business license tax 1,300,000 1,300,000 1,258,688 (41,312) Job valuation fees 40,000 40,000 41,692 1,692 Transient occupancy tax 8,500,000 8,500,000 7,030,048 (1,469,952) Franchises 2,900,000 2,900,000 2,818,729 (81,271) Penalties and interest on taxes 20,000 20,000 17,636 (2,364) Total Taxes 42,150,000 39,650,000 35,693,331 (3,956,669) Licenses and Permits: Building permits 900,000 900,000 948,130 48,130 Grading - - 2,675 2,675 Valet parking permits - - 275 275 Encroachment permits 75,000 75,000 55,289 (19,711) Miscellaneous permits - - 1,405 1,405 Business regulatory permits 70,000 70,000 68,934 (1,066) Total Licenses and Permits 1,045,000 1,045,000 1,076,708 31,708 Intergovernmental Revenues: Federal grants - - 34,772 34,772 State grants 10,400 10,400 - (10,400) Motor vehicle in-lieu fees 300,000 300,000 173,448 (126,552) Monthly parking ball - - 25,601 25,601 Reimbursement RDA costs 1,771,100 2,110,100 2,107,696 (2,404) Other reimbursements 810,000 810,000 1,155,551 345,551 Total Intergovernmental Revenues 2,891,500 3,230,500 3,497,068 266,568 See independent auditors' report.(Continued) For the year ended June 30, 2009 Budgeted Amounts BUDGETARY COMPARISON SCHEDULE BY DEPARTMENT GENERAL FUND - 116 - CITY OF PALM DESERT Schedule 4 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Resources (inflows) (Continued): Charges for Services: Subdivision fees 500,000$ 500,000$ 171,408$ (328,592)$ Zoning fees 100,000 100,000 120,825 20,825 Plan check fees 500,000 500,000 389,770 (110,230) Sale of maps and publications 30,000 30,000 17,927 (12,073) Microfilm fees 35,000 35,000 16,587 (18,413) Other fees - - 86,701 86,701 Total Charges for Services 1,165,000 1,165,000 803,218 (361,782) Fines and Forfeitures: Vehicle code fines 50,000 50,000 62,396 12,396 Municipal court fines 60,000 60,000 68,095 8,095 Total Fines and Forfeitures 110,000 110,000 130,491 20,491 Investment Earnings: Interest income 2,900,000 300,000 1,631,866 1,331,866 Interest on advances 1,200,000 1,200,000 368,371 (831,629) Interest on notes receivable 30,000 30,000 142,678 112,678 Total Investment Earnings 4,130,000 1,530,000 2,142,915 612,915 Miscellaneous Revenues: Code compliance - - 7,326 7,326 Strong motion instrument fee 25,000 25,000 19,470 (5,530) Special investigation fee - - 3,222 3,222 Certificate of compliance fee - - 1,400 1,400 Nuisance abatement tax 23,000 23,000 64,751 41,751 Abandoned vehicle abatement 70,000 70,000 109,046 39,046 Fire inspection service 200,000 200,000 168,328 (31,672) Rental income 70,000 70,000 246,223 176,223 Other revenue 302,000 302,000 192,638 (109,362) Total Miscellaneous Revenues 690,000 690,000 812,404 122,404 Transfers from other funds 1,250,000 2,900,000 2,684,568 (215,432) Amounts Available for Appropriation 53,431,500 50,320,500 46,840,703 (3,479,797) See independent auditors' report.(Continued) CITY OF PALM DESERT BUDGETARY COMPARISON SCHEDULE BY DEPARTMENT GENERAL FUND For the year ended June 30, 2009 Budgeted Amounts (CONTINUED) - 117 - Schedule 4 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Charges to appropriations (outflows): General Government - Departmental: City council 471,800$ 451,006$ 429,127$ 21,879$ City clerk 648,900 626,712 619,372 7,340 Legislative advocacy 63,000 51,000 38,397 12,603 Election 61,900 61,900 49,802 12,098 City attorney 233,000 233,000 229,930 3,070 Legal special services 495,000 765,000 684,846 80,154 City manager 799,900 1,051,787 1,049,737 2,050 Community services 2,020,100 1,969,242 1,894,742 74,500 Finance 2,011,200 1,993,062 1,993,051 11 Auditing 80,000 60,000 54,080 5,920 Human resources 983,400 751,931 749,916 2,015 General services 591,200 651,735 647,599 4,136 Data processing 1,459,450 1,210,670 1,151,466 59,204 Unemployment insurance 25,000 10,000 8,375 1,625 Insurance 463,500 717,500 476,103 241,397 Community promotions 1,868,190 1,800,740 1,798,860 1,880 Community development 1,884,750 1,822,861 1,795,360 27,501 Office of energy management 651,100 815,885 730,107 85,778 Marketing 1,430,458 1,183,475 1,151,767 31,708 Total General Government - Departmental 16,241,848 16,227,506 15,552,637 674,869 General Government - Nondepartmental: Contributions to other agencies 703,306 803,306 790,872 12,434 Public Safety: Police services 14,741,513 14,350,289 14,342,734 7,555 Animal regulation 240,000 240,000 199,385 40,615 Traffic safety 678,000 759,155 683,446 75,709 Development services 1,021,900 1,040,651 1,040,487 164 Building and safety 2,352,730 2,144,747 2,082,996 61,751 Total Public Safety 19,034,143 18,534,842 18,349,048 185,794 See independent auditors' report.(Continued) GENERAL FUND (CONTINUED) For the year ended June 30, 2009 Budgeted Amounts CITY OF PALM DESERT BUDGETARY COMPARISON SCHEDULE BY DEPARTMENT - 118 - Schedule 4 Variance with Final Budget Actual Positive Original Final Amounts (Negative) Charges to appropriations (outflows) (Continued): Public Works: Administration 3,771,800$ 3,778,379$ 3,720,106$ 58,273$ Street maintenance 2,387,900 2,219,945 2,183,445 36,500 Street resurfacing 2,000,000 2,334,165 1,115,721 1,218,444 Curb and gutter 200,000 432 164 268 Parking lot 100,000 16,518 15,981 537 Storm drain 100,000 - - - Stripping 250,000 421,500 387,045 34,455 Corporate yard 83,500 79,389 67,524 11,865 Equipment 500,000 519,583 353,735 165,848 Building maintenance 700,450 696,453 613,067 83,386 Portola community center 98,907 83,907 71,661 12,246 Storm water permit 50,000 50,000 43,065 6,935 Total Public Works 10,242,557 10,200,271 8,571,514 1,628,757 Parks, Recreation and Culture: Park maintenance 1,441,816 910,203 804,733 105,470 Civic center park 1,602,736 1,525,150 1,463,223 61,927 Landscape service 2,562,900 2,241,526 2,158,492 83,034 Visitors center 781,400 747,968 696,452 51,516 Total Parks, Recreation and Culture 6,388,852 5,424,847 5,122,900 301,947 Capital Outlay - Departmental - 309,350 309,350 - Transfers to other funds 620,000 3,614,035 3,612,998 1,037 Amounts Charged to Appropriation 53,230,706 55,114,157 52,309,319 2,804,838 Excess of resources over (under) charges to appropriations 200,794 (4,793,657) (5,468,616) (674,959) Fund balance, June 30 80,020,082$ 75,025,631$ 74,350,672$ (674,959)$ See independent auditors' report. - 119 - GENERAL FUND (CONTINUED) For the year ended June 30, 2009 Budgeted Amounts CITY OF PALM DESERT BUDGETARY COMPARISON SCHEDULE BY DEPARTMENT - 120 - THIS PAGE INTENTIONALLY LEFT BLANK - 121 - OTHER GOVERNMENTAL FUNDS COMBINING STATEMENTS Schedule 5 Total Special Debt Capital Other Revenue Service Projects Governmental Funds Fund Funds Funds ASSETS: Pooled cash and investments 43,031,178$ 244,194$ 28,060,143$ 71,335,515$ Receivables: Accounts 294,090 - 716,274 1,010,364 Assessments - 2,652,156 - 2,652,156 Interest 98,941 - 10,971 109,912 Loans 2,773,984 - - 2,773,984 Prepaid costs 990 36 1,026 Due from other governments 1,716,179 7,283 365,117 2,088,579 Due from other funds - - 13,216 13,216 Advances to other funds 654,000 - 12,765,000 13,419,000 Restricted assets: Cash and investments with fiscal agent 2,721,594 - 23,502,862 26,224,456 TOTAL ASSETS 51,290,956$ 2,903,633$ 65,433,619$ 119,628,208$ LIABILITIES: Accounts payable 1,076,139$ 292$ 254,011$ 1,330,442$ Accrued liabilities 44,154 - 4,149 48,303 Due to other funds 22,086 - - 22,086 Unearned revenues 806,018 - 128,967 934,985 Deferred revenue 1,004,041 2,652,156 702,360 4,358,557 Deposits payable 386,053 - 127,686 513,739 TOTAL LIABILITIES 3,338,491 2,652,448 1,217,173 7,208,112 FUND BALANCES: Reserved for: Encumbrances 1,909,230 - 3,043,686 4,952,916 Continuing appropriation 24,850,258 - 10,386,288 35,236,546 Loans 2,756,974 - - 2,756,974 Prepaid costs 990 - 36 1,026 Advances to other funds 654,000 - 12,765,000 13,419,000 Reserve requirement 27,285 - - 27,285 Unreserved: Designated for: Special revenue purposes 18,541,269 - - 18,541,269 Debt service - 251,185 - 251,185 Capital outlay - - 38,021,436 38,021,436 Undesignated (787,541) - - (787,541) TOTAL FUND BALANCES 47,952,465 251,185 64,216,446 112,420,096 TOTAL LIABILITIES AND FUND BALANCES 51,290,956$ 2,903,633$ 65,433,619$ 119,628,208$ See independent auditors' report. LIABILITIES AND FUND BALANCES - 122 - CITY OF PALM DESERT COMBINING BALANCE SHEET OTHER GOVERNMENTAL FUNDS June 30, 2009 Schedule 6 Total Special Debt Capital Other Revenue Service Projects Governmental Funds Fund Funds Funds REVENUES: Taxes 2,848,930$ -$ -$ 2,848,930$ Special assessments collected 919,601 211,002 - 1,130,603 Licenses and permits - - 307,070 307,070 Intergovernmental revenues 2,132,568 - 3,130,361 5,262,929 Rental income 4,883,360 - - 4,883,360 Investment earnings 1,058,069 3,430 1,253,591 2,315,090 Fines and forfeitures 184,793 - - 184,793 Miscellaneous 1,300,495 147,456 54,559 1,502,510 TOTAL REVENUES 13,327,816 361,888 4,745,581 18,435,285 EXPENDITURES: Current: General government 7,540,768 29,525 661,901 8,232,194 Public safety 166,875 - - 166,875 Public works 1,182,114 - 6,488,335 7,670,449 Capital outlay 5,175,568 - 9,830,400 15,005,968 Debt service: Principal retirement - 46,000 - 46,000 Interest and fiscal charges - 136,187 - 136,187 TOTAL EXPENDITURES 14,065,325 211,712 16,980,636 31,257,673 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (737,509) 150,176 (12,235,055) (12,822,388) OTHER FINANCING SOURCES (USES): Issuance of bonds 2,015,000 - - 2,015,000 Transfers in 5,421,685 - 1,051,914 6,473,599 Transfers out (1,395,332) - (858,351) (2,253,683) TOTAL OTHER FINANCING SOURCES (USES) 6,041,353 - 193,563 6,234,916 NET CHANGE IN FUND BALANCES 5,303,844 150,176 (12,041,492) (6,587,472) FUND BALANCES - BEGINNING OF YEAR 42,648,621 101,009 76,257,938 119,007,568 FUND BALANCES - END OF YEAR 47,952,465$ 251,185$ 64,216,446$ 112,420,096$ See independent auditors' report. - 123 - CITY OF PALM DESERT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER GOVERNMENTAL FUNDS For the year ended June 30, 2009 - 124 - THIS PAGE INTENTIONALLY LEFT BLANK - 125 - OTHER GOVERNMENTAL FUNDS - SPECIAL REVENUE Special Revenue Funds are used to account for proceeds of specific revenue sources other than expendable trust that are legally restricted to expenditures for specific purposes. Traffic Safety Fund - Traffic and court fines are collected in these funds. A transfer from this Fund to the General Fund is made at the end of the fiscal year by council action to be applied toward the eligible expenditures permitted by law. Gas Tax Fund - Portions of the tax rate per gallon levied by the State of California on all gasoline purchases are allocated to cities throughout the State. These funds are restricted to expenditure for transit and street-related purposes. Measure A Fund - In 1988, Riverside County voters approved a half-cent sales tax, known as Measure A, to fund a variety of highway improvements, local street and road maintenance, commuter assistance and specialized transit projects. This fund is used to collect this tax, and pursuant to the provision of Measure A (Ordinance No. 88-1 of the County of Riverside) it is restricted for local street and road expenditures only. Housing Mitigation Fee Fund - This fund is used to account for fees collected from construction of commercial and office buildings for low and moderate income mitigation purposes to be used strictly for projects and programs that benefit the low and moderate income households. Community Development Block Grant Fund - This fund is used to account for the receipts and expenditures of CDBG funds received from the U.S. Department of Housing and Urban Development. New Construction Tax Fund - This fund is used to account for tax collected upon application to the City for a building permit from every person/entity for the construction of any new building, addition or trailer space in the city according to a fee schedule. Its use is restricted for the acquisition and development of public facilities such as parks, playgrounds and public structures. Planned Drainage Fund - This fund is used to account for off-site drainage fees based on an established fee schedule collected prior to approval of the final map in the case of land being subdivided or prior to the issuance of a building permit in the case of construction or improvement of subdivided land. Park and Recreation Facilities Fund - This fund is used to account for fees collected for residential and subdivision developments collected either at the time grading permits are paid or prior to the approval of the final map. Its use is restricted for expenditures related to park development, maintenance and equipment. Traffic Signals Fund - This fund is used to account for fees collected for residential, commercial and industrial developments either at the time grading permits are paid or prior to the approval of the final map. Its use is restricted for expenditures related to the acquisition and maintenance of traffic signals. Recycling Fund - This fund is used to account for resources resulting from lower landfill tipping fees of $8.50 per ton, which took effect in July 1996. Due to limited landfill resources, it will be used for the implementation of appropriate long-range plans to be determined by the City Council for municipal solid waste disposal. - 126 - THIS PAGE INTENTIONALLY LEFT BLANK - 127 - OTHER GOVERNMENTAL FUNDS - SPECIAL REVENUE (CONTINUED) Public Safety Police Grants Fund - This fund is used to account for grants received from the U.S. Department of Justice under the Local Law Enforcement Block Grants Program for the purpose of purchasing equipment related to public safety. El Paseo Assessment District Fund - This fund is used to collect assessments on all business establishments located within the boundaries set for the El Paseo parking and business improvement area based on a fee schedule established for the various types of businesses. Collections are made in the same manner and at the same time as the City business license fees. Proceeds from all charges are used for the promotion of business activities in the area. Air Quality Management Fund - This fund accounts for receipts from South Coast Air Quality Management District, forty-five percent of which is disbursed to the Coachella Valley Association of Governments. The remaining fifty-five percent are spent for programs that promote the goal of attaining Federal and State air quality standards. City-Wide Business License Fund - This fund accounts for receipts received from the College of the Desert Alumni Association Fair collected from all street fair vendors at $2.00 per day for each space. Fifty percent of the proceeds are spent for city-wide business promotion and the other fifty percent is transferred to the General Fund for partial business licensing cost recovery. Various Landscape and Lighting District Funds - These funds are used to account for expenditures and receipts of property taxes and service fees levied to the property owners in the various landscaping and lighting districts, which were formed to provide landscaping and street lighting maintenance. Individual landscaping and lighting funds are set up for Districts No. 1 through 17. AIPP Maintenance Fund - This fund is used to account for monies set aside to maintain the artwork in the City of Palm Desert. Child Care Program Fund - This fund is used to collect funds from developers for the purpose of providing child care programs. Golf Course Maintenance Fund - This fund is used to offset the cost of capital improvements, equipment purchases, perimeter maintenance, pay off assessments and other nonrecurring costs that will arise as a result of Desert Willow Golf Course Resort. Funding sources for the Golf Course Maintenance Fund are collections from the IROC and Standard Vacation Ownership, Inc. time-share project. Fire Facilities Restoration Fund - This fund is used to collect funds from developers for the purpose of construction, restoration and purchase of equipment for fire stations within the City. Energy Independence Loan Fund -This fund is used to provide funding for the AB811 Energy Loans and collect assessments from those AB811 loans through property tax collections. The assessments collected will be used to service debt issued and to provide additional funding for the AB811 loans. Redevelopment Agency Housing Authority Fund - This fund is used to account for revenues and expenditures related to rental units owned by the Housing Authority. Housing Traffic Mitigation Safety Gas Tax Measure A Fee ASSETS: Pooled cash and investments -$ 800,227$ 14,946,789$ 2,114,589$ Receivables: Accounts - - - - Interest - - - - Loans - - - - Prepaid costs - - - - Due from other governments 44,459 172,656 1,345,705 - Advances to other funds - - - - Restricted assets: Cash and investments with fiscal agent - - - - TOTAL ASSETS 44,459$ 972,883$ 16,292,494$ 2,114,589$ LIABILITIES: Accounts payable -$ 51,625$ 211,091$ -$ Accrued liabilities - - - - Due to other funds - - - - Unearned revenues - 748,602 26,222 - Deferred revenue - - 874,737 - Deposits payable - - - - TOTAL LIABILITIES - 800,227 1,112,050 - FUND BALANCES (DEFICITS): Reserved for: Encumbrances - 748,675 500,705 - Continuing appropriation - - 13,807,142 - Loans - - - - Prepaid costs - - - - Advances to other funds - - - - Reserve requirement - - - - Unreserved: Designated for: Special revenue purposes 44,459 - 872,597 2,114,589 Undesignated - (576,019) - - TOTAL FUND BALANCES (DEFICITS) 44,459 172,656 15,180,444 2,114,589 TOTAL LIABILITIES AND FUND BALANCES 44,459$ 972,883$ 16,292,494$ 2,114,589$ See independent auditors' report. LIABILITIES AND FUND BALANCES - 128 - COMBINING BALANCE SHEET June 30, 2009 CITY OF PALM DESERT OTHER SPECIAL REVENUE FUNDS Schedule 7 Community New Park and Public Development Construction Planned Recreation Traffic Safety Police Block Grant Tax Drainage Facilities Signals Recycling Grants -$ 409,331$ 5,370,557$ 2,413,742$ 750,404$ 6,014,403$ -$ 269 - - 159,113 - 113,214 1,656 - - - - - - - 17,010 - - - - - - - - - - - 990 - 70,594 - 13,435 - - 6,518 35,410 - 654,000 - - - - - - - - - - - - 87,873$ 1,063,331$ 5,383,992$ 2,572,855$ 750,404$ 6,135,125$ 37,066$ 67,323$ -$ 53,342$ 17,152$ -$ 61,891$ 19,190$ - - - - - 2,234 - 3,927 - - - - - 4,943 - - - - - 9,689 - 17,010 - 13,435 - - - - - - - - - - - 88,260 - 66,777 17,152 - 73,814 24,133 209,130 59,217 7,316 32,427 9,214 146,827 - - - 3,151,629 1,954,060 540,969 - - - - - - - - - - - - - - 990 - - 654,000 - - - - - - - - - - - - - 350,114 2,158,270 569,216 200,221 5,913,494 12,933 (209,517) - - - - - - (387) 1,063,331 5,317,215 2,555,703 750,404 6,061,311 12,933 87,873$ 1,063,331$ 5,383,992$ 2,572,855$ 750,404$ 6,135,125$ 37,066$ (Continued) - 129 - Landscape El Paseo Air City Wide and Lighting Assessment Quality Business Districts District Management License Nos. 1 - 17 ASSETS: Pooled cash and investments 35,015$ 233,852$ -$ 952,310$ Receivables: Accounts - - 1,400 - Interest - - - - Loans - - - - Prepaid costs - - - - Due from other governments - 15,915 - 11,487 Advances to other funds - - - - Restricted assets: Cash and investments with fiscal agent - - - - TOTAL ASSETS 35,015$ 249,767$ 1,400$ 963,797$ LIABILITIES: Accounts payable 6,780$ 7,357$ -$ 41,438$ Accrued liabilities - - - - Due to other funds - - - - Unearned revenues - - - - Deferred revenue - - - - Deposits payable - - - - TOTAL LIABILITIES 6,780 7,357 - 41,438 FUND BALANCES (DEFICITS): Reserved for: Encumbrances - - - - Continuing appropriation - 80,000 - - Loans - - - - Prepaid costs - - - - Advances to other funds - - - - Reserve requirement - - - - Unreserved: Designated for: Special revenue purposes 28,235 162,410 1,400 922,359 Undesignated - - - - TOTAL FUND BALANCES (DEFICITS) 28,235 242,410 1,400 922,359 TOTAL LIABILITIES AND FUND BALANCES 35,015$ 249,767$ 1,400$ 963,797$ See independent auditors' report. LIABILITIES AND FUND BALANCES - 130 - CITY OF PALM DESERT COMBINING BALANCE SHEET OTHER SPECIAL REVENUE FUNDS June 30, 2009 (CONTINUED) Schedule 7 Redevelopment Total Fire Energy Agency Other AIPP Child Care Golf Course Facilities Independence Housing Special Revenue Maintenance Program Maintenance Restoration Loan Authority Funds -$ 1,470,942$ 2,717,964$ 614,606$ 1,775,480$ 2,410,967$ 43,031,178$ 14,415 - - - - 4,023 294,090 - - - - 98,859 82 98,941 - - - - 2,756,974 - 2,773,984 - - - - - - 990 - - - - - - 1,716,179 - - - - - - 654,000 - - - - - 2,721,594 2,721,594 14,415$ 1,470,942$ 2,717,964$ 614,606$ 4,631,313$ 5,136,666$ 51,290,956$ 3,204$ -$ 15,637$ -$ -$ 520,109$ 1,076,139$ - - - - - 41,920 44,154 13,216 - - - - - 22,086 - - - - - 21,505 806,018 - - - - 98,859 - 1,004,041 - - - - - 386,053 386,053 16,420 - 15,637 - 98,859 969,587 3,338,491 - - 97,823 - - 97,896 1,909,230 - 1,470,942 52,000 614,606 - 3,178,910 24,850,258 - - - - 2,756,974 - 2,756,974 - - - - - - 990 - - - - - - 654,000 - - - - - 27,285 27,285 - - 2,552,504 - 1,775,480 862,988 18,541,269 (2,005) - - - - - (787,541) (2,005) 1,470,942 2,702,327 614,606 4,532,454 4,167,079 47,952,465 14,415$ 1,470,942$ 2,717,964$ 614,606$ 4,631,313$ 5,136,666$ 51,290,956$ - 131 - Housing Traffic Mitigation Safety Gas Tax Measure A Fee REVENUES: Taxes -$ -$ 1,958,640$ 95,595$ Special assessments collected - - - - Intergovernmental revenues - 1,295,211 128,686 - Rental income - - - - Investment earnings 1,710 30,055 346,388 49,958 Fines and forfeitures 184,793 - - - Miscellaneous - - - 30,000 TOTAL REVENUES 186,503 1,325,266 2,433,714 175,553 EXPENDITURES: Current: General government - - - - Public safety - - - - Public works - 379,773 - - Capital outlay - - 1,237,512 - TOTAL EXPENDITURES - 379,773 1,237,512 - EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 186,503 945,493 1,196,202 175,553 OTHER FINANCING SOURCES (USES): Issuance of bonds - - - - Transfers in - - - - Transfers out (175,187) (853,927) - - TOTAL OTHER FINANCING SOURCES (USES) (175,187) (853,927) - - NET CHANGE IN FUND BALANCES 11,316 91,566 1,196,202 175,553 FUND BALANCES - BEGINNING OF YEAR 33,143 81,090 13,984,242 1,939,036 FUND BALANCES (DEFICITS) - END OF YEAR 44,459$ 172,656$ 15,180,444$ 2,114,589$ See independent auditors' report. COMBINING STATEMENT OF REVENUES, EXPENDITURES CITY OF PALM DESERT AND CHANGES IN FUND BALANCES For the year ended June 30, 2009 - 132 - OTHER SPECIAL REVENUE FUNDS Schedule 8 Community New Park and Public Development Construction Planned Recreation Traffic Safety Police Block Grant Tax Drainage Facilities Signals Recycling Grants -$ 361,355$ 39,270$ -$ 52,471$ -$ -$ - - - - - - - 397,162 - - - - 52,106 200,423 - - - - - - - 949 21,025 128,773 67,847 18,501 145,899 1,063 - - - - - - - - 16,449 - 159,113 - 466,508 - 398,111 398,829 168,043 226,960 70,972 664,513 201,486 444,794 - - - - 717,117 - - - - - - - 166,875 - 482 2,361 258,491 - - - - 3,981 208,971 432,441 95,017 - 32,811 444,794 4,463 211,332 690,932 95,017 717,117 199,686 (46,683) 394,366 (43,289) (463,972) (24,045) (52,604) 1,800 - - - - - - - - - - - - - - - - - (150,000) - - - - - - (150,000) - - - (46,683) 394,366 (43,289) (613,972) (24,045) (52,604) 1,800 46,296 668,965 5,360,504 3,169,675 774,449 6,113,915 11,133 (387)$ 1,063,331$ 5,317,215$ 2,555,703$ 750,404$ 6,061,311$ 12,933$ (Continued) - 133 - Landscape El Paseo Air City Wide and Lighting Assessment Quality Business Districts District Management License Nos. 1 - 17 REVENUES: Taxes -$ -$ 44,800$ -$ Special assessments collected 227,999 - - 691,602 Intergovernmental revenues - 58,980 - - Rental income - - - - Investment earnings - 5,348 3,960 6,848 Fines and forfeitures - - - - Miscellaneous - - - - TOTAL REVENUES 227,999 64,328 48,760 698,450 EXPENDITURES: Current: General government 242,037 39,547 32,200 - Public safety - - - - Public works - - - 541,007 Capital outlay - - - - TOTAL EXPENDITURES 242,037 39,547 32,200 541,007 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES (14,038) 24,781 16,560 157,443 OTHER FINANCING SOURCES (USES): Issuance of bonds - - - - Transfers in - - - 61,084 Transfers out - - (216,218) - TOTAL OTHER FINANCING SOURCES (USES) - - (216,218) 61,084 NET CHANGE IN FUND BALANCES (14,038) 24,781 (199,658) 218,527 FUND BALANCES - BEGINNING OF YEAR 42,273 217,629 201,058 703,832 FUND BALANCES (DEFICITS) - END OF YEAR 28,235$ 242,410$ 1,400$ 922,359$ See independent auditors' report. CITY OF PALM DESERT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER SPECIAL REVENUE FUNDS - 134 - For the year ended June 30, 2009 (CONTINUED) Schedule 8 Redevelopment Total Fire Energy Agency Other AIPP Child Care Golf Course Facilities Independence Housing Special Revenue Maintenance Program Maintenance Restoration Loan Authority Funds -$ 180,214$ -$ 116,585$ -$ -$ 2,848,930$ - - - - - - 919,601 - - - - - - 2,132,568 - - - - - 4,883,360 4,883,360 458 32,503 58,457 13,740 17,454 107,133 1,058,069 - - - - - - 184,793 14,515 - 597,616 - - 16,294 1,300,495 14,973 212,717 656,073 130,325 17,454 5,006,787 13,327,816 76,184 2,534 316,661 - - 5,669,694 7,540,768 - - - - - - 166,875 - - - - - - 1,182,114 - - 59,953 - - 3,104,882 5,175,568 76,184 2,534 376,614 - - 8,774,576 14,065,325 (61,211) 210,183 279,459 130,325 17,454 (3,767,789) (737,509) - - - - 2,015,000 - 2,015,000 8,351 - - - 2,500,000 2,852,250 5,421,685 - - - - - - (1,395,332) 8,351 - - - 4,515,000 2,852,250 6,041,353 (52,860) 210,183 279,459 130,325 4,532,454 (915,539) 5,303,844 50,855 1,260,759 2,422,868 484,281 - 5,082,618 42,648,621 (2,005)$ 1,470,942$ 2,702,327$ 614,606$ 4,532,454$ 4,167,079$ 47,952,465$ - 135 - Schedule 9-A Variance with Final Budget Actual Positive Original Final Amounts (Negative) Fund balance, July 1 33,143$ 33,143$ 33,143$ -$ Resources (inflows): Investment earnings 5,000 5,000 1,710 (3,290) Fines and forfeitures 220,000 220,000 184,793 (35,207) Total resources 225,000 225,000 186,503 (38,497) Charges to appropriations (outflows): Transfers to other funds 225,000 225,000 175,187 49,813 Total charges to appropriations 225,000 225,000 175,187 49,813 Excess of resources over (under) charges to appropriations - - 11,316 11,316 Fund balance, June 30 33,143$ 33,143$ 44,459$ 11,316$ See independent auditors' report. CITY OF PALM DESERT - 136 - For the year ended June 30, 2009 Budgeted Amounts SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL TRAFFIC SAFETY Schedule 9-B Variance with Final Budget Actual Positive Original Final Amounts (Negative) Fund balance, July 1 81,090$ 81,090$ 81,090$ -$ Resources (inflows): Intergovernmental revenues 995,000 1,323,148 1,295,211 (27,937) Investment earnings 30,000 30,000 30,055 55 Total resources 1,025,000 1,353,148 1,325,266 (27,882) Charges to appropriations (outflows): Current: Public works 800,300 1,128,448 379,773 748,675 Transfers to other funds 1,025,000 1,025,000 853,927 171,073 Total charges to appropriations 1,825,300 2,153,448 1,233,700 919,748 Excess of resources over (under) charges to appropriations (800,300) (800,300) 91,566 891,866 Fund balance, June 30 (719,210)$ (719,210)$ 172,656$ 891,866$ See independent auditors' report. CITY OF PALM DESERT - 137 - For the year ended June 30, 2009 Budgeted Amounts SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GAS TAX Schedule 9-C Variance with Final Budget Actual Positive Original Final Amounts (Negative) Fund balance, July 1 1,939,036$ 1,939,036$ 1,939,036$ -$ Resources (inflows): Taxes 240,000 240,000 95,595 (144,405) Investment earnings 60,000 60,000 49,958 (10,042) Other - - 30,000 30,000 Total resources 300,000 300,000 175,553 (124,447) Charges to appropriations (outflows): Current: General government 2,300,000 2,330,000 - 2,330,000 Excess of resources over (under) charges to appropriations (2,000,000) (2,030,000) 175,553 2,205,553 Fund balance, June 30 (60,964)$ (90,964)$ 2,114,589$ 2,205,553$ See independent auditors' report. CITY OF PALM DESERT - 138 - For the year ended June 30, 2009 Budgeted Amounts SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL HOUSING MITIGATION FEES Schedule 9-D Variance with Final Budget Actual Positive Original Final Amounts (Negative) Fund balance, July 1 46,296$ 46,296$ 46,296$ -$ Resources (inflows): Intergovernmental revenues 490,000 490,000 397,162 (92,838) Investment earnings 6,500 6,500 949 (5,551) Total resources 496,500 496,500 398,111 (98,389) Charges to appropriations (outflows): Current: General government 511,000 703,555 444,794 258,761 Total charges to appropriations 511,000 703,555 444,794 258,761 Excess of resources over (under) charges to appropriations (14,500) (207,055) (46,683) 160,372 Fund balance (deficit), June 30 31,796$ (160,759)$ (387)$ 160,372$ See independent auditors' report. CITY OF PALM DESERT - 139 - For the year ended June 30, 2009 Budgeted Amounts SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL COMMUNITY DEVELOPMENT BLOCK GRANT Schedule 9-E Variance with Final Budget Actual Positive Original Final Amounts (Negative) Fund balance, July 1 42,273$ 42,273$ 42,273$ -$ Resources (inflows): Special assessments collected 230,000 230,000 227,999 (2,001) Total resources 230,000 230,000 227,999 (2,001) Charges to appropriations (outflows): Current: General government 230,000 244,000 242,037 1,963 Total charges to appropriations 230,000 244,000 242,037 1,963 Excess of resources over (under) charges to appropriations - (14,000) (14,038) (38) Fund balance, June 30 42,273$ 28,273$ 28,235$ (38)$ See independent auditors' report. CITY OF PALM DESERT - 140 - For the year ended June 30, 2009 Budgeted Amounts SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL EL PASEO ASSESSMENT DISTRICT Schedule 9-F Variance with Final Budget Actual Positive Original Final Amounts (Negative) Fund balance, July 1 201,058$ 201,058$ 201,058$ -$ Resources (inflows): Taxes 50,000 50,000 44,800 (5,200) Investment earnings 5,000 5,000 3,960 (1,040) Total resources 55,000 55,000 48,760 (6,240) Charges to appropriations (outflows): Current: General government 50,000 75,000 32,200 42,800 Transfers out - 210,764 216,218 (5,454) Total charges to appropriations 50,000 285,764 248,418 37,346 Excess of resources over (under) charges to appropriations 5,000 (230,764) (199,658) 31,106 Fund balance, June 30 206,058$ (29,706)$ 1,400$ 31,106$ See independent auditors' report. CITY OF PALM DESERT - 141 - For the year ended June 30, 2009 Budgeted Amounts SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CITY WIDE BUSINESS LICENSE Schedule 9-G Variance with Final Budget Actual Positive Original Final Amounts (Negative) Fund balance, July 1 703,832$ 703,832$ 703,832$ -$ Resources (inflows): Taxes 770,872 770,872 691,602 (79,270) Investment earnings - - 6,848 6,848 Transfers from other funds 70,000 70,000 61,084 (8,916) Total resources 840,872 840,872 759,534 (81,338) Charges to appropriations (outflows): Current: Public works 800,940 813,548 541,007 272,541 Total charges to appropriations 800,940 813,548 541,007 272,541 Excess of resources over (under) charges to appropriations 39,932 27,324 218,527 191,203 Fund balance, June 30 743,764$ 731,156$ 922,359$ 191,203$ See independent auditors' report. CITY OF PALM DESERT - 142 - For the year ended June 30, 2009 Budgeted Amounts SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL LANDSCAPE AND LIGHTING DISTRICTS NOS. 1 - 17 - 143 - OTHER GOVERNMENTAL FUNDS - DEBT SERVICE City Highlands Undergrounding Fund - This fund is used to account for the resources and payment for debt related to Highlands Undergrounding. Schedule 10 Total City Other Highlands Debt Service Undergrounding Fund ASSETS: Pooled cash and investments 244,194$ 244,194$ Receivables: Assessments 2,652,156 2,652,156 Due from other governments 7,283 7,283 TOTAL ASSETS 2,903,633$ 2,903,633$ LIABILITIES: Accounts payable 292$ 292$ Deferred revenue 2,652,156 2,652,156 TOTAL LIABILITIES 2,652,448 2,652,448 FUND BALANCES: Unreserved: Designated for: Debt service 251,185 251,185 TOTAL FUND BALANCES 251,185 251,185 TOTAL LIABILITIES AND FUND BALANCES 2,903,633$ 2,903,633$ See independent auditors' report. LIABILITIES AND FUND BALANCES - 144 - CITY OF PALM DESERT COMBINING BALANCE SHEET OTHER DEBT SERVICE FUND June 30, 2009 Schedule 11 Total City Other Highlands Debt Service Undergrounding Fund REVENUES: Special assessments collected 211,002$ 211,002$ Investment earnings 3,430 3,430 Miscellaneous 147,456 147,456 TOTAL REVENUES 361,888 361,888 EXPENDITURES: Current: General government 29,525 29,525 Debt service: Principal retirement 46,000 46,000 Interest and fiscal charges 136,187 136,187 TOTAL EXPENDITURES 211,712 211,712 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 150,176 150,176 FUND BALANCES - BEGINNING OF YEAR 101,009 101,009 FUND BALANCES - END OF YEAR 251,185$ 251,185$ See independent auditors' report. - 145 - CITY OF PALM DESERT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER DEBT SERVICE FUND For the year ended June 30, 2009 - 146 - THIS PAGE INTENTIONALLY LEFT BLANK - 147 - OTHER GOVERNMENTAL FUNDS - CAPITAL PROJECTS Capital Projects Funds are used to account for the acquisition and construction of major capital facilities, except for those financed by certain Special Revenue and Enterprise funds. Arts in Public Places Fund - This fund is used to account for fees collected from residential, commercial and public facilities development except for street and drainage projects. Its use is restricted for acquisition, installation, improvement and maintenance of artwork to be displayed in the City, the administration of the program and community public art education programs. Capital Projects Reserve Fund - This fund is used to account for resources and expenditures for capital improvement projects that are related to the acquisition and development of public facilities, infrastructure and equipment. Drainage Facilities Fund - This fund is used to account for resources and expenditures for planned capital improvement projects that are under the Master Drainage Plan. Park and Recreational Facilities Fund - This fund is used to account for resources and expenditures for capital improvement projects that are related to park development, maintenance and equipment. Signalization Fund - This fund is used to account for resources and expenditures for capital improvement projects that are related to the acquisition and maintenance of traffic signals. Buildings Fund - This fund is used to account for resources and expenditures for capital improvement projects that are related to the improvement and maintenance of public facilities and structures. Library Fund - This fund is used to account for resources and expenditures for capital improvement projects that are related to the purchase of library resources for the Multi-Agency Library. CFD Indian Ridge Fund - This fund is used to account for the construction of public improvements from bond proceeds Series A resulting from the creation of this District. Special Assessment District Funds - This fund is used to account for the construction of public improvements from proceeds resulting from the creation of various assessment Districts. Assessment District No. 94-3 Merano Town Center Parking Lot - This fund is used to account for resources and expenditures for construction of a two-story parking lot at the Westfield Shopping Center. Silver Spur Ranch Fund - This fund is used to account for the construction of public improvements from bond proceeds resulting from the creation of this District. Highlands Undergrounding - This fund is used to account for the construction of public improvements from bond proceeds resulting from the creation of this District. CFD University - This fund is used to account for the construction of public improvements from proceeds resulting from the creation of this District. Assessment 29 - This fund is used to account for the construction of public improvement from proceeds resulting from the creation of this District. Capital Arts in Projects Drainage Public Places Reserve Facilities ASSETS: Pooled cash and investments 2,476,382$ 12,848,636$ 3,169,312$ Receivables: Accounts - 689,824 - Interest - 10,315 - Prepaid costs 36 - - Due from other governments - 365,117 - Due from other funds 13,216 - - Advances to other funds - 8,000,000 - Restricted assets: Cash and investments with fiscal agent - - - TOTAL ASSETS 2,489,634$ 21,913,892$ 3,169,312$ LIABILITIES: Accounts payable 289$ 48,669$ -$ Accrued liabilities 4,149 - - Deferred revenue - 702,360 - Unearned revenue - 128,967 - Deposits payable 127,686 - - TOTAL LIABILITIES 132,124 879,996 - FUND BALANCES: Reserved for: Encumbrances - 2,777,644 50,704 Continuing appropriation 550,000 6,122,468 1,853,060 Prepaid costs 36 - - Advances to other funds - 8,000,000 - Unreserved: Designated for: Capital outlay 1,807,474 4,133,784 1,265,548 TOTAL FUND BALANCES 2,357,510 21,033,896 3,169,312 TOTAL LIABILITIES AND FUND BALANCES 2,489,634$ 21,913,892$ 3,169,312$ See independent auditors' report. COMBINING BALANCE SHEET June 30, 2009 CITY OF PALM DESERT OTHER CAPITAL PROJECTS FUNDS LIABILITIES AND FUND BALANCES - 148 - Schedule 12 Parks and Assessment Recreation CFD District No. 94-3 Facilities Signalization Buildings Library Indian Ridge Merano 363,965$ 334,195$ 3,698,609$ 556,298$ -$ -$ - - - - - - - - - - - 5 - - - - - - - - - - - - - - - - - - 4,765,000 - - - - - - - - - - 178,800 5,128,965$ 334,195$ 3,698,609$ 556,298$ -$ 178,805$ 1,892$ -$ -$ 45,785$ -$ -$ - - - - - - - - - - - - - - - - - - - - - - - - 1,892 - - 45,785 - - - 59 - 6,842 - - - 10,760 1,850,000 - - - - - - - - - 4,765,000 - - - - - 362,073 323,376 1,848,609 503,671 - 178,805 5,127,073 334,195 3,698,609 510,513 - 178,805 5,128,965$ 334,195$ 3,698,609$ 556,298$ -$ 178,805$ (Continued) - 149 - Town Center Silver Spur Parking Lot Ranch ASSETS: Pooled