HomeMy WebLinkAboutAudited Fncl Rprts - CUFR - FYE 06/30/2009 CITY OF PALM DESERT
FINANCE DEPARTMENT
Staff Report
REQUEST: RECEIVE AND FILE THE AUDITED FINANCIAL REPORTS FOR
THE PALM DESERT REDEVELOPMENT AGENCY FOR THE
FISCAL YEAR ENDED JUNE 30, 2009
DATE: February 11, 2010
SUBMITTED BY: Paul S. Gibson, Finance Director
CONTENTS: Palm Desert Redevelopment Agency Audited Financial Report for
the Fiscal Year Ended June 30, 2009
Recommendation
By Minute Motion, that the City Council receive and file the audited
Component Unit Financial Report for the Palm Desert Redevelopment
Agency for fiscal year ended June 30, 2009.
Committee Recommendation
The Audit, Investment and Finance Committee received the audited financial statements
for the Palm Desert Redevelopment Agency at their January 26, 2010 meeting, and it was
recommended that the statements for the fiscal year ended June 30, 2009 be received
and filed by the City Council.
Background
Diehl, Evans &Associates, LLP, performed and completed the annual independent audit
for the fiscal year ended June 30, 2009, for the Redevelopment Agency in October 2009,
in accordance with generally accepted auditing standards. In the auditor's opinion, the
basic financial statements present fairly, in all material respects, the financial position of
the Redevelopment Agency as of June 30, 2009, and the results of its operations of the
year then ended are in conformity with accounting principles generally accepted in the
United States of America.
In conducting their audit, the auditors test the City's internal controls. Pages 79 and 80 of
the Annual Financial Report show the Report on Internal Controls over Financial
Reporting and on compliance and other matters based on an audit of Financial
Statements performed in accordance with Government Auditing Standards.
G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2009\SR-Council audit RDA CUFR 2009.docx
Staff Report
Approval of CUFR for Fiscal Year ended June 30, 2009
February 11, 2010
Page 2 of 2
Staff requests that the Council receive and file the audited Component Unit Financial
Report for the Palm Desert Redevelopment Agency for fiscal year ended June 30, 2009.
Fiscal Impact
There is no fiscal impact associated with this action.
Submitted by: Approved by:
961W(A/1
Paul S. Gibson, Finance Director/City Treasurer J n M. Wohlmuth, City Manager
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Original on file with City CI Office
G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2009\SR-Council audit RDA CUFR 2009.docx
Staff Report
Approval of CUFR for Fiscal Year ended June 30, 2009
February 11, 2010
Page 2 of 2
Staff requests that the Council receive and file the audited Component Unit Financial
Report for the Palm Desert Redevelopment Agency for fiscal year ended June 30, 2009.
Fiscal Impact
There is no fiscal impact associated with this action.
Submitted by: Approved by:
961A11/11/4
Paul S. Gibson, Finance Director/City Treasurer J n M. Wohlmuth, City Manager
PSG:JLE:nmo
G:\Finance\Niamh Ortega\Staff Reports\Audit staff reports\Audit Staff Reports 2009\SR-Council audit RDA CUFR 2009.docx
PALM DESERT REDEVELOPMENT AGENCY
PALM DESERT, CALIFORNIA
ANNUAL FINANCIAL REPORT
WITH REPORT ON AUDIT
,n0 BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
FOR THE YEAR ENDED JUNE 30, 2009
PALM DESERT REDEVELOPMENT AGENCY
TABLE OF CONTENTS
JUNE 30, 2009
Page
Number
INDEPENDENT AUDITORS'REPORT 1
MANAGEMENT'S DISCUSSION AND ANALYSIS 3
BASIC FINANCIAL STATEMENTS:
Government-Wide Financial Statements:
Exhibit A - Statement of Net Assets 11
Exhibit B - Statement of Activities 13
Fund Financial Statements:
Exhibit C - Balance Sheet - Governmental Funds 14
Exhibit D - Reconciliation of Governmental Funds Balance Sheet
to the Statement of Net Assets 17
Exhibit E- Statement of Revenues, Expenditures and Changes in Fund
Balances - Governmental Funds 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 66
Schedule 2 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds 67
Schedule 3 - Balance Sheet - Other Governmental Funds - Special Revenue 68
Schedule 4 - Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds - Special Revenue 69
PALM DESERT REDEVELOPMENT AGENCY
TABLE OF CONTENTS
(CONTINUED)
JUNE 30, 2009
Page
Number
SUPPLEMENTARY INFORMATION (CONTINUED):
Schedule 5 - Balance Sheet - Other Governmental Funds - Debt Service 70
Schedule 6 - Statement of Revenues, Expenditures and Changes """
in Fund Balances - Other Governmental Funds - Debt Service 71
Schedule 7 - Combining Balance Sheet - Other Governmental Funds - Capital Projects 72
Schedule 8 - Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Other Governmental Funds - Capital Projects 73
Schedule 9 - Combining Balance Sheet - Housing Authority Special Revenue Fund 74
Schedule 10 -Combining Statement of Revenues, Expenditures and Changes
in Fund Balances - Housing Authority Special Revenue Fund 76
Schedule 11 -Computation of Low and Moderate Housing Excess Surplus Funds 78
Independent Auditors'Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government Auditing Standards 79
400
DIEHL, EVANS & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS&CONSULTANTS
MICHAEL R.LUDIN,CPA
A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W.SPRAKER.CPA
NITIN P.PATEL,CPA
ROBERT J.CALLANAN.CPA
5 CORPORATE PARK,SUITE 100 •PHILIP H.HOLTKAMP,CPA
'THOMAS M.PERLOWSKI,CPA
IRVINE,CALIFORNIA 92606-5165 'HARVEY J.SCHROEDER.CPA
(949)399-0600•FAX(949)399-0610 KENNETH R AMES,CPA
www.diehlevans.com
•WILLIAM C.PENTZ,CPA
October 16, 2009 'A PROFESSIONAL CORPORATION
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and
Members of the City Council
Palm Desert Redevelopment Agency
Palm Desert, California
We have audited the accompanying financial statements of the governmental activities, each major
fund and the aggregate remaining fund information of the Palm Desert Redevelopment Agency (the
Agency), (a component unit of the City of Palm Desert, California), as of and for the year ended
June 30, 2009, which collectively comprise the Agency's basic financial statements, as listed in the
table of contents. These basic financial statements are the responsibility of the Agency's management.
Our responsibility is to express opinions on these basic financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the basic financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall basic
financial statement presentation. We believe that our audit provides a reasonable basis for our
opinions.
In our opinion, the basic financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, each major fund and the aggregate
remaining fund information of the Palm Desert Redevelopment Agency as of June 30, 2009, and the
respective changes in financial position thereof for the year then ended in conformity with accounting
principles generally accepted in the United States of America.
- 1 -
OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W.VALLEY PARKWAY,SUITE 330
CARLSBAD,CALIFORNIA 92008-2389 ESCONDIDO,CALIFORNIA 92025-2598
(760)729-2343•FAX(760)729-2234 (760)741-3141•FAX(760)741-9890
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In accordance with Government Auditing Standards, we have also issued our report dated
.60
October 16, 2009 on our consideration of the Palm Desert Redevelopment Agency's internal control
over financial reporting and our tests of its compliance with certain provisions of laws, regulations, �•
contracts, and grant agreements and other matters. The purpose of that report is to describe the scope
of our testing of internal control over financial reporting and compliance and the results of that testing,
and not to provide an opinion on the internal control over financial reporting or on compliance. That
report is an integral part of an audit performed in accordance with Government Auditing Standards and
should be considered in assessing the results of our audit.
The management's discussion and analysis, as listed in the table of contents, is not a required part of ,
the financial statements but is supplementary information required by the accounting principles
generally accepted in the United States of America. We have applied certain limited procedures, which
consisted principally of inquiries of management regarding the methods of measurement and
presentation of the required supplementary information. However, we did not audit the information
and express no opinion on it.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Palm Desert Redevelopment Agency's basic financial statements. The
combining and individual other governmental funds financial statements and the Computation of Low
and Moderate Housing Excess/Surplus Funds are presented for additional analysis and are not a
required part of the basic financial statements. The information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in
all material respects in relation to the basic financial statements taken as a whole.
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PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
June 30, 2009
Our discussion and analysis of the Palm Desert Redevelopment Agency's (Agency) financial performance for the
fiscal year ended June 30, 2009, provides a comparison of current year to prior year ending results based on the
government-wide statements, an analysis on the Agency's overall financial position and results of operations to assist
users in evaluating the Agency's financial position, and a discussion of significant changes that occurred within each
fund. In addition, it describes the activities during the year for capital assets and long-term debt. We end our
discussion and analysis with a description of currently known facts, decisions and conditions that are expected to
have a significant effect on the financial position or results of operations. Please read it in conjunction with the
Agency's financial statements.
FINANCIAL HIGHLIGHTS
• The Agency's governmental activities net assets deficit decreased $5.04 million,or 39.19 percent.
• During the year,the Agency had revenues that were$5.04 million more than the$95.28 million in expenses
recorded by the Agency in its governmental activities.
• The Agency's governmental activities program revenues and general revenues decreased $9.44 million, or
8.60 percent from the prior year, and program expenses decreased$2.50 million,or 2.55 percent.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Assets and Statement of
Activities (on pages 11 and 13) provide information about the activities of the Agency as a whole and present a long-
term view of the Agency's finances. Fund financial statements start on page 14. For governmental activities, these
fund statements tell how these services were financed in the short term as well as what remains for future spending.
Fund financial statements also report the Agency's operation in more detail than the government-wide statements by
providing information about the Agency's most significant funds as well as the other funds.
REPORTING THE AGENCY AS A WHOLE
The Statement of Net Assets and the Statement of Activities:
Our analysis of the Agency as a whole begins on page 11. One of the most important questions asked about the
Agency's finances is, "Is the Agency as a whole better off or worse off as a result of the year's activities?" The
Statement of Net Assets and the Statement of Activities report information about the Agency as a whole and about its
activities in a way to answer this question. These statements include all assets and liabilities of the Agency using the
accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the
current year's revenues and expenses are taken into account regardless of when cash is received or paid.
These two statements report the Agency's net assets and changes in them. Net assets are the difference between
assets and liabilities, which is one way to measure the Agency's financial health, or financial position. Over time,
increases or decreases in the Agency's net assets are an indication of whether its financial health is improving or
deteriorating.
In the Statement of Net Assets and the Statement of Activities, we separate the Agency into general government,
apartment complexes, public works, payments to other agencies and interest on long-term debt.
See independent auditors' report.
- 3 -
PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2009
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REPORTING THE AGENCY'S MOST SIGNIFICANT FUNDS
Fund Financial Statements:
The fund financial statements provide detailed information about the most significant funds and other funds- not the 000
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 °w
can readily be converted to cash. The governmental fund statements provide a detailed shot-term view of the
Agency's general government operations and the basic services it provides. Governmental fund information helps
determine whether there are more or fewer financial resources that can be spent in the near future to finance the
Agency's programs. The differences of results in the Governmental Fund financial statements to those in the
Government-Wide financial statements are explained in a reconciliation following each Governmental Fund financial
statement.
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See independent auditors' report.
- 4 -
PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2009
THE AGENCY AS A WHOLE
The Agency's net assets deficit decreased $5.04 million from $(12.86) million to $(7.82) 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, 2009 and 2008
Governmental Activities
2009 2008
Current and restricted assets $ 325.46 $ 313.56
Capital assets 158.15 169.12
TOTAL ASSETS 483.61 482.68
Long-term liabiities outstanding 430.52 442.08
Other liabiities 60.91 53.46
TOTAL LIABILITIES 491.43 495.54
Net assets(deficit):
Invested in capital assets, net of
related debt 121.72 128.77
Restricted 49.65 41.13
Unrestricted (179.19) (182.76)
TOTAL NET ASSETS(DEFICIT) $ (7.82) $ (12.86)
Compared to the prior year, the Agency's net assets deficit of governmental activities decreased by $5.04 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 $(182.76) million to $(179.19) million, or 1.95 percent. The Agency
currently has an unrestricted net deficit because of the debt it has issued. Proceeds from the debt were used for
capital improvements on behalf of the City or contributed to developers and is not offset by investments in capital
assets.
Total liabilities decreased by$4.11 million,which represents principal payment of long-term debt.
See independent auditors' report.
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PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2009
THE AGENCY AS A WHOLE(CONTINUED)
TABLE 2
CHANGES IN NET ASSETS .
(IN MILLIONS)
As of June 30, 2009 and 2008
Governmental Activities
2009 2008
REVENUES:
Program Revenues:
Charges for services $ 5.01 $ 5.03
Operating Grants and Contributions 0.03 0.81
General Revenues:
Tax increment 90.14 89.93
Other income 1.33 2.66
Investment earnings 3.81 11.33
TOTAL REVENUES 100.32 109.76
EXPENSES:
General government 11.30 19.20
Apartment complexes 5.67 5.98
Public works 18.47 11.21
Payments to other agencies 39.09 38.99
Interest on long-term debt 20.75 22.40
TOTAL EXPENSES 95.28 97.78
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INCREASE IN NET ASSETS 5.04 11.98
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BEGINNING NET ASSETS (12.86) (24.84)
RESTATEMENT OF NET ASSETS - - *roo,
ENDING NET ASSETS $ (7.82) $ (12.86)
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Governmental Activities 110
Total revenues decreased from $109.76 million to$100.32 million, an 8.60 percent decrease. The major factors that
contributed to the decrease were as follows:
• Decrease in grants and contributions due to completion of projects.
• Decrease in investment earnings due to declining interest rates.
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See independent auditors' report.
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PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2009
Governmental Activities(Continued)
The following schedule represents the net cost of providing services:
2009 2008
General Government $ (11.27) $ (19.18)
Apartment Complexes (0.66) (0.95)
Pubic Works (18.47) (10.42)
Payment to Other Agencies (39.09) (38.99)
Interest on Long-Term Debt (20.75) (22.40)
TOTAL $ (90.24) $ (91.94)
The major factor that contributed to the decrease in expenditures was:
• Decrease in expenditures on General Government.
• Increase in expenditures on Public Works.
• Decrease in interest paid on Long-Term Debt.
THE AGENCY'S FUNDS
On pages 14 and 15,the governmental funds balance sheet is shown. The combined fund balance of$259.39 million
increased from $254.69 million, or 1.84 percent. The Agency has reserved $79.58 million for encumbrances,
continuing appropriations, loans, debt service, etc. More detailed information about the combined fund balance
reserves is presented in Note 9 to the financial statements.
Major funds balance changes are noted below:
• For the Low and Moderate Income Housing fund, fund balance increased due to the decrease in required
debt service payments and an increase in transferred tax increment.
• For the Redevelopment Agency Financing Authority Debt Service fund, fund balance increased as a result
of transfers in from debt service to actively manage the debt prior to termination of the project areas.
• The Redevelopment Agency Project Area 1 Debt Service fund, fund balance decreased as a result of a
decrease in investment earnings.
• The Redevelopment Agency Project Area 2 Debt Service funds, fund balance increased as a result of an
increase in tax increment.
• The Redevelopment Agency Project Area 4 Debt Service funds, fund balance increased as a result of a
decrease in pass thru payments.
• The Redevelopment Agency Project Area 2 Capital Projects Funds, fund balance decreased as the result of
a decrease in investment earnings.
See independent auditors' report.
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PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2009
THE AGENCY'S FUNDS(CONTINUED)
In addition to the major funds, fund balances of other governmental funds had significant changes. The Housing
Authority Special Revenue fund had a decrease of $0.92 million from the prior year. This was due to capital
expenditures for the improvement of the apartment complexes. Project Area 3 debt service fund balance increased .�.
due to a decrease in interest expense subsequent to repayment of the City Advance in the prior year. Project Area 1
capital projects funds, fund balance decreased as a result of a decrease in investment earnings and capital project
expenditures. Project Area 3 and 4 capital projects fund balance changes were minimal. More detailed information
on the fund financial statements balances is presented in the notes to the financial statements.
