HomeMy WebLinkAbout01/25/11"1Ue must acceft finite cfisaffoinfmenf, 6ut we must never fose infinite hofe. "-Martin f.uther 1Vn_rj, 9r.
AGENDA
HERMOSA BEACH CITY COUNCIL
Tuesday, January 25, 2011-Council Chambers, City Hall
1315 Valley Drive
6:00p.m.-CLOSED SESSION: See attached Closed Session Agenda
7:00p.m.-REGULAR MEETING
MAYOR
Peter Tucker
MAYOR PROTEM
Howard Fishman
COUNCIL MEMBERS
Patrick 'Kit' Bobko
Michael DiVirgilio
Jeff Duclos
CITY CLERK
Elaine Doerfling
CITY TREASURER
John M. Workman
CITY MANAGER
Stephen R. Burrell
CITY ATTORNEY
Michael Jenkins
All council meetings are open to the public. PLEASE ATTEND.
The Council receives a packet with detailed information and recommendations on nearly every
agenda item.
City Council agendas and staff reports are available for your review on the City's web site
located at www.hermosabch.org.
Complete agenda packets are also available for public inspection in the Police Department, Fire
Department, Public Library and the Office of the City Clerk.
During the meeting, a packet is also available in the
Council Chambers foyer.
Written materials distributed to the City Council within 72 hours of the City Council meeting
are available for public inspection immediately upon distribution in the City Clerk's office at
1315 Valley Drive, Hermosa Beach, California, during normal business hours.
All written communications from the public included in the agenda will be posted with the
agenda on the City's website
To comply with the Americans with Disabilities Act of 1990, Assistive Listening Devices (ALD)
will be available for check out at the meeting.
If you require special assistance to participate in this meeting, you must call or submit your
request in writing to the Office of the City Clerk at (310) 318-0203 at least 48 hours prior to the
meeting.
Your participation in this meeting is in the public domain. Meetings are both cablecast
and streamed live over the Internet. Minutes of this meeting will reflect your participation in
this meeting and are posted on the city's website
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CALL TO ORDER
PLEDGE OF ALLEGIANCE
ROLLCALL
CLOSED SESSION REPORT
ANNOUNCEMENTS
PRESENTATIONS
COUNTY OF LOS ANGELES PUBLIC LIBRARY
2010 CHILDRENS BOOKMARK CONTEST
LOCAL BOOKMARK CONTEST WINNERS
PRESENTATION BY THE
HERMOSA BEACH CITY SCHOOL DISTRICT
STRATEGIC PLANNING TASK FORCE
PUBLIC PARTICIPATION: Although the City Council values your comments, the Brown
Act generally prohibits the Council from taking action on any matter not listed on the posted
agenda as a business item.
1. ORAL AND WRITTEN COMMUNICATIONS
This is the time for members of the public to address the City Council on any items within the
Council's jurisdiction not on this agenda, on items on this agenda as to which public comment
will not be taken, or to request the removal of an item from the consent calendar. Comments on
public hearing items are heard only during the public hearing. Members of the audience may
also speak:
1) during discussion of items removed from the Consent Calendar;
2) during Public Hearings; and,
3) during discussion of items appearing under Municipal Matters.
Comments from the public are limited to three minutes per speaker.
The City Council acknowledges receipt of the written communications listed below. No action
will be taken on matters raised in written communications.
The Council may take action to schedule issues raised in oral and written communications for a
future agenda.
Citizens with comments regarding City management or departmental operations are requested to
submit those comments to the City Manager.
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NO WRITTEN COMMUNICATIONS
2. CONSENT CALENDAR: The following more routine matters will be acted upon by
one vote to approve with the majority consent of the City Council. There will be no
separate discussion of these items unless a Council member removes an item from the
Consent Calendar. Items removed will be considered under Agenda Item 4, with public
comment permitted at that time.
(a) Recommendation to approve minutes of the regular meeting of the City Council
held on January 11, 2011.
(b) Recommendation to ratify check register.
(c) Recommendation to receive and file
1) Tentative Future Agenda Items; and,
2) City Council Directives
(d) Recommendation to receive and file the December 2010 financial reports:
1) Memorandum regarding the December 2010 Revenue and expenditure report;
2) City Treasurer's report; and,
3) Investment report.
