HomeMy WebLinkAbout06/30/05City of Hermosa Beach,
California
Comprehensive
Annual
Financial
Report
For the year ended June_30, 2005
City of
Hermosa Beach
Hermosa Beach, California
Comprehensive Annual Financial Report
For the year ended June 30, 2005
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, 2005
Table of Contents
Page
INTRODUCTORY SECTION
Table of Contents i
Letter of Transmittal v
Certificate of Achievement for Excellence in Financial Reporting -
Governmental Finance Officers Association ix
Organizational Chart x
Principal Officials of the City of Hermosa Beach xi
FINANCIAL SECTION
Independent Auditors' Report 1
Management's Discussion and Analysis (Required Supplementary Information) 3
Basic Financial Statements:
Government - Wide Financial Statements:
Statement of Net Assets 19
Statement of Activities and Changes in Net Assets 20
Fund Financial Statements:
Governmental Fund Financial Statements:
Balance Sheet 28
Reconciliation of the Governmental Funds Balance Sheet
to the Government -Wide Statement of Net Assets 29
Statement of Revenues, Expenditures
and Changes in Fund Balances 30
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 31
Proprietary Fund Financial Statements:
Statement of Net Assets 36
Statement of Revenues, Expenses and Changes in Fund Net Assets 37
Statement of Cash Flows 38
Fiduciary Fund Financial Statements:
Statement of Fiduciary Net Assets 42
Index to Notes to Basic Financial Statements 43
Notes to Basic Financial Statements 45
Required Supplementary Information 77
i
City of Hermosa Beach
Basic Financial Statements
For the year ended June 30, 2005
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Supplementary Information:
Non -Major Governmental Funds:
Combining Balance Sheet 88
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 94
Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Non -Major Special Revenue Funds:
Lighting and Landscape District 99
State Gas Tax 100
AB 939 101
Compensated Absences 102
Prop A Open Space 103
Tyco 104
Tyco Tidelands 105
Parks and Recreation Facilities 106
4% Utility Users Tax 107
Building Improvement 108
Lower Pier Administrative Expense 109
Myrtle District Administrative Expense 110
Loma District Administrative Expense 111
Beach Drive Assessment District Administrative Expense 112
Community Development Block Grant 113
Prop "A" Transit 114
Prop "C" Transit 115
Grants 116
Office of Traffic Safety Grant 117
Air Quality Management District 118
Supplemental Law Enforcement Services (COPS) 119
California Law Enforcement Program (CLEEP) 120
Taskforce for Regional Auto Theft Prevention 121
Sewer 122
Asset Seizure and Forfeiture Fund 123
Fire Protection 124
Artesia Boulevard Relinquishment 125
Beach Drive 2 Underground District 126
Lower Pier Avenue Assessment District 127
Myrtle Utility Underground Improvement 128
Loma Utility Underground Improvement 129
Bayview Drive Underground District 130
Bonnie Brae Underground District 131
Beach Drive Underground District 132
Prospect Utility Underground District 133
City of Hermosa Beach
Basic Financial Statements
For the year ended June 30, 2005
Table of Contents, Continued
Page
FINANCIAL SECTION, Continued
Supplementary Information, Continued:
Internal Service Funds:
Combining Statement of Net Assets 136
Combining Statement of Revenues, Expenses and Changes in Net Assets 137
Combining Statement of Cash Flows 138
Fiduciary Fund Financial Statements:
Combing Statement of Fiduciary Net Assets 140
Combing Statement of Changes in Assets and Liabilities 141
Capital Assets Used in the Operating Of Governmental Funds:
Schedule by Source 144
Schedule by Function and Activity 145
Schedule of Changes in Capital Assets by Function and Activity 146
STATISTICAL SECTION (Unaudited)
Government -Wide Revenues 147
Government -Wide Expense - By Function 148
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
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
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
Schedule of Insurance 158
Top Property Taxpayers 159
Top 25 Sales Tax Producers 160
Major Employers 161
Taxable Sales by Category 162
Miscellaneous Statistics 163
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iv
City of2lermosa l�eaclt�
Civic Center, 1315 Valley Drive, Hermosa Beach, California 90254-3885
December 12, 2005
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, 2005. 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 third 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
I 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, 2005,
I 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
I 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, 2005, are fairly presented in conformity with GAAP. The independent auditor's report
I 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 19,608, 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 2004-05 fiscal year, beach attendance ranged from a
low of 30,300 in December 2004 to a high of 488,200 in July 2005, 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, Loma Drive, Bayview Drive, and Beach 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 Ileach'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 77-82. 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 thirteenth highest percentage change in assessed valuation of the 88 cities in Los Angeles County for
2004-05. The assessed valuation (including exemptions) has risen, on average, 9.8% 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 2005 were $1,249,500, compared to $512,890 for Los Angeles County. The
average median home price for Hermosa Beach for fiscal year 2004-05 was $952,357.
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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 dose
proximity of all of the other cities in Los Angeles County. The unemployment rate in Hermosa Beach is
2.3%, compared with 5.6% for Los Angeles County, and 5.4% for California.
The revenue picture is changing somewhat in Hermosa Beach. Sales tax growth has ceased to exist with the
exodus of new car dealerships in 2002 (Audi/Porsche), 2003 (Volkswagen) and 2004 (BMW). BMW stayed
longer than originally planned so the biggest impact will be felt in 2005-06 fiscal year, rather than 2004-05.
Fortunately for the City, property taxes have grown 26% over the same period due to increased assessed
values and turnover of properties. Transient occupancy taxes (hotel tax) increased 14% with strong overall
occupancy of 73% for the year. Utility user taxes (UUT), which grew 24% in 2003-04, were virtually flat in
2004-05. With all of the technology changes in the telecommunication industry, this is a trend the City will
watch carefully since the UUT represents 14% of General Fund revenue.
California Public Employees Retirement System (Ca1PERS). City retirement rates are still high in 2004-05,
reflecting investment losses sustained by CaIPERS beginning in 2001. With investment rates back in the
black at 12.7% for 2004-05 and the effects from new employer rate smoothing policies implemented by
CalPERS this year, the City can expect rates to level out by 2006-07.
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. Hermosa Beach's loss for 2004-05 and 2005-06 is $326,472. One
positive sign was the early repayment of three months worth of vehide license fees, which. were
"borrowed" by the State in 2003-04. The State scheduled repayment for August 2006 but actually paid the
funds to local governments one year early in August 2005.
Long-term financial planning. Financial policies related to long-term financial planning for specific funds
' are:
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Contingency Fund—Goal of fund balance equal to 15% of the General Fund appropriations for
economic uncertainties, unforeseen emergencies.
Insurance Fund—Goal of $3,000,000 in retained earnings for daims 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.
Another of the City's financial policies is to set aside funds unspent in the General Fund at year-end for
specific purposes. For 2004-05, funds were transferred to the Capital Improvement Fund, Insurance Fund
and Retirement Stabilization Fund. Capital Improvement 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.
The City's long term financial planning focuses on the Capital Improvement Plan, which is produced as
part of 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.
vii
Primary projects coming up, (other than street and sewer improvements, which occur every year) are
Community Center Theatre upgrades, completion of Phase III, the final phase of the Municipal Pier
Upgrade, and renovation of the Public Works City Yard. The City will use federal Community
Development Block Grant Funds and Los Angeles County Proposition A Park Bond Act funds for these
projects, in addition to City funds.
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 19
months, with an average yield on investments of 2.03% 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.
Additional information on the City of Hermosa Beach's risk management activity can be found in Note 9 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).
CaIPERS 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 post employment heath care benefits for certain retirees. As of
the end of the current fiscal year, there were 19 retirees receiving these benefits, which are financed on a
pay-as-you-go basis. Generally Accepted Accounting Principles (GAAP) do not currently require
governments to report a liability in the financial statements in connection with an employer's obligation to
provide these benefits. However, Governmental Accounting Standards Board (GASB) Statements 43 and 45
will require different accounting and reporting for these types of "other post employment benefits" (OPEB).
For our size City, the effective date will be fiscal year 2007-08.
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 fifteenth 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 departments,
including the City Clerk and City Treasurer, and to our auditors, Caporicci & Larson, for their assistance
and support in preparation of the report. 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,
441.c.-4,21-44LeL)
Viki Copeland
Finance Director
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x
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, 2004
A Certificate of Achievement for Excellence in Financial
Reporting is presented by the Government Finance Officers
Association of the United States and Canada to
government units and public employee retirement
systems whose comprehensive annual financial
reports (CAFRs) achieve the highest
standards in government accounting
and financial reporting.
President
Executive Director
CITY OF HERMOSA BEACH ORGANIZATIONAL CHART
ELECTORATE
CITY CLERK
CITY COUNCIL
CITY TREASURER
PLANNING
COMMISSION
PUBLIC
WORKS
COMMISSION
CIVIL SERVICE
BOARD
BOARD OF
APPEALS
PARKS &
RECREATION
ADVISORY
COMMISSION
CITY PROSECUTOR
CITY MANAGER
CITY ATTORNEY
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
pecial
Investigations
Record Bureau
rossing Guard
FIRE
PERSONNEL/
RISK
MANAGEMENT
FINANCE -
OMMUNITY
ERVICES
Parking
Enforcement
nimal Control
Meter
Maintenance
Fire Suppression
Fire Prevention
Rescue
Public Education
Paramedics
Disaster
Preparedness
Reserves
Plan Checking
Ambulance
Transportation
xii
PERSONNEL
Recruitment
Training
Labor Relations
RISK MGT
Workers' Comp
Claims
Liability Claims
City Insurance
Secretarial
Support
Budget
Accounting
Payroll
Citation
Processing
Animal Licenses
Parking Permits
Business License
Bus Passes
COMMUNITY I
DEVELOPMENTI
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
J. R. Reviczky
Pete Tucker
Sam Y. Edgerton
Michael Keegan
Art Yoon
John Workman
Elaine Doerfling
Stephen Burrell
Viki Copeland
Sol Blumenfeld
Lisa Lynn
Michael Earl
Michael Lavin
Richard Morgan
Russell Tingley
June 30, 2005
Elected and Administrative Officials
City Council
Other Elected Officials
Administrative Officials
xm
Mayor
Mayor Pro Tempore
Councilmember
Councilmember
Councilmember
City Treasurer
City Clerk
City Manager
Finance Director
Community Development
Director
Community Resources
Director
Personnel Director and
Risk Manager
Police Chief
Public Works Director
Fire Chief
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xiv
FINANCIAL SECTION
111101 = M EMI = MN MI = M =II M MN - INIII M I =
FINANCIAL SECTION
IM n MI 11111 11111 111111 M MI MI M M MI MI MI MI
CSL
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, 2005, 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. 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, 2005, 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.
As described in Note 1 to the basic financial statements, the City adopted Statement of the
Governmental Accounting Standards Board No. 40, Deposit and Investment Risk Disclosures (an
amendment of GASB Statement No. 3).
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.
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 4858 Mercury, Suite 105
Oakland, California 94612 Costa Mesa, California 92626 Sacramento, California 95825 San Diego, California 92111
To the Honorable Mayor and City Council
of the City of Hermosa Beach
Hermosa Beach, California
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 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 and Statistical
Sections 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.
to
Za,Li6°rt'
Costa Mesa, California
September 29, 2005
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, 2005. 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 v - ix 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 $83,871,000 (net assets). Of this amount, $15,435,000 (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 $4,611,000. 90%, or $4.13 million, is attributable
to capital asset additions. The City purchased property adjacent to City Hall for $4.2 million.
• As of June 30, 2005, the City of Hermosa Beach's governmental funds reported combined ending
fund balances of $15,101,000, an increase of $969,000 in comparison with the prior year.
Approximately 28% of this amount is reserved to indicate that it is not available because it has
been 1) committed for purchase orders or contracts for the prior period and will be
reappropriated, 2) committed for advances between funds for the purchase of property adjacent
to City Hall, 3) committed for other specific projects or 4) represents an advance to other funds
for utility undergrounding startup costs. Another 2% is designated for specific uses, with the
remainder available for a variety of purposes.
• As of June 30, 2005, the unreserved fund balance for the General Fund was $0. 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 2004-05. The balance in the Contingency Fund (or "rainy day
fund") is $2.7 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 is 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.
3
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
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
downtown enhancement funds.
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,
Loma Drive, Bayview Drive and Beach 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 17-21 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-nine 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:
General Fund Capital Improvement Fund Retirement Stabilization Fund Contingency Fund
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.
4
Data from the other thirty-five 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.
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 23-32 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 downtown enhancement and parking 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 33-38 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, Loma Drive, Bayview Drive, and Beach 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 when an outside administrator is
hired by the City.
The basic fiduciary fund financial statements can be found on pages 39-42 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 43-76 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 page 77 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 85-98
of this report.
5
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, 2005, assets exceeded liabilities by $83,871,000.
By far the largest portion of the City of Hermosa Beach's net assets, $65,130,000, (78%) 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.
Net Assets
June 30, 2005
(dollars in thousands)
Governmental Business -type Total
Activities Activities
2005 2004 2005 2004 2005 2004
Current and Other Assets $28,185 $25,114 $(1,673) $1,322 $26,512 $26,436
Capital Assets 57,049 54,115 10,825 6,881 67,874 60,996
Total Assets 85,234 79,229 9,152 8,203 94,386 87,432
Long-term Liabilities
Outstanding 3,766 2,619 - - 3,766 2,619
Other Liabilities 6,181 5,059 568 494 6,749 5,553
Total Liabilities 9,947 7,678 568 494 10,515 8,172
Net Assets: 75,287 71,551 8,584 7,709 83,871 79,260
Invested in Capital Assets 57,049 54,115 8,081 6,881 65,130 60,996
Restricted 3,306 2,218 - - 3,306 2,218
Unrestricted 14,932 15,218 503 828 15,435 16,046
Total Net Assets $75,287 $71,551 $8,584 $7,709 $83,871 $79,260
A portion of the City of Hermosa Beach's net assets (2%) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets ($16,683,000) 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 position held true for the prior fiscal year.
The government's net assets increased by $4,611,000 during the current fiscal year. As mentioned
earlier, $4,134,000, or 90% of this increase is attributable to capital asset additions, primarily the
purchase of property adjacent to City Hall. 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
$3,736,000. Key elements of this increase are as follows:
6
Changes in Net Assets
June 30, 2005
(dollars in thousands)
Governmental Business -type Total
Activities Activities
2005 2004 2005 2004 2005 2004
Revenues:
Program Revenues:
Charges For Services $5,640 $3,412 $4,154 $3,789 $9,794 $7,201
Operating Grants and 721 675 - - 721 675
Contributions
Capital Grants and Contributions 2,466 666 - - 2,466 666
General Revenues:
Property Taxes 6,221 5,885 - 6,221 5,885
Other Taxes 8,482 8,155 - 531 8,482 8,686
Grants and Contributions Not
Restricted to Specific Programs 2,318 1,230 - - 2,318 1,230
Other 741 793 96 87 837 880
Total Revenues 26,589 20,816 4,250 4,407 30,839 25,223
Expenses:
Legislative and Legal 738 755 738 755
General Government 1,727 1,817 1,727 1,817
Public Safety 12,855 11,220 12,855 11,220
Community Development 1,356 1,116 1,356 1,116
Culture and Recreation 996 966 996 966
Public Works 6,688 4,592 6,688 4,592
Downtown Enhancement 166 940 166 940
Parking 1,702 1,632 1,702 1,632
Proposition A Transit - 310 - 310
Proposition C Transit - 48 - 48
Total Expenses 24,360 20,466 1,868 2,930 26,228 23,396
Increase (Decrease) in Net Assets
Before
Transfers 2,229 350 2,382 1,477 4,611 1,827
Transfers 1,507 2,357 (1,507) (2,357) - -
Increase (Decrease) in Net Assets 3,736 2,707 875 (880) 4,611 1,827
Net Assets - 7/1/04 71,551 68,125 7,709 8,441 79,260 76,566
Prior Period Inventory Adjustment - 719 - 148 - 867
Net Assets - 6/30/05 $75,287 $71,551 $8,584 $7,709 $83,871 $79,260
• The 65% increase in Charges to Services results primarily from fees related to two new
undergrounding districts formed during the year.
• Capital Grants and Contributions increased due to County Proposition A Open Space funds for the
Pier Renovation and a grant from the State Office of Traffic Safety.
• Property Taxes overall increased by $336,000 or approximately 6%. Secured property tax revenue
grew an average of 9.25% up to 2004-05. Due to the State's reduction of local property tax revenue
as a budget balancing measure, Hermosa Beach lost over $300,000. Without this loss, revenue
would have grown by over 10%.
• Other Taxes increased 4% as a result of increased revenue from the utility user tax and transient
occupancy tax (tax on hotel stays).
• Grants and Contributions Not Restricted to Specific Programs increased for the following reasons:
motor vehicle license fees appear to have increased by $288,000 but only because the State borrowed
a portion of the fees in 2003-04 ($328,378); a one-time payment of $300,000, due on the first
anniversary of the Tyco lease, was received; Proposition A and C Transit Funds were changed from
enterprise to special revenue fund types in 2003-04, resulting in an increase of $540,000 in this
category.