Budgetary Highlights
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During the year, with the recommendation from the Agency's staff, the Agency's Board revised the Agency budget
several times. Adjustments were made on a monthly basis as the Agency's staff requested additional appropriations
to cover the cost of projects that either had change orders for additional work, or the estimated cost at the beginning
of the project was underestimated. At mid-year, adjustments were made as department heads requested increases
or decreases to their budgets to maintain their current level of services. At year-end, budgets were adjusted for
unanticipated expenditures. The Agency's Board approves all amendments that either increase or decrease
appropriations. '
Formal budgetary integration is employed as a management control device during the year for the special revenue
and capital project funds. Budgetary data for the special revenue and capital projects funds are not presented herein, /14
as the budgets for these funds are long-term in nature. More detailed information about the Agency's budget is
presented in Note 1 (I)to the financial statements.
44
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital Assets
At the end of 2009, the Agency had $158.15 million invested in a broad range of capital assets, including land,
buildings and improvements, apartment complexes,vehicles and equipment(See Table 3).This amount represents a
net decrease(including additions and deductions)of$10.97 million, or 6.48 percent below last year.
TABLE 3
CAPITAL ASSETS AT YEAR-END
(NET OF DEPRECIATION, IN MILLIONS)
For the Years Ended June 30, 2009 and 2008
Governmental Activities
2009 2008
Land $ 77.13 $ 78.58
Construction in progress 11.83 28.34
Buildings and improvements 69.09 62.07
Equipment 0.10 0.13 w,
TOTAL $ 158.15 $ 169.12
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See independent auditors' report.
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PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
June 30, 2009
CAPITAL ASSET AND DEBT ADMINISTRATION(CONTINUED)
Capital Assets(Continued)
This year's major additions included (in millions):
Property acquisitions $ 3.91
Construction in progress at California Villas 3.10
Construction in progress for Desert Willow Mountain View Renovation 0.37
$ 7.38
The Agency's fiscal year 2010 capital budget calls for it to spend $29.95 million plus continuing projects of$71.95
million, the majority of which are attributable to the reimbursement to other governments for capital projects, land
development, construction of low-income family housing, and the undergrounding of utilities. More detailed
information about the Agency's capital assets is presented in Note 1(g)and Note 6 to the financial statements.
Debt
At year-end,the Agency's governmental activities had $430.52 million in bonds and notes versus$442.08 million last
year, a decrease of$11.56 million,or 2.61 percent as shown in Table 4.
TABLE 4
OUTSTANDING DEBT AT YEAR END
(IN MILLIONS)
For the Years Ended June 30,2009 and 2008
Governmental Activities
2009 2008
Notes payable $ 0.37 $ 0.49
Advances 22.66 22.66
Revenue bonds and notes(backed by
specific tax and fee revenues) 407.49 418.93
TOTALS $ 430.52 $ 442.08
The Agency was able to meet its current year debt obligation in a timely manner.The Agency repaid$12.73 million in
outstanding bonds. Debts issued in the prior years have been used to finance various capital projects.An example of
this would be the purchase of land, and construction of the City's municipal golf course.
See independent auditors' report.
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01.
PALM DESERT REDEVELOPMENT AGENCY
MANAGEMENT'S DISCUSSION AND ANALYSIS
(CONTINUED)
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June 30, 2009
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ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS
In preparing the budget for 2010, management looked at the following economic factors: ,•,
• In prior years,the City had unallocated reserves in its capital projects and special revenue funds that could
be used to start and complete Agency's projects in an effort to maximize the Agency's cash flow. In the five-
year capital improvement program, all restricted capital funds for the City have been allocated to various
projects.Any additional projects would require that the Agency fund their own projects. ,.•
• As the State of California attempts to balance their budget, Redevelopment Agency tax increment revenues
throughout the State have been captured to cover (at minimum) a $2.05 billion shortfall, resulting in an
estimated 2009-10 SERAF shift of$25,502,408,and an additional SERAF shift estimated at$5,276,438 for "'"'
2010-11 for the Palm Desert Redevelopment Agency. The effects of the State's endeavors to balance their
budget has caused the Agency to cut projects essential to the community and Redevelopment Plan. The
uncertainty of future takes from Redevelopment will determine the Agency's ability to complete such
projects,as well as the ability to meet the needs of the community.
The City of Palm Desert continues to grow with new hotels, commercial and residential development, construction of
a four-year university, street improvements, park construction, and various other improvement projects. The 2010
capital improvement project budget is a reflection of the Agency's commitment to the residents of Palm Desert. A
copy of the City's 2009-2010 financial plan can be obtained by contacting the City Finance Department(See below).
CONTACTING THE AGENCY'S FINANCIAL MANAGEMENT
spot
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. err
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See independent auditors' report.
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Exhibit A
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF NET ASSETS
June 30,2009
Governmental
Activities
ASSETS:
Cash and investments $ 149,525,586
Receivables 10,704,401
Due from other governments 27,988
Property held for resale 465,834
Prepaid items and deposits 35,789
Deferred charges 10,203,749
Restricted assets:
Restricted cash with fiscal agent 154,494,919
Capital assets,not depreciated 88,962,755
Capital assets,being depreciated(net of accumulated depreciation) 69,188,332
TOTAL ASSETS 483,609,353
LIABILITIES:
Accounts payable 2,012,682
Accrued liabilities 101,334
Interest payable 5.084,801
Deposits payable 401,553
Unearned revenue 30,361
Amounts due under pass-through agreements 53,285,469
Noncurrent liabilities:
Due within one year 14,267,707
Due in more than one year 416,248,594
TOTAL LIABILITIES 491,432.501
NET ASSETS:
Invested in capital assets,net of related debt 121,726,006
Restricted for:
Special projects 49,647,661
Unrestricted(deficit) (179.196.815)
)
TOTAL NET ASSETS(DEFICIT) $ (7,823,148)
See independent auditors'report and notes to basic financial statements.
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Exhibit B
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF ACTIVITIES
For the year ended June 30,2009
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 $ 11,304,100 $ - $ 27,579 $ - $(11,276,521)
Apartment complexes 5,669,694 5,006,787 - - (662,907)
Public works 18,473,631 - - - (18,473,631)
Payments to other agencies 39,085,940 - - - (39,085,940)
Interest on long-term debt 20,746,182 - - - (20,746,182)
Total Primary
Government $ 95,279,547 $ 5,006,787 $ 27,579 $ - (90,245,181)
GENERAL REVENUES:
Taxes:
Tax increment 90,137,057
Rental income 167,119
Other revenues 1,164,456
Investment earnings 3,819,342
Total general revenues 95,287,974
CHANGE IN NET ASSETS 5,042,793
NET ASSETS(DEFICIT)-BEGINNING OF YEAR (12,865,941)
NET ASSETS(DEFICIT)-END OF YEAR $ (7,823,148)
See independent auditors'report and notes to basic financial statements.
- 13-
•
PALM DESERT REDEVELOPMENT AGENCY ea
BALANCE SHEET-GOVERNMENTAL FUNDS '
es
June 30,2009
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Special
Revenue s
Fund Debt Service Funds
Low and '
Moderate
Income Project Project am
Housing Area 1 Area 2 ww
ASSETS:
Cash and investments $ 37,480,007 $ 66,957,653 $ 9,985,084 w
Restricted cash with fiscal agent 25,571,421 - -
Receivables 7,579,456 1,303 193
Due from other funds - - 187,999 et
Due from other governmental agencies 409 - -
Property held for resale 465,834 - - lik
Prepaid costs and deposits - - -
ato
TOTAL ASSETS $ 71,097,127 $ 66,958,956 $ 10,173,276 let
LIABILITIES AND FUND BALANCES +w
LIABILITIES:
Accounts payable $ 19,680 $ 500 $ 300 ofe
Accrued liabilities 16,088 - -
Deposits payable 500 - - op
Due to other funds - - -
Unearned revenue 8,856 - - a*
Deferred revenue 37,216 - - ow
Amounts due pass-through agreement - 32,506,707 2,237,879
iMw
TOTAL LIABILITIES 82,340 32,507,207 2,238,179
lik
FUND BALANCES:
•
Reserved 10,642,230 - -
Unreserved reported in: +k
Special revenue fund 60,372,557 - -
Debt service funds - 34,451,749 7,935,097 Nei
Capital projects funds - - - ark
TOTAL FUND BALANCES 71,014,787 34,451,749 7,935.097 OW
TOTAL LIABILITIES 'i"
AND FUND BALANCES $ 71,097,127 $ 66,958,956 $ 10,173,276
im
as
ma
so
ma
See independent auditors'report and notes to basic financial statements.
- 14-
Exhibit C
Capital
Debt Service Funds(Continued) Projects Fund
Other Total
Project Financing Project Governmental Governmental
Area 4 Authority Area 2 Funds Funds
$ 20,815,675 $ - $ - $ 14,287,167 $ 149,525,586
17,231,420 46,595,350 65,096,728 154,494,919
113 6,032 1,277 3,116,027 10,704,401
- - 187,999
- - - 27,579 27,988
- - - 465,834
- - - 35,789 35,789
$ 20,815,788 $ 17,237,452 $ 46,596,627 $ 82,563,290 $ 315,442,516
$ 300 $ - $ 584,548 $ 1,407,354 $ 2,012,682
- - 85,246 101,334
- - - 401,053 401,553
- - 187,999 - 187,999
- - - 21,505 30,361
- - 37,216
15,892,172 - - 2,648,711 53,285,469
15,892,472 - 772,547 4,563,869 56,056,614
- - 23,613,830 45,325,606 79,581,666
- - 862,988 61,235,545
4,923,316 17,237,452 - 2,362,324 66,909,938
- 22,210,250 29,448,503 51,658,753
4,923,316 17,237,452 45,824,080 77,999,421 259,385,902
$ 20,815,788 $ 17,237,452 $ 46,596,627 $ 82,563,290 $ 315,442,516
- 15-
OP
•
w
THIS PAGE INTENTIONALLY LEFT BLANK .,
1116.
SO
IM
OP
i
OP
OP
OP
al
OP
OF
PO
w.
r
MP
- 1 6 -
Exhibit D
PALM DESERT REDEVELOPMENT AGENCY
RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET
TO THE STATEMENT OF NET ASSETS
June 30,2009
Total fund balance for governmental funds $ 259,385,902
Amounts reported for governmental activities in the Statement of Net Assets are
different because:
When capital assets(land,buildings,equipment,etc.)that are to be used in
governmental activities are purchased or constructed,the costs of those assets
are reported as expenditures in governmental funds. However,the Statement
of Net Assets includes those capital assets among the assets of the Agency
as a whole:
Beginning Balance,net depreciation $ 169,115,703
Current year additions 10,078,803
Current year deletions (18,473,631)
Current year depreciation (2,569,788)
Ending Balance,net depreciation 158,151,087
Because the focus of governmental funds is on short-term financing,some assets
will not be available to pay for current-period expenditures. Those assets(for
example,receivables)are offset by deferred revenues in the governmental funds
and,thus,are not included in fund balance:
Interest that was not paid at year-end 37,216
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. (430,516,301)
Interest on long-term debt is not accrued in governmental funds,but rather is
recognized as an expenditure when due. (5,084,801)
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. 10.203,749
Net assets(deficit)of governmental activities $ (7,823,148)
See independent auditors'report and notes to basic financial statements.
- 17-
we
et
PALM DESERT REDEVELOPMENT AGENCY
alp
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-GOVERNMENTAL FUNDS ow
For the year ended June 30,2009 ao
wo
Special ws
Revenue
Fund Debt Service Funds "
Low and
NO
Moderate
Income Project Project 04
Housing Area 1 Area 2
REVENUES: ea
Taxes $ - $ 52,192,365 $ 19,493,421
Intergovernmental - - -
Investment earnings 1,298,185 887,591 141,169 w.
Rental income 2,965 - -
Other revenues 85,015 512,170 -
to
TOTAL REVENUES 1,386,165 53,592,126 19,634,590
4
EXPENDITURES:
Current: ow
General government 2,007,379 17,241 10,984
Payments to other agencies - 21,421,751 7,665,640
Capital outlay 2,831,366 - - ow
Debt service:
Interest and fiscal charges - 412,170 349,418
Principal retirement - - 122,707
w.
TOTAL EXPENDITURES 4,838,745 21,851,162 8,148,749 40
EXCESS OF REVENUES OVER 0*
(UNDER)EXPENDITURES (3,452,580) 31,740,964 11,485,841
,r
OTHER FINANCING SOURCES(USES):
so
Transfers in 18,237,021 120,834 44,978
Transfers out (12,141,838) (32,141,459) (9,771,714) 40
TOTAL OTHER FINANCING 00
SOURCES(USES) 6,095,183 (32,020,625) (9,726,736) 10
NET CHANGE IN FUND BALANCES 2,642,603 (279,661) 1,759,105 aft
10,
FUND BALANCES-BEGINNING OF YEAR 68,372,184 34,731,410 6,175,992
mo
FUND BALANCES-END OF YEAR $ 71,014,787 $ 34,451,749 $ 7,935,097
04
ow
04
ow
See independent auditors'report and notes to basic financial statements. ,
- 18-
spo
04
Exhibit E
Capital
Debt Service Funds(Continued) Projects Fund
Other Total
Project Financing Project Governmental Governmental
Area 4 Authority Area 2 Funds Funds
$ 13,753,606 $ - $ - $ 4,697,665 $ 90,137,057
- - 27,579 27,579
131,564 115,413 318,211 997,126 3,889,259
- - 5,047,514 5,050,479
- - - 583,565 1,180,750
13,885,170 115,413 318,211 11,353,449 100,285,124
7,884 - 879,140 11,481,378 14,404,006
7,784,441 - - 2,214,108 39,085,940
- 386,223 6,861,214 10,078,803
18,526,848 - - 19,288,436
12,610,000 - - 12,732,707
7,792,325 31,136,848 1,265.363 20,556,700 95,589,892
6,092,845 (31,021,435) (947,152) (9,203,251) 4,695,232
31,825 36,143,959 598,147 6,605,989 61,782,753
(5,385,541) (2,161) (140,480) (2,199,560) (61,782,753)
(5,353,716) 36,141,798 457,667 4,406,429 -
739,129 5,120,363 (489,485) (4,796,822) 4,695,232
4,184,187 12,117,089 46,313,565 82,796,243 254,690,670
$ 4,923,316 $ 17,237,452 $ 45,824,080 $ 77,999,421 $ 259,385,902
- 19-
OP
Exhibit F
PALM DESERT REDEVELOPMENT AGENCY +err
RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES AND we
CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS
TO THE STATEMENT OF ACTIVITIES
op
For the year ended June 30,2009
vat
Net change in fund balances-total governmental funds $ 4,695,232
+�r
Amounts reported for governmental activities in the Statement of Activities are
different because:
1144,
Governmental funds report capital outlays as expenditures. However,in the
Statement of Activities,the costs of those assets are allocated over their
estimated useful lives as a depreciation expense. This is the amount by
which capital assets deletions and depreciation($21,043,419)exceeded
capital assets addition($10,078,803)in the current period. (10,964,616)
The issuance of long-term debt provides current financial resources to
governmental funds,while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither
transaction,however,has any effect on net assets. Also,governmental funds
report the effect of issuance costs,premiums,discounts and similar items
when the debt is first issued,whereas these amounts are deferred and OPP
amortized in the Statement of Activities. These amounts are the net effect of
theses differences in the treatment of long-term debt and related items:
Principal payments $ 12,732,707 srw
Capital accretion (1,516.775)
11,215,932
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 212,564
The cost of issuing bonds is recognized as an expenditure in the period paid,
however,in the Statement of Net Assets,the deferred charges are amortized
over the life of the bonds. (506,523)
mok
Premium on bonds is recognized as an expenditure in the period paid,however
in the Statement of Net Assets it is amortized over the life of the bond. 475,703Lim
Losses on defeased bonds are recorded in the Statement of Net Assets as a
reduction to long-term liabilities and amortized over the life of the bonds. (122,715) , ,
Revenue will not be collected within 60 days of the Agency's fiscal year end
and,therefore,are not considered available in the governmental funds:
Interest not received on development disposition agreement. 37,216
Change in net assets of governmental activities $ 5,042,793
See independent auditors'report and notes to basic financial statements.
