Agenda packet, regular meeting — Palm Desert City Council, February 15, 2024 (part 2 of 7)

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standards generally recognized as being employed by professionals in the same discipline in the State of California. Consultant represents and maintains that it is skilled in the professional calling necessary to perform the Services. Consultant warrants that all employees and subconsultants shall have sufficient skill and experience to perform the Services assigned to them. Consultant represents that it, its employees and subconsultants have all licenses, permits, qualifications and approvals of whatever nature that are legally required to perform the Services, and that such licenses and approvals shall be maintained throughout the term of this Agreement. Consultant shall perform, at its own cost and expense and without reimbursement from the City, any services necessary to correct errors or omissions which are caused by the Consultant's failure to comply with the standard of care provided herein. Any employee of the Consultant or its sub-consultants who is determined by the City to be uncooperative, incompetent, a threat to the adequate or timely completion of the Project, a threat to the safety of persons or property, or any employee who fails or refuses to perform the Services in a manner acceptable to the City, shall be promptly removed from the Project by the Consultant and shall not be re-employed to perform any of the Services or to work on the Project.

3.2.9 Period of Performance. Consultant shall perform and complete all Services under this Agreement within the term set forth in Section 3.1.2 above (“Performance Time”). Consultant shall also perform the Services in strict accordance with any completion schedule or Project milestones described in Exhibits “A” or “B” attached hereto, or which may be separately agreed upon in writing by the City and Consultant (“Performance Milestones”).

Consultant agrees that if the Services are not completed within the aforementioned Performance Time and/or pursuant to any such Performance Milestones developed pursuant to provisions of this Agreement, it is understood, acknowledged and agreed that the City will suffer damage.

Neither City nor Consultant shall be considered in default of this Agreement for delays in performance caused by circumstances beyond the reasonable control of the non-performing Party. For purposes of this Agreement, such circumstances include a Force Majeure Event. A Force Majeure Event shall mean an event that materially affects a Party’s performance and is one or more of the following: (1) Acts of God or other natural disasters; (2) terrorism or other acts of a public enemy; (3) orders of governmental authorities (including, without limitation, unreasonable and unforeseeable delay in the issuance of permits or approvals by governmental authorities that are required for the services); (4) strikes and other organized labor action occurring at the site and the effects thereof on the services, only to the extent such strikes and other organized labor action are beyond the control of Consultant and its subcontractors, and to the extent the effects thereof cannot be avoided by use of replacement workers; and (5) pandemics, epidemics or quarantine restrictions. For purposes of this section, “orders of governmental authorities,” includes ordinances, emergency proclamations and orders, rules to protect the public health, welfare and safety, and other actions of a public agency applicable to the services and Agreement.

Should a Force Majeure Event occur, the non-performing Party shall, within a reasonable time of being prevented from performing, give written notice to the other Party describing the circumstances preventing continued performance and the efforts being made to resume performance of this Agreement. Force Majeure Events and/or delays, regardless of the Party responsible for the delay, shall not entitle Consultant to any additional compensation.

Notwithstanding the foregoing in this section, the City may still terminate this Agreement in accordance with the termination provisions of this Agreement.

3.2.10 Laws and Regulations; Employee/Labor Certification. Consultant shall keep itself fully informed of and in compliance with all local, state and federal laws, rules and regulations in any manner affecting the performance of the Project or the Services and shall give all notices required by law. Consultant shall be liable for all violations of such laws and regulations

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in connection with the Services and this Agreement. All violations of such laws and regulations shall be grounds for the City to terminate the Agreement for cause.

3.2.10.1 Employment Eligibility; Consultant. Consultant certifies that it fully complies with all requirements and restrictions of state and federal law respecting the employment of undocumented aliens, including, but not limited to, the Immigration Reform and Control Act of 1986, as may be amended from time to time and shall require all subconsultants and sub-subconsultants to comply with the same. Consultant certifies that it has not committed a violation of any such law within the five (5) years immediately preceding the date of execution of this Agreement and shall not violate any such law at any time during the term of the Agreement.

3.2.10.2 Equal Opportunity Employment. Consultant represents that it is an equal opportunity employer, and it shall not discriminate against any subconsultant, employee or applicant for employment because of race, religion, color, national origin, physical disability, ancestry, sex, age, marital status, gender, gender identity, gender expression, sexual orientation, reproductive health decision making, veteran or military status, or any other consideration made unlawful by federal, state, or local laws. Such non-discrimination shall include, but not be limited to, all activities related to initial employment, upgrading, demotion, transfer, recruitment or recruitment advertising, layoff or termination. Consultant shall also comply with all relevant provisions of City's Minority Business Enterprise program, Affirmative Action Plan or other related programs or guidelines currently in effect or hereinafter enacted.

3.2.10.3 Safety. Consultant shall execute and maintain its work so as to avoid injury or damage to any person or property. In carrying out its Services, the Consultant shall at all times be in compliance with all applicable local, state and federal laws, rules and regulations, and shall exercise all necessary precautions for the safety of employees appropriate to the nature of the work and the conditions under which the work is to be performed.

3.2.11 Insurance.

3.2.11.1 Minimum Requirements. Without limiting Consultant’s indemnification of City, and prior to commencement of the Services, Consultant shall obtain, provide, and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts described below and in a form that is satisfactory to City. (A) General Liability Insurance. Consultant shall maintain commercial general liability insurance with coverage at least as broad as Insurance Services Office form CG 00 01, in an amount not less than $1,000,000 per occurrence, $2,000,000 general aggregate, for bodily injury, personal injury, and property damage. The policy must include contractual liability that has not been amended. Any endorsement restricting standard ISO “insured contract” language will not be accepted.
(B) Automobile Liability Insurance. Consultant shall maintain automobile insurance at least as broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage for all activities of the Consultant arising out of or in connection with Work to be performed under this Agreement, including coverage for any owned, hired, nonowned or rented vehicles, in an amount not less than $1,000,000 combined single limit for each accident. The City’s Risk Manger may modify this requirement if it is determined that Consultant will not be utilizing a vehicle in the performance of his/her duties under this Agreement. 4 Revised 07-2023
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(C) Professional Liability (Errors & Omissions) Insurance.

Consultant shall maintain professional liability insurance that covers the Services to be performed in connection with this Agreement, in the minimum amount of $1,000,000 per claim and in the aggregate. Any policy inception date, continuity date, or retroactive date must be before the effective date of this Agreement and Consultant agrees to maintain continuous coverage through a period no less than three years after completion of the Services required by this Agreement. (D) Workers’ Compensation Insurance. Consultant shall
maintain Workers’ Compensation Insurance (Statutory Limits) and Employer’s Liability Insurance (with limits of at least $1,000,000). Consultant shall submit to City, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of the City, its officers, agents, employees, volunteers, and representatives.
(E) Umbrella or Excess Liability Insurance. Consultant may opt to utilize umbrella or excess liability insurance in meeting insurance requirements. In such circumstances, Consultant shall obtain and maintain an umbrella or excess liability insurance policy with limits that will provide bodily injury, personal injury and property damage liability coverage at least as broad as the primary coverages set forth above, including commercial general liability and employer’s liability. Such policy or policies shall include the following terms and conditions:
(1) A drop-down feature requiring the policy to respond if any primary insurance that would otherwise have
applied proves to be uncollectible in whole or in part for any reason;
(2) Pay on behalf of wording as opposed to reimbursement; (3) Concurrency of effective dates with primary policies; and (4) Policies shall “follow form” to the underlying primary policies.
(5) Insureds under primary policies shall also be insureds under the umbrella or excess policies.
(F) Fidelity Coverage. RESERVED
(G) Cyber Liability Insurance. Consultant shall procure and maintain Cyber Liability insurance with limits of $1,000,000 per occurrence/loss, which shall include the following coverage:
(1) Liability arising from the theft, dissemination and/or use of confidential or personally identifiable information; including credit monitoring and regulatory fines arising from such theft, dissemination, or use of the confidential information.
(2) Network security liability arising from the unauthorized use of, access to, or tampering with computer systems.

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(3) Liability arising from the failure of technology products (software) required under the contract for Consultant to properly perform the services intended.
(4) Electronic Media Liability arising from personal injury, plagiarism or misappropriation of ideas, domain name
infringement or improper deep-linking or framing, and
infringement or violation of intellectual property rights. (5) Liability arising from the failure to render professional services
If coverage is maintained on a claims-made basis, Consultant shall maintain such coverage for an additional period of three (3) years following termination of the Agreement.

3.2.11.2 Other Provisions or Requirements.
(A) Proof of Insurance. Consultant shall provide certificates of insurance to City as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement for workers’ compensation. Insurance certificates and endorsements must be approved by City’s Risk Manager prior to commencement of performance. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. City reserves the right to require complete, certified copies of all required insurance policies, at any time.
(B) Duration of Coverage. Consultant shall procure and
maintain for the duration of the Agreement insurance against claims for injuries to persons or damages to property, which may arise from or in connection with the performance of the Services hereunder by Consultant, his/her agents, representatives, employees or subconsultants. (C) Primary/Non-Contributing. Coverage provided by
Consultant shall be primary and any insurance or self-insurance procured or maintained by City shall not be required to contribute with it. The limits of insurance required herein may be satisfied by a combination of primary and umbrella or excess insurance. Any umbrella or excess insurance shall contain or be endorsed to contain a provision that such coverage shall also apply on a primary and non-contributory basis for the benefit of City before the City’s own insurance or selfinsurance shall be called upon to protect it as a named insured. (D) City’s Rights of Enforcement. In the event any policy of insurance required under this Agreement does not comply with these specifications, or is canceled and not replaced, City has the right, but not the duty, to obtain the insurance it deems necessary, and any premium paid by City will be promptly reimbursed by Consultant, or City will withhold amounts sufficient to pay premium from Consultant payments. In the alternative, City may terminate this Agreement.
(E) Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance or is on the List of Approved Surplus Line Insurers in the State of California, with an assigned policyholders’ Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best’s Key Rating Guide, unless otherwise approved by the City’s Risk Manager.

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(F) Waiver of Subrogation. All insurance coverage maintained or procured pursuant to this agreement shall be endorsed to waive subrogation against the City, its elected or appointed officers, agents, officials, employees, volunteers, and representatives or shall specifically allow Consultant or others providing insurance evidence in compliance with these specifications to waive their right of recovery prior to a loss. Consultant hereby waives its own right of recovery against the City, its elected or appointed officers, agents, officials, employees, volunteers and representatives and shall require similar written express waivers and insurance clauses from each of its subconsultants.
(G) Enforcement of Contract Provisions (non estoppel).

Consultant acknowledges and agrees that any actual or alleged failure on the part of the City to inform Consultant of non-compliance with any requirement imposes no additional obligations on the City nor does it waive any rights hereunder.
(H) Requirements Not Limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance.

Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. If the Consultant maintains higher limits than the minimums shown above, the City requires and shall be entitled to coverage for the higher limits maintained by the Consultant. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City. (I) Notice of Cancellation. Consultant agrees to oblige its insurance agent or broker and insurers to provide City with a thirty (30) day notice of cancellation (except for nonpayment for which a ten (10) day notice is required) or nonrenewal of coverage for each required coverage.
(J) Additional Insured Status. General liability, automobile liability, and if applicable, pollution liability and cyber liability, policies shall provide or be endorsed to provide that the City and its officers, officials, employees, agents, volunteers and representatives shall be additional insureds with regard to liability and defense of suits or claims arising out of the performance of the Agreement, under such policies. This provision shall also apply to any excess/umbrella liability policies.
(K) Prohibition of Undisclosed Coverage Limitations. None of the coverages required herein will be in compliance with these requirements if they include any limiting endorsement of any kind that has not been first submitted to City and approved of in writing.
(L) Separation of Insureds. A severability of interests provision must apply for all additional insureds ensuring that Consultant’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the insurer’s limits of liability. The policy(ies) shall not contain any cross-liability exclusions. (M) Pass Through Clause. Consultant agrees to ensure that its subconsultants, subcontractors, and any other party involved with the Project who is brought onto or involved in the Project by Consultant, provide the same minimum insurance coverage and endorsements required of Consultant. Consultant agrees to monitor and review all such coverage and assumes all responsibility for ensuring that such coverage is provided in conformity with the requirements of this section. Consultant agrees that upon request, all agreements with

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subconsultants, subcontractors, and others engaged in the Project will be submitted to City for review.
(N) City’s Right to Revise Specifications. The City and the City’s Risk Manager reserve the right at any time during the term of the Agreement to change the amounts and types of insurance required by giving the Consultant ninety (90) days advance written notice of such change. If such change results in additional cost to the Consultant, the City and Consultant may renegotiate Consultant’s compensation. If the City reduces the insurance requirements, the change shall go into effect immediately and require no advanced written notice. (O) Self-Insured Retentions. Any self-insured retentions must be declared to and approved by City. City reserves the right to require that self-insured retentions be eliminated, lowered, or replaced by a deductible. Self-insurance will not be considered to comply with these specifications unless approved by City. (P) Timely Notice of Claims. Consultant shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from Consultant’s performance under this Agreement, and that involve or may involve coverage under any of the required liability policies.
(Q) Additional Insurance. Consultant shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the Services.

3.2.12 Water Quality Management and Compliance. Consultant shall keep itself and all subcontractors, staff, and employees fully informed of and in compliance with all local, state and federal laws, rules and regulations that may impact, or be implicated by the performance of the Services including, without limitation, all applicable provisions of the City’s ordinances regulating water quality and storm water; the Federal Water Pollution Control Act (33 U.S.C. § 1251, et seq.); the California Porter-Cologne Water Quality Control Act (Water Code § 13000 et seq.); and any and all regulations, policies, or permits issued pursuant to any such authority.

Consultant must comply with the lawful requirements of the City, and any other municipality, drainage district, or other local agency with jurisdiction over the location where the Services are to be conducted, regulating water quality and storm water discharges. Failure to comply with laws, regulations, and ordinances listed in this Section is a violation of federal and state law. Consultant warrants that all employees and subcontractors shall have sufficient skill and experience to perform the work assigned to them without impacting water quality in violation of the laws, regulations, and policies of this Section.

3.3 Fees and Payments.

3.3.1 Compensation. Contractor shall receive compensation, including authorized reimbursements, for all Services rendered under this Agreement at the rates set forth in Exhibit “A” attached hereto and incorporated herein by reference. The compensation shall not exceed TWO HUNDRED EIGHTY TWO THOUSAND, FIVE HUNDRED DOLLARS ($282,500.00) per Fiscal Year and ONE MILLION, FOUR HUNDRED TWELVE THOUSAND, FIVE HUNDRED DOLLARS ($1,412,500.00) aggregate total cost without written approval of the City Council or City Manager, as applicable.

3.3.2 Payment of Compensation. Consultant shall submit to City monthly invoices which provide a detailed description of the Services and hours rendered by Consultant. City shall, within 30 days of receiving such invoice, review the invoice and pay all non-disputed and approved charges. If the City disputes any of Consultant's fees, the City shall give written
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notice to Consultant within thirty (30) days of receipt of an invoice of any disputed fees set forth therein. Consultant shall submit its final invoice to City within thirty (30) days from the last date of provided Services or termination of this Agreement and failure by the Consultant to submit a timely invoice may constitute a waiver of its right to final payment. Payment shall not constitute acceptance of any Services completed by Consultant. The making of final payment shall not constitute a waiver of any claims by the City for any reason whatsoever.

3.3.3 Reimbursement for Expenses. Consultant shall not be reimbursed for any expenses unless authorized in writing by City or included in Exhibit "A" of this Agreement.

3.3.4 Extra Work. At any time during the term of this Agreement, City may request that Consultant perform Extra Work. As used herein, "Extra Work" means any work which is determined by City to be necessary for the proper completion of the Project, but which the Parties did not reasonably anticipate would be necessary at the execution of this Agreement.

Consultant shall not perform, nor be compensated for, Extra Work without written authorization from the City.

3.4 Labor Code Requirements.

3.4.1 Prevailing Wages. Consultant is aware of the requirements of California Labor Code Section 1720, et seq., and 1770, et seq., as well as California Code of Regulations, Title 8, Section 16000, et seq., ("Prevailing Wage Laws"), which require the payment of prevailing wage rates and the performance of other requirements on "public works" and "maintenance" projects. If the Services are being performed as part of an applicable "public works" or "maintenance" project, as defined by the Prevailing Wage Laws, Consultant agrees to fully comply with such Prevailing Wage Laws. City shall provide Consultant with a copy of the prevailing rates of per diem wages in effect at the commencement of this Agreement. Consultant shall make copies of the prevailing rates of per diem wages for each craft, classification or type of worker needed to execute the Services available to interested parties upon request and shall post copies at the Consultant's principal place of business and at the project site. It is the intent of the parties to effectuate the requirements of sections 1771, 1774, 1775, 1776, 1777.5, 1813, and 1815 of the Labor Code within this Agreement, and Consultant shall therefore comply with such Labor Code sections to the fullest extent required by law. Consultant shall defend, indemnify, and hold the City, its officials, officers, employees, agents, volunteers and representatives, free and harmless from any claim or liability arising out of any failure or alleged failure to comply with the Prevailing Wage Laws.

3.4.2 Registration/DIR Compliance. If the Services are being performed on a public works project of over $25,000 when the project is for construction, alteration, demolition, installation, or repair work, or a public works project of over $15,000 when the project is for maintenance work, in addition to the foregoing, then pursuant to Labor Code sections 1725.5 and 1771.1, the Consultant and all subconsultants must be registered with the Department of Industrial Relations (“DIR”). Consultant shall maintain registration for the duration of the Project and require the same of any subconsultants. This Project may also be subject to compliance monitoring and enforcement by the DIR. It shall be Consultant’s sole responsibility to comply with all applicable registration and labor compliance requirements, including the submission of payroll records directly to the DIR. Any stop orders issued by the DIR against Consultant or any subconsultant that affect Consultant’s performance of Services, including any delay, shall be Consultant’s sole responsibility. Any delay arising out of or resulting from such stop orders shall be considered Consultant caused delay and shall not be compensable by the City. Consultant shall defend, indemnify, and hold the City, its officials, officers, employees, agents, volunteers and representatives free and harmless from any claim or liability arising out of stop orders issued

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by the DIR against Consultant or any subconsultant.

3.4.3 Labor Certification. By its signature hereunder, Consultant certifies that it is aware of the provisions of Section 3700 of the California Labor Code which require every employer to be insured against liability for Worker's Compensation or to undertake self-insurance in accordance with the provisions of that Code and agrees to comply with such provisions before commencing the performance of the Services.

3.5 Accounting Records.

3.5.1 Maintenance and Inspection. Consultant shall maintain complete and accurate records with respect to all costs and expenses incurred under this Agreement. All such records shall be clearly identifiable. Consultant shall allow a representative of City during normal business hours to examine, audit, and make transcripts or copies of such records and any other documents created pursuant to this Agreement. Consultant shall allow inspection of all work, data, documents, proceedings, and activities related to the Agreement for a period of three (3) years from the date of final payment under this Agreement.

3.6 General Provisions.

3.6.1 Termination of Agreement.

3.6.1.1 Grounds for Termination. City may, by written notice to Consultant, terminate the whole or any part of this Agreement at any time and without cause by giving written notice to Consultant of such termination, and specifying the effective date thereof, at least seven (7) days before the effective date of such termination. Upon termination, Consultant shall be compensated only for those Services which have been adequately rendered to City, and Consultant shall be entitled to no further compensation. Consultant may not terminate this Agreement except for cause. The rights and remedies of the City provided in this section shall not be exclusive and are in addition to any other rights and remedies provided by law, equity or under this Agreement.

3.6.1.2 Effect of Termination. If this Agreement is terminated as provided herein, City may require Consultant to provide all finished or unfinished Documents and Data and other information of any kind prepared by Consultant in connection with the performance of Services under this Agreement. Consultant shall be required to provide such document and other information within fifteen (15) days of the request.

3.6.1.3 Early Termination. Notwithstanding any provision herein to the contrary, if for any fiscal year of this Agreement the City Council fails to appropriate or allocate funds for future payment under the Agreement after exercising reasonable efforts to do so, the City may upon seven (7) days’ written notice, order work on the Project to cease. Upon termination, Consultant shall be compensated only for those Services which have been adequately rendered to City, and Consultant shall be entitled to no further compensation.

3.6.1.4 Additional Services. In the event this Agreement is terminated in whole or in part as provided herein, City may procure, upon such terms and in such manner as it may determine appropriate, services similar to those terminated.

3.6.2 Delivery of Notices. All notices permitted or required under this Agreement shall be given to the respective parties at the following address, or at such other address as the respective parties may provide in writing for this purpose:

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Consultant: FLOCK GROUP INC dba FLOCK SAFETY
1170 HOWELL MILL ROAD, NW SUITE 210
ATLANTA, GA, 30318
ATTN: TONIA CRUMP, CUSTOMER SUCCESS

MANAGER, MAJOR ACCOUNTS
City: City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260-2578
ATTN: L. TODD HILEMAN, CITY MANAGER
Such notice shall be deemed made when personally delivered or when mailed, forty-eight (48) hours after deposit in the U.S. Mail, first class postage prepaid and addressed to the party at its applicable address. Actual notice shall be deemed adequate notice on the date actual notice occurred, regardless of the method of service.

3.6.3 Ownership of Materials and Confidentiality.

3.6.3.1 Documents & Data; Licensing of Intellectual Property. This Agreement creates a non-exclusive and perpetual license for City to copy, use, modify, reuse, or sublicense any and all copyrights, designs, and other intellectual property embodied in plans, specifications, studies, drawings, estimates, and other documents or works of authorship fixed in any tangible medium of expression, including but not limited to, physical drawings or data magnetically or otherwise recorded on computer diskettes, which are prepared or caused to be prepared by Consultant under this Agreement ("Documents & Data"). All Documents & Data shall be and remain the property of City and shall not be used in whole or in substantial part by Consultant on other projects without the City’s express written permission. Within thirty (30) days following the completion, suspension, abandonment or termination of this Agreement, Consultant shall provide to City reproducible copies of all Documents & Data, in a form and amount required by City. City reserves the right to select the method of document reproduction and to establish where the reproduction will be accomplished. The reproduction expense shall be borne by City at the actual cost of duplication. In the event of a dispute regarding the amount of compensation to which the Consultant is entitled under the termination provisions of this Agreement, Consultant shall provide all Documents & Data to City upon payment of the undisputed amount. Consultant shall have no right to retain or fail to provide to City any such documents pending resolution of the dispute. In addition, Consultant shall retain copies of all Documents & Data on file for a minimum of fifteen (15) years following completion of the Project and shall make copies available to City upon the payment of actual reasonable duplication costs. Before destroying the Documents & Data following this retention period, Consultant shall make a reasonable effort to notify City and provide City with the opportunity to obtain the documents.

3.6.3.2 Subconsultants. Consultant shall require all subconsultants to agree in writing that City is granted a non-exclusive and perpetual license for any Documents & Data the subconsultant prepares under this Agreement. Consultant represents and warrants that Consultant has the legal right to license any and all Documents & Data. Consultant makes no such representation and warranty in regard to Documents & Data which were prepared by professionals other than Consultant or its subconsultants, or those provided to Consultant by the City.

3.6.3.3 Right to Use. City shall not be limited in any way in its use or reuse of the Documents and Data or any part of them at any time for purposes of this Project

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or another project, provided that any such use not within the purposes intended by this Agreement or on a project other than this Project without employing the services of Consultant shall be at City’s sole risk. If City uses or reuses the Documents & Data on any project other than this Project, it shall remove the Consultant’s seal from the Documents & Data and indemnify and hold harmless Consultant and its officers, directors, agents, and employees from claims arising out of the negligent use or re-use of the Documents & Data on such other project. Consultant shall be responsible and liable for its Documents & Data, pursuant to the terms of this Agreement, only with respect to the condition of the Documents & Data at the time they are provided to the City upon completion, suspension, abandonment, or termination. Consultant shall not be responsible or liable for any revisions to the Documents & Data made by any party other than Consultant, a party for whom the Consultant is legally responsible or liable, or anyone approved by the Consultant.

3.6.3.4 Indemnification – Documents and Data. Consultant shall defend, indemnify and hold the City, its directors, officials, officers, employees, volunteers, agents and representatives free and harmless, pursuant to the indemnification provisions of this Agreement, for any alleged infringement of any patent, copyright, trade secret, trade name, trademark, or any other proprietary right of any person or entity in consequence of the use on the Project by City of the Documents & Data, including any method, process, product, or concept specified or depicted.

3.6.3.5 Confidentiality. All ideas, memoranda, specifications, plans, procedures, drawings, descriptions, computer program data, input record data, written information, and other Documents & Data either created by or provided to Consultant in connection with the performance of this Agreement shall be held confidential by Consultant. Such materials shall not, without the prior written consent of City, be used by Consultant for any purposes other than the performance of the Services. Nor shall such materials be disclosed to any person or entity not connected with the performance of the Services or the Project. Nothing furnished to Consultant which is otherwise known to Consultant or is generally known, or has become known, to the related industry shall be deemed confidential. Consultant shall not use City's name or insignia, photographs of the Project, or any publicity pertaining to the Services or the Project in any magazine, trade paper, newspaper, television or radio production or other similar medium without the prior written consent of City.

3.6.3.6 Confidential Information. The City shall refrain from releasing Consultant’s proprietary information ("Proprietary Information") unless the City's legal counsel determines that the release of the Proprietary Information is required by the California Public Records Act or other applicable state or federal law, or order of a court of competent jurisdiction, in which case the City shall notify Consultant of its intention to release Proprietary Information. Consultant shall have five (5) working days after receipt of the release notice to give City written notice of Consultant's objection to the City's release of Proprietary Information.

Consultant shall indemnify, defend, and hold harmless the City, and its officers, directors, employees, agents, volunteers and representatives from and against all liability, loss, cost or expense (including attorney’s fees) arising out of a legal action brought to compel the release of Proprietary Information. City shall not release the Proprietary Information after receipt of an objection notice unless either: (1) Consultant fails to fully indemnify, defend (with City's choice of legal counsel), and hold City harmless from any legal action brought to compel such release; and/or (2) a final and non-appealable order by a court of competent jurisdiction requires that City release such information.

