HomeMy WebLinkAboutCity of Palm Desert ACFR Rev Final 2021PALM DESERT,
CALIFORNIA
CITY OF PALM DESERT
ANNUAL COMPREHENSIVE FINANCIAL REPORT
Fiscal Year Ended June 30, 2021
ANNUAL COMPREHENSIVE FINANCIAL REPORT
of the
CITY OF PALM DESERT, CALIFORNIA
For the Fiscal Year ended
June 30, 2021
Prepared by the Finance Department
City Treasurer/Director of Finance
Janet M. Moore
Deputy Director of Finance
Jose Luis Espinoza, CPA
Finance Staff
(in alphabetical order by positions and last names)
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CITY OF PALM DESERT, CALIFORNIA
ANNUAL COMPREHENSIVE FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
TABLE OF CONTENTS
Page
Number
REQUIRED SUPPLEMENTARY INFORMATION
Miscellaneous Plan – Agent Multiple-Employer Schedule of Changes
in Net Pension Liability and Related Ratios ............................................................................. 96
Miscellaneous Plan- Agent Multiple – Employer Schedule of Plan Contributions ......................... 98
Schedule of Changes in the Net OPEB Liability/(Asset) and Related Ratios .............................. 100
Schedule of Plan Contributions – OPEB ...................................................................................... 101
Budgetary Comparison Schedule by Department – General Fund .............................................. 102
Budgetary Comparison Schedule – Measure A ........................................................................... 104
Budgetary Comparison Schedule – Prop A Fire Tax ................................................................... 105
Budgetary Comparison Schedule –Housing Asset Fund ............................................................. 106
Budgetary Comparison Schedule – Housing Authority ................................................................ 107
Notes to Required Supplementary Information ............................................................................ 108
SUPPLEMENTARY SCHEDULES
Combining Balance Sheet – Other Governmental Funds ............................................................ 110
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances – Other Governmental Funds .............................................................................. 111
Other Governmental Funds – Special Revenue Funds ............................................................... 113
Combining Balance Sheet – Other Special Revenue Funds ....................................................... 116
Combining Statement of Revenues, Expenditures and Changes in
Fund Balances – Other Special Revenue Funds ................................................................... 122
Budgetary Comparison Schedules – Special Revenue Funds:
Traffic Safety .......................................................................................................................... 127
Gas Tax .................................................................................................................................. 128
Housing Mitigation Fees......................................................................................................... 129
Community Development Block Grant ................................................................................... 130
Child Care Program ............................................................................................................... 131
Public Safety Police Grants ................................................................................................... 132
New Construction Tax ............................................................................................................ 133
Planned Drainage .................................................................................................................. 134
Parks and Recreational Facilities ........................................................................................... 135
Traffic Signals ........................................................................................................................ 136
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Palm Desert’s active, five-star accredited Chamber of Commerce has more than 1,125
members who work to promote, support, and enhance business prosperity, civic vitality,
and the quality of life within their community. Noted for its extensive array of retail options,
including the world-famous upscale shopping destination of El Paseo, Palm Desert is
home to a variety of malls and retail centers including The Shops at Palm Desert, Desert
Crossing, The Gardens on El Paseo, and El Paseo Village.
The internationally acclaimed Desert Willow
Golf Resort, one of the nation’s premier
municipal courses, boasts 36 holes of
championship golf and stunning scenery in
close proximity to first-class hotel
accommodations and fine dining.
In addition to being the home of the Coachella
Valley’s only community college, College of the
Desert, Palm Desert is the location of satellite Desert Willow Golf Resort
campuses for both the University of California, Riverside, and California State University,
San Bernardino, the region’s only public, four-year university.
The State of California Employment Development Department Labor Market Information
Division reported that the City of Palm Desert had an unemployment rate of 7.4%
compared to Riverside County, which had a rate of 7.9%. The City, as a resort destination,
and its jurisdictional workforce, have been impacted greatly by the extraordinary
challenges caused by the worldwide COVID-19 pandemic and the State of California and
County-wide closures that began at the height of the tourist season and while recovery is
well underway, the variants of COVID-19 continue to challenge local businesses. The
unemployment rate, while lower than that of Riverside County, is understandably higher in
the City than in areas of California that do not rely as heavily on tourism.
LONG-TERM FINANCIAL PLANNING
In June 2021, the City Council approved a total of $48.16 million in funding for various
capital improvement projects for the fiscal year of 2021-2022. Projects include resurfacing
streets, sidewalk repairs and construction, accessibility improvements, street widening,
improving drainage areas, park improvements, and improvements at Desert Willow Golf
Resort and Parkview Office Complex.
Certificates of Awards for Outstanding Financial Reporting
The Government Finance Officers Association of the United States and Canada (GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of
Palm Desert for its annual comprehensive financial report for the fiscal year ended
June 30, 2020. This was the 24th consecutive year that the City has achieved this
prestigious award. In order to receive the Certificate of Achievement, a government
must publish an easily readable and efficiently organized annual comprehensive
financial report. This report must satisfy both generally accepted accounting
principles and applicable legal requirements.
v
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Palm Desert
California
For its Comprehensive Annual
Financial Report
For the Fiscal Year Ended
June 30, 2020
Executive Director/CEO
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INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
City of Palm Desert, California
Report on the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the discretely presented component unit, each major fund, and the aggregate remaining fund
information of City of Palm Desert, California, (the City) as of and for the year ended June 30, 2021, and
the related notes to the financial statements, which collectively comprise the City’s basic financial
statements as listed in the table of contents.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
respective financial position of the governmental activities, the business-type activities, the discretely
presented component unit, each major fund, and the aggregate remaining fund information of the
City of Palm Desert, California, as of June 30, 2021, and the respective changes in financial position and,
where applicable, cash flows thereof for the year then ended in accordance with accounting principles
generally accepted in the United States of America.
Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America (GAAS) and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We are required to be independent of the City and to
meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our
audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; and for the
design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about the City’s abilit y to continue as a
going concern for twelve months beyond the date of the financial statements.
203 N. Brea Blvd., Suite 203 Brea CA 92821 Lance, Soll & Lun hard, LLP Phone: 714.672.0022
To the Honorable Mayor and Members of the City Council
City of Palm Desert, California
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with the GAAS and
Government Auditing Standards will always detect a material misstatement when it exists. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control. Misstatements are considered material if, there is a substantial likelihood that, individually or in the
aggregate, they would influence the judgment made by a reasonable user based on the financial
statements.
In performing an audit in accordance with GAAS and Government Auditing Standards, we:
x Exercise professional judgment and maintain professional skepticism throughout the audit.
x Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, and design and perform audit procedures responsive to those risks. Such procedures
include examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements.
x Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the City’s internal control. According ly, no such opinion is expressed.
x Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of the
financial statements.
x Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,
that raise substantial doubt about the City’s ability to continue as a going concern for a reaso nable
period of time.
We are required to communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit, significant audit findings, and certain internal control-related matters
that we identified during the audit.
Other Reporting Responsibilities
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s
discussion and analysis, the budgetary comparison schedules for the General Fund, Measure A fund, Prop
A Fire Tax fund, Housing Asset fund, Housing Authority fund, the schedule of changes in net pension liability
and related ratios, the schedules of plan contributions and the schedule of changes in net
OPEB liability/(asset) and related ratios as listed in the table of contents be presented to supplement the
basic financial statements. Such information is the responsibility of management and, although not a part
of the basic financial statements, is required by the Governmental Accounting Standards Board, who
considers it to be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited procedures to the
required supplementary information in accordance with auditing standards generally accepted in the
United States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management’s responses to our inquiries,
the basic financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.
2
To the Honorable Mayor and Members of the City Council
City of Palm Desert, California
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City’s basic financial statements. The combining and individual nonmajor fund financial
statements and schedules are presented for purposes of additional analysis and are not a required part of
the basic financial statements. Such information is the responsibility of management and was derived from
and relates directly to the underlying accounting and other records used to prepare the financial statements.
The information has been subjected to the auditing procedures applied in the audit of the basic financial
statements and certain additional procedures, including comparing and reconciling such information directly
to the underlying accounting and other records used to prepare the basic financial statements or to the
basic financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America. In our opinion, the combining and individual
nonmajor fund financial statements and schedules are fairly stated, in all material respects in relation to the
basic financial statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other information
comprises the introductory section and statistical section but does not include the basic financial statements
and our auditor’s report thereon. Our opinions on the financial statements does not cover the other
information, and we do not express an opinion or any form of assurance thereon. In connection with our
audit of the financial statements, our responsibility is to read the other information and consider whether a
material inconsistency exists between the other information and the financial statements, or the other
information otherwise appears to be materially misstated. If, based on the work performed, we conclude
that an uncorrected material misstatement of the other information exists, we are required to describe it in
our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 20, 2021,on our consideration of the City’s internal control over financial reporting and on our
tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and
other matters. The purpose of that report is solely 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
effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral
part of an audit performed in accordance with Government Auditing Standards in considering the City’s
internal control over financial reporting and compliance.
Brea, California
December 20, 2021
3
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4
CITY OF PALM DESERT
MANAGEMENT’S DISCUSSION AND ANALYSIS
Our discussion and analysis of the City of Palm Desert’s financial performance for the fiscal year ended
June 30, 2021, provides: a comparison of current year to prior year ending results based on the
government-wide financial statements; an analysis of the City’s overall financial position and results of
operations to assist users in evaluating the City’s financial position; a discussion of significant changes that
occurred in the funds; and significant budget variances. In addition, it describes the activities during the
year for capital assets and long-term debt. We end our discussion and analysis with a description of known
facts, decisions, and conditions that are expected to have a significant effect on the financial position or
results of operations. Please read it in conjunction with the transmittal letter and the City’s financial
statements.
FINANCIAL HIGHLIGHTS
x The City’s total assets and deferred outflows exceeded its liabilities and deferred inflows by $787.26
million (net position).
x The City’s governmental activities net position increased $4.17 million, and the net position of the
business-type activities increased $0.99 million.
x During the year, the City’s revenues were $107.68 million and expenses were $103.51 million in its
governmental activities, compared to fiscal year 2020, where revenues were $93.22 million and
expenses were $106.51 million.
x In the City’s business-type activities, expenses were $0.99 million less than the $10.82 million
generated in golf course green fees, merchandise sales, rental income and other revenues
compared to the prior year, where business-type activities revenues were $0.60 million less than
its expenses.
x The City’s governmental activities program revenues and gene ral revenues increased by $14.46
million, while program expenses decreased by $3.00 million.
x Business-type activities revenues increased $1.96 million, from $8.86 million to $10.82 million.
Expenses increased from $9.46 million to $9.83 million.
x The City kept its General Fund expenditures within spending limits by $1.29 million. The revenues
available for expenditures exceeded budget by $0.23 million.
USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Position and
Statement of Activities (on pages 17, 18 and 19) provide information about the activities of the City as a
whole and present a long-term view of the City’s finances. The fund financial statements start on page 22.
For governmental activities, these fund statements tell how these services were financed in the short term
as well as what remains for future spending. The fund financial statements also report the City’s operation
in more detail than the government-wide statements by providing information about the City’s most
significant funds and other funds. The remaining fiduciary fund statement provides financial information
about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the
government.
5
REPORTING THE CITY AS A WHOLE
The Statement of Net Position and the Statement of Activities:
Our analysis of the City as a whole begins on page 17. One of the most important questions asked about
the City’s finances is, “Is the City as a whole better off or worse off as a result of the year’s activities?” The
Statement of Net Position and the Statement of Activities report information about the City as a whole and
about its activities in a way that answers this question. These statements include all assets and liabilities
of the City using the accrual basis of accounting, which is similar to the accounting used by most
private-sector companies. All of the current year’s revenues and expenses are taken into account
regardless of when cash is received or paid.
These two statements report the City’s net position and changes in them.Net position is the difference
between total assets and deferred outflows of resources less liabilities and deferred inflows, which is one
way to measure the City’s financial health, or financial position. Over time, increases or decreases in the
City’s net position are an indication of whether its financial health is improving or deteriorating. Other
non-financial factors should be considered, however, such as changes in the economy that could cause a
decrease in consumer spending.
In the Statement of Net Position and the Statement of Activities, we separate City activities as follows:
Governmental activities – Most of the City’s basic services are reported in this category, including general
administration (city manager, city clerk, finance, etc.), housing and redevelopment, public safety
(police and fire protection), public works, parks, recreation and culture departments. Property taxes,
sales tax, transient occupancy tax, user fees, interest income, franchise fees, state and federal grants,
contributions from other agencies, and other revenues finance these activities.
Business-type activities –The City charges customers to cover all or most of the cost of certain services
it provides. The City’s municipal golf course, Desert Willow, and the City’s Parkview Office Complex
activities are reported in this category.
Component unit activities –The City includes one separate legal entity in its report –the Palm Desert
Recreational Facilities Corporation. Although legally separate, this “component unit” is important because
the City is financially accountable for it.
REPORTING THE CITY’S MOST SIGNIFICANT FUNDS
Fund Financial Statements:
The fund financial statements provide detailed information about the most significant funds and other funds,
not the City as a whole. Some funds are required to be established by State law and by bond covenants.
However, management established many other funds to help it control and manage money for particular
purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other
resources. The City has three types of funds: governmental, proprietary and fiduciary.
Governmental funds – Most of the City’s basic services are reported in governmental funds, which focus
on how money flows in and out of those funds and the balances left at year-end that are available for
spending. These funds are reported using an accounting method called modified accrual accounting, which
measures cash and all other financial assets that can readily be converted to cash. The governmental fund
statements provide a detailed short-term view of the City’s general government operations and the basic
services it provides. Governmental fund information helps determine whether there are more or fewer
financial resources that can be spent in the near future to finance the City’s programs. The differences of
results in the Governmental Fund financial statements to those in the Government-wide financial
statements are explained in a reconciliation following each Governmental Fund financial statement.
6
Proprietary funds –When the City charges customers for the services it provides, these services are
generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are
reported in the Statement of Net Position and the Statement of Activities. The City’s enterprise funds are
the same as the business-type activities we report in the government-wide statements, but provide more
detail and information such as a statement of cash flows.
Fiduciary funds –Fiduciary funds are used to account for resources held for the benefit of parties outside
the government. Fiduciary funds are not reflected in the government-wide financial statement because the
resources of those funds are not available to support the City of Palm Desert operations. The accounting
used for fiduciary funds is much like that used for proprietary funds .
THE CITY AS TRUSTEE
Reporting the City’s Fiduciary Responsibilities:
The City is the trustee, or fiduciary, for the Successor Agency to the Palm Desert Redevelopment Agency’s
(Successor Agency) private-purpose trust fund and for certain custodial funds held on behalf of developers
and its employees’ retiree service stipend fund. The City’s fiduciary activities are reported in separate
Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position, Combining Statement
of Statement of Assets and Liabilities-All Custodial Funds, and Combining Statement of Changes in
Fiduciary Net Position-All Custodial Funds.We exclude these activities from the City’s other financial
statements because the City cannot use these assets to finance its operations. The City is responsible for
ensuring that the assets reported in these funds are used for their intended purposes.
THE CITY AS A WHOLE
During the fiscal year ending June 30, 2021, the City’s combined net position increased $5.16 million from
$782.10 million to $787.26 million. A separate review of the net change in the governmental and business-
type activities is provided for the reader. Our analysis focuses on the net position (Table 1) and changes in
net position (Table 2) of the City’s governmental and business -type activities.
7
2021 2020 2021 2020 2021 2020
Current and restricted assets 358.67$ 344.53$ 9.39$ 7.65$ 368.06$ 352.18$
Capital assets 421.57 424.16 68.66 69.54 490.23 493.70
TOTAL ASSETS 780.24 768.69 78.05 77.19 858.29 845.88
Deferred outflows of resources 8.82$ 8.82$ -$ -$ 8.82$ 8.82$
Long-term liabilities
outstanding 41.36 39.29 0.68 1.15 42.04 40.44
Other liabilities 34.49 26.92 1.32 0.98 35.81 27.90
TOTAL LIABILITIES 75.85 66.21 2.00 2.13 77.85 68.34
Deferred inflows of resources 2.00$ 4.26$ -$ -$ 2.00$ 4.26$
Net position:
Net investment in capital
assets 421.57 424.16 67.98 68.39 489.55 492.55
Restricted 197.08 196.86 - - 197.08 196.86
Unrestricted 92.56 86.02 8.07 6.67 100.63 92.69
TOTAL NET
POSITION 711.21$ 707.04$ 76.05$ 75.06$ 787.26$ 782.10$
TABLE 1
NET POSITION
As of June 30, 2021 and 2020
TotalActivities
Business-TypeGovernmental
Activities
(IN MILLIONS)
-
200
400
600
800
1,000
1,200
2021 2020 2021 2020 2021 2020
Governmental
Activities
Business-Type
Activities
Total
Do
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Table 1 - Graph
Total Assets & Liabilities
Total Assets
8
The City’s governmental activities net position increased $4.17 million. The City’s net position is made up
of three components: Net investment in capital assets; restricted net position; and unrestricted net position.
For governmental activities, unrestricted net position, which represents the part of net position that can be
used to finance day-to-day operations, accounted for 13.00 percent of the overall total net position.
Unrestricted net position increased $6.54 million from $86.02 million in 2020 to $92.56 million in 2021. The
increase in unrestricted net position was the result of the Federal grants for COVID-19 pandemic relief,
along with the increase in sales tax. In fiscal year 2021 the city received COVID-19 reimbursements grants
(ARPA) totaling $5.65 million, additionally total sales tax increased from $18.44 million in 2020 compared
to $21.16 million in 2021, an increase of $2.72 million.
The increase of $0.22 million in restricted net position was due to restricted special projects increasing by
$2.81 million from the prior year, while restricted capital projects fund decreased by $2.59 million. During
the year, construction in major projects continued; phase 2 of the San Pablo improvements, parking lot
modifications at President’s Plaza and the annual street resurfacing program totaling $11.89 million.
Restricted special projects increase was mainly due to the Genera l Fund transfer of funds to the Fire Fund
to cover future capital projects in the amount of $3.80 million.
Investment in capital assets decreased $2.59 million. The decrease is attributed to current year depreciation
of $11.48 million. The calculation of investment in capital assets includes outstanding debt used to purchase
or construct the City’s capital assets.
The City’s governmental activities total assets and deferred outflow of resources combined increased
$11.55 million from $777.51 million in 2020 to $789.06 million in 2021. The increase is attributable to an
increase in due from other governments which increased $7.27 million, from $4.79 million in the prior year
to $12.06 million this fiscal year. Additionally, cash increased from $192.81 million in 2020 to $213.01 million
in 2021, an increase of $20.20 million. Increases in sales tax, transient occupancy tax and lower
expenditures in public safety and public works also contributed to the increase in total assets and deferred
inflows.
Total liabilities and deferred inflows combined increased by $7.38 million from $70.47 million in 2020 to
$77.85 million in 2021. The major increase was with deposits payable which increased from $0.59 million
to $5.79 million as a result of GASB 84 implementation which changed how agency deposits are
recognized. Additionally, the City’s OPEB liability increased by $1.98 million from $34.82 million in 2020 to
$36.80 million in 2021.
The net position of the business-type activities recognized an increase of $0.99 million, from $75.06 million
during 2020 to $76.05 million during 2021. The main factor for the increase in net position was overall
decrease in capital lease obligation which decreased by $0.47 million. Additionally, increase in gross
revenues from the golf resort of $2.07 million from the prior year further added to the increase in net position.
Total assets in the business-type activities increased by $0.86 million from $77.19 million in 2020 to $78.05
million in 2021. The major increase was related to an increase in gross revenues of $2.07 million.
