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Home My WebLink AboutAtt. 1 City of Palm Desert ACFR FS Final 01-29-2026 CITY OF PALM DESERT, CALIFORNIA Annual Comprehensive Financial Report For the Year Ended June 30, 2025 2 3 CITY OF PALM DESERT, CALIFORNIA Annual Comprehensive Financial Report For the Year Ended June 30, 2025 Table of Contents Page INTRODUCTORY SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Letter of Transmittal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 GFOA Certificate of Achievement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Organizational Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 FINANCIAL SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Independent Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Management’s Discussion and Analysis (Unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Basic Financials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Statement of Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Government Fund Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position . . . . 46 Statement of Revenues, Expenditures and Changes in Fund Balances . . . . . . . . . . . . . . . . . . . 47 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of 50 Governmental Funds to the Statement of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Proprietary Fund Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Statement of Net Position - Proprietary Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds . . . . . . . . 52 Statement of Cash Flows - Proprietary Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Fiduciary Fund Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Statement of Fiduciary Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Statement of Changes in Fiduciary Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 4 Table of Contents FINANCIAL SECTION (continued) Page Required Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Schedule of Changes in the Net Pension Liability/(Asset) and Related Ratios - Miscellaneous Plan . . . 114 OPEB - Schedule of Changes in the Net OPEB Liability/(Asset) and Related Ratios . . . . . . . . . . . . . . . . 116 Schedules of Plan Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual . . . . . . . . 120 General Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 Prop A Fire Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 Housing Asset Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 Housing Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 Notes to Required Supplementary Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 Combining Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances . . . . . . . . . . . . . . . . 142 Special Revenue Funds - Schedule of Revenues, Expenditures, and Changes in Fund Balances -151 Budget and Actual .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Traffic Safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 Gas Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 Measure A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 Housing Mitigation Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 Community Development Block Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 Child Care Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Public Safety Police Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 New Construction Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 Planned Drainage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 Parks and Recreational Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 Traffic Signals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 Fire Facilities Restoration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162 Recycling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163 Energy Independence Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164 Air Quality Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165 Aquatic Center . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166 Cannabis Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 El Paseo Assessment District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168 Various Landscape and Lighting District . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169 Affordable Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170 Permanent Local Housing Allocation Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 Opioid Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 Library Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 5 Table of Contents FINANCIAL SECTION (continued) Required Supplementary Information (continued) Capital Project Funds - Schedules of Revenues, Expenditures, and Changes in Fund Balances – 174 Budget and Actual . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital Projects Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 Drainage Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175 Economic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176 Parks and Recreational Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 177 Art in Public Places . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178 Signalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179 Capital Golf . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180 Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181 Library . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182 Nonmajor Debt Service Funds - Schedules of Revenues, Expenditures, and Changes in Fund 183 Balances – Budget and Actual .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . City Highlands Undergrounding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 183 Internal Service Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 Combining Statement of Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 Statement of Revenues, Expenses and Changes in Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185 Combining Statement of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 Fiduciary Funds - Custodial Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Combining Statement of Fiduciary Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 187 Combining Statement of Fiduciary Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 6 195 200 205 210 215 220 225 Table of Contents Page STATISTICAL SECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189 Financial Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 Net Position by Component . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 Changes in Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Supplemental Historical General Fund Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Supplemental Historical General Revenue and Expenditures Per Capita . . . . . . . . . . . . . . . . . . . . . . . . . Changes in Net Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 Fund Balances of Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197 Changes in Fund Balances of Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 198 Graphs - Changes in Fund Balances of Governmental Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 199 Supplemental Graph - Historical General Fund Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201 Supplemental Historical General Fund Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 202 Supplemental Graph - Historical General Fund Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203 Revenue Capacity Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 Assessed Value and Estimated Actual Value of Taxable Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 207 Project Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Property Tax Rates Direct and Overlapping Property Tax Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Historical Net Assessed Taxable Values Citywide and Graph - Assessed Valuation Growth . . . . . . . . . . 208 Supplemental FY 2021 and 2020 Breakdown of Basic 1% Property Tax Rate Not in Redevelopment 209 Principal Property Taxpayers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211 Property Tax Levies and Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212 Supplemental Top 25 Sales Tax Generators and Graph - Historical Sales Tax Trends . . . . . . . . . . . . . . . 213 Debt Capacity Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 214 Ratios of Outstanding Debt by Type .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ratios of General Bonded Debt Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216 Supplemental Special Assessment Information Pledged-Revenue Coverage .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217 Direct and Overlapping Government Activities Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 218 Legal Debt Margin Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 Demographic and Economic Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 Demographic and Economic Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222 Principal Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223 Supplemental Miscellaneous Statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224 Operating Information .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 226 227 228 229 230 231 232 Full-Time Equivalent City Government Employees by Function/ Program . . .. . . . . . . . . . . . . . . . . . . . . . Operating Indicators by Function/ Program .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Redevelopment Custodial Project Areas Map .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SUPPLEMENTAL REDEVELOPMENT CUSTODIAL STATISTICAL SECTION . .. . . . . . . . . . . . . . . . . . . . Tax Allocation Bond Issue Information . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Capital Asset Statistics by Function/ Program . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Historical Tax Increment - Redevelopment Property Tax Trust Fund Summary . . . .. . . . . . . . . . . . . . . . . 8 INTRODUCTORY SECTION 9 i lLetter of Transm tta i i iGFOA Cert f cate of Ach evement 14 15 <CLIENT LOGO> City of Palm Desert, California Annual Comprehensive Financial Report Fiscal Year 2024 25 Board of Directors <Client Info Here> ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ <Manager>, General Manager 16 - Organizational Structure 17 18 19 FINANCIAL SECTION 20 ’ INDEPENDENT AUDITORS’ REPORT Independent Auditors Report To Honorable Mayor and Members of the City Council City of Palm Desert, California REPORT ON THE AUDIT OF 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 the City of Palm Desert, California (hereafter, the “City”), as of and for the year ended June 30, 2025, 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 as of June 30, 2025, 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 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 Auditors’ 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 audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. RESPONSIBILITIES OF MANAGEMENT FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of the 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 ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 21 To Honorable Mayor and Members of the City Council City of Palm Desert, California Palm Desert, California AUDITORS’ 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 auditors’ report that includes our opinions. 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 generally accepted auditing standards 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 generally accepted auditing standards and Government Auditing Standards, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • 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. • 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. Accordingly, no such opinion is expressed. • 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. • 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 reasonable 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. REQUIRED SUPPLEMENTARY INFORMATION Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison information, and required pension and other post-employment benefits schedules as listed on 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. 22 To Honorable Mayor and Members of the City Council City of Palm Desert, California 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 accompanying combining and individual fund financial statements and schedules (supplementary information) 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 basic 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 supplementary information is 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 and statistical sections but does not include the basic financial statements and our auditors’ report thereon. Our opinions on the basic financial statements do 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 basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic 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 January 30, 2026, 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 City’s internal control over financial reporting and compliance. Irvine, California January 30, 2026 23 24 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) Financial Highlights for Year Ended June 30, 2025 25 26 27 28 29 30 31 32 33 34 35 36 37 City of Palm Desert, California Annual Comprehensive Financial Report BASIC FINANCIALS 38 Statement of Net Position CITY OF PALM DESERT, CALIFORNIA Statement of Net Position June 30, 2025 Primary Government Component Unit Palm Desert Recreational Governmental Activities Business-Type Activities Total Facilities Corporation ASSETS Cash and investments $ 290,819,681 $ 13,300,334 $ 304,120,015 $ 883,712 Receivables: Accounts 4,727,994 186,633 4,914,627 - Assessments 956,907 -956,907 - Notes 926,000 -926,000 - Accrued interest 1,132,338 25,590 1,157,928 - Loans 22,218,415 -22,218,415 - Leases 2,836,447 6,794,837 9,631,284 - Internal balances 1,598,773 (1,598,773) -- Due from other governments 14,296,135 -14,296,135 1,640,138 Due from component unit 420,000 1,793,417 2,213,417 - Deposits 20,000 -20,000 - Prepaid costs 1,059,755 38,563 1,098,318 13,072 Inventories 14,825 352,900 367,725 55,502 Land held for resale 61,516 -61,516 - Restricted assets: Cash with fiscal agent 61,177,031 -61,177,031 - Capital assets (not being depreciated) 221,567,362 53,318,507 274,885,869 - Capital assets (net of accumulated depreciation/amortization) 208,023,534 13,648,168 221,671,702 2,351,641 Total assets 831,856,713 87,860,176 919,716,889 4,944,065 DEFERRED OUTFLOWS OF RESOURCES Pension-related 10,045,197 -10,045,197 - OPEB-related 4,837,981 -4,837,981 - Total deferred outflows of resources 14,883,178 -14,883,178 - (continued) See accompanying Notes to the Basic Financial Statements 39 CITY OF PALM DESERT, CALIFORNIA Statement of Net Position (Continued) June 30, 2025 Primary Government Component Unit Palm Desert Recreational Governmental Activities Business-Type Activities Total Facilities Corporation LIABILITIES Accounts payable $ 13,620,626 $ 982,154 $ 14,602,780 $ 54,390 Accrued liabilities 442,306 295,731 738,037 144,079 Accrued interest 8,494 -8,494 3,441 Deposits payable 15,510,709 327,594 15,838,303 - Unearned revenue 4,185,430 26,590 4,212,020 107,201 Noncurrent liabilities: Due within one year: Due to component unit -1,640,138 1,640,138 - Financed purchases -90,632 90,632 - Bonds, notes, leases, SBITA, claims, and compensated absences 1,307,795 -1,307,795 55,142 Due in more than one year: Due to primary government ---2,213,417 Net pension liability 42,151,310 -42,151,310 - Net OPEB liability 2,526,627 -2,526,627 - Financed purchases -53,925 53,925 - Bonds, notes, leases, SBITA, claims and compensated absences 5,545,162 -5,545,162 2,366,395 Total liabilities 85,298,459 3,416,764 88,715,223 4,944,065 DEFERRED INFLOWS OF RESOURCES OPEB-related 777,125 -777,125 - Lease-related 2,774,291 6,708,885 9,483,176 - Total deferred inflows of resources 3,551,416 6,708,885 10,260,301 - NET POSITION Net investment in capital assets 426,387,331 66,822,118 493,209,449 - Restricted: Capital projects 78,407,517 -78,407,517 - Debt service 163,255 -163,255 - Low income housing 65,136,622 -65,136,622 - Public facilities 9,968,763 -9,968,763 - Public safety 27,277,200 -27,277,200 - Special programs 3,733,017 -3,733,017 - Street related purposes 4,412,243 -4,412,243 - Unrestricted 142,404,068 10,912,409 153,316,477 - Total net position $ 757,890,016 $ 77,734,527 $ 835,624,543 $ - See accompanying Notes to the Basic Financial Statements 40 Statement of Activities CITY OF PALM DESERT, CALIFORNIA Statement of Activities For the Year Ended June 30, 2025 Program Revenues Expenses Operating Capital Charges for Contributions Contributions Services and Grants and Grants Functions/Programs: Primary government: Governmental activities: General government $ 39,384,397 $ 3,045,889 $ 2,050,249 $ 3,516,959 Public safety 47,044,930 22,620,838 1,346,201 53,474 Housing and redevelopment 9,719,050 9,539,293 439,873 26,079 Parks, recreation and culture 16,867,169 3,605,304 223,049 787,483 Public works 26,114,830 3,117,706 6,368,970 329,717 Library 2,934,418 --- Interest on long-term debt 64,265 --- Total governmental activities 142,129,059 41,929,030 10,428,342 4,713,712 Business-type activities: Parkview Office Complex 3,350,190 1,325,850 -- Desert Willow Golf Course 12,823,461 12,633,426 - 79,325 Total business-type activities 16,173,651 13,959,276 - 79,325 Total primary government $ 158,302,710 $ 55,888,306 $ 10,428,342 $ 4,793,037 Component Units: Palm Desert Recreational Facilities Corp. $ 4,875,456 $ 4,540,355 $ 335,101 $ - General revenues and transfers: General revenues: Property taxes Transient occupancy taxes Sales taxes Franchise taxes Other taxes Use of money and property Miscellaneous income Transfers Total general revenues and transfers Change in net position Net position-beginning, as previously reported Restatement - error correction Net position-beginning, as restated Net position-ending See accompanying Notes to the Basic Financial Statements 41 ---- CITY OF PALM DESERT, CALIFORNIA Statement of Activities (Continued) For the Year Ended June 30, 2025 Net (Expenses) Revenues and Changes in Net Position Component Primary Government Unit Palm Desert Recreational Governmental Business-Type Facilities Activities Activities Total Corporation $ (30,771,300) $ - $ (30,771,300) $ - (23,024,417) - (23,024,417) - 286,195 - 286,195 - (12,251,333) - (12,251,333) - (16,298,437) - (16,298,437) - (2,934,418) - (2,934,418) - (64,265) - (64,265) - (85,057,975) -(85,057,975) - - (2,024,340) (2,024,340) - - (110,710) (110,710) - - (2,135,050) (2,135,050) - (85,057,975) (2,135,050) (87,193,025) - 16,056,980 - 16,056,980 - 23,881,245 - 23,881,245 - 31,379,891 - 31,379,891 - 3,729,388 - 3,729,388 - 2,251,014 - 2,251,014 - 17,699,273 720,874 18,420,147 - 2,100,299 - 2,100,299 - 356,665 (356,665) -- 97,454,755 364,209 97,818,964 - 12,396,780 (1,770,841) 10,625,939 - 733,146,189 79,505,368 812,651,557 - 12,347,047 - 12,347,047 - 745,493,236 79,505,368 824,998,604 - $ 757,890,016 $ 77,734,527 $ 835,624,543 $ - 42 See accompanying Notes to the Basic Financial Statements Government Fund Financial Statements Balance Sheet CITY OF PALM DESERT, CALIFORNIA Balance Sheet Governmental Funds June 30, 2025 Special Revenue Funds General Fund Prop A Fire Tax Housing Asset Fund Housing Authority ASSETS Cash and investments $ 114,867,403 $ 27,910,884 $ 32,063,178 $ 17,170,040 Receivables: Accounts 2,857,192 758,434 256,918 420,060 Assessments ---- Notes 926,000 --- Accrued interest 628,935 -267,895 10 Loans 14,978 -21,413,813 - Leases 2,836,447 --- Deposits ---- Prepaid costs 1,003,363 -600 - Due from other governments 11,550,021 1,481,013 -- Due from other funds 84,095 --- Advances to other funds 709,000 --- Inventories 3,642 --- Land held for resale --61,516 - Due from component unit 420,000 --- Restricted assets: Cash with fiscal agent -121,720 -1,827,736 Total assets $ 135,901,076 $ 30,272,051 $ 54,063,920 $ 19,417,846 LIABILITIES Accounts payable $ 5,960,732 $ 3,040,181 $ 15,333 $ 415,796 Accrued Payroll 359,498 --82,808 Unearned revenue ---25,029 Deposits received 3,661,502 --523,928 Due to other funds ---- Advances from other funds ---- Total liabilities 9,981,732 3,040,181 15,333 1,047,561 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 2,439,590 -256,118 - Leases 2,774,291 --- Total deferred inflows of resources 5,213,881 -256,118 - FUND BALANCES Nonspendable 2,673,405 -600 - Restricted -27,231,870 53,769,292 6,494,797 Committed 63,315,645 --11,875,488 Assigned 18,337,816 --- Unassigned 36,378,597 --- Total fund balances 120,705,463 27,231,870 53,769,892 18,370,285 Total liabilities and fund balances $ 135,901,076 $ 30,272,051 $ 54,041,343 $ 19,417,846 See accompanying Notes to the Basic Financial Statements 43 CITY OF PALM DESERT, CALIFORNIA Balance Sheet (Continued) Governmental Funds June 30, 2025 Capital Projects Funds ASSETS Cash and investments Receivables: Accounts Assessments Notes Accrued interest Loans Leases Deposits Prepaid costs Due from other governments Due from other funds Advances to other funds Inventories Land held for resale Due from component unit Restricted assets: Cash with fiscal agent Restricted Capital Project Fund $ 43,538 - - - 202,866 - - - 553 - - - - - - 59,227,518 Total Nonmajor Funds $ 87,177,472 435,390 956,907 - 32,632 789,624 20,000 55,239 1,265,101 - 1,598,773 11,183 - - 57 Total Governmental Funds $ 279,232,515 4,727,994 956,907 926,000 1,132,338 22,218,415 2,836,447 20,000 1,059,755 14,296,135 84,095 2,307,773 14,825 61,516 420,000 61,177,031 Total assets $ 59,474,475 $ 92,342,378 $ 391,471,746 LIABILITIES Accounts payable Accrued Payroll Unearned revenue Deposits received Due to other funds Advances from other funds $ 214,520 - 14,901,154 - - - $ 3,689,802 - 584,526 - 84,095 709,000 $ 13,336,364 442,306 15,510,709 4,185,430 84,095 709,000 Total liabilities 15,115,674 5,067,423 34,267,904 DEFERRED INFLOWS OF RESOURCES Unavailable revenue Leases - - 985,346 - 3,681,054 2,774,291 Total deferred inflows of resources -985,346 6,455,345 FUND BALANCES Nonspendable Restricted Committed Assigned Unassigned 1,106 44,357,695 - - - 75,239 57,244,963 1,966,005 27,003,402 - 2,750,350 189,098,617 77,157,138 45,341,218 36,378,597 Total fund balances 44,358,801 86,289,609 350,725,920 Total liabilities and fund balances $ 59,474,475 $ 92,342,378 $ 391,449,169 See accompanying Notes to the Basic Financial Statements 44 45 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position CITY OF PALM DESERT, CALIFORNIA Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2025 Amounts reported for governmental activities in the Statement of Net Position are different because: Total fund balances - governmental funds $ 350,725,920 Capital assets, net of accumulated depreciation/amortization, used in governmental activities are not financial resources and, therefore, are not reported in the funds. 426,584,364 Differences between expected and actual experiences, assumption changes and net differences between projected and actual earnings, and contributions subsequent to the measurement date for the postretirement benefits (pension and OPEB) are recognized as deferred outflows of resources and deferred inflows of resources on the Statement of Net Position. Deferred outflows-pension related $ 10,045,197 Deferred outflows-OPEB related 4,837,981 Deferred inflows-OPEB related (777,125) Total deferred outflows and inflows related to postemployment benefits 14,106,053 Other long-term assets that are not available to pay for current period expenditures and, therefore, are either labeled unavailable or not reported in the funds. Long-term receivables 3,681,054 Total other long-term assets 3,681,054 Internal service funds provide services to other funds on a cost- reimbursement basis. The assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the internal service funds are included in governmental activities in the Statement of Activities. 