(e) Recommendation to approve a change in the date for the Pre-Budget Meeting from
Thursday, February 24, 2011, 7:00pm to Thursday, February 17, 2011, 6:00pm to
add presentation of the user fee study. Memorandum from Finance Director
Viki Copeland dated January 3, 2011.
(f) Recommendation to approve purchase of electronic traffic citation writers from the
replacement fund in the amount of $17,000.00 for the Police Department.
Memorandum from Police Chief Greg Savelli.
(g) Recommendation to receive and file the action minutes of the Green Task Force
meeting of January 10,2011.
(h) Recommendation to accept donations of $10 from Jan Sousa and $10 from
Jo Jennings to be used for the purchase of a television for the Hermosa Senior
Activity Center. Memorandum from Finance Director Viki Copeland dated
January 18, 2011.
(i) Recommendation to adopt a resolution acknowledging the receipt, filing and
approval of the annual statement of investment policy and delegating investment
authority to the City Treasurer for the year 2011. Memorandum from City Treasurer
John Workman dated January 12, 2011.
(j) Recommendation to receive and file the action minutes of the Planning Commission
meeting of January 18,2011.
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(k) Recommendation to receive and file Project Statns Report. Memorandum from
Interim Public Works Director Frank Senteno dated January 19, 2011.
(I) Recommendation to receive and file the 2009-10 Comprehensive Annual Financial
Report (CAFR), which includes the report from Caporicci and Larson, our
independent auditors. Memorandum from Finance Director Viki Copeland dated
January 20, 2011.
(m) Recommendation to adopt a resolution approving the list of projects recommended
for the Early Action Program of the South Bay Measure R Highway Program to be
acted on by the South Bay Council of Governments Board on January 27, 2011 and
submitted to the Metro Board for their action in February 2011 for funding
allocation approval. Memorandum from Interim Public Works Director Frank Senteno
dated January 20, 2011.
3. CONSENT ORDINANCES
a. ORDINANCE NO. 11•1319 -"AN ORDINANCE OF THE CITY OF
HERMOSA BEACH, CALIFORNIA, APPROVING A ZONE TEXT
AMENDMENT TO THE MUNICIPAL CODE TO AMEND THE
DEFINITIONS AND STANDARDS PERTAINING TO EDUCATION
INSTITUTIONS IN THE C-3 ZONE AND ZONES THAT ALLOW C-3
USES AS A CONDITIONAL USE." For adoption. Memorandum from City
Clerk Elaine Doerfling dated January 20, 2011.
b. ORDINANCE NO. 11-1320 -"AN ORDINANCE OF THE CITY OF
HERMOSA BEACH, CALIFORNIA, AMENDING SECTION 2.08.020 OF
THE HERMOSA BEACH MUNICIPAL CODE RELATING TO
CAMPAIGN CONTRIBUTION LIMITATIONS." For adoption.
Memorandum from City Clerk Elaine Doerfling dated January 20, 2011.
4. ITEMS REMOVED FROM THE CONSENT CALENDAR FOR SEPARATE
DISCUSSION
* Public comments on items removed from the Consent Calendar.
5. PUBLIC HEARINGS -TO COMMENCE AT 7:30P.M.
a. 2011-2012 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG)
PROGRAM. (Continued from meeting of January II, 20II) Memorandum from
Community Development Director Ken Robertson dated January 18, 2011.
RECOMMENDATION: 1) Approve the Fiscal Year 2011-2012 CDBG Annual
Planning Summary with an allocation of approximately $98,747; and, 2) authorize
staff to negotiate the exchange of up to $90,000 of new and existing City CDBG
funds with a city yet to be determined in return for unrestricted funds.
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b. ZOl\'E TEXT AMENDMENT TO ADD PROVISIONS FOR
'REASONABLE ACCOMMODATION' FOR PERSONS WITH
DISABILITIES SEEKING EQUAL ACCESS TO HOUSING. (Continued
from meeting of January 11, 2011) Memorandum from Community Development
Director Ken Robertson dated January 20, 2011.
RECOMMENDATION: Open public hearing and continue the matter to
February 8, 2011.
c. 2011 SPECIAL EVENT APPLICATIONS. Memorandum from City Manager
Stephen Burrell dated December 21,2010.