cash and investments 88,284$ 568$ Receivables: Accounts - - Interest - - Prepaid costs - - Due from other governments - - Due from other funds - - Advances to other funds - - Restricted assets: Cash and investments with fiscal agent - - TOTAL ASSETS 88,284$ 568$ LIABILITIES: Accounts payable 88,284$ -$ Accrued liabilities - - Deferred revenue - - Unearned revenue - - Deposits payable - - TOTAL LIABILITIES 88,284 - FUND BALANCES: Reserved for: Encumbrances - - Continuing appropriation - - Prepaid costs - - Advances to other funds - - Unreserved: Designated for: Capital outlay - 568 TOTAL FUND BALANCES - 568 TOTAL LIABILITIES AND FUND BALANCES 88,284$ 568$ See independent auditors' report. CITY OF PALM DESERT COMBINING BALANCE SHEET OTHER CAPITAL PROJECTS FUNDS June 30, 2009 (CONTINUED) LIABILITIES AND FUND BALANCES - 150 - Schedule 12 Total Other Highlands CFD Assessment Capital Projects Undergrounding University 29 Funds 1,016,368$ -$ 3,507,526$ 28,060,143$ - - 26,450 716,274 - 642 9 10,971 - - - 36 - - - 365,117 - - - 13,216 - - - 12,765,000 - 22,989,349 334,713 23,502,862 1,016,368$ 22,989,991$ 3,868,698$ 65,433,619$ -$ -$ 69,092$ 254,011$ - - - 4,149 - - - 702,360 - - - 128,967 - - - 127,686 - - 69,092 1,217,173 - - 208,437 3,043,686 - - - 10,386,288 - - - 36 - - - 12,765,000 1,016,368 22,989,991 3,591,169 38,021,436 1,016,368 22,989,991 3,799,606 64,216,446 1,016,368$ 22,989,991$ 3,868,698$ 65,433,619$ - 151 - Capital Arts in Projects Drainage Public Places Reserve Facilities REVENUES: Licenses and permits 307,070$ -$ -$ Intergovernmental revenues - 3,106,261 - Investment earnings 53,230 692,783 75,961 Miscellaneous 18,000 36,559 - TOTAL REVENUES 378,300 3,835,603 75,961 EXPENDITURES: Current: General government 314,364 - - Public works - 4,428,035 74,328 Capital outlay 18,000 1,931,349 6,884 TOTAL EXPENDITURES 332,364 6,359,384 81,212 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 45,936 (2,523,781) (5,251) OTHER FINANCING SOURCES (USES): Transfers in - 717,914 - Transfers out (8,351) - - TOTAL OTHER FINANCING SOURCES (USES) (8,351) 717,914 - NET CHANGE IN FUND BALANCES 37,585 (1,805,867) (5,251) FUND BALANCES - BEGINNING OF YEAR 2,319,925 22,839,763 3,174,563 FUND BALANCES - END OF YEAR 2,357,510$ 21,033,896$ 3,169,312$ See independent auditors' report. - 152 - OTHER CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES CITY OF PALM DESERT AND CHANGES IN FUND BALANCES For the year ended June 30, 2009 Schedule 13 Parks and Assessment Recreation CFD District No. 94-3 Facilities Signalization Buildings Library Indian Ridge Merano -$ -$ -$ -$ -$ -$ 24,100 - - - - - 137,225 6,971 88,647 - - 1,207 - - - - - - 161,325 6,971 88,647 - - 1,207 - - - 347,537 - - 43,992 14,181 82,880 - 7,401 - 171,170 - - - - - 215,162 14,181 82,880 347,537 7,401 - (53,837) (7,210) 5,767 (347,537) (7,401) 1,207 - - - 334,000 - - (850,000) - - - - - (850,000) - - 334,000 - - (903,837) (7,210) 5,767 (13,537) (7,401) 1,207 6,030,910 341,405 3,692,842 524,050 7,401 177,598 5,127,073$ 334,195$ 3,698,609$ 510,513$ -$ 178,805$ (Continued) - 153 - Town Center Silver Spur Parking Lot Ranch REVENUES: Licenses and permits -$ -$ Intergovernmental revenues - - Investment earnings - Miscellaneous - - TOTAL REVENUES - - EXPENDITURES: Current: General government - - Public works - 1 Capital outlay - - TOTAL EXPENDITURES - 1 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES - (1) OTHER FINANCING SOURCES (USES): Transfers in - - Transfers out - - TOTAL OTHER FINANCING SOURCES (USES) - - NET CHANGE IN FUND BALANCES - (1) FUND BALANCES - BEGINNING OF YEAR - 569 FUND BALANCES - END OF YEAR -$ 568$ See independent auditors' report. - 154 - For the year ended June 30, 2009 (CONTINUED) CITY OF PALM DESERT COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OTHER CAPITAL PROJECTS FUNDS Schedule 13 Total Other Highlands CFD Assessment Capital Projects Undergrounding University 29 Funds -$ -$ -$ 307,070$ - - - 3,130,361 - 197,567 - 1,253,591 - - - 54,559 - 197,567 - 4,745,581 - - - 661,901 - 1,046,708 790,809 6,488,335 - 6,526,959 1,176,038 9,830,400 - 7,573,667 1,966,847 16,980,636 - (7,376,100) (1,966,847) (12,235,055) - - - 1,051,914 - - - (858,351) - - - 193,563 - (7,376,100) (1,966,847) (12,041,492) 1,016,368 30,366,091 5,766,453 76,257,938 1,016,368$ 22,989,991$ 3,799,606$ 64,216,446$ - 155 - - 156 - THIS PAGE INTENTIONALLY LEFT BLANK - 157 - AGENCY FUNDS Agency Funds are used to account for assets held by the city as an agent for individuals, private organizations, other governments and/or funds. Agency Fund - This fund is used to account for deposits placed with the City by developers, individuals and groups to obtain future services. Deposits are reduced by disbursements and/or refunds to the depositors when the cost of services is determined. Treasurers 1911 Bond Act - This fund is used to account for the assets held on behalf of the assessment district’s property owners until they are remitted to the bondholders. Retiree Service Stipend Fund - This fund is used to account for assets held to pay for the retiree service stipend. Special Assessment Funds - These funds are used to account for the collection of special assessments and the future payment of debt service related to bonds issued. Schedule 14 Special Treasurers Retiree Service Assessment Agency 1991 Bond Act Stipend Fund Funds Totals Cash and investments 2,775,713$ 270,664$ 3,581,042$ 8,458,161$ 15,085,580$ Receivables (net of allowance for uncollectibles): Accounts - - - 109,500,634 109,500,634 Interest - - - 224 224 Restricted assets: Cash with fiscal agent - - - 8,203,488 8,203,488 TOTAL ASSETS 2,775,713$ 270,664$ 3,581,042$ 126,162,507$ 132,789,926$ Deposits 2,775,713$ 270,664$ 3,581,042$ 126,162,507$ 132,789,926$ TOTAL LIABILITIES 2,775,713$ 270,664$ 3,581,042$ 126,162,507$ 132,789,926$ See independent auditors' report. COMBINING STATEMENT OF ASSETS AND LIABILITIES ALL AGENCY FUNDS June 30, 2009 CITY OF PALM DESERT - 158 - ASSETS LIABILITIES Schedule 15 Balance Balance July 1, June 30, 2008 Additions Deletions 2009 ASSETS: Cash and investments 3,492,113$ 1,481,750$ 2,198,150$ 2,775,713$ Restricted assets: Cash with fiscal agent 43 43 - TOTAL ASSETS 3,492,156$ 1,481,750$ 2,198,193$ 2,775,713$ LIABILITIES: Deposits 3,492,156$ 1,481,750$ 2,198,193$ 2,775,713$ TOTAL LIABILITIES 3,492,156$ 1,481,750$ 2,198,193$ 2,775,713$ ASSETS: Cash and investments 270,664$ -$ -$ 270,664$ TOTAL ASSETS 270,664$ -$ -$ 270,664$ LIABILITIES: Deposits 270,664$ -$ -$ 270,664$ TOTAL LIABILITIES 270,664$ -$ -$ 270,664$ ASSETS: Cash and investments 3,708,059$ 514,387$ 641,404$ 3,581,042$ TOTAL ASSETS 3,708,059$ 514,387$ 641,404$ 3,581,042$ LIABILITIES: Deposits 3,708,059$ 514,387$ 641,404$ 3,581,042$ TOTAL LIABILITIES 3,708,059$ 514,387$ 641,404$ 3,581,042$ See independent auditors' report (Continued) COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES ALL AGENCY FUNDS For the year ended June 30, 2009 CITY OF PALM DESERT RETIREE SERVICES STIPEND FUND AGENCY TREASURERS 1911 BOND ACT - 159 - Schedule 15 Balance Balance July 1, June 30, 2008 Additions Deletions 2009 ASSETS: Cash and investments 6,661,425$ 10,810,675$ 9,013,939$ 8,458,161$ Receivables (net of allowance for uncollectibles): Accounts 112,628,103 253,051 3,380,520 109,500,634 Interest 20,857 224 20,857 224 Restricted assets: Cash with fiscal agent 10,035,473 94,733 1,926,718 8,203,488 TOTAL ASSETS 129,345,858$ 11,158,683$ 14,342,034$ 126,162,507$ LIABILITIES: Deposits 129,345,858$ 11,158,683$ 14,342,034$ 126,162,507$ TOTAL LIABILTIES 129,345,858$ 11,158,683$ 14,342,034$ 126,162,507$ ASSETS: Cash and investments 14,132,261$ 12,806,812$ 11,853,493$ 15,085,580$ Receivables (net of allowance for uncollectibles): Accounts 112,628,103 253,051 3,380,520 109,500,634 Interest 20,857 224 20,857 224 Restricted assets: Cash with fiscal agent 10,035,516 94,733 1,926,761 8,203,488 TOTAL ASSETS 136,816,737$ 13,154,820$ 17,181,631$ 132,789,926$ LIABILITIES: Deposits 136,816,737$ 13,154,820$ 17,181,631$ 132,789,926$ TOTAL LIABILITIES 136,816,737$ 13,154,820$ 17,181,631$ 132,789,926$ See independent auditors' report. - 160 - TOTAL - ALL AGENCY FUNDS SPECIAL ASSESSMENT FUNDS CITY OF PALM DESERT ALL AGENCY FUNDS COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES For the year ended June 30, 2009 (CONTINUED) 161 DESCRIPTION OF STATISTICAL SECTION CONTENTS June 30, 2009 This part of the City of Palm Desert’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information say about the City’s overall financial health. Contents Financial Trends Theses schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in 2001; schedules presenting government-wide information include information beginning in that year. City of Palm Desert Net Assets by Component Last Nine Fiscal Years (Accrual Basis of Accounting) Governmental Activities 2009 2008 2007 2006 2005 2004 Invested in capital assets, net of related debt 298,107,225 (3) 287,536,477 (3) 213,685,471 166,229,783 147,410,323 141,303,283 Restricted 170,528,579 168,029,901 173,335,615 (2) 153,342,045 103,701,569 100,268,597 Unrestricted 106,912,693 113,420,152 111,386,996 108,077,101 96,445,212 79,075,507 Total Governmental Activities Net Assets 575,548,497 568,986,530 498,408,082 427,648,929 347,557,104 320,647,387 Business-Type Activities Invested in capital assets, net of related debt 68,263,719 62,814,656 62,956,911 63,233,079 63,588,616 63,857,424 Restricted - - - - - - Unrestricted 4,686,899 5,211,985 5,294,980 4,459,840 2,948,910 1,830,204 Total Business-type Activities Net Assets 72,950,618 68,026,641 68,251,891 67,692,919 66,537,526 65,687,628 Primary Government Invested in capital assets, net of related debt 366,370,944 350,351,133 276,642,382 229,462,862 210,998,939 205,160,707 Restricted 170,528,579 168,029,901 173,335,615 153,342,045 103,701,569 100,268,597 Unrestricted 111,599,592 118,632,137 116,681,976 112,536,941 99,394,122 80,905,711 Total Primary Government Net Assets 648,499,115 637,013,171 566,659,973 495,341,848 414,094,630 386,335,015 Governmental Activities 2003 2002 2001 Invested in capital assets, net of related debt 143,448,973 44,179,223 41,332,088 Restricted 99,313,317 78,732,876 72,610,266 Unrestricted 80,229,689 88,266,933 80,007,103 Total Governmental Activities Net Assets 322,991,979 211,179,032 193,949,457 Business-Type Activities Invested in capital assets, net of related debt 64,269,694 64,085,563 64,702,174 Restricted - - Unrestricted 1,288,488 1,494,726 1,419,665 Total Business-type Activities Net Assets 65,558,182 65,580,289 66,121,839 Primary Government Invested in capital assets, net of related debt 207,718,667 108,264,786 106,034,262 Restricted 99,313,317 78,732,876 72,610,266 Unrestricted 81,518,177 89,761,659 81,426,768 Total Primary Government Net Assets 388,550,161 276,759,321 260,071,296 (1)The increase for FY 2006 is due to issuance of District Bond, see note #6. (2)The increase for FY 2007 is due to issuance of District Bond, see note #6. (3) The increase for FY 2008 is due to Capital Contribution of Hwy 111 & Hwy 74 infastructure totalling $30.19 million from the State of California. Note: The City of Palm Desert implemented GASB 34 for the fiscal year ended June 30, 2001. Schedules presenting government-wide information include information beginning in that year. 162 City of Palm Desert Changes in Net Assets Last Nine Fiscal Years (Accrual Basis of Accounting) Governmental Activities: General government 34,089,168 46,048,643 39,956,767 34,362,850 Public safety 27,670,237 26,855,060 24,674,424 21,856,311 Parks, recreation and culture 7,210,706 8,013,211 4,996,692 4,243,119 Public works 22,036,017 27,245,937 37,091,512 13,894,980 Interest on long term debt 20,128,441 20,706,514 20,097,198 12,526,964 Total Governmental Activites Expenses 111,134,569 128,869,365 126,816,593 86,884,224 Business-Type Activities: Desert Willow Golf Course 7,804,265 8,167,682 7,989,321 6,913,517 Office Complex - Parkview 852,746 649,548 716,592 646,769 Total Business-Type Activities 8,657,011 8,817,230 8,705,913 7,560,286 Total primary government expenses 119,791,580 137,686,595 135,522,506 94,444,510 Program Revenues Governmental Activities Charges for services General government 7,574,059 8,454,683 8,225,112 8,318,175 Public safety 9,396,435 8,808,300 9,078,214 8,376,981 Parks, recreation and culture 803,218 1,190,725 1,822,685 1,994,163 Public works 701,125 762,440 514,838 491,179 Operating grants & contributions 5,582,470 5,843,010 7,951,650 4,930,120 Capital grants & contributions (1)5,048,666 42,545,033 57,132,742 51,780,221 Total Governmental Activites Program Revenues 29,105,973 67,604,191 84,725,241 75,890,839 Business-Type Activities Charges for Service: Desert Willow Golf Course 6,872,935 8,182,741 7,830,863 7,442,330 Office Complex - Parkview 958,942 934,833 915,975 864,447 Capital grants & contributions - 206,609 278,757 295,304 Total Business-type activites program revenue 7,831,877 9,324,183 9,025,595 8,602,081 Total Primary Government program revenue 36,937,850 76,928,374 93,750,836 84,492,920 Net (Expense) / Revenue Governmental Activites (82,028,596) (61,265,174) (42,091,352) (47,837,446) Business-type activites (825,134) 506,953 319,682 1,041,795 Total Primary Government Net Expense (82,853,730) (60,758,221) (41,771,670) (46,795,651) General Revenues & Other Changes in Net Assets Governmental Activities: Taxes: (Combined/Net Pass-through) 84,564,947 90,527,965 86,766,864 114,826,387 Investment Earnings 6,161,309 15,309,271 17,521,600 6,197,595 Contributions not restricted for specific purpose 613,648 7,240,770 - - Gain(loss) on sales of assets - - - - Contributions from other agencies - - - - Miscellaneous 2,912,180 6,369,028 10,790,417 7,025,216 Refunding of special assessment debt - - - - Transfers In (5,661,521) 1,000,000 - - Total Governmental Activites Net Revenues 88,590,563 120,447,034 115,078,881 128,049,198 Business-Type Activities: Use of money and property 87,590 267,797 239,290 113,598 Transfers Out 5,661,521 (1,000,000) - - Total Business-type activites 5,749,111 (732,203) 239,290 113,598 Total primary government 94,339,674 119,714,831 115,318,171 128,162,796 Change in Net Assets Governmental Activities: 6,561,967 59,181,860 72,987,529 80,211,752 Business-Type Activities: 4,923,977 (225,250) 558,972 1,155,393 Total primary government 11,485,944 58,956,610 73,546,501 81,367,145 (1) The Increase for FY 2006 is due to Bond Funds received for capital improvement at the District known as University Park and Assessment 29. See note #14 Note: The City of Palm Desert implemented GASB 34 for the fiscal year ended June 30, 2001. Schedules presenting government-wide information include information beginning in that year. Expenses 2007 200620082009 163 City of Palm Desert Changes in Net Assets Continued Last Nine Fiscal Years (Accrual Basis of Accounting) Governmental Activities: General government 27,144,038 28,402,902 21,055,957 20,830,544 18,625,329 Public safety 18,743,083 15,420,151 15,601,833 14,547,981 12,744,434 Parks, recreation and culture 4,043,034 3,977,447 3,480,264 19,686,164 3,542,671 Public works 10,428,219 13,046,864 23,009,640 3,775,417 15,595,997 Interest on long term debt 12,749,188 14,124,371 14,443,467 15,271,200 16,224,248 Total Governmental Activites Expenses 73,107,562 74,971,735 77,591,161 74,111,306 66,732,679 Business-Type Activities: Desert Willow Golf Course 6,636,889 6,657,220 6,653,242 6,629,866 6,901,576 Office Complex - Parkview 609,298 570,135 511,272 534,865 1,481,938 Total Business-Type Activities 7,246,187 7,227,355 7,164,514 7,164,731 8,383,514 Total primary government expenses 80,353,749 82,199,090 84,755,675 81,276,037 75,116,193 Program Revenues Governmental Activities Charges for services General government 7,059,609 6,540,065 6,605,215 6,166,557 6,237,731 Public safety 3,945,395 2,737,585 2,737,571 2,903,623 2,882,947 Parks, recreation and culture 1,442,098 1,048,667 868,255 394,263 322,606 Public works 540,028 511,317 455,676 959,412 845,097 Operating grants & contributions 4,800,413 4,632,297 6,249,955 5,568,966 4,607,448 Capital grants & contributions (1)5,166,856 7,134,158 4,325,033 4,434,722 5,300,829 Total Governmental Activites Program Revenues 22,954,399 22,604,089 21,241,705 20,427,543 20,196,658 Business-Type Activities Charges for Service: Desert Willow Golf Course 6,814,638 6,237,087 5,824,079 5,753,581 5,882,813 Office Complex - Parkview 898,884 851,763 843,812 861,405 943,895 Capital grants & contributions 338,478 267,951 414,967 8,195 543,303 Total Business-type activites program revenue 8,052,000 7,356,801 7,082,858 6,623,181 7,370,011 Total Primary Government program revenue 31,006,399 29,960,890 28,324,563 27,050,724 27,566,669 Net (Expense) / Revenue Governmental Activites (80,336,571) (76,418,938) (78,490,293) (71,417,934) (60,853,995) Business-type activites 805,813 129,446 (81,656) (541,550) (1,013,503) Total Primary Government Net Expense (79,530,758) (76,289,492) (76,289,492) (71,959,484) (61,867,498) General Revenues & Other Changes in Net Assets Governmental Activities: Taxes: (Combined/Net Pass-through) 96,926,134 87,551,146 81,297,385 73,257,210 66,975,636 Investment Earnings 4,240,360 2,985,463 3,366,548 6,388,234 11,539,085 Contributions from fiduciary funds - - - - - Gain(loss) on sales of assets 17,459 - (984,837) 204,000 764,000 Contributions from other agencies - - - 262,193 4,328,656 Miscellaneous 6,347,396 1,852,229 3,997,338 4,709,580 2,785,106 Refunding of special assessment debt - (8,706,206)- - - Transfers In - - - - - Total Governmental Activites Net Revenues 107,531,349 83,682,632 87,676,434 84,821,217 86,392,483 Business-Type Activities: Use of money and property 43,831 - 11,718 - - Transfers Out 254 - 47,831 - - Total Business-type activites 44,085 - 59,549 - - Total primary government 107,575,434 83,682,632 87,735,983 84,821,217 86,392,483 Change in Net Assets Governmental Activities: 27,194,778 7,263,694 9,186,141 13,403,283 25,538,488 Business-Type Activities: 849,898 129,446 (22,107) (541,550) (1,013,503) Total primary government 28,044,676 7,393,140 9,164,034 12,861,733 24,524,985 (1) The Increase for FY 2006 is due to Bond Funds received for capital improvement at the District known as University Park and Assessment 29. See note #14 Note: The City of Palm Desert implemented GASB 34 for the fiscal year ended June 30, 2001. Schedules presenting government-wide information include information beginning in that year. 2004 2003 2002 2001 Expenses 2005 164 City of Palm Desert Fund Balances of Governmental Funds Last Nine Fiscal Years (Modified Accrual Basis of Accounting) General Fund: 2009 2008 2007 2006 Reserved 15,283,684 16,304,234 25,198,118 26,345,859 Unreserved 59,066,988 63,515,054 50,916,281 48,004,509 Total General Fund 74,350,672 79,819,288 76,114,399 