HomeMy WebLinkAbout06/30/04City of Hermosa Beach,
California
Comprehensive
Annual
Financial
Report
City of
Hermosa Beach
Hermosa Beach, California
Comprehensive Annual Financial Report
For the year ended June 30, 2004
PREPARED BY THE CITY OF HERMOSA BEACH, CALIFORNIA
FINANCE DEPARTMENT
VIKI L. COPELAND, FINANCE DIRECTOR
INTRODUCTORY SECTION
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INTRODUCTORY SECTION
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City of Hermosa Beach
Basic Financial Statements
For the year ended June 30, 2004
Table of Contents
'INTRODUCTORY SECTION Page
Table of Contents i
I
Letter of Transmittal v
Certificate of Achievement for Excellence in Financial Reporting -
Governmental Finance Officers Association ix
I
Organizational Chart x
Principal Officials of the City of Hermosa Beach xi
I
FINANCIAL SECTION
Independent Auditors' Report 1
IManagement Discussion and Analysis 3
IIBasic Financial Statements:
Government - Wide Financial Statements:
I Statement of Net Assets 17
Statement of Activities and Changes in Net Assets 18
I
Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet 26
I
Reconciliation of the Governmental Funds Balance Sheet
to the Government -Wide Statement of Net Assets 27
Statement of Revenues, Expenditures
Iand Changes in Fund Balances 28
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balances to the Government - Wide
IStatement of Activities and Changes in Net Assets 29
Proprietary Fund Financial Statements:
I Statement of Net Assets 34
Statement of Revenues, Expenses and Changes in Fund Net Assets 35
Statement of Cash Flows 36
IFiduciary Fund Financial Statements:
Statement of Fiduciary Net Assets 40
IIndex to Notes to Basic Financial Statements 41
Notes to Basic Financial Statements 43
IRequired Supplementary Information 75
City of Hermosa Beach
Basic Financial Statements
For the year ended June 30, 2004
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Supplementary Information:
Non -Major Governmental Funds:
Combining Balance Sheet 86
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 92
Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Non -Major Special Revenue Funds:
Lighting and Landscape District 97
State Gas Tax 98
AB 939 99
Compensated Absences 100
County Gas Tax 101
Prop A Open Space 102
Parks and Recreation Facilities 103
4% Utility Users Tax 104
Building Improvement 105
Lower Pier Administrative Expense 106
Myrtle District Administrative Expense 107
Loma District Administrative Expense 108
Community Development Block Grant 109
Prop "A" Transit 110
Prop "C" Transit 111
Grants 112
Office of Traffic Safety Grant 113
Air Quality Management District 114
Supplemental Law Enforcement Services (COPS) 115
California Law Enforcement Program (CLEEP) 116
Taskforce for Regional Auto Theft Prevention 117
Sewer 118
Asset Seizure and Forfeiture Fund 119
Fire Protection 120
Retirement Stabilization 121
Artesia Boulevard Relinquishment 122
Lower Pier Avenue Assessment District 123
Myrtle Utility Underground Improvement 124
Loma Utility Underground Improvement 125
Bayview Drive Underground District 126
Bonnie Brae Underground District 127
Beach Drive Underground District 128
Prospect Utility Underground District 129
Non -Major Proprietary Funds:
Combining Statement of Net Assets 132
Combining Statement of Revenues, Expenditures and Changes in Net Assets 133
Combining Statement of Cash Flows 134
ii
1
City of Hermosa Beach
' Basic Financial Statements
For the year ended June 30, 2004
Table of Contents, Continued
I
FINANCIAL SECTION, Continued Page
ISupplementary Information, Continued:
Internal Service Funds:
Combining Statement of Net Assets 136
I Combining Statement of Revenues, Expenses and Changes in Net Assets 137
Combining Statement of Cash Flows 138
I Fiduciary Fund Financial Statements:
Combing Statement of Fiduciary Net Assets 140
Combing Statement of Changes in Assets and Liabilities 141
ICapital Assets Used in the Operating Of Governmental Funds:
Schedule by Source 144
Schedule by Function and Activity 145
ISchedule of Changes in Capital Assets by Function and Activity 146
STATISTICAL SECTION (Unaudited)
IGovernment -Wide Revenues 147
Government -Wide Expense - By Function 148
I General Governmental Revenues by Source - Last Ten Fiscal Years 149
General Governmental Expenditures by Function - Last Ten Fiscal Years 150
Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years 151
I Property Tax Rates and Tax Levies - All Direct and Overlapping Governments - Last Ten Fiscal Years 152
Property Tax Levies and Collections - Last Ten Fiscal Years 153
Computation of Legal Debt Margin 154
I Statement of Direct and Overlapping Debt 155
Demographic Statistics - Last Ten Fiscal Years 156
Construction Value, Property Value and Bank Deposits - Last Ten Fiscal Years 157
I Schedule of Insurance 158
Top Property Taxpayers 159
Top 25 Sales Tax Producers 160
I Major Employers 161
Taxable Sales by Category 162
Miscellaneous Statistics 163
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iv
City of Hermosa rl3eaclt..)
Civic Center, 1315 Valley Drive, Hermosa Beach, California 90254-3885
December 16, 2004
Honorable Mayor and Members of the City Council:
Introduction
I am pleased to present the Comprehensive Annual Financial Report (CAFR) of the City of Hermosa Beach for
the fiscal year ended June 30, 2004. The report is intended to update readers on the status of the City's financial
position and results of operations for the past fiscal year.
This is the second CAFR prepared using the new financial reporting requirements established by Governmental
Accounting Standards Board (GASB) Statement 34 for state and local governments throughout the United States.
The required management's discussion and analysis (MD&A), gives readers an objective and easily readable
analysis of the government's financial performance for the year and government -wide financial statements,
prepared using accrual accounting for all of the government's activities. Long term assets and liabilities (such as
capital assets, including infrastructure and general obligation debt) are measured in addition to current assets
and liabilities. This letter of transmittal is designed to complement MD&A and should be read in conjunction
with it. The City of Hermosa Beach's MD&A can be found immediately following the report of the independent
auditors.
Management's representations concerning the finances of the City of Hermosa Beach are contained herein.
Consequently, management assumes full responsibility for the completeness and reliability of all of the
information presented in this report. To provide a reasonable basis for making these representations,
management of the City of Hermosa Beach has established an internal control framework that is designed both
to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for
the preparation of the City of Hermosa Beach's financial statements in conformity with generally accepted
accounting principles (GAAP) . Because the cost of internal controls should not outweigh their benefits, the City
of Hermosa Beach's framework of internal controls has been designed to provide reasonable rather than absolute
assurance that the financial statements will be free from material misstatement. As management, we assert that,
to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.
Audit
The City of Hermosa Beach's financial statements have been audited by Caporicci & Larson, a firm of licensed
certified public accountants. The goal of the independent audit was to provide reasonable assurance that the
financial statements of the City of Hermosa Beach for the fiscal year ended June 30, 2004, are free of material
misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements; assessing the accounting principles used and significant estimates made
by management; and evaluating the overall financial statement presentation. The independent auditor
concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the
City of Hermosa Beach's financial statements for the fiscal year ended June 30, 2004, are fairly presented in
conformity with GAAP. The independent auditor's report is presented as the first component of the financial
section of this report.
V
Profile of the Government
The City of Hermosa Beach is a beachfront, bedroom community with a stable population, located four miles
south of Los Angeles International Airport. The City occupies 1.3 square miles and serves a population of 19,549,
according to the State's latest population estimate. However as a beach city, Hermosa experiences a high visitor
population and the associated costs. Due to this high visitor population, the City operates in many ways like a
larger city. During the 2003-04 fiscal year, beach attendance ranged from a low of 34,500 in December 2003 to a
high of 838,000 in July 2004, according to the Los Angeles County Fire Department, Lifeguard Division.
The City of Hermosa Beach, incorporated on January 14, 1907 as a general law city, operates under the Council -
Manager form of government. Policy-making and legislative authority are vested in a governing council
consisting of five members of the City Council elected on a non-partisan basis at large for a four-year term.
Council members serve four-year, staggered terms, with an election every two years. One member is chosen by
fellow members to serve as Mayor for a period of nine months; one is chosen to serve as Mayor Pro Tem. The
Council is responsible for, among other things, establishing policy, passing ordinances, adopting an annual
budget; appointing members to various City Commissions and Boards and hiring the City Manager and City
Attorney. The City Manager is responsible for carrying out the policies and ordinances of the City Council, for
overseeing the day-to-day operations of the government, and for appointing the heads of the various
departments.
Hermosa Beach offers a full range of municipal services, including police and fire protection, community
development (planning and zoning), cultural, recreation and parks, maintenance and construction of public
improvements, parking and animal control, and general administration. Financial information for the
Downtown Business Area Enhancement District, the Lighting and Landscaping District, the Lower Pier Avenue
Assessment District and the Myrtle Avenue and Loma Drive Utility Underground Districts are included in the
City's financial statements as required by governmental accounting standards.
The annual budget serves as the foundation for the City of Hermosa Beach's financial planning and control. All
departments of the City of Hermosa Beach are required to submit requests for appropriation to the City Manager
according to a budget calendar. The City Manager uses these requests as the starting point for developing a
proposed budget, which is presented to the City Council for review by May 15. The City Council is required to
hold a public hearing on the budget, with adoption no later than June 30th. The appropriated budget is prepared
by fund and department (e.g., Police Department). The City Manager may make transfers of appropriations
between departments within each fund; transfers of appropriations between funds, however, require the
approval of the City Council. A midyear budget review is conducted after the first six months of the fiscal year
to ensure estimates are on target. Budget -to -actual comparisons are provided in this report for each individual
governmental fund for which an appropriated annual budget has been adopted. For the General Fund and
major governmental funds with appropriated annual budgets, this comparison is presented as Required
Supplementary Information on pages 77-78. For non -major governmental funds with appropriated annual
budgets, this comparison is presented as Supplementary Information, after the Notes to the Financial Statements.
Factors Affecting Financial Condition
The information presented in the financial statements is perhaps best understood when it is considered from the
broader perspective of the specific environment within which the City of Hermosa Beach operates.
Local economy. As a beachfront community, with more bedrooms than businesses, Hermosa Beach had the
tenth highest percentage change in assessed valuation of the 88 cities in Los Angeles County for 2003-04. The
assessed valuation has risen, on average, 9.2% per year for the past five years, making property tax the number
one revenue source in the General Fund. Median home prices in Hermosa Beach as of June 2004 were $902,500,
compared to $395,000 for Los Angeles County.
Hermosa Beach's three highest employment industries are food services, administrative and support and retail
trade, however residents enjoy access to a much more diverse employment base with the close proximity of all of
vi
the other cities in Los Angeles County. The unemployment rate in Hermosa Beach is 1.8%, compared with 6.7%
for Los Angeles County.
Sales tax growth up until 2001-02, averaged 12% per year, with a proliferation of eating and drinking places,
particularly in the downtown area, and sales of high-end new and used vehicles. Growth since then has been
only 2%, with the loss of two auto dealerships from 2001-2003. The loss of the only new car dealership expected
in 2004-05. Increases in transient occupancy tax from a new hotel and a windfall in utility users tax revenue will
assist in offsetting the negative sales tax trend.
California Public Employees Retirement System (Ca1PERS). City retirement rates will continue to increase for
the next two years significantly due to investment losses sustained by Ca1PERS. The slide on Ca1PERS
investment returns began in 2001, with a return of -7.2%. 2002 returns were -5.9%. 2003 returns were in the
black at 3.9% and 2004 was an encouraging 16.7%. If investment returns continue in line with or above
estimates, the City can hope to see some effect on employer contributions rates in a couple of years.
State Budget Through passage of Proposition 1A in November 2004, a deal was struck whereby $1.3 billion in
local government funds will be shifted to the State in 2004-05 and 2005-06, with funds protected thereafter unless
2/3 of the legislature votes to "borrow" funds again. This provides some assurance for the future, but only time
will tell whether the State can solve their budget deficit problems without relying on a reduction of local
government funds.
Long-term financial planning. The City's long term financial planning focuses on the Five -Year Capital
Improvement Plan, which is produced in conjunction with the annual budget. Since the City is built out, the
plan primarily addresses maintenance, repair and upgrading of facilities and infrastructure, particularly streets
and sewers.
One of the City's financial policies is to set aside funds unspent in the General Fund at year-end for four
purposes, one of which is capital improvements. These funds are primarily spent for street improvements.
Sewer and storm drain improvements are funded by a portion of the utility user tax revenue which is set aside
for that purpose.
Primary projects coming up, (other than street and sewer improvements, which occur every year) are renovation
of the Fire Department, architectural upgrades of the Community Center and Phase III, the final phase of the
Municipal Pier Upgrade. The City will use a variety of development generated fees (such as fire flow funds),
federal Community Development Block Grant Funds , grant funds from the State Wildlife Conservation Fund
and Los Angeles County Proposition A Park Bond Act funds for these projects.
Cash management policies and practices. Temporarily idle cash was invested during the year in obligations of
the U.S. Treasury and the State Treasurer's investment pool. The average maturity was 20 months, with an
average yield on investments of 1.67% Investment income includes changes in the fair value of investments.
Changes in fair value during the current year, however, do not necessarily represent trends that will continue
nor do such amounts necessarily become realized, since the City intends to hold the investments to maturity.
Risk management. The City is self-insured up to $250,000 for liability claims. Excess coverage up to $10 million
is obtained through the Independent Cities Risk Management Authority (ICRMA), a joint powers authority
consisting of medium-sized California municipalities. The cost of the insurance depends on both the loss
experience of member cities and the loss experience of Hermosa Beach.
The City is self-insured up to $500,000 for worker's compensation claims, with statutory limit excess coverage
provided through a private insurance carrier.
Claims defense and settlement are coordinated by third party administrators for both liability and worker's
compensation, with oversight by the City's Risk Manager.
vii
Additional information on the City of Hermosa Beach's risk management activity can be found in Note 8 of the
notes to the financial statements.
Pension and other post employment benefits. The City of Hermosa Beach provides pension benefits to safety
and non -safety employees through the California Public Employees Retirement System (Ca1PERS) CalPERS
provides retirement and disability benefits, annual cost -of -living adjustments and death benefits to plan
members and beneficiaries. The City pays employee contributions as a negotiated benefit. City employer
contributions are actuarially determined on an annual basis.
The City of Hermosa Beach also provides postretirement heath care benefits for certain retirees. As of the end of
the current fiscal year, there were 17 retirees receiving these benefits, which are financed on a pay-as-you-go
basis. GAAP do not require governments to report a liability in the financial statements in connection with an
employer's obligation to provide these benefits.
The City provides employee coverage for health insurance upon retirement for Police Officer Association
members, effective 7/1/03. The City plans to fully fund these benefits through a benefit trust fund.
Additional information on the City of Hermosa Beach's pension arrangements and other post employment
benefits can be found in Note 10 in the Notes to the Financial Statements.
Awards and Acknowledgements
The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in
Financial Reporting to the City of Hermosa Beach for its comprehensive annual financial report (CAFR) for the
fiscal year ended June 30, 2004. This was the fourteenth consecutive year that the government has received this
prestigious award. In order to be awarded a Certificate of Achievement, the government published an easily
readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues
to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to
determine its eligibility for another certificate.
The preparation of this report would not have been possible without the efficient and dedicated services of the
entire staff of the Finance Department, with particular appreciation to Valerie Mohler, the Accounting
Supervisor. We would also like to express our appreciation to the City Manager and all of the departrnents,
including the City Clerk and City Treasurer, and to our auditors, Caporicci & Larson, for their assistance and
support during this transition year. Credit also must be given to the Mayor and the City Council for their
unfailing support for maintaining the highest standards of professionalism in the management of the City of
Hermosa Beach's finances.
Respectfully submitted,
Viki Copeland
Finance Director
viii
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Hermosa Beach,
California
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2003
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and fmancial reporting.
President
Executive Director
ix
CITY OF HERMOSA BEACH ORGANIZATIONAL CHART
ELECTORATE
CITY CLERK
CITY COUNCIL
CITY TREASURER
PLANNING
COMMISSION
PUBLIC
WORKS
COMMISSION
CIVIL SERVICE
BOARD
BOARD OF
APPEALS
1
PARKS &
RECREATION
ADVISORY
COMMISSION
CITY PROSECUTOR
CITY MANAGER
CITY ATTORNEY
1
COMMUNITY
RESOURCES
PUBLIC WORKS
Parks &
Recreation/
Facilities
Management
Cultural/
Recreational
Athletic
Programming
Special Events
Cable T.V.
Liaison
ENGINEERING
Plan Checks
Field Inspection
Code Enforcement
Encroachments
Capital
Improvement
TRANSPORTATION
Traffic Eng.
Traffic Signals
Traffic Signage
Speed Survey
MAINTENANCE
Landscaping
Irrigation
Streets
Sewer
Storm Drain
Building Maint.
Vehicle Maint.
POLICE
Enforcement
Investigation
Detention
Emergency
Dispatch
Reserves
Special
Investigations
Record Bureau
Crossing Guard
COMMUNITY
ERVICES
Parking
Enforcement
nimal Control
Meter
Maintenance
FIRE
1
Fire Suppression
Fire Prevention
Rescue
Public Education
Paramedics
Disaster
Preparedness
Reserves
Plan Checking
Ambulance
Transportation
x
PERSONNEU
RISK
MANAGEMENT
PERSONNEL
Recruitment
Training
Labor Relations
RISK MGT
Workers' Comp
Claims
Liability Claims
City Insurance
Secretarial
Support
FINANCE
1
Budget
Accounting
Payroll
Citation
Processing
Animal Licenses
Parking Permits
Business License
Bus Passes
COMMUNITY
DEVELOPMENT
BUILDING AND
SAFETY
Plan Checking
Field Inspection
Code
Enforcement
PLANNING
Current Planning
Advanced
Planning
Environmental
Assessment
Conditional Use
Permit (C.U.P.)
Enforcement
PRINCIPAL OFFICIALS OF THE CITY OF HERMOSA BEACH, CALIFORNIA
June 30, 2004
Elected and Administrative Officials
City Council
Art Yoon Mayor
J. R. Reviczky Mayor Pro Tempore
Sam Y. Edgerton Councilmember
Michael Keegan Councilmember
Pete Tucker Councilmember
Other Elected Officials
John Workman City Treasurer
Elaine Doerfling City Clerk
Stephen Burrell
Viki Copeland
Sol Blumenfeld
Michael Earl
Michael Lavin
Richard Morgan
Russell Tingley
Administrative Officials
xi
City Manager
Finance Director
Community. Development
Director
Personnel Director and
Risk Manager
Police Chief
Public Works Director
Fire Chief
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xii
FINANCIAL SECTION
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FINANCIAL SECTION
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Caporicci & Larson
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
To the Honorable Mayor and City Council
of the City of Hermosa Beach
Hermosa Beach, California
We have audited the accompanying financial statements of the governmental activities, the business -type
activities, each major fund, and the aggregate remaining fund information of the City of Hermosa Beach,
California (City), as of and for the year ended June 30, 2004, which collectively comprise the City's basic
financial statements as listed in the table of contents. These financial statements are the responsibility of the
City's management. Our responsibility is to express an opinion on these financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards in the United States and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall basic financial statement presentation. We believe that our audit provides a
reasonable basis for our opinions.
In our opinion, the basic financial statements referred to above present fairly, in all material respects, the
financial position of the governmental activities, the business -type activities, each major fund, and the aggregate
remaining fund information of the City as of June 30, 2004, and the respective changes in financial position and
cash flows, where applicable, thereof for the year then ended in conformity with generally accepted accounting
principles in the United States.
In accordance with Government Auditing Standards, we have also issued our report dated October 7, 2004 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 grants. That report is an integral part of an audit
performed in accordance with Government Auditing Standards and should be read in conjunction with this
report in considering the results of our audit.
The accompanying Required Supplementary Information, such as management's discussion and analysis,
budgetary comparison information and other information as listed in the table of contents, are not a required
part of the basic financial statements but are supplementary information required by the Governmental
Accounting Standards Board. We have applied certain limited procedures, which consisted principally of
inquires of management regarding the methods of measurement and presentation of the Required
Supplementary Information. However, we did not audit the information and express no opinion on it.
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 supplementary information is presented for
Toll Free Ph: (877) 862-2200 Toll Free Fax: (866) 436-0927
Oakland Orange County Sacramento San Diego
180 Grand Ave., Suite 1365 3184-D Airway Avenue 777 Campus Commons Rd., Suite 200 600 "B" Street, Suite 1900
Oakland, California 94612 Costa Mesa, California 92626 Sacramento, California 95825 San Diego, California 92101
To the Honorable Mayor and City Council
of the City of Hermosa Beach
Hermosa Beach, California
purpose of additional analysis and is not a required part of the basic financial statements. The supplementary
information has been subjected to the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a
whole. The introductory section and statistical tables have not been subjected to the auditing procedures
applied in the audit of the basic financial statements and, accordingly, we express no opinion on them.
dria'4f
Costa Mesa, California
October 7, 2004
2
Management's Discussion and Analysis
As management of the City of Hermosa Beach, we offer readers of the City Of Hermosa Beach's
financial statements this narrative overview and analysis of the financial activities of the City of
Hermosa Beach for the fiscal year ended June 30, 2004. We encourage readers to consider the
information presented here in conjunction with additional information that we have furnished in our
letter of transmittal, which can be found on pages i -iv of this report.
Financial Highlights
• The assets of the City of Hermosa Beach exceeded its liabilities at the close of the last fiscal year
by $79,260,000 (net assets). Of this amount, $16,046,000 (unrestricted net assets) may be used to
meet the government's ongoing obligations to citizens and creditors.
• The government's total net assets increased by $2,694,000. Most of this increase, 65%, or $1.76
million, is attributable to capital asset additions.
• As of June 30, 2004, the City Of Hermosa Beach's governmental funds reported combined
ending fund balances of $14,132,000, an increase of $1,476,000 in comparison with the prior year.
Approximately 12% of this amount is reserved to indicate that it is not available because it has
been committed for purchase orders or contracts for the prior period and will be reappropriated.
Another 3% is designated for specific uses, with the remainder available for a variety of
purposes.
• As of June 30, 2004, the unreserved fund balance for the General Fund was $0. Generally, funds
remaining unspent in the General Fund at year end are transferred equally to the Contingency
Fund, Insurance Fund, Equipment Replacement Fund and the Capital Improvement Fund until
financial goals are met. See "Financial Analysis of the Government's Funds" for further
discussion of these transfers for 2003-04. The balance in the Contingency Fund (or "rainy day
fund") is $2.6 million or 15% of General Fund appropriations and serves as the City's cushion
against economic uncertainties.
• The City Of Hermosa Beach currently has no debt.
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the City of Hermosa Beach's
basic financial statements. The basic financial statements are comprised of three components: 1)
government -wide financial statements, 2) fund financial statements, and 3) notes to the financial
statements. The report also contains other supplementary information in addition to the basic financial
statements themselves.
Government -wide financial statements. The government -wide financial statements are designed to
provide readers with a broad overview of the City of Hermosa Beach's finances, in a manner similar to
a private -sector business.
The statement of net assets presents information on all of the City of Hermosa Beach's assets and
liabilities, with the difference between the two reported as net assets. Over time, increases or decreases
in net assets may serve as a useful indicator of whether the financial position of the City of Hermosa
Beach is improving or deteriorating.
The statement of activities presents information showing how the government's net assets changed
during the most recent fiscal year. All changes in net assets are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and
3
expenses are reported in this statement for some items that will only result in cash flows in future
fiscal periods (e.g., uncollected taxes and earned, but unused, vacation leave).
Both of the government -wide financial statements distinguish functions of the City of Hermosa Beach
that are principally supported by taxes and intergovernmental revenues (governmental activities) from
other functions that are intended to recover all or a significant portion of their costs through user fees
and charges (business -type activities). The governmental activities of the City of Hermosa Beach include
legislative and legal, general government, public safety, public works, community development, and
culture and recreation. The business -type activities of the City of Hermosa Beach include parking and
transit operations.
The government -wide financial statements include not only the City of Hermosa Beach itself, but also
the Lighting and Landscaping District, the Lower Pier Avenue Assessment District and the Myrtle Avenue
and Loma Drive Utility Underground Districts. Although these entities are legally separate, they function
for all practical purposes as part of the City, and therefore have been included as an integral part of
the primary government.
The government -wide financial statements can be found on pages 17-19 of this report.
Fund financial statements. A fund is a grouping of related accounts that is used to maintain control
over resources that have been segregated for specific activities or objectives. The City of Hermosa
Beach, like other state and local governments, uses fund accounting to ensure and demonstrate
compliance with finance -related legal requirements. All of the funds can be divided into three
categories: governmental funds, proprietary funds, and fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the government -wide financial statements. However, unlike the
government -wide financial statements, governmental fund financial statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end
of the fiscal year. Such information may be useful in evaluating a government's near-term financing
requirements.
Because the focus of governmental funds is narrower than that of the government -wide financial
statements, it is useful to compare the information presented for governmental funds with similar
information presented for governmental activities in the government -wide financial statements. By
doing so, readers may better understand the long-term impact of the government's near-term
financing decisions. Both the governmental fund balance sheet and the governmental fund statement
of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this
comparison between governmental funds and governmental activities.
The City of Hermosa Beach maintains thirty-seven individual governmental funds. Information is
presented separately in the governmental fund balance sheet and in the governmental fund statement
of revenues, expenditures, and changes in fund balances for the funds below, which are considered to
be major funds. Major funds are governmental or enterprise funds whose revenues,
expenditures/expenses, assets or liabilities are at least 10% of corresponding totals for all
governmental or enterprise funds and at least 5% of the corresponding total for all governmental and
enterprise funds combined.
General Fund Capital Improvement Fund Tyco Fund Contingency Fund
Data from the other thirty-three governmental funds are combined into a single, aggregated
presentation. Individual fund data for each of these non -major governmental funds is provided in the
form of combining statements elsewhere in this report.
4
The City of Hermosa Beach adopts an annual appropriated budget for its general fund. A budgetary
comparison statement has been provided for the General Fund to demonstrate compliance with this
budget.
The basic governmental fund financial statements can be found on pages 25-29 of this report.
Proprietary funds. The City of Hermosa Beach maintains two different types of proprietary funds.
Enterprise funds are used to report the same functions presented as business -type activities in the
government -wide financial statements. The City of Hermosa Beach uses enterprise funds to account
for its parking and transit operations. Internal service funds are an accounting device used to
accumulate and allocate costs internally among the City of Hermosa Beach's various functions. The
City of Hermosa Beach uses internal service funds to account for its fleet of vehicles, information
systems and risk management/ insurance. Because these services predominantly benefit
governmental rather than business -type functions, they have been included within governmental
activities in the government -wide financial statements.
Proprietary funds provide the same type of information as the government -wide financial statements,
only in more detail. The proprietary fund financial statements provide separate information for the
Downtown Enhancement Fund and the Parking Fund, both of which are considered to be major funds
of the City of Hermosa Beach. Internal service funds are combined into a single, aggregated
presentation in the proprietary fund financial statements. Individual fund data for the internal
service funds is provided in the form of combining statements elsewhere in this report.
