HomeMy Public PortalAbout02 Introductory SectionCITY OF RANCHO MIRAGE, CALIFORNIA
COMPREHENSIVE
ANNUAL
FINANCIAL REPORT
prepared by:
THE DEPARTMENT OF
ADMINISTRATIVE SERVICES
FINANCE DIVISION
Scott Morgan, Director of Administrative Services
Johnnie Snow, Accounting Manager
YEAR ENDED JUNE 30, 2008
C OMPREH ENSIVE
AtNUAL
FINANCIAL REPORT
INTRODUCTORY SECTION
Table of Contents, Letter of Transmittal, Organization Chart, Directory of
Officials, Certificates of Awards and Achievements
INTRODUCTORY SECTION:
Letter of Transmittal 1
Organizational Chart viii
Directory of Officials ix
Certificate of Achievement for Excellence in Financing Reporting (GFOA) x
FINANCIAL SECTION:
CITY OF RANCHO MIRAGE
Comprehensive Annual Financial Report
Year ended June 30, 2008
TABLE OF CONTENTS
Paee
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 Annual Financial Report
Year ended June 30, 2008
TABLE OF CONTENTS, (CONTINUED)
Paee
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 106
Debt Service Funds
Non -Major Balance Sheet 118
Non -Major Statement of Revenues, Expenditures and Changes in Fund
Balance 119
Budgetary Comparison Schedules
CITY OF RANCHO MIRAGE
Comprehensive Annual Financial Report
Year ended June 30, 2008
TABLE OF CONTENTS, (CONTINUED)
Page
120
Capital Projects Funds:
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
STATISTICAL SECTION:
Net Assets by Component, Last Four Fiscal Years 134
Changes in Net Assets, Last Four Fiscal Years 135
Fund Balances of Governmental Funds, Last Four Fiscal Years 136
Changes in Fund Balances of Governmental Funds, Last Four Fiscal Years 137
Major Revenue Sources Governmental Funds, Last Four 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 Nine 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 Bonded 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
January 21, 2009
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, 2008. 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 Council members, 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 vanous 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, has issued an unqualified "clean opinion
on the City of Rancho Mirage's financial statements for the fiscal year ended June 30, 2008. 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 17,057 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 Council members 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
DM(NilsTPATioN Carp ^iTV DCAELOPIICHT FIN NCC
Tel. (760) 324 -4511 Tel. (760) 328 -2266 Tel. (760) 770-3207
Fax (780) 324-8830 Fax. (760) 324 -3851 Fax (760) 324 -0528
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(760) 770 -3210
Fax. (760) 7 70-3251
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Tel (760) 341 -7323
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Tel. (760) 770- 3224
Fax. (760) 773-3261
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 1 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 prionties 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 by 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
12% 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
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 two resort hotels Rancho Las
Palmas Resort and Spa and the 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 2007 amounted to over $142 million in building permit
valuations an increase of approximately 82% from 2006. Single family residential construction totaled
over $27 million; commercial and other construction, including additions, renovations and public
property, totaled over $115 million. The significant increase from calendar year 2006 was primarily due
to permits issued for the $500 million construction and renovation project for the Ritz Carlton resort
hotel. Due to the current economic uncertainty, construction activity for calendar year 2008 is down
significantly compared to 2007. However, there are still numerous residential projects, retail
developments, medical facilities and office developments in various stages of the planning process.
Hotels, Sales Tax, Investments The Big Three
Together, the transient occupancy tax, sales tax and interest revenue (approximately $14 million) made up
approximately 56% of the General Fund operating revenue in FY 2007 -08 as compared to 55%
(approximately $13.5 million) in FY 2006 -07. Economic conditions that affect these City revenues are
those factors that influence tourism, residential growth, consumer spending and investment returns. As
previously noted, the current nationwide economic uncertainty will have a negative impact on these three
major revenue sources in FY 2008 -09.
The two 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 once the renovation of the Ritz Carlton Hotel is completed. It was anticipated that
the Hotel would reopen in January 2009. However, because of the nation's economic downturn and credit
crisis, funding to finish the project, which is 80% complete, dried up. It is uncertain at this time when the
Hotel will reopen. The project includes a spa facility, 54 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 2007 -08 were approximately $5.2
million 21% of General Fund operating revenue which totaled approximately $25.1 million. This is
down approximately $19,000 as compared to FY 2006 -07.
General Fund sales tax revenue totaled approximately $5.5 million during FY 2007 -08 22% of General
Fund operating revenue. This is down approximately $30,000 compared to FY 2006 -07. Sales tax
111
revenue will follow the national and statewide downward trend in FY 2008 -09. However Rancho Mirage
may be in a better situation than other cities in the Coachella Valley due to the diversity of our retail
businesses, the opening of new retail development projects and our location in the valley.