Total liabilities in the business-type activities decreased $0.13 million from $2.13 million in 2020 to $2.00
million in 2021. The decrease in debt obligation represents the majority of the decrease. In 2020 debt
obligation was $1.15 million compared to $0.68 million in 2021, a decrease of $0.47 million.
9
2021 2020 2021 2020 2021 2020
REVENUES:
Program Revenues:
Charges for services 31.49$ 30.14$ 10.47$ 8.41$ 41.96$ 38.55$
Operating grants and
contributions 10.61 10.42 - - 10.61 10.42
Capital grants and
contributions 16.84 3.66 0.22 0.18 17.06 3.84
General Revenues:
Property taxes 12.22 11.67 - - 12.22 11.67
Transient occupancy tax 10.78 12.07 - - 10.78 12.07
Sales tax 21.16 18.44 - - 21.16 18.44
Other taxes 3.07 3.02 - - 3.07 3.02
Investment earnings 0.30 2.37 0.02 0.16 0.32 2.53
Gain on sale of capital assets - 0.08 - - - 0.08
Other revenues 1.21 1.35 0.11 0.11 1.32 1.46
TOTAL REVENUES 107.68 93.22 10.82 8.86 118.50 102.08
EXPENSES:
General government 25.61 24.30 - - 25.61 24.30
Housing and redevelopment 10.50 8.80 - - 10.50 8.80
Public safety 34.28 37.29 - - 34.28 37.29
Parks, recreation and culture 7.97 7.65 - - 7.97 7.65
Public works 24.98 28.27 - - 24.98 28.27
Interest on long-term debt 0.17 0.20 - - 0.17 0.20
Golf Course-Desert Willow - - 8.96 8.60 8.96 8.60
Office Complex-Parkview - - 0.87 0.86 0.87 0.86
TOTAL EXPENSES 103.51 106.51 9.83 9.46 113.34 115.97
INCREASE (DECREASE) IN NET POSITION 4.17 (13.29) 0.99 (0.60) 5.16 (13.89)
BEGINNING NET POSITION 707.04 720.33 75.06 75.66 782.10 795.99
ENDING NET POSITION 711.21$ 707.04$ 76.05$ 75.06$ 787.26$ 782.10$
TABLE 2
CHANGES IN NET POSITION
As of June 30, 2021 and 2020
TotalActivities
Business-TypeGovernmental
Activities
(IN MILLIONS)
10
Table 2- Graph
Changes in Net Position
Governmental Activities
Total revenue increased by $14.46 million from $93.22 million to $107.68 million. Factors that contributed
to the changes in revenues are as follows:
x Transient occupancy tax decrease from $12.07 million in 2020 to $10.78 million in 2021, a decrease
of $1.29 million. Hotels were closed to the public for a period of time due to the COVID-19
pandemic.
x The City’s sales tax increased by $2.72 million from $18.44 million in 2020 to $21.16 million in
2021. Retail and restaurants were allowed to open for business after the economic shutdown from
the pandemic, and payments were made on sales tax deferrals fro m the prior year and the City’s
allocation of taxes from online sales increased.
x In 2021, investment rates continued to be near or below 1%, as a result, the City recognized $0.30
million in investment earnings compared to $2.37 million in 2020, a decrease of $2.07 million.
x Charges for services increased from $30.14 million in 2020 to $31.49 million in 2021. Cannabis tax
recognized an increase of $1.15 million.
x Operating contributions and grants recognized a minor increase of $0.19 million. This was the result
of small increases in CDBG and COPS AB3229 grants.
x Capital contribution and grants increased by $13.18 Million This was the result of a Federal ARPA
funds for COVID-19 relief of $5.65 million and reimbursements from Cal-trans of $2.43 million and
CVAG of $5.14 million for street improvements.
Total expenses decreased from $106.51 million to $103.51 million, a 2.81 percent decrease. The primary
reason for the decrease was reductions in both the public works and public safety function that accounted
for a combined decrease of $6.30 million. Police and Fire combined expenditures decreased $2.57 million,
from $34.56 Million in 2020 to $31.99 million in 2021.
-
100
200
300
400
500
600
700
800
2021 2020
Governmental Activities
Do
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s
i
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m
i
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i
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s
-
10
20
30
40
50
60
70
80
2021 2020
Business-Type Activities
Beginning Net
Position
Total Revenues
Ending Net Position
Total Expenses
11
The following schedule represents the net cost of providing services:
Governmental Activities
Net (Expense) Revenue
(In Millions)
Business-type Activities
In the business-type activities, total revenues increased by 22.12 percent from $8.86 million to $10.82
million, a $1.96 million increase. The main factor for the change in total revenues was the overall increase
in the combined fees and rentals revenues which recognized a $2.07 million growth from prior year.
The Parkview Office Complex revenues decreased slightly. Occupancy decreased from 91% in 2020 to
84% in 2021.
Operating expenses for business-type activities increased by $0.37 million from $9.46 million to
$9.83 million. The majority of the increase is related to the growth in operations at Desert Golf resort which
recognized an $0.40 million increase in overall expenditures. Parkview’s recognized minor increase in
overall costs from the prior year.
47%
7%
20%
15%0%
2021
Governmental Activities
Net (Expense) Revenue
32%
0%33%
29%0%
2020
Governmental Activities
Net (Expense) Revenue
General government
Housing and
redevelopment
Public safety
Parks, recreation &
culture
Public works
Interest on long term
debt
12
THE CITY’S FUNDS
On page 22, the governmental funds balance sheet is shown. The combined fund balance of
$312.57 million increased $7.46 million from $305.11 million. This total includes the General Fund balance
of $100.41 million, which increased by $7.53 million from the prior year. The City’s General Fund balance
has a non-spendable balance of $4.17 million, committed balance of $73.86 million, assigned balance of
$16.70 million, and $5.68 million of unassigned fund balance. The increase in the General Fund’s balance
was due in part to the COVID-19 relief grants received of $5.65 million and increased sales tax of $2.72
million. Other major fund balance changes are noted below:
x The Prop A Fire Tax Special Revenue Fund: The fund balance increased $4.13 million. The City
transferred $3.8 million to cover future capital projects.
x The Housing Asset Fund: The fund had a minor increase of $0.05 million.
x Measure A Special Revenue Fund: the fund balance increased from $20.46 million to
$22.15 million. The increase was related to projects not started.
x The Housing Authority Fund: The fund balance had a decrease of $1.08 million. The decrease was
directly related to increased capital improvement costs for One Quail and Candlewood apartment
complexes.
x Capital Properties Fund: The fund balance decreased $6.78 million from $61.83 million to
$55.05 million. The decrease was due to the capital project expenditures of $6.80 million.
More detailed information about the combined fund balance reserves is presented in Note 12 to the financial
statements.
General Fund Budgetary Highlights
Based upon recommendations from the staff, the City Council revised the budget several times during the
year. Adjustments were made on a monthly basis as City staff requested additional appropriations to cover
the cost of projects that either had change orders for additional work, or were underestimated. At mid-year,
no adjustments were requested as department budgets met current demands. At year-end, budgets were
adjusted for unanticipated approved expenditures. All amendments that either increase or decrease
appropriations are approved by the City Council.
For the City’s General Fund, the actual ending revenues of $64.49 million were $0.23 million more than the
final budgeted revenues of $64.26 million. Sales and transient occupancy taxes continue to be the top two
revenue generators for the City, totaling $31.91 million or 49.48 percent of the total General Fund actual
revenues. The original budget was $48.64 million compared to the final budget of $64.26 million an increase
of $15.62 million. The City increase in the final budget was related to the unanticipated increase in both
sales tax and transient occupancy tax which recognized a combined increase of $7.65 million, and state
and federal grants related to COVID-19 in the amount of $5.65 million, along with minor increases in several
other revenue sources which account for the overall increase to the final budget.
The General Fund actual ending expenditures of $56.95 million were $1.29 million less than the final budget
of $58.24 million. There were changes in the original budget compared to the final budget during the year.
The original expenditure budget was $58.79 million compared to the final budget of $58.24 million, a
$0.55 million decrease. During the year, the following represent the major changes between original budget
and final budget; $0.92 million was reduced for police services and $0.61 million was reduced for community
promotions. These reductions exceeded any increases that were recognized in the other expense
categories.
13
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At the end of 2021, the City had $490.23 million invested in a broad range of capital assets including land,
streets, bridges, drainage systems, traffic lights, parks, buildings, artwork, vehicles, golf courses and
equipment (See Table 3). This amount represents a net decrease (including additions and deductions) of
$3.47 million over the prior year, due mainly to depreciation.
-
100
200
300
400
500
600
700
2021 2020 2021 2020 2021 2020
Governmental
Activities
Business-Type
Activities
Total
Do
l
l
a
r
s
i
n
m
i
l
l
i
o
n
s
Table 3 - Graph
Capital Assets at Year-End
(Net of Depreciation in Millions)
Land
Construction-in-Progress
Buildings & Improvements other than
buildings
Equipment
Infrastructure & right-of-way
Totals
14
This year’s major additions included (in millions):
Street improvements $ 7.29
Park and recreation improvements 0.02
Building improvements 0.09
Equipment and software purchases 2.29
$ 9.69
The City’s fiscal year 2022 adopted capital budget calls for an additional $48.16 million to be spent, plus
continuing capital projects of $39.88 million from prior year, with the majority being spent on streets,
infrastructure, buildings, parks, and golf course improvements. Projects will be funded with existing bond
proceeds or funds that have been designated by an outside party for specific use. More detailed information
about the City’s capital assets is presented in Note 1f and Note 5 to the financial statements.
Debt
At year-end, the City’s governmental activities had $41.36 million in bonds, claims, compensated absences,
and pension liability versus $39.29 million last year, an increase of $2.07 million as shown in Table 4. The
major increase was the City’s Net Pension liability that went from $34.82 million in 2020 to $36.80 million
in 2021, an increase of $$1.98 million. In addition, the City’s meet all its annual bond debt payment
requirements decreasing their balances from $1.85 million to $1.67 million.
2021 2020 2021 2020 2021
2.50$ 2.57$ -$ -$ 2.50$ $
- - 0.68 1.15 0.68
0.39 0.05 - - 0.39
1.13 1.18 - - 1.13
bonds 0.54 0.67 - - 0.54
36.80 34.82 - - 36.80
The City was able to meet its current year debt obligation in a timely manner. Bonds that were issued in
prior years have been used to finance various capital projects.
15
The City’s business-type activities debt decreased $0.47 million from $1.15 million to $0.68 million. Debt in
the business-type activities is for capital leasing of equipment. The City’s golf course use s leasing as an
alternative to purchasing golf carts and maintenance equipment to maintain a cash flow to operate the
day-to-day activities. The City’s business-type activities were able to meet their current year debt obligation
in a timely manner. More detailed information about the City’s long -term liabilities is presented in Note 6
through Note 9 and Note 11 to the financial statements.
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS
During the fiscal year the State of California lifted COVID-19 restrictions which allowed the economy to
move towards operating fully. Although the economy has begun to operate and travel restrictions lifted, the
uncertainty relating to the COVID-19 Coronavirus pandemic, could once again impact the City’s two largest
revenue sources, sales tax, and transient occupancy tax. Consequently, the City remains committed to
spend cautiously while prioritizing projects that support recovery from the COVID-19 Coronavirus.
In preparing the budget for fiscal year 2022, management carefully considered operational adjustments due
to the extraordinary economic challenges faced by reopening and recovery of the global COVID-19
pandemic and its effects, while considering the wellbeing and safety of Palm Desert’s residents, visitors and
businesses. It remains a commitment of the City to provide a high level of service and maintenance of City
facilities by allocating resources for public safety and necessary infrastructure improvements. The 2022
budget is further a reflection of that commitment by authorizing the use of reserves to balance the General
Fund operating budget, if needed.
The City’s 2021-2022 Financial Plan can be found on the City’s website at www.cityofpalmdesert.org.
CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our residents, taxpayers, customers, investors, and creditors
with a general overview of the City’s finances and serves as a resource to demonstrate the stewardship
and accountability for the public monies it receives.
If you have questions about this report or need additional financial information, please contact the Finance
Department at (760) 346-0611 or info@cityofpalmdesert.org.
16
CITY OF PALM DESERT
STATEMENT OF NET POSITION
Component
Unit
Governmental Business-Type
Cash and investments 213,010,916$ 9,641,278$ 222,652,194$ 866,936$
Receivables:
Accounts 3,222,414 194,653 3,417,067 41,414
Notes 1,130,000 - 1,130,000 -
Accrued interest 2,510,187 - 2,510,187 -
Allowance for interest on Successor Agency (1,890,000) - (1,890,000) -
Loans 6,932,696 - 6,932,696 -
Internal balances 2,000,000 (2,000,000) - -
Prepaid costs 203,259 53,391 256,650 3,404
Deposits 15,129,753 - 15,129,753 -
Due from other governments 12,056,782 - 12,056,782 -
Inventories 5,790 129,065 134,855 47,347
Property held for resale 61,516 - 61,516 -
Due from component unit 420,000 1,370,792 1,790,792 -
Restricted assets:
Cash with fiscal agent 103,076,936 - 103,076,936 -
Advances to Successor Agency 6,000,000 - 6,000,000 -
Allowance on Advances to Successor Agency (6,000,000) - (6,000,000) -
Net OPEB asset 805,423 - 805,423 -
Capital assets, not being depreciated 213,764,381 53,304,965 267,069,346 -
Capital assets, net of depreciation 207,804,438 15,352,337 223,156,775 -
Deferred outflows from pensions 6,365,230 - 6,365,230 -
Deferred outflows from OPEB 2,456,165 - 2,456,165 -
Accounts payable 12,740,931 918,394 13,659,325 52,679
Accrued liabilities 438,134 110,875 549,009 33,031
Accrued interest 56,038 - 56,038 -
Due to primary government - - - 1,790,692
Unearned revenue 15,463,160 264,138 15,727,298 144,048
Deposits payable 5,792,557 26,590 5,819,147 -
Noncurrent liabilities:
Due within one year
Compensated absences 300,000 - 300,000 -
Capital leases - 488,548 488,548 -
Long-term debt 108,000 - 108,000 -
Claims and judgements 384,643 - 384,643 -
Due in more than one year
Compensated absences 2,201,835 - 2,201,835 -
Capital leases - 187,428 187,428 -
Long-term debt 1,564,000 - 1,564,000 -
Net pension liability 36,803,724 - 36,803,724 -
Deferred inflows from OPEB 2,004,106 - 2,004,106 -
Net investment in capital assets 421,568,819 67,981,326 489,550,145 -
Restricted for:
Special projects 97,546,130 - 97,546,130 -
Capital projects 99,536,759 - 99,536,759 -
Unrestricted (deficit) 92,557,050 8,069,182 100,626,232 (1,061,349)
See Notes to Financial Statements 17
CITY OF PALM DESERT
STATEMENT OF ACTIVITIES
YEAR ENDED JUNE 30, 2021
Operating
Governmental activities:
General government 25,610,212$ 2,437,840$ 1,104,120$ 1,501,625$
Housing and redevelopment 10,496,579 7,455,959 - 410,236
Public safety 34,280,941 18,828,021 86,873 6,355,308
Parks, recreation and culture 7,969,386 325,485 2,443,800 255,390
Public works 24,979,279 2,443,299 6,982,786 8,314,001
Interest on long-term debt 176,259 - - -
Total governmental activities 103,512,656 31,490,604 10,617,579 16,836,560
Business-type activities:
Desert Willow Golf Course 8,960,991 9,171,607 - 220,198
Parkview Office Complex 872,212 1,291,020 - -
Total Business-Type Activities 9,833,203 10,462,627 - 220,198
Total Primary Government 113,345,859$ 41,953,231$ 10,617,579$ 17,056,758$
Palm Desert Recreational Facilities Corp.2,343,554$ 2,181,902$ -$ -$
General Revenues:
Taxes:
Property taxes, levied for general purpose
Transient occupancy taxes
Sales taxes
Franchise taxes
Investment earnings
Miscellaneous
Total general revenues
Change in net position
Net position - beginning of year
Net position - end of year
Functions/Programs
See Notes to Financial Statements 18
Net (Expenses) Revenues and Changes in Net Position
Primary Government
(20,566,627)$ -$ (20,566,627)$ -$
(2,630,384) - (2,630,384) -
(9,010,739) - (9,010,739) -
(4,944,711) - (4,944,711) -
(7,239,193) - (7,239,193) -
(176,259) - (176,259) -
- 430,814 430,814 -
- 418,808 418,808 -
12,221,109 - 12,221,109 -
10,776,751 - 10,776,751 -
21,156,220 - 21,156,220 -
3,066,989 - 3,066,989 -
301,330 20,283 321,613 -
1,214,362 114,283 1,328,645 -
4,168,848 984,188 5,153,036 (161,652)
707,039,910 75,066,320 782,106,230 (899,697)
See Notes to Financial Statements 19
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CITY OF PALM DESERT
STATEMENT OF CHANGES IN FIDUCIARY NET POSITION
FIDUCIARY FUNDS
YEAR ENDED JUNE 30, 2021
ADDITIONS:
Taxes 4,584,359$ 37,667,136$
Investment income 52,412 13,180
Contributions from City 936,802 -
Other - 19,618
TOTAL ADDITIONS 5,573,573 37,699,934
DEDUCTIONS
Housing and development - 823,679
Administrative expenses 96,751 -
Contractual services 1,290,011 -
Interest 2,514,423 7,679,256
TOTAL DEDUCTIONS 3,901,185 8,502,935
CHANGES IN NET POSITION 1,672,388 29,196,999
NET POSITION - BEGINNING OF YEAR - (166,809,345)
Restatement (Note: 22)(32,968,953) -
NET POSITION - BEGINNING OF YEAR RESTATED (32,968,953) (166,809,345)
NET POSITION - END OF YEAR (31,296,565)$ (137,612,346)$
Private-Purpose Trust
Fund
Successor Agency to
the Palm Desert
Redevelopment
Agency Private-
Purpose Trust Fund Custodial Funds
See Notes to Financial Statements 34
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS
JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies
a. Description of the Reporting Entity
The City of Palm Desert was originally incorporated on November 26, 1973, as a
General Law City. In December 1997, Measure LL was enacted following a vote by
Palm Desert residents, which adopted a City Charter. The City operates under a
Council-Manager form of government and provides the following services: public safety
(police and fire), highways and streets, public improvements, community development
(planning, building and zoning) and general administrative services.
The City has defined its reporting entity in accordance with accounting principles generally
accepted in the United States of America which provides guidance for determining which
governmental activities, organizations and functions should be included in the reporting
entity. The Basic Financial Statements present information on the activities of the reporting
entity, which include the City of Palm Desert (the primary government) and its component
units, entities for which the government is considered financially accountable.
Accounting principles generally accepted in the United States of America require that the
component units be separated into blended or discretely presented units for reporting
purposes. The following criteria were used in determination of blended component units:
appointment of the governing board and fiscal dependence. Although legally separate
entities, blended component units are, in substance, part of the City’s operations.
Therefore, they are reported as part of the primary government. Discretely presented
component units are reported in a separate column in the basic financial statements to
emphasize that they are legally separate from the City.
Blended Component Units
Following are descriptions of legally separate component units for which the City is
financially accountable that are blended with the Primary Government. The governing
bodies of these component units are substantially the same with operational responsibility
as the City and provides a financial benefit.
The Palm Desert Housing Authority (Housing Authority) was established by the
City Council in January 1998, and is responsible for the administration of providing
affordable housing in the City. The Housing Authority transactions are reported in the
governmental funds balance sheet as a major fund.