The basic proprietary fund financial statements can be found on pages 33-36 of this report.
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 Hermosa Beach's own
programs. The accounting used for fiduciary funds is much like that used for proprietary funds.
Funds of the Lower Pier Avenue, Myrtle Avenue and Loma Drive Undergrounding Districts and
Other Post Employment Benefits (OPEB) - Police are held as fiduciary funds by the City. Police OPEB
funds will be placed in a trust fund as soon as an outside administrator is hired by the City.
The basic fiduciary fund financial statements can be found on pages 39-40 of this report.
Notes to the financial statements. The notes provide additional information that is essential to a full
understanding of the data provided in the government -wide and fund financial statements. The notes
to the financial statements can be found on pages 43-73 of this report.
Other information. In addition to the basic financial statements and accompanying notes, this report
also presents certain required supplementary information concerning the City of Hermosa Beach's
progress in funding its obligation to provide pension benefits to its employees. Required
supplementary information can be found on pages 76-80 of this report.
The combining statements referred to earlier in connection with non -major governmental funds and
internal service funds are presented immediately following the required supplementary information
on pensions. Combining and individual fund statements and schedules can be found on pages 83-96
of this report.
Government -wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. As of June 30, 2004, assets exceeded liabilities by $79,260,000.
5
By far the largest portion of the City of Hermosa Beach's net assets, $60,996,000, (77%) reflects its
investment in capital assets (e.g., land, buildings, machinery, and equipment). The City of Hermosa
Beach uses these capital assets to provide services to citizens; consequently, these assets are not
available for future spending.
Current and Other Assets
Capital Assets
Total Assets
Long-term Liabilities
Outstanding
Other Liabilities
Total Liabilities
Net Assets
Invested in Capital Assets
Restricted
Unrestricted
Total Net Assets
Net Assets
June 30, 2004
(dollars in thousands)
Governmental Business -type
Activities Activities
2004 2003 2004
25,114 23,072
54,115 52,435
79,229 75,507
2,619 1,904
5,059 5,478
7,678 7,382
71,551 68,125
54,115 52,435
2,218 524
15,218 15,166
71,551 68,125
1,322
6,881
8,203
2003
2,218
6,797
9,015
494 574
494 574
7,709 8,441
6,881 6,797
-- 864
828 780
7,709 8,441
Total
2004 2003
26,436 25,290
60,996 59,232
87,432 84,522
2,619 1,904
5,553 6,052
8,172 7,956
79,260 76,566
60,996 59,232
2,218 1,388
16,046 15,946
79,260 76,566
A portion of the City of Hermosa Beach's net assets (3%) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets ($16,457,000) may
be used to meet the government's ongoing obligations to citizens and creditors.
At the end of the current fiscal year, the City of Hermosa Beach is able to report positive balances in all
three categories of net assets, both for the government as a whole, as well as for its separate governmental
and business -type activities. The same situation held true for the prior fiscal year.
The government's net assets increased by $2,694,000 during the current fiscal year. As mentioned
earlier, $1,764,000, or 65% of this increase is attributable to capital asset additions. The balance of the
growth results from revenue increases which are discussed in more detail in the following report
sections.
Governmental activities. Governmental activities increased the City of Hermosa Beach's net assets by
$2,707,000. If prior period adjustments of $719,000 for construction in progress are included, it would
bring the total to $3,426,000. Key elements of this increase are as follows:
6
Changes in Net Assets
June 30, 2004
(dollars in thousands)
Governmental Business -type Total
Activities Activities
2004 2003 2004 2003 2004 2003
Revenues:
Program Revenues:
Charges For Services 3,412 3,058 3,789 3,293 7,201 6,351
Operating Grants and Contributions 675 642 675 642
Capital Grants and Contributions 666 476 666 476
General Revenues:
Property Taxes 5,885 5,282 5,885 5,282
Other Taxes 8,155 7,220 531 498 8,686 7,718
Grants and Contributions Not Restricted to
Specific Programs 1,230 3,112 1,230 3,112
Other 793 840 87 106 880 946
Total Revenues 20,816 20,630 4,407 3,897 25,223 24,527
Expenses:
Legislative and legal 755 811 755 811
General Government 1,817 1,415 1,817 1,415
Public Safety 11,220 10,415 11,220 10,415
Community Development 1,116 968 1,116 968
Culture and Recreation 966 1,046 966 1,046
Public Works 4,592 4,137 4,592 4,137
Downtown Enhancement 940 909 940 909
Parking 1,632 1,525 1,632 1,525
Proposition A Transit 310 303 310 303
Proposition C Transit 48 103 48 103
Total Expenses 20,466 18,792 2,930 2,840 23,396 21,632
Increase (Decrease) in Net Assets Before
Transfers 350 1,838 1,477 1,057 1,827 2,895
Transfers 2,357 991 (2,357) (991) --- ---
Increase (Decrease) in Net Assets 2,707 2,829 (880) 66 1,827 2,895
Net Assets - 7/1/03 68,125 65,296 8,441 8,375 76,566 73,671
Prior Period Inventory Adjustment 719 148 867
Net Assets - 6/30/04 71,551 68,125 7,709 8,441 79,260 76,566
• Proposition A and C Transit Funds were changed from enterprise to special revenue fund types,
resulting in a transfer from Business -type Activities to Governmental Activities of $1,065,000.
• The 12% increase in Charges to Services results primarily from higher planning and building fees
related to the booming residential improvement market. Other taxes increased 13% as a result of
increased revenue from the utility user tax and transient occupancy tax (tax on hotel stays).
• Property taxes overall increased by $603,000 or more than 11%. The largest share of the increase,
10%, is related to secured property taxes, which reflect the substantial growth in property values
and turnover in ownership. Secured Taxes have risen 10% on average for the past five years.
• A $719,000 capital assets inventory adjustment was recorded for infrastructure projects in progress
prior to GASB 34 implementation (See Note 13).
7
Expenses and Program Revenues
Governmental Activities
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
;noO 1e.1aQa9
Ames aggnd
naQ XnantutuoJ
aanslavaan;lnD
olaoM ailgnd
D Expenses
■ Program Revenue
Revenue by Source - Governmental Activities
Miscellaneous -
Investment Earnings
Grants and
Contributions Not
Restricted to Specific
Programs
Other Taxes
Charges for Services
Operating Grants and
Contributions
Utility User Taxes
Sales Taxes
Capital Grants and
Contributions
Property Taxes
On the expense side, employee salary and benefit increases of approximately 3.5% affect all
governmental categories. General Government shows an increase due to the required recording of a
loss on infrastructure assets (sewers and streets) which were replaced when not fully depreciated
($483,000). Adjusting for this entry would show that category expenses actually decreased by $97,000
due to one time software purchases in the previous year. Capital improvement projects for
maintenance, which are included in the Public Works category, are largely responsible for higher
spending in 2004.
Business -type activities. Business -type activities decreased the net assets by $880,000, representing a 39
percent decrease in the government's net assets. If prior period adjustments of $148,000 for construction in
progress are included, it would bring the total to $732,000. The primary contributing factors to this
decrease were:
8
J
J
;noO 1e.1aQa9
Ames aggnd
naQ XnantutuoJ
aanslavaan;lnD
olaoM ailgnd
D Expenses
■ Program Revenue
Revenue by Source - Governmental Activities
Miscellaneous -
Investment Earnings
Grants and
Contributions Not
Restricted to Specific
Programs
Other Taxes
Charges for Services
Operating Grants and
Contributions
Utility User Taxes
Sales Taxes
Capital Grants and
Contributions
Property Taxes
On the expense side, employee salary and benefit increases of approximately 3.5% affect all
governmental categories. General Government shows an increase due to the required recording of a
loss on infrastructure assets (sewers and streets) which were replaced when not fully depreciated
($483,000). Adjusting for this entry would show that category expenses actually decreased by $97,000
due to one time software purchases in the previous year. Capital improvement projects for
maintenance, which are included in the Public Works category, are largely responsible for higher
spending in 2004.
Business -type activities. Business -type activities decreased the net assets by $880,000, representing a 39
percent decrease in the government's net assets. If prior period adjustments of $148,000 for construction in
progress are included, it would bring the total to $732,000. The primary contributing factors to this
decrease were:
8
• Charges for Services increased 15% due to increased rates for parking fines, parking meters and
parking lots. (Rates were increased in June of 2003, with implementation later in the year.)
• Proposition A and C Transit Funds were reclassified to special revenue fund types with the assets of
$1,065,000 transferred to governmental funds.
• A $148,000 capital assets inventory adjustment was recorded for infrastructure assets that were
recorded in the governmental activities during the appraisal process (See Note 13).
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
Expenses and Program Revenues
Business -type Activities
0
e
O Expenses
• Program Revenue
Revenue by Source - Business -type Activities
Other Taxes
Investment Earnings
Parking Lot Revenue
Other Charges for
Miscellaneous Services
Parking Meters
Fines and Forfeitures
Financial Analysis of the Government's Funds
As noted earlier, the City of Hermosa Beach uses fund accounting to ensure and demonstrate compliance
with finance -related legal requirements.
9
Governmental funds. The focus of the City of Hermosa Beach's governmental funds is to provide information
on near-term inflows, outflows, and balances of spending resources. Such information is useful in assessing
the City of Hermosa Beach's financing requirements. In particular, unreserved fund balance may serve as a
useful measure of a government's net resources available for spending at the end of the fiscal year.
As of the end of the current fiscal year, the City of Hermosa Beach's governmental funds reported combined
ending fund balances of $14,132,000, an increase of $1,476,000, in comparison with the prior year.
Approximately 85% of this total amount ($12,012,000) constitutes unreserved fund balance, which is
available for spending at the government's discretion. The remainder of fund balance is reserved to indicate
that it is not available for new spending because it has already been committed to 1) liquidate contracts and
purchase orders of the prior period ($1,398,546), 2) fund transportation development act projects ($3,660) and
3) to account for advances to three undergrounding district funds ($288,000).
Four funds qualify as major funds under the GASB 34 reporting criteria: the General Fund, Tyco Fund,
Contingency Fund and Capital Improvement Fund.
The General Fund is the chief operating fund of the City of Hermosa Beach. At the end of the current
fiscal year, the total fund balance was $634,000, with $231,000 reserved for re -appropriations and
$403,000 unreserved but designated for certain purposes. Financial policies require that unspent funds
in the General Fund transfer to meet specific fund targets at year end. As those targets or goals are met,
transfers may be redirected where funds are needed. For 2003-04, the City Council redirected that
funds left unspent in the General Fund at year end transfer equally to the Compensated Absences
Fund (which was below goal), the Retirement Stabilization Fund, the Capital Improvement Fund and
the Insurance Fund. The transfer to each fund was $759,317. Key reasons funds were available at year
end are as follows:
• Property taxes were higher by 10%. As mentioned earlier, secured property taxes averaged
growth of 10% per year for the last five years.
• Utility user tax revenue grew by 24% due to increased revenue from telecommunication
companies. The windfall was created by a change in the application of the tax for those
providers.
• Transient occupancy tax revenue increased 23% with the opening of a new hotel and the slow
return to higher occupancy rates after 9/11.
• Parking fees and fines were increased, which translated to a higher transfer at year end to the
General Fund.
• Expenditures were 7% less than budgeted, namely due to the number of vacant positions which
equates to salary and benefit savings.
The Tyco Fund holds funds from an easement granted for a transpacific, submarine fiber optic cable
system originating in Japan with a landing in Hermosa Beach. The life of the project is approximately
25 years.
The Contingency Fund serves as the City's "rainy day fund" or reserve for economic uncertainties. A
goal amount of 15% of General Fund appropriations has been established. The balance of $2.6 million
represents 15% of appropriations.
General Fund Budgetary Highlights
Differences between the original budget and the final amended budget were negligible for estimated
revenue and appropriations. Estimated revenue increased by 3%. Actual revenue was higher than
budgeted by 9% due to aforementioned revenue increases. Transfers In increased by 5% due the
increase in parking fees and fines mentioned under business -type activities. Any unrestricted retained
earnings in the Parking Fund at year end transfer automatically to the General Fund.
10
Differences in appropriations other than Transfers Out equaled $115,123 or about 1%. They are briefly
summarized as follows:
• $31,725 in increases for legal costs in the Legislative/Legal category
• ($409,935) General Government funding from Prospective Expenditures for employee
memoranda of understanding (MOU) increases (funds transfer from prospective expenditures to
the department)
• $134,176 in Public Safety increases for Other Post Employment Benefits (OPEB) benefits
allocated to the Police Department and MOU increases for the Fire Department
• $68,192 for an upgrade of the Community Development software system
• $26,380 for MOU increases; $25,000 in donations appropriated for Sunset Concerts; $51,767 in
donations appropriated for recreation programs and community events, all of which increased
the Culture/ Leisure category
• $13,543 in MOU increases in the Public Works category
• $174,275 in increases for capital outlay for computer equipment related to the dispatch
changeover from the City of El Segundo to the South Bay Regional Communication Center and
Municipal Pier renovation
Transfers out increased due to the year end transfer out to several funds according to adopted financial
policies.
Proprietary funds. The City of Hermosa Beach's proprietary funds provide the same type of
information found in the government -wide financial statements, but in more detail. The Downtown
Enhancement Fund and Parking Fund are the major funds according to GASB 34 criteria.
Unrestricted net assets of the Downtown Enhancement operation at the end of the year were $812,000,
and $16,000 in the Parking Fund, which is for re -appropriations. Other factors concerning the finances
of these two funds have already been addressed in the discussion of the City of Hermosa Beach's
business -type activities.
Capital Asset and Debt Administration
Capital assets. The City of Hermosa Beach's investment in capital assets for its governmental and
business type activities as of June 30, 2004, amounts to $60,996,000 (net of accumulated depreciation).
This investment in capital assets includes land, buildings and structures, improvements, machinery and
equipment, park facilities, roads, highways, and monuments. The total increase in the City of Hermosa
Beach's investment in capital assets for the current fiscal year was 4 percent (a 3 percent increase for
governmental activities and a 1 percent increase for business -type activities).
Major capital asset events during the current fiscal year included the following:
Governmental Activities
• A variety of street and sewer projects (widening and expansion projects for existing streets)
which are ongoing; construction in progress as of the end of the current fiscal year had reached
$1,750,000.
• Community Center improvements began; construction in progress as of the end of the fiscal year
had reached $339,000.
• Municipal Pier Phase III improvements continued; construction in progress as of the end of the
current fiscal year had reached $460,000
Business type Activities
• On street parking improvements continued; construction in progress as of the end of the fiscal
year had reached $36,000.
11
City of Hermosa Beach's Capital Assets
(net of depreciation)
(dollars in thousands)
Governmental Business -type
Activities Activities Total
2004 2003 2004 2003 2004 2003
Land $18,052 $18,052 $ 1,573 $ 1,573 $19,625 $19,625
Buildings and structures 2,062 2,536 5,068 5,182 7,130 7,718
Improvements other than 4,637 2,956 4,637 2,956
buildings
Machinery and equipment 1,266 1,220 15 17 1,281 1,237
Vehicles 1,467 1,651 1,467 1,651
Infrastructure 24,082 22,497 189 24,271 22,497
Construction in progress 2,549 3,523 36 25 2,585 3,548
Total $54,115 $52,435 $6,881 $6,797 $60,996 $59,232
Additional information on the City of Hermosa Beach's capital assets can be found in Note 6 on pages
61-63 of this report.
Economic Factors and Next Year's Budgets and Rates
• Property tax growth has been particularly strong for the past four years, with an average growth of
10% per year.
• Up until 2001-02, sales tax growth had averaged 12% for the past five years. Loss of auto
dealerships caused a decline in the ensuing years. The BMW dealership will move at least a portion
of its dealership in 2004-05.
• Offsetting the sales tax drop, transient occupancy taxes have almost doubled in the past five years
due to added hotels and a second phase to an existing hotel. Hotel occupancies are also rising back
to the pre 9/11 level.
• The State's double digit deficit is of concern to all local governments since the State has a history of
"raiding" or "borrowing" local funds to balance their budget. For 2004-05 and 2005-06, $1.3 billion
was taken from local government as part of a negotiated arrangement with the Governor. Passage
of Proposition 1A in November 2004 is intended to prohibit further state grabs of local funds.
• Also looming are increased retirement rates from Ca1PERS, the State retirement fund with which
many cities contract for pension benefits. Investment losses have caused rates to skyrocket, with the
trend continuing for at least a couple of years. Investment returns have risen to 16.9% for 2004
which, if sustained, would stabilize rates. In the meantime, the City set up a Retirement
Stabilization Fund to assist in funding expenditures for budget purposes.
All of these factors were considered in preparing the City of Hermosa Beach's budget for the 2004 fiscal
year. A discussion of the factors affecting the City's financial condition may be found in the transmittal
letter at the front of this report.
Requests for Information
This financial report is designed to provide a general overview of the City of Hermosa Beach's finances
for all those with an interest in the government's finances. Questions concerning any of the information
provided in this report or requests for additional financial information should be addressed to the
Office of the Finance Director, 1315 Valley Drive, Hermosa Beach, CA 90254.
12
BASIC FINANCIAL STATEMENTS
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GOVERNMENT -WIDE FINANCIAL STATEMENTS
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16
City of Hermosa Beach
Statement of Net Assets
June 30, 2004
Primary Government
Governmental Business -Type
Activities Activities
ASSETS
Total
Current assets:
Cash and investments $ 22,370,841 $ 1,133,097 $ 23,503,938
Reimbursable grants receivable 436,159 436,159
Interest receivable on investments 82,621 6,348 88,969
Other accounts receivable 1,456,729 25,753 1,482,482
Notes receivable, due within a year 5,692 5,692
Property taxes receivable 641,983 641,983
Deposits 80,000 80,000
Other assets 46,113 688 46,801
Total current assets 25,114,446 1,171,578 26,286,024
Noncurrent assets:
Notes receivable, due in more than a year 150,451 150,451
Capital assets:
Non -depreciable 20,601,465 1,609,377 22,210,842
Depreciable, net 33,513,741 5,271,548 38,785,289
Total capital assets 54,115,206 6,880,925 60,996,131
Total noncurrent assets
Total assets
LIABILITIES
54,115,206
79,229,652
7,031,376 61,146,582
8,202,954 87,432,606
Current liabilities:
Workers' compensation claims payable - due within one year 453,000 453,000
General liability claims payable - due within one year 184,000 184,000
Accounts payable and accrued liabilities 1,012,364 301,890 1,314,254
Accrued wages and compensated absences 1,434,523 188,908 1,623,431
Refundable deposits 467,528 1,450 468,978
Unearned revenue 693,978 2,000 695,978
Compensated absences, due within one year 780,433 780,433
Other liabilities 33,457 33,457
Total current liabilities 5,059,283 494,248 5,553,531
Noncurrent liabilities:
Workers' compensation claims payable 2,110,966 2,110,966
General liability claims payable 186,675 186,675
Compensated absences 321,660 321,660
Total noncurrent liabilities 2,619,301 2,619,301
Total liabilities
7,678,584
494,248 8,172,832
NET ASSETS
Invested in capital assets 54,115,206 6,880,925 60,996,131
Restricted for:
Capital projects 174,719 174,719
Specific projects 2,043,104 2,043,104
Total restricted assets 2,217,823 2,217,823
Unrestricted net assets 15,218,039 827,781 16,045,820
Total net assets $ 71,551,068 $ 7,708,706 $ 79,259,774
See accompanying Notes to Basic Financial Statements.
17
City of Hermosa Beach
Statement of Activities and Changes in Net Assets
For the year ended June 30, 2004
Program Revenues I
Charges Operating Capital Total
for Grants and Grants and Program '
Functions/Programs Expenses Services Contributions Contributions Revenues
Primary government:
Governmental activities: I Legislative and legal $ 755,591
General government 1,816,801 $ 84,745 $ 22,662 $ 107,407
Public safety 11,219,996 914,655 249,125 $ 86,377 1,250,157
I
Community development 1,115,600 929,695 11,602 941,297
Culture and recreation 965,440 793,748 793,748
Public works 4,592,460 689,457 402,664 567,827 1,659,948
I
Total governmental activities 20,465,889 3,412,300 674,451 665,806 4,752,557
Business -type activities:
Downtown Enhancement 939,576 879,495 879,495
I
Parking 1,632,093 2,895,143 2,895,143
Proposition "A" Transit 310,113 14,384 14,384
Proposition "C" Transit 48,119 -
I
Total business -type activities 2,929,901 3,789,022 3,789,022
Total primary government $ 23,395,790 $ 7,201,322 $ 674,451 $ 665,806 $ 8,541,579
General Revenues:
Taxes:
Property taxes
Sale taxes
Other
Total taxes
Grants and contributions not restricted to specific programs
Investment earnings
Miscellaneous
Transfers
Total general revenues and transfers
Change in net assets
Net assets - beginning of year, as restated (Note 13)
Net assets - end of year
See accompanying Notes to Basic Financial Statements. ,
18
Net (Expense) Revenue and
Changes in Net Assets
I Governmental Business -type
Activities Activities Total
I$ (755,591) $ (755,591)
(1,709,394) (1,709,394)
I (9,969,839)
(174,303) (9,969,839)
(174,303)
(171,692) (171,692)
I (2,932,512) (2,932,512)
(15,713,332) $ (15,713,332)
I (60,081) (60,081)
1,263,050 1,263,050
(295,729) (295,729)
I (48,119) (48,119)
859,121 859,121
(15,713,332) 859,121 (14,854,211)
I
5,885,480 5,885,480
2,596,135 2,596,135
' 5,559,070 530,773 6,089,843
14,040,685 530,773 14,571,458
1,229,911 1,229,911
' 177,757 73,519 251,276
615,309 12,966 628,275
2,356,585 (2,356,585)
' 18,420,247 (1,739,327)
(880,206) 16,680,920
2,706,915 1,826,709
68,844,153 8,588,912 77,433,065
$ 71,551,068 $ 7,708,706 $ 79,259,774
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20
FUND FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
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GOVERNMENTAL FUND FINANCIAL STATEMENTS
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24
GOVERNMENTAL FUND FINANCIAL STATEMENTS
Governmental Funds of the City are outlined below:
The General Fund - This fund accounts for all revenues and expenditures used to finance the traditional services
associated with a municipal government which are not accounted for in the other funds. In Hermosa Beach, these
services include general government, safety, community development, culture and recreation and public works.
Tyco Fund - This fund is used to account for funds received from an easement granted for construction of a
transpacific, submarine fiber optic cable system originating in Japan with a landing in Hermosa Beach. The project
will provide additional capacity.
Contingency Special Revenue Fund - "Rainy day" funds set aside for unforeseen emergencies, unexpected
economic events, etc. City Council adopted goal is 15% of appropriations.
Capital Improvement Special Revenue Fund - Funds set aside for Capital Improvement Projects.
Other Governmental Funds - Other Governmental Funds is the aggregate of all the non -major governmental
funds.
25
City of Hermosa Beach
Balance Sheet
Governmental Funds
June 30, 2004
Major Funds
General
ASSETS
1
1
1
Capital
1
Tyco Contingency Improvement Other
Special Special Special Governmental '
Revenue Revenue Revenue Funds Total
Cash and investments (Note 2) $ 1,393,499 $ 1,899,511 $ 2,598,578 $ 2,585,675 $ 6,441,587 $ 14,918,850
Reimbursable grants receivable 436,159 436,159
Interest receivable on investments 23,753 9,956 13,626 9,487 25,799 82,621
Other accounts receivable 1,377,454 79,275 1,456,729
I
Property taxes receivable 632,890 9,093 641,983
Due from other funds (Note 5) 44,000 356,595 400,595
Advances to other funds 288,000 288,000
I
Other assets 42,346 902 43,248
Total assets and other debits $ 3,469,942 $ 1,909,467 $ 2,612,204 $ 2,927,162 $ 7,349,410 $ 18,268,185
LIABILITIES AND
FUND BALANCES
1
Liabilities: I Accounts payable and accrued liabilities $ 353,641 $ 208,289 $ 317,285 $ 879,215
Wages and compensated absences payable 1,306,897 $ 6,430 59,729 1,373,056
Due to other funds (Note 5) 400,595 400,595
I
Refundable deposits 467,528 467,528
Deferred revenue 684,885 9,093 693,978
Advances from other funds 288,000 288,000 I Other liabilities 23,009 10,448 33,457
Total liabilities 2,835,960 6,430 $ - 208,289 1,085,150 4,135,829
Fund Balances:
I
Reserved for:
Re -appropriations 230,527 113,940 245,784 808,295 1,398,546
Bike paths 668 668
Strand walkways 2,992 2,992
Advances to other funds 288,000 288,000
Unreserved, designated for: I Trash containers 3,900 3,900
Teen Program Donation/Mervyn's 10,000 10,000
Affordable housing 111,831 111,831 I Pier phase III 277,724 277,724
Justice and treasury department 25,842 25,842
Unreserved, undesignated: I Special revenue 1,789,097 2,612,204 2,185,089 5,426,463 12,012,853
Total fund balances 633,982 1,903,037 2,612,204 2,718,873 6,264,260 14,132,356
Total liabilities and fund balances $ 3,469,942 $ 1,909,467 $ 2,612,204 $ 2,927,162 $ 7,349,410 $ 18,268,185
See accompanying Notes to Basic Financial Statements.
26
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City of Hermosa Beach
Reconciliation of the Governmental Funds Balance Sheet
to the Government -Wide Statement of Net Assets
June 30, 2004
Total Fund Balances - Total Governmental Funds $ 14,132,356
Amounts reported for governmental activities in the Statement of Net Assets were
reported differently because:
Capital assets used in governmental activities were not current financial resources.
Therefore, they were not reported in the Governmental Funds Balance Sheet. Except
for the Internal Service Funds reported below, the capital assets were adjusted as
follow:
Governmental Internal Service
Funds Funds
Non -depreciable $ 20,225,771 $ 375,694 20,601,465
Depreciable, net 31,693,043 1,820,698 33,513,741
Total capital assets
Internal Service Funds were used by management to charge the costs of certain
activities, such as insurance and equipment replacement to individual funds. The
assets and liabilities of the Internal Service Funds were included in governmental
activities in the Government -Wide Statement of Net Assets.
Insurance Fund
$ 51,918,814 $ 2,196,392 54,115,206
4,733,356
Equipment Replacement Fund 2,606,884
Total internal service funds 7,340,240
Long-term liabilities were not due and payable in the current period. Therefore, they
were not reported in the Governmental Funds Balance Sheet.
Long-term liabilities - due within one year
Long-term liabilities - due in more than one year
Compensated absences payable
Total long-term liabilities
Governmental Internal Service
Funds Funds
$ (637,000) (637,000)
(2,297,641) (2,297,641)
$ (1,102,093) (1,102,093)
$ (1,102,093) $ (2,934,641) (4,036,734)
Net Assets of Governmental Activities $ 71,551,068
See accompanying Notes to Basic Financial Statements.