2011 COMMERCIAL EVENTS DATE
Hermosa Beach 5000 May 14
Elevation Group-Wide Open VB Tour August 27-28
MESP -Hermosa Day at the Beach Triathlon October 9
2011 NON PROFIT EVENTS DATE
The Samburu Project-Walk for Water March27
So Cal Foundation for Children-Smackfest Co-Ed VB April23,July23,Sep24
Little League-Night at the Ballpark Aprill6-17
USA V Collegiate Volleyball Aprill6-17
Great Autos of Yesteryear-Endless Summer Car Show May?
Superstar Fitness Boot Camp-Sand Run/Walk for May21
Wounded Warriors
Amateur Athletic Union (AAU) Championships May 22, July 9-10, Aug 21
Arts Group of Hermosa Beach-Art Walk June 11-12
I 00 Mile Club-The Hermosa 24 June 18-19
USA V Beach Championship Series July 15-17
KB Foundation-KB 4-Woman Volleyball July 24
Silvio's Brazilian BBQ-Beach Classic Soccer Tourn. August 6-7
Friends of the Parks -Movie in the Park September 10
RECOMMENDATION: Approve three (3) commercial events and thirteen (13)
non-profit events without granting of fee waivers.
6. MUNICIPALMATTERS
a. OPTIONS TO IMPROVE THE ANNUAL REVIEW OF ON-SALE
ALCOHOLIC BEVERAGE CONDITIONAL USE PERMITS. (Continued
from meeting of December 14, 2010) Memorandum from Community
Development Director Ken Robertson dated December 2, 2010.
RECOMMENDATION: Direct staff to implement the on-sale alcoholic
beverage conditional use permit review criteria and process set forth in
Attachment 1.
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b. DISCUSSION OF EXTENDING OR RESTRUCTURING THE GREEN
TASK FORCE. Memorandum from Community Development Director
Ken Robertson dated January 18, 2011. (Continued from meeting of
December 14, 2010)
RECOMMENDATION: Extend the Green Task Force for six months, and then
accept applications from interested residents for new terms of two years.
c. CONSIDERATION OF ORDINANCE PROHIBITING SMOKING IN
OUTDOOR DINING AREAS. Memorandum from City Attorney Michael
Jenkins dated January 18,2011.
RECOMMENDATION: To receive and file report; or, provide staff direction on
drafting an ordinance prohibiting smoking in outdoor dining areas.
7. MISCELLANEOUS ITEMS AND REPORTS-CITY MANAGER
a. STATE BUDGET-ELIMINATING REDEVELOPMENT AGENCIES.
Memorandum from City Manager Stephen Burrell dated January 20, 2011.
RECOMMENDATION: That the City Council consider taking a position on the
proposal to eliminate redevelopment agencies.
8. MISCELLANEOUS ITEMS AND REPORTS -CITY COUNCIL
NONE
9. OTHER MATTERS -CITY COUNCIL
Requests from Council members for possible future agenda items. No discussion or
debate of these requests shall be undertaken; the sole action is whether to schedule the
item for consideration on a future agenda. No public comment will be taken.
NONE
ADJOURNMENT
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AGENDA
CLOSED SESSION MEETING
HERMOSA BEACH CITY COUNCIL
Tuesday, January 25, 2011 -Council Chambers, City Hall
1315 Valley Drive
6:00p.m.
The City Council finds, based on advice from legal counsel, that discussion in open session will
prejudice the position of the City in existing and anticipated litigation.
CALL TO ORDER
1. PUBLIC COMMENT: This time has been set aside for members of the public to
address the City Council on Closed Session items.
2. MINUTES: Approval of minutes of Closed Session meeting held on January 11,2011.
3. CONFERENCE WITH LABOR NEGOTIATOR
Government Code Section 54957.6
City Negotiator:
Employee Organizations:
Stephen Burrell
Hermosa Beach Police Officers' Association
Hermosa Beach Firefighters' Association
Teamsters Union, Local911
Professional and Administrative Employee Group
Hermosa Beach Management Association
Hermosa Beach Police Management Association
Hermosa Beach Professional Engineers Bargaining Group
Unrepresented employees
4. CONFERENCE WITH REAL PROPERTY NEGOTIATOR
Government Code Section 54956.8
a. • Property:
Negotiating Parties:
Under negotiation:
b. Property:
Negotiating Parties:
Under Negotiation:
West of intersection of 2"d Street and Beach Drive
Stephen Burrell & GU Holdings, Inc.
