HomeMy WebLinkAboutAudited Financial Reports - Redevelopment Agency FYE June 30, 2010CITY OF PALM DESERT
FINANCE DEPARTMENT
Staff Report
REQUEST: RECEIVE AND FILE THE AUDITED FINANCIAL REPORTS FOR
THE PALM DESERT REDEVELOPMENT AGENCY FOR THE
FISCAL YEAR ENDED JUNE 30, 2010
DATE: April 14, 2011
SUBMITTED BY: Paul S. Gibson, Finance Director
CONTENTS: Palm Desert Redevelopment Agency Audited Financial Report for
the Fiscal Year Ended June 30, 2010
Recommendation
By Minute Motion, that the City Council receive and file the audited
Component Unit Financial Report for the Palm Desert Redevelopment
Agency for fiscal year ended June 30, 2010.
Committee Recommendation
The Audit, Investment and Finance Committee received the audited financial statements
for the Palm Desert Redevelopment Agency at their January 25, 2011 meeting, and it was
recommended that the statements for the fiscal year ended June 30, 2010 be received
and filed by the City Council.
Background
Diehl, Evans & Associates, LLP, performed and completed the annual independent audit
for the fiscal year ended June 30, 2010, for the Redevelopment Agency in October 2010,
in accordance with generally accepted auditing standards. In the auditor's opinion, the
basic financial statements present fairly, in all material respects, the financial position of
the Redevelopment Agency as of June 30, 2010, and the results of its operations of the
year then ended are in conformity with accounting principles generally accepted in the
United States of America.
In conducting their audit, the auditors test the City's internal controls. Pages 81 and 82 of
the Annual Financial Report show the Report on Internal Controls over Financial
Reporting and on compliance and other matters based on an audit of Financial
Statements performed in accordance with Government Auditing Standards.
G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2010\SR - Council audit RDA CUFR 2010.docx
Staff Report
Approval of CUFR for Fiscal Year ended June 30, 2010
April 14, 2011
Page 2 of 2
Staff requests that the Council receive and file the audited Component Unit Financial
Report for the Palm Desert Redevelopment Agency for fiscal year ended June 30, 2010.
Fiscal Impact
There is no fiscal impact associated with this action.
Submitted by:
6 �
Paul S. Gibson, Finance Director/City Treasurer
PSG:JLE:nmo
Approved by:
n M. Wohlmuth, City Manager
CITY COUNCIL ACTION
APPROVED _ DENIED
RECEIVED 2- File- OTIIE11
MEETING DATE, - --
AYES: rz/)&4,/,
NOES: � n�— �—
A13SENT: N CQC -
ABSTAIN:
VERIFIED BY• n�r
Original on File with City Clerks Office
G:\FinanceWiamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2010\SR - Council audit RDA CUFR 2010.docx
Staff Report
Approval of CUFR for Fiscal Year ended June 30, 2010
April 14, 2011
Page 2 of 2
Staff requests that the Council receive and file the audited Component Unit Financial
Report for the Palm Desert Redevelopment Agency for fiscal year ended June 30, 2010.
Fiscal Impact
There is no fiscal impact associated with this action.
Submitted by:
Paul S. Gibson, Finance Director/City Treasurer
PSG:JLE:nmo
Approved by:
City Manager
G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2010\SR -Council audit RDA CUFR 2010.docx
PALM DESERT REDEVELOPMENT AGENCY
PALM DESERT, CALIFORNIA
ANNUAL FINANCIAL REPORT
WITH REPORT ON AUDIT
BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED JUNE 30, 2010
PALM DESERT REDEVELOPMENT AGENCY
TABLE OF CONTENTS
JUNE 30, 2010
Page
Number
INDEPENDENT AUDITORS' REPORT 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Required Supplementary Information) 3
BASIC FINANCIAL STATEMENTS:
Government -Wide Financial Statements:
Exhibit A - Statement of Net Assets 11
Exhibit B - Statement of Activities 13
Fund Financial Statements:
Exhibit C - Balance Sheet - Governmental Funds 14
Exhibit D - Reconciliation of Governmental Funds Balance Sheet
to the Statement of Net Assets 17
Exhibit E - Statement of Revenues, Expenditures and Changes in Fund
Balances - Governmental Funds 18
Exhibit F - Reconciliation of the Statement of Revenues, Expenditures and
Changes in Fund Balances of Governmental Funds to the
Statement of Activities 20
Notes to Basic Financial Statements 21
SUPPLEMENTARY INFORMATION:
Schedule 1 - Combining Balance Sheet - Other Governmental Funds 68
Schedule 2 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds 69
Schedule 3 - Balance Sheet - Other Governmental Fund - Special Revenue 70
Schedule 4 - Statement of Revenues, Expenditures and Changes
in Fund Balance - Other Governmental Fund - Special Revenue 71
PALM DESERT REDEVELOPMENT AGENCY
TABLE OF CONTENTS
(CONTINUED)
JUNE 30, 2010
Page
Number
SUPPLEMENTARY INFORMATION (CONTINUED):
Schedule 5 - Balance Sheet - Other Governmental Fund - Debt Service 72
Schedule 6 - Statement of Revenues, Expenditures and Changes
in Fund Balance - Other Governmental Fund - Debt Service 73
Schedule 7 - Combining Balance Sheet - Other Governmental Funds - Capital Projects 74
Schedule 8 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds - Capital Projects 75
Schedule 9 - Combining Balance Sheet - Housing Authority Special Revenue Fund 76
Schedule 10 -Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Housing Authority Special Revenue Fund 78
Schedule 11 -Computation of Low and Moderate Housing Excess Surplus Funds 80
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 81
DIEHL, EVANS & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS
5 CORPORATE PARK, SUITE 100
IRVINE, CALIFORNIA 92606-5165
(949) 399-0600 • FAX (949) 399-0610
wwwbehlevansmm
MICHAEL R. LUDIN, CPA
CRAIG W. SPRAKER, CPA
NITTN P. PATEL, CPA
ROBERT J. CALLANAN, CPA
•PHILIP It HOLTKAMP, CPA
•THOMAS M. PERLOWSKI, CPA
-HARVEY 1. SCHROEDER, CPA
KENNETHR. AMES, CPA
WHIJAM C. PENTZ, CPA
November 29, 2010 •A PROFESSIONAL CORPORAT[ON
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and
Members of the City Council
Palm Desert Redevelopment Agency
Palm Desert, California
We have audited the accompanying financial statements of the governmental activities, each major
fund and the aggregate remaining fluid information of the Palm Desert Redevelopment Agency (the
Agency), (a component unit of the City of Palm Desert, California), as of and for the year ended
June 30, 2010, which collectively comprise the Agency's basic financial statements, as listed in the
table of contents. These basic financial statements are the responsibility of the Agency's management,
Our responsibility is to express opinions on these basic financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government 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 basic financial statements are
free of material misstatement. An audit includes consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Agency's internal control over
financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management, as
well as, evaluating the overall basic financial statement presentation. We believe that our audit
provides a reasonable basis for our opinions.
In our opinion, the basic financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, each major fund and the aggregate
remaining fund information of the Palm Desert Redevelopment Agency as of June 30, 2010, and the
respective changes in financial position thereof for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
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OTHER OFFICES AP: 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
In accordance with Government Auditing Standards, we have also issued our report dated
November 29, 2010 on our consideration of the Palm Desert Redevelopment Agency's internal control
over financial reporting and our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe the scope
of our testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing, Standards and
should be considered in assessing the results of our audit.
The management's discussion and analysis, identified as required supplementary information in the
table of contents, is not a required part of the basic financial statements but is supplementary
information required by the accounting principles generally accepted in the United States of America.
This information is an essential part of financial reporting for placing the basic financial statements in
an appropriate operational, economic or historical context. We have applied certain limited procedures
to the management's discussion and analysis in accordance with auditing standards generally accepted
in the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management's
responses to our inquiries, the basic financial statements, and other knowledge we obtained during the
audit of the basic financial statements. We do not express an opinion or provide any assurance on the
management's discussion and analysis because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance on the management's discussion and analysis.
Our audit was made for the purpose of forming opinions on the financial statements that collectively
comprise the Agency's basic financial statements. The combining, individual fund statements and
schedules, and the Computation of Low and Moderate Housing Excess/Surplus Funds are presented for
purposes of additional analysis and are not a required part of the basic financial statements of the
Agency. Such information is the responsibility of management and was derived from and relates
directly to the underlying accounting and other records used to prepare the financial statements. The
information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information
directly to the underlying accounting and other records used to prepare the basic financial statements
of the Agency or to the financial statements themselves, and other additional procedures in accordance
with auditing standards generally accepted in the United States of America. In our opinion, the
information is fairly stated in all material respects in relation to the basic financial statements taken as
a whole.
k./,",4,kI CVC-, cwv►A I LLP
-2-
PALMDESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2010
Our discussion and analysis of the Palm Desert Redevelopment Agency's (Agency) financial performance
for the fiscal year ended June 30, 2010, provides a comparison of current year to prior year ending results
based on the government -wide statements, an analysis on the Agency's overall financial position and
results of operations to assist users in evaluating the Agency's financial position, and a discussion of
significant changes that occurred within each fund. In addition, it describes the activities during the year
for capital assets and long-term debt. We end our discussion and analysis with a description of currently
known facts, decisions and conditions that are expected to have a significant effect on the financial
position or results of operations. Please read it in conjunction with the Agency's financial statements.
FINANCIAL HIGHLIGHTS
The Agency's governmental activities net assets deficit increased $5.15 million, or 65% percent.
The Agency currently has an unrestricted net deficit because of the debt it has issued. Proceeds
from the debt were used for capital improvements on behalf of the City or contributed to
developers and is not offset by investments in capital assets.
During the year, the Agency had revenues that were $5.15 million less than the $101.10 million
in expenses recorded by the Agency in its governmental activities.
The Agency's governmental activities program revenues and general revenues decreased $4.37
million, or 4.36 percent from the prior year, and program expenses increased $5.82 million, or
6.11 percent.
USING THIS ANNUAL REPORT
TI-ds annual report consists of a series of financial statements. The Statement of Net Assets and Statement
of Activities (on pages 11 and 13) provide information about the activities of the Agency as a whole and
present a long-term view of the Agency's finances. Fund financial statements start on page 14. For
governmental activities, these fund statements tell how these services were financed in the short term as
well as what remains for future spending. Fund financial statements also report the Agency's operation in
more detail than the government -wide statements by providing information about the Agency's most
significant funds as well as the other funds.
REPORTING THE AGENCY AS A WHOLE
The Statement of Net Assets and the Statement of Activities:
Our analysis of the Agency as a whole begins on page 11. One of the most important questions asked
about the Agency's finances is, "Is the Agency as a whole better off or worse off as a result of the year's
activities?" The Statement of Net Assets and the Statement of Activities report information about the
Agency as a whole and about its activities in a way to answer this question. These statements include all
assets and liabilities of the Agency using the accrual basis of accounting, which is similar to the
accounting used by most private -sector companies. All of the current year's revenues and expenses are
taken into account regardless of when cash is received or paid.
These two statements report the Agency's net assets and changes in them Net assets are the difference
between assets and liabilities, which is one way to measure the Agency's financial health, or financial
position. Over time, increases or decreases in the Agency's net assets are an indication of whether its
financial health is improving or deteriorating.
In the Statement of Net Assets and the Statement of Activities, we separate the Agency into general
government, apartment complexes, public works, payments to other agencies and interest on long-term
debt.
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REPORTING THE AGENCY'S MOST SIGNIFICANT FUNDS
Fund Financial Statements:
The fund financial statements provide detailed information about the most significant funds and other
funds - not the Agency as a whole. Some funds are required to be established by State law and by bond
covenants. However, management established many other funds to help it control and manage money for
particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants and
other resources. The Agency only has governmental type funds.
Governmental Funds - Most of the Agency's basic services are reported in governmental funds, which
focus on how money flows in and out of those funds and the balances left at year-end that are available
for spending. These funds are reported using the modified accrual basis of accounting, which measures
cash and all other financial assets that can readily be converted to cash. The governmental fund
statements provide a detailed short-term view of the Agency's general government operations and the
basic services it provides. Governmental fund information helps determine whether there are more or
fewer financial resources that can be spent in the near future to finance the Agency's programs. The
differences of results in the Governmental Fund financial statements to those in the Government -Wide
financial statements are explained in a reconciliation following each Governmental Fund financial
statement.
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THE AGENCY AS A WHOLE
The Agency's net assets deficit increased $5.15 million from $(7.82) million to $(12.97) million. Our
analysis below focuses on the net deficit (Table 1) and changes in net deficit (Table 2) of the Agency's
governmental activities.
TABLE 1
NET ASSETS
(IN MILLIONS)
As of June 30, 2010 and 2009
Current and restricted assets
Capital assets
TOTAL ASSETS
Long-term liabilities outstanding
Other liabilities
TOTAL LIABILITIES
Net assets (deficit):
Invested in capital assets, netof
related debt
Restricted
Unrestricted
TOTAL NET ASSETS (DEFICIT)
Governmental Activities
2010 2009
$ 314.90 $ 325.46
157.53 158.15
47243 483.61
417.41 430.52
67.99 60.91
485.40 491.43
118.80
56.26
(188.03)
$ 12 97
126.04
49.65
(183.51)
$ (7.82)
Compared to the prior year, the Agency's net assets deficit of governmental activities increased by $5.15
million. The Agency's Net Assets is made up of three components: Investment in Capital Assets, Net of
Related Debt, Restricted Net Assets and Unrestricted Net Deficit. Unrestricted deficit, the part of net
deficit that can be used to finance day-to-day operations, increased from $(183.51) million to
$(188.03) million, or 2.46 percent. The Agency currently has an unrestricted net deficit because of the
debt it has issued. Proceeds from the debt were used for capital improvements on behalf of the City or
contributed to developers and is not offset by investments in capital assets.
