HomeMy Public PortalAbout02 IntroductionCITY OF RANCHO MIRAGE, CALIFORNIA
An
NT OF
SERVICES A
YEAR ENDED JUNE 30, 2006
COMPREHENSIVE
ANNUAL
FINANCIAL REPORT
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, 2006
TABLE OF CONTENTS
INTRODUCTORY SECTION:
Pate
Letter of Transmittal i
Organizational Chart vii
Directory of Officials viii
Certificate of Award for Outstanding Financial Reporting (CSMFO) ix
Certificate of Achievement for Excellence in Financing Reporting (GFOA) x
FINANCIAL SECTION:
Independent Auditors' Report
Management's Discussion and Analysis
(Required Supplementary Information)
1
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 Annual Financial Report
Year ended June 30, 2006
TABLE OF CONTENTS, (CONTINUED)
Pate
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
91
Budgetary Comparison Schedules:
General Fund
92
Library Special Revenue Fund
97
Fire tax Special Revenue Fund
98
Housing Authority Special Revenue Fund
99
Low Cost Housing Special Revenue Fund
100
Supplementary Schedules
Non-Major Governmental Funds:
Combining Balance Sheet
101
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances
102
Non-Major Special Revenue Funds:
Combining Balance Sheet 104
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances 106
Budgetary Comparison Schedules 108
Debt Service Funds:
Non-Major Balance Sheet 122
Non-Major Statement of Revenues, Expenditures and Changes in Fund
Balance 123
CITY OF RANCHO MIRAGE
Comprehensive Annual Financial Report
Year ended June 30, 2006
TABLE OF CONTENTS, (CONTINUED)
Pate
Budgetary Comparison Schedules 124
Capital Projects Funds:
Non-Major Combining Balance Sheet 128
Non-Major Combining Statement of Revenues, Expenditures and Changes in
Fund Balances 129
Budgetary Comparison Schedules 130
AGENCY FUNDS:
Statement of Changes in Fiduciary Assets and Liabilities 136
STATISTICAL SECTION:
•
Net Assets by Component, Last Four Fiscal Years
138
•
Changes in Net Assets, Last Four Fiscal Years
139
•
Fund Balances of Governmental Funds, Last Four Fiscal Years
140
•
Changes in Fund Balances of Governmental Funds, Last Four Fiscal Years
141
•
Major Revenue Sources - Governmental Funds, Last Four Fiscal Years
142
•
Assessed and Estimated Value of Taxable Property, Last Ten Fiscal Years
144
•
Property Tax Rates - Direct and Overlapping Governments, Last Ten Fiscal Years
146
•
Principal Property Tax Payers, Current Year and Nine Years Ago
147
•
Property Tax Levies and Collections, Last Ten Fiscal Years
148
•
Ratios of Outstanding Debt by Type, Last Ten Fiscal Years
149
•
Ratio of General Bonded Debt Outstanding, Last Ten Fiscal Years
150
•
Direct and Overlapping Debt
151
•
Computation of Legal Debt Margin, Last Ten Fiscal Years
152
•
Pledged Revenue Coverage, Last Ten Fiscal Years
153
•
Demographic and Economic Statistics, Last Ten Calendar Years
154
•
Principal Employers
155
•
Full and Part-time Employees by Function, Last Ten Fiscal Years
156
•
Operating Indicators by Function, Last Ten Fiscal Years
158
•
Capital Assets by Function, Last Ten Fiscal Years
160
C "Y OF I ICI~O Y 1AGC
February 26, 2007
Citizens of the City of Rancho Mirage,
Honorable Mayor and Members of the City Council
It 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, 2006. This document provides an overview of
the City's financial activities during the past fiscal year. It 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, 2006. 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.
PROFILE 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 16,672 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 to four-year terms in alternate slates every two years. The Mayor is appointed by the City Council
for a one-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 Board 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
ADMINISTRATION COMMUNITY DEVELOPMENT FINANCE ROUSING AUTRORITY PUBLIC LIBRARY PUBLIC WORKS
Tel. (760) 324-4511 Tel. (760) 328-2266 Tel. (760) 770-3207 Tel. (760) 770-3210 Tel. (760) 341-7323 Tel. (760) 770-3224 ,I
Fax. (760) 324-8830 Fax. (760) 324-9851 Fax. (760) 324-0528 Fax. (760) 770-3261 Fax. (760) 341-5213 Fax. (760) 770-3261
69-825 F+IGRWAY 111 / RANCI+O MIRAGE, CA 92270
www.ci.rancho-mirage.ca.us
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, a highly-regarded public library, the construction and maintenance of streets
and other infrastructure as well as recreational and cultural activities.