11,697,227 Long-term liabilities that are not due and payable in the current period, and therefore, are not reported in the funds. Bonds payable (995,000) Notes payable (841,671) Leases and SBITA payable (2,381,500) Accrued interest payable on long-term debt (8,494) Net pension liability (42,151,310) Net OPEB liability (2,526,627) Total long-term liabilities (48,904,602) Net position of governmental activities $ 757,890,016 See accompanying Notes to the Basic Financial Statements 46 Statement of Revenues, Expenditures and Changes in Fund Balances CITY OF PALM DESERT, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2025 Special Revenue Funds General Fund Prop A Fire Tax Housing Asset Fund Housing Authority REVENUES Taxes $ 81,825,605 $ 13,045,657 $ - $ - Special assessments collected -2,188,202 -- Licenses and permits 1,410,552 --- Intergovernmental revenues 1,969,341 1,442,674 -- Fees and rentals 134,823 --9,402,683 Charges for services 2,168,157 4,424,656 68,979 - Investment earnings 5,803,145 1,419,450 1,786,096 776,883 Fines and forfeitures 150,788 --- Miscellaneous 841,201 -37,995 97,025 Total revenues 94,303,612 22,520,639 1,893,070 10,276,591 EXPENDITURES Current: General government 32,274,671 --- Public safety 26,030,163 18,941,495 -- Parks, recreation and culture 6,287,524 --- Public works 6,481,449 --- Housing --52,392 8,623,482 Library ---- Capital outlay 252,264 3,701,001 12,500 - Debt service: Principal 240,200 --- Interest 8,991 --- Total expenditures 71,575,262 22,642,496 64,892 8,623,482 Excess (deficiency) of revenues over (under) expenditures 22,728,350 (121,857) 1,828,178 1,653,109 OTHER FINANCING SOURCES (USES) Transfers in 2,491,425 5,000,000 -- Transfers out (31,008,583) --(380,542) Lease and subscription arrangements 140,618 --- Total other financing sources (uses) (28,376,540) 5,000,000 -(380,542) Net change in fund balances (5,648,190) 4,878,143 1,828,178 1,272,567 Fund balances-beginning, as originally reported 126,353,653 22,353,727 51,941,714 17,097,718 Restatements - correction of error ---- Fund balances-beginning, as restated 126,353,653 22,353,727 51,941,714 17,097,718 Fund balances-ending $ 120,705,463 $ 27,231,870 $ 53,769,892 $ 18,370,285 See accompanying Notes to the Basic Financial Statements 47 CITY OF PALM DESERT, CALIFORNIA Statement of Revenues, Expenditures and Changes in Fund Balances (Continued) For the Year Ended June 30, 2025 Capital Projects Funds Restricted Total Capital Project Fund Total Non- Major Funds Governmental Funds REVENUES Taxes $ -$ 5,048,819 $ 99,920,081 Special assessments collected -1,669,590 3,857,792 Licenses and permits -460,016 1,870,568 Intergovernmental revenues -4,706,974 8,118,989 Fees and rentals -329,266 9,866,772 Charges for services -4,121,682 10,783,474 Investment earnings 2,775,712 4,524,646 17,085,932 Fines and forfeitures -1,394 152,182 Miscellaneous -275,117 1,251,338 Total revenues 2,775,712 21,137,504 152,907,128 EXPENDITURES Current: General government 5,672 3,063,470 35,343,813 Public safety 243,565 177,617 45,392,840 Parks, recreation and culture -9,129,088 15,416,612 Public works 243,752 5,899,418 12,624,619 Housing -847,134 9,523,008 Library -2,934,418 2,934,418 Capital outlay 5,434,822 14,464,131 23,864,718 Debt service: Principal -379,046 619,246 Interest -102,818 111,809 Total expenditures 5,927,811 36,997,140 145,831,083 Excess (deficiency) of revenues over (under) expenditures (3,152,099) (15,859,636) 7,076,045 OTHER FINANCING SOURCES (USES) Transfers in -22,418,897 29,910,322 Transfers out -(2,115,140) (33,504,265) Lease and subscription arrangements -529,792 670,410 Total other financing sources (uses) -20,833,549 (2,923,533) Net change in fund balances (3,152,099) 4,973,913 4,152,512 Fund balances-beginning, as originally reported 47,233,177 81,315,696 346,295,685 Restatements - correction of error 277,723 -277,723 Fund balances-beginning, as restated 47,510,900 81,315,696 346,573,408 Fund balances-ending $ 44,358,801 $ 86,289,609 $ 350,725,920 See accompanying Notes to the Basic Financial Statements 48 49 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities CITY OF PALM DESERT, CALIFORNIA Reconciliation of the Statement of Revenues, Expenses and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2025 Amounts reported for governmental activities in the Statement of Activities are different because: Net change in fund balances - total governmental funds: $ 4,152,512 Governmental funds report capital outlays are expenditures. However, in the Statement of Activities, the cost of these assets is allocated over their estimated useful lives and reported as depreciation/amortization expense. This is the amount by which capital outlays exceeded depreciation/ amortization expense in the current period. Capital outlay $ 16,450,140 Depreciation/amortization expense (11,662,520) Total adjustment 4,787,620 Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Earned but unavailable grant revenues 809,755 Total adjustment 809,755 Bond and other debt proceeds provide current financial resources to governmental funds, but issuing debt increases long-term liabilities in the Statement of Net Position. Repayment of bond and other debt principal is an expenditure in the governmental funds, but repayment reduces long-term liabilities in the Statement of Net Position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the Statement of Activities. Net change in claims and judgments for the current period 2,833,669 Subscriptions and leases issued (670,410) Principal payments 619,245 Total adjustment 2,782,504 Internal service funds provide services to other funds on a cost- reimbursement basis. The net revenue of certain activities of internal service funds is reported with governmental activities. 3,066,334 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Accrued interest on long-term debt 47,544 Changes in pension liabilities and related deferred outflows and inflows of resources (1,841,182) Changes in OPEB liabilities and related deferred outflows and inflows of resources (1,408,307) Total adjustment (3,201,945) Change in net position of governmental activities $ 12,396,780 See accompanying Notes to the Basic Financial Statements 50 Proprietary Fund Financial Statements Statement of Net Position - Proprietary Funds CITY OF PALM DESERT, CALIFORNIA Statement of Net Position Proprietary Funds June 30, 2025 Governmental Business-Type Activities Activities Total Parkview Office Complex Desert Willow Golf Course Enterprise Funds Internal Service Funds ASSETS Current assets: Cash and investments Receivables (net of uncollectibles): Accounts Leases Due from other governments Prepaid costs Inventories Due from component unit $ 6,823,245 73,963 953,698 25,590 160 - - $ 6,477,089 112,670 - - 38,403 352,900 1,793,417 $ 13,300,334 186,633 953,698 25,590 38,563 352,900 1,793,417 $ 11,587,166 - - - - - - Total current assets 7,876,656 8,774,479 16,651,135 11,587,166 Noncurrent: Leases receivable Capital assets (not being depreciated/amortized) Capital assets (net of accumulated depreciation/ amortization) 5,841,139 - 4,657,919 - 53,318,507 8,990,249 5,841,139 53,318,507 13,648,168 - 11,821 2,994,711 Total noncurrent assets 10,499,058 62,308,756 72,807,814 3,006,532 Total assets 18,375,714 71,083,235 89,458,949 14,593,698 LIABILITIES Current liabilities: Accounts payable Accrued liabilities Unearned revenue Deposits received Due to component unit Financed purchases Compensated absences 65,486 - 3,031 26,590 - - - 916,668 295,731 324,563 - 1,640,138 90,632 - 982,154 295,731 327,594 26,590 1,640,138 90,632 - 261,685 - - - - - 500,000 Total current liabilities 95,107 3,267,732 3,362,839 761,685 Noncurrent liabilities: Financed purchases Advances from other funds Compensated absences - - - 53,925 1,598,773 - 53,925 1,598,773 - - - 2,134,786 Total noncurrent liabilities -1,652,698 1,652,698 2,134,786 Total liabilities 95,107 4,920,430 5,015,537 2,896,471 DEFERRED INFLOWS OF RESOURCES Leases 6,708,885 -6,708,885 - Total deferred inflows of resources 6,708,885 -6,708,885 - NET POSITION Net investment in capital assets Unrestricted 4,657,919 6,913,803 62,164,199 3,998,606 66,822,118 10,912,409 3,006,532 8,690,695 Total net position $ 11,571,722 $ 66,162,805 $ 77,734,527 $ 11,697,227 See accompanying Notes to the Basic Financial Statements 51 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds CITY OF PALM DESERT, CALIFORNIA Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds For the Year Ended June 30, 2025 Governmental Business-Type Activities Activities Parkview Total Office Complex Desert Willow Golf Course Enterprise Funds Internal Service Funds OPERATING REVENUES Fees and rentals $ 1,325,850 $ 10,633,952 $ 11,959,802 $ - Miscellaneous -333,475 333,475 452,291 Merchandise sales -1,665,999 1,665,999 - Total operating revenues 1,325,850 12,633,426 13,959,276 452,291 OPERATING EXPENSES General and administrative 97,406 3,330,916 3,428,322 178,700 Cost of merchandise -661,088 661,088 - Maintenance and operations 2,934,138 6,728,193 9,662,331 431,339 Depreciation/amortization 318,646 1,692,354 2,011,000 726,526 Total operating expenses 3,350,190 12,412,551 15,762,741 1,336,565 Operating income (loss) (2,024,340) 220,875 (1,803,465) (884,274) NONOPERATING REVENUES (EXPENSES) Interest income 531,705 189,169 720,874 - Interest expense and fiscal charges -(75,809) (75,809) - Contributions to component unit -(335,101) (335,101) - Total nonoperating revenues (expenses) 531,705 (221,741) 309,964 - Income (loss) before capital contributions and transfers (1,492,635) (866) (1,493,501) (884,274) Capital contributions -79,325 79,325 - Transfers in 19,620 -19,620 3,950,608 Transfers out (376,285) -(376,285) - Change in net position (1,849,300) 78,459 (1,770,841) 3,066,334 Net position - beginning 13,421,022 66,084,346 79,505,368 8,630,893 Net position - ending $ 11,571,722 $ 66,162,805 $ 77,734,527 $ 11,697,227 See accompanying Notes to the Basic Financial Statements 52 Statement of Cash Flows - Proprietary Funds CITY OF PALM DESERT, CALIFORNIA Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2025 Governmental Business-Type Activities Activities Parkview Office Desert Willow Internal Complex Golf Course Totals Service Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers $ 1,264,401 $ 12,811,175 $ 14,075,576 $ 452,291 Payments to suppliers and service providers (3,114,199) (10,998,335) (14,112,534) (192,805) Payments to employees for salaries and benefits -(771,259) (771,259) (216,601) Net cash provided by (used for) operating activities (1,849,798) 1,041,581 (808,217) 42,885 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 19,620 -19,620 3,950,608 Transfers to other funds (376,285) -(376,285) - Payments to other funds on interfund borrowings -(500,000) (500,000) - Net cash provided by (used for) noncapital financing activities (356,665) (500,000) (856,665) 3,950,608 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Capital contributions -79,325 79,325 - Acquisition and construction of capital assets -(275,254) (275,254) (851,883) Principal paid on capital debt -(88,395) (88,395) - Interest paid on capital debt -(75,809) (75,809) - Net cash provided by (used for) capital and related financing activities -(360,133) (360,133) (851,883) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 531,705 189,169 720,874 - Net cash provided by (used for) investing activities 531,705 189,169 720,874 - Net increase (decrease) in cash and cash equivalents (1,674,758) 370,617 (1,304,141) 3,141,610 Cash and cash equivalents-beginning 8,498,003 6,106,472 14,604,475 8,445,556 Cash and cash equivalents-ending $ 6,823,245 $ 6,477,089 $ 13,300,334 $ 11,587,166 See accompanying Notes to the Basic Financial Statements 53 CITY OF PALM DESERT, CALIFORNIA Statement of Cash Flows (Continued) Proprietary Funds For the Year Ended June 30, 2025 Governmental Business-Type Activities Activities Parkview Office Desert Willow Internal Complex Golf Course Totals Service Funds RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating income (loss) $ (2,024,340) $ 220,875 $ (1,803,465) $ (884,274) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation/amortization expense 318,646 1,692,354 2,011,000 726,526 (Increase) decrease in accounts receivable (39,797) 114,743 74,946 - (Increase) decrease in leases receivable 4,631 -4,631 - (Increase) decrease in inventories -(51,218) (51,218) - (Increase) decrease in prepaid items (160) (334,263) (334,423) - Increase (decrease) in accounts payable (82,495) 107,343 24,848 238,534 Increase (decrease) in accrued liabilities -29,170 29,170 - Increase (decrease) in deposits payable (26,283) 63,006 36,723 - Increase (decrease) in compensated absences -(800,429) (800,429) - Increase (decrease) in net pension liability ---(37,901) Total adjustments 174,542 820,706 995,248 927,159 Net cash provided by (used for) operating activities $ (1,849,798) $ 1,041,581 $ (808,217) $ 42,885 See accompanying Notes to the Basic Financial Statements 54 Fiduciary Fund Financial Statements Statement of Fiduciary Net Position CITY OF PALM DESERT, CALIFORNIA Statement of Fiduciary Net Position Fiduciary Funds June 30, 2025 Private Purpose Trust Funds Custodial Funds ASSETS Pooled cash and investments Receivables: $ 824,518 $ 8,570,033 Assessments Accrued interest Due from other governments Prepaid costs Restricted assets: - 5,567 - 1,035,520 42,707,169 649 24,177 - Cash and investments with fiscal agents Capital assets, not being depreciated 29,592,762 15,939,958 3,878,696 - Total assets 47,398,325 55,180,724 LIABILITIES Accounts payable Accrued interest Deposits payable Due to external parties/other agencies Long-term liabilities: Long-term debt due in one year Long-term debt due in more than one year 608,792 1,440,863 34,037 - 14,270,000 114,068,740 1,525 - 42,707,169 9,239,582 - - Total liabilities 130,422,432 51,948,276 DEFERRED INFLOWS OF RESOURCES Leases 124,608 - Total deferred inflows of resources 124,608 - NET POSITION Restricted for other purposes Unrestricted - (83,148,715) 3,232,448 - Total net position $ (83,148,715) $ 3,232,448 See accompanying Notes to the Basic Financial Statements 55 Statement of Changes in Fiduciary Net Position CITY OF PALM DESERT, CALIFORNIA Statement of Changes in Fiduciary Net Position Fiduciary Funds For the Year Ended June 30, 2025 ADDITIONS Contributions Investment income Taxes Intergovernmental Private Purpose Trust Funds $ - 55,995 20,297,365 - $ Custodial Funds 979,824 362,833 - 4,548,820 Total additions 20,353,360 5,891,477 DEDUCTIONS Administrative expenses Contractual services Interest expense Payments to bondholders - 760,816 5,031,830 - 194,425 1,013,039 1,725,408 2,820,000 Total deductions 5,792,646 5,752,872 Net increase (decrease) in fiduciary net position 14,560,714 138,605 Net position-beginning (97,709,429) 3,093,843 Net position-ending $ (83,148,715) $ 3,232,448 See accompanying Notes to the Basic Financial Statements 56 Notes to The Basic Financial Statements 504 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 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. 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 Corporation can be obtained from the City’s administrative offices. 57 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation Government-Wide Financial Statements The government-wide financial statements (i.e., the statement of net 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. 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. 58 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Debt Service Funds - Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term obligation principal, interest and related costs. Capital Projects Funds - Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities. 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. 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. 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 Special Revenue 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. 59 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. This fund is determined to be important to the users of the financial statements and determined to be a major fund. The Restricted Capital Project 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 Parkview Office Complex Fund is used to account for rent received from the City owned office complex. 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. 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 and custodial funds utilize an “economic resources” measurement focus. Proprietary fund and private purpose trust fund equity and custodial funds are classified as net position. 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. 60 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. 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. 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, 2025, proceeds of taxes did not exceed appropriations. E. 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. F. 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. 61 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G. 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, 2025, the cost of the property held for resale for various housing properties in Palm Desert totaled $61,516. H. Capital Assets and Depreciation Capital assets, which include property, 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 above the amounts described in the table below 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. 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. Capital assets of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful lives: Asset Type Capitalization Threshold Useful Life Subject to Depreciation? Land $ -Infinite No Buildings $ 100,000 20-50 Years Yes Infrastructure $ 100,000 10-50 Years Yes Improvements Other than Buildings $ 100,000 20-50 Years Yes Equipment, Furniture & Vehicles $ 10,000 3-15 Years Yes Intangible Assets - Permanent Easements $ 10,000 Infinite No Intangible Assets - Temporary Easements $ 10,000 5 Years Yes City-Owned or Developed Software $ 100,000 5 Years Yes Works of Art/Historical Treasures $ 10,000 Infinite No Construction in Progress $ -N/A No Lease and SBITA Assets $ 10,000 5 Years No I. Inventories, Prepaid Costs and Deposits Inventory in the amount of $352,900 and $55,502, 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. These inventories are held for resale. Inventory in the amount of $14,825 in the 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. 62 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) J. 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. K. Leases Lessee The City is a lessee for a noncancellable lease of buildings and equipment. The City recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the government-wide financial statements. The City recognizes lease liabilities with an initial, individual value of $10,000 or more. At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life. Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments. • The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases. • The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise. The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability. Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the statement of net position. Lessor The City is a lessor for several noncancellable lease of a building. The City recognizes a lease receivable and a deferred inflow of resources in the government-wide and governmental fund financial statements. 63 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term. Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts. • The City uses its estimated incremental borrowing rate as the discount rate for leases. • The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee. The City monitors changes in circumstances that would require a remeasurement of its lease, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. L. Subscription-Based Information Technology Arrangements The City is a subscriber for several noncancellable subscription of information technology services. The City recognizes a subscription liability and an intangible right-to-use subscription asset (subscription asset) in the government-wide financial statements. The City recognizes subscription liabilities with an initial, individual value of $5,000 or more. At the commencement of a subscription, the City initially measures the subscription liability at the present value of payments expected to be made during the subscription term. Subsequently, the subscription liability is reduced by the principal portion of subscription payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for subscription payments made at or before the subscription commencement date, plus certain initial direct costs. Subsequently, the subscription asset is amortized on a straight-line basis over its useful life. Key estimates and judgments related to subscriptions include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) lease term, and (3) subscription payments. • The City uses the interest rate charged by the vendor as the discount rate. When the interest rate charged by the vendor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for subscriptions. • The subscription term includes the noncancellable period of the subscription. Subscription payments included in the measurement of the subscription liability are composed of fixed payments that the City is reasonably certain to exercise. The City monitors changes in circumstances that would require a remeasurement of its subscriptions and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability. Subscription assets are reported with other capital assets and subscription liabilities are reported with long-term debt on the statement of net position. 64 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. 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 assets 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: • 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). • Deferred outflows related to pensions and OPEB resulting from the difference in projected and actual earnings on investments of the pension plan and OPEB fiduciary net position. These amounts are amortized over five years. • Deferred outflows of resources related to pensions and OPEB arising from a change in assumptions and 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 and OPEB through the plan. 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 assets 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: • 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. • 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. • Deferred inflows related to pensions and OPEB 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 and OPEB through the plan. • Deferred inflows from OPEB 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 OPEB through the plan. • Deferred inflows from lease related items for the amount of the lease receivable plus any lease payments related to future periods, less any lease incentives paid to, or on behalf of, the lessee at or before the commencement of the lease term. 65 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) N. Compensated Absences The City recognizes a liability for compensated absences for leave time that (1) has been earned for services previously rendered by employees, (2) accumulates and is allowed to be carried over to subsequent years, and (3) is more likely than not to be used as time off or settled (for example paid in cash to the employee or payment to an employee flex spending account) during or upon separation from employment. Based on the criteria listed, two types of leave qualify for liability recognition for compensated absences – vacation and sick leave. The liability for compensated absences is reported as incurred in the government-wide and proprietary fund financial statements. A liability for compensated absences is recorded in the governmental funds only if the liability has matured because of employee resignations or retirements. The liability for compensated absences includes salary-related benefits, where applicable. Vacation The City’s policy permits employees to accumulate earned but unused vacation benefits, which are eligible for payment at the employee’s current pay rate upon separation from employment. Sick Leave The City’s policy permits employees to accumulate earned but unused sick leave. All sick leave lapses when employees leave the employ of the City and, upon separation from service, no monetary obligation exists. However, a liability for estimated value of sick leave that will be used by employees as time off is included in the liability for compensated absences." 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) plans (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. GASB Statement No. 68 requires 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, 2023 Measurement Date June 30, 2024 Measurement Period July 1, 2023 to June 30, 2024 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, 2023 Measurement Date June 30, 2024 Measurement Period June 30, 2023 to June 30, 2024 66 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Q. Fund Balance 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 restricted 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. R. Net Position For government-wide reporting as well as in proprietary funds, the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources is called net position. Net position is comprised of three components: net investment in capital assets, restricted, and unrestricted. • Net investment in capital assets consists of capital assets, net of accumulated depreciation/amortization and reduced by outstanding balances of bonds, notes, and other debt that are attributable to the acquisition, construction, or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are included in this component of net position. • Restricted net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Assets are reported as restricted when constraints are placed on asset use either by external parties or by law through constitutional provision or enabling legislation. • Unrestricted net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that does not meet the definition of the two preceding categories. 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 in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted net position to have been depleted before unrestricted net position is applied. 67 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) S. 