HomeMy WebLinkAboutRDA Audited Financial Reports for Fiscal Year Ending 06/30/2004 ._71 C
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_, �,, STAFF REPORT
a£sg Council Meeting of January 13, 2005
TO: EXECUTIVE DIRECTOR, HONORABLE CHAIRPERSON AND
MEMBERS OF THE REDEVELOPMENT AGENCY
FROM: PAUL S. GIBSON, DIRECTOR OF FINANCE/CITY TREASURER
SUBJECT: Palm Desert Redevelopment Agency Audited Financial Reports for the
Fiscal Year Ending June 30, 2004
DATE: January 13, 2005
RECOMMENDATION:
By Minute Motion, receive and file the audited Component Unit Financial Statement for the
Palm Desert Redevelopment Agency for the fiscal year ending June 30, 2004.
BACKGROUND:
Lance Soll&Lunghard,LLP performed and completed the annual independent audit forthe
fiscal year ending June 30, 2004, for the Redevelopment Agency in September 2004, 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 30,2004,and the results of its operations for the year then
ended in conformity with accounting principles generally accepted in the United States of
America.
In conducting their audit,the auditors test the Agency's internal controls. For the year ended
June 30, 2004,the auditors noted one comment regarding the calculation of rent.Attached
is the agency's management letter and the correction plan.
The audited financial statements for the Redevelopment Agency will be submitted for review
to the Investment Committee at their meeting in January 2005.
Staff recommends that the Agency Board receive and file the audited financial statements
for the Palm Desert Redevelopment Agency for the Fiscal Year Ended June 30, 2004.
Respectfully submitted, Reviewed and concur,
azi..-/j/7--_____ /Adir,..,
PAUL S. GIBSON, CARLOS L. •,- EGA,
DIRECTOR OF FINANCE/TREASURER CITY MANAGER
H:\Acctg046Audit04tstaffreportrda2004.wpd
PALM DESERT REDEVELOPMENT AGENCY
PALM DESERT, CALIFORNIA
FINANCIAL STATEMENTS
JUNE 30, 2004
PALM DESERT REDEVELOPMENT AGENCY
JUNE 30, 2004
TABLE OF CONTENTS
Page
Number
INDEPENDENT AUDITORS' REPORT
Financial Audit 1
Compliance Audit 3
MANAGEMENT DISCUSSION AND ANALYSIS 5
BASIC FINANCIAL STATEMENTS
Government-Wide Financial Statements:
Exhibit A - Statement of Net Assets 12
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 16
Exhibit E - Statement of Revenues, Expenditures and Changes in Fund
Balances -Governmental Fund Types 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 43
Schedule 2 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances-Other Governmental Funds 44
Schedule 3 - Combining Balance Sheet- Housing Authority Special Revenue Fund 46
Schedule 4 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Housing Authority Special Revenue Fund 48
Schedule 5 - Combining Balance Sheet - Other Governmental Funds- 50
Debt Service
Schedule 6 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds-Debt Service 51
PALM DESERT REDEVELOPMENT AGENCY
JUNE 30,2004
TABLE OF CONTENTS •
Page
Number
SUPPLEMENTARY INFORMATION (Continued)
Schedule 7 - Combining Balance Sheet- Other Governmental Funds-
Capital Projects 52
Schedule 8 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances -Other Governmental Funds -Capital Projects 53
Schedule 9 - Computation of Low and Moderate Housing Excess Surplus Funds 54
Lance Brandon W.Burrows
SD" & Donald L Parker
Lunghard Michael K.Chu
David E.Hale
A ProAiu/pW CorpwaUon
LIP Donald G.Slater
Richard K.Kikuchi
Certified Public Accountants Retired
Robert C.Lance
1914-1994
Richard C.Soli
Fred J.Lunghard,Jr.
1929-1999
INDEPENDENT AUDITORS'REPORT
To the Honorable Mayor and Members of the City Council
Palm Desert Redevelopment Agency
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, a component
unit of the City of Palm Desert, California, as of and for the year ended June 30, 2004, which collectively
comprise the Agency's basic financial statements as listed in the table of contents. These financial
statements are the responsibility of the Palm Desert Redevelopment Agency's management. Our
responsibility is to express opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, each major fund and the aggregate remaining
fund information of the Palm Desert Redevelopment Agency, as of June 30, 2004, 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.
In accordance with Government Auditing Standards, issued by the Comptroller General of the United
States, we have also issued our report dated September 10, 2004 on our consideration of the Palm
Desert Redevelopment Agency's internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts and grants.
The accompanying management's discussion and analysis on pages 5 through 10 is not a required part
of the basic financial statements but is supplementary information required by the Governmental
Accounting Standards Board. We have applied certain limited procedures, which consisted principally of
inquiries of management regarding the methods of measurement and presentation of the required
supplementary information. However, we did not audit the information and express no opinion on it.
75 Years
t � �
1929 ` 7 2004
of Excellence 203 N. Brea Blvd.• Suite 203 • Brea,CA 92 82 1-4056• (714)672-0022 • Fax(714)672-0331 • www.lslcpas.com
Lance
Soil s
Lunghard
LLP
CERTIFIED PUBLIC ACCOUNTANTS
To the Honorable Chair and Members of the Governing Board
Palm Desert Redevelopment Agency
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the Agency's basic financial statements. The combining and individual nonmajor fund financial
statements and 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. Such
information has been subjected to the auditing procedures applied in the audit of_the basic financial
statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
aeol, „hi 54-07442ze eprtee°
September 10, 2004
Lance Brandon W.Burrows
Soil & Donald L.Parker
Lunghard Michael K.Chu
David E.Hale
A ProhaalorW Corporation
LLP Donald G.Slater
Richard K.Kikuchi
Certified Public Accountants Retired
Robert C.Lance
1914.1994
•
Richard C.Soil
Fred J.Lunghard,Jr.
1925-1999
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL
REPORTING 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
We have audited the financial statements of Palm Desert Redevelopment Agency as of and for the year
ended June 30, 2004, and have issued our report thereon dated September 10, 2004. 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.
Compliance
As part of obtaining reasonable assurance about whether the financial statements of the Palm Desert
Redevelopment Agency are free of material misstatements, we performed tests of its compliance with
certain provisions of laws, regulations, contracts and grants, 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 that are required to be reported under 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 Palm Desert Redevelopment Agency's internal
control over financial reporting in order to determine our auditing procedures for the purpose of
expressing our opinion on the financial statements and not to provide assurance on the internal control
over financial reporting. Our consideration of the internal control over financial reporting would not
necessarily disclose all matters in the internal control over financial reporting that might be material
weaknesses. A material weakness is a condition in which the design or operation of one or more of the
internal control components does not reduce to a relatively low level the risk that misstatements in
amounts that would be material in relation to the financial statements being audited may occur and not be
detected within a timely period by employees in the normal course of performing their assigned functions.
We noted no matters involving the internal control over financial reporting and its operation that we
consider to be material weaknesses.
75 Years
wf,�r " •
192 ( 2'2004
of Excellence 203 N. Brea Blvd. • Suite 203 • Brea,CA 92 82 1-4056• (714)672-0022 • Fax(714)672-0331 • www.lsicpas.com
Lance
Soll &
Lunghard
LLP
CERTIFIED PUBLIC ACCOUNTANTS
To the Honorable Chair and Members of the Governing Board
Palm Desert Redevelopment Agency
This report is intended for the information of the audit committee, management, and the State Controller.
However, this report is a matter of public record and its distribution is not limited.
September 10, 2004
CITY OF PALM DESERT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Our discussion and analysis of the Palm Desert Redevelopment Agency's (Agency)financial performance
for the fiscal year ended June 30, 2004 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 in funds. In addition, it describes the activities during the year for capital
assets and long-term debt. We end our discussion and analysis with a description of currently known
facts, decisions, and conditions that are expected to have a significant effect on the financial position or
results of operations. Please read it in conjunction with the Agency's financial statements.
FINANCIAL HIGHLIGHTS
• The Agency's governmental activities net assets deficit decreased $12.84 million, or 18.75
percent.
• During the year, the Agency had revenues that were $13.40 million more than the $52.13 million
in expenses recorded by the Agency in its governmental activities.
• The Agency's governmental activities program revenues and general revenues increased $8.95
million, or 15.82 percent from the prior year, while program expenses decreased $7.97 million, or
13.26 percent.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Assets and
Statement of Activities (on pages 12 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 12. 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.
5
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.
THE AGENCY AS A WHOLE
The Agency's net assets deficit decreased $12.84 million from $(68.46) million to $(55.62) 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 30,2004 and 2003
Government Activities
2004 2003
Current and restricted assets $ 166.65 $ 142.05
Capital assets 98.54 95.23
TOTAL ASSETS 265.19 237.28
Long-term liabilities outstanding 256.98 236.41
Other liabilities 63.85 69.33
TOTAL LIABILITIES 320.83 305.74
Net assets (deficit):
Invested in capital assets, net of
related debt 27.16 21.35
Restricted 36.81 33.36
Unrestricted (119.59) (123.17)
TOTAL NET ASSETS (DEFICIT) $ (55.62) $ (68.46)
6
Compared to the prior year, net assets deficit of the Agency's governmental activities decreased by
$12.84 million. The Agency's Net Assets is made-up of three components: Investment in Capital Assets,
Net of Related Debt, Restricted Net Assets and Unrestricted Net Deficit. Unrestricted deficit, the part of
net deficit that can be used to finance day-to-day operations, decreased from $(123.17) million to
$(119.59) million, or 2.90 percent. The Agency currently has an unrestricted net deficit because of the
debt it has issued. Proceeds from the debt were used for capital improvements on behalf of the City or
contributed to developers and is not offset by investments in capital assets.
The major change in the Agency's governmental activities total assets was from cash and investments,
which increased as a result of an increase in tax increment, and issuing of new debt.
Total liabilities increased by $15.09 million, the majority of the increase was due to the issuing of new
debt.
TABLE 2
CHANGES IN NET ASSETS
(IN MILLIONS)
As of June 30,2004 and 2003
Government Activities
2004 2003
REVENUES:
Program Revenues:
Charges for services $ 4.77 $ 4.52
General Revenues:
Tax increment 55.99 50.25
Other income 2.75 (0.13)
Investment earnings 2.02 1.94
TOTAL REVENUES 65.53 56.58
EXPENSES:
General government 6.09 4.77
Apartment complexes 6.13 3.77
Public works 0.78 16.68
Payments to other agencies 24.05 22.14
Interest on long-term debt 15.08 12.74
TOTAL EXPENSES 52.13 60.10
INCREASE (DECREASE) IN NET
ASSETS 13.40 (3.52)
BEGINNING NET ASSETS (68.46) (64.94)
RESTATEMENT OF NET ASSETS (0.56) -
ENDING NET ASSETS $ (55.62) $ (68.46)
7
Governmental Activities
Total revenues increased from $56.58 million to $65.53 million, a 15.81 percent increase. The major
factor that contributed to the increase was the following:
• Increase in property values provided additional tax increment.