7
Expenses and Program Revenues
Governmental Activities
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
tg o
?-• 71,
0 Expenses
■ Program Revenue
Revenue by Source - Governmental Activities
Grants and Contributions Not
Restricted to Specific
Programs
9%
Other Taxes
12%
Investment Earnings
Afiscelaneous
1%
Charges for Services
21%
Operating Grants and
Contributions
3%
Utility User Taxes
10%
Sales Taxes
10%
Property Taxes
23%
Capital Grants and
Contributions
9%
On the expense side, employee salary and benefit increases of approximately 5% affect all
governmental categories. Of this amount, 3% is attributable to the increase in retirement costs for 2004-
05. A large portion of the increase to the Public Safety category, $522,000, is due to a ten -city grant
administered by the City for a traffic management and ticket writing system. Capital improvement
projects for maintenance, including $1,230,000 for two new utility undergrounding districts which are
included in the Public Works category, are largely responsible for higher spending in 2005.
Business -type activities. Business -type activities increased the net assets by $875,000. The primary
contributing factors to this increase were:
• Charges for Services increased 10% due to increased revenue for parking fines, parking meters and
parking lots, and the addition of parking meters to the Upper Pier Avenue area of the City.
• The Downtown Enhancement operation shows a decrease in expenses primarily due to the sale of
real property, which resulted in a gain of $844,000. Adjusting for the gain, the operation would
reflect an increase of $70,000 or 7%, due to the following: depreciation expense increased because a
storage lot facility was purchased during the year, the County of Los Angeles share of net income
due for the parking structure increased because of higher parking structure revenue and capital
improvement maintenance expense increased.
8
3,500,000
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
Dom,
o
o.
O Expenses
■ Program Revenue
Revenue by Source - Business -type Activities
Miscellaneous
0%
Parking Lot
Revenue
21%
Investment r Parking Meters
Earnings € 36%
2%
Fines and
Forfeitures
33%
Other Charges for
Services
8%
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.
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 $15,101,000, an increase of $969,000, in comparison with the prior year.
Approximately 72% of this total amount $10,890,000 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 ($3,136,000), 2) fund transportation development act projects ($52,000), 3) to account
for advances to two undergrounding district funds ($277,000) and 4) to account for an advance to the
Downtown Enhancement proprietary fund for the purchase of a storage lot facility ($746,000).
9
Four funds qualify as major funds under the GASB Statement No. 34, Basic Financial Statements - and
Management Discussion and Analysis - for State and Local Governments, reporting criteria: the General Fund,
Retirement Stabilization 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 $477,000, with $103,000 reserved for re -appropriations and
$374,000 unreserved, but designated for certain purposes. The City's financial policies require that
unspent funds in the General Fund transfer to meet specific funding targets at year end. As those
targets or goals are met, transfers may be redirected where funds are needed. For 2004-05, the City
Council redirected that funds left unspent in the General Fund at year end transfer equally to the
Retirement Stabilization Fund, the Capital Improvement Fund and the Insurance Fund. The transfer to
each fund was $1,163,000. Key reasons funds were available at year end are as follows:
• Property taxes, while reduced by the $300,000 the State took to balance their budget, were still
6% higher overall than last year.
• Motor vehicle license fee revenue shows an increase of 33% because the State borrowed a
portion of City revenue in 2003-04.
• Transient occupancy tax revenue increased 14% with good overall hotel occupancy.
• Parking meter fees and fines increased 12% and 14% respectively, which translated to a higher
transfer at year end to the General Fund, since all unspent funds in the Parking Fund transfer to
the General Fund.
• Expenditures were 5% less than budgeted, namely due to a number of vacant positions which
equates to salary and benefit savings.
The Retirement Stabilization Fund is used to account for funds set aside by the City Council for use
during times of rate instability. Use of the funds has the effect of "rate smoothing."
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 $2.7 million
represents 15% of appropriations.
Proprietary funds. The City of Hermosa Beach's proprietary fund financial statements for the
Downtown Enhancement Fund and the Parking Fund, provide the same type of information found in
the government -wide financial statements, but in more detail.
Unrestricted net assets of the Downtown Enhancement operation at the end of the year were $492,000.
The $10,000 remaining in the Parking Fund is to be reappropriated. Other factors concerning the
finances of these two funds have already been addressed earlier in the discussion of the City of
Hermosa Beach's business -type activities.
General Fund Budgetary Highlights
Differences between the original budget and the final amended budget were 5% for estimated revenue
and 3% for appropriations. Actual revenue was higher than budgeted by 7% due to aforementioned
revenue increases. Transfers In increased by 19% due to the increase in parking meter 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.
Differences between original and final appropriations other than Transfers Out equaled $579,000 or
about 3%. They are briefly summarized as follows:
10
• $29,000 in increases in the Legislative/Legal category for property appraisal services, camera
operator training, newly implemented fraud protection bank service charges and a new
community e -newsletter.
• ($32,000) decrease represents General Government funding from Prospective Expenditures for a
Fire Department hazard mitigation program project.
• $153,000 in Public Safety increases for a Fire Department hazard mitigation program project, a
Fire Department retirement cash- out, an increase for Police mandated training and
appropriation for various donations.
• $5,000 to complete an upgrade of the Community Development software system.
• $42,000 increase to the Culture/Leisure category - $30,000 in donations appropriated for Sunset
Concerts; $12,000 in donations appropriated for recreation programs and community events.
• $85,000 to complete building maintenance projects, including a remodel of the heating and air
conditioning system at the Police department.
• $297,000 in increases for capital outlay for the Municipal Pier renovation that was
reappropriated from 2003-04.
Transfers Out increased due to the year end transfer out to several funds according to adopted financial
policies.
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, 2005, amounts to $67,874,000 (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 2004-05 fiscal year was 11% (a 5% increase for governmental
activities and a 57% increase for business -type activities).
Major capital asset events during the fiscal year included the following:
Governmental Activities
• Construction in progress on a variety of street (widening and expansion projects for existing
streets) and sewer projects was $2,055,000 at the end of the fiscal year.
• Construction in progress on Community Center Improvements was $383,000 at the end of the
fiscal year.
• Construction in progress on Municipal Pier Phase III Improvements was $4,266,000 at of the end
of the current fiscal year.
Business type Activities
• The Downtown Enhancement Fund purchased a storage lot facility for a total cost of $4,232,000.
The purchase was funded in part by loans from the Contingency, Insurance and Equipment
Replacement Funds.
11
Land
Buildings and Structures
Improvements Other
Than Buildings
Machinery and
Equipment
Vehicles
Infrastructure
Construction in Progress
Total
City of Hermosa Beach's Capital Assets
(net of depreciation)
(dollars in thousands)
Governmental
Activities
2005 2004
Business -type
Activities
2005 2004
Total
2005 2004
$18,052 $18,052 $5,188 $1,573 $23,240 $19,625
2,046 2,062 5,406 5,068 7,452 7,130
4,401 4,637 6 - 4,407 4,637
1,147 1,266 12 15 1,159 1,281
1,444
23,251
6,708
$57,049
1,467
24,082
2,549
$54,115
176
37
$10,825
1,444 1,467
189 23,427 24,271
36 6,745 2,585
$6,881 $67,874 $60,996
Additional information on the City of Hermosa Beach's capital assets can be found in note 6 on pages
63-65 of this report.
Economic Factors and Next Year's Budgets and Rates
• Housing sales and prices remain strong in Hermosa Beach as do the accompanying increases in
assessed value and property tax revenue. The assessed valuation in Hermosa Beach has risen
approximately 10% for the last five years.
• Sales tax growth has flattened, with the loss of the BMW dealership. A portion of the site will still
be used for a new Lotus auto dealership, however it remains to be seen whether the type of
replacement business , yet to be proposed, will be a comparable revenue generator or not.
Fortunately, transient occupancy taxes are up 14% for the same period, helping to offset the loss of
revenue growth. Utility user taxes, which produce 14% of General Fund revenue, have flattened
also due to reduced telecommunications revenue. With the advent of internet phone service and
other changes in service delivery, this erosion of the tax base is a concern as the debate over taxation
of the internet continues at the federal level.
• The Lighting/Landscaping Assessment District will not generate enough revenue from the property
tax assessment to cover its costs in 2005-06. As such, the City Council approved a contract to
proceed with a mailed ballot election to increase the assessment for 2006-07.
• Retirement contribution rates from the state retirement system, Ca1PERS, will continue to be high for
2005-06, but are expected to level off or decline in 2006-07 due to improved investment earnings and
rate -smoothing policies adopted by Ca1PERS. The City set up its own Retirement Stabilization
Fund to set aside funds for use in times of high retirement rates. A snapshot of Ca1PERS investment
earnings is as follows: 2001, -7.2%; 2002, -5.9%; 2003, 3.9%; 2004,16.7%; 2005,12.7%.
• The State of California's fiscal outlook, while much improved, is still a source of concern for local
government. Even with the protection of Proposition 1A (passed in November 2004), which
prevents further raids on local government revenue, it is difficult for local government to feel
"revenue -secure" until the State's house is in order. Even if the State takes no further action to
reduce our revenue, actions taken to date with respect to property tax, sales tax, and vehicle license
fees have made projecting our share of the revenue inordinately more complicated.
12
All of these factors were considered in preparing the City of Hermosa Beach's budget for the 2005-2006
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.
13
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14
BASIC FINANCIAL STATEMENTS
15
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16
GOVERNMENT -WIDE FINANCIAL STATEMENTS
17
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18
City of Hermosa Beach
Statement of Net Assets
June 30, 2005
ASSETS
Current assets:
Cash and investments
Reimbursable grants receivable
Interest receivable on investments
Other accounts receivable
Property taxes receivable
Internal balances
Deposits
Other assets
Total current assets
Noncurrent assets:
Capital assets:
Non -depreciable
Depreciable, net
Total capital assets
Total noncurrent assets
Total assets
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities
Accrued wages and compensated absences
Refundable deposits
Unearned revenue
Workers' compensation claims payable - due within one year
General liability claims payable - due within one year
Other liabilities
Total current liabilities
Noncurrent liabilities - due in more than one year:
Workers' compensation claims payable
General liability claims payable
Compensated absences
Total noncurrent liabilities
Total liabilities
NET ASSETS
Invested in capital assets, net of related debt
Restricted fon
Capital projects
Specific projects
Total restricted assets
Unrestricted net assets
Total net assets
See accompanying Notes to Basic Financial Statements.
19
Primary Government
Governmental
Activities
$ 21,378,473
1,829,087
172,918
1,259,321
630,585
2,743,658
80,000
91,105
28,185,147
24,760,718
32,288,766
57,049,484
57,049,484
85,234,631
2,333,277
1,613,115
505,409
800,050
690,000
202,000
37,691
6,181,542
2,347,557
415,933
1,002,151
3,765,641
9,947,183
57,049,484
394,195
2,911,283
3,305,478
14,932,486
Business -Type
Activities
$ 996,765
11,600
62,073
(2,743,658)
(1,673,220)
5,224,729
5,600,009
10,824,738
10,824,738
9,151,518
332,875
203,237
29,477
2,092
567,681
567,681
8,081,080
502,758
Total
22,375,238
1,829,087
184,518
1,321,394
630,585
80,000
91,105
26,511,927
29,985,447
37,888,775
67,874,222
67,874,222
94,386,149
2,666,152
1,816,352
534,886
802,142
690,000
202,000
37,691
6,749,223
2,347,557
415,933
1,002,151
3,765,641
10,514,864
65,130,564
394,195
2,911,283
3,305,478
15,435,244
$ 75,287,448 $ 8,583,838 $ 83,871,286
City of Hermosa Beach
Statement of Activities and Changes in Net Assets
For the year ended June 30, 2005
1
Program Revenues I
Charges Operating Capital Total
for Grants and Grants and Program '
Functions/Programs Expenses Services Contributions Contributions Revenues
Primary government:
Governmental activities:
Legislative and legal $ 737,903
General government 1,727,484 $ 88,375 $ 31,929 $ 120,304
Public safety 12855,036 1,063,594 267,986 $ 573,733 1,905,313
Community development 1,355,888 1,245,622 11,272 1,256,894
Culture and recreation 996,021 874,111 2262 876,373
Public works 6,687,811 2,368,076 407,749 1,891,965 4,667,790
Total governmental activities 24,360,143 5,639,778 721,198 2,465,698 8,826,674
Business -type activities:
Downtown Enhancement 166,732 906,857 906,857
Parking 1,701,775 3,247,478 3,247,478
Total business -type activities 1,868,507 4,154,335 - 4,154,335
Total primary government $ 26,228,650 $ 9,794,113 $ 721,198 $ 2,465,698 $ 12,981,009 '
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
Net assets - end of year
1
1
See accompanying Notes to Basic Financial Statements.
20
Net (Expense) Revenue and
Changes in Net Assets
Governmental Business -type
Activities Activities Total
I$ (737,903) $ (737,903)
(1,607,180) (1,607,180)
(10,949,723) (10,949,723)
I(98,994) (98,994)
(119,648) (119,648)
(2,020,021) (2,020,021)
1 (15,533,469) $ (15,533,469)
740,125 740,125
I1,545,703 1,545,703
2,285,828 2,285,828
(15,533,469) 2,285,828 (13,247,641)
6,221,535 6,221,535
2,584,015 2,584,015
1 5,897,908 5,897,908
14,703,458 14,703,458
2,318,501 2,318,501
1 467,923 96,365 564,288
272,664 243 272,907
1,507,304 (1,507,304)
I19,269,850 (1,410,696) 17,859,154
3,736,381 875,132 4,611,513
71,551,067 7,708,706 79,259,773
I$ 75,287,448 $ 8,583,838 $ 83,871,286
1
21
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FUND FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
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24
GOVERNMENTAL FUND FINANCIAL STATEMENTS
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26
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
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.
Retirement Stabilization Special Revenue Fund - This fund is used to account for funds set aside by the City
Council for use during times of rate instability. Use of the funds has the effect of "rate smoothing."
Contingency Special Revenue Fund - "Rainy day" funds set aside for unforeseen emergencies, unexpected
economic events, etc. The 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.
1
City of Hermosa Beach
Balance Sheet ,
Governmental Funds
June 30, 2005
Major Funds
Retirement Capital
Stabilization. Contingency Improvement Other
Special Special Special Governmental
General Revenue Revenue Revenue Funds Total
ASSETS
Cash and investments $ 1,603,415 $ 2,052,354 $ 1,869,214 $ 3,083,640 $ 6,796,790 $ 15,405,413
Reimbursable grants receivable 1,829,087. 1,829,087
Interest receivable on investments 50,518 8,887 18,804 31,246 63,463 172,918
Other accounts receivable 1,187,393 68,342 1,255,735
Property taxes receivable 616,093 14,492 630,585
Due from other funds 85,520 1,219,782 146,431 1,451,733
Advances to other funds 745,886 276,931 1,022,817 I Other assets 71,436 71,436
Total assets and other debits $ 3,528,855 $ 2,061,241 $ 2,719,424 $ 4,611,599 $ 8,918,605 $ 21,839,724
LIABILITIES AND
FUND BALANCES
Liabilities: I Accounts payable and accrued liabilities $ 337,394 $ 120,045 $ 1,667,364 $ 2,124,803
Wages and benefits payable 1,465,202 4,599 72,101 1,541,902
Due to other funds 1,451,733 1,451,733
Refundable deposits 505,409 505,409 I
Deferred revenue 706,328 4,000 89,722 800,050
Advances from other funds 276,931 276,931
Other liabilities 37,691 37,691 I
Total liabilities 3,052,024 $ . - $ 128,644 3,557,851 6,738,519
Fund Balances:
Reserved for.
Re -appropriations 103,014 1,189,555 1,843,289 3,135,858
Bike paths 48,954 48,954
Strand walkways 3,147 3,147
Advances to other funds 276,931 276,931
Storage Lot Purchase Loan 745,886 745,886
Unreserved, designated for. I
Sales tax in -lieu 137,703 137,703
Sunset Concerts 79,000 79,000
Affordable housing 111,831 111,831 I
Pier phase III 45,283 45,283
Unreserved, undesignated:
Special revenue 2,061,241 1,973,538 3,016,469 3,465,364 10,516,612 I
Total fund balances 476,831 2,061,241 2,719,424 4,482,955 5,360,754 15,101,205
$ 3,528,855 $ 2,061,241 $ 2,719,424 $ 4,611,599 $ 8,918,605 $ 21,839,724 I
Total liabilities and fund balances
See accompanying Notes to Basic Financial Statements. ,
no
City of Hermosa Beach
Reconciliation of the Governmental Funds Balance Sheet
to the Government -Wide Statement of Net Assets
June 30, 2005
Total Fund Balances - Total Governmental Funds $ 15,101,205
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.
Government -
Wide Statement Internal Service
of Net Assets Funds
Non -depreciable $ 24,760,718 $ (375,693) 24,385,025
Depreciable, net 32,288,766 (1,826,064) 30,462,702
Total capital assets $ 57,049,484 $ (2,201,757) 54,847,727
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
2,000,429
Equipment Replacement Fund 4,340,238
Total internal service funds 6,340,667
Compensated absences were not due and payable in the current period. Therefore,
they were not reported in the Governmental Funds Balance Sheet.
(1,002,151)
Net Assets of Governmental Activities $ 75,287,448
See accompanying Notes to Basic Financial Statements.