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. T. New and Upcoming GASB Pronouncements Effective During Fiscal Year New Pronouncements The requirements of the following accounting standards are effective for the purpose of implementation, if applicable to the City, for the year ended June 30, 2025. The financial statements included herein apply the requirements and provisions of these statements, including necessary retroactive adjustments to financial statement classifications and presentations. The City is currently analyzing its accounting practices to determine the potential impact on the financial statements for the following GASB statements: GASB Statement No. 101, Compensated Absences The requirements of this Statement will improve financial reporting by implementing a unified recognition and measurement model that will result in a liability for compensated absences that more appropriately reflects when a government incurs an obligation. Establishing the unified model will result in consistent application to any type of compensated absence and will eliminate potential comparability issues between governments that offer different types of leave. This Statement will also result in a more robust estimate of the amount of compensated absences that a government will pay or settle, which will enhance the relevance and reliability of information about the liability for compensated absences. See Note 18 for details on restatements related to this pronouncement. GASB Statement No. 102, Certain Risk Disclosures The requirements of this Statement will improve financial reporting by providing users of financial statements with essential information that currently is not often provided. The disclosures will provide users with timely information regarding certain concentrations or constraints and related events that have occurred or have begun to occur that make a government vulnerable to a substantial impact. As a result, users will have better information with which to understand and anticipate certain risks to a government’s financial condition. Management has assessed the impact of this Statement on the City's financial statements and determined that it did not have a material impact. Upcoming Pronouncements GASB Statement No. 103, Financial Reporting Model Improvements The requirements of this Statement will improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government’s accountability. The Statement requires that the information presented in MD&A be limited to the related topics discussed in five sections: (1) Overview of the Financial Statements, (2) Financial Summary, (3) Detailed Analyses, (4) Significant Capital Asset and Long-Term Financing Activity, and (5) Currently Known Facts, Decisions, or Conditions. 68 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) This Statement describes unusual or infrequent items as transactions and other events that are either unusual in nature or infrequent in occurrence. Furthermore, governments are required to display the inflows and outflows related to each unusual or infrequent item separately as the last presented flow(s) of resources prior to the net change in resource flows in the government-wide, governmental fund, and proprietary fund statements of resource flows. This Statement also requires that the proprietary fund statement of revenues, expenses, and changes in fund net position continue to distinguish between operating and nonoperating revenues and expenses. Operating revenues and expenses are defined as revenues and expenses other than nonoperating revenues and expenses. Nonoperating revenues and expenses are defined as (1) subsidies received and provided, (2) contributions to permanent and term endowments, (3) revenues and expenses related to financing, (4) resources from the disposal of capital assets and inventory, and (5) investment income and expenses. In addition to the subtotals currently required in a proprietary fund statement of revenues, expenses, and changes in fund net position, this Statement requires that a subtotal for operating income (loss) and noncapital subsidies be presented before reporting other nonoperating revenues and expenses. This Statement requires governments to present each major component unit separately in the reporting entity’s statement of net position and statement of activities if it does not reduce the readability of the statements. If the readability of those statements would be reduced, combining statements of major component units should be presented after the fund financial statements. This Statement requires governments to present budgetary comparison information using a single method of communication—RSI. Governments also are required to present (1) variances between original and final budget amounts and (2) variances between final budget and actual amounts. An explanation of significant variances is required to be presented in notes to RSI. The requirements of this Statement are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter. GASB Statement No. 104, Disclosure of Certain Capital Assets The requirements of this statement will provide users of government financial statements with essential information about certain types of capital assets. This Statement requires certain types of capital assets to be disclosed separately in the capital assets note disclosures required by Statement 34. Lease assets recognized in accordance with Statement No. 87, Leases, and intangible right-to-use assets recognized in accordance with Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements, should be disclosed separately by major class of underlying asset in the capital assets note disclosures. Subscription assets recognized in accordance with Statement No. 96, Subscription-Based Information Technology Arrangements, also should be separately disclosed. In addition, this Statement requires intangible assets other than those three types to be disclosed separately by major class. This Statement also requires additional disclosures for capital assets held for sale. A capital asset is a capital asset held for sale if (a) the government has decided to pursue the sale of the capital asset and (b) it is probable that the sale will be finalized within one year of the financial statement date. This Statement requires that capital assets held for sale be evaluated each reporting period. Governments should disclose (1) the ending balance of capital assets held for sale, with separate disclosure for historical cost and accumulated depreciation by major class of asset, and (2) the carrying amount of debt for which the capital assets held for sale are pledged as collateral for each major class of asset. The requirements of this Statement are effective for fiscal years beginning after June 15, 2025, and all reporting periods thereafter. 69 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 2 - CASH AND INVESTMENTS As of June 30, 2025 cash and investments were reported in the accompanying financial statements as follows: Governmental activities $ 351,996,712 Business-type activities 13,300,334 Component unit 883,712 Fiduciary Funds 42,866,009 Total cash and investments $ 409,046,767 Cash and investments at June 30, 2025 consisted of the following: Primary Government Demand accounts $ 3,397,457 Petty cash 22,963 Investments 361,876,626 Total cash and investments - Primary Government $ 365,297,046 Component Unit Demand accounts $ 883,712 Fiduciary Funds Demand accounts $ 9,292,006 Demand accounts pooled with primary government 1,919,494 Investments 31,654,509 Total cash and investments - Fiduciary Funds $ 42,866,009 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. A. Deposits At June 30, 2025, the carrying amount of the deposits was $13,573,175, and the bank balance was $6,357,188. The $7,215,987 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 secure deposits by pledging first trust deed mortgage notes having a value of 150% of total deposits. The City Treasurer may waive the collateral requirement for deposits that are fully insured up to $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. 70 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) B. Investments Investments Authorized by the California Government Code and the City’s Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code and the City’s investment policy. The table also identifies certain provisions of the California Government Code (or the City’s investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy. Authorized by Maximum Maximum Investment Types Investment Maximum Percentage Investment Authorized by State Law Policy Maturity * of Portfolio * in One Issuer * United States Treasury Bills, Notes, Bonds Yes 5 years 100% none p Agency Securities Yes 5 years 100% 30% California State and Local Agency Debt Yes 180 days none Commercial Paper Yes 270 days 25% 10% Negotiable Certificates of Deposit Yes 5 years 5% none Time Certificates of Deposit Yes 5 years 5% none Repurchase Agreements Yes 1 year 10% none Medium-Term Corporate Notes Yes 5 years 25% 10% Money Market Mutual Funds Yes 5 years 20% none Local Agency Investment Fund (LAIF) Yes N/A $75M/Acct none Structured Notes (STRIPS) Yes 5 years 20% none Local Government Investment Pools Yes N/A 1 none * Based on state law requirements or City investment policy requirements, whichever is more restrictive. 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. 71 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) Primary Government Minimum Exempt or Investment Type Total Legal Rating Aaa AAA Other Not Rated California Local Agency Investment Fund $ 2,048,197 N/A $ - $ - $ - $ 2,048,197 California Asset Management Program 228,863,550 N/A --228,863,550 - Riverside County Treasurer's Pooled Investment Fund 2,925,911 N/A 2,925,911 --- U.S. Agency Securities 46,459,921 N/A 46,459,921 --- Medium-term notes 21,122,330 N/A 557,090 -20,565,240 - Held by Fiscal Agent: Money Market Deposit Account 60,456,717 N/A ---60,456,717 Total $361,876,626 $ 49,942,922 $ - $249,428,790 $ 62,504,914 The ratings for the “Other” category above are as follows: Investment Type Aa A A1 A2 A3 Total Medium-Term Corporate Notes $ 6,767,934 $ 1,219,985 $ 5,420,342 $ 5,449,322 $ 2,264,747 $ 21,122,330 Fiduciary Funds Minimum Exempt or Investment Type Total Legal Rating Aaa AAA Not Rated California Local Agency Investment Fund $ 822 N/A $ -$ -$ 822 California Asset Management Program 6,619 N/A -6,619 - Riverside County Treasurer's Pooled Investment Fund 373 N/A 373 -- Investment in City Bonds 73,000 N/A --73,000 Held by Fiscal Agent: Money Market Deposit Account 31,573,695 N/A --31,573,695 Total $ 31,654,509 $ 373 $ 6,619 $ 31,647,517 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, 2025, none of the City’s deposits or investments were exposed to custodial credit risk. 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, 2025, 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. 72 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) Interest Rate Risk The City’s investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The City’s investment policy states that the City shall not invest in securities with maturities exceeding five years. The City has elected to use the segmented time distribution method of disclosure for its interest rate risk. As of June 30, 2025, the City had the following investments and maturities: Primary Government Investment Type Total Less than 6 Months 6 Months to 12 Months 13 to 36 Months 37 to 60 Months California Local Agency Investment Fund California Asset Management Program Riverside County Treasurer's Pooled Investment Fund U.S. Treasury Obligations U.S. Agency Securities Commercial paper Certificates of deposit (negotiable) Medium-term notes Held by Fiscal Agent: Money Market Deposit Account $ 2,048,197 228,863,550 2,925,911 - 46,459,921 - - 21,122,330 60,456,717 $ 2,048,197 228,863,550 2,925,911 - 325,660 - - 1,374,985 60,456,717 $ - - - - 5,562,457 - - - - $ - - - - 17,702,948 - - 10,480,084 - $ - - - - 22,868,856 - - 9,267,261 - Total $ 361,876,626 $ 295,995,020 $ 5,562,457 $ 28,183,032 $ 32,136,117 Fiduciary Funds Investment Type Total Less Than 6 Months 6 Months to 12 Months 12 Months to 36 Months California Local Agency Investment Fund California Asset Management Program Riverside County Treasurer's Pooled Investment Fund Investment in City Bonds Held by Fiscal Agent: Money Market Deposit Account $ 822 6,619 373 73,000 31,573,695 $ 822 6,619 373 37,000 31,573,695 $ - - - - - $ - - - 36,000 - Total $ 31,654,509 $ 31,618,509 $ -$ 36,000 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. 73 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 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 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: • Quoted prices for similar assets in active markets; • Quoted prices for identical or similar assets in inactive markets; • Inputs other than quoted prices that are observable for the asset; • Inputs that are derived principally from or corroborated by observable market data by correlation or other means. 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. 74 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) 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. Primary Government Input Category Investment Type Total Level 1 Level 2 Level 3 Uncategorized California Local Agency Investment Fund California Asset Management Program Riverside County Treasurer's Pooled Investment Fund U.S. Treasury Obligations U.S. Agency Securities Commercial paper Certificates of deposit (negotiable) Medium-term notes Held by Fiscal Agent: Money Market Deposit Account $ 2,048,197 228,863,550 2,925,911 - 46,459,921 - - 21,122,330 60,456,717 $ - - - - - - - - - $ - - - - 46,459,921 - - 21,122,330 - $ - - - - - - - - - $ 2,048,197 228,863,550 2,925,911 - - - - - 60,456,717 Total $ 361,876,626 $ -$ 67,582,251 $ -$ 294,294,375 75 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 2 - CASH AND INVESTMENTS (CONTINUED) Fiduciary Funds Investment Type Total Level 1 Input Category Level 2 Level 3 Uncategorized California Local Agency Investment Fund $ 822 $ -$ -$ -$ 822 California Asset Management Program 6,619 ---6,619 Riverside County Treasurer's Pooled Investment Fund 373 ---373 Investment in City Bonds 73,000 --73,000 - Held by Fiscal Agent: Money Market Deposit Account 31,573,695 ---31,573,695 Total $ 31,654,509 $ -$ -$ 73,000 $ 31,581,509 NOTE 3 - NOTES AND LOANS RECEIVABLE A. Notes Receivable On August 8, 2006, the City of 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, 2025, the receivable balance was $926,000. B. Loans Receivable 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, 2025, 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 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. As of June 30, 2025, the total receivable from PD Hovley Limited Partnership was $5,148,813. 76 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 3 - NOTES AND LOANS RECEIVABLE (CONTINUED) The Housing Asset Fund has a loan receivable for the construction of a multi-family affordable housing development dated December 20, 2022, due from Palm Desert Pacific Associates, a California Limited Partnership. The Authority Loan shall bear interest at three percent (3%) simple interest per annum, and repayment will commence as follows: 50% of Project Net Cash Flow, as defined in the Loan Agreement shall be paid to PDHA on an annual basis on June 30th after the first anniversary of issuance of a final certificate of occupancy for the project and each annual anniversary thereafter (with respect to the Project New Cash Flow for the preceding year ending on June 30th prior to each such payment date) until the Note has been satisfied in full. As of June 30, 2025, the total receivable from Palm Desert Pacific Associates was $6,030,000 and management has no reason to believe any allowance for doubtful accounts should be established for the loan. 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, 2025, 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, 2025, the outstanding loans receivable through the EIP Program was $186,349. On November 1, 2024 The Palm Desert Housing Authority entered into a new loan agreement with A0358 Monterey L.P., a California limited partnership, in the amount of Seven Million Two Hundred Thirty-Five Thousand Dollars ($7,235,000) from the Authority's Low and Moderate Income Housing Asset Fund to fund the construction of One-Hundred Thirty Nine (139) of the One-Hundred Seventy Four (174) affordable housing units comprising the proposed apartment project, Crossings at Palm Desert Apartments. 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. An allowance for doubtful accounts 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. On June 13, 2024, the City Council approved through a resolution of the Palm Desert Housing Authority a Disposition, Development and Loan Agreement (DDLA) with Chelsea Investments Corporation in the amount of Three Million Dollars ($3,000,000) from the Authority's Low and Moderate Income Housing Asset Fund, and have a term of Fifty-Five (55) years from the date of the issuance of the Certificate of Occupancy. The Authority Loan shall bear interest at three percent (3%) simple interest per annum, and principal will be repaid from a proportional share of the Projects residual receipts. The Authority Loan will be due and payable at the end of the loan term and will be used to fund the construction of Thirty-Nine (39) multi-family affordable housing units comprising the proposed apartment project, Arc Village Apartments. 77 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 3 - NOTES AND LOANS RECEIVABLE (CONTINUED) Detailed information for these loans is as follows: Accrued Total Project Name Home Improvement Loans Portola Palms Mobile Home Park Desert Rose Falcon Crest Acquisition, Rehabilitation, Resale Habitat for Humanity Principal Balance Outstanding $ 324,466 62,891 2,465,156 3,003,562 190,510 327,000 $ Unpaid Interest Outstanding - 1,887 73,955 90,107 5,715 9,810 $ Outstanding as of June 30, 2025 324,466 64,778 2,539,111 3,093,669 196,225 336,810 Interest Rate N/A 3.00% 3.00% 3.00% 3.00% 7.25% Maturity Date N/A 30 years 30-45 years* 30-45 years* 30-45 years 30 years or 2024 Notes (1),(2) (3) (1),(3) (1),(2) (2) (2) $ 6,373,585 $ 181,474 6,555,059 Less: Allowance for Doubtful Accounts (6,555,059) Balance at June 30, 2025 $ - * All properties acquired from the former Redevelopment Agency after June 2009 will have a 45 year restrictive covenant and are secured by a deed of trust. (1) Portion of deferred loans are from funding sources other than Housing Authority. (2) Loan is payable upon change or transfer of title, refinancing or upon the death of the borrower. (3) Loan balance and interest will be forgiven at maturity if debtor does not breach the terms and conditions of either the unit regulatory agreement or note. NOTE 4 - INTERFUND RECEIVABLES, PAYABLE, ADVANCES AND TRANSFERS The composition of interfund balances as of June 30, 2025, was as follows: A. Due To/From Other Funds Receivable Fund Payable Fund Amount General Fund Other Governmental Funds $ 84,095 The amounts loaned from the General Fund to non-major governmental funds and capital properties were to cover cash shortfall at year end as of June 30, 2025. B. Advances To/From Other Funds Receivable Fund Payable Fund Amount General Fund Other Governmental Funds $ 709,000 Other Governmental Funds Desert Willow Golf Course 1,598,773 $ 2,307,773 The General Fund advanced $709,000 to the Energy Independence Special Revenue Fund to payoff the bonds used to fund energy efficiency. The advance to the Energy Independence Special Revenue Fund is repaid as the Energy Independence Program (EIP) loans are repaid. See Note 3 for more information on these loans. 78 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 4 - INTERFUND RECEIVABLES, PAYABLE, ADVANCES AND TRANSFERS (CONTINUED) The Capital Golf fund advanced $3,627,329 to the Desert Willow Golf Course for the purchases of golf carts totaling $1,598,773. The advance for the golf carts will be repaid over 48 months beginning January 1, 2024 and bears interest at a rate of 2.5%. The advance for the golf course equipment will be repaid over 60 months beginning November 1, 2022 and bears interest at a rate of 2.5%. The future payment schedule for these advances are as follows: Advance to Desert Willow Golf Course Fund Fiscal Year Principal Payments Interest Payments Total Payments 2026 $ 820,670 $ 30,608 $ 851,278 2027 633,196 10,937 644,133 2028 144,907 756 145,663 Total $ 1,598,773 $ 42,301 $ 1,641,074 C. Due To/From Component Unit Receivable Fund Payable Fund Amount General Fund Palm Desert Recreational Facilities Corporation $ 420,000 Desert Willow Golf Course Palm Desert Recreational Facilities Corporation 1,793,417 $ 2,213,417 The Palm Desert Recreational Facilities Corporation (the Corporation) owes the General Fund $420,000 in deferred unpaid rent for various years through FY 2020-21 associated with the lease between the City and the Corporation. The Corporation owes the Desert Willow Golf Course Fund $1,793,417 which represents subsidies for operation, $1,437,644 of which relates to prior fiscal years and $355,773 which relates to the current year. There is no payment schedule in place for the repayment of these amounts, therefore these transactions have been recorded as long-term in the accompanying financial statements. D. Interfund Transfers The composition of interfund transfers as of June 30, 2025, was as follows: Transfers In Prop A Fire Tax Other Special Revenue Governmental Internal Service Transfers Out General Fund Fund Funds Fund Parkview Office Totals General Fund $ - $ 5,000,000 $ 22,038,355 $ 3,950,608 $ 19,200 $ 31,008,163 Housing Authority Special Revenue Fund -- 380,542 -- 380,542 Other Governmental Funds 2,115,140 ---- 2,115,140 Parkview Office 376,285 ---- 376,285 Totals $ 2,491,425 $ 5,000,000 $ 22,418,897 $ 3,950,608 $ 19,200 $ 33,880,130 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. 79 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 5 - CAPITAL ASSETS A summary of changes in capital assets at June 30, 2025, were as follows: A. Primary Government - Governmental Activities Balance Beginning Balance Balance June 30, 2024 Adjustments As Restated Transfers Additions Deletions June 30, 2025 Governmental activities: Capital assets, not being depreciated/amortized Land $ 82,697,020 $ - $ 82,697,020 $ - $ - $ - $ 82,697,020 Right-of-way 121,260,045 -121,260,045 ---121,260,045 Construction-in-progress 11,219,044 11,528,793 22,747,837 (20,272,566) 15,135,026 -17,610,297 Total capital assets, not being depreciated/amortized 215,176,109 11,528,793 226,704,902 (20,272,566) 15,135,026 -221,567,362 Capital assets, being depreciated/amortized Buildings 151,140,855 -151,140,855 8,615,451 --159,756,306 Improvements other than buildings 63,662,563 -63,662,563 5,583,668 426,615 -69,672,846 Machinery, equipment, and vehicles 10,959,328 540,531 11,499,859 77,914 218,089 -11,795,862 Infrastructure 254,409,656 -254,409,656 5,995,533 --260,405,189 Lease assets - buildings 2,468,060 -2,468,060 -529,792 -2,997,852 Lease assets - equipment 135,224 -135,224 ---135,224 Subscription assets - software as a service 813,368 -813,368 -140,618 (174,504) 779,482 Equipment - Internal service fund 9,824,905 -9,824,905 -851,883 -10,676,788 Total capital assets, being depreciated/amortized 493,413,959 540,531 493,954,490 20,272,566 2,166,997 (174,504) 516,219,549 Less accumulated depreciation/amortization Buildings (85,208,048) -(85,208,048) -(3,621,511) -(88,829,559) Improvements other than buildings (52,498,377) -(52,498,377) -(2,088,607) -(54,586,984) Machinery and equipment (10,723,639) -(10,723,639) -(234,153) -(10,957,792) Infrastructure (139,608,703) -(139,608,703) -(5,115,088) -(144,723,791) Lease assets - buildings (609,816) -(609,816) -(309,230) -(919,046) Lease assets - equipment (93,578) -(93,578) -(31,466) -(125,044) Subscription assets - software as a service (283,761) -(283,761) -(262,465) 174,504 (371,722) Equipment - Internal service fund (6,955,551) -(6,955,551) -(726,526) -(7,682,077) Total accumulated depreciation/amortization (295,981,473) -(295,981,473) -(12,389,046) 174,504 (308,196,015) Total capital assets, being depreciated/amortized, net 197,432,486 540,531 197,973,017 20,272,566 (10,222,049) -208,023,534 Total governmental activities capital assets $ 412,608,595 $ 12,069,324 $ 424,677,919 $ - $ 4,912,977 $ - $ 429,590,896 80 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 5 - CAPITAL ASSETS (CONTINUED) Depreciation/amortization expense was charged to functions/programs as follows: General government $ 2,288,199 Public safety 1,652,090 Highways and streets 196,042 Sanitation 6,075,632 Culture and recreation 1,450,557 Internal service funds * 726,526 Total depreciation/amortization expense $ 12,389,046 * - Depreciation and amortization of capital assets held by the City 's Internal Service Funds are charged to the various functions as part of the fees paid to the internal service funds throughout the year B. Primary Government – Business-Type Activities Business-type activities: Capital assets, not being depreciated/amortized Land Balance June 30, 2024 $ 53,304,965 Additions $ 13,542 $ Deletions - Balance June 30, 2025 $ 53,318,507 Total capital assets, not being depreciated/amortized 53,304,965 13,542 -53,318,507 Capital assets, being depreciated/amortized Buildings Machinery, equipment, and vehicles 28,643,259 9,429,229 14,967 246,745 - - 28,658,226 9,675,974 Total capital assets, being depreciated/amortized 38,072,488 261,712 -38,334,200 Less accumulated depreciation/amortization Buildings Machinery, equipment, and vehicles (16,931,633) (5,743,399) (835,069) (1,175,931) - - (17,766,702) (6,919,330) Total accumulated depreciation/amortization (22,675,032) (2,011,000) -(24,686,032) Total capital assets, being depreciated/amortized, net 15,397,456 (1,749,288) -13,648,168 Total business-type activities capital assets $ 68,702,421 $ (1,735,746) $ -$ 66,966,675 Depreciation/amortization expense was charged to functions/programs as follows: Parkview Office Complex Desert Willow Golf Course $ 318,646 1,692,354 Total depreciation/amortization expense $ 2,011,000 81 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 5 - CAPITAL ASSETS (CONTINUED) C. Component Unit Component Unit: Capital assets, being amortized Lease asset - building Balance June 30, 2024 $ 2,636,688 $ Additions -$ Deletions - Balance June 30, 2025 $ 2,636,688 Total capital assets, being amortized 2,636,688 --2,636,688 Less accumulated amortization Lease asset - building (213,786) (71,261) -(285,047) Total accumulated amortization (213,786) (71,261) -(285,047) Total capital assets, being amortized, net 2,422,902 (71,261) -2,351,641 Total component unit capital assets $ 2,422,902 $ (71,261) $ -$ 2,351,641 NOTE 6 - LONG-TERM LIABILITIES The following is a summary of long-term liability transactions of the City for the year ended June 30, 2025. A. Primary Government – Governmental Activities Balance Balance Due Within June 30, 2024 Additions Reductions* June 30, 2025 One Year Direct Borrowing: Special assessment debt with government commitment $ 980,000 $ -$ (55,000) $ 925,000 $ 58,000 Limited obligation improvement bonds 88,000 -(18,000) 70,000 13,000 Claims liabilities 3,675,340 -(2,833,669) 841,671 276,752 Compensated absences 2,672,687 -(37,901) 2,634,786 500,000 Leases payable 1,978,673 529,792 (339,696) 2,168,769 312,538 Subscriptions payable 278,662 140,618 (206,549) 212,731 147,505 Total $ 9,673,362 $ 670,410 $ (3,490,815) $ 6,852,957 $ 1,307,795 * - Reductions reported for compensated absences are reported as net additions and reductions. 