The following schedule represents the net cost of providing services:
Government Activities
• Net (Expense) Revenue
(In Millions)
2004 2003
General Government $ (6.08) $ (4.77)
Apartment Complexes (1.36) 0.75
Public Works (0.79) (16.68)
Payment to Other Agencies (24.05) (22.14)
Interest on Long-Term Debt (15.08) (12.74)
TOTAL $ (47.36) $ (55.58)
THE AGENCY'S FUNDS
On pages 14 and 15, the governmental funds balance sheet is shown. The combined fund balance of
$100.71 million increased from $72.07 million, or 39.74 percent. The Agency has reserved $45.52 million
for encumbrances, continuing appropriations, loans and notes, debt service, etc. More detailed
information about the combined fund balance reserves is presented in Note 11 to the financial
statements.
Major funds balance changes are noted below:
• For the Low and Moderate Income Housing fund, fund balance increased due to the increase in
tax increment received by the Redevelopment Agency.
• For the Redevelopment Agency Financing Authority Debt Service fund, fund balance increased
due to the issuing of new debt.
• The Redevelopment Agency Project Area 1, 2 and 4 Debt Service funds, fund balance increased
as a result of an increase in tax increment.
• The Redevelopment Agency Capital Project Area 1 fund, fund balance increase was due to the
issuing of new debt.
• The Redevelopment Agency Capital Project Area 4 fund, fund balance increased due to the
reimbursement from the City for the sale of land.
•
In addition to the major funds, fund balances of other governmental funds had significant changes. The
Housing Authority Special Revenue fund had an increase of $0.12 million from the prior year. This was
due to the addition of another apartment complex. Project Area 3 debt service fund balance decreased
due to the payment of interest and principal on current debt. Project Area 3 capital project fund balance
increased due to the issuing of new debt for projects. Project Area 2 moved from being a major fund in
the prior year to being a non-major fund in current year. More detailed information on the fund financial
statements balances is presented in the notes to the financial statements.
8
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 under estimated. 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 (g)to the financial statements.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of 2004, the Agency had $98.54 million invested in a broad range of capital assets, including
land, buildings and improvements, apartment complexes, vehicles and equipment (See Table 3). This
amount represents a net increase (including additions and deductions) of $3.31 million, or 3.48 percent
over last year.
TABLE 3
CAPITAL ASSETS AT YEAR-END
(NET OF DEPRECIATION, IN MILLIONS)
For the Years Ended June 30, 2004 and 2003
Governmental Activities
2004 2003
Land $ 46.81 $ 47.24
Construction in progress 7.81 5.12
Buildings and improvements 43.87 42.80
Equipment 0.05 0.07
TOTAL $ 98.54 $ 95.23
This year's major additions included (in millions):
Property acquisition of Laguna Palms, a low to moderate income
apartment complex, and $ 2.85
Construction in progress of Entrada Del Paseo 1.50
$ 4.35
The Agency's fiscal year 2005 capital budget calls for it to spend $21.06 million plus continuing projects of
$44.52 million. The majority being the reimbursement to other governments for capital projects, land
development, construction of a regional park, construction of low-income family housing, construction of
storm drain, and the undergrounding of utilities. More detailed information about the Agency's capital
assets is presented in Note 1(d)and Note 6 to the financial statements.
9
Debt
At year-end, the Agency's governmental activities had $256.98 million in bonds and notes versus $236.41
million last year, an increase of$20.57 million, or 8.70 percent as shown in Table 4.
TABLE 4
OUTSTANDING DEBT AT YEAR END
(IN MILLIONS)
For the Years Ended June 30, 2004 and 2003
Governmental Activities
2004 2003
Notes payable $ 0.98 $ 1.95
Revenue bonds and notes (backed by
specific tax and fee revenues) 256.00 234.46
TOTALS $ 256.98 $ 236.41
Three new bonds were issued during the fiscal year ended June 30, 2004. The Agency was able to meet
its current year debt obligation in a timely manner. Debts issued in the prior year have been used to
finance various capital projects.An example of this would be the purchase of land, and construction of the
City's golf course.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS
In preparing the budget for 2005, 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.
• Issue of new bonds for capital projects.
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 2005 capital improvement project budget is a reflection of the Agency's
commitment to the residents of Palm Desert. A copy of the City's 2004-2005 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.
10
THIS PAGE INTENTIONALLY LEFT BLANK
11
PALM DESERT REDEVELOPMENT AGENCY Exhibit A
STATEMENT OF NET ASSETS
JUNE 30,2004
Governmental
Activities
Assets:
Cash and investments $ 96,411,803
Receivables 11,727,806
Property held for resale 865,335
Prepaid items and deposits 19,759
Deferred charges 5,251,888
Restricted assets:
Cash with fiscal agent 52,376,892
Capital assets (net of accumulated depreciation) 98,544,775
Total Assets $ 265,198,258
Liabilities:
Accounts payable $ 507,932
Accrued liabilities 3,267,138
Deposits payable 309,804
Deferred revenue 85,623
Advances from City of Palm Desert 32,785,480
Amounts due under pass-through agreements 26,889,509
Noncurrent liabilities: •
Due within one year 5,637,707
Due in more than one year 251,343,949
Total Liabilities $ 320,827,142
Net Assets:
Invested in capital assets, net of related debt $ 27,155,223
Restricted for:
Special projects 36,805,082
Unrestricted (deficit) (119,589,189)
Total Net Assets $ (55,628,884)
See Notes to Financial Statements
12
PALM DESERT REDEVELOPMENT AGENCY Exhibit B
STATEMENT OF ACTIVITIES
FOR THE YEAR ENDED JUNE 30, 2004
Net (Expense)
Revenue and
Changes in
Program Revenues Net Assets
Operating Capital
Charges for Grants and Grants and Governmental
Functions/Programs Expenses Services Contributions Contributions Activities
Primary Government:
Governmental Activities:
General administration $ 6,083,048 $ - $ - $ - $ (6,083,048)
Apartment complexes 6,128,389 4,767,483 - - (1,360,906)
Public works 784,389 - - - (784,389)
Payments to other agencies 24,051,292 - - - (24,051,292)
Interest on long-term debt 15,083,216 - - - (15,083,216)
Total Primary
Government $ 52,130,334 $ 4,767,483 $ - $ - (47,362,851)
General Revenues:
Taxes:
Tax increment 55,994,780
Rental income 5,509
Gain (loss)on sale of land 924,522
Other revenues 1,812,138
Investment earnings 2,023,724
Total General Revenues 60,760,673
Change in Net Assets 13,397,822
Net Assets - Beginning of Year, as originally reported (68,464,427)
Restatement (562,279)
Net Assets - Beginning of Year, as restated (69,026,706)
Net Assets -End of Year $ (55,628,884)
See Notes to Financial Statements
13
PALM DESERT REDEVELOPMENT AGENCY
BALANCE SHEET-GOVERNMENTAL FUNDS
JUNE 30,2004
Special
Revenue
Funds Debt Service Funds
Low and
Moderate
Income Project Project Project
Housing Area 1 Area 2 Area 4
Assets:
Cash and investments $ 15,449,396 $ 44,997,501 $ 9,771,806 $ 8,215,160
Cash with fiscal agent-restricted 4,622,627 - -
Receivables 7,966,847 319,359 210,304 92,778
Due from other funds 94,524 - - -
Property held for resale 865,335
Prepaid items and deposits 2,646 - - -
- -
Due from other apartment - -
Total Assets $ 29,001,375 $ 45,316,860 $ 9,982,110 $ 8,307,938
Liabilities and Fund Balances:
Liabilities:
Accounts payable $ 66,338 $ - $ - $ -
Accrued liabilities 13,951 - - -
Deposits payable - - - _
Deferred revenue 51,885 - - -
Due to other apartment - - - -
Due to other funds - - -
Advances from the City of Palm Desert - 10,011,857 20,991,060
Amounts due-pass-through agreement - 17,981,828 1,528,715 6,179,497
Total Liabilities 132,174 27,993,685 22,519,775 6,179,497
Fund Balances (Deficit):
Reserved 15,669,340 - -
Unreserved 13,199,861 17,323,175 (12,537,665) 2,128,441
Total Fund Balances (Deficit) 28,869,201 17,323,175 (12,537,665) 2,128,441
Total Liabilities and Fund Balances $ 29,001,375 $ 45,316,860 $ 9,982,110 $ 8,307,938
See Notes to Financial Statements
14
Exhibit C
Debt Service Capital
Funds Projects Funds
Other Total
Financing Project Project Governmental Governmental
Authority Area 1 Area 4 Funds Funds
$ - $ 2,568,677 $ 24,909 $ 15,384,354 $ 96,411,803
6,647,085 13,922,099 18,615,531 8,569,550 52,376,892
19,020 2,143,407 882,162 93,929 11,727,806
- - - 94,524
- - - - 865,335
17,113 - - 19,759
- - - 552,572 552,572
$ 6,666,105 $ 18,651,296 $ 19,522,602 $ 24,600,405 $ 162,048,691
$ - $ 72,299 $ 39,305 $ 329,990 $ 507,932
6,591 11,722 - 79,550 111,814
- - - 309,804 309,804
- - - 33,738 85,623
- - - 552,572 552,572
- - - 94,524 94,524
- - - 1,782,563 32,785,480
- - - 1,199,469 26,889,509
6,591 84,021 39,305 4,382,210 61,337,258
600,424 12,228,640 9,851,459 13,384,524 51,734,387
6,059,090 6,338,635 9,631,838 6,833,671 48,977,046
6,659,514 18,567,275 19,483,297 20,218,195 100,711,433
$ 6,666,105 $ 18,651,296 $ 19,522,602 $ 24,600,405 $ 162,048,691
15
PALM DESERT REDEVELOPMENT AGENCY Exhibit D
RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
JUNE 30,2004
Total fund balances for governmental funds $100,711,433
Amounts reported for governmental activities in the statement of net assets are different because:
When capital assets(land, buildings, equipment)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 $ 95,226,072
Current year additions/deletions 5,681,870
Current year restatements (562,279)
Current year depreciation (1,800,888)
Ending Balance, net depreciation $ 98,544,775 98,544,775
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. (256,981,656)
Interest on long-term debt is not accrued in governmental funds,but rather is recognized as an
expenditure when due. (3,155,324)
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. 5,251,888
Net assets of governmental activities $ (55,628,884)
See Notes to Financial Statements
16
THIS PAGE INTENTIONALLY LEFT BLANK
17
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUND TYPES
FOR THE YEAR ENDED JUNE 30,2004
Special
Revenue
Fund Debt Service Funds
Low and
Moderate
Income Project Project Project
Housing Area 1 Area 2 Area 4
Revenues:
Taxes $ - $ 33,192,856 $ 12,387,750 $ 8,250,907
Investment income 178,569 177,972 61,096 22,032
Rental income 5,509 _ _
Other revenues 286,653 479,842 - -
Total Revenues 470,731 33,850,670 12,448,846 8,272,939
Expenditures:
Current:
General government 1,973,407 3,950 7,794 1,975
Payments to other agencies - 13,485,712 5,514,381 4,079,246
Public works
Capital outlay 3,007,528 _
- -
Debt Service:
Interest and fiscal charges - 554,115 322,125 -
Principal retirement - - 122,707 -