Terms of payment
51 Pier Avenue
Stephen Burrell & Fat Face Fenner's Fishack
Price & Terms of Payment
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5. CONFERENCE WITH LEGAL COUNSEL
The City Council finds, based on advice from legal counsel, that discussion in open
session will prejudice the position of the City in the litigation.
Existing Litigation: Government Code Section 54956.9(a)
a. Name of Case:
Case Number:
b. Name of Case:
Case Number:
Macpherson v. City of Hermosa Beach
BCI72546
Winters v. City of Hermosa Beach, eta!.
CV 09-5667 RCK (FMOx)
6. PUBLIC EMPLOYEE PERFORMANCE EVALUATION
Government Code Section 54957
Title: City Manager
ADJOURNMENT
8
City of Hermosa Beach,
California
Comprehensive
Annual
Financial
Report
For the year ended June 30, 2010
City of Hermosa Beach
Basic Financial Statements
For the year ended June 30, 2010
Table of Contents
i
Page
INTRODUCTORY SECTION (UNAUDITED)
Table of Contents ........................................................................................................................................................... i
Letter of Transmittal ...................................................................................................................................................... v
Certificate of Achievement for Excellence in Financial Reporting –
Governmental Finance Officers Association ....................................................................................................... xi
Organizational Chart ..................................................................................................................................................... xii
Principal Officials of the City of Hermosa Beach ...................................................................................................... xiii
FINANCIAL SECTION
Independent Auditors’ Report .......................................................................................................................................... 1
Management’s Discussion and Analysis (Required Supplementary Information) (Unaudited) ......................... 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 (Unaudited) ..................................................................................................... 79
City of Hermosa Beach
Basic Financial Statements
For the year ended June 30, 2010
Table of Contents, Continued
ii
Page
FINANCIAL SECTION, Continued
Supplementary Information:
Non-Major Governmental Funds:
Combining Balance Sheet ....................................................................................................................................... 90
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ...................................... 96
Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual
Non-Major Special Revenue Funds:
Lighting and Landscape District ........................................................................................................... 101
State Gas Tax ............................................................................................................................................ 102
AB 939 ....................................................................................................................................................... 103
Compensated Absences .......................................................................................................................... 104
Prop A Open Space ................................................................................................................................. 105
Tyco ........................................................................................................................................................... 106
Tyco Tidelands ......................................................................................................................................... 107
Parks/Recreation Facilities Tax ............................................................................................................. 108
Building Improvement ........................................................................................................................... 109
Bayview Drive Administrative Expense .............................................................................................. 110
Lower Pier Administrative Expense ..................................................................................................... 111
Myrtle District Administrative Expense .............................................................................................. 112
Loma District Administrative Expense ................................................................................................ 113
Beach Drive Assessment District Administrative Expense ............................................................... 114
Community Development Block Grant ................................................................................................ 115
Proposition “A” Transit .......................................................................................................................... 116
Proposition “C” ....................................................................................................................................... 117
Measure R ................................................................................................................................................. 118
Air Quality Management District.......................................................................................................... 119
Supplemental Law Enforcement Services (COPS) .............................................................................. 120
California Law Enforcement Program (CLEEP) ................................................................................. 121
Sewer ......................................................................................................................................................... 122
Asset Seizure and Forfeiture Fund ........................................................................................................ 123
Fire Protection .......................................................................................................................................... 124
Retirement Stabilization ......................................................................................................................... 125
Capital Improvement .............................................................................................................................. 126
Artesia Boulevard Relinquishment ....................................................................................................... 127
Beach Drive 2 Underground District .................................................................................................... 128
Myrtle Utility Underground Improvement ......................................................................................... 129
Bayview Drive Underground District Improvement ......................................................................... 130
Beach Drive Underground District Improvement .............................................................................. 131
Prospect Utility Underground District ................................................................................................. 132
City of Hermosa Beach
Basic Financial Statements
For the year ended June 30, 2010
Table of Contents, Continued
iii
Page
FINANCIAL SECTION, Continued
Supplementary Information, Continued:
Internal Service Funds:
Combining Statement of Net Assets ................................................................................................................... 134
Combining Statement of Revenues, Expenses and Changes in Net Assets .................................................. 135
Combining Statement of Cash Flows ................................................................................................................. 136
Fiduciary Fund Financial Statements:
Combing Statement of Fiduciary Net Assets .................................................................................................... 138
Combing Statement of Changes in Assets and Liabilities ............................................................................... 139
Capital Assets Used in the Operating Of Governmental Funds:
Schedule by Source ............................................................................................................................................... 142
Schedule by Function and Activity ..................................................................................................................... 143
Schedule of Changes in Capital Assets by Function and Activity ................................................................. 144
STATISTICAL SECTION (Unaudited)
Net Assets by Component ................................................................................................................................................. 146
Changes in Net Assets ........................................................................................................................................................ 147
Governmental Activities Tax Revenues By Source ........................................................................................................ 151
Fund Balances of Governmental Funds ........................................................................................................................... 152
Changes in Fund Balances of Governmental Funds ...................................................................................................... 153
Governmental Activities Tax Revenues By Source ........................................................................................................ 154
Assessed Value and Estimated Actual Value of Taxable Property .............................................................................. 155
Direct and Overlapping Government .............................................................................................................................. 156
Principal Property Taxpayers............................................................................................................................................ 157
Property Tax Levies and Collections................................................................................................................................ 158
Construction Value and Property Value ........................................................................................................................ 159
Direct and Overlapping Debt ............................................................................................................................................ 160
Legal Debt Margin Information ........................................................................................................................................ 162
Demographic and Economic Statistics ............................................................................................................................. 164
Principal Employers ........................................................................................................................................................... 165
Full-Time Equivalent City Government Employees by Function ................................................................................ 166
Operating Indicators by Function .................................................................................................................................... 167
Capital Asset Statistics by Function ................................................................................................................................. 168
Independent Auditor’ Report on Internal Control over Financial Reporting and
on Compliance and Other Matters Based on an Audit of Financial Statements
performed in Accordance with Government Auditing Standards ...................................................................... 169
iv
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City of 2lermosa BeacL
Civic Center,1315 Valley Drive,Hermosa Beach,CA 90254-3885
,‘
v
January 18, 2011
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, 2010. 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 eighth CAFR prepared using the new financial reporting requirements established by
Governmental Accounting Standards Board (GASB) Statement 34 for state and local governments
throughout the United States. The required Management’s Discussion and Analysis (MD&A), gives
readers an objective and easily readable analysis of the government’s financial performance for the year and
government-wide financial statements, prepared using accrual accounting for all of the government’s
activities. Long term assets and liabilities (such as capital assets, including infrastructure and general
obligation debt) are measured in addition to current assets and liabilities. This letter of transmittal is
designed to complement MD&A and should be read in conjunction with it. The City of Hermosa Beach’s
MD&A can be found immediately following the report of the independent auditors.
Management's representations concerning the finances of the City of Hermosa Beach are contained herein.
Consequently, management assumes full responsibility for the completeness and reliability of all of the
information presented in this report. To provide a reasonable basis for making these representations,
management of the City of Hermosa Beach has established an internal control framework that is designed
both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable
information for the preparation of the City of Hermosa Beach’s financial statements in conformity with
generally accepted accounting principles (GAAP). Because the cost of internal controls should not outweigh
their benefits, the City of Hermosa Beach’s framework of internal controls has been designed to provide
reasonable rather than absolute assurance that the financial statements will be free from material
misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report
is complete and reliable in all material respects.
Audit
The City of Hermosa Beach’s financial statements have been audited by Caporicci & Larson, a firm of
licensed certified public accountants. The goal of the independent audit was to provide reasonable
assurance that the financial statements of the City of Hermosa Beach for the fiscal year ended June 30, 2010,
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
vi
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, 2010, are fairly presented in conformity with GAAP. The independent auditor's report
is presented as the first component of the financial section of this report.
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 19,599, 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 2009-10 fiscal year, beach attendance ranged from a
low of 77,345 in December 2009 to a high of 1,960,000 in July 2009, 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 Beach’s financial planning and control.