74,350,368 All other Governmental Funds: Reserved 132,772,497 144,034,808 133,768,988 115,924,400 Unreserved, reported in: Special revenue funds 81,096,342 72,478,199 48,231,447 19,944,227 Capital projects funds 89,680,189 97,413,884 175,094,003 55,995,596 Debt service funds 44,506,123 35,706,020 24,254,967 10,095,576 Total all other Governmental Funds 348,055,151 349,632,911 381,349,405 201,959,799 General Fund: 2005 2004 2003 2002 2001 Reserved 26,505,414 27,838,819 25,701,984 27,506,623 22,951,643 Unreserved 36,793,370 27,619,600 23,113,284 23,827,558 24,419,570 Total General Fund 63,298,784 55,458,419 48,815,268 51,334,181 47,371,213 All other Governmental Funds: Reserved 96,349,160 83,603,140 86,423,841 89,223,387 77,271,685 Unreserved, reported in: Special revenue funds 25,991,171 32,614,358 24,709,698 24,222,615 15,521,068 Capital projects funds 34,196,750 40,652,793 48,976,239 46,630,038 53,720,744 Debt service funds 8,430,170 12,899,972 11,641,650 5,803,153 6,744,244 Total all other Governmental Funds 164,967,251 169,770,263 171,751,428 165,879,193 153,257,741 Note: The City of Palm Desert implemented GASB 34 for the fiscal year ended June 30, 2001. Schedules presenting government-wide information include information beginning in that year. 165 City of Palm Desert Changes in Fund Balances of Governmental Funds Last Nine Fiscal Years (Modified Accrual Basis of Accounting) Revenues: 2009 2008 2007 2006 2005 2004 2003 2002 2001 Taxes 134,060,681 140,331,466 138,272,454 131,303,483 102,020,742 93,948,185 83,762,760 78,631,363 72,173,943 Special assessments collected (2) (5) 2,759,444 2,060,791 929,348 269,036 227,848 214,950 5,818,624 6,684,402 12,884,346 Licenses & permits 1,383,778 1,453,177 2,691,486 2,685,415 2,056,554 1,316,669 1,286,262 1,417,012 1,511,652 Intergovernmental revenues 9,543,551 18,996,692 23,499,937 11,095,613 11,064,037 6,067,555 11,488,993 10,581,051 6,463,484 Rental income 5,050,479 4,789,421 4,513,146 4,737,861 4,430,915 4,494,098 4,115,892 4,186,607 3,943,706 Charges for services 803,218 1,190,725 1,822,685 1,994,163 1,463,850 1,052,467 873,605 975,841 845,097 Investment Earnings 8,322,808 22,592,392 23,985,001 9,351,716 5,654,986 3,322,733 5,035,799 7,671,358 15,114,698 Fines & forfeitures 315,284 254,857 274,365 310,868 323,775 306,630 367,903 305,197 238,872 Miscellaneous (4) 3,479,370 20,164,099 2,847,802 2,470,623 3,232,825 4,179,567 2,443,684 1,405,298 11,037,622 Contributions from property owners (1) - - 46,006,292 42,979,973 - - - - - Total Revenues 165,718,613 211,833,620 244,842,516 207,198,751 130,475,532 114,902,854 115,193,522 111,858,129 124,213,420 Expenditures: General government 33,310,015 62,795,604 44,587,985 34,506,987 26,112,125 27,122,532 20,034,295 19,194,096 17,286,613 Pass-through-agreement 39,085,941 38,993,445 35,719,075 36,844,061 30,183,408 24,051,292 22,140,837 17,734,171 14,317,974 Public safety 26,906,123 26,677,743 24,550,431 21,715,373 18,567,736 15,290,696 15,410,711 14,368,399 12,598,263 Parks, recreation & culture 5,122,900 4,572,695 3,921,063 3,304,867 2,889,789 2,638,386 2,656,809 2,580,841 2,434,884 Public works 16,241,963 22,936,721 33,925,623 11,103,943 7,306,791 10,153,096 20,631,322 17,657,120 13,167,046 Capital outlay 22,348,953 52,256,552 85,604,515 35,359,139 22,409,057 18,927,787 36,687,223 17,159,885 14,330,725 Debt service: Principal retirement 12,778,707 10,767,707 8,209,707 5,607,707 9,788,423 28,372,707 25,975,000 28,360,000 16,820,000 Interest and fiscal charges 19,424,623 23,376,564 25,814,526 14,072,572 13,537,219 16,643,049 17,071,421 17,062,974 16,452,210 Total Expenditures 175,219,225 242,377,031 262,332,925 162,514,649 130,794,548 143,199,545 160,607,618 134,117,486 107,407,715 Excess(deficiency of Revenues over(under) expenditures Other financing sources (uses) Transfers in 68,088,670 59,723,636 249,249,847 50,225,747 48,697,604 68,236,264 87,390,536 60,894,943 37,122,796 Transfers out (67,649,434) (58,723,636) (249,249,847) (50,225,747) (48,697,604) (68,236,264) (90,285,014) (60,894,943) (37,122,796) Bond Premiums - - 7,785,375 - - 915,773 - - - Bonds issued/Capital Accreation on bonds (3) 2,015,000 1,484,806 287,534,894 - - 48,690,000 50,682,363 37,765,000 - Payment refunded bond escrow agent - (101,656,501) - - - - - - Sale of property (4) - 47,000 5,230,000 3,360,030 3,356,369 1,728,522 979,533 766,279 767,500 Total Other financing sources (uses)2,454,236 2,531,806 198,893,768 3,360,030 3,356,369 51,334,295 48,767,418 38,531,279 767,500 Net Change In Fund Balance (7,046,376) (28,011,605) 181,403,359 48,044,132 3,037,353 14,334,398 3,353,322 16,271,922 17,573,205 (1)Bond was issued in FY 2006 and FY 2007. See note #14 for further explanation. (2) Prior to 2004, the City was recording Assessment District Property Taxes in its debt service funds, city has since removed these from its debt service funds. (3) See Note #6 of the Financial Statement, included Capital Accreation of Bonds. (4) Pior to 2008 Sale of Property/Inventory was recorded as other financing sources. In 2008 Sale of Inventory was moved to General Revenue (5) The $1.6 million in special assessment collected represents the amount received from property owners for Fire Protection. In prior years funds received from property owners were classified as taxes. Note: The City of Palm Desert implemented GASB 34 for the fiscal year ended June 30, 2001. Debt service as a percentage of noncapital expenditures 15.5% 21.5%19.3% (22,259,357) 34.7%18.0% (30,543,411) 44,684,102 (319,016) (9,500,612) 21.1%38.8%36.2% 16,805,705 35.8% (27,377,918) (45,414,096) (17,490,409) 166 City of Palm Desert Graphs - Changes in Fund Balances of Governmentals Funds Last Nine Fiscal Years (Modified Accrual Basis of Accounting) Combined Other(1) is a combination of rental income, use of money & property, and charges for services. $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 FY 2009FY 2008FY 2007FY 2006FY 2005FY 2004FY 2003FY 2002FY 2001Total Revenues Combined other (1) Miscellaneous other (2) Intergovernmental revenues Licenses & permits Taxes & Special Assessments $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 FY 2009FY 2008FY 2007FY 2006FY 2005FY 2004FY 2003FY 2002FY 2001Total Expenditures Parks, recreation & culture Pass-through-agreement Debt Expenditures (3) Capital outlay Public works Public safety General Government Combined Other(1) is a combination of rental income, use of money & property, and charges for services. Miscellaneous Other(2) is a combination of fines and forefeitures, miscellaneous and contributions from property owners Debt Expenditures(3) is a combination of interest/fiscal charges and principal retirement Note: The City of Palm Desert implemented GASB 34 for the fiscal year ended June 30, 2001. $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 FY 2009FY 2008FY 2007FY 2006FY 2005FY 2004FY 2003FY 2002FY 2001Total Revenues Combined other (1) Miscellaneous other (2) Intergovernmental revenues Licenses & permits Taxes & Special Assessments $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000 FY 2009FY 2008FY 2007FY 2006FY 2005FY 2004FY 2003FY 2002FY 2001Total Expenditures Parks, recreation & culture Pass-through-agreement Debt Expenditures (3) Capital outlay Public works Public safety General Government 167 City of Palm Desert Supplemental - Historical General Fund Revenues (Including Transfers In) Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Revenue Type: Sales Tax 14,474,933$ 17,195,743$ 17,918,375$ 17,776,928$ 15,453,148$ Transient Occupancy Tax 7,030,048 8,605,714 8,627,221 8,026,101 7,715,624 Property Tax (3)8,776,917 9,333,842 8,714,568 8,261,944 4,003,585 Interest 2,142,915 4,571,147 4,890,891 2,636,050 1,486,830 Transfer In 2,684,568 1,101,610 1,122,224 1,083,589 1,130,231 Franchises 2,818,729 2,887,727 2,907,062 2,580,917 2,439,134 State Subventions (1) (3)173,448 220,785 267,595 358,954 3,712,256 Building & Grading Permits 950,805 975,296 1,476,290 1,963,733 1,446,524 Reimbursments 3,263,247 4,933,807 2,465,685 1,982,846 1,830,295 Business License Tax 1,258,688 1,311,090 1,231,587 1,242,721 1,154,143 Timeshare Mitigation Fee 949,871 881,350 782,739 661,187 526,271 Plan Check Fees 389,770 562,930 617,999 702,857 701,215 Property Transfer Tax 324,817 604,236 671,806 1,030,412 1,099,665 Other Revenues (2)1,601,947 1,900,529 2,436,664 2,606,760 2,019,035 Total General Revenue 46,840,703$ 55,085,806$ 54,130,706$ 50,914,999$ 44,717,956$ FY 2004 2003 2002 2001 2000 Revenue Type: Sales Tax 15,138,424$ 13,463,197$ 13,027,395$ 13,619,607$ 13,203,564$ Transient Occupancy Tax 7,660,831 6,816,682 7,043,454 7,385,707 7,280,625 Property Tax 3,369,711 3,078,047 2,765,556 2,466,758 2,393,368 Interest 1,135,952 1,573,165 2,379,764 3,147,544 2,688,963 Transfer In 1,092,475 2,450,600 870,624 934,039 957,817 Franchises 2,417,856 2,198,663 2,131,820 1,981,697 1,837,806 State Subventions (1)2,020,583 2,634,949 2,555,811 2,262,535 1,991,034 Building & Grading Permits 970,826 876,372 1,064,097 1,101,743 1,182,392 Reimbursments 1,547,862 1,367,303 1,036,133 2,125,784 958,858 Business License Tax 955,501 961,675 898,113 826,591 749,831 Timeshare Mitigation Fee 392,988 262,403 158,302 265,350 553,800 Plan Check Fees 459,046 472,356 612,845 623,936 538,590 Property Transfer Tax 870,415 689,147 497,967 578,238 698,934 Other Revenues (2)1,144,752 1,845,700 1,116,608 711,438 1,255,860 Total General Revenue 39,177,222$ 38,690,259$ 36,158,489$ 38,030,967$ 36,291,442$ (1) State Subventions is any combination of motor vehicle and off-highway in-lieus, and subventions from state. (2) Other Revenues is any combination of miscellaneous penalties and interest, permits, grants, parking bails, fees, sales of maps and publications, vehicle and court fines and other revenues. (3) The State of California reprogramed motor vehicle fees, the City now receives this as property taxes. 168 City of Palm Desert Supplemental Graph - Historical General Fund Revenues (Including Transfers In) Last Ten Fiscal Years (1) Combined Other is any combination of transfers, franchises, state subventions*, building and grading permits, reimbursements, business license taxes, timeshare mitigation fees, plan check fees, property $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 FY 2009 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 FY 2001 FY 2000 Combined Other (1) Interest Property Tax Transient Occupancy Tax Sales Tax p, , , gf,p f,ppy transfer taxes. It also may include any combination of miscellaneous bails, fees, fines, grants, incomes, penalties, permits, sales and taxes. *State Subventions is any combination of trailer coach fees, motor vehicle and off-highway in-lieus, and subventions from state. $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 $70,000,000 FY 2009 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 FY 2001 FY 2000 Combined Other (1) Interest Property Tax Transient Occupancy Tax Sales Tax 169 City of Palm Desert Supplemental - Historical General Fund Expenditures (Including Transfers Out) Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Expenditure: Public Safety (1)16,266,052$ 14,413,196$ 13,404,056$ 12,323,448$ 12,135,671$ City Administration (2)10,076,543 9,861,106 8,588,341 8,410,706 7,196,081 Public Works Administration 3,720,106 3,329,792 3,014,583 2,823,359 2,506,688 Community Promotions 1,798,860 2,532,637 2,402,435 1,687,148 1,616,071 Street Maintenance 2,183,445 2,133,448 1,968,849 1,681,583 1,558,970 Building Safety 2,082,996 3,260,855 3,084,015 2,695,889 2,297,814 Street Resurfacing 1,115,721 3,342,542 1,192,629 1,277,554 1,375,409 Public Works 1,552,242 1,348,012 1,204,079 1,117,417 934,821 Other Expenditures (3)13,513,354 11,159,329 17,989,005 7,846,311 7,256,066 Total Expenditures 52,309,319$ 51,380,917$ 52,847,992$ 39,863,415$ 36,877,591$ FY 2004 2003 2002 2001 2000 Expenditure: Public Safety (1)11,432,803$ 10,869,991$ 10,732,159$ 9,489,468$ 8,841,693$ City Administration (2)5,999,228 6,573,351 6,461,706 4,972,981 4,617,682 Public Works Administration 2,270,854 1,937,184 1,745,513 1,764,947 1,673,434 Community Promotions 1,420,717 1,654,768 2,262,129 2,052,281 1,676,995 Street Maintenance 1,411,018 1,323,955 1,378,064 1,455,268 1,451,917 Building Safety 1,620,160 1,535,427 1,386,988 1,201,802 1,134,696 Street Resurfacing 897,153 2,078,218 608,616 1,422,637 1,028,354 Public Works 676,505 1,007,637 880,295 918,575 1,035,644 Other Expenditures (3)6,805,633 14,228,641 7,052,549 8,398,278 11,503,552 Total Expenditures 32,534,071$ 41,209,172$ 32,508,019$ 31,676,237$ 32,963,967$ (1) Public Safety is any combination of animal regulation, development services, police services, and traffic safety expenditures. (2) City Administration is any combination of community services, auditing, City attorney, City clerk, City council and City manager, data processing, elections, finance, general services, human resources, insurance, legal special services, legistlative advocacy and unemployment insurance expenditures. (3) Other Expenditures is any combination of aquisitions, centers, committees, contributions, community development, office of energy management, newsletter, marketing, interfund transfers, parks, recreation and culture, and visitor center. 170 City of Palm Desert Supplemental Graph - Historical General Fund Expenditures (Including Transfers Out) Last Ten Fiscal Years (1) "Combined Other" is any combination of street maintenance, building safety, street resurfacing and public works. It may also be aquisitions, centers, committees, contributions, community development, office of energy management, newsletter, marketing, interfund transfers, parks, recreation and culture, visitor center. (2) City Administration is any combination of community services, auditing, City attorney, City clerk, City council and City manager, data processing, elections, finance, general services, human resources, insurance, legal special services, legistlative advocacy and unemployment insurance expenditures. (3) Public Safety is any combination of animal regulation, development services, police services and traffic safety expenditures $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 FY 2009 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 FY 2001 FY 2000 Combined Other (1) Community Promotions Public Works Administration City Administration (2) Public Safety (3) services, and traffic safety expenditures. $0 $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 FY 2009 FY 2008 FY 2007 FY 2006 FY 2005 FY 2004 FY 2003 FY 2002 FY 2001 FY 2000 Combined Other (1) Community Promotions Public Works Administration City Administration (2) Public Safety (3) 171 THIS PAGE INTENTIONALLY LEFT BLANK 172 City of Palm Desert Supplemental Historical General Revenue and Expenditures Per Capita Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Total General Revenue (2)44,156,135$ 53,984,196$ 53,008,482$ 49,831,410$ 43,587,725$ Population (1)51,509 50,907 49,752 49,539 49,280 General Revenue Per Capita 857$ 1,060$ 1,065$ 1,006$ 884$ FY 2004 2003 2002 2001 2000 Total General Revenue (2)38,084,747$ 36,239,659$ 35,287,865$ 37,096,928$ 35,333,625$ Population (1)44,812 43,917 42,863 42,334 37,634 General Revenue Per Capita 850$ 825$ 823$ 876$ 939$ FY 2009 2008 2007 2006 2005 Total General Expenditures (2)48,696,321$ 49,238,257$ 43,565,108$ 38,488,367$ 35,426,268$ Population (1)51,509 50,907 49,752 49,539 49,280 General Expenditures Per Capita 945$ 967$ 876$ 777$ 719$ FY 2004 2003 2002 2001 2000 Total General Expenditures (2)31,674,743$ 34,935,591$ 30,941,156$ 28,902,706$ 26,343,720$ Population (1)44,812 43,917 42,863 42,334 37,634 General Expenditures Per Capita 707$ 795$ 722$ 683$ 700$ (1) Population figures are as of January start of fiscal year. (2) Interfund Transfers In/Out are not included in total. Sources: Population figures from State Department of Finance, City of Palm Desert Finance Department 173 City of Palm Desert Assessed Value and Estimated Actual Value of Taxable Property Last Nine Fiscal Years Fiscal Year Ended June 30 Residential Property Commercial Industrial Property Institutional Property Vacant Land Less: Tax Exempt Total Taxable Assessed Value Total Direct Tax Rate Estimated Actual Taxable Value (1) 2009 9,376,213,348 2,130,957,579 127,857,455 667,700,041 (255,714,909) 14,206,383,860 1.00000 13,808,181,235 2008 9,160,443,514 1,929,224,481 134,910,803 688,045,095 (242,839,445) 13,491,080,286 1.00000 13,114,105,220 2007 8,931,447,910 1,684,439,737 143,634,396 639,825,947 (248,095,775) 13,057,672,383 1.00000 11,853,797,089 2006 7,913,843,803 1,368,116,067 165,117,456 483,558,265 (247,676,185) 11,794,104,029 1.00000 10,503,193,237 2005 6,775,427,147 1,084,068,343 135,508,543 385,678,161 (239,745,884) 10,423,734,072 1.00000 9,281,846,679 2004 6,061,076,589 1,306,579,384 108,881,615 372,012,186 (199,616,295) 9,073,467,947 1.00000 8,704,132,380 2003 5,360,801,928 1,200,179,536 88,013,166 328,049,073 (184,027,529) 8,001,196,907 1.00000 8,066,795,481 2002 4,806,079,266 1,069,623,656 79,499,056 332,450,596 (173,452,485) 7,227,186,866 1.00000 7,291,094,312 2001 4,153,891,190 838,518,408 70,951,558 296,706,514 (161,253,540) 6,450,141,599 1.00000 6,511,773,110 (1) Estimated Actual Taxable Value = Net Taxable Value Notes: Property Taxes in Riverside County are subject to the State of California's Proposition 13, Jarvis-Gann Initiative which allows reappraisals of real property only when there is a change in ownership or new construction takes place. Further, the proposition limits property assessment increase to no more than two(2%) percent annually. Property is assessed at one hundred percent (100%) of its fair market value at the time of new construction or change in ownership. The tax rate is one (1%) percent of the assessed value. The City of Palm Desert chose to implement this schedule retroactively for the last nine years. Governments are encouraged, but not required, to implement retroactively. Ultimately, this schedule will include ten years. Per GASB44 assessed values are shown by major type. Source: Riverside County Assessor thru HDL Coren & Cone 174 City of Palm Desert Historical Net Assessed Taxable Values Citywide Graph - Assessed Valuation Growth Last Nine Fiscal Years Historical Major Additions Annexations FY Retail Centers FY Cook Street Area 88/89 Town Center Mall 83/84 Country Club #28 93/94 Desert Springs Marriott 86/87 Price Club/Costco 93/94 One Eleven Town Ctr 88/89 Palm Desert CC #29 94/95 Mervyn's Center 92/93 Palm Desert Greens 04/05 Desert Crossing 95/96 Suncrest 04/05 Lucky's/Albertson Deep Canyon 96/97 Remodel 111 Town Ctr (Best Buy) 97/98 Gardens on El Paseo 98/99 Remodel Westfield Mall (Sears, Barnes & Noble) 04/05 Sears Automotive 04/05 Lowes Home Improvement 05/06 Walmart / Sams Supercenters 05/06 Kohls 07/08 Source: Riverside County Assessor thru HDL Coren & Cone 12.76%11.97% 23.88%19.38%15.06% 20.67% 27.71%24.86% 16.49%5.00%10.00%15.00%20.00%25.00%30.00%35.00% 2001 2002 2003 2004 2005 2006 2007 2008 2009 Percent Increase in Assessed Valuation FY 2001 to FY 2009 $- $5,000 $10,000 $15,000 $20,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Value in Millions Net Assessed Valuation - Historical Comparison FY 2001 to FY 2009 175 City of Palm Desert Supplemental FY 2009 and 2008 Breakdown of Basic 1% Property Tax Rate Not In Redevelopment Project Area Taxing Agency FY 2009 Rate FY 2008 Rate County General 28.177327% 28.177327% County Free Library 2.728242% 2.728242% County Structure Fire Protection 5.873086% 5.873086% City of Palm Desert (1) 0.000000% 0.000000% Desert Sands Unified School District 36.221587% 36.221587% Desert Community College 7.526714% 7.526714% Riverside County Reg. Park & Open Space 0.426231% 0.426231% Riverside County Office of Education 4.094919% 4.094919% Desert Hospital 1.996808% 1.996808% Coachella Valley Public Cemetary 0.339927% 0.339927% Coachella Valley Recreation & Park 2.071624% 2.071624% Coachella Valley Mosquito & Vector Control 1.369698% 1.369698% Coachella Valley County Water 2.736607% 2.736607% Coachella Valley County Water Imp. District 80 2.972906% 2.972906% Coachella Valley County Water Storm Water Unit 3.464324% 3.464324% General Purpose Basic 1% 100.000000% 100.000000% (1) City of Palm Desert is a No-Low Property Tax City and the 7% represents what the state allocates to No-Low Property Tax Cities. Source: County of Riverside, Property Tax Allocation Percentages, TRA 018-041. 