27
City of Hermosa Beach
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the year ended June 30, 2004
Major Funds I Capital
Tyco Contingency Improvement Other
Special Special Special Govemmental 111General Revenue Revenue Revenue Funds Total
REVENUES:
Property taxes $ 5,885,480 $ 453,643 $ 6,339,123
I
Other taxes 8,155,205 107,000 8,262,205
Licenses and permits 664,169 664,169
Fines and forfeitures 365,811 5,991 371,802 1
Use of money and property 315,605 $ 275,000 590,605
Intergovernmental 959,110 1,208,967 2,168,077
Charges for services 1,321,294 93,371 1,414,665
Miscellaneous 532,178 261,455 793,633
Interest earned on investments 28,816 25,470 $ 38,494 $ 28,786 56,191 177,757
Total revenues 18,227,668 300,470 38,494 28,786 2,186,618 20,782,036 '
EXPENDITURES: ,
Current:
Legislative and legal 752,541 752,541
General government 1,126,004 133,271 1,259,275 I Public safety 10,334,723 220,446 10,555,169
Community development 1,077,453 11,603 1,089,056
Culture and recreation 932,447 932,447 I Public works 2,073,653 1,115,708 3,189,361
Capital outlay 181,769 30,614 758,118 2,148,764 3,119,265
Total expenditures 16,478,590 30,614 - 758,118 3,629,792 20,897,114
1
REVENUES OVER
(UNDER) EXPENDITURES 1,749,078 269,856 38,494 (729,332) (1,443,174) (115,078)
I
OTHER FINANCING SOURCES (USES):
Transfers in 2,138,850 1,034,317 3,789,674 6,962,841
Transfers out (3,946,762) (275,000) (368,470) (781,323) (5,371,555)
Total other financing sources (uses) (1,807,912) (275,000) (368,470) 1,034,317 3,008,351 1,591,286
II
Net change in fund balances (58,834) (5,144) (329,976) 304,985 1,565,177 1,476,208
FUND BALANCES:
I
Beginning of year, as restated (Note 13) 692,816 1,908,181 2,942,180 2,413,888 4,699,083 12,656,148
End of year $ 633,982 $ 1,903,037 $ 2,612,204 $ 2,718,873 $ 6,264,260 $ 14,132,356
1
See accompanying Notes to Basic Financial Statements.
I
28
City of Hermosa Beach
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes
in Fund Balances to the Government -Wide Statement of Activities and Changes in Net Assets
For the year ended June 30, 2004
Net Change in Fund Balances - Total Governmental Funds $ 1,476,208
Governmental Activities in the Statement of Activities were reported differently because:
Governmental Funds report capital outlay as expenditures. However, in the Government -Wide Statement of
Activities and Changes in Net Assets, the cost of those assets is allocated over their estimated useful lives as
depreciation expense. This is the amount of capital assets recorded in the current period.
Depreciation expense on capital assets is reported in the Government -Wide Statement of Activities and
Changes in Net Assets, but they do not require the use of current financial resources. Therefore, depreciation
expense is not reported as expenditures in governmental funds. Except for the Internal Service Funds
amounts of $435,105 which are reported below.
3,119,265
(1,443,988)
The net effect of sale involving various capital assets is to decrease net assets. (483,104)
Long-term compensated absences were reported in the Government -Wide Statement of Activities and
Changes in Net Assets, but they did not require the use of current financial resources. Therefore, long-term
compensated absences were not reported as expenditures in governmental funds.
Internal Service Funds are used by management to charge the costs of certain activities, such as insurance
and equipment replacement, to individual funds. The net revenue of the Internal Service Funds is reported
with Governmental Activities.
(205,551)
244,085
Change in Net Assets of Governmental Activities $ 2,706,915
See accompanying Notes to Basic Financial Statements.
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PROPRIETARY FUND FINANCIAL STATEMENTS
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PROPRIETARY FUND FINANCIAL STATEMENTS
Downtown Enhancement Fund - All parking lot revenues are deposited to the Downtown Enhancement Fund in
order to promote business in general and improve the appearance of the downtown area.
Parking Fund - All meter, fine and parking permit revenues are deposited to the Parking Fund in order to finance
parking operations and capital improvements.
Other Enterprise Funds - Other Enterprise Funds is the aggregate of all the non -major proprietary funds.
33
City of Hermosa Beach
Statement of Net Assets 1
Proprietary Funds
For the Year Ended June 30, 2004
Governmental
Major Enterprise Funds Other Total Activities
Downtown Enterprise Enterprise Intemal
Enhancement Parking Funds Funds Service Funds 1
ASSETS
Current assets: I Cash and investments $ 892,975 $ 240,122 $ 1,133,097 $ 7,451,991
Interest receivable on investments 4,662 1,686 6,348
Other accounts receivable 10,228 15,525 25,753
Notes receivable, due within a year 5,692 5,692
Deposits 80,000
Other assets 560 128 688 2,865 I
Total current assets 914,117 257,461 $ - 1,171,578 7,534,856
Noncurrent assets:
Notes receivable, due in more than a year 150,451 150,451
Property and equipment, net of
accumulated depreciation 6,503,098 377,827 6,880,925 2,196,392
Total noncurrent assets 6,653,549 377,827 7,031,376 2,196,392
Total assets 7,567,666 635,288 8,202,954 9,731,248
1
Current liabilities:
Current portion of long-term liabilities 637,000
Accounts payable 243,160 58,730 301,890 133,149
Accrued wages and compensated absences 7,919 180,989 188,908 61,467 I
Refundable deposit 1,450 1,450
Deferred revenue 2,000 2,000
LIABILITIES
Total current liabilities 253,079 241,169 494,248 831,616 1
Long-term liabilities:
Workers' compensation claims payable - 2,563,966
General liability claims payable - 370,675 I
Less current portion above - (637,000)
Total long-term liabilities - - 2,297,641 I
253,079 241,169
Total liabilities
NET ASSETS
Investment in capital assets
Unrestricted
Total net assets
See accompanying Notes to Basic Financial Statements
494,248 3,129,257
6,503,098 377,827 6,880,925 2,196,392
811,489 16,292 827,781 4,405,599
$ 7,314,587 $ 394,119 $ $ 7,708,706 $ 6,601,991
34 1
City of Hermosa Beach
Statement of Revenues, Expenses and Changes in Net Assets
Proprietary Funds
For the year ended June 30, 2004
Governmental
Major Enterprise Funds Other Total Activities
Downtown Enterprise Enterprise Internal
Enhancement Parking Funds Funds Service Funds
OPERATING REVENUES:
Other taxes $ 530,773 $ 530,773
Fines and forfeitures $ 1,244,636 1,244,636
Use of money and property $ 46,899 46,899
Charges for services 879,495 1,650,507 14,384 2,544,386 $ 2,578,321
Miscellaneous 9,424 3,542 12,966 34,183
Total operating revenues
OPERATING EXPENSES:
Salaries and wages
Contractor services
Supplies
Claims expense
Depreciation
Total operating expenses
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES):
Interest earned on investments
Loss on sale of assets
Total nonoperating revenues (expenses)
INCOME (LOSS) BEFORE TRANSFERS
TRANSFERS:
935,818 2,898,685 545,157 4,379,660 2,612,504
42,929 1,177,780 33,442 1,254,151 359,269
707,356 68,302 324,780 1,100,438 510,080
75,473 372,992 10 448,475 185,494
- 1,636,619
113,818 13,019 126,837 435,104
939,576 1,632,093 358,232 2,929,901 3,126,566
(3,758) 1,266,592 186,925 1,449,759 (514,062)
10,311 2,671 13,638 26,620
(7,152)
10,311 2,671 13,638 26,620 (7,152)
6,553 1,269,263 200,563 1,476,379 (521,214)
Transfers in 1,285 21,570 22,855 829,200
Transfers out (3,734) (1,311,119) (1,064,587) (2,379,440) (63,901)
Total operating transfers (2,449) (1,289,549) (1,064,587) (2,356,585) 765,299
Changes in net assets 4,104 (20,286) (864,024) (880,206) 244,085
NET ASSETS:
Beginning of the year, as restated
End of the year
See accompanying Notes to Basic Financial Statements.
7,310,483 414,405 864,024 8,588,912 6,357,906
7,314,587 $ 394,119 $ - $ 7,708,706 $ 6,601,991
35
City of Hermosa Beach
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2004
Governmental
Major Enterprise Funds Other Total Activities I
Downtown Enterprise Enterprise Internal
Enhancement Parking Funds Funds Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES: '
Cash received from customers $ 922,089 $ 2,897,476 $ 599,922 $ 4,419,487 $ 14,341
Cash received for services from other funds 2,578,321
Cash payments to suppliers for goods and services (776,171) (483,459) (387,141) (1,646,771) (652,662)
Cash payments to employees for services
Insurance premiums and settlements (41,987) (1,161,583) (35,061) (1,238,631) (359,679) I
(1,044,611)
Other operating revenues 9,424 3,542 12,966 34,183
Net cash provided by (used for) operating activities 113,355 1,255,976 177,720 1,547,051 569,893 I
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in 1,285 21,570 22,855 829,200
Transfers out (3,734) (1,311,119) (1,064,587) (2,379,440) (63,901)
Net cash provided by (used for) noncapital financing activities (2,449) (1,289,549) (1,064,587) (2,356,585) 765,299
CASH FLOWS CAPITAL AND RELATED FINANCING ACTIVITIES:
Loss on sale of capital assets (7,152)
Acquisition of capital assets (26,311) (26,583) (52,894) (204,290)
Net cash provided by (used for) capital and related financing activities (26,311) (26,583) - (52,894) (211,442)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest earned on investments 10,311 2,671 13,638 26,620 I Net cash provided (used) by investing activities 10,311 2,671 13,638 26,620 -
Net increase (decrease) in cash and cash equivalents 94,906 (57,485) (873,229) (835,808) 1,123,750
CASH AND CASH EQUIVALENTS: I
Beginning of year 798,069 297,607 873,229 1,968,905 6,328,241
Ending of year $ 892,975 $ 240,122 $ - $ 1,133,097 $ 7,451,991
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating income (loss) $ (3,758) $ 1,266,592 $ 186,925 $ 1,449,759 $ (514,062) I
Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities:
Depreciation 113,818 13,019 126,837 435,104 ,
Changes in operating assets and liabilities:
Interest receivable on investments 207 931 5,328 6,466
Other accounts receivable (791) 690 49,437 49,336 6,750
Notes receivable (5,161) (5,161)
I
Other assets (560) (128) (688) 7,591
Worker's compensation claims payable - 794,835
General liability claims payable (202,827) I Accounts payable 6,658 (42,165) (62,351) (97,858) 42,912
Accrued wages and compensated absences 942 16,197 (1,619) 15,520 (410)
Refundable deposits 840 840
Deferred revenue 2,000 2,000
Total adjustments 117,113 (10,616) (9,205) 97,292 1,083,955
Net cash provided (used) by operating activities $ 113,355 $ 1,255,976 $ 177,720 $ 1,547,051 $ 569,893
See accompanying Notes to Basic Financial Statements. I
FIDUCIARY FUND FINANCIAL STATEMENTS
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FIDUCIARY FUND FINANCIAL STATEMENTS
Agency Fund are used to account for assets held by the City in the capacity of agent for individuals. Agency Fund
spending is controlled primarily through legal agreements and applicable State and Federal laws.
39
City of Hermosa Beach
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2004
Agency
Funds
ASSETS
Cash and investments $ 352,411
Interest receivable 1,208
Other accounts receivable 10,051
Total assets
LIABILITIES
$ 363,670
Assessment:
Installment account $ 242,400
OPEB contribution from City 121,270
Total liabilities
See accompanying Notes to Basic Financial Statements.
40
$ 363,670
City of Hermosa Beach
Index to Notes to Basic Financial Statements
For the year ended June 30, 2004
Page
Note 1- Summary of Significant Accounting Policies
A. Financial Reporting Entity 43
B. Basis of Accounting and Measurement Focus 44
C. Use of Restricted/Unrestricted Net Assets 47
D. Cash and Investments 47
E. Property Tax Receivable 48
F. Interfund Transactions 48
G. Capital Assets 48
H. Claims Payable 49
I. Compensated Absences Payable 49
J. Unearned Revenue 50
K. Long -Term Debt 50
L. Net Assets 50
M. Fund Balances - Reservations and Designations 50
N. Use of Estimates 51
Note 2 - Cash and Investments 51
Note 3 -Receivables 55
Note 4 - Lease Revenues 57
Note 5 - Interfund Transactions 58
Note 6 - Capital Assets 61
Note 7 - Long -Term Debt 64
Note 8 - Other Required Fund Disclosures 66
Note 9 - Risk Management 66
Note 10 -Retirement Plans 68
Note 11- Commitments and Contingencies 72
Note 12 - Subsequent Events 72
Note 13 - Prior Period Adjustments 73
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City of Hermosa Beach
Notes to Basic Financial Statements
For the year ended June 30, 2004
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The basic financial statements of the City of Hermosa Beach, California, (City) have been prepared in
conformity with generally accepted accounting principles (GAAP) as applied to governmental agencies.
The Governmental Accounting Standards Boards (GASB) is the accepted standard setting body for
establishing governmental accounting and financial reporting principles. The more significant of the City's
accounting policies are described below.
A. Financial Reporting Entity
The City of Hermosa Beach was incorporated on January 14, 1907, under the general laws of the State of
California. The City operates under a Council -Manager form of government and provides the following
services: public safety (police, crossing guards and fire), maintenance and construction of public
improvements, cultural, recreation, community development (planning and zoning), and general
administrative services.
As required by GAAP, the basic financial statements present the City and its component units, entities for
which the City is considered to be financially accountable. Blended component units, although legally
separate entities, are in substance, part of the City's operations and data from these units are combined with
data of the City. Discretely presented component units, on the other hand, are reported in a separate
column in the combined basic financial statements to emphasize their legal separateness from the City.
Each blended component unit has a June 30 year-end. The City had no discretely presented component
units. The following entities are reported as blended component units because the governing board is
substantively the same as the primary government:
Hermosa Beach Street Lighting and Landscaping District
This fund is used to account for the Lighting and Landscaping Assessment District, which was created
for street lighting/median maintenance purposes pursuant to Street and Highway Code 22500-22679.
Lower Pier Avenue Assessment District Improvement Fund
This fund is used to account for the funds of the assessment district, which was created pursuant to
Street and Highway Code 10000 for improvements in the downtown Pier Plaza.
Myrtle Underground Utility District Improvement Fund
This fund is used to account for the funds of the electric underground assessment district, which was
created pursuant to Street and Highway Code 10000.
Loma Underground Utility District Improvement Fund
This fund is used to account for the funds of the electric underground assessment district, which was
created pursuant to Street and Highway Code 10000.
43
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus '
The accounts of the City are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for in a separate set of self -balancing
accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as
appropriate. City resources are allocated to and accounted for in individual funds based upon the purpose
for which they are to be spent and the means by which spending activities are controlled. '
Government - Wide Financial Statements
These statements are presented as required by GASB Statement No. 34. The City Government -Wide
Financial Statements include a Statement of Net Assets and a Statement of Activities and Changes in Net
Assets. These statements present summaries of Governmental and Business -Type Activities for the City,
the primary government, accompanied by a total column. Fiduciary activities of the City are not included
in these statements.
The basic financial statements are presented on an "economic resources" measurement focus and the accrual
basis of accounting. Accordingly, all of the City's assets and liabilities, including capital assets, as well as
infrastructure assets, and long-term liabilities, are included in the accompanying Statement of Net Assets.
The Statement of Activities presents changes in net assets. Under the accrual basis of accounting, revenues
are recognized in the period in which they are earned while expenses are recognized in the period in which
the liability is incurred. The types of transactions reported as program revenues for the City are reported in
three categories: 1) charges for services, 2) operating grants and contributions, and 3) capital grants and
contributions.
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regards to interfund
activities, payables and receivables. All internal balances in the Statement of Net Assets have been
eliminated except those representing balances between the governmental activities and the business -type
activities, which are presented as internal balances and eliminated in the total primary government
column. In the Statement of Activities, internal service fund transactions have been eliminated because
their expenses are reported a second time as expenditures/expenses in the funds that are billed for the
goods or services they provide. However, transactions between governmental and business -type activities
have not been eliminated. The following interfund activities, if applicable, have been eliminated:
➢ Due to/from other funds - short-term loans within the primary government
➢ Advances to/from other funds - long-term loans within the primary government
➢ Operating transfers in/out - flows of assets between funds without the requirement for
repayment
The City applies all applicable GASB pronouncements (including all NCGA Statements and Interpretations
currently in effect) as well as the following pronouncements issued on or before November 30, 1989, to the
business -type activities, unless those pronouncements conflict with or contradict GASB pronouncements:
Financial Accounting Standards Board (FASB) Statements and Interpretations, Accounting Principles Board
(APB) Opinions, and Accounting Research Bulletins (ARB) of the committee on Accounting Procedure.
The City applies all applicable FASB Statements and Interpretations issued after November 30, 1989, except
those that conflict with or contradict GASB pronouncements. '
44
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Governmental Fund Financial Statements
These statements are presented as required by GASB Statement No. 34. Governmental fund financial
statements include a Balance Sheet and a Statement of Revenues, Expenditures and Changes in Fund
Balances for all major governmental funds and non -major funds aggregated. An accompanying schedule is
presented to reconcile and explain the differences in net assets as presented in these statements to the net
assets presented in the government -wide financial statements. Major funds are governmental or
enterprise funds whose revenues, expenditures/expenses, assets or liabilities are at least 10% of
corresponding totals for all governmental or enterprise funds and at least 5% of the corresponding
total for all governmental and enterprise funds combined. The City reports the following major
governmental funds:
General Fund. This is the City's principal operating fund. It accounts for all revenues and expenditures
used to finance the traditional services associated with a municipal government except those required to be
accounted for in another fund.
Tyco Fund. This fund is used to account for funds received from an easement granted for construction of a
transpacific, submarine fiber optic cable system originating in Japan with a landing in Hermosa Beach. The
funds are primarily used for major improvement projects.
Contingency Fund. This fund accounts for "Rainy Day" funds set aside for unforeseen emergencies,
unexpected economic events, etc.
Capital Improvement Fund. This fund accounts for funds set aside for capital improvement projects.
All governmental funds are accounted for on a spending or "current financial resources" measurement focus
and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are
included on the Balance Sheet. The Statement of Revenues, Expenditures and Changes in Fund Balances
present increase (revenue and other financing sources) and decrease (expenditures and other financing
uses) in net current assets. Under the modified accrual basis of accounting, revenues are recognized in the
accounting period in which they become both measurable and available to finance expenditures of the
current period.
Revenues are recorded when received in cash, except those revenues subject to accrual (generally 60 days
after year-end) which are recognized when due. The primary revenue sources, which have been treated as
susceptible to accrual by the City, are property tax, sales tax, intergovernmental revenues and other taxes.
Business license fees are recorded as received. Expenditures are recorded in the accounting period in
which the related fund liability is incurred.
Unearned revenues arise when the government receives resources before it has a legal claim to them, as
when grant monies are received prior to incurring qualifying expenditures, or when lease payments,
recreation class registrations or facility rentals are received in advance. In subsequent periods when the
government has a legal claim to the resources, the unearned revenue is removed from the balance sheet
and revenue is recognized.
45
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
The Reconciliation of the Fund Financial Statements to the Government -Wide Financial Statements is
provided to explain the differences created by the integrated approach of GASB Statement No. 34 and is
located after the governmental funds balance sheet in the fund financial statements.
Proprietary Fund Financial Statements
Two types of funds are classified as proprietary funds: enterprise funds and internal service funds.
Proprietary Fund Financial Statements include a Statement of Net Assets, a Statement of Revenues,
Expenses and Changes in Fund Net Assets, and a Statement of Cash Flows for each major proprietary
fund. A separate column representing internal service funds is also presented in these statements.
However, internal service balances and activities have been combined with the governmental activities in
the Government -Wide Financial Statements.
The City reports the following major enterprise funds:
Downtown Enhancement Fund. This fund accounts for parking lot and parking structure operations and
expenses related to the promotion of business in general in the downtown area.
Parking Fund. This fund accounts for all meter, fine and parking permit revenues and expenditures
related to parking operations and capital improvements.
The internal service funds are used to account for fleet services, information technology services and risk
management services provided to other departments on a cost -reimbursement basis.
Proprietary funds are accounted for using the "economic resources" measurement focus and the accrual basis
of accounting. Accordingly, all assets and liabilities (whether current or non-current) are included on the
Statement of Net Assets. The Statement of Revenues, Expenses and Changes in Fund Net Assets presents
increases (revenues) and decreases (expenses) in total net assets. Under the accrual basis of accounting,
revenues are recognized in the period in which they are earned while expenses are recognized in the
period in which the liability is incurred. In these funds, receivables have been recorded as revenue and
provisions have been made for uncollectible amounts if applicable. In accordance with GASB Statement
No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Government Entities that Use
Proprietary Fund Accounting, the City applies all GASB pronouncements currently in effect as well as
Financial Accounting Standard Board Statements and Interpretations, Accounting Principles Board
Opinions and Accounting Research Bulletins of the Committee on Accounting Procedure issued on or
before November 30, 1989.
Operating revenues in the proprietary funds are those revenues that are generated from the primary
operations of the fund. All other revenues are reported as non-operating revenues. Operating expenses
are those expenses that are essential to the primary operations of the fund. All other expenses are reported
as non-operating expenses.
46
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Fiduciary Fund Financial Statements
Fiduciary Fund Financial Statements include a Statement of Net Assets. The City's Fiduciary funds
represent Agency Funds, which are custodial in nature (assets equal liabilities) and do not involve
measurement of results of operations. Fiduciary fund types are accounted for according to the nature of
the fund. Funds held as fiduciary funds represent assets resulting from assessments to the property
owners in three electric undergrounding districts and a downtown improvement district. The assets are
used to repay bonds secured by the private property in the district. In addition, a temporary agency fund
was established in 2003-2004 to account for contributions and expenditures related to other post
employment benefits for the Police Department. The City is in the process of establishing an agreement
with an outside party for the administration of these funds.
C. Use of Restricted/Unrestricted Net Assets
When both restricted and unrestricted net assets are available for an expense item, the City's policy is to
apply restricted net assets first.
D. Cash and Investments
The City pools cash resources of its various funds to facilitate cash management. Cash in excess of current
requirements is invested and reported as investments. It is the City's intent to hold investments until
maturity. However, the City may, in response to market conditions, sell investments prior to maturity in
order to improve the quality, liquidity or yield of the portfolio. Interest earnings are apportioned among
funds based on ending accounting period cash and investment balances.
The City's cash and cash equivalents are comprised of cash on hand, demand deposits, and highly liquid
investments with original maturities of three months or less at the time of acquisition.
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and
for External Investment Pools, highly liquid market investments with maturities of one year or less at time of
purchase are stated at amortized cost. All other investments are stated at fair value. Market value is used
as fair value for those securities for which market quotations are readily available.
The City participates in the Local Agency Investment Fund (LAIF), an investment pool managed by the
State of California. LAIF has invested a portion of the pool funds in Structured Notes and Asset -Backed
Securities. LAIF's investments are subject to credit risk with the full faith and credit of the State of
California collateralizing these investments. In addition, these Structured Notes and Asset -Backed
Securities are subject to market risk as a result of changes in interest rates.
47
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
E. Property Tax Receivable
Property taxes attach as an enforceable lien on property as of July 1 each year. Taxes are levied on
January 1 and are payable in two installments: December 10 and April 10 of each year. The County of Los
Angeles, California (County) bills and collects the property taxes and remits them to the City according to
a payment schedule established by the County. City property tax revenues are recognized when received
in cash except at year-end when they are accrued pursuant to the modified accrual basis of accounting.
The City recognizes available taxes or those collected within 60 days as revenue at June 30.
The County is permitted by State law to levy taxes at 1% of full market value (at time of purchase) and can
increase the assessed valuation no more than 2% per year. The City receives a share of this basic levy,
proportionate to what it received during the years 1976 to 1978.
F. Interfund Transactions
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end
of the fiscal year are referred to as either "due to/from other funds" (i.e., the current portion of interfund
loans) or "advances to/from other funds" (i.e., the noncurrent portion of interfund loans)." Any residual
balances outstanding between the governmental activities and business -type activities are reported in the
governmental -wide financial statements as "internal balances."
G. Capital Assets
Capital assets, which include land, buildings, improvements, equipment, furniture, and infrastructure
assets (e.g., roads, sidewalks, and similar items), are reported in the applicable governmental or business -
type activities in the Government -Wide Financial Statements. Capital assets are valued at historical cost or
estimated historical cost if actual historical cost was not available. Donated fixed assets are valued at their
estimated fair market value on the date donated. City policy has set the capitalization threshold for
reporting capital assets at $1,000 and infrastructure at $100,000. Depreciation is recorded on a straight-line
basis over estimated useful lives of the assets as follows:
Buildings
50 years
Improvements other than buildings
20 years
Machinery and equipment
3-20 years
Infrastructure
15-50 years
In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34 which
requires the inclusion of infrastructure capital assets in local governments' basic financial statements. In
accordance with GASB Statement No. 34, the City has included all infrastructure as of June 30, 2004 into
the 2003-2004 Basic Financial Statements.
48
1
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
G. Capital Assets, Continued
The City defines infrastructure as the basic physical assets that allow the City to function. The assets
include streets, sewers and storm drains, parking meters and monuments. Each major infrastructure
system can be divided into subsystems. For example the street system can be subdivided into pavement,
curb and gutters, sidewalks, medians, streetlights and landscaping. These subsystems were not delineated
in the basic financial statements. The appropriate operating department maintains information regarding
the subsystems.
Interest accrued during capital assets construction, if any, is capitalized for the business -type and
proprietary funds as part of the asset cost.
For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement
No. 34 for infrastructure reporting. The City commissioned an appraisal of City owned infrastructure and
property as of June 30, 2003. This appraisal determined the original cost, which is defined as the actual
cost to acquire new property in accordance with market prices at the time of first construction/acquisition.
Original costs were developed in one of three ways: (1) historical records; (2) standard unit costs
appropriate for the construction/acquisition date; or (3) present cost indexed by a reciprocal factor of the
price increase from the construction/acquisition date to the current date. The accumulated depreciation,
defined as the total depreciation from the date of construction/acquisition to the current date on a straight
line, unrecovered cost method was computed using industry- accepted life expectancies for each
infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation
from the original cost.
H. Claims Payable
The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general
liability claims (including property damage claims) and workers' compensation claims. The estimated
liability for workers' compensation claims and general liability claims includes "incurred but not reported"
(IBNR) claims. There is no fixed payment schedule to pay these liabilities.
