Cathedral City City Council
May 10, 2023

6.G.a
Packet Pg. 398
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

Capital asset additions will be recorded as assets when purchased. Additions and deletions of capital assets will be recorded at least on an annual basis. Asset additions and deletions will be verified with the source documents.

All costs associated with Capital Improvement Projects (CIP) Plan approved by City Council during the budget cycle will accumulate as construction-in-progress. At the end of the fiscal year, costs of completed projects, as accepted by City Council, will be transferred to the appropriate asset account as of the last day of the fiscal year. Depreciation will commence at the beginning of the next fiscal year.

The City will maintain a listing of all assets meeting the capitalization policy. Assets will be separated into the following classifications:

A. Vehicles, machinery, and equipment
B. Land and land improvements
C. Infrastructure

1. Bridges

2. Streets

3. Curbs and gutters

4. Access ramps

5. Bus turnouts

6. Sidewalks

7. Traffic signals

8. Streetlights

9. Storm drains

10. Retention basins

11. Sewer lines

12. Water lines

13. Utility lines

14. Urban landscaping
a. Irrigation
b. Lighting
c. Outdoor furniture
d. Trees
D. Buildings
E. Structures

Capital assets additions will be recorded in the year assets are purchased. Additions and deletions of capital assets will be recorded at least on an annual basis. Asset additions and deletions will be verified with the source documents.

All costs associates with capital improvement projects approved by City Council during the budget cycle will accumulate as construction in progress. At the end of t he fiscal year, costs of completed projects, as accepted by City Council, will be transferred to the appropriate asset account as of the last day of the fiscal year. Depreciation will commence at the beginning of the next fiscal year.

6.G.a
Packet Pg. 399
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

Developer constructed infrastructure is capitalized by the City as donated as sets at the end of the fiscal year in which the City accepts the infrastructure. The responsibility for general maintenance of the infrastructure transfers from the developer to the City at the time the City Coun cil accepts the project. The value of infrastructure is calculated based on information provided by the developer’s engineer.

The following will be included in capitalized costs:
 Purchased assets – Assets are capitalized individually at their historical cost, which includes trade-in allowance, sales tax, installation cost, freight and delivery charges, and any other ancillary charges needed to render the asset into service.
 Donated assets – Donated capital assets are recorded at estimated fair market value at the date of donation with a debit to expenditure and credit to revenue in related funds and the Statement of Net Assets.  Constructed assets – Capital projects are capitalized as construction in progress until completed. Costs to be capitalized include all dire ct costs, site pre paration, professional fees, as well as any other ancillary charges needed to render the asset into service. Upon completion and City Council acceptance, these costs are transferred to the appropriate asset classification.

Costs Unique to Specific Asset Classifications
 Land – Land costs, in addition to the purchase price, ma y include legal and title fees, survey fees, appraisal and negotiation fees, damage payments, relocation cost s, site preparation costs (clearing, filling, and leveling), and demolition of unwanted structures. Land is capitalized, but not depreciated. For associated costs related to the purchase of easements and rights of way, please see the intangibles section below.

 Buildings and Structures – Buildings and structures assets costs may include purchase or construction costs; professional fees for engineers, architects, attorneys, appraisers, financial advisers, etc.; payment of damage claims; costs of fixtures attached to the buildi ng or other structure; insurance premiums; interest and related costs incurred during the period of cons truction and other expenditures necessary to put the building or structure in use.

 Infrastructure – Infrastructure assets are long-lived ca pital assets stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets (e.g., roads, bridges, tunnels, drainage systems, water and sewer systems, dams, lighting systems). Land associated with infrastructure is reported as land rather than as part of the cost of the related infrastructure asset. The City categorizes its infrastructure as networks. A network of assets provides a particular type of service, e.g., streets.

Improvements vs. Maintenance
The reporting department will make the differentiati on between improvement and maintenance projects by reviewing the budget document and using the appropriate detailed account.  Improvements – Improvements consist of additions or betterments. An addition refers to a physical extension of an existing asset or the acquisition of an entirely new unit, which does not merely replace one of similar function or value. Betterments exist when a part of an existing asset is replaced by another and the replacement provides a signific ant increase in the life or value of the asset. These costs will be capitalized.
 Maintenance – Maintenance costs refer to repairs to maintain the asset at its useful and current value.

These costs will not be capitalized.

6.G.a
Packet Pg. 400
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

Depreciation and Estimated Useful Lives
All depreciable capital assets will be depreciated over their estimated useful lives using the straight-line method of depreciation and the beginning of month convention. Estimated useful life by asset category is as follows:

A. Vehicles, machinery, and equipment 5 to 20 years
B. Land and land improvements Not depreciable
C. Infrastructure:

C.1 Bridges 40 years
C.2 Streets 20 years
C.3 Curbs and gutters 30 years
C.4 Access ramps 30 years
C.5 Bus turnouts 30 years
C.6 Sidewalks 30 years
C.7 Traffic signals 20 years
C.8 Street lights 25 years
C.9 Storm drains 50 years
C.10 Retention basins 50 years
C.11 Sewer lines 50 years
C.12 Water lines 20 years
C.13 Utility lines 20 years
C.14 Urban landscaping:

C.14.a. Irrigation 10 years
C.14.b. Lighting 10 years
C.14.c. Outdoor furniture 10 years
C.14.d. Trees 10 years
D. Buildings 30 years
E. Structures 20 years

Intangible Assets
Governmental Accounting Standar ds Board (GASB) Statement 51, Accounting and Financial Reporting for Intangible Assets, became effective July 1, 2009 (FY 2010).

The cumulative effect, if any, of applying this Statem ent requires a restatement of beginning net assets, fund balances, or fund net assets (as appropriate). This mean s certain intangible assets (and related amortization) in existence from July 1, 1980 to June 30, 2009 may need to be reported as the beginning (July 1) balance for intangible assets for FY 2010. See section entitled “Retroactive Reporting” for further details.

6.G.a
Packet Pg. 401
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES
An intangible asset should be recognized in the statement of net assets only if it is identifiable, which means the asset is either:

A. Separable (i.e., it can be separat ed/divided from the government and sold, transferred, licensed, rented or exchanged) or
B. Arose from contractual or other legal rights, re gardless of whether those rights are transferable or separable.

GASB Statement 51 defines intangible assets as assets identifiable and possess all the following characteristics:

• lack of physical substance,
• nonfinancial nature (not in monetary form like cash or investment securities), and • initial useful life extending beyond a single reporting period.

Examples of intangible assets include easements, land use rights (i.e., water rights, timber rights and mineral rights), patents, trademarks, and copyrights. In addition, intangible assets include computer software purchased, licensed or internally generated (including websites) as well as outlays associated with an internally generated modification of computer software.

Intangible assets can be purchased or licensed, acqu ired through nonexchange transactions or internally generated.

All intangible assets subject to the provisions of G ASB Statement 51 should be classified as capital assets.

Accordingly, existing authoritative guidance related to the accounting and financial reporting for capital assets (i.e. recognition, measurement, presentation, disclosure, etc.) should be applied to intangible assets as applicable.

Exclusions

GASB Statement 51 applies to all intangible assets except: (a) assets acquired or created primarily for purposes of directly obtaining income or profit (these intangible assets should be considered investments), (b) assets from capital lease transactions reported by lessees, except licensing agreements to lease commercially available computer software, and (c) goodwill created through the combination of a government and another entity.

Threshold for Capitalization

The intangible asset capitalization threshold has been establ ished at $50,000. The threshold is to be consistently applied by all departments of the City for financial reporting purposes. All intangible assets at or above a specified dollar amount must be reported for the Annual Comprehensive Financial Report (ACFR), all other intangible assets are excluded.

Measurement/Recognition

Effective July 1, 2009, intangible assets exceeding the City’s threshold should be recorded at actual historical cost.

For business-type activities and enterprise funds capita lized interest and ancillary charges, if any, should be included in the historical cost.

Only direct costs will be capitalized (indirect costs will not be included).

Intangible assets received in a nonexchange transaction (i.e., donated) are to be recorded at their estimated fair value at the time of acquisition.

6.G.a
Packet Pg. 402
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

 The fair value of an asset is the amount at which the asset could be exchanged in a current transaction between willing parties, other than in forced or liquidati on sale. Therefore, it would be inappropriate to arbitrarily assign a nominal value to a donated intangib le asset without applying a rational technique to estimate its fair value.

The threshold for intangible assets applies to individual as sets and it is not acceptable to account for items in aggregate to meet the threshold limitations.

For internally generated intangible assets, outlays incurred by the government’s personnel, or by a third-party contractor on behalf of the government, for development of internally generated intangible assets should be capitalized.

For internally generated computer software, outlays incurred during the application development stage (see next page) will be capitalized if they exceed the threshold. T hese outlays include the initia l purchase of the computer software/license and modifications made to the software befor e it is placed into operation. The initial purchase of the software/license and modifications made should be analyzed separately for capitalization purposes (do not aggregate).

 Costs incurred prior to July 1, 2009, for internally generated computer software projects in the application development stage will not be capitalized. However, cost s incurred July 1, 2009 and beyond, for these projects will be capitalized if exceeding the City’s threshold.

Computer software licenses purchased/renewed will not be aggregated. Each individual license purchased/renewed will be measured against the City’s threshold and the useful life must extend beyond a single reporting period for the license to be capitalized.

Internally Generated Intangible Assets

Internally generated intangible assets are created or prod uced by the government or an entity contracted by the government, or they are acquired from a third party but require more than minimal incremental effort on the part of the government to begin to achieve their expected level of service capacity.

Outlays related to the development of an internally generated intangible asset identifiable should be capitalized only upon the occurrence of all the following:

Specified-Conditions Criteria
a. Determination of the specific objective of the projec t and the nature of the service capacity is expected to be provided by the intangible asset upon completion of the project. b. Demonstration of the technical or technological f easibility for completing the project so the intangible asset will provide its expected service capacity.
c. Demonstration of the current intent ion, ability, and presence of effort to complete or, in the case of a multiyear project, continue development of the intangible asset.

Only outlays incurred subsequent to meeting the above criteria should be capitalized; outlays incurred prior to this point should be expensed.

6.G.a
Packet Pg. 403
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES
Internally Generated Computer Software

Computer software is considered internally generated if it is developed in-house by the government’s personnel or by a third-party contractor on behalf of the government.

Commercially available software purchased or licensed by the government and modified using more than minimal incremental effort before being put into operation should be consider ed internally generated. Any of the following activities would satisfy the “modified using more than minimal incremental effort” criterion: changing code, changing fields, adding special reporting capabilities, and testing any changes.

The development and installation of internally generated computer software can be grouped into three stages:

1. Preliminary Project Stage: involves conceptual formulation and evaluation of alternatives, determination of the existence of needed technology and final select ion of alternatives for development of the software.

Expense all outlays in this stage.

2. Application Development Stage : includes the design of the chosen path (i.e., software configuration, software interfaces), coding, installation to hardwar e, and testing. Data conversion activities could be included in this phase if those activities are deemed necessary to make the software operational. Capitalize all outlays incurred during this stage once the Specified-Conditions Criteria are met. (Note: the Specified- Conditions Criteria are considered met when the Preliminary Project Stage is complete and management authorizes/commits to funding the project.) Capitali zation should cease when the computer software is substantially complete and operational.