City of Hermosa Beach
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the year ended June 30, 2005
Major Funds
Retirement Capital
Stabilization Contingency Improvement Other
Special Special Special Governmental
General Revenue Revenue Revenue Funds Total
REVENUES:
Property taxes $ 6,221,536 $ 446,979 $ 6,668,515
I
Other taxes 8,435,233 650,071 9,085,304
Licenses and permits 701,468 701,468
I
Fines and forfeitures 443,317 15,789 459,106
Use of money and property 346,782 525,000 871,782
Intergovernmental 1,259,467 3,074,482 4,333,949
Charges for services 1,712,006 140,720 1,852,726
Miscellaneous 224,216 1,829,034 2,053,250
Interest earned on investments 83,778 $ 29,121 $ 73,768 $ 81,963 199,295 467,925
I
Total revenues 19,427,803 29,121 73,768 81,963 6,881,370 26,494,025
EXPENDITURES:
Current:
Legislative and legal 727,026 727,026
General government 1,198,413 142,022 1,340,435
Public safety 11,466,114 673,019 12,139,133
Community development 1,051,691 273,528 1,325,219
Culture and recreation 940,158 940,158
Public works 2,125,564 1,248,799 3,374,363
Capital outlay 241,632 565,489 5,618,774 6,425,895
Total expenditures 17,750,598 - 565,489 7,956,142 26,272,229
REVENUES OVER
(UNDER) EXPENDITURES 1,677,205 29,121 73,768 (483,526) (1,074,772) 221,796
OTHER FINANCING SOURCES (USES):
Transfers in 2,391,314 1,162891 65,909 2247,608 1,500,480 7,368,202
Transfers out (4,225,670) (260,000) (32,457) (2,103,022) (6,621,149)
Total other financing sources (uses) (1,834,356) 902,891 33,452 2,247,608 (602,542) 747,053
111
Net change in fund balances (157,151) 932,012 107,220 1,764,082 (1,677,314) 968,849
FUND BALANCES:
Beginning of year 633,982 1,129,229 2,612,204 2,718,873 7,038,068 14,132,356
End of year $ 476,831 $ 2,061,241 $ 2,719,424 $ 4,482,955 $ 5,360,754 $ 15,101,205
See accompanying Notes to Basic Financial Statements. '
30
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, 2005
Net Change in Fund Balances - Total Governmental Funds
Governmental Activities in the Statement of Activities were reported differently because:
$ 968,849
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.
Total capital outlay expenditures reported in governmental funds 6,425,895
Less repair and maintenance expenditures reported in public works (1,698,971)
Total 4,726,924
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 $401,735 which are reported below.
Total depreciation reported in Government -Wide Statement of Activities
Less depredation reported in Internal Service Funds
Total
_ The net sale involving various capital assets to decrease net assets
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.
Change in Net Assets of Governmental Activities
See accompanying Notes to Basic Financial Statements.
31
(1,950,208)
401,735
(1,548,473)
(249,537)
99,942
(261,324)
$ 3,736,381
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32
PROPRIETARY FUND FINANCIAL STATEMENTS
33
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PROPRIETARY FUND FINANCIAL STATEMENTS
Downtown Enhancement Fund - All unmetered parking lot and parking structure 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.
City of Hermosa Beach
Statement of Net Assets
Proprietary Funds
For the Year Ended June 30, 2005
ASSETS
Current assets:
Cash and investments
Interest receivable on investments
Other accounts receivable
Advances to other funds
Deposits
Other assets
Total current assets
Noncurrent assets:
Property and equipment, net of
accumulated depreciation
Total noncurrent assets
Total assets
LIABILITIES
Current liabilities:
Current portion of long-term liabilities
Accounts payable
Accrued wages and compensated absences
Refundable deposit
Advances from other funds
Deferred revenue
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
Investment in capital assets, net of related debt
Unrestricted
Total net assets
See accompanying Notes to Basic Financial Statements.
Governmental
Major Enterprise Funds Total Activities
Downtown Enterprise Internal
Enhancement Parking Funds Service Funds
$ 795,722 $ 201,043 $ 996,765 $ 5,973,060 I
7,989 3,611 11,600
11,568 50,505 62,073 3,586
1,997,772
80,000
19,669 I 815,279 255,159 1,070,438 8,074,087
10,640,710 184,028 10,824,738 2,201,757
10,640,710 184,028 10,824,738 2,201,757
11,455,989 439,187 11,895,176 10,275,844
i
892,000
285,280 47,595 332,875 208,474
8,523 194,714 203,237 71,213
27,012 2,465 29,477
2,743,658 2,743,658 I
2,092 2,092
3,066,565 244,774 3,311,339 1,171,687
36
i
3,037,557
617,933
(892,000)
2,763,490
3,066,565 244,774 3,311,339 3,935,177
7,897,052 184,028 8,081,080 2,201,757
492,372 10,386 502,758 4,138,910
$ 8,389,424 $ 194,414 $ 8,583,838 $ 6,340,667
City of Hermosa Beach
Statement of Revenues, Expenses and Changes in Net Assets
Proprietary Funds
For the year ended June 30, 2005
OPERATING REVENUES:
Fines and forfeitures
Use of money and property
Charges for services
Miscellaneous
Total operating revenues
OPERATING EXPENSES:
Salaries and wages
Contractor services
Supplies
Claims expenses
Depreciation
Total operating expenses
OPERATING INCOME (LOSS)
NONOPERATING REVENUES (EXPENSES):
Interest earned on investments
Gain (loss) on sale of assets
Total nonoperating revenues (expenses)
INCOME (LOSS) BEFORE TRANSFERS
TRANSFERS:
Transfers in
Transfers out
Total operating transfers
Changes in net assets
Governmental
Major Enterprise Funds Total Activities
Downtown Enterprise Internal
Enhancement Parking Funds Service Funds
$ 1,422,721 $ 1,422,721
$ 61,660 61,660
906,857 1,824,757 2,731,614 $ 2,550,438
243 243 95,195
968,760 3,247,478 4,216,238 2,645,633
65,968 1,254,815 1,320,783 382,846
769,370 75,408 844,778 765,576
46,679 356,707 403,386. 246,231 ,
1,833,498
128,262 14,845 143,107 401,735
1,010,279 1,701,775 2712054. 3,629,886
(41,519) 1,545,703 1,504,184 (984,253)
25,553 9,152 34,705
844,500 (953) 843,547 (37,322)
870,053 8,199 878,252 (37,322)
828,534 1,553,902 2,382,436 (1,021,575)
250,348 250,348 1,179,086
(4,045) (1,753,607) (1,757,652) (418,835)
246,303 (1,753,607) (1,507,304) 760,251
1,074,837 (199,705) 875,132 (261,324)
NET ASSETS:
Beginning of the year 7,314,587 394,119 7,708,706 6,601,991
End of the year $ 8,389,424 $ 194,414 $ 8,583,838 $ 6,340,667
See accompanying Notes to Basic Financial Statements.
37
City of Hermosa Beach
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2005
Governmental
Major Enterprise Funds Total Activities
Downtown Enterprise Internal
Enhancement Parking Funds Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 1,147,657 $ 3,211,716 $ 4,359,373 $ (1,019,276)
Cash received for services from other funds 2,743,658 2,743,658 1,551,552
Cash payments to suppliers for goods and services (773,929) (443,250) (1,217,179) (936,482)
Cash payments to employees for services (65,364) (1,241,090) (1,306,454) (373,100)
Insurance premiums and settlements (1,112,649)
Other operating revenues 243 243 95,195
Net cash provided by (used for) operating activities 3,052,265 1,527,376 4,579,641 (1,794,760)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Transfers in 250,348 250,348 1,179,086
Transfers out (4,045) (1,753,607) (1,757,652) (418,835)
Net cash provided by (used for) noncapital financing activities 246,303 (1,753,607) (1,507,304) 760,251
1
1
CASH FLOWS CAPITAL AND RELATED FINANCING ACTIVITIES:
Gain (loss) on sale of capital assets 844,500 844,500 (37,322)
III
Transfer of capital assets (178,000) 178,000
Acquisition of capital assets (4,087,874) (4,087,874} (407,100)
Net cash provided by (used for) capital and related financing activities (3,421,374) 178,000 (3,243,374) (444,422)
I
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest earned on investments 25,553 9,152 34,705
Net cash provided (used) by investing activities 25,553 9,152 34,705
Net increase (decrease) in cash and cash equivalents (97,253) (39,079) (136,332) (1,478,931)
CASH AND CASH EQUIVALENTS:
Beginning of year 892,975 240,122 1,133,097 7,451,991
Ending of year $ 795,722 $ 201,043 $ 996,765 $ 5,973,060
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVmES:
Operating income (loss) $ (41,519) $ 1,545,703 $ 1,504,184 $ (984,253)
Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities:
Depreciation 128,262 14,845 143,107 401,735
Changes in operating assets and liabilities:
Interest receivable on investments (3,327) (1,925) (5,252)
Other accounts receivable (1,340) (34,980) (36,320) (3,586)
Notes Receivable 156,143 156,143
Other assets 560 128 688 (16,804)
Worker's compensation claims payable 473,591
General liability claims payable 247,258
Accounts payable 42,120 (11,135) 30,985 75,325
Accrued wages and compensated absences 604 13,725 14,329 9,746
Refundable deposits 27,012 1,015 28,027
Advances from (to) other funds 2,743,658 2,743,658 (1,997,772)
Deferred revenue 92 92
Total adjustments 3,093,784 (18,327) 3,075,457 (810,507)
Net cash provided (used) by operating activities $ 3,052,265 $ 1,527,376 $ 4,579,641 $ (1,794,760)
See accompanying Notes to Basic Financial Statements.
38
FIDUCIARY FUND FINANCIAL STATEMENTS
39
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40
FIDUCIARY FUND FINANCIAL STATEMENTS
Agency Fund are used to account for assets held by the City on behalf of or as agent for individuals. Agency Fund
111 spending is controlled primarily through legal agreements and applicable State and Federal laws.
City of Hermosa Beach
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2005
ASSETS
Cash and investments
Interest receivable
Other accounts receivable
Total assets
LIABILITIES
Assessment
Installment account
Reserve Requirement
OPEB contribution from City
Total liabilities
See accompanying Notes to Basic Financial Statements.
42
Agency 1
Funds
$ 531,502 I
2,582
13,876
$ 547,960
t
$ 260,527
13,253
274,180
$ 547,960
1
I
1
City of Hermosa Beach
Index to Notes to Basic Financial Statements
For the year ended June 30, 2005
Page
Note 1- Summary of Significant Accounting Policies 45
A. Financial Reporting Entity 45
B. Basis of Accounting and Measurement Focus 46
C. Use of Restricted/Unrestricted Net Assets 49
D. Cash and Investments 50
E. Property Tax Receivable 50
F. Interfund Transactions 50
G. Capital Assets 51
H. Claims Payable 52
I. Compensated Absences Payable 52
J. Unearned and Deferred Revenue 52
K. Long -Term Debt 52
L. Net Assets 53
M. Fund Balances - Reservations and Designations 53
N. Use of Estimates 53
O. Implementation of New GASB Pronouncements 53
Note 2 - Cash and Investments 54
Note 3 -Receivables 57
Note 4 - Lease Revenues 59
Note 5 - Interfund Transactions 60
Note 6 - Capital Assets 63
Note 7 - Long -Term Debt 66
Note 8 - Other Required Fund Disclosures 69
Note 9 - Risk Management 69
Note 10 -Retirement Plans 71
Note 11- Commitments and Contingencies 75
Note 12 - Subsequent Events 75
3
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City of Hermosa Beach
Notes to Basic Financial Statements
For the year ended June 30, 2005
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 in November
1997 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 utility underground assessment district, which was
created in October 1999 pursuant to Street and Highway Code 10000.
Loma Underground Utility District Improvement Fund
This fund is used to account for the funds of the utility underground assessment district, which was
created in October 1999 pursuant to Street and Highway Code 10000.
45
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
A. Financial Reporting Entity, Continued
Bayview Drive Underground District Improvement Fund
This fund is used to account for the funds of the utility underground assessment district, which was
created in February 2005 pursuant to Street and Highway Code 10000.
Beach Drive Assessment District Improvement Fund
This fund is used to account for the funds of the utility underground assessment district, which was
created in July 2004 pursuant to Street and Highway Code 10000.
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:
46
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Governmental Fund Financial Statements, Continued
> 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.
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.
Retirement Stabilization Fund. This fund is used to account for funds set aside by the City Council for use
during times of rate instability. Use of the funds has the effect of "rate smoothing."
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
presents increases (revenue and other financing sources) and decreases (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.
47
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Governmental Fund Financial Statements, Continued
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.
The exception to that rule is sales tax. The State took sales tax revenue (Sales Tax In Lieu) from cities and
counties in fiscal year 2004-05, in order to use the source of funds as a guarantee for state issued debt to
finance budget deficits. Sales tax is received on a monthly basis. Funds will be repaid according to the
property tax schedule, with the bulk of payments occurring only twice a year. As such, the City has
adopted an accrual policy of 7 to 12 months for recording this revenue. The revenue was earned by June 30,
however the payment will not be received until January 2006. A designation in this amount has been set up
to reflect that these funds are not available for appropriation. 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.
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 fund 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 unmetered 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.
48
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Proprietary Fund Financial Statements, Continued
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.
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.
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 four utility undergrounding districts, two reserve funds for utility 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 intends to
establish 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.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
D. Cash and Investments, Continued
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 collateralising these investments. In addition, these Structured Notes and Asset -Backed
Securities are subject to market risk as a result of changes in interest rates.
In accordance with GASB Statement No. 40, Deposit and Investment Risk Disclosures (an amendment of GASB
Statement No. 3), certain disclosure requirements, if applicable for deposit and investment risk are specified
for the following areas:
> Interest Rate Risk
> Credit Risk
• Overall
• Custodial Credit Risk
• Concentrations of Credit Risk
> Foreign Currency Risk
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
government -wide financial statements as "internal balances."
50
1
1
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
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 capitalisation threshold for
reporting capital assets at $5,000 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, 2005 into the
2004-2005 Basic Financial Statements.
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 capitalised 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.
51
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
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. The long-term amount is included as a liability
in the governmental activities of the Government -Wide Financial Statements. A liability for these amounts
is reported in governmental funds only if they have matured, for example, as a result of employee
resignations and retirements. 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.
I. Unearned and Deferred 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 cell phone site license lease payments received in advance, prepaid charges
for services and facility rentals paid in advance.
In the Fund Financial Statements, deferred revenue is recorded when transactions have not yet met the
revenue recognition criteria based on the modified accrual basis of accounting. The City records deferred
revenue for transactions for which revenues have not been earned, or for which funds are not available to
meet current financial obligations. Typical transactions for which deferred revenue is recorded are lease
payments, quarterly encroachment fees and advance registration for recreation classes which were not yet
earned or available.
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.
52
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
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, net of related debt- 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, net of related debt" 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.
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.
O. Implementation of New GASB Pronouncements
The City adopted new accounting standards in order to conform to the following Governmental
Accounting Standards Board Statement:
Statement No. 40, Deposit and Investment Risk Disclosures (an amendment of GASB Statement No. 3)
GASB Statement No. 40 updates the custodial credit risk disclosure requirements of GASB Statement No. 3,
deposits with financial institutions, investments, including repurchase agreements, and reverse repurchase
agreements, and establishes more comprehensive disclosure requirements addressing other common risks of
deposits and investments of state and local governments, such as interest rate risk, credit risk,
concentration of credit risk and foreign currency risk.
53
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
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 $360,820 at June 30,2005. Bank balances at June 30,
2005, were $605,519 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.
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
:54
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
2. CASH AND INVESTMENTS, Continued
B. Investments, Continued
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, 2005, amounted to an unrealized decrease of $24,623.
The City's investments with the Local Agency Investment Fund (LAIF), the State of California's investment
pool, at June 30, 2005, included a portion of the pooled funds invested in Structured Notes and Asset-
Backed
ssetBacked 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 collateralized mortgage obligations (CMO's), or credit
card receivables.
As of June 30, 2005, the City had $20,072,015 invested in LAIF. 2.406% of pool investment funds were
invested in Structured Notes and Asset -Backed Securities.
The City valued its investments in LAIF as of June 30, 2005 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 .997747553.
