HomeMy Public PortalAbout01 Introductory SectionCOMPREHENSIVE ANNUAL
FINANCIAL REPORT
tVi YEAR ENDED JUNE 30, 2009 rkA
City of Rancho Mirage Public Library
Entry feature Statue of former United States President
and Rancho Mirage resident Gerald R. Ford
CITY OF RANCHO MIRAGE
CALIFORNIA
'90 Auoug
1
CITY OF RANCHO MIRAGE, CALIFORNIA
COMPREHENSNE
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, 2009
1
1
C OMPREHE NS IVE
ANNUAL
FINANCIAL REPORT
INTRODUCTORY SECTION
Table of Contents, Letter of Transmittal, Organization Chart, Directory of
Officials, Certificates of Awards and Achievements
Seal
INTRODUCTORY SECTION:
Letter of Transmittal
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, 2009
TABLE OF CONTENTS
Page
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, 2009
TABLE OF CONTENTS, (CONTINUED)
Page
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 95
Budgetary Comparison Schedules:
General Fund 96
Library Special Revenue Fund 101
Fire Tax Special Revenue Fund 102
Housing Authority Special Revenue Fund 103
Low Cost Housing Special Revenue Fund 104
Supplementary Schedules
Non -Major Governmental Funds:
Combining Balance Sheet 105
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances 106
Non -Major Special Revenue Funds:
Combining Balance Sheet 108
Combining Statement of Revenues, Expenditures and Changes in Fund
Balances 110
Budgetary Comparison Schedules 112
Debt Service Funds:
Non -Major Balance Sheet 124
Non -Major Statement of Revenues, Expenditures and Changes in Fund
Balance 125
Comprehensive Annual Financial Report
Year ended June 30, 2009
TABLE OF CONTENTS, (CONTINUED)
Budgetary Comparison Schedules
CITY OF RANCHO MIRAGE
Page
126
Capital Projects Funds:
Non -Major Combining Balance Sheet 130
Non -Major Combining Statement of Revenues, Expenditures and Changes in
Fund Balances 131
Budgetary Comparison Schedules 132
AGENCY FUNDS
Combining Statement of Changes in Fiduciary Assets and Liabilities 138
STATISTICAL SECTION:
Net Assets by Component, Last Seven Fiscal Years 140
Changes in Net Assets, Last Seven Fiscal Years 141
Fund Balances of Governmental Funds, Last Seven Fiscal Years 142
Changes in Fund Balances of Governmental Funds, Last Seven Fiscal Years 143
Major Revenue Sources Governmental Funds, Last Ten Fiscal Years 144
Assessed and Estimated Value of Taxable Property, Last Ten Fiscal Years 146
Property Tax Rates Direct and Overlapping Governments, Last Ten Fiscal Years 148
Principal Property Tax Payers, Current Year and Nine Years Ago 149
Property Tax Levies and Collections, Last Ten Fiscal Years 150
Ratios of Outstanding Debt by Type, Last Ten Fiscal Years 151
Ratio of General Bonded Debt Outstanding, Last Ten Fiscal Years 152
Direct and Overlapping Debt 153
Computation of Legal Debt Margin, Last Ten Fiscal Years 154
Pledged Revenue Coverage, Last Ten Fiscal Years 155
Demographic and Economic Statistics, Last Ten Calendar Years 156
Principal Employers 157
Full and Part-time Employees by Function, Last Ten Fiscal Years 158
Operating Indicators by Function, Last Ten Fiscal Years 160
Capital Assets by Function, Last Ten Fiscal Years 162
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February 3, 2010
CITY OF R4INCFj,O MIRAGE
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, 2009 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 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, has issued an unqualified "clean opinion
on the City of Rancho Mirage's financial statements for the fiscal year ended June 30, 2009 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 17,180 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
ADMINISTRATION COMMUNITY DEVELOPMENT FINANCE HOUSING AUTHORITY 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
Fax. (760) 324 -8830 Fax. (760) 324 -9851 Fax. (760) 324 0528 Fax. (760) 341 -6793 Fax. (760) 341 -5213 Fax. (760) 770 3261
69 -825 HIGHWAY 111/ RANCH-0 MIRAGE, CA 92270
www.ci.Rancho- Mirage.ca.us www.RelaxRanchoMirage.com
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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's annual operating and capital improvements budgets are adopted by resolutions for the fiscal
year that begin July l 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.
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
Rancho Mirage, like every other municipality in the State and in the nation, has been adversely affected by
the slumping economy While there is no doubt that the uncertain economy has and will continue to affect
Rancho Mirage, we are weathering the situation better than most due to our historic commitment to fiscal
responsibility and the City Council's vision to attract new revenue generating businesses while
maintaining the City's well known reputation for high quality residential neighborhoods. Rancho Mirage
has and will continue to have an international reputation as a destination resort and medical and research
center and will continue to be recognized for its ambience and the unique lifestyle it provides and where
its residents enjoy a variety of cultural and recreational opportunities.
Any discussion of Rancho Mirage finances must include 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
12.7% 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
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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 Westin Mission Hills and Agua Caliente Casino.Resort.Spa 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.
Like the rest of the nation, Rancho Mirage has been affected by the slumping economy In spite of this
unprecedented downturn, construction in Rancho Mirage in calendar year 2008 amounted to over $55
million in building permit valuations. Currently several residential developments are under construction.
In addition, several single family residential projects, retail developments, medical facilities and office
developments are in various stages of construction and the planning process.