3. Post-Implementation/Operation Stage: includes application training and software maintenance. Data conversion activities would be included in this st age if not deemed necessary to make the software operational. Expense all outlays in this stage.

Outlays associated with an internally generated modificati on of computer software already in operation should be capitalized if the modification results in any of the following:

a. increase in functionality of the software (able to perform tasks it was previously incapable of performing), b. increase in efficiency of the software (increase in level of service provided without the ability to perform additional tasks) or
c. extension of the estimated useful life.

If the modification does not result in any of the three outcomes, the modification should be considered maintenance and expensed accordingly.

Amortization (Use Straight-Line Method)

The useful life of an intangible asset ar ising from contractual or other legal rights should not exceed the period to which the service capacity of the asset is limited by those contractual or legal provisions. Contract renewal periods may be considered in determining the useful life of the intangible asset if there is evidence the government will seek and be able to achieve renewal and the anticipated outlay for renewal is nominal in relation to the level of service capacity obtained.

If there are no legal, contractual, regulatory, technological, or other factors limiting the useful life of an intangible asset, then the intangible asset should be considered to have an indefinite useful life and no amortization should be recorded.

A useful life that must be estimated doe s not mean indefinite useful life. Int angible assets subject to amortization will be amortized over a period of 5 to 40 years, depending on the asset.

6.G.a
Packet Pg. 404
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES
Impairment

If changes in factors and conditions result in the useful life of an intangible asset no longer being indefinite, the asset should be tested for impairment because a change in the expected duration of use of the asset has occurred.

The carrying value of the intangible asset, if any, follo wing the recognition of any impairment loss should be amortized in subsequent reporting periods over the remaining estimated useful life of the asset.

A common indicator of impairment for internally generat ed intangible assets is development stoppage, such as stoppage of development of computer software due to changes in the priorities of management.

Retroactive Reporting

The City of Cathedral City will not retroactively report the following intangible assets:

1. Those considered to have indefinite useful lives as of June 30, 2009 or

2. Those that would be considered inte rnally generated as of June 30, 2009.

3. Costs incurred prior to July 1, 2009, for internally generated computer software projects in the application development stage will not be capitalized. However, costs incurred July 1, 2009 and beyond, for these projects will be capitalized if exceeding the City’s threshold.

Intangible assets (and related amortization) requiring retroactive reporting (for the period July 1, 1980 through June 30, 2009) will be reported at actual historical cost. This includes purchased software still in use, even if fully amortized as of June 30, 2009.

NOTE: If actual historical cost cannot be determined for these intangible assets due to lack of sufficient records, estimated historical cost will be used.

Miscellaneous
This policy must be applied to all intangible assets. If an intangible asset meeting the threshold criteria is fully amortized, the asset must be reported at the historical cost and the applicable accumulated amortization must also be reported. It is not appropriate to “net” the intangible asset and amortization to avoid reporting.

When intangible assets are sold or disposed of, it is necessary to calculate and report a gain or loss in the statement of activities. The gain/loss is calculated by subtracting the net book value (historical cost less any accumulated amortization) from the net amount realized on the sale or disposal.

Inventory Control Policy (Safeguarding)
Department heads are ultimately responsible for safeguardin g their fixed assets from theft or loss. However, the Financial Services Department does recognize and ack nowledge its responsibility to establish and maintain systems and procedures that enable department heads to properly safeguard their assets.

In general, inventory control is applied only to movable fixed assets (generally those falling into the “Vehicle and Equipment” category), and not to land, buildings, or other immovable fixed assets. Fixed assets subject to inventory control will be accounted for and controlled through the same systems and procedures used to account and control fixed assets subject to capitalization.

6.G.a
Packet Pg. 405
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

Fixed assets will be subject to inventory control if they meet at least one of the following criteria:

 The original cost of the fixed asse t is equal to or greater than $5,000.  Any asset less than $5,000 as requested from a department. This may include certain machinery and equipment that, due to its portability, value outside of the office, or character, are susceptible to theft or loss.

It may also include any asset that has been requested by a department to be controlled in order to satisfy an internal (operational) or external requirement. For example, Management Information Systems may wish to track all computer hardware to establish replacement and upgrade requirements for both hardware and system software.
 Any asset required to be controlled and separately reported pursuant to grant conditions or any other externally imposed reporting requirement. For example, a grant program that has funded the acquisition of a fixed asset may impose a requirement that the fixed asset be tracked and identified as a grant-funded asset.

The Financial Services Department will conduct a fixed asset inventory on a four-year rotation schedule:
 Year 1 – Police Facility
 Year 2 – City Hall
 Year 3 – Fire Facilities
 Year 4 – Public Works Facility

6.G.a
Packet Pg. 406
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

DEBT POLICY
The purpose of this Debt Management Policy is to organize and formalize debt issuance and management related policies and procedures for the City of Cathedral City, CA (City), the City of Cathedral City as Successor Agency to the Former Redevelopment Agency, and the Cathedral City Public Finance Authority (references herein to the “City” are deemed to include the Successor Agency and Authority) . The debt policies and procedures of the City are subject to and limited by applicable provisions of state and federal law and to prudent debt management principles.

This Debt Policy (Policy) is intended to comply with Government Code Section 8855(i), effective on January 1, 2017, and will apply to all future debt considerations and issuances for which the City Council acts as the legislative body for the City, the Successor Agency, and the Cathedral City Public Finance Authority (CCPFA).

The primary objectives of the City’s debt and financing related activities are to:

 Maintain cost-effective access to the capital markets through prudent fiscal management policies and practices;
 Ensure that judicious debt service commitments are made through effective planning and cash management;
 Ensure compliance with all applicable federal and state securities laws;  Achieve the highest practical credit ratings within the context of the City’s financing needs and financing capabilities;
 Ensure that all debt is structured in order to protect both current and future taxpayers, ratepayers and constituents of the City; and
 Ensure that the City’s debt is consistent with the City’s planning goals and objectives and capital improvement program or budget, as applicable.

ASSIGNMENT OF RESPONSIBILITY
This Policy will govern the issuance and management of a ll future debt issued by the City, Successor Agency and CCPFA. This Policy will be reviewed and updated periodically as necessary. Any change s to the Policy will be approved by the City Council. The City Council is responsibl e for overall policy direction of this Policy, as well as the authorization of each debt financing. The Financial Services Director or Finance Director is to be responsible for implementation of the Policy, as well as its day-to-day administration.

The City recognizes that, while this Policy provides guidance and structure for the decisions and management of the City’s debt, changes in capital markets, city programs and other unforeseen circumstances may arise that are not addressed in this Policy. In these cases, management flexibility is appropriate, and modifications or exceptions may be necessary to achieve the City’s goals.

6.G.a
Packet Pg. 407
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

DEBT ISSUANCE

Purpose of Debt Issuance

The City’s debt management program will consider debt issuance in cases where public policy, generational equity and economic efficiency provide a benefit to the residents of Cathedral City.

The City will utilize debt obligations and will give due consideration to all available funding sources, including available cash reserves, available current revenues, potential future revenue sources, potential grants, and all other financing sources legally available to be used for such purposes. Expenditure of bond proceeds are expected to fund major, non-recurring expenditures/expenses, including but not limited to: the financing of costs related to capital project planning and design, environmental, land acquisition, real property, and equipment acquisition; the construction or renovation of buildings and permanent structures; financing costs related to the debt issuance, capitalized interest, necessary or financially prudent debt service reserves; or other costs as permitted by law. Refunding or refinancing existing debt obligations are acceptable uses of bond proceeds.

Types of Debt

The City will evaluate the use of appropriate financial alternatives available as permitted by the State Constitution and applicable State statutes. These alternatives will be considered in order to secure the most cost advantageous financing alternative available while limiting the City’s risk exposure. Types of debt may include, but are not limited to:

 Lease revenue bonds
 Certificate of Participation
 Revenue bonds
 Land-secured financing, such as sp ecial tax bonds and assessment bonds  General obligation bonds
 Tax increment financing
 Conduit financing, such as financing for affordabl e rental housing and qualified 501(c)(3) organizations  Refunding/refinancing existing debt obligations
 General Obligation Bonds
 Short term notes
 Lease-purchase transactions
 Letters of Credit and revolving credit

The City will also consider the advantages of a negot iated or competitive bond sale and recognizes that a standard, all-purpose approach to debt financing does not serve the best interest of the City. The City will consider the unique combination of factors such as the type of debt needed, funding stream, market conditions and City programs to structure each debt issuance.

The City may choose to maintain an Interfund Loan Practice to provide guidance for internal financing between City funds.

Debt Structuring Practices

The maximum term of any debt issuance will not exceed the useful life of the assets funded from the financing.

Capitalized interest and deferral of principal may be considered but not required during construction of a debt- funded project. Fixed rate debt is preferred, but the City may consider the appropriateness of variable rate debt when considering financial market conditions and risk factors.

6.G.a
Packet Pg. 408
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

Financing Options

In general, debt may be issued to fund new projects or to refinance existing debt.

New Debt
New debt issuances are used to generate funding for capital projects. These funds will be used for necessary land acquisitions, capital construction, equipment, related financing costs, and other necessary expenses that would deliver a project for the City.

Refinancing Existing Debt
A periodic review of the City’s outstanding debt will be undertaken by the Financial Services Department to determine refunding opportunities.

Refunding bonds are issued to retire all or a portion of an outstanding bond issue, typically to secure lower interest rates and to reduce overall debt service. Alternatively, some refunding’s are undertaken for reasons other than to achieve cost savings, such as to restructure debt service payments, shorten maturities and to change the type of debt instruments being used, or to eliminate undesirable covenants.

A present value savings analysis will be prepared to identify the economic effects of any refunding being considered by the City. The savings from any particular refunding candidate shall generally be at least 3% of the refunded principle amount, net of all transaction expenses. This 3% savings target may be waived by the City upon a finding that such a refunding is in the City's best overall financial interest and shall not be applicable for refunding transactions that are not solely undertaken to achieve cost savings.

Integration with City Capital Improvement (CIP) Plan and Budgets

The City is committed to long-term financial planning, maintaining appropriate reserves levels, and employing prudent practices in governance, management, and budget administration. In addition, the City maintains a General Plan as well as a multi-year Capital Improvement Project (CIP) Plan to establish and monitor priorities for projects. The City strives to integrate its debt issuances with the goals of the CIP by timing the issuance of debt to ensure that projects are available when needed in furtherance of the City’s public purposes and in a timely manner to avoid having to make unplanned expenditures for capital improvements or equipment from its general fund budget.

The City intends to issue debt for the purposes stated in this Policy and to implement policy decisions incorporated both in the City’s annual operations budget as well as the CIP.

Policy Goals

The City is committed to long-term financial planning, maintaining appropriate reserves levels, and employing prudent practices in governance, management, and budget administration. It is a policy goal of the City to protect taxpayers, ratepayers, and constituents by utilizing conservative financing methods and techniques so as to obtain the highest practical credit ratings (if applicable) and the lowest practical borrowing costs.

The City will comply with applicable state and federal law as it pertains to the maximum term of debt and the procedures for levying and imposing any related taxes, assessments, rates, and charges.