*04
-20-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
June 30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Basis of Presentation:
Government-Wide Financial Statements
The government-wide financial statements (i.e., the statement of net assets and the statement of
activities) report information on all of the activities of the Agency. For the most part, the effect
of interfund activity has been removed from these statements. Governmental activities, which
normally are supported by taxes and intergovernmental revenues, are reported separately from
business-type activities, which rely to a significant extent on fees and charges for support. The
Palm Desert Redevelopment Agency has no business-type activities.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include: 1) charges to
customers or applicants who purchase, use or directly benefit from goods, services or privileges
provided by a given function or segment, and 2) grants and contributions that are restricted to
meeting the operational or capital requirements of a particular function or segment. Taxes and
other items not properly included among program revenues are reported instead as general
revenues.
Separate financial statements are provided for the governmental funds. Major individual
governmental funds are reported as separate columns in the fund financial statements.
Fund Financial Statements
The accounting system of the Agency is organized and operated on the basis of separate funds,
each of which is considered to be a separate accounting entity. Each fund is accounted for by
providing a separate set of self-balancing accounts that constitute its assets, liabilities, fund
equity, revenues and expenditures. An emphasis is placed on major funds within the
governmental category. A fund is considered major if total assets, liabilities, revenues or
expenditures of that individual governmental fund are at least 10% of the corresponding total
for all funds of that category or type.
See independent auditors' report.
-21 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS e,
(CONTINUED)
June 30, 2009 .w
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): *1.
a. Basis of Presentation (Continued):
Fund Financial Statements (Continued) w4P
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.
40,
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.
41110
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
014
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.
OP
See independent auditors' report. tow
- 22 -
.
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
a. Basis of Presentation (Continued):
Fund Financial Statements (Continued)
Major Governmental Funds (Continued)
Project Area 2 Capital Project Fund is used to account for financial resources to be used for the
acquisition or construction of major capital facilities in Project Area 2.
b. Measurement Focus and Basis of Accounting:
Measurement Focus
Measurement focus is a term used to describe "which" transactions are recorded within the
various financial statements. Basis of accounting refers to "when" transactions are recorded
regardless of the measurement focus applied.
On the government-wide statement of net assets and the statement of activities, activities are
presented using the economic resources measurement focus. Under the economic resources
measurement focus, all (both current and long-term) economic resources and obligations of the
government are reported.
In the fund financial statements, all governmental funds are accounted for on a spending or
"financial flow" measurement focus. This means that only current assets and current liabilities
are generally included on their balance sheets. Their reported fund balances (net current assets)
are considered a measure of "available spendable resources." Governmental fund operating
statements present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets.
Noncurrent portions of long-term receivables due to governmental funds are reported on their
balance sheets, in spite of their spending measurement focus. Special reporting treatments are
used to indicate, however, that they should not be considered "available spendable resources"
since they do not represent net current assets. Noncurrent portions of long-term receivables are
offset by fund balance reserve accounts.
See independent auditors' report.
- 23 -
10
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS .r
(CONTINUED)
June 30, 2009 ..
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): '"'
b. Measurement Focus and Basis of Accounting (Continued):
WA
Basis of Accounting
so
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 ofalat
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.
aap
taaf
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 tio
when payment is due.
ana
Revenues that are susceptible to accrual include property taxes that are levied for and due for
the fiscal year and collected within 60 days after year-end. Property taxes, rents and interest
associated with the current fiscal period are all considered to be susceptible to accrual and so
have been recognized as revenues of the current fiscal period. All other revenue items are
considered to be measurable and available only when cash is received by the government.
c. Investments:
Investments are stated at fair value (quoted market price or the best available estimate thereof).
d. Property Held for Resale:
The Agency purchased land within the Agency's project area. The land held for resale is " "
recorded in the Redevelopment Agency Special Revenue Fund as property held for resale, at
the lower of acquisition cost or net realizable value. At June 30, 2009, the cost of the property
held for resale for various housing properties in Palm Desert totaled $465,834. ask
w
Nib
1118
See independent auditors' report.
- 24 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
e. Prepaid Items and Deposits:
Certain payments to vendors reflect costs applicable to future accounting periods are recorded
as prepaid items in the government-wide and fund financial statements. The Agency has
$35,789 of miscellaneous prepaid items.
f. Property Tax Calendar:
Property taxes are assessed and collected each fiscal year according to the following property
tax calendar:
Lien Date 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.
g. Capital Assets and Depreciation:
Capital assets are reported in the government-wide financial statements. Capital assets are
defined by the Agency as assets with an initial cost of more than $500 and an estimated life in
excess of one year. Such assets are recorded at historical cost or estimated historical cost if
purchased or constructed. Donated capital assets are recorded at estimated fair market value at
the date of donation. The Agency had no infrastructure assets.
The cost of normal maintenance and repairs that do not add to the value of the asset or
materially extend asset lives are not capitalized.
See independent auditors' report.
- 25 -
PALM DESERT REDEVELOPMENT AGENCY
rr
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
lib
June 30, 2009 eli
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): �^
g. Capital Assets and Depreciation (Continued):
Property, plant and equipment are depreciated using the straight-line method over the following
estimated useful lives:
Buildings 40 years
Improvements other than buildings 20 years
ell
Machinery and equipment 5 to 8 years
h. Long-Term Obligations:
In the government-wide financial statements, long-term debt and other long-term obligations
are reported as liabilities. Bond premiums and discounts, as well as issuance costs, are deferred
and amortized over the life of the bonds using the effective interest method. Bonds payable are
tot
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. egt
vet
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 w
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 u►
reported as debt service expenditures.
i. Fund Equity: iw
wir
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.
s
WS
See independent auditors' report.
- 26 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
j. Explanation of differences between Governmental Funds Balance Sheets and the Statement of
Net Assets:
Long-Term Debt
Total Capital Transactions/ Reclassifications Statement
Governmental Related Interest and of Net
Funds Items Payable Eliminations Assets
Assets:
Cash and investments $ 149,525,586 $ - $ - $ - $ 149,525,586
Restricted cash with fiscal agent 154,494,919 - - - 154,494,919
Receivables 10,704,401 - - - 10,704,401
Due from other funds 187,999 - - (187,999) -
Due from other governmental
agencies 27,988 - - - 27,988
Property held for resale 465,834 - - - 465,834
Prepaid items and deposits 35,789 - - - 35,789
Deferred charges - - 10,203,749 - 10,203,749
Capital assets - 158,151,087 - - 158,151,087
Total Assets 315,442,516 158,151,087 10,203,749 (187,999) 483,609,353
Liabilities:
Accounts payable 2,012,682 - - - 2,012,682
Accrued liabilities 101,334 - - - 101,334
Interest payable - - 5,084,801 - 5,084,801
Deposits payable 401,553 - - - 401.553
Due to other funds 187,999 - - (187,999) -
Unearned revenue 30,361 - - - 30,361
Deferred revenue 37,216 - - (37,216) -
Amounts due under
pass-through agreements 53,285,469 - - - 53,285,469
Long-term liabilities-current - - 14,264,707 - 14,264.707
Long-term liabilities-noncurrent - - 416.251.594 - 416.251.594
Total Liabilities 56,056,614 - 435,601,102 (225,215) 491.432,501
Net Assets(Deficit) $ 259,385,902 $158,151,087 $(425,397,353) $ 37,216 $ (7.823,148)
See independent auditors' report.
- 27 -
MP
PALM DESERT REDEVELOPMENT AGENCY
vs
NOTES TO BASIC FINANCIAL STATEMENTS 0110
(CONTINUED)
t
June 30, 2009 go
hit
I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED): ""
WO
k. Explanation of differences between Governmental Funds Operating Statements and the
Statement of Activities: MP
Total Capital Long-Term Cost of Reclassifications Statement
Governmental Related Debt Accrued Issuance/ and of oio
Funds Items Transactions Interest perm amount Eliminations Activities
Revenues: MS
Taxes $ 90,137,057 $ - $ - $ - $ - $ - $ 90,137,057
wok
Intergovernmental 27,579 - - - - - 27,579
Investment earnings 3,889,259 - - - - (69,917) 3,819,342 oimo
Rental income 5,050,479 - - - - (4,883,360) 167,119
roak
Apartment complexes - - - - - 5,006,787 5,006,787
Other revenues 1,180,750 -
(16.294) 1.164.456
NIP
Total Revenues 100.285.124 - - - - 37,216 100,322,340 tow
MkExpenditures:
Current:
General government 14,404.006 2,569,788 - - - (5,669,694) 11,304,100
Payments to other agencies 39,085,940 - - - - - 39,085,940 OP
Apartment complexes - - - - - 5,669,694 5,669,694
Public works - 17,874,212 - - - 599,419 18,473,631
Capital outlay 10,078,803 (10,078,803) - - - - - NO
Debt service:
illb
Interest and fiscal charges 19,288,436 1,163,787 (212,564) 506,523 - 20,746,182
Principal retirement 12.732,707 - (12,732,707) - - - -
iii
Total Expenditures 95,589.892 10,365,197 (11.568,920) (212.564) 506,523 599.419 95.279.547 lig
OW
Other Financing Sources(Uses):
Sale of property - (599,419) - - - 599,419 - Ma
Transfers in 61,782,753 - - - - (61,782,753) -
Transfers out (61.782.753) - - - - 61.782,753 - el
WI
Total Other Financing
Sources(Uses) - (599,419) - - - 599,419 - NO N
Net Change in Fund Balance $ 4.695.232 $(10,964.616) $11.568.920 $ 212.564 $ (506,523) $ 37,216 $ 5.042,793
iii
Rib
NO
See independent auditors' report. wit
- 28 -
.R
W
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
1. Budgetary Accounting:
The Agency uses the following procedures in establishing its budgetary data reported in the
financial statements:
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.
m. Relationship to the City of Palm Desert:
The Palm Desert Redevelopment Agency is an integral part of the reporting entity of the City
of Palm Desert, California. The funds of the Agency have been included within the scope of the
basic financial statements of the City because the City Council of the City of Palm Desert
exercises oversight responsibility over the operations of the Agency. Only the funds of the
Agency are included herein and these financial statements, therefore, do not purport to
represent the financial position or results of operations of the City of Palm Desert.
See independent auditors' report.
- 29 -
so
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009 +•t
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
n. Use of Estimates:
The financial statements are prepared in conformity with accounting principles generally
accepted in the United States of America and, accordingly, include amounts that are based on
management's best estimates and judgments. The financial statements include estimates for
depreciation expense and fair value of investments. Accordingly, actual results could differ
from the estimates.
2. ORGANIZATION AND TAX INCREMENT FINANCING:
OP
The Agency is a separate governmental entity as prescribed in the California Community
Redevelopment law and as set forth in the Health and Safety Code of the State of California. The
Agency consists of Project Area 1, Project Area 2, Project Area 3 and Project Area 4.
In addition, the Agency and the City of Palm Desert (the City) have established the Palm Desert
Financing Authority as a joint power of authority between the Agency and the City for purposes of
financing and funding capital improvements. Transactions related to the joint power for the Agency
are recorded in a debt service fund.
The Palm Desert Housing Authority was established in January 1998, as a component unit of the
Agency and is partly responsible for the administration of providing affordable housing in the City
of Palm Desert. The apartment complexes are operated by the Authority through a management
company. The transactions related to the Housing Authority are reported in a Special Revenue Ito
Fund.
Agency expenses include capital improvement projects and operating costs which include required r
staff support and consultant services.
OP
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
at
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
Olt
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.
ew
at
See independent auditors' report. tot
- 30 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
3. CASH AND INVESTMENTS:
Cash and Investments
Cash and investments reported in the accompanying financial statements consisted of the
following:
Cash and investments pooled with the City $ 147,510,586
Investment in City Bonds 2,015,000
Restricted cash with fiscal agent 154,494,919
$ 304,020,505
Investments Authorized by the California Government Code and the Agency's Investment
Policy
Under provision of the City's investment policy and in accordance with the California Government
Code,the following investments are authorized:
• United States Treasury bills, notes, bonds or certificates of indebtedness
• United States government-sponsored enterprise obligations, participations or other instruments
• Banker's Acceptances issued by commercial banks
• Commercial Paper issued by general corporations
• Negotiable Certificates of Deposits, issued by a nationally or state-chartered bank, a savings
association, a federal association or by a state-licensed branch of a foreign bank
• Time Certificates of Deposit issued by qualified public depositories
• Repurchase Agreements sold by authorized brokers
• Medium-Term Notes issued by corporations organized and operating in the United States, or by
depository institutions operating in the United States and licensed by the United States or by
any state
• Money Market Mutual Funds that are registered with the SEC under the Investment. Act
of 1940
• State of California Local Agency Investment Fund (LAIF) that is managed by the State
Treasurer's Office
• Structured Notes in the form of callable securities or "STRIPS" issued by the United States
Treasury, Federal Agencies or government-sponsored enterprises
• Asset-Backed Commercial Paper issued by special purpose corporations, trusts or limited
liability companies
• Local Government Investment Pools
See independent auditors' report.
- 31 -
orm
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009 .e
3. CASH AND INVESTMENTS (CONTINUED):
Investments Authorized by the California Government Code and the Agency's Investment
Policy (Continued) pp
WPA
The City's Investment policy imposes the following restrictions on the maximum percentage it can
invest in a single type of investment.
Portfolio Single Issuer
Issuer Maximum Maximum
United States Treasury Bills,Notes, Bonds 100% N/A
United States Government-Sponsored Enterprise
Securities 100% 30%
Banker's Acceptances 40% 30%
Commercial Paper 25% 10% ,.,
Negotiable Certificates of Deposit 30% N/A
Time Certificates of Deposit 15% N/A
Repurchase Agreements 20% N/A mat
Medium-Term Corporate Notes 30% 15%
Money Market Mutual Funds 20% N/A
Local Agency Investment Fund (LAIF) $40M/Acct N/A .00
Structured Notes (STRIPS) 20% N/A
Asset-Backed Commercial Paper 25% N/A
Local Government Investment Pools 30% N/A
N/A -Not Applicable
The City's policy is more conservative than state law, which has no issuer concentration limits on who
federal agency debt. The federal agency debt that the City purchases have implied credit ratings of
"AAA/Aaa". op
Investments Authorized by Debt Agreements
Investment of debt proceeds held by bond trustee are governed by provisions of the debt
agreements, rather than the general provisions of the California Government Code or the Agency's
OM
investment policy.
elk
OP
See independent auditors' report.
- 32 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
3. CASH AND INVESTMENTS (CONTINUED):
Disclosures Relating to Interest Rate Risk
Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of
its fair value to changes in market interest rates. One of the ways that the Agency manages its
exposure to interest rate risk is by purchasing a combination of shorter term and longer term
investments and by timing cash flows from maturities so that a portion of the portfolio is maturing
or coming close to maturity evenly over time as necessary to provide the cash flow and liquidity
needed for operations.
Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. The Agency's investment in City of Palm Desert Bonds are not
rated, while investments held by bond trustee consist of money market mutual funds, which are
rated AAA by Standard and Poor's.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The custodial credit risk for
investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a
transaction, a government will not be able to recover the value of its investment or collateral
securities that are in the possession of another party. The California Government Code and the
Agency's investment policy do not contain legal or policy requirements that would limit the
exposure to custodial credit risk for deposits or investments, other than the following provision for
deposits: The California Government Code requires that a financial institution secure deposits
made by state or local governmental units by pledging securities in an undivided collateral pool
held by a depository regulated under state law (unless so waived by the governmental unit). The
market value of the pledged securities in the collateral pool must equal at least 110% of the total
amount deposited by the public agencies. California law also allows financial institutions to secure
the Agency deposits by pledging first trust deed mortgage notes having a value of 150% of the
secured public deposits.
Disclosures Related to Interest Rate Risk, Credit Risk and Custodial Credit Risk:
The Agency's cash and investments are pooled with the City of Palm Desert's cash and
investments. Additional disclosures regarding $147,510,586 pooled investments related to interest
rate risk, credit risk and custodial credit risk are available in the City of Palm Desert's
Comprehensive Annual Financial Report. The Agency's investment in City of Palm Desert Bonds
are due as follows: (1) within 12 months or less $80,000, (2)between 13 and 24 months $95,000,
and (3) over 24 months $1,840,000, for a total of$2,015,000.
See independent auditors' report.
- 33 -
so
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS mkt
(CONTINUED)
June 30, 2009 mw
4. LOANS,NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES:
Receivables consisted of the following at June 30, 2009:
Special
Revenue
Fund ,.M
Low and
Moderate Debt Service Funds
Income Project Project Project Financing
ow
Housing Area 1 Area 2 Area 4 Authority
Accounts $ 35,709 $ 1,303 $ 193 $ 113 $ - wry
Interest 67,863 - - - 6,032
Loans 7,475,884 - - - - so
$ 7,579,456 $ 1,303 $ 193 $ 113 $ 6,032
NO
Capital
Projects Fund Other Total
Project Governmental Governmental
Area 2 Funds Receivables
Accounts $ - $ 29,906 $ 67,224 ow
Interest 1,277 1,086,121 1.161,293
Loans - 2,000,000 9.475.884
$ 1,277 $ 3,116,027 $ 10,704.401
Loans Receivable
a. A loan receivable for the construction of a multi-family affordable housing development dated
June 14, 2001, with a balance of $7,443,238 is due from the Palm Desert Development
Company. The loan is secured by a Deed of Trust, with assignment to property, rent and
fixtures on the housing development located in Palm Desert. Interest is earned and due annually
at a rate of 1% per annum from the date on which the final certificate of occupancy is issued.
Principal on the loan is based on the applicable agency's percentage of positive net cash flow
derived from the operations of the Development.
b. The Agency has $32,646 in home improvement loans. Payments of interest and principal are OP
due monthly on these loans.
410
c. On April 21, 2003, the Agency entered into a loan agreement with The Regents of the ma
University of California, on behalf of its Riverside Campus, to loan various amounts over a 10
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 '"P
balance and interest on the note is due in five annual payments beginning July 15, 2009. As of
June 30, 2009, the amount outstanding on the loan was $2,000,000.
OP
See independent auditors' report.
- 34 -
�ff
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
4. LOANS,NOTES RECEIVABLE AND DUE FROM OTHER GOVERNMENTAL AGENCIES
(CONTINUED):
Loans Receivable (Continued)
d. The Agency has issued loans for several other projects, all of which are secured by a deed of
trust. A valuation allowance equal to the loan balance has been recognized where there is a
significant possibility that these loans either become uncollectible or forgiven by the Agency at
a future date if all the terms of the loans have been met.
Detailed information for these loans is as follows:
Loan
Balance Interest Maturity
Project Name Outstanding Rate Date Secured By Special Provisions of Loan
Self-Help $ 429,000 7.25% 30 years Deed of Trust Loan balance and interest due upon maturity,
Housing Program or 2024 unpaid balance of loan or interest will bear
an interest rate of 12%.
Home Improvement 171,488 N/A N/A Deed of Trust Loan is payable upon change or transfer of
title, refinancing or upon the death of the
Loans borrower. Restrictive convenants are placed
against property to maintain affordability for
up to 45 years in exchange for favorable loan
terms.
Portola Palms 149,040 3.00% 30 years Deed of Trust Loan balance and interest will be forgiven at
Mobilehome Park from date maturity if debtor does not breach the terms
of loan and conditions of either the unit regulatory
agreement or note.
Desert Rose 2,240,734 3.00% 30-45 years* Deed of Trust Loan will be forgiven at maturity unless the
from date debtor is in violation of the unit regulatory
of loan agreement or the deed of trust.
Falcon Crest 3,191,864 3.00% 45 years Deed of Trust Loan is payable upon change or transfer of
from date title, refinancing or upon the death of the
of loan borrower.
Acquisition, 190,510 3.00% 30-45 years Deed of Trust Loan is payable upon change or transfer of
Rehabilitation, from date Assignment title, refinancing or upon the death of the
Resale of loan of Rent borrower. Restrictive convenants are placed
against property to maintain affordability for
up to 45 years in exchange for favorable loan
terms.
*All properties acquired from the Redevelopment Agency after June 2009 will have a 45 year restrictive covenant.
See independent auditors' report.
- 35 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS ,,,»
(CONTINUED)
June 30, 2009
5. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS:
Due To/From Other Funds
The composition of interfund receivables/payables as of June 30, 2009 is as follows:
@dw€
The Project Area 2 Debt Service Fund loans $187,999 to Project Area 2 Capital Projects Fund to
provide temporary funds for operations.
Transfers
The composition of interfund transfers as of June 30, 2009, is as follows:
Transfers To
Special ,.
Revenue
Fund Capital mow
Low and Projects
Moderate Debt Service Funds Fund Other
Income Project Project Project Financing Project Governmental ewe
Transfers From Housing Area 1 Area 2 Area 4 Authority Area 2 Funds Total
Special Revenue Funds:
Low and Moderate
Income Housing $ - $ 120,834 $ 44,978 $ 31,825 $ 8,434,328 $ - $ 3,509,873 $ 12,141.838
Debt Service Funds:
Project Area 1 10,559,307 - - - 19,324,179 - 2.257,973 32,141,459
Project Area 2 3,943,662 - - - 5,229,905 598,147 - 9,771,714
Project Area 4 2,782,546 - - - 2,295,819 - 307,176 5,385,541
Financing Authority 2,161 2,161
Capital Projects Fund:
Project Area 2 - - - - - - 140,480 140.480
Other Governmental
Funds 951,506 - - - 859,728 - 388,326 2,199,560
OP
Totals $ 18,237,021 $ 120,834 $ 44.978 $ 31.825 $ 36,143,959 $ 598,147 $ 6,605,989 $ 61,782,753
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,
OP
2. transfer 20% of tax increments received by RDA Debt Service Funds to the Low and Moderate
Income Housing Special Revenue Fund,
MP
3. transfer allocation of administrative expenses, and
4. transfer revenues to provide for capital projects.
See independent auditors' report.
- 36 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
6. CAPITAL ASSETS:
A summary of changes in capital assets for the year ended June 30, 2009, is as follows:
Balance at Balance at
July 1,2008 Transfers Additions Deletions June 30,2009
Capital assets,not
being depreciated:
Land $ 78,577,471 $ 572,621 $ 2,026,834 $ (4,047,736) $ 77,129,190
Construction-in-progress 28,342,327 (7,485,376) 5,007,852 (14,031,238) 11.833.565
Total capital assets,not
being depreciated 106,919,798 (6,912,755) 7,034,686 (18,078,974) 88.962.755
Capital assets,being
'Y 4 depreciated:
Buildings 81,690,950 6,912,755 3,022,337 - 91,626,042
Improvements other
than buildings 7,857,821 - - (545,680) 7,312,141
Machinery and equipment 292,916 - 21,780 (17,228) 297.468
Total capital assets,
being depreciated 89,841.687 6.912,755 3,044,117 (562,908) 99,235.651
Less accumulated
depreciation for:
Buildings (24,380,009) - (2,167,727) - (26,547,736)
Improvements other
than buildings (3,106,691) - (365,607) 168,251 (3,304,047)
Machinery and equipment (159,082) - (36,454) - (195,536)
Total accumulated
depreciation (27,645,782) - (2,569,788) 168.251 (30,047,319)
Capital assets,being
depreciated,net 62,195,905 6,912,755 474,329 (394.657) 69.188.332
Capital assets,net-
Governmental Activities $169,115,703 $ - $ 7,509,015 $(18,473,631) $158,151,087
Depreciation expense of $2,569,788 is reported with general administration expense in the
Statement of Activities.
See independent auditors' report.
- 37 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
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.
APR
At June 30, 2009, the Agency has an obligation of $53,285,469 to other agencies and entities
related to specific pass-through agreements as follows:
Balance at Balance at
Entity June 30,2008 Additions Payments June 30, 2009
Riverside County-
Capital Improvement $ 12,926,378 * $ 17,995,475 $11,821,165 $ 19,100,688
Riverside County-Schools 817,005 834,791 831,004 820,792
Riverside County-Library 7,723,922 2,071,275 5,535 9,789,662
Riverside County-Fire 3,248,130 3,281,923 3,248,130 3,281,923
Coachella Valley Mosquito ^^
Abatement District 661,403 676,989 661,403 676,989
Coachella Valley Water District 8,204,203 1,522,832 13,552 9,713,483
Desert Community College District 1,410,834 1,446,977 1,436,566 1,421,245
Desert Sands Unified
School District 6,025,957 * 6,305,131 6,326,402 6,004,686
Coachella Valley Recreation
and Park District 511,218 511,403 511,218 511,403
Coachella Valley Resources District 4,926 4,743 4,926 4,743
Palm Springs Unified
School District 338,347 377,837 338,347 377,837
County Juvenile Health District 925,324 1,110,901 1,055,414 980,811 w�
Other Deposits 622,118 193,291 214,202 601,207
$ 43,419,765 $36,333,568 $26,467,864 $ 53,285,469
rr
* The Redevelopment Agency has used bond proceeds for the construction of capital IMP
improvements, which benefit these entities. These entities have agreements with the Ns
Redevelopment Agency, which will allow it to use a portion of these amounts to offset debt
en
service costs.
See independent auditors' report.
- 38 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES:
Schedule of Changes
The following is a schedule of changes in long-term liabilities of the Agency for the fiscal year
ended June 30, 2009:
Balance Repayments/ Balance Due Within
July 1,2008 Additions Reductions June 30,2009 One Year
Project Area No.1
2002A TARRBs,$22,070,000 $ 22,070,000 $ - $ - $ 22,070,000 $ -
2003 TARBs,$19,000,000 19,000,000 - - 19,000,000 -
2004A TARRBs,$24,945,000 21,805,000 - 1,030,000 20,775,000 945,000
2006 A&B TARBs,$62,320,000 58,140,000 - 2,075,000 56,065,000 2,195,000
2007A TARRBs,$32,600,000 30,470,000 - 2,410,000 28,060,000 2,640,000
1995A TARRBs,$6,305,000 635,000 - 635,000 - -
Advances from City 6,663,940 - - 6.663,940 -
Total $ 158,783,940 $ - $ 6.150,000 $ 152,633,940 $ 5,780,000
Project Area No.2
2002A TARRBs,$17,310,000 $ 14,030,000 $ - $ 675,000 $ 13,355,000 $ 695,000
2003 TARBs,$15,745,000 15,745,000 - - 15,745,000 -
2006 A-D TARBs,$67,618,213 68,638,975 1,031,046 1,320,000 68,350,021 2,015,000
Advances from City 15,991,060 - - 15,991,060 -
County note payable 490,828 - 122,707 368,121 122,707
Total $ 114,895,863 $ 1.031,046 $ 2.117,707 $ 113,809,202 $ 2,832,707
Project Area No.3
2003 TARBs,$4,745,000 $ 4,220,000 $ - $ 100,000 $ 4,120,000 $ 100,000
2006 A-C TABs,$15.059,526 15,386,115 205,661 25,000 15,566,776 135,000
Total $ 19,606,115 $ 205,661 $ 125,000 $ 19,686,776 $ 235,000
Project Area No.4
1998 TARBs,$11,02,000 $ 8,355,000 $ - $ - $ 8,355,000 $ -
2001 TARBs,$15,695,000 14,510,000 - 310,000 14,200,000 305,000
2006A TARBs,$19,273,089 19,774,610 280,068 200,000 19,854,678 445.000
Total $ 42,639,610 $ 280,068 $ 510.000 $ 42,409,678 $ 750,000
Combined Low and Moderate Housing
1998 TARBs,$48,760,000 $ 5,070.000 $ - $ 685,000 $ 4,385,000 $ 1,390,000
2002 TARBs,$12,100,000 10,875,000 - 265,000 10,610,000 275,000
2007 TARBs,$86,155,000 83,970,000 - 2,880,000 81,090.000 3,005,000
Total $ 99,915,000 $ - $ 3,830,000 $ 96,085,000 $ 4,670.000
Total-All Project Areas
Bonds payable $ 412,694,700 $ 1,516,775 $ 12,610,000 $ 401,601,475 $ 14.145,000
Advances from City 22,655,000 - - 22,655,000 -
County note payable 490,828 - 122,707 368,121 122,707
Subtotal 435,840,528 1,516.775 12,732,707 424,624,596 14,267.707
Add:
Unamortized bond premium 7,850,943 - 475.703 7,375,240 -
Less:
Deferred amount on refunding 1,606,250 - 122,715 1,483,535 -
Total $ 442,085.221 $ 1.516,775 $ 13,085,695 $ 430.516,301 $ 14,267,707
See independent auditors' report.
- 39 -
ew
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009 1*14
tkiki
8. LONG-TERM LIABILITIES (CONTINUED): m.
A description of long-term liabilities outstanding (excluding defeased debt) of the Agency as of
June 30, 2009, follows:
4.4
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
W.
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 lilt
State of California nor any of its political subdivisions is liable on the bonds, nor in any event shall
the bonds, and interest thereon, be payable out of any funds or properties other than those provided
under the Bond Resolution. The Agency purchased insurance from Ambac Assurance Corporation `.
(Ambac) and MBIA Insurance Corporation (MBIA) for the purpose of enhancing the
creditworthiness of the bonds. Since the date of purchase, Ambac and MBIA's ratings by Moody's
Investors Services have been downgraded from "AAA" to "Caa2", and "AAA" to "B3",
respectively. 4.4
Pursuant to California Health and Safety Code Section 33670, the total number of dollars of taxes
which may be divided and allocated to the Agency for Project Area No. 1 is $500,000,000, net tax
increment and it is estimated that the cap will be reached in the year 2022. Project Area No. 4's
total is $600,000,000, gross tax increment and it is estimated that this cap will be reached in the
year 2034. The result of reaching the cap limits would preclude the Agency from receiving taxes
and using the taxes to pay debt in these project areas, thereby requiring the Agency to call bonds
prior to those dates.
Po
I.
MP
OM
.�r
.e
See independent auditors' report.
- 40 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
2002 Series A Tax Allocation Refunding Revenue Bonds (Project Area No. 1 as Amended)
In March 2002, the Palm Desert Financing Authority issued $22,070,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 1 as Amended) 2002 Series A. The proceeds from the
bonds were loaned to the Palm Desert Redevelopment Agency. A portion of the proceeds of the
loan was used to prepay the prior loan, which effected the current refunding of a like portion of the
prior bonds. The remainder was used to fund various redevelopment capital projects of the Agency
in Project Area No. 1. The bonds consist of serial bonds of $10,905,000 at 5.00% due
April 1, 2025, and $11,165,000 in term bonds at 5.10% due April 1, 2030. Interest is payable
semi-annually on April 1 and October 1. Mandatory sinking fund redemptions begin April 1, 2024.