3.6.4 Cooperation; Further Acts. The Parties shall fully cooperate with one another and shall take any additional acts or sign any additional documents as may be necessary,

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appropriate, or convenient to attain the purposes of this Agreement.

3.6.5 [Reserved]

3.6.6 Indemnification.

3.6.6.1 To the fullest extent permitted by law, Consultant shall defend (with counsel of City’s choosing), indemnify and hold the City, its officials, officers, employees, volunteers, agents, and representatives free and harmless from any and all claims, demands, causes of action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity, to property or persons, including wrongful death, in any manner arising out of, pertaining to, or incident to any acts, errors or omissions, or willful misconduct of Consultant, its officials, officers, employees, subconsultants or agents in connection with the performance of the Consultant’s Services, the Project or this Agreement, including without limitation the payment of all expert witness fees, attorney’s fees and other related costs and expenses except such loss or damage caused by the sole negligence or willful misconduct of the City. Consultant's obligation to indemnify shall survive expiration or termination of this Agreement and shall not be restricted to insurance proceeds, if any, received by Consultant, the City, its officials, officers, employees, agents, volunteers, or representatives.

3.6.6.2 If Consultant’s obligation to defend, indemnify, and/or hold harmless arises out of Consultant’s performance as a “design professional” (as that term is defined under Civil Code section 2782.8), then, and only to the extent required by Civil Code section 2782.8, which is fully incorporated herein, Consultant’s indemnification obligation shall be limited to claims that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of the Consultant, and, upon Consultant obtaining a final adjudication by a court of competent jurisdiction, Consultant’s liability for such claim, including the cost to defend, shall not exceed the Consultant’s proportionate percentage of fault.

3.6.7 Entire Agreement. This Agreement contains the entire agreement of the Parties with respect to the subject matter hereof, and supersedes all prior negotiations, understandings, or agreements.

3.6.8 Governing Law. This Agreement shall be governed by the laws of the State of California. Venue shall be in Riverside County.

3.6.9 Time of Essence. Time is of the essence for each and every provision of this Agreement.

3.6.10 City's Right to Employ Other Consultants. City reserves right to employ other consultants in connection with this Project.

3.6.11 Successors and Assigns. This Agreement shall be binding on the successors and assigns of the Parties.

3.6.12 Assignment; Subcontracting. Consultant shall not assign, sublet, or transfer this Agreement or any rights under or interest in this Agreement without the written consent of the City, which may be withheld for any reason. Any attempt to so assign or so transfer without such consent shall be void and without legal effect and shall constitute grounds for termination. Consultant shall not subcontract any portion of the Services required by this Agreement, except as expressly stated herein, without prior written approval of City.

Subcontracts, if any, shall contain a provision making them subject to all provisions stipulated in

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Contract No. ___________
14 Revised 07-2023
BBK 72500.00001\32374915.1
this Agreement.

3.6.13 Construction; References; Captions. Since the Parties or their agents have participated fully in the preparation of this Agreement, the language of this Agreement shall be construed simply, according to its fair meaning, and not strictly for or against any Party. Any term referencing time, days or period for performance shall be deemed calendar days and not workdays. All references to Consultant include all personnel, employees, agents, and subconsultants of Consultant, except as otherwise specified in this Agreement. All references to City include its elected officials, officers, employees, agents, volunteers, and representatives except as otherwise specified in this Agreement. The captions of the various articles and paragraphs are for convenience and ease of reference only, and do not define, limit, augment, or describe the scope, content, or intent of this Agreement.

3.6.14 Amendment; Modification. No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing and signed by both Parties.

3.6.15 Waiver. No waiver of any default shall constitute a waiver of any other default or breach, whether of the same or other covenant or condition. No waiver, benefit, privilege, or service voluntarily given or performed by a Party shall give the other Party any contractual rights by custom, estoppel, or otherwise.

3.6.16 No Third-Party Beneficiaries. There are no intended third-party beneficiaries of any right or obligation assumed by the Parties.

3.6.17 Invalidity; Severability. If any portion of this Agreement is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect.

3.6.18 Prohibited Interests. Consultant maintains and warrants that it has not employed nor retained any company or person, other than a bona fide employee working solely for Consultant, to solicit or secure this Agreement. Further, Consultant warrants that it has not paid, nor has it agreed to pay any company or person, other than a bona fide employee working solely for Consultant, any fee, commission, percentage, brokerage fee, gift or other consideration contingent upon or resulting from the award or making of this Agreement. For breach or violation of this warranty, City shall have the right to rescind this Agreement without liability. For the term of this Agreement, no member, officer, or employee of City, during the term of his or her service with City, shall have any direct interest in this Agreement, or obtain any present or anticipated material benefit arising therefrom.

3.6.19 Authority to Enter Agreement. Consultant has all requisite power and authority to conduct its business and to execute, deliver, and perform the Agreement. Each Party warrants that the individuals who have signed this Agreement have the legal power, right, and authority to make this Agreement and bind each respective Party.

3.6.20 Counterparts. This Agreement may be signed in counterparts, each of which shall constitute an original.

3.6.21 Survival. All rights and obligations hereunder that by their nature are to continue after any expiration or termination of this Agreement, including, but not limited to, the indemnification obligations, shall survive any such expiration or termination. [SIGNATURES ON NEXT PAGE]

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Contract No. ___________
15 Revised 07-2023
BBK 72500.00001\32374915.1

SIGNATURE PAGE TO PROFESSIONAL SERVICES AGREEMENT

BY AND BETWEEN THE CITY OF PALM DESERT
AND FLOCK GROUP INC dba FLOCK SAFETY
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be executed on the day and year first above written.

CITY OF PALM DESERT
By:

L. Todd Hileman
City Manager
Attest:

By:

Anthony J. Mejia
City Clerk
Approved as to form:

By:

Best Best & Krieger LLP
City Attorney
FLOCK GROUP INC dba FLOCK SAFETY, A

CORPORATION
By:

Mark Smith
General Counsel
By:

Mike Molina
VP Legal, Deputy General Counsel
QC: _____
Insurance:
_____
Initial Review
_____
Final Approval

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EXHIBIT "A"
July 1, 2024 - June 30, 2029

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Exhibit "A"

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Exhibit "A"

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CITY OF PALM DESERT

STAFF REPORT
MEETING DATE: February 15, 2024
PREPARED BY: Liberty Urban, Deputy Director of Finance
REQUEST: RECEIVE AND FILE THE CITY OF PALM DESERT AUDITED ANNUAL

COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR
ENDED JUNE 30, 2023
RECOMMENDATION:

Receive and file the audited Annual Comprehensive Financial Report (ACFR) for the City of Palm Desert for the Fiscal Year ended June 30, 2023.

BACKGROUND/ANALYSIS:

Lance, Soll & Lunghard, LLP performed and completed the annual independent audit for the fiscal year ended June 30, 2023, for the City of Palm Desert, which includes the Palm Desert Housing Authority, in accordance with generally accepted auditing standards. In the auditor’s opinion, the basic financial statements present fairly, in all material respects, the financial position of the City of Palm Desert as of June 30, 2023, and the results of its operations and the cash flows of its proprietary funds for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In conducting their audit, the auditors test the City’s internal controls. Attached is the Report on Internal Controls over Financial Reporting and on compliance and other matters based on an audit of Financial Statements performed in accordance with Government Auditing Standards.

The ACFR was submitted for the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. We believe that our current annual comprehensive financial report continues to meet the Certificate of Achievement Program’s requirements, as it has for the past 26 years.

Legal Review:

This report has been reviewed by the City Attorney’s office.

Appointed Body Recommendation:

The Finance Committee received the Annual Comprehensive Financial Report (ACFR) at their meeting on January 22, 2024, and made a recommendation to receive and file the report as presented.

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City of Palm Desert
Receive and File ACFR for Fiscal Year ended June 30, 2023

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FINANCIAL IMPACT:

There is no fiscal impact associated with this action.

ATTACHMENTS:

1. City of Palm Desert Audited Financial Report for Fiscal Year ended June 30, 2023 (Annual Comprehensive Financial Report)

2. Auditor’s Letter to the City Council

3. Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards

4. Appropriations Limit Worksheet

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Annual
Comprehensive
Financial Report
FISCAL YEAR 2022-2023

CITY OF PALM DESERT, CALIFORNIA

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ANNUAL COMPREHENSIVE FINANCIAL REPORT
of the

CITY OF PALM DESERT, CALIFORNIA
For the Fiscal Year ended
June 30, 2023
Prepared by the Finance Department
City Treasurer/Director of Finance
Veronica Chavez
Deputy Director of Finance
John Ramont
Deputy Director of Finance
Liberty Urban, CPA
Finance Staff
(in alphabetical order by positions and last names)

ACCOUNTANT
Mitchell Arbaugh

ACCOUNTANT
Arlene Arellano

ACCOUNTANT
Sarah Sullivan

ACCOUNTING TECHNICIAN II
Horacio Celaya

ACCOUNTING TECHNICIAN II
Kalaina Perez

ACCOUNTING TECHNICIAN II
Miguel Zepeda

ADMINISTRATIVE ASSISTANT
Sarah Castro

FINANCE SUPERVISOR
James Bounds

MANAGEMENT ANALYST I
Skky Garcia

SENIOR CONTRACTS & GRANTS

ANALYST
Joe Barron

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7KLVSDJHLQWHQWLRQDOO\OHIWEODQN

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CITY OF PALM DESERT, CALIFORNIA
Annual Comprehensive Financial Report
For The Fiscal Year Ended June 30, 2023
Table of Contents
Page
Number

INTRODUCTORY SECTION
Letter of Transmittal ................................................................................................................................................. i GFOA Certificate of Achievement for Excellence in Financial Reporting ............................................................... v List of Principal Officials ......................................................................................................................................... vii Organizational Chart ............................................................................................................................................. viii

FINANCIAL SECTION
INDEPENDENT AUDITORS’ REPORT .................................................................................................................. 1 MANAGEMENT’S DISCUSSION AND ANALYSIS ................................................................................................ 5

BASIC FINANCIAL STATEMENTS
Statement of Net Position ............................................................................................................................... 17 Statement of Activities .................................................................................................................................... 18 Balance Sheet – Governmental Funds .......................................................................................................... 20 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ................................................................................................................. 23 Statement of Revenues, Expenditures and Changes in
Fund Balances – Governmental Funds ...................................................................................................... 24 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to
the Statement of Activities ........................................................................................................................... 27 Statement of Net Position – Proprietary Funds .............................................................................................. 28 Statement of Revenues, Expenses and Changes in Fund
Net Position – Proprietary Funds ................................................................................................................ 29 Statement of Cash Flows – Proprietary Funds .............................................................................................. 30 Statement of Fiduciary Net Position – Fiduciary Funds ................................................................................. 32 Statement of Changes in Fiduciary Net Position – Fiduciary Funds .............................................................. 33 Notes to Basic Financial Statements .............................................................................................................. 35

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CITY OF PALM DESERT, CALIFORNIA
Annual Comprehensive Financial Report
For The Fiscal Year Ended June 30, 2023
Table of Contents
Page
Number

REQUIRED SUPPLEMENTARY INFORMATION
Miscellaneous Plan – Agent Multiple-Employer Schedule of Changes in Net Pension Liability and Related Ratios ................................................................................................ 88 Miscellaneous Plan- Agent Multiple – Employer Schedule of Plan Contributions ............................................ 90 Schedule of Changes in the Net OPEB Liability/(Asset) and Related Ratios ................................................... 92 Schedule of Plan Contributions – OPEB ........................................................................................................... 94 Budgetary Comparison Schedule by Department – General Fund ................................................................... 96 Budgetary Comparison Schedule – Prop A Fire Tax ........................................................................................ 98 Budgetary Comparison Schedule –Housing Asset Fund .................................................................................. 99 Budgetary Comparison Schedule – Housing Authority ................................................................................... 100 Notes to Required Supplementary Information ............................................................................................... 101

SUPPLEMENTARY SCHEDULES
Combining Balance Sheet – Other Governmental Funds ............................................................................... 103 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Other Governmental Funds ................................................................................................. 104 Other Governmental Funds – Special Revenue Funds .................................................................................. 107 Combining Balance Sheet – Other Special Revenue Funds .......................................................................... 113 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Other Special Revenue Funds ..................................................................................... 114 Budgetary Comparison Schedules – Special Revenue Funds:

Traffic Safety ............................................................................................................................................. 119 Gas Tax..................................................................................................................................................... 120 Measure A ................................................................................................................................................. 121 Housing Mitigation Fees ........................................................................................................................... 122 Community Development Block Grant ...................................................................................................... 123 Child Care Program .................................................................................................................................. 124 Public Safety Police Grants ...................................................................................................................... 125 New Construction Tax ............................................................................................................................... 126 Planned Drainage ..................................................................................................................................... 127 Parks and Recreational Facilities ............................................................................................................. 128 Traffic Signals ........................................................................................................................................... 129

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CITY OF PALM DESERT, CALIFORNIA
Annual Comprehensive Financial Report
For The Fiscal Year Ended June 30, 2023
Table of Contents
Page
Number
Fire Facilities Restoration ...................................................................................................................... 130 Recycling................................................................................................................................................ 131 Energy Independence Loan ................................................................................................................... 132 Air Quality Management ........................................................................................................................ 133 Aquatic Center ....................................................................................................................................... 134 Cannabis Compliance ............................................................................................................................ 135 El Paseo Assessment District ................................................................................................................ 136 Landscape and Lighting Districts Nos. 1-17 .......................................................................................... 137 Affordable Housing Fund ....................................................................................................................... 138 Permanent Local Housing Allocation Grant ........................................................................................... 139 Other Governmental Funds – Capital Projects ............................................................................................ 141 Combining Balance Sheet – Other Capital Projects Funds ......................................................................... 142 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Other Capital Projects Funds .................................................................................... 146 Budgetary Comparison Schedules – Capital Project Funds:

Capital Properties .................................................................................................................................. 150 Capital Projects Reserve ....................................................................................................................... 151 Drainage Facilities ................................................................................................................................. 152 Economic Development ......................................................................................................................... 153 Parks and Recreational Facilities .......................................................................................................... 154 Art in Public Places ................................................................................................................................ 155 Signalization ........................................................................................................................................... 156 Capital Golf ............................................................................................................................................ 157 Buildings................................................................................................................................................. 158 Other Governmental Funds – Debt Service Funds ...................................................................................... 159 Balance Sheet – Other Debt Service Fund .................................................................................................. 160 Statement of Revenues, Expenditures and Changes in
Fund Balances – Other Debt Service Fund ........................................................................................... 161 Budgetary Comparison Schedule – Debt Service Fund:

City Highland Undergrounding ............................................................................................................... 162 Internal Service Funds ................................................................................................................................. 163 Combining Statement of Net Position – Internal Service Funds .................................................................. 164 Combining Statement of Revenues, Expenses and Changes
In Fund Net Position – Internal Service Fund ........................................................................................ 165 Combining Statement of Cash Flows – Internal Service Funds ................................................................... 166

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CITY OF PALM DESERT, CALIFORNIA
Annual Comprehensive Financial Report
For The Fiscal Year Ended June 30, 2023
Table of Contents
Page
Number
Custodial Funds ............................................................................................................................................ 167 Combining Statement of Net Position – All Custodial Funds ....................................................................... 168 Combining Statement of Changes in Fiduciary Net Position – All Custodial Funds .................................... 169

STATISTICAL SECTION
Description of Statistical Section ........................................................................................................................ 171 Financial Trends:

Net Position by Component .......................................................................................................................... 173 Changes in Net Position ............................................................................................................................... 174 Fund Balances of Governmental Funds ....................................................................................................... 177 Changes in Fund Balances of Governmental Funds ................................................................................... 178 Graphs – Changes in Fund Balances of Governmental Funds ................................................................... 179 Supplemental Historical General Fund Revenues ....................................................................................... 180 Supplemental Graph – Historical General Fund Revenues ......................................................................... 181 Supplemental Historical General Fund Expenditures .................................................................................. 182 Supplemental Graph – Historical General Fund Expenditures .................................................................... 183 Supplemental Historical General Revenue and Expenditures Per Capita ................................................... 184 Revenue Capacity:

Assessed Value and Estimated Actual Value of Taxable Property .............................................................. 185 Historical Net Assessed Taxable Values Citywide and
Graph – Assessed Valuation Growth ........................................................................................................ 186 Supplemental FY 2020 and 2019 Breakdown of Basic 1% Property Tax Rate Not In Redevelopment Project Area .......................................................................................... 187 Property Tax Rates Direct and Overlapping Property Tax Rates ................................................................ 188 Principal Property Taxpayers ....................................................................................................................... 189 Property Tax Levies and Collections ............................................................................................................ 190 Supplemental Top 25 Sales Tax Generators and
Graph – Historical Sales Tax Trends ........................................................................................................ 191 Debt Capacity:

Ratios of Outstanding Debt by Type ............................................................................................................ 192 Ratios of General Bonded Debt Outstanding ............................................................................................... 193 Supplemental Special Assessment Information ........................................................................................... 194 Direct and Overlapping Government Activities Debt .................................................................................... 195 Legal Debt Margin Information ..................................................................................................................... 196 Pledged-Revenue Coverage ........................................................................................................................ 197 Demographic and Economic Information:

Demographic and Economic Statistics ......................................................................................................... 198 Principal Employers ...................................................................................................................................... 199 Supplemental Miscellaneous Statistics ........................................................................................................ 200

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CITY OF PALM DESERT, CALIFORNIA
Annual Comprehensive Financial Report
For The Fiscal Year Ended June 30, 2023
Table of Contents
Page
Number
Operating Information:

Full-Time Equivalent City Government Employees by Function/Program ................................................... 201 Operating Indicators by Function/Program .................................................................................................. 202 Capital Asset Statistics by Function/Program .............................................................................................. 203

SUPPLEMENTAL REDEVELOPMENT CUSTODIAL STATISTICAL SECTION Redevelopment Custodial Project Areas Map ............................................................................................. 205 Tax Allocation Bond Issue Information ......................................................................................................... 206 Historical Tax Increment – Redevelopment Property
Tax Trust Fund Summary ...................................................................................................................... 207

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7KLVSDJHLQWHQWLRQDOO\OHIWEODQN

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C I T Y O F P A L M D E S E R T
73-510 FRED WARING DRIVE
PALM DESERT, CALIFORNIA 92260-2578
TEL: 760 346-0611
[email protected]
January 19, 2024
Residents of Palm Desert,
Honorable Mayor and Members of the City Council
The Finance Department is pleased to present the Annual Comprehensive Financial Report (ACFR) of the City of Palm Desert for the fiscal year ended June 30, 2023.

The financial statements are prepared in accordance with generally accepted accounting principles (GAAP) and the Governmental Accounting Standards Board (GASB). We believe the data, as presented, is accurate in all material respects and is presented in a manner that fairly represents the financial position and changes in financial position of the City as measured by the financial activity of each of its funds. We also believe that all disclosures necessary to enable the reader to fully understand the City's financial activities have been presented.

Responsibility for the accuracy, completeness and reliability of the information contained in this report rests with the City.

The City of Palm Desert conducts an annual audit, which is performed by an independent certified public accountant. The independent audit of the City’s financial statements for fiscal year ended June 30, 2023 was conducted by Lance Soll & Lunghard, LLP. The auditor’s unmodified opinion on the basic financial statements is included in the Financial Section of this report. This is the most favorable opinion.

As part of the City’s annual audit engagement, the auditors reviewed the City’s internal control structure as well as compliance with applicable laws and regulations. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute assurance, that the financial statements are free of any material misstatements. The results of the City’s annual audit for fiscal year ended June 30, 2023 provided no instances of material weaknesses in connection with the internal control structure or significant violations of applicable laws and regulations.

As recipients of federal, state and county financial resources, the City may be required to undergo an annual single audit. For the fiscal year ended June 30, 2023, the City will have a single audit performed. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complements this letter of transmittal and should be read in conjunction with it.

PROFILE OF THE CITY OF PALM DESERT
Located in Riverside County in the geographical center of the Coachella Valley, Palm Desert was incorporated on November 26, 1973, as a General Law City. On November 4, 1997, voters overwhelmingly approved Measure LL adopting a city charter.

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ii
Under the provisions of the charter, the City of Palm Desert has full authority over its own municipal affairs including: bidding and contracting procedures; regulation of parks, libraries, and other facilities; certain fees; imposition of taxes; municipal zoning; salaries of officials and employees; municipal utilities; and municipal election procedures.

The City operates under a Council-Manager form of government. The City Council is comprised of five members elected to four-year terms every two years by the residents of the City. The City has two-districts, District One includes neighborhoods in and around the Palm Desert Civic Center core, comprising about 20% of the City’s population which is represented by one (1) elected City Council member. District Two comprises 80% of the City’s population, which is represented by four (4) elected City Council members. Each December, the City Council selects the Mayor from among its members for a one-year term. The City Council appoints the City Manager and the City Attorney.

The City operates as a “contract city,” primarily utilizing agreements with other governmental entities, private firms, and individuals to provide many services. Contracted services include: police protection through the County of Riverside; fire protection through Cal-Fire; animal control; road maintenance and construction services; legal services; landscape maintenance; and recreation program services. Palm Desert is a member of the California Joint Powers Insurance Authority that provides insurance coverage for the City. Water, sewage treatment and wastewater disposal are provided by the Coachella Valley Water District. Southern California Gas Company supplies natural gas to the City and electric power is provided by the Southern California Edison Company. Waste Disposal is provided by Burrtec Waste & Recycling Services. Telephone/Internet service is available through Frontier Communications. Cable television/Internet service is provided by Time Warner Cable/Spectrum.

The City provides traditional municipal, public enterprise, and housing services as follows:

Municipal Services
Public improvements, infrastructure and maintenance
Public art and community promotion
Planning, zoning, building and engineering
Housing and community development
Code compliance
Economic development and business advocacy
Legislative, city clerk, visitor’s services, public information, general administration, fiscal services, human resources, and risk management
Building permitting, inspections and services
Public Enterprise Services Blended & Discrete Component Units Golf course Palm Desert Housing Authority
Office complex Palm Desert Financing Authority
Internal service Palm Desert Recreational Facilities Corporation The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the General, Special Revenue, Debt Service, and Capital Project Funds are included in the annual appropriated budget. Budgetary amounts for Debt Service, Capital Projects, and certain Special Revenue Funds are adopted annually; however, these budgets are considered to be long-term in nature.

Palm Desert Civic Center

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iii
The City also maintains an encumbrance accounting system of purchase orders and contracts at the fund level as a means of accomplishing budgetary control. At each fiscal year end, open encumbrances are carried over to the new fiscal year. Purchase orders are reviewed to ensure that funds are available and that requests are properly authorized prior to being released to vendors.

The adopted budget for fiscal year 2022-2023 was prepared in accordance with accounting principles generally accepted in the United States of America. As reflected in the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management.

LOCAL ECONOMY
The City comprises an area of approximately 26 square miles and, as of January 1, 2023, has a population of 50,615 according to data provided by the California Department of Finance. In addition to permanent residents, approximately 20,000 seasonal residents make Palm Desert their home for three to six months each year.

The City has cultivated a sound foundation of general fund revenues including sales tax, transient occupancy tax, licenses and permits, property tax, and investment earnings. The City’s main revenue sources are transient occupancy taxes and sales tax. Due to the timing of the City’s incorporation, in 1973, and the implementation of Proposition 13, the City receives less than 7 percent of property taxes; therefore, the City relies heavily on sales tax and transient occupancy tax.

As a community where economic, environmental, social, and cultural development flourishes, Palm Desert is a much sought-after place to visit and reside. Palm Desert is the first city in Riverside County to create a public art program and is home to numerous cultural attractions including: the McCallum Theatre for the Performing Arts, a 1,127-seat theater that hosts a wide variety of A-list entertainers, touring theatrical productions and arts-related educational programs; the Living Desert Zoo and Gardens, a 1,200-acre facility containing a wide array of plants and animals from desert regions around the world; and the Palm Desert Art in Public Places program, a museum without walls, featuring more than 150 works of art on permanent display throughout the city.

Palm Desert’s active, five-star accredited Chamber of Commerce has more than 1,125 members who work to promote, support, and enhance business prosperity, civic vitality, and the quality of life within their community.

Noted for its extensive array of retail options, including the world-famous upscale shopping destination of El Paseo, Palm Desert is home to a variety of malls and retail centers including The Shops at Palm Desert, Desert Crossing, The Gardens on El Paseo, and El Paseo Village.

The internationally acclaimed Desert Willow Golf Resort, one of the nation’s premier municipal courses, boasts 36 holes of championship golf and stunning scenery in close proximity to first-class hotel accommodations and fine dining.

In addition to being the home of the Coachella Valley’s only community college, College of the Desert, Palm Desert is the location of satellite campuses for both the University of California, Riverside, and California State University, San Bernardino, the region’s only public, four-year university.