C. Risk Disclosures
Interest Rate Risk - As a means of limiting its exposure to fair value losses arising from rising interest rates,
the City's investment policy limits investments to a maximum maturity of five years. At June 30, 2005, the
City had the following investment maturities:
Investment Type Fair Value Logs than 1 1 to 2
Federal Home Loan Bank $ 1,979,530 $ 495,940 $ 1,483,590
Federal Home Loan Mortgage Corporation 494,375 494,375
Local Agency Investment Fund 20,072,015 20,072,015
Total
$ 22,545,920 $ 495,940 $ 22,049,980
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
2. CASH AND INVESTMENTS, Continued
C. Risk Disclosures, Continued
Credit Risk - The City's investments are rated by the nationally recognized statistical rating organizations as
follows:
U.S. Agencies
Federal Home Loan Bank
Federal Home Loan Mortgage Corporation
Extemal Pool
Standard
Moody's & Poor's
Aaa AAA
Aaa AAA
State of California - Local Agency Investment Fund Not Rated Not Rated
Concentration of credit risk - The City's investment policy does not allow for an investment in any one
institution that is in excess of 5% of the government's total portfolio. '
D. Summary of Cash and Investments
The following is a summary of cash and investment at June 30, 2005:
Government -Wide Statement of Net Assets Funds Financial
Fiduciary Funds
Governmental Business -Type Statement of
Activities Activities Total Net Assets Total
Cash and Investments $ 21,378,473 $ 996,765 $ 22,375,238 $ 531,502 $ 22,906,740
Cash deposits and investments at June 30, 2005 were as follows:
Fair Value
City Treasury:
Cash Deposits:
Demand accounts $ 605,519
Less items in transit (244,699)
Total cash deposits 360,820
Investments:
Local Agency Investment Fund 20,072,015
U.S. government notes 2,473,905
Total investments 22,545,920
Total cash and investments
56
$ 22,906,740
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
3. RECEIVABLES
Government -Wide Financial Statements
At June 30, 2005, the Goverrunent-Wide Financial Statements show the following miscellaneous receivables
net of allowances for uncollectible amounts, if any:
Accounts
Taxes
Interest
Grants
Total
Government -Wide
Statement of Net Assets
Governmental
Activities
$ 1,259,321
630,585
172,918
1,829,087
$ 3,891,911
Business -Type
Activities
$ 62,073
11,600
Fiduciary Funds
Statement of
Net Assets Total
$ 13,876 $ 1,335,270
630,585
2,582 187,100
1,829,087
$ 73,673 $
16,458 $ 3,982,042
Fund Financial Statements
At June 30, 2005, 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 funds in the aggregate as of June 30, 2005, were as
follows:
Governmental Funds:
General Fund
Non -major Funds
Total governmental funds
Proprietary Funds:
Downtown Enhancement Fund
Parking Fund
Total proprietary funds
Internal Service Funds
Agency Funds
Total
57
$ 1,187,393
68,342
1,255,735
11,568
50,505
62,073
3,586
13,876
$ 1,335,270
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
3. RECEIVABLES, Continued
B. Taxes Receivable
At June 30, 2005, the City had taxes receivable in the following major funds and non -major funds in the
aggregate:
Property
Taxes
Governmental Funds:
General Fund $ 616,093
Non -major Funds 14,492
Total $ 630,585
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, 2005, was as follows:
City Pooled
Investments
Governmental Funds:
General fund $ 50,518
Retirement Stabilization fund 8,887
Contingency fund 18,804
Capital Improvement 31,246
Non -major funds 63,463
Total governmental funds 172,918
Proprietary Funds:
Downtown Enhancement fund 7,989
Parking fund 3,611
Total proprietary funds 11,600
Total 184,518
Agency Funds 2,582
Total interest receivable $ 187,100
58
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
I3. RECEIVABLES, Continued
D. Reimbursable Grants Receivable
Grants receivable consists of a variety of reimbursable grants from other agencies. The total amount of
I reimbursable grants for each major and non -major funds in the aggregate as of June 30, 2005 were as
follows:
Governmental Funds:
Non -major Funds $ 1,829,087
Total governmental funds $ 1,829,087
4. LEASE REVENUES
I 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
I 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
Ifor fiscal year 2004-2005 is $214,710.
In February 2001, a 50 year lease for the retail space located in front of the North Pier Parking Structure was
I 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.
1 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
Ipayment in the amount of $2,092.
In June 2005, the City purchased property adjacent to City Hall that includes a self -storage facility. The
I existing lease for the storage facility was transferred to the City as a condition of the sale. The monthly
lease payment increases in February of each year based on the consumer price index up to a maximum of
3% per year. The City receives a monthly lease payment in the amount of $14,319.
1 The City leases a portion of the Hermosa Beach Community Center to nonprofit and cultural organizations.
The leases are renegotiated annually.
I
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
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,
2006 $ 233,572
2007 225,302
2008 230,678
2009 145,173
2010 21,000
2011-2015 105,000
2016-2020 105,000
2021-2025 105,000
2026-2030 105,000
2031-2035 105,000
2036-2040 105,000
2041-2045 105,000
2046-2050 105,000
2051-2055 12,250
Total $ 1,707,975
Lease revenue for fiscal year 2005 was $115,379 with $69,274 reflected in the General Fund and $46,105 in
the Downtown Enhancement Fund, an enterprise fund.
5. INTERFUND TRANSACTIONS
A. Government -Wide Financial Statements
Transfers
At June 30, 2005, the City had the following operating transfers:
Transfers Out
Business -Type
Activities
Governmental Activities $ 1,507,304
Total $ 1,507,304
60
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
5. INTERFUND TRANSACTIONS, Continued
B. Fund Financial Statements
Due To/From Other Funds
The composition of due to/from other funds at June 30, 2005 is as follows:
Contingency Fund
Capital Improvement Fund
Non -major funds
Total
Due to Other
Funds
Non -major
Governmental
Funds
$ 85,520
1,219,782
146,431
$ 1,451,733
The balance of $85,520 due to the Contingency fund from non -major governmental funds resulted from
loans for the start up of two utility undergrounding districts. The remaining balance of $1,366,213 in the
Capital Improvement Fund and in non -major funds resulted from the time lag between the dates that
reimbursable expenditures occur and payments are received from other agencies. All balances are
scheduled to be collected in the subsequent year.
Advances From/To Other Funds
At June 30, 2005, the composition of advances to other funds is as follows:
Advances From Other Funds J
Downtown
Enhancement
Fund
Contingency Fund $ 745,886
Capital Improvement Fund
Internal Service funds 1,997,772
Total $ 2,743,658
Non -major
Governmental
Funds
Total
$ 745,886
$ 276,931 276,931
1,997,772
$ 276,931 $ 3,020,589
The balance of $276,931 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. The
balance of $2,743,658 from the Contingency Fund and Internal Service funds to the Downtown
Enhancement Fund, represents the balance owed to these funds for the purchase of real property. The
advances will be repaid from lease proceeds from a storage facility located on the property and any
available excess retained earnings at year end.
-61
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
5. INTERFUND TRANSACTIONS, Continued
B. Fund Financial Statements, Continued
Transfers
At June 30, 2005, the City had the following transfers:
d
W
F
Transfers Out
General
Retirement Non -major Downtown
Stabilization ContingencyGovernmental Enhancement
Fund Fund Funds Fund
Internal
Parking Service
Fund Fund Total
General Fund
Retirement
Stabilization Fund $ 1,162891
Contingency Fund
Capital
Improvement Fund 1,194,763
Non -major
Governmental Funds 700,000
Downtown
Enhancement Fund
Internal Service Fund 1,168,016
$ 260,000
$ 552,142 $ 3,565 $ 1,575,607 $ 2,391,314
65,909
$ 32457 601,553
800,000
72,348
1,162891
65,909
$ 418,835 2,247,608
1,500,480
178,000 250,348
11,070 1,179,086
Total $ 4,225,670 $ 260,000 $ 32457 $ 2,103,022 $ 4,045 $ 1,753,607 $ 418,835 $ 8,797,636
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, 2005, the following one-time transfers were made:
> The General Fund made a transfer of $2,400 to the Equipment Replacement Fund to finance the
purchase of a satellite dish for training in the City Council chambers;
> The General Fund made a transfer of $2,725 to the Equipment Replacement Fund to finance the
purchase of a coin change machine located in a business where new parking meters were installed;
> Excess funds in the Compensated Absences Fund in the amount of $326,553 were transferred to the
Capital Improvement Fund to finance future projects;
> Excess funds in the Compensated Absences Fund in the amount of $65,909 were transferred to the
Contingency Fund to assist in reaching the goal established by the City's financial policies of 15% of
General Fund operating budget appropriations at year end;
> The Equipment Replacement Fund made a transfer of $418,835 to the Capital Improvement Fund to
finance future projects. The Equipment Replacement Fund had excess funds according to the City's
financial policy.
62
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
6. CAPITAL ASSETS
In accordance with GASB Statement No. 34, the City reports 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. The basic approach records accumulated depreciation
and depreciation expense.
A. Government -Wide Financial Statements
At June 30, 2005, the City's capital assets consisted of the following:
Government Business -Type
Activities Activities Total
Non -Depreciable Assets:
Land $ 18,052,495 $ 5,188,092 $ 23,240,587
Construction in progress 6,708,223 36,637 6,744,860
Total non -depreciable assets 24,760,718 5,224,729 29,985,447
Depreciable Assets:
Buildings and structures 3,548,424 6,025,516 9,573,940
Improvements other than buildings 6,906,525 14,447 6,920,972
Machinery and equipment 2,375,797 38,649 2,414,446
Vehicles 2,777,489 2,777,489
Infrastructure 36,637,731 235,942 36,873,673
Total depreciable assets 52,245,966 6,314,554 58,560,520
Less accumulated depreciation for:
Buildings and structures (1,501,764) (619,129) (2,120,893)
Improvements other than Buildings (2,505,730) (8,837) (2,514,567)
Machinery and equipment (1,229,069) (26,901) (1,255,970)
Vehicles (1,333,595) (1,333,595)
Infrastructure (13,387,042) (59,678) (13,446,720)
Total accumulated depreciation (19,957,200) (714,545) (20,671,745)
Total depreciable assets, net 32,288,766 5,600,009 37,888,775
Total capital assets $ 57,049,484 $ 10,824,738 $ 67,874,222
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
6. CAPITAL ASSETS, Continued
A. Government -Wide Financial Statements, Continued
The following is a summary of capital assets for governmental activities for the year ended June 30, 2005:
Balance Balance
July 1, 2004 Additions Deletions Adjustments June 30, 2005
Capital assets not being depreciated:
Land $ 18,052,495 $ 18,052,495
Construction in progress 2548,970 $ 4,192,354 $ (33,101) 6,708,223
Total capital assets not being depreciated 20,601,465 4,192354 $ (33,101) 24,760,718
Capital assets being depredated:
Buildings and structures 3,491,998 57,816 (1,390) 3,548,424
Improvements other than buildings 6,861,043 61,918 (18,074) 1,638 6,906,525
Machinery and equipment 2,64Z173 238,860 (494,813) (15,423)- 2375,797
Vehicles 2,833,232 346,074 (401,817) 277Z489
Infrastructure 36,487,235 383,756 (233,260) 36,637,731
Total capital assets being depreciated 52320,681 1,088,424 (1,147,964) (15,175) 52245,966
Less accumulated depredation for.
Buildings and structures (1,430,398) (71,366) (1,501,764)
Improvements other than buildings (2,224,328) (290,757) 9,355 (2,505,730)
Machinery and equipment (1,380,993) (199,263) 351,187 (1,229,069)
Vehicles (1,366,399) (282104) 314,908 (1,333,595)
Infrastructure - (12,404,822) (1,106,718) 124,498 (13,387,042)
Total accumulated depreciation (18,806,940) (1,950,208) 799,948 (19,957,200)
Total capital assets being depredated, net 33,513,741 (861,784) (348,016) (15,175) 32288,766
Total governmental activities $ 54,115,206 $ 3,330,570 $ (348,016) $ (48,776) $ 57,019,484
The City allocated the depreciation expenses to departments/functions of the government as follows:
General Government $ 61,880
Public Safety 86,802
Community Development 7,511
Culture and Recreation 21,749
Public Works 263,813
Infrastructure 1,106,718
Capital Assets held by the governments internal
service funds are charged to the various functions
based on their usage of the assets 401,735
Total Depredation Expenses $ 1,950,208
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City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
6. CAPITAL ASSETS, Continued
A. Government -Wide Financial Statements, Continued
The following is a summary of capital assets for business -type activities:
Balance
Capital assets not being depreciated:
Land
Construction in progress
Total capital assets not being
Balance
July 1, 2004 Additions Deletions Ad'ustments June 30, 2005
$ 1,572,740 $ 3,899,157 $ (155,500) $ (128,305) $ 5,188,092
36,637 36,637
depredated 1,609,377 3,899,157 (155,500) (128,305) 5,224,729
Capital assets being depreciated:
Buildings and structures 5,558,605 338,606 128,305 6,025,516
Improvements other than buildings 13,141 5,610 (4,304) 14,447
Machinery and equipment 44,074 (5,425) 38,649
Infrastructure 235,942 235,942
Total capital assets, being depredated 5,851,762 344,216 (9,729) 128,305 6,314,554
Less accumulated depredation fon
Buildings and structures (490,587) (128,542) (619,129)
Improvements other than buildings • (13,141) 4,304 (8,837)
Machinery and equipment (29,381) (1,992) 4,472 (26,901)
Infrastructure (47,105) (12,573) (59,678)
Total accumulated depreciation (580,214) (143,107) 8,776 (714,545)
Total capital assets being depreciated,
net 5,271,548 201,109 (953) 128,305 5,600,009
Total business -type activities $ 6,880,925 $ 4,100,266 $ (156,453) $ - $ 10,824,738
Business -type activities depreciation expenses for capital assets for the year ended June 30, 2005 are as
follows:
Downtown enhancement $ 128,262
Parking 14,845
Total depreciation expense $ 143,107
B. Fund Financial Statements
The fund financial statements do not present general government capital assets. They are shown in the
Reconciliation of the Goverrunental Funds Balances Sheet to the Government -Wide Statement of Net Assets
located after the governmental fund balance sheet in the fund financial statements.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
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,
2005:
Classification
Balance Balance Due in Due in more
July 1, 2004 Additions Retirements June 30, 2005 One Year than One Year
Governmental Activities:
Compensated absences $ 1,102,093 $ 1,112,384 $ (1,212,326) $ 1,002,151 $ $ 1,002,151
Total $ 1,102,093 $ 1,112,384 $ (1,212,326) $ 1,002,151 $ - $ 1,002,151
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, 2005, was $1,002,151.
B. Long -Term Debt without City Commitment
At June 30, 2005, 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
June 30,
Principal
Balance
Interest Total
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 20,000 15,275 35,275
2011-2015 125,000 54,112 179,112
2016-2018 100,000 10,075 110,075
Total $ 320,000 $ 153,399 $ 473,399
66
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
7. LONG-TERM DEBT, Continued
B. Long -Term Debt without City Commitment, Continued
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
2006 $ 45,000 $ 47,645 $ 92,645
2007 45,000 45,552 90,552
2008 45,000 43,393 88,393
2009 45,000 41,165 86,165
2010 50,000 38,765 88,765
2011-2015 285,000 151,353 436,353
2016-2020 385,000 57,282 442,282
Total $ 900,000 $ 425,155 $ 1,325,155
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
June 30, Principal
Interest
Balance
Total
2006 $ 50,000 $ 55,115 $ 105,115
2007 50,000 52,790 102,790
2008 55,000 50,268 105,268
2009 55,000 47,545 102,545
2010 55,000 44,767 99,767
2011-2015 330,000 175,005 505,005
2016-2020 445,000 66,760 511,760
Total $ 1,040,000 $ 492,250 $ 1,532,250
;67
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
7. LONG-TERM DEBT, Continued
B. Long -Term Debt without City Commitment, Continued
2004 Beach Drive Utility Underground Assessment District Special Assessment Bonds
In July 2004, limited obligation improvement bonds in the amount of $404,341 were issued for the Beach
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
2006 $ 11,492 $ 19,133 $ 30,625
2007 13,122 18,542 31,664
2008 13,752 17,897 31,649
2009 14,412 17,221 31,633
2010 15,104 16,513 31,617
2011-2015 87,114 70,688 157,802
2016-2020 110,126 47,123 157,249
2021-2025 139,219 17,332. 156,551
Total 404,341 224,449 $ 628,790
2005 Bayview Drive Utility Underground Assessment District Improvement Bonds
In February 2005, limited obligation improvement bonds in the amount of $951,667 were issued for the
Bayview 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
2006 $ 40,446 $ 40,446
2007 $ 31,138 39,784 70,922
2008 32,462 38,433 70,895
2009 33,841 37,024 70,865
2010 35,280 35,555 70,835
2011-2015 200,205 153,462 353,667
2016-2020 246,522 106,161 352,683
2021-2025 303,553 47,917 351,470
2026 68,666 1,459 70,125
Total $ 951,667 $ 500,241 $ 1,451,908-
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City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
8. OTHER REQUIRED FUND DISCLOSURES
A. Deficit Fund Balances
At June 30, 2005, the following funds had deficit fund equity:
Beach Drive 2 Underground District
Bonnie Brae Underground District
$ (65,520)
$ (76,931)
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.
B. Excess of Expenditures over Appropriations
For the year ended . June 30, 2005, expenditures exceeded budget in the Special Revenue Taskforce for
Regional Autotheft Prevention (TRAP) Fund in the amount of $8,456 because an increase in the number of
cases worked by the police officer assigned to the taskforce resulted in unexpected overtime costs. The
expenditures were offset by revenue received as the City is reimbursed for all costs incurred for the police
officer assigned to the taskforce.
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.
.69
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
9. RISK MANAGEMENT, Continued
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:
2.76% weighted risk sharing percentage for July 1, 2004 to July 1, 2005
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
The City's premiums to ICRMA in the amount of $384,439 for the fiscal year 2004-2005 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 $3,655,490 reported at June 30, 2005, 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:
Current Year
Beginning Claims and End Amounts
of Year Changes in Claim of Year Due within
Liability Estimates Payments Liability One Year
Workers' Compensation
2002-2003 $ 1,980,829 $ 473,475 $ (685,173) $ 1,769,131 $ 325,000
2003-2004 1,769,131 2,337,918 (1,543,083) 2,563,966 453,000
2004-2005 2,563,966 1,566,804 (1,093,213) 3,037557 690,000
General Liability
2002-2003 332,382 596,841 (355,721) 573,502 250,000
2003-2004 573,502 (110,046) (92,781) 370,675 184,000
2004-2005 370,675 983,340 (736,082) 617,933 202,000
Detailed financial information may be obtained from the ICRMA Program Administrator located at 3760
Kilroy Airport Way, Suite 360, Long Beach, California 90806.
70
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
10. RETIREMENT PLANS
A. Public Employee Retirement System
Plan Description
The City contributes to the California Public Employees Retirement System (CaIPERS), 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. CalPERS
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 $774,514 for the year ended
June 30, 2005. The City, as the employer, is required to contribute for fiscal year 2004-2005 at actuarially
determined rates; which are applied to annual covered payroll. The 2004-2005 rate is 3.643% for
miscellaneous employees, 36.915% for police employees and 30.714% for fire employees. The contribution
requirements of City employees and the City employer are established and may be amended by Ca1PERS.