Total Expenditures 4,980,935 14,043,777 5,967,007 4,081,221
Excess of Revenues Over(Under)Expenditures (4,510,204) 19,806,893 6,481,839 4,191,718
Other Financing Sources(Uses):
Transfers in from the City of Palm Desert 233,770 - -
-
Transfers out to the City of Palm Desert - - -
-
Sale of property 924,522 - - -
Long-term debt issued -
Payment to refunding bond escrow agent-current issue - - - -
Transfers in 11,198,956 -
Transfers out (4,523,158) (15,596,003) (4,772,328) (3,652,550)
Total Other Financing Sources (Uses) 7,834,090 (15,596,003) (4,772,328) (3,652,550)
Net Change in Fund Balances 3,323,886 4,210,890 1,709,511 539,168
Fund Balances(Deficit)- Beginning of Year 25,545,315 13,112,285 (14,247,176) 1,589,273
Fund Balances(Deficit) -End of Year $ 28,869,201 $ 17,323,175 $(12,537,665) $ 2,128,441
See Notes to Financial Statements
18
Exhibit E
Debt Service
Funds Capital Projects Funds
Other Total
Financing Project Project Governmental Governmental
Authority Area 1 Area 4 Funds Funds
$ - $ - $ - $ 2,163,267 $ 55,994,780
985,031 301,892 176,176 188,007 2,090,775
- - 4,488,589 4,494,098
177,204 - 214,729 1,158,428
985,031 479,096 176,176 7,054,592 63,738,081
239 3,017,949 180,536 5,092,009 10,277,859
- - - 971,953 24,051,292
- 1,677,335 268,680 883,702 5,837,245
14,313,476 55,250 - 27,355 15,272,321
4,955,000 850,000 - - 5,927,707
19,268,715 5,600,534 449,216 6,975,019 61,366,424
(18,283,684) (5,121,438) (273,040) 79,573 2,371,657
- - 804,000 - 1,037,770
(511,704) (250,000) - (761,704)
- - - 924,522
48,690,000 - - - 48,690,000
(23,620,978) - - - (23,620,978)
17,466,578 20,134,873 388,901 5,001,753 54,191,061
(24,153,420) - (74,691) (1,418,911) (54,191,061)
18,382,180 19,623,169 868,210 3,582,842 26,269,610
98,496 14,501,731 595,170 3,662,415 28,641,267
6,561,018 4,065,544 18,888,127 16,555,780 72,070,166
$ 6,659,514 $18,567,275 $ 19,483,297 $ 20,218,195 $100,711,433
19
PALM DESERT REDEVELOPMENT AGENCY Exhibit F
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
JUNE 30,2004
Net change in fund balances -total governmental funds $ 28,641,267
Amounts reported for governmental activities in the statement of activities are different because:
When capital assets that are to be used in governmental activities are purchased or constructed,
the resources expended for those assets are reported as expenditures in governmental funds.
However, in the statement of activities, the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount by which capital
additions/deletions($5,681,870)exceeded depreciation ($1,800,888)in the current period. 3,880,982
Repayment of long-term debt is reported as expenditures in governmental funds and, thus, has
the effect of reducing fund balance because current financial resources have been used. For the
Agency as a whole, however, the principal payments reduce the liabilities in the statement of
net assets and do not result in an expense in the statement of activities. 28,122,707
Proceeds of long-term debt are reported as revenue in governmental funds, however, the
receipts of long-term debt increase liabilities in the statement of net assets and do not result
in revenues in the statement of activities. (48,690,000)
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. (30,591)
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. 1,645,674
Collection of deferred revenues are reported as revenues in governmental funds and, thus, has
the effect of increasing fund balances. For the Agency as a whole, however, the collection of
these receipts reduces the net assets in the statement of net assets and does not result in
revenues in the statement of activities:
Reimbursement revenue related to repairs completed by the Agency on behalf of the
public library. (172,217)
Change in net assets of governmental activities $ 13,397,822
See Notes to Financial Statements
20
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30,2004
I. SIGNIFICANT ACCOUNTING POLICIES
Note 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 intergovern-
mental revenues, are reported separately from business-type activities, which rely to
a significant extent on fees and charges for support. The Palm Desert Redevelop-
ment 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.
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.
21
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 1: Summary of Significant Accounting Policies(Continued)
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.
Project Area 1 Capital Projects Fund is used to account for the fiscal activities of
Project Area 1 of the Palm Desert Redevelopment Agency.
Project Area 4 Capital Projects Fund is used to account for the fiscal activities of
Project Area 4 of the Palm Desert Redevelopment Agency.
b. Measurement Focus and Basis of Accounting
Measurement Focus
Measurement focus is a term used to describe "which" transactions are recorded
within the various financial statements. Basis of accounting refers to "when"
transactions are recorded regardless of the measurement focus applied.
On the government-wide statement of net assets and the statement of activities,
activities are presented using the economic resources measurement focus. Under
the economic resources measurement focus, all (both current and long-term)
economic resources and obligations of the government are reported.
In the fund financial statements, all governmental funds are accounted for on a
spending or "financial flow" measurement focus. This means that only current assets
and current liabilities are generally included on their balance sheets. Their reported
fund balances (net current assets)are considered a measure of"available spendable
resources". Governmental fund operating statements present increases (revenues
and other financing sources) and decreases (expenditures and other financing uses)
in net current assets.
22
Palm Desert Redevelopment Agency
Notes to Financial Statements(Continued)
Note 1: Summary of Significant Accounting Policies (Continued)
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.
Basis of Accounting
In the government-wide statement of net assets and statement of activities, the
governmental activities are presented using the accrual basis of accounting. Under
the accrual basis of accounting, revenues are recognized when earned and
expenses are recorded when the liability is incurred or economic asset used.
Revenues, expenses, gains, losses, assets and liabilities resulting from exchange
and exchange-like transactions are recognized when the exchange takes place.
In the fund financial statements, governmental funds are presented on the modified
accrual basis of accounting. Under this modified accrual basis of accounting,
revenues are recognized when "measurable and available". Measurable means
knowing or being able to reasonably estimate the amount. Available means
collectible within the current period or soon enough thereafter to pay current
liabilities. Expenditures generally are recorded when a liability is incurred, as under
accrual accounting. However, debt service expenditures are recorded only when
payment is due.
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. Differences between Government-Wide Financial Statements and Fund Financial
Statements:
Explanation of differences between Governmental Funds Balance Sheets and the
Statement of Net Assets: •
Long-Term Debt Reclassifi-
Total Capital Transactions/ cations Statement
Governmental Related Interest and of Net
Funds Items Payable Eliminations Assets
Assets:
Cash and investments $ 96,411,803 $ - $ - $ - $ 96,411,803
Cash with fiscal agent 52,376,892 • - - - 52,376,892
Receivables 11,727,806 - - - 11,727,806
Due from other funds 94,524 - - (94,524) -
Property held for resale 865,335 - - - 865,335
Due from other apartment 552,572 - - (552,572) -
Prepaid items and deposits 19,759 - - - 19,759
Deferred charges - - 5,251,888 - 5,251,888
Capital assets - 98,544,775 - - 98,544,775
Total Assets 162,048,691 98,544,775 5,251,888 (647,096) 265,198,258
23
Palm Desert Redevelopment Agency
Notes to Financial Statements(Continued)
Note 1: Summary of Significant Accounting Policies (Continued)
Long-Term Debt Reclassifi-
Total Capital Transactions/ cations Statement
Governmental Related Interest and of Net
Funds Items Payable Eliminations Assets
Liabilities:
Accounts payable 507,932 - - - 50'7,932
Accrued liabilities 111,814 - 3,155,324 - 3,267,138
Deposits payable 309,804 - - - 309,804
Deferred revenue 85,623 - - - 85,623
Due to other apartment 552,572 - - (552,572) -
Due to other funds 94,524 - - (94,524) -
Advances from the City 32,785,480 - - - 32,785,480
Amounts due under
pass-through agreements 26,889,509 - - - 26,889,509
Long-term liabilities-current - - 5,637,707 - 5,637,707
Long-term liabilities-
noncurrent - - 251,343,949 - 251,343,949
Total Liabilities 61,337,258 - 260,136,980 (647,096) 320,827,142
Net Assets(Deficit) $ 100,711,433 $ 98,544,775 $ (254,885,092) $ - $ (55,628,884)
Explanation of differences between Governmental Funds Operating Statements and the
Statement of Activities:
Long-Term
Debt Reclass-
• Total Capital Transactions/ Other ifications Statement
Governmental Related Interest Revenues and of
Funds Items Payable Expenses Eliminations Activities
Revenues:
Taxes $ 55,994,780 $ - $ - $ - $ - $ 55,994,780
Use of money and property 2,090,775 - - - (67,051) 2,023,724
Rental income 4,494,098
Apartment complexes - - (4,767,483) 5,509
- - 4,767,483 4,767,483
Other income 1,158,428 - - - 653,710 1,812,138
Total Revenues 63,738,081 - - - 865,553 64,603,634
Expenditures:
Current:
General government 10,277,859 448,868 - - (4,643,679) 6,083,048
Payment to other agencies 24,051,292 - - - 24,051,292
Apartment complexes 1,484,710 - 4,643,679 6,128,389
Public works - 22,685 - - 761,704 784,389
Capital outlay 5,837,245 (5,837,245) - -
Debt service:
Interest and fiscal charges 15,272,321 - (1,615,083) - 1,425,978 15,083,216
Principal retirement 5,927,707 - (5,927,707) - - -
Total Expenditures 61,366,424 (3,880,982) (7,542,790) - 2,187,682 52,130,334
• 24
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 1: Summary of Significant Accounting Policies (Continued)
Long-Term
Debt Reclass-
Total Capital Transactions/ Other ifications Statement
Governmental Related Interest Revenues and of
Funds Items Payable Expenses Eliminations Activities
Other Financing Sources(Uses):
Sale of property 924,522 - - - - 924,522
Transfers in from City 1,037,770 - - - (1,037,770)
Transfers out to City (761,704) - - 761,704
Transfers in 54,191,061 - - - (54,191,061)
Transfers out (54,191,061) - - - 54,191,061 -
Payment to refunding bond agent (23,620,978) - 22,195,000 - 1,425,978
Bond proceeds 48,690,000 - (48,690,000) - - -
Total Other Financing 26,269,610 - (26,495,000) - 1,149,912 924,522
Net Change in Fund Balance $ 28,641,267 $ 3,880,982 $ (18,952,210) $ - $ (172,217) $ 13,397,822
d. 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.