When refinancing debt, it shall be the policy goal of the City to realize, whenever possible, and subject to any overriding non-financial policy considerations, (i) minimum net present value debt service savings equal to or greater than 3.0% of the refunded principal amount, and (ii) present value debt service savings equal to or greater than 100% of any escrow fund negative arbitrage.

6.G.a
Packet Pg. 409
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

Consultants

The City will, when appropriate and given the specific requirements of the financing, secure the services of independent financial advisors, underwriters, disclosure council, bond council, appraisal services and other service providers.

Investment of Bond Proceeds

Bond proceeds will be invested according to the City-adopted Investment Policy or the Bond Fiscal Agreement, if applicable. The City will not use derivatives unless the City adopts a separate comprehensive Derivatives Policy.

Ongoing Administration and Internal Controls

When issuing debt, in addition to complying with the terms of this Debt Policy, the City will comply with any other applicable policies regarding initial bond disclosure, continuing disclosure, post-issuance compliance, and investment of bond proceeds.

The City will accurately account for all debt-related activity. These records will be designed to ensure that the City maintains compliance with all debt covenants, as well as state and federal laws. The City will maintain a system of reporting interest earnings that relates to and complies with Internal Revenue Code requirements relating to rebate, yield limits and arbitrage.

Compliance

Initial Disclosure
In accordance with Senate Bill 1029 (2016) (“SB1029”), the City will submit a report of final sale to the California Debt and Investment Advisory Commission, not later than 21 days following the sale of the debt. A copy of the final Official Statement shall accompany the report of final sale. In the event that the Official Statement has not yet been finalized, the City will provide documentation to satisfy the requirements of SB1029, as necessary.

Ongoing Disclosure
The City will maintain compliance with the regulations set forth in Government Code Section 8855(i), Rule 15(c)2- 12 – Securities and Exchange Commission Rule 15(c)2-12, Continuing Disclosure (“Rule 15(c)2-12”) and SB 1029.

Section 8855(i), Rule 15(c)2-12 – The City will file an annual report and annual financial information with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System (EMMA). The reports will be made timely and in accordance with Rule 15(c)2-12 as amended.

SB 1029 – The City will submit an annual report for any issue of debt whose final sale occurred on or after January 21, 2017. The annual report will cover the reporting period July through June 30 and will be submitted no later than seven months following the end of the reporting period.

Adoption by Legislative Body

In accordance with SB1029, the City and the Cathedral Ci ty Public Finance Authority will adopt this policy. In implementing this policy from time to time, interpretations and variations may be made at the discretion of the City’s Manager or Chief Financial Officer, without approval of the Council, as determined by such person to be in the best interests of the City or its citizens, and/or for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law.

6.G.a
Packet Pg. 410
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

REIMBURSEMENT FOR TRAVEL AND TRAINING, AND VEHICLE USE POLICY The purpose of this Reimbursement for Travel and Training, and Vehicle Use Policy is to formalize an accountable plan and uniform procedures for travel expenses & reimbu rsing city employees for training, travel, meetings, and out of pocket expenses incurred while on official business.

The City hereby formalizes its policies and procedures for the reimbursement of training, general travel and other actual necessary expenses incurred by eligible individuals in the course of performing their official duties.

GENERAL POLICY

This policy formalizes standards for travel and business ex penses incurred while performing or conducting official City business.

 Eligible Individuals:

o All employees at the City covered by a collect ive bargaining agreement and all employees covered by Regulations Covering Executive, Administrative, Professional, Confidential, and Other Particular Employees.

o Councilmembers and members of boards, commissions, committees.

 The City Manager and department heads are charged wi th the responsibility of authorizing travel and reimbursement, per this policy, and ensuring that all expenditures hereunder are within approved budget limits.

 All employees requesting reimbursement for allowe d expenses, other than meals, shall provide a valid itemized receipt. Any such receipt shall include or be accompanied by documentation of the name of the vendor (e.g., hotel, airline, taxi), the date and purpos e of service and actual amount charged. Employees shall file a Travel Expense Report for reimbursement through the Employee Self Service system.

 In the event a receipt is not available to subst antiate an expense, the employee may submit a written explanation, with all pertinent expense and situati onal details, through their organizational chain of command to their respective department head. Requests approved by a department head may be sent to the City Manager, or designee, who will review su ch requests for reimbursement and make a final determination as to approval or denial. Reimbursement requests for business expenses without original receipts will be processed for payment only upon approval by City Manager, or designee.

 Discretion: This policy does not claim to have addressed all contingencies and conditions. Any necessary and reasonable expense that may from time-to-time be ju stified due to circumstances or opportunities for the City or any necessary and reasonable expenses that may deviate from the provision of this Policy, may be presented to the City Manager, or designee for their review and approval. The City Manager, or designee shall exercise due diligence to ensure that expenses are reasonable and necessary for the conduct of City business, are within budgetary limits and ensure the City's fiscal position by minimizing costs.

o If an expense is not outlined in this policy, it may be subject to dismissal or rejection.

 Personal and business travel shall not be commingled in such a manner as to increase allowable expense or otherwise adversely affect the interest of the City.

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

DEPARTMENT TRAINING AND TRAVEL BUDGETS

Departments will be provided an annual budget for business travel, conferences and training based upon their unique requirements. Departments should monitor their travel and training expenditures to ensure approved allocations are not exceeded. If the overall departmental budgeted allocation has been spent, and additional travel is necessary, authorization by the City Manager, or designee’s required.

JOB TRAINING

The City supports job training as an ongoing process and as an important tool to help employees remain current in their job responsibilities and skills. All training is subjec t to available funds; however, job-required training will be given preference in the decision-making process for expending training funds. The City encourages training opportunities that can be obtained in a cost-effective manne r. Such opportunities will be given priority over other similar types of training.

 Job Required Training: Includes mandated certifications , licenses or mandatory training required to perform the duties and responsibilities of a job. This may also include mandated safety training, technical or professional training, seminars an d conferences, workshops, and similar programs. For employees required to obtain certification to perform the duties of their job, the City will pay all expenses required to obtain the certification one time. If the employee is required to retake the test, the expenses will be the employee’s responsibility unless waived by the City Manager.

 Job Related Training: Includes general types of traini ng related to the performance of current job duties, development of skills, or training t hat would assist an employee’s adv ancement within their department and/or organization.

 Covered by MOU: These sections are not meant to pr ovide greater or different rights than those that exist in any Memorandum of Understanding (MOU). To the extent that any MOU addresses this topic and/or there is a conflict, the provisions of the MOU will govern.

COMPENSABLE TIME

 Time attending any work-related training in which the cost is paid by the City is compensable time.

 Travel Time: The principles which apply in determining whether time spent in travel is compensable time depends upon the kind of travel involved.

o Traveling during normal work hours is considered compensable work time, except for travel to and from the normal fixed or assigned workplace.

o If travelling to a location that is one other than the normal fixed or assigned workplace, an employee’s time traveling to and from the abnor mal or not assigned workplace location is compensable.

 Travel Away from Home: Travel that keeps an employ ee away from home overnight is travel away from home. Travel away from home is work time when it cuts across the employee's workday. The time is not only hours worked on regular working days during normal working hours but also during corresponding hours on nonworking days.

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

 Home to Work Travel: An employee who travels from home before the regular workday and returns to their home at the end of the workday is engaged in ordinary ho me to work travel, which is not work time and is not compensable.

 Time spent by an employee commuting to and from work is not work-related travel and is not compensable time.

 Lunch or meal breaks are not compensable time unless the lunch includes a speaker and/or is considered a working lunch as evidenced by the agenda.

GENERAL TRAVEL

 Employees shall select the most economical method of transportation in terms of expense to the City and the employee’s time away from the office. Employees shall receive approval, per the below, prior to making any travel arrangements.

o If travel expenses total more than five thousand dollars ($5,000), including registration, lodging, meals, and transportation (all expenses outlined in the travel approval form), travel shall be approved by the City Manager or designee.

o If travel expenses total less than five thousand dollars ($5,000), including registration, lodging, meals, and transportation (all expenses outlined in the travel approval form), travel need only be approved by the employee’s Department Head.

 Upon approval of travel, City credit cards may be us ed to make travel arrangements. Receipts, approval forms, and expense reports shall be submitted when reconciling City credit card statements.

o Employees who do not have a City credit card may have their supervisor or other department employee reserve lodging on their behalf using a City credit card.

o A travel advance may also be requested for lodging expenses. (Refer to Section J for additional information relating to travel advances.)

 If itemized receipts are not included in the Travel Expense Report, the employee may be responsible for travel expenses.

 An employee who extends the appr oved travel for their own convenien ce will not be entitled to any additional allowance for meals or lodging.

 Travel on behalf of the City in case of an emergency may be exempt from provisions of this section with approval from the City Manager. Expense reports or other paperwork will be completed and submitted as soon as practical upon return from travel, but no longer than thirty (30) days after travel expenses occurred.

 A valid California driver’s license with appropriate endo rsement is required if the employee is driving a City, personal, or rental vehicle while on City business. It is the employee’s responsibility to maintain a valid California driver’s license and report any changes to their supervisor. (Refer to Section M for additional information relating to private automobile.)

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

 If more than one employee is attending the same training, employees shall attempt to arrange to carpool, either using a City pool vehicle or a designated em ployee’s personal vehicle. Personal vehicle mileage reimbursement will not be paid to more than one employee when carpooling.

 Airfare/Train: Allowance for air and train travel is bas ed on actual round trip coach fare, tourist fare or by the method least costly to the City. Employees are expected to make special efforts to take advantage of discounts, special fares, and travel vouchers whenever available at reasonable and convenient times. If an employee opts to travel using a fare above the Coac h rate, the employee shall provide documentation for the two fares and is personally responsible for the cost difference.

 Travel Insurance: The purchase of travel insu rance requires prior authorization by the employee’s department head for airfare.

 Car Rental: Allowance for car rental is based on actual cost to rent a mid-range size vehicle. Employees are expected to make special efforts to take advantage of discounts, special fares, and travel vouchers whenever available at reasonable and convenient times. Employees shall have a valid California driver's license and proof of insurance when using a rental vehicle while on City business. Employees are required to notify Risk Management and/or their department head as soon as possible (within 24 hours) of any event/incident causing property damage, or accident related to the rental car.

 Taxis, Shuttles, and/or Ride Shares (Uber/Lyft): Taxi s, shuttles, and/or ride shares, such as Uber and Lyft may be reimbursed, with no more than 15% gratuity.

 Parking Expenses: The City will provide reimbursement for actual co st of parking associated with travel, including parking at the airport, hotel, and conference par king, training, or meeting site or in conjunction with any employee City business activity.

 Claims for payment or employee reimbursement sha ll be allowable when accompanied by a receipt for the purchase and a copy of the ticket purchased or other voucher for the common carrier expense.

 Government and group rates shall be used when avail able. Actual costs evidenced by an original, dated receipt and inclusive of all related taxes and other rent al fees shall be submitted along with actual gas receipts (dated, vendor name printed on the receipt) obtained for the purchase of gas for the rental vehicle.

ADVANCE TRAVEL AUTHORIZATION

 Travel expenses require prior authorization by the Department Head and the City Manager’s (or designee) approval when the estimated total cost (including regi stration, transportation, lodging, and meals) is expected to cost five thousand dollars ($5,000) or more per person.