Total liabilities decreased overall by $6.03 million which represents the difference between principal
payments of $13.42 million in long-term debt and the increase of $7.39 million in pass thru payments due
to other agencies.
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TABLE 2
CHANGES IN NET ASSETS
(IN MILLIONS)
As of June 30, 2010 and 2009
Governmental Activities
2010
2009
REVENUES:
Program Revenues:
Charges for services
$ 5.02
$ 5.01
Capital Grants and Contributions
0.20
0.03
General Revenues:
Tax increment
88.07
90.14
Other income
1.40
1.33
Investment earnings
1.26
3.81
TOTAL REVENUES
95.95
100.32
EXPENSES:
General government
37.83
11.30
Apartment complexes
5.02
5.67
Public works
-
18.47
Payments to other agencies
37.79
39.09
Interest on long-term debt
20.46
20.75
TOTAL EXPENSES
101.10
95.28
INCREASE (DECREASE) IN NET
ASSETS
(5.15)
5.04
BEGINNING NET ASSETS
(7.82)
(12,86)
RESTATEMENT OF NET ASSETS
ENDING NET ASSETS
$ (12.97)
$ (7,82)
Governmental Activities
Total revenues decreased from $100.32 million to $95.95 million, a 4.35 percent decrease. The major
factors that contributed to the decrease were as follows:
• Decrease in tax increment due to declining assessed property values.
�, Decrease in investment earnings due to declining interest rates.
The following schedule represents the net cost of providing services:
2010
General Government $ (37.59)
Apartment Complexes (0.03)
Pubic Works
Payment to Other Agencies (37.79)
Interest on Long -Term Debt (20.46)
TOTAL $ (95.87)
The major factor that contributed to the increase in expenditures was:
20M
$ (11.27)
(0.66)
(18.47)
(39.09)
20.7
$ (90.24)
• Increase in expenditures on General Government due to SERAF payment to State.
THE AGENCY'S FUNDS
On pages 14 and 15, the governmental funds balance sheet is shown. The combined fund balance of
$242.32 million decreased from $259.39 million, or 6.58 percent. The Agency has reserved $103.33
million for encumbrances, continuing appropriations, loans, debt service, etc. More detailed information
about the combined fund balance reserves is presented in Note 9 to the financial statements.
Major funds balance changes are noted below:
• For the Low and Moderate Income Housing fund, fund balance increased due to capital
expenditures being carried over and the reduction in transfer out that were made in the prior year
to cover capital projects.
• For the Redevelopment Agency Financing Authority Debt Service fund, fund balance decreased
as a result of transfers in from debt service to actively manage the debt prior to termination of the
project areas.
• The Redevelopment Agency Project Area 1 Debt Service fund, fund balance decreased as a result
of the 2009-10 SERAF payment to State of California.
• The Redevelopment Agency Project Area 2 Debt Service funds, fund balance decreased as a
result of the 2009-10 SERAF payment to the State of California.
• The Redevelopment Agency Project Area 4 Debt Service funds, fund balance decreased as a
result of the 2009-10 SERAF payment to the State of California.
• The Redevelopment Agency Project Area 2 Capital Projects Funds, fund balance increased as the
result of transfers in for administrative costs and capital improvements.
In addition to the major funds, fund balances of other governmental funds had significant changes. The
Housing Authority Special Revenue fund had a decrease of $0.07 million from the prior year. This was
due to declining revenue as a result of current economic conditions, as well as the lower income of
tenants, which determines the calculation of rental rates. Project Area 3 debt service fund balance
decreased due to the 2009-10 SERAF payment to the State of California. Project Area 1 capital projects
funds, fund balance decreased as a result of a decrease in cash with fiscal agent. Project Area 3 and 4
capital projects fund balance changes were minimal. More detailed information on the fund financial
statements balances is presented in the notes to the financial statements.
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Budgetary Highlights
During the year, with the recommendation from the Agency's staff, the Agency's Board revised the
Agency budget several times. Adjustments were made on a monthly basis as the Agency's staff requested
additional appropriations to cover the cost of projects that either had change orders for additional work, or
the estimated cost at the beginning of the project was underestimated. At mid -year, adjustments were
made as department heads requested increases or decreases to their budgets to maintain their current level
of services. At year-end, budgets were adjusted for unanticipated expenditures. The Agency's Board
approves all amendments that either increase or decrease appropriations.
Formal budgetary integration is employed as a management control device during the year for the special
revenue and capital project funds. Budgetary data for the special revenue and capital projects funds are
not presented herein, as the budgets for these funds are long-term in nature. More detailed information
about the Agency's budget is presented in Note 1 (1) to the financial statements.
CAPITAL ASSET AND DEBT ADNMIUSTRATION
Capital Assets
At the end of 2010, the Agency had $157.53 million invested in a broad range of capital assets, including
land, buildings and improvements, apartment complexes, vehicles and equipment (See Table 3). This
amount represents a net decrease (including additions and deductions) of $.62 million.
TABLE 3
CAPITAL ASSETS AT YEAR-END
(NET OF DEPRECIATION, IN MILLIONS)
For the Years Ended June 30, 2010 and 2009
Governmental Activities
2010 2009
Land $ 77.14 $ 77.13
Construction in progress 13.29 11.83
Buildings and improvements 67.02 69.09
Equipment 0.08 0.10
TOTAL $ 157.53 $ 158.15
-8-
This year's major addition included (in millions):
Construction in progressfor Desert Willow Lakeview Terrace/Kitchen Expansion $ 0.80
Construction in progress for Aquatic Center 0.33
Construction in progress for California Villas 0.13
$ 1.26
The Agency's fiscal year 2011 capital budget calls for it to spend $14.40 million plus continuing projects
of $96.98 million. The majority of which are attributable to the reimbursement to other governments for
capital projects, land development, construction of low-income family housing, and the undergrounding
of utilities. More detailed information about the Agency's capital assets is presented in Note l(g) and
Note 6 to the financial statements.
Debt
At year-end, the Agency's governmental activities had $417.41 million in bonds and notes versus $430.52
million last year, a decrease of $13.11 million, or 3.04 percent as shown in Table 4.
TABLE 4
OUTSTANDING DEBT AT YEAR END
(IN MILLIONS)
For the Years Ended June 30, 20 1, 0 and 2009
Notes payable
Advances
Revenue bonds and notes (backed by
specific tax and fee revenues)
TOTALS
Governmental Activities
2010 2009
$ 0.24 $
0.37
22.66
22.66
394.51
407.49
$ 417.41 $
430.52
The Agency was able to meet its current year debt obligation in a timely manner. The Agency repaid
$14.27 million dollars in outstanding bonds. Debts issued in the prior years have been used to finance
various capital projects. An example of this would be the purchase of land, and construction of the City's
municipal golf course. More detailed information about the Agency's debt is presented in Note 8 to the
financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS
In preparing the budget for 2011, management looked at the following economic factors;
• In prior years, the City had unallocated reserves in its capital projects and special revenue funds
that could be used to start and complete Agency's projects in an effort to maximize the Agency's
cash flow. In the five-year capital improvement program, all restricted capital funds for the City
have been allocated to various projects. Any additional projects would require that the Agency
fund their own projects.
• As the State of California attempts to balance their budget, Redevelopment Agency tax increment
revenues throughout the State have been captured to cover (at minimum) a $2.05 billion shortfall,
resulting in a prior year SERAF shift of $25,526,215, and an additional SERAF shift of
$5,255,397 for 2010-11 for the Palm Desert Redevelopment Agency. Both of these shifts are
currently in the appellate court following a decision made by the Sacramento Superior Court
affirming their legality. The effects of the State's endeavors to balance their budget, have caused
the Agency to cut projects essential to the community and Redevelopment Plan. Although the
passage of Proposition 22 has thwarted future takes under this same method, the uncertainty of
future State shortfalls and their resourcefulness in retaining local taxes derived from property tax
including Redevelopment funds, will determine the Agency's ability to complete such projects, as
well as the ability to meet the needs of the community.
The City of Palm Desert continues to grow with new hotels, commercial and residential development,
construction of a four-year university, street improvements, park construction, and various other
improvement projects. The 2011 capital improvement project budget is a reflection of the Agency's
commitment to the residents of Palm Desert. A copy of the City's 2010-2011 financial plan can be
obtained by contacting the City Finance Department (See below).
CONTACTING THE AGENCY'S FINANCIAL MANAGEMENT
This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors
with a general overview of the Agency's finances and to show the Agency's accountability for the money
it receives. If you have questions about this report or need additional financial information, contact the
City's Finance Department at the City of Palm Desert, 73-510 Fred Waring Drive, Palm Desert,
California 92260-2578, or (760) 346-0611.
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PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF NET ASSETS
June 30, 2010
ASSETS:
Cash and investments
Receivables
Property held for resale
Prepaid items and deposits
Unamortized debt issuance costs
Restricted assets:
Restricted cash with fiscal agent
Capital assets, not depreciated
Capital assets, being depreciated (net of accumulated depreciation)
TOTAL ASSETS
LIABILITIES:
Accounts payable
Accrued liabilities
Interest payable
Deposits payable
Unearned revenue
Amounts due under pass -through agreements
Noncurrent liabilities:
Due within one year
Due in more than one year
TOTAL LIABILITIES
NET ASSETS:
Invested in capital assets, net of related debt
Restricted for:
Special projects
Unrestricted (deficit)
TOTAL NET ASSETS (DEFICIT)
See independent auditors' report and notes to basic financial statements.
Exhibit A
Governmental
Activities
$ 144,529,949
9,923,249
855,224
26,813
9,697,225
149,878,702
90,425,168
67,100,637
472,436,967
1,621,826
124,054
5,135,113
411,069
18,160
60,678,180
14,747,707
402,663,580
485,399,689
118,799,925
56,263,384
(188,026,031)
$ (12,962,722)
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PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF ACTIVITIES
For the year ended June 30, 2010
Functions/Programs
Expenses
PRIMARY GOVERNMENT:
Governmental activities:
General administration
$ 37,828,828
Apartment complexes
5,023,817
Payments to other agencies
37,794,435
Interest on long-term debt
20,455,714
Total Primary
Program Revenues
Operating Capital
Charges for Grants and Grants and
Services Contributions Contributions
$ 35,226
4,986,066
Exhibit B
Net (Expense)
Revenue and
Changes in
Net Assets
Governmental
Activities
$ 208,068 $(37,585,534)
- (37,751)
(37,794,435)
(20,455,714)
Government $ 101,102,794 $ 5,021,292 $ - $ 208,068 (95,873,434)
GENERAL REVENUES:
Taxes:
Tax increment 88,068,683
Rental income 176,542
Other revenues 1,226,057
Investment earnings 1,262,578
Total general revenues 90,733,860
CHANGE IN NET ASSETS (5,139,574)
NET ASSETS (DEFICIT) - BEGINNING OF YEAR (7,823,148)
NET ASSETS (DEFICIT) - END OF YEAR $(12,962,722)
See independent auditors' report and notes to basic financial statements.
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PALM DESERT REDEVELOPMENT AGENCY
BALANCE SHEET - GOVERNMENTAL FUNDS
June 30, 2010
ASSETS:
Cash and investments
Restricted cash with fiscal agent
Receivables
Advances to other funds
Property held for resale
Prepaid costs and deposits
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts payable
Accrued liabilities
Deposits payable
Advances from other funds
Unearned revenue
Deferred revenue
Amounts due pass -through agreement
TOTAL LIABILITIES
FUND BALANCES:
Reserved
Unreserved reported in:
Special revenue fund
Debt service funds
Capital projects funds
TOTAL FUND BALANCES
TOTAL LIABILITIES
AND FUND BALANCES
Special
Revenue
Fund
Debt Service Funds
Low and
Moderate
Income
Project Project
Housing
Area 1 Area 2
$ 26,663,015
$ 74,527,487 $ 8,420,774
25,195,523
- -
7,525,042
142,800 54,587
17,821,288
- -
855,224
- -
$ 78,060,092 $ 74,670,287 $ 8,475,361
$ 30,841 $ - $
30,786 - -
500 - -
- 10,438,131 3,755,605
6,796 - -
36,493 - -
- 37,663,533 2,220,180
105,416 48,101,664 5,975,785
35,765,570 -
42,189,106 - -
- 26,568,623 2,499,576
77,954,676 26,568,623 2,499,576
$ 78,060,092 $ 74,670,287 $ 8,475,361
See independent auditors' report and notes to basic financial statements.