L Compensated Absences Payable
City employees have vested interest in varying levels of vacation, sick leave and compensatory time based
on their length of employment. It is the policy of the City to pay all accumulated vacation pay and a
portion of sick pay when an employee retires or terminates. Only the short-term liability for compensated
absences (the amount due to employees for future absences, such as vacation, sick and compensatory time,
which are attributable to services already rendered) is reported as a current liability in the fund financial
statements; the long-term amount is included as a liability in the governmental activities of the
Government -Wide financial statements. The short-term liability is the amount that will be liquidated with
current financial resources and is expected to be paid during the next fiscal year. All of the liability for
compensated absences applicable to proprietary funds is reported in those funds. As mentioned under
"Financial Policies," the City's goal is to accumulate funding in the Compensated Absences Fund for 50%
of the accrued liability for compensated absences.
49
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
J. Unearned Revenue
In the Government -Wide Financial Statements, unearned revenue is recognized for transactions for which
revenue has not yet been earned. Typical transactions recorded as unearned revenues in the Government -
Wide Financial Statements are lease payments received in advance, prepaid charges for services and
facility rentals paid.
In the Fund Financial Statements, the City records unearned revenue for transactions for which revenues
have not been earned. Typical transactions for which unearned revenue is recorded are grants received
but not yet earned or available, lease payments received in advance and advance registration for recreation
classes and facility rentals.
K. Long -Term Debt
Government -Wide Financial Statements
The City has no long-term debt. Other long-term obligations are reported on the Statement of Net Assets as
liabilities in the appropriate activities.
Fund Financial Statements
Long-term debt is not presented in the fund financial statements, but long-term liabilities are shown in the
Reconciliation of the Governmental Funds Balance Sheet to the Government -Wide Statement of Net Assets
located after the governmental funds balance sheet in the fund financial statements.
L. Net Assets
Government -Wide Financial Statements
In the government -wide financial statements, net assets are reported in one of three categories:
Invested in Capital Assets- This amount consists of capital assets net of accumulated depreciation and
reduced by outstanding debt, (if applicable), that is attributed to the acquisition, construction, or
improvement of the assets.
Restricted Net Assets - This amount is restricted by external creditors, grantors, contributors, or laws or
regulations of other governments.
Unrestricted Net Assets - This amount represents remaining net assets that do not meet the definition of
"invested in capital assets" or "restricted net assets."
M. Fund Balances - Reservations and Designations
In the fund financial statements, governmental funds report reservations of fund balances for amounts that
are not available for appropriation or are legally restricted by outside parties to use for a specific purpose.
Designations of fund balance represent tentative management plans that are subject to change.
50
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
N. Use of Estimates
The preparation of the basic financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions. These estimates and assumptions
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities.
In addition, estimates affect the reported amount of expenses. Actual results could differ from these
estimates and assumptions.
2. CASH AND INVESTMENTS
The City maintains a cash and investment pool which includes cash balances and authorized investments
of all funds. This pooled cash is invested by the City Treasurer to enhance earnings. The pooled interest
earned is allocated to the fund based on cash and investment balances in these funds at the end of each
accounting period.
A. Cash Deposits
The carrying amounts of the City's cash deposits were $819,972 at June 30, 2004. Bank balances at June 30,
2004, were $959,294 which were fully insured and collateralized with securities held by the pledging
financial institutions in the City's name as discussed below.
The California Government Code requires California banks and savings and loan associations to secure the
City's cash deposits by pledging securities as collateral. The law states that collateral pledged in this
manner shall have the effect of perfecting a security interest in such collateral superior to those of a general
creditor. Thus, collateral for cash deposits is considered to be held in the City's name.
The market value of pledged securities must equal at least 110% of the City's cash deposits. California law
also allows institutions to secure city deposits by pledging first trust deed mortgage notes having a value
of 150% of the City's total cash deposits. The City may waive collateral requirements for cash deposits,
which are fully insured up to $100,000 by the Federal Deposit Insurance Corporation. The City, however,
has not waived the collateralization requirements.
The City follows the practice of pooling cash and investments of all funds, except for funds required to be
held by fiscal agents under the provisions of bond indentures, if applicable. Interest income from cash and
investments with fiscal agents is credited directly to the related fund. Interest income earned on pooled
cash and investments is allocated on an accounting period basis to the various funds based on the period -
end cash and investment balances. Interest is not allocated to the Compensated Absences Fund, funds
created to advance costs for utility undergrounding districts, reimbursable grant funds or internal service
funds.
51
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
2. CASH AND INVESTMENTS, Continued
B. Investments
The City's investment policy is more restrictive than the State's, by design. Under the provisions of the
City's investment policy, and in accordance with California Government Code, the investments below are
authorized.
➢ Securities of the U.S. Government, or its agencies
➢ Banker's acceptances
➢ Time Certificates of Deposits
➢ Negotiable certificates of Deposit
➢ California Local Agency Investment Fund
➢ Corporate Medium -Term Notes
In accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and
for External Investment Pools, the City's investments are carried at fair market value instead of cost.
Accordingly, the City adjusts the carrying value of its investments to reflect their fair value at each fiscal
year-end with the effects of these adjustments included in income for that fiscal year. Changes in value for
the fiscal year ended June 30, 2004, amounted to an unrealized decrease of $44,982.
The City's investments with the Local Agency Investment Fund (LAIF), the State of California's investment
pool, at June 30, 2004, included a portion of the pool funds invested in Structured Notes and Asset -Backed
Securities. These investments included the following:
Structured Notes, which are debt securities (other than asset-backed securities) whose cash flow
characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices
and/or that have embedded forwards or options.
Asset -Backed Securities, the bulk of which are mortgage-backed securities, and which entitle their
purchasers to receive a share of the cash flows from a pool of assets such as principal and interest
repayments from a pool of mortgages, such as collaterialized mortgage obligations (CMO's), or credit
card receivables.
As of June 30, 2004, the City had $21,539,812 invested in LAIF. 1.603% of pool investment funds were
invested in Structured Notes and Asset -Backed Securities.
The City valued its investments in LAIF as of June 30, 2004 by multiplying its account balance with LAIF
by a fair value factor determined by LAIF. This fair value factor was determined by dividing all LAIF
participants' total aggregate fair value by total aggregate amortized cost resulting in a factor of .998384177.
52
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
2. CASH AND INVESTMENTS, Continued
C. Credit Risk
Governmental Accounting Standards Board Statement No. 3 requires that deposits and investments be
classified by credit risk.
Classification of deposits and investments by credit risk:
Deposits
Category 1 - Insured or collateralized with securities held by the entity or by its agent in the entity's
name.
Category 2 - Collateralized with securities held by the pledging financial institution's trust department
or agent in the entity's name.
Category 3 - Deposits which are uninsured or uncollateralized.
Investments
Category 1 - Insured or registered or securities held by the entity or its agent in the entity's name.
Category 2 - Uninsured and unregistered with securities held by the counterparty's trust department or
agent in the entity's name.
Category 3 - Uninsured and unregistered with securities held by the counterparty, or by its trust
department or agent, but not in the entity's name.
Investments Not Subject to Categorization
Investments in the California Local Agency Investment Fund (LAIF) are not categorized, as GASB
Statement No. 3 does not require categorization of investment pools managed by another government.
Certain fiscal agent investments, if applicable, are not categorized because the underlying assets are open-
ended mutual funds. Guaranteed investment contracts, if applicable, are not categorized because they are
direct contractual investments and are not securities. All such investments are not required to be
categorized under interpretive guidelines issued by the GASB.
D. Summary of Cash and Investments
The following is a summary of cash and investment at June 30, 2004:
Government -Wide Statement of Net Assets Funds Financial
Governmental Business -Type
Activities Activities
Total
Fiduciary Funds
Statement of
Net Assets
Total
Cash and Investments $ 22,370,841 $ 1,133,097 $ 23,503,938 $ 352,411 $ 23,856,349
53
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
2. CASH AND INVESTMENTS, Continued
D. Summary of Cash and Investments, Continued
Cash (deposits) and investments were categorized as follows at June 30, 2004:
Category
1
2 Uncategorized Fair Value
City Treasury:
Cash Deposits:
Demand accounts $ 113,000 $ 846,294 $ 959,294
Less items in transit (139,322)
Total cash deposits 113,000 846,294 $ 819,972
Investments:
Local Agency Investment Fund 21,539,812 21,539,812
U.S. government notes 1,496,565 1,496,565
Total investments 1,496,565 21,539,812 23,036,377
Total cash and investments $ 1,609,565 $ 846,294 $ 21,539,812 $ 23,856,349
At June 30, 2004, the City had no category 3 investments.
E. Summary of Investments to Maturity
Investments held in the City Treasury grouped by maturity date at June 30, 2004, are shown below:
Maturity Fair Value
Current to one year $ 22,041,687
One to two years 994,690
Total $ 23,036,377
54
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
3. RECEIVABLES
Government -Wide Financial Statements
At June 30, 2004, the Government -Wide Financial Statements show the following miscellaneous receivables
net of allowances for uncollectible amounts, if any:
Government -Wide
Statement of Net Assets Fiduciary Funds
Governmental Business -Type Statement of
Activities Activities Net Assets
Total
Accounts 1,456,729 $ 25,753 $ 10,051 $ 1,492,533
Taxes 641,983 641,983
Interest 82,621 6,348 1,208 90,177
Grants 436,159 436,159
Notes - 156,143 156,143
Total $ 2,617,492 $ 188,244 $ 11,259 $ 2,816,995
Fund Financial Statements
At June 30, 2004, the Fund Financial Statements show the following receivables:
A. Accounts Receivable
Accounts receivable consisted of amounts accrued in the ordinary course of operations. The total amount
of accounts receivable for each major and non -major fund in the aggregate as of June 30, 2004, were as
follows:
Governmental Funds:
General Fund $ 1,377,454
Non -major Funds 79,275
Total governmental funds 1,456,729
Proprietary Funds:
Downtown Enhancement Fund 10,228
Parking Fund 15,525
Total proprietary funds 25,753
Total $ 1,482,482
55
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
3. RECEIVABLES, Continued
B. Taxes Receivable
At June 30, 2004, the City had taxes receivable in the following major funds and non -major funds in the
aggregate:
Property
Taxes
Governmental Funds:
General Fund $ 632,890
Non -major Funds 9,093
Total $ 641,983
C. Interest Receivable
Interest receivable consists of interest from investments pooled by the City, which is distributed among the
funds according to their cash balances at the end of the accounting period, and interest receivable on
restricted investments held by the fiscal agents which are recorded in the funds holding the investment.
The interest receivable as of June 30, 2004, was as follows:
City Pooled
Investments
Governmental Funds:
General fund $ 23,753
Tyco fund 9,956
Contingency fund 13,626
Capital Improvement 9,487
Non -major funds 25,799
Total governmental funds 82,621
Proprietary Funds:
Downtown Enhancement fund
Parking fund
Total proprietary funds
Total
Agency Funds
Total interest receivable
56
4,662
1,686
6,348
88,969
1,208
90,177
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
3. RECEIVABLES, Continued
D. Reimbursable Grants Receivable
Grants receivable consists of a variety of reimbursable grants from other agencies. The total amount of
reimbursable grants for each major and non -major fund in the aggregate as of June 30, 2004 were as
follows:
Governmental Funds:
Non -major Funds
Total governmental funds
E. Notes Receivable
$ 436,159
$ 436,159
In April 1995, the City entered into an agreement with the South Bay Alano Club for the purchase of a
building and property owned by the City. The note in the amount of $200,000, which is secured by a deed
of trust, specified a 10 year term with an interest rate of 10% per annum. The final payment of unpaid
principal and interest accrued monthly is due in May 2010. The outstanding principal at June 30, 2004 is
$156,143.
4. LEASE REVENUES
In January 2000, the North Pier Parking Structure was completed. The parking structure contains 400
parking spaces and was funded in part by a downtown developer in exchange for the use of 100 spaces in
the structure. The remainder of the funding was provided by the City's Downtown Enhancement Fund
and Prop A Open Space funding contributed by the Los Angeles County Department of Beaches and
Harbors. In consideration of the County contribution, 50% of the annual net income derived from the
parking structure must be shared with the County each year by September 1. The payment to the County
for fiscal year 2003-2004 is $201,574.
In January 2001, a 50 year lease for the retail space located in front of the North Pier Parking Structure was
initiated. The City receives a monthly lease payment in the amount of $1,750. The lease includes a
negotiated increase to the monthly lease payment to be calculated every 60 months based on the consumer
price index. The first increase is due in January 2006.
In February 2004, the City entered into a 5 year lease agreement with Sprint, a cellular telephone company,
for placement of an antenna on the North Pier Parking Structure. The City receives a monthly lease
payment in the amount of $2,000.
The City leases a portion of the Hermosa Beach Community Center to nonprofit and cultural
organizations. The leases are renegotiated annually.
57
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
4. LEASE REVENUES, Continued
All of the above leases are accounted for as operating leases by the City. The future minimum rental
revenues under these leases are as follows:
Year Ending
June 30,
2005 $ 61,241
2006 45,000
2007 45,000
2008 45,000
2009 35,000
2010-2014 105,000
2015-2019 105,000
2020-2024 105,000
2025-2029 105,000
2030-2034 105,000
2035-2039 105,000
2040-2044 105,000
2045-2049 105,000
2050-2054 33,250
Total $ 1,104,491
Lease revenue for fiscal year 2004 was $95,951 with $64,951 reflected in the General Fund and $31,000 in
the Downtown Enhancement Fund, an enterprise fund.
5. INTERFUND TRANSACTIONS
A. Government -Wide Financial Statements
Transfers
At June 30, 2004, the City had the following operating transfers:
Transfers Out
Business -Type
Activities
Governmental Activities $ 2,356,585
Total $ 2,356,585
58
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
5. INTERFUND TRANSACTIONS, Continued
B. Fund Financial Statements
The composition of due to/from other funds at June 30, 2004 is as follows:
Due From Other
Funds
Capital Improvement Fund
Non -major funds
Total
Due to
Other Funds
Non -major
Governmental
Funds
$ 44,000
356,595
$ 400,595
The balance of $44,000 due to the Capital Improvement fund from Non -major governmental funds resulted
from loans for the start up of a utility undergrounding district. A balance of $111,158 in non -major funds
resulted from the time lag between the dates that reimbursable expenditures occur and payments are
received from other agencies. The remaining balance of $245,437 resulted from an additional claim the
City was required to file for a reimbursable state parks grant. All balances are scheduled to be collected in
the subsequent year.
Advances
At June 30, 2004, the composition of advances to other funds is as follows:
o
a.h
z
< O
Advances from
Other Funds
Non -major
Governmental
Funds
Capital Improvement Fund $ 288,000
Total $ 288,000
The balance of $288,000 advanced from the Capital Improvement fund to the Non -major Governmental
funds resulted from long term loans for the start up costs of 3 utility undergrounding districts. Since the
advances are not scheduled to be collected in the subsequent year, the fund balance of the Capital
Improvement fund was reserved to reflect that the financial resources are not currently available.
59
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
5. INTERFUND TRANSACTIONS, Continued
B. Fund Financial Statements, Continued
Transfers
At June 30, 2004, the City had the following operating transfers:
Transfers Out
1
General
Tyco
Fund
Non -major Downtown
Contingency Governmental Enhancement
Fund Funds Fund
Parking
Fund
Other
Enterprise
Funds
Internal
Service
Fund Total
General Fund $ 760,096 $ 3,734 $ 1,311,119 $ 63,901 $ 2,138,850
Capital
Improvement Fund $ 759,317 $ 275,000 1,034,317
Non -major
Governmental Funds 2,356,617 $ 368,470 $ 1,064,587 3,789,674
Downtown
Enhancement Fund 1,285 1,285
Parking Fund 21,570 21,570
Internal Service Fund 807,973 21,227 829,200
Total $ 3,946,762 $ 275,000 $ 368,470 $ 781,323 $ 3,734 $ 1,311,119 $ 1,064,587 $ 63,901 $ 7,814,896
In general, transfers are used to 1) transfer any unexpended balance in the General Fund according to the
City's financial policies, 2) use unrestricted revenues collected in one fund to finance various programs
accounted for in other funds in accordance with budgetary authorizations, and 3) to reimburse the General
Fund for administration services provided to other funds . '
In the year ended June 30, 2004, the following one-time transfers were made:
• The General Fund made a transfer of $113,343 to subsidize the operations of the Lighting
Landscaping District fund;
• The General Fund made a transfer of $56,151 to the Lighting Landscaping District Fund, the
Downtown Enhancement Fund, the Parking Fund, the AB939 Fund, the Sewer Fund, the Insurance
Fund, and the Equipment Replacement Fund for changes to employee memoranda of
understanding (MOU's); '
• The General Fund made a transfer of $40,000 to the Equipment Replacement fund to finance a pilot
wireless network program;
• The Park/Recreation Facility Tax Fund made a transfer of $54,300 to fund special projects in the
General Fund related to recreational facilities;
• The Asset Seizure/Forfeiture Fund made a transfer of $40,500 to fund special projects in the
General fund related to the police station;
• The Equipment Replacement Fund made a transfer to the General Fund to subsidize the purchase
of a Community Development software upgrade;
• The transfer out in "other enterprise funds" reflects the re-classification of the Proposition A Fund
and Proposition C Fund from enterprise to special revenue funds. 1
60
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
6. CAPITAL ASSETS
In accordance with GASB Statement No. 34, the City has reported all capital assets, including
infrastructure, in the Government -Wide Statement of Net Assets. The City elected to use the "Basic
Approach" as defined by GASB Statement No. 34 for infrastructure reporting. All capital and infrastructure
systems were reported using the basic approach whereby accumulated depreciation and depreciation
expense have been recorded.
A. Government -Wide Financial Statements
At June 30, 2004, the City's capital assets consisted of the following:
Government Business -Type
Activities Activities
Total
Non -Depreciable Assets:
Land $ 18,052,495 $ 1,572,740 $ 19,625,235
Construction in progress 2,548,970 36,637 2,585,607
Total non -depreciable assets 20,601,465 1,609,377 22,210,842
Depreciable Assets:
Buildings and structures 3,491,998 5,558,605 9,050,603
Improvements other than buildings 6,861,043 13,141 6,874,184
Machinery and equipment 2,647,173 44,074 2,691,247
Vehicles 2,833,232 2,833,232
Infrastructure 36,487,235 235,942 36,723,177
Total depreciable assets 52,320,681 5,851,762 58,172,443
Less accumulated depreciation for:
Buildings and structures (1,430,398) (490,587) (1,920,985)
Improvements other than Buildings (2,224,328) (13,141) (2,237,469)
Machinery and equipment (1,380,993) (29,381) (1,410,374)
Vehicles (1,366,399) (1,366,399)
Infrastructure (12,404,822) (47,105) (12,451,927)
Total accumulated depreciation (18,806,940) (580,214) (19,387,154)
Total depreciable assets, net 33,513,741 5,271,548 38,785,289
Total capital assets $ 54,115,206 $ 6,880,925 $ 60,996,131
61
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
6. CAPITAL ASSETS, Continued
The following is a summary of capital assets for governmental activities for the year ended June 30, 2004:
A. Government -Wide Financial Statements, Continued
Balance Balance
July 1, 2003 Additions Deletions Adjustments June 30, 2004
Capital assets not being depreciated:
I
Land $ 18,052,495 $ 18,052,495
Construction in progress 3,523,017 $ 529,281 $ (1,503,328) 2,548,970
Total capital assets not being depreciated 21,575,512 529,281 (1,503,328) 20,601,465
Capital assets being depreciated:
Buildings and structures 3,906,022 4,390 (418,414) 3,491,998
I
Improvements other than buildings 5,004,018 1,513,421 343,604 6,861,043
Machinery and equipment 2529,642 300,971 $ (61,854) (121,586) 2,647,173
Vehicles 2765,500 136,916 (77,777) 8,038 2833,232
I
Infrastructure 34,822,539 2362,564 (1,438,346) 740,478 36,487,235
Total capital assets being depreciated 49,027,721 4,318,262 (1,577,477) 552120 52320,681
I
Less accumulated depreciation for:
Buildings and structures (1,370,480) (65,541) 5,623 (1,430398)
Improvements other than buildings (2048,250) (207,198) 31,120 (2,224,328)
Machinery and equipment (1,309,260) (232,578) 58,445 102400 (1,380,993)
Vehicles (1,114,858) (302,637) 65,320 (14,224) (1,366,399)
Infrastructure (12,325,563) (1,071,139) 955,243 36,637 (12404,822) I
Total accumulated depreciation (18,168,411) (1,879,093) 1,079,008 161,556 (18,806,940)
Total capital assets being depreciated, net 30,859,310 2,439,169 (498,414) 713,676 33,513,741
Total governmental activities $ 52,434,822 $ 2968,450 $ (498,414) $ (789,652) $ 54,115,206
Governmental activities depreciation expense for capital assets for the year ended June 30, 2004 was
$1,879,093. The City allocated the depreciation expense to departments/functions.
62
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
6. CAPITAL ASSETS, Continued
A. Government -Wide Financial Statements, Continued
The following is a summary of capital assets for business -type activities:
Balance
Balance
July 1, 2003 Additions Deletions Ad'ustments June 30, 2004
Capital assets not being depreciated:
Land $ 1,572,740 $ 1,572,740
Construction in progress 25,047 11,590 36,637
depreciated 1,597,787 11,590 $ $ - $ 1,609,377
Capital assets being depreciated:
Buildings and structures 5,558,605
Improvements other than buildings 13,141
Machinery and equipment 50,336
Infrastructure
Total capital assets, being depreciated
26,586
5,622,082 26,586
5,558,605
13,141
(6,262) 44,074
209,356 235,942
203,094 5,851,762
Less accumulated depreciation for:
Buildings and structures (376,486) (114,101) (490,587)
Improvements other than buildings (13,141) (13,141)
Machinery and equipment (33,374) (2,269) 6,262 (29,381)
Infrastructure (10,468) (36,637) (47,105)
Total accumulated depreciation (423,001) (126,838) (30,375) (580,214)
net 5,199,081 (100,252) 172,719 5,271,548
Total business -type activities $ 6,796,868 $ (88,662) $ $ 172,719 $ 6,880,925
Business -type activities depreciation expense for capital assets for the year ended June 30, 2004 are as
follows:
Downtown enhancement $ 113,817
Parking 13,021
Total depreciation expense $ 126,838
B. Fund Financial Statements
The fund financial statements do not present General Government Capital Assets. They are shown in the
Reconciliation of the Governmental Funds Balances Sheet to the Government -Wide Statement of Net
Assets located after the governmental fund balance sheet in the fund financial statements.
63
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
7. LONG-TERM DEBT
A. Long -Term Debt with City Commitment
The following is a summary of compensated absences payable transactions for the year ended June 30,
2004:
Classification
Balance Balance Due in Due in more
July 1, 2003 Additions Retirements June 30, 2004 One Year than One Year
Governmental Activities:
Compensated absences $ 896,542 $ 1,043,193 $ (837,642) $ 1,102,093 $ 780,433 $ 321,660
Total $ 896,542 $ 1,043,193 $ (837,642) $ 1,102,093 $ 780,433 $ 321,660
The long-term portion of compensated absences payable has been accrued for the Governmental Activities
on the Government -Wide Financial Statement. Typically, the General Fund (major fund), the Lighting and
Landscaping District Fund, AB939 Fund and the Sewer Fund (non -major funds) have been used to
liquidate the liability for compensated absences. There is no fixed payment schedule to pay these
liabilities. The total amount of compensated absences payable at June 30, 2004, was $1,102,093.
B. Long -Term Debt without City Commitment
At June 30, 2004, the following Special Assessment Bonds are payable from the proceeds of the Special
Assessment levied and collected on all real property within the special districts. The City is in no way
obligated to repay the debt in the event of default and the debt is not recorded in the accompanying
financial statements.
1998 Lower Pier Special Assessment Bonds
In November 1997, limited obligation improvement bonds in the amount of $400,000 were issued for the
Lower Pier Avenue Assessment District for street and sidewalk improvements in the downtown area. The
City is in no way financially obligated for payments of the bonds, which are secured by private property in
the district. The bonds will be repaid from assessments to the property owners as part of their annual
property tax bill.
The annual debt service requirements by year are as follows:
Year Ending Balance
June 30, Principal Interest Total
2005 $ 15,000 $ 21,287 $ 36,287
2006 15,000 20,312 35,312
2007 20,000 19,175 39,175
2008 20,000 17,875 37,875
2009 20,000 16,575 36,575
2010-2014 115,000 61,913 176,913
2015-2018 130,000 17,550 147,550
Total $ 335,000 $ 174,687 $ 509,687
64
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
7. LONG-TERM DEBT, Continued
B. Long -Term Debt without City Commitment
1999 Myrtle Utility Underground District Special Assessment Bonds
In October 1999, limited obligation improvement bonds in the amount of $1,159,114 were issued for the
Myrtle Avenue Utility Underground Assessment District for the undergrounding of utilities within the
district. The City is in no way financially obligated for payment of the bonds, which are secured by private
property in the district. The bonds will be repaid from assessments to the property owners as part of their
annual property tax bill.
The annual debt service requirements by year are as follows:
Year Ending Balance
June 30, Principal Interest Total
2005 $ 40,000 $ 50,360 $ 90,360
2006 45,000 48,425 93,425
2007 45,000 46,333 91,333
2008 45,000 44,172 89,172
2009 50,000 41,820 91,820
2010-2014 280,000 167,568 447,568
2015-2019 365,000 78,724 443,724
2020-2023 85,000 2444 87,444
Total $ 955,000 $ 479,846 $ 1,434,846
1999 Loma Utility Underground District Special Assessment Bonds
In October 1999, limited obligation improvement bonds in the amount of $1,324,653 were issued for the
Loma Drive Utility Underground Assessment District for the undergrounding of utilities within the
district. The City is in no way financially obligated for payment of the bonds, which are secured by private
property in the district. The bonds will be repaid from assessments to the property owners as part of their
annual property tax bill.
The annual debt service requirements by year are as follows:
Year Ending Balance
June 30, Principal Interest Total
2005 $ 50,000 $ 58,440 $ 108,440
2006 50,000 56,165 106,165
2007 50,000 53,840 103,840
2008 55,000 51,318 106,318
2009 55,000 48,595 103,595
2010-2014 330,000 194,293 524,293
2015-2019 420,000 91,490 511,490
2020-2023 100,000 2,875 102,875
Total $ 1,110,000 $ 557,016 $ 1,667,016
65
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
8. OTHER REQUIRED FUND DISCLOSURES
A. Deficit Fund Balances
At June 30, 2004, the following funds had deficit fund equity:
Bayview Drive Underground District $ (38,000)
Bonnie Brae Underground District $ (50,000)
Beach Drive Underground District $ (27,000)
Prospect Utility Underground District $ (200,000)
The deficits represent "start up" costs for the district and will be eliminated once the districts have been
formed and assessment collections are received. If the districts are not approved, the costs will be borne by
the City and transferred to another fund.
9. RISK MANAGEMENT
The City maintains an internal service fund to account for the City's general liability and workers'
compensation claims, automobile, property, and unemployment insurance.
The City is self-insured for individual workers' compensation claims up to $500,000 and for each general
liability claim up to $250,000. The City is insured above the self-insured retention for general liability
insurance coverage, up to a maximum of $10,000,000 per occurrence, as a member of the Independent Cities
Risk Management Authority (ICRMA). Settled claims have not exceeded this coverage in any of the past
five years.