The Palm Desert Financing Authority (Financing Authority) was formed on
January 26, 1989. The purpose of the Financing Authority is to issue debt and loan the
proceeds to the City and Agency. The Financing Authority’s capital related transactions are
reported in the governmental fund financial statements in the capital projects funds, and
the collection of assessments and payments of debt service is recorded in the fiduciary
funds.
The City Council of Palm Desert is the governing body for the Housing Authority and
Financing Authority.
Separate financial statements are not issued for the Housing Authority and Financing
Authority.
35
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued)
Discretely Presented Component Unit
The Palm Desert Recreational Facilities Corporation (Corporation) was incorporated on
February 25, 1997. The purpose of the Corporation is to lease, operate and manage a
restaurant and bar in the Desert Willow Golf Course in Palm Desert, California. The Board
of Directors of the Corporation appoints an executive director to administer operations.
The Corporation is in a separate column to emphasize that it is legally separate from the
City and is financially accountable to the City. The two-member board governing the
Corporation is appointed by the City Council, the City has authority to approve the
Corporation’s budget, and the City must approve any debt issued.
Complete financial statements of the Component Unit can be obtained from the City’s
administrative offices.
b. Basis of Presentation:
Government-Wide Financial Statements
The government-wide financial statements (i.e., the statement of net position and the
statement of activities) report information on all of the nonfiduciary activities of the primary
government and its component units. For the most part, the effect of interfund activity has
been removed from these statements. Interfund services provided and used are not
eliminated in the process of consolidation. Governmental activities, which normally are
supported by taxes and intergovernmental revenues, are reported separately from
business-type activities, which rely to a significant extent on fees and charges for support.
Likewise, the primary government is reported separately from certain legally separate
component units for which the primary government is financially accountable.
The statement of activities demonstrates the degree to which the direct and indirect
expenses of a given function or segment are offset by program revenues. Direct expenses
are those that are clearly identifiable with a specific function or segment. Program revenues
include: 1) charges to customers or applicants who purchase, use or directly benefit from
goods, services or privileges provided by a given function or segment, and 2) grants and
contributions that are restricted to meeting the operational or capital requirements of a
particular function or segment. Taxes and other items not properly included among
program revenues are reported instead as general revenues. Expenses reported for
functional activities include allocated indirect expenses.
Separate financial statements are provided for governmental funds, proprietary funds and
fiduciary funds, even though the latter are excluded from the government-wide financial
statements. Major individual governmental funds and major individual enterprise funds are
reported as separate columns in the fund financial statements.
36
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued)
Fund Financial Statements
The accounting system of the City is organized and operated on the basis of separate
funds, each of which is considered to be a separate accounting entity. Each fund is
accounted for by providing a separate set of self-balancing accounts that constitute its
assets, liabilities, deferred inflows of resources, fund equity, revenues and
expenditures/expenses. Funds are organized into three major categories: governmental,
proprietary and fiduciary. An emphasis is placed on major funds within the governmental
and proprietary categories.
A fund is considered major if it is the primary operation fund of the City or meets the
following criteria:
a.Total assets plus deferred outflows of resources, liabilities plus deferred inflows of
resources, revenues or expenditures/expenses of that individual governmental or
enterprise fund are at least 10% of the corresponding total for all funds of that category
or type; and
b.Total assets plus deferred outflows of resources, liabilities plus deferred inflows of
resources, revenues or expenditures/expenses of the individual governmental fund or
enterprise fund are at least 5% of the corresponding total for all governmental and
enterprise funds combined; and
c.The government has determined that a fund is important to the financial statement
user.
The funds of the financial reporting entity are described below:
Governmental Fund Types
General Fund - The General Fund is the general operating fund of the City. It is used to
account for all financial resources except those required to be accounted for in another
fund.
Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of
specific revenue resources (other than major capital projects) that are legally restricted to
expenditures for specified purposes.
Debt Service Funds - Debt Service Funds are used to account for the accumulation of
resources for, and the payment of, general long-term obligation principal, interest and
related costs.
Capital Projects Funds - Capital Projects Funds are used to account for financial resources
to be used for the acquisition or construction of major capital facilities.
37
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued)
Proprietary Fund Types
Enterprise Funds - The Enterprise Funds account for operations that are financed and
operated in a manner similar to private business enterprises, where the intent of the
City Council is that the costs (expenses including depreciation) of providing goods and
services to the general public on a continuing basis be financed or recovered primarily
through user charges.
The Primary Government’s Enterprise funds consist of the Parkview Office Complex and
the Desert Willow Golf Course. Desert Willow Golf Course is operated by a management
company. The discretely presented Component Unit’s fund consists of the Palm Desert
Recreational Facilities Corporation, also operated by a management company.
Internal Service Funds - The Internal Service Funds account for financial transactions
related to replacement of City-owned vehicles and equipment and to fund compensated
absences. These services are provided to other departments or agencies of the City on a
cost reimbursement basis.
Fiduciary Fund Types
Private-Purpose Trust Fund
The Successor Agency to the Palm Desert Redevelopment Agency Private Purpose Trust
Fund is used to account for the activities of the Successor Agency to the Palm Desert
Redevelopment Agency.
Custodial Funds
The Custodial, Special Assessment and Treasurers 1911 Bond Act Funds are used to
account for assets held by the City in a custodial capacity as a trustee. These assets
include deposits placed with the City by individuals, as well as deposits from assessment
district’s property owners. These deposits are reduced by payments to individuals or
entities at some future time. Custodial funds are custodial in nature and do not involve
measurement of results of operations.
The City’s Retiree Service Stipend Fund is used to account for assets held to pay for the
retiree service stipend.
The Treasures 1991 Bond Act Fund is used to account for assets held for the Bond Act.
The major funds are as follows:
Governmental Funds
The General Fund is the general operating fund of the City. It is used to account for all
financial resources except those required to be accounted for in another fund.
38
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued)
The Measure A Special Revenue Fund - In 1988, Riverside County voters approved a
half-cent sales tax, known as Measure A, to fund a variety of highway improvements, local
street and road maintenance, commuter assistance and specialized transit projects. This
fund is used to collect this tax, and pursuant to the provision of Measure A
(Ordinance No. 88-1 and Ordinance No. 02-001 of the County of Riverside) it is restricted
for local street and road expenditures only.
The Prop A Fire Tax Special Revenue Fund is used to account for all revenues derived
from tax collected within the City for upgrading fire protection and prevention. Its use is
restricted to obtaining, furnishing, operating and maintaining fire protection and prevention
services (currently under contract with Riverside County Fire Department) equipment or
apparatus. This fund is reported as a major fund because the tax collected is a voter
approved measure.
The Housing Asset Fund is used to account for any funds generated from housing assets
of the former Redevelopment Agency to be used for projects that benefit low and moderate
income families.
The Housing Authority Special Revenue Fund is used to account for revenues and
expenditures related to rental units owned by the Housing Authority, established in
January 1998.
The Capital Properties Capital Projects Fund is used to account for the cost of city owned
properties that will either be sold or for the construction of public facilities, and the proceeds
of bond funds for capital related properties.
Proprietary Fund
The Desert Willow Golf Course Fund is used to account for the fees collected and expenses
incurred in connection with operating the municipal golf course in the City of Palm Desert.
c. Measurement Focus and Basis of Accounting
Measurement focus is a term used to describe which transactions are recorded within the
various financial statements. Basis of accounting refers to when transactions are recorded
regardless of the measurement focus applied.
On the government-wide Statement of Net Position and the Statement of Activities, both
governmental and business-like activities are presented using the economic resources
measurement focus. The accounting objectives of the economic measurement focus are
the determination of operating income, changes in net position (or cost recovery), financial
position and cash flows. All assets, deferred outflows of resources, liabilities and deferred
inflows of resources (whether current or noncurrent) associated with their activities are
reported.
39
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued)
In the fund financial statements, the “current financial resources” measurement focus or
the “economic resources” measurement focus is used as appropriate:
1.All governmental funds utilize a “current financial resources” measurement focus. Only
current financial assets, deferred outflows of resources, current liabilities and deferred
inflows of resources are generally included on their balance sheets. Their operating
statements present sources and uses of available spendable financial resources
during a given period. These funds use fund balance as their measure of available
spendable financial resources at the end of the period.
2.The proprietary fund and private purpose trust fund utilize an “economic resources”
measurement focus. Proprietary fund and private purpose trust fund equity are
classified as net position.
3.Custodial funds are not involved in the measurement of results of operations; therefore,
measurement focus is not applicable to them.
Basis of Accounting
In the government-wide Statement of Net Position and Statement of Activities, both
governmental and business-like activities are presented using the accrual basis of
accounting. Under the accrual basis of accounting, revenues are recognized when earned
and expenses are recorded when the liability is incurred, or economic asset used.
Revenues, expenses, gains, losses, assets and liabilities resulting from exchange and
exchange-like transactions are recognized when the exchange takes place.
In the fund financial statements, governmental funds are presented on the modified accrual
basis of accounting. Under this modified accrual basis of accounting, revenues are
recognized when “measurable and available”. Measurable means knowing or being able
to reasonably estimate the amount. Available means collectible within the current period
or soon enough thereafter to pay current liabilities.
Revenues that are susceptible to accrual include property taxes and special assessments
that are levied for and due for the fiscal year and collected within 60 days after year-end.
Licenses, permits, fines, forfeits, charges for services and miscellaneous revenues are
recorded as governmental fund type revenues when received in cash because they are
not generally measurable until actually received. Revenue from taxpayer assessed taxes,
such as sales taxes, are recognized in the accounting period in which they became both
measurable and available to pay liabilities of the current period. Grants and similar items
are recognized as soon as all eligibility requirements imposed by the provider have been
met. Expenditures generally are recorded when a liability is incurred, as under accrual
accounting. However, debt service expenditures as well as expenditures related to
compensated absences and claims and judgments, are recorded only when payment is
due.
Interfund activity has been eliminated from the general government function for the
government-wide financial statements except for charges between the government’s
Desert Willow Golf Course and Parkview Office Complex funds and various other functions
of the government. Elimination of these charges would distort the direct costs and program
revenues for the various functions considered.
40
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued)
The accrual basis of accounting is followed by the proprietary fund and private purpose
trust fund. Under the accrual basis of accounting, revenues are recognized when earned
and expenses are recorded when the liability is incurred, or economic assets are used.
Proprietary funds distinguish operating revenues and expenses from non-operating items.
Operating revenues and expenses generally result from providing goods and services in
connection with a proprietary fund’s principal ongoing operations. The principal revenue of
the Desert Willow Golf Course and Parkview Office Complex Enterprise Funds are charges
to customers for use of the golf course and rental fees. Operating expenses for enterprise
funds include the cost of sales and services, administrative expenses and depreciation on
capital assets. All revenues and expenses not meeting this definition are reported as
non-operating revenues and expenses.
d. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position and the governmental funds balance
sheet will sometimes report a separate section for deferred outflows of resources. This
separate financial statement element, deferred outflows of resources, represents a
consumption of net position that applies to future periods and so will not be recognized as
an outflow of resources (expense/expenditure) until that time. The City has the following
items that qualify for reporting in this category:
x Deferred amount on refunding. A deferred amount on refunding results from the
difference in the carrying value of the refunded debt and its reacquisition price. This
amount is deferred and amortized over the shorter of the life of the refunded or
refunding debt.
x Deferred outflows related to pensions and OPEB. This amount is equal to employer
contributions made after the measurement date of the net pension liability and net
OPEB liability/(asset).
x Deferred outflows related to pensions resulting from the difference in projected and
actual earnings on investments of the pension plan fiduciary net position. These
amounts are amortized over five years.
x Deferred outflows of resources related to pensions arising from a change in
assumptions. These amounts are amortized over a closed period equal to the average
of the expected remaining service lives of all employees that are provided with
pensions through the plan, which is 3.0 years.
In addition to liabilities, the statement of net position and the governmental funds balance
sheet will sometimes report a separate section for deferred inflows of resources. This
separate financial statement element, deferred inflows of resources, represents an
acquisition of net position that applies to future periods and will not be recognized as an
inflow of resources (revenue) until that time. The City has the following items that qualify
for reporting in this category:
x Deferred inflows from unavailable revenue, which arises under a modified accrual
basis of accounting is reported only in the governmental fund balance sheet. The
governmental funds report unavailable revenues from the following sources: rent,
investment income, grants, notes receivables collections and reimbursements. These
amounts are unavailable and recognized as an inflow of resources in the period that
the amounts become available.
41
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued)
x Deferred inflows related to pensions for differences between expected and actual
experience. These amounts are amortized over a closed period equal to the average
of the expected remaining service lives of all employees that are provided with
pensions through the plan, which is 3.0 years.
x Deferred inflows from pensions resulting from changes in assumptions. These
amounts are amortized over a closed period equal to the average expected remaining
service lives of all employees that are provided with pensions through the plan, which
is 3.0 years.
Gains and losses related to changes in total OPEB liability and fiduciary net position are
recognized in OPEB expense systematically over time. Amounts are first recognized in
OPEB expense for the year the gain or loss occurs. The remaining amounts are
categorized as deferred outflows and deferred inflows of resources related to OPEB and
are to be recognized in future OPEB expense.
x The recognition period differs depending on the source of the gain or loss:
e. Net Position Flow Assumption
Sometimes the City will fund outlays for a particular purpose from both restricted
(e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate
the amounts to report as restricted - net position and unrestricted - net position, a flow
assumption must be made about the order in which the resources are considered to be
applied.
It is the City’s practice to consider restricted - net position to have been depleted before
unrestricted - net position is applied.
f. Capital Assets and Depreciation
Capital assets, which include property, plant, equipment and infrastructure assets
(e.g., roads, traffic signals, drainage systems and similar items), are reported in the
applicable governmental or business-type activities column in the government-wide
financial statements. Capital assets are defined by the City as assets with an initial cost of
more than $500 and an estimated life in excess of one year. Such assets are recorded at
historical cost or estimated historical cost if purchased or constructed. Donated capital
assets are recorded at acquisition value at the date of donation.
42
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued)
The City has reported general infrastructure assets acquired in prior and current years.
The cost of normal maintenance and repairs that do not add to the value of the asset or
materially extend asset lives are not capitalized.
Property, plant and equipment of the primary government, as well as the component units,
are depreciated using the straight-line method over the following estimated useful lives:
Buildings 40 years
Improvements other than buildings 20 years
Machinery and equipment 5 to 8 years
Infrastructure 20 to 75 years
g. Appropriations Limit
Under Article XIII-B of the California Constitution (the Gann Spending Limitation Initiative),
the City is restricted as to the amount of annual appropriations from the proceeds of taxes,
and if proceeds of taxes exceed allowed appropriations, the excess must either be
refunded to the State Controller or returned to the taxpayers through revised tax rates,
revised fee schedules or other refund arrangements. For the fiscal year ended
June 30, 2021, proceeds of taxes did not exceed appropriations.
h. Investments
Investments are reported in the accompanying financial statements at fair value. Fair value
is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Changes in fair value
that occur during a fiscal year are recognized as investment income reported for that fiscal
year. Investment income includes interest earnings, changes in fair value, and any gains
or losses realized upon the liquidation, maturity, or sale of investments.
i. Cash and Investments
For purposes of the statement of cash flows, the City has defined cash and investments to
include cash on hand, demand deposits, investments held in various instruments, and
investments held in the California Local Agency Investment Fund (LAIF), California Asset
Management Program (CAMP) and Riverside County Treasurer’s Pooled Investment
Fund.
j. Employee Compensated Absences
It is the government’s policy to permit employees to accumulate earned but u nused
vacation and sick leave (compensated absences). Vacation pay and sick leave, which are
expected to be liquidated with expendable available resources, are reported as expenditure
and liability of the governmental fund that will pay it only if they have matured, for example,
as a result of employee resignations or retirements.
k. Property Held for Resale
The land held for resale is recorded in the Housing Asset Fund as property held for resale
at the lower of cost or market. At June 30, 2021, the cost of the property held for resale for
various housing properties in Palm Desert totaled $61,516.
43
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued)
l. Inventories, Prepaid Costs and Deposits
Inventory in the amount of $129,065 and $47,347, for the Desert Willow Golf Course
Enterprise Fund (Primary Government) and Palm Desert Recreational Facilities
Corporation (Component Unit), respectively, are reported at lower of cost or market.
Inventory in the amount of $5,790 in the Other Governmental Funds are also reported at
lower of cost or market. Inventory and prepaid costs are recorded as an expenditure when
consumed rather than purchased.
Certain payments to vendors that reflect costs applicable to future accounting periods are
recorded as prepaid costs in the government-wide and fund financial statements.
The Measure A Special Revenue Fund has a deposit in the amount of $15,109,753 with
another governmental agency to pay for future construction of a City project.
Deposit of $20,000 in other governmental funds represents security deposit on rental of
commercial space.
m. Property Tax Calendar
Property taxes are assessed and collected each fiscal year according to the following
property tax calendar:
Lien date: January 1
Levy date: July 1 to June 30
Due date: November 1 - 1st Installment
March 1 - 2nd Installment
Delinquent date: December 10 - 1st Installment
April 10 - 2nd Installment
Under California law, property taxes are assessed and collected by the counties up to 1%
of assessed value, plus other increases approved by the voters. The property taxes go into
a pool and are then allocated to the cities based on complex formulas prescribed by state
statutes. The City accrues only those taxes, which are received within 60 days after the
year-end. The City is a participant in the Teeter Plan under the California Revenue and
Taxation Code. The County of Riverside has responsibility for the collection of delinquent
taxes and the City receives 100% of the levy.
n. Restricted Assets
Certain proceeds of debt issues, as well as certain resources set aside for their repayment,
are classified as restricted assets on the balance sheet because they are maintained in
separate trustee bank accounts and their use is limited to applicable bond covenants. In
addition, funds have been restricted for future capital improvements by City resolution.
44
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 1: Summary of Significant Accounting Policies (Continued)
o. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of
resources related to pensions, and pension expense, information about the fiduciary net
position of the District’s California Public Employees’ Retirement System (CalPERS) pla ns
(Plans) and additions to/deductions from the Plans’ fiduciary net position have been
determined on the same basis as they are reported by CalPERS. For this purpose, benefit
payments (including refunds of employee contributions) are recognized when due and
payable in accordance with the benefit terms. Investments are reported at fair value.
p. Other Post-Employment Benefits (OPEB)
For purposes of measuring the total OPEB liability, deferred outflows of resources and
deferred inflows of resources related to OPEB, and the OPEB expense have been
determined by an independent actuary. For this purpose, benefit payments are recognized
when currently due and payable in accordance with the benefit terms.
Generally accepted accounting principles require that the reported results must pertain to
liability and asset information within certain defined timeframes. For this report, the
following timeframes are used:
Valuation Date June 30, 2019
Measurement Date June 30, 2020
Measurement Period June 30, 2019 to June 30, 2020
q. Use of Estimates
The financial statements are prepared in accordance 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 includ e
estimates for the value of the capital assets (infrastructure), depreciation expense, the fair
value of investments, the amounts reported for the net pension liability and related items
(Note 11), the amounts reported for the net pension liability, net OPEB liability/(asset) and
related items (Note 15), and claims payable (Note 9). Accordingly, actual results could
differ from the estimates.
Note 2: Cash and Investments
As of June 30, 2021, cash and investments were reported in the accompanying financial
statements as follows:
45
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 2: Cash and Investments (Continued)
Cash and investments at June 30, 2021, consisted of the following:
The City of Palm Desert maintains a cash and investment pool that is available for use for all
funds. Each fund type’s position in the pool is reported on the combined balance sheet as cash
and investments. The City has adopted an investment policy, which authorizes it to invest in
various investments.