176 City of Palm Desert Property Tax Rates Direct and Overlapping Property Tax Rates Last Nine Fiscal Years Fiscal Year Basic County-wide Levy Total Direct Tax Rate Desert Sands Unified School District Desert Community College Dist. Coachella Valley Water District Coachella Valley Water District I.D. 58 2009 1.00000 1.00000 0.07990 0.01995 0.04000 0.00000 2008 1.00000 1.00000 0.07561 0.01995 0.04000 0.00230 2007 1.00000 1.00000 0.07613 0.01995 0.02080 0.01560 2006 1.00000 1.00000 0.07674 0.01995 0.02080 0.02520 2005 1.00000 1.00000 0.09581 0.01994 0.02080 0.02690 2004 1.00000 1.00000 0.09750 0.00000 0.02080 0.02870 2003 1.00000 1.00000 0.09750 0.00000 0.02080 0.03060 2002 1.00000 1.00000 0.09750 0.00000 0.02080 0.03060 2001 1.00000 1.00000 0.09750 0.00000 0.02080 0.04060 Notes:Proposition 13 limits the ability of the city to raise the property tax rate. The City of Palm Desert chose to implement this schedule retroactively for the last nine years. Governments are encouraged, but not required, to implement retroactively. Ultimately, this schedule will include ten years. Source: CalMuni Statistics Inc City Direct Overlapping Rates 177 City of Palm Desert Principal Property Taxpayers Current Year and Ten Years Ago 2009 2000 Taxpayer Taxable Assessed Value Rank Percentage of Total City Tax Assessed Value Taxpayer Taxable Assessed Value Rank Percentage of Total City Tax Assessed Value Marriott Desert Springs 279,271,039$ 1 2.01% Marriott Desert Springs $187,742,451 1 3.28% WEA Palm Desert 135,678,768 2 0.98%Teachers Insurance & Annuity Assoc 69,110,895 2 1.21% Pru of Desert Crossing II LLC 86,575,826 3 0.62%Property California SCJLW One Corp.53,446,748 3 0.93% Elisabeth E. Stewart 80,189,869 4 0.58%Marriott Ownership Resorts 32,051,576 4 0.56% Gardens SPE II 77,210,317 5 0.56% San Tropez Apartments 25,060,546 5 0.44% Monarch Sevilla Venture 62,544,816 6 0.45%National Golf Operatiing LP 24,172,690 6 0.42% Palm Desert Funding Co 60,922,381 7 0.44%Colony Cablevision of California 24,138,625 7 0.42% Capri W Canterra 58,920,898 8 0.42% U.S. Filter Corporation 23,599,788 8 0.41% Walmart Real Estate Business Trust 46,666,992 9 0.34% Sunrise Desert Partners 22,764,492 9 0.40% Time Warner Ent Advance 43,628,923 10 0.31% Indian Ridge Land 21,904,055 10 0.38% Total 931,609,829$ 6.71%Total 483,991,866$ 8.46% Note:The estimated property tax revenue stated above is based upon net taxable values, tax ratios and base year values that impact the revenue calculation. As a result, parcels with the same assessed value that are assigned to different tax rate areas may contribute dissimilar amounts of total revenue to the City and Redevelopment Agency. Source: HdL Coren & Cone thru Riverside County Assessor 08/09 and City of Palm Desert CAFR 99/00 178 City of Palm Desert Property Tax Levies and Collections Last Nine Fiscal Years Fiscal Year Taxes Levied Collections Ended for the Percentage in Subsequent Percentage June 30, Fiscal Year Amount of Levy Years (4)Amount (4)of Levy 2001 2,426,812 2,387,760 98.39% 39,052 2,426,812$ 100.00% 2002 2,603,643 2,475,308 95.07% 128,335 2,603,643$ 100.00% 2003 3,273,730 2,723,336 83.19% 550,394 3,273,730$ 100.00% 2004 3,080,422 3,007,652 97.64% 72,770 3,080,422$ 100.00% 2005 3,768,896 3,501,718 92.91% 267,178 3,768,896$ 100.00% 2006 4,318,880 4,243,595 98.26% 75,285 4,318,880$ 100.00% 2007 4,820,583 4,575,158 94.91% 245,425 4,820,583$ 100.00% 2008 5,206,384 4,734,970 90.95% 471,414 5,206,384$ 100.00% 2009 5,697,181 4,760,806 83.56% 135,057 4,895,863$ 85.93% (1) City of Palm Desert is on the "Teeter Plan" with the County of Riverside. The first payment was received in the fiscal year 1993/94. (2) City of Palm Desert is a "No-Low Property Tax City". Proposition 13 rolled the tax rates back to 1973 which is when the City of Palm Desert Incorporated and the Property Tax rates were zero. Based on current state law the County allocates 7% of the 1% assessed values within the City less the Redevelopment Agency tax increment. Fiscal Year 1992/93 was the first year to receive the No/Low taxes. (3) Fiscal Year 1996/97 final total collected includes adjustments for No-Low property tax collections from prior years modified by the County of Riverside. The County adjusted the payment to the City of Palm Desert (FY 1995/96) for the annexation of Palm Desert Country Club. (4) Inlcludes tax collections accrued as of June 30, 2009 and received before the completion of the audit field work. Note: The City of Palm Desert chose to implement this schedule retroactively for the last nine years. Governments are encouraged, but not required, to implement retroactively. Ultimately, this schedule will include ten years. Source: Riverside County Auditor Controller Office and City of Palm Desert Collected within the Fiscal Year of the Levy (1) (2) (3) Total Collections to Date 179 City of Palm Desert Supplemental Top 25 Sales Tax Generators Graph - Historical Sales Tax Trends June 30, 2009 Top 25 Sales Tax Generators (1) Primary Economic Category ALBERTSON'S FOOD CENTERS SUPERMARKETS BARNES & NOBLE BOOKSTORES STATIONERY / BOOKS BED BATH & BEYOND SPECIALTY STORES BEST BUY STORES LP APPLIANCE / ELECTRONICS CIRCUIT CITY STORES APPLIANCE / ELECTRONICS COSTCO WHOLESALE COMPANY GENERAL STORES DESERT SPRINGS RESORT & SPA HOTEL / FOOD & BEVERAGE HIGH TECH IRRIGATION SPECIAL MATLS-WHSLE HD SUPPLY CONSTRUCTION BLDG.MATLS-WHSLE J.C.PENNY COMPANY INC DEPARTMENT STORES KOHLS DEPARTMENT STORES LOWE'S HOME IMPROVEMENT BLDG.MATLS-WHSLE MACY'S DEPARTMENT STORES DEPARTMENT STORES MARSHALLS OF CA APPAREL STORES MERVYN'S STORE DEPARTMENT STORES MOBIL SERVICE STATION SERVICE STATIONS PETE CARLSONS GOLF & TENNIS SPORTING GOODS SAKS FIFTH AVENUE DEPARTMENT STORES SAM'S CLUB DEPARTMENT STORES SEARS-ROEBUCK AND CO DEPARTMENT STORES STONELEDGE FURNITURE HOME FURNISHINGS TARGET STORE DEPARTMENT STORES TOMMY BAHAMA APPAREL STORES WAL-MART SUPERCENTER DEPARTMENT STORES WEST COAST TURF BLDG.MATLS-WHSLE (1) Listed in Alphabetical Order Note : Current California law prohibits production of individual tax information as an effort not to infringe on proprietary information, therefore confidential information which is protected by law is not disclosed. * The State of California exchanged Sales Tax Revenue with Property taxes, this amount represents the portion of sales tax that were exchanged. Source: SBOE Data, MuniServices LLC. In Lieu given to city from State ERAF Property Taxes, City of Palm Desert $7.0 $9.0 $11.0 $13.0 $15.0 $17.0 $19.0 200120022003200420052006200720082009Millions Sales and Use Tax Trends FY 2001 - 2009 0.8% -2.5% -14.1% Amounts in Millions % = % Change from Prior Year 2.0% 15.0% 13.620 13.027 13.463 15.138 15.453 17.776 17.918 17.481 15.005 -4.5%3.1%3.2% 11.1% -In Lieu * 180 City of Palm Desert Supplemental Taxable Sales by Category Last Nine Calendar Years Sector 2008 2007 2006 2005 2004 2003 2002 2001 2000 Apparel Stores 142,488$ 159,207$ 155,859$ 141,510$ 132,831$ 108,829$ 97,924$ 93,792$ 92,192$ General Merchandise 326,673 388,583 392,738 362,512 340,277 307,186 278,583 272,856 269,776 Food Markets 44,880 49,398 53,870 50,556 47,455 52,461 51,738 52,282 55,817 Restaurants 145,907 181,731 184,954 178,248 167,315 152,508 148,228 155,911 153,970 Furniture/Appliance 106,166 135,775 161,997 166,109 155,921 135,694 128,623 125,130 128,899 181 Bldg.Matls-Wholesale 86,564 95,633 69,773 73,228 68,737 56,180 54,111 64,251 57,865 Automotive 10,301 8,596 6,121 6,245 5,862 8,211 6,904 8,825 8,108 Service Stations 64,912 63,969 59,401 48,564 45,585 39,146 23,930 22,633 25,807 Other Retail 218,005 282,973 295,830 281,388 264,129 243,474 228,286 220,252 227,591 Non-Retail (1)182,223 219,411 222,177 218,591 205,184 193,041 190,058 195,137 197,961 Amounts in millions Totals 1,328,119$ 1,585,276$ 1,602,720$ 1,526,951$ 1,433,296$ 1,296,730$ 1,208,385$ 1,211,069$ 1,217,986$ ,,,,,,,,,,,,,,,,,, City direct sales tax rate 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% (1) Non-retail are a mix of manufacturers, distributors, builders and professionals selling direct to consumers. Note: The combined sales tax rate for the City of Palm Desert is 7.75%, which represents the State of California mandated tax rate of 7.25% and 0.5% additional sales tax imposed by the County of Riverside. The City of Palm Desert receives 1% of all sales tax generated within the city limits. The City of Palm Desert chose to implement this schedule retroactively for the last nine years. Governments are encouraged, but not required, to implement retroactively. Ultimately, this schedule will include ten years. Source: John E. Husing, Ph.D. Economics and Politics Inc. via California State Board of Equalization 181 City of Palm Desert Supplemental Prinicipal Sales Tax Remitters Current and Nine Calendar Years Ago(2) Tax Amount Rank Percentage Tax Amount Rank Percentage General Merchandise 326,673$ 1 24.60% 269,800$ 1 22.15% Other Retail 218,005 2 16.41% 227,600 2 18.69% Non-Retail (1) 182,223 3 13.72% 198,000 3 16.26% Restaurants 145,907 4 10.99% 154,000 4 12.64% Apparel Stores 142,488 5 10.73% 128,900 5 10.58% Furniture/Appliance 106,166 6 7.99% 92,200 6 7.57% Bldg.Matls-Wholesale 86,564 7 6.52% 57,870 7 4.75% Service Stations 64,912 8 4.89% 25,800 9 2.12% Food Markets 44,880 9 3.38% 55,800 8 4.58% Automotive 10,301 10 0.78% 8,100 10 0.66% Amounts in millions Totals 1,328,119$ 1,218,070$ (1) Non-retail are a mix of manufacturers, distributors, builders and professionals selling direct to consumers. (2) City only has the last nine years of information available. Note: Current California law prohibits production of individual tax information as an effort not to infringe on proprietary information, therefore confidential information which is protected by law is not disclosed. Source: John E. Husing, Ph.D. Economics and Politics Inc. via California State Board of Equalization 2008 2000Industry 182 City of Palm Desert Ratios of Outstanding Debt by Type Last Nine Fiscal Years Business Type Activities Special Total Percentage Fiscal Redevelopment Assessment Note Capital Primary of Personal Per Year Bonds Bonds c Payable Leases Government Income b Capita b 2001 193,015,000 48,415,000 - 373,556 241,803,556 13.90% 5,712 2002 207,990,000 43,145,000 - 106,373 251,241,373 15.96% 5,861 2003 234,464,000 40,528,000 1,104,363 1,146,582 277,242,945 16.73% 6,313 2004 256,000,000 28,623,000 981,656 833,358 286,438,014 16.16% 6,392 2005 250,485,000 26,050,000 858,949 509,755 277,903,704 13.45% 5,639 2006 245,000,000 73,855,000 736,242 170,493 319,025,493 15.21% 6,440 2007 a 421,819,894 122,393,000 613,535 2,181,546 547,007,975 25.65% 10,987 2008 412,694,700 115,398,000 490,828 1,582,782 530,166,310 21.49% 10,414 2009 d 401,601,475 114,597,000 368,121 955,141 517,521,737 29.80% 10,047 Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. The City of Palm Desert chose to implement this schedule retroactively for the last eight years. Governments are encouraged, but not required, to implement retroactively. Ultimately, this schedule will include ten years. a - The city issued $50.51 million of special assessment bonds in fiscal year end 2007 allocated to three separate assessment districts. In addition the City's Redevelopment Agency issued $284.37 in bonds of which $183.15 was new debt. b - Personal income, population and per capita information provided by John E. Husing, Ph.D. Economics & Politics, Inc ., California Department of Finance, and U.S Census Bureau. c - Special Assessment includes Highlands Undergrounding AD No# 04-01, as of June 30, 2009 the balance was $2,702,000 d - Fiscal Year End 2009 the City issued the Energy Independence Program Limited Obligation Improvement Bonds Series 2009A (Taxable) $2.5 million to fund the Energy Independence Loan Program. The actual Bond Issuance was for $2.015m. Governmental Activities 183183 City of Palm Desert Ratios of General Bonded Debt Outstanding Last Nine Fiscal Years Percentage of Actual Fiscal Redevelopment Special Assessment Taxable Value of Per Year Bonds Bonds Property a Capita b 2001 193,015,000 2.990% 4,559$ 2002 207,990,000 2.880% 4,852$ 2003 234,464,000 2.930% 5,339$ 2004 256,000,000 2.820% 5,713$ 2005 250,485,000 2.400% 5,083$ 2006 245,000,000 2.080% 4,946$ 2007 421,819,894 2,783,000 3.250% 8,478$ 2008 412,694,700 2,748,000 3.170% 8,107$ 2009 401,601,475 4,717,000 2.940% 7,797$ Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. The City of Palm Desert chose to implement this schedule retroactively for the last nine years. Governments are encouraged, but not required, to implement retroactively. Ultimately, this schedule will include ten years. a - County of Riverside, County Auditor Controller, Assessed Valuations b - Population information provided by John E. Husing , Ph.D. Economics & Politics, Inc., California Department of Finance., and U.S Census Bureau. General Bonded Debt Outstanding 184 City of Palm Desert Supplemental Special Assesment Information June 30, 2009 District Name\Description 2003 01-01 Revenue Bonds 94-2 Sunterrace 2003 01-01 Revenue Bonds 94- 3 Merano 2003 01-01 Revenue Bonds Silver Spur Ranch Utility Undergrounding 2004 R-Bonds 98-1 Canyons @ Bighorn Community Facilities District No. 2005-1 (University Park) Special Tax Bonds Series 2006A Bond Issue Date 06/25/03 06/25/03 06/25/03 02/19/04 05/09/06 Final Maturity Date 09/02/14 09/02/20 09/02/28 09/02/18 09/01/37 Highest Interest Rate 4.80% 5.25% 5.375% 5.100% 5.424% Bond Issue Amount 930,000 1,153,000 2,340,000 2,955,000 67,915,000 Matured Principal 410,000 303,000 325,000 1,020,000 1,990,000 Called Principal 145,000 - 110,000 1,220,000 - Outstanding Bonds (4)375,000 850,000 1,905,000 715,000 65,925,000 Redemption Premium 3.00% 3.00% 3.00% 3.00% 3.00% Original Parcels 71 201 250 73 37 Active Parcels 64 121 195 19 69 Reserve Requirement (5)37,500$ 85,000$ 162,094$ 71,500$ 4,583,361$ Reserve Balance 09/10 (1)90,754$ 85,000$ 166,184$ 142,152$ 4,610,912$ Principal Due 09/10 (2)70,000 60,000 60,000 65,000 1,210,000 Principal Levied 09/10 (3)81,127 60,000 61,682 68,686 1,210,000 Interest Due 09/10 (2)16,715 43,410 97,411 32,714 3,373,361 Interest Levied 09/10 (3)19,070 41,210 97,219 34,047 3,398,680 09/10 Delinquency Rate 4.62% 1.54% 5.14% 0.00% 1.79% Arbitrage Installment Computation Date: 90% Rebate Due 09/02/09 09/02/09 12/17/13 12/16/13 05/09/11 Arbitrage Yield Rate 7.9769% 6.672% 5.1577% 5.8386% 5.3599% Arbitrage-Amount Owed - - - - - Continuing Disclosure Last Report Issued:6/16/2009 6/16/2009 6/16/2009 12/12/2008 12/11/2008 District Name\Description 2004-2 Section 29 Assessment District Limited Obligation Improvement Bonds 2004-1 Palm Desert Highlands Undergrounding Series 2006 Series 2008 Community Facilities District No. 91-1 Special Tax Refunding Bonds Series 2009A (Taxable) Energy Independence Program Limited Obligation Improvement Bonds Bond Issue Date 3/29/2007 8/8/2006 12/19/2007 5/31/2009 Final Maturity Date 9/2/2037 9/2/2036 10/1/2020 9/2/2029 Highest Interest Rate 5.100% 5.150% 4.000% 3.000% Bond Issue Amount 29,430,000 3,165,000 10,935,000 2,015,000 Matured Principal 505,000 129,000 2,520,000 - Called Principal - 1,377,000 - - Outstanding Bonds (4)28,925,000 1,659,000 8,415,000 2,015,000 Redemption Premium 3.00% 3.00% 3.00% 3.00% Original Parcels 167 172 1,154 61 Active Parcels 329 135 1,063 59 Reserve Requirement (5)1,933,175$ NA 841,500$ 0$ Reserve Balance 09/10 (1)1,945,358$ NA 1,093,500$ 0$ Principal Due 09/10 (2)525,000 31,000 880,000 80,000 Principal Levied 09/10 (3)525,000 50,074 880,000 80,000 Interest Due 09/10 (2)1,407,160 82,689 274,920 75,898 Interest Levied 09/10 (3)1,417,660 133,235 288,560 123,485 09/10 Delinquency Rate 1.29% 3.58% 0.87% 0.00% Arbitrage Installment Computation Date: 90% Rebate Due 03/29/12 08/08/11 08/08/11 NA Arbitrage Yield Rate 5.0134% 5.0691% 3.8681% NA Arbitrage-Amount Owed --- - Continuing Disclosure Last Report Issued: 12/11/2008 NA 12/11/2008 NA (1) Reserve Balances are as of 9/30/09, shortfall will be recovered by additional levy, and interest earnings see Financial Statements Note 10 (2) Amount represents principal and interest to be collected on the FY 08/09 tax roll for Debt Service Payment due in FY 09/10. (3) Levied amounts reflect adjustments for construction funds, reserve funds, redemption funds and other adjustments. (4) Represents Outstanding Bonds after September 2, 2009 principal payment. (5) Reserve Requirement as of 9/2/09 Source: Wildan Financial Annual Report 185 City of Palm Desert Direct and Overlapping Government Acitivities Debt JUNE 30, 2009 2008/09 Assessed Valuation: 13,841,151,264$ Redevelopment Incremental Valuation: 8,939,192,885 Adjusted Assessed Valuation: 4,901,958,379$ City's Share of DIRECT AND OVERLAPPING TAX ASSESSEMENT DEBT:Total Debt 6/30/09 % Applicable (1) Debt 6/30/09 Desert Community College District 325,869,507$ 13.276% 43,262,436$ Desert Sands Unified School District General Obligation Bonds 296,353,845 27.427% 81,280,969 Desert Sands Unified School District Lease Tax Obligations 2,710,000 27.427% 743,272 Palm Springs Unified School District 231,840,000 2.799% 6,489,202 Coachella Valley County Water District, ID No. 54 2,975,000 62.739% 1,866,485 