The State of California Employment Development Department Labor Market Information Division reported that the City of Palm Desert had an unemployment rate of 4.8% compared to Riverside County, which had a rate of 5.0%. Worldwide issues such as inflation and supply-chain Desert Willow Golf Resort

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Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Palm Desert
California
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
June 30, 2022
Executive Director/CEO
v

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7KLVSDJHLQWHQWLRQDOO\OHIWEODQN
vi

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CITY OF PALM DESERT
List of Principal Officials
as of June 30, 2023
City Council - Manager Form of Government

CITY COUNCIL

KATHLEEN KELLY
Mayor

KARINA QUINTANILLA
Mayor Pro-Tempore
JAN C. HARNIK
Council Member

GINA NESTANDE
Council Member

EVAN TRUBEE
Council Member

CITY ADMINISTRATION

TODD HILEMAN
City Manager
Robert W. Hargreaves Veronica Chavez
City Attorney - Best, Best & Krieger, LLP Director of Finance/City Treasurer

SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY

TODD HILEMAN
Executive Director
vii

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City Manager Executive
Assistant
Public Affairs
Manager
Management
Analyst I/II
(Environmental
)
HR Manager
Director of
Economic
Development
Records
Coordinator
Management
Analyst I/II (2)
Deputy Clerk
I/ II
Management
Analyst I/II
(Art)
Assistant City
Clerk
Admin
Assistant I/II
City Clerk
Senior Deputy
Clerk
Senior Admin
Assistant
Human
Resources
Analyst I/II (2)
Office
Assistant I/ II
Communicatio
ns Analyst I/II
(2)
Marketing
Specialist
Special Events
Coordinator
Admin
Assistant I/II
Deputy
Director of
Economic
Development
Admin Assistant
Special
Programs
I/II
Housing
Manager
Management
Analyst I/II
Housing
Program Tech
Director of
Finance
Deputy
Director of
Finance
Deputy
Director of
Finance
Finance
Supervisor
Senior
Contracts and
Grants Analyst
Purchasing
Coordinator
Admin
Assistant I/II
Senior
Network
Engineer
Accountant (2)
Information
Systems
Manager
Senior
Information
Systems
Admin
Senior GIS
Admin
Biz Systems
Enterprise
Accounting
Technician
Accounting
Technician (5)
Admin
Assistant I/II
Management
Analyst I
Assistant City
Manager
Receptionist
Social Services
Coordinator
Management
Analyst I/II
City Engineer Director of
Public Works
Director of
Development
Services
Director of
Capital
Projects

CITY OF PALM DESERT ORGANIZATION CHART
viii

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Director of
Public Works
Deputy
Director of
Public Works
Assistant City
Manager
Social Services
Coordinator
Management
Analyst I/II
Director of
Development
Services Deputy
Director of
Development
Services
Senior Admin
Assistant
Management
Analyst I/II
Executive
Assistant
Permit Center
Supervior
Code
Compliance
Office I/II (5)
Permit
Specialist I/II
(4)
Principal
Planner
Chief Building
Official
Code
Compliance
Supervisor
Senior
Building
Inspector
Office
Assistant I/II
Building
Inspector I/II
(3)
Office
Assistant I/II
Senior Planner
Associate
Planner I/II
Assistant
Planner I/II
Chief
Inspector
Land
Development
Tech
Director of
Capital
Projects
Admin
Assistant I/II
Capital
Projects
Manager (2)
PW Inspector
(3)
Senior Project
Manager
Project
Manager (2)
Transportation
Manager
Business
Operations
Manager
Project
Manager
Senior
Managment
Analyst
Admin
Assistant I/II
(2)
Traffic Signal
Specialist
Traffic Signal
Tech I/II (2)
Street
Maintenance
Supervisor
Community
Services
Manager
Admin
Assistant I/II
Office
Assistant I/II
Senior
Maintenance
Worker
Maintenance
Worker I/II/III
(10)
Supervising
Landscape
Supervisor
Landscape
Inspector (3)
Project
Manager
Senior
Facilities
Specialist
Project
Technician
Facilities
Specialist
City Engineer

CITY OF PALM DESERT ORGANIZATION CHART
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1611 E. Fourth Street, Suite 200
Santa Ana, CA 92701
(714) 569-1000
203 N. Brea Blvd, Suite 203
Brea, CA 92821
(714) 672-0022
21 Waterway Avenue, Suite 30089
The Woodlands, TX 77380
(936) 828-4587
2151 River Plaza Dr., Suite 150
Sacramento, CA 95833
(916) 503-9691
24422 Avenida de la Carlota, Suite 275
Laguna Hills, CA 92653
(949) 829-8299
www.lslcpas.com
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members of the City Council
City of Palm Desert, California
Report on the Audit of the Financial Statements
Opinions
We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Palm Desert, California (the “City”), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents.

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City, as of June 30, 2023, and the respective changes in financial position, and, where applicable, cash flows thereof, for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinions
We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Emphasis of Matter
Change in Accounting Principle
As described in Note 1 to the financial statements, in 2023, the City adopted new accounting guidance, GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements and GASB Statement No. 96, Subscription Based Information Technology Arrangements. Our opinion is not modified with respect to this matter.

Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

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To the Honorable Mayor and Members of the City Council
City of Palm Desert, California
In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter.

Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions.

Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we:
 Exercise professional judgment and maintain professional skepticism throughout the audit.  Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.  Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, no such opinion is expressed.  Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.  Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, budgetary comparison schedules for the General Fund and major special revenue funds, and the required pension and other postemployment benefits schedules, as listed on the table of contents, presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 2

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To the Honorable Mayor and Members of the City Council
City of Palm Desert, California
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying combining and individual fund financial statements and schedules (supplementary information) are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements.

The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information
Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon.

In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated January 30, 2024, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City’s internal control over financial reporting and compliance.

Brea, California
January 30, 2024
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CITY OF PALM DESERT
MANAGEMENT’S DISCUSSION AND ANALYSIS
Our discussion and analysis of the City of Palm Desert’s financial performance for the fiscal year ended June 30, 2023, provides: a comparison of current year to prior year ending results based on the government-wide financial statements; an analysis of the City’s overall financial position and results of operations to assist users in evaluating the City’s financial position; a discussion of significant changes that occurred in the funds; and significant budget variances. In addition, it describes the activities during the year for capital assets and long-term debt. We end our discussion and analysis with a description of known facts, decisions, and conditions that are expected to have a significant effect on the financial position or results of operations. Please read it in conjunction with the transmittal letter and the City’s financial statements.

FINANCIAL HIGHLIGHTS
 The City’s total assets and deferred outflows exceeded its liabilities and deferred inflows by $825.09 million (net position).
 The City’s governmental activities net position increased by $11.51 million, and the net position of the business-type activities increased by $1.95 million.  During the year, the City’s revenues were $131.59 million and expenses were $120.10 million in its governmental activities, compared to fiscal year 2022, where revenues were $125.46 million and expenses were $102.87 million.
 In the City’s business-type activities, expenses were $12.48 million, $1.62 million more than the $10.86 million in prior year expenses. Revenues generated from golf course green fees, merchandise sales, rental income and other revenues increased by $1.00 million compared to prior year, and Parkview Office Complex revenues for business-type activities revenues increased $132.70 thousand from prior year.
 The City’s governmental activities program revenues and general revenues increased by $6.13 million, while program expenses increased by $17.23 million.  Business-type activities revenues increased $1.79 million, from $12.64 million to $14.43 million.

Expenses increased from $10.86 million to $12.48 million.  The City kept its General Fund expenditures within spending limits by $5.39 million. The revenues available for expenditures exceeded budget by $14.34 million.

USING THIS ANNUAL REPORT
This annual report consists of a series of financial statements. The Statement of Net Position and Statement of Activities (on pages 17, 18 and 19) provide information about the activities of the City as a whole and present a long-term view of the City’s finances. The fund financial statements start on page 20.

For governmental activities, these fund statements tell how these services were financed in the short term as well as what remains for future spending. The fund financial statements also report the City’s operation in more detail than the government-wide statements by providing information about the City’s most significant funds and other funds. The remaining fiduciary fund statement provides financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government.
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REPORTING THE CITY AS A WHOLE
The Statement of Net Position and the Statement of Activities:

Our analysis of the City as a whole begins on page 17. One of the most important questions asked about the City’s finances is, “Is the City as a whole better off or worse off as a result of the year’s activities?” The Statement of Net Position and the Statement of Activities report information about the City as a whole and about its activities in a way that answers this question. These statements include all assets and liabilities of the City using the accrual basis of accounting, which is similar to the accounting used by most private-sector companies. All of the current year’s revenues and expenses are taken into account regardless of when cash is received or paid.

These two statements report the City’s net position and changes in them. Net position is the difference between total assets and deferred outflows of resources less liabilities and deferred inflows, which is one way to measure the City’s financial health, or financial position. Over time, increases or decreases in the City’s net position are an indication of whether its financial health is improving or deteriorating. Other non-financial factors should be considered, however, such as changes in the economy that could cause a decrease in consumer spending.

In the Statement of Net Position and the Statement of Activities, we separate City activities as follows:

Governmental activities – Most of the City’s basic services are reported in this category, including general administration (city manager, city clerk, finance, etc.), housing and redevelopment, public safety (police and fire protection), public works, parks, recreation and culture departments. Property taxes, sales tax, transient occupancy tax, user fees, interest income, franchise fees, state and federal grants, contributions from other agencies, and other revenues finance these activities.

Business-type activities – The City charges customers to cover all or most of the cost of certain services it provides. The City’s municipal golf course, Desert Willow, and the City’s Parkview Office Complex activities are reported in this category.

Component unit activities – The City includes one separate legal entity in its report – the Palm Desert Recreational Facilities Corporation. Although legally separate, this “component unit” is important because the City is financially accountable for it.

REPORTING THE CITY’S MOST SIGNIFICANT FUNDS
Fund Financial Statements:

The fund financial statements provide detailed information about the most significant funds and other funds, not the City as a whole. Some funds are required to be established by State law and by bond covenants. However, management established many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grants, and other resources. The City has three types of funds: governmental, proprietary and fiduciary.

Governmental funds – Most of the City’s basic services are reported in governmental funds, which focus on how money flows in and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Governmental fund information helps determine whether there are more or fewer financial resources that can be spent in the near future to finance the City’s programs. The differences of results in the Governmental Fund financial statements to those in the Government-wide financial statements are explained in a reconciliation following each Governmental Fund financial statement.
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Proprietary funds – When the City charges customers for the services it provides, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. The City’s enterprise funds are the same as the business-type activities we report in the government-wide statements, but provide more detail and information such as a statement of cash flows.

Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City of Palm Desert operations. The accounting used for fiduciary funds is much like that used for proprietary funds.

THE CITY AS TRUSTEE
Reporting the City’s Fiduciary Responsibilities:

The City is the trustee, or fiduciary, for the Successor Agency to the Palm Desert Redevelopment Agency’s (Successor Agency) private-purpose trust fund and for certain custodial funds held on behalf of developers and its employees’ retiree service stipend fund. The City’s fiduciary activities are reported in separate Statement of Fiduciary Net Position, Statement of Changes in Fiduciary Net Position, Combining Statement of Statement of Assets and Liabilities-All Custodial Funds, and Combining Statement of Changes in Fiduciary Net Position-All Custodial Funds. We exclude these activities from the City’s other financial statements because the City cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used for their intended purposes.

THE CITY AS A WHOLE
During the fiscal year ending June 30, 2023, the City’s combined net position increased $4.15 million from $811.63 million to $815.78 million. A separate review of the net change in the governmental and business-type activities is provided for the reader. Our analysis focuses on the net position (Table 1) and changes in net position (Table 2) of the City’s governmental and business-type activities. 7

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2023 2022 2023 2022 2023 2022
Current and restricted assets 397.71 $ 373.47$ $ 11.08 11.31 $ 409.02$ 384.55$ Noncurrent assets
Receivables 1.23 3.44 5.89 5.90 9.33 7.13
Capital assets 422.26 424.81 69.55 67.52 492.33 491.81
TOTAL ASSETS 799.51 823.41 86.75 84.50 884.01 910.16
Deferred outflows of resources $ 18.10 6.75$ -$ -$ 18.10$ 6.75$ 841.51 806.26
Current liabilities 32.33 45.70 1.69 1.36 47.39 33.69
Noncurrent liabilities 24.79 45.28 0.23 - 45.51 24.79
TOTAL LIABILITIES 57.12 90.98 1.92 1.36 92.90 58.48
Deferred inflows of resources $ 16.53$ 5.22 -$ -$ 5.22$ 16.53$

73.65 96.20
Net position:

Net investment in capital assets 416.68 422.40 69.24 67.33 489.73 485.92 Restricted 164.63 172.53 - - 172.53 164.63
Unrestricted 146.77 156.10 10.54 10.50 157.27 166.64
TOTAL NET POSITION 745.31 $ 733.80$ $ 77.83 79.78 $ 825.09$ 811.63$ Activities Activities Total
TABLE 1

NET POSITION
(IN MILLIONS)
As of June 30, 2023 and 2022
Governmental Business-Type
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The City’s governmental activities net position increased $11.51 million. The City’s net position is made up of three components: Net investment in capital assets; restricted net position; and unrestricted net position. For governmental activities, unrestricted net position, which represents the part of net position that can be used to finance day-to-day operations, accounted for 20 percent of the overall total net position. Unrestricted net position increased $9.33 million from $146.77 million in 2022 to $156.10 million in 2023, and restricted net position increased from $164.63 million to $172.53 million, an increase of $7.9 million. The increase in unrestricted net position was primarily driven by increases in program revenues, investment earnings and transient occupancy tax, as tourism continued to strengthen after pandemic closures were lifted and the City’s investment portfolio took advantage of high interest rates in both short-term savings vehicles and longer-term investments. A portion of these increases was offset by $7.29 million in decreases for operating grants and contributions compared to prior year. Total charges for services increased from $32.22 million in 2022 compared to $38.83 million in 2023, an increase of $6.13 million; and transient occupancy tax increased from $22.13 million in 2022 to $23.96 million in 2023, representing an increase of $1.83 million. Investment earnings saw an increase of $7.14 million from 2022 to 2023 and interest rates remained high through the end of fiscal year 2023.

The decrease of $1.41 million in restricted net position was due to restricted special projects decreasing by $2.76 million from the prior year, while restricted capital projects funds increased by $1.35 million.

During the year, construction on major projects continued; including the completion of the Council Chambers renovation and Cook Street resurfacing, progress on the Development Services Lobby renovation, and continuation of the annual street resurfacing program. Investment in capital assets in governmental funds decreased marginally by $5.72 million, slightly over 1 percent of the total balance.

The City’s governmental activities total assets and deferred outflow of resources combined increased $35.25 million from $806.26 million in 2022 to $841.51 million in 2023. The majority of increases to total assets were in cash and investments, which increased by $22.04 million over the prior year. Some of this increase is related to stronger-than-expected revenue results in General Fund sales tax and charges for services, along with robust interest earnings for the fiscal year, whereas other portions of the increase, such as those in the Fire Tax fund, are related to the timing of cash outflows for yearend expenditures. Increases to deferred outflows made up the remainder of the $35.25 million increase, totaling $8.91 million in pension deferred outflows and $2.44 million in OPEB deferred outflows.

Total governmental fund liabilities and deferred inflows combined increased by $22.55 million from $73.65 million in 2022 to $96.20 million in 2023. An increase of $33.86 million in total liabilities, mainly attributable to a pension liability increase of $19.09 million and an accounts payable increase of $15.92 million, was offset by a decrease in deferred inflows of $11.31 million, mostly due to increased deferred inflows from pensions.

The net position of the business-type activities recognized an increase of $1.95 million, from $77.83 million during 2022 to $79.78 million during 2023. The main factor for the increase in net position was the addition of just over $2 million in capital assets, primarily new golf carts and equipment for Desert Willow Golf Course.

Total assets in the business-type activities increased by $2.25 million from $84.50 million in 2022 to $86.75 million in 2023. The major increase was related to the addition of Desert Willow Golf Course golf carts and equipment mentioned above. Total liabilities in the business-type activities increased slightly by $0.56 million from $1.36 million in 2022 to $1.92 million in 2023. 9

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2023 2022 2023 2022 2023 2022

REVENUES
Program Revenues:

Charges for services 38.83$ 32.22$ 13.63$ 12.41$ 52.46$ $ 44.63 Operating grants and contributions 13.04 20.33 - - 13.04 20.33 Capital grants and contributions 4.67 4.83 0.09 0.19 4.76 5.02 General Revenues:

Property taxes 13.89 12.94 - - 13.89 12.94
Transient occupancy tax 23.96 22.13 - - 23.96 22.13
Sales tax 26.37 27.50 - - 26.37 27.50
Other taxes 3.58 3.63 - - 3.58 3.63
Investment earnings 5.17 (1.97) 0.45 (0.10) 5.62 (2.07) Other revenues 2.08 3.85 0.26 0.14 2.34 3.99
TOTAL REVENUES 131.59 125.46 14.43 12.64 146.02 138.10

EXPENSES
General Government 26.19 24.74 - - 26.19 24.74
Housing and redevelopment 13.25 9.63 - - 13.25 9.63
Public safety 40.76 37.40 - - 40.76 37.40
Parks, recreation and culture 19.11 8.88 - - 19.11 8.88 Public works 20.65 22.07 - - 20.65 22.07
Interest on long-term debt 0.15 0.15 - - 0.15 0.15
Golf Course - Desert Willow - - 11.07 9.91 11.07 9.91
Office Complex - Parkview - - 1.41 0.95 1.41 0.95
TOTAL EXPENSES 120.10 102.87 12.48 10.86 132.58 113.73
INCREASE (DECREASE) IN NET POSITION 11.49 22.59 1.95 1.78 13.44 24.37 BEGINNING NET POSITION 733.80 711.21 77.83 76.05 811.63 787.26 RESTATEMENT OF NET POSITION 0.02 - - - 0.02 -
ENDING NET POSITION 745.31$ 733.80$ 79.78$ 77.83$ 825.09$ 811.63$ Activities Activities Total
TABLE 2

CHANGES IN NET POSITION
(IN MILLIONS)
As of June 30, 2023 and 2022
Governmental Business-Type
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Governmental Activities
Total revenue increased by $6.13 million from $125.46 million to $131.59 million. Factors that contributed to the changes in revenues are as follows:
 Transient occupancy tax increased from $22.13 million in 2022 to $23.96 million in 2023, a slight increase of $1.83 million. The use of hotels and short-term rentals throughout the city continued to strengthen through 2023, and the implementation of a new online system for short-term rental registration and payment of transient occupancy taxes gave residents a new, convenient option for tax and fee remittance.
 The City’s sales tax decreased by $1.13 million from $27.50 million in 2022 to $26.37 million in 2023. Despite the year-over-year decrease, sales tax receipts still exceeded budget expectations by about $680 thousand for 2023.
 In 2023, the City’s investment earnings were $7.14 million more than the prior year, an increase from $(1.97) million in 2022 to $5.17 million in 2023, which was strongly correlated to the high interest rate environment. The City continued to utilize multiple investment vehicles throughout the year, taking advantage of high interest rates available in short-term investment pools such as the Local Agency Investment Fund (LAIF), and the California Asset Management Program (CAMP), along with the reinvestment of maturing investments into long-term investment products.  Charges for services saw a strong increase from $32.22 million in 2022 to $38.83 million in 2023.  Operating contributions and grants recognized a decrease of $7.29 million. This decrease was mainly the result of one-time public safety operating contributions and grants that were received in the prior year, but not in the current year. Capital contributions and grants decreased by $0.16 million, from $4.83 million in 2022 to $4.67 million in 2023.

Total governmental expenses increased from $102.87 million in 2022 to $120.10 million in 2023, an increase of about 17 percent. Factors that contributed to the changes in expenditures are as follows:
 Expenditures in housing and redevelopment increased from $9.63 million in 2022 to $13.25 million in 2023, an increase of $3.62 million.
 Public safety expenditures increased by $3.36 million, from $37.40 million in 2022 to $40.76 million in 2023, related to increases in contracted police services of $1 million, and increases in contracted fire protection services of $1.90 million. The large increase in fire protection costs was related to the adoption of new memorandums of understanding for fire protection staff.
 Parks, recreation, and culture saw increases in expenditures of $10.23 million, from $8.8 million in 2022 to $19.11 million in 2023.
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0% 11%
20%
10%
31%
28%
2023
Governmental Activities Net
(Expense) Revenue
1% 7%
7%
25%
27%
33%
2022
Governmental Activities Net
(Expense) Revenue
Interest on long
term debt
Housing and
redevelopment
Parks, recreation
and culture
Public works
Public safety
General
Government
0%3%
23%
11%
30%
33%
2023
Governmental Activities Net
(Expense) Revenue
The following schedule represents the net cost of providing services:

Governmental Activities
Net (Expense) Revenue
(In Millions)
Business-type Activities
In the business-type activities, total revenues increased by 14 percent from $12.64 million to $14.43 million, a $1.79 million increase. The main factor for the change in total revenues was the overall increase in fee revenue, which recognized a $1.22 million growth from prior year.

The Parkview Office Complex revenues increased slightly from $1.34 million in 2022 to $1.47 million in 2023 due to annual lease adjustments.

Operating expenses for business-type activities increased by $1.62 million from $10.86 million to $12.48 million. The majority of the increase is related to the growth in operations at Desert Golf resort which recognized an $1.16 million increase in overall expenditures. Parkview Office Complex accounts for the remaining increase of $0.46 million due to tenant improvements completed throughout 2023.

THE CITY’S FUNDS
On page 20, the governmental funds balance sheet is shown. The combined fund balance of $341.59 million increased $13.34 million from $328.25 million. This total includes the General Fund balance of $120.92 million, which increased by $1.04 million from the prior year. The City’s General Fund balance has a non-spendable balance of $3.49 million, committed balance of $83.42 million, assigned 2023 2022
General government ($21.01) ($15.13)
Housing and redevelopment (1.76) (3.11)
Public safety (19.18) (12.43)
Parks, recreation and culture (14.39) (3.33)
Public works (7.07) (11.34)
Interest on long term debt (0.15) (0.15)
Total ($63.56) ($45.49)
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balance of $19.28 million, and $14.72 million of unassigned fund balance. The increase in the General Fund’s balance was due to increases in sales tax and development fees as building remained strong throughout the City during fiscal year 2023. Other major fund balance changes are noted below:
 The Prop A Fire Tax Special Revenue Fund: The fund balance increased by $3.06 million.  The Housing Asset Fund: The fund had an increase of $1.41 million mainly due to significant increases in investment earnings during the fiscal year.  The Housing Authority Fund: The fund balance had a slight increase of $132 thousand.  Capital Properties Fund: The fund balance increased $3.02 million from $48.19 million to $51.21 million. The increase represents the accumulation of fund balance needed to implement the City’s Capital Improvement Plan for the 2024 fiscal year.  The remaining increase of $4.69 million is spread across multiple non-major funds.

More detailed information about the combined fund balance reserves is presented in Note 16 to the financial statements.

General Fund Budgetary Highlights
Based upon recommendations from the staff, the City Council revised the budget several times during the year. Adjustments were made on a monthly basis as City staff requested additional appropriations to cover the cost of projects that either had change orders for additional work, or were underestimated. At mid-year, some adjustments were also requested to better meet departmental demands and adjust for any revenue fluctuations. At year-end, budgets were adjusted for unanticipated approved expenditures.

All amendments that either increase or decrease appropriations are approved by the City Council.

For the City’s General Fund, the actual ending revenues of $86.12 million were $14.34 million more than the final budgeted revenues of $71.79 million. Sales and transient occupancy taxes continue to be the top two revenue generators for the City, totaling $50.33 million or 58.27 percent of the total General Fund actual revenues. The original budget was $71.18 million compared to the final budget of $71.79 million, an increase of $0.61 million. The City increase in the final budget was related to better-than-expected increases in both building permit and plan check fee revenues.

The General Fund actual ending expenditures of $85.11 million were $5.39 million less than the final budget of $90.50 million. There were changes in the original budget compared to the final budget during the year. The original expenditure budget was $71.18 million compared to the final budget of $90.50 million, a $19.32 million increase. During the year, the following represent the major changes between the original budget and the final budget: the City Clerk, Street Maintenance, and Public Buildings Operations/Maintenance budgets were increased to accommodate new staff and expanded city services.

The budget for transfers out was increased by $16.91 million. These transfers were mainly to capital project funds to cover upcoming projects, including the Discover PD visitors’ center, Lupine Plaza, Turf Retrofit grants, the Development Services Lobby renovation, along with property purchases. 13

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CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
At the end of 2023, the City had $491.79 million invested in a broad range of capital assets including land, streets, bridges, drainage systems, traffic lights, parks, buildings, artwork, vehicles, golf courses and equipment (See Table 3). This amount represents a net decrease (including additions and deductions) of $0.53 million over the prior year, due mainly to depreciation. 2023 2022 2023 2022 2023 2022
Land $ 82.06 82.29 $ $ 53.31$ 135.60 53.31 $ 135.37 $
Construction-in-progress 18.45 10.12 - - 10.12 18.45
Buildings and improvements 82.59 78.28 82.59 78.28
other than buildings 13.34 12.51 12.51 13.34
Machinery and equipment 4.35 3.53 3.74 0.87 7.27 5.22
Infrastructure & right-of-way 241.19 241.66 - - 241.19 241.66 Lease assets 2.13 - - - 2.13 -
Subscription assets 0.41 - - - 0.41 -
TOTALS 424.80 422.26 69.56 67.52 491.82 492.32
Activities Activities Total
TABLE 3

CAPITAL ASSETS AT YEAR-END
(NET OF DEPRECIATION, IN MILLIONS)
For the years ended June 30, 2023 and 2022
Governmental Business-Type
14

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This year’s major additions included (in millions):

Buildings $ 6.85
Improvements other than buildings 2.78
Equipment purchases 0.28
Infrastructure 1.04
Land/right of way 0.27
Lease assets – subscriptions 0.00
Subscription assets 0.54
$ 11.76
The City’s fiscal year 2024 adopted capital budget calls for an additional $78.88 million to be spent, plus continuing capital projects of $14.89 million from prior year, with the majority being spent on streets, infrastructure, buildings, parks, and golf course improvements. Projects will be funded with existing bond proceeds or funds that have been designated by an outside party for specific use. The City has adopted a bold capital improvement program to make significant capital improvements throughout the jurisdiction, and to catch up on projects that may have been deferred in the past. More detailed information about the City’s capital assets is presented in Note 1h and Note 5 to the financial statements.

