HomeMy Public PortalAbout02 IntroductionCITY OF RANCHO MIRAGE, CALIFORNIA
YEAR ENDED JUNE 30, 2007
INTRODUCTORY SECTION
Table of Contents, Letter of Transmittal, Organization Chart, Directory of
Officials, Certificates of Awards and Achievements
CITY OF RANCHO MIRAGE
Comprehensive Annual Financial Report
Year ended June 30, 2007
TABLE OF CONTENTS
P~
INTRUDt1CT~RY SECTIfJN:
Letter of Transmittal .i
Organizational Chart vii.
Directory of Officials viii
Certificate of Achievement for Excellence in Financing Reporting (GFOA) ix
FINANCIAL SECTIUN:
Independent Auditors' Report 1
Management's Discussion and Analysis
{Required Supplementary Information) 3
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Assets 11
Statement of Activities 12
Fund Financial Statements:
Government Funds:
Balance Sheet 14
Reconciliation of the Balance Sheet -Statement of Net Assets 16
Statement of Revenues, Expenditures and Changes in Fund Balances 18
Reconciliation of Statement of Revenues, Expenditures and Changes
In Fund Balances - Statement of Activities 20
CITY OF RANCHO MIRAGE
Comprehensive A~inual Financial Report
Year ended June 30, 2007
TABLE OF CONTENTS, .(CONTINUED)
Pte.
Fiduciary Funds:
Statement of Fiduciary Assets and Liabilities -Agency Funds 21
Notes to -the Financial Statements 23
Required Supplementary Information
Notes to Required Supplementary Information ~ 89
Budgetary Comparison Schedules:
General Fund 90
Library Special Revenue Fund 95
Fire tax Special Revenue Fund 96
Housing .Authority Special Revenue Fund 97
Low Cost Housing Special Revenue Fund 98
Supplementary Schedules
Non-Major Governmental Funds:
Combining Balance Sheet 99
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances 100
Non-Major Special Revenue Funds:
Combining Balance Sheet 102
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances 104
Budgetary Comparison Schedules 10~
Debt Service Funds:
Non-Major Balance Sheet 118
Non-Major Statement of Revenues, Expenditures and Changes in Fund
Balance 119
CITY OF RANCHO MIRAGE
Comprehensive Annual Financial Report
Year ended June 30, 2007
TABLE OF CONTENTS, (CONTINUED)
P~
Budgetary Comparison Schedules 120
Capital Prajects Finds:
Non-Major Combining Balance Sheet 124
Non-Major Combining Statement of Revenues, Expenditures and Changes in
Fund Balances 125
Budgetary Comparison Schedules 126
AGENCY FUNDS:
Statement of Changes in Fiduciary Assets and Liabilities 132
STA TISTICAL SECTION:
• Net Assets by Component, Last Five Fiscal Years 134
• Changes in Net Assets, Last Five Fiscal Years 135
• Fund Balances of Governmental Funds, Last Five Fiscal Years 136
• Changes in Fund Balances of Governmental Funds, Last Five Fiscal Years 137
• Major Revenue Sources -Governmental Funds, Last Ten Fiscal Years 138
• Assessed and Estimated Value of Taxable Property, Last Ten Fiscal Years 140
• -Property Tax Rates -Direct and Overlapping Governments, Last Ten Fiscal Years 142
• Principal Property Tax Payers, Current Year and Ten Years Ago 143
• Property Tax Levies and Collections, Last Ten Fiscal Years 144
• Ratios of Outstanding Debt by Type, Last Ten Fiscal Years 145
• Ratio of General Banded Debt Outstanding, Last Ten Fiscal Years 146
• Direct and Overlapping Debt 147
• Computation of Legal Debt Margin, Last Ten Fiscal Years 148
• Pledged Revenue Coverage, Last Ten Fiscal Years 149
• Demographic and Economic Statistics, Last Ten Calendar Years 150
• Principal Employers 151
• Full and Part-time Employees by Function, Last Ten Fiscal Years 152
• Operating Indicators by Function, Last Ten Fiscal Years 154
• Capital Assets by Function, Last Ten Fiscal Years 156
1.
~,:~ ~~ '~
_ ~r~_
~'
`,
~. '-_-
February 8, 2008
Citizens of the .City of Rancho Mirage,
Honorable Mayor and Members of the City Council
~t is with great pleasure that I present to you the Comprehensive Annual Financial Report (CAFR) of the
City of Rancho Mirage for the fiscal year ended June 30, 2007. This document provides an overview of
the City's financial activities during the past fiscal year. Yt has been prepared by the Finance Division of
the Department of Administrative Services for the benefit of City Councilmembers, citizens, investors,
grantors, employees and others who may have an interest in the financial well-being of the City.