Property, plant and equipment are depreciated using the straight-line method over the
following estimated useful lives:
Assets Years
Buildings 40
Improvements other than buildings 20
Machinery and equipment 5 -8
e. 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.
•
25
Palm Desert Redevelopment Agency
Notes to Financial Statements(Continued)
Note 1: Summary of Significant Accounting Policies (Continued)
f. 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.
g. Budgetary Accounting
The Agency uses the following procedures in establishing its budgetary data reported in
the financial statements:
1. Before the beginning of the fiscal year, the Executive Director submits to the Board of
Directors a proposed budget for the year commencing the following July 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.
h. Investments
Investments are stated at fair value (quoted market price or the best available estimate
thereof).
i. Property Held for Resale
The Agency purchased land within the Agency's project area. The land held for resale is
recorded in the Redevelopment Agency Special Revenue Fund as property held for
resale, at the lower of acquisition cost or net realizable value. At June 30, 2004, the cost
of the property held for resale for various housing properties in Palm Desert totaled
$865,335.
26
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 1: Summary of Significant Accounting Policies (Continued)
j. 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. As of
June 30, 2004; the Agency's balance was $18,734.
The Agency has deposited $1,025 in escrow to purchase various properties.
k. Property Tax Calendar
Property taxes are assessed and collected each fiscal year according to the following
property tax calendar:
Lien Date January 1
Levy Date July 1 to June 30
Due Date November 1 - 1st Installment
March 1 -2nd Installment
Delinquent Date December 10- 1st Installment
April 10-2nd Installment
Under California law, property taxes are assessed and collected by the counties up to 1%
of assessed value, plus other increases approved by the voters. The property taxes go
into a pool, and are then allocated to the agencies based on complex formulas prescribed
by the state statutes.
I. Relationship to the City of Palm Desert
The Palm Desert Redevelopment Agency is an integral part of the reporting entity of the
City of Palm Desert, California. The funds and account groups of the Agency have been
included within the scope of the basic financial statements of the City because the City
Council of the City of Palm Desert exercises oversight responsibility over the operations
of the Agency. Only the funds and account groups of the Agency are included herein and
these financial statements, therefore, do not purport to represent the financial position or
results of operations of the City of Palm Desert.
Note 2: Organization and Tax Increment Financing
The Agency is a separate governmental entity as prescribed in the California Community
Redevelopment law and as set forth in the Health and Safety Code of the State of California.
The Agency consists of Project Area 1, Project Area 2, Project Area 3 and Project Area 4.
In addition, the Agency and the City of Palm Desert (the City) have established the Palm
Desert Financing Authority as a joint power of authority between the Agency and the City for
purposes of financing and funding capital improvements. Transactions related to the joint
power for the Agency are recorded in a debt service fund.
The Palm Desert Housing Authority was established in January 1998 as a component unit of
the Agency and is partly responsible for the administration of providing affordable housing in
the City of Palm Desert. The apartment complexes owned by the Housing Authority are
operated by a management company. The transactions related to the Housing Authority are
reported in a Special Revenue Fund.
27
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 2: Organization and Tax Increment Financing (Continued)
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.
Note 3: Cash and Investments
Cash and investments reported in the accompanying financial statements consisted of the
following:
Cash and investments pooled with the City $ 96,411,803
Cash and investments with fiscal agent 52,376,892
$ 148,788,695
The Agency's funds are pooled with the City of Palm Desert's cash and investments in order
to generate optimum interest income. The City has implemented GASB Statement No. 40,
Deposit and Investment Risk Disclosures. GASB No. 40 establishes and modifies
disclosure requirements related to deposit and investment risks. The information required by
GASB Statement No. 40 related to authorized investments, credit risk, etc., is available in the
annual report of the City.
Note 4: Loans, Notes Receivable and Due from Other Governmental Agencies
Receivables consisted of the following at June 30, 2004:
Low and
Other
Moderate Debt Service Capital Projects Govern- Total
Income Project Project Project Financing Project Project mental Governmental
Housing Area 1 Area 2 Area 4 Authority Area 1 Area 4 Funds Receivables
Accounts $ 26,511 $ 319,359 $ 210,304 $ 92,778 $ $ - $
Interest 54,512 $ 25,075 $ 717,806
- - 19,020 211,524 40,719 25,075 350,850
Loans 226,387
Notes 7,659,437 432,763
_ - - 1,931,883 841,443 - 10,432,763
$ 7,966,847 $ 319,359 $ 210,304 $ 92,778 $ 19,020 $ 2,143,407 $882,162 $ 93,929 $ 11,727,806
Loans Receivable
a. The Agency has loaned $147,181 in below market loans, secured by deeds of trust, to
eligible low-income households. Monthly payments of interest and principal are due over
a period of 30 years unless the homes are sold, in which case the entire loan balance is
due and payable.
b. The Agency has $79,205 in home improvement loans. Payments of interest and principal
are due monthly on these loans.
•
28
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 4: Loans, Notes Receivable and Due from Other Governmental Agencies (Continued)
c. The Agency has issued loans for several other projects, all of which are secured by a
deed of trust. A valuation allowance equal to the loan balance has been recognized
where there is a significant possibility that these loans either become uncollectible or
forgiven by the Agency at a future date if all the terms of the loans have been met.
Detailed information for these loans is as follows:
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
Housing Program or 2024 due upon maturity, unpaid
balance of loan or interest
will bear an interest rate of
12%.
Home Improvement 222,176 N/A N/A Deed of Trust Loan is payable upon
Loans change or transfer of title,
refinancing or upon the
death of the borrower.
Portola Palms 362,837 5.00% 30 years Deed of Trust Loan balance and interest
Mobilehome Park from date due upon maturity. If
of loan debtor of loan is not in
default with the note, deed
of trust, loan agreement or
restrictive covenant, then
the Agency will forgive 2%
per annum of the interest.
Desert Rose 2,106,750 3.00% 30 years Deed of Trust Loan will be forgiven at
from date maturity unless the debtor
of loan is in violation of the unit
regulatory agreement or
the deed of trust.
Acquisition, 52,000 3.00% 30 years Deed of Trust Loan balance and interest
Rehabilitation, from date Assignment will be forgiven at maturity
Resale of loan of Rent if debtor does not breach
the terms and conditions of
either the unit regulatory
aareement or note.
Notes Receivable
A loan receivable for the construction of a multi-family affordable housing development
dated June 14, 2001 with a balance of $7,659,437 is due from the Palm Desert
Development Company. The loan is secured by a Deed of Trust, with assignment to
property, rent and fixtures on the housing development located in Palm Desert. Interest is
earned and due annually at a rate of 1% per annum from the date on which the final
certificate of occupancy is issued. Principal on the loan is based on the applicable
agency's percentage of positive net cash flow derived from the operations of the
Development.
29
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 4: Loans, Notes Receivable and Due from Other Governmental Agencies (Continued)
Due From Other Governmental Agencies
The Agency entered into a cooperative agreement with the County of Riverside (County)
and Desert Community College District (District) to construct and operate a regional
library. On behalf of the County and District, the Agency advanced payments on this
project, which are to be repaid from certain County Library and District pass-through
funds (see Note 7). The advances earn interest at 6.44% until paid. At June 30, 2004,
amounts due from the County and District were $8,116 and $1,923,767, respectively.
On April 21, 2003, the Agency entered into a loan agreement with The Regents of the
University of California, on behalf of its Riverside Campus, to loan various amounts over
a period of time, not to exceed an aggregate amount of$2,000,000. Proceeds of the loan
are to be used for capital improvements at the University's Riverside Campus. The
outstanding principal balance and interest on the note is due in five annual payments
beginning on a future date yet to be determined. As of June 30, 2004, the amount
outstanding on the loan was $841,443.
Note 5: Interfund Receivable, Payable and Transfers
The composition of interfund balances as of June 30,2004 is as follows:
Due To/From Other Funds
Due to Other
Funds
Special
Other
Governmental
Funds Funds
Due From Other Funds:
Special Revenue Fund:
Low and Moderate Income Housing $ 94,524
The due to Low and Moderate Income Housing Fund of $94,524 from nonmajor funds
was due to temporary cash shortages in those funds.
30
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 5: Interfund Receivable, Payable and Transfers (Continued)
Interfund Transfers
Transfers To
Special Debt
Revenue Service Capital Projects •
Low and
Moderate Other
Income Financing Project Project Governmental
Housing Authority Area 1 Area 4 Funds Total
Transfers In:
Special Revenue-
Low and Moderate
Income Housing $ - $ 4,301,802 $ 221,356 $ - $ - $ 4,523,158
Debt Service Project
Area 1 6,638,571 8,957,432 - - - 15,596,003
Debt Service Project
Area 2 2,477,550 2,294,778 - - - 4,772,328
Debt Service Project
Area 4 1,650,181 1,613,468 - 388,901 - 3,652,550
Debt Service Financing
Authority - - 19,662,333 - 4,491,087 24,153,420
Capital Projects Project
Area 4 - 74,691
-
Other Governmental 74,691
Funds 432,654 299,098 176,493 - 510,666 1,418,911
Total $ 11,198,956 $ 17,466,578 $ 20,134,873 $ 388,901 $ 5,001,753 $ 54,191,061
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,
4. transfer revenues to provide for capital projects,
5. reimburse the Low and Moderate Income Housing Special Revenue Fund from RDA
Capital Project Area 1 for expenditures related to general redevelopment projects,
and
6. transfer bond proceeds to the appropriate funds.