Debt
At year-end, the City’s governmental activities had $48.80 million in bonds, claims, compensated absences, and pension liability versus $26.14 million last year, a increase of $22.66 million as shown in Table 4. The major increase was the City’s Net Pension liability which went from $19.59 million in 2022 to $38.68 million in 2023, an increase of $19.09 million.
2023 2022 2023 2022 2023 2022
Compensated absences 2.60 $ 2.29$ -$ -$ 2.60 $ 2.29 $
Due to primary government 2.10 - - - 2.10 -
Lease liability 2.41 2.20 - 2.20 2.41
Financed purchase - 0.32 0.19 - 0.32 0.19
SBITA liability 0.40 - - - 0.40 -
Claims and judgments payable 0.56 0.68 - - 0.68 0.56
Special assesments debt with
government commitment 1.08 1.03 - - 1.03 1.08
Limited obligation improvement
bonds 0.21 0.26 - - 0.26 0.21
OPEB liability (net) 0.86 - - - - -
Pension liability (net) 19.59 38.68 - - 38.68 19.59$
TOTALS $ 26.14$ 48.80 0.32$ 0.19$ $ 26.33 48.27 $
Activities Activities Total
TABLE 4

OUTSTANDING DEBT AT YEAR-END
(IN MILLIONS)
For the years ended June 30, 2023 and 2022
Governmental Business-Type
15

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The City was able to meet its current year debt obligations in a timely manner. Bonds that were issued in prior years have been used to finance various capital projects.

The City’s business-type activities debt increased $0.13 million from $0.19 million to $0.32 million. Debt in the business-type activities is for amounts due back to the City for the financing of capital equipment. The City’s golf course used a city-funded financing option as an alternative to purchasing golf carts and maintenance equipment from cash flows derived through day-to-day operations. The City’s business-type activities were able to meet their current year debt obligation in a timely manner. More detailed information about the City’s long-term liabilities is presented in Note 6 through Note 10 to the financial statements.

ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS
In preparing the budget for fiscal year 2024, management and the City Council considered many ongoing economic impacts such as inflation, supply chain constraints, and labor issues associated with contracts.

Keeping the well-being and safety of residents, visitors, and businesses as the highest priority, the City Council has maintained funding to sustain current service levels and supported efforts to ensure that much of the deferred maintenance owing to the pandemic is now being addressed. In addition, the City Council established strategic goals and objectives before the creation of the annual budget, which were given the highest priority during the budget development process. The City Council’s strategic goals and objectives include both capital and monetary investments to support the City’s economic stability.

Most notably, the fiscal year 2024 budget includes a robust Capital Improvement Plan, which will be supported by a newly created Capital Projects department. Additionally, during fiscal year 2024, the City expects to transition the local library from a county-run facility to a municipal library with support from a new Library Services department. These considerations, among others, have been factored into the fiscal year 2024 budget to date.

The City’s 2023-2024 Financial Plan can be found on the City’s website at www.cityofpalmdesert.org.

CONTACTING THE CITY’S FINANCIAL MANAGEMENT
This financial report is designed to provide our residents, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and serves as a resource to demonstrate the stewardship and accountability for the public monies it receives.

If you have questions about this report or need additional financial information, please contact the Finance Department at (760) 346-0611 or [email protected]. 16

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Statement of Net Position
Component
Unit
Governmental Business-Type
Activities Activities Total
Assets:

Current assets:

Cash and investments $ 295,587,088 $ 14,100,518 $ 309,687,606 $ 1,216,690 Receivables:

Accounts 4,839,487 241,436 5,080,923 33,236
Notes 1,032,000 - 1,032,000 -
Accrued interest 917,006 - 917,006 -
Loans 12,415,466 - 12,415,466 -
Leases 177,671 799,886 977,557 -
Internal balances 4,179,888 (4,179,888) - -
Prepaid costs 535,478 25,479 560,957 10,937
Deposits 20,000 - 20,000 -
Due from other governments 9,556,392 - 9,556,392 -
Inventories 17,570 313,932 331,502 75,170
Property held for resale 61,516 - 61,516 -
Restricted assets:

Cash with fiscal agent 68,373,658 - 68,373,658 -
Noncurrent assets:

Leases receivable 3,018,822 4,312,103 7,330,925 -
Due from component unit 420,000 1,578,564 1,998,564 -
Capital assets, not being depreciated/amortized 213,726,834 53,304,965 267,031,799 - Capital assets, net of depreciation/amortization 208,530,757 16,253,767 224,784,524 2,494,164 Total Assets 823,409,633 86,750,762 910,160,395 3,830,197 Deferred Outflows of Resources:

Deferred outflows from pensions 13,243,801 - 13,243,801 - Deferred outflows from OPEB 4,860,869 - 4,860,869 -
Total Deferred Outflows of Resources 18,104,670 - 18,104,670 - Liabilities:

Current liabilities:

Accounts payable 24,202,824 1,006,261 25,209,085 37,113 Accrued liabilities 737,981 232,666 970,647 137,002
Accrued interest 56,038 - 56,038 3,594
Unearned revenue 15,460,263 333,836 15,794,099 188,193
Deposits payable 3,949,536 26,590 3,976,126 -
Noncurrent liabilities:

Due within one year:

Compensated absences 500,000 - 500,000 -
Lease liability - 218,453 218,453 53,295
SBITA liability - 274,401 274,401 -
Long-term debt 74,000 86,217 160,217 -
Claims and judgements 224,361 - 224,361 -
Due in more than one year:

Due to primary government - - - 1,998,564
Compensated absences 2,101,028 - 2,101,028 -
Lease liability - 1,978,673 1,978,673 2,475,747
SBITA liability - 125,182 125,182 -
Claims and judgements 455,520 - 455,520 -
Long-term debt 1,084,000 232,952 1,316,952 -
Net OPEB liability - 855,839 855,839 -
Net pension liability 38,681,819 - 38,681,819 -
Total Liabilities 90,979,918 1,918,522 92,898,440 4,893,508 Deferred Inflows of Resources:

Deferred inflows from pensions 1,614,248 - 1,614,248 -
Deferred inflows from OPEB 433,542 - 433,542 -
Deferred inflows from leases 3,168,657 5,051,339 8,219,996 - Total Deferred Inflows of Resources 5,216,447 5,051,339 10,267,786 - Net Position:

Net investment in capital assets 416,680,537 69,239,563 485,920,100 - Restricted for:

Special projects 93,279,580 - 93,279,580 -
Capital projects 79,251,472 - 79,251,472 -
Unrestricted (deficit) 156,106,349 10,541,338 166,647,687 (1,063,311) Total Net Position $ 745,317,938 $ 79,780,901 $ 825,098,839 $ (1,063,311) June 30, 2023
Primary Government
Palm Desert
Recreational
Facilities
Corporation

CITY OF PALM DESERT
See Notes to Financial Statements.
17

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Statement of Activities
Operating Capital
Charges for Contributions Contributions
Expenses Services and Grants and Grants
Primary Government:

Governmental activities:

General government $ 26,185,065 $ 2,678,135 $ 781,822 $ 1,711,324 Housing and redevelopment 11,016,631 13,251,192 266,263 211,596 Public safety 18,831,126 40,753,734 2,393,227 346,836
Parks, recreation and culture 19,112,483 3,339,445 632,113 750,777 Public works 20,646,936 2,958,606 8,966,309 1,652,965
Interest on long-term debt 143,521 - - -
Total Governmental Activities 120,092,931 38,823,943 13,039,734 4,673,498 Business-type activities:

Desert Willow Golf Course 11,073,128 12,159,419 - 99,154 Parkview Office Complex 1,409,321 1,473,376 - -
Total Business-Type Activities 13,632,795 12,482,449 - 99,154 Total Primary Government $ 132,575,380 $ 52,456,738 $ 13,039,734 $ 4,772,652 Component Unit:

Palm Desert Recreational Facilities Corp. $ 4,958,674 $ 4,875,792 $ - $ - General Revenues:

Taxes:

Property taxes, levied for general purpose
Transient occupancy taxes
Sales taxes
Franchise taxes
Other taxes
Investment earnings
Miscellaneous
Gain on sale of capital assets
Total general revenues
Change in net position
Net position - beginning of year
Restatement of net position
Net position - beginning of year, as restated
Net position - end of year

CITY OF PALM DESERT
Program Revenues
Functions/Programs
Year Ended June 30, 2023
See Notes to Financial Statements.
18

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Net (Expenses) Revenues and Changes in Net Position
Primary Government
Component
Unit
Governmental Business-Type
Activities Activities Total
$ (21,013,784) $ - $ (21,013,784) $ -
(1,756,702) - (1,756,702) -
(19,182,545) - (19,182,545) -
(14,390,148) - (14,390,148) -
(7,069,056) - (7,069,056) -
(143,521) - (143,521) -
(63,555,756) - (63,555,756) -
- 1,185,445 1,185,445 -
- 64,055 64,055 -
- 1,249,500 1,249,500 -
(63,555,756) 1,249,500 (62,306,256) -
- - - (82,882)
13,887,103 - 13,887,103 -
23,959,975 - 23,959,975 -
26,373,509 - 26,373,509 -
3,574,273 - 3,574,273 -
14,330 - 14,330 -
5,165,176 450,279 5,615,455 -
1,250,480 257,743 1,508,223 -
825,294 - 825,294 -
75,050,140 708,022 75,758,162 -
11,494,384 1,957,522 13,451,906 (82,882)
733,803,875 77,823,379 811,627,254 (960,750)
19,679 - 19,679 (19,679)
733,823,554 77,823,379 811,646,933 (980,429)
$ 745,317,938 $ 79,780,901 $ 825,098,839 $ (1,063,311)
Palm Desert
Recreational
Facilities
Corporation
See Notes to Financial Statements.
19

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CITY OF PALM DESERT
Balance Sheet
Governmental Funds
General
Assets:

Pooled cash and investments 124,938,153 $ 19,058,450 $ 38,807,689 $ 16,258,989 $ Receivables:

Accounts 2,322,660 496,957 - 36,378
Assessments - - - -
Notes 1,032,000 - - -
Interest 590,361 - 19,553 -
Loans 14,978 - 11,178,813 -
Leases Receivable 3,196,493 - - -
Prepaid costs 498,844 - 551 -
Deposits - - - -
Due from other governments 6,287,055 1,787,917 - -
Due from other funds 1,136,962 - - -
Advances to other funds 1,956,000 - - -
Inventories - - - -
Property held for resale - - 61,516 -
Due from component unit 420,000 - - -
Restricted assets:

Cash and investments with fiscal agent - - 2 3,758,346
Total Assets $ 142,393,506 $ 21,343,324 $ 50,068,124 $ 20,053,713 Liabilities, Deferred Inflows of Resources and
Fund Balances
Liabilities:

Accounts payable $ 12,918,122 $ 5,604,693 $ 33,692 $ 28,404 Accrued liabilities 575,858 - - 147,603
Unearned revenues - - - 27,002
Deposits payable 3,352,482 - - 593,274
Due to other funds - - - -
Advances from other funds - - - -
Total Liabilities 16,846,462 5,604,693 33,692 796,283
Deferred Inflows of Resources:

Unavailable revenue 1,461,875 - 19,551 -
Leases 3,168,657 - - -
Total Deferred Inflows of Resources: 4,630,532 - 19,551 - Fund Balances:

Nonspendable 3,501,822 - 551 -
Restricted - 15,738,631 50,014,330 7,381,942
Committed 83,424,843 - 11,875,488 -
Assigned 19,282,496 - - -
Unassigned 14,707,351 - - -
Total Fund Balances 120,916,512 15,738,631 50,014,881 19,257,430 Total Liabilities, Deferred Inflows of
Resources, and Fund Balances $ 142,393,506 $ 21,343,324 $ 50,068,124 $ 20,053,713 June 30, 2023
Housing Asset
Fund
Housing
Authority
Prop A Fire
Tax
Special Revenue Funds
See Notes to Financial Statements.
20

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CITY OF PALM DESERT
Balance Sheet
Governmental Funds
Assets:

Pooled cash and investments
Receivables:

Accounts
Assessments
Notes
Interest
Loans
Leases Receivable
Prepaid costs
Deposits
Due from other governments
Due from other funds
Advances to other funds
Inventories
Property held for resale
Due from component unit
Restricted assets:

Cash and investments with fiscal agent
Total Assets
Liabilities, Deferred Inflows of Resources and
Fund Balances
Liabilities:

Accounts payable
Accrued liabilities
Unearned revenues
Deposits payable
Due to other funds
Advances from other funds
Total Liabilities
Deferred Inflows of Resources:

Unavailable revenue
Leases
Total Deferred Inflows of Resources:

Fund Balances:

Nonspendable
Restricted
Committed
Assigned
Unassigned
Total Fund Balances
Total Liabilities, Deferred Inflows of
Resources, and Fund Balances
June 30, 2023
Capital
Projects Funds
$ 1,633,533 $ 85,737,530 $ 286,434,344
- 902,488 3,758,483
- 1,081,004 1,081,004
- - 1,032,000
257,841 49,251 917,006
- 1,221,675 12,415,466
- - 3,196,493
- 34,087 533,482
- 20,000 20,000
- 1,481,420 9,556,392
- - 1,136,962
- 3,179,888 5,135,888
- 17,570 17,570
- - 61,516
- - 420,000
64,615,310 68,373,658 -
$ 66,506,684 $ 93,724,913 $ 394,090,264
$ 394,640 $ 5,223,273 $ 24,202,824
- 14,520 737,981
14,901,154 532,107 15,460,263
- 3,780 3,949,536
- 1,136,962 1,136,962
- 956,000 956,000
15,295,794 7,866,642 46,443,566
1,405,998 - 2,887,424
- - 3,168,657
- 1,405,998 6,056,081
- 51,657 3,554,030
51,210,890 48,185,259 172,531,052
- 3,692,757 98,993,088
32,522,600 - 51,805,096
- - 14,707,351
51,210,890 84,452,273 341,590,617
$ 66,506,684 $ 93,724,913 $ 394,090,264
Other
Governmental
Funds
Total
Governmental
Funds
Capital
Properties
See Notes to Financial Statements.
21

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7KLVSDJHLQWHQWLRQDOO\OHIWEODQN
22

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CITY OF PALM DESERT
Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position
Total fund balance for governmental funds $ 341,590,617 Amounts reported for governmental activities in the Statement of Net Position are different because:

Capital assets net of depreciation/amortization have not been included as financial resources in the governmental fund activity. 419,648,133
Differences between expected and actual experiences, assumption changes and net differences between projected and actual earnings, and contributions subsequent to the measurement date for the postretirement benefits (pension and OPEB) are recognized as deferred outflows and deferred inflows of resources on the Statement of Net Position
Deferred outflows-pension related 13,243,801
Deferred outflows-OPEB related 4,860,869
Deferred inflows-pension related (1,614,248)
Deferred inflows-OPEB related (433,542) 16,056,880
Long-term debt, claims and judgements and net pension liability are not in the governmental fund activity:

Bonds (1,158,000)
Claims and judgments (679,881)
Lease liability (2,197,126)
SBITA Liability (399,583)
Net OPEB liability (855,839)
Net pension liability (43,972,248) (38,681,819)
Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. (56,038)
Unavailable revenues are not reported as revenues in governmental funds and thus have the effect of decreasing fund balances. For the City as a whole, however, the collection of these receipts increases the net position in the Statement of Net Position and results in revenues in the Statement of Activities. 2,887,424 Internal service funds are used by management to charge the costs of certain activities, such as equipment and compensated absences to individual funds. The assets and liabilities of the internal service fund must be added to the Statement of Net Position. 9,163,170 Net Position of Governmental Activities $ 745,317,938
June 30, 2023
See Notes to Financial Statements.
23

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CITY OF PALM DESERT
Statement of Revenues
Expenditures and Changes in Fund Balances
Governmental Funds
Year Ended June 30, 2023
General
Revenues:

Taxes $ 70,722,443 $ 9,169,242 $ - $ -
Special assessments collected 2,138,587 - - -
Licenses and permits 2,539,460 - - -
Intergovernmental revenues 1,615,519 1,457,526 - -
Rental income 138,649 - 8,737,330 -
Charges for services 1,918,866 3,100,323 - -
Investment earnings 5,025,534 222,043 1,554,962 685,559 Fines and forfeitures 119,702 - - -
Miscellaneous 568,556 - 38,780 -
Total Revenues 82,648,729 16,087,721 1,593,742 9,422,889 Expenditures:

Current:

General government 22,880,727 - - -
Public safety 23,304,557 16,970,960 - -
Parks, recreation and culture 5,561,999 - - -
Public works 6,879,202 - - -
Housing - - 419,870 8,874,525
Capital outlay 685,071 660,442 56,074 -
Debt service:

Principal retirement 129,574 - - -
Interest and fiscal charges 4,498 - - -
Total Expenditures 59,445,628 17,631,402 475,944 8,874,525 Excess of Revenues Over (Under) Expenditures 23,203,101 (1,543,681) 1,117,798 548,364 Other Financing Sources (Uses):

Transfers in 2,478,731 4,600,000 - -
Transfers out (24,813,041) - (415,990) -
Proceeds from sale of capital asset 452,687 - 293,804 - Contribution to other government (834,654) - - -
Proceeds from subscriptions 529,156 - - -
Total Other Financing Sources (Uses) (22,187,121) 4,600,000 293,804 (415,990) Net Change in Fund Balances 1,015,980 3,056,319 1,411,602 132,374 Fund Balances, Beginning of Year 12,682,312 119,880,853 48,603,279 19,125,056 Restatements 19,679 - - -
Fund Balances, Beginning of Year, as restated 119,900,532 12,682,312 48,603,279 19,125,056 Fund Balances, End of Year $ 15,738,631 120,916,512 $ 50,014,881 $ 19,257,430 $ Housing Asset
Fund
Housing
Authority
Prop A Fire
Tax
Special Revenue Funds
See Notes to Financial Statements.
24

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CITY OF PALM DESERT
Statement of Revenues
Expenditures and Changes in Fund Balances
Governmental Funds
Year Ended June 30, 2023
Revenues:

Taxes
Special assessments collected
Licenses and permits
Intergovernmental revenues
Rental income
Charges for services
Investment earnings
Fines and forfeitures
Miscellaneous
Total Revenues
Expenditures:

Current:

General government
Public safety
Parks, recreation and culture
Public works
Housing
Capital outlay
Debt service:

Principal retirement
Interest and fiscal charges
Total Expenditures
Excess of Revenues Over (Under) Expenditures
Other Financing Sources (Uses):

Transfers in
Transfers out
Proceeds from sale of capital asset
Contribution to other government
Proceeds from subscriptions
Total Other Financing Sources (Uses)
Net Change in Fund Balances
Fund Balances, Beginning of Year
Restatements
Fund Balances, Beginning of Year, as restated
Fund Balances, End of Year
Capital
Projects Funds
$ 6,796,234 - $ $ 86,687,919
1,480,385 - 3,618,972
- 571,716 3,111,176
3,638,318 - 6,711,363
- 82,981 8,958,960
3,724,605 - 8,743,794
2,203,742 2,437,890 12,129,730
- 7,385 127,087
- 244,817 852,153
2,203,742 18,984,331 130,941,154
1,540 2,014,679 24,896,946
- 384,731 40,660,248
12,146,635 - 17,708,634
824,708 7,583,978 15,287,888
- 1,016,156 10,310,551
158,993 6,275,182 7,835,762
- 136,000 265,574
- 129,640 134,138
985,241 29,687,001 117,099,741
1,218,501 (10,702,670) 13,841,413
1,800,000 17,867,742 26,746,473
(2,478,731) - (27,707,762)
- - 746,491
- - (834,654)
- - 529,156
1,800,000 15,389,011 (520,296)
3,018,501 4,686,341 13,321,117
48,192,389 79,765,932 328,249,821
- - 19,679
48,192,389 79,765,932 328,269,500
$ 51,210,890 $ 84,452,273 $ 341,590,617
Capital
Properties
Other
Governmental
Funds
Total
Governmental
Funds
See Notes to Financial Statements.
25

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7KLVSDJHLQWHQWLRQDOO\OHIWEODQN
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CITY OF PALM DESERT
Reconciliation of the Revenues, Expenditures
and Changes in the Fund Balances of Governmental Funds
to the Statement of Activities
Year Ended June 30, 2023
Net change in fund balances - total governmental funds $ 13,321,117 Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets are allocated over their estimated useful lives as depreciation/amortization expense.

Capital outlay $ 13,151,163
Loss on disposal and transfer of capital assets (3,572,869) Depreciation and amortization (1,881,889) (11,460,183)
Bond and other debt proceeds provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position.

Bond principal payments 77,000
Subscriptions issued (529,156)
Subscription and lease payments 398,389 (53,767)
Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds:

Net change in accrued interest for the current period (9,383) Net change in claims and judgments for the current period (115,408) (124,791) Pension obligation and OPEB expenses are expenditures in the governmental funds, but reduce the Net Pension Liability and Net OPEB Liability in the statement of net position:

Pension expense 208,654
OPEB expense 735,400 944,054
Unavailable revenues are not reported as revenues in governmental funds and thus has the effect of decreasing fund balances. For the City as a whole, however, the collection of these receipts increases the net position in the Statement of Net Position and results in revenues in the Statement of Activities. (465,423) Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds.

The net revenues (expenses) of the internal service funds is reported with governmental activities. (244,917)
Change in Net Position of Governmental Activities $ 11,494,384 See Notes to Financial Statements.
27

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CITY OF PALM DESERT
Statement of Net Position
Proprietary Funds
Assets:

Current Assets:

Cash and investments $ 8,242,310 $ 5,858,208 $ 14,100,518 $ 9,152,744 Receivables:

Accounts 134,734 106,702 241,436 -
Lease 799,886 - 799,886 -
Prepaid costs - 25,479 25,479 1,996
Inventories - 313,932 313,932 -
Due from component unit 1,578,564 - 1,578,564 -
Total Current Assets 9,176,930 7,882,885 17,059,815 9,154,740 Noncurrent Assets:

Lease receivable 4,312,103 4,312,103 - -
Nondepreciable capital assets 53,304,965 - 53,304,965 11,821 Depreciable capital assets, net 5,295,210 10,958,557 16,253,767 2,597,637 Total Noncurrent Assets 9,607,313 64,263,522 73,870,835 2,609,458 Total Assets 18,784,243 72,146,407 90,930,650 11,764,198 Liabilities:

Current Liabilities:

Accounts payable 355,421 650,840 1,006,261 -
Accrued liabilities - 232,666 232,666 -
Unearned revenues 29,314 304,522 333,836 -
Deposits payable 26,590 - 26,590 -
Financed purchases - 86,217 86,217 -
Compensated absences - - - 500,000
Total Current Liabilities 411,325 1,274,245 1,685,570 500,000 Noncurrent Liabilities:

Financed purchases - 232,952 232,952 -
Advances from other funds 4,179,888 - 4,179,888 -
Compensated absences - - 2,101,028 -
Total Noncurrent Liabilities - 4,412,840 4,412,840 2,101,028 Total Liabilities 411,325 5,687,085 6,098,410 2,601,028 Deferred Inflows of Resources:

Leases 5,051,339 5,051,339 - -
Total Deferred Inflows of Resources 5,051,339 - 5,051,339 - Net Position:

Net investment in capital assets 5,295,210 63,944,353 69,239,563 2,609,458 Unrestricted 8,026,369 2,514,969 10,541,338 6,553,712
Total Net Position $ 13,321,579 $ 66,459,322 $ 79,780,901 $ 9,163,170 June 30, 2023
Business-Type Activities - Enterprise Funds
Major Funds
Total
Enterprise
Funds
Governmental
Activities -
Internal
Service Funds
Parkview
Office
Complex
Desert Willow
Golf Course
See Notes to Financial Statements.
28

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CITY OF PALM DESERT
Statement of Revenues, Expenses
and Changes in Fund Net Position
Proprietary Funds
Operative Revenues:

Fees and rentals $ 1,473,376 $ 10,480,418 $ 11,953,794 $ - Miscellaneous - 257,743 257,743 -
Merchandise sales - 1,679,001 1,679,001 -
Total Operating Revenues 1,473,376 12,417,162 13,890,538 - Operating Expenses:

General and administrative 146,143 2,954,930 3,101,073 425,084 Cost of merchandise - 725,418 725,418 -
Maintenance and operations 948,002 6,050,549 6,998,551 394,955 Depreciation and amortization 315,176 1,224,975 1,540,151 751,260 Total Operating Expenses 1,409,321 10,955,872 12,365,193 1,571,299 Operating Income (Loss) 64,055 1,461,290 1,525,345 (1,571,299) Nonoperating Revenues (Expenses)
Interest revenue 331,447 118,832 450,279 286,290
Interest expense - (117,256) (117,256) -
Gain on disposal of capital assets - - - 78,803
Total Nonoperating Revenues (Expenses) 331,447 1,576 333,023 365,093 Income (Loss) Before Capital Contributions &
Transfers 395,502 1,462,866 1,858,368 (1,206,206)
Capital Contributions - 99,154 99,154 -
Transfers In - - - 961,289
Change in Net Position 395,502 1,562,020 1,957,522 (244,917) Net Position, Beginning of Year 12,926,077 64,897,302 77,823,379 9,408,087 Net Position, End of Year $ 13,321,579 $ 66,459,322 $ 79,780,901 $ 9,163,170 Year Ended June 30, 2023
Business-Type Activities - Enterprise Funds
Major Funds
Total
Enterprise
Funds
Governmental
Activities -
Internal
Service Funds
Parkview
Office
Complex
Desert Willow
Golf Course
See Notes to Financial Statements.
29

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CITY OF PALM DESERT
Statement of Cash Flows
Proprietary Funds
Cash Flows from Operating Activities:

Receipts from customers $ 1,364,506 $ 12,067,646 $ 13,432,152 $ - Payments to suppliers (784,472) (9,603,099) (10,387,571) (401,470) Cash paid to employees for services - - - ( 113,394)
Net Cash Provided (Used) by
Operating Activities 580,034 2,464,547 3,044,581 (514,864) Cash Flows from Noncapital and
Related Financing Activities:

Cash received from other funds - - 961,289
Repayment of advances from other funds ( - 500,000) (500,000) - Advance received from other funds 3,179,888 3,179,888 - Net Cash Provided by (Used) Noncapital and
Related Financing Activities - 2,679,888 2,679,888 961,289 Cash Flows from Capital and :