Responsibility for both the accuracy of the data and the completeness and fairness of the presentation,
including all disclosures, rests with the City of .Rancho Mirage. To the best of our knowledge and belief,
the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly
the financial position and results of operations of the various funds of the City. All disclosures necessary
to enable the reader to gain an understanding of the City's financial activities have been included.
Mayer Hoffman McCann P.C., Certified Public Accountants, have issued an unqualified ("clean") opinion
on the City of Rancho Mirage's financial statements for the fiscal year ended June 30, 2007. The
independent auditor's report is located at the front of the financial section of this report.
Management's discussion and analysis (MD&A} immediately follows the independent auditor's report
and provides a narrative introduction, overview and analysis of the basic financial statements. MD&A
complements this letter of transmittal and should be read in conjunction with it.
PR(JFILE OF THE CITY
The City of Rancho Mirage, located in eastern Riverside County in Southern California, was incorporated
on August 3, 1973 and became a Charter City on December 25, 1997 as a result of a citywide election.
According to official State estimates, the City has a permanent population of 1 x,944 within a boundary of
approximately 25 square miles. The City sits at the base of the beautiful Santa Rosa Mountains and is an
integral part of the larger, world-renowned resort and retirement area known as the Coachella Valley.
The City operates under the Council-Manager form of government. The five City Councilmembers are
elected tofour-year terms in alternate slates every two years. The Mayor is appointed by the City Council
for aone-year period on a rotating basis. The Mayor presides over City Council meetings and represents
the City at many public functions. The City Council also serves as the Boards of Directors of the
Redevelopment Agency, Housing Authority, Community Services District and the Joint Powers Financing
Authority component units as well as the Library. The City Council appoints the City Manager who heads
the executive branch of the government, implements policies as directed and established by the City
ADi~II~ISTRATI®i~ COMMUNITY DCVCLC~PMC~T FI~AI~CE I~C~USI(~~' AUT{~~Jf~IT~ PUa! IC ~IaRAP.'~ PUQLIC ~lr~(~ICS ~,
Tel. (760) 324-4511 Tel. (760) 328-2266 Tei. (760)'770-3207 Tei, (760) 770-3210 Tel. (760) 341-7323 Tel. (760) 770-3224 ~ ~
_ - .760 770-3261 Fax. 760 341-5213 Fax. 760 770-3261 ~`,~
Fax. (760) 324 8830 Fax. (760) 324-9851 Fax. (760) 324 0528 Fax ( ) ( ) ( )
69-~25 6G~ 11 ~ / ~'A~C~ ~~GA CA 92270
w~v~r.c~.~a~ch~~~T~ira~.ca.l~s
Council and manages the administrative and operational functions through the department directors. The
City Manager appoints the department directors with the exception of the City Clerk and the City Attorney
who are both appointed by the City Council. The City Manager also serves as the City Treasurer and the
Executive Director of the Redevelopment Agency and Housing Authority.
The City of Rancho Mirage provides a full range of services, .including police and fire protection,
affordable housing programs, ahighly-regarded public library, the construction and maintenance of streets
and other infrastructure as well as recreational and cultural activities.
The City operates under atwo-year budget cycle in order to achieve greater time and cost efficiencies in
contrast to an annual budget. The City's annual operating and capital improvements budgets are adopted
b resolutions for the two fiscal ears that be in 1ul 1 s`. Se crate resolutions are ado ted b the Cit
Y Y g Y p p Y Y
Council and the Boards of Directors of the Library, Redevelopment Agency, Community Services
District, Joint Powers Financing Authority and the Housing Authority for the specific funds under their
supervision.
During the month of April, in the second year of the two-year budget cycle, staff reviews City
CounciUBoards of Directors ,priorities and the projected revenue and expenditure estimates of the second
year budget to use as a basis for analyzing the adjustments necessary to the original second year budget.
Staff then prepares a report to present the proposed adjustments to the City Council/Boards of Directors
for their review and adoption, as presented or amended, at a public hearing during a scheduled City
CounciUBoards of Directors meeting in June.
The budget document is categorized according to the City of Rancho Mirage's major entities -the City,
the Redevelopment Agency and the Housing Authority. They are further subdivided into organizational
units referred to as departments/divisions, programs or funds. Expenditures for General Fund Divisions
cannot exceed amounts budgeted within the objects of salaries and benefits, operations and maintenance
and capital such as furniture and equipment. For other funds, expenditures cannot exceed the total amount
budgeted for each fund. The City Manager is authorized to transfer appropriations within an object of a
General Fund Division and within total fund appropriations for other funds. The City CounciUBoards of
Directors approve all other changes.