 Travel expenses require prior authorization by the employee’s Department Head when the estimated total cost (including registration, transportation, lodging, and meals) is less t han five thousand dollars ($5,000) per person. The Department Head’s approval indicates that the travel is approved and within budget.

USE OF TRAVEL ADVANCE AND/OR TRAVEL EXPENSE REPORT

 Each employee submitting a claim for reimbursement under this policy shall file a Travel Expense Report, through the Employee Self Service portal.

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

 The Travel Expense Report shall include the date(s) of travel, business destination, total amount, and business purpose. It shall include a copy accompanied by all required supporting documents (expenditure receipts, lodging facility folio, registration forms, and meeting itineraries, conference flyer, etc.).

 Claims shall be filed promptly, but no later than 30 days after the expense occurred. Claims filed after this time may not be considered for payment.

 Each claim form submitted shall meet the requirements of this policy, including providing receipts and/or credit card slips, and shall be reviewed and approved by the submitting employee's department head and the Financial Services Department for compliance with this policy.

 All claim forms and associated documents related to reimbursable City expenditures are considered public records and may be subject to disclosure under t he California Public Records Act {Chapter 3.5 (Commencing with Section 6250) of Division 7 Title 1}.

TRAVEL ADVANCES:

 Employees may request a travel advance for use in th e course of necessary and allowable travel and shall be requested via the Employee Self Service (ESS) system. The employee's department head shall approve the issuance of cash advances.

 Travel advances may be requested for the following expenses:
o Meals
o Lodging
o Air fare
o Car rental

If a travel expense is not listed above, it sha ll be reimbursed after the fact. Typical reimbursable expenses include mileage, transportation (ride shares), and parking.

 Travel advances are to be documented and reported in the same manner as expenses incurred and submitted for reimbursements, e.g., receipts shall be saved (exceptions apply to meal expenses – Section L), a claim form may be submitted, expenses are limi ted, approvals of expenses shall be secured, etc.

Should there be unused travel advance, the City shall be reimbursed within five (5) days if the following applies:

o Travel arrangements have been cancelled; or,

o At the conclusion of travel.

Notwithstanding, a travel advance of any denomin ation will not be granted whenever the requesting employee has an open travel-advance on file, wherein the employee has not submitted the necessary receipts and paperwork confirming the previous advance was used in its entirety for actual and necessary expenditures in accordance with this policy.

 Travel advances will be provided through payroll. A Claim Voucher sh all be submitted to payroll through the Employee Self Service (ESS) system.

o Travel shall occur within 30 days of the advance.

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

LODGING AND RELATED EXPENSES:

 Lodging and overnight stays are not authorized for travel under 50-miles from the city limits. They may be authorized for travel more than 50 miles from City limits.

 Employees should seek the most affordable rates av ailable for safe, convenient, clean accommodations at 3-star quality properties, using government, group, or discounted rates when available at reasonable and convenient times. In addition to the primary travel co st, e.g., room rate, etc., an employee making lodging arrangements should also consider secondary costs, e.g., internet service fees, property use fees, etc.

o Reservations for lodging should be booked as early as possible to take advantage of lower rates.

 When lodging is in connection with a conference or organized educational activity, lodging expenses shall not exceed the group rate published by the conferen ce sponsor for the conference in question. The employee shall endeavor to stay at the conference sponsored lodging facility.

 Lodging expenses over $250 per night shall be appro ved by the City Manager, or designee. If the GSA’s lodging per diem rate for the destination site is gr eater than $250, the corresponding GSA per diem rates shall be submitted with the travel approval form for review by all approving parties.

o However, this requirement does not apply if a conference sponsor has set aside rooms for conference attendees at a lodging facility. Instead, you shall book lodging directly with the lodging facility.

 The group rate shall be clearly defined in the supporting documents provided by the conference coordinators or conference sponsor (all supporting documents shall be accompanied with the travel approval form).

 Actual and necessary cost of lodging and related ex penses, including advance payments to any city employee shall be allowed, except as otherwise provided in this Section.

 Lodging in upgraded rooms is allowable if:

o the employee pays the cost difference and provides proof of the price difference for the original and upgraded rooms; or,

o the employee or their department can document that no other option exists, and the selected lodging is the only option available – supporting documentation shall be attached to the travel approval form.

 Lodging and related expenditures outside the provisions of this policy may be allowed only when pre- approved by the City Manager, in accordance with Section General Policy - Discretion.

 An employee's reimbursement claims for lodging shal l include an explanation of the business purpose of the stay and be supported by receipts, a facility fo lio, and shall be accompanied by all approved travel forms. When reconciling City Credit card travel expe nses shall be included as supporting documents for invoice reconciliation.

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

MEAL EXPENSES:

 Meal expenses shall be allowed at the maximum dai ly meal allowance rate of $60 ($15 for breakfast, $20 for lunch, and $ 25 for dinner) per employee, inclusiv e of taxes and reasonable tips. Per diem advances and reimbursements for meals shall be allowed when related to attendance at conventions, scheduled meetings, conferences, seminars, special training, or assignments that require an overnight stay.

o An employee's meal reimbursement claim shall be based on meals while enroute to the training site, at training, and enroute home, but does not include breakfast on the departure date and dinner on the return home date.

o Meal expenses up to the per diem rate do not require a receipt to be allowable. Meal expenses beyond the per diem reimbursement allowance are the responsibility of the employee. If an employee uses a City credit card for meals, then the employee will reimburse the City if any meal limit amounts identified above are exceeded.

o Meals included in a conference or meeting r egistration are not eligible for reimbursement.

Therefore, if a meal is provided by conference or meeting registration, but the traveler chooses to eat elsewhere, the added meal expense is not reimbursable.

 Meal expenses during attendance at any single day ev ent will be allowable only when it is not reasonable for the employee to provide their own meal(s). Requests for a same-day travel meal shall only be allowed when preapproved by the employee's department head, in accordance with this policy. In evaluating any request for same-day meal reimbursements, the employee's department head shall consider special situations on a case-by-case basis, taking into cons ideration the distance traveled and the duration of the specific business activity. The maximum reimbursement for any same day event should be $20 for lunch.

PRIVATE AUTOMOBILE

 With the exception of employees receiving an automobile stipend, the City's preference is for all employees to use City vehicles rather than personal vehicles.

 The City's private-vehicle mileage reimbursement rate is the same as the Internal Revenue Service (IRS) standard mileage rate (www.irs.gov) for private vehicles and will be effective concurrently with IRS periodic establishment of said rate.

 Mileage shall be calculated by deducting the employee’ s normal commute from the total number of miles to and from the destination.

 Mileage reimbursements for use of a private vehicle shall be allowed upon authorization of the employee's department head. Reimbursement of private mileage will only be granted when a more economical means of travel is not available. However, travel/map do cumentation shall be provided with the travel expense form. In any case, mileage will not be reimbursed for po rtions of the trip made for non-busi ness-related matters.

 Private vehicle expenses are allowable when in the course and scope of employment, including overnight travel.

o Private vehicle use shall be approved by the employee's department head.

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

o In the event of an incident or accident, the City does not assume responsibility for any physical damage to an employee's personal vehicle or for the payment of any kind of deductible.

o Employee shall maintain a valid dr iver's license, which is appropriate for the class of vehicle to be operated. If any restrictions apply, the employee shall notify their supervisor of the restrictions and/or any and all changes in the license (i.e., suspended, etc.).

 The use of motorcycles, mopeds, and similar types of v ehicles for the conduct of City business is expressly prohibited, with the exception of personnel on duty in a specific assignment.

 When a department head or the City Manager authorize s use of a private vehicle for the convenience of the driver, instead of more economical travel by air, reimbursement shall not exceed the cost of usual airfare, plus ground transportation.

o The quote shall be accompanied by the Travel Expense Report.

 Employees are required to notify Risk Managemen t and the employee's department head, as soon as possible, but in no event more than twenty-four (24) hours after any incident or accident, unless physically unable.

 Neither an employee receiv ing a monthly auto allowance nor an employee utilizing a city owned vehicle in their regular scope of employment is eligible to receive private-vehicle mileage reimbursement.

LOCAL TRANSPORTATION, TOLLS, AND PARKING

 Public transportation use is described as local tran sportation and can be claimed with itemized receipts.

 Bridge and road tolls may be reimbursable with receipts.

 Receipts are required for reimbursement of allowable parking fees.

MISCELLANEOUS EXPENSES:

 Miscellaneous expenses, including charges for fax servic e, internet, the cost of usual or necessary services and supplies, including emergency repairs, parts or towi ng for City vehicles, conference registration fees, vehicle parking, bridge tolls, and any other justifiable business expenses shall be allowed if the expense is necessary for the employee to conduct City related business or is otherwise a legitimate business need.

 A satisfactory explanation and documentation of t he circumstances is required for these miscellaneous expenditures. An employee's reimbursement request for actual miscellaneous expenses shall be accompanied by an original receipt or other original voucher.

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

NON-REIMBURSABLE EXPENSES:

 Expenses that the city will not reimbu rse include, but are not limited to:

o Purchases made for goods and/or services of a business owned (whether in whole or in part) by any current member of the City Council, or other authority for which the city is a partner agency.

o The personal portion of any trip.

o Political or charitable contributions.

o Family expenses, including spouse or partner's expenses when accompanying an employee on agency-related business, as well as children- or pet-related expenses.

o Personal guest expenses

o Entertainment expenses, including but not limited to theater, movies (either in-room or at the theater), recreational events not related to City business (including gym, massage and/or golf related expenses), and cultural events not related to City business.

o Personal automobile expenses, including repairs, traffic citations, insurance, or gasoline.

o Personal alcohol or bar expenses, even when incu rred in conjunction with reimbursable meal expenses.

o Personal losses incurred while on City business.

o Expenses bearing no relation to City business, ev en if incurred while traveling for City business.

o If an expense is not outlined in this policy, it may be subject to dismissal or rejection.

PENALTIES:

 Penalties for the misuse of public resources, non-com pliance with this policy or falsifying expense reports in violation of expense reporting policies may include, but are not be limited to, employee discipline as well as the penalties specified in state law including:

o The loss of reimbursement privileges.

o Restitution to the local agency.

o Civil penalties for misuse of public resources pu rsuant to Section 8314 of the Government Code; and,

o Prosecution for misappropriation of public resources, per Section 424 of the Penal Code.

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

FINANCIAL POLICIES

EXEMPTIONS

 The City Manager or Designee is authorized to exempt, by ratification after the expense is incurred or prior to the expense being incurred, any City personnel from the official rules, regulations, and procedures set forth herein under extenuating circumstances.

 The City Manager or Designee may, at their discreti on, approve or disapprove any of the types of travel and/or business expenses outlined above, or any other expense not listed, as they deem appropriate under the specific circumstances.

 The City Manager or Designee shall decide all questions of interpretation of the policies, rules, regulations, and procedures set forth herein.

DISPUTES

 Disputed expenditures may be brought to t he City Manager or Designee for resolution.

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

DEBT ADMINISTRATION

The City of Cathedral City (“City”) has financed capital acquisitions by issuing bonds and entering into capital leases.

The table below highlights the total principal and in terest due for FY 2023/2024 and FY 2024/2025. Amounts due beyond the current two-year budget period are summarized in a single line.

Separate tables identifying principal and interest amounts are included in the individual sections that follow.