Related Financing Activities
Purchases of capital assets (3, - 583,646) (3,583,646) (90,621) Principal paid financed purchases ( - 222,721) (222,721) - Interest paid on financed purchases (117,256) (117,256) - Proceeds from sale of capital assets - 453,616 453,616 86,265 Net Cash Used by Capital and
Related Financing Activities - (3,470,007) (3,470,007) (4,356) Cash Flows from Investing Activities:

Interest and dividends 331,447 118,832 450,279 286,290
Net Cash Provide by (Used)
Investing Activities 331,447 118,832 450,279 286,290
Net Increase (Decrease) in
Cash and Cash Equivalents 911,481 1,793,260 2,704,741 728,359 Cash and Cash Equivalents, Beginning of Year 7,330,829 4,064,948 11,395,777 8,424,385 Cash and Cash Equivalents, End of Year $ 5, 8,242,310 $ 14, 858,208 $ 9,152,744 100,518 $ Year Ended June 30, 2023
Governmental
Activities -
Internal
Service Funds
Total
Enterprise
Funds
Business-Type Activities - Enterprise Funds
Major Funds
Parkview
Office
Complex
Desert Willow
Golf Course
See Notes to Financial Statements.
30

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CITY OF PALM DESERT
Statement of Cash Flows
Proprietary Funds
Year Ended June 30, 2023
Governmental
Activities -
Internal
Service Funds
Total
Enterprise
Funds
Business-Type Activities - Enterprise Funds
Major Funds
Parkview
Office
Complex
Desert Willow
Golf Course
Reconciliation of Operating Income
(Loss) to Net Cash Provided (Used) by
Operating Activities:

Operating income (loss) $ 64,055 $ 1,461,290 $ 1,525,345 $ (1,571,299) Adjustments to Reconcile Operating
Income (Loss) to Net Cash Provided
(Used) by Operating Activities:

Depreciation and amortization 315,176 1,224,975 1,540,151 751,260 Changes in assets and liabilities:
(Increase) decrease in receivables, net (31,074) 15,234 (15,840) - (Increase) decrease in lease receivable, net (33,358) - (33,358) - (Increase) decrease in prepaid costs - 28,963 28,963 4,150 (Increase) decrease in due from other governments - - - - (Increase) decrease in inventories - (45,672) (45,672) - (Increase) decrease in due from component unit ( - 383,040) (383,040) - Increase (decrease) in accounts payable
and accrued liabilities 309,673 144,507 454,180 (10,665) Increase (decrease) in deposits payable - - - -
Increase (decrease) in unearned revenue (44,438) 18,290 (26,148) - Increase (decrease) in compensated absences - - - 311,690 Total Adjustments 515,979 1,003,257 1,519,236 1,056,435 Net Cash Provided (Used)
by Operating Activities $ 580,034 $ 2,464,547 $ 3,044,581 $ (514,864) Noncash Items:

Capital Contributions $ - $ 99,154 $ 99,154 $ -
See Notes to Financial Statements.
31

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CITY OF PALM DESERT
Statement of Fiduciary Position
Fiduciary Funds
PrivatePurpose Trust
Custodial
Funds
Assets:

Pooled cash and investments $ 7,620,166 $ 29,574,317
Receivables:

Assessments 35,481,134 -
Accrued interest 699 164
Prepaid costs - 1,223,948
Due from other governments 24,995 -
Restricted assets:

Cash and investments with fiscal agents 2,948,748 12,493,814 Capital assets:

Capital assets, not being depreciated - 17,226,397
Total Assets 46,075,742 60,518,640
Liabilities:

Accounts payable - 704,122
Accrued interest - 1,750,413
Deposits payable 35,481,134 20,000
Due to external parties/other agencies 7,638,549 -
Long-term liabilities:

Long-term debt due in one year - 19,915,000
Long-term debt due in more than one year - 142,971,365
Total Liabilities 43,119,683 169,868,487
Deferred Inflows of Resources:

Deferred charge on refunding - 273,476
Total Deferred Inflows or Resources - 273,476
Net Position:

Restricted for dissolution of former RDA - (109,623,323) Restricted for other purposes 2,956,059 -
Total Net Position $ 2,956,059 $ (109,623,323)
Successor
Agency to the
Palm Desert
Redevelopment
Agency
June 30, 2023
See Notes to Financial Statements.
32

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CITY OF PALM DESERT
Statement of Changes in Fiduciary Net Position
Fiduciary Funds
Year Ended June 30, 2023
Additions:

Taxes $ 23,501,644 3,054,242 $
Investment income 201,683 261,102
Contributions from City - 834,654
Other - -
Gain sale of capital assets - 5,485,088
Total Additions 4,090,579 29,247,834
Deductions:

Housing and development - 945,727
Administrative expenses 50,179 -
Contractual services 1,216,447 -
Interest expense 1,446,244 6,287,959
Payments to bondholders 1,305,000 -
Contributions to other governments - 12,167,792
Total Deductions 4,017,870 19,401,478
Changes in Net Position 72,709 9,846,356
Net Position, Beginning of Year (119,469,679) 10,674,106 Restatement (Note 15) (7,790,756) -
Net Position, Beginning of Year, as restated 2,883,350 (119,469,679) Net Position, End of Year 2,956,059 $ (109,623,323) $
PrivatePurpose Trust
Successor
Agency to the
Palm Desert
Redevelopment
Agency
Custodial
Funds
See Notes to Financial Statements.
33

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34

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Description Of The Reporting Entity
The City of Palm Desert was originally incorporated on November 26, 1973, as a General Law City. In December 1997, Measure LL was enacted following a vote by Palm Desert residents, which adopted a City Charter.

The City operates under a Council-Manager form of government and provides the following services: public safety (police and fire), highways and streets, public improvements, community development (planning, building and zoning) and general administrative services.

The City has defined its reporting entity in accordance with accounting principles generally accepted in the United States of America which provides guidance for determining which governmental activities, organizations and functions should be included in the reporting entity. The Basic Financial Statements present information on the activities of the reporting entity, which include the City of Palm Desert (the primary government) and its component units, entities for which the government is considered financially accountable.

Accounting principles generally accepted in the United States of America require that the component units be separated into blended or discretely presented units for reporting purposes. The following criteria were used in determination of blended component units: appointment of the governing board and fiscal dependence. Although legally separate entities, blended component units are, in substance, part of the City’s operations. Therefore, they are reported as part of the primary government. Discretely presented component units are reported in a separate column in the basic financial statements to emphasize that they are legally separate from the City.

Blended Component Units
Following are descriptions of legally separate component units for which the City is financially accountable that are blended with the Primary Government. The governing bodies of these component units are substantially the same with operational responsibility as the City and provides a financial benefit.

The Palm Desert Housing Authority (Housing Authority) was established by the City Council in January 1998, and is responsible for the administration of providing affordable housing in the City. The Housing Authority transactions are reported in the governmental funds balance sheet as a major fund.

The Palm Desert Financing Authority (Financing Authority) was formed on January 26, 1989. The purpose of the Financing Authority is to issue debt and loan the proceeds to the City and Agency. The Financing Authority’s capital related transactions are reported in the governmental fund financial statements in the capital projects funds, and the collection of assessments and payments of debt service is recorded in the fiduciary funds.

The City Council of Palm Desert is the governing body for the Housing Authority and Financing Authority.

Separate financial statements are not issued for the Housing Authority and Financing Authority.

Discretely Presented Component Unit
The Palm Desert Recreational Facilities Corporation (Corporation) was incorporated on February 25, 1997. The purpose of the Corporation is to lease, operate and manage a restaurant and bar in the Desert Willow Golf Course in Palm Desert, California. The Board of Directors of the Corporation appoints an executive director to administer operations.

The Corporation is in a separate column to emphasize that it is legally separate from the City and is financially accountable to the City. The two-member board governing the Corporation is appointed by the City Council, the City has authority to approve the Corporation’s budget, and the City must approve any debt issued.

Complete financial statements of the Component Unit can be obtained from the City’s administrative offices. 35

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Basis of Presentation
Government-Wide Financial Statements
The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Interfund services provided and used are not eliminated in the process of consolidation. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable.

The statement of activities demonstrates the degree to which the direct and indirect expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use or directly benefit from goods, services or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Expenses reported for functional activities include allocated indirect expenses.

Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

Fund Financial Statements
The accounting system of the City is organized and operated on the basis of separate funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, liabilities, deferred inflows of resources, fund equity, revenues and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories.

A fund is considered major if it is the primary operation fund of the City or meets the following criteria:
a. Total assets plus deferred outflows of resources, liabilities plus deferred inflows of resources, revenues or expenditures/expenses of that individual governmental or enterprise fund are at least 10% of the corresponding total for all funds of that category or type; and;
b. Total assets plus deferred outflows of resources, liabilities plus deferred inflows of resources, revenues or expenditures/expenses of the individual governmental fund or enterprise fund are at least 5% of the corresponding total for all governmental and enterprise funds combined; and; c. The government has determined that a fund is important to the financial statement user.

The funds of the financial reporting entity are described below:

Governmental Fund Types
General Fund - The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund.

Special Revenue Funds - Special Revenue Funds are used to account for the proceeds of specific revenue resources (other than major capital projects) that are legally restricted to expenditures for specified purposes. 36

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Debt Service Funds - Debt Service Funds are used to account for the accumulation of resources for, and the payment of, general long-term obligation principal, interest and related costs.

Capital Projects Funds - Capital Projects Funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities.

Proprietary Fund Types
Enterprise Funds - The Enterprise Funds account for operations that are financed and operated in a manner similar to private business enterprises, where the intent of the City Council is that the costs (expenses including depreciation) of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges.

The Primary Government’s Enterprise funds consist of the Parkview Office Complex and the Desert Willow Golf Course. Desert Willow Golf Course is operated by a management company. The discretely presented Component Unit’s fund consists of the Palm Desert Recreational Facilities Corporation, also operated by a management company.

Internal Service Funds - The Internal Service Funds account for financial transactions related to replacement of City-owned vehicles and equipment and to fund compensated absences. These services are provided to other departments or agencies of the City on a cost reimbursement basis.

Fiduciary Fund Types
Private-Purpose Trust Fund
The Successor Agency to the Palm Desert Redevelopment Agency Private Purpose Trust Fund is used to account for the activities of the Successor Agency to the Palm Desert Redevelopment Agency.

Custodial Funds
The Custodial, Special Assessment and Treasurers 1911 Bond Act Funds are used to account for assets held by the City in a custodial capacity as a trustee. These assets include deposits placed with the City by individuals, as well as deposits from assessment district’s property owners. These deposits are reduced by payments to individuals.

The City’s Retiree Service Stipend Fund is used to account for assets held to pay for the retiree service stipend.

The Treasures 1991 Bond Act Fund is used to account for assets held for the Bond Act.

The major funds are as follows:

Governmental Funds
The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund.

The Prop A Fire Tax Special Revenue Fund is used to account for all revenues derived from tax collected within the City for upgrading fire protection and prevention. Its use is restricted to obtaining, furnishing, operating and maintaining fire protection and prevention services (currently under contract with Riverside County Fire Department) equipment or apparatus. This fund is reported as a major fund because the tax collected is a voter approved measure.
37

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The Housing Asset Special Revenue Fund is used to account for any funds generated from housing assets of the former Redevelopment Agency to be used for projects that benefit low and moderate income families.

The Housing Authority Special Revenue Fund is used to account for revenues and expenditures related to rental units owned by the Housing Authority, established in January 1998. This fund is determined to be important to the users of the financial statements and determined to be a major fund.

The Capital Properties Capital Projects Fund is used to account for the cost of city owned properties that will either be sold or for the construction of public facilities, and the proceeds of bond funds for capital related properties.

Proprietary Fund
The Parkview Office Complex Fund is used to account for rent received from the City owned office complex.

The Desert Willow Golf Course Fund is used to account for the fees collected and expenses incurred in connection with operating the municipal golf course in the City of Palm Desert.

C. Measurement Focus and Basis of Accounting
Measurement focus is a term used to describe which transactions are recorded within the various financial statements. Basis of accounting refers to when transactions are recorded regardless of the measurement focus applied.

On the government-wide Statement of Net Position and the Statement of Activities, both governmental and business-like activities are presented using the economic resources measurement focus. The accounting objectives of the economic measurement focus are the determination of operating income, changes in net position (or cost recovery), financial position and cash flows. All assets, deferred outflows of resources, liabilities and deferred inflows of resources (whether current or noncurrent) associated with their activities are reported.

In the fund financial statements, the “current financial resources” measurement focus or the “economic resources” measurement focus is used as appropriate:

1. All governmental funds utilize a “current financial resources” measurement focus. Only current financial assets, deferred outflows of resources, current liabilities and deferred inflows of resources are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period.

2. The proprietary fund and private purpose trust fund and custodial funds utilize an “economic resources” measurement focus. Proprietary fund and private purpose trust fund equity and custodial funds are classified as net position.

Basis of Accounting
In the government-wide Statement of Net Position and Statement of Activities, both governmental and businesslike activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred, or economic asset used.

Revenues, expenses, gains, losses, assets and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place.
38

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting.

Under this modified accrual basis of accounting, revenues are recognized when “measurable and available.” Measurable means knowing or being able to reasonably estimate the amount. Available means collectible within the current period or soon enough thereafter to pay current liabilities.

Revenues that are susceptible to accrual include property taxes and special assessments that are levied for and due for the fiscal year and collected within 60 days after year-end. Licenses, permits, fines, forfeits, charges for services and miscellaneous revenues are recorded as governmental fund type revenues when received in cash because they are not generally measurable until actually received. Revenue from taxpayer assessed taxes, such as sales taxes, are recognized in the accounting period in which they became both measurable and available to pay liabilities of the current period. Grants and similar items are recognized as soon as all eligibility requirements imposed by the provider have been met. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Interfund activity has been eliminated from the general government function for the government-wide financial statements except for charges between the government’s Desert Willow Golf Course and Parkview Office Complex funds and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues for the various functions considered.

The accrual basis of accounting is followed by the proprietary fund and private purpose trust fund. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred, or economic assets are used.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing goods and services in connection with a proprietary fund’s principal ongoing operations. The principal revenue of the Desert Willow Golf Course and Parkview Office Complex Enterprise Funds are charges to customers for use of the golf course and rental fees. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses and depreciation on capital assets.

All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

D. Appropriations Limit
Under Article XIII-B of the California Constitution (the Gann Spending Limitation Initiative), the City is restricted as to the amount of annual appropriations from the proceeds of taxes, and if proceeds of taxes exceed allowed appropriations, the excess must either be refunded to the State Controller or returned to the taxpayers through revised tax rates, revised fee schedules or other refund arrangements. For the fiscal year ended June 30, 2023, proceeds of taxes did not exceed appropriations.

E. Cash and Investments
For purposes of the statement of cash flows, the City has defined cash and investments to include cash on hand, demand deposits, investments held in various instruments, and investments held in the California Local Agency Investment Fund (LAIF), California Asset Management Program (CAMP) and Riverside County Treasurer’s Pooled Investment Fund.

F. Investments
Investments are reported in the accompanying financial statements at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Changes in fair value that occur during a fiscal year are recognized as investment income reported for that fiscal year. Investment income includes interest earnings, changes in fair value, and any gains or losses realized upon the liquidation, maturity, or sale of investments. 39

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) G. Property Held for Resale
The land held for resale is recorded in the Housing Asset Fund as property held for resale at the lower of cost or market. At June 30, 2023, the cost of the property held for resale for various housing properties in Palm Desert totaled $61,516.

H. Capital Assets and Depreciation
Capital assets, which include property, plant, equipment and infrastructure assets (e.g., roads, traffic signals, drainage systems and similar items), are reported in the applicable governmental or business-type activities column in the government-wide financial statements. Capital assets are defined by the City as assets with an initial cost above the amounts described in the table below and an estimated life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation.

The City has reported general infrastructure assets acquired in prior and current years.

The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Property, plant and equipment of the primary government, as well as the component units, are depreciated using the straight-line method over the following estimated useful lives:

I. Inventories, Prepaid Costs and Deposits
Inventory in the amount of $313,932 and $75,170, for the Desert Willow Golf Course Enterprise Fund (Primary Government) and Palm Desert Recreational Facilities Corporation (Component Unit), respectively, are reported at lower of cost or market. These inventories are held for resale.

Inventory in the amount of $17,570 in the Other Governmental Funds are also reported at lower of cost or market.

Inventory and prepaid costs are recorded as an expenditure when consumed rather than purchased.

Certain payments to vendors that reflect costs applicable to future accounting periods are recorded as prepaid costs in the government-wide and fund financial statements.

Deposit of $20,000 in other governmental funds represents security deposit on rental of commercial space. 40

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) J. Property Tax Calendar
Property taxes are assessed and collected each fiscal year according to the following property tax calendar:

Lien date: January 1
Levy date: July 1 to June 30
Due date: November 1 - 1st Installment
March 1 - 2nd Installment
Delinquent date: December 10 - 1st Installment
April 10 - 2nd Installment
Under California law, property taxes are assessed and collected by the counties up to 1% of assessed value, plus other increases approved by the voters. The property taxes go into a pool and are then allocated to the cities based on complex formulas prescribed by state statutes. The City accrues only those taxes, which are received within 60 days after the year-end. The City is a participant in the Teeter Plan under the California Revenue and Taxation Code. The County of Riverside has responsibility for the collection of delinquent taxes and the City receives 100% of the levy.

K. Leases
Lessee
The City is a lessee for a noncancellable lease of equipment. The City recognizes a lease liability and an intangible right-to-use lease asset (lease asset) in the government-wide financial statements. The City recognizes lease liabilities with an initial, individual value of $10,000 or more.

At the commencement of a lease, the City initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight-line basis over its useful life. Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments.
 The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases.
 The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.

The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.

Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the statement of net position.

Lessor
The City is a lessor for a noncancellable lease of a building. The City recognizes a lease receivable and a deferred inflow of resources in the government-wide and governmental fund financial statements. 41

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date.

Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.

Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts.  The City uses its estimated incremental borrowing rate as the discount rate for leases.  The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.

The City monitors changes in circumstances that would require a remeasurement of its lease, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.

L. Subscription-Based Information Technology Arrangements The City is a subscriber for a noncancellable subscription of information technology services. The City recognizes a subscription liability and an intangible right-to-use subscription asset (subscription asset) in the government-wide financial statements. The City recognizes subscription liabilities with an initial, individual value of $5,000 or more.

At the commencement of a subscription, the City initially measures the subscription liability at the present value of payments expected to be made during the subscription term. Subsequently, the subscription liability is reduced by the principal portion of subscription payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for subscription payments made at or before the subscription commencement date, plus certain initial direct costs. Subsequently, the subscription asset is amortized on a straight-line basis over its useful life. Key estimates and judgments related to subscriptions include how the City determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) lease term, and (3) subscription payments.
 The City uses the interest rate charged by the vendor as the discount rate. When the interest rate charged by the vendor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for subscriptions.
 The subscription term includes the noncancellable period of the subscription. Subscription payments included in the measurement of the subscription liability are composed of fixed payments that the City is reasonably certain to exercise.

The City monitors changes in circumstances that would require a remeasurement of its subscriptions and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability.

Subscription assets are reported with other capital assets and subscription liabilities are reported with long-term debt on the statement of net position.
42

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) M. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to future periods and so will not be recognized as an outflow of resources (expense/expenditure) until that time. The City has the following items that qualify for reporting in this category:
 Deferred amount on refunding. A deferred amount on refunding results from the difference in the carrying value of the refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.
 Deferred outflows related to pensions and OPEB. This amount is equal to employer contributions made after the measurement date of the net pension liability and net OPEB liability/(asset).  Deferred outflows related to pensions resulting from the difference in projected and actual earnings on investments of the pension plan fiduciary net position. These amounts are amortized over five years.  Deferred outflows of resources related to pensions arising from a change in assumptions. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plan, which is 3.0 years.

In addition to liabilities, the statement of net position and the governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The City has the following items that qualify for reporting in this category:
 Deferred inflows from unavailable revenue, which arises under a modified accrual basis of accounting is reported only in the governmental fund balance sheet. The governmental funds report unavailable revenues from the following sources: rent, investment income, grants, notes receivables collections and reimbursements.

These amounts are unavailable and recognized as an inflow of resources in the period that the amounts become available.
 Deferred inflows related to pensions for differences between expected and actual experience. These amounts are amortized over a closed period equal to the average of the expected remaining service lives of all employees that are provided with pensions through the plan, which is 3.0 years.  Deferred inflows from pensions resulting from changes in assumptions. These amounts are amortized over a closed period equal to the average expected remaining service lives of all employees that are provided with pensions through the plan, which is 3.0 years.
 Deferred inflows from lease related items for the amount of the lease receivable plus any lease payments related to future periods, less any lease incentives paid to, or on behalf of, the lessee at or before the commencement of the lease term.

Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. Amounts are first recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense.
43

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)  The recognition period differs depending on the source of the gain or loss:

Net difference between projected and actual earnings
on OPEB plan investments
5 years straight-line recognition
All other amounts Straight-line recognition over the expected average remaining service lifetime (EARSL) of all members that
are provided with benefits, determined as of the
beginning of the Measurement Period. In determining
the EARSL, all active, retired and inactive (vested)
members are counted, with the latter two groups
having 0 remaining service years.

N. Employee Compensated Absences
It is the government’s policy to permit employees to accumulate earned but unused vacation and sick leave (compensated absences). Vacation pay and sick leave, which are expected to be liquidated with expendable available resources, are reported as expenditure and liability of the governmental fund that will pay it only if they have matured, for example, as a result of employee resignations or retirements.

O. Pensions
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the District’s California Public Employees’ Retirement System (CalPERS) plans (Plans) and additions to/deductions from the Plans’ fiduciary net position have been determined on the same basis as they are reported by CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

GASB Statement No. 68 requires that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used.

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
P. Other Post-Employment Benefits (OPEB)
For purposes of measuring the total OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and the OPEB expense have been determined by an independent actuary. For this purpose, benefit payments are recognized when currently due and payable in accordance with the benefit terms.

Generally accepted accounting principles require that the reported results must pertain to liability and asset information within certain defined timeframes. For this report, the following timeframes are used:

Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period June 30, 2021 to June 30, 2022
44

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Q. Fund Balance
The fund balances reported on the fund statements now consist of the following categories:
 Nonspendable - This classification includes amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact.  Restricted - This classification includes amounts that can be spent only for specific purposes stipulated by constitution, external resource providers or through enabling legislation.  Committed - This classification includes amounts that can be used only for the specific purposes determined by a formal action of the City Council. The City considers the adoption of a resolution to institute a formal action of City Council for the purpose of establishing, modifying or rescinding committed fund balances.  Assigned - This classification includes amounts to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. This includes amounts that are assigned through adoption of a resolution by City Council. The Council may delegate the ability of an employee or committee to assign uses of specific funds, for specific purposes. Such delegation of authority occurred on September 27th, 2018 and will be in effect for future fiscal years.  Unassigned - This classification includes the residual balance for the government’s general fund and includes all spendable amounts not contained in other classifications. In other funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed or assigned.

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balances are available, the City’s policy is to apply restricted fund balance first. When an expenditure is incurred for purposes for which committed, assigned or unassigned fund balances are available, the City’s policy is to apply committed fund balance first, then assigned fund balance, and finally unassigned fund balance.

R. Net Position
For government-wide reporting as well as in proprietary funds, the difference between assets and deferred outflows of resources less liabilities and deferred inflows of resources is called net position. Net position is comprised of three components: net investment in capital assets, restricted, and unrestricted.  Net investment in capital assets consists of capital assets, net of accumulated depreciation/amortization and reduced by outstanding balances of bonds, notes, and other debt that are attributable to the acquisition, construction, or improvement of those assets. Deferred outflows of resources and deferred inflows of resources that are attributable to the acquisition, construction, or improvement of those assets or related debt are included in this component of net position.
 Restricted net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Assets are reported as restricted when constraints are placed on asset use either by external parties or by law through constitutional provision or enabling legislation.  Unrestricted net position is the net amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that does not meet the definition of the two preceding categories.

Sometimes the City will fund outlays for a particular purpose from both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government-wide and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the City’s policy to consider restricted net position to have been depleted before unrestricted net position is applied. 45

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) S. Restricted Assets
Certain proceeds of debt issues, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because they are maintained in separate trustee bank accounts and their use is limited to applicable bond covenants. In addition, funds have been restricted for future capital improvements by City resolution.

T. Deficit Fund Equity
At June 30, 2023, the City reported deficit fund balances/net position in the following funds:

Primary Government
The deficit in the Compensation Benefits Fund will be eliminated in future years through contributions from other funds.

Component Unit
The deficit in the Palm Desert Recreational Facilities Corporation will be eliminated with future revenues through banquet and dining reservations.

Fiduciary Funds
The deficit in the Successor Agency to the Palm Desert Redevelopment Agency Private-Purpose Trust Fund will be eliminated through future property taxes collected by the County under the direction of the State. The State of California is the responsible body for the elimination of this deficit.

U. Use of Estimates
The financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and, accordingly, include amounts that are based on management’s best estimates and judgments. The financial statements include estimates for the value of the capital assets (infrastructure), depreciation expense, the fair value of investments, the amounts reported for the net pension liability and related items (Note 11), the amounts reported for the net pension liability, net OPEB liability/(asset) and related items (Note 15), and claims payable (Note 9). Accordingly, actual results could differ from the estimates.

V. New GASB Pronouncements Effective During Fiscal Year The following Government Accounting Standards Board (GASB) pronouncements were effective for and/or early implemented for the fiscal year ended June 30, 2023:

Fund Name Fund Type Deficit
Compensation Benefits Internal Service Fund $ (272,399) Fund Name Fund Type Deficit
Palm Desert Recreational Facilities Corporation Component Unit $ (1,063,311) Fund Name Fund Type Deficit
Successor Agency to the Palm Desert
Redevelopment Agency Private-Purpose Trust Fund $ (109,623,323) 46

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) GASB Statement No. 91, Conduit Debt Obligations
The requirements of this Statement will improve financial reporting by eliminating the existing option for issuers to report conduit debt obligations as their own liabilities, thereby ending significant diversity in practice. The clarified definition will resolve stakeholders’ uncertainty as to whether a given financing is, in fact, a conduit debt obligation.