ECON0IVIIC CONDITIONS AND OUTLOOK
Any discussion of Rancho Mirage finances must begin with an acknowledgment that Rancho Mirage is
considered to be a "no-property-tax" City. The City did not have a separate property tax rate prior to the
voter enactment of Proposition 13 in 1978 and is, therefore, prohibited from imposing one without a vote
of the citizens. Thus, additional property tax revenue generated by development projects within the City,
but not within the boundaries of the Rancho Mirage Redevelopment Agency, is not remitted to the City's
General Fund. Instead, it is remitted to other taxing agencies such as Riverside County, school districts
and other special districts. The only exception to this relates to land annexed to the City after June 30,
1980. In this instance, the City's General Fund receives 25% of the County's 30% share or 7.5°10 of the
property taxes paid by those specific property owners. As a result, the City's. General Fund only received
8.4°10 of its total revenue from property tax.
The Rancho Mirage Redevelopment Agency encompasses close to b2% of the total acreage of the City.
Additional property tax revenue resulting from increased assessed valuation within the boundaries of the
Redevelopment Agency is remitted to the Redevelopment Agency and is known as tax increment revenue.
After meeting requirements for pass-through payments to other taxing agencies, the 20°10 set-aside for low
11
and moderate income housing, debt service payments and administrative fees, the balance of tax
increment revenue is transferred to the whitewater and Northside Capital Project Funds for both capital
and operating purposes.
'While the residential base is the single greatest asset of the community, the prestigious image of Rancho
Mirage has also been enhanced by major nonresidential uses including three resort hotels -Rancho. Las
Palmas Resort and Spa, the reopening of the Ritz Carlton and westitl Mission Hills -Eisenhower Medical
Center, the Betty Ford Center and The River at Rancho Mirage entertainment and retail center. These
facilities are considered to be of the highest quality level with some receiving both national as well as
international recognition. These uses, in conjunction with the strong residential base, have allowed
Rancho Mirage to become a prominent community within the Coachella Valley.
Rancho Mirage was one of the first, communities in the ,Coachella Valley to capitalize on the demand for
high quality residentiaUresort ,housing units in the Valley. As such, the City has traditionally had the
unique advantage of widespread name recognition as one of the most affluent residential communities in
the Valley. Within .the context of continued growth within the Coachella Valley, the vast amount of
vacant available land creates competition throughout the Valley for desirable new development types.
Construction in Rancho Mirage in calendar year 2006 amounted to over $78 million in building permit
valuations. Single family residential construction totaled over $32 million; commercial and other
construction, including additions, renovations and public property, totaled over $46 million. Currently
various residential projects, retail developments, medical facilities and .office developments are in various
stages of the planning process.
Hotels, Sores Tax, investments -The Big Three
Together, the transient .occupancy tax, sales 'tax and interest revenue made up approximately 55% of
General Fund operating revenue. Economic conditions that affect the City's revenues are those factors
that influence tourism, residential growth, consumer spending and Investment returns.
The three hotels in the City of Rancho Mirage noted above are considered to be first-class, destination
resorts. Rancho Mirage has firmly established itself in a competitive position within the Coachella Valley
with enhanced recognition by leisure and group resort travelers throughout the world. This position will
be further strengthened as a result of the Ritz Carlton's approved $360 million construction and
renovation project. Construction is underway to add a spa facility, develop S4 hotel villas, 24 tennis villas
and a new hotel wing consisting of 54 units. The project includes fractional ownership and condominium
hotel ownership of the new units developed. Transient occupancy receipts during FY 2006-07 were
approximately $S.2 million - 21°10 of General Fund operating revenue which totaled approximately $24.7
million.
General Fund sales tax revenue totaled approximately $5.5 million during FY 2006-07 - 22°10 of General
Fund operating revenue. Retail sales will continue to grow as the population in the City of Rancho
Mirage and the Coachella Valley continues to increase, along with the. opening of new retail development
projects.
The continuing development of the final 10 acres within the 50-acre Monterey Marketplace will add
substantial retail sales as this center is fast becoming one of the most ,popular shopping locations in the
Coachella Valley.