The future debt service requirements on the 2002 Series A Tax Allocation Refunding Revenue
Bonds (Project Area No. 1, as amended) are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ - $ 1,114,665 $ 1,114,665
2011 - 1,114,665 1,114,665
2012 - 1,114,665 1,114,665
2013 - 1,114,665 1,114,665
2014 - 1,114,665 1,114,665
2015 - 2019 - 5,573,325 5,573,325
2020 - 2024 4,780,000 5,573,325 10,353,325
2025 - 2029 14,830,000 2,515,060 17,345,060
2030 2,460,000 125,460 2,585,460
22,070,000 $ 19,360,495 $ 41,430,495
See independent auditors' report.
- 41 -
MOW
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Series 2003 Tax Allocation Revenue Bonds (Project Area No. 1) 4M„
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 4
the Redevelopment Agency. The Agency used the proceeds of the loan to fund various
redevelopment capital projects of the Agency and to finance costs of issuance of the bonds. The
bonds bear interest at 5.0%. They consist of$7,050,000 serial bonds with principal payments due
in 2026 and 2027, and $11,950,000 term bonds due in 2030. Interest will be payable on April 1 and
October 1, of each year, beginning April 1, 2004. Principal payments will be on April 1 of the
years stated above.
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project
Area No. 1) are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ - $ 950,000 $ 950,000
2011 - 950,000 950,000
2012 - 950,000 950,000
2013 - 950,000 950,000
2014 - 950,000 950,000
2015 -2019 - 4,750,000 4,750,000
2020 - 2024 - 4,750,000 4,750,000
2025 - 2029 14,820,000 3,683,500 18,503,500
2030 4,180,000 209,000 4,389,000 ..
$ 19,000,000 $ 18,142,500 $ 37,142,500
fib
rw
OOP
See independent auditors' report. 00
- 42 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
2004 Series A Tax Allocation Refunding Revenue Bonds (Project Area No. 1 as Amended)
In June 2004, the Palm Desert Financing Authority issued $24,945,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 1 as Amended) 2004 Series A. The proceeds from the
bonds were loaned to the Palm Desert Redevelopment Agency to refinance a portion of the
Agency's obligations from 1995 and to fund various redevelopment capital projects within or of
benefit to the project area. Interest rates on the bonds vary from 3.0% to 5.0% per annum payable
semi-annually on April 1 and October 1. Principal payments will be made annually beginning
April 1, 2005.
The future debt service requirements on the 2004 Series A Tax Allocation Revenue Bonds (Project
Area No. 1, as amended) are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ 945,000 $ 974,313 $ 1,919,313
2011 1,130,000 927,063 2,057,063
2012 1.050,000 876,213 1,926,213
2013 1,155,000 828,963 1,983,963
2014 1,210,000 7 76,98 8 1,986,988
2015 - 2019 6,730,000 3,072,513 9,802,513
2020 - 2024 7,295,000 1,400,100 8,695,100
2025 1,260,000 63,000 1,323,000
$ 20,775,000 $ 8,919,153 $ 29,694,153
See independent auditors' report.
-43 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation Revenue Bonds (Project Area No. 1, as Amended) 2006 Series A and Series B 5fe
(Taxable)
On July 6, 2006, the Palm Desert Financing Authority issued $37,780,000 of Tax Allocation
Revenue Bonds (Project Area No. 1, as Amended) 2006 Series A and $24,540,000 of Tax
Allocation Refunding Revenue Bonds (Project Area No. 1, as Amended) 2006 Series B (Taxable).
The Palm Desert Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment
Agency. The proceeds of the Series A loan will be used to assist the Agency to fund various
redevelopment capital projects within or of benefit to Project Area No. 1, as Amended,pay costs of
issuance and pay the premium on a Reserve Fund surety bond. The proceeds of the Series B loan
will be used to refinance the Agency's obligations incurred under a loan agreement entered into in ,
1997, pay costs of issuance and pay the premium on a Reserve Fund surety bond. The Series A
bonds consist of $26,415,000 Serial Bonds with interest rates ranging from 4.70% to 5.25%
payable semiannually on October 1 and April 1. Bond maturities begin April 1, 2017, and continue
annually through 2030. Term bonds in the amount of$11,365,000 carry an interest rate of 5.00%
and mature April 1, 2022. The Series B bonds consist of$13,220,000 Serial Bonds with interest
rates ranging from 5.56% to 5.77% payable semiannually on October 1 and April 1. Bond
maturities began April 1, 2007, and continue annually through 2012. Term bonds in the amount of
$11,320,000 carry an interest rate of 5.82% and mature April 1, 2016.
The future debt service requirements on the 2006 Series A and Series B Tax Allocation Revenue
Bonds (Project Area No. 1, as amended) are as follows:
Year Ending ,..,
June 30, Principal Interest Total
2010 $ 2,195,000 $ 2,974,259 $ 5,169,259
2011 2,320,000 2,848,266 5,168,266
2012 2,450,000 2,714,634 5,164,634 mow
2013 2,595,000 2,573,269 5,168,269
mot
2014 2,745,000 2,422,240 5,167,240
2015 - 2019 13,050,000 9,946,464 22,996,464 lop
2020 - 2024 25,300,000 4,821,000 30,121,000
2025 - 2029 5,120,000 601,818 5,721,818
2030 290.000 13,775 303,775 ma
$ 56,065,000 $ 28,915,725 $ 84,980,725
•
See independent auditors' report.
-44-
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation Refunding Revenue Bonds (Project Area No. 1, as amended) 2007 Series A
On January 9, 2007, the Palm Desert Financing Authority issued $32,600,000 Tax Allocation
Refunding Revenue Bonds (Project Area No. 1, as amended) 2007 Series A. The Palm Desert
Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment Agency. The
proceeds of the 2007 Loan will be used to refinance a portion of the outstanding obligations of the
Redevelopment Agency, fund various redevelopment capital projects within the Palm Desert
Redevelopment Agency Project Area No. 1, as amended, and pay the costs associated with the
issuance of the bonds. The Series A bonds consist of$32,600,000 Serial Bonds with interest rates
ranging from 3.50% to 5.00% payable semiannually on October 1 and April 1. Bond maturities
began April 1, 2008 and continue annually through 2018.
The future debt service requirements on the 2007 Series A Tax Allocation Refunding Revenue
Bonds (Project Area No. 1, as amended) are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ 2,640,000 $ 1,320,425 $ 3,960,425
2011 2,625,000 1,201,625 3,826,625
2012 2,870,000 1,083,500 3,953,500
2013 2,955,000 940,000 3,895,000
2014 3,100,000 794,500 3,894,500
2015 - 2019 13,870,000 1,764,500 15,634,500
$ 28,060,000 $ 7,104,550 $ 35,164,550
See independent auditors' report.
- 45 -
amp
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS �.
(CONTINUED)
June 30, 2009 .,R
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
1995 Series A Tax Allocation Revenue Refunding Bonds (Project Area No.1)
In August 1995, the Palm Desert Financing Authority issued $6,305,000 in Tax Allocation
Revenue Refunding Bonds 1995 Series A. The proceeds from the bonds were loaned to the Palm
Desert Redevelopment Agency to provide funds to refund in advance $6,430,000 of the 1988 Tax
Allocation Bonds. The Bonds were paid off during the year.
2002 Series A Tax Allocation Refunding Revenue Bonds (Project Area No. 2) ,e
In July 2002, the Palm Desert Financing Authority issued $17,310,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 2). The Palm Desert Financing Authority loaned the
bond proceeds to the Palm Desert Redevelopment Agency to prepay outstanding indebtedness and
to fund various redevelopment capital projects within or of benefit to the project area. Interest rates
on the bonds vary from 3.0% to 5.0% per annum payable semi-annually on February 1 and 04,
August 1.
The future debt service requirements on the 2002 Series A Tax Allocation Refunding Revenue •*
Bonds (Project Area No. 2) are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ 695,000 $ 607,867 $ 1,302,867
2011 720,000 581,497 1,301,497
2012 760,000 548,638 1,308,638
2013 795,000 509,763 1,304,763 op
2014 835,000 472,353 1,307,353
2015 - 2019 4,780,000 1,759,947 6,539,947 ork
2020 - 2023 4,770,000 491,150 5,261,150 ,
$ 13,355,000 $ 4,971,215 $ 18,326,215
atfr
le
1011
See independent auditors' report. woo
-46 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Series 2003 Tax Allocation Revenue Bonds (Project Area No. 2)
In March 2003, the Palm Desert Financing Authority issued $15,745,000 of Tax Allocation
Revenue Bonds (Project Area No. 2) Series 2003. The Palm Desert Financing Authority loaned the
bond proceeds to the Palm Desert Redevelopment Agency to fund various redevelopment capital
projects of the Agency in Project Area No. 2. Interest rates on the bonds vary from 4.5% to 5.0%
per annum payable semi-annually on February 1 and August 1, with principal maturing as follows:
$ 875,000 Serial Bonds August 1, 2023
910,000 Serial Bonds August 1, 2024
2,485,000 Term Bonds August 1, 2026
11,475,000 Term Bonds August 1, 2033
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project
k
Area No. 2) are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ - $ 769,006 $ 769,006
2011 - 769,006 769,006
2012 - 769,006 769,006
2013 - 769,006 769,006
2014 - 769,006 769,006
2015 - 2019 - 3,845,031 3,845,031
2020 - 2024 875,000 3,825,344 4,700,344
2025 -2029 6,275,000 2,981,347 9,256,347
2030 - 2034 8,595,000 1,117,625 9,712,625
$ 15,745,000 $ 15,614,377 $ 31,359,377
See independent auditors' report.
- 47 -
so
PALM DESERT REDEVELOPMENT AGENCY
.r
NOTES TO BASIC FINANCIAL STATEMENTS ,.
(CONTINUED)
so
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Project Area No. 2 Tax Allocation Refunding Revenue Bonds 2006 Series A, Tax Allocation
Revenue Capital Appreciation Bonds 2006 Series B, Revenue Bonds 2006 Series C and
Subordinate Tax Allocation Revenue Capital Appreciation Bonds 2006 Series D
On July 25, 2006, the Palm Desert Financing Authority issued its Project Area No. 2, $41,340,000
Tax Allocation Refunding Revenue Bonds 2006 Series A, $1,567,118 Tax Allocation Revenue
Capital Appreciation Bonds 2006 Series B, $7,775,000 Tax Allocation Revenue Bonds "'o
2006 Series C and $16,936,095 Subordinate Tax Allocation Revenue Capital Appreciation Bonds
2006 Series D. The Palm Desert Financing Authority loaned the bond proceeds to the Palm Desert
Redevelopment Agency. The proceeds of the Series A, B and C Bonds will be used to make three
loans to refinance the Agency's obligations incurred under a loan agreement entered into in 1995,
fund various redevelopment capital projects within or of benefit to its Project Area No. 2, purchase
a Reserve Fund surety policy bond and pay costs of issuance of the bonds. The Agency will use
the proceeds of the Series D Bonds to fund various redevelopment capital projects within or of
benefit to the Project Area, fund a debt service reserve fund and pay cost of issuance of the bonds.
The Series A bonds consist of$16,250,000 Serial Bonds with interest rates ranging from 4.00% to *�
5.00% payable semiannually on August 1 and February 1. Bond maturities begin August 1, 2007,
and continue annually through 2026. Term bonds in the amount of$8,225,000 carry an interest
rate of 4.90% and mature August 1, 2031. Term bonds in the amount of $16,865,000 carry an
interest rate of 5.125% and mature August 1, 2036. The Series B bonds consist of $1,567,118
Capital Appreciation Bonds with a reoffering yield ranging from 3.85% to 4.08%. Bond maturities
begin April 1, 2007, and continue annually through 2010. The Series C bonds consist of
$3,950,000 Serial Bonds with interest rates ranging from 3.90% to 4.90% payable semiannually on
August 1 and February 1. Bond maturities begin August 1, 2010, and continue annually through
2026. Term bonds in the amount of $1,910,000 carry an interest rate of 4.90% and mature
August 1, 2031. Term bonds in the amount of $1,915,000 carry an interest rate of 5.00% and
mature August 1, 2035. The Series D bonds consist of $16,936,095 Capital Appreciation Bonds
with a reoffering yield ranging from 4.65% to 6.10%. Bond maturities began August 1, 2007, and
continue annually through 2035. Each year the outstanding balance is increased for the accretion
of interest associated with the bonds. The accreted interest at June 30, 2009, is $2,860,841.
A
410
See independent auditors' report. les
- 48 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Project Area No. 2 Tax Allocation Refunding Revenue Bonds 2006 Series A, Tax Allocation
Revenue Capital Appreciation Bonds 2006 Series B, Revenue Bonds 2006 Series C and
Subordinate Tax Allocation Revenue Capital Appreciation Bonds 2006 Series D (Continued)
The debt service requirements schedules on the 2006 Series A Tax Allocation Refunding Revenue
Bonds, Series B Tax Allocation Revenue Capital Appreciation Bonds, Series C Revenue Bonds
and Series D Subordinate Tax Allocation Revenue Capital Appreciation Bonds (Project Area
No. 2) do not agree to the liability for those bonds shown in the schedule of changes. These bond
issues include capital appreciation bonds, which are issued at a discount. The carrying amount of
these bonds accretes, or increases each year. The amount shown in the schedule of changes include
the accreted value to date. The future debt service requirements are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ 1,777,789 $ 2,595,139 $ 4,372,928
2011 1,547,001 2,589,956 4,136,957
2012 1,647,818 2,561,720 4,209,538
2013 1,808,558 2,628,779 4,437,337
2014 1,880,353 2,681,585 4,561,938
2015 - 2019 7,767,793 12,577,044 20,344,837
2020 - 2024 9,570,330 13,693,667 23,263,997
2025 -2029 11,989,204 13,730,253 25,719,457
2030 -2034 12,855,785 10,851,033 23,706,818
2035 - 2037 14,644,549 4,170,432 18,814,981
$ 65,489,180 $ 68,079,608 $ 133,568,788
See independent auditors' report.
- 49 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS „s
(CONTINUED)
June 30, 2009 ..
8. LONG-TERM LIABILITIES (CONTINUED):
Wtat
Tax Allocation Bonds (Continued)
Series 2003 Tax Allocation Revenue Bonds (Project Area No. 3)
In July 2003, the Financing Authority issued $4,745,000 Tax Allocation Revenue Bonds (Project
Area No. 3) Series 2003. The proceeds of the bonds were disbursed to make a loan to the
Redevelopment Agency. The Agency will use the proceeds of the loan to fund various
redevelopment capital projects within or of benefit to the project area and to finance costs of
issuance of the bonds. The bonds bear interest at rates ranging from 3.000% to 5.125%. Principal ow
maturities for the serial bonds of$2,475,000 began April 1, 2004, and continue through October 1, MINP
2031. The term bonds in the amount of$2,270,000 are due in 2033.
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project „o
Area No. 3) are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ 100,000 $ 193,048 $ 293,048
2011 105,000 189,848 294,848 ..
2012 110,000 186,225 296,225
2013 115,000 182,265 297,265
2014 120,000 177,953 297,953
2015 - 2019 660,000 814,847 1,474,847
2020 - 2024 820,000 656,858 1,476,858
2025 -2029 1,050,000 433,063 1,483,063
2030 -2033 1,040,000 136,581 1,176,581
OP
$ 4,120,000 $ 2,970,688 $ 7,090,688
OP
PO
ON
See independent auditors' report.
- 50 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Project Area No. 3 Tax Allocation Revenue Bonds 2006 Series A, Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series B and Subordinate Tax Allocation Revenue Capital Appreciation
Bonds 2006 Series C
ra On July 25, 2006, the Palm Desert Financing Authority issued its Project Area No. 3, $11,915,000
Tax Allocation Revenue Bonds 2006 Series A, $383,660 Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series B and $2,760,866 Subordinate Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series C. The Palm Desert Financing Authority loaned the bond
proceeds to the Palm Desert Redevelopment Agency. The proceeds of the Series A and B Bonds
will be used to make two loans to fund various redevelopment capital projects within or of benefit
to its Project Area No. 3, purchase a Reserve Fund surety policy and pay the costs of issuance of
the bonds. The Agency will loan the proceeds of the Series C Bonds to fund various
redevelopment capital projects within or of benefit to the Project Area, fund a debt service reserve
fund and pay the costs of issuance of the bonds.