•
31
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 6: Capital Assets
A summary of changes in capital assets for the year ended June 30, 2004 is as follows:
Balance at
Balance at July 1,2003, Balance at
Primary Government: July 1,2003 Adjustments As Adjusted Additions Deletions June 30,2004
Capital assets,not being depreciated:
Land $ 47,239,805 $ (562.279) $ 46,677,526 $ 135,690 $ - S 46,813,216
Construction-in-progress 5,117,261 - 5,117,261 2,847,574 155.375 7.809,460
Total Capital Assets Not
Being Depreciated 52,357,066 (562,279) 51,794,787 2,983,264 155,375 54,622,676
Capital assets,being depreciated:
Buildings 53,995,522 - 53,995,522 2,849,725 56,845,247
Improvements other than
buildings 7,232,558 - 7,232,558 - 7,232,558
Machinery and equipment 140,256 - 140,256 4,256 11,882 132,630
Total Capital Assets
Being Depreciated 61,368,336 - 61,368,336 2,853,981 11.882 64,210.435
Less accumulated depreciation for.
Buildings (17,152,990) - (17,152,990) (1,421,131) (18,574,121)
Improvements other than
buildings (1,272,499) - (1,272,499) (361,628)
Machinery and equipment (73,841) (73,841) (1.634,127)
(18,129) 11,882 (80,088)
Total Accumulated
Depreciation (18,499,330) - (18,499,330) (1,800,888) 11,882 (20,288,336)
Net Capital Assets
Being Depreciated 42,869,006 - 42,869,006 1,053,093 - 43,922,099
Net Capital Assets
Governmental Activities $ 95,226,072 $ (562,279) $ 94,663,793 $ 4,036,357 $ 155,375 $ 98,544,775
The adjustments are results of deletions to equipment due to inventory findings that were
completed after closing of the prior year.
Note 7: Amounts Due Under Pass-Through Agreements
Property taxes related to the incremental increase in assessed values after the adoption of
the Redevelopment Plan are, except where otherwise provided by specific agreement,
allocated to the Agency. The Agency has entered into various pass-through agreements with
other agencies to allocate its tax increment revenue.
32
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 7: Amounts Due Under Pass-Through Agreements (Continued)
At June 30, 2004, the Agency has an obligation of$26,889,509 to other agencies and entities
related to specific pass-through agreements as follows:
Balance at Balance at
Entity July 1,2003 Additions Payments June 30,2004
Riverside County-
Capital Improvement $ 11,003,160 * $ 8,659,352 $ 4,564,680 $ 15,097,832
Riverside County-Schools 351,108 406,181 351,107 406,182
Riverside County-Library 846,443 * 921,174 793,253 974,364
Riverside County-Fire 921,252 1,809,932 921,252 1,809,932
Coachella Valley Mosquito
Abatement District 322,455 340,399 322,455 340,399
Coachella Valley Water
District 2,264,299 991,100 - 3,255,399
Desert Community College
District 237,653 * 575,130 554,448 258,335
Desert Sands Unified
School District 2,772,785 • 3,146,129 2,783,044 3,135,870
Coachella Valley Recreation
and Park District 228,213 216,496 228,213 216,496
Coachella Valley
Resources District 9,929 2,540 - 12,469
Palm Springs Unified
School District 44,369 89,104 44,791 88,B82
County Juvenile Health
District 670,052 1,316,366 1,293,111 693,307
Other Deposits 632,239 24,753 56,750 600,242
$ 20,303,957 $ 18,498,656 $ 11,913,104 $ 26,889,509
*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.
Note 8: Long-Term Liabilities
The changes in long-term liabilities for the year ended June 30, 2004 were as follows:
Due
Balance at Payments/ Balance at Within
July 1,2003 Additions Defeasance June 30,2004 One Year
Tax Allocation
Bonds $ 234,460,000 $ 48,690,000 $ 27,150,000 $ 256,000,000 $ 5,515,000
Notes Payable 1,954,363 - 972,707 981,656 122,707
$ 236,414,363 $ 48,690,000 $ 28,122,707 $ 256,981,656 $ 5,637,707
33
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 8: Long-Term Liabilities (Continued)
A description of long-term liabilities outstanding (excluding defeased debt)of the Agency as
of June 30, 2004 follows:
a. Tax Allocation Bonds
Tax Allocation bonds are special obligations of the Agency and the Financing Authority,
(a component unit of the Agency) and are secured by an irrevocable pledge of tax
revenues and other funds as provided under the Bond Resolution. The bonds, and any
interest thereon, are not a debt of the City, the State of California or any of its political
subdivisions and neither the City, the State of California nor any of its political
subdivisions is liable on the bonds, nor in any event shall the bonds,and interest thereon,
be payable out of any funds or properties other than those provided under the Bond
Resolution.
1995 Series Tax Allocation Revenue Bonds (Project Area No. 1)
In June 1995, the Palm Desert Financing Authority issued $24,025,000 of Tax
Allocation Bonds (Project Area No. 1) Series 1995. The Palm Desert Financing
Authority loaned the bond proceeds to the Palm Desert Redevelopment Agency to
finance certain redevelopment activities of the Agency in Project Area No. 1. Interest
rates on the bonds vary from 4.40% to 5.95% per annum payable semi-annually on
April 1 and October 1 with principal maturing annually. In June 2004, $22,195,000 of
these bonds were advance refunded. See Note 10 for additional information.
1995 Series Tax Allocation Revenue Bonds (Project Area No. 2)
In June 1995, the Palm Desert Financing Authority issued $4,090,000 of Tax
Allocation Bonds (Project Area No. 2) Series 1995. The Palm Desert Financing
Authority loaned the bond proceeds to the Palm Desert Redevelopment Agency to
•
finance certain redevelopment activities of the Agency in Project Area No. 2. Interest
rates on the bonds vary from 4.40% to 5.95% per annum payable semi-annually on
February 1 and August 1 with principal maturing annually on August 1.
1995 Series A- Tax Allocation Revenue Refunding Bonds
In August 1995, the Palm Desert Financing Authority issued $6,305,000 in Tax
Allocation Revenue Refunding Bonds 1995 Series A. The proceeds from the bonds
were loaned to the Palm Desert Redevelopment Agency to provide funds to refund in
advance $6,430,000 of the 1988 Tax Allocation Bonds. Interest rates on the bonds
vary from 3.80% to 5.55% with interest payable semi-annually on March 1 and
September 1 with principal maturing annually on September 1.
1997 Series Tax Allocation Refunding Revenue Bonds
On July 24, 1997, the Palm Desert Financing Authority issued $71,955,000 in Tax
Allocation Refunding Revenue Bonds (Project Area No. 1 as Amended) 1997 Series.
The proceeds from the bonds were loaned to the Palm Desert Redevelopment
Agency to provide funds to refund in advance a portion of the 1992 Series A Tax
Allocation Revenue Bonds. Interest rates on the bonds vary from 4.100% to 5.625%
with interest payable semi-annually on April 1 and October 1 with principal maturing
annually on April 1.
•
34
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 8: Long-Term Liabilities (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.
1998 Series Tax Allocation Revenue Bonds (Proiect 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 finance certain
redevelopment activities 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.
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 finance certain
redevelopment activities 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.
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 effected the current refunding of a like portion of the prior bonds. The
remainder was used to finance certain redevelopment activities of the Agency in
Project Area No. 4. The bonds consist of serial bonds of $10,905,000 at 5.00% due
April 1, 2025 and $11,165,000 in term bonds at 5.10% due April 1, 2030. Interest is
payable semi-annually on April 1 and October 1. Mandatory sinking fund redemptions
begin April 1, 2024.
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 finance certain redevelopment
activities 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.
Principal payments will be made annually beginning August 1, 2003.
35
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 8: Long-Term Liabilities(Continued)
Series 2002 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 finance certain low and moderate housing activities 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.
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 finance certain redevelopment activities 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
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 will use
the proceeds of the loan to finance certain redevelopment activities of the Agency
and to finance costs of issuance of the bonds. The bonds bear interest at 5.0%. They
consist of$7,050,000 serial bonds with principal payments due in 2026 and 2027 and
$11,950,000 term bonds due in 2030. Interest will be payable on April 1 and October
1 of each year, beginning April 1, 2004. Principal payments will be on April 1 of the
years stated above.
Series 2003 Tax Allocation Revenue Bonds (Project Area No. 3)
In July 2003, the Financing Authority issued Tax Allocation Revenue Bonds (Project
Area No. 3) Series 2003 in the amount of $4,745,000. 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 finance redevelopment activities 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.
36
Palm Desert Redevelopment Agency
Notes to Financial Statements(Continued)
Note 8: Long-Term Liabilities(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 finance
certain redevelopment activities 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.
b. Notes Payable
In May 2000, the Palm Desert Redevelopment Agency borrowed $850,000 to provide
funds for land acquisition. The note bore interest at 6.5% per annum with quarterly
interest payments commencing August 3, 2000. The note matured on May 3, 2004.
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, 2004 was $981,656. Annual payments on the note are $122,707.