Deposits
At June 30, 2021, the carrying amount of the deposits was $13,732,961, and the bank balance
was $14,890,674. The $1,157,713 difference represents outstanding checks, deposits in transit
and other reconciling items.
The California Government Code requires California banks and savings and loan associations
to secure an Entity’s deposits by pledging government securities with a value of 110% of an
Entity’s deposits. California law also allows financial institutions to s ecure deposits by pledging
first trust deed mortgage notes having a value of 150% of total deposits. The City Treasurer
may waive the collateral requirement for deposits that are fully insured up to $250,000 by the
FDIC. The collateral for deposits in federal and state-chartered banks is held in safekeeping by
an authorized Agent of Depository recognized by the State of California Department of Banking.
The collateral for deposits with savings and loan associations is generally held in safekeeping
by the Federal Home Loan Bank in San Francisco, California as an Agent of Depository. These
securities are physically held in an undivided pool for all California public agency depositors.
Under Government Code Section 53655, the placement of securities by a bank or savings and
loan association with an Agent of Depository has the effect of perfecting the security interest in
the name of the local governmental agency. Accordingly, all collateral held by California Agents
of Depository are considered to be held for, and in the name of, the local governmental agency.
46
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 2: Cash and Investments (Continued)
Investments
Under provision of the City’s investment policy and in accordance with the California
Government Code, the following investments are authorized:
x United States Treasury bills, notes, bonds or certificates of indebtedness
x United States government-sponsored agency obligations, participations or other
instruments
x California State and Local Agency Debt
x Commercial Paper issued by general corporations
x 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
x Time Certificates of Deposit issued by qualified public depositories.
x Repurchase Agreements sold by authorized brokers
x 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
x Money Market Mutual Funds that are registered with the SEC under the Investment
Act of 1940
x State of California Local Agency Investment Fund (LAIF) that is managed by the
State Treasurer’s Office
x Structured Notes in the form of callable securities or “STRIPS” issued by the
United States Treasury, Federal Agencies or government-sponsored enterprises
x Local Government Investment Pools
GASB Statement No. 31
The City adopted GASB Statement No. 31, Accounting and Financial Reporting for
Certain Investments and for External Investment Pools, as of July 1, 1997.
GASB Statement No. 31 establishes fair value standards for investments in participating
interest earning investment contracts, external investment pools, equity securities, option
contracts, stock warrants and stock rights that have readily determinable fair values.
The City Treasurer is authorized under state and municipal law to invest in various types of
securities that meet specified credit quality standards, based upon credit risk ratings assigned
by Standard and Poors (S&P), Fitch, or by Moody’s Investor Services (Moody’s). Permissible
City investments include medium-term notes that are rated “A” or higher at time of purchase;
commercial paper that is rated “A-1” or the equivalent; money market mutual funds that are
rated “AAA”; and United States Government and Federal Agency securities (the quality of
United States Treasury securities is not analyzed since they are not deemed to have credit
risk).
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally
recognized statistical rating organization. Presented below is the minimum rating required,
when applicable, by the California Government Code, the City’s investment policy, or debt
agreements, and the rating by Standard and Poor’s, Fitch and Moody’s as of year-end for each
investment type.
47
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 2: Cash and Investments (Continued)
Primary Government
75,215,860$ N/A -$ -$ -$ $
62,583,760 N/A - 62,583,760 -
79,393,569 N/A 79,393,569 - -
43,477,800 A 5,001,200 - 38,476,600
63,249,189 N/A - - -
1,916,435 N/A - - -
The ratings for the “Other” category above are as follows:
Aa A Total
20,265,850$ 18,210,750$ 38,476,600$Medium- Term Corporate Notes
Investment Type
48
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 2: Cash and Investments (Continued)
Fiduciary Funds
Custodial Credit Risk
The custodial credit risk for deposits is the risk that, in the event of the failure of a depository
financial institution, a government will not be able to recover deposits or will not be able to
recover collateral securities that are in the possession of an outside party. The custodial credit
risk for the investments is the risk that, in the event of the failure of the counterparty to a
transaction, a government will not be able to recover the value of investment or collateral
securities that are in the possession of an outside party.
As of June 30, 2021, none of the City’s deposits or investments were exposed to custodial
credit risk.
49
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 2: Cash and Investments (Continued)
Concentration of Credit Risk
The City’s investment policy imposes restrictions on the percentage the City can invest in
certain types of investments, which the City is in compliance. As of June 30, 2021, in
accordance with GASB Statement No. 40, if the City has invested more than 10% of its total
investments in any one issuer then they are exposed to concentration of credit risk. The City is
not invested in any one issuer that is more than 10% of its total investments.
The City’s Investment policy imposes the following restrictions on the maximum percentage it
can invest in a single type of investment.
The City’s policy is more conservative than state law, which has no issuer concentration limits
on federal agency debt.
Interest Rate Risk
The City’s investment policy limits investment maturities as a means of managing its exposure
to fair value losses arising from increasing interest rates. The City’s investment policy states
that the City shall not invest in securities with maturities exceeding five years. The City has
elected to use the segmented time distribution method of disclosure for its interest rate risk.
50
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 2: Cash and Investments (Continued)
As of June 30, 2021, the City had the following investments and maturities:
Less Than 6 months - 1 year - Over Fair
6 months 1 year 3 years 3 years Value
15,016,850 - 28,460,950 -
63,249,189 - - -
California Local Agency
Less Than 6 months - 1 year - Over Fair
6 months 1 year 3 years 3 years Value
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated
by California Government Code Section 16429 under the oversight of the Treasurer of the
State of California. The fair value of the City’s investment in this pool is reported in the
accompanying financial statements at amounts based upon the City’s pro-rata share of the fair
value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that
portfolio). The balance available for withdrawal is based on the accounting records maintained
by LAIF, which are recorded on an amortized cost basis.
51
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 2: Cash and Investments (Continued)
Investment in California Asset Management Program
The California Asset Management Program (CAMP) is a public joint powers authority which
provides California Public Agencies with investment management services for surplus funds
and comprehensive investment management, accounting and arbitrage rebate calculation
services for proceeds of tax-exempt financings. The CAMP currently offers the Cash Reserve
Portfolio, a short-term investment portfolio, as a means for Public Agencies to invest these
funds. Public Agencies that invest in the Pool (Participants) purchase shares of beneficial
interest. Participants may also establish individual, professionally managed investment
accounts (Individual Portfolios) by separate agreement with the Investment Advisor.
Investments in the Pools and Individual Portfolios are made only in investments in which
Public Agencies generally are permitted by California statute. The CAMP may reject any
investment and may limit the size of a Participant’s account. The Pool seeks to maintain, but
does not guarantee, a constant net asset value of $1.00 per share. A Participant may withdraw
funds from its Pool accounts at any time by check or wire transfers. Requests for same-day
wire transfers must be made by 11:00 a.m. that day. Fair value of the Pool is determined by
the fair value per share of the Pool’s underlying portfolio.
Investment in Riverside County Treasurer’s Pooled Investment Fund
The City is a voluntary participant in the Riverside County Treasurer’s Pooled Investment Fund
(Pooled Fund). The fair value of the City’s investment in this pool is reported in the
accompanying financial statements at amounts based upon the City’s pro-rata share of the fair
value that the Riverside County Treasurer’s Office has provided for the entire Pooled Fund
(in relation to the amortized cost of that portfolio). The balance available for withdrawal is based
upon the accounting records that the Riverside County Treasurer’s Office maintains, which are
recorded on an amortized cost basis.
Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established by
generally accepted accounting principles. The hierarchy is based on the relative inputs used to
measure the fair value of the investments. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets (Level 1 measurements) and the lowest
priority to unobservable inputs (Level 3 measurements).
The three levels of the fair value hierarchy are described as follows:
Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical
assets in active markets that the City has the ability to access.
Level 2: Inputs to the valuation methodology include:
x Quoted prices for similar assets in active markets;
x Quoted prices for identical or similar assets in inactive markets;
x Inputs other than quoted prices that are observable for the asset;
x Inputs that are derived principally from or corroborated by observable market
data by correlation or other means.
52
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 2: Cash and Investments (Continued)
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair
value measurement. Unobservable inputs reflect the City’s own assumptions
about the inputs market participants would use in pricing the asset
(including assumptions about risk). Unobservable inputs are developed based on
the best information available in the circumstances and may include the City’s
own data.
The asset’s level within the hierarchy is based on the lowest level of input that is significant to
the fair value measurement. Valuation techniques used need to maximize the use of
observable inputs and minimize the use of unobservable inputs.
The determination of what constitutes observable requires judgment by the City’s
management. City management considers observable data to be that market data which is
readily available, regularly distributed or updated, reliable, and verifiable, not proprietary, and
provided by multiple independent sources that are actively involved in the relevant market.
The categorization of an investment within the hierarchy is based upon the relative observability
of the inputs to its fair value measurement and does not necessarily correspond to City
management’s perceived risk of that investment.
The methods described may produce a fair value calculation that may not be indicative of net
realizable value or reflective of future fair values. The use of different methodologies or
assumptions to determine the fair value of certain financial instruments could result in a
different fair value measurement at the reporting date.
When available, quoted prices are used to determine fair value. When quoted prices in active
markets are available, investments are classified within Level 1 of the fair value hierarchy.
When quoted prices in active markets are not available, fair values are based on evaluated
prices received by City’s asset manager from third party service provider.
The following is a description of the recurring valuation methods and assumptions used by the
City to estimate the fair value of its investments.
For a large portion of the City’s portfolio, the City’s custodian applies their leveling methodology
across all securities in a specific sector (i.e. U.S. Government Sponsored Agency Securities).
Inputs to their pricing models are based on observable market inputs in active markets.
The Successor Agency Former RDA’s investment in City bonds is not tradable and is
categorized in Level 3. When valuing Level 3 securities, the inputs or methodology are not
necessarily an indication of the risks associated with investing in those securities. Changes in
valuation techniques may result in transfers into or out of an assigned level within the disclosure
hierarchy.
53
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 2: Cash and Investments (Continued)
Primary Government
Quoted Observable Unobservable
Prices Inputs Inputs
Level 1 Level 2 Level 3 Total
Medium-Term Corporate Notes -$ 43,477,800$ -$ 43,477,800$
Total Leveled Investments -$ 43,477,800$ -$ 43,477,800
California Local Agency Investment Fund* 75,215,860
California Asset Management Program* 62,583,760
Pooled Investment Fund*79,393,569
Held by Fiscal Agent:
Money Market Deposit Accounts* 63,249,189
California Local Agency Investment Fund* 1,916,435
Total Investment Portfolio 325,836,613$
Investment Type
Riverside County Treasurer's
Fiduciary Funds
Quoted Observable Unobservable
Prices Inputs Inputs
Level 1 Level 2 Level 3 Total
Investment in City Bonds -
-$ -$ 542,000$ 542,000$
Total Leveled Investments -$ -$ 542,000$ 542,000
California Local Agency Investment Fund*742
California Asset Management Program*5,728
Pooled Investment Fund*336
Held by Fiscal Agent:
Money Market Deposit Accounts* -
Successor Agency Former RDA 37,780,051
Money Market Deposit Accounts* -
Assessment District 1,961,966
LAIF* - Assessment District 2,701,862
Total Investment Portfolio 42,992,685$
* Not subject to fair value measurements
Investment Type
Riverside County Treasurer's
Successor Agency Former RDA
54
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 3: Receivables
Primary Government’s Governmental Funds
Notes and Loans Receivable:
On August 8, 2006, the City Palm Desert issued $3,165,000 of Limited Obligation Bonds. The
proceeds of the Bonds were used to finance the construction of the utility undergrounding and
pay the cost of issuance. The debt service on the bonds is to be paid by assessments secured
on the property tax rolls of those properties benefiting from the improvements. Bond maturities
began September 2, 2007, and continue annually through 2036. The interest rates of the bonds
range from 3.85% to 5.15%. The City of Palm Desert is the only bondholder on record for the
bonds and reports a receivable in the general fund that corresponds to the outstanding principal
on the bonds. As of June 30, 2021, the receivable balance was $1,130,000.
The City entered into several individual loan agreements with residents of the Highlands Utility
Undergrounding Assessment District No. 04-01. The loans were issued by the City to pay off
the principal of the respective properties assessment. In turn, the residents agreed to pay to
the City the full cost of the loan amount plus any accrued interest at a rate of 5.35%. The full
amount of the loan along with all accrued interest is due and payable at the earliest of
September 2, 2036 or any change in ownership of the property. As of June 30, 2021, the total
receivable from the Highlands Deferral Loan Program was $14,978.
Pursuant to Health and Safety Code 34176(b), the housing assets of the former RDA have
been transferred to the Housing Asset Fund as the successor housing entity. The Housing
Asset Fund has a loan receivable for the construction of a multi-
family affordable housing development dated June 14, 2001, with a balance of $5,148,813
due from the PD Hovley Limited Partnership. The loan is secured by a Deed of Trust and
Regulatory Agreement with Options on the housing development located in Palm Desert. On
April 8, 2021 the Authority Board approved the re-syndication, refinancing and rehabilitation of
the affordable housing development. The existing 2001 loan was modified to extend its
maturity for fifty-five (55) years and provides for a suspension of principal payments for the
estimated construction period. The Authority Loan shall bear interest at the greater of the
current applicable federal rate as of the date of the Promissory Note or one percent (1%) simple
interest per annum, and will be repaid from seventy-five percent (75%) of the developments
residual receipts remaining after payment of fees and expenses.
On August 28, 2008, the City Council approved through resolution the Energy Independence
Program (EIP), which is supported by Assembly Bill AB811. The EIP program allowed the City
to create the funding mechanism to assist the residents and businesses entering into a loan
agreement with the City and providing the money for the borrowers to acquire and install energy
efficient improvements. Assembly Bill AB811 allows the City to lien the properties through
annual property tax assessments for a period not to exceed 20 years. To date,
279 residents and business owners entered into loan agreements with the City and have
completed their improvements through the EIP program, as of June 30, 2021, 160 loans have
been repaid. The loans are payable in two annual installments for a period of 5 years to
20 years at an interest rate of 7% annually. On June 30, 2021, the outstanding loans receivable
through the EIP Program was $1,768,905.
55
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 3: Receivables (Continued)
Pursuant to Health and Safety Code 34176(b), the housing assets of the former RDA have
been transferred to the Palm Desert Housing Authority as the successor housing entity. The
Housing Authority has loans for several other projects, all of which are secured by a deed of
trust. A valuation allowance equal to the loan balance has been recognized since there is a
significant possibility that these loans will either become uncollectible or forgiven by the
Housing Authority at a future date if all the terms of the loans have been met.
Detailed information for these loans is as follows:
Balance Interest Maturity Special Provisions
Project Name Outstanding Rate Date Secured By of Loan
429,000$ 7.25%Deed of Trust balance and interest
maturity, unpaid
or interest will
300,855$ N/A N/A Deed of Trust
is payable upon
of title,
the death of the
covenants are
property to
for up to 45
for favorable
74,580$ 3.00%Deed of Trust
at maturity if debtor
breach the terms
of either the
Deed of Trust
unit regulatory
Deed of Trust
of title,
190,510$ 3.00%
of title,
the death of the
covenants are
property to
from up to 45
exchange for favorable
56
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 4: Interfund Receivables, Payable and Transfers
Due To/From Other Funds
The composition of interfund balances as of June 30, 2021, was as follows:
The General Fund advanced $1,394,000 to the Energy Independence Special Revenue Fund
to payoff the bonds used to fund energy efficiency, loaned $1,500,000 to Desert Willow Golf
Course to fund the daily operations, including the daily operations of the restaurant, and
advanced $999,050 and $98,656 to the Capital Properties and New Construction Tax Fund,
respectively, to cover cash shortfall at year end.
The Other Governmental Funds advanced $500,000 to Desert Willow Golf Course for
operations during the construction phase of the clubhouse and kitchen expansion.
Due To/From Component Unit
Due From
Component
Unit
Major Funds:
General Fund $
Desert Willow Golf Course
The receivable by the General Fund is for rent owed by the Palm Desert Recreational Facilities
Corporation (PDRFC), and the receivable by the Desert Willow Golf Course represents funds
loaned to PDRFC for operation.
57
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 4: Interfund Receivables, Payable and Transfers (Continued)
Interfund Transfers
The composition of interfund transfers as of June 30, 2021, was as follows:
Transfers are used to:
1.Transfer revenues to provide for capital projects.
2.Transfer revenues to provide for additional resources to pay for expenditures.
3.Transfer to cover future cost of assets.
58
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 5: Capital Assets
A summary of changes in capital assets at June 30, 2021, was as follows:
Primary Government –Governmental Activities
Balance at
July 1, 2020 Transfers Additions Deletions
Balance at
June 30, 2021
Capital assets not being depreciated:
Land 81,958,949$ -$ -$ -$ $
Right-of-way 121,210,045 - - -
Construction-in-progress 3,985,114 - 7,406,925 (796,652)
Total Capital Assets Not
being Depreciated 207,154,108 - 7,406,925 (796,652)
Buildings 144,231,143 - - -
Improvements other than buildings 60,679,106 - - -
Machinery and equipment 10,654,160 (231,775) 433,513 (25,345)
244,190,768 - - -
Equipment - Internal service fund 7,212,135 231,775 1,852,041 (230,444)
Total Capital Assets
being Depreciated 466,967,312 - 2,285,554 (255,789)
Buildings (71,067,522) - (3,493,838) -
Improvements other than buildings (44,936,062) - (1,900,271) -
Machinery and equipment (9,899,237) - (266,949) 20,663
59
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 5: Capital Assets (Continued)
A summary of changes in capital assets at June 30, 2021, was as follows:
Primary Government –Business-Type Activities
Balance at
July 1, 2020 Additions Deletions
Balance at
June 30, 2021
Land 53,304,965$ -$ -$ 53,304,965$
Total capital assets, not being depreciated 53,304,965 - - 53,304,965
Buildings and improvements 28,041,594 434,733 - 28,476,327
Machinery and equipment 6,616,313 113,034 - 6,729,347
Total capital assets, being depreciated 34,657,907 547,767 - 35,205,674
Buildings and improvements (13,487,887) (851,870) - (14,339,757)
Machinery and equipment (4,935,915) (577,665) - (5,513,580)
Total capital assets being depreciated, net 16,234,105 (881,768) - 15,352,337
Capital assets, net - Business-Type Activities 69,539,070$ (881,768)$ -$ 68,657,302$
- (19,853,337)
Capital assets, not being depreciated:
Capital assets, being depreciated:
Less accumulated depreciation for:
Total accumulated depreciation
Depreciation expense was charged to functions/programs of the primary government as
follows:
General government $
Housing and redevelopment
Public safety
Public works
Parks, recreation and culture
60
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 6: Long-Term Debt
The following is a summary of long-term liability transactions of the City for the year ended
June 30, 2021.
Primary Government –Governmental Activities
Balance
June 30, 2020 Additions Reductions
1,178,000$ -$ (48,000)$ 1,130,000$ $
668,000 - (126,000) 542,000
Debt service payments for the special assessment debt with government commitment, tax
allocation bonds and notes payable are made from debt service funds and a special revenue
fund.
The City historically allocates costs to liquidate liabilities for compensated absences and
pension liability based on the allocation of the employees earning the respective benefits and
their respective payroll expense to various fund across the City.