A pre-budget policy meeting with the City Council is held prior to budget preparation. 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. At least one public budget workshop
is held prior to the required public hearing, with adoption required no later than June 30th. If the City
Council fails to adopt a budget by that date, the budget submitted by the City Manager, as amended by the
City Council, if applicable, is the appropriated budget except for capital improvement outlays. 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. The City Council receives monthly
revenue and expenditure reports during the year and 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 CAFR 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 81-83. For non-major
governmental funds with appropriated annual budgets, this comparison is presented as Supplementary
Information, after the Notes to the Financial Statements.
vii
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 fifteenth highest percentage change in secured and unsecured assessed valuation of the 88 cities in Los
Angeles County for 2009-1009. This growth of 3% is the lowest rate since the 1999 rate of 5.25%. In the five
years preceding this fiscal year, the increase in assessed valuation averaged 10.48; 9.93% for the last ten
years. Even with lower growth, property tax is by far the highest source of revenue for the City. Median
home prices in Hermosa Beach as of June 2010 were $900,000, compared to $336,000 for Los Angeles
County. The Hermosa Beach median home price for June 2009 was $980,000 and the average median price
was $1,120,083. The average median home price for Hermosa Beach for fiscal year 2009-10 was $899,604.
Home values adjacent to the beach continue to hold up much better than other parts of the county and state.
As a beach city, the three highest occupations are management, sales, and administrative support, however
residents enjoy access to a much more diverse employment base with the close proximity of all of the other
cities in Los Angeles County. The unemployment rate in Hermosa Beach is 5.5%, compared with 12.2% for
Los Angeles County, and 12.2% for California as of June 2010.
Secured property taxes increased 4% in 2009-10 and on average, 9%, over the past five years, corresponding
with the increase in assessed valuation mentioned above (in spite of the shift of over $650,000 in 2004-05
and 2005-06 in property tax funds from local government to the State to balance their budget). The strength
in this area helped offset the decline in the sales tax base that began in 2001-02 with the loss of several new
auto dealerships: Audi/Porsche in 2002, Volkswagen in 2003 and BMW in 2004. The biggest impact was
BMW new car sales, which was felt in full for the first time in 2005-06. BMW still maintains pre-owned
sales on a portion of the previous site. Sales tax receipts over the past ten years were highest in 2000-01 at
$2.7 million with the low in 2009-10 of $2.1 million. Receipts for 2009-10 are down 12% with the largest
decline in Auto Dealers/Supplies and Building Materials. Receipts for 2009-10 are consistent with sales tax
receipts of 1998-99.
In the past ten year period, transient occupancy tax has increased from a low of $793,818 in 2000-01 to a
high of $1.9 million in 2007-08, or an average increase of 12%. During that ten years, three new hotels were
added; the Beach House (phases 1 and 2), the Holiday Inn Express, and the Hampton Inn. Revenue for
2009-10 declined 5% to $1.5 million, which approximates the level in 2004-05. Average occupancy for 2009-
10 was 65.8% for Hermosa Beach compared to last year’s rate of 67.7%.
Utility user tax (UUT) was 1% less than 2008-09. The utility user tax is the second highest single source of
income for the City. Since the City was successful in obtaining voter approval (72%) for adoption of a
modern UUT ordinance in November 2007, revenue is protected as technology changes occur. The ballot
measure was intended to be revenue-neutral, in that the video and telecom rate was reduced from 6% to
5.5% to offset any new revenue received from new technology in those areas. The UUT as a source of
revenue has been very reliable.
National Economy. The latest news from the Federal Reserve is that the economy appeared to be gaining
strength but not enough to put a dent in the unemployment rate (9.8% as of this writing). The latest survey
of economists by the Wall Street Journal also see a stronger economy in the first half of 2011, with odds of a
double-dip recession going down to 15%. Jobless claims hit the lowest level since July 2008 in December
2010. While this is encouraging news, it is not yet apparent in the local economy. Hermosa Beach does fare
better with unemployment estimated at 5.5% and stronger assessed valuations on property, but the effects
of this economy are still felt with less growth in property tax and declining sales tax and transient
occupancy tax revenue.
viii
While many communities continue to experience effects from subprime mortgages, Hermosa Beach
foreclosure activity was .2% or less for each month of 2009-10.
California Public Employees Retirement System (CalPERS). While CalPERS had a positive investment
return of 11.6% as of June 2010, prior losses will still affect employer rates for the future. Rates increased by
3 points in 2009-10 and will remain flat for 2010-11, however rates for 2011-12 are projected to increase by 11
points. Because of this, the City is negotiating with all bargaining units to implement two tier retirement
plans which would cost far less than current plans.