BONDS
Lease Revenue Bonds
Lease revenue bonds were issued by the Cathedral City Public Financing Authority (“Authority”) and loaned to the City. The City pledged lease revenues to the Authority for repayment of the bonds. Monies from the 1997 bonds were used to make a construction loan to Big League Dreams Sports, LLC for the construction of a sports complex and community park. In July 2015 the authority sold lease revenue refunding bonds to refund the 1997 bonds.

On April 13, 2022, the Cathedral City Public Financing Aut hority issued Cathedral City Public Financing Authority Lease Revenue Bonds, 2022 Series A (Federally Taxable) in the amount of $28,780,000. The purpose of the issuance of the bonds was to refinance a portion of the City’s CalPERS Obligation and refund the outstanding Authority Lease Revenue Refunding Bonds Series 2015A (Taxable). The City Council approved the issuance of the pension obligation bonds on September 15, 2021.

The table below highlights the total principal and interest due for FY 2023/2024 and FY 2024/2025 on the new issue. Amounts due beyond the current two-year budget period are summarized in a single line.

Year Ended
June 30
Lease
Revenue
Bonds
Limited
Obligation
Bonds
Tax
Allocation
Bonds
Capital
Lease
Obligations Total
2024 3,664,632 $ 2,806,091 5,075,077 - 11,545,800 2025 3,609,694 2,808,942 5,075,001 - 11,493,636 2026 - 2036 24,597,955 25,494,294 34,624,955 - 84,717,203 Total 31,872,281$ 31,109,327 44,775,032 - 107,756,639

OUTSTANDING DEBT
Year Ended
June 30 Principal Interest Total
2024 2,705,000 $ 959,632 3,664,632
2025 2,730,000 879,694 3,609,694 2026 - 2033 20,715,000 3,882,955 24,597,955 Total 26,150,000$ 5,722,281 31,872,281

LEASE REVENUE BONDS

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

DEBT ADMINISTRATION

Local Agency Revenue Bonds
Local Agency Revenue bonds were issued by the Authority and used to purchase outstanding Assessment District Bonds: Assessment District 96-1 (Rio Vista), Assessment District 01-01, Assessment District 03-01 (35th Avenue), Assessment District 04-01 (Dream Homes) and Assessment District 04-02 (Cove). In addition, the Authority’s 2004 Limited Obligation Refunding Bonds, were refunded. Repaym ent of the bonds is secured solely by the payments received from the purchased assessment district bonds.

The table that follows highlights the total principal and interest due for FY 2023/2024 and FY 2024/2025. Amounts due beyond the current two-year budget period are summarized in a single line.

Tax Allocation Bonds
The proceeds of various tax allocation bonds issued by the Authority were either loaned to the former redevelopment agency to assist in financing the acquisition and construction of capital projects within the redevelopment area or used to purchase debt of the former redevelopment agency. Tax increment revenues were pledged by the former redevelopment agency to the Authority for debt service.

The State of California dissolved all redevelopment agencies in January 2012. Effective February 1, 2012, the Successor Agency to the RDA was established to pay all enforceable obligations of the former redevelopment agency. The tax allocation bonds are considered an enforce able obligation. Property taxes are allocated to the Successor Agency to the RDA from Riverside County based on the annually approved Recognized Obligation Payment Schedule (ROPS), which includes the bond payments.

In October 2014, the Successor Agency to the RDA issued Tax Allocation Refunding Bonds, Series 2014A ($46,140,000), Tax Allocation Housing Revenue Refunding Bonds, Series 2014B ($15,630,000) and Taxable Tax Allocation Housing Revenue Refunding Bonds, Series 2014C ($11,985,000). These bonds refunded the Cathedral City Public Financing Authority’s 2002 Tax Allocation Bonds, Series A; 2002 Tax Allocation Bonds, Series D; 2002 Tax Allocation Bonds, Series E; 2004 Tax Allocation Bonds, Series A; 2005 Tax Allocation Bonds, Series A; and a portion of the 2000 Tax Allocation Bonds, Series A.

In January 2021, the Successor Agency to the RDA issued Tax Allocation Revenue Refunding Bonds, Series 2021A ($26,195,000), Tax Allocation Revenue Refunding Bond s, Series 2021B ($5,905,000) and Subordinate Taxable Tax Allocation Revenue Refunding Bonds, Series 2021C ($18,840,000). These bonds refunded the Cathedral City Public Financing Authority’s 2004 Tax Allocation Bonds, Series B; 2007 Tax Allocation Bonds, Series A; and 2007 Tax Allocation Bonds, Series C.

Year Ended
June 30 Principal Interest Total
2024 1,880,000 $ 926,091 2,806,091
2025 1,955,000 853,942 2,808,942 2026 - 2036 20,970,000 4,524,294 25,494,294 Total 24,805,000$ 6,304,327 31,109,327

LOCAL AGENCY REVENUE BONDS

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

DEBT ADMINISTRATION

The table below highlights the total principal and interest due on the remaining tax allocation bonds for FY 2023/2024 and FY 2024/2025. Amounts due beyond the current two-year budget period are summarized in a single line. The table does not include the refunding bonds issued by the Succ essor Agency to the RDA as these bonds are the sole responsibility of the Successor Agency to the RDA (a private purpose trust fund).

Year Ended
June 30 Principal Interest Total
2024 2,891,094 $ 2,183,984 5,075,077
2025 3,015,528 2,059,473 5,075,001
2026 - 2036 23,084,379 11,540,575 34,624,955 Total 28,991,000$ 15,784,032 44,775,032

TAX ALLOCATION BONDS

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

LEGAL DEBT MARGIN

Under State law, the City has a legal debt limitation not to exceed 15% of the total assessed valuation of taxable property within the City boundaries. In accordance with California Government Code Section 43605, only the City’s general obligation bonds are subject to the legal debt limit. With no outstanding debt subject to the legal debt limit and a legal debt limit of $773,530,976, the City is not at risk of exceeding the legal debt limit.

Legal Debt Margin Calculation as of June 30, 2022

Assessed value (net taxable) 1 $ 5,348,739,839

Debt limit (15% of assessed value) $ 802,310,976

Less outstanding debt (subject to legal debt limit) (28,780,000)

Legal debt margin $ 773,530,976

1 Source: HdL Coren & Cone (Riverside County Assessor 2021/22 Combined Tax Rolls), as reported in City of Cathedral City, California Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2022.

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

APPENDICIES

 Glossary of Acronyms
 Glossary of Terms

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

GLOSSARY OF ACRONYMS

A
AB: Assembly Bill
ABC: Alcohol Beverage Control
ACBCI: Agua Caliente Band of Cahuilla Indians
ACFR: Annual Comprehensive Financial Report
AD: Assessment District
ADA: Americans with Disabilities Act
ADFAP: Assessment District Fee Assistance Program
AFSCME: American Federation of State, County and Municipal Employees ALS: Advanced Life Support
AO: Ambulance Operator
APWA: American Public Works Association
ATP: Active Transportation Program
B
BLS: Basic Life Support
C
CA: California
CAD: Computer Aided Dispatch
CALED: California Association for Local Economic Development CalPERS: California Public Employees’ Retirement System CCFMA: Cathedral City Fire Management Association
CCHS: Cathedral City High School
CCPD: Cathedral City Police Department
CCPFA: Cathedral City Professional Firefighters Association CCPMA: Cathedral City Police Management Association
CCPOA: Cathedral City Police Officers Association
CDBG: Community Development Block Grant
CDTFA: California Department of Tax and Fee Administration CERT: Community Emergency Response Team
CFD: Community Facilities District
CHIP: Community Home Improvement Program
CIP: Capital Improvement Project

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CIWMB: Countywide Integrated Waste Management Bureau
CMO’s: Collateralized Mortgage Obligations
COP: Citizens on Patrol
COVID-19: Novel Coronavirus 2019-nCoV
CPR: Cardiopulmonary Resuscitation
CRRA: California Resource Recovery Association
CSO: Community Resource Officer
CURC: City Urban Revitalization Corporation
CV: Coachella Valley
CVAG: Coachella Valley Association of Governments
CVEP: Coachella Valley Economic Partnership
CVRep: Coachella Valley Repertory
CVWD: Coachella Valley Water District
CY: Calendar Year
D
DHRP: Dream Homes Rehabilitation Program
DHS: Desert Hot Springs
DIF: Development Impact Fee
DMV: Department of Motor Vehicles
DRD: Desert Recreation District
DUI: Driving Under the Influence
E
E/O: East of
EAP: Employee Assistance Program
ECD: Early Childhood Development
EDA: Economic Development Authority
EMD: Emergency Management Division
EMD: Emergency Medical Dispatching
EMPG: Emergency Management Performance Grant
EMS: Emergency Medical Service
EMT: Emergency Medical Technician
EOC: Emergency Operations Center
ERICA: East Riverside County Interoperability Communications Authority

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ERP: Enterprise Resource Planning
F
FTE: Full-Time Equivalents
FTHB: First Time Home Buyer
FTO: Field Training Officer
FY: Fiscal Year
G
GASB: Governmental Accounting Standards Board
GC: Government Code
GCVCC: Greater Coachella Valley Chamber of Commerce
GEMT: Ground Emergency Medical Transport
GFOA: Government Finance Officers Association
GIS: Geographic Information Systems
H
HBPF: Highway Bridge Program Fund
HEAL: Healthy Eating Active Living
HSIP: Highway Safety Improvement Program
HUD: Housing and Urban Development
I
IES: Inland Empire Section
IO’s: Interest-Only
ISO: Insurance Services Office
L
LAIF: Local Agency Index Fund
LGBT: Lesbian, Gay, Bisexual, Transgender
LWCF: Land and Water Conservation Fund
M
MOE: Maintenance of Effort
MTNs: Medium-Term Notes
N
NFIRS: National Fire Incident Reporting System
NIBRS: National Incident-Based Reporting System
NIMS: National Information Management System
NPDES: National Pollution Discharge Elimination System

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O
OPEB: Other Post-Employment Benefits
OSHA: Occupational Safety and Health Administration
OTS: Office of Transportation Safety
P
PACT: Post-Release Accountability & Compliance Team
PBI: Project Budget Indicator
PEG: Public Education and Government
PIP: Parks Improvement Project
PMP: Pavement Management Program
PO’s: Principal-Only
POST: Police Officers Standards Training
PPE: Personal Protective Equipment
PSEC: Public Safety Enterprise Communication
PSR: Project Study Report
PUC: Public Utility Commission
Q
QAF: Quality Assurance Fee

R
RCTC: Riverside County Transportation Commission
RDA: Redevelopment Agency
REAS: Rubberized Emulsion Aggregate Slurry
REMSA: Riverside County EMS Agency
RIPA: Racial Profiling Data Collection
RMRA: Road Maintenance and Rehabilitation Account
RMS: Records Management System
ROPS: Recognized Obligation Payment Schedule
S
S/O: South of
SAS: Statement of Auditing Standards
SB1: Senate Bill 1
SCAG: Southern California Association of Governments
SCAQMD: South Coast Air Quality Management District

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SCLP: Short-Lived Climate Pollutants
SCRAP: Student Creative Recycle Art Program
SEMS: Standard Emergency Management System
SFST: Standardized Field Sobriety Test
SHARP: Sewer Hookup Assistance Program
SRRE: Source Reduction Recycling Element
STVR: Short-Term Vacation Rental
T
TAB: Tax Allocation Bond
TDA: Transportation Development Act
TOT: Transient Occupancy Tax
TOWS: Threats, Opportunities, Weaknesses and Strengths
TUT: Transactions and Use Tax
U
UUT: Utility Users’ Tax
V
VHF: Very High Frequency
VLF: Vehicle License Fee

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GLOSSARY OF TERMS

A
ACCRUAL BASIS OF ACCOUNTING: Revenues are recognized when both measurable and earned; expenditures are recorded when services have been substantially performed or goods have been received and the liabilities incurred.