Coachella Valley County Water District, ID No. 55 4,170,000 3.861% 161,004 Coachella Valley County Water District, ID No. 58 1,960,000 34.830% 682,668 City of Palm Desert 0 100.000% 0 City of Palm Desert 1915 Act Bonds 33,525,000 100.000% 33,525,000 City of Palm Desert Community Facilities District No. 91-1 9,270,000 100.000% 9,270,000 City of Palm Desert Community Facilities District No. 2005-1 67,090,000 100.000% 67,090,000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT 244,371,036$ OVERLAPPING GENERAL FUND OBLIGATION DEBT: Riverside County General Fund Obligations 760,794,659$ 2.834% 21,560,921$ Riverside County Pensions Obligations 382,090,000 2.834% 10,828,431 Riverside County Board of Education Certificate of Participation 8,270,000 2.834% 234,372 Desert Sands Unified School District Certificates of Participation 69,795,000 27.427% 19,142,675 Coachella Valley Recreation and Park District Certificates of Participation 2,455,000 21.938% 538,578 Coachella Valley County Water District, ID No. 71 Certificate of Participation 5,240,000 19.110% 1,001,364 TOTAL GROSS OVERLAPPING GENERAL FUND OBLIGATION DEBT 53,306,341$ Less: Riverside County Self-Supporting Obligations 463,483 - TOTAL NET OVERLAPPING GENERAL FUND OBLIGATION DEBT 52,842,858$ GROSS COMBINED TOTAL DEBT 297,677,376 (2) NET COMBINED TOTAL DEBT 297,213,893 (1) Percentage of overlapping ageny's assessed valuation located within bondaries of city (2) Excludes tax revenue anticipation noted, enterprise revenue, mortage revenue and tax allocation bonds and non-bonded capital lease obligations Ratios to 2008-09 Assessed Valualtions: Direct Debt 0.00% Total Direct and Overlapping Tax and Assessment Debt 1.77% Ratios to Adjusted Valuations Gross Combined Total Debt 6.07% Net Combined Total Debt 6.06% STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/09 0$ Source: California Municipal Statistics, Inc., San Francisco 186 City of Palm Desert Legal Debt Margin Information Last Nine Fiscal Years Assessed Value 13,841,151,264$ Debt Limit (15% of Assessed Value) (1) 2,076,172,690 Debt Applicable to Limit: General Obligation Bonds 2,702,000 Less: Amount set aside for repayment of general obligation debt - Total Debt Applicable to Limit 2,702,000 Legal debt margin 2,073,470,690$ 2001 2002 2003 2004 2005 2006 2007 2008 2009 Debt Limit 967,521,240 1,084,078,030 1,200,179,536 1,306,436,757 1,397,304,489 1,582,592,579 1,783,572,979 1,971,408,152 2,076,172,690 Total Net debt applicable to limit - - - - - - 2,783,000 2,748,000 2,702,000 Legal debt margin 967,521,240 1,084,078,030 1,200,179,536 1,306,436,757 1,397,304,489 1,582,592,579 1,780,789,979 1,968,660,152 2,073,470,690 Total net debt applicable to the limit as a percentage of debt limit 0% 0% 0% 0% 0% 0% 0.16% 0.14% 0.13% (1) Section 43605 of the California Government Code. Note: The City of Palm Desert chose to implement this schedule retroactively for the last nine years. Governments are encouraged, but not required, to implement retroactively. Ultimately, this schedule will include ten years. Source: California Municipal Statistic, Inc. San Francisco FISCAL YEAR Legal Debt Margin Calculation for Fiscal Year 2009 187 City of Palm Desert Pledged-Revenue Coverage Last Nine Fiscal Years Special Special Fiscal Assessment Assessment Year Collections Principal Interest Coverage Collections Principal Interest Coverage 2001 5,471,643 2,485,000 3,436,552 0.9240 14,993,158 3,895,000 10,610,473 1.034 2002 4,623,412 2,295,000 2,730,780 0.9199 16,294,794 3,960,000 10,538,582 1.124 2003 4,495,603 1,930,000 2,451,363 1.0261 18,496,636 4,195,000 10,960,525 1.221 2004 4,606,935 1,790,000 2,161,283 1.1659 20,344,776 4,800,000 11,748,004 1.229 2005 2,878,134 2,073,000 1,483,245 0.8093 23,585,980 5,260,000 12,366,733 1.338 2006 a 2,788,698 1,645,000 1,378,548 0.9223 24,065,285 5,485,000 12,409,968 1.345 2007 a 4,444,967 1,972,000 3,464,355 0.8176 28,675,094 7,704,000 16,434,841 1.188 2008 6,245,888 1,635,000 c 5,414,793 0.8860 41,978,187 10,610,000 21,402,246 1.311 2009 d 8,486,467 2,816,000 5,666,827 1.0004 33,095,785 12,610,000 20,043,623 1.013 Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements. The City of Palm Desert chose to implement this schedule retroactively for the last eight years. Governments are encouraged, but not required, to implement retroactively. Ultimately, this schedule will include ten years. a - The city issued $50.51 million of special assessment bonds in fiscal year end 2007, and an additional $17.915 in fiscal year end 2008 from the same district. The RDA issued $284.37 million of debt of which $183.15 was new debt. b - Tax increment bonds are backed by property tax increment based on calculation provided by the Riverside County tax assessor office. Additional informantion on tax increment can be found in the notes to the financial statements. c - The 1997 91-1 Bonds was refunded in full on April 1, 2008, with Communities Facilities District no. 91-1 Improvement Special Tax Refunding Bonds Additional principal on note 14 reflects the total principal paid along with the refunded portion. d - The City issued $2.015 million dollars of the Energy Independence Program (AB811 Assessments) Limited Obligation Improvement Bonds (Taxable) The special assessment collection will commence during the fiscal year 2009-2010 with the first interest payment due on March 2, 2010. Tax Increment b Debt ServiceDebt Service Special Assessment Bonds 188 Last Ten Calendar Years Fiscal Percentage Per Capita City Riverside Percentage County Year City Increase Personal Personal Unemployment County Increase Unemployment End Population (Decrease)Income CY a b Income CY Rate c Population (Decrease)Rate c 2009 51,509 1.2% 2,476,011,613$ 48,069$ 6.8% 2,107,653 0.93% 11.46% 2008 50,907 2.3% 2,439,420,309 47,919$ 4.1% 2,088,322 6.91% 8.6% 2007 49,752 0.4% 2,132,710,348 42,867 3.6% 2,031,625 4.01% 6.0% 2006 49,539 0.5% 2,097,434,084 42,339 2.9% 1,953,330 4.07% 5.0% 2005 49,280 10.0% 2,066,437,521 41,933 3.1% 1,877,000 5.64% 5.4% 2004 44,812 2.0% 1,772,405,266 39,552 3.5% 1,776,743 5.00% 6.0% 2003 43,917 2.5% 1,657,414,199 37,740 3.8% 1,692,187 2.91% 6.5% 2002 42,863 1.2% 1,573,796,241 36,717 3.7% 1,644,341 3.06% 6.5% 2001 42,334 12.5% 1,739,444,000 41,089 3.2% 1,595,576 5.73% 5.5% 2000 37,634 3.7% 1,713,352,340 45,527 3.1% 1,509,114 2.43% 5.4% Note: The City of Palm Desert chose to implement this schedule retroactively for the last ten years. Governments are encouraged, but not required, to implement retroactively. a - Personal income, population and per capita information provided by John E. Husing, Ph.D. Economics & Politics Inc ., Californa Department of Finance., and U.S. Census Bureau. b - Personal Income estimated based on average growth rate of previous four years. The growth rate factor used was 1.5%. Income data will be updated once the actual data is available. c - Unemployment rate for fiscal year 08/09 is based on annual information from State of California Employment Development Department Labor Market Information Division (not seasonally adjusted) Sources: State Department of Finance, U.S. Dept of Labor, John E. Husing, PhD, Economics & Politics, Inc, State Employment Development Department City of Palm Desert Demographic & Economic Statistics 189 City of Palm Desert Principal Employers Current and Ten Years Ago Employer Employees Rank Percentage of Total City Employment Employer Employees Rank Percentage of Total City Employment JW Marriot-Desert Springs Resort 2,000 1 6.08% Heckmann Corp.1,811 2 5.50% Guthy Renker Corp.825 3 2.51% College of the Desert 711 4 2.16% Securitas-Security Service USA 700 5 2.13% Desert Valley Industries 400 6 1.22% WalMart Super Center 350 7 1.06% William Bower Associates 350 8 1.06% Macy's West 300 9 0.91% Bighorn Golf Club 250 10 0.76% Totals 7,697 23% Totals - 0% (1) The information for 2000 is not available (2) As of June 1, 2009 Sources: City of Palm Desert RDA thru InfoUSA.com 2009 2 2000 1 190 City of Palm Desert Supplemental Miscellaneous Statistics 1-Jun June 30, 2009 City/ Municipal Government Form of Gorvernment: Council - City Manager/Charter City Date of Incorporation: November 26, 1973 Number of Employees 165 Full Time Employees Size of City 25.5 Square Miles Geographic Location: Located 117 miles east of Los Angeles and 515 miles south of San Francisco. Streets 159 paved street miles Number of Business Licenses 7,404 active business licenses Number of Hotels & Rooms 15 hotels, 2,135 rooms CONTRACT SERVICES: Police Department Contract with Riverside County Sheriff - 75 positions plus 19 support staff Fire Department Contract with Riverside County/State Fire 49 positions plus 5 Fire Prevention Staff Animal Control Riverside County Animal Services Water & Sewer: Coachella Valley Water District Trash Collection Burrtec - Waste Management Electric Southern Calif. Edison Gas Southern California Gas Telephone Verizon Airport Palm Springs International Airport Public Education Elementary School (grades K - 5) 3 Middle School (grades 6 - 8) 1 High School (grades 9 - 12) 1 Community College - C.O.D. 1 CSUSB - Palm Desert Campus 1 UCR - Palm Desert Graduate Center 1 Insurance Coverage General Liability Coverage Calif. Joint Powers Insurance Authority 50 Million/Event (Excludes Earthquake & Flood) Excess Coverage: American Guarantee & Liab. Insurance Special Events Calif. Joint Powers Insurance Authority 1 Million Workers Compensation Calif. Joint Powers Insurance 5 Million Property Insurance Robert Driver Based on Prop. Value Health Insurance Medical California PERS; choice of PPO, HMO Dental Delta Dental Vision Vision Service Plan Disability Insurance Disability - Standard Insurance Company Life Standard Insurance Company Retirement California PERS - Public Employers Retirement System Source: City of Palm Desert 191 City of Palm Desert Full-time Equivalent City Government Employee's by Function / Program Last Nine Fiscal Years Function / Program 2009 2008 2007 2006 2005 2004 2003 2002 2001 General Government City 49 49 51 53 52 51 51 48 45 Redevelopment Agency 19 19 19 19 19 18 18 15 11 Public Safety 35 35 35 28 28 28 32 30 31 Police & Fire (1) 148 146 143 129 123 123 126 126 125 Public Works 53 52 44 49 39 39 39 36 35 Parks, recreation & culture 14 14 18 11 16 16 16 16 14 Totals 318 315 310 289 277 275 282 271 261 (1) The City operates as a "contract city" utilizing, primarily, agreement with other governmental entities, private firms and individuals to provide services. Contracted services include: Police and Fire protection through the County of Riverside, animal control, health services, legal services and landscape maintenance. Note: The City of Palm Desert chose to implement this schedule retroactively, for the last nine years. Governments are encouraged, but not required, to implement retroactively. Ultimately, this schedule will include ten years. Source: City of Palm Desert Financial Plan, California Department of Forestry and Fire Protection, Riverside County Sheriffs Department 192 City of Palm Desert Operating Indicators by Function / Program Last Four Fiscal Years Function / Program 2009 2008 2007 2006 General Government Business License Inspections 617 489 447 420 Contracted Services - Burrtec Waste (1) Refuse Collected (tons)58,198 67,940 73,467 71,820 Recyclables Collected 22,155 23,798 24,089 24,359 Public Safety Physical Arrests 1,446 1,550 1,430 543 Parking Violations 1,278 770 694 1,374 Traffic Violations 9,162 5,929 6,875 4,527 Emergency Responses-Fire Department 7,149 6,908 6,785 6,600 Fires Extinguished 147 154 241 928 Fire Inspections 8,248 4,267 5,934 1,845 Building Permits Issued 3,637 4,012 5,813 5,683 Building Inspections Conducted 18,040 26,401 33,215 29,925 Public Works Street Resurfacing (miles)13 17 9 11 Parks, recreation & culture Athletic Field Permits Issued 6,149 5,949 4,510 2,967 Amphitheater / Pavilions Permits Issued 133 133 84 81 Community Center Admissions 55,954 112,540 97,339 92,083 (1) The City operates as a "contract city" utilizing, primarily, agreement with other governmental entities, private firms and individuals to provide services. 193 p Contracted services include: Police and Fire protection through the County of Riverside, animal control, health services, legal services and landscape maintenance. Note: The City of Palm Desert chose to implement this schedule retroactively. Governments are encouraged, but not required, to implement retroactively. Ultimately, this schedule will include ten years. Sources: Riverside County Sheriffs Dept., California State Department of Forestry & Fire Protection, City of Palm Desert, Coachella Valley Recreation & Park District, Burrtec Waste 193 City of Palm Desert Capital Asset Statistics by Function / Program Last Four Fiscal Years Function / Program 2009 2008 2007 2006 General Government Contracted Services (1) Collection trucks 54 69 61 71 Public Safety - Police & Fire Police Stations 1111 Police Sub Stations 2222 Patrol Units-Cars 30 29 29 28 Patrol Units-Motorcycles 10 7 5 4 Fire Stations 3 3 3 3 194 Fire Stations 3 3 3 3 Fire Trucks 4 plus 2 Reserved 4 plus 2 Reserved 4 plus 2 Reserved 4 plus 2 Reserved Ambulance 3 plus 1 Breathing Support 3 plus 1 Breathing Support 3 plus 1 Breathing Support 3 plus 1 Breathing Support Fire Prevention Pick-ups 3333 Public Works Streets (miles)159 159 154.11 154.11 Traffic Signals 99 99 87 85 Parks, recreation & culture Acreage 212 200 200 200 Total Parks 14 13 13 11 Playgrounds 16 9 8 7 Baseball/softball diamonds 911118 S/f f 9 7 7 5 Soccer/football fields 9775 Basketball Courts 11 9 9 6 Tennis Courts 10 10 10 8 Volleyball Courts 810106 Community Centers 2222 Skateboard Park 2221 Commercial Office Space (Parkview Office Complex) Leaseable Space (square feet)50,322 50,322 50,322 50,322 Occupancy Rate 98% 100% 100% 100% Number of Tenants by Type Government (State, local regional)11 11 10 9 Government (State, local regional)11 11 10 9 Non-Profit 5766 Private 7688 Square Footage lease by tenant Government (State, local regional)34,617 34,402 33,298 32,457 Non-Profit 4,735 6,188 5,708 5,708 Private 10,212 9,732 11,316 10,836 Vacant 758 0 0 1,321 Municipal Golf Course (Desert Willow Golf Resort) Courses - Fire Cliff and Mountain View 2222 Holes 36 36 36 36 Golf Carts 160 160 160 160 33 000 33 000 33 000 33 000 Clubhouse square footage 33,000 33,000 33,000 33,000 Rounds per Course Fire Cliff 46,041 46,688 47,263 46,602 Mountain View 34,899 43,898 41,182 43,725 Total Annual Rounds 80,940 90,586 88,445 90,327 (1) The City operates as a "contract city" utilizing, primarily, agreement with other governmental entities, private firms and individuals to provide services. C d i i l d P li d Fi i h h h C f Ri id i l l h l h i Contracted services include: Police and Fire protection through the County of Riverside, animal control, health services, legal services and landscape maintenance. Note: The City of Palm Desert chose to implement this schedule retroactively. Governments are encouraged, but not required, to implement retroactively. Ultimately, this schedule will include ten years. Sources: Riverside County Sheriffs Dept., California State Department of Forestry & Fire Protection, City of Palm Desert, Coachella Valley Recreation & Park District, Burrtec Waste 194 Note: This section is not required by GASB No. 44, however, City believes that statistical information is beneficial to the reader. Supplemental Redevelopment Agency Statistical Section City of Palm Desert, California 195 THIS PAGE INTENTIONALLY LEFT BLANK 196 Redevelopment Agency Project Areas COOK STMONTEREY AVEFRED WARING DR PORTOLA AVEHOVLEY LN E STATE HWY 111 STATE HWY 74FRANK SINATRA DR EL PASEO GERALD FORD DR WASHINGTON STELDORADO DRWARNER TRLHOVLEY LN W OASIS CLUB DRTAMARISK ROW D RCALIFO R N IA AVESAN PABLO AVEPARK VIEW DR MESA VIEW DR DEEP CANYON RDMAGNESIA FALLS DR DINAH SH OR E D R COOK STHAYSTACK RDTOWNCENTERWAYMONTEREY AVEP O R TO L A AVEPORTOLA AVEGRAPEVINE STSHADOW M OUN TAIN DR FAIRWAY DR HOVLEY LN EPORTOLA AVEFRED WARING DR COUNTRY CLUB DR FRANK SINATRA DRPORTOLA AVECOUNTRY CLUB DR MONTEREY AVECOOK STINTERSTATE HWY 10 INTERSTATE HWY 10 Project Area No. 1Original1975 Project Area No. 1Added Territory1982 Project Area No. 31991 Project Area No. 21987 Project Area No. 41993 0 1 20.5 Miles Project Area No. 1 - Original (1975) Project Area No. 1 - Added Territory (1982) Project Area No. 2 (1987) Project Area No. 3 (1991) Project Area No. 4 (1993) City Limits City of Palm Desert July, 2004 City of Palm Desert RDA Project Area #1 and 1982 Annex FY 2009 Top Twenty Property Taxpayers Owner (Number of Parcels) Assessed Value $ Cumulative % (1) Business Description WEA Palm Desert (8) 135,678,768$ 20.5% 800,000 sq. ft. Retail Shopping Mall Westfield Shopping Town Pru of Desert Crossing II LLC(11) 86,575,826$ 13.1% Major Commercial / Retail Buildings Elisabeth Stewart-Marrakesh CC(267) 79,493,371$ 12.0% Golf Course/Country Club Gardens SPE II (1) 77,210,317$ 11.6% Garden's at El Paseo up-scale retail shopping Center. Macys Calif (1) 32,998,933$ 5.0% Retail Store in Westfield Mall (Macy's) Harsch Investment Realty LLC(11) 29,344,704$ 4.4% Mix Commercial Buildings One-Eleven Town Center Shopping Center Bighorn Development (58) 25,446,024$ 3.8% Recreational / Residential Land Developer Shamrock Hostmark PD (5) 22,420,464$ 3.4% 198 Suite Hotel Desert El Paseo (2) 20,807,999$ 3.1% Commercial Shopping Center Palm Dundee One (2) 18,467,098$ 2.8% Commercial Shopping Center 26 Del Sur Palms LLC (3) 17,799,000$ 2.7% Commercial Center Palms to Pines Ralphs/Washington Mutual Sears Roebuck & Company (1) 14,724,591$ 2.2% Westfield Mall (SearsParking Structure) Bernard Jacques Debonne Trust (5) 14,328,195$ 2.2% Vacant Commercial Land (Village Court) L. Lee Bosley Trust (2) 13,565,476$ 2.0% Residential Land Bighorn Development Target Stores (1) 12,844,466$ 1.9% Commercial, Department Store El Paseo Land Company (2) 12,796,919$ 1.9% Commercial Shopping Center & Parking lot Nationwide Health Properties Inc. (1) 12,736,368$ 1.9% Assissted Living Center James E. Hummer (4) 12,679,773$ 1.9% Residential Land Bighorn Development Seoul Garden Plaza Inc (3) 11,798,935$ 1.8% 152 Room Hotel Summit Cable Services of Georgia (1) 11,349,103$ 1.7% Residential Development Total Net Assessed Value 663,066,330$ 100% (1) Cumulative represents only the top twenty properties. Source: Muniservices LLC and Riverside County Assessor 2008/2009 Combined Tax Rolls 198 City of Palm Desert RDA Project Area #2 FY 2009 Top Twenty Property Taxpayers Owner (Number of Parcels) Assessed Value $ Cumulative % (1) Business Description 1 Desert Springs Hotel (11) 279,271,039$ 48.3% Marriott Desert Springs Resort 895 room Hotel 2 Palm Desert Funding Company (9) 60,922,381$ 10.5% Vacant Commercial/Residential Land 3 Lakha Prop Palm Desert (9) 31,800,000$ 5.5% Commercial, Food Store, Retail 4 Marriot Ownership Resort Inc (38) 30,330,376$ 5.2% Time Share Condos/Villas (Shadow Ridge & Desert Springs Villas) 5 RST4 Tenant, Lessee (1) 25,714,873$ 4.4% Courtyard 151 Room and Residence Inn 130 Room Hotels 6 Palm Desert North 80 (2) 21,095,054$ 3.6% Vacant Commercial Land 7 WVC Rancho Mirage Inc. (18) 17,293,869$ 3.0% Vacant Commercial Land 8 BNY Western Company Trust (48) 16,137,370$ 2.8% Golf Course Timeshares Condominiums 9 DS Hotel Services (3) 14,132,021$ 2.4% Desert Springs Golf Course 10 Sinatra & Cook Project (1) 11,593,697$ 2.0% Vacant Commercial Land 11 Mathew V Johnson (2) 11,432,160$ 2.0% Vacant Commercial Land 12 Desert Falls Country Club Inc (3) 10,051,979$ 1.7% Private Golf Course & Homes 13 Manor Healthcare Corporation (1) 9,277,046$ 1.6% Assissted Living Center 14 RJT Homes Catavina (2) 7,428,454$ 1.3% Vacant Commercial Land 15 Willow View (1) 5,538,963$ 1.0% Office Buildings 16 Payless Drugstores Northwest (1) 5,500,000$ 1.0% Commercial Shopping Centers 17 Scotelle Development (7) 5,469,353$ 0.9% General Office Buildings 18 Chestnut Assets (14) 5,379,204$ 0.9% Vacant Residential Land 19 Resort Ventures (26) 5,323,360$ 0.9% Golf Course Timeshares Land 20 Palm Desert Terracina (36) 4,577,736$ 0.8% Vacant Residential Land Total Net Assessed Value 578,268,935$ 100% (1) Cumulative represents only the top twenty properties. Source: Muniservices LLC and Riverside County Assessor 2008/2009 Combined Tax Rolls 199 City of Palm Desert RDA Project Area #3 FY 2009 Top Twenty Property Taxpayers Owner (Number of Parcels) Assessed Value $ Cumulative % (1) Business Description Capri W. Canterra (1) 58,911,998$ 27.1% Multi Family Dwelling (Canterra Apts & Vacant land) Sunrise IV Carlotta SL (1) 26,786,886$ 12.3%Senior Citizens Assisted Living Center(The Fountains) Time Warner Entertainment Advance (5) 20,655,326$ 9.5% Cable Operator (Commercial Office Buildings) Guthy Renker Corporation (3) 17,332,030$ 8.0% Business / Commercial Offices Burrtec Waste & Recycling (3) 9,010,364$ 4.2% Refuse Collection Base / Industrial Offices Business Park of the Desert (13) 8,784,482$ 4.0% Industrial / Commercial Business Park SAG Palm Desert (1) 8,526,859$ 3.9% Industrial / Commercial Business Park Northern Trust Bank of California (8) 7,743,451$ 3.6% Industrial / Commercial Business Park Desert Properties LLC (5) 6,572,371$ 3.0% Industrial Offices & Parking Lot VPM Rancho Vista (7) 6,314,182$ 2.9% Multi Family Dwellings (Rancho Vista Apts) Eddleman Roy T (1) 6,275,982$ 2.9% Industrial / Commercial Business Park SMG 17 (1) 6,190,217$ 2.9% Business / Commercial Offices 43100 Cook St (1) 5,469,685$ 2.5% Business / Commercial Offices Cook St. Office (1) 5,105,931$ 2.4%Business / Commercial Offices (Corner of Cook/Hovley St) Lakeside Investment Properties (5) 4,664,896$ 2.1% Mix Use Industrial/Commercial Buildings/Stores Desert Art Properties (1) 4,244,831$ 2.0% Industrial / Commercial Business Park Stor N Lock Partners 16 (1) 3,864,302$ 1.8% Storage Facility (Stor-n-Lock) Eclectic Associates (1) 3,734,389$ 1.7% Business / Commercial Offices WR XVII (1) 3,699,677$ 1.7% Vacant Commercial Land Kaplan Bruce Alan 3,148,523$ 1.5% Industrial / Commercial Business Park Total Net Assessed Value 217,036,382$ 100% (1) Cumulative represents only the top twenty properties. Source: Muniservices LLC and Riverside County Assessor 2008/2009 Combined Tax Rolls 200 City of Palm Desert RDA Project Area #4 FY 2009 Top Twenty Property Taxpayers Owner (Number of Parcels) Assessed Value $ Cumulative % (1) Business Description Indian Ridge Country Club Inc. (29) 30,600,857$ 17.5% Indian Ridge Golf Course & Homes (Private) Ashford Park Holdings (1) 28,638,413$ 16.4% Multi-Family Dwellings (Desert Oasis Apts) FKC Palm Desert (4) 19,739,348$ 11.3% Business / Commercial Offices Sure Save Storage Palm Desert (2) 12,989,183$ 7.4% Storage Facility Palm Desert SPE (4) 12,274,877$ 7.0% Multi-Family Dwellings (Palm Desert Apts) PDCC Development LLC (17) 11,215,940$ 6.4% Palm Desert C.C. Golf Course & Clubhouse D R Horton Los Angeles (57) 10,488,955$ 6.0% Multiple Singe Family Residences (PDCC) PD Villas on the Green (1) 7,915,915$ 4.5% Multi-Family Dwellings (Villas on th Green, 55+Apts) CT Woodhaven (4) 5,786,630$ 3.3% Woodhaven Golf Course SR Mutual Investment Corp. (11) 5,554,123$ 3.2% Palm Desert Resort Golf Course & Clubhouse Royal Palms Realty LLC (39) 4,754,203$ 2.7% Multi-Family Dwellings (Royal Palms Apts) First Interstate Bank of California (1) 3,634,825$ 2.1%Business / Commercial Offices (Corner of Fred Waring & Washington St) Edward R. Chiuminatta (2) 3,206,175$ 1.8% Single Family Residence (Indian Ridge C.C.) Christopher P Mottern (2) 2,891,592$ 1.7% Single Family Residences Denver Braden (2) 2,821,215$ 1.6% 2 Single Family Residences (Indian Ridge C.C.) D R Horton Los Angeles (11) 2,594,622$ 1.5% Multi-Family Dwelling Frank Kerrigan T (1) 2,450,397$ 1.4% Professional Medical MLK (1) 2,365,000$ 1.4% 3 Single Family Residence (Indian Ridge C.C.) Toscana Limited LP (1) 2,276,880$ 1.3% Commercial Bldg & Parking Lot(Indian Ridge C.C.) Peggy M. Hoffman (2) 2,272,000$ 1.3% 2 Single Family Residences (Indian Ridge C.C.) Total Net Assessed Value 174,471,150$ 100% (1) Cumulative represents only the top twenty properties. Source: Muniservices LLC and Riverside County Assessor 2008/2009 Combined Tax Rolls 201 City of Palm Desert Project Area Statistics June 30, 2009 Description RDA 1 Original RDA 1 Annex RDA 2 RDA 3 RDA 4 Date Project Area was Established July 16, 1975 November 25, 1981 July 15, 1987 July 17, 1991 July 19, 1993 Most Recent Amendment Date December 9, 2004 December 9, 2004 December 9, 2004 December 9, 2004 December 9, 2004 Effectiveness of Plan (Project Duration)July 16, 2016 November 25, 2022 July 15, 2028 July 17, 2032 July 19, 2034 Repayment of Indebtedness July 16, 2026 November 25, 2032 July 15, 2038 July 17, 2042 July 19, 2044 Last Date to incur indebtedness Eliminated Eliminated Eliminated Eliminated Eliminated Eminent Domain July 16, 1987 November 25, 1993 July 15, 1999 July 17, 2003 July 19, 2005 800,000,000$ 1,534,916,881$ 150,000,000$ 287,796,915$ Types of Area in Project R, C, P R, C, P R, C, P, O R, I, C, P R, I, C, P Acreage Size of Project Area 580 5,240 2,927 764 2,260 R = Residential, C= Commercial, P= Public Facilities, I= Industrial, O= Other (1) Top figures are unadjusted limits and bottom figures are adjusted limits per Consumers Price Index set by the Bureau of Labor Statistics for RDA 2. Source: Palm Desert Redevelopment Agency 360,000,000$ 500,000,000$ 758,000,000$ Tax Increment Limit (1) Redevelopment Plan Limitations: Bonded Debt Limits (1) none 200,000,000$ 100,000,000$ 135,000,000$ 600,000,000$ 202 City of Palm Desert Redevelopment Agency Tax Allocation Bond Issue Information June 30, 2009 DESCRIPTION $22,070,000 Tax Allocation Bonds $19,000,000 Tax Allocation Bonds $24,945,000 Tax Allocation Bonds $62,300,000 Tax Allocation Revenue $32,600,000 Tax Allocation Revenue BdYears 28 27 21 24 11 Bond Issue Date 03/13/02 08/05/03 06/24/04 07/06/06 01/09/07 Final Maturity Date 04/01/30 04/01/30 04/01/25 04/01/30 04/01/18 Highest Interest Rate 5.100% 5.000% 5.000% 5.820% 5.000% Bond Issue Amount 22,070,000$ 19,000,000$ 24,945,000$ 62,320,000$ 32,600,000$ Outstanding Bond Amount 22,070,000$ 19,000,000$ 20,775,000$ 56,065,000$ 28,060,000$ Call Premium 0 - 2.00% 0.00% 0.00% 0.00% 0.00% Bond Insurer MBIA MBIA AMBAC MBIA MBIA Reserve Requirement (1) 2,804,344 950,000 2,430,750 13,117,662 13,116,979 Reserve Balance (1) (1) (1) (1) (1) (1) Called Bonds -$ -$ -$ -$ -$ Principle due 09/10 - 945,000 2,195,000 2,640,000 Interest Due 09/10 1,114,665 950,000 974,313 2,975,259 1,320,425 Arbritage Yield Rate 5.2939% 4.8571% 4.7961% 4.7182% 3.8374% Arbritage-Amount Owed - - - - - Arbritage Five Year Due Date:03/13/07 08/05/08 06/24/09 07/06/11 01/09/12 DESCRIPTION $17,310,000 Tax Allocation Revenue Bonds $15,745,000 Tax Allocation Revenue Bonds $67,600,000 Tax Allocation Revenue Bonds $4,745,000 Tax Allocation Bonds $15,050,000 Tax Allocation Revenue Years 20 30 30 30 35 Bond Issue Date 07/17/02 03/26/03 07/25/06 08/05/03 07/25/06 Final Maturity Date 08/01/22 08/01/33 08/01/36 04/01/33 04/01/41 Highest Interest Rate 5.000% 5.00% 6.10% 5.13% 6.10% Bond Issue Amount 17,310,000$ 15,745,000$ 67,618,213$ 4,745,000$ 15,059,526$ Outstanding Bond Amount 13,355,000$ 15,745,000$ 65,489,180$ 4,120,000$ 14,997,514$ Call Premium 0 - 2.00% 1 - 2.00% 0.00% 2.00% 0.00% Bond Insurer MBIA MBIA AMBAC MBIA MBIA Reserve Requirement (1) 1,324,750 769,006 5,309,825 297,953 1,034,250 Reserve Balance (1) (1) (1) (1) (1) (1) Called Bonds -$ -$ -$ -$ Principle due 09/10 695,000 - 1,777,789 100,000 126,100 Interest Due 09/10 607,868 769,006 2,595,139 193,048 573,175 Arbritage Yield Rate 4.7043% 4.9502% 5.2580% 4.9358% 5.3626% Arbritage-Amount Owed - - - - - Arbritage Five Year Due Date:07/17/12 03/26/13 07/25/11 08/05/13 07/25/11 DESCRIPTION $11,020,000 Tax Allocation Revenue Bonds $15,695,000 Tax Allocation Revenue Bonds $19,200,000 Tax Allocation Revenue $48,760,000 Tax Allocation Revenue Bonds $12,100,000 Tax Allocation Revenue Bonds $86,155,000 Tax Allocation Revenue Years 30 30 28 30 30 20 Bond Issue Date 03/01/98 11/28/01 07/25/06 01/01/98 09/05/02 02/07/07 Final Maturity Date 10/01/28 10/01/31 10/01/34 10/01/27 10/01/31 10/01/27 Highest Interest Rate 5.00% 4.80% 5.56% 5.10% 4.90% 5.00% Bond Issue Amount 11,020,000$ 15,695,000$ 19,273,089$ 48,760,000$ 12,100,000$ 86,155,000$ Outstanding Bond Amount 8,355,000$ 14,200,000$ 19,073,089$ 4,385,000$ 10,610,000$ 81,090,000$ Call Premium 0 - 2.00% 0 - 2.00% 0.00% 0 - 2.00% 1 - 2.00% 0.00% Bond Insurer MBIA MBIA MBIA MBIA MBIA MBIA Reserve Requirement (1) 768,020 482,890 3,740,843 572,500 767,625 7,887,224 Reserve Balance (1) (1) (1) (1) (1) (1) (1) Called Bonds 105,000$ -$ -$ -$ -$ -$ Principle due 09/10 - 305,000 439,497 1,390,000 275,000 3,005,000 Interest Due 09/10 429,590 651,250 686,949 184,500 491,454 3,736,750 Arbritage Yield Rate 5.2271% 4.9464% 5.1111% 5.1343% 4.8290% 4.1830% Arbritage-Amount Owed - - - - - - Arbritage Five Year Due Date:10/01/12 11/28/11 07/25/11 10/01/12 09/05/12 02/07/12 (1) A surety bond was issued by MBIA Insurance, future reserve balance's will be zero. Note: As of dates noted, all bond proceeds have been expended. Provided that no other proceeds become allocable to the issue and the debt service funds remain bona fide, no further reports are required. Should this situation change the calculation will be updated. Source: City of Palm Desert and Redevelopment Agency PROJECT AREA #3 PROJECT AREA #4 PROJECT AREA #2 HOUSING FUND PROJECT AREA #1 203 City of Palm Desert FY 2008/2009 Breakdown of Basic 1% Property Tax Levy Rates Redevelopment Project Areas Rate Taxing Agency RDA 1 Original RDA 1 1982 Annex RDA 2 RDA 3 RDA 4 County General 28.40564298% 28.30623560% 26.76930614% 25.5107035% 21.90490999% County Library 2.75032973% 2.88971813% 2.94511519% 2.8152163% 2.82769084% County Fire 5.92064021% 6.22070121% 6.33994946% 6.0603197% 6.08717188% City of Indian Wells Annex 0.00000000%0.00008086%0.00000000% 0.00000000%0.00000000% Supervisor Road District 4 0.00000000% 0.00000578% 0.00000000% 0.00000000%0.00000000% City of Palm Desert 0.00000000% 2.20931769% 4.51708430% 4.31531475% 8.71499351% Rancho Mirage Library 0.00000000% 0.01357979% 0.00000000% 0.00000000% 0.00000000% Rancho Mirage Fire Asmt.0.00000000% 0.02923324% 0.00000000% 0.00000000% 0.00000000% Desert Sands Unified School District 36.51489635% 36.95115121% 23.36433581% 37.3763553% 37.54194454% Palm Springs Unified School District 0.00000000% 0.00000000% 11.45632217% 0.00000000% 0.00000000% Desert Community College 7.58765931% 8.03919041% 8.12502870% 7.7666675% 7.80107872% County Superintendent of Schools 4.12807352% 4.37373148% 4.42043231% 4.2254635% 4.24418872% Riverside County Reg Park & Open Space 0.42959586% 0.42863009% 0.40493128% 0.3858868% 0.44176663% Coachella Valley Public Cemetary 0.34267508% 0.30337380% 0.21926546% 0.3507592% 0.35231654% Palm Springs Public Cemetary 0.00000000% 0.02746068% 0.06793522% 0.00000000% 0.00000000% Desert Hospital 2.01297234% 1.27674614% 1.82371186% 1.14050499% 0.00000000% Coachella Valley Mosquito & Vector Control 1.38078400% 1.46295492% 1.47857696% 1.4133595% 1.41962475% Coachella Valley Recreation & Park 2.08839447% 1.84887016% 1.33627793% 2.1376643% 2.14713770% Coachella Valley Water District 2.75876292% 2.92197650% 2.95414485% 2.8238481% 2.88786037% Coachella Valley Resource Cons.0.00000000% 0.02120132% 0.03787304% 0.0722844% 0.03636145% Coachella Valley Imp District 80 2.18720060% 1.00191167% 0.00000000% 3.5747649% 0.00234948% Coachella Valley Water District Storm Water Unit 3.49237262% 1.67392931% 3.73970933% 0.0308872% 3.59060487% ERAF RDV 0.00000000% 0.00000000% 0.00000000% 0.00000000% 0.00000000% General Purpose Basic 1% Rate 100.00000000% 100.00000000% 100.00000000% 100.00000000% 100.00000000% Source: Palm Desert Redevelopment Agency, Tax Increment Calculations & County of Riverside 204 City of Palm Desert Historical Tax Increment Summary Redevelopment Project Area #1 - Original Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Secured/Unsecured 9,587,028$ 9,112,173$ 8,618,586$ 7,996,533$ 7,406,602$ Supplemental 30,362 330,285 255,077 817,902 200,879 SBE (Utility)361,150 362,009 358,243 280,131 300,931 Total Gross Increment 9,978,539 9,804,467 9,231,907 9,094,566 7,908,412 Low/Mod Housing Set Aside (1,995,708) (1,960,893) (1,829,832) (1,803,116) (1,561,352) Tax Increment Less Low/Mod 7,982,832 7,843,574 7,402,075 7,291,450 6,347,059 Total Pass-Throughs (885,352) (841,237) (724,021) (830,846) (279,854) SB 2557 Charges (92,168) (86,539) (82,749) (78,987) (101,653) Net Tax Increment Agency (2)7,005,311$ 6,915,798$ 6,595,305$ 6,381,617$ 5,965,552$ FY 2004 2003 2002 2001 2000 Secured/Unsecured 6,934,754$ 6,503,515$ 6,360,760$ 6,199,196$ 5,549,207$ Supplemental 151,075 49,849 104,267 140,667 58,949 SBE (Utility)297,098 288,489 285,323 292,520 332,579 Total Gross Increment 7,382,927 6,841,853 6,750,350 6,632,383 5,940,736 Low/Mod Housing Set Aside (1,455,810) (1,348,011) (1,328,643) (1,305,693) (1,168,457) Tax Increment Less Low/Mod 5,927,117 5,493,842 5,421,707 5,326,690 4,772,279 Total Pass-Throughs (1)(316,366) (696,443) (922,984) 0 0 SB 2557 Charges (103,877) (101,797) (107,137) (103,919) (98,451) Net Tax Increment Agency (2)5,506,874$ 4,695,602$ 4,391,586$ 5,222,771$ 4,673,828$ (1) RDA Project Area 1 does not have Total Pass-Throughs with the exception of FY 1991/92. (2) Net Tax Increment Agency does not include Debt Service payments. Sources: City of Palm Desert, Tax Increment Calculations & County of Riverside $0 $1,500,000 $3,000,000 $4,500,000 $6,000,000 $7,500,000 $9,000,000 2009 2008 2007 2006 2005 6.97%8.33% Percentage represents change from prior year. 3.35%4.86%1.29% 205 City of Palm Desert Historical Tax Increment Summary Redevelopment Project Area # 1 - Amended Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Secured/Unsecured 42,187,053$ 40,030,758$ 36,240,089$ 31,237,832$ 27,778,894$ Supplemental 310,030 2,644,698 3,587,825 5,644,432 1,502,190 SBE (Utility)320,911 280,014 255,476 167,752 142,166 Total Gross Increment 42,817,994 42,955,470 40,083,390 37,050,016 29,423,250 Low/Mod Housing Set Aside (8,563,599) (8,591,094) (7,949,224) (7,350,269) (5,811,002) Tax Increment Less Low/Mod 34,254,395 34,364,376 32,134,166 29,699,746 23,612,248 Total Pass-Throughs (20,165,002) (20,349,225) (18,869,733) (17,382,480) (13,463,639) SB 2557 Charges (391,166) (368,824) (337,271) (298,669) (368,240) Net Tax Increment Agency (1)13,698,227$ 13,646,327$ 12,927,162$ 12,018,598$ 9,780,369$ FY 2004 2003 2002 2001 2000 Secured/Unsecured 25,247,194$ 22,967,677$ 19,826,224$ 15,969,365$ 12,683,176$ Supplemental 886,454 910,786 2,011,351 1,352,695 879,432 SBE (Utility)144,829 136,296 134,804 138,207 152,108 Total Gross Increment 26,278,477 24,014,759 21,972,379 17,460,268 13,714,716 Low/Mod Housing Set Aside (5,182,761) (4,733,721) (4,330,166) (3,440,490) (2,699,974) Tax Increment Less Low/Mod 21,095,716 19,281,038 17,642,213 14,019,778 11,014,742 Total Pass-Throughs (11,740,730) (10,523,374) (9,583,446) (7,339,195) (4,598,001) SB 2557 Charges (364,672) (346,155) (321,551) (257,820) (214,847) Net Tax Increment Agency (1)8,990,314$ 8,411,509$ 7,737,217$ 6,422,763$ 6,201,894$ (1) Net Tax Increment Agency does not include Debt Service payments. Sources: City of Palm Desert, Tax Increment Calculations Worksheets & County of Riverside $0 $3,000,000 $6,000,000 $9,000,000 $12,000,000 $15,000,000 $18,000,000 2009 2008 2007 2006 2005 Percentage represents change from prior year. 22.88% 16.27% 7.56%5.56%0.38% 206 City of Palm Desert Historical Tax Increment Summary Redevelopment Project Area # 2 Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Secured/Unsecured 19,400,296$ 17,779,922$ 15,816,298$ 13,756,558$ 12,629,958$ Supplemental 216,957 1,121,602 1,332,272 1,553,145 698,023 SBE (Utility)101,056 81,421 70,380 39,774 23,747 Total Gross Increment 19,718,309 18,982,945 17,218,950 15,349,478 13,351,728 Low/Mod Housing Set Aside (3,943,662) (3,796,589) (3,414,421) (3,043,663) (2,636,969) Tax Increment Less Low/Mod 15,774,648 15,186,356 13,804,529 12,305,815 10,714,759 Total Pass-Throughs (7,665,640) (7,598,015) (6,846,307) (6,072,950) (5,459,600) SB 2557 Charges (179,911) (163,443) (146,845) (131,163) (166,884) Net Tax Increment Agency (1)7,929,096$ 7,424,898$ 6,811,376$ 6,101,702$ 5,088,275$ FY 2004 2003 2002 2001 2000 Secured/Unsecured 11,717,869$ 10,422,746$ 8,575,348$ 7,816,649$ 7,120,210$ Supplemental 812,847 548,517 257,896 391,197 244,912 SBE (Utility)25,689 22,768 22,519 23,088 25,187 Total Gross Increment 12,556,405 10,994,031 8,855,763 8,230,934 7,390,309 Low/Mod Housing Set Aside (2,477,550) (2,167,507) (1,743,454) (1,621,091) (1,454,141) Tax Increment Less Low/Mod 10,078,855 8,826,524 7,112,309 6,609,843 5,936,168 Total Pass-Throughs (4,683,769) (4,320,158) (3,296,575) (2,790,025) (2,423,175) SB 2557 Charges (168,655) (156,494) (138,491) (125,482) (119,606) Net Tax Increment Agency (1)5,226,431$ 4,349,872$ 3,677,242$ 3,694,336$ 3,393,387$ (1) Net Tax Increment Agency does not include Debt Service payments. Sources: City of Palm Desert, Tax Increment Calculations Worksheets $0 $1,500,000 $3,000,000 $4,500,000 $6,000,000 $7,500,000 $9,000,000 2009 2008 2007 2006 2005 19.92%11.63% -2.64% 9.01%6.79% 207 City of Palm Desert Historical Tax Increment Summary Redevelopment Project Area #3 Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Secured/Unsecured 4,499,995$ 3,924,542$ 3,402,301$ 2,858,918$ 2,137,750$ Supplemental 236,572 454,199 185,346 607,706 261,674 SBE (Utility)13,956 9,990 6,910 3,147 763 Total Gross Increment 