-14-
Capital
Debt Service Funds (Continued) Projects Fund
Exhibit C
Other
Total
Project
Financing
Project
Governmental
Governmental
Area 4
Authority
Area 2
Funds
Funds
$ 21,058,713
$ -
$ -
$ 13,859,960
$ 144,529,949
-
16,139,929
46,965,009
61,578,241
149,878,702
35,624
14,509
1,644
2,149,043
9,923,249
-
-
-
-
17,821,288
-
-
-
-
855,224
-
-
-
26,813
26,813
$ 21,094,337
$ 16,154,438
$ 46,966,653
$ 77,614,057
$ 323,035,225
$ 848,992 $ 741,993 $ 1,621,826
- 93,268 124,054
- 410,569 411,069
2,657,239 - - 970,313 17,821,288
- - - 11,364 18,160
- - - 36,493
16,704,628 - - 4,089,839 60,678,180
19,361,867 - 848,992 6,317,346 80,711,070
22,136,111 45,432,498 103,334,179
- - - - 42,189,106
1,732,470 16,154,438 - 1,870,304 48,825,411
- - 23,981,550 23,993,909 47,975,459
1,732,470 16,154,438 46,117,661 71,296,711 242,324,155
$ 21,094,337 $ 16,154,438 $ 46,966,653 $ 77,614,057 $ 323,035,225
-15-
THIS PAGE INTENTIONALLY LEFT BLANK
-16-
PALM DESERT REDEVELOPMENT AGENCY
RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
June 30, 2010
Total fund balance for governmental funds
Amounts reported for governmental activities in the Statement of Net Assets are
different because:
When capital assets (land, buildings, equipment, etc.) that are to be used in
governmental activities are purchased or constructed, the costs of those assets
are reported as expenditures in governmental funds. However, the Statement
of Net Assets includes those capital assets among the assets of the Agency
as a whole:
Beginning Balance, net depreciation
Current year additions
Current year deletions
Current year depreciation
Ending Balance, net depreciation
$ 158,151,087
3,039,204
(1,055,324)
(2,609,162)
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:
Interest that was not paid at year-end
Long-term liabilities applicable to the Agency's governmental activities are not
due and payable in the current period and, accordingly, are not reported as fund
liabilities. All liabilities, both current and long-term, are reported in the Statement
of Net Assets.
tnterest on long-term debt is not accrued in governmental funds, but rather is
recognized as an expenditure when due.
The cost of issuing bonds is recognized as an expenditure in the period paid,
however, in the Statement of Net Assets, it is amortized over the life of the bonds.
Net assets (deficit) of governmental activities
See independent auditors' report and notes to basic financial statements.
-17-
Exhibit D
$ 242,324,155
157,525,805
36,493
(417,411,287)
(5,135,113)
9,697,225
$ (12,962,722)
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS
For the year ended June 30, 2010
REVENUES:
Taxes
Intergovernmental
Investment earnings
Rental income
Other revenues
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Payments to other agencies
Capital outlay
Debt service:
Interest and fiscal charges
Principal retirement
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
TOTAL OTHER FINANCING
SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING OF YEAR
FUND BALANCES - END OF YEAR
Special
Revenue
Fund
Debt Service Funds
Low and
Moderate
Income
Project
Project
Housing
Area 1
Area 2
$ -
$ 51,579,766
$ 18,562,862
485,444
101,720
33,355
3,067
-
-
743,313
473,864
-
1,231,824
52,155,350
18,596,217
See independent auditors' report and notes to basic financial statements.
-18-
2,522,568 15,402,222 5,385,616
- 20,896,327 7,284,372
4,099 - -
310,395 425,016
- - 122,707
2,526,667 36,608,944 13,217,711
(1,294,843) 15,546,406 5,378,506
17,821,289 122,178 43,033
(9,586,557) (23,551,710) (10,857,060)
8,234,732 �23,429,532) (10,814,027)
6,939,889 (7,883,126) (5,435,521)
71,014,787 34,451,749 7,935,097
$ 77,954,676 $ 26,568,623 $ 2,499,576
Capital
Debt Service Funds (Continued) Projects Fund
Project Financing Project
Area 4 Authority Area 2
Exhibit E
Other Total
Governmental Governmental
Funds Funds
$ 13,129,446 $ - $ - $ 4,796,609 $ 88,068,683
- - - 243,294 243,294
34,779 94,667 10,871 522,409 1,283,245
- - - 5,020,703 5,023,770
- - 760 127,014 1,344,951
13,164,225 94,667 11,631 10,710,029 95,963,943
3,736,718 - 1,074,962 11,066,073 39,188,159
7,400,665 - - 2,213,071 37,794,435
- - 1,137,092 1,898,013 3,039,204
18,000,774 - - 18,736,185
- 14,145,000 - - 14,267,707
11,137,383 32,145,774 2,212,054 15,177,157 113,025,690
2,026,842 (32,051,107) (2,200,423) (4,467,128) (17,061,747)
31,349 31,759,391 2,750,356 987,191 53,514,787
(5,249,037) (791,298) (256,352) (3,222,773) (53,514,787)
(5,217,688)
30,968,093
2,494,004
(2,235,582) -
(3,190,846)
(1,083,014)
293,581
(6,702,710) (17,061,747)
4,923,316
17,237,452
45,824,080
77,999,421 259,385,902
$ 1,732,470
$ 16,154,438
$ 46,117,661
$ 71,296,711 $ 242,324,155
-19-
PALM DESERT REDEVELOPMENT AGENCY
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
For the year ended June 30, 2010
Net change in fund balances - total governmental funds
Amounts reported for governmental activities in the Statement of Activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities, the costs of those assets are allocated over their
estimated useful lives as a depreciation expense. This is the amount by
which capital assets deletions and depreciation ($3,664,486) exceeded
capital assets addition ($3,039,204) in the current period.
The issuance of long-term debt provides current financial resources to
governmental funds, while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither
transaction, however, has any effect on net assets. Also, governmental funds
report the effect of issuance costs, premiums, discounts and similar items
when the debt is first issued, whereas these amounts are deferred and
amortized in the Statement of Activities. These amounts are the net effect of
theses differences in the treatment of long-term debt and related items:
Principal payments
Capital accretion
Some expenses reported in the Statement of Activities do not require the use
of current financial resources and, therefore, are not reported as expenditures
in governmental funds:
Net change in accrued interest for the current period
The cost of issuing bonds is recognized as an expenditure in the period paid,
however, in the Statement of Net Assets, the deferred charges are amortized
over the life of the bonds.
Premium on bonds is recognized as a revenue 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.
Revenue will not be collected within 60 days of the Agency's fiscal year end
and, therefore, are not considered available in the governmental funds:
Interest not received on development disposition agreement.
Change in net assets of governmental activities
See independent auditors' report and notes to basic financial statements.
$ 14,267,707
(1,515,681)
Exhibit F
$ (17,061,747)
(625,282)
12,752,026
(50,312)
(506,524)
475,703
(122,715)
(723)
$ (5,139,574)
-20-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Basis of Presentation:
Government -Wide Financial Statements
The government -wide financial statements (i.e., the statement of net assets and the statement of
activities) report information on all of the activities of the Agency. For the most part, the effect
of interfund activity has been removed from these statements. Governmental activities, which
normally are supported by taxes and intergovernmental revenues, are reported separately from
business -type activities, which rely to a significant extent on fees and charges for support. The
Palm Desert Redevelopment Agency has no business -type activities.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include: 1) charges to
customers or applicants who purchase, use or directly benefit from goods, services or privileges
provided by a given function or segment, and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general
revenues.
Separate financial statements are provided for the governmental funds. Major individual
governmental funds are reported as separate columns in the fund financial statements.
Fund Financial Statements
The accounting system of the Agency is organized and operated on the basis of separate funds,
each of which is considered to be a separate accounting entity. Each fund is accounted for by
providing a separate set of self -balancing accounts that constitute its assets, liabilities, fund
equity, revenues and expenditures. An emphasis is placed on major funds within the
governmental category. A fund is considered major if total assets, liabilities, revenues or
expenditures of that individual governmental fund are at least 10% of the corresponding total
for all funds of that category or type.
See independent auditors' report.
-21-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
a. Basis of Presentation (Continued):
Fund Financial Statements (Continued)
The funds of the Agency are described below:
Governmental Fund Types:
Special Revenue Funds - Special Revenue Funds are used to account 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.
The Agency's major governmental funds are as follows:
The Low and Moderate 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.
Project Area 1 Debt Service Fund is used to account for the tax increment revenues and
expenditures of Project Area 1.
Project Area 2 Debt Service Fund is used to account for tax increment revenues and
expenditures of Project Area 2.
Project Area 4 Debt Service Fund is used to account for tax increment revenues and
expenditures of Project Area 4.
The Financing Authority Debt Service Fund is used to account for the resources and payment
of the debt issued by the Palm Desert Financing Authority and loaned to the Redevelopment
Agency.
See independent auditors' report.
-22-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
a. Basis of Presentation (Continued):
Fund Financial Statements (Continued)
Major Governmental Funds (Continued)
Project Area 2 Capital Project Fund is used to account for financial resources to be used for the
acquisition or construction of major capital facilities in Project Area 2.
b. Measurement Focus and Basis of Accounting:
Measurement Focus
Measurement focus is a term used to describe "which" transactions are recorded within the
various financial statements.
On the government -wide statement of net assets and the statement of activities, activities are
presented using the economic resources measurement focus. Under the economic resources
measurement focus, all (both current and long-term) economic resources and obligations of the
government are reported.
In the fund financial statements, all governmental funds are accounted for on a spending or
"financial flow" measurement focus. This means that only current assets and current liabilities
are generally included on their balance sheets. Their reported fund balances (net current assets)
are considered a measure of "available spendable resources." Governmental fund operating
statements present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets.
Noncurrent portions of long-term receivables due to governmental funds are reported on their
balance sheets, in spite of their spending measurement focus. Special reporting treatments are
used to indicate, however, that they should not be considered "available spendable resources"
since they do not represent net current assets. Noncurrent portions of long-term receivables are
offset by fund balance reserve accounts.
See independent auditors' report.
- 23 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
b. Measurement Focus and Basis of Accounting (Continued):
Basis of Accounting
Basis of accounting refers to "when" transactions are recorded regardless of the measurement
focus applied.
In the government -wide statement of net assets and statement of activities, the governmental
activities are presented using the accrual basis of accounting. Under the accrual basis of
accounting, revenues are recognized when earned and expenses are recorded when the liability
is incurred or economic asset used. Revenues, expenses, gains, losses, assets and liabilities
resulting from exchange and exchange -like transactions are recognized when the exchange
takes place.
In the fund financial statements, governmental funds are presented on the modified accrual
basis of accounting. Under this modified accrual basis of accounting, revenues are recognized
when "measurable and available." Measurable means knowing or being able to reasonably
estimate the amount. Available means collectible within the current period or soon enough
thereafter to pay current liabilities. Expenditures generally are recorded when a liability is
incurred, as under accrual accounting. However, debt service expenditures are recorded only
when payment is due.
Revenues that are susceptible to accrual include property taxes that are levied for and due for
the fiscal year and collected within 60 days after year-end. Property taxes, rents and interest
associated with the current fiscal period are all considered to be susceptible to accrual and so
have been recognized as revenues of the current fiscal period. All other revenue items are
considered to be measurable and available only when cash is received by the government.
c. Investments:
Investments are stated at fair value (quoted market price or the best available estimate thereof).
d. Property Held for Resale:
The Agency purchased land within the Agency's project area. The land held for resale is
recorded in the Redevelopment Agency Special Revenue Fund as property held for resale, at
the lower of acquisition cost or net realizable value. At June 30, 2010, the cost of the property
held for resale for various housing properties in Palm Desert totaled $855,224.
See independent auditors' report.
-24-
1
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e. Prepaid Items and Deposits:
Certain payments to vendors reflect costs applicable to future accounting periods are recorded
as prepaid items in the government -wide and fund financial statements. The Agency has
$26,813 of miscellaneous prepaid items.
f. Property Tax Calendar:
Property taxes are assessed and collected each fiscal year according to the following property
tax calendar:
Lien Date
Levy Date
Due Date
Delinquent Date
January 1
July 1 to June 30
November 1 - 1 st Installment
March 1 - 2nd Installment
December 10 - 1 st Installment
April 10 - 2nd Installment
Under California law, property taxes are assessed and collected by the counties up to 1 % of
assessed value, plus other increases approved by the voters. The property taxes go into a pool,
and are then allocated to the agencies based on complex formulas prescribed by the state
statutes.
g. Capital Assets and Depreciation:
Capital assets are reported in the government -wide financial statements. Capital assets are
defined by the Agency as assets with an initial cost of more than $500 and an estimated life in
excess of one year. Such assets are recorded at historical cost or estimated historical cost if
purchased or constructed. Donated capital assets are recorded at estimated fair market value at
the date of donation. The Agency had no infrastructure assets.
The cost of normal maintenance and repairs that do not add to the value of the asset or
materially extend asset lives are not capitalized.
See independent auditors' report.
-25-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
g. Capital Assets and Depreciation (Continued):
Property, plant and equipment are depreciated using the straight-line method over the following
estimated useful lives:
Buildings 40 years
Improvements other than buildings 20 years
Machinery and equipment 5 to 8 years
h. Long -Term Obligations:
In the government -wide financial statements, long-term debt and other long-term obligations
are reported as liabilities. Bond premiums and discounts, as well as issuance costs, are deferred
and amortized over the life of the bonds using the effective interest method. Bonds payable are
reported net of the applicable bond premium or discount. Bond issuance costs are reported as
deferred charges and amortized over the term of the related debt.
In the fund financial statements, governmental fund types recognize bond premiums and
discounts, as well as bond issuance costs, during the current period. The face amount of debt
issued is reported as other financing sources. Premiums received on debt issuances are reported
as other financing sources while discounts on debt issuances are reported as other financing
uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are
reported as debt service expenditures.
i. Fund Equity:
In the fund financial statements, governmental funds report reservations of fund balance for
amounts that are not available for appropriation or are legally restricted by outside parties for
use for a specific purpose. Designations of fund balance represent tentative management plans
that are subject to change.