Requiring issuers to recognize liabilities associated with additional commitments extended by issuers and to recognize assets and deferred inflows of resources related to certain arrangements associated with conduit debt obligations also will eliminate diversity, thereby improving comparability in reporting by issuers. Revised disclosure requirements will provide financial statement users with better information regarding the commitments issuers extend and the likelihood that they will fulfill those commitments. That information will inform users of the potential impact of such commitments on the financial resources of issuers and help users assess issuers’ roles in conduit debt obligations.

GASB Statement No. 94, Public-Private and Public-Public Partnerships and Availability Payment Arrangements
The requirements of this Statement will improve financial reporting by establishing the definitions of PPPs and APAs and providing uniform guidance on accounting and financial reporting for transactions that meet those definitions.

That uniform guidance will provide more relevant and reliable information for financial statement users and create greater consistency in practice. This Statement will enhance the decision usefulness of a government’s financial statements by requiring governments to report assets and liabilities related to PPPs consistently and disclose important information about PPP transactions. The required disclosures will allow users to understand the scale and important aspects of a government’s PPPs and evaluate a government’s future obligations and assets resulting from PPPs.

GASB Statement No. 96, Subscription-Based Information Technology Arrangements The requirements of this Statement will improve financial reporting by establishing a definition for SBITAs and providing uniform guidance for accounting and financial reporting for transactions that meet that definition. That definition and uniform guidance will result in greater consistency in practice. Establishing the capitalization criteria for implementation costs also will reduce diversity and improve comparability in financial reporting by governments.

This Statement also will enhance the relevance and reliability of a government’s financial statements by requiring a government to report a subscription asset and subscription liability for a SBITA and to disclose essential information about the arrangement. The disclosures will allow users to understand the scale and important aspects of a government’s SBITA activities and evaluate a government’s obligations and assets resulting from SBITAs.

GASB Statement No. 100, Accounting Changes and Error Corrections The requirements of this Statement will improve the clarity of the accounting and financial reporting requirements for accounting changes and error corrections, which will result in greater consistency in application in practice. In turn, more understandable, reliable, relevant, consistent, and comparable information will be provided to financial statement users for making decisions or assessing accountability. In addition, the display and note disclosure requirements will result in more consistent, decision useful, understandable, and comprehensive information for users about accounting changes and error corrections.
47

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 2: CASH AND INVESTMENTS
As of June 30, 2023, cash and investments were reported in the accompanying financial statements as follows:

Cash and investments at June 30, 2023, consisted of the following:

The City of Palm Desert maintains a cash and investment pool that is available for use for all funds. Each fund type’s position in the pool is reported on the combined balance sheet as cash and investments. The City has adopted an investment policy, which authorizes it to invest in various investments.

A. Deposits
At June 30, 2023, the carrying amount of the deposits was $59,044,877, and the bank balance was $59,647,216.

The $602,339 difference represents outstanding checks, deposits in transit and other reconciling items.

The California Government Code requires California banks and savings and loan associations to secure an Entity’s deposits by pledging government securities with a value of 110% of an Entity’s deposits. California law also allows financial institutions to secure deposits by pledging first trust deed mortgage notes having a value of 150% of total deposits. The City Treasurer may waive the collateral requirement for deposits that are fully insured up to $250,000 by the FDIC. The collateral for deposits in federal and state-chartered banks is held in safekeeping by an authorized Agent of Depository recognized by the State of California Department of Banking. The collateral for deposits with savings and loan associations is generally held in safekeeping by the Federal Home Loan Bank in San Francisco, California as an Agent of Depository. These securities are physically held in an undivided pool for all California public agency depositors.

Under Government Code Section 53655, the placement of securities by a bank or savings and loan association with an Agent of Depository has the effect of perfecting the security interest in the name of the local governmental agency. Accordingly, all collateral held by California Agents of Depository are considered to be held for, and in the name of, the local governmental agency.

Governmental activities $ 363,960,746
Business-type activities 14,100,518
Component unit 1,216,690
Fiduciary funds 52,637,045
Total cash and investments $ 431,914,999
Primary Government
Demand accounts $ 20,721,619
Petty cash 22,550
Investments 357,317,095
Total cash and investments - Primary Government $ 378,061,264 Component Unit
Demand accounts $ 1,216,690
Fiduciary Funds
Demand accounts $ 37,106,568
Pooled with primary government 32,906
Investments 15,497,571
Total cash and investments - Fiduciary Funds $ 52,637,045 48

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
B. Investments
Investments Authorized by the California Government Code and the City’s Investment Policy The table below identifies the investment types that are authorized for the City by the California Government Code and the City’s investment policy. The table also identifies certain provisions of the California Government Code (or the City’s investment policy, if more restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not address investments of debt proceeds held by bond trustee that are governed by the provisions of debt agreements of the City, rather than the general provisions of the California Government Code or the City’s investment policy.

GASB Statement No. 31
The City adopted GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, as of July 1, 1997. GASB Statement No. 31 establishes fair value standards for investments in participating interest earning investment contracts, external investment pools, equity securities, option contracts, stock warrants and stock rights that have readily determinable fair values.

The City Treasurer is authorized under state and municipal law to invest in various types of securities that meet specified credit quality standards, based upon credit risk ratings assigned by Standard and Poors (S&P), Fitch, or by Moody’s Investor Services (Moody’s). Permissible City investments include medium-term notes that are rated “A” or higher at time of purchase; commercial paper that is rated “A-1” or the equivalent; money market mutual funds that are rated “AAA”; and United States Government and Federal Agency securities (the quality of United States Treasury securities is not analyzed since they are not deemed to have credit risk).

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.

Presented below is the minimum rating required, when applicable, by the California Government Code, the City’s investment policy, or debt agreements, and the rating by Standard and Poor’s, Fitch and Moody’s as of year-end for each investment type.

Authorized by Maximum Maximum
Investment Types Investment Maximum Percentage Investment Authorized by State Law Policy Maturity * of Portfolio * in One Issuer * United States Treasury Bills, Notes, Bonds Yes 5 years 100% none United States Government-Sponsored Agency
Securities Yes 5 years 100% 30%
California State and Local Agency Debt Yes 180 days 25% none Commercial Paper Yes 270 days 25% 10%
Negotiable Certificates of Deposit Yes 5 years 5% none
Time Certificates of Deposit Yes 5 years 5% none
Repurchase Agreements Yes 1 year 10% none
Medium-Term Corporate Notes Yes 5 years 25% 10%
Money Market Mutual Funds Yes 5 years 20% none
Local Agency Investment Fund (LAIF) Yes N/A $75M/Acct none Structured Notes (STRIPS) Yes 5 years 20% none
Local Government Investment Pools Yes N/A 75% none
* Based on state law requirements or City investment policy requirements, whichever is more restrictive. 49

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
Primary Government
The ratings for the “Other” category above are as follows:

Fiduciary Funds
Custodial Credit Risk
The custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, a government will not be able to recover deposits or will not be able to recover collateral securities that are in the possession of an outside party. The custodial credit risk for the investments is the risk that, in the event of the failure of the counterparty to a transaction, a government will not be able to recover the value of investment or collateral securities that are in the possession of an outside party.

As of June 30, 2023, none of the City’s deposits or investments were exposed to custodial credit risk.

Concentration of Credit Risk
The City’s investment policy imposes restrictions on the percentage the City can invest in certain types of investments, which the City is in compliance. As of June 30, 2023, in accordance with GASB Statement No. 40, if the City has invested more than 10% of its total investments in any one issuer then they are exposed to concentration of credit risk. The City is not invested in any one issuer that is more than 10% of its total investments.

Interest Rate Risk
The City’s investment policy limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The City’s investment policy states that the City shall not invest in securities with maturities exceeding five years. The City has elected to use the segmented time distribution method of disclosure for its interest rate risk.

Minimum Exempt or
Investment Type Total Legal Rating Aaa AAA Other Not Rated California Local Agency Investment Fund $ 21,483,702 N/A $ - $ - $ - $ 21,483,702 California Asset Management Program 205,329,656 N/A - 205,329,656 - - Riverside County Treasurer's Pooled Investment Fund 2,449,520 N/A 2,449,520 - - - U.S. Government Sponsored Agency Securities 35,532,809 N/A 35,532,809 - - - Medium-Term Corporate Notes 24,147,750 N/A - - 24,147,750 - Held by Fiscal Agent:

Money Market Deposit Account 68,373,658 N/A - - - 68,373,658 Total $ 357,317,095 $ 37,982,329 $ 205,329,656 $ 24,147,750 $ 89,857,360 Investment Type A1 A2 Total
Medium-Term Corporate Notes $ 16,305,700 $ 7,842,050 $ 24,147,750 Minimum Exempt or
Investment Type Total Legal Rating Aaa AAA Not Rated
California Local Agency Investment Fund $ N/A 762 $ - $ - $ 762 California Asset Management Program 5,973 N/A - 5,973 - Riverside County Treasurer's Pooled Investment Fund N/A 341 341 - - Investment in City Bonds 126,000 N/A - - 126,000
Held by Fiscal Agent:

Money Market Deposit Account 15,364,495 N/A - - 15,364,495 Total $ 15,497,571 $ 341 $ 15,491,257 5,973 $
50

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
As of June 30, 2023, the City had the following investments and maturities:

Primary Government
Fiduciary Funds
Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized cost basis.

Investment in California Asset Management Program
The California Asset Management Program (CAMP) is a public joint powers authority which provides California Public Agencies with investment management services for surplus funds and comprehensive investment management, accounting and arbitrage rebate calculation services for proceeds of tax-exempt financings. The CAMP currently offers the Cash Reserve Portfolio, a short-term investment portfolio, as a means for Public Agencies to invest these funds. Public Agencies that invest in the Pool (Participants) purchase shares of beneficial interest.

Participants may also establish individual, professionally managed investment accounts (Individual Portfolios) by separate agreement with the Investment Advisor.

Investments in the Pools and Individual Portfolios are made only in investments in which Public Agencies generally are permitted by California statute. The CAMP may reject any investment and may limit the size of a Participant’s account. The Pool seeks to maintain, but does not guarantee, a constant net asset value of $1.00 per share. A Participant may withdraw funds from its Pool accounts at any time by check or wire transfers. Requests Less Than 6 Months - 1 Year - Over
Investment Type Total 6 Months 1 Year 3 Years 3 Years
California Local Agency Investment Fund 21,483,702 $ 21,483,702 $ $ - $ - $ - California Asset Management Program 205,329,656 205,329,656 - - - Riverside County Treasurer's Pooled Investment Fund 2,449,520 2,449,520 - - - U.S. Government Sponsored Agency Securities 35,532,809 20,266,899 15, - 265,910 - Medium-Term Corporate Notes 24,147,750 19, - 177,300 4, - 970,450 Held by Fiscal Agent:

Money Market Deposit Account 68,373,658 68,373,658 - - - Total $ 357,317,095 $ 317,903,435 $ 19,177,300 $ 15,265,910 $ 4,970,450 Less Than 6 Months - 1 Year - Over
Investment Type Total 6 Months 1 Year 3 Years 3 Years
California Local Agency Investment Fund 762 $ 762 $ - $ - $ - $ California Asset Management Program 5,973 5,973 - - -
Riverside County Treasurer's Pooled Investment Fund 341 341 - - - Investment in City Bonds 126,000 67,000 - 59,000 -
Held by Fiscal Agent:

Money Market Deposit Account 15,364,495 15,364,495 - - - Total 15,497,571 $ 15,438,571 $ - $ 59,000 $ - $
51

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
for same-day wire transfers must be made by 11:00 a.m. that day. Fair value of the Pool is determined by the fair value per share of the Pool’s underlying portfolio.

Investment in Riverside County Treasurer’s Pooled Investment Fund The City is a voluntary participant in the Riverside County Treasurer’s Pooled Investment Fund (Pooled Fund). The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value that the Riverside County Treasurer’s Office has provided for the entire Pooled Fund (in relation to the amortized cost of that portfolio). The balance available for withdrawal is based upon the accounting records that the Riverside County Treasurer’s Office maintains, which are recorded on an amortized cost basis.

Fair Value Measurements
The City categorizes its fair value measurement within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the relative inputs used to measure the fair value of the investments. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy are described as follows:

Level 1: Inputs to the valuation methodology are unadjusted quoted prices for identical assets in active markets that the City has the ability to access.

Level 2: Inputs to the valuation methodology include:
 Quoted prices for similar assets in active markets;
 Quoted prices for identical or similar assets in inactive markets;  Inputs other than quoted prices that are observable for the asset;  Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Unobservable inputs reflect the City’s own assumptions about the inputs market participants would use in pricing the asset (including assumptions about risk). Unobservable inputs are developed based on the best information available in the circumstances and may include the City’s own data.

The asset’s level within the hierarchy is based on the lowest level of input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The determination of what constitutes observable requires judgment by the City’s management. City management considers observable data to be that market data which is readily available, regularly distributed or updated, reliable, and verifiable, not proprietary, and provided by multiple independent sources that are actively involved in the relevant market.

The categorization of an investment within the hierarchy is based upon the relative observability of the inputs to its fair value measurement and does not necessarily correspond to City management’s perceived risk of that investment.

The methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 2: CASH AND INVESTMENTS (CONTINUED)
When available, quoted prices are used to determine fair value. When quoted prices in active markets are available, investments are classified within Level 1 of the fair value hierarchy. When quoted prices in active markets are not available, fair values are based on evaluated prices received by City’s asset manager from third party service provider.

The following is a description of the recurring valuation methods and assumptions used by the City to estimate the fair value of its investments.

For a large portion of the City’s portfolio, the City’s custodian applies their leveling methodology across all securities in a specific sector (i.e. U.S. Government Sponsored Agency Securities). Inputs to their pricing models are based on observable market inputs in active markets.

The Successor Agency Former RDA’s investment in City bonds is not tradable and is categorized in Level 3. When valuing Level 3 securities, the inputs or methodology are not necessarily an indication of the risks associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an assigned level within the disclosure hierarchy.

Primary Government
Fiduciary Funds
NOTE 3: NOTES AND LOANS RECEIVABLE
A. Notes Receivable
On August 8, 2006, the City of Palm Desert issued $3,165,000 of Limited Obligation Bonds. The proceeds of the Bonds were used to finance the construction of the utility undergrounding and pay the cost of issuance. The debt Investment Type Total Level 1 Level 2 Level 3 Uncategorized California Local Agency Investment Fund $ 21,483,702 $ - $ - $ - $ 21,483,702 California Asset Management Program 205,329,656 - - - 205, 329,656 Riverside County Treasurer's Pooled Investment
Fund 2,449,520 - - - 2, 449,520
U.S. Government Sponsored Agency Securities 35,532,809 - $ 35,532,809 - - Medium-Term Corporate Notes 24,147,750 - 24,147,750 - - Held by Fiscal Agent:

Money Market Deposit Account 68,373,658 - - - 68, 373,658 Total $ 357,317,095 $ - $ 59,680,559 $ - $ 297,636,536
Input Category
Investment Type Total Level 1 Level 2 Level 3 Uncategorized California Local Agency Investment Fund $ 762 $ - $ - $ - $ 762 California Asset Management Program 5,973 - - - 5,973
Riverside County Treasurer's Pooled Investment
Fund 341 - - - 341
Investment in City Bonds 126,000 - - 126,000 -
Held by Fiscal Agent:

Money Market Deposit Account 15,364,495 - - - 15,364,495 Total $ 15,497,571 $ - $ - $ 126,000 $ 15,371,571
Input Category
53

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 3: NOTES AND LOANS RECEIVABLE (CONTINUED)
service on the bonds is to be paid by assessments secured on the property tax rolls of those properties benefiting from the improvements. Bond maturities began September 2, 2007, and continue annually through 2036. The interest rates of the bonds range from 3.85% to 5.15%. The City of Palm Desert is the only bondholder on record for the bonds and reports a receivable in the general fund that corresponds to the outstanding principal on the bonds. As of June 30, 2023, the receivable balance was $1,032,000.

B. Loans Receivable
The City entered into several individual loan agreements with residents of the Highlands Utility Undergrounding Assessment District No. 04-01. The loans were issued by the City to pay off the principal of the respective properties assessment. In turn, the residents agreed to pay to the City the full cost of the loan amount plus any accrued interest at a rate of 5.35%. The full amount of the loan along with all accrued interest is due and payable at the earliest of September 2, 2036 or any change in ownership of the property. As of June 30, 2023, the total receivable from the Highlands Deferral Loan Program was $14,978.

Pursuant to Health and Safety Code 34176(b), the housing assets of the former RDA have been transferred to the Housing Asset Fund as the successor housing entity. The Housing Asset Fund has a loan receivable for the construction of a multi-family affordable housing development dated June 14, 2001 due from the PD Hovley Limited Partnership. The loan is secured by a Deed of Trust and Regulatory Agreement with Options on the housing development located in Palm Desert. On April 8, 2021 the Authority Board approved the re-syndication, refinancing and rehabilitation of the affordable housing development. The existing 2001 loan was modified to extend its maturity for fifty-five (55) years and provides for a suspension of principal payments for the estimated construction period. The Authority Loan shall bear interest at the greater of the current applicable federal rate as of the date of the Promissory Note or one percent (1%) simple interest per annum, and will be repaid from seventy-five percent (75%) of the developments residual receipts remaining after payment of fees and expenses. As of June 30, 2023, the total receivable from PD Hovley Limited Partnership was $5,148,813.

The Housing Asset Fund has a loan receivable for the construction of a multi-family affordable housing development dated December 20, 2022, due from Palm Desert Pacific Associates, a California Limited Partnership. The Authority Loan shall bear interest at three percent (3%) simple interest per annum, and repayment will commence as follows:
50% of Project Net Cash Flow, as defined in the Loan Agreement shall be paid to PDHA on an annual basis on June 30th after the first anniversary of issuance of a final certificate of occupancy for the project and each annual anniversary thereafter (with respect to the Project New Cash Flow for the preceding year ending on June 30th prior to each such payment date) until the Note has been satisfied in full. As of June 30, 2023, the total receivable from Palm Desert Pacific Associates was $6,030,000 and management has no reason to believe any allowance for doubtful accounts should be established for the loan.

On August 28, 2008, the City Council approved through resolution the Energy Independence Program (EIP), which is supported by Assembly Bill AB811. The EIP program allowed the City to create the funding mechanism to assist the residents and businesses entering into a loan agreement with the City and providing the money for the borrowers to acquire and install energy efficient improvements. Assembly Bill AB811 allows the City to lien the properties through annual property tax assessments for a period not to exceed 20 years. To date, 279 residents and business owners entered into loan agreements with the City and have completed their improvements through the EIP program, as of June 30, 2023, 160 loans have been repaid. The loans are payable in two annual installments for a period of 5 years to 20 years at an interest rate of 7% annually. On June 30, 2023, the outstanding loans receivable through the EIP Program was $1,221,675.

Pursuant to Health and Safety Code 34176(b), the housing assets of the former RDA have been transferred to the Palm Desert Housing Authority as the successor housing entity. The Housing Authority has loans for several other projects, all of which are secured by a deed of trust. An allowance for doubtful accounts equal to the loan balance has been recognized since there is a significant possibility that these loans will either become uncollectible or forgiven by the Housing Authority at a future date if all the terms of the loans have been met. 54

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 3: NOTES AND LOANS RECEIVABLE (CONTINUED)
Detailed information for these loans is as follows:

NOTE 4: INTERFUND RECEIVABLES, PAYABLE, ADVANCES AND TRANSFERS The composition of interfund balances as of June 30, 2023, was as follows:

A. Due To/From Other Funds
The amounts loaned from the General Fund to non-major governmental funds and capital properties were to cover cash shortfall at year end as of June 30, 2023.

B. Advances To/From Other Funds
The General Fund advanced $956,000 to the Energy Independence Special Revenue Fund to payoff the bonds used to fund energy efficiency, and loaned $1,000,000 to Desert Willow Golf Course to fund the daily operations, including the daily operations of the restaurant. The advance to the Energy Independence Special Revenue Fund is repaid as the Energy Independence Program (EIP) loans are repaid. See Note 3 for more information on these loans.

The Capital Golf fund advanced $3,627,329 to the Desert Willow Golf Course for the purchases of golf carts totaling $2,051,890 and golf course equipment totaling $1,575,439. The advance for the golf carts will be repaid over 48 months beginning January 1, 2023 and bears interest at a rate of 2.5%. The advance for the golf course equipment will be repaid over 60 months beginning November 1, 2022 and bears interest at a rate of 2.5%.

Accrued Total
Principal Unpaid Outstanding
Balance Interest as of Interest Maturity
Project Name Outstanding Outstanding June 30, 2023 Rate Date Notes Home Improvement Loans 324,466 - 324,466 N/A N/A (1),(2) Portola Palms Mobile Home Park 94,930 2,848 3.00% 30 years (3) 97,778 Desert Rose 2,319,754 69,593 2,389,347 3.00% 30-45 years* (1),(3) Falcon Crest 3,023,876 90,716 3,114,592 3.00% 30-45 years* (1),(2) Acquisition, Rehabilitation, Resale 190,510 5,715 196,225 3.00% 30-45 years (2) Habitat for Humanity 327,000 23,708 350,708 7.25% 30 years or 2024 (2) $ 6,280,536 $ 192,580 6,473,116
Less: Allowance for Doubtful Accounts (6,473,116)
Balance at June 30, 2023 $ -
Receivable Fund Payable Fund Amount
General Fund Other Governmental Funds $ 1,136,962
Receivable Fund Payable Fund Amount
General Fund Other Governmental Funds $ 956,000
Desert Willow Golf Course 1,000,000
Other Governmental Funds Desert Willow Golf Course 3,179,888 $ 5,135,888
55

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 4: INTERFUND RECEIVABLES, PAYABLE, ADVANCES AND TRANSFERS (CONTINUED) The future payment schedule for these advances are as follows:

C. Due To/From Component Unit
The Palm Desert Recreational Facilities Corporation (the Corporation) owes the General Fund $420,000 in deferred unpaid rent for various years through FY 2020-2021 associated with the lease between the City and the Corporation. The Corporation owes the Desert Willow Golf Course Fund $1,578,564 which represents subsidies for operation, $1,195,524 of which relates to prior fiscal years and $383,040 which relates to the current year. There is no payment schedule in place for the repayment of these amounts, therefore these transactions have been recorded as long-term in the accompanying financial statements.

D. Interfund Transfers
The composition of interfund transfers as of June 30, 2023, was as follows:

Transfers are used to:

1. Transfer revenues to provide for capital projects.

2. Transfer revenues to provide for additional resources to pay for expenditures.

3. Transfer to cover future cost of assets.

Fiscal Year
Principal
Payments
Interest
Payments
Total
Payments
2024 780,687 $ 70,592 $ 851,279 $
2025 800,428 50,849 851,277
2026 820,670 30,608 851,278
2027 633,196 10,937 644,133
2028 144,907 756 145,663
Total 3,179,888 $ 163,742 $ 3,343,630 $
Advance to Other Governmental Fund
Receivable Fund Payable Fund Amount
General Fund Palm Desert Recreational Facilities Corporation 420,000 $ Desert Willow Golf Course Palm Desert Recreational Facilities Corporation 1,578,564 $ 1,998,564
Transfers Out General Fund
Prop A Fire
Tax Special
Revenue Fund
Capital
Properties
Capital
Projects Fund
Other
Governmental
Funds
Internal
Service Fund Totals
General Fund - $ 4,600,000 $ 1,800,000 $ 17,451,752 $ 961,289 $ 24,813,041 $ Housing Authority
Special Revenue Fund - - - 415,990 - 415,990
Other Governmental Funds 2,478,731 - - - - 2,478,731
Totals 2,478,731 $ 4,600,000 $ 1,800,000 $ 17,867,742 $ 961,289 $ 27,707,762 $ Transfers In
56

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 5: CAPITAL ASSETS
A summary of changes in capital assets at June 30, 2023, was as follows:

A. Primary Government – Governmental Activities
Depreciation/amortization expense was charged to functions/programs as follows:

Balance Balance
July 1, 2022 Transfers Additions Deletions June 30, 2023 Governmental activities:

Capital assets, not being depreciated/amortized
Land $ 82,066,168 $ - $ 220,921 $ 82,287,089 - $
Right-of-way 121,210,045 50,000 - - 121,260,045
Construction-in-progress 18,450,547 (6,087,441) 1,389,462 (3,572,868) 10,179,700 Total capital assets, not being depreciated/amortized 221,726,76 0 (6,087,441) 1,660,383 (3,572,868) 213,726,834 Capital assets, being depreciated/amortized
Buildings 144,293,925 6, - 846,930 - 151,140,855
Improvements other than buildings 60,724,608 158,113 2,779,842 63,662,563 - Machinery, equipment, and vehicles 11,277,689 - 276,110 (107,074) 11,446,725 Infrastructure 247,521,105 5,844,499 1,044,052 - 254,409,656 Lease assets 2,603,284 - - 2,603,284 -
Subscription assets - - 543,846 543,846 -
Equipment - Internal service fund 9,205,887 84,829 90,621 (500,987) 8,880,350 Total capital assets, being depreciated/amortized 475,626,498 6,087,441 11,581,401 (608,061) 492,687,279 Less accumulated depreciation/amortization
Buildings (78,047,903) (3, - 573,698) (81,621,601) -
Improvements other than buildings (48,675,399) (1, - 928,401) (50,603,800) - Machinery and equipment (10,124,102) ( - 499,151) 107,073 (10,516,180) Infrastructure (129,439,376) (5, - 095,482) ( - 134,534,858) Lease assets (233,919) ( - 234,737) (468,656) -
Subscription assets - ( - 128,714) (128,714) -
Equipment - Internal service fund (6,024,978) ( - 751,260) 493,525 (6,282,713) Total accumulated depreciation/amortization (272,545,677) (12, - 211,443) 600,598 (284,156,522) Total capital assets, being depreciated/amortized, net 203,080,8 21 6,087,441 (630,042) (7,463) 208,530,757 Total Governmental Activities Capital Assets $ 424,807,581 $ 1, - $ 030,341 $ (3,580,331) $ 422,257,591 Governmental Activities:

General government 2,095,474 $
Housing and redevelopment 1,600,448
Public safety 93,486
Public works 6,266,926
Parks, recreation and culture 1,403,849
Internal Service Funds 751,260
Total Depreciation/Amortization Expense - Governmental Activities $ 12,211,443 57

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 5: CAPITAL ASSETS (CONTINUED)
B. Primary Government – Business-Type Activities
Depreciation/amortization expense was charged to functions/programs as follows:

C. Component Unit

Balance Balance
July 1, 2022 Additions Deletions June 30, 2023
Business-type activities:

Capital assets, not being depreciated/amortized
Land $ 53,304,965 $ - $ 53,304,965 - $
Total capital assets, not being depreciated/amortized 53,304,965 - 53,304,965 - Capital assets, being depreciated/amortized
Buildings and improvements 28,576,279 25,614 28,601,893 - Machinery and equipment 6,968,012 3,558,032 (2,138,233) 8,387,811 Total capital assets, being depreciated/amortized 35,544,291 3,583,646 (2,138,233) 36,989,704 Less accumulated depreciation/amortization
Buildings and improvements (15,231,748) (855,268) (16,087,016) - Machinery and equipment (6,102,271) (684,883) 2,138,233 (4,648,921) Total accumulated depreciation/amortization (21,334,019) (1,540,151) 2,138,233 (20,735,937) Total capital assets, being depreciated/amortized, net 14,210,27 2 2,043,495 16,253,767 - Total business-type activities capital assets $ 67,515,237 $ 2,043,495 $ 69,558,732 - $ Business-Type Activities:

Parkview Office Complex 315,176 $
Desert Willow Golf Course 1,224,975
Total depreciation/amortization expense - business-type activities 1,540,151 $ Balance Balance
July 1, 2022 Adjustments Additions Deletions June 30, 2023 Component Unit:

Capital assets, being amortized
Lease asset $ 2,636,688 - $ $ - $ 2,636,688 - $
Total capital assets, being amortized 2,636,688 - - 2,636,688 - Less accumulated amortization
Lease asset (71,262) - (71,262) (142,524) -
Total accumulated amortization (71,262) - (71,262) (142,524) - Total capital assets, being amortized, net 2,565,426 - (71,262) 2,494,164 - Total component unit capital assets $ 2,565,426 - $ $ (71,262) $ 2,494,164 - $ 58

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 6: LONG-TERM DEBT
The following is a summary of long-term liability transactions of the City for the year ended June 30, 2023.