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. 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. 82 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 6 - LONG-TERM LIABILITIES (CONTINUED) The future debt service requirements on the Highlands Undergrounding Assessment District No. 04-01, Limited Obligation Improvement Bonds, Series 2006 are as follows: Year Ending June 30 Principal Interest Total 2026 $ 58,000 $ 46,099 $ 104,099 2027 61,000 43,065 104,065 2028 64,000 39,861 103,861 2029 67,000 36,488 103,488 2030 70,000 32,959 102,959 2031-2035 410,000 105,055 515,055 2036-2037 195,000 10,171 205,171 Totals $ 925,000 $ 313,698 $ 1,238,698 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 bonds bear 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: Year Ending June 30 Principal Interest Total 2026 $ 7,000 $ 1,140 $ 8,140 2027 7,000 930 7,930 2028 8,000 720 8,720 2029 8,000 480 8,480 2030 8,000 240 8,240 Totals $ 38,000 $ 3,510 $ 41,510 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 bonds bear interest at 3% payable semiannually on September 2 and March 2. Bond maturities commenced September 2, 2010, and continue annually through September 2, 2029. 83 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 6 - LONG-TERM LIABILITIES (CONTINUED) The future debt service requirements on the Limited Obligation Improvement Bonds Series 2009B (Taxable) are as follows: Year Ending June 30 Principal Interest Total 2026 $ 6,000 $ 1,170 $ 7,170 2027 7,000 960 7,960 2028 7,000 720 7,720 2029 7,000 480 7,480 2030 5,000 240 5,240 Totals $ 32,000 $ 3,570 $ 35,570 B. Primary Government – Business-Type Activities Balance Balance Due Within June 30, 2024 Additions Deletions June 30, 2025 One Year Direct Borrowing: GPSI Leasing, LLC $ 232,952 $ - $ 88,395 $ 144,557 $ 90,632 Total $ 232,952 $ -$ 88,395 $ 144,557 $ 90,632 The City entered into a financed purchase agreement with GPSI Leasing, LLC for the purchase of golf carts. The financed purchase bears interest at a rate of 5.75%. On December 20, 2022 the finance purchase agreement was amended to extend additional the term for an 48 months resulting in a revised annual payment of $93,213 beginning February 1, 2024. The future debt service requirements on the financed purchases are as follows: Year Ending June 30 Principal Interest Total 2026 2027 $ 90,632 53,925 $ 2,580 450 $ 93,212 54,375 Totals $ 144,557 $ 3,030 $ 147,587 84 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 7 - COMPENSATED ABSENCES The City's policy relating to compensated absences is described in Note 1 of the Notes to Financial Statements. 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. The outstanding liability for compensated absences accrued was $2,634,786. NOTE 8 - LEASES A. Leases Receivable and Deferred Inflows of Resources Primary Government – Governmental Activities The City has entered into 4 leases as lessor ranging between 60-months and 444-months for the use of City buildings, cell towers, and soccer parks. An initial lease receivable was recorded related to these leases totaling $3,563,024. As of June 30, 2025, the value of the lease receivable is $2,836,447. The lessees are required to make monthly fixed payments ranging from $2,838 to $27,063. The leases have interest rates ranging from 0.577% to 1.583%. The value of the deferred inflows of resources as of June 30, 2025 were $2,774,291, and the City recognized lease revenue of $197,183 during the fiscal year. The principal and interest payments that are expected to maturity are as follows: Governmental Activities June 30 Principal Interest Total Payments 2026 $ 187,203 $ 45,373 $ 232,576 2027 91,761 43,336 135,097 2028 94,353 41,916 136,269 2029 97,017 62,915 159,932 2030 99,756 38,966 138,722 2031 - 2035 440,898 172,170 613,068 2036 - 2040 338,357 141,643 480,000 2041 - 2045 368,445 111,555 480,000 2046 - 2050 401,208 78,792 480,000 2051 - 2055 436,885 43,115 480,000 2056 - 2058 280,564 7,436 288,000 Totals $ 2,836,447 $ 787,217 $ 3,623,664 Primary Government – Business-Type Activities The City has entered into 13 leases as lessor ranging between 24-months and 120-months for the use of City buildings. An initial lease receivable was recorded related to these leases totaling $6,967,788. As of June 30, 2025, the value of the lease receivable is $6,842,690. The lessees are required to make monthly fixed payments ranging from $903 to $41,645. The leases have interest rates ranging from 0.577% to 3.739%. The value of the deferred inflows of resources as of June 30, 2025 were $6,708,885, and the City recognized lease revenue of $1,057,400 during the fiscal year. 85 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 8 - LEASES (CONTINUED) The principal and interest payments that are expected to maturity are as follows: Business-Type Activities June 30 Principal Interest Total Payments 2026 2027 2028 2029 2030 2031 - 2035 $ 1,001,552 1,012,400 1,037,898 964,814 942,510 1,835,663 $ 125,051 105,616 85,506 65,372 47,430 40,651 $ 1,126,603 1,118,016 1,123,404 1,030,186 989,940 1,876,314 Totals $ 6,794,837 $ 469,626 $ 7,264,463 B. Leases Payable Primary Government – Governmental Activities As of June 30, 2025, the City had 4 active leases. The leases have payments that range from $2,138 to $216,884 and interest rates that range from 0.6320% to 2.9999%. As of June 30, 2025, the total combined value of the lease liability is $2,168,769, the total combined value of the short-term lease liability is $312,538. The combined value of the right to use assets, as of June 30, 2025 was $3,133,076 with accumulated amortization of $1,044,090. The leases had no variable payments and no other payments, not included in the lease liability, within the fiscal year. The principal and interest payments that are expected to maturity are as follows: Governmental Activities June 30 2026 2027 2028 2029 2030 2031 - 2035 Principal $ 312,538 309,871 314,848 320,659 214,287 696,566 Interest $ 33,242 27,635 21,945 16,133 10,193 14,286 Total Payments $ 345,780 337,506 336,793 336,792 224,480 710,852 Totals $ 2,168,769 $ 123,434 $ 2,292,203 Component Unit On July 1, 2021, the Corporation entered into a 444-month lease as lessee for the use of the restaurant at the Desert Willow Golf Course Clubhouse from the City. An initial lease liability was recorded in the amount of $2,636,688. As of June 30, 2025, the value of the lease liability is $2,421,537. The Corporation is required to make monthly fixed payments of $8,000. The lease has an interest rate of 1.705%. The changes in lease liability for the year ended June 30, 2025 are as follows: 86 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 8 - LEASES (CONTINUED) Lease liability Balance Balance Due Within June 30, 2024 Additions Reductions June 30, 2025 One Year $ 2,475,747 $ -$ (54,210) $ 2,421,537 $ 55,142 The principal and interest payments that are expected to maturity are as follows: Component unit June 30 2026 2027 2028 2029 2030 2031 - 2035 2036 - 2040 2041 - 2045 2046 - 2050 2051 - 2055 2056 - 2058 $ Principal 55,142 56,090 57,054 58,034 59,031 310,726 338,357 368,445 401,208 436,885 280,565 $ Interest 40,858 39,910 38,946 37,966 36,969 169,274 141,643 111,555 78,792 43,115 7,436 Total Payments $ 96,000 96,000 96,000 96,000 96,000 480,000 480,000 480,000 480,000 480,000 288,001 Totals $ 2,421,537 $ 746,464 $ 3,168,001 87 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 9 - SUBSCRIPTIONS As of June 30, 2025, the City had 10 active subscriptions. The subscriptions have payments that range from $8,350 to $59,577 and interest rates that range from 2.0240% to 3.7640%. As of June 30, 2025 the total combined value of the subscription liability is $212,731 and the total combined value of the short-term subscription liability is $147,505. The combined value of the right to use asset, as of June 30, 2025 was $779,482 with accumulated amortization of $371,722. The subscriptions had no variable payments and no other payments, not included in the subscription liability, within the fiscal year. The principal and interest payments that are expected to maturity are as follows: Governmental Activities June 30 Principal Interest Total Payments 2026 2027 $ 147,505 65,226 $ 6,149 1,623 $ 153,654 66,849 Totals $ 212,731 $ 7,772 $ 220,503 NOTE 10 - RISK MANAGEMENT AND CLAIMS PAYABLE 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 126 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 California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee. B. Primary Self-Insurance Programs of the Authority Each member pays an annual contribution at the beginning of the coverage period. The total funding requirement for primary 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. C. Primary 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 also have a $50 million per occurrence limit. 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/coverage/risk-sharing-pools/. 88 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 10 - RISK MANAGEMENT AND CLAIMS PAYABLE (CONTINUED) D. 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 from $200,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers. For 2025 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 through reinsurance policies, and Employer’s Liability losses from $5 million to $10 million are pooled among members. E. 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. F. 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. City of Palm Desert property is currently insured according to a schedule of covered property submitted by the City of Palm Desert to the Authority. City of Palm Desert property currently has all-risk property insurance protection in the amount of $397,495,666. There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance which has a $2,500 deductible. G. 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. H. 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. I. 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 2024-25. J. Claims Payable Estimates for all workers’ compensation and general liabilities up to the self-insured levels have been recorded as long-term liabilities. 89 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 10 - RISK MANAGEMENT AND CLAIMS PAYABLE (CONTINUED) Changes in claims liabilities during the past two years are as follows: June 30, 2024 June 30, 2025 Claims payable - Beginning of year $ 679,881 $ 3,675,340 Incurred claims (including IBNR) and changes in estimates 3,987,107 (1,707,500) Claims payments (991,648) (1,126,169) Claims payable - End of year $ 3,675,340 $ 841,671 Claims payable - due in one year $ 1,212,864 $ 276,752 Claims payable - due in more than one year 2,462,476 564,919 $ 3,675,340 $ 841,671 NOTE 11 - 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. In June 2024, the City transitioned all 457 accounts from Nationwide and ICMA to Empower. The City does not have fiduciary responsibility for the plan assets held by NRS, ICMA, or Empower. 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 of the 457 plan in the amount of $15,873,542 held by NRS, ICMA, and Empower of the 457 Plan are not reflected in the City’s financial statements. 90 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 12 - 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. 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: Miscellaneous Prior to On or after Hire date January 1, 2013 January 1, 2013 Benefit formula 2.7% @ 55 2.0% @ 62 Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life Retirement age 50-67 52-67 Monthly benefits, as a % of eligible compensation 2.0% - 2.7% 1.0% - 2.5% Required employee contribution rates 7%-8% 7.75% Required employer contribution rates 13.20% 13.20% 91 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 12 - PENSION PLAN (CONTINUED) Employees Covered At June 30, 2023, the following employees were covered by the benefit terms for all Plans: Inactive employees or beneficiaries currently receiving benefits 196 Inactive employees entitled to but not yet receiving benefits 97 Active employees 128 Total 421 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. 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. The net pension liability of Plan is measured as of June 30, 2024, using an annual actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 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, 2024 actuarial valuations were determined using the following actuarial assumptions: Valuation date June 30, 2023 Measurement date June 30, 2024 Actuarial cost method Entry age normal Actuarial assumptions: Discount rate 6.90% Inflation 2.30% Payroll Growth 2.80% Projected Salary Increase Varies by Entry Age and Service Investment Rate of Return 6.8% Net of Pension Plan Investment and Administrative Expenses; includes Inflation Mortality rate table * Derived using CalPERS' membership data for all funds *The mortality table used was developed based on CalPERS-specific data. The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. Mortality rates incorporate full generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the 2021 experience study report from November 2021 that can be found on the CalPERS website. 92 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 12 - PENSION PLAN (CONTINUED) Discount Rate The discount rate used to measure the total pension liability was 6.90% 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 6.80% discount rate is appropriate and the use of the municipal bond rate calculation is not deemed necessary. The long-term expected discount rate of 6.80% 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. 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 long-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. Assumed Asset Asset Class Allocation Real Return 1, 2 Global equity-cap-weighted 30.0 % 4.5 % Global equity-non-cap-weighted 12.0 % 3.8 % Private equity 13.0 % 7.3 % Treasury 5.0 % 0.3 % Mortgage-backed securities 5.0 % 0.5 % Investment grade corporates 10.0 % 1.6 % High yield 5.0 % 2.3 % Emerging market debt 5.0 % 2.5 % Private debt 5.0 % 3.6 % Real assets 15.0 % 3.2 % Leverage (5.0)% (0.6)% 1 An expected inflation of 2.30% used for this period. 2 Figures are based on the 2022 Asset Liability Management study 93 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 12 - PENSION PLAN (CONTINUED) C. Changes in the Net Pension Liability The changes in the net pension liability for the year ended June 30, 2025, with a measurement date of June 30, 2024, for the Miscellaneous Plan are as follows: Increase (Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability/(Asset) (a) (b) (c) = (a) - (b) Balance at June 30, 2023 (Measurement Date) $ 163,168,247 $ 119,170,887 $ 43,997,360 Changes in the Year: Service cost 2,533,663 -2,533,663 Interest on total pension liability 11,137,558 -11,137,558 Differences between expected and actual experience 1,408,050 -1,408,050 Contributions - Employer -4,510,683 (4,510,683) Contributions - Employees -1,092,559 (1,092,559) Net investment income -11,419,049 (11,419,049) Benefit payments, including refunds of employee contributions (8,858,458) (8,858,458) - Administrative expense -(96,970) 96,970 Net Changes 6,220,813 8,066,863 (1,846,050) Balance at June 30, 2024 (Measurement Date) $ 169,389,060 $ 127,237,750 $ 42,151,310 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: Discount Rate Current Discount Rate -1 Percent Discount Rate +1 Percent (5.90%) (6.90%) (7.90%) Plan's net pension liability/(asset) $ 63,752,843 $ 42,151,310 $ 24,233,249 Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports. 94 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 12 - PENSION PLAN (CONTINUED) D. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2025, the City recognized pension expense of $7,380,538. At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources Pension contributions subsequent to the measurement date $ 5,697,799 $ - Differences between expected and actual experience 2,509,642 - Net difference between projected and actual earnings on pension plan investments 1,837,756 - Total $ 10,045,197 $ - The $5,697,799 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, 2026. Other amounts reported as deferred inflows of resources related to pensions will be recognized as pension expense as follows: Deferred Outflows/(Inflows) Fiscal year ended June 30, of Resources 2026 $ 1,832,210 2027 3,595,927 2028 (418,113) 2029 (662,626) Total $ 4,347,398 95 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 13 - OTHER POSTEMPLOYMENT BENEFITS (OPEB) A. Plan Description In addition to the pension benefits described in Note 11 and 12, 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: Consecutive Years of Service City's Contribution With the City at Retirement Percentage 10 years of service 50% 11 years of service 55% 12 years of service 60% 13 years of service 65% 14 years of service 70% 15 or more years of service 75% 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: Consecutive Years of Service at Retirement Age 15 16 17 18 19 20 21 22 23 24 25+ 50 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% 51 10% 15% 20% 25% 30% 35% 40% 45% 50% 50% 50% 52 20% 25% 30% 35% 40% 45% 50% 50% 50% 50% 50% 53 30% 35% 40% 45% 50% 50% 50% 50% 50% 50% 50% 54 40% 45% 50% 50% 50% 50% 50% 50% 50% 50% 50% 55+ 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 96 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 13 - OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) 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 ($151 in 2024 and $157 in 2025) 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, 2023, the date of the most recent actuarial valuation, the City's plan has 128 active employees. Employees Covered - Plan membership, at June 30, 2023 valuation date, membership consisted of the following: Inactive members currently receiving benefits 94 Active members 128 Total 222 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 Liability/(Asset) The City’s Net OPEB Liability/(Asset) was measured as of June 30, 2024 and the Total OPEB Liability used to calculate the Net OPEB Liability/(Asset) was determined by an actuarial valuation as of June 30, 2023. 97 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 13 - OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) Actuarial assumptions. The total OPEB liability was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Inflation 2.50% Salary Increase 3.00% per annum Assumed Wage Inflation 3.00% per annum Investment Rate of Return 5.85% per annum Healthcare cost-trend rates Assumed to start at 6.0% and grade down by 0.5% each year to 3.9% in 2075. Retirement Age The City offers the same plans to its retirees as to its active employees, with the general exception that upon reaching age 65 and becoming eligible for Medicare, the retiree must join one of the Medicare Supplement coverages offered under PEMHCA. Mortality Mortality rates used were those published by CalPERS under the 2021 Experience study and projected using the MacLeod Watts Scale 2022 applied generationally. 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; a. 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. 98 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 13 - OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) E. Changes in the Net OPEB Liability/(Asset) The changes in the net OPEB liability/(asset) for the Plan are as follows: Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability/(Asset) (a) (b) (c) = (a) - (b) Balance at June 30, 2023 (measurement date) $ 23,671,335 $ 21,789,415 $ 1,881,920 Changes in the year: Service cost 383,189 - 383,189 Interest on total OPEB liability 1,287,056 - 1,287,056 Contributions - employer - 1,306,991 (1,306,991) Net investment income - 1,198,225 (1,198,225) Benefit payment contributions (1,306,991) (1,306,991) - Changes due to investment experience - 584,831 (584,831) Changes in benefit terms 3,055,225 - 3,055,225 Change in trust return/discount Rate (997,730) - (997,730) Administrative expense -(7,014) 7,014 Net changes 2,420,749 1,776,042 644,707 Balance at June 30, 2024 (measurement date) $ 26,092,084 $ 23,565,457 $ 2,526,627 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 4.85 percent) or 1-percentage-point higher (6.85 percent) than the current discount rate: Discount Rate -1% Current Discount Rate +1% (4.85%) (5.85%) (6.85%) Plan's net OPEB liability/(asset) $ 5,546,833 $ 2,526,627 $ (9,011) 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 or 1-percentage-point higher than the current healthcare cost trend rates: Current 1% Heathcare 1% Decrease Trend Rate Increase Plan's net OPEB liability/(asset) $ (278,177) $ 2,526,627 $ 5,897,995 99 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 13 - OTHER POSTEMPLOYMENT BENEFITS (OPEB) (CONTINUED) H. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2025, the City recognized OPEB expense of $2,811,802. As of fiscal year ended June 30, 2025, the City reported deferred outflows and inflows of resources related to OPEB from the following sources: Deferred Outflows Deferred Inflows of Resources of Resources OPEB contributions subsequent to the measurement date $ 1,403,495 $ - Changes of assumptions 224,484 613,703 Differences between expected and actual experience 2,162,407 163,422 Net difference between projected and actual earnings on pension plan investments 1,047,595 - Total $ 4,837,981 $ 777,125 The City will recognize the contributions made subsequent to the measurement date totaling $1,403,495 in the next fiscal year. In addition, future recognition of the deferred resources is shown below: Deferred Outflows/(Inflows) Fiscal year ended June 30, of Resources 2026 $ 1,521,369 2027 1,281,033 2028 (24,360) 2029 (105,936) 2030 11,031 Thereafter (25,776) Total $ 2,657,361 100 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 14 - SPECIAL ASSESSMENT DEBT Below is a summary of the changes in the special assessment bonds payable: Amount Balance Balance Due Within June 30, 2024 Additions Deletions June 30, 2025 One Year 2003 Assessment Revenue Bonds $ 559,001 $ -$ 120,000 $ 439,001 $ 125,000 CFD 2021-1 Special Tax Bonds Series 2021 14,114,999 -315,000 13,799,999 325,000 CFD 2005-1 Special Tax Bonds Series 2021A 4,645,000 -280,000 4,365,000 290,000 Section 29 Assessment District 2004-02 Limited Obligation Bonds Series 2021 14,650,000 -2,106,831 12,543,169 850,000 Special Tax Bonds, Series 2024 11,600,000 -40,000 11,560,000 50,000 Total $ 45,569,000 $ -$ 2,861,831 $ 42,707,169 $ 1,640,000 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. A. 2003 Assessment Revenue Bonds In June 2003, the Palm Desert Financing Authority issued $4,423,000 in 2003 Assessment Revenue Bonds. The proceeds were used to purchase three series of limited obligation improvement bonds issued by the City in connection with the financing and refinancing of certain improvements of benefit to property within the City’s Assessment District No. 94-2 (Sunterrace), Assessment District No. 94-3 (Merano) and Silver Spur Ranch Utility Undergrounding Assessment District No. 01-01. These bonds were issued under the 1915 Improvement Bond Act to provide funds for public improvements in the respective assessment districts. Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interest Total 2026 $ 125,000 $ 25,934 $ 150,934 2027 135,000 18,947 153,947 2028 140,000 11,556 151,556 2029 39,001 3,897 42,898 Total $ 439,001 $ 60,334 $ 499,335 As of June 30, 2025, the principal amounts to be repaid by the Assessment District No. 01-1 to pay off the loans from the Financing Authority is $439,001. 