Special Assessment Debt with Government Commitment
Highlands Undergrounding Assessment District No. 04-01, Limited Obligation Improvement
Bonds, Series 2006
On August 8, 2006, the City Palm Desert issued $3,165,000 of Limited Obligation Bonds. The
proceeds of the Bonds were used to finance the construction of the utility undergrounding and
pay the cost of issuance. The debt service on the bonds is to be paid by assessments secured
on the property tax rolls of those properties benefiting from the improvements. In the event that
assessment collections are insufficient to pay the debt service, the City has a potential
obligation to provide additional funds to pay the debt service, therefore these bonds are
reported as special assessment debt with government commitment. Bond maturities begin
September 2, 2007, and continue annually through 2036. The interest rates of the bonds range
from 3.85% to 5.15%. The City of Palm Desert is the only bondholder on record of the bonds
and the City does not own the constructed assets.
61
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 6: Long-Term Debt (Continued)
The future debt service requirements on the Highlands Undergrounding Assessment District
No. 04-01, Limited Obligation Improvement Bonds, Series 2006 are as follows:
June 30, Principal Interest
2022 48,000$ 56,797$
2023 50,000 54,310
2024 52,000 51,709
2025 55,000 48,981
2026 58,000 46,099
2027-2031 336,000 181,625
2032-2036 431,000 83,404
2037 100,000 2,575
Limited Obligation Bonds
Limited Obligation Improvement Bonds Series 2009A (Taxable)
On January 29, 2009, the City issued $2,015,000 Limited Obligation Improvement Bonds
Series 2009A (Taxable). The proceeds of the Bonds were used to fund the City’s Energy
Independence Program. Concurrent with the issuance of the Bonds, the City entered into a
bond purchase agreement with the Agency whereby the Agency agreed to purchase the Bonds
equal to par value.
The Series 2009A (Taxable) bonds consist of $2,015,000 Serial Bonds with interest at
3% payable semiannually on September 2 and March 2. Bond maturities commenced
September 2, 2010, and continue annually through September 2, 2029.
The future debt service requirements on the Limited Obligation Improvement Bonds
Series 2009A (Taxable) are as follows:
Principal Interest Total
2022 30,000$ 8,340$ $
2023 30,000 7,440
2024 31,000 6,525
2025 32,000 5,580
2026 32,000 4,620
138,000 8,430
62
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 6: Long-Term Debt (Continued)
Limited Obligation Improvement Bonds Series 2009B (Taxable)
On September 2, 2009, the City issued $1,136,000 Limited Obligation Improvement Bonds
Series 2009B (Taxable). The proceeds of the Bonds were used to fund the City’s Energy
Independence Program. Concurrent with the issuance of the Bonds, the City entered into a
bond purchase agreement with the Agency whereby the Agency agreed to purchase the Bonds
equal to par value.
The Series 2009B (Taxable) bonds consist of $1,136,000 Serial Bonds with interest at
3% payable semiannually on September 2 and March 2. Bond maturities commenced
September 2, 2010, and continue annually through September 2, 2029.
The future debt service requirements on the Limited Obligation Improvement Bonds
Series 2009B (Taxable) are as follows:
Principal Interest Total
2022 30,000$ 7,020$ $
2023 31,000 6,105
2024 31,000 5,175
2025 32,000 4,230
2026 24,000 3,390
Note 7: Compensated Absences
The City's policy relating to compensated absences is described in Note 1 of the Notes to
Financial Statements. This liability will be paid in future years from future resources in the
internal service fund. The outstanding liability for compensated absences accrued was
$2,501,835.
Note 8: Capital Leases
Primary Government –Business-type Activities
Balance
June 30, 2020 Additions Reductions
63
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 8: Capital Leases (Continued)
Obligations under capital leases are as follows:
Club Car National Account - The present value of the minimum lease payment
on the Club Car cart fleet equipment was capitalized at $471,909
rate of 5.75%. Lease is payable in 48 months, commencing
1, 2019. Payments are $12,330 monthly. The lease agreement
$
GPSI Leasing, LLC - The present value of the minimum lease payment on the
GPSI Visage Golf Cart GPS System was capitalized at $267,040
rate of 5.75%. On December 27, 2018 GPSI lease was
for an additional 48 months and lower the payment to $5,792.
lease was payable in 48 monthly installments of $5,792
PNC Equipment Finance LLC -The present value of the minimum lease
payment on the Toro golf course maintenance equipment was
using an interest rate of 2.95%. Lease is payable in 60
of $25,078 beginning on October 1, 2017. The lease was
The following is a schedule, by year, of future minimum lease payments and present value of
the net minimum lease payments for capital leases as of June 30, 2021:
2022 $
The assets acquired through capital lease are as follows:
64
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 9: Claims and Judgements Payable
Estimates for all workers’ compensation and general liabilities up to the self -insured levels have
been recorded as long-term liabilities.
Changes in claims liabilities during the past two years are as follows:
584,439$ $
41,690
Note 10: Deferred Compensation Plan
The City offers its employees a deferred compensation plan created in accordance with
Internal Revenue Code Section 457. The plan, available to all City employees, permits them to
defer a portion of their salary until future years. The deferred compensation is not available to
employees until termination, retirement, death or unforeseeable emergency. Pursuant to
changes in August 1996, of IRC Section 457, in January 1997, the City established a trust in
which all assets held by Nationwide Retirement Solutions, Inc. (NRS) and ICMA Retirement
Corporation (ICMA) were placed. The City does not have fiduciary responsibility for the plan
assets held by NRS and ICMA. The assets, all property and rights purchased with such
amounts and all income attributable to such amounts are held in trust for the exclusive benefit
of the participants and the beneficiaries. The assets are no longer the property of the City, and
as such, are no longer subject to the claims of the City’s general creditors. As a result, the
assets in the amount of $17,780,969 held by NRS and ICMA of the 457 Plan are not reflected
in the City’s financial statements.
Note 11: Pension Plan
a. General Information about the Pension Plan:
Plan Description
All qualified permanent and probationary employees are eligible to participate in the City’s
Miscellaneous Plan, agent multiple-employer defined benefit pension plans administered
by the California Public Employees’ Retirement System (CalPERS), which acts as a
common investment and administrative agent for its participating member employers.
Benefit provisions under the Plan are established by State statute and City resolution.
CalPERS issues publicly available reports that include a full description of the pension plan
regarding benefit provisions, assumptions and membership information that can be found
on the CalPERS website.
65
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 11: Pension Plan (Continued)
Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living
adjustments and death benefits to plan members, who must be public employees and
beneficiaries. Benefits are based on years of credited service, equal to one year of full-time
employment. Members with five years of total service are eligible to retire at age 50 with
statutorily reduced benefits. All members are eligible for non-duty disability benefits after
10 years of service. The death benefit is one of the following: the Basic Death Benefit, the
1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living
adjustments for the plan are applied as specified by the Public Employees’ Retirement
Law.
The Plan’s provisions and benefits in effect at measurement date, are summarized as
follows:
Prior to
January 1, 2013
2.7% @ 55 2.0% @ 62
Miscellaneous
Employees Covered
At June 30, 2021, the following employees were covered by the benefit terms for all Plans:
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the
employer contribution rates for all public employers be determined on an annual basis by
the actuary and shall be effective on the July 1 following notice of a change in the rate.
Funding contributions for both Plans are determined annually on an actuarial basis as of
June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary
to finance the costs of benefits earned by employees during the year, with an additional
amount to finance any unfunded accrued liability. The City is required to contribute the
difference between the actuarially determined rate and the contribution rate of employees.
66
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 11: Pension Plan (Continued)
b. Net Pension Liability
The City’s net pension liability for the Plan is measured as the total pension liability, less
the pension plan’s fiduciary net position. T he net pension liability of Plan is measured as
of June 30, 2020, using an annual actuarial valuation as of June 30, 2019 rolled forward to
June 30, 2020 using standard update procedures. A summary of principal assumptions
and methods used to determine the net pension liability is shown below.
Actuarial Assumptions
The total pension liabilities in the June 30, 2020 actuarial valuations were determined using
the following actuarial assumptions:
*The mortality table used was developed based on CalPERS-specific data. The table
includes 15 years of mortality improvements using the Society of Actuaries Scale 90% of
scale MP 2016. For more details on this table, please refer to the December 2017
experience study report (based on CalPERS demographic data from 1997 to 2015) that
can be found on the CalPERS website.
Discount Rate
The discount rate used to measure the total pension liability was 7.15% for the Plan. To
determine whether the municipal bond rate should be used in the calculation of a discount
rate for the plan, CalPERS stress tested plans that would most likely result in a discount
rate that would be different from the actuarially assumed discount rate. Based on the
testing of the Plans, the tests revealed the assets would not run out. Therefore, the current
7.15% discount rate is appropriate and the use of the municipal bond rate calculation is not
deemed necessary. The long term expected discount rate of 7.15% is applied to all plans
in the Public Employees Retirement Fund (PERF). The stress test results are presented in
a detailed report called “GASB Crossover Testing Report” that can be obtained from the
CalPERS website under the GASB 68 section.
The long-term expected rate of return on pension plan investments was determined using
a building-block method in which best-estimate ranges of expected future real rates of
return (expected returns, net of pension plan investment expense and inflation) are
developed for each major asset class.
67
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 11: Pension Plan (Continued)
In determining the long-term expected rate of return, CalPERS took into account both
short-term and long-term market return expectations as well as the expected pension fund
cash flows. Such cash flows were developed assuming that both members and employers
will make their required contributions on time and as scheduled in all future years. Using
historical returns of all the funds’ asset classes, expected compound (geometric) returns
were calculated over the short-term (first 10 years) and the long-term (11-60 years) using
a building-block approach. Using the expected nominal returns for both short-term and
long-term, the present value of benefits was calculated for each fund. The expected rate
of return was set by calculating the single equivalent expected return that arrived at the
same present value of benefits for cash flows as the one calculated using both short-term
and long-term returns. The expected rate of return was then set equivalent to the single
equivalent rate calculated above and rounded down to the nearest one quarter of
one percent.
The table below reflects the lo-ng-term expected real rate of return by asset class. The rate
of return was calculated using the capital market assumptions applied to determine the
discount rate and asset allocation. The target allocation shown was adopted by the
CalPERS Board effective on July 1, 2014.
New Strategic Real Return Real Return
Allocation Years 1-10 (1) Years 11+ (2)
Global Equity 50.00% 4.80% 5.98%
Global Fixed Income 28.00% 1.00% 2.62%
Inflation Sensitive 0.00% 0.77% 1.81%
Private Equity 8.00% 6.30% 7.23%
Real Estate 13.00% 3.75% 4.93%
Liquidity 1.00% 0.00% -0.92%
Total 100.00%
Asset Class
(1) An expected inflation of 2.00% used for this period.
(2) An expected inflation of 2.92% used for this period
68
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 11: Pension Plan (Continued)
c. Changes in the Net Pension Liability
The changes in the net pension liability for the year ended June 30, 2021, with a
measurement date of June 30, 2020, for the Miscellaneous Plan are as follows:
Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability (Asset)
Balance at June 30, 2019 (Measurement Date)136,590,663$ 101,765,740$ $
Changes in the Year:
(6,540,485) (6,540,485)
Net Changes 5,724,716 3,745,915 1,978,801
Balance at June 30, 2020 (Measurement Date) 142,315,379$ 105,511,655$ 36,803,724$
Increase (Decrease)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate
The following presents the net pension liability of the City for the Plan, calculated using the
discount rate for the Plan, as well as what the City’s net pension liability would be if it were
calculated using a discount rate that is 1-percentage point lower or 1-percentage point
higher than the current rate:
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the
separately issued CalPERS financial reports.
Change of Assumptions
In 2020, there were no changes in the discount rate or the inflation rate.
69
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 11: Pension Plan (Continued)
d. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions
For the year ended June 30, 2021, the City recognized pension expense of $4,838,651. At
June 30, 2021, the City reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred
Outflows of
Resources
Deferred
Inflows of
Resources
840,071
6,365,230$ -$
$4,732,417 reported as deferred outflows of resources related to contributions subsequent
to the measurement date will be recognized as a reduction of the net pension liability in the
year ending June 30, 2022. Other amounts reported as deferred inflows of resources
related to pensions will be recognized as pension expense as follows:
Year Ending
June 30 Amount
2022 $
2023
2024
e. Payable to the Pension Plan
At June 30, 2021, the City had no outstanding amount of contributions to the pension plan
required for the year ended June 30, 2021.
70
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 12: Fund Balances
In the fund financial statements, reserves segregate portions of fund balances that are either
not available or have been earmarked for specific purposes. The various reserves established
as of June 30, 2021, were as follows:
General Fund
Advances 2,894,000$ -$ -$ -$ -$ -$ -$ $
1,144,978 - - - - - -
139,202 - - - - - 18,427
Total Nonspendable 4,178,180 - - - - - 18,427
Capital projects:
Assessment districts improvements - - - - - - 2,116,419 2,116,419
Capital bond projects - - - 4,938,989 - 55,049,189 - 59,988,178
Total capital projects - - - 4,938,989 - 55,049,189 2,116,419 62,104,597
Debt service - - - - - - 79,261 79,261
Low income housing:
Projects and programs - - - 43,679,887 - - 3,575,892 47,255,779
Apartments - - - - 7,469,637 - - 7,469,637
Total low income housing - - - 43,679,887 7,469,637 - 3,575,892 54,725,416
Public facilities:
Park facilities - - - - - - 1,599,065 1,599,065
Childcare facilities - - - - - - 1,549,239 1,549,239
City facilities - - - - - - 1,078,653 1,078,653
Total public facilities - - - - - - 4,226,957 4,226,957
Public safety:
Fire facilities - - - - - - 1,261,388 1,261,388
Fire operation - - 8,546,839 - - - - 8,546,839
Police programs & equipment - - - - - - 914,981 914,981
Total public safety - - 8,546,839 - - - 2,176,369 10,723,208
Special programs:
Community projects - - - - - - 56,359 56,359
Recycling projects - - - - - - 2,859,433 2,859,433
Special district advertising - - - - - - 62,142 62,142
Air quality projects - - - - - - 27,100 27,100
Landscaping and lighting - - - - - - 4,194,727 4,194,727
Art construction & improvements - - - - - - 1,140,484 1,140,484
Total special programs - - - - - - 8,340,245 8,340,245
Street related purposes:
Construction & improvements - 6,241,487 - - - - - 6,241,487
Street resurfacing - - - - - - 4,869,886 4,869,886
Facilities maintenance reserve - 15,913,298 - - - - - 15,913,298
Drainage projects - - - - - - 707,674 707,674
Traffic signals projects - - - - - - 436,491 436,491
Total street related purposes - 22,154,785 - - - - 6,014,051 28,168,836
Total Restricted - 22,154,785 8,546,839 48,618,876 7,469,637 55,049,189 26,529,194 168,368,520
Committed to:
Aquatic center - - - - - - 2,239,645 2,239,645
Capital asset replacement - - - - 11,875,488 - - 11,875,488
Capital improvement projects reserve 17,008,555 - - - - - - 17,008,555
Facilities maintenance reserve 23,109,303 - - - - - - 23,109,303
Liability reserve 4,000,000 - - - - - - 4,000,000
Other fund stability reserve 7,280,435 - - - - - - 7,280,435
Emergency/contingency reserve 11,101,221 - - - - - - 11,101,221
Employment benefits reserve 9,334,243 - - - - - - 9,334,243
Equipment Replacement Reserve 1,193,094 - - - - - - 1,193,094
Economic development /
land acquisition reserve 830,000 - - - - - - 830,000
Energy loan program - - - - - - 2,197,246 2,197,246
Total Committed 73,856,851 - - - 11,875,488 - 4,436,891 90,169,230
Assigned to:
General fund operating reserve 15,626,136 - - - - - - 15,626,136
Capital projects:
Facilities maintenance reserve - - - - - - 6,073,334 6,073,334
City capital outlay projects - - - - - - 4,553,719 4,553,719
Total capital projects - - - - - - 10,627,053 10,627,053
Property acquisition - - - - - - 420,387 420,387
Community contingency 444,000 - - - - - - 444,000
Public facilities:
Facilities maintenance reserve - - - - - - 2,857,741 2,857,741
Public facilities - - - - - - 1,415,456 1,415,456
Golf facilities - - - - - - 9,304,743 9,304,743
Total public facilities - - - - - - 13,577,940 13,577,940
Special programs:
Library - - - - - - 673,861 673,861
Professional services 331,342 - - - - - - 331,342
Total special programs 331,342 - - - - - 673,861 1,005,203
Street related purposes:
Street maintenance 295,347 - - - - - - 295,347
Facilities maintenance reserve - - - - - - 2,160,494 2,160,494
Total street related purposes 295,347 - - - - - 2,160,494 2,455,841
Total Assigned 16,696,825 -- - - - 27,459,735 44,156,560
Unassigned 5,681,608 - - - - - - 5,681,608
Totals 100,413,464$ 22,154,785$ 8,546,839$ 48,618,876$ 19,345,125$ 55,049,189$ 58,444,247$ 312,572,525$
Loans and notes receivable
71
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 12: Fund Balances (Continued)
The fund balances reported on the fund statements now consist of the following categories:
Nonspendable - This classification includes amounts that cannot be spent because they are
either (a) not in spendable form or (b) legally or contractually required to be maintained intact.
Restricted - This classification includes amounts that can be spent only for specific purposes
stipulated by constitution, external resource providers or through enabling legislation.
Committed - This classification includes amounts that can be used only for the specific
purposes determined by a formal action of the City Council. The City considers the adoption of
a resolution to institute a formal action of City Council for the purpose of establishing, modifying
or rescinding committed fund balances.
Assigned - This classification includes amounts to be used by the government for specific
purposes but do not meet the criteria to be classified as restricted or committed. This includes
amounts that are assigned through adoption of a resolution by City Council. The Council may
delegate the ability of an employee or committee to assign uses of specific funds, for specific
purposes. Such delegation of authority occurred on September 27th, 2018 and will be in effect
for future fiscal years.
Unassigned -This classification includes the residual balance for the government’s general
fund and includes all spendable amounts not contained in other classifications. In other funds,
the unassigned classification is used only to report a deficit balance resulting from
overspending for specific purposes for which amounts had been restricted, committed or
assigned.
When an expenditure is incurred for purposes for which both restricted and unrestricted fund
balances are available, the City’s policy is to apply res tricted fund balance first.
When an expenditure is incurred for purposes for which committed, assigned or unassigned
fund balances are available, the City’s policy is to apply committed fund balance first, then
assigned fund balance, and finally unassigned fund balance.
Note 13: Risk Management
a. Description of Self-Insurance Pool Pursuant to Joint Power Agreement
The City of Palm Desert is a member of the California Joint Powers Insurance Authority
(Authority). The Authority is composed of 123 California public entities and is organized
under a joint powers agreement pursuant to California Government Code §6500 et seq.
The purpose of the Authority is to arrange and administer programs for the pooling of
self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group
purchased insurance for property and other lines of coverage. The Authority began
covering claims of its members in 1978. Each member government has an elected official
as its representative on the Board of Directors which operates through a nine-member
Executive Committee.
72
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 13: Risk Management (Continued)
b. Primary Self-Insurance Programs of the Authority
Each member pays an annual contribution at the beginning of the coverage period. A
retrospective adjustment is then conducted annually thereafter, for coverage years
2012-13 and prior. Coverage years 2013-14 and forward are not subject to routine annual
retrospective adjustment. The total funding requirement for self-insurance programs is
based on an actuarial analysis. Costs are allocated to individual agencies based on payroll
and claims history, relative to other members of the risk-sharing pool.