See independent auditors' report.
-26-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
j. Explanation of differences between Governmental Funds Balance Sheets and the Statement of
Net Assets:
Long -Term Debt
Total
Capital
Transactions/
Reclassifications
Statement
Governmental
Related
Interest
and
of Net
Funds
Items
Payable
Eliminations
Assets
Assets:
Cash and investments
$ 144,529,949
$ -
$ -
$ -
$ 144,529,949
Restricted cash with fiscal agent
149,878,702
-
-
-
149,878,702
Receivables
9,923,249
-
-
-
9,923,249
Advances to other funds
17,821,288
-
-
(17,821,288)
-
Property held for resale
855,224
-
-
-
855,224
Prepaid items and deposits
26,813
-
-
-
26,813
Deferred charges
-
-
9,697,225
-
9,697,225
Capital assets
-
157,525,805
-
-
157,525,805
Total Assets
323,035,225
157,525,805
9,697,225
(17,821,288)
472,436,967
Liabilities:
Accounts payable
1,621,826
-
-
-
1,621,826
Accrued liabilities
124,054
-
-
-
124,054
interest payable
-
-
5,135,113
-
5,135,113
Deposits payable
411,069
-
-
-
411,069
Advances to other funds
17,821,288
-
-
(17,821,288)
-
Unearned revenue
18,160
-
-
-
18,160
Deferred revenue
36,493
-
-
(36,493)
-
Amounts due under
pass -through agreements
60,678,180
-
-
-
60,678,180
Long-term liabilities - current
-
-
14,747,707
-
14,747,707
Long-term liabilities - noncurrent
-
-
402,663,580
-
402,663,580
Total Liabilities
80,711,070
-
422,546,400
(17,857,781)
485,399,689
Net Assets (Deficit)
$ 242,324,155
$157,525,805
$ (412,849,175)
$ 36,493
$ (12,962,722)
See independent auditors' report.
-27-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
k. Explanation of differences between Governmental Funds Operating Statements and the
Statement of Activities:
Total
Capital
Long -Term
Cost of
Reclassifications
statement
Governmental
Related
Debt
Accrued Issuance/
and
of
Funds
Items
Transactions
Interest perm amount
Eliminations
Activities
Revenues:
Taxes
$ 88,068,683
$
$
$ $
$
$ 88,068,683
Intergovernmental
243,294
-
243,294
Investment earnings
1,283,245
(20,667)
1,262,578
Rental income
5,023,770
(4,847,228)
176,542
Charges for services
-
4,986,066
4,986,066
Other revenues
1,344,951
(118,894)
1,226,057
Total Revenues
95,963,943
-
(723)
95,963,220
Expenditures:
Current:
General government
39,188,159
3,664,486
(5,023,817)
37,828,828
Payments to other agencies
37,794,435
-
-
37,794,435
Apartment complexes
-
5,023,817
5,023,817
Capital outlay
3,039,204
(3,039,204)
-
-
Debt service:
Interest and fiscal charges
18,736,185
1,515,681
50,312 153,536
20,455,714
Principal retirement
14,267,707
(14,267,707)
- -
-
Total Expenditures
113,025,690
625,282
(12,752,026)
50,312 153,536
101,102,794
Other Financing Sources (Uses):
Transfers in
53,514,787
-
- -
(53,514,787)
-
Transfers out
(53,514,787)
53,514,787
Total Other Financing
Sources (Uses) - - -
Net Change in Fund Balance $ (17,061,747) $ (625,282) $12,752,026 $ (SQ312) $ (153,536) $ (723) $ (LI39,574)
See independent auditors' report.
-28-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
1. Budgetary Accounting:
The Agency uses the following procedures in establishing its budgetary data reported in the
financial statements:
Before the beginning of the fiscal year, the Executive Director submits to the Board of
Directors a proposed budget for the year commencing the following July 1.
2. Public hearings are conducted to obtain taxpayer comments.
3. The Budget is subsequently adopted through passage of a resolution.
4. Original appropriations are modified by supplementary appropriations and transfers among
budget categories. The Board approves all significant changes. Annual appropriations lapse
at year-end.
5. Encumbrances and Continuing Appropriations are rebudgeted as of July 1 by Board action.
They are reported as reservations of fund balance in the fund -level financial statements.
6. Formal budgetary integration is employed as a management control device during the year
for the Special Revenue and Capital Projects Funds. Formal budgetary integration is not
employed for Debt Service Funds because effective budgetary control is alternatively
achieved through debt indenture provisions.
7. Budgets are adopted on a basis consistent with accounting principles generally accepted in
the United States of America. Budgetary data for the Special Revenue Funds and Capital
Projects Funds are not presented herein, as the budgets for these funds are long-term in
nature.
m. Relationship to the City of Palm Desert:
The Palm Desert Redevelopment Agency is an integral part of the reporting entity of the City
of Palm Desert, California. The funds of the Agency have been included within the scope of the
basic financial statements of the City because the City Council of the City of Palm Desert
exercises oversight responsibility over the operations of the Agency. Only the funds of the
Agency are included herein and these financial statements, therefore, do not purport to
represent the financial position or results of operations of the City of Palm Desert.
See independent auditors' report.
-29-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
n. Use of Estimates:
The financial statements are prepared in conformity with accounting principles generally
accepted in the United States of America and, accordingly, include amounts that are based on
management's best estimates and judgments. The financial statements include estimates for
depreciation expense and fair value of investments. Accordingly, actual results could differ
from the estimates.
2. ORGANIZATION AND TAX INCREMENT FINANCING:
The Agency is a separate governmental entity as prescribed in the California Community
Redevelopment law and as set forth in the Health and Safety Code of the State of California. The
Agency consists of Project Area 1, Project Area 2, Project Area 3 and Project Area 4.
In addition, the Agency and the City of Palm Desert (the City) have established the Palm Desert
Financing Authority as a joint power of authority between the Agency and the City for purposes of
financing and funding capital improvements. Transactions related to the joint power for the Agency
are recorded in a debt service fund.
The Palm Desert Housing Authority was established in January 1998, as a component unit of the
Agency and is partly responsible for the administration of providing affordable housing in the City
of Palm Desert. The apartment complexes are operated by the Authority through a management
company. The transactions related to the Housing Authority are reported in a Special Revenue
Fund.
Agency expenses include capital improvement projects and operating costs which include required
staff support and consultant services.
The Agency's primary source of revenue comes from property taxes, referred to in the
accompanying financial statements as "tax increment revenue." The assessed valuation of all
property within each project area was determined on the date of adoption of the Project Area.
Except for certain amounts provided by specific agreement (see Note 7), property taxes related to
the incremental increase in assessed values after the adoption of the Project Area have been
allocated to the Agency, while all property taxes on the "frozen" assessed valuation as of the
adoption date have been allocated to the City and other districts.
See independent auditors' report.
-30-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
3. CASH AND INVESTMENTS:
Cash and Investments
Cash and investments reported in the accompanying financial statements consisted of the
following:
Cash and investments pooled with the City $ 141,378,949
Investment in City Bonds 3,151,000
Restricted cash with fiscal agent 149,878,702
$ 294,408,651
Investments Authorized by the California Government Code and the Agency's Investment
Policy
The Agency is subject to the City's investment policy. Under provision of the City's investment
policy and in accordance with the California Government Code, the following investments are
authorized:
• United States Treasury bills, notes, bonds or certificates of indebtedness
• United States government -sponsored enterprise obligations, participations or other instruments
• Banker's Acceptances issued by commercial banks
• Commercial Paper issued by general corporations
• Negotiable Certificates of Deposits, issued by a nationally or state -chartered bank, a savings
association, a federal association or by a state -licensed branch of a foreign bank
• Time Certificates of Deposit issued by qualified public depositories
• Repurchase Agreements sold by authorized brokers
• Medium -Term Notes issued by corporations organized and operating in the United States, or by
depository institutions operating in the United States and licensed by the United States or by
any state
• Money Market Mutual Funds that are registered with the SEC under the Investment Act
of 1940
• State of California Local Agency Investment Fund (LAIF) that is managed by the State
Treasurer's Office
• Structured Notes in the form of callable securities or "STRIPS" issued by the United States
Treasury, Federal Agencies or government -sponsored enterprises
• Local Government Investment Pools
See independent auditors' report.
-31-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
3. CASH AND INVESTMENTS (CONTINUED):
Investments Authorized by the California Government Code and the Agency's Investment
Policy (Continued)
The City's Investment policy imposes the following restrictions on the maximum percentage it can
invest in a single type of investment.
Portfolio
Issuer
Maximum
United States Treasury Bills, Notes, Bonds
100%
United States Government -Sponsored Enterprise
Securities
100%
Banker's Acceptances
40%
Commercial Paper
25%
Negotiable Certificates of Deposit
30%
Time Certificates of Deposit
15%
Repurchase Agreements
20%
Medium -Term Corporate Notes
30%
Money Market Mutual Funds
20%
Local Agency Investment Fund (LAIF)
$50M/Acct
Structured Notes (STRIPS)
20%
Local Government Investment Pools
30%
N/A - Not Applicable
Single Issuer
Maximum
N/A
30%
30%
10%
N/A
N/A
N/A
5%
N/A
N/A
N/A
N/A
The City's policy is more conservative than state law, which has no issuer concentration limits on
federal agency debt. The federal agency debt that the City purchases have implied credit ratings of
'AAA/Aaa' .
Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustee are governed by provisions of the debt
agreements, rather than the general provisions of the California Government Code or the Agency's
investment policy.
See independent auditors' report.
-32-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
3. CASH AND INVESTMENTS (CONTINUED):
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of
its fair value to changes in market interest rates. One of the ways that the Agency manages its
exposure to interest rate risk is by purchasing a combination of shorter term and longer term
investments and by timing cash flows from maturities so that a portion of the portfolio is maturing
or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity
needed for operations.
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. The Agency's investment of $3,151,000 in City of Palm Desert
Bonds are not rated, while investments held by bond trustee of $147,287,068 consist of
$66,381,033 in money market mutual funds, which are rated AAA by Standard and Poor's and
$80,906,035 in LAIF which is not rated. The Agency also reports $2,591,634 in restricted cash
with fiscal agent for the Housing Authority which consists of $2,112,833 investment in CAMP
(local government investment pool) which is rated AAA by Standards and poor's, $22,126
invested with LAIF which is not rated and $456,675 in deposits which are not subject to credit risk.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The custodial credit risk for
investments is the risk that, in the event of the failure of the counterparty (e.g., broker -dealer) to a
transaction, a government will not be able to recover the value of its investment or collateral
securities that are in the possession of another party. The California Government Code and the
Agency's investment policy do not contain legal or policy requirements that would limit the
exposure to custodial credit risk for deposits or investments, other than the following provision for
deposits: The California Government Code requires that a financial institution secure deposits
made by state or local governmental units by pledging securities in an undivided collateral pool
held by a depository regulated under state law (unless so waived by the governmental unit). The
market value of the pledged securities in the collateral pool must equal at least 110% of the total
amount deposited by the public agencies. California law also allows financial institutions to secure
the Agency deposits by pledging first trust deed mortgage notes having a value of 150% of the
secured public deposits.
See independent auditors' report.
-33-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
3. CASH AND INVESTMENTS (CONTINUED):
Disclosures Related to Interest Rate Risk, Credit Risk and Custodial Credit Risk:
The Agency's cash and investments are pooled with the City of Palm Desert's cash and
investments. Additional disclosures regarding $141,378,949 pooled investments related to interest
rate risk, credit risk and custodial credit risk are available in the City of Palm Desert's
Comprehensive Annual Financial Report. The Agency's investment of $3,151,000 in the City of
Palm Desert Bonds is due as follows: (1) within 12 months or less $101,000, (2) between 13 and 24
months $447,000, and (3) over 24 months $2,603,000. The restricted cash and investments held by
the bond trustee and Housing Authority consist of investments in money market mutual funds,
local government investment pools and demand deposits and are not subject to interest rate risk.
4. LOANS, NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES:
Receivables consisted of the following at June 30, 2010:
Accounts
Interest
Loans
Accounts
Interest
Loans
Special
Revenue
Fund
Low and
Moderate
Debt Service Funds
Income
Project
Project Project
Financing
Housing
Area 1
Area 2 Area 4
Authority
$ 125,666
$ 142,800
$ 54,587 $ 35,624
$ -
71,366
-
- -
14,509
7,328,010
-
- -
-
7,525,042
_
142,800
5 ,587 35,624
14,509
Capital
Projects Fund
Project
Area 2
1,644
1,
Other
Governmental
Funds
$ 67,334
481,709
1,600,000
2,149,043
Total
Governmental
Receivables
$ 426,011
569,228
8,928,010
—S 9,923,27U—
See independent auditors' report.
-34-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
4. LOANS, NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES
(CONTINUED):
Loans Receivable
a. A loan receivable for the construction of a multi -family affordable housing development dated
June 14, 2001, with a balance of $7,298,547 is due from the Palm Desert Development
Company. The loan is secured by a Deed of Trust, with assignment to property, rent and
fixtures on the housing development located in Palm Desert. Interest is earned and due annually
at a rate of 1% per annum from the date on which the final certificate of occupancy is issued.