37
Palm Desert Redevelopment Agency
Notes to Financial Statements(Continued)
Note 8: Long-Term Liabilities (Continued)
c. Schedule of Changes
The following is a schedule of changes in long-term liabilities of the Agency for the fiscal
•
year ended June 30, 2004:
Balance Balance Due Within
July 1,2003 Additions Repayments June 30,2004 One Year
Project Area No. 1
1995 Series TARBs,$24,025,000 $ 22,695,000 $ - $ 22,440,000 $ 255,000 $ 255,000
2002A TARRBs,$22,070,000 22,070,000 - - 22,070,000
Note Payable 850,000 - 850,000
1997 Series TARRBS,$71,955,000 64,025,000 - 2,225,000 61,800,000 2,260,000
2003A TARBs,$19,000,000 - 19,000,000 - 19,000,000
2004A TARRBs,$24,945,000 • 24,945,000 -
24,945,000 495,000
Total $ 109,640,000 $ 43,945,000 $ 25,515,000 $ 128,070,000 $ 3,010,000
Project Area No.2
County Note Payable $ 1,104,363 $ - $ 122,707 $ 981,656 $ 122,707
1995 Series TARBs,$4,090,000 3,975,000 - 35,000 3,940,000 35,000
2002 Series A TARRBs,$17,310,000 17,310,000 - 645,000 16,665,000 665,000
2003 Series TARBs,$15,745,000 15,745,000 -
- 15,745,000 -
Total $ 38,134,363 $ - $ 802,707 $ 37,331,656 $ 822,707
Project Area No.3
2003 Series TARBs,$4,745,000 $ - $ 4,745,000 $ 155,000 $ 4,590,000 $ 90,000
Total $ - $ 4,745,000 $ 155,000 $ 4,590,000 $ 90,000
Project Area No.4
1998 Series TARBs,$11,020,000 $ 10,815,000 $ - $ 220,000 $ 10,595,000 $ 225,000
2001 Series TARBs,$15,695,000 15,545,000 - 150,000 15,395,000 160,000
Total $ 26,360,000 $ - $ 370,000 $ 25,990,000 $ 385,000
Combined Low and Moderate Housing
1998 Series TARBs $ 46,785,000 $ - $ 550,000 $ 46,235,000 $ 565,000
2002 Series TARBs 12,100,000 - 235,000 11,865,000 240,000
1995 Series A TARRBs,$6,305,000 3,395,000 - 495,000 2,900,000 525,000
Total $ 62,280,000 $ - $ 1,280,000 $ 61,000,000 $ 1,330,000
Total-All Project Areas
Notes $ 1,954,363 $ - $ 972,707 $ 981,656 $ 122,707
Bonds 234,460,000 48,690,000 27,150,000 256,000,000 5,515,000
Total $ 236,414,363 $ 48,690,000 $ 28,122,707 $ 256,981,656 $ 5,637,707
38
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 8: Long-Term Liabilities (Continued)
d. The following schedule illustrates the debt service requirements to maturity for bonds
outstanding as of June 30,2004:
Area No. 1-Tax Allocation
Area No. 1 -Tax Allocation Revenue Refunding Bonds,Series 1997- Area No. 1-Tax Allocation Refunding
Bonds,Series 1995-$24.025M $71.955M Bonds,2002 Series A-$22.07M
Principal Interest Principal Interest Principal Interest
2004-2005 $ 255,000 $ 13,260 $ 2,260,000 ' $ 3,310,989 $ - $ 1,114,665
2005-2006 - - 2,025,000 3,205,899 - 1,114,665
2006-2007 - 2,065,000 3,110,724 - 1,114,665
2007-2008 2,290,000 3,011,604 - 1,114,665
2008-2009 - • 2,255,000 2,899,394 - 1,114,665
2009-2014 - - 13,585,000 12,598,261 - 5,573,325
2014-2019 - - 17,700,000 8,551,769 - 5,573,325
2019-2024 - - 19,620,000 2,958,750 4,780,000 5,573,325
2024-2029 - - 14,830,000 2,515,060
2029•2034 - - - - 2,460,000 125,460
Totals $ 255,000 $ 13,260 $ 61,800,000 $ 39,647,390 $ 22,070,000 $ 24,933,820
Area No.1-Tax Allocation
Area No.1-Tax Allocation Revenue Refunding Bonds,2004 Series A- Area No.2-Tax Allocation Revenue
Bonds,Series 2003-$19M $24.945M Bonds,Series 1995-$4.09M
Principal Interest Principal Interest Principal Interest
2004-2005 $ - $ 950,000 $ 495,000 $ 875,560 $ 35,000 $ 231,606
2005-2006 - 950,000 855,000 1,123,063 35,000 229,795
2006-2007 - 950,000 940,000 1,097,413 115,000 225,481
2007-2008 - 950,000 850,000 1,059,813 120,000 218,528
2008-2009 - 950,000 1,030,000 1,025,813 125,000 211,279
2009-2014 - 4,750,000 5,490,000 4,383,538 760,000 930,535
• 2014-2019 - 4,750,000 6,730,000 3,072,513 1,010,000 670,520
2019.2024 - 4,750,000 7,295,000 1,400,100 1,305,000 328,269
2024-2029 14,820,000 3,683,500 1,260,000 63,000 435,000 20,424
2029-2034 4,180,000 209,000 - -
Totals $ 19,000,000 $ 22,892,500 $ 24,945,000 $ 14,100,813 $ 3,940,000 $ 3,066,437
Area No.2-Tax Allocation
Refunding Bonds,2002 Series A- Area No.2-Tax Allocation Revenue Area No.3-Tax Allocation Revenue
$17.31M Bonds,Series 2003-$15.745M Bonds,Series 2003-$4.745M
Principal Interest Principal Interest Principal Interest
2004-2005 $ 665,000 $ 710,513 $ - $ 769,006 $ 90,000 $ 206,998
2005-2006 690,000 690,188 - 769,006 90,000 204,298
2006-2007 630,000 671,333 - 769,006 95,000 201,598
2007-2008 650,000 653,078 - 769,006 95,000 198,748
2008-2009 675,000 631,853 - 769,006 100,000 195,898
2009-2014 3,805,000 2,720,118 - 3,845,031 550,000 929,338
2014-2019 4,780,000 1,759,946 - 3,845,031 660,000 814,848
2019-2024 4,770,000 491,150 875,000 3,825,344 820,000 656,858
2024-2029 - - 6,275,000 2,981,347 1,050,000 433,063
2029-2034 - - 8,595,000 1,117,625 1,040,000 136,581
Totals $ 16,665,000 $ 8,328,179 $ 15,745,000 $ 19,459,408 $ 4,590,000 $ 3,978,228
•
39
Palm Desert Redevelopment Agency
Notes to Financial Statements(Continued)
Note 8: Long-Term Liabilities(Continued)
Area No.4-Tax Allocation Bonds, Area No.4-Tax Allocation Bonds, Housing Set-Aside Revenue Bonds,
Series 1998-$11.02M Series 2001 -$15.695M 1995 Series A-$6.305M
Principal Interest Principal Interest Principal Interest
2004-2005 $ 225,000 $ 531,465 $ 160,000 $ 696,600 $ 525,000 $ 141,195
2005-2006 230,000 520,415 170,000 690,825 555,000 113,378
2006-2007 250,000 508,759 270,000 682,994 585,000 83,445
2007-2008 260,000 496,378 285,000 673,013 600,000 51,593
2008-2009 265,000 483,628 310,000 662,313 635,000 17,621
2009-2014 1,560,000 2,209,836 1,660,000 3,133,884 - -
2014-2019 1,975,000 1,778,371 2,050,000 2,743,198 - -
2019-2024 2,545,000 1,198,990 2,565,000 2,214,740 - -
2024-2029 ' 3,285,000 444,470 3,200,000 1,533,120 - -
2029-2034 - - 4,725,000 347,160 - -
Totals $ 10,595,000 $ 8,172,312 $ 15,395,000 $ 13,377,847 $ 2,900,000 $ 407,232
Housing Set-Aside Revenue Bonds, Housing Set-Aside Revenue Bonds,
Series 1998-$48.76M Series 2002-$12.1 M Total
Principal Interest Principal Interest Principal Interest
2004-2005 $ 565,000 $ 2,301,954 $ 240,000 $ 526,181 $ 5,515,000 $ 12,379,992
2005-2006 590,000 2,277,410 245,000 521,025 5,485,000 12,409,967
2006-2007 615,000 2,251,804 250,000 515,144 5,815,000 12,182,366
2007-2008 655,000 2,224,816 255,000 508,449 6,060,000 11,929,691
2008-2009 685,000 2,196,341 265,000 500,573 6,345,000 11,658,384
2009-2014 7,700,000 9,985,175 1,480,000 2,347,150 36,590,000 53,406,191
2014-2019 9,890,000 7,797,175 1,805,000 2,014,791 46,600,000 43,371,487
2019-2024 12,730,000 4,953,885 2,280,000 1,550,077 59,585,000 29,901,488
2024-2029 12,805,000 1,347,803 2,915,000 911,625 60,875,000 13,933,412
2029-2034 - - 2,130,000 163,250 23,130,000 2,099,076
Totals $ 46,235,000 $ 35,336,363 $ 11,865,000 $ 9,558,265 $ 256,000,000 $ 203,272,054
Note 9: Bond Reserve Requirements
At June 30, 2004, the reserve balance requirements and actual balances were as follows:
Issue Requirement Actual
1995 Refunding Tax Allocation Bonds $ 290,000 $ 810,979
2001 Tax Allocation Revenue Bonds 310,424 319,229
These actual amounts are included in the Fund Balance reserved or designated for Debt
Service (see Note 11).
Note 10: Defeased Obligations
In June 2004, the Agency issued $24,945,000 Tax Allocation Refunding Revenue Bonds
(Project Area No. 1 as Amended) 2004 Series A to advance refund $22,195,000 of
outstanding Tax Allocation Revenue Bonds Series 1995. The net proceeds of $23,620,978
(after paying certain issuance costs and depositing moneys in the project fund)were used to
purchase U.S. government securities. Those securities were deposited in an irrevocable trust
with an escrow agent to provide for all future debt service payments on the 1995 bonds. As a
result, $22,195,000 of the 1995 bonds are considered to be defeased and the liability for
these bonds has been removed from the statement of net assets.
•
40
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 10: Defeased Obligations (Continued)
The Agency advanced refunded the 1995 bonds to reduce its total debt service payments
over the next 21 years by $209,195 and to obtain an economic gain (difference between the
present values of the debt service payments on the old and new debt)of$796,646.
The Agency defeased certain Redevelopment obligations in prior years by placing the
proceeds of new obligations in an irrevocable trust to provide for all future debt service
payments on the old obligations. Accordingly, the trust account assets and the liability for the
defeased obligations are not included in the accompanying financial statements.
Amount
Issue Outstanding
1996 Series B Tax Allocation
Bonds $ 6,840,000
Note 11: Reserves of Fund Balances
Special Debt
Revenue Service
Fund Funds Capital Project Funds
Low and
Moderate Other
Income Financing Project Project Governmental
Housing Authority Area 1 Area 4 Funds Total
Loans and notes
receivable $ 7,882,339 $ - $ 1,931,883 $ 841,443 $ - $ 10,655,665
Property held for resale 865,335 - - - 865,335
Prepaid items and deposits 2,646 - 17,113 - - 19,759
Encumbrances 663,507 - 619,532 1,460,386 2,965,014 5,708,439
Continuing appropriations 6,160,989 - 9,660,112 7,549,630 4,205,482 27,576,213
Advances to other funds 94,524 - - - - 94,524
Debt service - 600,424 - - - 600,424
Low income purposes - - - - 6,214,028 6,214,028
$ 15,669,340 $ 600,424 $ 12,228,640 $ 9,851,459 $13,384,524 $ 51,734,387
Reserved for Loans and Notes 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, 2004.
Although all appropriations lapse at year-end, even if encumbered, the City intends either to
honor the contracts in progress or to cancel them. Reserve for encumbrances are rebudgeted
on July 1, by Board action.
Reserved for Continuing Appropriations-This reserve is for appropriations for capital projects
which are unexpended as of June 30, 2004 and are carried forward as continuing
appropriations to be expended in 2004-2005.