101 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 14 - SPECIAL ASSESSMENT DEBT (CONTINUED) B. Community Facilities District No. 2005-1, Series 2021A In July 2021, the City of Palm Desert Community Facilities District No. 2005-1 (University Park) Special Tax Refunding Bonds, Series 2021A (the “Bonds”) are being issued by City of Palm Desert Community Facilities District No. 2005-1 (University Park) (the “District”) to provide funds: (i) to refund a portion of the District’s outstanding Special Tax Bonds, Series 2006A (the “2006 Bonds”); (ii) to fund a Reserve Account for the Bonds; and (iii) to pay costs incurred in connection with the issuance of the Bonds. The 2006 Bonds were issued for the purpose of providing funds to pay the costs of acquiring certain public facilities. The Bonds are special obligations of the District and are payable solely from Net Taxes (as defined herein), and the other assets pledged therefor under the Indenture, all as further described herein. Special Taxes (as defined herein) are to be levied according to the rate and method of apportionment approved by the City Council of the City and the qualified electors within the District. Interest rates vary from 3.00% to 4.00% with interest payable semi-annually on March 1 and September 1, with principal maturing annually on September 1. Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interest Total 2026 $ 290,000 $ 168,800 $ 458,800 2027 300,000 157,000 457,000 2028 315,000 144,700 459,700 2029 330,000 131,800 461,800 2030 340,000 118,400 458,400 2031-2035 1,505,000 328,700 1,833,700 2036-2037 1,285,000 78,500 1,363,500 Total $ 4,365,000 $ 1,127,900 $ 5,492,900 C. Section 29 Assessment District (No 2004-02), Limited Obligation Improvement Bonds, Series 2021 In July 2021, the City of Palm Desert issued $16,400,000 Limited Obligation Improvement Bonds. The proceeds of the Bonds will be used to refund previously issued series 2017 bonds that financed 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. 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 $12,543,169 carry an interest rate of 5.10% and mature September 2, 2037. 102 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 14 - SPECIAL ASSESSMENT DEBT (CONTINUED) Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interest Total 2026 $ 850,000 $ 547,000 $ 1,397,000 2027 880,000 512,400 1,392,400 2028 920,000 476,400 1,396,400 2029 955,000 438,000 1,393,000 2030 990,000 399,100 1,389,100 2031-2035 3,230,000 950,200 4,180,200 2036-2038 4,718,169 599,200 5,317,369 Total $ 12,543,169 $ 3,922,300 $ 16,465,469 D. Community Facilities District No. 2021-1, Series 2021 The City of Palm Desert Community Facilities District No. 2021-1 (University Park) Special Tax Bonds, Series 2021 (the “Bonds”) are being issued by the City of Palm Desert Community Facilities District No. 2021-1 (University Park) (the “District”) to: (i) pay and defease a pro rata portion of outstanding Series 2006A Special Tax Bonds (the “CFD 2005-1 Pro Rata Bonds”) issued by, and secured by the special taxes of existing City of Palm Desert Community Facilities District No. 2005-1 (University Park) (“CFD No. 2005-1”); (ii) finance the acquisition of certain public improvements needed with respect to the development of property located within the District, including public improvements to be owned by the City and water and sewer facilities to be owned and operated by the Coachella Valley Water District; (iii) fund a reserve account for the Bonds; and (iv) pay costs of issuance for the Bonds. Interest rates vary from 3.00% to 4.00% with interest payable semi-annually on March 1 and September 1, with principal maturing annually on September 1. Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interest Total 2026 $ 325,000 $ 543,675 $ 868,675 2027 335,000 533,775 868,775 2028 345,000 523,575 868,575 2029 355,000 513,075 868,075 2030 365,000 502,275 867,275 2031-2035 1,575,000 1,886,650 3,461,650 2036-2040 2,335,000 1,980,900 4,315,900 2041-2045 2,835,000 1,465,100 4,300,100 2046-2050 3,445,000 839,500 4,284,500 2051-2052 1,884,999 147,800 2,032,799 Total $ 13,799,999 $ 8,936,325 $ 22,736,324 103 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 14 - SPECIAL ASSESSMENT DEBT (CONTINUED) E. Community Facilities District No. 2021-1, Series 2024 The City of Palm Desert Community Facilities District No. 2021-1 (University Park) Special Tax Bonds, Series 2024 (the “Bonds”) are being issued by the City of Palm Desert Community Facilities District No. 2021-1 (University Park) (the “District”) to: (i) finance the acquisition of certain public improvements needed with respect to the development of property located within the District, including public improvements to be owned by the City of Palm Desert (the "City") and water and sewer facilities to be owned and operated by the Coachella Valley Water District ("CVWD"); (ii) fund a reserve account for the Bonds; and (iii) pay costs of issuance for the Bonds; and (iv) fund capitalized interest to pay debt service on the Bonds through and including September 1, 2024. Interest rates vary from 3.00% to 4.00% with interest payable semi-annually on March 1 and September 1, with principal maturing annually on September 1. Debt service requirements to maturity are as follows: Year Ending June 30, Principal Interest Total 2026 $ 50,000 $ 569,975 $ 619,975 2027 65,000 567,850 632,850 2028 80,000 565,088 645,088 2029 95,000 561,688 656,688 2030 120,000 557,650 677,650 2031-2035 875,000 2,696,875 3,571,875 2036-2040 1,510,000 2,432,500 3,942,500 2041-2045 2,390,000 1,972,500 4,362,500 2046-2050 3,540,000 1,266,000 4,806,000 2051-2053 2,835,000 290,250 3,125,250 Total $ 11,560,000 $ 11,480,376 $ 23,040,376 F. Bond Reserve Requirements At June 30, 2025, the fund balance reserve requirements and actual reserve balances were as follows: Requirement Actual 2003 Financing Authority Revenue Bonds $ 151,566 $ 151,566 CFD 2021-1 Special Tax Bonds, Series 2021 868,775 868,775 CFD 2005-1 Special Tax Bonds, Series 2021A 461,800 461,800 Section 29 Assessment District 2004-02 Limited Obligation Bonds Series 2021 1,267,900 1,267,900 Special Tax Bonds, Series 2024 1,007,164 1,007,164 104 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 15 - 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, 2025, were as follows: Special Revenue Funds Capital Projects Fund Restricted General Prop A Fire Tax Housing Asset Fund Housing Authority Capital Project Fund Other Governmental Funds Total Nonspendable Inventory $ 3,642 $ - $ - $ -$ -$ -$ 3,642 Prepaid costs and deposits 1,019,785 -600 -1,106 75,239 1,096,730 Notes and loans 940,978 -----940,978 Advances 709,000 -----709,000 Total nonspendable 2,673,405 -600 -1,106 75,239 2,750,350 Restricted Capital projects ----44,357,695 34,049,822 78,407,517 Debt service -----163,255 163,255 Low income housing --53,769,292 6,494,797 -4,872,533 65,136,622 Public facilities -----9,968,763 9,968,763 Public safety -27,231,870 ---45,330 27,277,200 Special programs -----3,733,017 3,733,017 Street related purposes -----4,412,243 4,412,243 Total restricted -27,231,870 53,769,292 6,494,797 44,357,695 57,244,963 189,098,617 Committed Capital asset replacement ---11,875,488 --11,875,488 Capital improvement projects reserve 11,342,033 -----11,342,033 Facilities maintenance reserve 6,961,265 -----6,961,265 Liability reserve 4,000,000 -----4,000,000 Other fund stability reserve 7,961,507 -----7,961,507 Emergency/contingency reserve 19,359,007 -----19,359,007 Employment benefits reserve 10,697,122 -----10,697,122 Equipment replacement reserve 2,994,711 -----2,994,711 Energy loan program -----1,966,005 1,966,005 Total committed 63,315,645 --11,875,488 -1,966,005 77,157,138 Assigned General fund operating reserve 17,893,816 -----17,893,816 Community contingency 444,000 -----444,000 Capital projects -----21,171,489 21,171,489 Special programs -----995,033 995,033 Street related purposes -----4,836,880 4,836,880 Total assigned 18,337,816 ----27,003,402 45,341,218 Unassigned 36,378,597 -----36,378,597 Total fund balances (deficits) $120,705,463 $27,231,870 $53,769,892 $18,370,285 $44,358,801 $ 86,289,609 $350,725,920 105 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 16 - CONSTRUCTION AND OTHER SIGNIFICANT COMMITMENTS Construction Commitments Primary Government Project Measure A El Paseo Street Rehabilitation Project Slurry Seal Project FY2024-25 Stormwater & Drainage Infrastructure Assessment Traffic Signal Improvements Walk n Roll PD - Phase I, II, and III Capital Projects El Paseo Street Rehabilitation Project Eldorado Drive Rehabilitation Project Fire Station 33 Remdel & 71 Rebuild North Sphere Fire Station 102 Park Improvements Housing Authority City owned buildings improvments Other Governmental Funds City Owned Buildings Improvements DW Perimeter Landscape & Lighting Rehabilitation Equipment Ordered, Vehicles Street Improvements Contract Amount $ 537,900 2,710,175 1,109,437 474,428 605,370 4,783,489 2,885,336 1,536,700 16,322,686 1,232,952 5,053,562 495,828 1,231,528 735,655 266,413 $ 39,981,459 $ $ Spent To Date 106,630 2,049,809 589,124 144,018 391,096 4,398,037 2,585,652 940,574 5,515,562 122,926 2,799,032 261,054 1,047,089 320,807 111,837 21,383,247 Remaining Commitment $ 431,270 660,366 520,313 330,410 214,274 385,452 299,684 596,126 10,807,124 1,110,026 2,254,530 234,774 184,439 414,848 154,576 $ 18,598,212 106 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 17 - SUCCESSOR AGENCY DISCLOSURES Dissolution of Redevelopment Agency 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. 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 fiscal year 2019-20. During fiscal year 2024-25, the City received a final determination from the California Department of Finance that these advances would not be deemed an enforceable obligation. There is no financial statement impact as these balances were offset by an allowance for doubtful accounts in previous years. 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. 107 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 17 - SUCCESSOR AGENCY DISCLOSURES (CONTINUED) 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. 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. 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: Capital Assets Balance Balance Capital assets, not being depreciated: Land Total capital assets, not being depreciated Total fuduciary fund capital assets June 30, 2024 $ 15,939,958 15,939,958 $ 15,939,958 $ $ Additions - $ - - $ Deletions June 30, 2025 - $ 15,939,958 - 15,939,958 - $ 15,939,958 108 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 17 - SUCCESSOR AGENCY DISCLOSURES (CONTINUED) Tax Allocation Bonds A summary of changes in tax allocation bonds at June 30, 2025, was as follows: Amount Balance Balance Due Within June 30, 2024 Additions Deletions June 30, 2025 One Year 2003 TARBs, $15,745,000 $ 14,870,000 $ -$ 910,000 $ 13,960,000 $ 1,145,000 2017 A TARBs, $52,390,000 35,690,000 -6,630,000 29,060,000 6,910,000 2017 B TARBs, $140,130,000 84,670,000 -5,585,000 79,085,000 5,710,000 2017 H-A TARBs, $7,365,000 4,570,000 -475,000 4,095,000 505,000 Subtotal 139,800,000 - 13,600,000 126,200,000 14,270,000 Add: Unamortized bond premium 3,996,060 -562,560 3,433,500 - Less: Unamortized bond discount (1,374,437) -(79,677) (1,294,760) - Total $ 142,421,623 $ -$ 14,082,883 $ 128,338,740 $14,270,000 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. 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. 109 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 17 - SUCCESSOR AGENCY DISCLOSURES (CONTINUED) The future debt service requirements on the 2003 Series Tax Allocation Revenue Bonds (Project Area No. 2) are as follows: Year Ending June 30, Principal Interest Total 2026 $ 1,145,000 $ 662,203 $ 1,807,203 2027 1,340,000 604,738 1,944,738 2028 1,405,000 538,625 1,943,625 2029 1,475,000 466,625 1,941,625 2030 1,550,000 391,000 1,941,000 2031-2033 7,045,000 726,625 7,771,625 Total $ 13,960,000 $ 3,389,816 $ 17,349,816 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, 2024, the outstanding principal balance on the bonds $29,060,000. The future debt service requirements on the 2017A Bonds are as follows: Year Ending June 30, Principal Interest Total 2026 $ 6,910,000 $ 1,280,250 $ 8,190,250 2027 5,245,000 976,375 6,221,375 2028 5,495,000 707,875 6,202,875 2029 4,055,000 469,125 4,524,125 2030 3,590,000 278,000 3,868,000 2031 3,765,000 94,125 3,859,125 Total $ 29,060,000 $ 3,805,750 $ 32,865,750 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, 2025, the outstanding principal balance on the bonds is $79,085,000. 110 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 17 - SUCCESSOR AGENCY DISCLOSURES (CONTINUED) Year Ending June 30, Principal Interest Total 2026 $ 5,710,000 $ 2,979,956 $ 8,689,956 2027 8,060,000 2,751,156 10,811,156 2028 4,790,000 2,531,319 7,321,319 2029 5,055,000 2,355,872 7,410,872 2030 5,975,000 2,152,219 8,127,219 2031-2034 26,060,000 6,169,013 32,229,013 2035-2039 21,420,000 1,738,463 23,158,463 2040-2042 2,015,000 130,794 2,145,794 Total $ 79,085,000 $ 20,808,792 $ 99,893,792 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, 2025, the outstanding principal balance on the bonds is $4,095,000. The future debt service requirements on the 2017 Series H-A Tax Allocation Refunding Bonds are as follows: Year Ending June 30, Principal Interest Total 2026 $ 505,000 $ 168,394 $ 673,394 2027 525,000 142,644 667,644 2028 555,000 115,644 670,644 2029 585,000 87,144 672,144 2030 615,000 57,144 672,144 2031-2032 1,310,000 42,497 1,352,497 Total $ 4,095,000 $ 613,467 $ 4,708,467 111 CITY OF PALM DESERT, CALIFORNIA Notes to Basic Financial Statements For the Year Ended June 30, 2025 NOTE 18 - RESTATEMENT OF BEGINNING BALANCE During the current fiscal year, the City determined that certain expenditures incurred in fiscal year 2024 related to ongoing construction projects and subscriptions in progress had been expensed rather than capitalized as construction in progress. The City adjusted the beginning balance of net position for the governmental activities as of June 30, 2024 has been restated. The adjustment increased capital assets and beginning net position by $12,069,324. In addition, the City restated the beginning fund balance for the Restricted Capital Project Fund by $277,723 to capture accrued interest revenue that was not recorded in fiscal year 2024. Net Position Net Position June 30, 2024 as June 30, 2024 previously reported Error Correction as restated Government-wide Governmental activities $ 733,146,189 $ 12,347,047 $ 745,493,236 Governmental Funds Restricted Capital Project Fund $ 47,233,177 $ 277,723 $ 47,510,900 NOTE 19 - SUBSEQUENT EVENTS The City evaluated subsequent events for recognition and disclosure through January 30, 2026, the date on which these financial statements were available to be issued. Management concluded that no material subsequent events have occurred since June 30, 2025, that required recognition or disclosure in these financial statements. 112 113 Required Supplementary Information Schedule of Changes in the Net Pension Liability/(Asset) and Related Ratios - Miscellaneous Plan CITY OF PALM DESERT, CALIFORNIA Schedule of Changes in the Net Pension Liability/(Asset) and Related Ratios Miscellaneous Plan As of June 30, For the Last Ten Fiscal Years 2025 2024 2023 2022 Measurement Date 6/30/2024 6/30/2023 6/30/2022 6/30/2021 TOTAL PENSION LIABILITY Service cost $ 2,533,663 $ 2,235,788 $ 1,976,289 $ 2,042,043 Interest on total pension liability 11,137,558 10,733,434 10,122,299 10,005,168 Changes of benefit terms -105,799 -- Changes of assumptions --4,699,855 - Difference between expected and actual experience 1,408,050 4,624,824 (2,563,805) 116,967 Benefit payments, including refunds of employee contributions (8,858,458) (8,480,159) (7,723,744) (7,041,890) Net change in total pension liability 6,220,813 9,219,686 6,510,894 5,122,288 Total pension liability-beginning 163,168,247 153,948,561 147,437,667 142,315,379 Total pension liability-ending (a) 169,389,060 163,168,247 153,948,561 147,437,667 PLAN FIDUCIARY NET POSITION Contributions-employer 4,510,683 4,539,654 4,020,131 4,729,858 Contributions-employee 1,092,559 868,122 791,130 745,959 Net investment income 11,419,049 7,061,290 (9,592,025) 24,010,711 Benefit payments, including refunds of employee contributions (8,858,458) (8,480,159) (7,723,744) (7,041,890) Net plan to plan resource movement ---- Administrative expense (96,970) (84,762) (79,643) (105,400) Other miscellaneous income/(expense) ---- Net change in fiduciary net position 8,066,863 3,904,145 (12,584,151) 22,339,238 Plan fiduciary net position-beginning 119,170,887 115,266,742 127,850,893 105,511,655 Plan fiduciary net position-ending (b) 127,237,750 119,170,887 115,266,742 127,850,893 Net pension liability/(asset) (a) - (b) $ 42,151,310 $ 43,997,360 $ 38,681,819 $ 19,586,774 Plan fiduciary net position as a percentage of the total pension liability 75.1% 73% 75% 87% Covered payroll $ 11,030,033 $ 10,601,359 $ 9,621,662 $ 10,386,791 Plan net pension liability/(asset) as a percentage of covered payroll 382% 415% 402% 189% Notes to Schedule of Changes in the Net Pension Liability and Related Ratios: Benefit Changes: The figures above generally include any liability impact that may have resulted from voluntary benefit changes that occurred on or before the measurement date. However, offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes) that occurred after the valuation date are not included in the figures above, unless the liability impact is deemed to be material by the plan actuary. Changes of Assumptions: There were no assumption changes in 2023 or 2024. Effective with the June 30, 2021, valuation date (June 30, 2022, measurement date), the accounting discount rate was reduced from 7.15% to 6.90%. In determining the long-term expected rate of return, CalPERS took into account long-term market return expectations as well as the expected pension fund cash flows. In addition, demographic assumptions and the price inflation assumption were changed in accordance with the 2021 CalPERS Experience Study and Review of Actuarial Assumptions. The accounting discount rate was 7.15% for measurement dates June 30, 2017, through June 30, 2021, and 7.65% for measurement dates June 30, 2015, through June 30, 2016. See accompanying Notes to the Basic Financial Statements 114 CITY OF PALM DESERT, CALIFORNIA Schedule of Changes in the Net Pension Liability/(Asset) and Related Ratios (Continued) Miscellaneous Plan As of June 30, For the Last Ten Fiscal Years 2021 2020 2019 2018 2017 2016 6/30/2020 6/30/2019 6/30/2018 6/30/2017 6/30/2016 6/30/2015 $ 2,086,683 $ 1,973,971 $ 2,196,462 $ 2,204,265 $ 2,076,964 $ 2,125,437 9,645,145 9,261,660 8,797,867 8,558,529 8,327,823 8,223,320 ------ --(1,148,708) 7,367,723 -(2,091,348) 533,373 1,762,387 (594,882) (1,895,482) (4,259,317) (2,378,254) (6,540,485) (6,383,377) (5,934,338) (5,401,531) (4,801,252) (4,597,025) 5,724,716 6,614,641 3,316,401 10,833,504 1,344,218 1,282,130 136,590,663 129,976,022 126,659,621 115,826,117 114,481,899 113,199,769 142,315,379 136,590,663 129,976,022 126,659,621 115,826,117 114,481,899 4,521,813 5,963,737 5,407,412 5,303,371 4,257,322 4,065,411 805,528 791,794 812,447 828,467 870,981 878,171 5,102,524 6,322,815 7,555,653 8,800,663 448,184 1,682,498 (6,540,485) (6,383,377) (5,934,338) (5,401,531) (4,801,252) (4,597,025) --(222) --- (143,465) (67,893) (136,651) (115,573) (47,263) (87,279) -222 (259,502) --- 3,745,915 6,627,298 7,444,799 9,415,397 727,972 1,941,776 101,765,740 95,138,442 87,693,643 78,278,246 77,550,274 75,608,498 105,511,655 101,765,740 95,138,442 87,693,643 78,278,246 77,550,274 $ 36,803,724 $ 34,824,923 $ 34,837,580 $ 38,965,978 $ 37,547,871 $ 36,931,625 74% 75% 73% 69% 68% 68% $ 10,353,849 $ 9,807,088 $ 10,751,687 $ 10,684,238 $ 11,342,713 $ 11,448,621 356% 355% 324% 365% 331% 323% See accompanying Notes to the Basic Financial Statements 115 OPEB - Schedule of Changes in the Net OPEB Liability/(Asset) and Related Ratios CITY OF PALM DESERT, CALIFORNIA Schedule of Changes in the Net OPEB Liability/(Asset) and Related Ratios As of June 30, For the Last Ten Fiscal Years1 2025 2024 2023 2022 Measurement Date 6/30/2024 6/30/2023 6/30/2022 6/30/2021 TOTAL OPEB LIABILITY Service cost $ 383,189 $ 357,354 $ 294,337 $ 378,897 Interest on total pension liability 1,287,056 1,193,064 1,205,943 1,161,531 Changes of benefit terms 3,055,225 --(910,834) Changes of assumptions -170 1,691,792 1,053,761 Difference between expected and actual experience (997,730) 1,327,257 -- Benefit payments, including refunds of employee contributions (1,306,991) (1,082,459) (944,960) (819,968) Net change in total OPEB liability 2,420,749 1,795,386 2,247,112 863,387 Total OPEB liability-beginning 23,671,335 21,875,949 19,628,837 18,765,450 Total OPEB liability-ending (a) 26,092,084 23,671,335 21,875,949 19,628,837 PLAN FIDUCIARY NET POSITION Contributions-employer 1,306,991 1,108,988 1,230,895 1,140,548 Net investment income 1,783,056 748,799 (3,022,583) 3,878,532 Benefit payments, including refunds of employee contributions (1,306,991) (1,082,459) (944,960) (819,968) Administrative expense (7,014) (6,023) (6,034) (7,193) Other miscellaneous income/(expense) ---- Net change in fiduciary net position 1,776,042 769,305 (2,742,682) 4,191,919 Plan fiduciary net position-beginning 21,789,415 21,020,110 23,762,792 19,570,873 Plan fiduciary net position-ending (b) 23,565,457 21,789,415 21,020,110 23,762,792 Net OPEB liability/(asset) (a) - (b) $ 2,526,627 $ 1,881,920 $ 855,839 $ (4,133,955) Plan fiduciary net position as a percentage of the total OPEB liability 90.3% 92.0% 96.1% 121.1% Covered payroll $ 15,090,207 $ 12,780,729 $ 11,208,147 $ 10,881,697 Plan net OPEB liability/(asset) as a percentage of coveredpayroll 16.7% 14.7% 7.6% (38.0)% Notes to Schedule of Changes in the Net OPEB Liability/(Asset) and Related Ratios: Benefit Changes: None Changes in Assumptions: None 1 Fiscal year 2018 was the first year of implementation; therefore, only eight years are shown. See accompanying Notes to the Basic Financial Statements 116 CITY OF PALM DESERT, CALIFORNIA Schedule of Changes in the Net OPEB Liability/(Asset) and Related Ratios (Continued) As of June 30, For the Last Ten Fiscal Years1 2021 2020 2019 2018 6/30/2020 6/30/2019 6/30/2018 6/30/2017 $ 366,971 $ 369,299 $ 357,675 $ 346,417 1,117,500 1,256,431 1,199,747 1,144,106 ---- -2,552,767 -- -(4,066,457) -- (752,486) (756,759) (696,845) (653,187) 731,985 (644,719) 860,577 837,336 18,033,465 18,678,184 17,817,607 16,980,271 18,765,450 18,033,465 18,678,184 17,817,607 1,280,453 2,408,260 1,381,501 1,255,960 977,487 1,226,966 843,319 902,331 (752,486) (756,759) (696,845) (653,187) (9,045) (3,515) (7,371) (6,541) --(18,115) - 1,496,409 2,874,952 1,502,489 1,498,563 18,074,464 15,199,512 13,697,023 12,198,460 19,570,873 18,074,464 15,199,512 13,697,023 $ (805,423) $ (40,999) $ 3,478,672 $ 4,120,584 104.3% 100.2% 81.4% 76.9% $ 11,382,103 $ 10,546,052 $ 10,741,786 $ 10,584,400 (7.1)% (0.4)% 32.4% 38.9% See accompanying Notes to the Basic Financial Statements 117 118 Schedules of Plan Contributions CITY OF PALM DESERT, CALIFORNIA Schedules of Plan Contributions As of June 30, For the Last Ten Fiscal Years Fiscal Year Actuarially Actual Contribution Contribution as a Ending Determined Employer Deficiency Covered % of Covered June 30, Contribution Contributions (Excess) Payroll Payroll Miscellaneous Agent, Multiple-Employer Pension Plan 2025 $ 4,510,683 $ 5,697,799 $ (1,187,116) $ 12,751,196 44.7% 2024 4,539,654 4,669,126 (129,472) 11,030,033 42.3% 2023 4,574,753 4,574,753 -10,601,359 43.2% 2022 4,123,142 4,123,142 -9,621,662 42.9% 2021 4,936,652 4,729,797 206,855 10,386,791 45.5% 2020 4,736,668 4,521,813 214,855 10,353,849 43.7% 2019 4,225,204 5,963,737 (1,738,533) 9,807,088 60.8% 2018 4,219,764 5,396,908 (1,177,144) 10,751,687 50.2% 2017 3,550,127 5,303,371 (1,753,244) 10,684,238 49.6% 2016 3,585,082 4,257,322 (672,240) 11,342,713 37.5% Notes to Schedule: Valuation Date: June 30, 2023 Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method/period Level percentage of payroll, closed Asset valuation method Fair Value Inflation 2.30% Salary increases Varies by entry age and service Payroll growth 2.80% Investment rate of return 6.8% net of pension investment and administrative expenses, including inflation. Retirement age The probabilities of retirement are based on the 2021 CalPERS Experience Study fand Review ofActuarial Assumptions. Mortality The probabilities of mortality are based on the 2021 CalPERS Experience Study and Review ofActuarial Assumptions. Mortality rates incorporates full generational mortality improvements using 80% of Scale MP-2020 published by the Society ofActuaries. Single Employer OPEB Plan 2025 $ 533,751 $ 1,403,495 $ (869,744) $ 16,637,603 8.4% 2024 533,751 1,306,991 (773,240) 15,090,207 8.7% 2023 452,627 1,123,177 (670,550) 12,780,729 8.8% 2022 285,935 1,230,895 (944,960) 11,208,147 11.0% 2021 320,508 1,140,548 (820,040) 10,881,697 10.5% 2020 527,966 1,340,978 (813,012) 11,382,103 11.8% 2019 651,501 2,408,260 (1,756,759) 10,546,052 22.8% 2018 684,656 1,381,501 (696,845) 10,741,786 12.9% Notes to Schedule: Actuarial cost method EntryAge Normal Amortization method/period Level percent of payroll over a closed rolling 30-year period Asset valuation method 2.50% Inflation 3.00% per anum, in aggregate Salary increases 5.50% per annum Payroll growth Assumed to start at 6.5% and grade down by 0.5% each year to 5% in 2024 Investment rate of return The City offers the same plans to its retirees as to its active