Annual Pension Cost
For fiscal year 2004-2005, the City's annual pension cost of $1,884,239 for CaIPERS was equal to the City's
required and actual contributions, of which $174,915 is for the miscellaneous plan, $1,123,987 for the police
plan and $585,337 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) induded 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 dosed 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.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
10. RETIREMENT PLANS, Continued
A. Public Employee Retirement System, Continued
THREE-YEAR TREND INFORMATION FOR PERS
Miscellaneous Plan
Fiscal Year
Annual Percentage of
Pension Cost APC Net Pension
(APC) Contributed Obligation
6/30/2003 100%
6/30/2004 100%
6/30/2005 $ 174,915 100%
Police Plan
Annual Percentage of
Pension Cost APC Net Pension
Fiscal Year (APC) Contributed Obligation
6/30/2003 $ 635,079 100%
6/30/2004 827,733 100%
6/30/2005 1,123,987 100%
Fiscal Year
Fire Plan
Annual Percentage of
Pension Cost APC Net Pension
(APC) Contributed Obligation
6/30/2003 $ 154,110 100%
6/30/2004 351,984 100%
6/30/2005 585,337 100%
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.
72
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
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.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
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 2004-2005, two retirees received benefits
at a total cost of $6,786.
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 2004-2005, seventeen retirees
received benefits at a total cost of $25,158.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
11. COMMITMENTS AND CONTINGENCIES
A. Commitments
The City had several outstanding or planned construction projects as of June 30,2005. These projects are
evidenced by contractual commitments with contractors and include:
Project
Infrastructure
Municipal Pier Upgrades
Commitment
Spent to Date _ Remaining
$ 305,448 $ 310,328
4,226,132 1,604,727
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, the Tyco Fund, the Tyco Tidelands
Fund, the Capital Improvement Fund, the Sewer Fund and the Artesia Boulevard Relinquishment Fund,
with remaining funding provided by a County Open Space Grant and a State Wildlife Conservation Grant.
B. Contingencies
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
MacPherson Oil Project
The City entered into a lease with MacPherson Oil in 1986 to allow oil drilling from the City Yard site.
During 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, to 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 Appeals, 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 Appeals 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.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2005
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
appeals, and in an unpublished decision issued in November 2005, the Court of Appeals reversed, rejecting
many of the City's defenses and remanding the case back to the trial court for trial. The City's petition to
the Supreme Court for review of this decision was denied. The case will return to the trial court in early
2006 where the trial court will be asked to determine whether MacPherson bore the risk of a change in the
law such as Proposition E. If the trial court determines as a factual matter that it did, then the City will
prevail. If the trial court determines that MacPherson did not bear that risk, then it will be necessary to try
the case for damages. At that point, the court will be asked to determine, as a matter of law, whether
MacPherson is entitled only to restitution or whether it may seek lost profits. It is possible that the Court's
ruling on that issue could be subject to appeal before a trial on damages is conducted. The City continues
to vigorously defend the case; no new settlement discussions have occurred as of the Court of Appeals'
latest ruling. Both the cost of defense and a potential adverse judgment in this case could have a material
effect on the financial position of the City.
76
REQUIRED SUPPLEMENTARY INFORMATION
City of Hermosa Beach
Required Supplementary Information
For the year ended June 30, 2005
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 2004-2005,
the City Council deferred the transfer to the Equipment Replacement Fund, the Compensated Absences
Fund and to the Contingency Fund since goals had been met. In 2003-04, 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 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.
78
City of Hermosa Beach
Required Supplementary Information, Continued
For the year ended June 30, 2005
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 schedules for the General Fund and applicable major special revenue
funds for which an annual operating budget was adopted.
Budgetary Comparison Schedule - General Fund
Positive
(Negative)
Budgeted Amounts Actual Variance with
Original Final Amounts Final Budget
Fund Balance, July 1 $ 125,731 $ 633,982 $ 633,982 $ -
Resources (inflows):
Property taxes 5,794,536 6,001,421 6,221,536 220,115
Other taxes 7,287,448 8,014,352 8,435,233 420,881
Licenses and permits 544,794 546,608 701,468 154,860
Fines and forfeitures 300,000 425,000 443,317 18,317
Use of money and property 231,250 265,070 346,782 \81,712
Intergovernmental 1,254,663 1,227,112 1,259,467 32,355
Charges for services 1,254,480 1,387,131 1,712,006 324,875
Miscellaneous 34,708 195,827 224,216 28,389
Interest earned on investments 41,655 43,861 83,778 39,917
Transfers in 2,009,762 2,391,315 2,391,314 (1)
Total resources 18,753,296 20,497,697 21,819,117 1,321,420
Charges to appropriations (outflows):
Legislative and legal 747,950 776,585 727,026 49,559
General government 1,274,417 1,241,958 1,198,413 43,545
Public safety 11,603,584 11,756,893 11,466,114 290,779
Community development 1,198,025 1,203,395 1,051,691 151,704
Culture and recreation 993,593 1,036,250 940,158 96,092
Public works 2,207,754 2,292,333 2,125,564 166,769
Capital outlay 10,000 307,347 241,632 65,715
Transfers out 731,873 4,225,670 4,225,670 -
Total charges to appropriations 18,767,196 22,840,431 21,976,268 864,163
Excess of resources over (under)
charges to appropriations (13,900) (2,342,734) (157,151) 2,185,583
Fund Balances, June 30 $ 111,831 $ (1,708,752) $ 476,831 $ 2,185,583
,79
1
City of Hermosa Beach
Required Supplementary Information, Continued
For the year ended June 30, 2005
2. BUDGETS AND BUDGETARY ACCOUNTING, Continued
Budgetary Comparison Schedule -Retirement Stabilization Fund 1
Positive
(Negative) 1
Budgeted Amounts Actual Variance with
Original Final Amounts Final Budget
Fund Balance, July 1 $ 701,081 $ 1,129,229 $ 1,129,229 $ - 1
Resources (inflows):
Interest eamed on investments 7,555 27,601 29,121 1,520
Transfers in 1162 890 1,162,891 1
Total resources 7,555 1,190,491 1,192,012 1,521
charges to appropriations (outflows): g PPriations ( P )
Transfers out 260,000 260,000 260,000
Total charges to appropriations 260,000 260,000 260,000
Excess of resources over (under)
charges to appropriations (252,445) 930,491 932,012 1,521 I Fund Balances, June 30 $ 448,636 $ 2,059,720 $ 2,061,241 $ 1,521
Budgetary Comparison Schedule - Contingency Fund
Positive 1
(Negative)
Budgeted Amounts Actual Variance with I Original Final Amounts Final Budget
Fund Balance, July 1 $ 2,635,626 $ 2,612,204 $ 2,612,204 $ -
Resources (inflows): 1
Interest earned on investments 54,098 81,473 73,768 (7,705)
Transfers In 65,909 65,909 -
Total resources 54,098 147,382 139,677 (7,705) I
charges to appropriations (outflows):
Transfers out 32,457 32,457 32,457 = 1
Total charges to appropriations 32,457 32,457 32,457
Excess of resources over (under) I charges to appropriations 21,641 114,925 _ 107,220 (7,705)
Fund Balances, June 30 $ 2,657,267 $ 2,727,129 $ 2,719,424 $ (7,705)
1
80 1
City of Hermosa Beach
Required Supplementary Information, Continued
For the year ended June 30, 2005
2. BUDGETS AND BUDGETARY ACCOUNTING, Continued
Budgetary Comparison Schedule - Capital Improvement Fund
Positive
(Negative)
Budgeted Amounts Actual Variance with
Original Final Amounts Final Budget
Fund Balance, July 1 $ 1,836,388 $ 2,718,873 $ 2,718,873 $ -
Resources (inflows):
Interest earned on investments 39,989 71,747 81,963 10,216
Transfers in 588,763 2,247,608 2,247,608 -
Total resources 628,752 2,319,355 _ 2,329,571 10,216
Charges to appropriations (outflows):
Capital outlay 2,173,877 1,877,851 565,489 1,312,362
Total charges to appropriations 2,173,877 1,877,851 565,489 1,312,362
Excess of resources over (under)
charges to appropriations (1,545,125) 441,504 1,764,082 1,322,578
Fund Balances, June 30 $ 291,263 $ 3,160,377 $ 4,482955 $ 1,322,578
,81
City of Hermosa Beach
Required Supplementary Information, Continued
For the year ended June 30, 2005
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
22,158,209
(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) (D)
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
(c)
Unfunded
(Overfunded)
Actuarial
Accrued
Liability
(B -A)
$ 2,726,990
5,377,216
9,120,835
Fire Plan
(C)
(E)
Funded
Ratio Covered
(A/B) Payroll
129.6% $ 4,116,801
111.6% 4,369,031
92.6% 4,589,334
(D) (E)
Funded
Ratio
(A/B)
91.4%
83.4%
75.1%
(D)
Covered
Payroll
2,576,494
2,820,718
3,030,766
(E)
Unfunded
Actuarial
Accrued Funded
Liability Ratio Covered
(B -A) (A/B) Payroll
$ 29,913 99.8% $ 1,522,830
1,904,046 87.4% 1,721,850
2,880,204 82.4% 1,802,610
82
(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
This page intentionally left blank.
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.
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.
Tyco Fund - This fund is used to account for funds received from an easement granted for construction of a
transpacific, submarine fiber optics cable system originating in Japan with a landing in Hermosa Beach. The
project will provide additional capacity for global voice and data transmission.
Tyco Tidelands Fund - This fund is used to account for the portion of the funds specific to the tidelands and
submerged lands received from an easement granted for construction of a transpacific, submarine fiber optic cable
system originating in Japan with a landing in Hermosa Beach that were set aside to build one new restroom and
rehabilitate three existing restrooms at the beach.
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.
NON -MAJOR GOVERNMENTAL FUNDS, Continued
Special Revenue Funds, Continued:
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.
Beach Drive Assessment 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.
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 bicycle helmet use
through education and enforcement.
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.
86
NON -MAJOR GOVERNMENTAL FUNDS, Continued
Special Revenue Funds, Continued:
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.
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.
Beach Drive 2 Underground District Fund - 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.
Lower Pier Avenue Assessment District Improvement Fund - This fund is used to account for proceeds from the
sale of bonds in November 1997 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 in October 1999 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 in October 1999 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 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 in February 2005 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.
Bonnie Brae Underground District Fund - 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 Assessment District 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 in July 2004 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.
Prospect Utility Underground District Fund - 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.
87
City of Hermosa Beach
Combining Balance Sheet
Non -Major Governmental Funds
June 30, 2005
Special Revenue Funds
Lighting and Prop A
Landscaping State Compensated Open
District Gas Tax AB 939 Absences Space
Tyco
ASSETS
Cash and investments $ 132,765 $ 64,943 $ 301,698 $ 551,047 $ 973,261
Reimbursable grants receivable $ 1,571,949
Interest receivable on investments 1,328 636 3,012 9,842
Other accounts receivable 7,177 4,878
Property taxes receivable 14,492
Due from other funds
Advances to other funds
Other assets
Total assets $ 155,762 $ 65,579 $ 309,588- $ 551,047 $ 1,571,949 $ 983,103
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable $ 20,5% $ 1,862 $ 352,164 $ 234,517
Wages and benefits payable 22,313 4,549 1,422
Due to other funds 1,219,782
Deferred revenue 14,722 75,000
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
57,631 $ 6,411 $ - 1,571,946 310,939
48,954
3,147
34,500 650,007
63,631 13,478 303,177 551,047 3 22,157
98,131 65,579 303,177 551,047 3 672,164
$ 155,762 $ 65,579 $ 309,588 $ 551,047 $ 1,571,949 $ 983,103
88
Special Revenue Funds
Beach Drive Community
Parks and Lower Pier Myrtle Dist Loma Dist Assessment Development
Tyco Recreation 4% Utility Building Admin Admin Admin Dist Admin Block
Tidelands Facilities Users Tax Improvement Expense Expense Expense Expense Grant
462,442 $ 220,789 $ 28,634 $ 4,723 $ 1,083 $ .7,466 $ 10,464 $ 373
4,603 2152 299 37
75 112
1,402
467,045 $ 222,941 $ 28,933 $ 4,760 $ 1,083 $ 7,541 $ 10,576 $ 373 $ 1,402
147,779 $ 19,735
$ 309 $ . 414 $ 502 $ 348
1,018
147,779 19,735 $
414
348 1,401
67,972 150,255
251,294 52,951 28,933 4,760 774 7,127 10,074 25 1
319,266 203,206 28,933 4,760 774 7,127 10,074 25 1
$ 467,045 $ 222,941 $ 28,933 $ 4,760 $ 1,083 $ 7,541 $ 10,576 $ 373 $ 1,402
(Continued)
89
City of Hermosa Beach
Combining Balance Sheet, Continued
Non -Major Governmental Funds, Continued
June 30, 2005
Special Revenue Funds
Proposition "A" Proposition "C"
Transit Transit
Grants
Office of Air Supplemental
Traffic Quality Law.