The development of the final 10 acres within the 50 -acre Monterey Marketplace continued during FY 07-
08 and businesses continued to open. All remaining spaces are in active negotiations with numerous
potential tenants. Even in the current state of the economy, several new retail projects are in the
development and /or planning stage. For example, a Los Angeles development firm is formulating plans
to develop 33 acres of undeveloped property on Monterey Avenue south of Home Depot for a retail
project to be called Monterey Commons. Also plans have been submitted to develop approximately 18
acres of commercially zoned property on Highway 111 across from the Rancho Mirage Public Library.
The Preliminary Development Plan calls for 189,616 S.F of high -end retail. The developer is also
pursuing a hotel use on the site and has been in discussions with several possible users. The Architectural
Review Board endorsed this project on October 27, 2008.
The Highway 111 corridor through Rancho Mirage is a 4 -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 at 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 $3.4 million during FY 2007 -08
13.5% of General Fund operating revenue. This is up approximately $570,000 as compared to FY 2006-
07. The increase is primarily due to a slight increase (.26 in the average rate of return for FY 2007 -08.
Interest earnings are enhanced by the ability to invest up to 25% of the portfolio in investments maturing
between 5 and 10 years.
Tourism
Historically, 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,
the newly opened Agua Caliente Casino Resort and Spa, 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
Carlton's $500 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 and the addition of the Agua Caliente Casino Resort and Spa, Rancho Mirage is
uniquely positioned in the tourism industry in the Coachella Valley and California. To enhance our
position, in January 2005, the Council formed a Hotel Marketing and Tounsm 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. Even in the current economic
situation, Rancho Mirage plans to continue its aggressive tourism marketing program in 2009 by including
a program to position Rancho Mirage as the destination that is golf, tennis, cycling and running friendly
and is the presenter of events that attract enthusiasts of these sporting activities. If addition, a "Medical
Meetings Marketing Initiative" has been approved that will strive to make Rancho Mirage widely
recognized as the most favorable destination for medical association meetings. The Initiative will be
undertaken in partnership with the Eisenhower Medical Center and will commence in the first quarter of
2009.
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 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, are the General Fund's total ending fund balance over the last ten fiscal years and
undesignated fund balance plus designations for prudent reserve, disaster recovery and public facilities
Year Ended
June 30
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Trend information for the General Fund's Undesignated Fund Balance is also presented graphically on
page vii.
AWARDS AND ACKNOWLEDGEMENTS
Total
Fund Balance
$40,198,026
44,122,486
50,947,626
57,809,871
64,953,095
68,926,752
71,091,623
69,950,725
73,868,852
74,602,827
Undesignated Fund Balance
Designations for Prudent
Reserve, Disaster Recovery
Public Facilities
27,001,308
24,333,293
28,073,720
34,148,823
37,905,182
41,052,083
43,694,795
56,121,413
65,012,840
64,447,442
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, 2007. This is the
eighteenth 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.
V
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
VI
70,000,000
60,000,000
50,000,000
40,000,000
h
30,000,000
20,000,000
10,000,000
General Fund Financial History
Undesignated Fund Balance Plus
Designations for Prudent Reserve,
Disaster Recovery Public Facilities
Last Ten Fiscal Years
0
'4).9 22 20
Fiscal Year Ended June 30
vii
1
CITY OF RAIYCF10 MIRAGE ORGANISATION CHART
tR
Library
Services
Circulation
Information
Reference
Children's
Services
Adult
Services
Educational
Programs
City Attorney
'r Community
Development
Planning
Zoning
Building
Safety
Code
Compliance
l
f
(Administrative
Services
Finance
Information
Services
Emergency
Preparedness
Citizens
Rancho Mirage
City Council
City Manager
RDA Housing Authority
Executive Director
Management
Services
Human Resources
General
Government
Mandated
Programs
Regional Planning
Implementation
Special Programs
Public Information
Community
Relations
Tourism
Marketing
Executive
Assistance
1
1
Public
Safety
Riverside
County
Sheriff's
Department
Citizens on
Patrol
(COPs)
Riverside
County Fire
Department
City Clerk
Records Management
!Redevelopment
Agency
Housing
Authority
Project
Management
Economic
Development
Project
Management
Affordable
Housing
Program
Home
Improvement
Program
Title 25
Assistance for
Mobile Home
Communities,
Public
Works
Engineering
Capital
Improvements
Street
Maintenance
Parks/ Median
Islands
Parkways
Facilities
Fleet
Maintenance
Ron Meepos
Gordon Moller
G. Dana Hobart
Richard W. Kite
Alan Seman
Patrick M. Pratt
Steven B. Quintanilla
Elena Keeran
Scott Morgan
Catherine A. Mitton
Randal K. Bynder
Bruce B. Harry, Jr.
Curt Watts
David Bryant
Johnnie Snow
CITY OF RANCHO MIRAGE
Directory of Officials
June 30, 2008
CITY COUNCIL
ADMINISTRATION
ix
Mayor
Mayor Pro Tern
Councilmember
Councilmember
Councilmember
City Manager/Executive Director
of the Redevelopment Agency
City Attorney
City Clerk
Director of Administrative Services
Director of Management Services
Director of Community Development
Director of Public Works
Economic Development Director
Library Director
Accounting Manager
F
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Rancho Mirage
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2007
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
President
Executive Director