Principal on the loan is based on the applicable agency's percentage of positive net cash flow
derived from the operations of the Development.
b. The Agency has $29,463 in home improvement loans. Payments of interest and principal are
due monthly on these loans.
c. On April 21, 2003, the Agency entered into a loan agreement with The Regents of the
University of California, on behalf of its Riverside Campus, to loan various amounts over a
period of time, not to exceed an aggregate amount of $2,000,000. Proceeds of the loan are to be
used for capital improvements at the University's Riverside Campus. The outstanding principal
balance and interest on the note is due in five annual payments beginning July 15, 2009. As of
June 30, 2010, the amount outstanding on the loan was $1,600,000.
d. The Agency has issued loans for several other projects, all of which are secured by a deed of
trust. A valuation allowance equal to the loan balance has been recognized where there is a
significant possibility that these loans either become uncollectible or forgiven by the Agency at
a future date if all the terms of the loans have been met.
See independent auditors' report.
- 35 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
4. LOANS, NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES
(CONTINUED):
Detailed information for these loans is as follows:
Loans Receivable
Loan
Balance
Interest
Maturity
Project Name Outstanding
Rate
Date Secured By
Special Provisions of Loan
Self -Help $ 429,000
7.25%
30 years Deed of Trust
Loan balance and interest due upon maturity,
Housing Program
or 2024
unpaid balance of loan or interest will bear
an interest rate of 12%.
Home Improvement 218,346 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 2,257,521 3.00% 30 - 45 years' Deed of Trust
from date
of loan
Falcon Crest 5,888,423 3.00% 30-45 years Deed of Trust
from date
of loan
Loan is payable upon change or transfer of
title, refinancing or upon the death of the
borrower. Restrictive convenants 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.
Loan is payable upon change or transfer of
title, refinancing or upon the death of the
borrower.
Acquisition, 190,510 3.00% 30 - 45 years Deed of Trust Loan is payable upon change or transfer of
Rehabilitation, from date Assignment title, refinancing or upon the death of the
Resale of loan of Rent borrower. Restrictive convenants are placed
against property to maintain affordability for
up to 45 years in exchange for favorable loan
terms.
* All properties acquired from the Redevelopment Agency after June 2009 will have a 45 year restrictive covenant
See independent auditors' report.
-36-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
4. LOANS, NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES
(CONTINUED):
Advances To/From Other Funds
Advances From Advances To Amount
Low and Moderate Income Housing Debt Service Project Area #1 $ 10,438,131
Low and Moderate Income Housing Debt Service Project Area 92 3,755,605
Low and Moderate Income Housing Other Governmental Funds 970,313
Low and Moderate Income Housing Debt Service Project Area #4 2,657,239
S 17.8 288
The advances from the Low and Moderate Income Housing Fund to the Debt Service Project Areas Funds
were made to cover the SERAF payment. The advances have no interest rate.
5. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS:
Transfers
The composition of interfund transfers as of June 30, 2010, is as follows:
Transfers From
Special Revenue Funds:
Low and Moderate
Income Housing
Debt Service Funds:
Project Area I
Project Area 2
Project Area 4
Financing Authority
Capital Projects Fund:
Project Area 2
Other Governmental
Funds
Totals
Special
Revenue
Fund
Low and
Moderate
Income Project
Housing Area 1
Transfers To
Capital
Projects
Debt Service Funds Fund
Project Project Financing Project
Area 2 Area 4 Authority Area 2
Other
Governmental
Funds Total
$ - $ 122,178 $ 43,033 $ 31,349 $ 9,082,658 $ - $ 307,339 $ 9,586,557
10,438,133 13,113,577 - 23,551,710
3,755,605 6,061,182 1,040,273 10,857,060
2,657,238 2,512,272 - 79,527 5,249,037
- 791,298 - 791,298
- 256,352 256,352
970,313 - - - 989,702 918,785 343,973 3,222,773
$ 17,821,289 $ 122,178 $ 43,033 $ 31,349 $ 31,759,391 $ 2,750,356 $ 987,191 $ 53,514,787
See independent auditors' report.
-37-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
5. INTERFUND RECEIVABLES, PAYABLES AND 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 increments received by RDA Debt Service Funds to the Low and Moderate
Income Housing Special Revenue Fund,
3. transfer allocation of administrative expenses, and
4. transfer revenues to provide for capital projects.
See independent auditors' report.
-38-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
6. CAPITAL ASSETS:
A summary of changes in capital assets for the year ended June 30, 2010, is as follows:
Balance at
July 1, 2009
Transfers
Additions
Deletions
Balance at
June 30, 2010
Capital assets, not
being depreciated:
Land $ 77,129,190 $ - $ 1,064,047 $ (1,055,324) $ 77,137,913
Construction -in -progress 11,833,565 - 1,453,690 - 13,287,255
Total capital assets, not
being depreciated 88,962,755 - 2,517,737 (1,055,324) 90,425,168
Capital assets, being
depreciated:
Buildings
91,626,042
- 511,582
-
92,137,624
Improvements other
than buildings
7,312,141
- -
-
7,312,141
Machinery and equipment
297,468
- 9,885
(10,830)
296,523
Total capital assets,
being depreciated
99,235,651
- 521,467
(10,830)
99,746,288
Less accumulated
depreciation for:
Buildings
(26,547,736)
- (2,207,413)
-
(28,755,149)
Improvements other
than buildings
(3,304,047)
- (365,607)
-
(3,669,654)
Machinery and equipment
(195,536)
- (36,142)
10,830
(220,848)
Total accumulated
depreciation
(30,047,319)
- (2,609,162)
10,830
(32,645,651)
Capital assets, being
depreciated, net
69,188,332
- (2,087,695)
-
67,100,637
Capital assets, net -
Governmental Activities
$158,151,087 $
- $ 430,042
$ (1,055,324)
$157,525,805
Depreciation expense of $2,609,162 is reported with general administration expense in the
Statement of Activities.
See independent auditors' report.
-39-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
7. AMOUNTS DUE UNDER PASS -THROUGH AGREEMENTS:
Property taxes related to the incremental increase in assessed values after the adoption of the
Redevelopment Plan are, except where otherwise provided by specific agreement, allocated to the
Agency. 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.
At June 30, 2010, the Agency has an obligation of $60,678,180 to other agencies and entities
related to specific pass -through agreements as follows:
Balance at
Balance at
Entity
June 30, 2009
Additions
Payments
June 30, 2010
Riverside County -
Capital Improvement
$ 19,100,688 *
$ 20,693,584
$15,887,409
$ 23,906,863
Riverside County - Schools
820,792
789,297
826,486
783,603
Riverside County - Library
9,789,662
1,849,126
24,558
11,614,230
Riverside County - Fire
3,280,832
3,180,860
3,284,204
3,177,488
Coachella Valley Mosquito
Abatement District
676,989
643,523
677,243
643,269
Coachella Valley Water District
9,713,483
1,289,051
30,074
10,972,460
Desert Community College District
1,421,245
1,368,077
1,445,317
1,344,005
Desert Sands Unified
School District
6,004,686 *
5,926,865
6,274,284
5,657,267
Coachella Valley Recreation
and Park District
511,403
486,412
512,268
485,547
Coachella Valley Resources District
4,743
4,969
4,774
4,938
Palm Springs Unified
School District
377,837
376,618
377,837
376,618
County Juvenile Health District
980,811
983,252
914,148
1,049,915
Other Deposits
602,298
313,177
253,498
661,977
$ 53,285,469 $ 37,904,811 $30,512,100 $ 60,678,180
* The Redevelopment Agency has used bond proceeds for the construction of capital
improvements, which benefit these entities. These entities have agreements with the
Redevelopment Agency, which will allow it to use a portion of these amounts to offset debt service
costs.
See independent auditors' report.
-40-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. LONG-TERM LIABILITIES:
Schedule of Changes
The following is a schedule of changes
in long-term liabilities
of the Agency for the
fiscal year
ended June 30, 2010:
Balance
Repayments/
Balance
Due Within
July 1, 2009
Additions
Reductions
June 30, 2010
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
20,775,000
-
945,000
19,830,000
1,130,000
2006 A & B TARBs, $62,320,000
56,065,000
- .
2,195,000
53,870,000
2,320,000
2007A TARRBs, $32,600,000
28,060,000
-
2,640,000
25,420,000
2,625,000
Advances from City
6,663,940
-
6,663,940
Total
$
152,633,940
$ 10,438,131
$ 5,780,000
$
146,853,940
$
6,075,000
Project Area No. 2
2002A TARRBs, $17,310,000
$
13,355,000
$ -
$ 695,000
$
12,660,000
$
720,000
2003 TARBs, $15,745,000
15,745,000
-
-
15,745,000
-
2006 A-D TARBs, $67,618,213
68,350,021
1,005,564
2,015,000
67,340,585
1,790,000
Advances from City
15,991,060
-
-
15,991,060
-
County note payable
368,121
-
122,707
245,414
122,707
Total
$
113,809,202
$ 1, 5,564
2,832,707
$
111,982,059
$
2,632,707
Project Area No. 3
2003 TARBs, $4,745,000
$
4,120,000
$ -
$ 100,000
$
4,020,000
$
105,000
2006 A-C TABs, $15,059,526
15,566,776
216,202
135,000
15,647,978
170,000
Total
$
19,686,776
$ 216,202
$ 235,000
5
19,667,978
$
275,000
Project Area No. 4
1998 TARBs, $11,02,000
$
8,355,000
$ -
$ -
$
8,355,000
$
130,000
2001 TARBs, $15,695,000
14,200,000
-
305,000
13,895,000
320,000
2006A TARBs, $19,273,089
19,854,678
293,915
445,000
19,703,593
435,000
Total
$
42,409,678
$ 293,915
$ 750,000
$
41,953,593
$
885,000
Combined Low and Moderate Housing
1998 TARBs, $48,760,000
$ 4,385,000
$
- $ 1,390,000
$
2,995,000
$
1,460,000
2002 TARBs, $12,100,000
10,610,000
- 275,000
10,335,000
285,000
2007 TARBs, $86,155,000
81,090,000
- 3,005,000
78,085,000
3,135,000
Total
$ 96,085,000
$
- $ 4,670,000
$
91,415,000
5
4,880,000
Total - All Project Areas
Bonds payable
$ 401,601,475
$
1,515,681 $ 14,145,000
$
388,972,156
$
14,625,000
Advances from City
22,655,000
- -
22,655,000
-
County note payable
368,121
122,707
245,414
122,707
Subtotal
424,624,596
1,515,68f 14,2 7,7 7
411,812,5TO
7,707
Add:
Unamortized bond premium
7,375,240
475,703
6,899,537
Less:
Deferred amount on refunding
1,483,535
- 122,715
1,360,820
Total
430,516,301
$
17515,681 14,620,695
$
417,411,287
$
14,747,707
See independent auditors' report.
-41-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. LONG-TERM LIABILITIES (CONTINUED):
A description of long-term liabilities outstanding (excluding defeased debt) of the Agency as of
June 30, 2010, follows:
Tax Allocation Bonds
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.
On November 8, 2010, Ambac Financial Group, Inc. ("Ambac Group"), whose principal operating
subsidiary, Ambac Assurance Corporation, is a guarantor of public finance and structured finance
obligations, announced that it filed for a voluntary petition for relief under Chapter 11 of the
United States Bankruptcy Code ("Bankruptcy Code") in the United States Bankruptcy Court for
the Southern District of New York ("Bankruptcy Court"). Ambac Group will continue to operate in
the ordinary course of business as "debtor -in -possession" under the jurisdiction of the Bankruptcy
Court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of
the Bankruptcy Court.
On February 18, 2009, MBIA announced the restructuring of its financial guaranty insurance
operations into two separately capitalized sister companies, with one entity (MBIA Illinois)
assuming the risk associated with its US municipal exposures, and the other (MBIA Corp) insuring
the remainder of the portfolio. Subsequent to the restructuring of MBIA, Moody's Ratings assigned
ratings to the reinsured municipal securities based on the higher of (a) the insurance financial
strength rating of MBIA Illinois, to `Baal'; or (b) the published underlying rating. Subsequent to
the restructuring of MBIA, S&P assigned its insurance financial strength rating of MBIA Illinois to
`AA -minus'. Effective March 19, 2009, MBIA Illinois was renamed National Public Finance
Guarantee Corporation ("NPFGC").
See independent auditors' report.
-42-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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, 2010,
the Agency has transferred $6,273,954 to its trustee to cover debt payments.
Standard & Poor's Ratings Services ("Standard & Poor's") has lowered its underlying rating from
"A" to "A-" on the following issues of bonds issued by the Authority: (i) the Authority's Tax
Allocation Revenue Bonds (Project Area No. 1, as Amended), 2006 Series A (the "2006A
Authority Bonds"), (ii) the Authority's Tax Allocation Refunding Revenue Bonds (Project Area
No. 1, as Amended), 2006 Series B (Taxable) (the "2006B Authority Bonds", and together with the
2006A Authority Bonds, the "2006 Authority Bonds"), and (iii) the Authority's Tax Allocation
Refunding Revenue Bonds (Project Area No. 1, as Amended), 2007 Series A (the "2007 Authority
Bonds").
See independent auditors' report.
- 43 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (continued)
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
2011
$ -
2012
-
2013
-
2014
-
2015
-
2016- 2020
-
2021- 2025
10,905,000
2026 - 2030
11,165,000
$ 22,070,000
See independent auditors' report.