The Series A bonds consist of$2,980,000 Serial Bonds with interest rates ranging from 4.00% to
4.75% payable semiannually on April 1 and October 1. Bond maturities begin April 1, 2007, and
continue annually through 2025. Term bonds in the amount of$4,465,000 carry an interest rate of
4.75% and mature April 1, 2036. Term bonds in the amount of$4,470,000 carry an interest rate of
5.00% and mature April 1, 2041. The Series B bonds consist of $383,660 Capital Appreciation
Bonds with a yield ranging from 5.31% to 5.54%. Bond maturities are April 1, 2020, 2021, 2027
and 2028. The Series C bonds consist of $2,760,866 Capital Appreciation Bonds with a yield
ranging from 4.80% to 6.10%. Bond maturities began April 1, 2009, and continue annually
through 2034. Each year the outstanding balance is increased for the accretion of interest
associated with the bonds. The accreted interest at June 30, 2009, is $569,262.
See independent auditors' report.
- 51 -
PALM DESERT REDEVELOPMENT AGENCY
)46
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009 a.
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Project Area No. 3 Tax Allocation Revenue Bonds 2006 Series A, Tax Allocation Revenue Capital
Appreciation Bonds 2006 Series B and Subordinate Tax Allocation Revenue Capital Appreciation
Bonds 2006 Series C (Continued)
The debt service requirements schedules on the 2006 Series A Tax Allocation Revenue Bonds,
OP
Series B Tax Allocation Revenue Capital Appreciation Bonds and Series C Subordinate Tax
Allocation Revenue Capital Appreciation Bonds (Project Area No. 3) do not agree to the liability '"`
for those bonds shown in the schedule of changes. These bond issues include capital appreciation OP
bonds, which are issued at a discount. The carrying amount of these bonds accretes, or increases
each year. The amount shown in the schedule of changes includes the accreted value to date. The tat
future debt service requirements are as follows:
Year Ending
June 30, Principal Interest Total UPI
2010 $ 126,100 $ 573,175 $ 699,275
2011 160,871 570,204 731,075
2012 198,934 562,141 761,075 ""'
2013 228,133 565,742 793,875
2014 254,760 571,715 826,475
•
2015 - 2019 1,639,310 3,015,003 4,654,313
2020 - 2024 1,750,563 3,764,087 5,514,650 116
2025 - 2029 1,901,982 4,098,668 6,000,650
at
2030 - 2034 2,761,861 4,012,927 6,774,788
il
2035 - 2039 4,055,000 1,102,063 5,157,063 "`
2040 - 2041 1,920,000 145.250 2,065.250 int
$ 14,997,514 $ 18,980,975 $ 33,978,489
Wit
el
+rr
See independent auditors' report. two
- 52 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
1998 Series Tax Allocation Revenue Bonds (Project Area No. 4)
On March 1, 1998, the Palm Desert Financing Authority issued $11,020,000 of Tax Allocation
Revenue Bonds (Project Area No. 4) Series 1998. The proceeds from the bonds were loaned to the
Palm Desert Redevelopment Agency to fund various redevelopment capital projects of the Agency
in Project Area No. 4. Interest rates on the bonds vary from 4.0% to 5.2%per annum payable semi-
annually on April 1 and October 1, with principal maturing annually on October 1. In July 2006
$1,785,000 of the outstanding balance was advance refunded by the issuance of Tax Allocation
Refunding Revenue Bonds (Project Area No. 4) 2006 Series A.
The future debt service requirements on the 1998 Series Tax Allocation Revenue Bonds (Project
Area No. 4) (after defeasance) are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ - $ 429,590 $ 429,590
2011 130,000 426,665 556,665
2012 135,000 420,635 555,635
2013 140,000 414,240 554,240
2014 145,000 407,506 552,506
2015 - 2019 1,975,000 1,778,371 3,753,371
2020 - 2024 2,545,000 1,198,990 3,743,990
2025 - 2029 3,285,000 444,470 3,729,470
$ 8,355,000 $ 5,520,467 $ 13,875,467
See independent auditors' report.
- 53 -
es
PALM DESERT REDEVELOPMENT AGENCY
WO
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED) tea
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED): �.
Tax Allocation Bonds (Continued)
2001 Series Tax Allocation Revenue Bonds (Project Area No. 4) ow
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 two
Palm Desert Redevelopment Agency to fund various redevelopment capital projects of the Agency
in Project Area No. 4. Interest rates on the bonds vary from 3.5% to 4.9%per annum payable semi-
annually on April 1 and October 1, with principal maturing annually on October 1.
WV
The future debt service requirements on the 2001 Series Tax Allocation Revenue Bonds (Project
Area No. 4) are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ 305,000 $ 651,250 $ 956,250
2011 320,000 639,909 959,909
2012 325,000 628,011 953,011
2013 345,000 614,805 959,805
2014 365,000 599,909 964,909
2015 -2019 2,050,000 2,743,198 4,793,198
2020 -2024 2,565,000 2,214,740 4,779,740
2025 - 2029 3,200,000 1,533,120 4,733,120
2030 - 2032 4,725,000 347,160 5,072,160 so
$ 14,200,000 $ 9,972,102 $ 24,172,102
OM
OP
.r
OP
See independent auditors' report. ONO
- 54 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation Refunding Revenue Bonds (Project Area No. 4) 2006 Series A and Tax Allocation
Revenue Capital Appreciation Bonds (Project Area No. 4) Series B
On July 25, 2006, the Palm Desert Financing Authority issued $14,610,000 of Tax Allocation
Refunding Revenue Bonds (Project Area No. 4) 2006 Series A and $4,663,089 of Tax Allocation
Revenue Capital Appreciation Bonds (Project Area No. 4) 2006 Series B. The Palm Desert
Financing Authority loaned the bond proceeds to the Palm Desert Redevelopment Agency.
The proceeds of the Series A and B Bonds will be used to make two loans to refinance a portion of
the outstanding obligations of the Redevelopment Agency under a loan agreement dated
March 1, 1998, fund various redevelopment capital projects within or of benefit to its Project Area
No. 3, purchase a Reserve Fund surety policy and pay the costs of issuance of the bonds. The
Series A bonds consist of$8,155,000 Serial Bonds with interest rates ranging from 4.40% to 5.00%
payable semiannually on October 1 and April 1. Bond maturities began October 1, 2008, and
continue annually through 2026. Term bonds in the amount of$2,200,000 carry an interest rate of
5.00% and mature October 1, 2029. Term bonds in the amount of$4,255,000 carry an interest rate
of 5.00% and mature October 1, 2034. The Series B bonds consist of $4,663,089 Capital
Appreciation Bonds with a yield ranging from 4.14% to 5.56%. Bond maturities begin
October 1, 2009 and continue annually through 2034. Each year the outstanding balance is
increased for the accretion of interest associated with the bonds. The accreted interest at
June 30, 2009, is $781,589.
See independent auditors' report.
- 55 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009 .�.
8. LONG-TERM LIABILITIES (CONTINUED): oft
Tax Allocation Bonds (Continued)
Tax Allocation Refunding Revenue Bonds (Project Area No. 4) 2006 Series A and Tax Allocation
Revenue Capital Appreciation Bonds (Project Area No. 4) Series B (Continued)
The debt service requirements schedules on the 2006 Series A Tax Allocation Refunding Bonds 40
and Series B Tax Allocation Revenue Capital Appreciation Bonds (Project Area No. 4) do not
agree to the liability for those bonds shown in the schedule of changes. These bond issues include
capital appreciation bonds, which are issued at a discount. The carrying amount of these bonds Nit
accretes, or increases each year. The amount shown in the schedule of changes includes the 10
accreted value to date. The future debt service requirements are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ 439,497 $ 686,949 $ 1,126,446
2011 435,000 662,658 1,097,658
2012 554,233 657,612 1,211,845
2013 656,190 651,686 1,307,876
2014 779,182 635,195 1,414,377 OF
2015 - 2019 1,833,756 2,786,779 4,620,535
2020 - 2024 2,367,037 2,891,481 5,258,518
2025 -2029 4,290,643 3,288,956 7,579,599
2030 -2034 5,816,888 7,561,987 13,378,875
2035 1,900,663 2,102,837 4,003,500
$ 19,073,089 $ 21,926,140 $ 40,999,229 r"
or
eta
ea
aii
See independent auditors' report.
- 56 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
1998 Series Tax Allocation (Housing Set-Aside) Revenue Bonds
In January 1998, the Palm Desert Financing Authority issued $48,760,000 in Tax Allocation
(Housing Set-Aside) Revenue Bonds. The proceeds from the bonds were loaned to the Palm Desert
Redevelopment Agency to finance the acquisition of seven apartment complexes consisting of 725
rental units from the Housing Authority of the County of Riverside. Interest rates on the bonds vary
from 4.0% to 5.1% per annum payable semi-annually on April 1 and October 1 with principal
maturing annually on October 1. In February 2007 $38,740,000 of the outstanding balance was
advance refunded by the issuance of Tax Allocation (Housing Set-Aside) Refunding Revenue
Bonds Series 2007.
The future debt service requirements on the 1998 Series Tax Allocation (Housing Set-Aside)
Revenue Bonds (after defeasance) are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ 1,390,000 $ 184,500 $ 1,574,500
2011 1,460,000 113,250 1,573,250
2012 1,535,000 38,375 1,573,375
$ 4,385,000 $ 336,125 $ 4,721,125
See independent auditors' report.
- 57 -
PALM DESERT REDEVELOPMENT AGENCY
ea
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
vie
June 30, 2009
tot
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
410
2002 Series Tax Allocation (Housing Set-Aside) Revenue Bonds
In August 2002, the Palm Desert Financing Authority issued $12,100,000 of Tax Allocation
(Housing Set-Aside) Revenue Bonds Series 2002. The Palm Desert Financing Authority loaned the
bond proceeds to the Palm Desert Redevelopment Agency to fund various low and moderate
housing capital projects of the Agency and to finance costs of issuance of the bonds. Interest rates u'
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 001
bonds bear an interest rate of 5.0%per annum and mature October 1, 2031.
The future debt service requirements on the 2002 Series Tax Allocation (Housing Set-Aside)
Revenue Bonds are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ 275,000 $ 491,454 $ 766,454
2011 285,000 481,298 766,298
2012 295,000 470,201 765,201
2013 305,000 458,348 763,348
2014 320,000 445,848 765,848
2015 - 2019 1,805,000 2,014,791 3,819,791
2020 - 2024 2,280,000 1,550,077 3,830,077
2025 - 2029 2,915,000 911,625 3,826,625
2030 - 2032 2,130,000 163,250 2,293,250 W6
OP
$ 10,610,000 $ 6,986,892 $ 17,596,892
al
MO
See independent auditors' report.
- 58 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
8. LONG-TERM LIABILITIES (CONTINUED):
Tax Allocation Bonds (Continued)
Tax Allocation (Housing Set-Aside) Refunding Revenue Bonds Series 2007
On February 7, 2007, the Palm Desert Financing Authority issued $86,155,000 Tax Allocation
(Housing Set-Aside) Refunding Revenue Bonds Series 2007. The Palm Desert Financing
Authority loaned the proceeds to the Palm Desert Redevelopment Agency. The proceeds of the
2007 Loan will be used to finance the development of low and moderate income housing by the
Redevelopment Agency, refinance a portion of the outstanding obligations of the Redevelopment
Agency, purchase a debt service surety bond for deposit in the Reserve Fund, and pay certain costs
associated with the issuance of the bonds. The Series 2007 bonds consist of $86,155,000 Serial
Bonds with interest rates ranging from 4.00% to 5.00% payable semiannually on October 1 and
April 1. Bond maturities began October 1, 2007 and continue annually through 2027.
The future debt service requirements on the Tax Allocation (Housing Set-Aside) Refunding
Revenue Bonds Series 2007 are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ 3,005,000 $ 3,736,750 $ 6,741,750
2011 3,135,000 3,606,438 6,741,438
2012 3,265,000 3,478,438 6,743,438
2013 5,005,000 3,313,038 8,318,038
2014 5,235,000 3,082,063 8,317,063
2015 - 2019 30,490,000 11,096,688 41,586,688
2020 - 2024 17,905,000 4,549,031 22,454,031
2025 - 2028 13,050,000 1,139,000 14,189,000
$ 81,090,000 $ 34,001,446 $ 115,091,446
Advances from City
The City of Palm Desert has made advances to the Agency to finance capital projects in the
following amounts: (a) $6,663,940 for Project Area No. 1 and $15,991,060 for Project Area No. 2.
These advances do not have a fixed repayment schedule.
See independent auditors' report.
- 59 -
in
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS .■
(CONTINUED)
rwr
June 30, 2009 .r
8. LONG-TERM LIABILITIES (CONTINUED): ..
Notes Payable
IMP
The Agency entered into a cooperation agreement with the County of Riverside (the County) on 10,
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.
NO
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, 2009, was $368,121. Annual payments on the note are $122,707. The note is non-interest
bearing.
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Future debt service payments are as follows:
Year Ending
June 30, Principal Interest Total
2010 $ 122,707 $ - $ 122,707
2011 122,707 - 122,707
2012 122,707 - 122,707
$ 368,121 $ - $ 368,121
OM
See independent auditors' report.
- 60 -
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
9. RESERVES OF FUND BALANCES:
Special
Revenue
Fund Capital
Low and Projects
Moderate Fund Other
Income Project Governmental
Housing Area 2 Funds Total
Loans receivable $ 7,475,884 $ - $ 2,000,000 $ 9,475,884
Property held for resale 465,834 - - 465,834
Prepaid items and deposits - - 35,789 35,789
Encumbrances 153,401 1,735,139 2,033,597 3,922,137
Continuing appropriations 2,547,111 21,878,691 41,228,935 65,654,737
Reserve requirement - - 27,285 27,285
Totals $ 10,642,230 $ 23,613,830 $ 45,325,606 $ 79,581,666
Reserved for Loans Receivables - These reserves are set up to reflect the noncurrent portion
receivables so that they will not be considered as current funds available.
Reserved for Property Held for Resale - This reserve for property held for resale has been set aside
to indicate that it'will not be considered as current funds available.
Reserved for Prepaid Items and Deposits - These reserves are set up to reflect the noncurrent
portion of the deposits so that they will not be considered as current funds available.
Reserved for Encumbrances - These reserves represent the portion of purchase orders awarded for
which the goods or services had not yet been received at June 30, 2009. Although all
appropriations lapse at year-end, even if encumbered, the City intends either to honor the contracts
in progress or to cancel them. Encumbrances are rebudgeted on July 1, by Council action.
Reserved for Continuing Appropriations - This reserve is for appropriations for capital projects that
are unexpended as of June 30, 2009, and are carried forward as continuing appropriations to be
expended in 2009-2010.
Reserved for Reserve Requirement - These reserves are set up for the maintenance requirements
for the housing apai tments.
See independent auditors' report.