ADOPTED BUDGET: The official budget as approved by the City Council prior to the start of each fiscal year.

AMENDED BUDGET: The official budget as approved by the City Council with amendments approved throughout the budgeted fiscal year.

ANNEXATION: The inclusion, attachment, or addition of territory to a city.

APPROPRIATIONS: A legal authorization granted by a legislative body to make expenditures and to incur obligations for specific purposes. An appropriation is us ually limited in amount and to the time when it may be expended.

ASSESSED VALUATION: A municipality’s property tax base stated in dollars based on real estate and/or other taxable business property for the purposes of taxation, sometimes expressed as a percent of the full market value of the taxable property within a community.

ASSESSMENT DISTRICT: Assessment Districts are created to provide public works improvements to a large area at one time. Municipal bonds are sold for the full cost of the improvements.

AUDIT: An official examination of an organizations or individual’s accounts, performed by an independent entity.

AUTHORITY OR AGENCY: A state or local unit of government created to perform a single activity or a limited group of functions and authorized by the state legislature to issue bonded debt.

B
BALANCED BUDGET: When the budgeted expenditures are equal to or less than the budgeted revenues plus other available sources.

BOND: A security whereby an issuer borrows money from an investor and agrees and promises, by written contract, to pay a fixed principal sum on a specified date (maturity date) and at a specified rate of interest.

BOND DISCOUNT: The amount at which a bond or note is bought, or sold, below its par value excluding accrued interest.

BOND PREMIUM: The amount at which a bond or note is bought or sold above its par value or face value without including accrued interest.

BROKER: A bond trader in the secondary market buying from and selling to bond dealers. Its most common usage is as a description of a bond salesperson.

BUDGET: A plan of financial operation comprised of estimated expenditures for a given period and the proposed means of financing the expenditures (through revenues).

BUDGET MESSAGE: A written discussion of the budget presented by the City Manager, or their designee to the City Council.

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C
CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION: The state organization responsible for the administration of 30+ different taxes and fees, categori zed as: 1) Prepaid Telephony, 2) Sales and Use Tax, 3) Special Taxes and Fees, or 4) Collection Cost Recovery Fees.

CAPITAL IMPROVEMENT PROJECT (CIP) PLAN: A plan for capital improvements to be implemented each year over multiple years to meet capital needs arising from the assessment of long-term needs. It sets forth the estimated cost for each project and specifies the resources required to finance the projected expenditures.

CAPITAL IMPROVEMENT PROJECT: The budget unit to group activities and costs necessary to implement a specific capital improvement and/or acquisition. A project can include the construction, acquisition, expansion, replacement, or rehabilitation of a physical facility or improvement. Projects often include planning and design, land acquisition, and project management costs related to such facilities and improvements.

CAPITAL OUTLAY: Expenditures for equipment/furniture and fixtures with a cost of more than $5,000 and a useful life exceeding one year.

CAPITAL PROJECTS FUNDS: Used to account for financial resources for the acquisition or construction of major capital facilities other than those financed by proprietary (internal service) and trust funds.

COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG): Grants funded by the Federal government’s Department of Housing and Urban Development (HUD) to eliminate blight and provide benefits to low- and moderate-income households.

CONTRACTED SERVICES: Services rendered in support of City operat ions and activities by external parties.

These may be based upon either formal contracts or ad hoc charges.

CUSTODIAL FUND: Used to account for assets held by the City in a fiduciary capacity for individuals, government entities, and others. Such funds are o perated by carrying out the specific ations of trust indentures, statutes, ordinances, or other governing regulations.

CY: Calendar Year
D
DEALER: A corporation or partnership buying, selling, and maintaining an ongoing position in bonds and/or notes.

They are also authorized to underwrite new issues. Some large commercial banks are licensed to act as bond dealers.

DEBT LIMIT: The maximum statutory or constitutional amount of debt the general obligation bond issuer can either issue or have outstanding at any time.

DEBT SERVICE FUNDS: Account for the accumulation of resources set aside to meet current and future debt service requirements (payments) on general long-term debt.

DELINQUENT TAXES: Property taxes that have been levied but remain unpaid on and after the due date. In California, the due dates are November 1 and March 1, and are considered delinquent if not paid by December 10 and April 10, respectively. Special levies and assess ments are often due on these dates as well. When tax delinquencies exceed 5%, the Bond Advisor places the issue on its internal Bond Watch.

DEPARTMENT: A major organizational group of the City with overall management responsibility for an operation or a group of related operations within a functional area.

DEPRECIATION: The expense incurred with the expiration of a capital asset.

DIVISION: An organizational subgroup of a department.

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E
ENCUMBRANCE: The commitment of appropriated funds to purc hase goods, which have not been received, or services yet to be rendered.

ENTERPRISE FUNDS: Used to report any activity for which a fee is charged to external users for goods or services.

Traditionally provide significant financial assistance to city’s operations.

EXPENDITURES: Decreases in net financial resources. Expendi tures include current operating expenses which require the current or future use of net current assets, debt service and capital outlays.

EXPENSES: Decreases in net total assets. Expenses represent the total cost of operations during a period regardless of the timing of related payments.

F
FIDUCIARY FUNDS: Used to account for assets held by the City ac ting in a fiduciary capacity for other entities, carrying out specific actions of agreements, ordinance s, and other governing regulations. These funds cannot be used to support City programs.

FISCAL AGENT: Also known as the Paying Agent, the bank, designated by the issuer, to pay interest and principal to the bondholder.

FISCAL YEAR (FY): A 12-month period to which the annual operating budget applies and at the end of which an entity determines its financial position, the results of its operations, and ad opts a budget for the coming year. The City of Cathedral City's fiscal year is from July 1 to June 30.

FIXED ASSETS: Equipment costing $5,000 or more with a useful life more than one year, and not qualifying as a capital improvement project. Includes automotive equipmen t, office equipment, office furniture, acquisitions, landscaping improvements, etc.

FULL-TIME EQUIVALENT (FTE): The conversion of part-time employee hours to an equivalent of a full-time position. For example: one person working 20 hours a week for a year would be 0.5 FTE.

FUND: An independent fiscal and accounting entity with a self -balancing set of accounts, recording resources, related liabilities, obligations, reserves, and equities segregated for the purpose of carrying out specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations.

FUND BALANCE: The equity (assets minus liabilities) of governmental fund and fiduciary fund types. However, for budgeting purposes, a working capital definition of curre nt assets minus current liabilities is used for the computation.

G
GENERAL FUND: The City’s main operating fund used to pay for City services.

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP): Uniform minimum standards of and guidelines for financial accounting and reporting. They govern the fo rm and content of the basic financial statements of an entity. GAAP encompasses the convent ions, rules, and procedu res necessary to defi ne accepted accounting practices at a particular time. They include not only bro ad guidelines of general application, but also detailed practices and procedures. GAAP provides a standard by which to measure financial presentations.

GOVERNMENTAL FUNDS: These funds are used to account for tax-supported (governmental) activities. These include the General Fund, Special Revenue Funds, Capital Projects Funds, and Debt Service Funds.

GRANT: Contributions or gifts of cash or other assets fr om another governmental entity to be expended for a specific purpose, activity, or facility. An example is the Community Development Block Grant awarded by the Federal government.

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I
INTERFUND TRANSFERS: Defined as "flows of assets" (such as goods or services) without equivalent flows of assets in return and without requirement for repayment.

INTERGOVERNMENTAL REVENUE: Revenue collected by one government and distributed (usually through some predetermined formula) to another level of government(s).

INTERNAL SERVICE FUNDS: Account for the goods or services prov ided by one fund and/or department to another fund and/or department on a cost reimbursement basis.

ISSUER: A state or local unit of government borrowing money through the sale of bonds and/or notes.

M
MAJOR FUND: Governmental fund or enterprise fund reported as a separate column in the basic fund financial statements and subject to a separate opinion in the independent auditor’s report.

MELLO-ROOS BOND: The Mello-Roos (named for its legislative sponsors) Community Facilities District Act of 1982 established a method whereby almost every municipal subdivision of the state may form a special, separate district to finance a long list of public facilities by the sale of bonds and finance certain public services on a pay-as- you-go basis. These Community Facilities Districts are formed and bonds are issued authorized by a two-thirds vote of the property owners in the district. Typically, t he only voters in a district are one or more real estate developers who own or have an option on the land in the district. These l and-based financings were nicknamed "dirt bonds" by the Bond Advisor years ago. Bonds are sold to finance facilities that can include school, parks, libraries, public utilities, and other forms of infrastructure . The Districts may provide public services that include police and fire protection, recreation programs, area ma intenance, library services, flood, and storm drainage.

Bonded debt service and/or the public services are paid fo r by special taxes levied on the real property within the district. As the developer subdivides and sells off the land, the new property owner assumes the tax burden.

MODIFIED ACCRUAL BASIS: The accrual basis of accounting where revenues are recognized when they become both "measurable" and "available" to finance expenditur es of the current period. All governmental funds and custodial funds are accounted for using the modified accrual basis of accounting.

N
NON-MAJOR FUND: Funds deemed insignificant enough to not wa rrant an individual separate column when reported. These are aggregated and reported in a separate column.

O
OBJECTIVE: A simply stated, readily measurable statement of aim or expected accomplishment within the fiscal year. A good statement of objective should specify a standard of performance for a given program or stated goal.

OPERATING BUDGET: A budget focusing on everyday operating activities and programs. Usually includes personnel, maintenance and operations and capital equipment.

P
PAR VALUE: The face value or principal amount of a bond, usually $5,000, due to the holder at maturity. It has no relation to the market value.

PERSONNEL EXPENSES: Compensation paid to or on behalf of City employees for salaries and wages, overtime, and benefits.

PREMIUM: The amount, if any, by which the price exceeds the pr incipal amount (par value) of a bond. Its current yield will be less than its coupon rate.

PRINCIPAL: The face value of a bond, exclusive of interest.

PROJECT AREA: An area designated in the Redevelopment Plan for redevelopment and revitalization efforts.

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PROPERTY TAX: A tax levied on real estate and personal property. The basic rate in Riverside County is 1% of assessed value, of which the City of Cathedral City receives approximately 16 cents for every dollar collected.

PROPOSED BUDGET: The budget as formulated and proposed by the City Manager. It is submitted to the City Council for review and approval.

PROPRIETARY FUND: These funds are used to account for business-type activities. These include the Internal Service Funds and Enterprise Funds.