The City operates under a two-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
by resolutions for the two fiscal years that begin July I". Separate resolutions are adopted by the City
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
Council/Boards 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
Council/Boards 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 Council/Boards of
Directors approve all other changes.
ECONOMIC 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% of the
property taxes paid by those specific property owners. As a result, the City's General Fund only received
8.4% of its total revenue from property tax.
The Rancho Mirage Redevelopment Agency encompasses close to 62% 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% set-aside for low
ii
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 Lodge at Rancho Mirage and Westin 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 residential/resort 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 2005 amounted to over $119 million in building permit
valuations. Single family residential construction totaled almost $77 million, commercial construction
totaled over $15 million and other construction, including additions, renovations and public property,
totaled over $27 million. The housing market continued to be very healthy in Rancho Mirage during
calendar 2005: 276 single family homes were constructed.
Hotels, Sales Tax, Investments - The Big Three
Together, the transient occupancy tax, sales tax and interest revenue make up approximately 60% of the
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. Transient
occupancy receipts during FY 2005-06 were approximately $5.8 million net of approximately $42,000 in
transient occupancy tax rebates - 25% of General Fund operating revenue which totaled approximately
$23.6 million.
General Fund sales tax revenue, net of approximately $433,000 in sales tax rebates, also totaled
approximately $5.8 million during FY 2005-06 - 25% 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.
The Highway 111 corridor through Rancho Mirage is a 41/2-mile-long major thoroughfare, with daily
traffic exceeding 50,000 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 at Rancho Mirage, the cornerstone of the
iii
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 $2.2 million during FY 2005-06,
10% 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 have increased by
approximately 30% in the past ten years.
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 industry. To enhance our position, in January 2005, the Council formed a Hotel Marketing and
Tourism Subcommittee.
Long-Term 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 a long-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.
Undesignated Fund Balance
+ Fund Balance Reserved
Year Ended
Total
Undesignated
for Receivables/Advances
June 30
Fund Balance
Fund Balance
and Caoital Projects
1997
$29,882,825
18,160,607
23,696,164
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
iv
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 ACKNOWLEDGEMENTS
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, 2005. This is the
sixteenth 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 for 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.
In addition, the City has also been awarded for the sixteenth consecutive year the Certificate of Award for
Outstanding Financial Reporting by the California Society of Municipal Finance Officers (CSMFO) for its
Comprehensive Annual Financial Report for the fiscal year ended June 30, 2005. Beginning fiscal year
ended June 30, 2006, CSMFO will limit their program participation to agencies that either did not receive
an award for the previous year's report or that are not submitting a report to the GFOA's CAFR award
program. Therefore we will not submit a report to the CSMFO this year.
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
60,000,000 -
50,000,000
Undesignated Fund Balance
Last Ten Fiscal Years
40,000,000 0000~
C
0
30,000,000
?0,000,000
10,000,000
0
Jyy) I'~y~ Jyyy 2ppp ~ppl 2pp2 2pp.~' dppQ ~ppS 2ppG
Fiscal Year Ended June 30
vi
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I
CITY OF RANCHO MIRAGE
Directory of Officials
June 30, 2006
CITY COUNCIL
Richard W. Kite
G. Dana Hobart
Ron Meepos
Alan Seman
Gordon Moller
Mayor
Mayor Pro Tem.
Councilmember
Councilmember
Councilmember
ADMINISTRATION
Patrick M. Pratt
Steven B. Quintanilla
Elena Keeran
Scott Morgan
Robert A. Brockman
Bruce B. Harry, Jr.
Tom Johnson
Cathy Mitton
Curt Watts
Johnnie Snow
City Manager/Executive Director
of the Redevelopment Agency
City Attorney
City Clerk
Director of Administrative Services
Director of Community Development
Director of Public Works
Library Director
Director of Management Services
Economic Development Director
Accounting Manager
viii
CczZi• fornzci ~Soczet~ o- f
~~/Lur~.icipaZ ~inc~nce affi~ers
Certificate t~f Award
outstanding Financial RepaYting- 204-0~
Presented to the
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FHhrrrttry 24, 2006
City of Rrxncho Mirctge
Oedicltted !o E_~CCC/lcilc•cr iii :7frliric•in[I! i--iiirlncia! .'Mnr:o~rr~istcrllr
Certificate of
Ac--iievement
for Exce'lence
.
in Financia"
Reporting
Prescnted to
City of Rancho Mirage Call-fornia
For its. Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 0, 2045
A Certificate of Achievement- for Excellence in Financial
Repoiling is presented by tha Gvve,rrtment Finance Officers
Association of the United States and. Canada to
t overnme,ni units and public employee retirement
systems whosc; comprehensive annual financial
reports (C;AFRs) achieve the highest
standards in government accounting
and financial reporting,
V MR.
[atzC~ . ~ ~
President,
d C?tf~g
Executive Director
x