Safety Management Enforcement
Grant District Services
ASSETS
Cash and investments $ 354,234 $ 1,166,887 $ 39,928 $ 121,277
Reimbursable grants receivable $ 255,736
Interest receivable on investments 3,536 11,638 393 1,197
Other accounts receivable 1,669 6,494
Property taxes receivable
Due from other funds
Advances to other funds
Other assets
Total assets
LIABILITIES AND
FUND BALANCES
$ 359,439 $ 1,178,525 $ 255,736_ $ : $ 46,815 $ 122,474
Liabilities:
Accounts payable $ 132,914 $ 127,918
Wages and benefits payable 1,641 $ 1 (3) $ 3
Due to other funds 119,426
Deferred revenue
Advances from other funds
Other liabilities _
$ 20,458
Total liabilities 134,555 1 247,341 $ 3 20,458
Fund Balances:
Reserved:
Bike paths
Strand walkways
Re -appropriations 60,000 8,315 14,200
Unreserved, designated
Unreserved, undesignated
Special revenue 224,884 1,118,524 80 46,812 87,816
Total fund balances
Total liabilities
and fund balances
224,884 1,178,524 8,395 46,812 102,016
359,439 $ 1,178,525 $ 255,736 $ $ 46,815 $ 122,474
Special Revenue Funds
California Law
Enforcement Taskforce for Artesia Lower
Equipment Regional Asset Blvd. Beach Drive 2 Pier Ave Myrtle Utility
Program Auto Theft Seizure and Fire Relinquish- Underground Assessment Underground
(CLEEP) Prevention Sewer Forfeiture Protection went District District Improvement
29,949 $ 1,136,747 $ 21,297 $ 230,218 $ 526,243 $ 7,884
299
$ 31,618
12,667 206 2,283 5,276
6,923 9,583
146,431
$ 30,248 $ 31,618 $ 1,302,768 $ 31,086 $ 232,501 $ 531,519 $
$ 7,959
$ 23,427 $ 419,732 $ 7,142 $ 157,164
$ 5,631 31,088 $ 5,456
25,987 $ 65,520
• 23,427 31,618 450,820 5,456 7,142 157,164 65,520 $ $
5,483 483,520. 91,425
1,338
368,428 25,630 133,934 374,355 (65,520) 7,959
6,821
851,948 25,630 225,359 374,355 (65,520) 7,959
$ 30,248 $ 31,618 $ 1,302,768 $ 31,086 $ 232,501 $ 531,519 $ $ - $ 7,959
(Continued)
91
City of Hermosa Beach
Combining Balance Sheet, Continued
Non -Major Governmental Funds, Continued
June 30, 2005
ASSETS
Cash and investments
Reimbursable grants receivable
Interest receivable on investments
Other accounts receivable
Property taxes receivable
Due from other funds
Advances to other funds
Other assets
Total assets
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable
Wages and benefits payable
Due to other funds
Deferred revenue
Advances from other funds
Other liabilities
Special Revenue Funds
Bayview Drive Beach Drive Prospect
Loma Utility Underground Bonnie Brae Assessment Utility Total Other
Underground District Underground District Underground Governmental
Improvement Improvement District Improvement District Funds
$ 101,882 $ 205,156 $ 20,000 $ 75,400
1,010 2039
748
$ 6,796,790
1,829,087
63,463
68,342
14,492
146,431
$ 102,892 $ 207,195 $ 20,000: $ 76,148 $ $ 8,918,605
$ 20,000
76,931
$ 1,667,364
72,101
1,451,733
89,722
$ 200,000 276,931
Total liabilities $ $ - 96,931 $ - 200,000 3,557,851
Fund Balances:
Reserved:
Bike paths
Strand walkways
Re -appropriations
Unreserved, designated
Unreserved, undesignated
Special revenue
Total fund balances
48,954
3,147
202,793 74,819 1,843,289
102,892 4,402 (76,931) 1,329 (200,000) 3,465,364
102,892 207,195 (76,931) 76,148 (200,000) 5,360,754
Total liabilities
and fund balances $ 102,892 $ 207,195 $ 20,000 $ 76,148 $ $ 8,918,605
(Concluded)
92
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.93
City of Hermosa Beach
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Non -Major Governmental Funds
For the year ended June 30, 2005
Special Revenue Funds
Lighting and Prop A
Landscaping State Compensated Open
District Gas Tax AB 939 Absences Space Tyco
REVENUES:
111
Property taxes $ 446,979
Other taxes
Fines and forfeitures
Use of money and property $ 525,000
Intergovernmental $ 411,145 $ 5,000 $ 1,592,507
Charges for services 59,418
Miscellaneous
Interest earned on investments 3,877 1,752 10,193 49,890
Total revenues 450,856 412,897 74,611 $ 1,592,507 574,890
EXPENDITURES:
Current
General government 123,960
Public safety
Community development
Public works 538,910
Capital outlay 1,571,950 730,763
Total expenditures 538,910 - 123,960 - 1,571,950 730,763
REVENUES OVER (UNDER) EXPENDITURES (88,054) 412,897 (49,349) 20,557 (155,873)
OTHER FINANCING SOURCES (USES): I
Transfers in
Transfers out (17,198) (357,151) (392,462) (20,557) (1,075,000)
Total other financing sources (uses) (17,198) (357,151) (392,462) (20,557) (1,075,000) I
REVENUES AND OTHER FINANCING
SOURCES OVER (UNDER) EXPENDITURES
AND OTHER FINANCING USES (105,252) 55,746 (49,349) (392,462) (1,230,873)
FUND BALANCES: I
Beginning of year 203,383 9,833 352,526 943,509 3 1,903,037 I End of year $ 98,131 $ 65,579 $ 303,177 $ 551,047 $ 3 $ 672,164
94
1
Special Revenue Funds
Beach Drive Community
I
Parks and Lower Pier Myrtle Dist Loma Dist Assessment Development
Tyco Recreation 4% Utility Building Admin Admin Admin Admin Block
Tidelands Facilities Users Tax Improvement Expense Expense Expense Expense Grant
I
$ 3,500
I
$ 54,621
99,605 $ 2,890 $ 8,903 $ 9,665 $ 3,016
$ 3,997 6,417 $ 907 $ 122 263 361 23
3,997 109,522 907 122 2,890 9,166 10,026 3,039 54,621
1,363 7,284 7,340 1,515
11,271
484,731 104,744 43,350
484,731 104,744 - 1,363 7,284 7,340 1,515 54,621
111
(480,734) 4,778 907 122 1,527 1,882 2,686 1,524 -
800,000
(1,039) (3,011) (3,441) (1,499)
800,000 (1,039) (3,011) (3,441) (1,499)
I
319,266 4,778 907 122 488 (1,129) (755) 25
I
198,428 28,026 4,638 286 8,256 10,829 1
$ 319,266 $ 203,206 $ 28,933 $ 4,760 $ 774 $ 7,127 $ 10,074 $ 25 $ 1
' (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, 2005
Special Revenue Funds
Office of Air
Traffic Quality Supplemental
Proposition "A" Proposition "C" Safety Management Law
Transit Transit Grants Grant District Enforcement
REVENUES:
Property taxes
Other taxes $ 312,627 $ 233,944 $ 100,000
Fines and forfeitures
Use of money & property
Intergovernmental $ 302,610 $ 537,491 $ 23,679
Charges for services 13,133
Miscellaneous
Interest earned on investments 9,013 32,361 963 4,091
Total revenues 334,773 266,305 302,610 537,491 24,642 104,091
EXPENDITURES:
I
Current
General government 560
Public safety 34,569 367,491 13,785
Community development 262,257
Public works 4,402
Capital outlay 271,667 170,000 77,491 111
Total expenditures 262,257 310,638 537,491 560 91,276
REVENUES OVER (UNDER) EXPENDITURES 72,516 266,305 (8,028) 24,082 12,815 I
OTHER FINANCING SOURCES (USES): I
Transfers in
Transfers out
Total other financing sources (uses) -
REVENUES AND OTHER FINANCING
SOURCES OVER (UNDER) EXPENDITURES
AND OTHER FINANCING USES 72,516 266,305 (8,028) 24,082 12,815
FUND BALANCES: I
Beginning of year 152,368 912,219 16,423 22,730 89,201 I End of year $ 224,884 $ 1,178,524 $ 8,395 $ $ 46,812 $ 102,016
'96 1
r
1 Special Revenue Funds
California Law
Enforcement Taskforce for Artesia Lower
I
Equipment
Program Regional Asset Blvd. Pier Ave Myrtle Utility
Auto Theft Seizure and Fire Relinquish- Beach Drive 2 Assessment Underground
(CLEEP) Prevention Sewer Forfeiture Protection went Underground District Improvement
1
$ 15,789
$ 131,749 $ 15,680
68,169
6,682 $ • 117,657 $ 3,224
$ 958 39,360 1,812 8,154 $ 14,275 $ 1,542 190
958 131,749 129,891 17,601 125,811 14,275 $ 1,542 3,414
I
I428 131,749 123,380 1,617
I 702,511 2,976
29,572 543,399 113,672 155,205 65,520
30,000 131,749 1,245,910 123,380 115,289 158,181 65,520
1 (29,042) (1,116,019) (105,779) 10,522 (143,906) (65,520) 1,542 3,414
' 700,000 480
-
(154,316) - (72,348)
700,000 (154,316) (71,868)
I
(29,042) (416,019) (105,779) (143,794) (143,906) (65,520) (70,326) 3,414
35,863 1,267,967 131,409 369,153 . 518,261 70,326 4,545
$ 6,821 $ $ 851,948 $ 25,630 $ 225,359 $ 374,355 $ (65,520) $ $ 7,959
' (Continued)
97
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, 2005
Special Revenue Funds
Bayview Drive Beach Drive
Loma Utility Underground Bonnie Brae Assessment Prospect Utility Total Other
Underground District Underground District Underground Governmental
Improvement Improvement District Improvement District Funds
REVENUES:
Property taxes $ 446,979
Other taxes 650,071
Fines and forfeitures 15,789
Use of money and property 525,000
Intergovernmental 3,074,482
Charges for services 140,720
Miscellaneous $ 1,087,022 $ 490,370 1,829,034
Interest earned on investments $ 3,044 4,402 1,328 199,295
Total revenues 3,044 1,091,424 $ - 491,698 $ 6,881,370
EXPENDITURES:
Current
General government
Public safety
Community development
Public works
Capital outlay
142,022
673,019
273,528
1,248,799
843,729 26,931 386,050 5,618,774
Total expenditures 843,729 26,931 386,050
REVENUES OVER (UNDER) EXPENDITURES 3,044 247,695 (26,931) 105,648
OTHER FINANCING SOURCES (USES):
Transfers in
Transfers out (2,500)
7,956,142
(1,074,772)
1,500,480
(2,500) (2,103,022)
Total other financing sources (uses) (2,500)
(2,500) - (602,542)
REVENUES AND OTHER FINANCING
SOURCES OVER (UNDER) EXPENDITURES
AND OTHER FINANCING USES 3,044 245,195 (26,931) 103,148
FUND BALANCES:
Beginning of year
End of year
(1,677,314)
99,848 (38,000) (50,000) (27,000) (200,000) 7,038,068
$ 102,892 $ 207,195 $ (76,931) $ 76,148 $ (200,000) $ 5,360,754
98
(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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Property taxes
Interest earned on investments
Amount available for appropriation
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
203,383 $ 203,383 $
454,631
446,979 (7,652)
3,135 3,877 742
457,766
450,856 (6,910)
Charges to appropriations (outflows):
Public works 586,255 538,910 47,345
Transfers out 17,198 17,198
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2005
.99
603,453
(145,687)
556,108 47,345
(105,252) 40,435
57,696 $ 98,131 $ 40,435
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, 2005
Fund balance, July 1, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 9,833 $ 9,833 $
Resources (inflows):
Intergovernmental 403,850 411,145
Interest earned on investments 1,487 1,752
Amount available for appropriation 405,337 412,897
Charges to appropriations (outflows):
Transfers out 357,151 357,151
Total charges to appropriations 357,151 357,151
7,295
265
7,560
Excess of resources over (under)
charges to appropriations 48,186 55,746
Fund balance, June 30, 2005 $ 58,019 $ 65,579 $
100
7,560
7,560
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
AB 939
For the year ended June 30, 2005
Fund balance, July 1, 2004
Resources (inflows):
Intergovernmental
Charges for services
Interest earned on investments
Amount available for appropriation
Charges to appropriations (outflows):
General government
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2005
101
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 352,526 $ 352,526
5,000 5,000 -
59,020 59,418 398
10,928 10,193 (735)
74,948 74,611 (337)
130,253 123,960 6,293
130,253
(55,305)
123,960 6,293
(49,349) 5,956
$ 297,221 $ 303,177 $ 5,956
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Compensated Absences
For the year ended June 30, 2005
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
I
Fund balance, July 1, 2004 $ 943,509 $ 943,509 $
es to appropriations ( outflows : '
Charges )
Transfers out 392462 392,462
Total charges to appropriations 392,462 392462 1
Excess of resources over (under) IIcharges to appropriations (392462) (392,462)
Fund balance, June 30, 2005 $ 551,047 $ 551,047 $ '
102 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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Intergovernmental
Amount available for appropriation
Charges to appropriations (outflows):
Capital outlay
Transfers out
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2005
103
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 3 $ . 3 $
242,300 1,592,507 1,350,207
242,300 1,592,507 1,350,207
1,605,753 1,571,950 33,803
20,557 20,557
1,626,310 1,592,507 - - 33,803
(1,384,010) 1,384,010
$ (1,384,007) $ 3 $ 1,384,010
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Tyco
For the year ended June 30, 2005
Positive
I
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget '
Fund balance, July 1, 2004 $ 1,903,037 $ 1,903,037 $
Resources (inflows): I
Use of money and property 600,000 525,000 (75,000)
Interest earned on investments 66,178 49,890 (16,288)
I
Amount available for appropriation 666,178 574,890 (91,288)
Charges to appropriations (outflows): 1
Capital outlay 1,480,770 730,763 750,007
Transfers out 1,075,000 1,075,000 - I
Total charges to appropriations 2,555,770 1,805,763 750,007
Excess of resources over (under)
1
charges to appropriations (1,889,592) (1,230,873) 658,719
Fund balance, June 30, 2005 $ 13,445 $ 672,164 $ 658,719
I
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Tyco Tidelands
For the year ended June 30, 2005
Fund balance, July 1, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Resources (inflows):
Interest earned on investment 3,997 3,997
Transfer in 800,000 800,000
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, 2005
105
800,000
552,704
552,704
247,296
803,997 3,997
484,731 67,973
484,731 67,973
319,266 71,970
$ 247,296 $ 319,266 $ 71,970
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, 2005
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget ,
Fund balance, July 1, 2004 $ 198,428 $ 198,428 $ -
Resources (inflows): I
Other taxes 7,000 3,500 (3,500)
Miscellaneous 67,104 99,605 32,501 '
Interest earned on investments 6,800 6,417 (383)
Amount available for appropriation 80,904 109,522 28,618
I
Charges to appropriations (outflows):
Capital outlay 255,000 104,744 150,256
I
Total charges to appropriations 255,000 104,744 150,256
Excess of resources over (under)
I
charges to appropriations (174,096) 4,778 178,874
Fund balance, June 30, 2005 $ 24,332 $ 203,206 $ 178,874
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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Interest earned on investments
Amount available for appropriation
Fund balance, June 30, 2005
107
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 28,026 $ 28,026 $
935 907 (28)
935 907 (28)
$ 28,961 $ 28,933 $ (28)
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Building Improvement
For the year ended June 30, 2005
Fund balance, July 1, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 4,638 $ 4,638 $
Resources (inflows):
Interest earned on investments 137 122 (15)
Amount available for appropriation 137 122 (15)
Fund balance, June 30, 2005 $ 4,775 $
108
4,760 $ (15)
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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Miscellaneous
Amount available for appropriation
Charges to appropriations (outflows):
General government
Transfers out
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2005
109
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
286 $ 286 $
2,889 2,890
2,889 2,890 1
1,851 1,363 488
1,039 1,039
2,890 2,402 488
(1) 488 489
285 $ 774 $ 489
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, 2005
Positive
I
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
I
Fund balance, July 1, 2004 $ 8,256 $ 8,256 $
Resources (inflows):
Miscellaneous 8,903 8,903 -
. Interest earned on investments 227 263 36
Amount available for appropriation 9,130 9,166 36
Charges to appropriations (outflows): I
General government 7,400 7,284 116
Transfers out 3,011 3,011 1
Total charges to appropriations 10,411 10,295 116
Excess of resources over (under)
I
charges to appropriations (1,281) (1,129) 152
Fund balance, June 30, 2005 $ 6,975 $ 7,127 $ 152
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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Miscellaneous
Interest earned on investments
Amount available for appropriation
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 10,829
10,829
9,802 9,665 (137)
185 361 176
9,987 10,026 39
Charges to appropriations (outflows):
General government 7,855 7,340
Transfers out 3,441 3,441
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2005
11,296
(1,309)
515
10,781 515
(755) 554
$ 9,520 $ 10,074 $
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Beach Drive Assessment District Administrative Expense
For the year ended June 30, 2005
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2004
Resources (inflows):
Miscellaneous - 2,856 3,016 160
Interest earned on investments 14 23 9 1
Amount available for appropriation 2,870 3,039 169
Charges to appropriations (outflows):
General government 1,517 1,515 - 2
Transfers out 1,499 1,499
Total charges to appropriations 3,016 3,014 2
Excess of resources over (under) 1
charges to appropriations (146) 25 171
Fund balance, June 30, 2005 $ (146) $ 25 $ 171 1
1
1
1
1
1
1
1
"Ii2 1
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, 2005
Fund balance, July 1, 2004
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, 2005 "
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
159,522
159,522
11,300
148,222
159,522
54,621 (104,901)
54,621 (104,901)
11,271 ' 29
43,350 104,872
54,621 104,901
$ 1 $
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, 2005
Fund balance, July 1, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 152,368 $ 152,368
Resources (inflows):
Other taxes 310,204 312,627 2,423
Charges for services ... 11,294 13,133 1,839
Interest earned on investments 7,439 9,013 1,574
Amount available for appropriation 328,937 334,773 5,836
Charges to appropriations (outflows)
Community Development 390,179 262,257 127,922
Amount available for appropriation 390,179 262,257 127,922
Excess of resources over (under)
charges to appropriations (61,242) 72,516 133,758
Fund balance, June 30, 2005
114
$ 91,126 $ 224,884 $ 133,758
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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Other taxes
Interest earned on investments
Amount available for appropriation
Charges to appropriations (outflows):
Capital outlay
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 912219 $ 912219 $
226,492
30,137
256,629
233,944 7,452
32,361 2,224
266,305 9,676
60,000 60,000
Total charges to appropriations 60,000 60,000
Excess of resources over (under)
changes to appropriations
Fund balance, June 30, 2005
115
196,629
266,305 69,676
$ 1,108,848 $ 1,178,524 $ 69,676
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Grants
For the year ended June 30, 2005
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
III
Fund balance, July 1, 2004 $ 16,423 $ 16,423 $
Resources (inflows): I
Intergovernmental 635,469 302,610 (332859)
Amount available for appropriation 635,469 302,610 (332859) I
Charges to appropriations (outflows): I Public safety 43,372 34,569 8,803
Public works 12,449 4,402 8,047
Capital outlay 595,991 271,667 324,324
Total charges to appropriations 651,812 310,638 341,174
Excess of resources over (under)
I
charges to appropriations (16,343) (8,028) 8,315
Fund balance, June 30, 2005 $ 80 $ 8,395 $ 8,315
I
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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Intergovernmental
Amount available for appropriation
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
711,845
711,845
537,491 (174,354)
537,491 (174,354)
Charges to appropriations (outflows):
Public safety 541,845 367,491 174,354
Capital outlay 170,000 170,000
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2005
•117
711,845
537,491 174,354
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, 2005
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget '
Fund balance, July 1, 2004 $ 22,730 $ 22,730 $
Resources (inflows):
Intergovernmental 22,000 23,679 1,679
1
Interest earned on investments 741 963 222
Amount available for appropriation 22,741 24,642 1,901
Charges to appropriations (outflows): I
General government 1,000 560 440
Total charges to appropriations 1,000 560 440
Excess of resources over (under)
charges to appropriations 21,741 24,082 2,341 1
Fund balance, June 30, 2005 $ 44,471 $ 46,812 $ 2,341
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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Other taxes
Interest earned on investments
Amount available for appropriation
Charges to appropriations (outflows):
Public safety
Capital outlay
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2005 -
119
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 89,201 $ 89,201 $
100,000 100,000 -
3,949 4,091 142
103,949 104,091 142
15,000 13,785 1,215
159,147 77,491 81,656
174,147 91,276 82,871
(70,198) 12,815 83,013
$ 19,003 $ 102,016 $ 83,013
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, 2005
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
I
Fund balance, July 1, 2004 $ 35,863 $ 35,863 $
Resources (inflows):
Interest eamed on investments 1,212 958 (254)
Amount available for appropriation 1,212 958 (254) 1
Charges to appropriations (outflows): I Public safety 5,910 428 5,482
Capital outlay 29,952 29,572 380
Total charges to appropriations 35,862 30,000 5,862
Excess of resources over (under)
charges to appropriations (34,650) (29,042) 5,6081
Fund balance, June 30, 2005 $ 1,213 $ 6,821 $ 5,608
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, 2005
Fund balance, July 1, 2004
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, 2005
:121
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
123,293
123,293
123,293
123,293
131,749 8,456
131,749 - 8,456
131,749 (8,456)
131,749 - (8,456)
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Sewer
For the year ended June 30, 2005
Fund balance, July 1, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 1,267,967 $ 1,267,967 $
Resources (inflows):
Intergovernmental 8,400 15,680 7,280
Charges for services 61,312 68,169 6,8571
Miscellaneous 9,536 6,682 (2,854)
Interest earned on investments 41,278 39,360 (1,918)
Transfers in 700,000 700,000
Il
Amount available for appropriation 820,526 829,891 9,365
1
1
1
1
1
1
Charges to appropriations (outflows):
Public works
Capital Outlay
Total charges to appropriations
764,138
1,025,301
702,511 61,627
543,399 481,902
1,789,439 1,245,910 543,529
Excess of resources over (under)
charges to appropriations (968,913) (416,019) 552,894
1
1
1
Fund balance, June 30, 2005 $ 299,054 $ 851,948 $ 552894
122
1
1
1
1
1
1
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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Fines and forfeitures
Interest earned on investments
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, 2005.