ICRMA is a joint exercise of powers authority organized and operating pursuant to the California
Government Code. ICRMA was formed in 1980 pursuant to joint exercise of power agreements for
insurance and risk management purposes, which, as amended, enable ICRMA to provide programs of risk
sharing, insurance and risk management services in connection with liability, property, and workers'
compensation claims.
ICRMA's annual budget is based on estimated payroll, historical loss experience and self insured retention
for each participating member. The budgeted weighted risk sharing percentage is one element of
determining the City's annual premium but does not necessarily represent the percentage participation in
the losses of the ICRMA. Budgeted weighted risk sharing percentages for the last five years are listed
below:
3.93% weighted risk sharing percentage for July 1, 2003 to July 1, 2004
2.57% weighted risk sharing percentage for July 1, 2002 to July 1, 2003
3.10% weighted risk sharing percentage for July 1, 2001 to July 1, 2002
3.10% weighted risk sharing percentage for July 1, 2000 to July 1, 2001
1.84% weighted risk sharing percentage for July 1, 1999 to July 1, 2000
66
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
9. RISK MANAGEMENT, Continued
The City's premiums to ICRMA in the amount of $ 260,570 for the fiscal year 2003-2004 are in accordance
with formulas established by ICRMA. The City is liable for possible additional assessments and
withdrawal costs under terms of the membership agreement, however there has never been an additional
assessment since the pool was formed.
The City has entered into contracts with third party administrators who supervise and administer the
City's general liability and workers' compensation insurance program. Claim loss estimates are
determined by the third party administrator based on the nature of an individual claim. The loss estimates
include amounts for future compensation, medical, legal and administrative fees. The City also includes
estimated claims incurred but not reported (IBNR) provided by an actuary. Reimbursement requests are
submitted to the City on a monthly basis as claims are paid.
The workers' compensation and general liability claims payable of $2,934,641 reported at June 30, 2004, are
based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires
that a liability for claims be reported if information prior to the issuance of the financial statements
indicates that it is probable that a liability has been incurred at the date of the financial statements and the
amount of the loss can be reasonably estimated. Changes in the Fund's claims liability amounts were as
follows:
Workers' Compensation
2001-2002
2002-2003
2003-2004
General Liability
2001-2002
2002-2003
2003-2004
Beginning
of Year
Liability
$ 1,410,368
1,980,829
1,769,131
$ 572,923
332,382
573,502
Current Year
Claims and
Changes in
Estimates
$ 1,256,827
473,475
2,337,918
$ 10,316
596,841
(110,046)
Claim
Payments
End
of Year
Liability
$ (686,366) $
(685,173)
(1,543,083)
$ (250,857) $
(355,721)
(92,781)
1,980,829
1,769,131
2,563,966
332,382
573,502
370,675
Amounts
Due within
One Year
$ 325,000
325,000
453,000
$ 250,000
250,000
184,000
Detailed financial information may be obtained from the ICRMA Program Administrator located at 3760
Kilroy Airport Way, Suite 360, Long Beach, California 90806.
67
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
10. RETIREMENT PLANS
A. Public Employee Retirement System
Plan Description
The City contributes to the California Public Employees Retirement System (Ca1PERS), an agent multiple -
employer public employee defined benefit pension plan. Ca1PERS provides retirement and disability
benefits, annual cost -of -living adjustments, and death benefits to plan members and beneficiaries.
Ca1PERS acts as a common investment and administrative agent for participating public entities within the
State of California. Benefit provisions and all other requirements are established by State statute and City
ordinance. Copies of the Ca1PERS annual financial report may be obtained from their Executive Office
located at 400 P Street, Sacramento, California 95814.
Funding Policy
City employees are required by State statute to contribute 7% for miscellaneous employees and 9% for
safety employees of their annual covered salary. As a negotiated benefit, the City makes the contributions
required of City employees on their behalf. Those contributions amounted to $763,538 for the year ended
June 30, 2004. The City, as the employer, is required to contribute for fiscal year 2003-2004 at actuarially
determined rates; which are applied to annual covered payroll. The 2003-2004 rate is 0% for miscellaneous
employees, 27.843% for police employees and 18.510% for fire employees. The contribution rate for
miscellaneous employees is 0% because their plan is superfunded, meaning that the actuarial value of
plan assets exceeds the present value of projected benefits. The contribution requirements of City
employees and the City employer are established and may be amended by Ca1PERS.
Annual Pension Cost
For fiscal year 2003-2004, the City's annual pension cost of $1,179,717 for Ca1PERS was equal to the City's
required and actual contributions, of which $0 is for the miscellaneous plan, $827,733 for the police plan
and $351,984 for the fire plan. The required contribution was determined as part of the June 30, 2003,
actuarial valuation using the entry age normal actuarial cost method. The actuarial assumptions included
(a) 7.75% investment rate of return (net of administrative expenses); (b) projected salary increases ranging
from 3.75% to 14.45% depending on age, service, and type of employment, and (c) 2% per year cost -of -
living adjustments. Both (a) and (b) included an inflation component of 3.0%. The actuarial value of PERS
assets was determined using techniques that smooth the effects of short-term volatility in the market value
of investments over a three year period. PERS unfunded actuarial accrued liability (or surplus) is being
amortized as a level percentage of projected payroll on a closed basis. The amortization period at June 30,
2003 was 17 years for public safety police employees, 15 years for public safety fire employees, and 17
years for miscellaneous employees for prior and current service unfunded liability.
68
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
10. RETIREMENT PLANS, Continued
A. Public Employee Retirement System, Continued
THREE-YEAR TREND INFORMATION FOR PERS
Miscellaneous Plan
Annual Percentage of
Pension Cost APC Net Pension
Fiscal Year (APC) Contributed Obligation
6/30/2002 $ - 100% $
6/30/2003 100%
6/30/2004 100%
Police Plan
Annual Percentage of
Pension Cost APC Net Pension
Fiscal Year (APC) Contributed Obligation
6/30/2002 $ 563,961 100% $
6/30/2003 635,079 100%
6/30/2004 827,733 100%
Fire Plan
Annual Percentage of
Pension Cost APC Net Pension
Fiscal Year (APC) Contributed Obligation
6/30/2002 $ 169,691 100% $
6/30/2003 154,110 100%
6/30/2004 351,984 100%
B. Other Post -Employment Benefits
In addition to the pension benefits described above, the City provides post -employment health care
benefits, in accordance with negotiated Memoranda of Understanding. Prior to July 1, 2000 these benefits
were available to employees represented by the Management Association, General and Supervisory
Bargaining Unit represented by the California Teamsters Public, Professional and Medical Employees'
Union and the Professional and Administrative Employee Association. Eligible employees were service
retirees, age 55 or over, with a minimum of ten years continuous service with the City.
69
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
10. RETIREMENT PLANS, Continued
B. Other Post -Employment Benefits, Continued
Employees who retired from September 1, 1988 through August 31, 1991 were provided:
1) $60 per month (or cost of policy, whichever is less) for a minimum of ten years continuous service
with the City, or
2) $80 (or the cost of policy, whichever is less) for a minimum of twenty years continuous service,
payable to the medical insurance provider.
Employees who retired from September 1, 1991 to June 30, 2000 were provided:
1) $40 per month (or cost of policy, whichever is less) for a minimum of ten years continuous service
with the City, or
2) $60 respectively (or the cost of policy, whichever is less) for a minimum of twenty years continuous
service, payable to the medical insurance provider.
For employees retiring on or after July 1, 2002, post employment benefits are as follows for each bargaining
group:
General and Supervisory Bargaining Unit
For service retirement at age 55 or over employee will receive a medical insurance supplement in the
amount of:
1) $80 per month (or the cost of policy, whichever is less) with a minimum of ten years of continuous
service with the City, or
2) $140 per month (or cost of policy, whichever is less) with a minimum of 20 years of service.
Professional and Administrative Employees Association
For service retirement at age 55 or over employee will receive a medical insurance supplement in the
amount of:
1) $80 per month (or the cost of policy, whichever is less) with a minimum of ten years of continuous
service with the City, or
2) $140 per month (or cost of policy, whichever is less) with a minimum of 20 years of service.
Hermosa Beach Management Association
For service retirement at age 55 or over employee will receive a medical insurance supplement in the
amount of:
1) $60 per month (or the cost of policy, whichever is less) with a minimum of ten years of continuous
service with the City, or
2) Cost of policy for employee only with a minimum of 20 years of service.
70
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
10. RETIREMENT PLANS, Continued
B. Other Post -Employment Benefits, Continued
Police Management Association
For service retirement:
1) At age 55 or over employee will receive a medical insurance supplement in the amount of $200 per
month (or cost of policy, whichever is less) with a minimum of fifteen years of continuous service
with the City, or
2) At age 50 employee will receive a medical insurance supplement in the amount of $200 per month
(or cost of policy, whichever is less) with a minimum of 20 years of continuous service.
Police Officers Association
For service retirement prior to July 1, 2003:
1) At age 55 or over employee will receive a medical insurance supplement in the amount of $200 per
month (or cost of policy, whichever is less) with a minimum of fifteen years of total full-time
service with the City, or
2) At age 50 employee will receive a medical insurance supplement in the amount of $200 per month
(or cost of policy, whichever is less) with a minimum of 20 years of total full-time service.
For service retirement July 1, 2003 or later:
1) At age 50, or for disability retirement (no age restriction), employee will receive an amount up to
the employee only HMO premium available through the City's medical insurance provider with a
minimum of twenty years total full-time sworn police service with the City, or
2) At age 55, or for disability retirement (no age restriction), employee will receive an amount up to
the employee only HMO premium available through the City's medical insurance provider with a
minimum of fifteen years total full-time sworn police service with the City.
An actuary was hired to determine the annual required contribution for benefits for police officers retiring
after July 1, 2003. A temporary agency fund was established in 2003-2004 to account for contributions and
expenditures related to these benefits. The City is in the process of establishing an agreement with an
outside party for the administration of these funds. For fiscal year 2003-2004, two retirees received benefits
at a total cost of $7,374.
Firefighters Association
For service retirement at age 50 or disability retirement (no age restriction) employee will receive a medical
insurance supplement in the amount of:
1) $150 per month with a minimum of ten years of service with the City, or
2) $250 per month with a minimum of 20 years of service.
Estimated benefits payable are budgeted each fiscal year. For fiscal year 2003-2004, seventeen retirees
received benefits at a total cost of $25,158.
71
City of Hermosa Beach
Notes to Basic Financial Statements, Continued '
For the year ended June 30, 2004
11. COMMITMENTS AND CONTINGENCIES
A. Commitments I
The City had several outstanding or planned construction projects as of June 30, 2004. These projects are
evidenced by contractual commitments with contractors and include: I
Commitment
Project Spent to Date Remaining
Infrastructure $ 1,750,589 $ 2,112,606
Municipal Pier Upgrades 460,000 1,910,200 1
The infrastructure projects include both street and sewer projects that are funded by multiple funds
including the Tyco Fund, the Proposition C Fund, the Capital Improvement Fund and the Sewer Fund.
The Municipal Pier Upgrades project is a commitment of the General Fund and the Tyco Fund, with
remaining funding provided by a County Open Space Grant and a State Coastal Conservancy Grant. The
Valley Park Renovation project is a commitment of multiple funds including the Parks/Rec Facility Tax
Fund, the Sewer Fund and the Capital Improvement Fund.
B. Contingencies t
The City is a defendant in a number of lawsuits, which have arisen in the normal course of business. While
substantial damages are alleged in some of these actions, their outcome cannot be predicted with certainty.
12. SUBSEQUENT EVENTS 1
MacPherson Oil Project
The Cityentered into a lease with MacPherson Oil in 1986 to allow oil drillingfrom the CityYard site. During I/
g
the time that ensued, MacPherson was taking the necessary steps to obtain all required environmental reviews
and permits. In 1995 the voters enacted a new ordinance by way of an initiative, entitled Proposition E, tc'
prohibit oil drilling in the City. The issue of whether Proposition E applied to MacPherson's project was the
subject of a lawsuit initiated by Proposition E proponents. The City and MacPherson argued that Proposition E
did not preclude MacPherson from exercising its rights under the lease. The court of appeal, in a final opinion,,
ruled otherwise, and the oil project is now dead as a result of that decision.
MacPherson has now sued the City, by way of a cross-complaint in the legal action referred to above, for
damages due to the alleged breach of contract caused by Proposition E. Both parties filed motions for
summary judgment in the trial court. In its motion, MacPherson contended, among other things, that
enactment of Proposition E worked a breach of its lease with the City, entitling it to damages for lost
profits. It claims damages in excess of $100 million. In its motion, the City contended that because the
Court of Appeal has ruled Proposition E not to be an unconstitutional impairment of contract, it cannot
work a breach. The City further contended that the passage of Proposition E made performance of the
lease impossible. Finally, the. City contended that if MacPherson is entitled to any damages, they are
limited to restitution, and not lost profits.
I
72
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2004
12. SUBSEQUENT EVENTS, Continued
In December, 2003, the trial court granted the City's motion in its entirety, holding that MacPherson is not
entitled to proceed against the City for damages. MacPherson appealed this ruling to the court of appeal,
where it is now fully briefed. The City is vigorously defending the trial court ruling in its favor. We expect
oral argument to be scheduled soon. Should MacPherson prevail and obtain a reversal, the matter will be
remanded to the trial court for trial. That event could have a material effect on the financial position of the
City.
13. PRIOR PERIOD ADJUSTMENTS
Government -Wide Statements
The City recorded the following prior period
progress prior to the implementation of GASB
were recorded during the appraisal process
activities. Accordingly, the net assets as of July
Government -type Activities:
Net assets
Total governmental -type activities
Business -type Activities:
Total business -type activities
Fund Financial Statements
adjustments to record infrastructure projects that were in
Statement No. 34 and to reclassify infrastructure assets that
in governmental -type activities rather than business -type
1, 2003, have been restated as follow:
Net Assets
as Previously
Reported
Prior Period
Adjustments Net Assets
Capital Assets as Restated
$ 68,125,128 $ 719,025 $ 68,844,153
$ 68,125,128 $ 719,025 $ 68,844,153
$ 8,441,238 $ 147,674 $ 8,588,912
$ 8,441,238 $ 147,674 $ 8,588,912
The following prior period adjustments were made in the fund financial statements:
➢ The City made adjustments in the following funds as a result of infrastructure assets that were
recorded during the appraisal process in the General Fixed Assets Account Group rather than the
enterprise funds:
Major Fund:
Parking
Net Assets
as Previously Prior Period Net Assets
Reported Adjustments as Restated
$ 8,441,238 $ 147,674 $ 8,588,912
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74
REQUIRED SUPPLEMENTARY INFORMATION
75
City of Hermosa Beach
Required Supplementary Information
For the year ended June 30, 2004
1. FINANCIAL POLICIES
In 2001 - 2002, the City established financial goals for the following funds:
Contingency Fund - Goal of fund balance equal to 15% of the General Fund operating budget
appropriations for economic uncertainties, unforeseen emergencies.
Insurance Fund - Goal of $3,000,000 in retained earnings for claims reserves and catastrophic losses.
Equipment Replacement Fund - Goal of retained earnings equal to the accumulated amount calculated for
all equipment, based on replacement cost and useful life of equipment.
Compensated Absences Fund - Goal of fund balance equal to 50% funding for accrued liabilities for
employee vacation, sick and compensatory time.
Generally, any funds remaining unspent at year-end in the General Fund transfer equally to the
Contingency Fund, Insurance Fund, Equipment Replacement Fund and the Capital Improvement Fund. As
goals are met according to the above policy, transfers may be redirected to the Capital Improvement Fund
(since there are never enough capital improvement funds) or other funds, as the need arises. For 2003-2004,
the City Council deferred the transfer to the Equipment Replacement Fund and to the Contingency Fund
since goals had been met. A new fund was established to set aside funds for use during periods of
retirement rate instability. Therefore, in order to meet the established goals, funds were transferred to the
Compensated Absences Fund, the newly established Retirement Stabilization Fund, the Capital
Improvement Fund and the Insurance Fund.
2. BUDGETS AND BUDGETARY ACCOUNTING
Budgets are annually adopted for all governmental and proprietary fund types on a basis consistent with
generally accepted accounting principles. The City is required by its municipal code to adopt an annual
budget on or before June 30 for the ensuing fiscal year. From the effective date of the budget, the amounts
become the "annual appropriated budget."
The appropriated budget is prepared by fund, department and division. The City Council may amend the
budget by motion during the fiscal year. Expenditures may not legally exceed appropriations at the fund
level. The City Manager is authorized to transfer budgeted amounts between departments within the same
fund, however, any transfers between funds or revisions that alter total appropriations of any fund require
City Council approval. The legal level of control is therefore at the fund level. An example of this would be
the Finance Department, which has two divisions, Finance Administration, funded by the General Fund
and Finance Cashier, funded by the Parking Fund. The City Manager may approve a transfer from Finance
Administration to another department within the General Fund, however, a transfer from Finance
Administration to Finance Cashier would require City Council approval because the divisions are in two
different funds.
Supplemental appropriations, which increase appropriations, were made during the fiscal year, therefore,
"final" budgeted revenue and appropriation amounts shown in the financial statements represent the
original budget, modified for adjustments during the year. Appropriations lapse at the end of the fiscal
year.
76
City of Hermosa Beach
Required Supplementary Information, Continued
For the year ended June 30, 2004
2. BUDGETS AND BUDGETARY ACCOUNTING, Continued
Encumbrances - Under encumbrance accounting, purchase orders, contracts and other commitments for
expenditures are recorded to reserve that portion of the applicable appropriation. Encumbrance accounting
is employed as an extension of formal budgetary accounting. Unexpended appropriations lapse at year-
end.
Following are the budget comparison schedule for the General Fund and applicable major special revenue
funds for which an annual operating budget was adopted.
Budgetary Comparison Schedule - General Fund
Fund Balance, July 1
Resources (inflows):
.Property taxes
Other taxes
Licenses and permits
Fines and forfeitures
Use of money and property
Intergovernmental
Charges for services
Miscellaneous
Interest earned on investments
Transfers in
Total resources
Charges to appropriations (outflows):
Legislative and legal
General government
Public safety
Community development
Culture and recreation
Public works
Capital outlay
Transfers out
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund Balances, June 30
Budgeted Amounts Actual
Original Final Amounts
$ 456,731 $ 692,816 $ 692,816
5,522,931
7,024,502
545,351
230,000
219,600
1,113,181
1,067,390
352,299
62,919
2,037,937
5,717,112
7,436,874
547,238
280,000
225,600
835,546
1,065,345
409,407
48,589
2,138,644
5,885,480
8,155,205
664,169
365,811
315,605
959,110
1,321,294
532,178
28,816
2,138,850
18,176,110 18,704,355 20,366,518
810,123
1,690,250
10,570,763
1,181,147
1,010,155
2,213,672
331,000
700,000
841,848
1,280,315
10,704,939
1,249,339
1,113,302
2,227,215
505,275
3,946,762
752,541
1,126,004
10,334,723
1,077,453
932,447
2,073,653
181,769
3,946,762
18,507,110 21,868,995 20,425,352
(331,000) (3,164,640)
(58,834)
$ 125,731 $ (2,471,824) $
77
Positive
(Negative)
Variance with
Final Budget
168,368
718,331
116,931
85,811
90,005
123,564
255,949
122,771
(19,773)
206
1,662,163
89,307
154,311
370,216
171,886
180,855
153,562
323,506
1,443,643
3,105,806
633,982 $ 3,105,806
City of Hermosa Beach
Required Supplementary Information, Continued
For the year ended June 30, 2004
2. BUDGETS AND BUDGETARY ACCOUNTING, Continued
Budgetary Comparison Schedule - Tyco Fund
Positive
(Negative)
Budgeted Amounts Actual Variance with
Original Final Amounts Final Budget
Fund Balance, July 1 $
1,901,454 $ 1,908,181 $ 1,908,181
Resources (inflows):
Use of money and property 275,000 275,000 275,000
Interest earned on investments _ 43,275 42,990 25,470 (17,520)
Total resources 318,275 317,990 300,470 (17,520)
Charges to appropriations (outflows):
Capital outlay 1,861,499 1,442,429 30,614 1,411,815
Transfers out 275,000 275,000 275,000 -
Total charges to appropriations 2,136,499 1,717,429 305,614 1,411,815
Excess of resources over (under)
charges to appropriations (1,818,224) (1,399,439) (5,144) 1,394,295
Fund Balances, June 30 $ 83,230 $ 508,742 $ 1,903,037 $ 1,394,295
Budgetary Comparison Schedule — Contingency Fund
Positive
(Negative)
Budgeted Amounts Actual Variance with
Original Final Amounts Final Budget
Fund Balance, July 1 $ 2,493,329 $ 2,942,180 $ 2,942,180 $
Resources (inflows):
Interest earned on investments 50,661 61,424 38,494 (22,930)
Total resources 50,661 61,424 38,494 (22,930)
Charges to appropriations (outflows):
Transfers out 368,470 368,470
Total charges to appropriations 368,470 368,470
Excess of resources over (under)
charges to appropriations 50,661 (307,046) (329,976) (22,930)
Fund Balances, June 30 $ 2,543,990 $ 2,635,134 $ 2,612,204 $ (22,930)
78
City of Hermosa Beach
Required Supplementary Information, Continued
For the year ended June 30, 2004
2. BUDGETS AND BUDGETARY ACCOUNTING, Continued
Budgetary Comparison Schedule - Capital Improvement Fund
Fund Balance, July 1
Resources (inflows):
Interest earned on investments
Transfers in
Total resources
Charges to appropriations (outflows):
Capital outlay
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund Balances, June 30
Budgeted Amounts
Original Final
Positive
(Negative)
Actual Variance with
Amounts Final Budget
$ 1,697,303 $ 2,413,888 $ 2,413,888
46,227
275,000
321,227
1,809,280
1,809,280
(1,488,053)
43,678
1,034,319
1,077,997
1,644,259
1,644,259
(566,262)
28,786
1,034,317
1,063,103
758,118
758,118
304,985
(14,892)
(2)
(14,894)
886,141
886,141
871,247
$ 209,250 $ 1,847,626 $ 2,718,873 $ 871,247
79
City of Hermosa Beach
Required Supplementary Information, Continued
For the year ended June 30, 2004
Actuarial
Valuation
Date
6/30/2001
6/30/2002
6/30/2003
Actuarial
Valuation
Date
6/30/2001
6/30/2002
6/30/2003
Actuarial
Value
Date
6/30/2001
6/30/2002
6/30/2003
PUBLIC EMPLOYEE RETIREMENT SYSTEMS (PERS)
SCHEDULE OF FUNDING PROGRESS
(A)
Actuarial
Asset
Value
$ 23,817,395
22,146,887
22,158,2.09
(A)
Actuarial
Asset
Value
$ 28,814,227
27,092,413
27,490,370
(A)
Actuarial
Asset
Value
$ 13,815,326
13,153,033
13,526,717
Miscellaneous Plan
(B) (c)
Entry Age
Actuarial
Accrued
liability
18,384,409
19,851,090
23,938,282
(B)
Entry Age
Actuarial
Accrued
liability
$ 31,541,217
32,469,629
36,611,205
(B)
Entry Age
Actuarial
Accrued
Liability
$ 13,845,239
15,057,079
16,406,921
Unfunded
(Overfunded)
Actuarial
Accrued
Liability
(B -A)
$ (5,432,986)
(2,295,797)
1,780,073
Police Plan
(q
Unfunded
(Overfunded)
Actuarial
Accrued
Liability
(B -A)
$ 2,726,990
5,377,216
9,120,835
Fire Plan
(C)
Unfunded
Actuarial
Accrued
Liability
(B -A)
$ 29,913
1,904,046
2,880,204
80
(D) (E)
Funded
Ratio
(A/B)
129.6%
111.6%
92.6%
Covered
Payroll
$ 4,116,801
4,369,031
4,589,334
(D) (E)
Funded
Ratio
(A/B)
91.4%
83.4%
75.1%
Covered
Payroll
$ 2,576,494
2,820,718
3,030,766
(D) (E)
Funded
Ratio
(A/B)
99.8%
87.4%
82.4%
Covered
Payroll
$ 1,522,830
1,721,850
1,802,610
(F)
Unfunded
(Overfunded)
Actuarial
Liability as
Percentage of
Covered
Payroll
(C/E)
(132.0)%
(52.5)%
38.8%
(F.)
Unfunded
Actuarial
liability as
Percentage of
Covered
Payroll
(C/E)
105.8%
190.6%
300.9%
(F)
Unfunded
Actuarial
Liability as
Percentage of
Covered
Payroll
(C/E)
2.0%
110.6%
159.8%
SUPPLEMENTARY INFORMATION
81
This page intentionally left blank.
82
NON -MAJOR GOVERNMENTAL FUNDS
Special Revenue Funds:
Lighting and Landscaping District Fund - This fund is used to account for the Lighting Assessment District, which
was created for street lighting/median maintenance purposes pursuant to Street and highway Code 22500-22679.
State Gas Tax Fund - This fund is used to account for the City's share of state gasoline tax, which is restricted for
use on public streets. Restricted Transportation Development Act funds from Los Angeles County Transportation
Commission for the Strand Walkway Project and Bicycle Path Project are also accounted for in this fund.
AB 939 Fund - This fund is used to account for the fees collected in connection with solid waste collection. The
fees are used to implement a Source Reduction and Recycling Element and a Household Waste Element.
Compensated Absences Fund - This fund is used to account for funds set aside to provide for liabilities associated
with vacation time, sick time, etc. accumulated by employees.
County Gas Tax Fund - This fund is used to account for County Aid to City's funds for use on eligible streets of
general countywide interest.
Prop A Open Space Fund - This fund is used to account for funds generated by passage of the L.A. County Safe
Neighborhood Parks Bond Act by County voters for the purpose of improving parks and recreational facilities.
Parks and Recreation Facilities Fund - This fund is used to account for revenue from subdivision fees and park or
recreation facility tax fees on new dwellings. Generally, the funds are to be used for acquisition, improvements
and expansion of park or recreational facilities.
4% Utility Users Tax Fund - This fund is used to account for funds remaining from a 4% utility users tax which
was pledged for lease payments relating to certificates of participation (COPs) for the purchase of open space. The
COPs were defeased in 1997. Remaining funds must be spent for open space purposes.
Building Improvement Fund - This fund is intended to provide funds for ongoing building maintenance.
Lower Pier Administrative Expense Fund - This fund temporarily holds funds for payment of administrative
expenses for the assessment district. These funds are invested but interest is not allocated to this fund because it is
not required by the bond documents.
Myrtle District Administrative Expense Fund - This fund is used to account for all administrative expenditures
required for the Myrtle Avenue Utility Underground Special Assessment District.
Loma District Administrative Expense Fund - This fund is used to account for all administrative expenditures
required for the Loma Drive Utility Underground Special Assessment District.