employees, with the general exception that upon reaching age 65 and becoming eligible for Medicare, the retiree must join one of the Medicare Supplement coverages under PEMHCA. Retirement age Mortality rates used were those published by CalPERS under the 2017 Experience study and projected using the MacLeod Watts Scale 2018 applied generationally. See accompanying Notes to the Basic Financial Statements 119 Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – General Fund CITY OF PALM DESERT, CALIFORNIA Budgetary Comparison Schedule by Department General Fund For the Year Ended June 30, 2025 Budget Amounts Actual Variance with Final Budget Positive Original Final Amounts (Negative) Resources (inflows): Taxes Property tax $ 11,501,654 $ 11,500,654 $ 11,352,162 $ (148,492) Property transfer tax 1,122,435 1,122,435 797,229 (325,206) Property tax in lieu 5,527,780 5,527,780 5,746,578 218,798 Timeshare mitigation fee 1,754,107 3,465,702 3,465,702 - Sales tax 25,000,000 27,000,000 31,379,891 4,379,891 Business license tax 1,100,000 1,100,350 1,334,949 234,599 Job valuation fees 106,500 56,500 54,270 (2,230) Transient occupancy tax 22,916,000 22,798,500 23,881,245 1,082,745 Franchises 3,400,000 3,400,000 3,729,388 329,388 Penalties and interest on taxes 43,000 63,000 84,191 21,191 Total Taxes 72,471,476 76,034,921 81,825,605 5,790,684 Licenses and Permits Building permits 1,428,300 1,100,300 1,237,713 137,413 Grading permits 11,000 36,000 28,467 (7,533) Encroachment permits 85,500 130,500 118,827 (11,673) Miscellaneous permits 800 1,450 1,125 (325) Business regulatory permits 16,000 16,000 21,985 5,985 Golf cart permits 1,300 1,300 2,210 910 Valet parking permits 700 700 225 (475) Total Licenses and Permits 1,543,600 1,286,250 1,410,552 124,302 Intergovernmental State mandate cost --263,956 263,956 Motor vehicle in-lieu fees 61,000 61,000 80,237 19,237 Monthly parking bail 5,000 5,000 10,971 5,971 Reimbursement RDA costs 597,015 597,015 597,015 - Other reimbursements 735,500 1,088,000 1,017,162 (70,838) Total Intergovernmental 1,398,515 1,751,015 1,969,341 218,326 Rental income 162,329 162,329 134,823 (27,506) Charges for Services Subdivision fees 382,999 382,999 514,289 131,290 Zoning fees 68,000 61,000 64,425 3,425 Plan check fees 408,000 408,000 607,498 199,498 Sale of maps and publications 3,500 4,000 9,803 5,803 Microfilm fees 100 100 -(100) Vehicle impact fees 430,000 430,000 755,972 325,972 Other fees 54,000 174,500 216,170 41,670 Total Charges for Services 1,346,599 1,460,599 2,168,157 707,558 Investment Earnings Interest Income 4,500,000 5,000,000 5,660,055 660,055 Interest on notes receivable 200,000 200,000 143,090 (56,910) Total Investment Earnings 4,700,000 5,200,000 5,803,145 603,145 Fines and Forfeitures Vehicle code fines 22,000 22,000 44,813 22,813 Municipal court fines 3,000 11,000 6,493 (4,507) VICR fees 67,000 77,000 99,482 22,482 Total Fines and Forfeitures 92,000 110,000 150,788 40,788 Miscellaneous Code compliance 50,000 25,000 56,754 31,754 Certificate of compliance fee 300 300 -(300) Nuisance abatement fee 5,600 4,000 -(4,000) Abandoned vehicle abatement 24,999 44,999 45,574 575 Other revenue 259,759 434,668 738,873 304,205 Total Miscellaneous 340,658 508,967 841,201 332,234 Transfer in 1,167,700 2,680,140 2,491,425 (188,715) Lease and subscription arrangements --140,618 140,618 Amounts available for appropriations 83,222,877 89,194,221 96,935,655 7,600,816 See accompanying Notes to the Basic Financial Statements 120 CITY OF PALM DESERT, CALIFORNIA Budgetary Comparison Schedule by Department (Continued) General Fund For the Year Ended June 30, 2025 Budget Amounts Actual Variance with Final Budget Positive Original Final Amounts (Negative) Charges to appropriation (outflow): Current: General government City Council 350,401 420,244 332,247 87,997 City Clerk 1,192,865 1,353,119 1,224,963 128,156 Legislative advocacy 40,845 40,845 36,000 4,845 Elections 165,000 149,500 104,350 45,150 City attorney 317,520 320,916 320,916 - Legal special services 353,590 838,590 789,001 49,589 City manager 2,077,045 1,341,928 1,221,146 120,782 Finance 2,436,288 2,629,456 3,430,188 (800,732) Independent audit 100,000 161,731 137,088 24,643 Human resources 1,117,478 1,121,837 939,615 182,222 General services 4,967,875 6,468,574 5,904,180 564,394 Information technology 3,498,426 6,712,429 3,915,867 2,796,562 Unemployment insurance 10,000 25,000 24,597 403 Insurance 1,254,623 1,135,423 1,126,169 9,254 Community promotions 557,720 557,720 440,314 117,406 Public affairs and marketing 2,206,326 2,096,713 1,929,768 166,945 Visitor services 12,930 12,930 8,461 4,469 Economic development 1,776,934 1,980,660 1,667,046 313,614 Code enforcement 946,494 1,089,962 1,032,843 57,119 Permit center 951,321 1,117,942 1,010,934 107,008 Contributions 1,979,025 1,979,290 1,917,955 61,335 Capital projects 4,729,818 6,028,134 4,761,023 1,267,111 Total General Government 31,042,524 37,582,943 32,274,671 5,308,272 Public safety Police services 22,294,902 22,862,461 22,308,994 553,467 Animal regulation 410,000 592,000 490,341 101,659 Traffic safety 1,469,949 1,854,758 1,520,765 333,993 Building and safety 1,318,941 1,526,558 1,439,413 87,145 Community safety 224,100 304,100 270,650 33,450 Total Public Safety 25,717,892 27,139,877 26,030,163 1,109,714 Parks, Recreation, and Culture Civic center park 2,199,500 2,157,248 1,665,519 491,729 Citywide park maintenance 1,487,000 1,665,475 1,366,158 299,317 Landscape services 3,231,294 3,679,709 3,255,847 423,862 Total Parks, Recreation, and Culture 6,917,794 7,502,432 6,287,524 1,214,908 Public works Public works 1,827,840 2,035,705 1,909,389 126,316 Public works streets 2,637,730 2,928,077 2,676,968 251,109 ADA improvements 50,000 50,000 50,000 - Parking lot improvements 200,000 368,380 171,909 196,471 Corporation yard 214,700 261,200 199,881 61,319 Public works fleet 412,500 483,615 409,854 73,761 Building maintenance 1,287,958 1,058,830 890,217 168,613 Portola community center 219,750 219,750 173,231 46,519 Total Public Works 6,850,478 7,405,557 6,481,449 924,108 Capital Outlay 544,000 420,885 252,264 168,621 Debt service: Principal --240,200 (240,200) Interest and fiscal charges --8,991 (8,991) Interfund transfers 11,990,324 31,846,028 31,008,583 837,445 Total charges to appropriations 83,063,012 111,897,722 102,583,845 9,313,877 Net change in fund balance $ 159,865 $ (22,703,501) (5,648,190) $ 17,055,311 Fund balance-beginning 126,353,653 Fund balances-ending $ 120,705,463 See accompanying Notes to the Basic Financial Statements 121 Prop A Fire Tax CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Prop A Fire Tax For the Year Ended June 30, 2025 Variance with Actual Final Budget Positive Original Final Amounts (Negative) REVENUES Taxes $ 11,402,490 $ 11,402,490 $ 13,045,657 $ 1,643,167 Special assessments collected 2,474,050 2,474,050 2,188,202 (285,848) Intergovernmental revenues 1,450,000 1,450,000 1,442,674 (7,326) Charges for services 2,900,000 2,900,000 4,424,656 1,524,656 Investment earnings 500,000 500,000 1,419,450 919,450 Total revenues 18,726,540 18,726,540 22,520,639 3,794,099 EXPENDITURES Current: Public safety 22,239,138 22,253,715 18,941,495 3,312,220 Capital outlay 1,810,000 21,785,115 3,701,001 18,084,114 Total expenditures 24,049,138 44,038,830 22,642,496 21,396,334 Excess (deficiency) of revenues over (under) expenditures (5,322,598) (25,312,290) (121,857) 25,190,433 OTHER FINANCING SOURCES (USES) Transfers in 5,000,000 5,000,000 5,000,000 - Total other financing sources (uses) 5,000,000 5,000,000 5,000,000 - Net change in fund balance $ (322,598) $(20,312,290) 4,878,143 $ 25,190,433 Fund balance-beginning 22,353,727 Fund balances-ending $ 27,231,870 See accompanying Notes to the Basic Financial Statements 122 Housing Asset Fund CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Housing Asset Fund For the Year Ended June 30, 2025 Variance with Actual Final Budget Positive Original Final Amounts (Negative) REVENUES Charges for services $ -$ -$ 68,979 $ 68,979 Investment earnings 280,600 1,952,000 1,786,096 (165,904) Miscellaneous -35,328 37,995 2,667 Total revenues 280,600 1,987,328 1,893,070 (94,258) EXPENDITURES Current: Housing 3,543,650 11,929,080 52,392 11,876,688 Capital outlay 300,000 300,000 12,500 287,500 Total expenditures 3,843,650 12,229,080 64,892 12,164,188 Net change in fund balance $ (3,563,050) $(10,241,752) 1,828,178 $ 12,069,930 Fund balance-beginning 51,941,714 Fund balances-ending $ 53,769,892 See accompanying Notes to the Basic Financial Statements 123 Housing Authority CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Housing Authority For the Year Ended June 30, 2025 Variance with Actual Final Budget Positive Original Final Amounts (Negative) REVENUES Fees and rentals $ 9,663,031 $ 9,663,031 $ 9,402,683 $ (260,348) Investment earnings 70,600 70,600 776,883 706,283 Miscellaneous --97,025 97,025 Total revenues 9,733,631 9,733,631 10,276,591 542,960 EXPENDITURES Current: Housing 13,458,975 16,091,568 8,623,482 7,468,086 Total expenditures 13,458,975 16,091,568 8,623,482 7,468,086 Excess (deficiency) of revenues over (under) expenditures (3,725,344) (6,357,937) 1,653,109 8,011,046 OTHER FINANCING SOURCES (USES) Transfers out (493,772) (493,772) (380,542) 113,230 Total other financing sources (uses) (493,772) (493,772) (380,542) 113,230 Net change in fund balance $ (4,219,116) $ (6,851,709) 1,272,567 $ 8,124,276 Fund balance-beginning 17,097,718 Fund balances-ending $ 18,370,285 See accompanying Notes to the Basic Financial Statements 124 Notes to Required Supplementary Information CITY OF PALM DESERT, CALIFORNIA Notes to Required Supplementary Information For the Year Ended June 30, 2025 NOTE 1: BUDGETS AND BUDGETARY ACCOUNTING The City used the following procedures in establishing the budgetary data reported in the financial statements: 1. Before the beginning of the fiscal year, the City Manager submits to the City Council a proposed budget for the year commencing the following July 1. 2. Public hearings are conducted to obtain taxpayer comments. 3. The budget is subsequently adopted through passage of a resolution. 4. Expenditures for the General Fund cannot exceed amounts budgeted at the departmental level, which is the legal level of control. For other funds, expenditures cannot exceed the total amount budgeted for each fund, which is the legal level of control. The City Manager is authorized to transfer appropriations (without council approval) between an object of a General Fund Department and authority to adjust intra-and outer departmental budgeted line items, as well as inter-fund transfers, provided such adjustments do not exceed the total approved budget. The City Council approves all other changes. Annual appropriation amounts lapse at year-end. 5. Encumbrances and continuing appropriations are rebudgeted as of July 1, by Council action. 6. Annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America for all governmental funds except for certain special revenue funds and capital projects funds, which adopt project length budgets and debt service funds that are not budgeted as effective budgetary control is achieved through debt indenture provisions. The following funds did not have legally adopted budgets during the current fiscal year: Capital Projects Fund - Special Assessment District See accompanying Notes to the Basic Financial Statements 125 126 OTHER GOVERNMENTAL FUNDS COMBINING STATEMENTS 127 OTHER GOVERNMENTAL FUNDS - SPECIAL REVENUE Special Revenue Funds are used to account for proceeds of specific revenue sources other than expendable trust that are legally restricted to expenditures for specific purposes. Traffic Safety Fund – Traffic and court fines are collected in these funds. A transfer from this Fund to the General Fund is made at the end of the fiscal year by council action to be applied toward the eligible expenditures permitted by law. Gas Tax Fund – Portions of the tax rate per gallon levied by the State of California on all gasoline purchases are allocated to cities throughout the State. These funds are restricted to expenditure for transit and street-related purposes. Measure A Fund – This fund is used to account for the half- cent sales tax approved by the voters of Riverside County in 1988. Funds are restricted for local street and road expenditures only. Housing Mitigation Fee Fund – This fund is used to account for fees collected from construction of commercial and office buildings for low and moderate income mitigation purposes to be used strictly for projects and programs that benefit the low and moderate income households. Community Development Block Grant Fund – This fund is used to account for the receipts and expenditures of CDBG funds received from the U.S. Department of Housing and Urban Development. Child Care Program Fund – This fund is used to collect funds from developers for the purpose of providing child care programs. Public Safety Police Grants Fund – This fund is used to account for grants received from the U.S. Department of Justice under the Local Law Enforcement Block Grant Program for the purpose of purchasing equipment related to public safety. New Construction Tax Fund – This fund is used to account for tax collected upon application to the City for a building permit from every person/entity for the construction of any new building, addition or trailer space in the city according to a fee schedule. Its use is restricted for the acquisition and development of public facilities such as parks, playgrounds and public structures. Planned Drainage Fund – This fund is used to account for off-site drainage fees based on an established fee schedule collected prior to approval of the final map in the case of land being subdivided or prior to the issuance of a building permit in the case of construction or improvement of subdivided land. Parks and Recreational Facilities Fund – This fund is used to account for fees collected for residential and subdivision developments collected either at the time grading permits are paid or prior to the approval of the final map. Its use is restricted for expenditures related to park development, maintenance and equipment. Traffic Signals Fund – This fund is used to account for fees collected for residential, commercial and industrial developments either at the time grading permits are paid or prior to the approval of the final map. Its use is restricted for expenditures related to the acquisition and maintenance of traffic signals. Fire Facilities Restoration Fund – This fund is used to collect funds from developers for the purpose of construction, restoration and purchase of equipment for fire stations within the City. Recycling Fund – This fund is used to account for resources resulting from lower landfill tipping fees which have been reduced to zero in 2013, and State grant funds. Funds will be utilized for purposes of promoting recycling and recycling related activities. 128 Energy Independence Loan Fund – This fund is used to provide funding for the AB811 Energy Loans and collect assessments from those AB811 loans through property tax collections. The assessments collected will be used to service debt issued and to provide additional funding for the AB811 loans. Air Quality Management Fund – This fund accounts for receipts from South Coast Air Quality Management District, sixty percent of which is disbursed to the Coachella Valley Association of Governments. Aquatic Center Fund – This fund is used to account for revenues and expenditures for the City’s aquatic facility. Cannabis Compliance Fund – This fund is used to account for revenues and expenditures for the City’s cannabis compliance activity. El Paseo Assessment District Fund – This fund is used to collect assessments on all business establishments located within the boundaries set for the El Paseo Parking and business improvement area based on a fee schedule established for the various types of businesses. Proceeds from all charges are used for the promotion of business activities in the area. Various Landscape and Lighting District Fund – These funds are used to account for expenditures and receipts of property taxes and service fees levied to the property owners in the various landscaping and lighting districts, which were formed to provide landscaping and street lighting maintenance. Individual landscaping and lighting funds are set up for Districts No 1 through 17. Affordable Housing Fund – This fund is used to account for the management and operation of the affordable housing portfolio. Permanent Local Housing Allocation Grant Fund – This fund provides a permanent source of funding to cities and counties to help meet the need for affordable housing and to increase the supply of affordable housing units. Opioid Settlement Fund – This fund is used to account for the receipts and expenditures related to the Nationwide Class Action Opioid Settlement intended to be used to address the nation' s continuing opioid crisis. Library Services Fund – This fund is used to account for revenues and expenditures for the City's library facility. 129 OTHER GOVERNMENTAL FUNDS - CAPITAL PROJECTS Capital Projects Funds are used to account for the acquisition and construction of major capital facilities, except for those financed by certain Special Revenue and Enterprise funds. Capital Projects Reserve Fund - This fund is used to account for resources and expenditures for capital improvement projects that are related to the acquisition and development of public facilities, infrastructure and equipment. Drainage Facilities Fund - This fund is used to account for resources and expenditures for planned capital improvement projects that are under the Master Drainage Plan. Economic Development Fund - This fund is used to account for façade enhancement projects for Palm Desert businesses utilizing funds from the sales of certain City-owned properties. Parks and Recreational Facilities Fund - This fund is used to account for resources and expenditures for capital improvement projects that are related to park development, maintenance and equipment. Art in Public Places Fund - This fund is used to account for fees collected from residential, commercial and public facilities development except for street and drainage projects. Its use is restricted for acquisition, installation, improvement and maintenance of artwork to be displayed in the City, the administration of the program and community public art education programs. Signalization Fund - This fund is used to account for resources and expenditures for capital improvement projects that are related to the acquisition and maintenance of traffic signals. Capital Golf Fund - This fund is used to offset the cost of capital improvements, equipment purchases, perimeter maintenance, pay off assessments and other nonrecurring costs that will arise as a result of Desert Willow Golf Course Resort. Funding sources for the Golf Course Maintenance Fund are collections from the IROC and Standard Vacation Ownership, Inc. time-share project. Buildings Fund - This fund is used to account for resources and expenditures for capital improvement projects that are related to the improvement and maintenance of public facilities and structures. Library Fund - This fund is used to account for resources and expenditures for capital improvement projects that are related to the purchase of library resources for the Multi-Agency Library. Special Assessment District Fund - This fund is used to account for the construction of public improvements from proceeds resulting from the creation of various assessment Districts. Assessment District No. 94-3 Merano Silver Spur Ranch Highlands Undergrounding CFD University Special Assessment Assessment 29 University Park 130 OTHER GOVERNMENTAL FUNDS - DEBT SERVICE FUND City Highlands Undergrounding Fund – This fund is used to account for the resources and payment for debt related to Highlands Undergrounding. 131 Combining Balance Sheet CITY OF PALM DESERT, CALIFORNIA Combining Balance Sheet Nonmajor Governmental Funds June 30, 2025 Special Revenue Funds ASSETS Cash and investments Receivables: Accounts Assessments Accrued interest Loans Deposits Prepaid expenses Due from other governments Advances to other funds Inventories Restricted assets: Cash with fiscal agent Total assets Traffic Safety $ 3,881 - - - - - - 77 - - - $ 3,958 $ $ Gas Tax 5,939,706 - - - - - - 495,027 - - - 6,434,733 Measure A $ 17,636,719 - - - - - - 581,951 - - - $ 18,218,670 Housing Mitigation Fee $ 3,244,054 300 - - - - - - - - - $ 3,244,354 LIABILITIES Accounts payable Unearned revenue Due to other funds Advances from other funds $ - - - - $ 332,396 - - - $ 1,115,871 - - - $ - - - - Total liabilities -332,396 1,115,871 - DEFERRED INFLOWS OF RESOURCES Unavailable revenue ---- Total deferred inflows of resources ---- FUND BALANCES Nonspendable Restricted total Committed Assigned Total fund balances - 3,958 - - 3,958 - 6,102,337 - - 6,102,337 - 17,102,799 - - 17,102,799 - 3,244,354 - - 3,244,354 Total liabilities, deferred inflows, and fund balances $ 3,958 $ 6,434,733 $ 18,218,670 $ 3,244,354 132 CITY OF PALM DESERT, CALIFORNIA Combining Balance Sheet (Continued) Nonmajor Governmental Funds June 30, 2025 Special Revenue Funds Community Development Block Grant Child Care Program Public Safety Police Grants New Construction Tax ASSETS Cash and investments $ -$ 962,918 $ 386,531 $ 1,883,822 Receivables: Accounts ---- Assessments ---- Accrued interest ---- Loans ---- Deposits ---- Prepaid expenses ---- Due from other governments 135,354 --- Advances to other funds ---- Inventories ---- Restricted assets: Cash with fiscal agent ---- Total assets $ 135,354 $ 962,918 $ 386,531 $ 1,883,822 LIABILITIES Accounts payable $ 12,097 $ - $ 136,584 $ 16,771 Unearned revenue --204,617 - Due to other funds 84,095 --- Advances from other funds ---- Total liabilities 96,192 -341,201 16,771 DEFERRED INFLOWS OF RESOURCES Unavailable revenue ---- Total deferred inflows of resources ---- FUND BALANCES Nonspendable ---- Restricted total 39,162 962,918 45,330 1,867,051 Committed ---- Assigned ---- Total fund balances 39,162 962,918 45,330 1,867,051 Total liabilities, deferred inflows, and fund balances $ 135,354 $ 962,918 $ 386,531 $ 1,883,822 133 CITY OF PALM DESERT, CALIFORNIA Combining Balance Sheet (Continued) Nonmajor Governmental Funds June 30, 2025 Special Revenue Funds ASSETS Cash and investments Receivables: Accounts Assessments Accrued interest Loans Deposits Prepaid expenses Due from other governments Advances to other funds Inventories Restricted assets: Cash with fiscal agent $ Planned Drainage 1,038,982 - - - - - - - - - - Parks and Recreational Facilities $ 2,094,118 - - - - - - - - - - Traffic Signals $ 271,513 - - - - - - - - - - Fire Facilities Restoration $ 712,167 - - - - - - - - - - Total assets $ 1,038,982 $ 2,094,118 $ 271,513 $ 712,167 LIABILITIES Accounts payable Unearned revenue Due to other funds Advances from other funds $ - - - - $ - $ 20,243 -- -- -- $ 40,211 - - - Total liabilities --20,243 40,211 DEFERRED INFLOWS OF RESOURCES Unavailable revenue ---- Total deferred inflows of resources ---- FUND BALANCES Nonspendable Restricted total Committed Assigned - 1,038,982 - - - 2,094,118 - - - 251,270 - - - 671,956 - - Total fund balances 1,038,982 2,094,118 251,270 671,956 Total liabilities, deferred inflows, and fund balances $ 1,038,982 $ 2,094,118 $ 271,513 $ 712,167 134 CITY OF PALM DESERT, CALIFORNIA Combining Balance Sheet (Continued) Nonmajor Governmental Funds June 30, 2025 Special Revenue Funds ASSETS Cash and investments Receivables: Accounts Assessments Accrued interest Loans Deposits Prepaid expenses Due from other governments Advances to other funds Inventories Restricted assets: Cash with fiscal agent Recycling $ 3,765,683 70,352 - - - - 166 - - - - Energy Independence Loan $ 1,881,188 - 4,193 32,632 789,624 - - - - - - Air Quality Management $ 74,601 - - - - - - - - - - $ Aquatic Center 3,159,064 279,070 - - - - 7,100 - - 11,183 - Total assets $ 3,836,201 $ 2,707,637 $ 74,601 $ 3,456,417 LIABILITIES Accounts payable Unearned revenue Due to other funds Advances from other funds $ 54,299 14,250 - - $ - $ 25,791 -- -- 709,000 - $ 613,506 2,250 - - Total liabilities 68,549 709,000 25,791 615,756 DEFERRED INFLOWS OF RESOURCES Unavailable revenue -32,632 -- Total deferred inflows of resources -32,632 -- FUND BALANCES Nonspendable Restricted total Committed Assigned 166 3,767,486 - - - - 1,966,005 - - 48,810 - - 7,100 2,833,561 - - Total fund balances 3,767,652 1,966,005 48,810 2,840,661 Total liabilities, deferred inflows, and fund balances $ 3,836,201 $ 2,707,637 $ 74,601 $ 3,456,417 135 CITY OF PALM DESERT, CALIFORNIA Combining Balance Sheet (Continued) Nonmajor Governmental Funds June 30, 2025 Special Revenue Funds Various Cannabis Compliance El Paseo Assessment District Landscape and Lighting District Affordable Housing ASSETS Cash and investments $ 1,948,893 $ 197,812 $ 2,992,285 $ 1,463,191 Receivables: Accounts 70,273 9,521 -1,577 Assessments ---- Accrued interest ---- Loans ---- Deposits ---- Prepaid expenses ---- Due from other governments --36,150 - Advances to other funds ---- Inventories ---- Restricted assets: Cash with fiscal agent ---- Total assets $ 2,019,166 $ 207,333 $ 3,028,435 $ 1,464,768 LIABILITIES Accounts payable $ -$ 12,609 $ 105,126 $ (259) Unearned revenue ---- Due to other funds ---- Advances from other funds ---- Total liabilities -12,609 105,126 (259) DEFERRED INFLOWS OF RESOURCES