R
REDEVELOPMENT AGENCY (RDA): A legislatively established subdivisi on of government established to revitalize blighted and economically depressed areas of a community and to promote economic growth. Tax Allocation Bonds were issued to pay the cost of l and and building acquisition and their redevelopment and are repaid by the incremental increase in property tax revenues produced by the increase assessed value of the area after redevelopment. Redevelopment Agencies were able to sell Housing Mortgage Revenue Bonds to finance housing units within the area, 20% of which must be for low-cost housing. As a result of Assembly Bill X1-26, effective February 1, 2012, redevelopment agencies were dissolved by the state of California.

REFUNDING BOND: The issuance of a new bond for the purpose of retiring an already outstanding bond issue.

RETAINED EARNINGS: An equity account reflecting the accumulated earnings of Proprietary Fund types. For budgeting purposes, the working capital definition of fund balance is used.

REVENUE: Moneys the City receives as income such as tax payments, fees from specific services, receipts from other governments, fines, forfeitures, grants, shared revenues, and interest income.

REVENUE BOND: A municipal bond whose debt service is payable solely from the revenues received from operating the facilities acquired or constructed with the proceeds of the bonds.

ROPS: Recognized Obligation Payment Schedule
S
SELF-INSURANCE: The retention of liabilities, arising out of the ownership of property or from some other cause, instead of transferring risk to an i ndependent third party through the purcha se of an insurance policy. The City currently provides self-insurance for $250,000 for workers' compensation and general liability. The City participates in risk sharing pools related to general liability for losses up to $5 million per occurrence, limited to $10 million.

SPECIAL REVENUE FUNDS: Account for the revenue derived from spec ific taxes or other earmarked revenue sources (other than expendable trusts or for major capital pr ojects) restricted by law or administrative action to expenditures for specified purposes.

SUCCESSOR AGENCY: The agency, such as city or county author izing the creation of each redevelopment agency or another entity as provided for in Health & Safety Code Section 34173.

SUPPLEMENTAL ROLL PROPERTY TAXES: Assessed on property that changes ownership during the year and is based on the difference between the new and old assessed values.

T
TAX ALLOCATION BONDS: Bonds repaid with tax increments flowi ng to the Successor Agency to the RDA resulting from an increase in property taxes and assessed values over the original (frozen) base.

TAX BASE: The total resources of the community that are legally available for taxation.

TAXES: Compulsory charges levied by a government for the purpose of financing services performed for the common benefit. This term does not include specific charges made against certain persons or property for current or permanent benefits such as special assessments. Neither does the term include charges for services rendered only to those paying such charges, e.g., user charges.

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TRUSTEE: A bank designated as the custodian of funds and of ficial representative of bondholders. They are appointed to ensure compliance with the trust indenture.

U
USER CHARGES: Payments made by users or customers of public ly provided services benefiting specific individuals. These services exhibit "public good" characteri stics. Examples of user charges are fees paid for recreational activities, building fees, police fees, etc.

W
WORKING CAPITAL: Working capital (also known as net working c apital) represents the amount of day-by-day operating liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated as current assets minus current liabilities.

Note: This is a universal glossary of terms to include terminology for both the City of Cathedral City Adopted Budget as well as the City of Cathedral City Annual Comprehensive Financial Report.

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 GANN Appropriations Limit

 Resolutions

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GANN APPROPRIATIONS LIMIT

In 1979, one year after Proposition 13 was adopted, the voters approved Proposition 4, referred to as the Gann Initiative. This proposition is now Article XIIIB of the California Constitution. In June 1990, the original Article XIIIB (Proposition 4) and its implementing Chapter 1205/80 were modified by Proposition III and SB88 (Chapter 60/90).

The Gann Initiative was aimed at government spending and places limitations on appropriations of revenue from the “proceeds of taxes.” These proceeds are defined to include: (1) all tax revenues; (2) revenues from the investment of tax revenues; (3) revenues from user charges and regulatory fees to the extent it exceeds the reasonable cost of providing the service; and (4) local government subventions received from the State.

In order to determine the “Gann Limit,” the City was required to establish a base year 1981/1982 appropriations limitation. Each year this limitation has been adjusted to reflect changes in population and the cost of living.

Beginning with the FY 1990/1991 Appropriations Limit, the annual adjustment factors changed. Instead of using the lesser of California Per Capita Income or U.S. CPI to measure inflation, each city may choose:

 The growth in the California Per Capita Income, OR

 The growth in the non-residential assessed val uation due to new construction within the city.

In addition, instead of using only the population growth of the city, each city may choose to use the population growth within its county. These are both annual elections.

After determining the dollar limit, the budgeted or anticipated “tax revenues” are calculated and compared to the “Gann Limit.” If the City exceeds its “Gann Limit” in any one year they may avoid a tax refund if they fall sufficiently below the limit in the next fiscal year. They then have two more years to refund any remaining excess by revising tax rates or fee schedules or actually return monies already collected or obtain a successful override vote.

The State Department of Finance and the Riverside County Assessor's Office are charged with providing the data necessary for local jurisdictions to establish their appropri ation limit. According to thes e sources, for purposes of the FY 2022/2023 calculation, the County population increased 0.80% while the City population increased 0.42%.

As such, the City population increase of 0.42% was used in the calculation. California per capita personal income increased by 5.73%. The City has chosen to use the change in California Per Capita Income as the annual factor.

The tax revenues of the City of Cathedral City are curre ntly at about 45.39% of the “Gann Limit,” which indicates that the City is not overtaxing its citizens.

The FY 2022/2023 Appropriation Limit was calculated as follows:

FY 2021/2022 Appropriation Limit $89,770,411
Increased by an inflation factor composed of the increase in population and increase in CA per capita income
(1.0755 x 1.0042 = 1.080)

X 1.080
FY 2022/2023 Appropriation Limit $96,953,579

The "Proceeds of Taxes", as included in the FY 2022/2023 Adopted Budget, subject to the appropriations limit are estimated to be $44,014,053. Therefore, the City has what is referred to as an appropriation "gap" of $52,939,526 ($96,953,579 - $44,014,053). Simply stated, this means the City could collect and spend up to $52,939,526 more in taxes during FY 2022/2023 without exceeding the Constitutional limit.

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RESOLUTIONS

RESOLUTION NO. 2023 -

A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY, CALIFORNIA, APPROVING A BUDGET FOR THE FISCAL YEARS 2023/2024 AND 2024/2025.

WHEREAS, a municipal budget for the Fiscal Years 2023/2024 and 2024/2025 has been prepared by the City Manager and Financial Services Director; and

WHEREAS, the City Council examined said budget and conferred with the City Manager and the Financial Services Director; and

WHEREAS, the City Council desires to adopt a final budget for the fiscal years; and

WHEREAS, the City Council has, after due deliberation and consideration, made such amendments in the proposed final budget as it considered desirable;

NOW, THEREFORE, BE IT RESOLVED , by the City Council of the City of Cathedral City as follows:

SECTION 1. The budget, summary of which is attached hereto and made a part of hereof, is hereby approved and amounts thereby appropriated to the departments, activities, and projects. The revenue estimates contained are hereby accepted.

SECTION 2. The Financial Services Director shall have the authority to adjust the appropriations within each fund, provided however, the total appropriations for the entire fund do not exceed the amounts approved in this budget resolution (or amending resolution). Said adjustments of the appropriations for each department or activity shall be made only upon written request to the City Manager and/or the Financial Services Director, the form of which shall be prescribed and approved by the Financial Services Director. Once such a written request is properly executed and approved, the Financial Services Department shall make such funds available.

SECTION 3 . Transfers of fund balances from one fund to another shall be approved by the Financial Services Director.

SECTION 4. At the close of a fiscal year, outstanding Operating Budget purchase commitments for goods and services will not be carried forward into the next fiscal year. Budgets for Capital Improvement Projects are appropriated for the duration of the project. Therefore, appropriations for Capital Improvement Projects and unfulfilled Capi tal Improvement purchasing commitments at the end of a fiscal year are automatically carried forward to the next fiscal year.

SECTION 5. Financial  Services Director is authorized to advance pay the City’s annual obligation to CalPERS should the advance pay result in savings to the City and any savings would be allocated to the City’s CalPERS reserve to mitigate future rate increases.

SECTION 6. The repayment of demands prior to audit may be made by the Financial  Services Director in conformity with the authority provided by Section 37208 of the Government Code of the State of California.

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SECTION 7. The Financial Services Director shall render a semi-annual report to the City Council on the status of City operational revenues and expenditures.

PASSED, APPROVED, AND ADOPTED this 9
th day of June 2021.

___________________________
Raymond Gregory, Mayor

ATTEST:

____________________________
Tracey Hermosillo, City Clerk

APPROVED AS TO FORM:

____________________________
Eric S. Vail. City Attorney

I, TRACEY HERMOSILLO, CITY CLERK of the City of Cathedral City, do hereby certify that the foregoing Resolution was introduced and adopted at a regular meeting of the City Council of the City of Cathedral City held on the 24
th day of May 2023 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Tracey Hermosillo, City Clerk

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RESOLUTIONS

RESOLUTION NO. 2023 –

A RESOLUTION BY THE BOARD OF THE CATHEDRAL CITY PUBLIC FINANCING AUTHORITY APPROVING A BUDGET FOR THE FISCAL YEARS 2023/2024 AND 2024/2025.

WHEREAS, a budget for the Fiscal Years 2023/2024 and 2024/2025 has been prepared by the Cathedral City Public Financing Authority’s Manager (City Manager) and Fiscal Officer (Financial Services Director); and

WHEREAS, the Board examined said budget and conferred with the Manager and the Fiscal Officer and

WHEREAS, the Board desires to adopt a final budget for the fiscal year; and

WHEREAS, the Board has, after due deliberation and consideration, made such amendments in the proposed final budget as it considered desirable;

NOW, THEREFORE, BE IT RESOLVED, by the Board of the Cathedral City Public Financing Authority as follows:

SECTION 1. The budget, a summary of which is attached hereto and made a part of hereof, is hereby approved and amounts thereby appropriated to the departments, activities, and projects. The revenue estimates contained are hereby accepted.

SECTION 2. The Fiscal Officer shall have the authority to adjust the appropriations within each fund, provided however, the total appropriations for the entire fund do not exceed the amounts approved in this budget resolution (or amending resolution). Said adjustments of the appropriations for each department or activity shall be made only upon written request to the Manager and/or the Fiscal Officer, the form of which shall be prescribed and approved by the Fiscal Officer. Once such a written request is properly executed and approved, the Financial Services Department shall make such funds available.

SECTION 3. Transfers of fund balances from one fund to another shall be approved by the Fiscal Officer.

SECTION 4. At the close of a fiscal year, outstanding Operating Budget purchase commitments for goods and services will not be carried forward into the next fiscal year. Budgets for Capital Improvement Projects are appropriated for the duration of the project. Therefore, appropriations for Capital Improvement Projects and unfulfilled Capital Improvement purchasing commitments at the end of a fiscal year are automatically carried forward to the next fiscal year.

SECTION 5. The repayment of demands prior to audit may be made by the Fiscal Officer in conformity with the authority provided by Section 37208 of the Government Code of the State of California.

SECTION 6. The Fiscal Officer shall render a semi-annual report to the Board on the status of operational revenues and expenditures.

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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

PASSED, APPROVED, AND ADOPTED this 24th day of May 2023.