-44-
Interest
Total
$ 1,114,665
$ 1,114,665
1,114,665
1,114,665
1,114,665
1,114,665
1,114,665
1,114,665
1,114,665
1,114,665
5,573,325
5,573,325
5,334,325
16,239,325
1,764,855
12,929,855
$ 18,245,830 $ 40,315,830
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Series 2003 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) Series 2003. 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 I 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
2011
$ - $ 950,000
$ 950,000
2012
- 950,000
950,000
2013
- 950,000
950,000
2014
- 950,000
950,000
2015
- 950,000
950,000
2016 - 2020
- 4,750,000
4,750,000
2021 - 2025
- 4,750,000
4,750,000
2026 - 2030
19,000,000 2,942,500
21,942,500
$ 19,000,000 $ 17,192,500
$ 36,192,500
See independent auditors' report.
-45-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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
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
1,235,000
728,588
1,963,588
2016 - 2020
7,015,000
2,763,826
9,778,826
2021 - 2025
7,035,000
1,043,200
8,078,200
$ 19,830,000
$ 7,944,841
$ 27,774,841
See independent auditors' report.
- 46 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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
2011
$ 2,320,000
2012
2,450,000
2013
2,595,000
2014
2,745,000
2015
2,905,000
2016 - 2020
15,430,000
2021 - 2025
21,015,000
2026 - 2030
4,410,000
$ 53,870,000
See independent auditors' report.
-47-
Interest
Total
$ 2,848,266
$ 5,168,266
2,714,634
5,164,634
2,573,269
5,168,269
2,422,240
5,167,240
2,262,482
5,167,482
9,229,753
24,659,753
3,542,788
24,557,788
348,035
4,758,035
$ 25,941,467 $ 79,811,467
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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,
2011
2012
2013
2014
2015
2016 - 2018
Principal
$ 2,625,000
2,870,000
2,955,000
3,100,000
3,230,000
10,640,000
$ 25,420,000
See independent auditors' report.
-48-
$ 1,201,625
1,083,500
940,000
794,500
686,000
1,078,500
$ 5,784,125
Interest Total
$ 3,826,625
3,953,500
3,895,000
3,894,500
3,916,000
11,718,500
$ 31,204,125
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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). 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,
2011
2012
2013
2014
2015
2016 - 2020
2021 - 2023
Principal
$ 720,000
760,000
795,000
835,000
870,000
5,010,000
3,670,000
$ 12,660,000
See independent auditors' report.
-49-
Interest
$ 581,497
548,638
509,763
472,353
436,113
1,533,734
281,250
$ 4,363,348
Total
$ 1,301,497
1,308,638
1,304,763
1,307,353
1,306,113
6,543,734
3,951,250
$ 17,023,348
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Series 2003 Tax Allocation Revenue Bonds (Project Area No. 2)
In March 2003, the Palm Desert Financing Authority issued $15,745,000 of Tax Allocation
Revenue Bonds (Project Area No. 2) Series 2003. The Palm Desert Financing Authority loaned the
bond proceeds to the Palm Desert Redevelopment Agency to fund various redevelopment capital
projects of the Agency in Project Area No. 2. Interest rates on the bonds vary from 4.5% to 5.0%
per annum payable semi-annually on February 1 and August 1, with principal maturing as follows:
$ 875,000 Serial Bonds
August 1, 2023
910,000 Serial Bonds
August 1, 2024
2,485,000 Term Bonds
August 1, 2026
11,475,000 Term Bonds
August 1, 2033
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project
Area No. 2) are as follows:
Year Ending
June 30,
2011
2012
2013
2014
2015
2016 - 2020
2021 - 2025
2026 - 2030
2031 - 2034
Principal
1,785,000
6,915,000
7,045,000
$ 15,745,000
See independent auditors' report.
-50-
Interest
$ 769,006
769,006
769,006
769,006
769,006
3,845,030
3,765,494
2,663,192
726,625
$ 14,845,371
Total
$ 769,006
769,006
769,006
769,006
769,006
3,845,030
5,550,494
9,578,192
7,771,625
$ 30,590,371
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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, purchase
a Reserve Fund surety policy bond and pay costs of issuance of the bonds. The Agency will use
the proceeds of the Series D Bonds to fund various redevelopment capital projects within or of
benefit to the Project Area, fund a debt service reserve fund and pay cost of issuance of the bonds.
The Series A bonds consist of $16,250,000 Serial Bonds with interest rates ranging from 4.00% to
5.00% payable semiannually on August 1 and February 1. Bond maturities begin August 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, 2010, is $3,629,194.
See independent auditors' report.
-51-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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 debt service requirements schedules on the 2006 Series A Tax Allocation Refunding Revenue
Bonds, Series B Tax Allocation Revenue Capital Appreciation Bonds, Series C Revenue Bonds
and Series D Subordinate Tax Allocation Revenue Capital Appreciation Bonds (Project Area
No. 2) do not agree to the liability for those bonds shown in the schedule of changes. These bond
issues include capital appreciation bonds, which are issued at a discount. The carrying amount of
these bonds accretes, or increases each year. The amount shown in the schedule of changes include
the accreted value to date. The future debt service requirements are as follows:
Year Ending
June 30,
Principal
2011
$ 1,547,001
2012
1,647,818
2013
1,808,558
2014
1,880,353
2015
1,949,239
2016 - 2020
7,490,552
2021 - 2025
10,454,379
2026 - 2030
11,799,082
2031 - 2035
15,396,513
2036 - 2037
9,737,896
See independent auditors' report.
$ 63,711,391
Interest
Total
$ 2,589,956
$ 4,136,957
2,561,720
4,209,538
2,628,779
4,437,337
2,681,585
4,561,938
2,733,786
4,683,025
12,445,214
19,93 5,766
14,017,066
24,471,445
13,051,939
24,851,021
10,589,477
25,985,990
2,184,947
11,922,843
$ 65,484,469 $ 129,195,860
-52-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Series 2003 Tax Allocation Revenue Bonds (Project Area No. 3)
In July 2003, the Financing Authority issued $4,745,000 Tax Allocation Revenue Bonds (Project
Area No. 3) Series 2003. The proceeds of the bonds were disbursed to make a loan to the
Redevelopment Agency. The Agency will use the proceeds of the loan to fund various
redevelopment capital projects within or of benefit to the project area and to finance costs of
issuance of the bonds. The bonds bear interest at rates ranging from 3.000% to 5.125%. Principal
maturities for the serial bonds of $2,475,000 began April 1, 2004, and continue through October 1,
2031. The term bonds in the amount of $2,270,000 are due in 2033.
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project
Area No. 3) are as follows:
Year Ending
June 30,
2011
2012
2013
2014
2015
2016 - 2020
2021 - 2025
2026 - 2030
2031 - 2033
Principal
$ 105,000
110,000
115,000
120,000
120,000
690,000
860,000
1,100,000
800,000
$ 4,020,000
See independent auditors' report.
- 53 -
$ 189,848
186,225
182,265
177,953
173,272
787,135
618,411
379,250
83,281
$ 2,777,640
Interest Total
$ 294,848
296,225
297,265
297,953
293,272
1,477,135
1,478,411
1,479,250
883,281
$ 6,797,640
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Project Area No. 3 Tax Allocation Revenue Bonds 2006 Series A, Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series B and Subordinate Tax Allocation Revenue Capital Appreciation
Bonds 2006 Series C
On July 25, 2006, the Palm Desert Financing Authority issued its Project Area No. 3, $11,915,000
Tax Allocation Revenue Bonds 2006 Series A, $383,660 Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series B and $2,760,866 Subordinate Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series C. The Palm Desert Financing Authority loaned the bond
proceeds to the Palm Desert Redevelopment Agency. The proceeds of the Series A and B Bonds
will be used to make two loans to fund various redevelopment capital projects within or of benefit
to its Project Area No. 3, purchase a Reserve Fund surety policy and pay the costs of issuance of
the bonds. The Agency will loan the proceeds of the Series C Bonds to fiind various
redevelopment capital projects within or of benefit to the Project Area, fund a debt service reserve
fund and pay the costs of issuance of the bonds.
The Series A bonds consist of $2,980,000 Serial Bonds with interest rates ranging from 4.00% to
4.75% payable semiannually on April 1 and October 1. Bond maturities begin April 1, 2007, and
continue annually through 2025. Term bonds in the amount of $4,465,000 carry an interest rate of
4.75% and mature April 1, 2036. Term bonds in the amount of $4,470,000 carry an interest rate of
5.00% and mature April 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, 2010, is $776,564.
See independent auditors' report.
-54-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Project Area No. 3 Tax Allocation Revenue Bonds 2006 Series A, Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series B and Subordinate Tax Allocation Revenue Capital Appreciation
Bonds 2006 Series C (Continued)
The 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,
2011
2012
2013
2014
2015
2016 - 2020
2021 - 2025
2026 - 2030
2031 - 2035
2036 - 2040
2041
Principal
$ 160,871
198,934
228,133
254,760
285,721
1,614,190
1,916,677
1,941,143
3,030,985
4,255,000
985,000
$ 14,871,414
See independent auditors' report.
-55-
$ 570,204
562,141
565,742
571,715
578,154
3,217,255
3,721,092
4,153,207
3,515,965
903,075
49,250
$ 18,407,800
Interest Total
$ 731,075
761,075
793,875
826,475
863,875
4,831,445
5,637,769
6,094,350
6,546,950
5,158,075
1,034,250
$ 33,279,214
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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) Series 1998. The proceeds from the bonds were loaned to the
Palm Desert Redevelopment Agency to fund various redevelopment capital projects of the Agency
in Project Area No. 4. Interest rates on the bonds vary from 4.0% to 5.2% per annum payable semi-
annually on April 1 and October 1, with principal maturing annually on October 1. In July 2006
$1,785,000 of the outstanding balance was advance refunded by the issuance of Tax Allocation
Refunding Revenue Bonds (Project Area No. 4) 2006 Series A.
The future debt service requirements on the 1998 Series Tax Allocation Revenue Bonds (Project
Area No. 4) (after defeasance) are as follows:
Year Ending
June 30,
Principal
Interest
Total
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
360,000
394,973
754,973
2016 - 2020
2,070,000
1,674,728
3,744,728
2021 - 2025
2,680,000
1,063,140
3,743,140
2026 - 2029
2,695,000
288,990
2,983,990
$ 8,355,000
$ 5,090,877
$ 13,445,877
See independent auditors' report.
-56-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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) Series 2001. The proceeds from the bonds were loaned to the
Palm Desert Redevelopment Agency to fund various redevelopment capital projects of the Agency
in Project Area No. 4. Interest rates on the bonds vary from 3.5% to 4.9% per annum payable semi-
annually on April 1 and October 1, with principal maturing annually on October 1.
The future debt service requirements on the 2001 Series Tax Allocation Revenue Bonds (Project
Area No. 4) are as follows:
Year Ending
June 30,
2011
2012
2013
2014
2015
2016 - 2020
2021 - 2025
2026 - 2030
2031 - 2032
Principal
320,000
325,000
345,000
365,000
375,000
2,150,000
2,670,000
4,125,000
3,220,000
$ 13,895,000
See independent auditors' report.
-57-
639,909
628,011
614,805
599,909
584,038
2,648,851
2,091,529
1,357,320
156,480
$ 9,320,852
Interest Total
959,909
953,011
959,805
964,909
959,038
4,798,851
4,761,529
5,482,320
3,376,480
$ 23,215,852
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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. 3, purchase a Reserve Fund surety policy and pay the costs of issuance of the bonds. The
Series A bonds consist of $8,155,000 Serial Bonds with interest rates ranging from 4.40% to 5.00%
payable semiannually on October 1 and April 1. Bond maturities 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, 2010 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, 2010, is $1,070,001.
See independent auditors' report.
-58-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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 (Continued)
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,
2011
2012
2013
2014
2015
2016 - 2020
2021 - 2025
2026 - 2030
2031 - 2035
Principal
$ 435,000
554,233
656,190
779,182
718,718
1,453,205
2,778,326
4,495,323
6,763,415
$ 18,633,592
See independent auditors' report.
-59-
Interest
$ 662,658
657,612
651,686
635,195
599,477
2,716,225
2,947,368
3,545,510
8,823,461
$ 21,239,192
Total
$ 1,097,658
1,211,845
1,307,876
1,414,377
1,318,195
4,169,430
5,725,694
8,040,833
15,586,876
$ 39,872,784
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
1998 Series Tax Allocation (Housing Set -Aside) Revenue Bonds
In January 1998, the Palm Desert Financing Authority issued $48,760,000 in Tax Allocation
(Housing Set -Aside) Revenue Bonds. The proceeds from the bonds were loaned to the Palm Desert
Redevelopment Agency to finance the acquisition of seven apartment complexes consisting of 725
rental units from the Housing Authority of the County of Riverside. Interest rates on the bonds vary
from 4.0% to 5.1 % per annum payable semi-annually on April 1 and October 1 with principal
maturing annually on October 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
2011
1,460,000
113,250
1,573,250
2012
1,535,000
38,375
1,573,375
$ 2,995,000
$ 151,625
$ 3,146,625
See independent auditors' report.
-60-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. 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 Series 2002. The Palm Desert Financing Authority loaned the
bond proceeds to the Palm Desert Redevelopment Agency to fund various low and moderate
housing capital projects of the Agency and to finance costs of issuance of the bonds. Interest rates
on the $6,555,000 serial bonds vary from 2.0% to 4.9% per annum payable semi-annually on
March 1 and October 1. Annual principal payments begin October 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,
2011
2012
2013
2014
2015
2016 - 2020
2021 - 2025
2026 - 2030
2031 - 2032
See independent auditors' report.