41
Palm Desert Redevelopment Agency
Notes to Financial Statements (Continued)
Note 11: Reserves of Fund Balances (Continued)
Reserved for Debt Service - These reserves for Debt Service represent reserves
accumulated by the Agency that are legally restricted to the payment of long-term debt
principal and interest amounts that mature in future years.
Reserved for Advances - These reserves are set up to reflect the advances to the
Redevelopment Agency so that they will not be considered as current funds available.
Reserved for Low Income Purposes - These reserves represent fund balances related to low
income housing which are not considered as current funds available.
Note 12: Net Assets Restatement
The beginning balance of net assets has been decreased by $562,279 due to a prior period
adjustment to capital assets.
Note 13: Conduit Debt Obligation
Series 1996-$7,010,000 Lease Revenue Bonds
In August 1996, the Palm Desert Financing Authority (the Authority) issued $7,010,000 in
Lease Revenue Bonds. The proceeds of the Bonds were used to finance the construction
of a County Administrative Center and related facilities upon a site located in the City of
Blythe, County of Riverside, fund a reserve account, fund approximately eight months of
capitalized interest and pay costs of issuance of the bonds. The Authority will lease the
site from the County of Riverside (the County) pursuant to a site lease dated August 1,
1996, by and between the Authority and the County and will lease back to the Authority
the site and the facilities (together"the Project")pursuant to a Lease Agreement dated as
of August 1, 1996, by and between the Authority and County (Lease). Under the Lease,
the County will pay the Trustee Base Rental Payments to the trustee in an amount equal
to the scheduled debt service payments on 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 are 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. During the
current fiscal year, these bonds were refunded through the issuance of the 2003 Series A
Lease Revenue Bonds.
Note 14: Insurance
The Agency is covered under the City of Palm Desert's insurance. For additional information,
see the City's financial statements.
42
PALM DESERT REDEVELOPMENT AGENCY Schedule 1
COMBINING BALANCE SHEET -OTHER GOVERNMENTAL FUNDS
JUNE 30,2004
Housing
Authority
Special Debt Capital
Revenue Service Projects
Fund Fund Funds Totals
Assets:
Cash and investments $ 8,167,192 $ 2,842,284 $ 4,374,878 $15,384,354
Cash with fiscal agent-restricted 310,707 - 8,258,843 8,569,550
Accounts receivable 2,175 66,679 - 68,854
Interest receivable 22,353 - 2,722 25,075
Due from other apartment 552,572 - - 552,572
Total Assets $ 9,054,999 $ 2,908,963 $ 12,636,443 $24,600,405
Liabilities and Fund Balances:
Liabilities:
Accounts payable $ 48,930 $ - $ 281,060 $ 329,990
Accrued liabilities 79,550 - - 79,550
Deposits payable 309,804 - - 309,804
Deferred revenue 33,738 - - 33,738
Due to other apartment 552,572 - - 552,572
Due to other funds 94,524 - - 94,524
Advances from the City of Palm Desert - 1,782,563 - 1,782,563
Amount due-pass-through agreements - 1,199,469 - 1,199,469
Total Liabilities 1,119,118 2,982,032 281,060 4,382,210
Fund Balances:
Reserved:
Encumbrances 330,980 - 2,634,034 2,965,014
Continuing appropriations 1,390,873 - 2,814,609 4,205,482
Low income purposes 6,214,028 - - 6,214,028
Unreserved:
Debt service - (73,069) - (73,069)
Capital outlay - - 6,906,740 6,906,740
Total Fund Balances 7,935,881 (73,069) 12,355,383 20,218,195
Total Liabilities
and Fund Balances $ 9,054,999 $ 2,908,963 $ 12,636,443 $24,600,405
43
PALM DESERT REDEVELOPMENT AGENCY Schedule 2
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
OTHER GOVERNMENTAL FUNDS
FOR THE YEAR ENDED JUNE 30,2004
Housing
Authority
Special Debt Capital
Revenue Service Project
Fund Fund Fund Totals
Revenues:
Taxes $ - $ 2,163,267 $ - $ 2,163,267
Other revenue 211,843 - 2,886 214,729
Rental income 4,488,589 - - 4,488,589
Investment income 67,051 21,480 99,476 188,007
Total Revenues 4,767,483 2,184,747 102,362 7,054,592
Expenditures:
Current:
General government 4,643,679 - 448,330 5,092,009
Capital outlay - - 883,702 883,702
Payment to other agencies - 971,953 - 971,953
Debt service:
Interest and fiscal charges - 27,355 - 27,355
Total Expenditures 4,643,679 999,308 1,332,032 6,975,019
Excess (Deficiency)of Revenues
Over(Under)Expenditures 123,804 1,185,439 (1,229,670) 79,573
Other Financing Sources(Uses):
Transfers in - - 5,001,753 5,001,753
Transfers out - (1,237,067) (181,844) (1,418,911)
Total Other Financing
Sources (Uses) - (1,237,067) 4,819,909 3,582,842
Net Change in Fund Balances 123,804 (51,628) 3,590,239 3,662,415
Fund Balances-Beginning of Year 7,812,077 . (21,441) 8,765,144 16,555,780
Fund Balances -End of Year $ 7,935,881 $ (73,069) $ 12,355,383 $ 20,218,195
44
THIS PAGE INTENTIONALLY LEFT BLANK
45
PALM DESERT REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET
HOUSING AUTHORITY SPECIAL REVENUE FUND
JUNE 30, 2004
•
Complexes
Laguna Catalina Desert Las
Capital Palms Gardens Pointe Serenas
Assets:
Cash -checking $ 6,239,394 $ - $ 114,459 $ 141,913 $ 561,742
Cash -trust 1,313 13,634 22,862 21,293 44,450
Cash -petty - 200 150 150 350
Accounts receivable - - - - 47
Due from other apartment - - - - _
Interest receivable 22,353 - - -
Total Assets $ 6,263,060 $ 13,834 $ 137,471 $ 163,356 $ 606,589
Liabilities and Fund Balances:
Liabilities:
Accounts payable $ 6,649 $ 8,554 $ 3,305 $ 3,495 $ 5,238
Due to other apartment - 262,941 - - -
Security deposits - 14,044 22,862 21,293 44,450
Accrued management fees - 992 2,201 1,922 4,464
Accrued payroll - 5,761 2,343 2,690 6,239
Due to other funds 94,524 - - -
Deferred revenue - 2,206 577 1,487 170
Total Liabilities 101,173 294,498 31,288 30,887 60,561
Fund Balances:
Reserved:
Encumbrances 330,980 - - - _
Continuing appropriations 1,390,873 - -
Low income purposes 4,440,034 (280,664) 106,183 132,469 546,028
Total Fund Balances 6,161,887 (280,664) 106,183 132,469 546,028
Total Liabilities and
Fund Balances $ 6,263,060 $ 13,834 $ 137,471 $ 163,356 $ 606,589
46
Schedule 3
Complexes (Continued)
One California Total Combined
Neighbors Quail Pueblos Villas Taos Complexes Total
$ 31,091 $ 1,077,043 $ - $ - $ - $ 1,926,248 $ 8,165,642
7,568 158,171 4,455 30,803 6,158 309,394 310,707
50 350 - 250 50 1,550 1,550
- 798 - 1,330 - 2,175 2,175
- 552,572 - - - 552,572 552,572
- - - - - - 22,353
$ 38,709 $ 1,788,934 $ 4,455 $ 32,383 $ 6,208 $ 2,791,939 $ 9,054,999
$ 1,560 $ 16,956 $ 353 $ 2,046 $ 774 $ 42,281 $ 48,930
- - 30,906 249,239 9,486 552,572 552,572
7,568 158,171 4,455 30,803 6,158 309,804 309,804
682 11,563 465 2,852 434 25,575 25,575
265 26,749 775 8,683 470 53,975 53,975
- - - 94,524
71 26,576 1,425 1,050 176 33,738 33,738
10,146 240,015 38,379 294,673 17,498 1,017,945 1,119,118
- - - - - - 330,980
- - - - - 1,390,873
28,563 1,548,919 (33,924) (262,290) (11,290) 1,773,994 6,214,028
28,563 1,548,919 (33,924) (262,290) (11,290) 1,773,994 7,935,881
$ 38,709 $ 1,788,934 $ 4,455 $ 32,383 $ 6,208 $ 2,791,939 $ 9,054,999
47
PALM DESERT REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCES-HOUSING AUTHORITY SPECIAL REVENUE FUND
FOR THE YEAR ENDED JUNE, 2004
Complexes
Laguna Catalina Desert Las
Capital Palms Gardens Pointe Serenas
Revenues:
Rental income $ - $ 220,641 $ 261,561 $ 269,189 $ 694,646
Other revenues 4,527 7,332 2,856 9,796 3,886
Interest income 67,051 - _
Total Revenues 71,578 227,973 264,417 278,985 698,532
Expenditures:
Current:
Payroll - 112,098 50,338 50,777 132,799
Administrative 5,699 143,733 130,110 146,382 260,422
Management - 12,452 25,931 22,232 52,914
Capital outlay 277,407 240,354 9,442 20,397 35,949
Total Expenditures 283,106 508,637 215,821 239,788 482,084
Excess(Deficiency)of Revenues
Over(Under)Expenditures (211,528) (280,664) 48,596 39,197 216,448
Fund Balances-Beginning of•Year. 6,373,415 - 57,587 93,272 329,580
Fund Balances-End of Year $ 6,161,887 $ (280,664) $ 106,183 $ 132,469 $ 546,028
•
48
Schedule 4
Complexes(Continued)
One California Total Combined
Neighbors Quail Pueblos Villas Taos Complexes Total
$ 112,986 $ 2,288,783 $ 53,378 $ 522,043 $ 65,362 $ 4,488,589 $ 4,488,589
3,777 160,984 11 14,902 3,772 207,316 211,843
- - - - 67,051
116,763 2,449,767 53,389 536,945 69,134 4,695,905 4,767,483
10,835 573,242 16,493 184,600 11,070 1,142,252 1,142,252
57,955 955,372 33,329 317,401 55,709 2,100,413 2,106,112
8,422 136,063 5,415 39,002 5,444 307,875 307,875
17,645 164,616 2,907 306,971 11,752 810,033 1,087,440
94,857 1,829,293 58,144 847,974 83,975 4,360,573 4,643,679
21,906 620,474 (4,755) (311,029) (14,841) 335,332 123,804
6,657 928,445 (29,169) 48,739 3,551 1,438,662 7,812,077
$ 28,563 $ 1,548,919 $ (33,924) $ (262,290) $ (11,290) $ 1,773,994 $ 7,935,881
49
PALM DESERT REDEVELOPMENT AGENCY Schedule 5
COMBINING BALANCE SHEET-OTHER GOVERNMENTAL FUNDS
DEBT SERVICE
JUNE 30, 2004
Project
Area 3 Totals
Assets:
Cash and investments $ 2,842,284
$ 2,842,284
Accounts receivable 66,679 66,679
Total Assets $ 2,908,963 $ 2,908,963
Liabilities and Fund Balances:
Liabilities:
Advances from the City of Palm Desert $ 1,782 563 $ 1,782,563
Amount due-pass-through agreements 1,199,469 1,199,469
Total Liabilities 2,982,032 2,982,032
Fund Balances:
Unreserved:
Debt service (73,069) (73,069)
Total Fund Balances (73,069) (73,069)
Total Liabilities and Fund Balances $ 2,908,963 $ 2,908,963
50
PALM DESERT REDEVELOPMENT AGENCY Schedule 6
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
OTHER GOVERNMENTAL FUNDS -DEBT SERVICE
FOR THE YEAR ENDED JUNE 30,2004
Project
Area 3 Totals
Revenues:
Taxes $ 2,163,267 $ 2,163,267
Investment income 21,480 21,480
Total Revenues 2,184,747 2,184,747
Expenditures:
Payment to other agencies 971,953 971,953
Debt service:
Interest and fiscal charges 27,355 27,355
Total Expenditures 999,308 999,308
Excess of Revenues Over
(Under) Expenditures 1,185,439 1,185,439
Other Financing Sources(Uses):