4,750,524 4,388,731 3,594,557 3,469,772 2,400,187 Low/Mod Housing Set Aside (950,105) (877,746) (712,606) (688,513) (474,397) Tax Increment Less Low/Mod 3,800,419 3,510,985 2,881,951 2,781,259 1,925,790 Total Pass-Throughs (2,214,109) (2,173,895) (1,806,340) (1,750,650) (1,197,599) SB 2557 Charges (1)(42,288) (36,007) (31,526) (27,207) (28,204) Net Tax Increment Agency 1,544,022$ 1,301,083$ 1,044,084$ 1,003,402$ 699,987$ FY 2004 2003 2002 2001 2000 Secured/Unsecured 2,040,874$ 1,359,556$ 1,204,009$ 1,028,201$ 854,991$ Supplemental 150,716 79,744 130,497 47,444 15,963 SBE (Utility)1,001 731 723 742 908 Total Gross Increment 2,192,591 1,440,031 1,335,229 1,076,387 871,862 Low/Mod Housing Set Aside (432,653) (283,930) (263,165) (211,984) (171,507) Tax Increment Less Low/Mod 1,759,938 1,156,101 1,072,064 864,403 700,355 Total Pass-Throughs (899,766) (448,489) (183,986) (548,192) (519,921) SB 2557 Charges (1)(29,324) (20,379) (19,405) (16,469) (14,327) Net Tax Increment Agency 830,848$ 687,233$ 868,673$ 299,742$ 166,107$ (1) Data for SB 2557 Charges is available from FY 1993/94. Sources: City of Palm Desert, Tax Increment Calculations Worksheets $0 $300,000 $600,000 $900,000 $1,200,000 $1,500,000 $1,800,000 2009 2008 2007 2006 2005 Percentage represents change from prior year. 43.35 % -15.75% 4.05% 24.61% 18.67% 208 City of Palm Desert Historical Tax Increment Summary Redevelopment Project Area # 4 Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Secured/Unsecured 13,712,549$ 13,518,052$ 12,117,535$ 10,483,484$ 9,017,457$ Supplemental 140,937 1,013,384 1,296,818 2,197,486 694,864 SBE (Utility)59,245 43,558 34,914 15,009 2,036 Total Gross Increment 13,912,731 14,574,994 13,449,266 12,695,978 9,714,357 Low/Mod Housing Set Aside (2,782,546) (2,914,999) (2,667,385) (2,519,237) (1,919,081) Tax Increment Less Low/Mod 11,130,185 11,659,995 10,781,881 10,176,742 7,795,276 Total Pass-Throughs (7,784,441) (8,032,775) (7,426,842) (6,778,536) (5,145,220) SB 2557 Charges (1)(127,300) (124,107) (112,342) (99,794) (118,954) Net Tax Increment Agency 3,218,444$ 3,503,113$ 3,242,697$ 3,298,411$ 2,531,102$ FY 2004 2003 2002 2001 2000 Secured/Unsecured 8,044,541$ 7,275,223$ 6,205,401$ 4,612,165$ 3,293,418$ Supplemental 318,307 411,994 854,021 829,389 1,027,462 SBE (Utility)3,641 1,952 1,930 1,979 2,117 Total Gross Increment 8,366,489 7,689,169 7,061,353 5,443,533 4,322,997 Low/Mod Housing Set Aside (1,650,181) (1,516,029) (1,392,274) (1,073,936) (853,567) Tax Increment Less Low/Mod 6,716,308 6,173,140 5,669,078 4,369,597 3,469,431 Total Pass-Throughs (3,569,212) (3,863,556) (3,747,180) (3,640,563) (2,856,325) SB 2557 Charges (1)(115,583) (109,024) (99,981) (73,853) (55,164) Net Tax Increment Agency 3,031,513$ 2,200,560$ 1,821,917$ 655,182$ 557,941$ (1) Data for SB 2557 Charges is available from FY 1995/96. Sources: City of Palm Desert, Tax Increment Calculations Worksheets $0 $750,000 $1,500,000 $2,250,000 $3,000,000 $3,750,000 $4,500,000 2009 2008 2007 2006 2005 Percentage represents change from prior year. 30.32% -16.51% -1.69%8.03%-8.13% 209 City of Palm Desert Historical Net Assessed Taxable Values Redevelopment Project Area # 1 - Original Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Secured: (1) Land 241,759,729$ 233,208,647$ 216,759,847$ 209,051,600$ 193,066,855$ Improvements 610,061,698 584,395,005 552,604,613 515,092,610 468,555,559 Personal Property 5,000,717 4,856,393 6,825,265 7,420,696 4,909,559 Penalty 0 0 0 0 0 Less Other Exempt (455,200) (1,570,949) (760,295) (610,338) (730,777) Less Home Owner Value (70,000) (63,000) (70,000) (70,000) (70,000) Less B Inv. Value 0 0 0 0 0 Total Net Assessed Taxable Secured Value 856,296,944 820,826,096 775,359,430 730,884,568 665,731,196 Unsecured: Land 1,267 1,245 1,220 396 156,701 Improvements 69,008,584 60,185,535 56,536,963 48,736,306 51,133,704 Personal Property 60,792,341 57,684,012 57,404,440 47,480,402 51,093,465 Penalty 0 0 0 0 0 Less Other Exempt (66,749) (56,785) (32,652) (32,573) (39,043) Total Net Assessed Taxable Unsecured Value 129,735,443 117,814,007 113,909,971 96,184,531 102,344,827 Total Net Assessed Taxable Value 986,032,387$ 938,640,103$ 889,269,401$ 827,069,099$ 768,076,023$ FY 2004 2003 2002 2001 2000 Secured: (1) Land 180,571,588$ 175,028,644$ 171,440,095$ 167,254,618$ 157,749,660$ Improvements 430,563,506 403,984,613 389,716,686 381,168,647 342,048,525 Personal Property 2,970,008 3,290,180 3,824,393 4,621,105 3,958,876 Penalty 0 0 2,536 61,938 24,969 Less Other Exempt (100) 0 0 0 0 Less Home Owner Value (77,000) (75,600) (70,000) (49,000) (56,000) Less B Inv. Value 0 0 0 0 0 Total Net Assessed Taxable Secured Value 614,028,002 582,227,837 564,913,710 553,057,308 503,726,030 Unsecured: Land 174,128 201,461 229,626 191,925 211,902 Improvements 52,581,364 48,916,729 52,533,594 47,281,799 44,481,799 Personal Property 54,158,601 46,472,846 44,331,125 44,847,382 33,234,094 Penalty 0 0 1,592,700 2,089,768 735,012 Less Other Exempt (57,842) (57,121) (58,570) (61,394) (38,283) Total Net Assessed Taxable Unsecured Value 106,856,251 95,533,915 98,628,475 94,349,480 78,624,524 Total Net Assessed Taxable Value 720,884,253$ 677,761,752$ 663,542,185$ 647,406,788$ 582,350,554$ (1) Secured values include State assessed data. Source: County of Riverside, County Auditor Controller, Assessed Valuations 210 City of Palm Desert Change in Taxable Values Redevelopment Project Area # 1 - Original 2009 versus 2008 FY 2009 2008 Secured: (1) Land 241,759,729$ 233,208,647$ Improvements 610,061,698$ 584,395,005$ Personal Property 5,000,717$ 4,856,393$ Penalty 0$ 0$ Less Other Exempt (455,200)$ (1,570,949)$ Less Home Owner Value (70,000)$ (63,000)$ Total Net Assessed Taxable Secured Value 856,296,944$ 820,826,096$ Unsecured: Land 1,267$ 1,245$ Improvements 69,008,584$ 60,185,535$ Personal Property 60,792,341$ 57,684,012$ Penalty 0$ 0$ Less Other Exempt (66,749)$ (56,785)$ Total Net Assessed Taxable Unsecured Value 129,735,443$ 117,814,007$ Total Net Assessed Taxable Value 986,032,387$ 938,640,103$ (1) Secured values include State assessed data. Source: County of Riverside, County Auditor Controller, Assessed Valuations 211 City of Palm Desert Historical Net Assessed Taxable Values Redevelopment Project Area # 1 - Amended Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Secured: (1) Land 1,646,837,956$ 1,548,363,317$ 1,404,883,142$ 1,221,817,819$ 1,099,974,404$ Improvements 3,216,329,372 3,098,549,660 2,848,708,294 2,548,978,946 2,322,285,503 Personal Property 4,295,752 4,850,231 5,159,912 5,081,062 4,080,748 Penalty 0 0 0 0 0 Less Other Exempt (86,439,305) (84,042,297) (71,117,424) (75,212,626) (72,356,678) Less Home Owner Value (30,414,878) (30,606,235) (30,941,142) (30,902,546) (31,114,156) Less B Inv. Value 0 0 0 0 0 Total Net Assessed Taxable Secured Value 4,750,608,897 4,537,114,676 4,156,692,782 3,669,762,655 3,322,869,821 Unsecured: Land 56,456 714 781 0 1,449 Improvements 37,501,662 36,438,840 38,277,529 33,710,842 33,165,394 Personal Property 67,485,677 62,971,014 57,326,123 51,779,049 53,234,502 Penalty 0 0 0 0 0 Less Other Exempt (11,366,822) (7,990,591) (3,164,410) (6,306,859) (6,430,836) Total Net Assessed Taxable Unsecured Value 93,676,973 91,419,977 92,440,023 79,183,032 79,970,509 Total Net Assessed Taxable Value 4,844,285,870$ 4,628,534,653$ 4,249,132,805$ 3,748,945,687$ 3,402,840,330$ 2004 2003 2002 2001 2000 Secured: (1) Land 1,037,831,772$ 964,043,115$ 887,797,124$ 746,195,135$ 631,896,282$ Improvements 2,109,457,532 1,966,604,300 1,742,745,364 1,493,036,846 1,292,074,218 Personal Property 3,722,255 4,822,804 4,009,942 3,266,563 1,984,406 Penalty 0 0 31,999 159,145 37,717 Less Other Exempt (50,011,055) (50,251,474) (55,711,920) (47,407,077) (46,013,692) Less Home Owner Value (30,819,292) (28,898,212) (28,025,997) (27,838,129) (27,464,787) Less B Inv. Value 0 0 0 0 0 Total Net Assessed Taxable Secured Value 3,070,181,212 2,856,320,533 2,550,846,512 2,167,412,483 1,852,514,144 Unsecured: Land 9,581 135,778 143,855 52,422 46,483 Improvements 32,087,933 29,960,052 26,976,720 27,217,181 20,563,813 Personal Property 56,477,588 46,150,607 42,134,507 40,144,238 29,967,514 Penalty 0 0 494,612 673,565 181,234 Less Other Exempt (8,791,155) (8,632,424) (9,613,037) (10,316,419) (6,335,363) Total Net Assessed Taxable Unsecured Value 79,783,947 67,614,013 60,136,657 57,770,987 44,423,681 Total Net Assessed Taxable Value 3,149,965,159$ 2,923,934,546$ 2,610,983,169$ 2,225,183,470$ 1,896,937,825$ (1) Secured values include State assessed data. Source: County of Riverside, County Auditor Controller, Assessed Valuations 212 City of Palm Desert Change in Taxable Value Redevelopment Project Area # 1 - Amended 2009 versus 2008 FY 2009 2008 % Change Secured: (1) Land 1,646,837,956$ 1,548,363,317$ 6.4% Improvements 3,216,329,372$ 3,098,549,660$ 3.8% Personal Property 4,295,752$ 4,850,231$ -11.4% Penalty 0$ 0$ 0.0% Less Other Exempt (86,439,305)$ (84,042,297)$ 2.9% Less Home Owner Value (30,414,878)$ (30,606,235)$ -0.6% Total Net Assessed Taxable Secured Value 4,750,608,897$ 4,537,114,676$ 4.7% Unsecured: Land 56,456$ 714$ 7807.0% Improvements 37,501,662$ 36,438,840$ 2.9% Personal Property 67,485,677$ 62,971,014$ 7.2% Penalty 0$ 0$ 0.0% Less Other Exempt (11,366,822)$ (7,990,591)$ 42.3% Total Net Assessed Taxable Unsecured Value 93,676,973$ 91,419,977$ 2.5% Total Net Assessed Taxable Value 4,844,285,870$ 4,628,534,653$ 4.7% (1) Secured values include State assessed data. Source: County of Riverside, County Auditor Controller, Assessed Valuations 213 City of Palm Desert Historical Net Assessed Taxable Values Redevelopment Project Area # 2 Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Secured: (1) Land 633,335,921$ 587,058,715$ 521,340,003$ 414,088,670$ 377,500,739$ Improvements 1,367,855,491 1,276,315,674 1,137,488,315 1,043,768,419 964,730,831 Personal Property 866,004 590,836 6,592,802 6,930,907 8,309,969 Penalty (2)0 0 0 0 0 Less Other Exempt (7,964,045) (9,550,463) (7,655,384) (3,292,024) (3,133,357) Less Home Owner Value (3,724,000) (3,735,200) (3,752,000) (3,752,000) (3,689,000) Less B Inv. Value 0 0 0 0 0 Total Net Assessed Taxable Secured Value 1,990,369,371 1,850,679,562 1,654,013,736 1,457,743,972 1,343,719,182 Unsecured: Land 2,542 0 0 0 0 Improvements 18,201,638 5,343,621 6,215,099 4,187,472 3,853,947 Personal Property 29,865,376 20,391,298 19,806,418 12,129,847 13,891,105 Penalty 0 0 0 0 0 Total Net Assessed Taxable Unsecured Value 48,069,556 25,734,919 26,021,517 16,317,319 17,745,052 Total Net Assessed Taxable Value 2,038,438,927$ 1,876,414,481$ 1,680,035,253$ 1,474,061,291$ 1,361,464,234$ FY 2004 2003 2002 2001 2000 Secured: (1) Land 338,504,943$ 298,852,366$ 268,700,076$ 254,353,602$ 241,562,963$ Improvements 915,313,076 830,436,695 675,455,198 615,751,576 557,262,592 Personal Property 7,136,535 7,539,988 6,840,530 6,545,424 10,603,177 Penalty (2)0 0 0 0 Less Other Exempt (2,979,597) (2,823,135) (2,767,781) (1,213,512) (1,189,719) Less Home Owner Value (3,316,600) (2,853,200) (2,639,000) (2,623,600) (2,522,800) Less B Inv. Value 0 0 0 0 0 Total Net Assessed Taxable Secured Value 1,254,658,357 1,131,152,714 945,589,023 872,813,490 805,716,213 Unsecured: Land 0 0 0 0 0 Improvements 4,482,615 2,799,545 2,910,472 2,417,234 1,877,417 Personal Property 11,486,746 7,626,600 8,438,055 5,921,587 3,984,295 Penalty 0 0 115,676 46,458 77,730 Total Net Assessed Taxable Unsecured Value 15,969,361 10,426,145 11,464,203 8,385,279 5,939,442 Total Net Assessed Taxable Value 1,270,627,718$ 1,141,578,859$ 957,053,226$ 881,198,769$ 811,655,655$ (1) Secured values include State assessed data. Source: County of Riverside, County Auditor Controller, Assessed Valuations 214 City of Palm Desert Change in Taxable Value Redevelopment Project Area # 2 2009 versus 2008 FY 2009 2008 % Change Secured: (1) Land 633,335,921$ 587,058,715$ 7.9% Improvements 1,367,855,491$ 1,276,315,674$ 7.2% Personal Property 866,004$ 590,836$ 46.6% Penalty 0$ 0$ 0.0% Less Other Exempt (7,964,045)$ (9,550,463)$ -16.6% Less Home Owner Value (3,724,000)$ (3,735,200)$ -0.3% Less B Inv. Value 0$ 0$ 0.0% Total Net Assessed Taxable Secured Value 1,990,369,371 1,850,679,562 7.5% Unsecured: Land 2,542$ 0$ 2542.0% Improvements 18,201,638$ 5,343,621$ 240.6% Personal Property 29,865,376$ 20,391,298$ 46.5% Penalty 0$ 0$ 0.0% Total Net Assessed Taxable Unsecured Value 48,069,556 25,734,919 86.8% Total Net Assessed Taxable Value 2,038,438,927$ 1,876,414,481$ 8.6% (1) Secured values include State assessed data. Source: County of Riverside, County Auditor Controller, Assessed Valuations 215 City of Palm Desert Historical Net Assessed Taxable Values Redevelopment Project Area # 3 Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Secured: (1) Land 134,147,217$ 119,422,958$ 114,253,170$ 103,496,559$ 91,523,675$ Improvements 418,977,238 375,240,496 333,347,161 298,197,384 243,139,587 Personal Property 3,308,454 3,629,771 3,893,071 3,890,560 3,152,374 Penalty 0 0 0 0 0 Less Other Exempt (20,782,445) (19,251,214) (19,311,510) (20,251,190) (19,430,222) Less Home Owner Value (2,331,000) (2,203,600) (2,206,400) (2,046,800) (1,974,000) Total Net Assessed Taxable Secured Value 533,319,464 476,838,411 429,975,492 383,286,513 316,411,414 Unsecured: Land 0 0 0 370 2,138 Improvements 18,796,505 17,795,034 13,109,332 12,424,085 9,635,015 Personal Property 45,622,109 45,542,975 44,899,884 38,091,911 35,730,772 Penalty 0 0 0 0 0 Less Other Exempt (549,632) (402,531) (437,726) (434,582) (455,101) Total Net Assessed Taxable Unsecured Value 63,868,982 62,935,478 57,571,490 50,081,784 44,912,824 Total Net Assessed Taxable Value 597,188,446$ 539,773,889$ 487,546,982$ 433,368,297$ 361,324,238$ FY 2004 2003 2002 2001 2000 Secured: (1) Land 83,600,129$ 76,423,641$ 70,984,182$ 67,042,691$ 62,879,457$ Improvements 221,590,995 176,923,362 167,824,429 149,512,375 142,889,361 Personal Property 1,581,880 1,224,360 1,221,819 1,739,556 4,247,032 Penalty 0 0 255 40,255 0 Less Other Exempt (3,149,364) (2,977,801) (2,868,530) (2,651,190) (2,429,452) Less Home Owner Value (1,912,400) (1,750,000) (1,687,000) (1,762,600) (1,789,200) Total Net Assessed Taxable Secured Value 301,711,240 249,843,562 235,475,155 213,921,087 205,797,198 Unsecured: Land 2,138 2,213 29,325 29,992 31,781 Improvements 13,245,112 8,281,641 11,021,570 11,069,151 8,832,767 Personal Property 37,209,995 26,061,080 21,453,363 24,808,691 18,345,262 Penalty 0 0 904,695 1,176,179 625,647 Less Other Exempt (470,220) (459,656) (646,953) (424,328) (399,507) Total Net Assessed Taxable Unsecured Value 49,987,025 33,885,278 32,762,000 36,659,685 27,435,950 Total Net Assessed Taxable Value 351,698,265$ 283,728,840$ 268,237,155$ 250,580,772$ 233,233,148$ (1) Secured values include State assessed data. Source: County of Riverside, County Auditor Controller, Assessed Valuations 216 City of Palm Desert Change in Taxable Values Redevelopment Project Area # 3 2009 versus 2008 FY 2009 2008 % Change Secured: (1) Land 134,147,217$ 119,422,958$ 12.3% Improvements 418,977,238$ 375,240,496$ 11.7% Personal Property 3,308,454$ 3,629,771$ -8.9% Penalty 0$ 0$ 0.0% Less Other Exempt (20,782,445)$ (19,251,214)$ 8.0% Less Home Owner Value (2,331,000)$ (2,203,600)$ 5.8% Total Net Assessed Taxable Secured Value 533,319,464 476,838,411 11.8% Unsecured: Land 0$ 0$ 0.0% Improvements 18,796,505$ 17,795,034$ 5.6% Personal Property 45,622,109$ 45,542,975$ 0.2% Penalty 0$ 0$ 0.0% Less Other Exempt (549,632)$ (402,531)$ 36.5% Total Net Assessed Taxable Unsecured Value 63,868,982 62,935,478 1.5% Total Net Assessed Taxable Value 597,188,446$ 539,773,889$ 10.6% (1) Secured values include State assessed data. Source: County of Riverside, County Auditor Controller, Assessed Valuations 217 City of Palm Desert Historical Net Assessed Taxable Values Redevelopment Project Area # 4 Last Ten Fiscal Years FY 2009 2008 2007 2006 2005 Secured: (1) Land 612,342,380$ 589,549,492$ 538,079,392$ 480,264,736$ 423,136,913$ Improvements 1,338,202,248 1,340,102,309 1,253,230,590 1,145,343,698 1,060,291,261 Personal Property 3,221,691 4,306,781 895,558 1,037,306 1,039,548 Penalty (2)0 0 0 0 0 Less Other Exempt (3,034,308) (3,046,149) (2,814,993) (2,988,924) (2,213,136) Less Home Owner Value (15,250,200) (15,577,800) (15,797,600) (15,874,600) (16,083,200) Less B Inv. Value Total Net Assessed Taxable Secured Value 1,935,481,811 1,915,334,633 1,773,592,947 1,607,782,216 1,466,171,386 Unsecured: Land 0 0 0 0 0 Improvements 1,404,311 1,372,786 1,581,231 1,606,970 2,043,627 Personal Property 6,296,641 6,712,170 7,973,923 10,276,814 4,639,732 Penalty (2)0 0 0 0 0 Total Net Assessed Taxable Unsecured Value 7,700,952 8,084,956 9,555,154 11,883,784 6,683,359 Total Net Assessed Taxable Value 1,943,182,763$ 1,923,419,589$ 1,783,148,101$ 1,619,666,000$ 1,472,854,745$ FY 2004 2003 2002 2001 2000 Secured: (1) Land 387,894,896$ 363,532,124$ 336,601,532$ 295,636,937$ 266,431,690$ Improvements 1,000,472,990 943,610,707 861,691,896 742,772,488 639,902,284 Personal Property 903,523 1,176,104 1,269,934 1,085,189 1,130,254 Penalty (2)0 0 91,675 32,666 Less Other Exempt (2,236,588) (2,005,855) (1,924,780) (1,240,153) (1,125,349) Less Home Owner Value (16,032,800) (15,162,000) (14,604,800) (14,263,200) (13,610,800) Less B Inv. Value 0 0 0 0 0 Total Net Assessed Taxable Secured Value 1,371,002,021 1,291,151,080 1,183,125,457 1,024,023,927 892,728,079 Unsecured: Land 0 0 0 0 0 Improvements 1,172,618 1,610,760 1,878,576 2,018,343 1,874,135 Personal Property 3,438,910 6,790,656 8,053,034 8,071,994 8,292,670 Penalty (2)0 0 70,495 31,283 28,376 Total Net Assessed Taxable Unsecured Value 4,611,528 8,401,416 10,002,105 10,121,620 10,195,181 Total Net Assessed Taxable Value 1,375,613,549$ 1,299,552,496$ 1,193,127,562$ 1,034,145,547$ 902,923,260$ (1) Secured values include State assessed data. Source: County of Riverside, County Auditor Controller, Assessed Valuations 218 City of Palm Desert Change in Taxable Values Redevelopment Project Area # 4 2009 versus 2008 FY 2009 2008 % Change Secured: (1) Land 612,342,380$ 589,549,492$ 3.9% Improvements 1,338,202,248$ 1,340,102,309$ -0.1% Personal Property 3,221,691$ 4,306,781$ -25.2% Penalty 0$ 0$ 0.0% Less Other Exempt (3,034,308)$ (3,046,149)$ -0.4% Less Home Owner Value (15,250,200)$ (15,577,800)$ -2.1% Less B Inv. Value 0$ 0$ 0.0% Total Net Assessed Taxable Secured Value 1,935,481,811 1,915,334,633 1.1% Unsecured: Land 0$ 0$ 0.0% Improvements 1,404,311$ 1,372,786$ 2.3% Personal Property 6,296,641$ 6,712,170$ -6.2% Penalty 0$ 0$ 0.0% Total Net Assessed Taxable Unsecured Value 7,700,952 8,084,956 -4.7% Total Net Assessed Taxable Value 1,943,182,763$ 1,923,419,589$ 1.0% (1) Secured values include State assessed data. Source: County of Riverside, County Auditor Controller, Assessed Valuations 219 THIS PAGE INTENTIONALLY LEFT BLANK 220