Primary Liability Program
In the liability program, claims are pooled separately between police and general
government exposures. (1) The payroll of each member is evaluated relative to the payroll
of other members. A variable credibility factor is determined for each member, which
establishes the weight applied to payroll and the weight applied to losses within the
formula. (2) The first layer of losses includes incurred costs up to $100,000 for each
occurrence and is evaluated as a percentage of the pool’s total incurred costs within the
first layer. (3) The second layer of losses includes incurred costs from $100,000 to
$500,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred
costs within the second layer. (4) Incurred costs from $500,000 to $50 million, are
distributed based on the outcome of cost allocation within the first and second loss layers.
The overall coverage limit for each member, including all layers of coverage, is $50 million
per occurrence. Subsidence losses have a limit of $50 million per occurrence. The
coverage structure is composed of a combination of pooled self-insurance, reinsurance,
and excess insurance. Additional information concerning the coverage structure is
available on the Authority’s website: https://cjpia.org/protection/coverage-programs.
Primary Workers' Compensation Program
Claims are pooled separately between public safety (police and fire) and general
government exposures. (1) The payroll of each member is evaluated relative to the payroll
of other members. A variable credibility factor is determined for each member, which
establishes the weight applied to payroll and the weight applied to losses within the
formula. (2) The first layer of losses includes incurred costs up to $75,000 for each
occurrence and is evaluated as a percentage of the pool’s total incurred costs within the
first layer. (3) The second layer of losses includes incurred costs from $75,000 to $200,000
for each occurrence and is evaluated as a percentage of the pool’s total incurred costs
within the second layer. (4) Incurred costs in excess from $200,000 to statutory limits are
distributed based on the outcome of cost allocation within the first and second loss layers.
For 2020-21, the Authority’s pooled retention is $1 million per occurrence, with reinsurance
to statutory limits under California Workers’ Compensation Law.Employer's Liability losses
are pooled among members to $1 million. Coverage from $1 million to $5 million is
purchased as part of a reinsurance policy, and Employer's Liability losses from $5 million
to $10 million are pooled among members.
73
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 13: Risk Management (Continued)
c. Purchased Insurance
Pollution Legal Liability Insurance
The City of Palm Desert participates in the pollution legal liability insurance program which
is available through the Authority. The policy covers sudden and gradual pollution of
scheduled property, streets, and storm drains owned by the City of Palm Desert. Coverage
is on a claims-made basis. There is a $250,000 deductible. The Authority has an aggregate
limit of $20 million.
Property Insurance
The City of Palm Desert participates in the all-risk property protection program of the
Authority. This insurance protection is underwritten by several insurance companies. The
City of Palm Desert’s property is currently insured according to a schedule of covered
property submitted by the City of Palm Desert to the Authority. The City of Palm Desert’s
property currently has all-risk property insurance protection in the amount of $264,643,396.
There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance,
which has a $2,500 deductible.
Crime Insurance
The City of Palm Desert purchases crime insurance coverage in the amount of
$10,000,000 with a $2,500 deductible. The fidelity coverage is provided through the
Authority.
Special Event Tenant User Liability Insurance
The City or Palm Desert further protects against liability damages by requiring tenant users
of certain property to purchase low-cost tenant user liability insurance for certain activities
on agency property. The insurance premium is paid by the tenant user and is paid to the
City of Palm Desert according to a schedule. The City of Palm Desert then pays for the
insurance. The insurance is facilitated by the Authority.
d. Adequacy of Protection
During the past three fiscal years, none of the above programs of protection experienced
settlements or judgments that exceeded pooled or insured coverage. There were no
significant reductions in pooled or insured liability coverage in the fiscal year
2020-21.
74
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 14: Unearned Revenues and Deferred Inflows of Resources
Unearned Revenues
Major Governmental Funds
Measure A Special Revenue Fund has $15,109,753 in funds received from the Successor
Agency that are deemed unearned until expenditures are incurred related to construction of
interchange.
Housing Authority Special Revenue Fund has other amounts reported as unearned revenues
include $57,698 for prepaid rents.
Other Governmental Funds
Special Revenue Funds
$184,959 of grant funds are deemed unearned until expenditures are incurred in the Public
Safety Police Grants Fund.
$13,428 of grant funds are deemed unearned until expenditures are incurred in the Recycling
Fund.
$30,218 of unused portion of deposits are deemed unearned until event incurred in the Aquatic
Center Fund.
$4,063 of grant funds are deemed unearned until expenditures are incurred in the El Paseo
Assessment District Fund.
Capital Projects Fund
Capital Projects Reserve fund has $63,041 of unearned revenue represents deposits for street
improvements and public facilities, as the funds have not been spent as of
June 30, 2021.
Business-type Activities
The balance of $255,228 represents the unused portions of prepaid golf fees and value of
unredeemed gift certificates.
The balance of $8,910 represents the unearned rent for the Parkview Office.
Component Unit
The balance of $144,048 represents the unused portions of prepaid banquets.
75
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 14: Unearned Revenues and Deferred Inflows of Resources (Continued)
Deferred Inflows of Resources
Major Governmental Funds
General Fund
On March 13, 1997, the City entered into an agreement with subsequent amendments on
June 4, 1997, May 18, 2004, and May 12, 2009, with the Palm Desert Recreational Facilities
Corporation (Corporation) for the use of property at the City’s Golf Resort (Des ert Willow).
Payment is due when the Corporation’s revenues exceed its expenses. At June 30, 2021, the
Corporation owed the City rent totaling $420,000, which will be recognized as revenue by the
City when the rent is paid by the Corporation.
The City entered into several individual loan agreements with residents of the Highlands Utility
Undergrounding Assessment District No. 04-01. The residents agreed to pay to the City the full
cost of the loan amount plus any accrued interest at a rate of 5.35%. The full amount of the
loan along with all accrued interest is due and payable at the earliest of September 2, 2036, or
any change in ownership of the property. As of June 30, 2021, $39,937 in interest has been
accrued. Recognition of the interest revenue has been reported as unavailable until it becomes
due.
Interest receivable in the amount of $31,820 on the advance from the General Fund to the
Energy Independence Special Revenue Fund, and $176,981 on investments purchased, and
$32,850 on advance to Desert Willow are reported as unavailable revenue.
Other accounts receivable for reimbursement of court fees in the amount of $17,477,
outstanding lien in the amount of $83,798, traffic light reimbursements in the amount of
$93,731, county abandoned vehicle reimbursement in the amount of $28,753, Emergency
Management Performance Grant in the amount of $14,363, and $388,784 of timeshare
facilities fees, are not available at year end.
Housing Asset Fund
Uncollected interest on notes receivable of $37,620 due from the Palm Desert Development
Company has been reported as unavailable.
Other Governmental Funds
Special Revenue Funds
Interest accrued on loans of $64,274 on loans receivable through the City’s EIP Program is
reported as unavailable (see Note 3).
76
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 14: Unearned Revenues and Deferred Inflows of Resources (Continued)
Capital Projects Fund
The Capital Golf fund has $34,959 uncollected interest on advances due form the Desert Willow
Golf Course.
Debt Service Fund
Assessment receivables in the amount of $1,188,117 represent future assessments to be
received from property owners in Highlands Undergrounding Assessment Districts 04-1 to pay
for long-term obligations incurred in making capital improvements in the Assessment District.
Recognition of the revenue from the assessments has been deferred until it becomes available.
Once received, the monies will be used to make annual debt service payments.
Note 15: Other Post-Employment Benefits
a. Plan Description
In addition to the pension benefits described in Note 11, the City provides other
post-employment benefits (OPEB) through the California Employers’ Retiree Benefit Trust
Fund (CERBT), an agent multiple-employer defined benefit healthcare plan administered
by the California Public Employees’ Retirement System (CalPERS).
All full-time or part-time employees who meet the eligibility requirements for this program
may continue their medical coverage through the CalPERS Health Plan and receive
reimbursement from the City for a portion of the costs for the coverage. Separate financial
statements for the CERBT may be obtained by writing to CalPERS at Lincoln Plaza North,
400 Q Street, Sacramento, California 95811, or by visiting the CalPERS website at
www.calpers.ca.gov.
Employees Hired Prior to January 1, 2008
Eligibility for the stipend requires retirement simultaneously from the City and CalPERS on
or after age 50 with at least 10 consecutive years of service with the City. Eligible
employees must be covered under the CalPERS Health Plan at the time of retirement and
elect to participate in the stipend program within 30 days of retirement.
The City’s contribution towards the coverage is based on years of service as follows:
With the City at Retirement Percentage
10 years of service 50%
11 years of service 55%
12 years of service 60%
13 years of service 65%
14 years of service 70%
15 or more years of service 75%
77
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 15: Other Post-Employment Benefits (Continued)
Employees Hired On or After January 1, 2008
Eligibility for the stipend requires retirement simultaneously from the City and CalPERS on
or after age 50 with at least 15 consecutive years of service with the City. Eligible
employees must be covered under the CalPERS Health Plan at the time of retirement and
elect to participate in the stipend program within 30 days of retirement. The stipend is
discontinued when the retiree reaches Medicare eligibility age. The City’s contribution
towards the coverage will be applied to the lowest cost plan and is based on age at
retirement and consecutive years of service with the City as outlined in the following table:
Employees with at least 5 years of service, not meeting the eligibility requirements for the
stipend program, who retire simultaneously from the City and CalPERS are eligible to
continue medical coverage through the CalPERS Health Plan. The City is required to pay
the CalPERS minimum employer contribution ($139 in 2020 and $143 in 2021) for these
employees.
Employees Hired On or After January 1, 2015
Employees are not eligible for either of the defined retiree health benefits plan but are
instead enrolled in the City’s ICMA Retirement Health Savings Account. Employees have
a mandatory 1% contribution to the Retirement Health Savings Plan and the City matches
the 1% contribution. In addition, an employee can participate in the ICMA 401A
Governmental Money Purchase Plan with a maximum pre-tax dollar contribution of 10%,
with the City maximum match of 2%.
As of June 30, 2020, the date of the most recent actuarial valuation, the City's plan has
111 active employees.
78
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 15: Other Post-Employment Benefits (Continued)
Employees Covered -Plan membership, at June 30, 2020 valuation date, membership
consisted of the following:
b. City Contributions to the Plan
City contributions to the Plan occur as benefits are paid to retirees and/or to the
OPEB trust.
c. Net OPEB Asset
The City’s Net OPEB Asset was measured as of June 30, 2020 and the Total OPEB
Liability used to calculate the Net OPEB Asset was determined by an actuarial valuation
as of June 30, 2020. Standard actuarial update procedures were used to project/discount
from valuation to measurement dates.
Actuarial assumptions. The total OPEB liability was determined using the following
actuarial assumptions, applied to all periods included in the measurement, unless
otherwise specified:
3.25% per annum
3.25% per annum
6.20% per annum
with the general exception that upon reaching
becoming eligible for Medicare, the retiree must join
Experience study and projected using the MacLeod
79
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 15: Other Post-Employment Benefits (Continued)
d. Discount Rate
GASB 75 requires a discount rate that reflects the following:
a) The long-term expected rate of return on OPEB plan investments –to the extent that
the OPEB plan’s fiduciary net position (if any) is projected to be sufficient to make
projected benefit payments and assets are expected to be invested using a strategy to
achieve that return;
b) A yield or index rate for 20-year, tax-exempt general obligation municipal bonds with
an average rating of AA/Aa or higher –to the extent that the conditions in
(a) are not met.
e. Changes in the Net OPEB Liability/(Asset)
The changes in the Net OPEB liability/(Asset) for the Plan are as follows:
Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability
Increase (Decrease)
f. Sensitivity of the Total OPEB Liability and Net OPEB Liability/(Asset) to Changes in
the Discount Rate
The following presents the Total OPEB liability and Net OPEB liability/(asset), as well as
what the total OPEB liability and net OPEB liability/(asset) would be if they were calculated
using a discount rate that is 1-percentage point lower (5.20 percent) or 1-percentage-point
higher (7.20 percent) than the current discount rate:
(5.20%)(6.20%)(7.20%)
80
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 15: Other Post-Employment Benefits (Continued)
g. Sensitivity of the Total OPEB Liability and Net OPEB Liability/(Asset) to Changes in
the Health Care Cost Trend Rates
The following presents the Total OPEB liability and net OPEB liability/(asset), as well as
what the Total OPEB liability and net OPEB liability/(asset) would be if they were
calculated using healthcare cost trend rates that are 1-percentage-point lower
(5.50 percent decreasing to 4.00 percent) or 1-percentage-point higher (7.50 percent
decreasing to 6.00 percent) than the current healthcare cost trend rates:
h. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB
For the fiscal year ended June 30, 2021, the City recognized OPEB expense (revenue) of
($12,675). As of fiscal year ended June 30, 2021, the City reported deferred outflows and
inflows of resources related to OPEB from the following sources:
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Total 2,456,165$ 2,004,106$
The City will recognize the Contributions Made Subsequent to the Measurement Date in
the next fiscal year. In addition, future recognition of the deferred resources is shown
below:
Measurement
Period ended
June 30:
Deferred
2022 (369,489)$
2023 (308,585)
2024 (3,190)
2025 26,527
2026 (5,317)
Thereafter (28,435)
Total (688,489)$
81
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 16: Special Assessment Debt
Below is a summary of the changes in the special assessment bonds payable:
Additions
27,280,000 - 1,030,000 26,250,000
20,565,000 - 735,000 19,830,000
The City has Special Assessment Bonds Payable issued under the 1911 and 1915, Special
Improvement Acts and the 1982 Mello-Roos Community Facilities Act (1982 Bonds). The City
has no liability to 1911 Act bondholders until assessments have been collected from the
property owner. Such liability is then recorded in the Custodial Funds. Therefore, the 1911
Bonds are not recorded as liabilities in the accompanying financial statements.
The City also has no liability to the 1915 Act bondholders, or the bondholders of bonds issued
under the 1982 Mello-Roos Community Facilities Act until assessments are collected on the
tax rolls. However, the City may take certain actions to assume secondary liability for all or part
of 1915 Act Bonds and the 1982 Bonds until such time as foreclosure proceedings are
consummated.
Special assessment bonds payable, as described below, and are not recorded as
long-term liabilities, as these obligations do not constitute a debt or obligation of the City.
2003 Assessment Revenue Bonds
In June 2003, the Palm Desert Financing Authority issued $4,423,000 in 2003 Assessment
Revenue Bonds. The proceeds were used to purchase three series of limited obligation
improvement bonds issued by the City in connection with the financing and refinancing of
certain improvements of benefit to property within the City’s Assessment District No. 94-2
(Sunterrace), Assessment District No. 94-3 (Merano) and Silver Spur Ranch Utility
Undergrounding Assessment District No. 01-01. These bonds were issued under the
1915 Improvement Bond Act to provide funds for public improvements in the respective
assessment districts.
Debt service requirements to maturity are as follows:
2022 100,000$ 50,719$ $
2023 110,000 45,206
2024 115,000 39,300
2025 120,000 33,056
2026 125,000 26,472
82
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 16: Special Assessment Debt (Continued)
As of June 30, 2021, the principal amounts to be repaid by the assessment district 01-1 to pay
off the loans from the Financing Authority is $1,000,000.:
Community Facilities District No. 2005-1
The bonds were issued in an original amount of $50,000,000 in May 2006, to construct and
acquire certain public facilities of benefit to the District, provide for the establishment of a
reserve account, provide capitalized interest, and pay the costs of issuance of the bonds. The
bonds are secured by and payable from a pledge of net taxes derived from special taxes to be
levied by the District on real properties within the boundaries of the District from the net
proceeds of any foreclosure actions brought following delinquency in the payment of the special
taxes, and from amounts held in certain funds under the indenture. Interest rates vary from
4.0% to 5.5% with interest payable semi-annually on March 1 and September 1, with principal
maturing annually on September 1.
In May 2007, the 2007 Bonds were issued in the amount of $17,915,000 pursuant to the
Bond Indenture in May 2006, as supplemented by a First supplemental Indenture in May 2007,
to provide construct and acquire certain public facilities of benefit to the District, provide
capitalized interest, and pay the costs of issuance of the 2007 Bonds. The bonds are secured
by and payable, on parity with the bonds issued in May 2006 for $50,000,000, from a pledge
of net taxes derived from special taxes to be levied by the District on real properties within the
boundaries of the District from the net proceeds of any foreclosure actions brought following
delinquency in the payment of the special taxes, and from amounts held in certain funds under
the indenture. On March 1, 2016, a combined total of $20,885,000 of the outstanding bonds
were called. Interest rates vary from 3.875% to 5.20% with interest payable semi-annually on
March 1 and September 1, with principal maturing annually on September 1.
Debt service requirements to maturity are as follows:
Principal Interest Total
2022 1,080,000$ 1,382,625$ $
2023 1,140,000 1,325,700
2024 1,195,000 1,264,406
2025 1,255,000 1,200,094
2026 1,320,000 1,132,500
83
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 16: Special Assessment Debt (Continued)
Section 29 Assessment District (No 2004-02), Limited Obligation Improvement Bonds,
Series 2007
In March 2007, the City of Palm Desert issued $29,430,000 Limited Obligation Improvement
Bonds. The proceeds of the Bonds will be used to finance certain infrastructure improvements
within the City’s Section 29 Assessment District (No. 2004-02). The debt service on the bonds
is to be paid by assessments secured on the property tax rolls of those properties benefiting
from the improvements. The bonds consist of Serial Bonds in the amount of $6,870,000 with
interest ranging from 4.00% to 4.70% payable semiannually on March 2 and September 2.
Bond maturities begin September 2, 2009 and continue annually through 2020. Term bonds in
the amount of $2,525,000 carry an interest rate of 4.75% and mature September 2, 2022. Term
bonds in the amount of $5,110,000 carry an interest rate of 5.05% and mature
September 2, 2027. Term bonds in the amount of $14,925,000 carry an interest rate of 5.10%
and mature September 2, 2037.
Debt service requirements to maturity are as follows:
Principal Interest Total
2022 765,000$ 985,354$ $
2023 800,000 948,185
2024 845,000 907,849
2025 885,000 864,166
2026 930,000 818,338
3,290,000 169,830
Bond Reserve Requirements
At June 30, 2021, the fund balance reserve requirements and actual reserve balances were as
follows:
Note 17: Other Disclosures
The Palm Desert Recreational Facilities Corporation has a deficit of $1,061,349, which will be
eliminated by increasing revenues through banquet reservations and outings directly related to
the expansion of the outside dining terrace and the kitchen.
The Fiduciary Private-Purpose Trust Fund has a deficit of $137,612,346, which will be funded
through future property taxes collected by the County under the direction of the State. The
State of California is the responsible body for the elimination of this deficit.