:123
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 131,409 $ 131,409
3,400 15,789 12,389
2981 1,812 (1,169)
6,381 17,601 11,220
125,415
125,415
(119,034)
123,380 2035
123,380 2,035
(105,779) 13,255
12,375 $ 25,630 $ 11,220
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Fire Protection
For the year ended June 30, 2005
Fund balance, July 1, 2004
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 369,153 $ 369,153 $
Resources (inflows):
Miscellaneous 83,009 117,657 34,648
Interest earned on investments 9,885 8,154 (1,731)
Amount available for appropriation 92,894 125,811 32,917
Charges to appropriations (outflows):
Public safety
Capital outlay
Transfers out
1,668 1,617 51
212,068 113,672 98,396
154,316 154,316 -
Total charges to appropriations 368,052 269,605 98,447
Excess of resources over (under)
charges to appropriations (275,158) (143,794)
Fund balance, June 30, 2005
124
131,364
93,995 $ 225,359 $ 131,364
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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Interest earned on investments
Amount available for appropriation
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 518,261 $ 518,261 $
15,706
15,706
14,275 (1,431)
14,275 (1,431)
Charges to appropriations (outflows):
Public works 9,000 2,976 6,024
Capital outlay 155,205 155,205
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2005
125
164,205
(148,499)
158,181 6,024
(143,906) 4,593
$ 369,762 $ 374,355 $ 4,593
City of Hermosa Beach
Schedule of Rev. enues, Expenditures and Changes in Fund Balances - Budget and Actual
Beach Drive 2 Underground District
For the year ended June 30, 2005
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2004 $ - $ - $
Charges to appropriations (outflows):
Capital outlay 65,520 65,520
Total charges to appropriations 65,520 65,520
Excess of resources over (under)
charges to appropriations (65,520) (65,520)
Fund balance, June 30, 2005 $ (65,520) $ (65,520) $
111
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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Interest earned on investments
Transfer in
Amount available for appropriation
Charges to appropriations (outflows):
Transfer out
Total charges to appropriations
Excess of resources over (under)
charges of appropriations
Fund balance, June 30, 2005
.127
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 70,326 $ 70,326
2207 1,542 (665)
480 480
2207 2,022 (185)
72,348 72,348
72,348 72,348
(70,141) (70,326) (185)
$ 185 $ $ (185)
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual
Myrtle Utility Underground Improvement
For the year ended June 30, 2005
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2004 $ 4,545 $ 4,545 $
Resources inflows • '
Miscellaneous 3,224 3,224
Interest earned on investments 142 190 48 '
Amount available for appropriation 142 3,414 3,272
Excess of resources over (under) 1
charges to appropriations 1423,414 3,272
Fund balance, June 30,2005 $ 4,687 $ 7,959 $ 3,272 t
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128
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, 2005
Fund balance, July 1, 2004
Resources (inflows):
Interest earned on investments
Amount available for appropriation
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2005
429
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ 99,848 $ 99,848 $
3,098 3,044 (54)
3,098 3,044 : (54)
3,098 3,044 (54)
$ 102,946 $ 102,892 $ (54)
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, 2005
Positive
Budgeted (Negative}
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2004 $ (38,000) $ (38,000) $
Resources (inflows):
Miscellaneous 1,087,022 1,087,022
Interest earned on investments 4,402 4,402
Amount available for appropriation 1,091,424 1,091,424
Charges to appropriations (outflows):
Capital outlay 1,046,522 843,729 202,793
Transfer out 2,500 2,500
Total charges to appropriations 1,049,022 846,229 202,793
Excess of resources over (under)
I
charges to appropriations (1,049,022) 245,195 1,294,217
Fund balance, June 30, 2005 $ (1,087,022) $ 207,195 $ 1,294,217
I
130 '
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, 2005
Fund balance, July 1, 2004
Charges to appropriations (outflows):
Capital outlay
Total charges to appropriations
Excess of resources over (under)
charges to appropriations
Fund balance, June 30, 2005
.131
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
$ (50,000) $ (50,000) $
46,931 26,931 20,000
46,931 26,931 20,000
(46,931) (26,931) 20,000
$ (96,931) $ (76,931) $ 20,000
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, 2005
Positive
Budgeted (Negative)
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2004 $ (27,000) $ (27,000) $
Resources (inflows):
Miscellaneous 490,370 490,370
Interest earned on investments 1,328 1,328 '
Amount available for appropriation 490,370 491,698 1,328
Charges to appropriations (outflows):
Capital outlay 460,869 386,050 74,819
Transfer out 2,500 2,500 '
Total charges to appropriations 463,369 388,550 74,819
Excess of resources over (under)
1
charges to appropriations 27,001 103,148 76,147
Fund balance, June 30, 2005 $ 1 $ 76,148 $ 76,147
1
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1
1
1
1
132 1
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, 2005
Fund balance, July 1, 2004
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) $
Fund balance, June 30, 2005 l $ (200,000) $ (200,000)
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134
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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, 2005
ASSETS
Current assets:
Cash and investments
Other accounts receivable
Deposits
Advances to other funds
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
Wages and benefits payable
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
$ 4,711,908 $ 1,261,152 $ 5,973,060 I
3,586 3,586
80,000 80,000
998,886 998,886 1,997,772 I
1,821 17,848 19,669
5,792615 2,281,472 8,074,087 I
2,201,757 2,201,757
5,792,615 4,483,229 10,275,844
1
892,000 892,000
112,568 95,906 208,474
24,128 47,085 71,213
1,028,696 142,991 1,171,687
3,037,557 3,037,557
617,933 617,933 1
(892,000) (892,000)
2,763,490 2,763,490 t
3,792,186 142,991 3,935,177
1
2,201,757 2,201,757
2,000,429 2,138,481 4,138,910
$ 2,000,429 $ 4,340,238 $ 6,340,667
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, 2005
OPERATING REVENUES:
Charges for services
Miscellaneous
Total operating revenues
OPERATING EXPENSES:
Equipment
Insurance Replacement
Fund Fund
Total
$ 1,450,152 $ 1,100,286 $ 2550,438
70,638 24,557 95,195
1,520,790 1,124,843 2645,633
Salaries and wages 112,124 270,722 382,846
Contractor services 535,079 230,497 765,576
Supplies 1,266 244,965 246,231
Claims expense 1,833,498 1,833,498
Depreciation 401,735 401,735
Total operating expenses 2,481,967 1,147,919 3,629,886
OPERATING INCOME (LOSS) (961,177) (23,076) (984,253)
NONOPERATING REVENUES (EXPENSES):
Loss on sale of assets (37,322) (37,322)
Total nonoperating revenues (expenses) (37,322) (37,322)
INCOME (LOSS) BEFORE TRANSFERS (961,177) (60,398) (1,021,575)
Transfers in 1,162,891 16,195 1,179,086
Transfers out (418,835) (418,835)
NET INCOME (LOSS) 201,714 (463,038) (261,324)
NET ASSETS
Beginning of the year 1,798,715 4,803,276 6,601,991
End of the year $ 2,000,429 $ 4,340,238 $ 6,340,667
137
City of Hermosa Beach
Combining Statement of Cash Flows
All Internal Service Funds
For the year ended June 30, 2005
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
Advances to other funds
Other assets
Worker's compensation daims payable
General liability claims payable
Accounts payable
Accrued wages and compensated absences
Total adjustments
Net cash provided (used) by operating activities
'138
Insurance
Fund
Equipment
Replacement
Fund Total
$ (999,880) $ (19,396) $ (1,019,276)
1,450,152 101,400 1,551,552
(530,125) (406,357) (936,482)
(106,653) (266,447) (373,100)
(1,112,649) (1,112,649)
70,638 24,557 95,195
(1,228,517) (566,243) (1,794,760)
1,162,891
1,162,891
(65,626)
4,777,534
$ 4,711,908
16,195
(418,835)
(402,640)
(37,322)
(407,100)
(444,422)
(1,413,305)
2,674,457
$ 1,261,152
$ (961,177) $ (23,076)
(998,886)
(994)
473,591
247,258
6,220
5,471
(267,340)
401,735
(3,586)
(998,886)
(15,810)
69,105
4,275
(543,167)
1,179,086
(418,835)
760,251
(37,322)
(407,100)
(444,422)
(1,478,931)
7,451,991
$ 5,973,060
(984,253)
401,735
(3,586)
(1,997,772)
(16,804)
473,591
247,258
75,325
9,746
(810,507)
$ (1,228,517) $ (566,243) $ (1,794,760)
FIDUCIARY FUNDS
The Agency Fund of the City was established to account for transactions related to payments for limited obligation
bonds for the Bayview Drive Underground District, Lower Pier Avenue Assessment District, the Myrtle Avenue
Utility Undergrounding Assessment District, the Loma Drive Utility Undergrounding Assessment District, Beach
Drive Assessment District and the Other Post Employment Benefits - Police Fund.
139
Cty
i of Hermosa Beach
Combining Statement of Fiduciary Net Assets
All Agency Funds
June 30, 2005
Beach Drive '
Bayview Lower Pier Assessment Beach Drive Bayview Other Post
Drive District District Assessment Myrtle Avenue Loma Drive Drive Employment
Redemption Redemption Redemption Reserve Assessment Assessment Reserve Benefits - Police Total
ASSETS
Cash and investments $ 25,958 $ 30,224 $ 18,500 $ 3,060 $ 84,277 $ 85,241 $ 10,062 $ 274,180 $ 531,502 I Interest receivable 262 299 187 37 842 861 94 2,582
Other accounts receivable 2,857 2,671 5,837 2,511 13,876
Total assets $ 26,220 $ 33,380 $ 21,358 $ 3,097 $ 90,956 $ 88,613 $ 10,156 $ 274,180 $ 547,960 I
LIABILITIES
Assessment ,
Installment account $ 26,220 $ 33,380 $ 21,358 $ 90,956 $ 88,613 $ 260,527
Reserve requirement $ 3,097 $ 10,156 13,253
OPEB contribution from City $ 274,180 274,180
Total liabilities $ 26,220 $ 33,380 $ 21,358 $ 3,097 $ 90,956 $ 88,613 $ 10,156 $ 274,180 $ 547,960
City of Hermosa Beach
Combining Statement of Changes in Assets and Liabilities
All Agency Funds
For the year ended June 30, 2005
Balance Balance
July 1, 2004 Additions Deletions June 30, 2005
ASSETS
Bayview Drive Redemption Fund:
Cash and investments $ 26,323 $ (365) $ 25,958
Interest receivable 262 262
Lower Pier District Redemption Fund:
Cash and investments $ 30,375 40,853 (41,004) 30,224
Interest receivable 162 309 (172) 299
Other accounts receivable 2,737 2,857 (2,737) 2,857
Beach Drive Assessment District Redemption Fund:
Cash and investments 32,376 (13,876) 18,500
Interest receivable 187 187
Other accounts receivable 2,671 2,671
Beach Drive Assessment District Reserve Fund:
Cash and investments 3,114 (54) 3,060
Interest receivable 37 37
Myrtle Avenue Assessment Fund:
Cash and investments 93,773 104,866 (114,362) 84,277
Interest receivable 487 870 (515) 842
Other accounts receivable 4,313 5,837 (4,313) 5,837
Loma Drive Assessment Fund:
Cash and investments 106,993 112,950 (134,702) 85,241
Interest receivable 559 893 (591) 861
Other accounts receivable 3,001 2,511 • (3,001) 2,511
Bayview Drive Reserve Fund
Cash and investments 10,192 (130) 10,062
Interest receivable 94 94
Other Post Employment Benefits - Police:
Cash and investments 121,270 159,696 (6,786) 274,180
Total assets $ 363,670 $ 506,898 $ (322,608) $ 547,960
LIABILITIES
Bayview Drive Redemption Fund:
Assessment installment account
Lower Pier District Redemption Fund:
Assessment installment account
Beach Drive Assessment District Redemption Fund:
Assessment installment account
Beach Drive Assessment District Reserve Fund:
Assessment installment account
Myrtle Avenue Assessment Funds:
Assessment installment account
Loma Drive Assessment Fund:
Assessment installment account
Bayview Drive Reserve Fund
Assessment installment account
Other Post Employment Benefits - Police:
OPEB contribution from City
$ 26,585 $ (365) $ 26,220
$ 33,274 44,019 (43,913) 33,380
35,234 (13,876) 21,358
3,151 (54) 3,097
98,573 111,573 (119,190) 90,956
110,553 116,354 (138,294) 88,613
10,286 (130) 10,156
121,270 159,696 (6,786) 274,180
Total liabilities $ 363,670 $ 506,898 $ (322,608) $ 547,960
141
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'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, 2005
GOVERNMENTAL FUNDS CAPITAL ASSETS:
Land $ 17,676,802
Buildings and improvements 3,548,424
Improvements other than buildings 6,901,980
Machinery and equipment 1,478,078
Vehicles 25,996
Construction in progress 6,708,223
Infrastructure 36,637,731
Total governmental funds capital assets
Accumulated depreciation
Total governmental funds capital assets, net
INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE:
72,977,234
(18,129,507)
$ 54,847,727
State grants $ 89,427
General fund revenues 31,184,325
Special revenue funds revenues 41,388,344
Donated assets 315,138
Total governmental funds capital assets 72,977,234
Accumulated depreciation (18,129,507)
Total governmental funds capital assets, net $ 54,847,727
* 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
City of Hermosa Beach
Capital Assets Used in the Operation of Governmental Funds
Schedule by Function and Activity*
June 30, 2005
Buildings Improvements Machinery
and Other than and Construction
Land Structures Buildings Equipment Vehicles Infrastructure in Progress Total
GOVERNMENTAL FUNDS
CAPITAL ASSETS
General government $ 60,000 $ 2254,173 $ 97,728 $ 307,431 $ 2,719,332
Public safety 252,671 742458 865,131 $ 25,996 1,886,256.
Community development 99,858 12,755 112,613
Culture and recreation 650,000 572,169 203,154 113,438 1,538,761
Public works 16,966,802 469,411 5,758,782 179,323 $ 36,637,731 $ 6,708,223 66,720,272
Total governmental funds capital assets 17,676,802 3,548,424 6,901,980 1,478,078 25,996 36,637,731 6,708,223 72,977,234
Accumulated depreciation (1,501,764) (2,505,390) (731,303) (4,007) (13,387,043) (18,129,507)
Total governmental funds capital assets $ 17,676,802 $ 2,046,660 $ 4,396,590 $ 746,775 $ 21,989 $ 23,250,688 $ 6,708,223 $ 54,847,727
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, 2005
Function and Activity:
General government
Public safety
Community development
Culture and recreation
Public works
Total governmental funds capital assets
Accumulated depreciation
Total governmental funds capital assets, net
Capital
Assets
July 1, 2004
$ 2,745,254
1,966,523
116,349
1,552,644
62,530,179
Additions
Deletions
$ 4,913 $
186,909
800
4,582,577
68,910,949 4,775,199
Inventory
Adjustment
Capital
Assets
June 30, 2005
(30,835)- $ 2,719,332
(252,002) $ (15,174) 1,886,256
(3,736) 112,613
(14,683) 1,538,761
(359,383) (33,101) 66,720,272
(660,639) (48,275) 72,977,234
(16,992,135) (1,548,472) 411,100 (18,129,507)
$ 51,918,814 $ 3,226,727 $ (249,539) $ (48,275) $ 54,847,727
* This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in the internal service
funds are exduded from the above amounts.