Community Development Block Grant Fund - This fund is used to account for funds received for participation in
the federal block grant program. Projects must be approved by the County CDBG Commission.
83
NON -MAJOR GOVERNMENTAL FUNDS, Continued
Special Revenue Funds, Continued:
Proposition "A" Transit Fund - Transit revenue consists primarily of Proposition A fund (the 1/2 cent sales tax for
Los Angeles County transportation purposes). The City currently operates a Dial -a -Ride program, a taxi voucher
program, a commuter bus and subsidizes bus passes for senior citizens and students.
Proposition "C" Transit Fund - The Proposition C Fund is a fund which was added during 1992 to account for
funds allocated from the voter -approved 1/2 cent sales tax. Funds must be used for transit purposes.
Grants Fund - This fund is used to account for State and Federal grants for specific projects.
Office of Traffic Safety Grant - This fund is used to account for a grant from the State of California that addresses
decreasing alcohol and hit and run collisions and increasing seat belt, child safety seat and bivycle helmet use
through education and en
Air Quality Management District Fund - This fund is used to account for funds distributed by the South Coast Air
Quality Management district. The revenues are restricted to programs which promote reduction in air pollution
from motor vehicles.
Supplemental Law Enforcement Services Fund (COPS) - This fund is used to account for funds received from the
Citizen Option for Public Safety (COPS) program, established by the State Legislature in fiscal year 1996-1997.
Funds must be used for front line municipal police services and must supplement and not supplant existing
funding.
California Law Enforcement Equipment Program Fund (CLEEP) - Funds received for the purchase of high
technology law enforcement equipment.
Taskforce for Regional Auto Theft Prevention (TRAP) Fund - Funds provided by a $1 fee on vehicle registration
implemented by the Los Angeles County Board of Supervisor for a program to deter, investigate and prosecute
vehicle theft in Los Angeles County.
Sewer Fund - This fund is used to account for funds derived from a portion of the 6% utility user tax and
miscellaneous services charges. Funds are spent on the Sewer/Storm Drain Department and capital sewer
projects.
Asset Seizure and Forfeiture Fund - This fund is used to account for property seized as a result of illegal activity
and forfeited to the Police Department. Funds must be used for law enforcement purposes to supplement, not
replace or decrease, existing appropriations.
Fire Protection Fund - This fund is used to account for fire flow fees which are used to upgrade and enhance the
fire flow capabilities of the fire protection system.
Retirement Stabilization - This fund is used to account for funds set aside for use when retirement rates are
unstable and have therefore increased beyond expectations.
84
NON -MAJOR GOVERNMENTAL FUNDS, Continued
Special Revenue Funds, Continued:
Artesia Boulevard Relinquishment Fund - This fund is used to track the costs related to the transfer ownership of
Artesia Boulevard from the State to the City. During the fiscal year 2000-01, the State of California determined an
estimated cost for the rehabilitation of the street which will be contributed to the City as a part of the transfer of
ownership.
Lower Pier Avenue Assessment District Fund - This fund is used to account for proceeds from the sale of bonds for
downtown improvement. The bonds are secured by real property in the downtown area and repaid from
assessments against the property. The City is not obligated in any way with respect to the bonds.
Myrtle Utility Underground Improvement Fund - This fund is used to account for expenditures relating to the cost
for utility undergrounding in the special assessment district. It is also used to account for proceeds from bonds
sold to finance the cost of the undergrounding. The bonds are secured by liens against real property within the
district and will be repaid from assessments against the property. The City is not obligated in any way with
respect to the bonds.
Loma Utility Underground Improvement Fund - This fund is used to account for expenditures relating to the cost
for utility undergrounding in the special assessment district. It is also used to account for proceeds from bonds
sold to finance the cost of the undergrounding. The bonds are secured by liens against real property within the
district and will be repaid from assessments against the property. The City is not obligated in any way with
respect to the bonds.
Bayview Drive Underground District - This fund is used to account for funds set aside for the creation of a new
utility undergrounding district. The expenditures in this fund will be reimbursed to the City upon formation of
the district.
Bonnie Brae Underground District - This fund is used to account for funds set aside for the creation of a new
utility undergrounding district. The expenditures in this fund will be reimbursed to the City upon formation of
the district.
Beach Drive Underground District - This fund is used to account for funds set aside for the creation of a new
utility undergrounding district. The expenditures in this fund will be reimbursed to the City upon formation of
the district.
Prospect Utility Underground District - This fund is used to account for funds set aside for the creation of a new
utility undergrounding district. The expenditures in this fund will be reimbursed to the City upon formation of
the district.
,85
City of Hermosa Beach
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2004
Special Revenue Funds ,
Lighting and Prop A i
Landscaping State Compensated County Open
District Gas Tax AB 939 Absences Gas Tax Space
ASSETS I
Cash and investments $ 245,045 $ 9,788 $ 370,479 $ 943,509
Reimbursable grants receivable $ 41,113 I
Interest receivable on investments 676 45 1,930
Other accounts receivable 8,208 4,981
Property taxes receivable 9,093 i
Due from other funds
Other assets 902
Total assets $ 263,924 $ 9,833 $ 377,390 $ 943,509 $ - $ 41,113 1
LIABILITIES AND I FUND BALANCES
Liabilities:
Accounts payable $ 25,250 $ 20,021 i
Accrued wages and
compensated absences 26,198 4,843
Due to other funds $ 41,110
Deferred revenue 9,093
Advances to other funds
Other liabilities 1
Total liabilities 60,541 $ 24,864 $ - $ - 41,110
Fund Balances:
Reserved:
Bike paths 668
Strand walkways 2,992
Re -appropriations 22,000
Unreserved, designated
Unreserved, undesignated
Special revenue 203,383 6,173 330,526 943,509 3
Total fund balances 203,383 9,833 352,526 943,509 - 3
Total liabilities
and fund balances $ 263,924 $ 9,833 $ 377,390 $ 943,509 $ - $ 41,113
86 1
1
1
1
1 Special Revenue Funds
Community
IParks and Lower Pier Myrtle Dist Loma Dist Development
Recreation 4% Utility Building Admin Admin Admin Block Proposition "A" Proposition "C"
i
Facilities Users Tax Improvement Expense Expense Expense Grant Transit Transit
$ 197,418 $ 27,873 $ 4,620 $ 736 $ 8,695 $ 11,349 $ 253,315 $ 912,229
1 $ 70,378
1,010 153 18 45 63 1,325 4,761
1
1 $ 198,428 $ 28,026 $ 4,638 $ 736 $ 8,740 $ 11,412 $ 70,378 $ 254,640 $ 916,990
1
1 $ 450 $ 484 $ 583 $ 62,504 100,783 4,770
1 1,489 1
7,873
1
$ $ - $ 450 484 583 70,377 102,272 4,771
1
1
50,000
1
148,428 28,026 4,638 286 8,256 10,829 1 152,368 912,219
i198,428 28,026 4,638 286 8,256 10,829 1 152,368 912,219
$ 198,428 $ 28,026 $ 4,638 $ 736 $ 8,740 $ 11,412 $ 70,378 $ 254,640 $ 916,990
I
(Continued)
87
City of Hermosa Beach
Combining Balance Sheet, Continued
111
Non-Major Governmental Funds, Continued
June 30, 2004
Special Revenue Funds ,
California Law
Office of Air Supplemental Enforcement Taskforce for
Traffic Quality Law Equipment Regional
Safety Management Enforcement Program Auto Theft
Grants Grant District Services (CLEEP) Prevention
ASSETS
I
Cash and investments $ 16,573 $ 100,114 $ 36,765
Reimbursable grants receivable $ 324,668
I
Interest receivable on investments 90 370 334
Other accounts receivable 6,096 $ 54,477
Property taxes receivable
i
Due from other funds
Other assets
Total assets $ 324,668 $ $ 22,759 $ 100,484 $ 37,099 $ 54,477
I
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable $ 50,059 $ 897 $ 1,236
i
Accrued wages and
compensated absences $ 29 $ 4,989
i
Due to other funds 258,124 49,488
Deferred revenue
Advances from other funds
i
Other liabilities 62 10,386
Total liabilities 308,245 $ - 29 11,283 1,236 54,477
Fund Balances: I
Reserved:
Bike paths
Strand walkways
Re -appropriations 16,075 12,540
Unreserved, designated
I
Unreserved, undesignated
Special revenue 348 22,730 76,661 35,863
Total fund balances 16,423 22,730 89,201 35,863 '
Total liabilities
and fund balances $ 324,668 $ $ 22,759 $ 100,484 $ 37,099 $ 54,477
88 I
I
I
I
ISpecial Revenue Funds
Artesia Lower
Asset Blvd. Pier Ave Myrtle Utility Loma Utility Bayview Drive
Seizure and Fire Retirement Relinquish- Assessment Underground Underground Underground
IISewer Forfeiture Protection Stabilization ment District Improvement Improvement District
$ 962,264 $ 126,812 $ 380,112 $ 1,127,299 $ 515,556 $ 69,956 $ 4,518 $ 99,334
III6,800 658 1,975 1,930 2705 370 27 514
1,574 3,939
I
356,595
1 $ 1,327,233 $ 131,409 $ 382087 $ 1,129,229 $ 518,261 $ 70,326 $ 4,545 $ 99,848 $
I
I$ 37,086 $ 12,934
1
22,180
I$ 38,000
59,266 $ - 12,934 $ - $ $ - $ $ - 38,000
I
I
620,605 87,075
I25,842
647,362 105,567 282,078 1,129,229 518,261 70,326 4,545 99,848 (38,000)
I1,267,967 131,409 369,153 1,129,229 518,261 70,326 4,545 99,848 (38,000)
III$ 1,327,233 $ 131,409 $ 382,087 $ 1,129,229 $ 518,261 $ 70,326 $ 4,545 $ 99,848 $
1
(Continued)
89
City of Hermosa Beach
Combining Balance Sheet, Continued
Non -Major Governmental Funds, Continued
June 30, 2004
ASSETS
Cash and investments
Reimbursable grants receivable
Interest receivable on investments
Other accounts receivable
Property taxes receivable
Due from other funds
Other assets
Total assets
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable
Accrued wages and
compensated absences
Due to other funds
Deferred revenue
Advances from other funds
Other liabilities
Total liabilities
Fund Balances:
Reserved:
Bike paths
Strand walkways
Re -appropriations
Unreserved, designated
Unreserved, undesignated
Special revenue
Total fund balances
Total liabilities
and fund balances
90
Special Revenue Funds
Prospect
Bonnie Brae Beach Drive Utility Total Other
Underground Underground Underground Governmental
District District District Funds
$ 17,228 $ 6,441,587
436,159
25,799
79,275
9,093
356,595
902
$ $ 17,228 $ - $ 7,349,410
$ 228 $ 317,285
59,729
44,000 400,595I
9,093
$ 50,000 $ 200,000 288,000 11110,448
50,000 44,228 200,000 1,085,150
I
(50,000) (27,000) (200,000)
692
2,992
808,295
25,842
5,426,463
(50,000) (27,000) (200,000) 6,264,260
$ - $ 17,228 $ - $ 7,349,410
(Concluded)
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91
I
City of Hermosa Beach
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
I
Non-Major Governmental Funds
For the year ended June 30, 2004
I
Special Revenue Funds
Lighting and Prop A
I
Landscaping State Compensated County Open
District Gas Tax AB 939 Absences Gas Tax Space
REVENUES:
I
Property taxes $ 453,643
Other taxes I Fines and forfeitures
Intergovernmental $ 361,618 $ 20,557
Charges for services $ 59,104
I
Miscellaneous
Interest earned on investments 1,526 113 6,001 $ 53
Total revenues 455,169 361,731 65,105 $ - $ 53 20,557
EXPENDITURES:
Current: 1
General government 122,221
Public safety
Community development
Public works 519,525
Capital outlay
I
Total expenditures 519,525 - 122,221 - - -
REVENUES OVER (UNDER) EXPENDITURES (64,356) 361,731 (57,116) - 53 20,557
OTHER FINANCING SOURCES (USES):
Transfers in 121,125 236 759,317 1
Transfers out (20,463) (355,488) (148,972) (205) (20,557)
Total other financing sources (uses) 100,662 (355,488) 236 610,345 (205) (20,557) ,
REVENUES AND OTHER FINANCING
SOURCES OVER (UNDER) EXPENDITURES
I
AND OTHER FINANCING USES 36,306 6,243 (56,880) 610,345 (152)
FUND BALANCES: ,
Beginning of year 167,077 3,590 409,406 333,164 152 3
End of year $ 203,383 $ 9,833 $ 352,526 $ 943,509 $ $ 3 1
92 1
Special Revenue Funds
Community
Parks and Lower Pier Myrtle Dist Loma Dist Development
Recreation 4% Utility Building Admin Admin Admin Block Proposition "A" Proposition "C"
Facilities Users Tax Improvement Expense Expense Expense Grant Transit Transit
$ 7,000
$ 579,429
60,564 $ 11,174 $ 2,807 $ 9,083 $ 9,920
2,390 450 $ 66 136 170
69,954 11,624 66 2,807 9,219 10,090 579,429
$
1,763
4,515
4,099 4,458
11,603
567,895
4,515
1,763 4,099 4,458 579,498
65,439 11,624 66 1,044 5,120 5,632 (69) -
(40,800)
(1,021)
(2,959) (3,382)
152,368 912,219
(40,800) - (1,021) (2,959) (3,382)
152,368 912,219
24,639 11,624 66 23 2,161 2,250 (69) 152,368 912,219
173,789 16,402 4,572 263 6,095 8,579 70
$ 198,428
28,026 $ 4,638 $ 286 $ 8,256 $ 10,829 $ 1 $ 152,368 $ 912,219
(Continued)
93
City of Hermosa Beach
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Non -Major Governmental Funds, Continued
For the year ended June 30, 2004
REVENUES:
Property taxes
Other taxes
Fines and forfeitures
Intergovernmental
Charges for services
Miscellaneous
Interest earned on investments
Total revenues
EXPENDITURES:
Special Revenue Funds
Grants
California Law
Office of Air Enforcement Taskforce for
Traffic Quality Supplemental Equipment Regional
Safety Management Law Program Auto Theft
Grant District Enforcement (CLEEP) Prevention
$ 100,000
$ 89,448 $ 15,440 $ 22,662 $ 112,102
25 2,376 $ 550
89,448 15,440 22,687 102,376 550 112,102
Current:
General government
Public safety 79,257 15,440
Community development
Public works 4,432
Capital outlay
730
11,533
489 112,102
84,148 7,950
Total expenditures 83,689 15,440 730 95,681 8,439 112,102
REVENUES OVER (UNDER) EXPENDITURES 5,759 21,957 6,695 (7,889)
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out (21,227)
Total other financing sources (uses) (21,227)
REVENUES AND OTHER FINANCING
SOURCES OVER (UNDER) EXPENDITURES
AND OTHER FINANCING USES
5,759 21,957 (14,532) (7,889)
FUND BALANCES:
Beginning of year 10,664 773 103,733 43,752
End of year $ 16,423 $ $ 22,730 $ 89,201 $ 35,863
94
111
I
.1
ISpecial Revenue Funds
Artesia Lower
Asset Blvd. Pier Ave Myrtle Utility Loma Utility Bayview Drive
Seizure and Fire Retirement Relinquish- Assessment Underground Underground Underground
Sewer Forfeiture Protection Stabilization ment District Improvement Improvement District
I
111 $ 5,991
$ 7,711
I 34,267
66,581 $ 89,201 $ 125
22,253 2,437 6,452 $ 1,442 $ 7,300 $ 961 56 $ 1,434
1 130,812 8,428 95,653 1,442 7,300 961 181 1,434 $ -
I
1 1,625
591,751
I1,161,292 16,000 78,249 5,439 8,000
1,753,043 16,000 79,874 - 5,439 - 8,000
i(1,622,231) (7,572) 15,779 1,442 7,300 961 (5,258) 1,434 (8,000)
I716,622 1,127,787
(40,500) (125,749)
1 716,622 (40,500) (125,749) 1,127,787
(905,609) (48,072) (109,970) 1,129,229 7,300 961 (5,258) 1,434 (8,000)
I
2,173,576 179,481 479,123 510,961 69,365 9,803 98,414 (30,000)
I$ 1,267,967 $ 131,409 $ 369,153 $ 1,129,229 $ 518,261 $ 70,326 $ 4,545 $ 99,848 $ (38,000)
I(Continued)
95
City of Hermosa Beach
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Non -Major Governmental Funds, Continued
For the year ended June 30, 2004
REVENUES:
Property taxes
Other taxes
Fines and forfeitures
Intergovernmental
Charges for services
Miscellaneous
Interest earned on investments
Special Revenue Funds
Bonnie Brae Beach Drive Prospect Utility Total Other
Underground Underground Underground Governmental
District District District Funds
12,000
$ 453,643
107,000
5,991
1,208,967
93,371
261,455
56,191
Total revenues $ $ 12,000 $ 2,186,618
EXPENDITURES:
Current:
General government 133,271
Public safety 220,446
Community development 11,603
Public works 1,115,708
Capital outlay 15,276 200,000 2,148,764
Total expenditures - 15,276 200,000 3,629,792
REVENUES OVER (UNDER) EXPENDITURES (3,276) (200,000) (1,443,174)
OTHER FINANCING SOURCES (USES):
Transfers in 3,789,674
Transfers out (781,323)
Total other financing sources (uses)
3,008,351
REVENUES AND OTHER FINANCING
SOURCES OVER (UNDER) EXPENDITURES
AND OTHER FINANCING USES - (3,276) (200,000) 1,565,177
FUND BALANCES:
Beginning of year
End of year
96
(50,000) (23,724) 4,699,083
$ (50,000) $ (27,000) $ (200,000) $ 6,264,260
(Concluded)
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Lighting and Landscaping District
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Property taxes
Interest earned on investments
Interest earned on investments
Amount available for appropriation
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 167,077 $ 167,077 $
455,900 453,643
1,884 1,526
7,781 121,125
465,565
(2,257)
113,344
576,294 110,729
Charges to appropriations (outflows):
Public works 565,655 519,525 46,130
Transfers out 20,463 20,463
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
586,118
(120,553)
539,988 46,130
36,306 156,859
Fund balance, June 30, 2004 $ 46,524 $ 203,383 $ 156,859
.97
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
State Gas Tax
For the year ended June 30, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2003 $ 3,590 $ 3,590 $ -
I
Resources (inflows):
Intergovernmental 357,151 361,618 4,467
I
Interest earned on investments 54 113 59
Amount available for appropriation 357,205 361,731 4,526
Charges to appropriations (outflows): 111
Transfers out 355,488 355,488
Total charges to appropriations 355,488 355,488
1
Excess of resources over (under)
charges to appropriations 1,717 6,243 4,526
Fund balance, June 30, 2004 $ 5,307 $ 9,833 $ 4,526
1
1
1
1
1
1
1
1
98 '
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
AB 939
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Charges for services
Interest earned on investments
Transfers in
Amount available for appropriation
Charges to appropriations (outflows):
General government
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 409,406 $ 409,406 $
59,020 59,104 84
9,844 6,001 (3,843)
236 236 -
69,100 65,341 (3,759)
213,519 122,221 91,298
213,519 122,221 91,298
(144,419)
(56,880) 87,539
Fund balance, June 30, 2004 $ 264,987 $ 352,526 $ 87,539
99
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Compensated Absences
For the year ended June 30, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2003 $ 333,164 $ 333,164 $
Resources (inflows):
Operating transfers in 759,316 759,317 1
Amount available for appropriation 759,316 759,317 1
Charges to appropriations (outflows): ,
Transfers out 148,972 148,972
Total charges to appropriations 148,972 148,972
Excess of resources over (under)
charges to appropriations 610,344 610,345 1
Fund balance, June 30, 2004 $ 943,508 $ 943,509 $ 1
1
100 '
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
County Gas Tax
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Interest earned on investments
Amount available for appropriation
Charges to appropriations (outflows):
Transfers out
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
152 $ 152 $
53
53
206 205
206 205
(206) (152)
53
53
1
1
54
Fund balance, June 30, 2004 $ (54) $ - $ 54
101
1
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Prop A Open Space
For the year ended June 30, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2003 $ 3 $ 3 $ I
Resources (inflows):
Intergovernmental 162,280 20,557 (141,723)
Miscellaneous -
Amount available for appropriation 162,280 20,557 (141,723)
Charges to appropriations (outflows): 1
Capital outlay 141,723 141,723
Transfers out 20,557 20,557
I
Total charges to appropriations 162,280 20,557 141,723
Excess of resources over (under) 1
charges to appropriations -
Fund balance, June 30, 2004 $ 3 $ 3 $
I
I
i
102 i
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Parks and Recreation Facilities
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Other taxes
Miscellaneous
Interest earned on investments
Amount available for appropriation
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 173,789 $ 173,789 $
7,000 7,000
41,168 60,564
4,110 2,390
52,278
19,396
(1,720)
69,954 - 17,676
Charges to appropriations (outflows):
Culture and recreation 2,500 2,500
Capital outlay 182,768 4,515 178,253
Transfers out 40,800 40,800
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2004
103
226,068
(173,790)
45,315 180,753
24,639 198,429
(1) $ 198,428 $ 198,429
I
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
4% Utility Users Tax
For the year ended June 30, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2003 $ 16,402 $ 16,402 $ - I
Resources (inflows):
Miscellaneous 11,174 11,174
Interest earned on investments 733 450 (283)
Amount available for appropriation 733 11,624 10,891
Fund balance, June 30, 2004 $ 17,135 $ 28,026 $ 10,891 1
1
1
1
1
104 ,
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Building Improvement
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Interest earned on investments
Amount available for appropriation
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 4,572 $ 4,572 $
104
104
66 (38)
66 (38)
Fund balance, June 30, 2004 $ 4,676 $ 4,638 $ (38)
105
I
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Lower Pier Administrative Expense
For the year ended June 30, 2004
Positive '
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2003 $ 263 $ 263 $ -
Resources (inflows):
Miscellaneous 2,807 2,807 - I Amount available for appropriation 2,807 2,807 -
Charges to appropriations (outflows):
General government 1,763 1,763 -
Transfers out 1,021 1,021 -
Total charges to appropriations 2,784 2,784 _ - I
Excess of resources over (under)
charges to appropriations 23 23
Fund balance, June 30, 2004 $ 286 $ 286 $
106 I
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Myrtle District Administrative Expense
For the year ended June 30, 2004
Fund balance, July 1, 2003
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 6,095 $ 6,095 $
Resources (inflows):
Miscellaneous 9,083 9,083
Interest earned on investments 139 136
Amount available for appropriation
9,777 9,219
(3)
(3)
Charges to appropriations (outflows):
General government 5,718 4,099 1,619
Transfers out 2,959 2,959
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
8,677 7,058 1,619
545 2,161 1,616
Fund balance, June 30, 2004 $ 6,640 $ 8,256 $ 1,616
107
1
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual '
Loma District Administrative Expense
For the year ended June 30, 2004 ,
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2003 $ 8,579 $ 8,579 $ -
I
Resources (inflows):
Miscellaneous 9,920 9,920 -
Interest earned on investments 202 170 (32)
Amount available for appropriation 10,122 10,090 (32)
Charges to appropriations (outflows): I
General government 6,200 4,458 1,742
Transfers out 3,382 3,382 -
Total charges to appropriations 9,582 7,840 1,742
Excess of resources over (under)
I
charges to appropriations 540 2,250 1,710
Fund balance, June 30, 2004 $ 9,119 $ 10,829 $ 1,710
108 '
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Community Development Block Grant
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Intergovernmental
Amount available for appropriation
Charges to appropriations (outflows):
Community development
Capital outlay
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2004
109
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 70 $ 70 $
624,539 579,429 (45,110)
624,539 579,429 (45,110)
11,609 11,603 6
613,000 567,895 45,105
624,609 579,498 45,111
(70) (69) 1
1 $ 1
I
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual '
Proposition "A" Transit
For the year ended June 30, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2003
Resources (inflows):
Transfers in 152,368 152,368 111Amount available for appropriation 152,368 152,368
Fund balance, June 30, 2004 $ $ 152,368 $ 152,368
1
1
I
I
1
1
1
110 ,
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Proposition "C" Transit
For the year ended June 30, 2004
Fund balance, July 1, 2003
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ - $
Resources (inflows):
Transfers in 912,219 912,219
Amount available for appropriation
Fund balance, June 30, 2004
111
912,219 912,219
$ 912,219 $ 912,219
1
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Grants
For the year ended June 30, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2003 $ 10,664 $ 10,664 $
1
Resources (inflows):
Intergovernmental 414,239 89,448 (324,791)
Amount available for appropriation 414,239 89,448 (324,791)
Charges to appropriations (outflows):
Public safety 89,395 79,257 10,138
Public works 11,507 4,432 7,075
Capital outlay 324,000 324,000 1
Total charges to appropriations 424,902 83,689 341,213
Excess of resources over (under)
charges to appropriations (10,663) 5,759 16,422
Fund balance, June 30, 2004 1 $ 16,423 $ 16,422 1
1
1
1
1
1
1
1
112 1
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Office of Traffic Safety Grant
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Intergovernmental
Amount available for appropriation
Charges to appropriations (outflows):
Public safety
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2004
113
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
15,441 15,440 (1)
15,441 15,440 (1)
15,441
15,441
15,440 1
15,440 1
$ - $
I
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Air Quality Management District
For the year ended June 30, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2003 $ 773 $ 773 $
Resources (inflows):
Intergovernmental 22,000 22,662 662
Interest earned on investments 5 25 20
Amount available for appropriation 22,005 22,687 682
Charges to appropriations (outflows): I
General government 1,000 730 270
Total charges to appropriations 1,000 730 270
Excess of resources over (under)
charges to appropriations 21,005 21,957 952
111
Fund balance, June 30, 2004 $ 21,778 $ 22,730 $ 952
114 '
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Supplemental Law Enforcement Services
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Other taxes
Interest earned on investments
Amount available for appropriation
Charges to appropriations (outflows):
Public safety
Capital outlay
Transfers out
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 103,733 $ 103,733 $
100,000 100,000
2,953 2,376 (577)
102,953 102,376 (577)
54,000 11,533
95,260 84,148
21,227 21,227
170,487 116,908
42,467
11,112
53,579
(67,534) (14,532) 53,002
Fund balance, June 30, 2004 $ 36,199 $ 89,201 $ 53,002
115
i
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
California Law Enforcement Equipment Program
For the year ended June 30, 2004
Positive
I
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
I
Fund balance, July 1, 2003 $ 43,752 $ 43,752 $
Resources (inflows):
Interest earned on investments 1,072 550 (522) 111Amount available for appropriation 1,072 550 (522)
Charges to appropriations (outflows):
Public safety 116 489 (373)
Capital outlay 42,665 7,950 34,715
Total charges to appropriations 42,781 8,439 34,342
1
Excess of resources over (under)
charges to appropriations (41,709) (7,889) 33,820
Fund balance, June 30, 2004 $ 2,043 $ 35,863 $ 33,820
1
1
1
1
1
1
1
116 ,
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Taskforce for Regional Auto Theft Prevention
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Intergovernmental
Amount available for appropriation
Charges to appropriations (outflows):
Public safety
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
- $ $
148,200
148,200
148,200
148,200
112,102 (36,098)
112,102 (36,098)
112,102 36,098
112,102 36,098
Fund balance, June 30, 2004
117
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Sewer
For the year ended June 30, 2004
Positive111
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2003 $ 2,173,576 $ 2,173,576 $
Resources (inflows): i
Intergovernmental 7,919 7,711 (208)
Charges for services 20,670 34,267 13,597
Miscellaneous 8,896 66,581 57,685
Interest earned on investments 42,003 22,253 (19,750)
Transfers in 716,622 716,622 -
Amount available for appropriation 796,110 847,434 51,324
Charges to appropriations (outflows): I
Public works 655,369 591,751 63,618
Capital outlay 2,147,530 1,161,292 986,238
I
Total charges to appropriations 2,802,899 1,753,043 1,049,856
Excess of resources over (under)
I
charges to appropriations (2,006,789) (905,609) 1,101,180
Fund balance, June 30, 2004 $ 166,787 $ 1,267,967 $ 1,101,180
1
1
1
1
1
1
118 1
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Asset Seizure and Forfeiture
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Fines and forfeitures
Interest earned on investments
Amount available for appropriation
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 179,481 $ 179,481 $
1,700 5,991 4,291
3,966 2,437 (1,529)
5,666 8,428 2,762
Charges to appropriations (outflows):
Capital outlay 16,000 16,000
Transfers out 40,500 40,500
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2004
119
56,500 56,500
(50,834)
(48,072) 2,762
$ 128,647 $ 131,409 $ 2,762
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Fire Protection
For the year ended June 30, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2003 $ 479,123 $ 479,123 $
Resources (inflows):
Miscellaneous 67,200 89,201 22,001
Interest earned on investments 10,749 6,452 (4,297)
Amount available for appropriation 77,949 95,653 17,704
Charges to appropriations (outflows):
Public Safety 5,179 1,625
Capital outlay 199,791 78,249 121,542
Transfers out 125,749 125,749
Total charges to appropriations 330,719 205,623 125,096
Excess of resources over (under)
charges to appropriations (252,770) (109,970) 142,800
Fund balance, June 30, 2004 $ 226,353 $ 369,153 $ 142,800
120
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Retirement Stabilization
For the year ended June 30, 2004
Fund balance, July 1, 2003
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ - $
Resources (inflows):
Interest earned on investments 1,442 1,442
Transfers in 1,127,787 1,127,787
Amount available for appropriation
1,127,787
1,129,229 1,442
Fund balance, June 30, 2004 $ 1,127,787 $ 1,129,229 $ 1,442
121
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Artesia Boulevard Relinquishment
For the year ended June 30, 2004
Fund balance, July 1, 2003
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 510,961 $ 510,961
Resources (inflows):
Interest earned on investments 12,124 7,300 (4,824)
Amount available for appropriation 12,124 7,300 (4,824)
Fund balance, June 30, 2004 $ 523,085 $ 518,261 $ (4,824)
122
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Lower Pier Avenue Assessment District
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Interest earned on investments
Amount available for appropriation
Positive
Budgeted . (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 69,365 $ 69,365 $
1,636 961 (675)
1,636 961 (675)
Fund balance, June 30, 2004 $ 71,001 $ 70,326 $ (675)
1.23
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
111
Myrtle Utility Underground Improvement
For the year ended June 30, 2004
Positive
I
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
I
Fund balance, July 1, 2003 $ 9,803 $ 9,803 $ -
Resources (inflows):
Miscellaneous 125 125
Interest earned on investments 128 56 (72)
Amount available for appropriation 128 181 53
Charges to appropriations (outflows): I
Capital outlay 5,440 5,439 1
Total charges to appropriations 5,440 5,439 1
Excess of resources over (under)
charges to appropriations (5,312) (5,258) 54
Fund balance, June 30, 2004 $ 4,491 $ 4,545 $ 54
1
1
1
1
1
1
1
124 '
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Loma Utility Underground Improvement
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Interest earned on investments
Amount available for appropriation
Excess of resources over (under)
charges to appropriations
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 98,414 $ 98,414 $
2,322 1,434 (888)
2,322 1,434 (888)
2,322 1,434 (888)
Fund balance, June 30, 2004 $ 100,736 $ 99,848 $ (888)
125
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Bayview Drive Underground District
For the year ended June 30, 2004
Fund balance, July 1, 2003
Charges to appropriations (outflows):
Capital outlay
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ (30,000) $ (30,000) $
8,000 8,000
8,000 8,000
(8,000) (8,000)
Fund balance, June 30, 2004 $ (38,000) $ (38,000) $
126
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Bonnie Brae Underground District
For the year ended June 30, 2004
Fund balance, July 1, 2003
Charges to appropriations (outflows):
Capital outlay
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ (50,000) $ (50,000) $
Fund balance, June 30, 2004 $ (50,000) $ (50,000) $
127
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Beach Drive Underground District
For the year ended June 30, 2004
Fund balance, July 1, 2003
Resources (inflows):
Miscellaneous
Amount available for appropriation
Charges to appropriations (outflows):
Capital outlay
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2004
128
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ (23,724) $ (23,724) $
12,000 12,000
12,000 12,000
1
1
1
1
1
1
1
15,276 5,000 1
20,276
1
1
1
1
1
1
1
1
1
1
1
20,276 15,276 5,000
(20,276) (3,276) 17,000
$ (44,000) $ (27,000) $ 17,000
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Prospect Utility Underground District
For the year ended June 30, 2004
Fund balance, July 1, 2003
Charges to appropriations (outflows):
Capital outlay
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
200,000 200,000
200,000 200,000
(200,000) (200,000)
Fund balance, June 30, 2004 $ (200,000) $ (200,000) $
129
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130
NON -MAJOR PROPRIETARY FUNDS
Proposition "A" Transit Fund - Transit revenue consists primarily of Proposition A fund (the 1/2 cent sales tax
for Los Angeles County transportation purposes). The City currently operates a Dial -a -Ride program, a taxi
voucher program, a commuter bus and subsidizes bus passes for senior citizens and students.