84
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 18: Construction and Other Significant Commitments
Construction Commitments
Primary Government
Current Year Prior Year Remaining
Spent Spent Commitment
General Fund
Landscape and Lighting Distict 2,240$ -$ -$
Traffic Signal Improvements 90,127 - 127,623
Marriott / Hotel El Paseo CO-OP - - 57,450
Promotional Advertising / Rebranding 274,330 - 134,670
Drainage Improvements 3,855 - 6,145
Local NonProfit Agency Funding Agreement 7,500 - 13,168
City Fleet Maintenance 34,847 64,291 74,829
Misc nonConsturction 154,263 - 212,804
Measure A
Street Improvements 283,736 1,031,356 1,757,349
San Pablo Street Improvements 2,905,806 861,577 2,538,404
CVLINK 60,547 - 39,350
Traffic Signal Improvements 77,791 - 361,512
Capital Properties
San Pablo Street Improvements 3,695,701 1,514,219 725,002
Pesidents Plaza Parking Lot Improvements 720,395 552,433 7,312,949
Alessandro West Improvement Project 1,088,757 11,720 111,095
Housing Authority
City Owned Buildings Improvments - - 511,164
Other Governmental Funds
City Owned Buildings Improvments 16,680 112,094 76,156
Street Improvements 2,066,179 837,040 43,797
CVLINK 5,698,631 22,107 2,062,642
Recycle Projects 201,636 48,359 263,005
Traffic Signal Improvements - - 6,925
Promotional Advertising / Rebranding 14,859 - 3,971
Alessandro West Improvement Project 411,312 17,936 45,000
Drainage Improvements - 273,818 36,100
El Paseo Art Exhibit 81,000 9,000 10,000
Local NonProfit Agency Funding Agreement 400,000 800,000 1,000,000
City Fleet 243,357 448,371 523,417
iHub 206,015 96,665 1,172,450
Equipment Ordered, Vehicles - - 126,339
CDBG 237,156 - 146,444
CDBG-Covid 19 143,190 - 79,230
Misc Non-Consturction 103,172 19,563 169,545
19,223,082 6,720,549 19,748,535
Project
85
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 18: Construction and Other Significant Commitments (Continued)
Fiduciary Funds
Project
Sewer Rent Payment $ 139,673 $ 372,461 $ 2,479,192
139,673$ 372,461$ 2,479,192$
Note 19: Dissolution of California Redevelopment Agencies and Wind-Down by Successor
Agencies
Pursuant to AB X1 26 (adopted by the California Legislature in June 2011)and the
State Supreme Court’s decision in California Redevelopment Association, et al. v. Ana
Matosantos, et al., 53 Cal. 4th 231 (2011), all redevelopment agencies in the State were
dissolved as of February 1, 2012. The City Council adopted Resolution No. 2011-76 on August
25, 2011, pursuant to Health and Safety Code (“HSC”) Section 34172, electing for the City to
serve as the Successor Agency (‘SARDA”)to the former Palm Desert Redevelopment Agency
(the “Dissolved RDA”). SARDA is tasked with the wind-down of the Dissolved RDA’s affairs.
Certain SARDA actions must first be approved by an oversight board, composed of
seven-members representing taxing entities.
HSC Section 34173(g) expressly provides that SARDA is a separate public entity from the City,
and the liabilities and assets of the Dissolved RDA shall not be transferred to the City.
Pursuant to HSC Section 34176, the City Council adopted Resolution No. 2012-07, on
February 9, 2012, electing to have the Palm Desert Housing Authority to serve as the Housing
Successor. The Housing Authority (as the Housing Successor) submitted to the State
Department of Finance (“DOF”) a list of housing assets to be transferred by SARDA to the
Housing Successor. On August 31, 2012, the DOF issued a letter indicating that the DOF had
no objection to such housing asset list.
The housing assets (per the housing asset list), obligations, and activities of the Dissolved RDA
were transferred to the Housing Successor and are reported in the Housing Asset Fund
beginning in fiscal year 2011-12. However, outstanding bonds (“Housing Bonds”), secured by
a pledge of moneys which would have been deposited into the Dissolved RDA’s low and
moderate income housing fund (known as the “Housing Set Aside”), remain as the SARDA’s
enforceable obligations. See also “Stipulated Judgment”below. All other assets, obligations,
and activities of the Dissolved RDA have been transferred and are reported in a fiduciary fund
(private-purpose trust fund) in the financial statements of the City.
The County Auditor-Controller (“CAC”)has established a Redevelopment Property Tax Trust
Fund (the “RPTTF”) for SARDA and is charged with depositing into the RPTTF the amount of
property taxes that would have been redevelopment property tax increment had the Dissolved
RDA not been dissolved.
86
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 19: Dissolution of California Redevelopment Agencies and Wind-Down by Successor
Agencies (Continued)
SARDA is required to prepare an annual recognized obligation payment schedule
(the “ROPS”) setting forth the amounts due for enforceable obligations from each July 1 through
the following June 30. The CAC only makes payments to the SARDA from the RPTTF based
on the ROPS amounts approved by the oversight board and the DOF.
During fiscal year 2012-13, SARDA was required to conduct due diligence reviews of the low
and moderate income housing fund and all other funds to compute the funds (cash) which were
not needed to be retained to pay existing enforceable obligations or otherwise unrestricted, and
therefore, must be remitted to the CAC. SARDA paid a total amount of $40,988,399 to the
CAC based on the due diligence reviews per the DOF’s determination.
The DOF issued a Finding of Completion on May 15, 2013 after SARDA remitted such
payments.
The Finding of Completion allows the placement of certain loans (“Advances”) made by the
City to the Dissolved RDA (which were previously voided by operation of law upon the
Dissolved RDA’s dissolution) on the ROPS. For each approved repayment 20% of the
repayment amount must be allocated to the Housing Asset Fund. The repayment of the
Advances, pursuant to the oversight board’s and the DOF’s approval, began during fi scal year
2019-20. At June 30, 2021, the balance of outstanding and unpaid Advances were paid in full.
See further discussion under Note 20.
Pursuant to HSC Section 34191.4(b), unpaid interest on the remaining principal amount of the
Advances shall be calculated at a simple rate of 3%. Based on the 3% simple rate, the unpaid
accrued interest on the Advances as of June 30, 2021, totaled $0 due to the remaining balance
payoff.
The California State Controller was directed to review the propriety of any transfers of assets
between the Dissolved RDA and other public bodies that occurred after January 1, 2011. The
State Controller completed its review on March 14, 2013 and did not identify any unallowable
transfers of assets that occurred between the Dissolved RDA and the City or other public
agencies.
SARDA’s use and disposition of all real properties held (Long Range Property Management
Plan (“LRPMP”), was approved by the DOF on June 2, 2014. The LRPMP allowed the SARDA
to transfer property used for government purposes with a cost basis of $6,390,263 to the City.
Stipulated Judgment
On May 15, 1991, the Riverside County Superior Court entered a final judgment incorporating
the terms of a Stipulation for Entry of Judgment (“Original Stipulation”) in Case No. 51124 and
a Stipulation for Entry of Judgment pursuant to Settlement Agreement and Mutual Release
(“Settlement Agreement”) in Case No. 51124, among the Dissolved RDA, the City, the Western
Center on Law and Poverty, Inc., California Rural Legal Assistance, and others. On
June 18, 1997 and on September 20, 2002, the Riverside County Superior Court amended the
judgment, incorporating Stipulations Amending Stipulation for Entry of Judgment.
87
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 19: Dissolution of California Redevelopment Agencies and Wind-Down by Successor
Agencies (Continued)
The judgment, as amended (the “Judgment”), generally required the Dissolved RDA to use
20% of its tax increment revenues, and additional tax increment revenues if necessary, to
develop, rehabilitate, or otherwise financially assist affordable housing units and to meet certain
housing needs of the City. Before dissolution, the Dissolved RDA used its Housing Set-Aside
to fulfill its obligations under the Judgment (including the payment of debt service on the
Housing Bonds issued to finance and refinance affordable housing projects that satisfied the
requirements of both the Judgment and the relevant Redevelopment Law provisions).
While the low and moderate income housing fund and the requirement to deposit the Housing
Set-Aside into such fund have been eliminated upon the Dissolved RDA’s dissolution,SARDA
continues to recognize the Judgment as its enforceable obligation. On its ROPS, the SARDA
has included line items designated as “Stipulation Judgment Case No. 51124,” listing the
amounts necessary to fulfill its obligations under the Judgment (after taking into account the
amounts already listed for the repayment of the Housing Bonds). While the DOF originally
approved such line items, the DOF changed its position beginning with
ROPS 14-15A (i.e., covering the period commencing July 1, 2014).
On August 14, 2014, SARDA filed an action, SARDA to the Palm Desert Redevelopment
Agency v. Michael Cohen, Sacramento Superior Court Case No. 34-2014-00167698
(the “Successor Agency Lawsuit”), seeking to compel the DOF to permit payment of the
affordable housing obligations mandated by the Judgment. Subsequently, in view of the fact
that there were similar cases pending in the California Court of Appeal (Third District), the
SARDA voluntarily dismissed its action without prejudice pending resolution of those other
cases. To date, none of the other cases has resulted in a decision that would compel the DOF
to permit payment of the obligations under the Judgment as an enforceable obligation.
Note 20: Successor Agency Disclosures
The assets and liabilities of the Dissolved RDA (except for those transferred to the Housing
Successor and reported in the Housing Asset Fund) have been transferred to the SARDA. The
SARDA is acting in a fiduciary capacity for the assets and liabilities. Disclosures related to
these transactions are as follows:
The advances from the General Fund and Other Governmental Funds were made to the
Dissolved RDA for capital improvements. The Dissolved RDA’s low and moderate housing fund
also made an advance to the Dissolved RDA to cover the remittance that the Dissolved RDA
made to the CAC for deposit into the County Supplemental Educational Revenue
Augmentation Fund (“SERAF”) in fiscal year 2009-10.
The repayment of the Advances repayable to City Funds for any fiscal year is subject to a cap
calculated pursuant to HSC Section 34191.4 and has a lower priority for repayment relative to
the repayment of the SERAF loans. Further, 20% of the repayment must be transferred to the
Housing Asset Fund (Housing Authority, as Housing Successor).
88
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 20: Successor Agency Disclosures (Continued)
Capital Assets
Balance at
July 1, 2020 Additions Deletions
Balance at
June 30, 2021
Capital assets, not being depreciated:
Land 24,891,841$ -$ -$ 24,891,841$
Total capital assets, not being depreciated 24,891,841$ -$ -$ 24,891,841$
Tax Allocation Bonds
A summary of changes in tax allocation bonds at June 30, 2021, was as follows:
Project Area No. 2
2003 TARBs, $15,745,000 15,745,000$ -$ -$ 15,745,000$ -$
2017 A TARBs, $52,390,000 45,535,000 - 2,875,000 42,660,000 3,060,000
2017 B TARBs, $140,130,000 122,855,000 - 8,325,000 114,530,000 8,780,000
2017 H-A TARBs, $7,365,000 6,265,000 - 395,000 5,870,000 415,000
2017 H-B TARBs, $45,815,000 23,805,000 - 5,735,000 18,070,000 5,860,000
Subtotal 214,205,000 - 17,330,000 196,875,000 18,115,000
Add: Unamortized bond premium 6,649,415 - 643,183 6,006,232 -
Less: Unamortized bond discount (1,872,071) - (134,731) (1,737,340)-
Total 218,982,344$ -$ 17,838,452$ 201,143,892$ 18,115,000$
2017 Tax Allocation Refunding Bonds
The tax allocation revenues bonds issued before 2011 (i.e., before the dissolution of the
Dissolved RDA) were issued by the Palm Desert Financing Authority, the proceeds of which
were loaned to the Dissolved RDA for financing or refinancing redevelopment projects.
Pursuant to the bond documents, the Authority’s bonds were secured by the Dissolved RDA’s
(and after dissolution, are secured by the Successor Agency’s)repayment of the loans were
secured by tax increment (after the Dissolved RDA’s dissolution, are secured by certain
moneys deposited in the RPTTF, see Notes 19) and other funds as provided in the bond
documents.
In January 2017, the Successor Agency issued four series of bonds: (i) the Tax Allocation
Refunding Bonds, 2017 Series A, in the aggregate principal amount of $52,390,000
(the “2017A Bonds”), (ii) the Taxable Tax Allocation Refunding Bonds, 2017 Series B, in the
aggregate principal amount of $140,130,000 (the “2017B Bonds”), (iii) the Tax Allocation
Refunding Bonds, 2017 Series H-A, in the aggregate principal amount of $7,365,000
(the “2017H-A Bonds”); and (iv) the Taxable Tax Allocation Refunding Bonds, 2017 Series
H-B, in the aggregate principal amount of $45,815,000 (the “2017H-B Bonds”). As further
described below, the 2017 refunding refunded all of the outstanding tax allocation revenue
bonds, except for the Project Area No. 2 2003 Bonds.
None of these bonds or any interest thereon are a debt of the City, the State of California or
any of its political subdivisions (except for the Successor Agency), and none the City, the
State of California nor any of its political subdivisions (except for the Successor Agency) 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 respective bond documents.
89
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 20: Successor Agency Disclosures (Continued)
The remaining outstanding Project Area No. 2 2003 Bonds were insured by MBIA Insurance
Corporation (“MBIA”). On February 18, 2009, MBIA announced the restructuring of its financial
guaranty insurance operations into two separately capitalized sister companies, with one entity
(MBIA Illinois) assuming the risk associated with its U.S. municipal exposures, and the other
(MBIA Corp) insuring the remainder of the portfolio. Effective March 19, 2009, MBIA Illinois
was renamed National Public Finance Guarantee Corporation (“NPFGC”).
Some (but not all) of the maturities of each series of the 2017 Bonds are insured by
Build America Mutual Assurance Company.
2003 Series Tax Allocation Revenue Bonds (Project Area No. 2)
On March 26, 2003, the Palm Desert Financing Authority issued $15,745,000 of Tax Allocation
Revenue Bonds (Project Area No. 2) 2003 Series. The Palm Desert Financing Authority loaned
the bond proceeds to the Dissolved RDA to fund various redevelopment capital projects in
Project Area No. 2. Interest rates on the bonds vary from 4.5% to 5.0% per annum payable
semi-annually on February 1 and August 1, with principal maturing as follows:
875,000 Serial Bonds August 1, 2023
910,000 Serial Bonds August 1, 2024
2,485,000 Term Bonds August 1, 2026
11,475,000 Term Bonds August 1, 2033
The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds
(Project Area No. 2) are as follows:
Principal Interest Total
2022 -$ 769,006$ $
2023 - 769,006
2024 875,000 749,319
2025 910,000 709,156
2026 1,145,000 662,203
2027 - 2031 7,400,000 2,312,488
2032 - 2034 5,415,000 415,125
2017 Series A Tax Allocation Refunding Bonds
On January 31, 2017, the Successor Agency issued the 2017A Bonds, in the principal amount
of $52,390,000. The proceeds from the 2017A Bonds were utilized to refund the Project Area
No. 1 2002A Bonds, Project Area No. 1 2003 Bond, Project Area No. 1 2004 Bonds, the Project
Area No. 2 2002A Bonds, and the Project Area No. 4 1998 Bonds and pay certain costs
associated with the issuance of the bonds.
Interest rates on the bonds vary from 2.00% to 5.00% per annum payable semi-annually on
April 1 and October 1, commencing April 1, 2017, with principal maturing annually on
October 1. As of June 30, 2021, the outstanding principal balance on the bonds $42,660,000.
90
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 20: Successor Agency Disclosures (Continued)
The future debt service requirements on the 2017A Bonds are as follows:
Principal Interest Total
2022 3,060,000$ 2,056,500$ $
2023 3,195,000 1,900,125
2024 715,000 1,802,375
2025 6,630,000 1,618,750
2026 6,910,000 1,280,250
22,150,000 2,525,500
2017 Series B Tax Allocation Refunding Bonds
On January 31, 2017, the Successor Agency issued the 2017B Bonds, in the principal amount
of $140,130,000. The proceeds from the 2017B Bonds were utilized refund the Project Area
No. 1 2006A Bonds, the Project Area No. 2 2006A Bonds, the Project Area No. 2 2006D Bonds,
the Project Area No. 3 2003 Bonds, the Project No. 3 2006A Bonds, the Project Area
No. 3 2006B Bonds, the Project Area No. 3 2006C Bonds, the Project Area No. 4 2001 Bonds,
the Project Area No. 4 2006A Bonds, and the Project Area No. 4 2006B Bonds and pay certain
costs associated with the issuance of the bonds.
Interest rates on the bonds vary from 1.25% to 4.25% per annum payable semi-annually on
April 1 and October 1, commencing April 1, 2017, with principal maturing annually on
October 1. As of June 30, 2021, the outstanding principal balance on the bonds is
$114,530,000.
The future debt service requirements on the 2017B Bonds are as follows:
Principal Interest Total
2022 8,780,000$ 3,971,400$ $
2023 9,405,000 3,726,844
2024 11,675,000 3,422,400
2025 5,585,000 3,160,009
2026 5,710,000 2,979,956
30,115,000 11,713,848
35,175,000 5,520,306
7,385,000 579,806
2042 700,000 14,875
91
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 20: Successor Agency Disclosures (Continued)
2017 Series H-A Tax Allocation Refunding Bonds
On January 31, 2017, the Successor Agency issued the 2017H-A Bonds, in the principal
amount of $7,365,000. The proceeds from the 2017H-A Bonds were used to refund the
2002 Housing Bonds and pay certain costs associated with the issuance of the bonds.
Interest rates on the bonds vary from 2.00% to 5.00% per annum payable semi-annually on
April 1 and October 1, commencing April 1, 2017, with principal maturing annually on
October 1. As of June 30, 2021, the outstanding principal balance on the bonds is $5,870,000.
The future debt service requirements on the 2017 Series H-A Tax Allocation Refunding Bonds
are as follows:
Principal Interest Total
2022 415,000$ 259,394$ $
2023 430,000 238,269
2024 455,000 216,144
2025 475,000 192,894
2026 505,000 168,394
2,925,000 434,265
2032 665,000 10,806
2017 Series H-B Tax Allocation Refunding Bonds
On January 31, 2017, the Successor Agency issued the 2017H-B Bonds, in the principal
amount of $45,815,000. The proceeds from the 2017 H-B Bonds were used to refund the
2007 Housing Bond and pay certain costs associated with the issuance of the bonds.
Interest rates on the bonds vary from 1.25% to 3.00% per annum payable semi-annually on
April 1 and October 1, commencing April 1, 2017, with principal maturing annually on
October 1. As of June 30, 2021, the outstanding principal balance on the bonds is $18,070,000.
The future debt service requirements on the 2017H-B Bonds are as follows:
Principal Interest Total
2022 5,860,000$ 428,175$ $
2023 6,015,000 268,556
2024 6,195,000 92,925
92
CITY OF PALM DESERT
NOTES TO BASIC FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 2021
Note 21: Tax Abatement
The City entered into a tax abatement agreement of transient occupancy tax revenue with a
local hotel under the authority of the City Council of the City of Palm Desert. Tax abated each
year is a calculation of the product of fifty percent (50%) of paid transient occupancy tax
revenues paid to the City by the hotel. For the fiscal year ended June 30, 2021, the City abated
tax increment totaling $802,324 under this agreement.
Note 22: Prior Period Adjustment
At June 30, 2021, the City reported a prior period adjustment in the amount of $32,968,953 in
the custodial funds in the Statement of Changes in Fiduciary Net Position. The prior period
adjustment was due to the implementation of GASB Statement No. 84, Fiduciary Activities, for
accounting and financial reporting purposes. The adjustment will convert former agency funds,
which previously only reported assets and liabilities, to a full accrual custodial fund with an
economic resources measurement focus to include the reporting of the custodial funds net
position.
Note 23: Subsequent Event
On July 28, 2021, the City of Palm Desert issued CFD 2021-1 Special Tax Bonds Series 2021
and CFD 2005-1 Special Tax Refunding Bonds Series 2021A in relation to the University Park
development. The purpose of the bonds is to refund the CFD 2005-1 Special Tax Bonds Series
2006A. In addition, the CFD 2021-1 bonds finance certain new public improvements for the
University Park development. The new bonds carry principal balances of $15,200,000 and
$5,165,000 respectively. The bonds bear interest rates of 3% to 4%. The CFD 2021-1 bonds
are payable over 30 years with interest payments beginning on March 1, 2022 and principal
payments beginning on September 1, 2022. The new CFD 2005-1 bonds are payable over 15
years with interest payments beginning on March 1, 2 022 and principal payments beginning
on September 1, 2022.