146
STATISTICAL SECTION
N 11111 GM - 111111 1111 2 - ! = • = = 11111 = MN
STATISTICAL SECTION
MO MO ME N N E 11111 M .— N ! NM all IIIIII IIIII — r
City of Hermosa Beach
Government -wide Revenues
June 30, 2005
Last Four Fiscal Years
(Unaudited)
PROGRAM REVENUES GENERAL REVENUES
Grants and
Contributions
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 25,222,499
2004-2005 9,794,113 721,198 2,465,698 14,703,458 2,318,501 564,288 272,907 30,840,163
Source : City of Hermosa Beach - Finance Department
GASB Statement 34 implemented fiscal year 2004
147
City of Hermosa Beach
Government -wide Expense by Function
June 30, 2005
Last Four Fiscal Years
(Unaudited) ,
Fiscal Year '
2001-2002 2002-2003 2003-2004 2004-2005
I
Legislative and Legal $ 823,736 $ 810,589 $ 754,169 $ 737,903
General Government 1,748,183 1,415,000 1,800,769 1,727,484
I
Public Safety 9,686,652 10,415,112 10,868,420 12,855,036
Community Development 907,709 968,000 1,086,608 1,355,888
Culture and Recreation 921,851 1,045,567 965,924 996,021
I
Public Works 6,109,734 4,136,564 4,578,896 6,687,811
Downtown Enhancement 933,796 909,137 939,576 166,732
Parking 1,577,320 1,525,371 1,632093 1,701,775 I 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 $ 26,228,650
I
Source : City of Hermosa Beach - Finance Department
I
GASB Statement 34 implemented fiscal year 2004
148
City of Hermosa Beach
General Governmental Revenues by Source
June 30, 2005
Last Ten Fiscal Years
(Unaudited)
Property
and Licenses
Fiscal Year Other Taxes and Permits
19954996 $ 9,484,209
1996-1997 8,901,449
1997-1998 9,472,541
1998-1999 9,993,562
1999-2000 10,754,339
2000-2001 11,801,668
2001-2002 12,574,773
2002-2003 13,060,204
2003-2004 14,601,328
2004-2005 15,753,819
$ 183,533
275,424
484,154
567,607
558,456
579,608
445,673
571,682
664,169
701,468
Interest
Earned on
Investments
and Use of
Fines and Money and Inter -
Forfeitures Property governmental
$ 124,268 $ 1,043,782 $ 3,100,743
132,334 890,799 1,717,746
163,001 883,387 1,738,821
209,785 938,892 6,081,589
205,822 1,055,608 3,039,122
185,736 1,434,124 2,816,543
225,653 945,232 3,257,239
278,334 2,635,498 2,175,932
371,802 768,362 2,168,077
459,106 1,339,707 4,333,949
Source : City of Hermosa Beach - Finance Department
149
Charges
for
Services
$ 660,850
755,949
1,058,616
1,184,003
2,246,195
1,203,290
1,108,816
1,254,917
1,414,665
1,852,726
Other
Total
$ 474,014 $ 15,071,399
845,830 13,519,531
774,839 14,575,359
394,383 19,369,821
4,653,620 22,513,162
826,154 18,847,123
645,600 19,202,986
645,335 20,621,902
793,633 20,782,036
2,053,250 26,494,025
City of Hermosa Beach
General Governmental Expenditures by Function
June 30, 2005
Last Ten Fiscal Years
(Unaudited)
Culture
General Public Community and
Fiscal Year Government Safety Development Recreation
19954996 $ 1,366,906 $ 6,443,474 $ 490,673 $ 475,734
1996-1997 1,490,253 6,809,657 699,250 497,993
1997-1998 1,618,188 7,202,300 665,860 579,692
19984999 1,691,483 7,597,552 756,665 662,438
1999-2000 1,568,591 7,872,772 814,392 744,245
2000-2001 1,743,773 8,997,038 866,389 725,387
2001-2002 1,913,892 9,186,446 888,262 888,734
2002-2003 2077,463 10,040,618 951,856 966,621
2003-2004 2,011,816 10,555,169 1,089,056 932,447
2004-2005 2,067,461 12,139,133 1,325,219 940,158
Source : City of Hermosa Beach - Finance Department
150
Public
Works
$ 2,158,067
2,174,626
2,270,463
2,344,034
2,481,209
2,582,510
2,975,944
3,082,096
3,189,361
3,374,363
Debt
Service
Capital
Outlay
$ 3,130,579 $
11,152
10,114
5,836
2713,833
3,603,009
1,009,505
6,434,628
5,608,405
3,406,953
3,486,133
4,281,144
3,119,265
6,425,895
Total
$ 16,779,266
15,285,940
13,356,122
19,492,636
19,089,614
18,322,050
19,339,411
21,399,798
20,897,114
26,272,229
City of Hermosa Beach
Assessed and Estimated Actual Value of Taxable Property
June 30, 2005
Last Ten Fiscal Years
I(Unaudited)
- Ratio of Net
Assessed Value
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to Estimated
Secured Unsecured Less Net Assessed Estimated Percentage Actual Value
Fiscal Year Property Property Exemptions Value Valuation Increase (%)
I1995-1996 $ 1,682,602,183 $ 17,400,969 $ 29,395,303 $ 1,670,607,849 $ 1,700,003,152 98.27%
1996-1997 1,704,314,436 19,059,312 30,812,333 1,692,561,415 1,723,373,748 1.37% 9821%
1997-1998 1,737,072,254 20,195,505 31,168,694 1,726,099,065 1,757,267,759 1.97% 98.23%
I1998-1999 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%
I 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%
I 2003-2004 2,844,974,502 29,409,345 27,924,765 2,846,459,082 2,874,383,847 9.45% 99.03%
2004-2005 3,113,396,139 28,473,921 31,158,359 3,110,711,701 3,141,870,060
9.31% 99.01 %
Source : County of Los Angeles Auditor -Controller
Note : Assessed valuations available from the County of Los Angeles are based on 100%
Iof full value per Section 135 of the California Revenue and Taxation Code.
City of Hermosa Beach
Property Tax Rates and Tax Levies - All Direct and Overlapping Governments
(per $100 of assessed valuation)
June 30, 2005 - Last Ten Fiscal Years
(Unaudited) '
Metropolitan I
Los Angeles Elementary Community Flood Water
Fiscal Year General County Schools College Control District Total
1995-1996 1.000000 0.001814 0.000963 0.008900 1.009863
1996-1997 1.000000 0.001604 0.001991 0.008900 1.011677
1997-1998 1.000000 0.001584 0.002197 0.008900 1.012495
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1998-1999 1.000000 0.001422 0.001765 0.008900 1.012304
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
2002-2003 1.000000 0.001033 0.000881 0.006700 1.008614 I 2003-2004 1.000000 0.000992 0.019308 0.019025 0.000462 0.006100 1.045887
2004-2005 1.000000 0.000923 0.016685 0.016558 0.000245 0.005800 1.040211
Source : County of Los Angeles Auditor -Controller
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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. 1
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City of Hermosa Beach
Property Tax Levies and Collections
' June 30, 2005
Last Ten Fiscal Years
1 (Unaudited)
1 Total Total Percentage
Current Current of Levy
I Fiscal Year Levy Collection Collected
1995-1996 $ 3,337,288 $ 3,093,600 92.70%
1996-1997 3,362,402 3,149,979 93.68%
1 1997-1998 3,434,310 3,252,801 94.71%
1998-1999 3,623,653 3,442,675 95.01%
1999-2000 4,002,324 3,808,235 95.15%
1 2000-2001 4,370,463 4,239,808 97.01%
2001-2002 4,790,920 4,576,910 95.53%
2002-2003 5,193,796 5,017,148 96.60%
I2003-2004 5,688,428 5,489,332 96.50%
2004-2005 5,907,698 5,688,036 96.28%
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Source : County of Los Angeles Auditor -Controller
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City of Hermosa Beach -
Computation of Legal Debt Margin '
June 30, 2005
(Unaudited)
Total assessed value of all real and personal property $ 3,141,870,060
Legal debt limit -15 % of total assessed valuation $ 471,280,509 (a) 111
Amount of debt applicable to limit None (b) I
Legal debt margin $ 471,280,509
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Percentage of legal debt limit authorized 0% •
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.
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City of Hermosa Beach
Statement of Direct and Overlapping Debt
June 30, 2005
(Unaudited)
2003-2004 Assessed Valuation : Percent Net
Gross Bonded Applicable Bonded
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Debt Balance to City Debt
DIRECT DEBT :
Hermosa Beach Elementary School District 2002 $ 9,414,401 100.000% $ 9,414,401
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TOTAL DIRECT DEBT: $ 9,414,401 $ 9,414,401
OVERLAPPING DEBT:
Los Angeles County Detention Facilities 1987 Debt Service $ 16,205,000 0.462% $ 74,832
Los Angeles County Flood Control Storm Drain Debt Service 1,990,000 0.468% 9,321
Los Angeles County Flood Control Refunding Bonds 1993 Debt Service 275,000
419,390,0000.468% 1,288
West Basin Water District Debt Service* 0.443% 1,856,074
El Camino Community College District 2002 Debt Service 56,580,000 5.616% 3,177,604
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TOTAL OVERLAPPING DEBT $ 5,119,119
TOTAL DIRECT AND OVERLAPPING DEBT $ 14,533,520
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2004/05 Net Assessed Valuation : $ 3,110,711,701
IDebt to Assessed Valuation Ratios : Direct Debt 0.30%
Overlapping Debt 0.16%
Total Debt 0.47%
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* 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 2004/2005 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.
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City of Hermosa Beach
Demographic Statistics
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June 30, 2005
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
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1995-1996 18,681 2.014 2.1 887
1996-1997 - 18,919 2.021 1.8 1,324 I 1997-1998 19,098 2.038 1.6 1,346
1998-1999 19,401 2.059 1.4 1,384
1999-2000 19,631 2.082 1.5 1,420
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2000-2001 18,912 $ 54,244 2.112 1.4 1,430
2001-2002 19,175 1.995 1.4 1,471
2002-2003 19,365 2.019 1.7 1,489
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2003-2004 19,549 2.036 1.8 1,498
2004-2005 19,608 2.050 2.3 1,475
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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.
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City of Hermosa Beach
Construction Value, Property Value and Bank Deposits
June 30, 2005
Last Ten Fiscal Years
' (Unaudited)
IIIResidential Commercial
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Number of Number of Total Bank Deposits
Fiscal Year Permits Valuation Permits Valuation Assessed (in thousands)
1995-1996 316 $ 7,643,660 75 $ 1,840,624 $ 1,700,003,152 $ 135,486
I 1996-1997 363 12,034,307 67 4,508,672 1,723,373,748 146,695
1997-1998 612 29,728,509 73 3,977,221 1,757,267,759 153,236
I 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
2000-2001 540 32136,129 56 7,402324 2,219,952,219 190,111
2001-2002 591 19,260,802 43 2,142,566 2,425,823,846 194,276
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
1 2004-2005 610 33,433,982 74 4,388,664 3,141,870,060 316,423
I Source : Construction values - City of Hermosa Beach Community Development Department
Bank Deposits - Federal Deposit Insurance Corporation
(includes Savings and Loans)
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City of Hermosa Beach
Schedule of Insurance
June 30, 2005
(Unaudited)
Annual
Company & Policy Number Policy Period Limits & Coverages Premium
Independent Cities Risk
Management Authority
Independent Cities Risk
Management Authority
7-1-04 through 6-30-05
7-1-04 through 6-30-05
Self-insured workers' compentation $ 152,091
to $1,000,000. CPEIA excess insurance
to $100 million
$500,000 S.I.R.
Excess Liability Insurance
$250,000 S.I.R
$20 million limit for bodily injury,
property damage, personal injury, or
Public Officials' E&O.
232,348
Travelers Indemnity Co. of Ill. 7-1-04 through 6-30-05 Auto Physical damage including $ 10,783
QT6603526A232TIL04 Comprehensive & Collision coverage
with $10,000 deductible for high dollar
value vehicles.
Lloyd's of London
DC440204
7-1-04 through 6-30-05
" All-risk" physical loss or damage to
real and personal property, EDP
equipment, media, and extra expense,
rents, and mobile equipment.
Excludes earthquake and flood.
24,435
Travelers Property Casualty 7-1-04 through 6-30-05 Boiler and Machinery Insurance $ 1,751
Essex Insurance 7-1-04 through 6-30-05 Supplemental policy for earthquake, $ 17,611
ESX354185Z flood and loss of income on the parking
structure.
The Hartford 11-7-04 through 11-7-05 $100,000 public official bond for $ 400
Finance Director.
The Hartford 11-24-04 through 11-24-05 $100,000 public official bond for $ 400
City Treasurer.
Fidelity & Deposit 11-12-03 through 11-12-06 $10,000 public official bond for City $ 355
Clerk. (3 year period)
Fidelity & Deposit 7-1-04 through 7-1-07 $25,000 public employee dishonesty $ 1,770
bond with $2,500 deductible. (3 year period)
The Hartford 1-3-03 through 1-3-06 $100,000 public official bond for City $ 1,040
Manager. (3 year period)
Source : City of Hermosa Beach - Personnel Department
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City of Hermosa Beach
1 Top Property Taxpayers
June 30, 2005
(Unaudited)
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% of Total
Owner (Number of Parcels) Assessed Value Assessed Valuation
International Church of The Four Square (43) $ 17,119,475 0.54%
1 Regency Centers Limited Partnership (7) 12,956,008 0.41%
Playa Pacifica Limited (2) 12,022,424 0.38%
Beta Group (2) 11,189,565 0.36%
1 Robert J. & Ranae R. Desantis Trust (1) 10,810,206 034%
Barbara IC Robinson (1) 8,100,000 0.25%
Century TCI California (4) 7,648,607 0.24%
1 Cheng Yi & Ying Yin Chang (1) 7,496,291 0.24%
Formosa Hotel, Inc (1) 7,406,972 0.24%
SII Trust Schuler Investment Corporation (1) 6,222,014 0.20%
Source: HdL Coren & Cone, Los Angeles County Assessor Combined Tax Rolls
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City of Hermosa Beach
Top 25 Sales Tax Producers *
June 30, 2005
(Unaudited)
Business Name
Albertson's
Aloha Sharkeez
Becker Surfboards
Casey's Premium Cars
Chase Manhattan Auto Finance
Classic Tile & Design
Club Sushi
Comedy & Magic Club
E T Surfboards
Efram's Mobil
Hennessey's Tavern
Import Auto Sales
Jama Auto House
Leamed Lumber
Lotus of South Bay
May Mohit Gas Station & Mini Market
Okell's Fireplace
Patrick Molloy's
Ralph's
Rocky Cola Cafe
Sangria
Say On Drugs
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 2004 through March 2005
Business Category
Grocery Stores with Liquor
Restaurants with Beer and Wine
Sporting Goods/Bike Stores
Used Automotive Dealers
Auto Lease
Lumber/Building Materials
Restaurants with Liquor
Restaurants with Liquor
Sporting Goods/Bike Stores
Service Stations
Restaurants with Liquor
Used Automotive Dealers
Used Automotive Dealers
Lumber/Building Materials
New Motor Vehicle Dealers
Service Stations
Home Furnishings
Restaurants with Liquor
Grocery Stores with Liquor
Fast Food
Restaurants with Liquor
Drug Stores
Sporting Goods/Bike Stores
Restaurant with Liquor
Grocery Stores with Liquor
City of Hermosa Beach
Major Employers*
June 30, 2005
(Unaudited)
Name Type of Business
I Club Sushi Restaurant with Liquor
Comedy & Magic Club Entertainment
Hennessey's Tavern Restaurant with Liquor
IPatrick Molloy's Restaurant with Liquor
Pointe 705 Restaurant with Liquor
Rocky Cola Cafe Fast Food
IShorewood Realtors, Inc Real Estate
Larry Moore & Associates Real Estate
I Union Cattle Co. Restaurant with Liquor
Von's Grocery Store with Liquor
Source : City of Hermosa Beach - Finance Department
• Businesses Listed Alphabetically
City of Hermosa Beach
Taxable Sales by Category (in thousands)
June 30, 2005
Last Ten Calendar Years
(Unaudited)
Sales
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Retail Stores:
Apparel Stores $ 3,074 $ 4,179 $ 2,351 $ 6,269 $ 3,360 $ 2,892 $ 3,114 $ 2,781 $ 2,685 $ 2,899
Automobile Dealers and Supplies 25,532 30,914 41,852 41,005 60,655 83,096 91,434 74,953 77,871 77,623
Building Materials and Farm Tools 8,799 9,051 9,704 13,197 12,580 12,403 12,406 15,284 16,266 18,956
Eating and Drinking Places 32,631 35,252 40,371 43,981 48,815 52,866 55,921 58,192 60,861 64,536
Food Stores 17,955 18,662 19,496 19,953 19,342 20,076 19,874 19,494 18,472 17,703
Home Furnishing and Appliances 2,145 3,122 3,589 3,452 4,620 6,109 5,235 5,662 6,319 6,045
General Merchandise 218
Other Retail Stores 23,646 24,614 21,577 26,886 27,270 33,522 30,705 21,270 31,677 40,095
Packaged Liquor Stores 1,610 1,531 2213 2169 2,348 2,731 2416 2,104 1,647 2004
Service Stations (a) (a) (a) (a) (a) (a) (a) (a) (a) (a)
Total retail stores 115,392 127,325 141,153 156,912 178,990 213,695 221,105 199,738 215,798 230,079
All Other Outlets 18,283 18,633 27,903 27,850 23,357 23,309 23,659 28,058 16,987 15,881
Total all outlets $ 133,675 $ 145,958 $ 169,056 $ 184,762 $ 202,347 $ -237,004 $ 244,764 $ 227,796 $ 232,785 $ 245,960
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
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City of Hermosa Beach
Miscellaneous Statistics
June 30, 2005
(Unaudited)
Date of Incorporation January 14,1907
Fonn of Govennnent Council -Manager
Number of Employees (excluding police and fire) :
Full-time 80
Part-time (excluding police and fire reserves) 20
Area in square miles 1.3
Hermosa Beads 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 swom officers 39
Number of authorized reserve police 20
Number of law violations:
Physical arrests 1,330
Traffic violations 3,421
Parking violations 54,051
Sewerage System:
Miles of sanitary sewers 34
Linear feet of storm drains 6,011
Land Use Statistics:
Parcels1 6,848
Housing Units2 9,877
Building permits issued 684
Facilities and services not included in the reporting entity:
Education:
Number of elementary schools (2 public, 2 private) 4
Cable Television System:
Miles of service 73.46
Source : City of Hermosa Beach - Finance Department
1 HdL Coren & Cone
2 State of California Department of Finance
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