Transfers out (1,237,067) (1,237,067)
Net Change in Fund Balances (51,628) (51,628)
Fund Balances- Beginning of Year (21,441) (21,441)
Fund Balances -End of Year $ (73,069) $ (73,069)
51
PALM DESERT REDEVELOPMENT AGENCY Schedule 7
COMBINING BALANCE SHEET-OTHER GOVERNMENTAL FUNDS
CAPITAL PROJECTS
JUNE 30, 2004
Project Project
Area 2 Area 3 Totals
Assets:
Cash and investments $ 4,129,921 $ 244,957 $ 4,374,878
Cash with fiscal agent-restricted 3,828,238 4,430,605 8,258,843
Interest receivable 1,552 1,170 2,722
Total Assets $ 7,959,711 $ 4,676,732 $ 12,636,443
Liabilities and Fund Balances:
Liabilities:
Accounts payable $ 35,640 $ 245,420 $ 281,060
Total Liabilities 35,640 245,420 281,060
Fund Balances:
Reserved:
Encumbrances 1,589,268 1,044,766 2,634,034
Continuing appropriations 2,270,874 543,735 2,814,609
Unreserved:
Capital projects 4,063,929 2,842,811 6,906,740
Total Fund Balances 7,924,071 4,431,312 12,355,383
Total Liabilities and
Fund Balances $ 7,959,711 $ 4,676,732 $ 12,636,443
52
PALM DESERT REDEVELOPMENT AGENCY Schedule 8
COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES
IN FUND BALANCES -OTHER GOVERNMENTAL FUNDS -CAPITAL PROJECTS
FOR THE YEAR ENDED JUNE 30,2004
Project Project
Area 2 Area 3 Totals
Revenues:
Investment income $ 74,628 $ 24,848 $ 99,476
Other revenue 2,036 850 2,886
Total Revenues 76,664 25,698 102,362
Expenditures:
Current:
General government 350,133 98,197 448,330
Capital outlay 413,935 469,767 883,702
Total Expenditures 764,068 567,964 1,332,032
Excess (Deficiency)of Revenues
Over(Under) Expenditures (687,404) (542,266) (1,229,670)
Other Financing Sources (Uses):
Transfers in - 5,001,753 5,001,753
Transfers out •
(153,647) (28,197) (181,844)
Total Other Financing
Sources (Uses) (153,647) 4,973,556 4,819,909
Net Change in Fund Balances (841,051) 4,431,290 3,590,239
Fund Balances-Beginning of Year 8,765,122 22 8,765,144
Fund Balances - End of Year $ 7,924,071 $ 4,431,312 $ 12,355,383
•
53
PALM DESERT REDEVELOPMENT AGENCY Schedule 9
COMPUTATION OF LOW AND MODERATE
HOUSING EXCESS SURPLUS FUNDS
AS OF JUNE 30,2004
Excess Surplus in the Low and Moderate Income Housing Fund is any unexpended or unencumbered
amount that exceeds the greater of either $1,000,000 or the aggregate amount deposited in the Low and
Moderate Income Housing Fund during the preceding four fiscal years. it is computed at the beginning of the
fiscal year to which it relates.
Tax Increment
Fiscal Deposits to
Year Housing Fund
1999-2000 $ 6,347,646
2000-2001 7,768,705
2001-2002 9,057,701
2002-2003 10,049,970
Total $ 33,224,022
Base Limitation $ 1,000,000
Greater Amount $ 33,224,022
Fund Balance of the Low and Moderate
Income Housing Fund-July 1,2003 33,357,392
Less: Unavailable amounts
Encumbrances 5,651,036
Loans and notes receivable 4,085,042
Property held for resale 427,797
Prepaid items and deposits 2,867,478
Available Fund Balance of the Low and Moderate
Income Housing Fund -July 1, 2003 $ 20,326,039
Computed Excess Surplus -July 1,2003 $
54
Lance Brandon W.Burrows
sows
L.Parker
Michael K.Chu
Lunghard David E.Hale
A Professional Corporation
LLfp Donald G.Slater
Richard K.Kikuchi
Certified Public Accountants Retired
Robert C.Lance
1914.1994
Richard C.Soli
Fred J.Lunghard,Jr.
1928-1999
REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER
FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of the City Council
The City of Palm Desert, California
We have audited the financial statements of the City of Palm Desert, California, as of and for the year
ended June 30, 2004, and have issued our report thereon dated September 10, 2004. 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.
Compliance
As part of obtaining reasonable assurance about whether the City of Palm Desert's financial statements
are free of material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grants, noncompliance with which could have a direct and material effect on
the determination of financial statement amounts. However, providing an opinion on compliance with
those provisions was not an objective of our audit and, accordingly, we do not express such an opinion.
The results of our tests disclosed no instances of noncompliance that are required to be reported under
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 City of Palm Desert's internal control over
financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion
on the financial statements and not to provide assurance on the internal control over financial reporting.
However, we noted certain matters involving the internal control structure and its operations that we
consider to be reportable conditions. Reportable conditions involve matters coming to our attention
relating to significant deficiencies in the design or operation of the internal control structure that, in our
judgment, could adversely affect the City's ability to record, process, summarize and report financial data
consistent with the assertions of management in the financial statements. We noted the following matters
which we believe to be a reportable conditions:
Housing Authority Review
During our review of 100 randomly selected tenant files for the various apartment complexes of the
Housing Authority, we noted two instances of noncompliance. In one instance, at the One Quail Place
Apartments, a tenant was being undercharged. The total amount of the undercharge was $1,104. In the
other instance, at the California Villas Apartments, a tenant was being overcharged. The total amount of
the overcharge was $912. Per subsequent discussions with the Apartment's management personnel,
these two tenants have been informed of the errors and, in the latter instance, a credit was issued on their
future bill.
75 Years
1929\ 2004
of Excellence 203 N. Brea Blvd.• Suite 203• Brea, CA 92821-4056• (714)672-0022 • Fax (714)672-0331 • www.Islcpas.con1
[c—LanceIs
Lunghard
LUP
CEATIF/f0 PUBLIC ACCOUNTANTS
To the Honorable Mayor and Members of the City Council
The City of Palm Desert, California
City's Management Response
In order to minimize future errors, the rent for all new move-ins and re-certifications will be set based on
the established rent schedule for the affordable level and family size. Two signatures are required, one of
which will be a manager. Also the management company is implementing a more frequent system for
internal auditing of files, in an effort to avoid finding in the future. City staff is also recommending
additional testing on rent calculation by our auditors.
Bid Process Review
During our audit, we reviewed compliance with bid procedures for various City departments. As part of
our testwork, we noted that no documentation was being kept to allow us to verify that bulletin board
postings were being done in instances where the notice inviting bids were being done over the telephone.
City's Management Response
We agree with the auditor's finding regarding bulletin board posting and will implement the following
procedure. Departments that bid over the telephone will be required to have their bid specs stamped by
the City Clerk indicating that it was posted in the bulletin board. For a purchase order to be processed,
the stamped bid specs must be verified by the Finance Department.
Bid Process Review
Our review also included testing several public works contracts to verify that the Public Works Department
is in compliance with the Public Works Contracts and Bidding Requirements guidelines. During our
testwork, we noted that three items were not sent out for bid, each of which were deemed to be sole
source suppliers by the Public Works personnel.The details of these three bids are as follows:
Vendor P.O. Amount
Eagle Arial Imaging $ 2,165.00
One Stop Auto Supplies $ 4,000.00
A American Electric $ 2,225.46
To strengthen controls in this area, we recommend that the City departments follow the proper bid
procedures for Public Works contracts as outlined in both the City's purchasing policy and the Public
Works Contracts and Bidding Requirements guidelines. With respect to "sole source" purchases, we
suggest that the Finance Department be informed of such instances prior to acceptance.
City's Management Response
We agree with the auditors regarding "Sole Source" finding. The vendors mentioned above were
considered sole source because they consistently gave us the best prices and provided certain services
that other vendors were not providing. By strict definition, these vendors were not a sole source. The
Public Works department has since received authorization from Council to award a yearlong contract to
the vendors who provide the best prices or services based on a list of frequently purchased items. It has
streamlined the purchasing process to award a contract on a yearly basis rather than to go out to bid for
every job when purchasing relatively inexpensive items or services that require bids.
Lance
Soll s
Lunghard
LLP
CERTIFIED PUBLIC ACCOUNTAN Ts
To the Honorable Mayor and Members of the City Council
The City of Palm Desert, California
A material weakness is a condition in which the design or operation of one or more of the internal control
components does not reduce to a relatively low level the risk that misstatements in amounts that would be
material in relation to the financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their assigned functions. Our
consideration of the internal control over financial reporting would not necessarily disclose all matters in
the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all
reportable conditions that are also considered to be material weaknesses. However, we believe that the
reportable conditions noted above are not material weaknesses.
This report is intended solely for the information of the City Council, management, federal awarding
agencies and pass-through entities and is not intended to be, and should not be, used by anyone other
than these specified parties.
,Zet, .44 p?",,4
September 10, 2004