- 61 -
so
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
10. CONDUIT DEBT OBLIGATION: ■,
2003 Series A- $22,310,000 Lease Revenue Bonds
In December 2003, the Palm Desert Financing Authority (Authority) issued $22,310,000 in Lease
Revenue Bonds. The proceeds of the Bonds were used to: a) finance the construction of a County
animal shelter and related facilities located in the unincorporated area of Thousand Palms, am
California; b) finance construction of certain County medical clinic facilities located in Mecca,
California; c) refund the Palm Desert Financing Authority Lease Revenue Bonds Series 1996;
d) acquire a debt service reserve insurance policy; e) fund capitalized interest on the bonds; and
f) pay costs of issuance of the bonds. The Authority will lease sites relating to each project from dirir
the County of Riverside (County) pursuant to a Site Lease dated as of December 1, 2003, and will
lease back to the Countythe Sites and the Facilities °"'�
pursuant to a Facilities Lease dated
December 1, 2003. Under the Lease, the County will pay to the Trustee Base Rental Payments in
the amount equal to the scheduled debt service of the Bonds. The Authority will assign its right to
receive the Base Rental Payments to the Trustee for the benefit of the owners of the bonds. The
debt service on the bonds is to be paid solely from lease payments made by the County. The
Authority has no obligation to make the debt service payments in the event that the County is not
able to make the required base rental payments. As of June 30, 2009, the outstanding amount was
$19,780,000. "
2008 Series A- $72,445,000 Lease Revenue Bonds
■r
In November 2008, the Palm Desert Financing Authority (Authority) issued $72,445,000 in Lease
Revenue Bonds. The proceeds of the Bonds were used to: a) finance the construction, installation,
acquisition, development and rehabilitation of certain public capital improvements within the
County, including the Palm Desert Sheriffs Station Facilities (as described herein), community
centers, a multi-service center, park improvements and other various infrastructure improvements;
b) fund capitalized interest on the 2008 Series A Bonds related to the Palm Desert Sheriff Station
Facilities through August 31, 2010 and with respect to the Multi-Service Center Facilities (as •
described herein) through December 31, 2009; c) fund a deposit into the Reserve Account as
additional security for the 2008 Series A Bonds; and d) pay certain costs associated with the
issuance and delivery of the 2008 Series A Bonds. Under the Lease, the County will pay to the no
Trustee Base Rental Payments in the amount equal to the scheduled debt service of the Bonds. The nib
Authority will assign its right to receive the Base Rental Payments to the Trustee for the benefit of
the owners of the bonds. The debt service on the bonds is to be paid solely from lease payments no
made by the County. The Authority has no obligation to make the debt service payments in the
event that the County is not able to make the required base rental payments. As of June 30, 2009,
the outstanding amount was $72,445,000.
AM
See independent auditors' report.
- 62 -
OP
*ma
PALM DESERT REDEVELOPMENT AGENCY
NOTES TO BASIC FINANCIAL STATEMENTS
(CONTINUED)
June 30, 2009
11. INSURANCE:
The Agency is covered under the City of Palm Desert's insurance. For additional information, see
the City's financial statements.
12. COMMITMENTS AND CONTINGENCIES:
ERAF and SERAF Contingency
During the fiscal year 2008-2009, the State of California experienced a severe budgetary crisis.
Various "budget trailer bills" were passed by the state legislature to balance the state's budget,
including bills that required California redevelopment agencies to transfer funds to the Educational
Revenue Augmentation Fund (ERAF) and Supplemental Educational Revenue Augmentation Fund
(SERAF) administered by the various county auditor-controllers. Noted below is a general
explanation of the ERAF and SERAF legislation, together with the effect of this legislation on the
Palm Desert Redevelopment Agency(the Agency).
ERAF Contribution for the Fiscal Year 2008-2009
Pursuant to AB 1389, a budget trailer bill, California redevelopment agencies were required to
make ERAF contributions totaling $350 million for the fiscal year 2008-2009. The contributions
were due by May 10, 2009. The Agency's required contribution for the fiscal year 2008-2009 was
$5,250,496.
In response to AB 1389, the California Redevelopment Association (CRA) filed a lawsuit against
the State of California (California Redevelopment Association et al v. Genest), challenging the
constitutionality of the required ERAF contributions. On April 30, 2009, the Sacramento Superior
Court held in favor of CRA, ruling that AB 1389 was unconstitutional. On September 28, 2009, the
State of California announced its decision not to appeal the decision in "Genest". Accordingly, the
Superior Court's decision is now final and binding, and California redevelopment agencies will not
be required to make the ERAF contributions pursuant to AB 1389. Accordingly, the Agency did
not make the ERAF contribution of$5,250,496 for the fiscal year 2008-2009.
See independent auditors' report.
- 63 -
10
PALM DESERT REDEVELOPMENT AGENCY
woo
NOTES TO BASIC FINANCIAL STATEMENTS iff„
(CONTINUED)
June 30, 2009 ..
12. COMMITMENTS AND CONTINGENCIES (CONTINUED):
ERAF and SERAF Contingency (Continued)
SERAF Contributions for the Fiscal Years 2009-2010 and 2010-2011
Pursuant to AB 26 4x, a budget trailer bill, California redevelopment agencies were required to
make SERAF contributions totaling $1.7 billion for the fiscal year 2009-2010 and $350 million for too
the fiscal year 2010-2011. Under AB 26 4x, agencies may borrow a portion of the required
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contributions from their low and moderate income housing fund. Alternatively, sponsoring
governmental agencies (the cities or counties) may elect to pay the SERAF contributions on behalf
of their redevelopment agencies. On October 20, 2009, the CRA filed a class action lawsuit in
OP
behalf of all California redevelopment agencies, again challenging the SERAF obligations as
sok
unconstitutional.
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The Agency's estimated SERAF contributions are $25,502,408 for the fiscal year 2009-2010 and
orb
$5,276,438 for 2010-2011. However, it is the position of Agency officials that the SERAF
contributions estimated by AB 26 4x are unconstitutional, and that the Agency is not obligated to
make these contributions. Accordingly, the Agency intends to join as a Plaintiff in CRA's class
action lawsuit,to overturn the provisions of AB 26 4x.
If the class action lawsuit is unsuccessful, and if the Agency is required to make these SERAF
contributions, Agency officials have estimated that the Agency will have sufficient funds to make
the required contributions.
Commitments
The Agency has various disposition and development agreements and owner participation too
agreements outstanding. All liabilities incurred to date have been accrued in the financial
or
statements. Construction commitments are reported as fund balances reserved for encumbrances
and are detailed in Note 9. +rw
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itOo
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See independent auditors' report. evo
- 64 -
.ir
SUPPLEMENTARY INFORMATION
- 65 -
no
Schedule 1
PALM DESERT REDEVELOPMENT AGENCY on
COMBINING BALANCE SHEET-OTHER GOVERNMENTAL FUNDS _
ww
June 30,2009
OW
liaw
Total
Special Debt Capital Other no
Revenue Service Projects Governmental
Fund Fund Funds Funds
ASSETS:
Cash and investments $ 2,410,967 $ 5,011,208 $ 6,864,992 $ 14,287,167 ""
Restricted cash with fiscal agent 2,721,594 - 62,375,134 65,096,728
Accounts receivable 4,023 27 25,856 29,906
Interest receivable 82 - 1,086,039 1,086,121 WM
Notes receivable - - 2,000,000 2,000,000
Due from other governmental agencies - - 27,579 27,579
Prepaid costs and deposits - - 35,789 35,789 M.
TOTAL ASSETS $ 5,136,666 $ 5,011,235 $ 72,415,389 $ 82,563,290 low
LIABILITIES AND FUND BALANCES on
LIABILITIES:
Accounts payable $ 520,109 $ 200 $ 887,045 $ 1,407,354
Accrued liabilities 41,920 - 43,326 85,246
Deposits payable 386,053 - 15,000 401,053
Unearned revenues 21,505 - - 21,505
Amounts due pass-through agreement - 2,648,711 - 2,648.711
TOTAL LIABILITIES 969,587 2,648,911 945,371 4,563,869
WV
FUND BALANCES: w
Reserved for:
Encumbrances 97,896 - 1,935,701 2,033,597
Notes receivable - - 2,000,000 2,000,000
Continuing appropriations 3,178,910 - 38,050,025 41,228,935
Reserve requirement 27,285 - - 27,285
Prepaid costs and deposits - - 35,789 35,789 n`
Unreserved,designated for: woo.
Special revenue purposes 862,988 - - 862,988
Debt service - 2,362,324 - 2,362,324 no
Capital projects - - 29,448,503 29,448,503 Imo
TOTAL FUND BALANCES 4,167,079 2,362,324 71,470,018 77,999,421 o,
TOTAL LIABILITIES 11W
AND FUND BALANCES $ 5,136,666 $ 5,011,235 $ 72,415,389 $ 82,563,290
or
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mw
sow
See independent auditors'report.
-66-
No
Schedule 2
PALM DESERT REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-OTHER GOVERNMENTAL FUNDS
For the year ended June 30,2009
Total
Special Debt Capital Other
Revenue Service Projects Governmental
Fund Fund Funds Funds
REVENUES:
Taxes $ - $ 4,697,665 $ - $ 4,697,665
Intergovernmental - - 27,579 27,579
Investment earnings 107,133 65,497 824,496 997,126
Rental income 4,883,360 - 164,154 5,047,514
Other revenues 16,294 - 567,271 583,565
TOTAL REVENUES 5,006,787 4,763,162 1,583,500 11,353,449
EXPENDITURES:
Current:
General government 5,669,694 8,557 5,803,127 11,481,378
Payments to other agencies - 2,214,108 - 2,214,108
Capital outlay 3,104,882 - 3,756,332 6,861,214
TOTAL EXPENDITURES 8,774,576 2,222,665 9,559,459 20,556,700
EXCESS OF REVENUES OVER
(UNDER)EXPENDITURES (3,767,789) 2,540,497 (7,975,959) (9,203,251)
OTHER FINANCING SOURCES(USES):
Transfers in 2,852,250 10,572 3,743,167 6,605,989
Transfers out - (1,870,577) (328,983) (2,199,560)
TOTAL OTHER FINANCING
SOURCES(USES) 2,852,250 (1,860,005) 3,414,184 4,406,429
NET CHANGE IN FUND BALANCES (915,539) 680,492 (4,561,775) (4,796,822)
FUND BALANCES-BEGINNING OF YEAR 5,082,618 1,681,832 76,031,793 82,796.243
FUND BALANCES-END OF YEAR $ 4,167,079 $ 2,362,324 $ 71,470,018 $ 77,999,421
See independent auditors'report.
-67-
Schedule 3
PALM DESERT REDEVELOPMENT AGENCY m'
BALANCE SHEET-OTHER GOVERNMENTAL FUNDS
SPECIAL REVENUE
June 30,2009
wr
Housing iw
Authority Totals
ASSETS:
Cash and investments $ 2,410,967 $ 2,410,967 on
Restricted cash with fiscal agent 2,721,594 2,721,594
Accounts receivable 4.023 4,023 -++
Interest receivable 82 82
es
TOTAL ASSETS $ 5,136,666 $ 5,136,666
LIABILITIES AND FUND BALANCES Ns
LIABILITIES:
Accounts payable $ 520,109 $ 520,109
two
Accrued liabilities 41,920 41,920
Deposits payable 386,053 386,053
Unearned revenue 21,505 21,505
TOTAL LIABILITIES 969,587 969.587
FUND BALANCES:
Reserved for:
Encumbrances 97,896 97,896
Continuing appropriations 3,178,910 3,178,910
Reserve requirement 27,285 27,285
IMP
Unreserved, designated for:
Special revenue purposes 862,988 862,988
TOTAL FUND BALANCES 4,167.079 4.167,079
TOTAL LIABILITIES
AND FUND BALANCES $ 5,136,666 $ 5,136,666
NIP
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ille
Oa
rir
MI
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See independent auditors'report. yr
-68-
.ei
Schedule 4
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-OTHER GOVERNMENTAL FUNDS
SPECIAL REVENUE
For the year ended June 30,2009
Housing
Authority Totals
REVENUES:
Investment earnings $ 107,133 $ 107,133
Rental income 4,883,360 4,883,360
Other revenues 16,294 16,294
TOTAL REVENUES 5,006,787 5,006,787
EXPENDITURES:
Current:
General government 5,669,694 5,669,694
Capital outlay 3,104,882 3,104,882
TOTAL EXPENDITURES 8,774,576 8,774,576
EXCESS OF REVENUES OVER
(UNDER)EXPENDITURES (3,767,789) (3,767,789)
OTHER FINANCING SOURCES:
Transfers in 2,852,250 2,852,250
TOTAL OTHER FINANCING SOURCES 2,852,250 2,852,250
NET CHANGE IN FUND BALANCES (915,539) (915,539)
FUND BALANCES-BEGINNING OF YEAR 5,082,618 5,082,618
FUND BALANCES-END OF YEAR $ 4,167,079 $ 4,167,079
See independent auditors'report.
-69-
Schedule 5
PALM DESERT REDEVELOPMENT AGENCY
BALANCE SHEET-OTHER GOVERNMENTAL FUNDS
DEBT SERVICE
June 30,2009
00.
Project ..
Area 3 Totals
ASSETS:
Cash and investments $ 5,011,208 $ 5,011,208 ,O.
Accounts receivable 27 27
000
TOTAL ASSETS $ 5,011,235 $ 5,011,235
sip
LIABILITIES AND FUND BALANCES 1.00
LIABILITIES:
Accounts payable $ 200 $ 200
Amounts due pass-through agreement 2,648,711 2,648,711
TOTAL LIABILITIES 2,648,911 2,648,911 no
FUND BALANCES:
Unreserved,designated for:
Debt service 2,362,324 2,362,324
TOTAL FUND BALANCES 2,362,324 2,362,324
TOTAL LIABILITIES
AND FUND BALANCES $ 5,011,235 $ 5,011,235
we
fah
wr
See independent auditors'report.
-70-
0.
Schedule 6
PALM DESERT REDEVELOPMENT AGENCY
STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-OTHER GOVERNMENTAL FUNDS
DEBT SERVICE
For the year ended June 30,2009
Project
Area 3 Totals
REVENUES:
Taxes $ 4,697,665 $ 4,697,665
Investment earnings 65,497 65,497
TOTAL REVENUES 4,763,162 4,763,162
EXPENDITURES:
Current:
General government 8,557 8,557
Payments to other agencies 2,214,108 2,214,108
TOTAL EXPENDITURES 2,222,665 2,222,665
EXCESS OF REVENUES OVER
(UNDER)EXPENDITURES 2,540,497 2,540,497
OTHER FINANCING SOURCES(USES):
Transfers in 10,572 10,572
Transfers out (1,870,577) (1,870,577)
TOTAL OTHER FINANCING SOURCES(USES) (1,860,005) (1,860,005)
NET CHANGE IN FUND BALANCES 680,492 680,492
FUND BALANCES-BEGINNING OF YEAR 1,681,832 1,681,832
FUND BALANCES-END OF YEAR $ 2,362,324 $ 2,362,324
See independent auditors'report.
-71 -
so
Schedule 7
PALM DESERT REDEVELOPMENT AGENCY lift
COMBINING BALANCE SHEET-OTHER GOVERNMENTAL FUNDS go
CAPITAL PROJECTS w®►
June 30,2009 me
WO
Project Project Project ran
Area 1 Area 3 Area 4 Totals
ASSETS:
Cash and investments $ 2,309,592 $ 2,821,307 $ 1,734,093 $ 6,864,992 Part
Restricted cash with fiscal agent 22,008,525 18,350,165 22,016,444 62,375,134
Accounts receivable 19,034 - 6,822 25,856
Interest receivable 1,008,269 503 77,267 1,086,039
Notes receivable - - 2,000,000 2,000,000 OW
Due from other governmental agencies 27,579 - - 27,579 odo
Prepaid costs and deposits 35,789 - - 35,789
ow
TOTAL ASSETS $ 25,408,788 $ 21,171,975 $ 25,834,626 $ 72,415,389
io
LIABILITIES AND FUND BALANCES
ow
LIABILITIES: bli
Accounts payable $ 861,087 $ 19,027 $ 6,931 $ 887,045
Accrued liabilities 43,326 - - 43,326 '"'
Deposits payable - - 15,000 15,000
TOTAL LIABILITIES 904,413 19,027 21,931 945,371 M„
FUND BALANCES:
Reserved:
Encumbrances 904,103 500,224 531,374 1,935,701
Notes receivable - - 2,000,000 2,000,000
Continuing appropriations 13,397,060 11,159,171 13,493,794 38,050,025
Prepaid costs and deposits 35,789 - - 35,789
Unreserved,designated for:
Capital projects 10,167,423 9,493,553 9,787,527 29,448,503
TOTAL FUND BALANCES 24,504,375 21,152,948 25,812,695 71,470,018
WI
TOTAL LIABILITIES
AND FUND BALANCES $ 25,408,788 $ 21,171,975 $ 25,834,626 $ 72,415,389 ma
rr
no
ala
a.