___________________________
Rita Lamb, Chairman

ATTEST:

___________________________
Tracey Hermosillo, Secretary

APPROVED AS TO FORM:

____________________________
Eric S. Vail, Authority Attorney

I, TRACEY HERMOSILLO, SECRETARY of the Cathedral City Public Finance Authority, do hereby certify that the foregoing Resolution was introduced and adopted at a regular meeting of the City Council of the City of Cathedral City held on the 24 th day of May 2023 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Tracey Hermosillo, Secretary

6.G.a
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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

RESOLUTIONS

RESOLUTION NO. SA-2023-_______

A RESOLUTION BY THE SUCCESSOR AGENCY TO THE CATHEDRAL CITY

REDEVELOPMENT AGENCY APPROVING A BUDGET FOR THE FISCAL YEARS 2023/2024 AND 2024/2025.

WHEREAS, estimates of revenue from all sources and estimates of expenditures required for the proper conduct of the activities of the Successor Agency to the Cathedral City Redevelopment Agency (“Successor Agency”) for the Fiscal Years 2023/2024 and 2024/2025 has been prepared by the City Manager and Financial Services Director; and

WHEREAS, the Successor Agency has examined said budget and conferred with the City Manager and the Financial Services Director; and

WHEREAS, the Successor Agency Board desires to adopt a final budget, as approved and presented in the Recognized Obligation Payment Schedule (“ROPS”) for the fiscal years; and

WHEREAS, the Successor Agency Board has, after due deliberation and consideration, made such amendments in the proposed final budget as it considered desirable;

NOW, THEREFORE, BE IT RESOLVED, by the Successor Agency Board as follows:

SECTION 1. The budget, summary of which is attached hereto and made a part of hereof, is hereby approved and amounts thereby appropriated to the departments, activities, and projects. The revenue estimates contained are hereby accepted.

SECTION 2. The Financial Services Director shall have the authority to adjust the appropriations within each fund, provided however, the total appropriations for the entire fund do not exceed the amounts approved in this budget resolution (or amending resolution). Said adjustments of the appropriations for each department or activity shall be made only upon written request to the City Manager and/or the Financial Services Director, the form of which shall be prescribed and approved by the Financial Services Director. Once such a written request is properly executed and approved, the Financial Services Department shall make such funds available.

SECTION 3. Transfers of fund balances from one fund to another shall be approved by the Financial Services Director.

SECTION 4. At the close of a fiscal year, outstanding Operating Budget purchase commitments for goods and services will not be carried forward into the next fiscal year. Budgets for Capital Improvement Projects are appropriated for the duration of the project. Therefore, appropriations for Capital Improvement Projects and unfulfilled Capital Improvement purchasing commitments at the end of a fiscal year are automatically carried forward to the next fiscal year.

SECTION 5. The repayment of demands prior to audit may be made by the Financial Services Director in conformity with the authority provided by Section 37208 of the Government Code of the State of California.

PASSED, APPROVED, AND ADOPTED this 24
th day of May 2023.

6.G.a
Packet Pg. 444
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

___________________________
Rita Lamb, Chairman

ATTEST:

____________________________
Tracey Hermosillo, Secretary

APPROVED AS TO FORM:

____________________________
Eric S. Vail, City Attorney

I, TRACEY HERMOSILLO, SECRETARY of the Successor Agency to the Cathedral City Redevelopment Agency, do hereby certify that the foregoing Resolution was introduced and adopted at a regular meeting of the Board of the Successor Agency to the City of Cathedral City Redevelopment Agency held on the 24
th day of May 2023 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Tracey Hermosillo, Secretary

6.G.a
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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

RESOLUTIONS

RESOLUTION NO. HSA-2023-_____

A RESOLUTION BY THE CITY OF CATHEDRAL CITY AS THE HOUSING

SUCCESSOR AGENCY APPROVING A BUDGET FOR THE FISCAL YEARS 2023/2024 AND 2024/2025.

WHEREAS, estimates of revenue from all sources and estimates of expenditures required for the proper conduct of the activities of the City of Cathedral City as the Housing Successor Agency (“Successor Agency”) for the Fiscal Years 2023/2024 and 2024/2025 has been prepared by the City Manager and Financial Services Director; and

WHEREAS, the Successor Agency has examined said budget and conferred with the City Manager and the Financial Services Director; and

WHEREAS, the Successor Agency Board desires to adopt a final budget for the fiscal years; and

WHEREAS, the Successor Agency Board has, after due deliberation and consideration, made such amendments in the proposed final budget as it considered desirable;

NOW, THEREFORE, BE IT RESOLVED, by the Successor Agency Board as follows:

SECTION 1. The budget, summary of which is attached hereto and made a part of hereof, is hereby approved and amounts thereby appropriated to the departments, activities, and projects. The revenue estimates contained are hereby accepted.

SECTION 2. The Financial Services Director shall have the authority to adjust the appropriations within each fund, provided however, the total appropriations for the entire fund do not exceed the amounts approved in this budget resolution (or amending resolution). Said adjustments of the appropriations for each department or activity shall be made only upon written request to the City Manager and/or the Financial Services Director, the form of which shall be prescribed and approved by the Financial Services Director. Once such a written request is properly executed and approved, the Financial Services Department shall make such funds available.

SECTION 3. Transfers of fund balances from one fund to another shall be approved by the Financial Services Director.

SECTION 4. At the close of a fiscal year, outstanding Operating Budget purchase commitments for goods and services will not be carried forward into the next fiscal year. Budgets for Capital Improvement Projects are appropriated for the duration of the project. Therefore, appropriations for Capital Improvement Projects and unfulfilled Capital Improvement purchasing commitments at the end of a fiscal year are automatically carried forward to the next fiscal year.

SECTION 5. The repayment of demands prior to audit may be made by the Financial Services Director in conformity with the authority provided by Section 37208 of the Government Code of the State of California.

PASSED, APPROVED, AND ADOPTED this 24
th day of May 2023.

6.G.a
Packet Pg. 446
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

___________________________
R i t a L a m b , M a y o r

ATTEST:

____________________________
Tracey Hermosillo, Secretary

APPROVED AS TO FORM:

____________________________
Eric S. Vail, Agency Attorney

I, TRACEY HERMOSILLO, SECRETARY of the Housing Successor Agency, do hereby certify that the foregoing Resolution was introduced and adopted at a regular meeting of the Board of the Housing Successor Agency held on the 24
th day of May 2023 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Tracey Hermosillo, Secretary

6.G.a
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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

RESOLUTIONS

RESOLUTION NO. 2023 -

A RESOLUTION BY THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY,

CALIFORNIA, APPROVING A CAPITAL IMPROVEMENT PROGRAM (CIP) FOR FISCAL YEARS 2022 THROUGH 2026.

WHEREAS, the City Council has received the proposed summary of CIP approved projects for Fiscal Years 2022 through 2026; and

WHEREAS, the City Council reviewed said CIP of planned projects and conferred with the City Manager and the Financial Services Director; and

WHEREAS, the City Council desires to adopt the CIP of planned projects for the five-year period; and

NOW, THEREFORE, BE IT RESOLVED , by the City Council of the City of Cathedral City as follows:

SECTION 1. The City Council does hereby adopt the five-year CIP of planned projects for Fiscal Years 2022 through 2026, a summary of which is attached hereto and made a part of hereof, and amounts are thereby allocated to the departments, projects, and activities. These amounts are subject to existing priorities and available funds.

SECTION 2. Since budgets for Capital Improvement Projects are appropriated prior to the commencement of the individual project, the attached CIP is intended to be a planning document only.

The adoption of the attached CIP identifies the amounts planned to be expended during the FY 2021/2022 and FY 2022/2023 budget periods and in each of the subsequent three fiscal years.

SECTION 3. Each project in the attached CIP has previously received independent final approval from the City Council.

SECTION 4. The funding for each previously approved project is based on the anticipated funding mechanism as of the current date.

SECTION 5. The City Manager or the Financial Services Director shall have the authority to adjust amounts within each fund, provided however, the total amount for the CIP project does not exceed the amount approved for the CIP project.

6.G.a
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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

PASSED, APPROVED, AND ADOPTED this 24th day of May 2023.

___________________________
R i t a L a m b , M a y o r

ATTEST:

____________________________
Tracey Hermosillo, City Clerk

APPROVED AS TO FORM:

____________________________
Eric S. Vail, City Attorney

I, TRACEY HERMOSILLO, CITY CLERK of the City of Cathedral City, do hereby certify that the foregoing Resolution was introduced and adopted at a regular meeting of the City Council of the City of Cathedral City held on the 24
th day of May 2023 by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Tracey Hermosillo, City Clerk

6.G.a
Packet Pg. 449
Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget)

68‐700 Avenida Lalo Guerrero
Cathedral City, CA 92234
760.770.0378
www.cathedralcity.gov

6.G.a
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Attachment: Proposed Budget Document FY24 & FY25 (3739 : Fiscal Year (FY) 2023/2024 and FY 2024/2025 Proposed Biennial Budget) FY 2023/2024 FY  2024/2025
Total Budget Revenues ‐ Budget Workbook 66,957,499$         64,550,726$ Franchise Fees SCE 50,000                    50,000                     Increased based on updated data from county Total Budget Revenues ‐ Adjusted 67,007,499$         64,600,726$ Total Budget Expenditures ‐ Budget Workbook 69,165,871$         69,906,705$ Community Assistance-113 (25,000)                  (25,000)                   Calculation error ‐ Adjustment made to correct Communication and Events-133 (1,000)                    (1,000)                     Remove fleet budget ‐ No division vehicle at this time Information Technology -142 138,000                 8,000                       Calculation error ‐ Adjustment made to correct Finance- Admin- 140 (1,000)                    (1,000)                     Remove fleet budget ‐ Costs were for Administrative Services Dept vehicle (sold) Risk-122 700,000                 700,000                  Increased to account for rising premiums Development Services-150 12,658                    12,926                     Reclass fleet budget from Planning to Administration Plannning-152 (12,658)                  (12,926)                   Reclass fleet budget from Planning to Administration Engineering-156 25,000                    19,000                     Increased as a result of FY23 invoicing (NPDES charges) Public Maintenance- 411 (291,900)                ‐                            Tamarisk Tree project completed in FY2023 Public Maintenance- 411 30,000                    30,000                     Annual maintenance on Tamarisk Trees ‐ PS Tree Service and Maintenance Parks-511 ‐                          (100,000)                 Calculation error ‐ Adjustment made to correct Parks-511 (24,392)                  (24,392)                  Reduced based on Engineers Report Investigative Services-312 (20,000)                  (20,000)                   Reduced fleet budget as a result of leasing unmarked vehicles Investigative Services-312 144,900                 99,010                     Increased budget for leased unmarked vehicles Dispatch-314 (165,928)                (165,928)                 Reduced budget ‐  Mark43 Emergency Services-332 57,600                    57,600                     Reclassed Paramedic Recertifications from Overtime to Training Emergency Services-332 (57,600)                  (57,600)                   Reclassed Paramedic Recertifications from Overtime to Training General Government-911 5,000                      ‐                            Additional analysis ‐ Increased membership dues by 3% Total Budget Expenditures ‐ Adjusted 69,679,551$         70,425,395$ Net Surplus (Deficit) (2,672,052) $          (5,824,669)$

6.G.b
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Attachment: FY2024 and FY2025 Budget Book Adjustments (3739 : Fiscal Year (FY) 2023/2024 and FY