111
The Highway 11.1 corridor through Rancho Mirage is a 41/2-mile-long major thoroughfare, with daily
traffic exceeding 65,000 vehicles. It is recognized as the circulation and commercial axis of the Coachella
Valley. The focus of the eastern-most portion of Highway 111 within Rancho Mirage is largely retail,
restaurants and professional offices. In this area is The River ar Rancho Mirage, the cornerstone of the
City's revitalization of Highway 111. The 30-acre waterfront development offers an upscale shopping and
entertainment experience in an environment. that features a river, fountains and waterfalls. People from all
corners of the Coachella Valley, Southern California and beyond are coming to enjoy the many amenities
offered at The River. The resulting ripple effect along Highway 111 is now transforming this area into a
unique and vibrant commercial "downtown" for the community.
The City enjoys a substantial return on investments. Interest revenue earned by the City's, General Fund,
excluding interest earned on license tax- revenue, totaled approximately $2.8 million during FY 2006-07,
11 % of General Fund operating revenue.
Tourism
'With over 3.5 million people visiting the Desert annually, tourism helps drive the hotel and lodging
industry in the Coachella Valley. With three world-class, award winning destination resort hotels and two
mid-priced, limited-service suite hotels, Rancho Mirage has been a major contributor. to the growth of the
hotel and lodging business in the. Coachella Valley. Hotel room sales in Rancho Mirage continue to
increase. The completion of the Ritz Canton's $360 million construction and renovation project is
expected to have a tremendous positive impact on hotel room sales for Rancho Mirage.
Rancho Mirage offers superb golf courses, ample recreation amenities, top-notch convention facilities and
a .diverse make-up of shopping and restaurants that attract tourists. With a combination of world-class
resorts and quality hotels, Rancho Mirage is uniquely positioned to benefit from projected growth in the
tourism indust~r. To enhance our position, in January 2045, the Council formed a Hotel Marketing and
Tourism Subcommittee. A Tourism and Marketing Division was created in Fiscal Year 2007-08 and in
September 2007 a Marketing Manager was hired to formulate, and implement a tourism marketing
program.
Long-Terms Financial Planning
Each year, a Ten Year Financial Plan is presented to the City Council for review. This document
incorporates General Fund revenue and operating expenditure assumptions with capital spending goals
and projects future undesignated fund balance. This Plan provides along-term view of the General
Fund's financial condition as a tool for City Council policy setting. The result is improved management
efficiency and enhanced financial stability.
Perhaps the best indication of the financial stability of the City is the amount of fund balance. Listed
below, from left to right, is the General Fund's total ending fund balance over the last ten fiscal years,
undesignated fund balance, and the .sum of undesignated fund balance plus that portion of fund balance
reserved for receivables/advances to other funds and capital projects.
iv
Undesignated Fund Balance
+ Fund Balance Reserved
Year Ended Total Undesignated for Receivables/Advances
June 30 Fund Balance Fund Balance and Capital Proiects
1998 $35,612,146 26,211,974 26,837,567
1999 40,198,026 27,001,308 27,626,901
2000 44,122,486 24,333,293 24,971,443
2001 50,947,626. 28,073,720 32,848,948
2002 ~ 57,809,871 34,148,823 40,991,058
2003 64,953,095 37,905,182 46,170,401
2004 68,926,752 41,052,083 48,453,836
2005 71,091,623 43,694,795 51,096,548
2006 69,950,725 56,121,413 62,010,574
2007 73,868,852 65,012,840 65,301,778
Trend information for the General Fund's Undesignated Fund Balance is also presented graphically on
page vi. Discussion of the reasons for this significant increase in Undesignated Fund Balance may be
found on page 7. -
AWARDS AND ACKNOWLED~EMEN~'S
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in Financial Reporting to the City of Rancho Mirage for its
Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2006. This is the
seventeenth. consecutive year that the City has received this award. In order to be awarded a Certificate of
Achievement, a government must publish an easily readable and efficiently organized Comprehensive
Annual Financial Report. This report must satisfy both generally accepted accounting principles and
applicable legal requirements.
A Certificate of Achievement is valid far a period of one year only. 'We believe our current report
continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the
GFOA to determine its eligibility for another certificate.
I would like to express my appreciation to the City Council for their ongoing oversight of the financial
affairs of the City and their prudent fiscal policy and direction. I also thank City staff members with
special thanks to the Finance Division of the Department of Administrative Services for their continued
effort to provide timely and accurate financial data to City management and to Mayer Hoffman McCann
P.C., the City's independent auditors, who assisted and contributed to the preparation of this report.