Proposition "C" Transit Fund - The Proposition C Fund is a fund which was added during 1992 to account for
funds allocated from the voter -approved 1/2 cent sales tax. Funds must be used for transit purposes.
131
City of Hermosa Beach
Combining Statement of Net Assets
Non -Major Proprietary Funds
For the year ended June 30, 2004
Total
I
Proposition "A" Proposition "C" Other Enterprise
Transit Transit Funds
ASSETS
I
Current assets:
Cash and investments
Interest receivable on investments
Other accounts receivable
Total current assets
Total assets -
LIABILITIES
Current liabilities:
Accounts payable
Accrued wages and compensated absences -
Total liabilities
NET ASSETS
Restricted for special projects - 1
Total net assets
1
* The Proposition "A" and "C" Transit funds were reclassified as special revenue funds as shown on page 87.
1
1
1
1
1
1
132 1
City of Hermosa Beach
Combining Statement of Revenues, Expenses and Changes in Net Assets
Non -Major Proprietary Funds
For the year ended June 30, 2004
Total
Proposition "A" Proposition "C" Other Enterprise
Transit Transit Funds
OPERATING REVENUES:
Other taxes $ 309,038 $ 221,735 $ 530,773
Charges for services 14,384 14,384
Total operating revenues 323,422 221,735 545,157
OPERATING EXPENSES:
Salaries and wages 33,442 33,442
Contractor services 276,661 48,119 324,780
Supplies 10 10
Total operating expenses 310,113 48,119 358,232
OPERATING INCOME (LOSS) 13,309 173,616 186,925
NONOPERATING REVENUES (EXPENSES):
Interest earned on investments 2,410 11,228 13,638
Total nonoperating revenues (expenses) 2,410 11,228 13,638
INCOME (LOSS) BEFORE TRANSFERS 15,719 184,844 200,563
Transfers out (152,368) (912,219) (1,064,587)
NET INCOME (LOSS) (136,649) (727,375) (864,024)
NET ASSETS:
Beginning of the year
End of the year
133
136,649
727,375 864,024
City of Hermosa Beach
Combining Statement of Cash Flows
Non -Major Proprietary Funds
For the year ended June 30, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers
Cash payments to suppliers for goods and services
Cash payments to employees for services
Net cash provided by (used for) operating activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers out
Net cash provided by (used for) noncapital financing activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest earned on investments
Net cash provided (used) by investing activities
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS:
Beginning of year
Ending of year
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating income (loss)
Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities:
Changes in operating assets and liabilities:
Interest receivable on investments
Other accounts receivable
Accounts payable
Accrued wages and compensated absences
Total adjustments
Net cash provided (used) by operating activities:
134
Total
Proposition "A" Proposition "C" Other Enterprise
Transit Transit Funds
$ 352,305 $ 247,617 $ 599,922
(339,022) (48,119) (387,141)
(35,060) (1) (35,061)
(21,777) 199,497 177,720
(152,368) (912,219) (1,064,587)
(152,368) (912,219) (1,064,587) I
2,410 11,228 13,638 I
2,410 11,228 13,638
(171,735) (701,494) (873,229)
171,735 701,494 873,229
$ 13,309 $ 173,616 $ 186,925
1,053 4,275 5,328 I 27,830 21,607 49,437
(62,351) (62,351)
(1,618) (1) (1,619) I (35,086) 25,881 (9,205)
$ (21,777) $ 199,497 $ 177,720
INTERNAL SERVICE FUNDS
Insurance Fund - This fund was created to account for costs associated with the City's insurances: liability,
workers' compensation, unemployment, auto, property and officials' bonds.
Equipment Replacement Fund - This fund was created to provide ongoing funds to replace assets at the end of the
assets' useful life.
135
City of Hermosa Beach
Combining Statement of Net Assets
All Internal Service Funds
June 30, 2004
ASSETS
Current assets:
Cash and investments
Deposits
Other assets
Total current assets
Property and equipment, net of
accumulated depreciation
Total assets
LIABILITIES
Current liabilities:
Current portion of long-term liabilities
Accounts payable
Accrued wages and compensated absences
Total current liabilities
Long-term liabilities:
Workers' compensation claims payable
General liability claims payable
Less current portion above
Total long-term liabilities
Total liabilities
NET ASSETS
Invested in capital assets
Unrestricted
Total net assets
136
1
1
1
Equipment
Insurance Replacement
Fund Fund Total
1.
$ 4,777,534 $ 2,674,457 $ 7,451,991
80,000 80,000
827 2,038 2,865
4,858,361 2,676,495 7,534,856
2,196,392 2,196,392
4,858,361 4,872,887 9,731,248
1
637,000 637,000
106,348 26,801 133,149
18,657 42,810 61,467
762,005 69,611 831,616
2,563,966 2,563,966 1
370,675 370,675
(637,000) (637,000)
2,297,641 2,297,641 1
3,059,646 69,611 3,129,257
1
2,196,392 2,196,392
1,798,715 2,606,884 4,405,599
$ 1,798,715 $ 4,803,276 $ 6,601,991
1
1
1
1
City of Hermosa Beach
Combining Statement of Revenues, Expenses, and Changes in Net Assets
All Internal Service Funds
For the year ended June 30, 2004
Equipment
Insurance Replacement
Fund Fund
OPERATING REVENUES:
Total
Charges for services $ 1,412,810 $ 1,165,511 $ 2,578,321
Miscellaneous 31,644 2,539 34,183
Total operating revenues
OPERATING EXPENSES:
1,444,454
1,168,050 2,612,504
Salaries and wages 100,710 258,559 359,269
Contractor services 412,963 97,117 510,080
Supplies 1,258 184,236 185,494
Claims expense 1,636,619 1,636,619
Depreciation 435,104 435,104
Total operating expenses
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES):
Loss on sale of assets
2,151,550
(707,096)
975,016 3,126,566
193,034 (514,062)
(7,152) (7,152)
Total nonoperating revenues (expenses) (7,152) (7,152)
INCOME (LOSS) BEFORE TRANSFERS (707,096) 185,882 (521,214)
Transfers m 761,869 67,331 829,200
Transfers out (63,901) (63,901)
NET INCOME (LOSS) 54,773 189,312 244,085
NET ASSETS
Beginning of the year 1,743,942 4,613,964 6,357,906
End of the year $ 1,798,715 $ 4,803,276 $ 6,601,991
137
City of Hermosa Beach
Combining Statement of Cash Flows
All Internal Service Funds
For the year ended June 30, 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers
Cash received for services from other funds
Cash payments to suppliers of goods and services
Cash payments to employees for services
Insurance premiums and settlements
Cash received from (payments to) others
Net cash provided by (used for) operating activities
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in
Transfers out
Net cash provided by (used for) noncapital financing activities
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Loss on sale of capital assets
Acquisition of capital assets
Net cash provided (used for) by capital and related financing activities
Net increase (decrease) in cash and cash equivalents
CASH AND CASH EQUIVALENTS:
Beginning of year
End of year
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Operating income (loss)
Adjustments to reconcile net operating income (loss)
to net cash provided (used) by operating activities:
Depreciation
Changes in current assets and liabilities:
Other accounts receivable
Other assets
Worker's compensation claims payable
General liability claims payable
Accounts payable
Accrued wages and compensated absences
Total adjustments
Net cash provided (used) by operating activities
138
Equipment '
Replacement
placement
Fund Fund Total
$ 919 $ 13,422 $ 14,341
1,412,810 1,165,511 2,578,321 I (343,106) (309,556) (652,662)
(100,684) (258,995) (359,679)
(1,044,611) (1,044,611) I 31,644 2,539 34,183
(43,028) 612,921 569,893
761,869 67,331 829,200
(63,901) (63,901)
761,869 3,430 765,299
(7,152) (7,152)
(204,290) (204,290)
(211,442) (211,442)
718,841 404,909 1,123,750
4,058,693 2,269,548 6,328,241
$ 4,777,534 $ 2,674,457 $ 7,451,991
$ (707,096) $ 193,034 $ (514,062)
435,104 435,104
6,750 6,750
919 6,672 7,591
794,835 794,835
(202,827) (202,827)
71,115 (28,203) 42,912
26 (436) (410)
664,068 419,887 1,083,955
$ (43,028) $ 612,921 $ 569,893
FIDUCIARY FUNDS
The Agency Fund of the City was established to account for transactions related to payments for limited obligation
bonds for the Lower Pier Avenue Assessment District, the Myrtle Avenue Utility Undergrounding Assessment
District, the Loma Drive Utility Undergrounding Assessment District and the Other Post Employment Benefits -
Police Fund.
139
1
City of Hermosa Beach
Combining Statement of Fiduciary Net Assets I
All Agency Funds
June 30, 2004
Lower Pier Other Post I
District Myrtle Avenue Loma Drive Employment
Redemption Assessment Assessment Benefits - Police Total
ASSETS I
Cash and investments $ 30,375 $ 93,773 $ 106,993 $ 121,270 $ 352,411
Interest receivable 162 487 559 1,208 I
Other accounts receivable 2,737 4,313 3,001 10,051
Total assets $ 33,274 $ 98,573 $ 110,553 $ 121,270 $ 363,670 I
LIABILITIES
Assessment: '
Installment account $ 33,274 $ 98,573 $ 110,553 $ 242,400
OPEB contribution from City $ 121,270 121,270
Total liabilities $ 33,274 $ 98,573 $ 110,553 $ 121,270 $ 363,670 '
City of Hermosa Beach
Combining Statement of Changes in Assets and Liabilities
All Agency Funds
For the year ended June 30, 2004
ASSETS
Lower Pier District Redemption Fund:
Cash and investments
Interest receivable
Other accounts receivable
Myrtle Avenue Assessment Fund:
Cash and investments
Interest receivable
Other accounts receivable
Loma Drive Assessment Fund:
Cash and investments
Interest receivable
Other accounts receivable
Other Post Employment Benefits - Police:
Cash and investments
Total assets
LIABILITIES
Lower Pier District Redemption Fund:
Assessment installment account
Myrtle Avenue Assessment Funds:
Assessment installment account
Loma Drive Assessment Fund:
Assessment installment account
Other Post Employment Benefits - Police:
OPEB contribution from City
Balance Balance
July 1, 2003 Additions Deletions June 30, 2004
$ 31,803 $ 45,300 $ (46,728) $ 30,375
198 186 (277) 162
- 2,737 2,737
93,726 114,887 (114,840) 93,773
573 556 (642) 487
2,899 5,188 (3,774) 4,313
99,425 132,113 (124,545) 106,993
605 638 (684) 559
2,577 7,490 (7,066) 3,001
128,644 (7,374) 121,270
$ 231,806 $ 437,739 $ (305,875) $ 363,670
$ 32,001 $ 48,223 $ (46,950) $ 33,274
97,198 120,631 (119,256) 98,573
102,607 140,241 (132,295) 110,553
128,644 (7,374) 121,270
Total liabilities $ 231,806 $ 437,739 $ (305,875) $ 363,670
141
This page intentionally left blank.
142
CAPITAL ASSETS USED IN THE OPERATING
OF GOVERNMENTAL FUNDS
143
City of Hermosa Beach
Capital Assets Used in the Operation of Governmental Funds
Schedule By Source*
June 30, 2004
GOVERNMENTAL FUNDS CAPITAL ASSETS:
Land
Buildings and improvements
Improvements other than buildings
Machinery and equipment
Vehicles
Construction in progress
Infrastructure
Total governmental funds capital assets
Accumulated depreciation
Total governmental funds capital assets, net
INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE:
State grants
General fund revenues
Special revenue funds revenues
Donated assets
Total governmental funds capital assets
Accumulated depreciation
Total governmental funds capital assets, net
* This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets
reported in the internal service funds are excluded from the above amounts. Generally, the capital assets of internal service
funds are included as governmental activities in the statement of net assets.
144
1
1
1
1
$ 17,676,802
3,491,998
6,861,043
1,820,552
24,352
2,548,967
36,487,235
68,910,949
(16,992,135)
$ 51,918,814
$ 36,116
31,238,726
37,324,181
311,926
68,910,949
(16,992,135) 1
$ 51,918,814
City of Hermosa Beach
Capital Assets Used in the Operation of Governmental Funds
Schedule by Function and Activity*
June 30, 2004
Land
GOVERNMENTAL FUNDS
CAPITAL ASSETS
Buildings Improvements Machinery
and Other than and Construction
Structures Buildings Equipment Vehicles Infrastructure in Progress Total
General government $ 60,000 $ 2,254,173 $ 97,728 $ 333,353 $ 2,745,254
Public safety 194,855 694,262 1,053,054 $ 24,352 1,966,523
Community development 99,858 16,491 116,349
Culture and recreation 650,000 573,559 203,555 125,530 1,552,644
Public works 16,966,802 469,411 5,765,640 292,124 $ 36,487,235 $ 2,548,967 62,530,179
Total governmental funds capital assets 17,676,802 3,491,998 6,861,043 1,820,552 24,352 36,487,235 2,548,967 68,910,949
Accumulated depreciation (1,430,397) (2,224,328) (932,298) (290) (12,404,822) (16,992,135)
Total governmental funds capital assets $ 17,676,802 $ 2,061,601 $ 4,636,715 $ 888,254 $ 24,062 $ 24,082,413 $ 2,548,967 $ 51,918,814
* This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in the internal service funds are excluded from
the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets.
145
City of Hermosa Beach
Capital Assets Used in the Operation of Governmental Funds
Schedule of Changes in Capital Assets - By Function by Activity*
For the year ended June 30, 2004
Capital Capital
Assets Inventory Assets
July 1, 2003 Additions Deletions Adjustment June 30, 2004
Function and Activity:
General government $ 3,064,720 $ (319,466) $ 2,745,254
Public safety 1,560,606 $ 405,917 1,966,523
Community development 153,965 (37,616) 116,349
Culture and recreation 1,553,428 102,193 (102,977) 1,552,644
Public works 60,378,105 2,235,060 (1,032,820) $ 949,834 62,530,179
Total governmental funds capital assets 66,710,824 2,743,170 (1,492,879) 949,834 68,910,949
Accumulated depreciation (16,703,208) (372,319) 83,392 - (16,992,135)
Total governmental funds capital assets, net $ 50,007,616 $ 2,370,851 $ (1,409,487) $ 949,834 $ 51,918,814
This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in the internal service
funds are excluded from the above amounts.
146
STATISTICAL SECTION
UN EN UM MI IIIII 11111 IIIII N ON MI I IIIIII E IIII NM MI MI IIIII MI
STATISTICAL SECTION
® woo.saxepupoiworM 1616-ZZt'-008 said saxapui leuoissa;oad
NM 11111 UN SIB MIMI 1111 NIB nil Ell 11111 all 11111 NIB NIB OM NB r
1
City of Hermosa Beach
Government -wide Revenues
June 30, 2004
Last Three Fiscal Years
' (Unaudited)
I
PROGRAM REVENUES GENERAL REVENUES
IGrants and
Contributions
I Charges Operating Capital Not Restricted
for Grants and Grants and to Specific Investment
Fiscal Year Services Contributions Contributions Taxes Programs Earnings Other Total
' 2001-2002 $ 5,233,107 $ 596,278 $ 1,678,235 $ 12,924,320 $ 1,146,371 $ 797,918 $ 567,261 $ 22,943,490
2002-2003 5,895,438 642,214 475,933 13,454,981 3,111,569 535,167 411,470 24,526,772
2003-2004 7,201,322 674,451 665,806 14,571,458 1,229,911 251,276 628,275 25,272,499
I
{ Source : City of Hermosa Beach - Finance Department
GASB Statement 34 implemented fiscal year 2003
147
City of Hermosa Beach
Government -wide Expense by Function
June 30, 2004 111
Last Three Fiscal Years
(Unaudited) 1
Fiscal Year '
2001-2002 2002-2003 2003-2004
Legislative and Legal $ 823,736 $ 810,589 $ 754,169
General Government 1,748,183 1,415,000 1,800,769
I
Public Safety 9,686,652 10,415,112 10,868,420
Community Development 907,709 968,000 1,086,608
Culture and Recreation 921,851 1,045,567 965,924
I
Public Works 6,109,734 4,136,564 4,578,896
Downtown Enhancement 933,796 909,137 939,576
Parking 1,577,320 1,525,371 1,632,093
Proposition A Transit 263,641 302,907 310,113
Proposition C Transit 443,344 103,091 48,119
Total $ 23,415,966 $ 21,631,338 $ 22,984,688
Source : City of Hermosa Beach - Finance Department
I
GASB Statement 34 implemented fiscal year 2003
148 '
City of Hermosa Beach
I General Governmental Revenues by Source
June 30, 2004
Last Ten Fiscal Years
(Unaudited)
IInterest
Earned on
I Property Investments
and Use of Charges
and Licenses Fines and Money and Inter- for
I Fiscal Year Other Taxes and Permits Forfeitures Property governmental Services Other Total
1994-1995 $ 8,640,996 $ 139,758 $ 117,384 $ 1,032,825 $ 2,062,111 $ 467,405 $ 156,519 $ 12,616,998
1995-1996 9,484,209 183,533 124,268 1,043,782 3,100,743 660,850 474,014 15,071,399
I 1996-1997 8,901,449 275,424 132,334 890,799 1,717,746 755,949 845,830 13,519,531
1997-1998 9,472,541 484,154 163,001 883,387 1,738,821 1,058,616 774,839 14,575,359
1998-1999 9,993,562 567,607 209,785 938,892 6,081,589 1,184,003 394,383 19,369,821
I 1999-2000 10,754,339 558,456 205,822 1,055,608 3,039,122 2,246,195 4,653,620 22,513,162
2000-2001 11,801,668 579,608 185,736 1,434,124 2,816,543 1,203,290 826,154 18,847,123
2001-2002 12,574,773 445,673 225,653 945,232 3,257,239 1,108,816 645,600 19,202,986
I 2002-2003 13,060,204 571,682 278,334 2,635,498 2,175,932 1,254,917 645,335 20,621,902
2003-2004 14,601,328 664,169 371,802 768,362 2,168,077 1,414,665 793,633 20,782,036
Source : City of Hermosa Beach - Finance Department
149
City of Hermosa Beach
General Governmental Expenditures by Function I June 30, 2004
Last Ten Fiscal Years
(Unaudited)
I
Culture
I
General Public Community and Public Debt Capital
Fiscal Year Government Safety Development Recreation Works Service Outlay Total t
1994-1995 $ 1,463,336 $ 6,382,332 $ 437,203 $ 731,466 $ 2,020,106 $ 534,211 $ 1,191,483 $ 12,760,137
1995-1996 1,366,906 6,443,474 490,673 475,734 2,158,067 3,130,579 2,713,833 16,779,266
1996-1997 1,490,253 6,809,657 699,250 497,993 2,174,626 11,152 3,603,009 15,285,940
I
1997-1998 1,618,188 7,202,300 665,860 579,692 2,270,463 10,114 1,009,505 13,356,122
1998-1999 1,691,483 7,597,552 756,665 662,438 2344,034 5,836 6,434,628 19,492,636
1999-2000 1,568,591 7,872,772 814,392 744,245 2,481,209 - 5,608,405 19,089,614 I 2000-2001 1,743,773 8,997,038 866,389 725,387 2,582,510 - 3,406,953 18,322,050
2001-2002 1,913,892 9,186,446 888,262 888,734 2,975,944 3,486,133 19,339,411
2002-2003 2,077,463 10,040,618 951,856 966,621 3,082096 - 4,281,144 21,399,798
I
2003-2004 2,011,816 10,555,169 1,089,056 932,447 3,189,361 - 3,119,265 20,897,114
Source : City of Hermosa Beach - Finance Department '
1
1
1
150
City of Hermosa Beach
Assessed and Estimated Actual Value of Taxable Property
June 30, 2004
Last Ten Fiscal Years
(Unaudited)
Ratio of Net
Assessed Value
to Estimated
Secured Unsecured Less Net Assessed Estimated Percentage Actual Value
Fiscal Year Property Property Exemptions Value Valuation Increase (%)
1994-1995 $ 1,677,528,958 $ 19,406,553 $ 27,445,557 $ 1,669,489,954 $ 1,696,935,511 2.00% 98.38%
1995-1996 1,682,602,183 17,400,969 29,395,303 1,670,607,849 1,700,003,152 0.18% 98.27%
1996-1997 1,704,314,436 19,059,312 30,812,333 1,692,561,415 1,723,373,748 1.37% 98.21%
1997-1998 1,737,072,254 20,195,505 31,168,694 1,726,099,065 1,757,267,759 1.97% 98.23%
1998-1999 1,826,726,032 22,813,132 31,150,694 1,818,388,470 1,849,539,164 5.25% 98.32%
1999-2000 2,014,926,680 23,889,046 29,734,340 2,009,081,386 2,038,815,726 10.23% 98.54%
2000-2001 2,196,702,270 23,249,949 30,692,035 2,189,260,184 2,219,952,219 8.88% 98.62%
2001-2002 2,399,510,371 26,313,475 26,277,711 2,399,546,135 2,425,823,846 9.27% 98.92%
2002-2003 2,596,802,111 29,323,836 29,039,328 2,597,086,619 2,626,125,947 8.26% 98.89%
2003-2004 2,844,974,502 29,409,345 27,924,765 2,846,459,082 2,874,383,847 9.45% 99.03%
Source : County of Los Angeles Auditor -Controller
Note : Assessed valuations available from the County of Los Angeles are based on 100%
of full value per Section 135 of the California Revenue and Taxation Code.