Principal
$ 285,000
295,000
305,000
320,000
330,000
1,890,000
2,390,000
3,065,000
1,455,000
$ 10,335,000
-61-
Interest
$ 481,298
470,201
458,348
445,848
432,848
1,934,347
1,436,798
762,125
73,625
$ 6,495,438
Total
$ 766,298
765,201
763,348
765,848
762,848
3,824,347
3,826,798
3,827,125
1,528,625
$ 16,830,438
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. '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 rates 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
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
5,505,000
2,813,563
8,318,563
2016 - 2020
32,050,000
9,533,188
41,583,188
2021 - 2025
13,895,000
3,788,675
17,683,675
2026 - 2028
9,995,000
649,294
10,644,294
$ 78,085,000
$ 30,264,697
$ 108,349,697
Advances from City
The City of Palm Desert has made advances to the Agency to finance capital projects in the
following amounts: (a) $6,663,940 for Project Area No. 1 and $15,991,060 for Project Area No. 2.
These advances do not have a fixed repayment schedule.
See independent auditors' report.
-62-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
8. LONG-TERM LIABILITIES (CONTINUED):
Notes Payable
County of Riverside
The Agency entered into a cooperation agreement with the County of Riverside (the County) on
December 15, 1987, regarding the adoption of the Agency's Project Area No. 2. The agreement
states that the Agency was to retain 50% of the County's share of tax increment. This was based on
the County's share of tax increment being what would be allocated to the County in the absence of
a redevelopment project area being adopted.
This agreement called for the Agency to retain 50% of the County's share until the gross increment
reached $3,500,000. The agreement further states that when gross increment reaches $10,000,000
that the Agency would repay the 50% of the retained County's share of increment in equal
payments over a 10-year period.
The gross increment reached the $3,500,000 limit in fiscal year 1991-1992. The Agency reached
the $10,000,000 limit in fiscal year 2002-2003. The total amount owed to the County at
June 30, 2010, was $368,121. Annual payments on the note are $122,707.
Future debt service payments are as follows:
Year Ending
June 30,
Principal
2011
$ 122,707
2012
122,707
$ 245,414
See independent auditors' report.
Interest
Total
$ 122,707
122,707
$ 245,414
-63-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
9. RESERVES OF FUND BALANCES:
Loans receivable
Property held for resale
Prepaid items and deposits
Encumbrances
Continuing appropriations
Advances
Reserve requirement
Totals
June 30, 2010
Special
Revenue
Fund
Low and
Moderate
Income
Housing
$ 7,328,010
855,224
243,423
9,517,625
17,821,288
Capital
Proj ects
Fund Other
Project Governmental
Area 2 Funds
1,885,151
20,250,960
$ 1,600,000
26,813
1,607,171
42,162,148
- - 36,366
$ 35,765,570 $ 22,136,111 $ 45,432,498
Total
$ 8,928,010
855,224
26,813
3,735,745
71,930,733
17,821,288
36,366
$ 103,334,179
Reserved for Loans Receivables - These reserves are set up to reflect the noncurrent portion
receivables so that they will not be considered as current funds available.
Reserved for Property Held for Resale - This reserve for property held for resale has been set aside
to indicate that it will not be considered as current funds available.
Reserved for Prepaid Items and Deposits - These reserves are set up to reflect the noncurrent
portion of the deposits so that they will not be considered as current funds available.
Reserved for Encumbrances - These reserves represent the portion of purchase orders awarded for
which the goods or services had not yet been received at June 30, 2010. Although all
appropriations lapse at year-end, even if encumbered, the City intends either to honor the contracts
in progress or to cancel them. Encumbrances are rebudgeted on July 1, by Council action.
Reserved for Continuing Appropriations - This reserve is for appropriations for capital projects that
are unexpended as of June 30, 2010, and are carried forward as continuing appropriations to be
expended in 2010-2011.
Reserved for Advances - These reserves are set up to indicate that these funds will not be
considered as current funds available.
Reserved for Reserve Requirement - These reserves are set up for the maintenance requirements
for the housing apartments.
See independent auditors' report.
-64-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
10. CONDUIT DEBT OBLIGATION:
2003 Series A - $22,310,000 Lease Revenue Bonds
In December 2003, the Palm Desert Financing Authority (Authority) issued $22,310,000 in Lease
Revenue Bonds. The proceeds of the Bonds were used to: a) finance the construction of a County
animal shelter and related facilities located in the unincorporated area of Thousand Palms,
California; b) finance construction of certain County medical clinic facilities located in Mecca,
California; c) refund the Palm Desert Financing Authority Lease Revenue Bonds Series 1996;
d) acquire a debt service reserve insurance policy; e) fund capitalized interest on the bonds; and
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, 2010, the outstanding amount was
$19,185,000.
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, 2010,
the outstanding amount was $70,510,000.
See independent auditors' report.
-65-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2010
11. INSURANCE:
The Agency is covered under the City of Palm Desert's insurance. For additional information, see
the City's financial statements.
12. COMMITMENTS AND CONTINGENCIES:
SERAF Contingency:
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. On May 13, 2010, the Superior Court found in favor of the State relative to the
class action suit.
The Agency's SERAF contributions for fiscal year 2009-2010 was $25,526,215. The Agency
borrowed funds from the low and moderate income housing fund to make this payment. The
Agency's SERAF contribution for fiscal year 2010-2011 will be $5,225,397.
See independent auditors' report.
-66-
SUPPLEMENTARY INFORMATION
-67-
Schedule 1
PALM DESERT REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET - OTHER GOVERNMENTAL FUNDS
June 30, 2010
Total
Special
Debt
Capital
Other
Revenue
Service
Projects
Governmental
Fund
Fund
Funds
Funds
ASSETS:
Cash and investments
$ 1,474,601
$ 6,912,926
$ 5,472,433
$ 13,859,960
Restricted cash with fiscal agent
2,591,634
-
58,986,607
61,578,241
Accounts receivable
4,813
17,530
44,991
67,334
Interest receivable
30
-
481,679
481,709
Notes receivable
-
-
1,600,000
1,600,000
Prepaid costs and deposits
-
-
26,813
26,813
TOTAL ASSETS
$ 4,071,078
$ 6,930,456
$ 66,612,523
$ 77,614,057
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts payable
$ 152,652
$ -
$ 589,341
$ 741,993
Accrued liabilities
43,755
-
49,513
93,268
Deposits payable
395,569
-
15,000
410,569
Unearned revenues
11,364
-
-
11,364
Advances due to other funds
-
970,313
-
970,313
Amounts due pass -through agreement
-
4,089,839
-
4,089,839
TOTAL LIABILITIES
603,340
5,060,152
653,854
6,317,346
FUND BALANCES:
Reserved for:
Encumbrances
78,998
-
1,528,173
1,607,171
Notes receivable
-
-
1,600,000
1,600,000
Continuing appropriations
3,352,374
-
38,809,774
42,162,148
Reserve requirement
36,366
-
-
36,366
Prepaid costs and deposits
-
-
26,813
26,813
Unreserved, designated for:
Debt service
-
1,870,304
-
1,870,304
Capital projects
-
-
23,993,909
23,993,909
TOTAL FUND BALANCES
3,467,738
1,870,304
65,958,669
71,296,711
TOTAL LIABILITIES
AND FUND BALANCES
$ 4,071,078
$ 6,930,456
$ 66,612,523
$ 77,614,057
See independent auditors' report.
-68-
Schedule 2
PALM DESERT REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS
REVENUES:
Taxes
Intergovernmental
Investment earnings
Rental income
Other revenues
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Payments to other agencies
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
For the year ended June 30, 2010
Total
Special
Debt
Capital
Other
Revenue
Service
Projects
Governmental
Fund
Fund
Funds
Funds
$ -
$ 4,796,609
$ -
$ 4,796,609
-
-
243,294
243,294
19,944
20,907
481,558
522,409
4,847,228
-
173,475
5,020,703
118,894
-
8,120
127,014
4,986,066
4,817,516
906,447
10,710,029
5,030,676
1,044,024
4,991,373
11,066,073
-
2,213,071
-
2,213,071
654,731
-
1,243,282
1,898,013
5,685,407
3,257,095
6,234,655
15,177,157
(699,341) 1,560,421 (5,328,208) (4,467,128)
10,991 976,200 987,191
(2,063,432) (1,159,341) (3,222,773)
TOTAL OTHER FINANCING
SOURCES (USES)
- (2,052,441)
(183,141)
(2,235,582)
NET CHANGE IN FUND BALANCES
(699,341) (492,020)
(5,511,349)
(6,702,710)
FUND BALANCES - BEGINNING OF YEAR
4,167,079 2,362,324
71,470,018
77,999,421
FUND BALANCES - END OF YEAR
$ 3,467,738 $ 1,870,304
$ 65,9584669
$ 71,296,711
See independent auditors' report.
-69-
PALM DESERT REDEVELOPMENT AGENCY
BALANCE SHEET - OTHER GOVERNMENTAL FUND
SPECIAL REVENUE
ASSETS:
Cash and investments
Restricted cash with fiscal agent
Accounts receivable
Interest receivable
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts payable
Accrued liabilities
Deposits payable
Unearned revenue
TOTAL LIABILITIES
FUND BALANCES:
Reserved for:
Encumbrances
Continuing appropriations
Reserve requirement
TOTAL FUND BALANCES
TOTAL LIABILITIES
AND FUND BALANCES
See independent auditors' report.
June 30, 2010
Schedule 3
Housing
Authority Totals
$ 1,474,601 $ 1,474,601
2,591,634 2,591,634
4,813 4,813
30 30
$ 4,071,078 $ 4,071,078
$ 152,652
$ 152,652
43,755
43,755
395,569
395,569
11,364
11,364
603,340
603,340
78,998 78,998
3,352,374 3,352,374
36,366 36,366
3,467,738 3,467,738
$ 4,071,078 $ 4,071,078
-70-
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUND
SPECIAL REVENUE
For the year ended June 30, 2010
REVENUES:
Investment earnings
Rental income
Other revenues
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
FUND BALANCES - BEGINNING OF YEAR
FUND BALANCES - END OF YEAR
See independent auditors' report.
Schedule 4
Housing
Authority
Totals
$ 19,944
$ 19,944
4,847,228
4,847,228
118,894
118,894
4,986,066
4,986,066
5,030,676
5,030,676
654,731
654,731
5,685,407
5,685,407
(699,341) (699,341)
4,167,079 4,167,079
$ 3,467,738 $ 3,467,738
-71-
PALM DESERT REDEVELOPMENT AGENCY
BALANCE SHEET - OTHER GOVERNMENTAL FUND
DEBT SERVICE
ASSETS:.
Cash and investments
Accounts receivable
TOTAL ASSETS
LIABILITIES AND FUND BALANCES
LIABILITIES:
Advances due to other funds
Amounts due pass -through agreement
TOTAL LIABILITIES
FUND BALANCES:
Unreserved, designated for:
Debt service
TOTAL FUND BALANCES
TOTAL LIABILITIES
AND FUND BALANCES
See independent auditors' report.
June 30, 2010
Schedule 5
Project
Area 3 Totals
$ 6,912,926 $ 6,912,926
17,530 17,530
$ 6,930,456 $ 6,930,456
$ 970,313 $ 970,313
4,089,839 4,089,839
5,060,152 5,060,152
1,870,304 1,870,304
1,870,304 1,870,304
$ 6,930,456 $ 6,930,456
-72-
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUND
DEBT SERVICE
For the year ended June 30, 2010
REVENUES:
Taxes
Investment earnings
EXPENDITURES:
Current:
General government
Payments to other agencies
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
TOTAL OTHER FINANCING SOURCES (USES)
NET CHANGE IN FUND BALANCES
FUND BALANCES - BEGINNING OF YEAR
FUND BALANCES - END OF YEAR
See independent auditors' report.
Schedule 6
Proj ect
Area 3 Totals
$ 4,796,609 $ 4,796,609
20,907 20,907
4,817,516 4,817,516
1,044,024
1,044,024
2,213,071
2,213,071
3,257,095
3,257,095
1,560,421 1,560,421
10,991 10,991
(2,063,432) (2,063,432)
(2,052,441) (2,052,441)
(492,020) (492,020)
2,362,324 2,362,324
$ 1,870,304 $ 1,870,304
-73-
Schedule 7
PALM DESERT REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET - OTHER GOVERNMENTAL FUNDS
CAPITAL PROJECTS
June 30, 2010
Project
Project
Project
Area 1
Area 3
Area 4
Totals
ASSETS:
Cash and investments
$
936,454
$
2,808,529
$
1,727,450
$
5,472,433
Restricted cash with fiscal agent
18,460,143
18,431,472
22,094,992
58,986,607
Accounts receivable
44,991
-
-
44,991
Interest receivable
376,166
21,095
84,418
481,679
Notes receivable
-
-
1,600,000
1,600,000
Prepaid costs and deposits
26,813
-
-
26,813
TOTAL ASSETS
$
19,844,567
$
21,261,096
$
25,506,860
$
66,612,523
LIABILITIES AND FUND BALANCES
LIABILITIES:
Accounts payable
$
520,045
$
51,353
$
17,943
$
589,341
Accrued liabilities
49,513
-
-
49,513
Deposits payable
-
-
15,000
15,000
TOTAL LIABILITIES
569,558
51,353
32,943
653,854
FUND BALANCES:
Reserved:
Encumbrances
491,129
500,000
537,044
1,528,173
Notes receivable
-
-
1,600,000
1,600,000
Continuing appropriations
14,598,011
10,839,182
13,372,581
38,809,774
Prepaid costs and deposits
26,813
-
-
26,813
Unreserved, designated for:
Capital projects
4,159,056
9,870,561
9,964,292
23,993,909
TOTAL FUND BALANCES
19,275,009
21,209,743
25,473,917
65,958,669
TOTAL LIABILITIES
AND FUND BALANCES
$
19,844,567
$
21,261,096
$
25,506,860
$
66,612,523
See independent auditors' report.