Ns
ow
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See independent auditors'report. too
-72-
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go
Schedule 8
PALM DESERT REDEVELOPMENT AGENCY
COMBINING STATEMENT OF REVENUES,EXPENDITURES AND
CHANGES IN FUND BALANCES-OTHER GOVERNMENTAL FUNDS
CAPITAL PROJECTS
For the year ended June 30,2009
Project Project Project
Area 1 Area 3 Area 4 Totals
REVENUES:
Intergovernmental $ 27,579 $ - $ - $ 27,579
Investment earnings 322,335 217,404 284,757 824,496
Rental income 82,496 - 81,658 164,154
Other revenues 87,216 - 480,055 567,271
TOTAL REVENUES 519,626 217,404 846,470 1,583,500
EXPENDITURES:
Current:
General government 5,365,560 112,376 325,191 5,803,127
Capital outlay 3,746,046 - 10,286 3,756,332
TOTAL EXPENDITURES 9,111,606 112,376 335,477 9,559,459
EXCESS OF REVENUES OVER
(UNDER)EXPENDITURES (8,591,980) 105,028 510,993 (7,975,959)
OTHER FINANCING SOURCES(USES):
Transfers in 3,375,246 60,744 307,177 3,743,167
Transfers out - (78,149) (250,834) (328,983)
TOTAL OTHER FINANCING
SOURCES(USES) 3,375,246 (17,405) 56,343 3,414,184
NET CHANGE IN FUND BALANCES (5,216,734) 87,623 567,336 (4,561,775)
FUND BALANCES-BEGINNING OF YEAR 29,721,109 21,065,325 25,245,359 76,031,793
FUND BALANCES-END OF YEAR $ 24,504,375 $ 21,152,948 $ 25,812,695 $ 71,470,018
See independent auditors'report.
-73 -
OP
SO
PALM DESERT REDEVELOPMENT AGENCY
COMBINING BALANCE SHEET ow
HOUSING AUTHORITY SPECIAL REVENUE FUND
raw
June 30,2009
s
Complexes
Laguna Catalina Desert Las One
Ile
Capital Palms Gardens Pointe Serenas Neighbors Quail Pueblos
ASSETS:
+ir
Cash and investments $2,410,967 $ - $ - S - $ - $ _ $ - $
Restricted cash with fiscal agent 2,129,013 22,405 23,531 23.147 47,801 8,793 365,631 4.820
Ow
Accounts receivable - 1,200 - 1,117 615 1 59 41
Interest receivable 82 _ - - - - _ _ m
Due from other apartment - - - - 877,468 - 5,423.513 -
No
TOTAL ASSETS $4,540.062 $ 23,605 $ 23.531 $ 24.264 $ 925.884 S 8.794 $ 5.789.203 $ 4.861
elor
LIABILITIES AND
FUND BALANCES MR
LIABILITIES:
Accounts payable $ 370,703 $ 5,601 $ 10,988 $ 9,698 $ 10,519 $ 2,259 $ 46.147 $ 2,227
Management fee payable - 1.680 2.485 2.205 5,005 735 13,336 665
Accrued payroll - 2.151 3,330 3.009 4.080 574 18,957 601
Security deposits payable - 22.405 23,531 23,147 47,801 8,793 159,103 4.820
Unearned revenue - 1,945 656 554 316 272 16,317
Due to other apartment - 1,044.160 185.530 316,099 - 182.922 - 299.266 OW
TOTAL LIABILITIES 370.703 1.077.942 226,520 354.712 67.721 195.555 253.860 307.579 4044
FUND BALANCES(DEFICITS): NUR
Reserved:
Encumbrances 97.896 - - - - _ - -
Continuing appropriations 3,178,910 - - - - - - -
Reserve requirement fund _ _ _ _ _ _ - OPP
Low income purposes 892.553 (1,054,337) (202.989) (330.448) 858.163 (186,761) 5,535,343 (302,718)
TOTAL FUND
BALANCES(DEFICITS) 4.169,359 (1.054,337) (202.989) (330,448) 858.163 (186.761) 5.535.343 (302.718) illi
10
TOTAL LIABILITIES
AND FUND BALANCES $4.540,062 $ 23.605 $ 23.531 $ 24.264 $ 925.884 $ 8.794 $ 5,789,203 $ 4.861
OR
illi
III
Ili
III
NM
Ili
NIP
MI
all
See independent auditors'report. se
-74-
Schedule 9
Complexes(Continued)
California Country Palm Total Combined Combined
Villas Taos Village Village Candlewood La Rocca Sage Crest Complexes Total Reclassification Total
$ - $ - $ - $ - $ - $ - $ - $ - $ 2,410,967 $ - $ 2,410,967
53,619 3,001 - 17,250 8,023 10,500 4,060 592,581 2,721,594 - 2.721,594
478 50 - 58 - 404 - 4,023 4.023 - 4,023
- - - - - - - - 82 - 82
- _ - - - _ - 6.300,981 6,300,981 (6,300,981) -
$ 54,097 $ 3,051 $ - $ 17,308 9 8,023 $ 10,904 $ 4.060 $ 6.897,585 $11,437,647 $ (6,300.981) $ 5,136,666
$ 8,478 $ 4,281 $ - $ 2,705 $ 7,003 $ 1,532 $ 2,302 $ 113,740 $ 484.443 $ - $ 484,443
4,760 560 - 1,260 1,015 945 1,015 35,666 35,666 - 35,666
4.546 656 - 851 1,213 809 1,143 41,920 41,920 - 41,920
53,619 3.001 - 17.250 8,023 10,500 4,060 386,053 386,053 - 386,053
394 19 - 156 46 406 424 21,505 21,505 - 21,505
2,920,340 263,074 365,436 110,388 403,308 59,851 150,607 6,300,981 6,300.981 (6.300,981) -
2,992.137 271,591 365.436 132,610 420,608 74.043 159,551 6.899,865 7,270.568 (6.300.981) 969,587
- - - - - - - - 97,896 - 97.896
- _ - 3,178,910 - 3,178,910
- - - 27,285 - - - 27,285 27,285 - 27,285
(2,938,040) (268,540) (365.436) (142,587) (412,585) (63.139) (155.491) (29,565) 862,988 - 862.988
(2.938,040) (268,540) (365.436) (115,302) (412,585) (63,139) (155,491) (2,280) 4,167,079 - 4,167.079
$ 54,097 $ 3.051 $ - $ 17,308 $ 8,023 $ 10.904 $ 4.060 $ 6,897,585 $11,437.647 $ (6.300,981) $ 5.136,666
-75-
im
PALM DESERT REDEVELOPMENT AGENCY .r&
COMBINING STATEMENT OF REVENUES,EXPENDITURES 11111
AND CHANGES IN FUND BALANCES
HOUSING AUTHORITY SPECIAL REVENUE FUND .ro
June 30,2009 MIN
Mit
Complexes
NW
Laguna Catalina Desert Las One
Capital Palms Gardens Pointe Serenas Neighbors Quail Pueblos
WOO
REVENUES:
Rental income $ - $ 182,958 $ 261.327 $ 259,477 $ 635,220 $ 111,175 $ 2,321,159 $ 57,283
owOther revenues 16.294 - - - - - - -
Investment earnings 107.133 - - - - - - -
Witel
TOTAL REVENUES 123.427 182.958 261.327 259.477 635,220 111,175 2.321,159 57.283
imii
EXPENDITURES: two-
Current:
Payroll - 66.253 120,952 114,067 151,910 37,747 737,721 23,112 IIPP
Administrative 65,929 107,649 220,177 264,193 388,736 174,472 1,304,644 74,604
Management - 15,995 29,680 26,460 60,340 9,310 160,965 7,945
Maintenance - 13,004 - - - - 58,693 640
Capital outlay 3,104.882 - - - - - - - �1
TOTAL EXPENDITURES 3.170,811 202.901 370.809 404,720 600.986 221.529 2.262.023 106,301 WM
EXCESS OF REVENUES OR
OVER(UNDER)
illt
EXPENDITURES (3.047.384) (19.943) (109.482) (145.243) 34.234 (110,354) 59,136 (49.018)
OTHER FINANCING SOURCES: OR
Transfers in 2.852.250 - - - - - - -
TOTAL OTHER
FINANCING SOURCES 2,852,250 - - - - - - -
NET CHANGE IN
FUND BALANCES (195,134) (19,943) (109,482) (145,243) 34,234 (110,354) 59,136 (49,018)
011111
FUND BALANCES(DEFICITS)- iiiii
BEGINNING OF YEAR 4.364,493 (1.034.394) (93,507) (185.205) 823,929 (76.407) 5.476,207 (253.700)
all
FUND BALANCES(DEFICITS)-
END OF YEAR $ 4.169.359 $ (1.054.337) $(202.989) $ (330.448) $ 858.163 $ (186,761) $ 5,535.343 $ (302,718) illi
ali
IN
MR
OW
IR
RR
OP
RI
RIP
See independent auditors'report. Yy
-76-
Schedule 10
Complexes(Continued)
California Country Palm Total Combined Combined
Villas Taos Village Village Candlewood La Rocca Sage Crest Complexes Total Reclassification Total
$ 559,937 $ 37,164 $ 8,456 $ 173,848 $ 113,138 $ 126,281 $ 35,937 $ 4,883,360 $ 4,883,360 $ - $ 4,883,360
16.294 - 16,294
107,133 - 107,133
- -
- -
559,937 37,164 8.456 173,848 113,138 126,281 35,937 4,883,360 5.006.787 - 5,006,787
177,753 26,086 (156) 50,474 46,556 34.760 46,776 1,634,011 1,634,011 - 1,634.011
294,922 73.819 48,481 62,270 177,269 69,810 43,588 3.304,634 3,370.563 - 3.370,563
56.945 6,720 4,500 14,665 12,145 11,130 7,455 424,255 424,255 - 424,255
71,780 - - - 10,200 - 86,548 240,865 240,865 - 240,865
-
3.104.882 - 3,104.882
601,400 106,625 52,825 127,409 246,170 115,700 184,367 5.603,765 8.774,576 - 8,774.576
(41,463) (69,461) (44.369) 46,439 (133.032) 10,581 (148.430) (720,405) (3,767.789) - (3.767,789)
2,852,250 - 2,852,250
- - -
- -
- -
- -
-
- - - - 2,852.250 - 2.852,250
(41,463) (69,461) (44,369) 46,439 (133,032) 10,581 (148,430) (720,405) (915,539) - (915,539)
(2,896.577) (199.079) (321.067) (161.741) (279,553) (73.720) (7,061) 718.125 5,082.618 - 5.082.618
$(2.938,040) $ (268.540) $ (365,436) $ (115.302) $ (412,585) $ (63,139) $(155.491) $ (2.280) $ 4,167.079 $ - $ 4,167,079
-77-
OP
Schedule 11
PALM DESERT REDEVELOPMENT AGENCY
COMPUTATION OF LOW AND MODERATE
HOUSING EXCESS SURPLUS FUNDS wr
July 1,2008
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. °"at
Tax Increment
Deposits to
Housing Fund
OPENING FUND BALANCE-JULY 1,2008 $ 73,454,802 ""°'
LESS UNAVAILABLE AMOUNTS:
Encumbrances 3,831,410
Loans and notes receivable 7,695,368
Property held for resale 25,000
Prepaid items and deposits 156
Unspent bond proceeds 32,324,067
AVAILABLE LOW/MODERATE INCOME HOUSING FUNDS 29,578,801
LIMITATION(GREATER OF$1,000,000 OR FOUR YEARS SET-ASIDE):
Set-aside for last four years:
2007-2008 $ 18,141,936 gip
2006-2007 16,573,467
2005-2006 15,404,798
2004-2005 12,402,800
TOTAL SET-ASIDE FOR LAST FOUR YEARS $ 62,523,001
Base limitation $ 1,000,000 OP
GREATER AMOUNT
62,523,001
COMPUTED EXCESS SURPLUS-JULY 1,2008
w
um
sit
N I
OP
NW
See independent auditors'report.
-78-
no
DIEHL, EVANS & COMPANY, LLP
CERTIFIED PUBLIC ACCOUNTANTS&CONSULTANTS
MICHAEL R.LUDIN.CPA
A PARTNERSHIP INCLUDING ACCOUNTANCY CORPORATIONS CRAIG W.SPRAKER.CPA
NITIN P.PATEL,CPA
ROBERT J.CALLANAN.CPA
5 CORPORATE PARK,SUITE 100 •PHILIP H.HOLTKAMP.CPA
*THOMAS M.PERLOWSKI,CPA
IRVINE,CALIFORNIA 92606-5165 *HARVEY I.SCHROEDER.CPA
(949)399-0600•FAX(949)399-0610 KENNETH R.AMES,CPA
•WILLIAM C.PENTZ.CPA
www.diehlevans.com
October 16, 2009 "A PROFESSIONAL CORPORATION
INDEPENDENT AUDITORS'REPORT ON INTERNAL CONTROL OVER
FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and
Members of the City Council
Palm Desert Redevelopment Agency
Palm Desert, California
We have audited the accompanying financial statements of the governmental activities, each major
fund and the aggregate remaining fund information of the Palm Desert Redevelopment Agency (the
Agency) as of and for the year ended June 30, 2009, which collectively comprise the Agency's basic
financial statements and have issued our report thereon dated October 16, 2009. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the Agency's internal control over financial
reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the
Agency's internal control over financial reporting. Accordingly, we do not express an opinion on the
effectiveness of the Agency's internal control over financial reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control such that there is a reasonable possibility that a material
misstatement of the Agency's financial statements will not be prevented, or detected and corrected on a
timely basis.
- 79 -
OTHER OFFICES AT: 2965 ROOSEVELT STREET 613 W.VALLEY PARKWAY,SUITE 330
CARLSBAD,CALIFORNIA 92008-2389 ESCONDIDO,CALIFORNIA 92025-2598
(760)729-2343•FAX(760)729-2234 (760)741-3141•FAX(760)741-9890
MP
Internal Control Over Financial Reporting(Continued)
VOA
Our consideration of the internal control over financial reporting was for the limited purpose described
in the first paragraph of this section and was not designed to identify all deficiencies in internal control
that might be deficiencies, significant deficiencies or material weaknesses. We did not identify any
deficiencies in internal control over financial reporting that we consider to be material weaknesses, as
defined above.
fIRIP
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Agency's financial statements are free of
material misstatements, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. Such provisions included those
provisions of laws and regulations identified in the Guidelines For Compliance Audits of California
Redevelopment Agencies, issued by the State Controller and as interpreted in the Suggested Auditing
Procedures for Accomplishing Compliance Audits of California Redevelopment Agencies, issued by
the Governmental Accounting and Auditing Committee of the California Society of Certified Public
Accountants. However, providing an opinion on compliance with those provisions was not an
objective of our audit and, accordingly, we do not express such an opinion. The results of our tests
disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards. „W
This report is intended solely for the information and use of the Palm Desert Redevelopment Agency
Directors and management of the Palm Desert Redevelopment Agency and the State Controller's *�
Office, Division of Accounting and Reporting and is not intended to be and should not be used by
anyone other than these specific parties.
OP
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■.