Respectfully submitted,
~?~~~~~
Patrick M. Pratt
City Manager
v
General Fund Financial History
Undesignated Fund Balance
Last Ten Fiscal Years
~o,ooo,ooo
~o,ooo,ooo
so,ooo,ooo
40,000,000
0
.~
^.,
.,,
30,000,000
20,000,000
10,000,000
0
Fiscal Year Ended June 30
vi
1yJ~ j999 ~'pp p 2ppj 2pp2 2pp~ 2pp~ *'pps 2pp~ 2pp,
ORGAN[1ATION CNART
Citizens
RanchoNlirage
City C~ur~ci!
City IVlana~er/ Cit Clerk
.City Attorney RDA & Housing Authority
Executive Director Retards Management
Library Community Administrative Management Public Redevelapmen# Pubiie
~
~~ Services Development Services Services Safety Agency 1Norks
Housing
Circulation Planning & .Finance Human Resources Riverside Authority Engineering
.Zoning County
Information / Information General Sheriff's Pra)ect Capital
Reference Building & Services Government Department Management Improvements.
Safety Econamic
Children's Emergency Mandated Citizens on Development Street
Services Code Preparedness Programs Patrol Maintenance
Gampliance Regional Planning (COPs) Project
Adult
& Implementation Management Parks! Median
Services Riverside Affordable islands&
Special Programs County Fire Housing .Parkways
Educational Department Program
Programs
~ Public Information Facilities &
,
& Community
Home
Fleet
Relations Impravement Maintenance
Program
Tourism &
Marketing Title 25
Assistance for
Executive Mobile Hame
Assistance Communities
CITY OF RANCHO MIRAGE
Directory of Officials
June 30, 2007
CITY COUNCIL
G. Dana Hobart Mayor
Ron Meepos Mayor Pro Tem
Richard W. Kite Councilmember
Gordon Moller Councilmember
Alan Seman Councilmember
ADMINISTRATION
Patrick M. Pratt City Manager/Executive Director
of the Redevelopment Agency
Steven B. Quintanilla City Attorney
Elena Keenan City .Clerk
Scott Morgan Director of Administrative Services
Catherine A. Mitton Director of Management Services
Randal K. Bynder Director of Community Development
Bruce. B. Harry, Jr. Director of Public Works
Curt Watts Economic Development Director
Betty Teoman Library Director
Johnnie Snow Accounting Manager
viii
1X
J
V
~..
X
g s
An Independent CPA Firm
~ over ~~~~~ ~~~~
2301 Dupont Drive, Suite 200
Irvine, California 92612
949-474-2020 ph
949-263-5520 fx
www.mhm-pc.com
The Honorable Mayor and City Council
City of Rancho Mirage, California
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying financial statements of the governmental activities, each
major fund, and the aggregate remaining fund information of the City of Rancho Mirage,
California, as of and for the year ended June 30, 2007, which collectively comprise the City's
basic financial statements, as listed in the table of contents. These financial statements are the
responsibility of the City of Rancho Mirage's management. Our responsibility is to express
opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial. statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by management,
as well as evaluating the overall financial .statement presentation. We believe that our audit
provides a reasonable basis for our opinions.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the .respective financial position of the governmental activities, each major fund, and the
aggregate remaining fund information of the City of Rancho Mirage, California, as of June 30,
2007, and the respective changes in financial position, of the City of Rancho 1Vlirage, California
for the year then ended in conformity with accounting principles generally accepted in the United
States of America.
In accordance with Governmental. Auditing Standards, we have also issued our report dated
December 20, 2007 on our consideration of the City of Rancho Mirage's internal control over
financial reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, grant agreements and other matters. The purpose of that report is to describe the scope
of our testing of internal control over financial reporting and compliance and the results of that
testing, and not to provide an opinion on the internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with Government
Auditing Standards and should be considered in assessing the results of our .audit.
The information .identified in the accompanying table of contents as management's discussion
and analysis and required supplementary information are not a required part of the basic
financial statements, but are supplementary information required by accounting principles
generally accepted in the United States of America. We have applied certain limited procedures,
which consisted principally of inquiries of management regarding the methods of measurement
and presentation of the required supplementary information. However, we did not audit the
information and express no opinion on it.
The Honorable Mayor and City Council
City of Rancho Mirage, California
Page Two
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Rancho Mirage's basic financial statements. The introductory
section, combining and individual nonmajor fund financial statements, schedules and statistical
tables are presented for purposes of additional analysis and are not a required part of the basic
financial statements. The combining and individual nonmajor fund financial statements and
schedules have been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole. The introductory section and statistical tables have
not been subjected to the auditing procedures applied in the audit of the basic financial
statements and, accordingly, we express no opinion on them.
~p~.~ /54~ ~...a. ~!e ~ ~ ~ tel.
Irvine, California
December 20, 2007
.,
2