Hotels, Sales Tax, Investments The Big Three
Together, the transient occupancy tax, sales tax and interest revenue (approximately $12 million) made up
approximately 51% of the General Fund operating revenue in FY 2008 -09 compared to 56%
(approximately $14 million) in FY 2007 -08. 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 slump has had a negative impact on these three major
revenue sources in FY 2008 -09
Regarding transient occupancy tax, 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 once the renovation of the Ritz
Carlton Hotel is completed. It is anticipated that the Hotel will reopen in January 2011. The project
includes a spa facility, 54 hotel villas, 25 tennis villas and a new hotel wing consisting of 57 units. The
project includes fractional ownership and condominium hotel ownership of the new units developed. This
newly renovated resort along with the Rancho Las Palmas Resort and Spa, the Westin Mission Hills
Resort and Spa and the new (April 2008) Agua Caliente Casino.Resort.Spa will keep Rancho Mirage
firmly established in a competitive position within the Coachella Valley for recognition by leisure and
group resort travelers throughout the world. Transient occupancy receipts during FY 2008 -09 were
approximately $4 6 million 19% of General Fund operating revenue (approximately $24 million), down
approximately $522,800 compared to FY 2007 -08. This decrease is directly related to the economic
slump and is anticipated to continue in FY 2009 -10.
General Fund sales tax revenue totaled approximately $4.5 million during FY 2008 -09 19% of General
Fund operating revenue. This is down approximately $1 million compared to FY 2007 -08. As with
111
transient occupancy tax, the decrease in sales tax revenue is directly related to the economic slump.
Rancho Mirage may be in a better situation than other cities in the Coachella Valley due to the diversity of
our retail businesses and our location in the Valley
The development of the final 10 acres within the 50 -acre Monterey Marketplace continued during FY 08-
09 and businesses continued to open and, 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 the Preliminary Development Plan has
been approved for Five Peaks, a proposed 232,882 S.F commercial development on approximately 18
acres located at the southwest corner of Highway 111 and Mirage Road. The developer is also pursuing a
hotel use on the eastern most portion of the property Another example is The Shoppes of Rancho Mirage,
a proposed retail center to be located on 4.82 acres at 70 -265 Highway 111 and Thunder Road (adjacent to
Lord Fletcher' s). The Preliminary Development Plan has been approved for this project as well. This
project has received preliminary gold level LEED (Leadership in Energy and Environmental Design)
certification. Mac Gallery announced that it will open its third Southern California location in The
Shoppes and was attracted by the "green" standards of the project.
The Highway 111 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 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
Regarding interest revenue, 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
million during FY 2008 -09 13% of General Fund operating revenue. This is a decrease of
approximately $348,000 compared to FY 2007 -08. The decrease is due to a decrease in the average rate
of return for FY 2008 -09
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 two world class, award winning destination resort hotels,
the newly opened Agua Caliente Casino.Resort•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 The completion of the Ritz Carlton's 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.Spa, Rancho Mirage is
uniquely positioned in the tourism industry in the Coachella Valley and California. To enhance our
position, in January 2005, the City 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 In early 2008 a Tourism
Advisory Committee was established and is comprised of Rancho Mirage hospitality leaders to provide
the City with expert advice and a collaborative partnership for all Rancho Mirage marketing endeavors.
Even in the current economic situation, Rancho Mirage plans to continue its aggressive tourism marketing
program in FY 2009 -10.
Long -Tenn Financial Planning
In January 2010, a Ten Year Financial Projection for the General Fund was 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 In addition, the City Council/Boards or Directors
act quickly when events, whether local, state or nationwide, occur that change or may change the City's
economic stability As an example, during the FY 2009 -10 budget process, the City Council met with
staff several times to arrive at a balanced budget despite the declining revenues due to the weak economy
The discussions concentrated on existing programs and services and what programs and/or services could
be modified or eliminated based on the community's needs, the City's priorities and specific revenue
streams.
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
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Trend information for the General Fund's Undesignated Fund Balance plus Designations for Prudent
Reserve, Disaster Recovery and Public Facilities is also presented graphically on page vii.
AWARDS AND ACKNOWLEDGEMENTS
Total
Fund Balance
$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
75,490,961
Undesignated Fund Balance
Designations for Prudent
Reserve, Disaster Recovery
Public Facilities
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
66,077,681
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, 2008. This is the
nineteenth 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.
V
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.
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
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
200 200
<-3 20 4) x)
Fiscal Year Ended June 30
vii
cIYY Of- RAMC oMR1(
0116 LNIl1T10N CHART
Library
Se rvices
Circulation
Information
Reference
Children's
Services
Adult
Services
Educational
Programs
Administrative
Ser s
Finance
Information
Services
Emergency
Preparednes
City Manager I
RDA Housing Authority
Executive Director
Management
Services
vices
Human Resources
General
Government
Mandated
Programs
Regional Planning
implementation
Special Programs
Public Information
Community
Relations
Tourism
Marketing
Executive
Assistance
Public
Safet
Citizens on
Patrol
(COPS)
Riverside
County Fire
Department
Cit Clerk
Records Management
Project
Management
Economic
Development
Proiect
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
Community
)evei� o
Planning
Zoning
Building
Safety
Code
Compliance
Gordon Moller
Alan Seman
G Dana Hobart
Richard W Kite
Ron Meepos
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, 2009
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
City of Rancho Mirage
California
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2008
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the C_ _.._......Finance Officers
Association of the United States and Canada to
.......ent 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
x