Unavailable revenue ---- Total deferred inflows of resources ---- FUND BALANCES Nonspendable ---- Restricted total 2,019,166 194,724 2,923,309 1,465,027 Committed ---- Assigned ---- Total fund balances 2,019,166 194,724 2,923,309 1,465,027 Total liabilities, deferred inflows, and fund balances $ 2,019,166 $ 207,333 $ 3,028,435 $ 1,464,768 136 CITY OF PALM DESERT, CALIFORNIA Combining Balance Sheet (Continued) Nonmajor Governmental Funds June 30, 2025 ASSETS Cash and investments Receivables: Accounts Assessments Accrued interest Loans Deposits Prepaid expenses Due from other governments Advances to other funds Inventories Restricted assets: Cash with fiscal agent Special Revenue Funds Permanent Local Housing Allocation Opioid Library Grant Settlement Services $ 127,739 $ 368,380 $ 528,558 -- 4,297 --- --- --- --- -- 6,771 --940 --- --- --- $ Capital Projects Funds Capital Projects Reserve 16,890,798 - - - - - - - - - - Total assets $ 127,739 $ 368,380 $ 540,566 $ 16,890,798 LIABILITIES Accounts payable Unearned revenue Due to other funds Advances from other funds $ 3,750 - - - $ 39,427 298,786 - - $ 121,104 1,582 - - $ 408,711 63,041 - - Total liabilities 3,750 338,213 122,686 471,752 DEFERRED INFLOWS OF RESOURCES Unavailable revenue ---- Total deferred inflows of resources ---- FUND BALANCES Nonspendable Restricted total Committed Assigned - 123,989 - - - 30,167 - - 6,771 411,109 - - - - - 16,419,046 Total fund balances 123,989 30,167 417,880 16,419,046 Total liabilities, deferred inflows, and fund balances $ 127,739 $ 368,380 $ 540,566 $ 16,890,798 137 CITY OF PALM DESERT, CALIFORNIA Combining Balance Sheet (Continued) Nonmajor Governmental Funds June 30, 2025 Capital Projects Funds ASSETS Cash and investments Receivables: Accounts Assessments Accrued interest Loans Deposits Prepaid expenses Due from other governments Advances to other funds Inventories Restricted assets: Cash with fiscal agent $ Drainage Facilities 4,738,925 - - - - - - - - - - Economic Development $ 1,037,652 - - - - 20,000 25,392 11,313 - - - Parks and Recreational Facilities $ 11,181 - - - - - - - - - - Art in Public Places $ 1,736,956 - - - - - 1,000 - - - - Total assets $ 4,738,925 $ 1,094,357 $ 11,181 $ 1,737,956 LIABILITIES Accounts payable Unearned revenue Due to other funds Advances from other funds $ 26,025 - - - $ 53,932 - - - $ - - - - $ 5,190 - - - Total liabilities 26,025 53,932 -5,190 DEFERRED INFLOWS OF RESOURCES Unavailable revenue ---- Total deferred inflows of resources ---- FUND BALANCES Nonspendable Restricted total Committed Assigned Total fund balances - - - 4,712,900 4,712,900 45,392 - - 995,033 1,040,425 - - - 11,181 11,181 1,000 1,731,766 - - 1,732,766 Total liabilities, deferred inflows, and fund balances $ 4,738,925 $ 1,094,357 $ 11,181 $ 1,737,956 138 CITY OF PALM DESERT, CALIFORNIA Combining Balance Sheet (Continued) Nonmajor Governmental Funds June 30, 2025 Capital Projects Funds ASSETS Cash and investments Receivables: Accounts Assessments Accrued interest Loans Deposits Prepaid expenses Due from other governments Advances to other funds Inventories Restricted assets: Cash with fiscal agent Total assets Signalization $ 123,980 - - - - - - - - - - $ 123,980 Capital Golf $ 3,548,078 - - - - - - - 1,598,773 - - $ 5,146,851 Buildings $ 4,648,639 - - - - - - - - - - $ 4,648,639 $ $ Library 3,390,859 - - - - - 14,810 - - - - 3,405,669 LIABILITIES Accounts payable Unearned revenue Due to other funds Advances from other funds $ - - - - $ 405,589 - - - $ 6,907 - - - $ 133,922 - - - Total liabilities -405,589 6,907 133,922 DEFERRED INFLOWS OF RESOURCES Unavailable revenue ---- Total deferred inflows of resources ---- FUND BALANCES Nonspendable Restricted total Committed Assigned Total fund balances - - - 123,980 123,980 - - - 4,741,262 4,741,262 - 4,641,732 - - 4,641,732 14,810 3,256,937 - - 3,271,747 Total liabilities, deferred inflows, and fund balances $ 123,980 $ 5,146,851 $ 4,648,639 $ 3,405,669 139 CITY OF PALM DESERT, CALIFORNIA Combining Balance Sheet (Continued) Nonmajor Governmental Funds June 30, 2025 Capital Projects Funds Debt Service Funds ASSETS Cash and investments Receivables: Accounts Assessments Accrued interest Loans Deposits Prepaid expenses Due from other governments Advances to other funds Inventories Restricted assets: Cash with fiscal agent Special Assessment District $ 209,633 - - - - - - - - - 57 City Highlands Undergrounding $ 158,966 - 952,714 - - - - 4,289 - - - $ Total Nonmajor Funds 87,177,472 435,390 956,907 32,632 789,624 20,000 55,239 1,265,101 1,598,773 11,183 57 Total assets $ 209,690 $ 1,115,969 $ 92,342,378 LIABILITIES Accounts payable Unearned revenue Due to other funds Advances from other funds $ - - - - $ - - - - $ 3,689,802 584,526 84,095 709,000 Total liabilities --5,067,423 DEFERRED INFLOWS OF RESOURCES Unavailable revenue -952,714 985,346 Total deferred inflows of resources -952,714 985,346 FUND BALANCES Nonspendable Restricted total Committed Assigned - 209,690 - - - 163,255 - - 75,239 57,244,963 1,966,005 27,003,402 Total fund balances 209,690 163,255 86,289,609 Total liabilities, deferred inflows, and fund balances $ 209,690 $ 1,115,969 $ 92,342,378 140 141 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances CITY OF PALM DESERT, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2025 Special Revenue Funds REVENUES Taxes Special assessments collected Licenses and permits Intergovernmental revenues Fees and rentals Charges for services Investment earnings Fines and forfeitures Miscellaneous Traffic Safety $ - - - - - - 288 1,394 - $ Gas Tax Measure A - $ 3,337,580 -- -- 2,816,735 - -- -- 245,971 1,124,018 -- -- Housing Mitigation Fee $ 26,079 - - - - - 173,153 - - Total revenues 1,682 3,062,706 4,461,598 199,232 EXPENDITURES Current: General government Public safety Parks, recreation and culture Public works Housing Library Capital outlay Debt service: Principal Interest - - - - - - - - - - - - - 911,127 - - 288,596 - - - - - - 3,697,192 - - 7,047,609 - - - - - - - 65,000 - - - - - Total expenditures -1,199,723 10,744,801 65,000 Excess (deficiency) of revenues over (under) expenditures 1,682 1,862,983 (6,283,203) 134,232 OTHER FINANCING SOURCES (USES) Transfers in Transfers out Lease and subscription arrangements - (2,700) - - - - - - - - - - Total other financing sources (uses) (2,700) --- Net change in fund balances (1,018) 1,862,983 (6,283,203) 134,232 Fund balances (deficit)-beginning 4,976 4,239,354 23,386,002 3,110,122 Fund balances (deficit)-ending $ 3,958 $ 6,102,337 $ 17,102,799 $ 3,244,354 142 CITY OF PALM DESERT, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances(Continued) Nonmajor Governmental Funds For the Year Ended June 30, 2025 Special Revenue Funds REVENUES Taxes Special assessments collected Licenses and permits Intergovernmental revenues Fees and rentals Charges for services Investment earnings Fines and forfeitures Miscellaneous Community Development Block Grant $ - - - 477,867 - - - - - $ Child Care Program 47,660 - - - - - 48,336 - - Public Safety Police Grants $ - - - 165,899 - - 15,571 - - New Construction Tax $ 164,382 - - - - - 98,969 - - Total revenues 477,867 95,996 181,470 263,351 EXPENDITURES Current: General government Public safety Parks, recreation and culture Public works Housing Library Capital outlay Debt service: Principal Interest 422,077 - - - - - 55,790 - - - - - - - - - - - - - - 165,899 - - - - - - - - - - - - - - 329,927 - - - Total expenditures 477,867 -165,899 329,927 Excess (deficiency) of revenues over (under) expenditures -95,996 15,571 (66,576) OTHER FINANCING SOURCES (USES) Transfers in Transfers out Lease and subscription arrangements - - - - - - - - - - - - Total other financing sources (uses) ---- Net change in fund balances -95,996 15,571 (66,576) Fund balances (deficit)-beginning 39,162 866,922 29,759 1,933,627 Fund balances (deficit)-ending $ 39,162 $ 962,918 $ 45,330 $ 1,867,051 143 CITY OF PALM DESERT, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances(Continued) Nonmajor Governmental Funds For the Year Ended June 30, 2025 Special Revenue Funds REVENUES Planned Drainage Parks and Recreational Facilities Traffic Signals Fire Facilities Restoration Taxes Special assessments collected Licenses and permits Intergovernmental revenues Fees and rentals $ 146,635 - - - - $ 327,467 - - - - $ 18,700 - - - - $ 53,474 - - - - Charges for services Investment earnings Fines and forfeitures - 52,000 - - 112,020 - - 31,221 - - 59,011 - Miscellaneous ---- Total revenues 198,635 439,487 49,921 112,485 EXPENDITURES Current: General government Public safety Parks, recreation and culture Public works - 11,718 - - - - - - - - - - - - - - Housing Library Capital outlay Debt service: - - - - - - 134,960 - - - 404,866 - - - 626,834 - Principal Interest - - - - - - - - Total expenditures 11,718 134,960 404,866 626,834 Excess (deficiency) of revenues over (under) expenditures 186,917 304,527 (354,945) (514,349) OTHER FINANCING SOURCES (USES) Transfers in ---- Transfers out ---- Proceeds from subscriptions and leases ---- Total other financing sources (uses) ---- Net change in fund balances 186,917 304,527 (354,945) (514,349) Fund balances (deficit)-beginning, as restated 852,065 1,789,591 606,215 1,186,305 Fund balances (deficit)-ending $ 1,038,982 $ 2,094,118 $ 251,270 $ 671,956 144 CITY OF PALM DESERT, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances(Continued) Nonmajor Governmental Funds For the Year Ended June 30, 2025 Special Revenue Funds REVENUES Taxes Special assessments collected Licenses and permits Intergovernmental revenues Fees and rentals Charges for services Investment earnings Fines and forfeitures Miscellaneous $ Recycling - - - 95,893 - 496,923 193,622 - - Energy Independence Air Quality Loan Management $ - $ - 82,184 - -- -67,147 -- -- 91,881 2,581 -- -- Aquatic Center $ - - - - 168,216 849,317 179,887 - - Total revenues 786,438 174,065 69,728 1,197,420 EXPENDITURES Current: General government Public safety Parks, recreation and culture Public works Housing Library Capital outlay Debt service: Principal Interest 488,128 - - - - - - - - - 4,117 - - - - - - - 19,000 54,325 52,650 - - - - - - - - - - - 2,911,931 - - - 1,181,558 - - - Total expenditures 488,128 77,442 52,650 4,093,489 Excess (deficiency) of revenues over (under) expenditures 298,310 96,623 17,078 (2,896,069) OTHER FINANCING SOURCES (USES) Transfers in Transfers out Proceeds from subscriptions and leases - - - - - - - - - 2,937,500 - - Total other financing sources (uses) ---2,937,500 Net change in fund balances 298,310 96,623 17,078 41,431 Fund balances (deficit)-ending $ 3,767,652 $ 1,966,005 $ 48,810 $ 2,840,661 145 CITY OF PALM DESERT, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances(Continued) Nonmajor Governmental Funds For the Year Ended June 30, 2025 REVENUES Cannabis Compliance Special Revenue Funds Various El Paseo Landscape and Assessment Lighting District District Affordable Housing Taxes Special assessments collected Licenses and permits Intergovernmental revenues Fees and rentals $ 926,842 - - - - $ - 393,678 - - - $ - 1,060,060 - - - $ - - - - - Charges for services Investment earnings Fines and forfeitures - 97,822 - - 10,404 - - 141,165 - - 538 - Miscellaneous ---- Total revenues 1,024,664 404,082 1,201,225 538 EXPENDITURES Current: General government Public safety Parks, recreation and culture Public works Housing Library Capital outlay Debt service: - - - - - - - - 312,002 - - - - - - - - - - 976,621 - - - - 2,360 - - - 373,475 - 228 - Principal Interest - - - - - - - - Total expenditures -312,002 976,621 376,063 Excess (deficiency) of revenues over (under) expenditures 1,024,664 92,080 224,604 (375,525) OTHER FINANCING SOURCES (USES) Transfers in Transfers out Proceeds from subscriptions and leases - (500,000) - - - - 194,251 - - 430,542 - - Total other financing sources (uses) (500,000) -194,251 430,542 Net change in fund balances 524,664 92,080 418,855 55,017 Fund balances (deficit)-beginning 1,494,502 102,644 2,504,454 1,410,010 Fund balances (deficit)-ending $ 2,019,166 $ 194,724 $ 2,923,309 $ 1,465,027 146 CITY OF PALM DESERT, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances(Continued) Nonmajor Governmental Funds For the Year Ended June 30, 2025 Special Revenue Funds Permanent Local Housing Allocation Opioid Grant Settlement Library Services Capital Projects Funds Capital Projects Reserve REVENUES Taxes $ -$ -$ -$ - Special assessments collected Licenses and permits Intergovernmental revenues Fees and rentals - - 439,873 - - - 242,845 - - - - - - - - - Charges for services Investment earnings Fines and forfeitures - - - - 22,628 - 5,926 57,502 - - 750,664 - Miscellaneous --51,318 223,049 Total revenues 439,873 265,473 114,746 973,713 EXPENDITURES Current: General government Public safety Parks, recreation and culture Public works Housing Library Capital outlay Debt service: - - - - 45,000 - - - - - - - 242,845 - - - - - - - - 2,934,418 - - 1,293,190 - 168,280 24,114 - - 2,694,601 - Principal Interest - - - - 112,313 - - - Total expenditures 45,000 242,845 3,046,731 4,180,185 Excess (deficiency) of revenues over (under) expenditures 394,873 22,628 (2,931,985) (3,206,472) OTHER FINANCING SOURCES (USES) Transfers in Transfers out Proceeds from subscriptions and leases - (100,000) - - - - 2,185,290 - 529,792 11,017,674 (1,512,440) - Total other financing sources (uses) (100,000) -2,715,082 9,505,234 Net change in fund balances 294,873 22,628 (216,903) 6,298,762 Fund balances (deficit)-beginning (170,884) 7,539 634,783 10,120,284 Fund balances (deficit)-ending $ 123,989 $ 30,167 $ 417,880 $ 16,419,046 147 CITY OF PALM DESERT, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances(Continued) Nonmajor Governmental Funds For the Year Ended June 30, 2025 REVENUES Drainage Facilities Capital Projects Funds Parks and Economic Recreational Development Facilities Art in Public Places Taxes $ -$ -$ -$ - Special assessments collected Licenses and permits Intergovernmental revenues Fees and rentals Charges for services Investment earnings Fines and forfeitures - - - - - 252,797 - - - 400,715 161,050 - 57,919 - - - - - - 576 - - 460,016 - - - 85,127 - Miscellaneous -750 -- Total revenues 252,797 620,434 576 545,143 EXPENDITURES Current: General government Public safety Parks, recreation and culture Public works Housing Library Capital outlay Debt service: - - - 285,621 - - - - 472,681 - - 4,743 120,814 - - - - - - - - - - - - - 153,734 - - - 168,891 - Principal Interest - - 193,733 - - - - - Total expenditures 285,621 791,971 -322,625 Excess (deficiency) of revenues over (under) expenditures (32,824) (171,537) 576 222,518 OTHER FINANCING SOURCES (USES) Transfers in ---- Transfers out ---- Proceeds from subscriptions and leases ---- Total other financing sources (uses) ---- Net change in fund balances (32,824) (171,537) 576 222,518 Fund balances (deficit)-beginning 4,745,724 1,211,962 10,605 1,510,248 Fund balances (deficit)-ending $ 4,712,900 $ 1,040,425 $ 11,181 $ 1,732,766 148 CITY OF PALM DESERT, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances(Continued) Nonmajor Governmental Funds For the Year Ended June 30, 2025 REVENUES Signalization Capital Projects Funds Capital Golf Buildings Library Taxes $ -$ -$ -$ - Special assessments collected Licenses and permits Intergovernmental revenues Fees and rentals - - - - - - - - - - - - - - - - Charges for services Investment earnings Fines and forfeitures - 6,402 - 2,769,516 283,949 - - 119,600 - - 192,265 - Miscellaneous ---- Total revenues 6,402 3,053,465 119,600 192,265 EXPENDITURES Current: General government Public safety Parks, recreation and culture Public works - - - - - - 5,895,143 - - - - - - - - - Housing Library Capital outlay Debt service: - - - - - - - - - - 856,887 - - - 673,384 - Principal Interest - - - - - - - - Total expenditures -5,895,143 856,887 673,384 Excess (deficiency) of revenues over (under) expenditures 6,402 (2,841,678) (737,287) (481,119) OTHER FINANCING SOURCES (USES) Transfers in Transfers out - - - - 5,653,640 - - - Proceeds from subscriptions and leases ---- Total other financing sources (uses) --5,653,640 - Net change in fund balances 6,402 (2,841,678) 4,916,353 (481,119) Fund balances (deficit)-beginning 117,578 7,582,940 (274,621) 3,752,866 Fund balances (deficit)-ending $ 123,980 $ 4,741,262 $ 4,641,732 $ 3,271,747 149 CITY OF PALM DESERT, CALIFORNIA Combining Statement of Revenues, Expenditures, and Changes in Fund Balances(Continued) Nonmajor Governmental Funds For the Year Ended June 30, 2025 Capital Projects Funds Debt Service Funds REVENUES Special Assessment District City Highlands Undergrounding Total Nonmajor Funds Taxes Special assessments collected Licenses and permits Intergovernmental revenues Fees and rentals Charges for services Investment earnings Fines and forfeitures Miscellaneous $ - - - - - - 10,844 - - $ - 133,668 - - - - 5,915 - - $ 5,048,819 1,669,590 460,016 4,706,974 329,266 4,121,682 4,524,646 1,394 275,117 Total revenues 10,844 139,583 21,137,504 EXPENDITURES Current: General government Public safety Parks, recreation and culture Public works Housing Library Capital outlay Debt service: - - - - - - - - 16,265 - - - - - - - 3,063,470 177,617 9,129,088 5,899,418 847,134 2,934,418 14,464,131 Principal Interest - - 54,000 48,493 379,046 102,818 Total expenditures -118,758 36,997,140 Excess (deficiency) of revenues over (under) expenditures 10,844 20,825 (15,859,636) OTHER FINANCING SOURCES (USES) Transfers in Transfers out Proceeds from subscriptions and leases - - - - - - 22,418,897 (2,115,140) 529,792 Total other financing sources (uses) --20,833,549 Net change in fund balances 10,844 20,825 4,973,913 Fund balances (deficit)-beginning 198,846 142,430 81,315,696 Fund balances (deficit)-ending $ 209,690 $ 163,255 $ 86,289,609 150 Special Revenue Funds - Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual - Traffic Safety CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Traffic Safety For the Year Ended June 30, 2025 REVENUES Investment earnings Fines and forfeitures $ Original - 3,000 $ Final - 3,000 Actual Amounts $ 288 1,394 Variance with Final Budget Positive (Negative) $ 288 (1,606) Total revenues 3,000 3,000 1,682 (1,318) OTHER FINANCING SOURCES (USES) Transfers out (2,700) (2,700) (2,700) - Total other financing sources (uses) (2,700) (2,700) (2,700) - Net change in fund balance $ 300 $ 300 (1,018) $ (1,318) Fund balance-beginning 4,976 Fund balances-ending $ 3,958 151 Gas Tax CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Gas Tax For the Year Ended June 30, 2025 REVENUES Intergovernmental revenues Investment earnings $ Original 2,700,834 193,400 $ Final 2,700,834 193,400 Actual Amounts $ 2,816,735 245,971 Variance with Final Budget Positive (Negative) $ 115,901 52,571 Total revenues 2,894,234 2,894,234 3,062,706 168,472 EXPENDITURES Current: Public works Capital outlay 3,660,000 - 2,515,050 4,292,342 911,127 288,596 1,603,923 4,003,746 Total expenditures 3,660,000 6,807,392 1,199,723 5,607,669 Net change in fund balance $ (765,766) $ (3,913,158) 1,862,983 $ 5,776,141 Fund balance-beginning 4,239,354 Fund balances-ending $ 6,102,337 152 Measure A CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Measure A For the Year Ended June 30, 2025 REVENUES Taxes Investment earnings Budget Amounts Original Final $ 3,328,000 $ 3,328,000 875,600 875,600 $ Actual Amounts 3,337,580 1,124,018 Variance with Final Budget Positive (Negative) $ 9,580 248,418 Total revenues 4,203,600 4,203,600 4,461,598 257,998 EXPENDITURES Current: Public works Capital outlay 3,300,000 11,210,000 3,779,883 23,657,253 3,697,192 7,047,609 82,691 16,609,644 Total expenditures 14,510,000 27,437,136 10,744,801 16,692,335 Net change in fund balance $ (10,306,400) $ (23,233,536) (6,283,203) $ 16,950,333 Fund balance-beginning 23,386,002 Fund balances-ending $ 17,102,799 153 Housing Mitigation Fee CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Housing Mitigation Fee For the Year Ended June 30, 2025 REVENUES Taxes Investment earnings $ Budget Amounts Original Final 149,118 $ 49,118 132,300 132,300 $ Actual Amounts 26,079 173,153 Variance with Final Budget Positive (Negative) $ (23,039) 40,853 Total revenues 281,418 181,418 199,232 17,814 EXPENDITURES Current: Housing 409,135 423,335 65,000 358,335 Total expenditures 409,135 423,335 65,000 358,335 Net change in fund balance $ (127,717) $ (241,917) 134,232 $ 376,149 Fund balance-beginning 3,110,122 Fund balances-ending $ 3,244,354 154 Community Development Block Grant CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Community Development Block Grant For the Year Ended June 30, 2025 REVENUES Intergovernmental revenues $ Budget Amounts Original Final 1,351,359 $ 1,351,359 $ Actual Amounts 477,867 Variance with Final Budget Positive (Negative) $ (873,492) Total revenues 1,351,359 1,351,359 477,867 (873,492) EXPENDITURES Current: General government Capital outlay 728,686 - 1,047,159 204,762 422,077 55,790 625,082 148,972 Total expenditures 728,686 1,251,921 477,867 774,054 Net change in fund balance $ 622,673 $ 99,438 -$ (99,438) Fund balance-beginning 39,162 Fund balances-ending $ 39,162 155 Child Care Program CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Child Care Program For the Year Ended June 30, 2025 REVENUES Taxes Investment earnings $ Budget Amounts Original Final 207,779 $ 107,779 28,500 28,500 $ Actual Amounts 47,660 48,336 Variance with Final Budget Positive (Negative) $ (60,119) 19,836 Total revenues 236,279 136,279 95,996 (40,283) Net change in fund balance $ 236,279 $ 136,279 95,996 $ (40,283) Fund balance-beginning 866,922 Fund balances-ending $ 962,918 156 Public Safety Police Grants CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Public Safety Police Grants For the Year Ended June 30, 2025 REVENUES Intergovernmental revenues Investment earnings $ Budget Amounts Original Final 165,000 $ 165,000 12,000 12,000 $ Actual Amounts 165,899 15,571 Variance with Final Budget Positive (Negative) $ 899 3,571 Total revenues 177,000 177,000 181,470 4,470 EXPENDITURES Current: Public safety 35,000 168,000 165,899 2,101 Total expenditures 35,000 168,000 165,899 2,101 Net change in fund balance $ 142,000 $ 9,000 15,571 $ 6,571 Fund balance-beginning 29,759 Fund balances-ending $ 45,330 157 New Construction Tax CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual New Construction Tax For the Year Ended June 30, 2025 REVENUES Taxes Investment earnings $ Budget Amounts Original Final 650,302 $ 150,302 63,700 63,700 $ Actual Amounts 164,382 98,969 Variance with Final Budget Positive (Negative) $ 14,080 35,269 Total revenues 714,002 214,002 263,351 49,349 EXPENDITURES Capital outlay -494,500 329,927 164,573 Total expenditures -494,500 329,927 164,573 Net change in fund balance $ 714,002 $ (280,498) (66,576) $ 213,922 Fund balance-beginning 1,933,627 Fund balances-ending $ 1,867,051 158 Planned Drainage CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Planned Drainage For the Year Ended June 30, 2025 REVENUES Taxes Investment earnings $ Budget Amounts Original Final 70,000 $ 220,000 33,500 33,500 $ Actual Amounts 146,635 52,000 Variance with Final Budget Positive (Negative) $ (73,365) 18,500 Total revenues 103,500 253,500 198,635 (54,865) EXPENDITURES Current: Public safety -286,718 11,718 275,000 Total expenditures -286,718 11,718 275,000 Net change in fund balance $ 103,500 $ (33,218) 186,917 $ 220,135 Fund balance-beginning 852,065 Fund balances-ending $ 1,038,982 159 Parks and Recreational Facilities CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Parks and Recreational Facilities For the Year Ended June 30, 2025 REVENUES Taxes Investment earnings $ Budget Amounts Original Final 175,000 $ 250,108 70,800 70,800 $ Actual Amounts 327,467 112,020 Variance with Final Budget Positive (Negative) $ 77,359 41,220 Total revenues 245,800 320,908 439,487 118,579 EXPENDITURES Capital outlay -639,729 134,960 504,769 Total expenditures -639,729 134,960 504,769 Net change in fund balance $ 245,800 $ (318,821) 304,527 $ 623,348 Fund balance-beginning 1,789,591 Fund balances-ending $ 2,094,118 160 Traffic Signals CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Traffic Signals For the Year Ended June 30, 2025 REVENUES Taxes Investment earnings $ Budget Amounts Original Final 20,000 $ 20,000 19,300 19,300 $ Actual Amounts 18,700 31,221 Variance with Final Budget Positive (Negative) $ (1,300) 11,921 Total revenues 39,300 39,300 49,921 10,621 EXPENDITURES Capital outlay -460,075 404,866 55,209 Total expenditures -460,075 404,866 55,209 Net change in fund balance $ 39,300 $ (420,775) (354,945) $ 65,830 Fund balance-beginning 606,215 Fund balances-ending $ 251,270 161 Fire Facilities Restoration CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fire Facilities Restoration For the Year Ended June 30, 2025 REVENUES Taxes Investment earnings $ Budget Amounts Original Final 116,100 $ 116,100 59,700 59,700 $ Actual Amounts 53,474 59,011 Variance with Final Budget Positive (Negative) $ (62,626) (689) Total revenues 175,800 175,800 112,485 (63,315) EXPENDITURES Capital outlay -1,111,915 626,834 485,081 Total expenditures -1,111,915 626,834 485,081 Net change in fund balance $ 175,800 $ (936,115) (514,349) $ 421,766 Fund balance-beginning 1,186,305 Fund balances-ending $ 671,956 162 Recycling CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Recycling For the Year Ended June 30, 2025 REVENUES Intergovernmental revenues Charges for services Investment earnings $ Budget Amounts Original