151
City of Hermosa Beach
Property Tax Rates and Tax Levies - All Direct and Overlapping Governments
(per $100 of assessed valuation)
June 30, 2004 - Last Ten Fiscal Years
(Unaudited) I
Metropolitan
Los Angeles Elementary Community Flood Water
Fiscal Year General County Schools College Control District Total
1994-1995 1.000000 0.001993
0.006041 0.008900 1.014941
1995-1996 1.000000 0.001814 0.000963 0.008900 1.009863
I
1996-1997 1.000000 0.001604 0.001991 0.008900 1.011677
1997-1998 1.000000 0.001584 0.002197 0.008900 1.012495
1998-1999 1.000000 0.001422 0.001765 0.008900 1.012304 I 1999-2000 1.000000 0.001451 0.001953 0.008900 1.012087
2000-2001 1.000000 0.001314 0.001552 0.008800 1.011666
2001-2002 1.000000 0.001033 0.000881 0.006700 1.011666 I 2002-2003 1.000000 0.001033 0.000881 0.006700 1.008614
2003-2004 1.000000 0.000992 0.019308 0.019025 0.000462 0.006100 1.045887
Source : County of Los Angeles Auditor -Controller
Note : Assessed valuations available from the County of Los Angeles are based on 100% '
of full value per Section 135 of the California Revenue and Taxation Code.
I
1
152 1
1
City of Hermosa Beach
1 Property Tax Levies and Collections
June 30, 2004
Last Ten Fiscal Years
1 (Unaudited)
Total Total Percentage
Current Current of Levy
I
Fiscal Year Levy Collection Collected
1994-1995 $ 3,321,595 $ 3,038,420 91.47%
I 1995-1996 3,337,288 3,093,600 92.70%
1996-1997 3,362,402 3,149,979 93.68%
1997-1998 3,434,310 3,252,801 94.71%
I 1998-1999 3,623,653 3,442,675 95.01%
1999-2000 4,002,324 3,808,235 95.15%
2000-2001 4,370,463 4,239,808 97.01 %
I 2001-2002 4,790,920 4,576,910 95.53%
2002-2003 5,193,796 5,017,148 96.60%
2003-2004 5,688,428 5,489,332 96.50%
1
Source : County of Los Angeles Auditor -Controller
1
1
1
1
1
1
1
1
1
1
153
City of Hermosa Beach
Computation of Legal Debt Margin
June 30, 2004
(Unaudited)
1
1
Total assessed value of all real and personal property $ 2,874,383,847
Legal debt limit -15 % of total assessed valuation $ 431,157,577 (a)
Amount of debt applicable to limit None (b) 1
Legal debt margin $ 431,157,577 1
Percentage of legal debt limit authorized 0%
1
Source : City of Hermosa Beach - Finance Department
(a) Per California Government Code Section 43605
(b) The City has no debt payable from taxes levied upon property in the City.
1
1
1
1
1
1
1
1
1
154 1
City of Hermosa Beach
Statement of Direct and Overlapping Debt
June 30, 2004
(Unaudited)
2003-2004 Assessed Valuation:
Percent Net
Gross Bonded Applicable Bonded
Debt Balance to City Debt
DIRECT DEBT :
Hermosa Beach Elementary School District 2002 $ 9,579,401 100.000% $ 9,579,401
TOTAL DIRECT DEBT: $ 9,579,401 $ 9,579,401
OVERLAPPING DEBT:
Los Angeles County Detention Facilities 1987 Debt Service $ 23,470,000 0.455% $ 106,818
Los Angeles County Flood Control Storm Drain Debt Service 5,600,000 0.462% 25,853
Los Angeles County Flood Control Refunding Bonds 1993 Debt Service 555,000 0.462% 2,562
West Basin Water District Debt Service* 447,475,000 0.434% 1,943,226
El Camino Community College District 2002 Debt Service 63,700,000 5.417% 3,450,663
TOTAL OVERLAPPING DEBT $ 5,529,122
TOTAL DIRECT AND OVERLAPPING DEBT $ 15,108,523
2003/04 Net Assessed Valuation :
Debt to Assessed Valuation Ratios :
$ 2,846,459,082
Direct Debt 0.34%
Overlapping Debt 0.19%
Total Debt 0.53%
* This fund is a portion of a larger agency, and is responsible for debt in areas outside the City.
Source : HdL Coren & Cone, Los Angeles County Assessor Combined 2002/2003 Lien
Date Tax Rolls
This report reflects general obligation debt which is being repaid through voter -approved
indebtedness. It excludes revenue, mortgage revenue, tax allocation bonds, interim
financing obligations, non -bonded capital lease obligations, and certificates of participation.
155
City of Hermosa Beach
Demographic Statistics
June 30, 2004
Last Ten Fiscal Years
(Unaudited)
I
(b) (c) (d) (e) I
(a) Per Capita Persons per Unemployment School
Fiscal Year Population Income Household Rate (%) Enrollment
I
1994-1995 18,598 2.034 1.9 760
1995-1996 18,681 2.014 2.1 887 I 1996-1997 18,919 2.021 1.8 1,324
1997-1998 19,098 2.038 1.6 1,346
1998-1999 19,401 2.059 1.4 1,384
I
1999-2000 19,631 2.082 1.5 1,420
2000-2001 18,912 $ 54,244 2.112 1.4 1,430
2001-2002 19,175 1.995 1.4 1,471
I
2002-2003 19,365 2.019 1.7 1,489
2003-2004 19,549 2.036 1.8 1,498
I
Data Source:
(a) State of California Department of Finance, estimated population.
(b) U.S. Department of Commerce, Bureau of the Census, per capita income
available every ten years as part of national census. Census 2000.
(c) State of California Department of Finance
(d) State of California Employment Development Department. Expressed as a percentage,
estimate based on ratio to County movement since 1980 and 1990 Census.
(e) State Department of Education.
156
City of Hermosa Beach
I Construction Value, Property Value and Bank Deposits
June 30, 2004
Last Ten Fiscal Years
I(Unaudited)
IResidential Commercial
INumber of Number of Total Bank Deposits
Fiscal Year Permits Valuation Permits Valuation Assessed (in thousands)
I
1994-1995 236 $ 3,681,282 71 $ 1,296,815 $ 1,696,935,511 $ 129,866
1995-1996 316 7,643,660 75 1,840,624 1,700,003,152 135,486
1996-1997 363 12,034,307 67 4,508,672 1,723,373,748 146,695
1 1997-1998 612 29,728,509 73 3,977,221 1,757,267,759 153,236
1998-1999 594 37,648,012 55 6,857,053 1,849,539,164 166,610
1999-2000 476 27,553,549 57 6,044,503 2,038,815,726 183,910
I
2000-2001 540 32,136,129 56 7,402,324 2,219,952,219 190,111
2001-2002 591 19,260,802 43 2,142,566 2,425,823,846 194,276
1
2002-2003 630 23,174,222 65 2,499,590 2,626,125,947 210,669
2003-2004 596 28,114,344 75 6,713,988 2,874,383,847 279,395
ISource : Construction values - City of Hermosa Beach Community Development Department
Bank Deposits - Federal Deposit Insurance Corporation
I(includes Savings and Loans)
City of Hermosa Beach
Schedule of Insurance
June 30, 2004
(Unaudited)
Annual
Company & Policy Number Policy Period Limits & Coverages Premium
Independent Cities Risk 7-1-03 through 6-30-04 Self-insured workers' compentation $ 51,679
I
Management Authority to $1,000,000. CSAC excess insurance
to $50 million I $500,000 S.I.R.
Independent Cities Risk 7-1-03 through 6-30-04 Excess Liability Insurance $ 208,891 111Management Authority $250,000 S.I.R.
$19 million limit for bodily injury,
property damage, personal injury, or
Public Officials' E&O.
Travelers Indemnity Co. of Ill. 7-1-03 through 6-30-04 Auto Physical damage including $ 9,954 I QT6603526A232TIL03 Comprehensive & Collision coverage
with $5,000 deductible for high dollar
value vehicles.
I
Lloyd's of London 7-1-03 through 6-30-04 " All-risk" physical loss or damage to $ 28,409
DP187603(1)/DC417903 real and personal property, EDP
I
equipment, media, and extra expense,
rents, and mobile equipment.
Excludes earthquake and flood.
I
Essex Insurance 7-1-03 through 6-30-04 Supplemental policy for earthquake $ 14,489
ESX354185 and loss of income on the parking
I
structure.
The Hartford 11-7-03 through 11-7-04 $100,000 public official bond for $ 400
Finance Director.
The Hartford 11-24-03 through 11-24-04 $100,000 public official bond for $ 400
City Treasurer.
I
Fidelity & Deposit 11-12-03 through 11-12-07 $10,000 public official bond for City $ 355
Clerk. (4 year period)
I
Fidelity & Deposit 7-1-01 through 7-1-04 $25,000 public employee dishonesty $ 1,617
bond with $2,500 deductible. (3 year period)
I
The Hartford 1-3-03 through 1-3-06 $100,000 public official bond for City $ 1,040
Manager. (3 year period)
I
Source : City of Hermosa Beach - Personnel Department
158
City of Hermosa Beach
Top Property Taxpayers
June 30, 2004
(Unaudited)
Owner (Number of Parcels)
% of Total
Assessed Value Assessed Valuation
International Church of The Four Square (43) $ 13,983,673 0.49%
Regency Centers Limited Partnership (7) 12,718,559 0.44%
Playa Pacifica Limited (2) 11,803,796 0.41%
Beta Group (2) 10,984,923 0.38%
Robert J. & Ranae R. Desantis Trust (1) 10,612,080 0.37%
Cheng Yi & Ying Yin Chang (1) 7,358,901 0.26%
Adelphia Media Services Inc. (3) 6,887,759 0.24%
Robert Lovelace (2) 6,380,460 0.22%
Barbara K. Robinson (1) 6,77 ,180 0.22%
SII Trust Schuler Investment Corporation (1) 6,107,979 0.21%
Source: HdL Coren & Cone, Los Angeles County Assessor Combined Tax Rolls
City of Hermosa Beach
Top 25 Sales Tax Producers *
June 30, 2004
(Unaudited)
Business Name
Albertson's
Aloha Sharkeez
Audi Leasing Ltd Bentley Leasing
Becker Surfboards
Casey's Premium Cars
Chase Manhattan Auto Finance
Classic Tile & Design
Club Sushi
E T Surfboards
Efram's Mobil
Hennessey's Tavern
Jama Auto House
Learned Lumber
May Mohit Gas Station & Mini Market
Okell's Fireplace
Pacific Volkswagen
Patrick Molloy's
Ralph's
Richard M. Pola & Associates
Rocky Cola Cafe
Say On Drugs
South Bay B M W
Spyderboards
Union Cattle Co.
Von's
Percent of City Total Paid By
Top 25 Accounts = Approximately 65.74%
Source : Hinderliter, de Llamas & Associates, State Board of Equalization
* Businesses Listed Alphabetically
Period: April 2003 through March 2004
Business Category
Grocery Stores with Liquor
Restaurants with Beer and Wine
Auto Lease
Sporting Goods/Bike Stores
Used Automotive Dealers
Auto Lease
Lumber/Building Materials
Restaurants with Liquor
Sporting Goods/Bike Stores
Service Stations
Restaurants with Liquor
Used Automotive Dealers
Lumber/Building Materials
Service Stations
Home Furnishings
New Motor Vehicle Dealers
Restaurants with Liquor
Grocery Stores with Liquor
Textiles/Furnishings
Fast Food
Drug Stores
New Motor Vehicle Dealers
Sporting Goods/Bike Stores
Restaurant with Liquor
Grocery Stores with Liquor
I
City of Hermosa Beach
I Major Employers*
June 30, 2004
I
(Unaudited)
Name Type of Business
IAloha Sharkeez Restaurant with Liquor
Comedy & Magic Club Entertainment
I Hennessey's Tavern
Patrick Molloy's Restaurant with Liquor
Restaurant with Liquor
Pointe 705 Restaurant with Liquor
I Rocky Cola Caf@ Fast Food
Shorewood Realtors, Inc. Real Estate
South Bay BMW New Motor Vehicle Dealer, Auto Repair
IUnion Cattle Co. Restaurant with Liquor
Von's Grocery Store with Liquor
I
Source : City of Hermosa Beach - Finance Department
I
* Businesses Listed Alphabetically
I
I
I
I
I
I
I
I
I 161
City of Hermosa Beach
Taxable Sales by Category (in thousands)
June 30, 2003
Last Ten Calendar Years
(Unaudited)
Sales
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Retail Stores :
Apparel Stores $ 2,873 $ 3,074 $ 4,179 $ 2,351 $ 6,269 $ 3,360 $ 2,892 $ 3,114 $ 2,781 $ 2,685
Food Stores 17,529 17,955 18,662 19,496 19,953 19,342 20,076 19,874 19,494 18,472
Packaged Liquor Stores 1,728 1,610 1,531 2,213 2,169 2,348 2,731 2,416 2,104 1,647
Eating and Drinking Places 30,499 32,631 35,252 40,371 43,981 48,815 52,866 55,921 58,192 60,861
I
Home Furnishing and Appliances 1,892 2,145 3,122 3,589 3,452 4,620 6,109 5,235 5,662 6,319
Building Materials and Farm Tools 8,663 8,799 9,051 9,704 13,197 12,580 12,403 12,406 15,284 16,266 I
Automobile Dealers and Supplies 24,584 25,532 30,914 41,852 41,005 60,655 83,096 91,434 74,953 77,871
Service Stations (a) (a) (a) 5,893 5,258 (a) (a) (a) (a) (a)
111
Other Retail Stores 23,498 23,646 24,614 15,684 21,628 27,270 33,522 30,705 21,270 31,677
Total retail stores 111,266 115,392 127,325 141,153 156,912 178,990 213,695 221,105 199,738 215,798
1
1
1
All Other Outlets
16,760 18,283 18,633 27,903 27,850 23,357 23,309 23,659 28,058 16,987
Total all outlets $ 128,026 $ 133,675 $ 145,958 $ 169,056 $ 184,762 $ 202,347 $ 237,004 $ 244,764 $ 227,796 $ 232,785
Source : State Board of Equalization.
(a) Due to limited number of businesses in this category, sales for this category are confidential -
they are included in other retail.
162
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1
1
1
1
1
1
1
1
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1
City of Hermosa Beach
Miscellaneous Statistics
June 30, 2004
(Unaudited)
Date of Incorporation January 14, 1907
Form of Government Council -Manager
Number of Employees (excluding police and fire) :
Full-time
Part-time (excluding police and fire reserves)
82
18
Area in square miles 1.3
Hermosa Beach facilities and services:
Miles of Streets 40
Number of Street Lights (city owned) 588
Number of Parking Meters 1,714
Culture and Recreation:
Community Theatre 1
Parks 20
Park acreage 21.70
Beach acreage 36.52
Hermosa Valley Green Belt (open space park) acreage 19.50
Fire Protection:
Number of stations 1
Number of firefighters and paramedics 20
Number of authorized reserve firefighters 26
Police Protection:
Number of stations 1
Number of sworn officers 39
Number of authorized reserve police 20
Number of law violations:
Physical arrests 1,424
Traffic violations 3,171
Parking violations 49,379
Sewerage System:
Miles of sanitary sewers 34
Linear feet of storm drains 6,011
Land Use Statistics:
Parcels1 6,909
Housing Units2 9,916
Building permits issued 671
Facilities and services not included in the reporting entity:
Education:
Number of elementary schools (2 public, 2 private)
Cable Television System:
Miles of service
Source : City of Hermosa Beach - Finance Department
1HdL Coren & Cone
2 State of California Department of Finance
163
4
73.46
INN i t I N - = N I M NE EN MI NE N N NEI
City of
Hermosa Beach
Hermosa Beach, California
Single Audit Reports
For the year ended June
For the year ended June 30, 2004
I
C&L
Caporicci & Larson
Certified Public Accountants
City of Hermosa Beach
Single Audit Reports
For the year ended June 30, 2004
Table of Contents
1 Page
' Independent Auditors' Report on Compliance and on
Internal Control over Financial Reporting Based on
an Audit of Financial Statements Performed in Accordance
with Government Auditing Standards 1
Independent Auditors' Report on Compliance with
' Requirements Applicable to Each Major Program
and Internal Control over Compliance in
Accordance with OMB Circular A-133 2
Schedule of Expenditures of Federal Awards 4
Notes to the Schedule of Expenditures of Federal Awards 5
Schedule of Findings and Questioned Costs 6
Supplemental Schedule:
Detail of CDBG Projects 7
1
1
1
1
1
1
CSL
Caporicci & Larson
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE AND ON INTERNAL CONTROL
OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS
PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and Members of City Council
of the City of Hermosa Beach
Hermosa Beach, California
We have audited the basic financial statements of the City of Hermosa Beach (City) as of and for the
year ended June 30, 2004, and have issued our report thereon dated October 7, 2004. We conducted
our audit in accordance with generally accepted auditing standards in the United States and the
standards applicable to financial audits contained in Government Auditing Standards, issued by the
Comptroller General of the United States.
Compliance
As part of obtaining reasonable assurance about whether the City's financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grants, noncompliance with which could have a direct and material effect
on the determination of financial statement amounts. However, providing an opinion on compliance
with those provisions was not an objective of our audit and, accordingly, we do not express such an
opinion. The results of our tests disclosed no instances of noncompliance that are required to be
reported under Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit, we considered the City's internal control over financial
reporting in order to determine our auditing procedures for the purpose of expressing our opinion on
the financial statements and not to provide assurance on the internal control over financial reporting.
Our consideration of the internal control over financial reporting would not necessarily disclose all
matters in the internal control over financial reporting that might be material weaknesses. A material
weakness is a condition in which the design or operation of one or more of the internal control
components does not reduce to a relatively low level the risk that misstatements in amounts that
would be material in relation to the financial statements being audited may occur and not be detected
within a timely period by employees in the normal course of performing their assigned functions.
We noted no matters involving the internal control over financial reporting and its operation that we
consider to be material weaknesses.
This report is intended for the information of management and federal awarding agencies and pass-
through entities. However, this report is a matter of public record and its distribution is not limited.
Costa Mesa, California
October 7, 2004
Toll Free Ph: (877) 862-2200 Toll Free Fax: (866) 436-0927
Oakland Orange County Sacramento San Diego
180 Grand Ave., Suite 1365 3184-D Airway Avenue 777 Campus Commons Rd., Suite 200 600 "B" Street, Suite 1900
Oakland, California 94612 Costa Mesa, California 92626 Sacramento, California 95825 San Diego, California 92101
UM E MI N NM MI MI IN N OM EN N N = 1 1 INI1 N
C&L
Caporicci & Larson
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT ON COMPLIANCE WITH REQUIREMENTS
APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER
COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
To the Honorable Mayor and Members of City Council
of the City of Hermosa Beach
Hermosa Beach, California
Compliance
We have audited the compliance of the City of Hermosa Beach (City) with the types of compliance
requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance
Supplement that are applicable to each of its major federal programs for the year ended June 30, 2004.
The City's major federal programs are identified in the summary of the auditors' results section of the
accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of
laws, regulations, contracts and grants applicable to each of its major federal programs is the
responsibility of the City's management. Our responsibility is to express an opinion on the City's
compliance based on our audit.
We conducted our audit of compliance in accordance with generally accepted auditing standards in
the United States; the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audit of
States, Local Governments, and Non -Profit Organizations. Those standards and OMB Circular A-133
require that we plan and perform the audit to obtain reasonable assurance about whether
noncompliance with the types of compliance requirements referred to above that could have a direct
and material effect on a major federal program occurred. An audit includes examining, on a test
basis, evidence about the City's compliance with those requirements and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion. Our audit does not provide a legal determination on the City's
compliance with those requirements.
In our opinion, the City complied, in all material respects, with the requirements referred to above
that are applicable to each of its major federal programs for the year ended June 30, 2004.
Internal Control Over Compliance
The management of the City is responsible for establishing and maintaining effective internal control
over compliance with requirements of laws, regulations, contracts and grants applicable to federal
programs. In planning and performing our audit, we considered the City's internal control over
compliance with requirements that could have a direct and material effect on a major federal
program in order to determine our auditing procedures for the purpose of expressing our opinion on
compliance and to test and report on internal control over compliance in accordance with OMB
Circular A-133.
Toll Free Ph: (877) 862-2200 Toll Free Fax: (866) 436-0927
Oakland Orange County Sacramento San Diego
180 Grand Ave., Suite 1365 3184-D Airway Avenue 777 Campus commons Rd., Suite 200 600 "B" Street, Suite 1900
Oakland, California 94612 Costa Mesa, California 92626 Sacramento, California 95825 San Diego, California 92101
To the Honorable Mayor and Members of City Council
of the City of Hermosa Beach
Hermosa Beach, California
Page 2
Our consideration of the internal control over compliance would not necessarily disclose all matters
in the internal control that might be material weaknesses. A material weakness is a condition in
which the design or operation of one or more of the internal control components does not reduce to a
relatively low level the risk that noncompliance with applicable requirements of laws, regulations,
contracts and grants that would be material in relation to a major federal program being audited may
occur and not be detected within a timely period by employees in the normal course of performing
their assigned functions. We noted no matters involving the internal control over compliance and its
operation that we consider to be material weaknesses.
Schedule of Expenditures of Federal Awards
We have audited the basic financial statements of the City as of and for the year ended June 30, 2004,
and have issued our report thereon dated October 7, 2004. Our audit was performed for the purpose
of forming an opinion on the financial statements taken as a whole. The accompanying Schedule of
Expenditures of Federal Awards is presented for purposes of additional analysis as required by OMB
Circular A-133 and is not a required part of the financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the financial statements taken as whole.
This report is intended for the information of management and federal awarding agencies and pass-
through entities. However, this report is a matter of public record and its distribution is not limited.
Costa Mesa, California
October 7, 2004
3
City of Hermosa Beach
Single Audit Reports
Schedule of Expenditures of Federal Awards
For the year ended June 30, 2004
Federal Grantor/Pass-Through Grantor
Program Title
Federal Agency or
CFDA Pass -Through Federal
Number Number Expenditures
U.S. Department of Housing and Urban Development
Pass-through County of Los Angeles
Community Development Block Grant Program Administration 14.218* 600112-03 $ 11,603
ADA Compliance - Removal of Architectural Barriers 14.218* D96256-97 249,603
ADA Compliance - Community Theater and Center 14.218* 600308-03 318,292
Total U.S. Department of Housing and Urban Development 579,498
U.S. Department of Justice
Pass-through County of Los Angeles
Office of Justice Programs Equipment Grant
Pass-through Bureau of Justice of Assistance
Local Law Enforcement Block Grant Program
97.038 4,483
16.592 2003 -LB -BX -2286 2,182
Total U.S. Department of Justice 6,665
U.S. Department of Homeland Security
Pass-through Federal Emergency Management Agency
Assistance to Firefighters Grant Program 83.554 EMW-2003-FG-03766 47,700
Total Federal Awards $ 633,863
* Denotes major program.
See accompanying Notes to Schedule of Expenditures of Federal Awards.
4
City of Hermosa Beach
Single Audit Reports
Notes to Schedule of Expenditures of Federal Awards
For the year ended June 30, 2004
1. REPORTING ENTITY
The financial reporting entity consists of (a) the primary government, City of Hermosa Beach (City), (b)
organizations for which the primary government is financially accountable, and (c) other organizations
for which the primary government is not accountable, but for which the nature and significance of their
relationship with the primary government are such that exclusion would cause the reporting entity's
financial statements to be misleading or incomplete.
Component units are legally separate organizations for which the elected officials of the primary
government are financially accountable. In addition, component units can be other organizations for
which the primary government's exclusion would cause the reporting entity's financial statements to
be misleading or incomplete.
The following is a brief review of the component units included in the basic financial statements of the
City.
• Downtown Business Area Enhancement District
• Hermosa Beach Street Lighting and Landscaping District
• Lower Pier Avenue Assessment District Improvement Fund
• Myrtle Underground Utility District Improvement Fund
• Loma Underground Utility District Improvement Fund
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
Funds received under the various grant programs have been recorded within the special revenue funds
of the City. The City utilises the modified accrual basis of accounting for the special revenue funds.
The accompanying Schedule of Expenditures of Federal Awards (Schedule) has been prepared
accordingly.
Schedule of Expenditures of Federal Awards
The accompanying Schedule presents the activity of all Federal financial assistance programs of the
City. Federal financial assistance received directly from Federal agencies as well as Federal financial
assistance passed through the State of California is included in the Schedule.
The Schedule was prepared only from the accounts of various grant programs and, therefore, does not
present the financial position or results of operation of the City.
5
City of Hermosa Beach
Single Audit Reports
Schedule of Findings and Questioned Costs
For the year ended June 30, 2004
A. SUMMARY OF AUDIT RESULTS
1. The auditors' report expresses an unqualified opinion on the basic financial statements of the City.
2. No reportable conditions relating to the audit of the financial statements are reported in the basic
financial statements.
3. No instances of noncompliance material to the financial statements of the City were disclosed
during the audit.
4. No reportable conditions relating to the audit of the major Federal award programs is reported in
the basic financial statements.
5. The auditors' report on compliance for the major Federal award programs for the City expresses an
unqualified opinion.
6. Audit findings relative to the major Federal award programs for the City are reported in Part C of
this Schedule.
7. The programs tested as major programs include:
Major Program
Federal
CFDA
Number Expenditures
Housing and Urban Development 14.218 $ 579,498
Total Major Program Expenditures $ 579,498
Total Federal Expenditures $ 633,863
Percent of Total Federal Award Expenditures 91%
8. The threshold for distinguishing Types A and B programs was $300,000.
9. The City was determined to be a low risk auditee.
B. FINDINGS - FINANCIAL STATEMENTS AUDIT
None
C. FINDINGS AND QUESTIONED COSTS - MAJOR FEDERAL AWARD PROGRAM AUDIT
None
6
City of Hermosa Beach
Single Audit Reports
Supplemental Schedule
For the year ended June 30, 2004
Schedule of Expenditures of Federal Awards
Detail of Community Development Block Grant Projects
(1) (2) (3) (1)+(2)-(3)
Federal Assistance
received from CDC
CDBG Project during fiscal year Accrual as of Accrual as of Total
Number June 30, 2004 June 30, 2004 June 30, 2003 Expenditures
600112-03 $ 14,596 $ 1,105 $ (4,098) $ 11,603
D96256-97 288,775 293 (39,465) 249,603
600308-03 256,541 68,980 (7,229) 318,292
Total all projects $ 559,912 $ 70,378 $ (50,792) $ 579,498
7
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