On July 14, 2021, the City of Palm Desert issued Section 29 Assessment District 2004 -02
Limited Obligation Refunding Improvement Bonds Series 2021. The purpose of the issuance
is to refund the Section 29 AD 2004-02 Limited Obligation Improvement Bonds Series 2007.
The principal balance of the new bonds was $16,400,000. The bonds bear interest rates of
2% to 4% and are payable over 16 years with interest payments beginning on March 2, 2022
and principal payments beginning on September 2, 2022.
93
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CITY OF PALM DESERT
SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY/(ASSET) AND RELATED RATIOS
AS OF JUNE 30, FOR THE LAST TEN FISCAL YEARS (1)
2018 2019 2020 2021
Total OPEB Liability
Service cost 346,417$ 357,675$ 369,299$ 366,971$
Interest on the total OPEB liability 1,144,106 1,199,747 1,256,431 1,117,500
Differences between expected and actual experience - - (4,066,457)-
Changes in assumptions - - 2,552,767 -
Benefit payments (653,187) (696,845) (756,759) (752,486)
Net change in total OPEB liability 837,336 860,577 (644,719) 731,985
Total OPEB liability - beginning 16,980,271 17,817,607 18,678,184 18,033,465
Total OPEB liability - ending (a) 17,817,607$ 18,678,184$ 18,033,465$ 18,765,450$
Plan Fiduciary Net Position
Contribution - employer 1,255,960$ 1,381,501$ 2,408,260$ 1,280,453$
Net investment income 902,331 843,319 1,226,966 977,487
Benefit payments (653,187) (696,845) (756,759) (752,486)
Administrative expense (6,541) (7,371) (3,515) (9,045)
Other Expenses - (18,115) - -
Net change in plan fiduciary net position 1,498,563 1,502,489 2,874,952 1,496,409
Plan fiduciary net position - beginning 12,198,460 13,697,023 15,199,512 18,074,464
Plan fiduciary net position - ending (b) 13,697,023 15,199,512 18,074,464 19,570,873
Net OPEB Liability/(Asset) - ending (a) - (b)4,120,584$ 3,478,672$ (40,999)$ $
76.87% 81.38% 100.23% 104.29%
10,584,400$ 10,749,431$ 10,546,052$ 11,382,103$
38.93% 32.36% -0.39% -7.08%
Historical information is required only for the measurement periods for which GASB 75 is applicable. Fiscal Year 2018 was the first year of
implementation. Future years' information will be displayed up to 10 years as information becomes available.
See Notes to Required Supplementary Information 100
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CITY OF PALM DESERT
BUDGETARY COMPARISON SCHEDULE
PROP A FIRE TAX
YEAR ENDED JUNE 30, 2021
Variance with
Final Budget
Budget Amounts Actual Positive
Original Final Amounts (Negative)
Budgetary Fund Balance, July 1 4,418,202$ 4,418,202$ 4,418,202$ -$
Resources (Inflows):
Taxes 6,305,384 6,305,384 7,889,982 1,584,598
Assessments 2,250,000 2,250,000 2,140,682 (109,318)
Intergovernmental 1,050,000 1,050,000 1,101,349 51,349
Charges for services 2,275,000 2,275,000 2,571,832 296,832
Investment earnings 6,000 6,000 35,596 29,596
Miscellaneous 28,000 28,000 24,845 (3,155)
Transfers in 3,800,000 3,800,000 3,800,000 -
Amounts Available for Appropriations 20,132,586 20,132,586 21,982,488
Public safety 15,235,328 14,322,500 13,169,943 1,152,557
Capital outlay 480,172 480,172 265,706 214,466
See Notes to Required Supplementary Information 105
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CITY OF PALM DESERT
BUDGETARY COMPARISON SCHEDULE
BUILDINGS
YEAR ENDED JUNE 30, 2021
Variance with
Final Budget
Budget Amounts Actual Positive
Original Final Amounts (Negative)
Budgetary Fund Balance, July 1 2,878,300$ 2,878,300$ 2,878,300$ -$
Resources (Inflows):
Investment earnings 5,000 5,000 5,888 888
Amounts Available for Appropriations 2,883,300 2,883,300 2,884,188 888
Charges to Appropriation (Outflow):
General government 286,000 578,600 21,962 556,638
Public safety - 90,000 28,886 61,114
Parks, recreation and culture 615,000 850,180 - 850,180
Total Charges to Appropriations 901,000 1,518,780 50,848 1,467,932
Budgetary Fund Balance, June 30 1,982,300$ 1,364,520$ 2,833,340$ 1,468,820$
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(1) On February 1, 2012 the State of California dissolved the City of Palm Desert Redevelopment Agency as part of the Statewide dissolution of all
City Redevelopment Agencies, which in turn created the Successor Agency to the Redevelopment Agency of the City of Palm Desert.
(2) The implementation of GASB Statement No. 68 and Statement No. 71 resulted in a prior year restatement decrease of $37.73 million in the
governmental activities net positons.
(3) The City's Capital Properties Capital Project Fund received $65,566,963 and the Housing Asset Fund received $6,571,706 for a combined total of
$72,138,669 of capital bond proceeds transferred from the Successor Agency.
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(1) On February 1, 2012 the State of California dissolved the City of Palm Desert Redevelopment Agency as part of the Statewide dissolution of all
City Redevelopment Agencies, which in turn created the Successor Agency to the Redevelopment Agency of the City of Palm Desert.
(2) The City's Capital Properties Capital Project Fund received $65,566,963 and the Housing Asset Fund received $6,571,706 for a combined total of
$72,138,669 of capital bond proceeds transferred from the Successor Agency.
(3) City established an allowance for advances owed by the Successor Agency.
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(1) On February 1, 2012 the State of California dissolved the City of Palm Desert Redevelopment Agency as part of the Statewide dissolution of all
City Redevelopment Agencies, which in turn created the Successor Agency to the Redevelopment Agency of the City of Palm Desert.
(2) The City's Capital Properties Capital Project Fund received $65,566,963 and the Housing Asset Fund received $6,571,706 for a combined total of
$72,138,669 of capital bond proceeds transferred from the Successor Agency.
(3) City established an allowance for advances owed by the Successor Agency.
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(1) On February 1, 2012 the State of California dissolved the City of Palm Desert Redevelopment Agency as part of the Statewide dissolution of all
City Redevelopment Agencies, which in turn created the Successor Agency to the Redevelopment Agency of the City of Palm Desert.
(2) Advances to the Successor Agency reclassified from Nonspendable to Restricted for Special Revenue Funds.
(3) The City's Capital Properties Capital Project Fund received $65,566,963 and the Housing Asset Fund received $6,571,706 for a combined
total of $72,138,669 of capital bond proceeds transferred from the Successor Agency.
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(1) On February 1, 2012 the State of California dissolved the City of Palm Desert Redevelopment Agency as part of the Statewide dissolution of all
City Redevelopment Agencies, which in turn created the Successor Agency to the Redevelopment Agency of the City of Palm Desert.
For more information on the dissolution of the RDA please see Note 16 and 17.
(2) The City's Capital Properties Capital Project Fund received $65,566,963 and the Housing Asset Fund received $6,571,706 for a combined
total of $72,138,669 of capital bond proceeds transferred from the Successor Agency.
(3) City established an allowance for advances owed by the Successor Agency.
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(1) State Subventions is any combination of motor vehicle, off-highway in-lieu, and subventions from state.
(2) Other Revenues is any combination of miscellaneous penalties and interest, permits, grants, parking bails, fees,
sales of maps and publications, vehicle and court fines, rental income, other revenues and Federal ARPA-Covid19.
(3) The State of California reprogramed motor vehicle fees, the City now receives this as property taxes.
(4) Reimbursements is a combination of RDA costs and other reimbursements, due to dissolution in February 2012 the RDA reimbursement
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(1) Combined Other is any combination of transfers, franchises, state subventions*, building and grading
permits, reimbursements, business license taxes, timeshare mitigation fees, plan check fees, property
transfer taxes. It also may include any combination of miscellaneous bails, fees, fines, grants,
incomes, penalties, permits, sales and taxes.
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(1) Public Safety is any combination of animal regulation, police services, community safety and traffic safety expenditures, this does not
include the cost for Fire Services. Fire Services are reported in a different fund.
(2) City Administration is any combination of community services, independent audit, City attorney, City clerk, City council,
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legislative advocacy and unemployment insurance expenditures.
(3) Other Expenditures is any combination of acquisitions, committees, contributions, retiree health, planning & community development,
economic development, marketing, interfund transfers, parks, recreation and culture, extraordinary loss and visitor center, capital outlay,
special item, included in the transfer out is transfer to the Fire fund for its shortfall.
(4) Public Works is a combination of curb & gutter, parking lot, auto fleet, corporate yard,
public building maintenance, Portola Community center, storm water permit.
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(1) Public Safety is any combination of animal regulation, police services, community safety and traffic safety expenditures, this does not include the cost
or Fire Services. Fire Services are reported in a different fund.
(2) City Administration is any combination of community services, independent audit, City attorney, City clerk, City council,
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legislative advocacy and unemployment insurance expenditures.
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(1) Estimated Actual Taxable Value = Net Taxable Value
Per HDL there was an artifact change in the Riverside County Assessors data that occurred primarily between 2018 and 2019, new vs old system differences,
the few properties which are listed as having asssessed value and being non-taxable are either new to the roll or are newly non-taxable for 2019.
Notes: Property Taxes in Riverside County are subject to the State of California's Proposition 13, Jarvis-Gann Initiative which allows reappraisals of real property only
when there is a change in ownership or new construction takes place. Further, the proposition limits property assessment increase to no more than two(2%) percent
annually. Property is assessed at one hundred percent (100%) of its fair market value at the time of new construction or change in ownership.
The tax rate is one (1%) percent of the assessed value.
Source: Riverside County Assessor thru HDL Coren & Cone
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Source: Riverside County Assessor thru HDL Coren & Cone
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(1) City of Palm Desert is a No-Low Property Tax City and the 7% represents what the state allocates to No-Low Property
Tax Cities.
Source: County of Riverside, Property Tax Allocation Percentages, TRA 018-041.
194
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Notes:Proposition 13 limits the ability of the city to raise the property tax rate.
Source: CalMuni Statistics Inc
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Note:The estimated property tax revenue stated above is based upon net taxable values, tax ratios and base year values that impact the revenue
calculation. As a result, parcels with the same assessed value that are assigned to different tax rate areas may contribute dissimilar amounts
of total revenue to the City and Redevelopment Agency.
Source: HdL Coren & Cone thru Riverside County Assessor 17/18 and HdL Coren & Cone thru Riverside County Assessor 08/09
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(1) City of Palm Desert is on the "Teeter Plan" with the County of Riverside. The first payment was
received in the fiscal year 1993/94.
(2) City of Palm Desert is a "No-Low Property Tax City". Proposition 13 rolled the tax rates back to 1973
which is when the City of Palm Desert incorporated and the Property Tax rates were zero.
Based on current state law the County allocates 7% of the 1% assessed values within the City less the
Redevelopment Agency tax increment. Fiscal Year 1992/93 was the first year to receive the No/Low taxes.
(3) Includes tax collections accrued as of June 30, 2021.
(4) Includes amounts receivable for tax year 2020-2021 along with prior receivables due for prior tax years.
Source: Riverside County Auditor Controller Office and City of Palm Desert
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information, therefore confidential information which is protected by law is not disclosed.
* The State of California exchanged Sales Tax Revenue with Property taxes, this amount represents the portion of sales tax that were exchanged.
Source: SBOE Data, MuniServices LLC. In Lieu given to city from State ERAF Property Taxes, City of Palm Desert
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City of Palm Desert
Ratios of Outstanding Debt by Type
Last Ten Fiscal Years
Special Assessment Total Percentage Total Debt
Fiscal Local Obligation Capital Primary of Total Personal Per
Year Bonds b,c,d Leases Government Income a,f Capita a,f
2012 9,238,000 2,291,358 11,529,358 0.47% 241
2013 8,920,000 1,751,083 10,671,083 0.44% 223
2014 8,246,000 1,222,915 9,468,915 0.39% 198
2015 3,302,000 e 1,435,046 4,737,046 0.19% 99
2016 3,045,000 929,860 3,974,860 0.16% 83
2017 2,808,000 499,881 3,307,881 0.14% 69
2018 2,658,000 1,493,330 4,151,330 0.17% 87
2019 2,071,000 1,595,394 3,666,394 0.24% 128
2020 1,846,000 1,145,011 2,991,011 0.23% 105
2021 1,672,000 675,976 2,347,976 0.20% 92
a - Personal income, population and per capita information provided by California Department of Finance,
and U.S Census Bureau and/or estimated by City Finance using 1% growth rate.
b - Special Assessment Government Activities includes Highlands Undergrounding AD No# 04-01, as of June 30, 2021 the balance was $1.130M.
c - Fiscal Year End 2009 the City issued the Energy Independence Program Limited Obligation Improvement Bonds Series 2009A (Taxable) $2.5 milli
Energy Independence Loan Program. The actual Bond Issuance was for $2.015m. At June 30, 2021 the oustanding balance was $0.293M
d - The City issued $1.136 million dollars of the Energy Independence Program (AB811 Assessments) Limited Obligation Improvement Bonds (Taxable
The special assessment collection will commence during the fiscal year 2010-2011. At June 30, 2021 the outstanding balance was $0.249M.
e - In addition the Palm Desert Financing Authority issued $5.225 million dollars of the Energy Independence Program Variable Rate Demand Lease
Revenue Bonds, Series 2009(Federally Taxable). On September 2, 2014 the bonds were called in full.as of June 30, 2017 their were no outstandin
f - Personal income and Per Capita statistic includes government and business type activities combined.
Governmental Activities Business Type Activities
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(1) Reserve Balances are as of 6/30/21.
(2) Amount represents principal and interest collected during the FY 20/21 tax roll for Debt Service Payment due in FY 21/22.
(3) Levied amounts reflect adjustments for construction funds, reserve funds, redemption funds and other adjustments.
(4) Outstanding bond balance at June 30, 2021.
(5) The schedule presents the information for each individual local obligation bonded district. Assessment Districts
94-3 Merano and 01-01 Silver Spur were refunded and obligated to pay Debt Service to Series 2003 Assessment Revenue Bonds
see note 16 for additional information.
Source: Wildan Financial Annual Report
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Source: California Municipal Statistic, Inc. San Francisco
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Notes: Details regarding the city's outstanding debt can be found in the notes to the financial statements.
a - The City issued $2.015 million dollars of the Energy Independence Program (AB811 Assessments) Limited Obligation Improvement Bonds (Taxable)
The special assessment collection will commence during the fiscal year 2009-2010 with the first interest payment paid on March 2, 2010.
b - Tax increment bonds are backed by property tax increment based on calculation provided by the Riverside County tax assessor office.
Additional information on tax increment can be found in the notes to the financial statements.
c - The City issued $1.136 million dollars of the Energy Independence Program (AB811 Assessments) Limited Obligation Improvement Bonds (Taxable)
The special assessment collection will commence during the fiscal year 2010-2011, in addition, the Palm Desert Financing Authority issued $5.225
million dollars of the Energy Independence Program Variable Rate Demand Lease Revenue Bonds, Series 2009 (Federally Taxable). Interest is paid
monthly commencing August 2009 and Principal is paid annually on September 2. The first princiapl payment was paid on September 2, 2010
d- A portion of the $50.51 (2007) and $17.915 (2008) million CFD 2005-1 (University Park) was prepaid in the amount of $6.269 Million. The prepaid
$6.269M and $2.280 (2004-1) were called during on September 2, 2014.
e- The total amount payable for the bonded obligations is disbursed by the State of California Department of Finance to the City of Palm Desert Successor Agency.
The annual collection equal the annual obligations.
f The City called the $5.225 Million Energy Independence Program Variable Rate Demand Lease Revenue Bonds, Series 2009 (Federally Taxable) in
full on September 2, 2014 in the amount of $4.485 Million. The Energy Fund used the remaining $5.225 Bond Funds in the amount of $2.155 Million
in addition to the $2.5 Million loan from the City General Fund as proceeds to call the bonds.
g The City of Palm Desert loaned the Energy Fund $2.5 Million to call the $5.225 Million Energy Independence Program Lease Revenue Bonds,
Series 2009 (Federally Taxable). The $2.5 Million is included as Special Assessment Collections.
h- During the Fiscal Year 2015-16 the Communities Facilities District 2005-1 (University Park Series, Special Tax Bonds Series 2006A and Series 2007
defeased $20.885M of the original issued $67.715M.
i- During the Fiscal Year 2016-17 the Successor Agency issued four series of bonds (1) the Tax Allocation Refunding Bonds, 2017 Series A ($52.39M),
(ii) Taxable Tax Allocation Refunding Bonds, 2017 Series B ($140.130M), Tax allocation Refunding Bonds, 2017 Series H-A ($7.365M), and
(iv) Taxable Tax Allocation Refunding Bonds, 2017 H-B ($45.815M). See Note 18 Tax Allocation Bonds. The 2017 Refunding Bonds refunded all of the
tax allocation revenue bonds; with the exception of the Project Area No. 1 2007A Bonds, and the Project Area No. 2 2003 Bonds.
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a - Personal Income estimated based on average growth rate of previous four years. The growth rate factor used was 1.5%. Income data will be
updated once the actual data is available.
b - Unemployment rate for fiscal year 20/21 is based on annual information from State of California Employment Development Department
Labor Market Information Division (not seasonally adjusted)
Sources: State Department of Finance, State Employment Development Department
205
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Sources: CA Employment Development Department - Federal and State Government not included
* Data based on prior years numbers, at the time of preparation data was not available.
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Source: City of Palm Desert
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(1) The City operates as a "contract city" utilizing, primarily, agreement with other governmental entities, private firms and individuals
to provide services.
Contracted services include: Police and Fire protection through the County of Riverside, Cal-Fire, animal control, health services,
legal services and landscape maintenance.
a - As of June 2011 realignments were made due to budget cuts, retirements and layoffs, these continued to FY 2013.
b - On February 1, 2012 the State of California dissolved the City of Palm Desert Redevelopment Agency as part of the Statewide dissolution of all
City Redevelopment Agencies, which in turn created the Successor Agency to the Redevelopment Agency of the City of Palm Desert.
Source: City of Palm Desert Financial Plan, California Department of Forestry and Fire Protection, Riverside County Sheriff's Department
208
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(1) The City operates as a "contract city" utilizing, primarily, agreement with other governmental entities, private firms and individuals
to provide services.
Contracted services include: Police and Fire protection through the County of Riverside, animal control, health services,
legal services and landscape maintenance.
(2) Aquatic Center operations began in June 2011, managed by the YMCA.
(3) New methods of street resurfacing have improved efficiency, therefore equaling more miles resurfaced.
(*) Per Building & Safety Department business license inspections are no longer done.
(#) City discontinued the City Fire Marshal services and contracted with the County for State mandated inspections only.
Sources: Riverside County Sheriff's Dept., California State Department of Forestry & Fire Protection,
City of Palm Desert, Coachella Valley Recreation & Park District, Burrtec Waste and The YMCA.
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(1) The City operates as a "contract city" utilizing, primarily, agreement with other governmental entities, private firms and individuals
to provide services.
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legal services and landscape maintenance.
Sources: Riverside County Sheriff's Dept., California State Department of Forestry & Fire Protection,
City of Palm Desert, Coachella Valley Recreation & Park District, Burrtec Waste
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1975
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1982
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1991
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City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
760-346-0611
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