Final 260,000 $ 260,000 430,000 430,000 121,900 121,900 $ Actual Amounts 95,893 496,923 193,622 Variance with Final Budget Positive (Negative) $ (164,107) 66,923 71,722 Total revenues 811,900 811,900 786,438 (25,462) EXPENDITURES Current: General government 753,000 832,011 488,128 343,883 Total expenditures 753,000 832,011 488,128 343,883 Net change in fund balance $ 58,900 $ (20,111) 298,310 $ 318,421 Fund balance-beginning 3,469,342 Fund balances-ending $ 3,767,652 163 Energy Independence Loan CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Energy Independence Loan For the Year Ended June 30, 2025 REVENUES Special assessments collected Investment earnings $ Budget Amounts Original Final 115,000 $ 115,000 61,500 61,500 $ Actual Amounts 82,184 91,881 Variance with Final Budget Positive (Negative) $ (32,816) 30,381 Total revenues 176,500 176,500 174,065 (2,435) EXPENDITURES Current: General government Debt service: Principal Interest 15,000 121,000 56,145 15,000 121,000 56,145 4,117 19,000 54,325 10,883 102,000 1,820 Total expenditures 192,145 192,145 77,442 114,703 Net change in fund balance $ (15,645) $ (15,645) 96,623 $ 112,268 Fund balance-beginning 1,869,382 Fund balances-ending $ 1,966,005 164 Air Quality Management CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Air Quality Management For the Year Ended June 30, 2025 REVENUES Intergovernmental revenues Investment earnings $ Budget Amounts Original Final 65,000 $ 65,000 1,180 1,180 $ Actual Amounts 67,147 2,581 Variance with Final Budget Positive (Negative) $ 2,147 1,401 Total revenues 66,180 66,180 69,728 3,548 EXPENDITURES Current: General government Capital outlay 74,000 15,830 74,000 15,830 52,650 - 21,350 15,830 Total expenditures 89,830 89,830 52,650 37,180 Net change in fund balance $ (23,650) $ (23,650) 17,078 $ 40,728 Fund balance-beginning 31,732 Fund balances-ending $ 48,810 165 Aquatic Center CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Aquatic Center For the Year Ended June 30, 2025 REVENUES Fees and rentals Charges for services Investment earnings $ Budget Amounts Original Final - $ 74,080 648,000 840,287 39,500 39,500 $ Actual Amounts 168,216 849,317 179,887 Variance with Final Budget Positive (Negative) $ 94,136 9,030 140,387 Total revenues 687,500 953,867 1,197,420 243,553 EXPENDITURES Current: Parks, recreation and culture Capital outlay 3,251,500 350,000 3,181,989 1,529,632 2,911,931 1,181,558 270,058 348,074 Total expenditures 3,601,500 4,711,621 4,093,489 618,132 Excess (deficiency) of revenues over (under) expenditures (2,914,000) (3,757,754) (2,896,069) 861,685 OTHER FINANCING SOURCES (USES) Transfers in 2,937,500 2,937,500 2,937,500 - Total other financing sources (uses) 2,937,500 2,937,500 2,937,500 - Net change in fund balance $ 23,500 $ (820,254) 41,431 $ 861,685 Fund balance-beginning 2,799,230 Fund balances-ending $ 2,840,661 166 Cannabis Compliance CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Cannabis Compliance For the Year Ended June 30, 2025 REVENUES Taxes Investment earnings $ Budget Amounts Original Final 957,853 $ 892,401 -- $ Actual Amounts 926,842 97,822 Variance with Final Budget Positive (Negative) $ 34,441 97,822 Total revenues 957,853 892,401 1,024,664 132,263 OTHER FINANCING SOURCES (USES) Transfers out (500,000) (500,000) (500,000) - Total other financing sources (uses) (500,000) (500,000) (500,000) - Net change in fund balance $ 457,853 $ 392,401 524,664 $ 132,263 Fund balance-beginning 1,494,502 Fund balances-ending $ 2,019,166 167 El Paseo Assessment District CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual El Paseo Assessment District For the Year Ended June 30, 2025 REVENUES Special assessments collected Investment earnings $ Budget Amounts Original Final 250,000 $ 300,000 -- $ Actual Amounts 393,678 10,404 Variance with Final Budget Positive (Negative) $ 93,678 10,404 Total revenues 250,000 300,000 404,082 104,082 EXPENDITURES Current: General government 275,000 325,000 312,002 12,998 Total expenditures 275,000 325,000 312,002 12,998 Net change in fund balance $ (25,000) $ (25,000) 92,080 $ 117,080 Fund balance-beginning 102,644 Fund balances-ending $ 194,724 168 Various Landscape and Lighting District CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Various Landscape and Lighting District For the Year Ended June 30, 2025 REVENUES Special assessments collected Investment earnings $ Budget Amounts Original Final 1,035,784 $ 1,035,784 130,900 60,900 $ Actual Amounts 1,060,060 141,165 Variance with Final Budget Positive (Negative) $ 24,276 80,265 Total revenues 1,166,684 1,096,684 1,201,225 104,541 EXPENDITURES Current: Public works 1,211,031 1,394,776 976,621 418,155 Total expenditures 1,211,031 1,394,776 976,621 418,155 Excess (deficiency) of revenues over (under) expenditures (44,347) (298,092) 224,604 522,696 OTHER FINANCING SOURCES (USES) Transfers in 158,000 195,500 194,251 (1,249) Total other financing sources (uses) 158,000 195,500 194,251 (1,249) Net change in fund balance $ 113,653 $ (102,592) 418,855 $ 521,447 Fund balance-beginning 2,504,454 Fund balances-ending $ 2,923,309 169 Affordable Housing CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Affordable Housing For the Year Ended June 30, 2025 REVENUES Investment earnings $ Budget Amounts Original Final - $ -$ Actual Amounts 538 Variance with Final Budget Positive (Negative) $ 538 Total revenues --538 538 EXPENDITURES Current: General government Housing Capital outlay 2,400 494,102 600 2,400 489,365 228 2,360 373,475 228 40 115,890 - Total expenditures 497,102 491,993 376,063 115,930 Excess (deficiency) of revenues over (under) expenditures (497,102) (491,993) (375,525) 116,468 OTHER FINANCING SOURCES (USES) Transfers in 497,102 547,102 430,542 (116,560) Total other financing sources (uses) 497,102 547,102 430,542 (116,560) Net change in fund balance $ - $ 55,109 55,017 $ (92) Fund balance-beginning 1,410,010 Fund balances-ending $ 1,465,027 170 Permanent Local Housing Allocation Grant CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Permanent Local Housing Allocation Grant For the Year Ended June 30, 2025 REVENUES Intergovernmental revenues $ Budget Amounts Original Final 960,899 $ 439,883 $ Actual Amounts 439,873 Variance with Final Budget Positive (Negative) $ (10) Total revenues 960,899 439,883 439,873 (10) EXPENDITURES Current: Housing 195,000 45,000 45,000 - Total expenditures 195,000 45,000 45,000 - Excess (deficiency) of revenues over (under) expenditures 765,899 394,883 394,873 (10) OTHER FINANCING SOURCES (USES) Transfers out (265,000) (100,000) (100,000) - Total other financing sources (uses) (265,000) (100,000) (100,000) - Net change in fund balance $ 500,899 $ 294,883 294,873 $ (10) Fund balance-beginning (170,884) Fund balances-ending $ 123,989 171 Opioid Settlement CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Opioid Settlement For the Year Ended June 30, 2025 REVENUES Intergovernmental revenues Investment earnings $ Budget Amounts Original Final 51,098 $ 403,826 -- $ Actual Amounts 242,845 22,628 Variance with Final Budget Positive (Negative) $ (160,981) 22,628 Total revenues 51,098 403,826 265,473 (138,353) EXPENDITURES Current: Housing 101,000 251,000 242,845 8,155 Total expenditures 101,000 251,000 242,845 8,155 Net change in fund balance $ (49,902) $ 152,826 22,628 $ (130,198) Fund balance-beginning 7,539 Fund balances-ending $ 30,167 172 Library Services CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Library Services For the Year Ended June 30, 2025 REVENUES Charges for services Investment earnings Miscellaneous $ Budget Amounts Original Final - $ 688 -- - 50,000 $ Actual Amounts 5,926 57,502 51,318 Variance with Final Budget Positive (Negative) $ 5,238 57,502 1,318 Total revenues -50,688 114,746 64,058 EXPENDITURES Current: Library Debt service: Principal 2,601,077 - 2,665,327 - 2,934,418 112,313 (269,091) (112,313) Total expenditures 2,601,077 2,665,327 3,046,731 (381,404) Excess (deficiency) of revenues over (under) expenditures (2,601,077) (2,614,639) (2,931,985) (317,346) OTHER FINANCING SOURCES (USES) Transfers in Lease and subscription arrangements 2,400,000 - 2,185,290 - 2,185,290 529,792 - 529,792 Total other financing sources (uses) 2,400,000 2,185,290 2,715,082 529,792 Net change in fund balance $ (201,077) $ (429,349) (216,903) $ 212,446 Fund balance-beginning 634,783 Fund balances-ending $ 417,880 173 Capital Project Funds - Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual – Capital Projects Reserve CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Capital Projects Reserve For the Year Ended June 30, 2025 REVENUES Investment earnings Miscellaneous $ Budget Amounts Original Final 335,000 $ 335,000 -- $ Actual Amounts 750,664 223,049 Variance with Final Budget Positive (Negative) $ 415,664 223,049 Total revenues 335,000 335,000 973,713 638,713 EXPENDITURES Current: General government Parks, recreation and culture Public works Capital outlay 1,000,000 125,000 150,000 7,253,612 3,383,314 1,180,000 25,000 10,857,126 1,293,190 168,280 24,114 2,694,601 2,090,124 1,011,720 886 8,162,525 Total expenditures 8,528,612 15,445,440 4,180,185 11,265,255 Excess (deficiency) of revenues over (under) expenditures (8,193,612) (15,110,440) (3,206,472) 11,903,968 OTHER FINANCING SOURCES (USES) Transfers in Transfers out - - 11,017,674 (1,512,440) 11,017,674 (1,512,440) - - Total other financing sources (uses) -9,505,234 9,505,234 - Net change in fund balance $ (8,193,612) $ (5,605,206) 6,298,762 $ 11,903,968 Fund balance-beginning 10,120,284 Fund balances-ending $ 16,419,046 174 Drainage Facilities CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Drainage Facilities For the Year Ended June 30, 2025 REVENUES Investment earnings $ Budget Amounts Original Final 73,700 $ 73,700 $ Actual Amounts 252,797 Variance with Final Budget Positive (Negative) $ 179,097 Total revenues 73,700 73,700 252,797 179,097 EXPENDITURES Current: Public works 275,000 3,717,240 285,621 3,431,619 Total expenditures 275,000 3,717,240 285,621 3,431,619 Net change in fund balance $ (201,300) $ (3,643,540) (32,824) $ 3,610,716 Fund balance-beginning 4,745,724 Fund balances-ending $ 4,712,900 175 Economic Development CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Economic Development For the Year Ended June 30, 2025 REVENUES Intergovernmental revenues Fees and rentals Investment earnings Miscellaneous $ Budget Amounts Original Final 15,000 $ 147,738 64,543 64,543 61,700 61,700 -750 $ Actual Amounts 400,715 161,050 57,919 750 Variance with Final Budget Positive (Negative) $ 252,977 96,507 (3,781) - Total revenues 141,243 274,731 620,434 345,703 EXPENDITURES Current: General government Public works Housing 506,992 3,600 234,000 1,171,993 5,000 217,599 472,681 4,743 120,814 699,312 257 96,785 Total expenditures 744,592 1,394,592 791,971 602,621 Net change in fund balance $ (603,349) $ (1,119,861) (171,537) $ 948,324 Fund balance-beginning 1,211,962 Fund balances-ending $ 1,040,425 176 Parks and Recreational Facilities CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Parks and Recreational Facilities For the Year Ended June 30, 2025 REVENUES Investment earnings Total revenues $ Budget Amounts Original Final 400 $ 400 400 400 $ Actual Amounts 576 576 Variance with Final Budget Positive (Negative) $ 176 176 Net change in fund balance Fund balance-beginning Fund balances-ending $ 400 $ 400 $ 576 10,605 11,181 $ 176 177 Art in Public Places CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Art in Public Places For the Year Ended June 30, 2025 REVENUES Licenses and permits Investment earnings Miscellaneous $ Budget Amounts Original Final 328,275 $ 328,275 53,000 53,000 164,790 164,790 $ Actual Amounts 460,016 85,127 - Variance with Final Budget Positive (Negative) $ 131,741 32,127 (164,790) Total revenues 546,065 546,065 545,143 (922) EXPENDITURES Current: Parks, recreation and culture Capital outlay 254,120 820,000 254,995 879,000 153,734 168,891 101,261 710,109 Total expenditures 1,074,120 1,133,995 322,625 811,370 Net change in fund balance $ (528,055) $ (587,930) 222,518 $ 810,448 Fund balance-beginning 1,510,248 Fund balances-ending $ 1,732,766 178 Signalization CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Signalization For the Year Ended June 30, 2025 REVENUES Investment earnings $ Budget Amounts Original Final 4,300 $ 4,300 $ Actual Amounts 6,402 Variance with Final Budget Positive (Negative) $ 2,102 Total revenues 4,300 4,300 6,402 2,102 Net change in fund balance $ 4,300 $ 4,300 6,402 $ 2,102 Fund balance-beginning 117,578 Fund balances-ending $ 123,980 179 Capital Golf CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Capital Golf For the Year Ended June 30, 2025 REVENUES Charges for services Investment earnings $ Budget Amounts Original Final 2,587,865 $ 2,587,865 421,400 421,400 $ Actual Amounts 2,769,516 283,949 Variance with Final Budget Positive (Negative) $ 181,651 (137,451) Total revenues 3,009,265 3,009,265 3,053,465 44,200 EXPENDITURES Current: Parks, recreation and culture 3,075,000 8,249,888 5,895,143 2,354,745 Total expenditures 3,075,000 8,249,888 5,895,143 2,354,745 Net change in fund balance $ (65,735) $ (5,240,623) (2,841,678) $ 2,398,945 Fund balance-beginning 7,582,940 Fund balances-ending $ 4,741,262 180 Buildings CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Buildings For the Year Ended June 30, 2025 REVENUES Investment earnings $ Budget Amounts Original Final 102,150 $ 102,150 $ Actual Amounts 119,600 Variance with Final Budget Positive (Negative) $ 17,450 Total revenues 102,150 102,150 119,600 17,450 EXPENDITURES Current: General government Capital outlay 150,000 2,925,000 150,000 3,588,821 - 856,887 150,000 2,731,934 Total expenditures 3,075,000 3,738,821 856,887 2,881,934 Excess (deficiency) of revenues over (under) expenditures (2,972,850) (3,636,671) (737,287) 2,899,384 OTHER FINANCING SOURCES (USES) Transfers in -5,653,640 5,653,640 - Total other financing sources (uses) -5,653,640 5,653,640 - Net change in fund balance $ (2,972,850) $ 2,016,969 4,916,353 $ 2,899,384 Fund balance-beginning (274,621) Fund balances-ending $ 4,641,732 181 Library CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Library For the Year Ended June 30, 2025 REVENUES Investment earnings $ Budget Amounts Original Final - $ 180,000 $ Actual Amounts 192,265 Variance with Final Budget Positive (Negative) $ 12,265 Total revenues -180,000 192,265 12,265 EXPENDITURES Capital outlay 3,200,000 3,869,816 673,384 3,196,432 Total expenditures 3,200,000 3,869,816 673,384 3,196,432 Net change in fund balance $ (3,200,000) $ (3,689,816) (481,119) $ 3,208,697 Fund balance-beginning 3,752,866 Fund balances-ending $ 3,271,747 182 Nonmajor Debt Service Funds - Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual - City Highlands Undergrounding CITY OF PALM DESERT, CALIFORNIA Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual City Highlands Undergrounding For the Year Ended June 30, 2025 REVENUES Special assessments collected Investment earnings $ Budget Amounts Original Final 120,391 $ 120,391 2,600 2,600 $ Actual Amounts 133,668 5,915 Variance with Final Budget Positive (Negative) $ 13,277 3,315 Total revenues 122,991 122,991 139,583 16,592 EXPENDITURES Current: General government Debt service: Principal Interest 16,684 55,000 48,981 16,684 55,000 48,981 16,265 54,000 48,493 419 1,000 488 Total expenditures 120,665 120,665 118,758 1,907 Net change in fund balance $ 2,326 $ 2,326 20,825 $ 18,499 Fund balance-beginning 142,430 Fund balances-ending $ 163,255 183 Internal Service Funds - Combining Statement of Net Position CITY OF PALM DESERT, CALIFORNIA Combining Statement of Net Position (Continued) Internal Service Funds June 30, 2025 Total Internal Equipment Replacement Compensation Benefits Service Funds ASSETS Current assets: Cash and investments $ 8,477,081 $ 3,110,085 $ 11,587,166 Total current assets 8,477,081 3,110,085 11,587,166 Noncurrent: Nondepreciable capital assets 11,821 -11,821 Depreciable capital assets, net 2,994,711 -2,994,711 Total noncurrent assets 3,006,532 -3,006,532 Total assets 11,483,613 3,110,085 14,593,698 LIABILITIES Current liabilities: Accounts payable 261,685 -261,685 Compensated absences -500,000 500,000 Total current liabilities 261,685 500,000 761,685 Noncurrent liabilities: Compensated absences -2,134,786 2,134,786 Total noncurrent liabilities -2,134,786 2,134,786 Total liabilities 261,685 2,634,786 2,896,471 NET POSITION Net invested in capital assets 3,006,532 -3,006,532 Unrestricted 8,215,396 475,299 8,690,695 Total net position $ 11,221,928 $ 475,299 $ 11,697,227 184 Statement of Revenues, Expenses and Changes in Net Position CITY OF PALM DESERT, CALIFORNIA Statement of Revenues, Expenses and Changes in Net Position Internal Service Funds For the Year Ended June 30, 2025 OPERATING REVENUES Interest Income Total operating revenues Equipment Replacement $ 301,704 301,704 Compensation Benefits $ 150,587 150,587 Total Internal Service Funds $ 452,291 452,291 OPERATING EXPENSES General and administrative Maintenance and operations Depreciation Total operating expenses - 431,339 726,526 1,157,865 178,700 - - 178,700 178,700 431,339 726,526 1,336,565 Operating income (loss) (856,161) (28,113) (884,274) Income (loss) before transfers (856,161) (28,113) (884,274) Transfers in 3,291,980 658,628 3,950,608 Change in net position 2,435,819 630,515 3,066,334 Net position-beginning Net position-ending 8,786,109 $ 11,221,928 (155,216) $ 475,299 8,630,893 $ 11,697,227 185 Combining Statement of Cash Flows CITY OF PALM DESERT, CALIFORNIA Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2025 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and service providers Payments to employees for salaries and benefits Equipment Replacement $ 301,704 (192,805) - Compensation Benefits $ 150,587 - (216,601) $ Totals 452,291 (192,805) (216,601) Net cash provided by (used for) operating activities 108,899 (66,014) 42,885 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds 3,291,980 658,628 3,950,608 Net cash provided by (used for) noncapital financing activities 3,291,980 658,628 3,950,608 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (851,883) -(851,883) Net cash provided by (used for) capital and related financing activities (851,883) -(851,883) Net increase (decrease) in cash and cash equivalents 2,548,996 592,614 3,141,610 Cash and cash equivalents-beginning 5,928,085 2,517,471 8,445,556 Cash and cash equivalents-ending $ 8,477,081 $ 3,110,085 $ 11,587,166 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities: Depreciation/amortization expense Increase (decrease) in accounts payable Increase (decrease) in compensated absences $ (856,161) 726,526 238,534 - $ (28,113) - - (37,901) $ (884,274) 726,526 238,534 (37,901) Total adjustments 965,060 (37,901) 927,159 Net cash provided by (used for) operating activities $ 108,899 $ (66,014) $ 42,885 186 Fiduciary Funds - Custodial Funds - Combining Statement of Fiduciary Net Position CITY OF PALM DESERT, CALIFORNIA Combining Statement of Fiduciary Net Position Fiduciary Funds - Custodial Funds June 30, 2025 ASSETS Cash and cash equivalents Receivables: Assessments Accrued interest Due from other governments Cash and investments with fiscal agents Retiree Service Stipend $ 3,232,448 - - - - Special Assessment $ 5,337,585 42,707,169 649 24,177 3,878,696 $ Total Custodial Funds 8,570,033 42,707,169 649 24,177 3,878,696 Total assets 3,232,448 51,948,276 55,180,724 LIABILITIES Accounts payable Deposits received Due to other governments - - - 1,525 42,707,169 9,239,582 1,525 42,707,169 9,239,582 Total liabilities -51,948,276 51,948,276 NET POSITION Restricted for other purposes 3,232,448 -3,232,448 Total net position $ 3,232,448 $ -$ 3,232,448 187 Combining Statement of Fiduciary Net Position CITY OF PALM DESERT, CALIFORNIA Combining Statement of Changes in Fiduciary Net Position Fiduciary Funds - Private Purpose Trust Funds For the Year Ended June 30, 2025 ADDITIONS Contributions from City Investment income Intergovernmental revenues Retiree Service Stipend $ 979,824 169,570 - Special Assessment $ - 193,263 4,548,820 $ Total Custodial Funds 979,824 362,833 4,548,820 Total additions 1,149,394 4,742,083 5,891,477 DEDUCTIONS Administrative expenses Contractual Services Interest Principal Total deductions - 1,010,789 - - 1,010,789 194,425 2,250 1,725,408 2,820,000 4,742,083 194,425 1,013,039 1,725,408 2,820,000 5,752,872 Net increase (decrease) in fiduciary net position 138,605 -138,605 Net position-beginning Net position-ending 3,093,843 $ 3,232,448 $ - -$ 3,093,843 3,232,448 188 STATISTICAL SECTION Financial Trends Revenue Capacity Debt Capacity Demographic and Economic Information Operating Information 189 CITY OF PALM DESERT, CALIFORNIA DESCRIPTION OF STATISTICAL SECTION CONTENTS JUNE 30, 2025 This part of the Cityt’s annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements and the note disclosures say about the government’s overall financial health. Contents: Pages: Financial Trends: these schedules contain trend information to help the reader understand how the City’s financial performance and well being have changed over time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 Revenue Capacity: these schedules contain information to help the reader assess the City’s most significant local revenue source, the property tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 206 Debt Capacity: these schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future . . . . . . 214 Demographic and Economic Information: these schedules offer demographic and economic indicators to help the reader understand the environment within which the City’s financial activities take place . . . . . 221 Operating Information: these schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225 190 191 Financial Trends Source: CITY Finance Department 192 i iNet Pos t on by Component Source: CITY Finance Department 193 i i iChanges n Net Pos t on Source: CITY Finance Department 194 i i iChanges n Net Pos t on Source: CITY Finance Department 195 Source: CITY Finance Department 196 l lFund Ba ances of Governmenta Funds Source: CITY Finance Department 197 i l lChanges n Fund Ba ances of Governmenta Funds Source: CITY Finance Department 198 - i l lGraphs Changes n Fund Ba ances of Governmenta Funds Source: CITY Finance Department 199 l l i i l lSupp ementa H stor ca Genera Fund Revenues Source: CITY Finance Department 200 l l - i i l lSupp ementa Graph H stor ca Genera Fund Revenues Source: CITY Finance Department 201 l l i i l l iSupp ementa H stor ca Genera Fund Expend tures Source: CITY Finance Department 202 l l - i i l l iSupp ementa Graph H stor ca Genera Fund Expend tures Source: CITY Finance Department 203 Source: CITY Finance Department 204 l l i i l l i iSupp ementa H stor ca Genera Revenue and Expend tures Per Cap ta Source: CITY Finance Department 205 Revenue Capacity Information Source: CITY Finance Department 206 l i l l lAssessed Va ue and Est mated Actua Va ue of Taxab e Property Source: CITY Finance Department 207 i i l l l i i -l iH stor ca Net Assessed Taxab e Va ues C tyw de and Graph Assessed Va uat on Growth Source: CITY Finance Department 208 l l i i l jSupp ementa FY 2021 and 2020 Breakdown of Bas c 1% Property Tax Rate Not n Redeve opment Pro ect Area Source: CITY Finance Department 209 i l iProperty Tax Rates D rect and Over app ng Property Tax Rates Source: CITY Finance Department 210 i i lPr nc pa Property Taxpayers Source: CITY Finance Department 211 i ll iProperty Tax Lev es and Co ect ons Source: CITY Finance Department 212 l l l - i i l lSupp ementa Top 25 Sa es Tax Generators and Graph H stor ca Sa es Tax Trends Source: CITY Finance Department 213 Debt Capacity Information Source: CITY Finance Department 214 i iRat os of Outstand ng Debt by Type Source: CITY Finance Department 215 i l iRat os of Genera Bonded Debt Outstand ng Source: CITY Finance Department 216 l l i l iSupp ementa Spec a Assessment Informat on Source: CITY Finance Department 217 i l i i i iD rect and Over app ng Government Act v t es Debt Source: CITY Finance Department 218 l i iLega Debt Marg n Informat on Source: CITY Finance Department 219 l -P edged Revenue Coverage Source: CITY Finance Department 220 Demographic and Economic Information Source: CITY Finance Department 221 i i i iDemograph c and Econom c Stat st cs Source: CITY Finance Department 222 i i l lPr nc pa Emp oyers Source: CITY Finance Department 223 l l i ll i iSupp ementa M sce aneous Stat st cs Source: CITY Finance Department 224 Operating Information Source: CITY Finance Department 225 ll- i i l i l iFu T me Equ va ent C ty Government Emp oyees by Funct on/ Program Source: CITY Finance Department 226 i i iOperat ng Ind cators by Funct on/ Program Source: CITY Finance Department 227 l i l jRedeve opment Custod a Pro ect Areas Map Source: CITY Finance Department 228 SUPPLEMENTAL REDEVELOPMENT CUSTODIAL STATISTICAL SECTION Note: This section is not required by GASB No. 44, however, City believes that statistical information is beneficial to the reader. 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 19 and note 20. Source: CITY Finance Department 229 ll i iTax A ocat on Bond Issue Informat on Source: CITY Finance Department 230 i l i i iCap ta Asset Stat st cs by Funct on/ Program Source: CITY Finance Department 231 i i l - lH stor ca Tax Increment Redeve opment Property Tax Trust Fund Summary Source: CITY Finance Department 232 Source: CITY Finance Department 233