A. Primary Government – Governmental Activities
Debt service payments for the special assessment debt with government commitment, tax allocation bonds and notes payable are made from debt service funds and a special revenue fund.

Special Assessment Debt with Government Commitment
Highlands Undergrounding Assessment District No. 04-01, Limited Obligation Improvement Bonds, Series 2006 On August 8, 2006, the City Palm Desert issued $3,165,000 of Limited Obligation Bonds. The proceeds of the Bonds were used to finance the construction of the utility undergrounding and pay the cost of issuance. The debt service on the bonds is to be paid by assessments secured on the property tax rolls of those properties benefiting from the improvements. In the event that assessment collections are insufficient to pay the debt service, the City has a potential obligation to provide additional funds to pay the debt service, therefore these bonds are reported as special assessment debt with government commitment. Bond maturities begin September 2, 2007, and continue annually through 2036. The interest rates of the bonds range from 3.85% to 5.15%. The City of Palm Desert is the only bondholder on record of the bonds and the City does not own the constructed assets.

The future debt service requirements on the Highlands Undergrounding Assessment District No. 04-01, Limited Obligation Improvement Bonds, Series 2006 are as follows:

Limited Obligation Bonds
Limited Obligation Improvement Bonds Series 2009A (Taxable) On January 29, 2009, the City issued $2,015,000 Limited Obligation Improvement Bonds Series 2009A (Taxable).

The proceeds of the Bonds were used to fund the City’s Energy Independence Program. Concurrent with the issuance of the Bonds, the City entered into a bond purchase agreement with the Agency whereby the Agency agreed to purchase the Bonds equal to par value. The bonds bear interest at 3% payable semiannually on September 2 and March 2. Bond maturities commenced September 2, 2010, and continue annually through September 2, 2029.

Balance
June 30, 2022 Additions Reductions Bond Calls
Balance
June 30, 2023
Due Within
One Year
Direct Borrowing:

Special assessment debt 1,082,000 $ - $ (50, $ - 000) $ 1, $ 52,000 032,000 $ with government commitment
Limited obligation improvement bonds 212,000 - (27, (59,000) 000) 126,000 22,000 Total 1,294,000 $ - $ (77, $ (59,000) 000) $ 1,158,000 $ 74,000 $ Year Ending
June 30, Principal Interest Total
2024 $ 52,000 $ 51,709 103,709
2025 55,000 48,981 103,981
2026 58,000 46,099 104,099
2027 61,000 43,065 104,065
2028 64,000 39,861 103,861
2029-2033 371,000 145,256 516,256
2034-2038 371,000 39,423 410,423
Total 1,032,000$ $ 414,394 $ 1,446,394
59

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 6: LONG-TERM DEBT (CONTINUED)
The future debt service requirements on the Limited Obligation Improvement Bonds Series 2009A (Taxable) are as follows:

Limited Obligation Improvement Bonds Series 2009B (Taxable) On September 2, 2009, the City issued $1,136,000 Limited Obligation Improvement Bonds Series 2009B (Taxable).

The future debt service requirements on the Limited Obligation Improvement Bonds Series 2009B (Taxable) are as follows:

B. Primary Government – Business-Type Activities

The City entered into a 48-month agreement for the purchase of golf cart fleet equipment with Club Car National on June 12, 2018. Payments are $12,330 monthly commencing on February 1, 2019 and includes interest at 5.75%.

The amount was paid in full as of June 30, 2023.

Year Ending
June 30, Principal Interest Total
2024 12,000 $ 1,950 $ 13,950 $
2025 11,000 1,605 12,605
2026 9,000 1,305 10,305
2027 9,000 1,035 10,035
2028 10,000 750 10,750
2029-2033 19,000 600 19,600
Total 70,000 $ 7,245 $ 77,245 $
Year Ending
June 30, Principal Interest Total
2024 10,000 $ 1,620 $ 11,620 $
2025 10,000 1,320 11,320
2026 7,000 1,065 8,065
2027 8,000 840 8,840
2028 8,000 600 8,600
2029-2033 13,000 480 13,480
Total 56,000 $ 5,925 $ 61,925 $
Amount
Balance Balance Due Within
July 1, 2022 Additions Deletions June 30, 2023 One Year Club Car National Account $ 75,743 $ 75,743 - $ $ - $ - GPSI Leasing, LLC 36,826 36,826 - - -
PNC Equipment Finance LLC 74,859 74,859 - - -
GPSI Leasing, LLC 354,462 - 35,293 319,169 86,217
Totals $ 187,428 $ 354,462 $ 222,721 $ 319,169 $ 86,217 60

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 6: LONG-TERM DEBT (CONTINUED)
The City entered into a 48-month agreement for the purchase of golf cart fleet equipment with GPSI Leasing, LLC.

The agreement was amended on December 27, 2018 to extend the payment terms an additional 48 months and lower the payment to $5,792 beginning on November 1, 2018, including interest at 5.75%. The amount was paid in full as of June 30, 2023.

The City entered into a 60-month agreement for the purchase of Toro golf course equipment with PNC Equipment Finance, LLC. Payments are $25,078 monthly commencing on October 1, 2017 and includes interest at 2.95%.

The amount was paid in full as of June 30, 2023.

The City entered into a financed purchase agreement with GPSI Leasing, LLC for the purchase of golf carts. The financed purchase bears interest at a rate of 5.75%. On December 20, 2022 the finance purchase agreement was amended to extend additional the term for an 48 months resulting in a revised annual payment of $93,213 beginning February 1, 2023.

The future debt service requirements on the financed purchases are as follows:

NOTE 7: COMPENSATED ABSENCES
The City's policy relating to compensated absences is described in Note 1 of the Notes to Financial Statements.

The City historically allocates costs to liquidate liabilities for compensated absences and pension liability based on the allocation of the employees earning the respective benefits and their respective payroll expense to various fund across the City. This liability will be paid in future years from future resources in the internal service fund. The outstanding liability for compensated absences accrued was $2,601,028.

NOTE 8: LEASES
A. Leases Receivable and Deferred Inflows of Resources
Primary Government – Governmental Activities
On July 1, 2021, the City entered into a 262-month lease as lessor for the Crown Castle Cell Tower - Cook St @ Desert Willow. An initial lease receivable was recorded in the amount of $42,517. As of June 30, 2023, the value of the lease receivable is $24,343. The lessee is required to make annual fixed payments of $19,243. The lease has an interest rate of 1.5830%. The value of the deferred inflow of resources as of June 30, 2023 was $38,623, and the City recognized lease revenue of $1,947 during the fiscal year. The lessee has 2 extension options, each for 120 months.

Year Ending
June 30, Principal Interest Total
2024 86,217 $ 6,996 $ 93,213 $
2025 88,397 4,816 93,213
2026 90,632 2,580 93,212
2027 53,923 450 54,373
Total 319,169 $ 14,842 $ 334,011 $
Balance Balance Due Within
June 30, 2022 Additions Deletions June 30, 2023 One Year $ 2,289,338 $ 425,084 $ 113,394 $ 2,601,028 $ 500,000
61

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 8: LEASES (CONTINUED)
On July 1, 2021, the City entered into a 60-month lease as lessor for the use of Soccer Park. An initial lease receivable was recorded in the amount of $135,241. As of June 30, 2023, the value of the lease receivable is $81,189. The lessee is required to make annual fixed payments of $27,376. The lease has an interest rate of

0.5770%. The value of the deferred inflow of resources as of June 30, 2023 was $81,680, and the City recognized lease revenue of $26,780 during the fiscal year.

On July 1, 2021, the City entered into a 136-month lease as lessor for the use of Civic Center Cell Tower. An initial lease receivable was recorded in the amount of $415,792. As of June 30, 2023, the value of the lease receivable is $356,282. The lessee is required to make monthly fixed payments of $2,838. The lease has an interest rate of

1.2540%. The value of the deferred inflow of resources as of June 30, 2023 was $342,417, and the City recognized lease revenue of $36,688 during the fiscal year. The lessee has 2 extension options, each for 60 months.

On July 1, 2021, the City entered into a 66-month lease as lessor for the use of the Vineyards Commercial Center.

An initial lease receivable was recorded in the amount of $332,785.96. As of June 30, 2023, the value of the lease receivable is $205,636. The lessee is required to make annual fixed payments of $64,542. The lease has an interest rate of 0.7030%. The value of the deferred inflow of resources as of June 30, 2023 was $211,773, and the City recognized lease revenue of $60,507 during the fiscal year.

On July 1, 2021, the City entered into a 444-month lease as lessor for the use of the restaurant at the Desert Willow Golf Course Clubhouse from the Corporation. An initial lease receivable was recorded in the amount of $2,636,688.

As of June 30, 2023, the value of the lease receivable is $2,529,043. The Corporation is required to make monthly fixed payments of $8,000. The lease has an interest rate of 1.7050%. The value of the deferred inflow of resources as of June 30, 2023 was $2,494,164, and the City recognized lease revenue of $71,262 during the fiscal year.

The principal and interest payments that are expected to maturity are as follows:

Primary Government – Business-Type Activities
On January 3, 2023, the City entered into a 24-month lease as lessor for the use of Parkview Office Complex, Ste 129. An initial lease receivable was recorded in the amount of $40,498. As of June 30, 2023, the value of the lease receivable is $30,661. The lessee is required to make monthly fixed payments of $1,706. The lease has an interest rate of 2.707%. The value of the deferred inflow of resources as of June 30, 2023 was $30,486, and the City recognized lease revenue of $10,012 during the fiscal year. The lessee has 5 extension options, each for 12 months.

Fiscal Year Principal Payments Interest Payments Total Payments 2024 177,671 $ $ 49,293 $ 130,964
2025 182,375 47,358 133,733
2026 187,203 45,373 133,733
2027 91,761 43,336 133,733
2028 94,353 41,916 133,733
2029 - 2033 510,196 7,387 133,733
2034 - 2038 327,022 152,979 133,733
2039 - 2043 356,101 123,899 133,733
2044 - 2048 387,767 92,233 133,733
2049 - 2053 422,249 57,751 133,733
2054 - 2058 459,795 20,203 133,733
Total $ 3,196,493 $ 681,728 $ 1,468,294
Governmental Activities
62

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 8: LEASES (CONTINUED)
On May 1, 2023, the City entered into a 60-month lease as lessor for the use of Parkview Office Complex, Ste 126.

An initial lease receivable was recorded in the amount of $103,212. As of June 30, 2023, the value of the lease receivable is $99,976. The lessee is required to make monthly fixed payments of $1,716. The lease has an interest rate of 2.31%. The value of the deferred inflow of resources as of June 30, 2023 was $99,772, and the City recognized lease revenue of $3,440 during the fiscal year. The lessee has 5 extension options, each for 12 months.

On December 1, 2022, the City entered into a 60-month lease as lessor for the use of Parkview Office Complex, Ste 120. An initial lease receivable was recorded in the amount of $143,073. As of June 30, 2023, the value of the lease receivable is $128,250. The lessee is required to make monthly fixed payments of $2,438. The lease has an interest rate of 3.305%. The value of the deferred inflow of resources as of June 30, 2023 was $126,381, and the City recognized lease revenue of $16,692 during the fiscal year. The lessee has 5 extension options, each for 12 months.

On December 1, 2022, the City entered into a 24-month lease as lessor for the use of Parkview Office Complex, Suites 108, 100, 116, and 220. An initial lease receivable was recorded in the amount of $172,400. As of June 30, 2023, the value of the lease receivable is $123,684. The lessee is required to make monthly fixed payments of $7,298. The lease has an interest rate of 3.207%. The value of the deferred inflow of resources as of June 30, 2023 was $122,117, and the City recognized lease revenue of $50,283 during the fiscal year. The lessee has 1 extension options, for 12 months.

On December 1, 2022, the City entered into a 24-month lease as lessor for the use of Parkview Office Complex Ste 103. An initial lease receivable was recorded in the amount of $24,118. As of June 30, 2023, the value of the lease receivable is $18,137. The lessee is required to make monthly fixed payments of $903. The lease has an interest rate of 3.2070%. The value of the deferred inflow of resources as of June 30, 2023 was $17,083, and the City recognized lease revenue of $7,034 during the fiscal year. The lessee has 2 extension options, each for 12 months.

On July 1, 2021, the City entered into a 48-month lease as lessor for the use of 73-720 Fred Waring Dr. An initial lease receivable was recorded in the amount of $400,629. As of June 30, 2023, the value of the lease receivable is $213,504. The lessee is required to make monthly fixed payments of $8,139. The lease has an interest rate of

0.5770%. The value of the deferred inflow of resources as of June 30, 2023 was $200,315, and the City recognized lease revenue of $100,157 during the fiscal year.

On July 1, 2021, the City entered into a 132-month lease as lessor for the use of Parkview Suite 112. An initial lease receivable was recorded in the amount of $223,707. As of June 30, 2023, the value of the lease receivable is $192,177. The lessee is required to make monthly fixed payments of $1,823. The lease has an interest rate of

2.927%. The value of the deferred inflow of resources as of June 30, 2023 was $183,033, and the City recognized lease revenue of $20,337 during the fiscal year.

On July 1, 2021, the City entered into a 84-month lease as lessor for the use of Parkview Office Ste 104. An initial lease receivable was recorded in the amount of $261,206. As of June 30, 2023, the value of the lease receivable is $187,993. The lessee is required to make monthly fixed payments of $3,200. The lease has an interest rate of

0.8330%. The value of the deferred inflow of resources as of June 30, 2023 was $186,576, and the City recognized lease revenue of $37,315 during the fiscal year. The lessee has 1 extension options, each for 60 months.

On July 1, 2021, the City entered into a 63-month lease as lessor for the use of Parkview Ste 102. An initial lease receivable was recorded in the amount of $131,906. As of June 30, 2023, the value of the lease receivable is $82,087. The lessee is required to make monthly fixed payments of $2,125. The lease has an interest rate of

0.5770%. The value of the deferred inflow of resources as of June 30, 2023 was $81,656, and the City recognized lease revenue of $25,125 during the fiscal year. The lessee has 3 extension options, each for 12 months.

On January 1, 2022, the City entered into a 120-month lease as lessor for the use of Civic Center Sheriff Substation.

An initial lease receivable was recorded in the amount of $4,710,493. As of June 30, 2023, the value of the lease 63

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 8: LEASES (CONTINUED)
receivable is $4,035,520. The lessee is required to make monthly fixed payments of $41,645. The lease has an interest rate of 1.2050%. The value of the deferred inflow of resources as of June 30, 2023 was $4,003,920, and the City recognized lease revenue of $471,049 during the fiscal year. The lessee has 1 extension option for 60 months.

The principal and interest payments that are expected to maturity are as follows:

B. Leases Payable and Lease Assets
Primary Government – Governmental Activities
On July 1, 2021, the City entered into a 51-month lease as lessee for the use of Xerox Financial Services. An initial lease liability was recorded in the amount of $125,262. As of June 30, 2023, the value of the lease liability is $70,926.

The City is required to make monthly fixed payments of $2,646. The lease has an interest rate of 0.6320%. The value of the lease asset as of June 30, 2023 of $125,262 with accumulated amortization of $58,947 is included with equipment on the lease class activities table found below.

On July 1, 2021, the City entered into a 145-month lease as lessee for the use of 37023 Cook Street. An initial lease liability was recorded in the amount of $2,468,060. As of June 30, 2023, the value of the lease liability is $2,119,331.

The City is required to make monthly fixed payments of $16,621. The lease has an interest rate of 1.2540%. The value of the lease asset as of June 30, 2023 of $2,468,060 with accumulated amortization of $406,544 is included with buildings on the lease class activities table found below. The City has one extension options for 84 months.

On November 29, 2021, the City entered into a 60-month lease as lessee for the use of Xerox Financial Services.

An initial lease liability was recorded in the amount of $9,962. As of June 30, 2023, the value of the lease liability is $6,869. The City is required to make monthly fixed payments of $178. The lease has an interest rate of 2.1840%.

The value of the lease asset as of June 30, 2023 of $9,962 with accumulated amortization of $3,165 is included with equipment on the lease class activities table found below.

The principal and interest payments that are expected to maturity are as follows:

Fiscal Year Principal Payments Interest Payments Total Payments 2024 $ 799,886 $ 64,001 $ 863,887
2025 749,755 52,327 802,082
2026 596,544 43,590 640,134
2027 588,292 35,471 623,763
2028 567,858 27,424 595,282
2029 - 2033 1,809,654 43,241 1,852,895
Total $ 5,111,989 $ 266,054 $ 5,378,043
Business-Type Activities
Fiscal Year Principal Payments Interest Payments Total Payments 2024 218,453 $ 26,008 $ 244,461 $
2025 227,383 23,394 250,777
2026 212,749 20,718 233,467
2027 207,088 18,104 225,192
2028 208,982 15,498 224,480
2029 - 2033 1,085,116 37,283 1,122,399
2034 - 2038 37,355 59 37,414
Total 2,197,126 $ 141,064 $ 2,338,190 $
Governmental Activities
64

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 8: LEASES (CONTINUED)
Lease assets by class activity at June 30, 2023 are as follows:

Component Unit
On July 1, 2021, the Corporation entered into a 444-month lease as lessee for the use of the restaurant at the Desert Willow Golf Course Clubhouse from the City. An initial lease liability was recorded in the amount of $2,636,688. As of June 30, 2023, the value of the lease liability is $2,529,042. The Corporation is required to make monthly fixed payments of $8,000. The lease has an interest rate of 1.705%. The value of the lease asset as of June 30, 2023 of $2,636,688 with accumulated amortization of $142,524 is included with buildings on the lease class activities table found below.

The principal and interest payments that are expected to maturity are as follows:

Lease assets by class activity at June 30, 2023 are as follows:

NOTE 9: SUBSCRIPTIONS
For the year ended June 30, 2023, the financial statements include the adoption of GASB Statement No. 96, Subscription-Based Information Technology Arrangements. The primary objective of this statement is to enhance the relevance and consistency of information about governments' subscription activities. This statement establishes a single model for subscription accounting based on the principle that subscriptions are financings of the subscription asset. Under this Statement, an organization is required to recognize a subscription liability and an intangible subscription asset. For additional information, refer to the disclosures below.

Amount of
Leased Capital
Assets
Accumulated
Amortization
Lease assets - building 2,468,060 $ 406,544 $
Lease assets - equipment 135,224 62,112
$ 2,603,284 $ 468,656
Lease Type
Equipment
Building
Major Class of Underlying Asset
Fiscal Year Principal Payments Interest Payments Total Payments 2024 53,295 $ 42,705 $ 96,000 $
2025 54,211 41,789 96,000
2026 55,142 40,858 96,000
2027 56,090 39,910 96,000
2028 57,054 38,946 96,000
2029 - 2033 300,316 179,684 480,000
2034 - 2038 327,022 152,978 480,000
2039 - 2043 356,101 123,899 480,000
2044 - 2048 387,767 92,233 480,000
2049 - 2053 422,249 57,751 480,000
2054 - 2058 459,795 20,204 479,999
Total $ 2,529,042 $ 830,957 $ 3,359,999
Component Unit
Amount of
Leased Capital
Assets
Accumulated
Amortization
Lease assets - building 2,636,688 $ 142,524 $
Lease Type Major Class of Underlying Asset
Building
65

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 9: SUBSCRIPTIONS (CONTINUED)
On August 15, 2022, the City entered into a 24-month subscription for the use of DebtBook. An initial subscription liability was recorded in the amount of $123,373. As of June 30, 2023, the value of the subscription liability is $113,623. The City is required to make monthly fixed payments of $9,750. The subscription has an interest rate of

2.0240%. The value of the subscription asset as of June 30, 2023 is $129,123 with accumulated amortization of $56,671.

On February 1, 2023, the City entered into a 36-month subscription for the use of Recycle Coach. An initial subscription liability was recorded in the amount of $22,920. As of June 30, 2023, the value of the subscription liability is $15,570. The City is required to make annual fixed payments of $7,350. The subscription has an interest rate of 2.6560%. The value of the subscription asset as of June 30, 2023 is $22,920 with accumulated amortization of $3,183. The City had a termination period of 3 months as of the subscription commencement.

On January 1, 2023, the City entered into a 24-month subscription for the use of OpenGov Budgeting and Planning.

An initial subscription liability was recorded in the amount of $76,656. As of June 30, 2023, the value of the subscription liability is $37,816. The City is required to make annual fixed payments of $38,840. The subscription has an interest rate of 2.7070%. The value of the subscription asset as of June 30, 2023 is $76,656 with accumulated amortization of $19,164 is included with Software on the Subscription Class activities table found below.

On November 15, 2022, the City entered into a 26-month subscription for the use of OpenGov Procurement. An initial subscription liability was recorded in the amount of $72,791. As of June 30, 2023, the value of the subscription liability is $45,893. The City is required to make annual fixed payments of $24,056. The subscription has an interest rate of 3.2070%. The value of the subscription asset as of June 30, 2023 is $72,791 with accumulated amortization of $20,667.

On April 14, 2023, the City entered into a 14-month subscription for the use of Zoho Manage Engine. An initial subscription liability was recorded in the amount of $100,176. As of June 30, 2023, the value of the subscription liability is $78,793. The City is required to make monthly fixed payments of $7,255. The subscription has an interest rate of 2.5600%. The value of the subscription asset as of June 30, 2023 is $100,176 with accumulated amortization of $18,366.

On February 16, 2023, the City entered into a 60-month subscription for the use of eScribe Agenda Management.

An initial subscription liability was recorded in the amount of $133,239. As of June 30, 2023, the value of the subscription liability is $107,888. The City is required to make monthly fixed payments of $25,500. The subscription has an interest rate of 2.6820%. The value of the subscription asset as of June 30, 2023 is $142,180 with accumulated amortization of $10,663. The Vendor has 2 extension option(s), each for 12 months.

The principal and interest payments that are expected to maturity are as follows:

Fiscal Year Principal Payments Interest Payments Total Payments 2024 274,401 $ 10,175 $ $ 284,576
2025 67,037 3,233 70,270
2026 27,960 1,559 29,519
2027 30,185 810 30,995
Total $ 399,583 $ 15,777 $ 415,360
Governmental Activities
66

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 9: SUBSCRIPTIONS (CONTINUED)
Subscription assets include the following at June 30, 2023:

NOTE 10: RISK MANAGEMENT AND CLAIMS PAYABLE
A. Description of Self-Insurance Pool Pursuant to Joint Power Agreement The City of Palm Desert is a member of the CALIFORNIA JOINT POWERS INSURANCE AUTHORITY (Authority).

The Authority is composed of 124 California public entities and is organized under a joint powers agreement pursuant to California Government Code §6500 et seq. The purpose of the Authority is to arrange and administer programs for the pooling of self-insured losses, to purchase excess insurance or reinsurance, and to arrange for group purchased insurance for property and other lines of coverage. The California JPIA began covering claims of its members in 1978. Each member government has an elected official as its representative on the Board of Directors. The Board operates through a nine-member Executive Committee.

B. Primary Self-Insurance Programs of the Authority
Each member pays an annual contribution at the beginning of the coverage period. A retrospective adjustment is then conducted annually thereafter, for coverage years 2012-13 and prior. Coverage years 2013-14 and forward are not subject to routine annual retrospective adjustment. The total funding requirement for primary self-insurance programs is based on an actuarial analysis. Costs are allocated to individual agencies based on payroll and claims history, relative to other members of the risk-sharing pool.