-74-
Schedule 8
PALM DESERT REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES - OTHER GOVERNMENTAL FUNDS
CAPITAL PROJECTS
REVENUES:
Intergovernmental
Investment earnings
Rental income
Other revenues
TOTAL REVENUES
EXPENDITURES:
Current:
General government
Capital outlay
TOTAL EXPENDITURES
EXCESS OF REVENUES OVER
(UNDER) EXPENDITURES
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out
For the year ended June 30, 2010
Project
Project
Project
Area 1
Area 3
Area 4
Totals
$ 243,294
$ -
$ -
$ 243,294
121,374
143,555
216,629
481,558
91,615
-
81,860
173,475
8,120
-
-
8,120
464,403
143,555
298,489
906,447
4,456,055
144,209
391,109
4,991,373
1,112,184
-
131,098
1,243,282
5,568,239
144,209
522,207
6,234,655
(5,103,836) (654) (223,718) (5,328,208)
793,255 103,418 79,527 976,200
(918,785) (45,969) (194,587) (1,159,341)
TOTAL OTHER FINANCING
SOURCES (USES)
(125,530)
57,449
(115,060)
(183,141)
NET CHANGE IN FUND BALANCES
(5,229,366)
56,795
(338,778)
(5,511,349)
FUND BALANCES - BEGINNING OF YEAR
24,504,375
21,152,948
25,812,695
71,470,018
FUND BALANCES - END OF YEAR
$ 19,275,009
$ 21,209,743
$ 25,473,917
$ 65,958,669
See independent auditors' report.
-75-
PALM DESERT REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET
HOUSING AUTHORITY SPECIAL REVENUE FUND
June 30,2010
Complexes
Laguna
Catalina
Desert
Las
One
Capital
Palms
Gardens
Pointe
Serenas
Neighbors
Quail
Pueblos
ASSETS:
Cash and investments
S 1,474,601
S
$
$ -
$ -
S -
$
$
Restncted cash with fiscal agent
2,134,922
20,948
25,792
21,042
49,357
9,410
227,377
4,620
Accounts receivable
-
175
-
356
854
70
281
11
Interest receivable
30
Due from other apartment
972,143
5,576,345
-
TOTAL ASSETS
$ 3,609,553
$ 21,123
$ 25,792
$ 21,398
$ 1,022,354
$ 9,480
$ 5,804,003
$ 4,631
LIABILITIES AND
FUND BALANCES
LIABILITIES:
Accounts payable
$ 4,163
$ 5,447
$ 6,391
$ 11,363
$ 10,196
$ 1,499
$ 36,331
$ 911
Management fee payable
1,680
2,518
2,191
5,249
840
13,404
526
Accrued payroll
1,851
2,737
3,157
3,866
1,005
20,922
740
Security deposits payable
20,748
25,492
20,892
49,007
9,360
167,694
4,620
Unearned revenue
277
591
413
490
296
7,771
Due to other apartment
-
1,013,786
254,996
441,639
-
241,478
-
337,175
TOTAL LIABILITIES
4,163
1,043,789
292,725
479,655
68,808
254,478
246,112
343,972
FUND BALANCES (DEFICffS):
Reserved:
Encumbrances
78,998
-
Continuing appropriations
3,352,374
Reserve requirement fund
-
Low income purposes
174,018
(1,022,666)
(266,933)
(458,257)
953,546
(244,998)
5,557,891
(339,341)
TOTALFUND
BALANCES (DEFICITS) 3,605,390 (1,022,666) (266,933) (458,257) 953,546 (244,998) 5,557,891 (339,341)
TOTAL LIABILITIES
AND FUND BALANCES $ 3,609,553 $ 21,123 $ 25,792 $ 21,398 $ 1,022,354 $ 9,480 $ 5,804,003 $ 4,631
See independent auditors' report.
.76-
Schedule 9
Complexes (Continued)
_
California
Country Palm
Total
Combined
Combined
Villas
Taos Village Village Candlewood
La Rocca
Sage Crest Complexes
Total
Reclassification
Total
$
$ - $ $ _ $ _
$ -
$ $
$ 1,474,601
$
$ 1,474,601
54,542
3,150 17,000 8,556
10,200
4,718 456,712
2,591,634
2,591,634
2,478
144 -
444
- 4,813
4,813
4,813
-
-
30
30
- -
-
- 6,548,488
6,548,488
(6,548,488)
$ 57,020
S 3,150 $ $ 17,144 $ 8,556
$ 10,644
S 4,718 $ 7,010,013
$ 10,619,566
$ (6,548,488)
$ 4,071,078
S 10,196
$ 1,775
$ S .
$ 24,705
$ 2,451
$ 1,829
$ 113,094
$ 117,257
$
$ 117,257
4,690
359
1,109
1,054
910
865
35,395
35,395
35,395
4,098
667
1,465
1,216
937
1,094
43,755
43,755
43,755
54,292
3,100
16,950
8,556
10,200
4,668
395,569
395,569
395,569
851
5
479
131
29
31
11,364
11,364
11,364
2,835,116
337,856
365,436 48,808
453,491
27,824
190,983
6,548,488
6,548,488
(6,548,488)
-
2,909,243
343,762
365,436 68,811
489,153
42,351
199,370
7,147,665
7,151,828
(6,548,488)
603,340
_ -
-
-
78,998
78,998
3,352,374
3,352,374
36,366
36,366
36,366
36,366
(2,852,223)
(340,612)
(365,436) (88,033)
(480,597)
(31,707)
(194,652)
(174,018)
-
-
(2,852,223)
(340,612)
(365,436) (51,667)
(480,597
(31,707)
(194,652)
(137,652)
3,467,738
3,467,738
S 57,020
$ 3,150
S - S 17,144
S 8,556
$ 10,644
$ 4,718
$ 7.010,013
$ 10,619,566
$ (6,548,488)
S 4,071,078
77.
PALM DESERT REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUES, EXPENDITURES
AND CHANGES IN FUND BALANCES
HOUSING AUTHORITY SPECIAL REVENUE FUND
June 30,2010
Complexes
Laguna
Catalina
Desert
Las
One
Capital
Palms
Gardens
Pointe
Serenas
Neighbors
Quail
Pueblos
REVENUES:
Rental income
$
$ 211,806
$ 278,820
$ 246,637
$ 678,822
$ 94,600
$ 2,154,678
$ 48,532
Other revenues
118,894
Investment earnings
19,944
TOTAL REVENUES
138,838
211,806
278,820
246,637
678,822
94,600
2,154,678
48,532
EXPENDITURES:
Current:
Payroll
-
66,197
119,166
114,364
155,885
33,754
764,582
30,486
Administrative
48,076
80,204
156,356
180,571
277,631
77,442
864,384
35,050
Management
13,889
37,212
52,951
$7,903
31,771
340,699
12,204
Maintenance
19,845
30,030
26,560
62,020
9,870
162,465
7,415
Capital outlay
654,731
-
-
-
-
TOTAL EXPENDITURES
702,807
180,135
342,764
374,446
583,439
152,837
2,132,130
85,155
EXCESS OF REVENUES
OVER (UNDER)
EXPENDITURES
(563,969)
31,671
(63,944)
(127,809)
95,383
(58,237)
22,548
(36,623)
FUND BALANCES (DEFICITS) -
BEGINNING OFYEAR
4,169,359
(1,054,337)
(202,989)
(330,448)
858,163
(186,761)
5,535,343
(302,718)
FUND BALANCES (DEFICITS) -
END OF YEAR
$ 3,605,390
$ (1,022,666)
$ (266,933)
$(458,257)
$ 953,546
$(244,998)
$ 5,557,891
$(339,341)
See independent auditors' report.
.78.
Schedule 10
Complexes (Continued)
California
Country
Palm
Total
Combined
Combined
Villas
Taos Village
Village
Candlewood
La Rocca
Sage Crest
Complexes
Total
Reclassification Total
$ 615,574
$ 21,389 $
$ 185,937
$ 110,976
$ 131,597
$ 67,860
$ 4,847,228
$ 4,847,228
$ $ 4,947,228
118,894
118,894
-
19,944
19,944
615,574
21,389
185,937
110,976
131,597
67,860
4,847,228
4,986,066
4,986,066
186,728
24,799
50,367
52,250
35,228
44,093
1,677,899
1,677,899
1,677,899
233,444
49,563
44,799
80,025
45,796
39,213
2,164,478
2,212,554
2,212,554
52,050
14,579
12,016
34,113
7,906
14,641
711,934
711,934
711,934
57,535
4,520
15,120
12,600
11,235
9,074
428,289
428,289
428,289
-
-
654,731
654,731
529,757
93,461
122,302
178,988
100,165
107,021
4,982,600
5,685,407
5,685,407
85,817
(72,072)
63,635
(68,012)
31,432
(39,161)
(135,372)
(699,341)
(699,341)
(2,938,040)
(268,540) (365,436)
(115,302)
412,585
(63,139)
155,491
(2,280)
4,167,079
4,167,079
$ (2,852,223) $(340,612) $(365,436) $ (51,667) $(480,597) $ (31,707) $ (194,652) $ (137,652) $ 3,467,738 $ $ 3,467,738
-79-
Schedule 11
PALM DESERT REDEVELOPMENT AGENCY
COMPUTATION OF LOW AND MODERATE
HOUSING EXCESS SURPLUS FUNDS
July 1, 2009
Excess Surplus in the Low and Moderate Income Housing Fund is any unexpended or unencumbered amount that exceeds
the greater of either $1,000,000 or the aggregate amount deposited in the Low and Moderate Income Housing Fund during
the preceding four fiscal years. It is computed at the beginning of the fiscal year to which it relates.
OPENING FUND BALANCE - JULY 1, 2009
LESS UNAVAILABLE AMOUNTS:
Encumbrances
Loans and notes receivable
Property held for resale
Reserve requirement
Unspent bond proceeds
AVAILABLE LOW/MODERATE INCOME HOUSING FUNDS
LIMITATION (GREATER OF $1,000,000 OR FOUR YEARS SET -ASIDE):
Set -aside for last four years:
2008 - 2009 $ 18,235,620
2007 - 2008 18,141,322
2006 - 2007 16,573,467
2005 - 2006 15,404,798
TOTAL SET -ASIDE FOR LAST FOUR YEARS $ 68,355,207
Base limitation $ 1,000,000
GREATER AMOUNT
COMPUTED EXCESS SURPLUS - JULY 1, 2009
See independent auditors' report.
Tax Increment
Deposits to
Housing Fund
$ 75,181,866
251,297
7,475,884
465,834
27,285
25,571,421
41,390,145
68,355,207
-80-
DIEHL, EVANS & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS
5 CORPORATE PARK, SUITE 100
IRVINE, CALIFORNIA 92606-5165
(949) 399-0600 • FAX (949) 399-0610
www.diehlevans.com
MICHAEL R LUDIN, CPA
CRAIG W. SPRAKER, CPA
NrM P. PATBL, CPA
ROBERT J. CALLANANI CPA
•PHILIP R HOLTKAMP, CPA
*THOMAS M. PERLOWSKI, CPA
•HARVEYJ.SCHROEDER,CPA
KENNETH R AMES, CPA
WILLIAM C. PENTZ, CPA
November 29, 2010 'A PROFESSIONAL CORPORATION
INDEPENDENT AUDITORS' REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and
Members of the City Council
Palm Desert Redevelopment Agency
Palm Desert, California
We have audited the accompanying financial statements of the governmental activities, each major
fund and the aggregate remaining fund information of the Palm Desert Redevelopment Agency (the
Agency) as of and for the year ended June 30, 2010, which collectively comprise the Agency's basic
financial statements and have issued our report thereon dated November 29, 2010. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Agency's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the
Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the Agency's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect 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 Agency's financial statements will not be prevented, or detected and corrected on a
timely basis.
-81-
OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W. VALLEY PARKWAY, SUITE 330
CARLSBAD, CALIFORNIA 92008-2389 ESCONDIDO, CALIFORNIA 92025-2598
(760) 729-2343 • FAX (760) 729-2234 (760) 741-3141 • FAX (760) 741-9890
Internal Control Over Financial Reporting(Continued)
Our consideration of the internal control over financial reporting was for the limited purpose described
in the first paragraph of this section and was not designed to identify all deficiencies in internal control
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 weaknesses, as
defined above.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Agency's financial statements are free of
material misstatements, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. Such provisions included those
provisions of laws and regulations identified in the Guidelines For Compliance Audits of California
Redevelopment Agencies, issued by the State Controller and as interpreted in the Suggested Auditing
Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies, issued by
the Governmental Accounting and Auditing Committee of the California Society of Certified Public
Accountants. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.
This report is intended solely for the information and use of the Palm Desert Redevelopment Agency
Directors and management of the Palm Desert Redevelopment Agency and the State Controller's
Office, Division of Accounting and Reporting and is not intended to be and should not be used by
anyone other than these specific parties.
-82-