C. Primary Liability Program
Claims are pooled separately between police and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $100,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $100,000 to $500,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $500,000 to $50 million, are distributed based on the outcome of cost allocation within the first and second loss layers.

The overall coverage limit for each member, including all layers of coverage, is $50 million per occurrence.

Subsidence losses also have a $50 million per occurrence limit. The coverage structure is composed of a combination of pooled self-insurance, reinsurance, and excess insurance. Additional information concerning the coverage structure is available on the Authority’s website: https://cjpia.org/coverage/risk-sharing-pools/.

D. Primary Workers' Compensation Program
Claims are pooled separately between public safety (police and fire) and general government exposures. (1) The payroll of each member is evaluated relative to the payroll of other members. A variable credibility factor is determined for each member, which establishes the weight applied to payroll and the weight applied to losses within the formula. (2) The first layer of losses includes incurred costs up to $75,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the first layer. (3) The second layer of losses includes incurred costs from $75,000 to $200,000 for each occurrence and is evaluated as a percentage of the pool’s total incurred costs within the second layer. (4) Incurred costs from $200,000 to statutory limits are distributed based on the outcome of cost allocation within the first and second loss layers.

Amount of
Subscription
Assets
Accumulated
Amortization
Subscription assets - software $ 543,846 $ 128,714
Major Class of Underlying Asset
67

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 10: RISK MANAGEMENT AND CLAIMS PAYABLE (CONTINUED) For 2022-23 the Authority’s pooled retention is $1 million per occurrence, with reinsurance to statutory limits under California Workers’ Compensation Law. Employer’s Liability losses are pooled among members to $1 million.

Coverage from $1 million to $5 million is purchased through reinsurance policies, and Employer’s Liability losses from $5 million to $10 million are pooled among members.

E. Pollution Legal Liability Insurance
The City of Palm Desert participates in the pollution legal liability insurance program which is available through the Authority. The policy covers sudden and gradual pollution of scheduled property, streets, and storm drains owned by the City of Palm Desert. Coverage is on a claims-made basis. There is a $250,000 deductible. The Authority has an aggregate limit of $20 million.

F. Property Insurance
The City of Palm Desert participates in the all-risk property protection program of the Authority. This insurance protection is underwritten by several insurance companies. City of Palm Desert property is currently insured according to a schedule of covered property submitted by the City of Palm Desert to the Authority.

City of Palm Desert property currently has all-risk property insurance protection in the amount of $363,203,889.

There is a $10,000 deductible per occurrence except for non-emergency vehicle insurance which has a $2,500 deductible.

G. Crime Insurance
The City of Palm Desert purchases crime insurance coverage in the amount of $10,000,000 with a $2,500 deductible. The fidelity coverage is provided through the Authority.

H. Special Event Tenant User Liability Insurance
The City or Palm Desert further protects against liability damages by requiring tenant users of certain property to purchase low-cost tenant user liability insurance for certain activities on agency property. The insurance premium is paid by the tenant user and is paid to the City of Palm Desert according to a schedule. The City of Palm Desert then pays for the insurance. The insurance is facilitated by the Authority.

I. Adequacy of Protection
During the past three fiscal years, none of the above programs of protection experienced settlements or judgments that exceeded pooled or insured coverage. There were no significant reductions in pooled or insured liability coverage in the fiscal year 2022-23.

J. Claims Payable
Estimates for all workers’ compensation and general liabilities up to the self-insured levels have been recorded as long-term liabilities.
68

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 10: RISK MANAGEMENT AND CLAIMS PAYABLE (CONTINUED) Changes in claims liabilities during the past two years are as follows:

NOTE 11: DEFERRED COMPENSATION PLAN
The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years.

The deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. Pursuant to changes in August 1996, of IRC Section 457, in January 1997, the City established a trust in which all assets held by Nationwide Retirement Solutions, Inc. (NRS) and ICMA Retirement Corporation (ICMA) were placed. In June 2023, the City transitioned all 457 accounts from Nationwide and ICMA to Empower. The City does not have fiduciary responsibility for the plan assets held by NRS, ICMA, or Empower. The assets, all property and rights purchased with such amounts and all income attributable to such amounts are held in trust for the exclusive benefit of the participants and the beneficiaries. The assets are no longer the property of the City, and as such, are no longer subject to the claims of the City’s general creditors. As a result, the assets of the 457 plan in the amount of $7,494,722 held by NRS, ICMA, and Empower of the 457 Plan are not reflected in the City’s financial statements.

NOTE 12: PENSION PLAN
A. General Information about the Pension Plan:

Plan Description
All qualified permanent and probationary employees are eligible to participate in the City’s Miscellaneous Plan, agent multiple-employer defined benefit pension plans administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding benefit provisions, assumptions and membership information that can be found on the CalPERS website.

Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 10 years of service.

The death benefit is one of the following: the Basic Death Benefit, the 1957 Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for the plan are applied as specified by the Public Employees’ Retirement Law.

June 30, 2022 June 30, 2023
Claims payable - Beginning of year 384,643 $ 564,473 $
Incurred claims (including IBNR) and changes in estimates 205,45 7 299,985 Claims payments (25,627) (184,577)
Claims payable - End of year $ 564,473 $ 679,881
Claims payable - due in one year 186,276 224,361
Claims payable - due in more than one year 378,197 455,520 $ 564,473 $ 679,881
69

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 12: PENSION PLAN (CONTINUED)
The Plan’s provisions and benefits in effect at measurement date, are summarized as follows:

Employees Covered
At June 30, 2022, the following employees were covered by the benefit terms for all Plans:

Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions for both Plans are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. The City is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.

B. Net Pension Liability
The City’s net pension liability for the Plan is measured as the total pension liability, less the pension plan’s fiduciary net position. The net pension liability of Plan is measured as of June 30, 2022, using an annual actuarial valuation as of June 30, 2021 rolled forward to June 30, 2022 using standard update procedures. A summary of principal assumptions and methods used to determine the net pension liability is shown below.

Prior to On or after
Hire date January 1, 2013 January 1, 2013
Benefit formula 2.7% @ 55 2.0% @ 62
Benefit vesting schedule 5 years of service 5 years of service Benefit payments monthly for life monthly for life
Retirement age 50-67 52-67
Monthly benefits, as a % of eligible compensation 2.0% - 2.7% 1.0% - 2.5% Required employee contribution rates 7%-8% 6.25%
Required employer contribution rates 12.890% 12.890%
Miscellaneous
Inactive employees or beneficiaries currently receiving benefits 89 Inactive employees entitled to but not yet receiving benefits 35 Active employees 97
Total 221
70

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 12: PENSION PLAN (CONTINUED)
Actuarial Assumptions
The total pension liabilities in the June 30, 2022 actuarial valuations were determined using the following actuarial assumptions:
*The mortality table used was developed based on CalPERS-specific data. The table includes 15 years of mortality improvements using the Society of Actuaries Scale 90% of scale MP 2016. For more details on this table, please refer to the December 2017 experience study report (based on CalPERS demographic data from 1997 to 2015) that can be found on the CalPERS website.

Discount Rate
The discount rate used to measure the total pension liability was 6.90% for the Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate for the plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate.

Based on the testing of the Plans, the tests revealed the assets would not run out. Therefore, the current 6.90% discount rate is appropriate and the use of the municipal bond rate calculation is not deemed necessary. The long-term expected discount rate of 6.90% is applied to all plans in the Public Employees Retirement Fund (PERF).

The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained from the CalPERS website under the GASB 68 section.

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.

In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach.

Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent.

The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The target allocation shown was adopted by the CalPERS Board effective on July 1, 2014.

Valuation date June 30, 2021
Measurement date June 30, 2022
Actuarial cost method Entry age normal
Actuarial assumptions:

Discount rate 6.90%
Inflation 2.30%
Payroll Growth 2.75%
Projected Salary Increase Varies by Entry
Investment Rate of Return 6.9% Net of Pension Plan Investment and Administrative Expenses; includes Inflation
Mortality rate table * Derived using CalPERS' membership data for all funds 71

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 12: PENSION PLAN (CONTINUED)
C. Changes in the Net Pension Liability
The changes in the net pension liability for the year ended June 30, 2023, with a measurement date of June 30, 2022, for the Miscellaneous Plan are as follows:

Assumed
Asset
Asset Class Allocation Real Return 1, 2
Global equity-cap-weighted 30.00% 4.54%
Global equity-non-cap-weighted 12.00% 3.84%
Private equity 13.00% 7.28%
Treasury 5.00% 0.27%
Mortgage-backed securities 5.00% 0.50%
Investment grade corporates 10.00% 1.56%
High yield 5.00% 2.27%
Emerging market debt 5.00% 2.48%
Private debt 5.00% 3.57%
Real assets 15.00% 3.21%
Leverage -5.00% -0.59%
1 An expected inflation of 2.30% used for this period.
2 Figures are based on the 2021 Asset Liability Management study Total Pension
Liability
Plan Fiduciary
Net Position
Net Pension
Liability (Asset)
Balance at June 30, 2021 (Measurement Date) $ 147,437,667 $ 127,850,893 $ 19,586,774 Changes in the Year:

Service Cost 1,976,289 1,976,289 -
Interest on the Total Pension Liability 10,122,299 10,122,299 - Difference between Expected and Actual Experience (2,563,805) (2,563,805) - Changes in Assumptions 4,699,855 4,699,855 -
Net Plan to Plan Resource Movement - - -
Contributions - Employer 4,020,131 - (4,020,131)
Contributions - Employees 791,130 - (791,130)
Net Investment Income (9,592,025) - 9,592,025
Benefit Payments including Refunds of Employee (7,723,744) (7,723,744) - Administrative expense - (79,643) 79,643
Other Misc Income / (Expense) - - -
Net Changes 6,510,894 (12,584,151) 19,095,045
Balance at June 30, 2022 (Measurement Date) $ 153,948,561 $ 115,266,742 $ 38,681,819 Increase (Decrease)
72

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 12: PENSION PLAN (CONTINUED)
Sensitivity of the Net Pension Liability to Changes in the Discount Rate The following presents the net pension liability of the City for the Plan, calculated using the discount rate for the Plan, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:

Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial reports.

D. Pension Expense and Deferred Outflows/Inflows of Resources Related to Pensions For the year ended June 30, 2023, the City recognized pension expense of $208,654. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
$4,574,753 reported as deferred outflows of resources related to contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending June 30, 2024. Other amounts reported as deferred inflows of resources related to pensions will be recognized as pension expense as follows:

Discount Rate Current Discount Rate
-1 Percent Discount Rate +1 Percent
(5.90%) (6.90%) (7.90%)
Plan's net pension liability/(asset) 58,826,252 $ $ 38,681,819 $ 21,984,690 Deferred Outflows Deferred Inflows
of Resources of Resources
Pension contributions subsequent to the measurement date 4,574,753 $ $ - Change in assumptions 2,959,168 -
Differences between expected and actual experience 30,325 1,614,248 Net difference between projected and actual earnings on pension plan investments 5,679,555 -
Total $ 13,243,801 $ 1,614,248
Deferred
Outflows/(Inflows)
Fiscal year ended June 30, of Resources
2024 1,700,763 $
2025 1,335,314
2026 356,699
2027 3,662,024
Total 7,054,800 $
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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 13: OTHER POST-EMPLOYMENT BENEFITS
A. Plan Description
In addition to the pension benefits described in Note 11, the City provides other post-employment benefits (OPEB) through the California Employers’ Retiree Benefit Trust Fund (CERBT), an agent multiple-employer defined benefit healthcare plan administered by the California Public Employees’ Retirement System (CalPERS).

All full-time or part-time employees who meet the eligibility requirements for this program may continue their medical coverage through the CalPERS Health Plan and receive reimbursement from the City for a portion of the costs for the coverage. Separate financial statements for the CERBT may be obtained by writing to CalPERS at Lincoln Plaza North, 400 Q Street, Sacramento, California 95811, or by visiting the CalPERS website at www.calpers.ca.gov.

Employees Hired Prior to January 1, 2008
Eligibility for the stipend requires retirement simultaneously from the City and CalPERS on or after age 50 with at least 10 consecutive years of service with the City. Eligible employees must be covered under the CalPERS Health Plan at the time of retirement and elect to participate in the stipend program within 30 days of retirement.

The City’s contribution towards the coverage is based on years of service as follows:

Employees Hired On or After January 1, 2008
Eligibility for the stipend requires retirement simultaneously from the City and CalPERS on or after age 50 with at least 15 consecutive years of service with the City. Eligible employees must be covered under the CalPERS Health Plan at the time of retirement and elect to participate in the stipend program within 30 days of retirement. The stipend is discontinued when the retiree reaches Medicare eligibility age. The City’s contribution towards the coverage will be applied to the lowest cost plan and is based on age at retirement and consecutive years of service with the City as outlined in the following table:

Employees with at least 5 years of service, not meeting the eligibility requirements for the stipend program, who retire simultaneously from the City and CalPERS are eligible to continue medical coverage through the CalPERS Health Plan. The City is required to pay the CalPERS minimum employer contribution ($149 in 2022 and $151 in 2023) for these employees.

Consecutive Years of Service City's Contribution
With the City at Retirement Percentage
10 years of service 50%
11 years of service 55%
12 years of service 60%
13 years of service 65%
14 years of service 70%
15 or more years of service 75%
Age 15 16 17 18 19 20 21 22 23 24 25+
50 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
51 10% 15% 20% 25% 30% 35% 40% 45% 50% 50% 50%
52 20% 25% 30% 35% 40% 45% 50% 50% 50% 50% 50%
53 30% 35% 40% 45% 50% 50% 50% 50% 50% 50% 50%
54 40% 45% 50% 50% 50% 50% 50% 50% 50% 50% 50%
55+ 50% 50% 50% 50% 50% 50% 50% 50% 50% 50% 50%
Consecutive Years of Service at Retirement
74

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 13: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
Employees Hired On or After January 1, 2015
Employees are not eligible for either of the defined retiree health benefits plan but are instead enrolled in the City’s ICMA Retirement Health Savings Account. Employees have a mandatory 1% contribution to the Retirement Health Savings Plan and the City matches the 1% contribution. In addition, an employee can participate in the ICMA 401A Governmental Money Purchase Plan with a maximum pre-tax dollar contribution of 10%, with the City maximum match of 2%.

As of June 30, 2022, the date of the most recent actuarial valuation, the City's plan has 97 active employees.

Employees Covered - Plan membership, at June 30, 2021 valuation date, membership consisted of the following:

B. City Contributions to the Plan
City contributions to the Plan occur as benefits are paid to retirees and/or to the OPEB trust.

C. Net OPEB Liability/(Asset)
The City’s Net OPEB Liability/(Asset) was measured as of June 30, 2022 and the Total OPEB Liability used to calculate the Net OPEB Liability/(Asset) was determined by an actuarial valuation as of June 30, 2021. Standard actuarial update procedures were used to project/discount from valuation to measurement dates.

Actuarial assumptions. The total OPEB liability was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified:

D. Discount Rate
GASB 75 requires a discount rate that reflects the following:
a) The long-term expected rate of return on OPEB plan investments – to the extent that the OPEB plan’s fiduciary net position (if any) is projected to be sufficient to make projected benefit payments and assets are expected to be invested using a strategy to achieve that return;
b) A yield or index rate for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher – to the extent that the conditions in (a) are not met.

Inactive plan members or beneficiaries 124
Active plan members 97
Total 221
Inflation 2.50%
Salary Increase 3.00% per annum
Assumed Wage Inflation 3.00% per annum
Investment Rate of Return 5.50% per annum
Healthcare cost-trend rates Assumed to start at 6.5% and grade down by 0.5% each year to 5% in 2024 Retirement Age The City offers the same plans to its retirees as to its active employees, with the general exception that upon reaching age 65 and becoming eligible for Medicare, the retiree must join one of the Medicare Supplement coverages offered under PEMHCA.

Mortality Mortality rates used were those published by CalPERS under the 2017 Experience study and projected using the MacLeod Watts Scale 2018 applied generationally.
75

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 13: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
E. Changes in the Net OPEB Liability/(Asset)
The changes in the net OPEB liability/(asset) for the Plan are as follows:

F. Sensitivity of the Total OPEB Liability and Net OPEB Liability/(Asset) to Changes in the Discount Rate The following presents the total OPEB liability and net OPEB liability/(asset), as well as what the total OPEB liability and net OPEB liability/(asset) would be if they were calculated using a discount rate that is 1-percentage point lower (5.50 percent) or 1-percentage-point higher (6.50 percent) than the current discount rate:

G. Sensitivity of the Total OPEB Liability and Net OPEB Liability/(Asset) to Changes in the Health Care Cost Trend Rates
The following presents the total OPEB liability and net OPEB liability/(asset), as well as what the total OPEB liability and net OPEB liability/(asset) would be if they were calculated using healthcare cost trend rates that are 1-percentage-point lower (5.70 percent decreasing to 4.70 percent) or 1-percentage-point higher (5.70 percent increasing to 6.70 percent) than the current healthcare cost trend rates:

Total OPEB
Liability
Plan Fiduciary
Net Position
Net OPEB
Liability (Asset)
Balance at June 30, 2021 (Measurement Date) 19,628,837 $ 23,762,792 $ (4,133,955) $ Changes in the Year:

Service Cost 294,337 - 294,337
Interest on the Total OPEB Liability 1,205,943 - 1,205,943 Changes in Assumptions 1,691,792 (4,504,553) 6,196,345
Contributions - Employer 1,230,895 (1,230,895)
Net Investment Income 1,481,970 (1,481,970)
Benefit Payments (944,960) (944,960) -
Changes in Benefit Terms - - -
Administrative Expenses - (6,034) 6,034
Net Changes 2,247,112 (2,742,682) 4,989,794
Balance at June 30, 2022 (Measurement Date) 21,875,949 $ 21,020,110 $ 855,839 $ Increase (Decrease)
Discount Rate Current Discount Rate
-1 Percent Discount Rate +1 Percent
(4.50%) (5.50%) (6.50%)
Net OPEB liability/(asset) 3,679,950 $ 855,839 $ (1,498,372) $ 1% Decrease Trend Rate 1% Increase
Net OPEB liability/(asset) (1,599,584) $ 855,839 $ 3,818,003 $ 76

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 13: OTHER POST-EMPLOYMENT BENEFITS (CONTINUED)
H. OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the fiscal year ended June 30, 2023, the City recognized OPEB expense (revenue) of $610,395. As of fiscal year ended June 30, 2023, the City reported deferred outflows and inflows of resources related to OPEB from the following sources:

The City will recognize the contributions made subsequent to the measurement date totaling $1,108,988 in the next fiscal year. In addition, future recognition of the deferred resources is shown below:

NOTE 14: SPECIAL ASSESSMENT DEBT
Below is a summary of the changes in the special assessment bonds payable:

Deferred Outflows Deferred Inflows
of Resources of Resources
OPEB contributions subsequent to the measurement date $ 1,108,988 $ - Change in assumptions 1,633,966 553
Differences between expected and actual experience 73,555 432,989 Net difference between projected and actual earnings on pension plan investments 2,044,360 -
Total $ 4,860,869 $ 433,542
Deferred
Outflows/(Inflows)
Fiscal year ended June 30, of Resources
2024 891,446 $
2025 949,901
2026 440,465
2027 924,029
2028 23,210
Thereafter 89,288
Total 3,318,339 $
Amount
Balance Balance Due Within
July 1, 2022 Additions Deletions June 30, 2023 One Year 2003 Assessment Revenue Bonds 900,000 $ - $ 120,000 $ 780,000 $ 115,000 $ CFD 2021-1 Special Tax Bonds Series 2021 15,200,000 - 245,000 14,955,000 305,000 CFD 2005-1 Special Tax Bonds Series 2021A 5,165,000 - 250,000 4,915,000 270,000 Section 29 Assessment District 2004-02
Limited Obligation Bonds Series 2021 16,400,000 - 685,000 15,715,000 785,000 Total 37,665,000 $ - $ 1,300,000 $ 36,365,000 $ 1,475,000 $ 77

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 14: SPECIAL ASSESSMENT DEBT (CONTINUED)
The City has Special Assessment Bonds Payable issued under the 1911 and 1915, Special Improvement Acts and the 1982 Mello-Roos Community Facilities Act (1982 Bonds). The City has no liability to 1911 Act bondholders until assessments have been collected from the property owner. Such liability is then recorded in the Custodial Funds.

Therefore, the 1911 Bonds are not recorded as liabilities in the accompanying financial statements.

The City also has no liability to the 1915 Act bondholders, or the bondholders of bonds issued under the 1982 Mello-Roos Community Facilities Act until assessments are collected on the tax rolls. However, the City may take certain actions to assume secondary liability for all or part of 1915 Act Bonds and the 1982 Bonds until such time as foreclosure proceedings are consummated.

Special assessment bonds payable, as described below, and are not recorded as long-term liabilities, as these obligations do not constitute a debt or obligation of the City.

A. 2003 Assessment Revenue Bonds
In June 2003, the Palm Desert Financing Authority issued $4,423,000 in 2003 Assessment Revenue Bonds. The proceeds were used to purchase three series of limited obligation improvement bonds issued by the City in connection with the financing and refinancing of certain improvements of benefit to property within the City’s Assessment District No. 94-2 (Sunterrace), Assessment District No. 94-3 (Merano) and Silver Spur Ranch Utility Undergrounding Assessment District No. 01-01. These bonds were issued under the 1915 Improvement Bond Act to provide funds for public improvements in the respective assessment districts.

Debt service requirements to maturity are as follows:

As of June 30, 2023, the principal amounts to be repaid by the Assessment District No. 01-1 to pay off the loans from the Financing Authority is $780,000.

B. Community Facilities District No. 2005-1, Series 2021A In July 2021, the City of Palm Desert Community Facilities District No. 2005-1 (University Park) Special Tax Refunding Bonds, Series 2021A (the “Bonds”) are being issued by City of Palm Desert Community Facilities District No. 2005-1 (University Park) (the “District”) to provide funds: (i) to refund a portion of the District’s outstanding Special Tax Bonds, Series 2006A (the “2006 Bonds”); (ii) to fund a Reserve Account for the Bonds; and (iii) to pay costs incurred in connection with the issuance of the Bonds. The 2006 Bonds were issued for the purpose of providing funds to pay the costs of acquiring certain public facilities. The Bonds are special obligations of the District and are payable solely from Net Taxes (as defined herein), and the other assets pledged therefor under the Indenture, all as further described herein. Special Taxes (as defined herein) are to be levied according to the rate and method of apportionment approved by the City Council of the City and the qualified electors within the District. Interest rates vary from 3.00% to 4.00% with interest payable semi-annually on March 1 and September 1, with principal maturing annually on September 1.

Year Ending
June 30, Principal Interest Total
2024 115,000 $ 38,763 $ 153,763 $
2025 120,000 32,519 152,519
2026 125,000 25,934 150,934
2027 135,000 18,947 153,947
2028 140,000 11,556 151,556
2029 145,000 3,897 148,897
Total 780,000 $ 131,616 $ 911,616 $
78

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CITY OF PALM DESERT
Notes To Basic Financial Statements
Year Ended June 30, 2023
NOTE 14: SPECIAL ASSESSMENT DEBT (CONTINUED)
Debt service requirements to maturity are as follows:

C. Section 29 Assessment District (No 2004-02), Limited Obligation Improvement Bonds, Series 2021 In July 2021, the City of Palm Desert issued $16,400,000 Limited Obligation Improvement Bonds. The proceeds of the Bonds will be used to refund previously issued series 2017 bonds that financed certain infrastructure improvements within the City’s Section 29 Assessment District (No. 2004-02). The debt service on the bonds is to be paid by assessments secured on the property tax rolls of those properties benefiting from the improvements. interest ranging from 4.00% to 4.70% payable semiannually on March 2 and September 2. Bond maturities begin September 2, 2009 and continue annually through 2020. Term bonds in the amount of $2,525,000 carry an interest rate of 4.75% and mature September 2, 2022. Term bonds in the amount of $5,110,000 carry an interest rate of

5.05% and mature September 2, 2027. Term bonds in the amount of $14,925,000 carry an interest rate of 5.10% and mature September 2, 2037.

Debt service requirements to maturity are as follows:

D. Community Facilities District No. 2021-1, Series 2021 The City of Palm Desert Community Facilities District No. 2021-1 (University Park) Special Tax Bonds, Series 2021 (the “Bonds”) are being issued by the City of Palm Desert Community Facilities District No. 2021-1 (University Park) (the “District”) to: (i) pay and defease a pro rata portion of outstanding Series 2006A Special Tax Bonds (the “CFD 2005-1 Pro Rata Bonds”) issued by, and secured by the special taxes of existing City of Palm Desert Community Facilities District No. 2005-1 (University Park) (“CFD No. 2005-1”); (ii) finance the acquisition of certain public improvements needed with respect to the development of property located within the District, including public improvements to be owned by the City and water and sewer facilities to be owned and operated by the Coachella Valley Water District; (iii) fund a reserve account for the Bonds; and (iv) pay costs of issuance for the Bonds. Interest rates vary from 3.00% to 4.00% with interest payable semi-annually on March 1 and September 1, with principal maturing annually on September 1.

Year Ending
June 30, Principal Interest Total
2024 270,000 $ 187,050 $ 457,050 $
2025 280,000 178,800 458,800
2026 290,000 168,800 458,800
2027 300,000 157,000 457,000
2028 315,000 144,700 459,700
2029-2033 1,780,000 519,600 2,299,600
2034-2037 1,680,000 137,800 1,817,800
Total 4,915,000 $ 1,493,750 $ 6,408,750 $
Year Ending
June 30, Principal Interest Total
2024 785,000 $ 612,900 $ 1,397,900 $
2025 815,000 596,600 1,411,600
2026 850,000 647,600 1,497,600
2027 880,000 513,000 1,393,000
2028 920,000 477,000 1,397,000
2029-2033 5,175,000 1,792,100 6,967,100
2034-2038 6,290,000 649,200 6,939,200
Total 15,715,000 $ 5,288,400 $ 21,003,400 $
79

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Palm Desert City CouncilFebruary 15, 2024

Palm Desert City Council
February 15, 2024