The City needs to plan ahead now for anticipated rate increases. The City created a Retirement Stabilization
Fund in 2003-04 for this purpose. The fund balance at 6/30/10 is $753,149.
State Budget. The passage of Proposition 22 by statewide voters in November 2010 is a positive for local
government. The measure prevents the state from borrowing property tax, motor vehicle fuel tax,
Proposition 42 sales tax on gasoline and public transportation funds. With a projected state budget deficit
of $28 billion, this protection is a welcome development. With a new Governor just installed, it remains to
be seen how the state will solve its problems. One rumored solution is the taking of local redevelopment
funds which will impact many local governments in California. Hermosa Beach would not be impacted
however, since we do not have a Redevelopment Agency.
It is doubtful that the deficit can be resolved without pain across-the-board for all who are touched by the
budget. Impacts will likely remain unknown for some time though as the new Governor and legislature go
through the balancing motions.
Long-term financial planning. The City Council’s adopted financial policies relating to long-term financial
planning for specific funds, are as follows:
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 net assets for claims reserves and catastrophic
losses.
Equipment Replacement Fund—Goal of net assets 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 25% funding for accrued
liabilities for employee vacation, sick and compensatory time.
The City also has a financial policy of transferring funds unspent in the General Fund at year-end to the
Contingency Fund, Insurance Fund, Equipment Replacement Fund, and Capital Improvement Fund to
build equity in those funds. For 2009-10, the City Council determined that all unspent funds in the General
Fund ($1,227,569) would be transferred to the Insurance Fund to fund insurance liabilities and costs of the
ongoing MacPherson Oil lawsuit which is discussed in detail in the Notes to the Financial Statements. The
City Council makes changes as necessary to the year end transfer, depending on the equity in the funds or
based on other needs.
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.
ix
Primary projects coming up, (other than street and sewer improvements, which occur every year) are
continuing upgrades to the Community Center and Emergency Operations Center; rehabilitation of beach
restrooms; and a major renovation of the Public Works City Yard. The City will use Los Angeles
Proposition A Open Space Grant, Traffic Congestion Relief funds, and Measure R funds for these projects,
in addition to City funds. The Upper Pier Avenue Improvement Project, which began in January 2010 will
also be completed. The City used federal stimulus funds, grants and bond funds for the project, with no
expenditure of City funds. As part of the project, the city installed an innovative infiltration/storm drain
system that captures trash, storm water and urban runoff from a 36-acre drainage area before it can pollute
ocean waters, This part of the project won the 2010 Environmental Achievement Award from the U.S.
Environmental Protection Agency.
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 23
months, with an average yield on investments of .74% 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 $20
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 of Hermosa Beach purchases workers’ compensation coverage through a self-insured program
available through ICRMA. The City maintains a $500,000 self-insured retention limit and participates in a
self-insured risk sharing pool through the ICRMA and the California State Association of Counties (CSAC).
Together, these two joint powers authorities provide a shared limit of coverage up to a maximum of $200
million.
Claims defense and settlement are coordinated by third party administrators for both liability and worker's
compensation, with oversight by the City Manager (City’s Risk Manager/Human Resources Director
position is vacant).
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 (CalPERS).
CalPERS provides retirement and disability benefits, annual cost-of-living adjustments and death benefits
to plan members and beneficiaries. The City pays employee contributions as a negotiated benefit. City
employer contributions are actuarially determined on an annual basis.
The City of Hermosa Beach also provides post employment heath care benefits for certain retirees. As of
the end of the current fiscal year, there were 30 retirees receiving these benefits.
The City elected early implementation of GASB 45 and established a trust with an outside party to
administer these funds in July 2007. The City is contributing the annual required contribution for all
employees as determined by an actuarial study in the manner as is done for retirement contributions to
CalPERS.
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.
x
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, 2009. This was the twentieth consecutive year that the government has
received this prestigious award. In order to be awarded a Certificate of Achievement, the government
published a report that 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 continuing support for maintaining the highest standards of professionalism in the management of the
City of Hermosa Beach’s finances.
Respectfully submitted,
Viki Copeland
Finance Director
xi
xii
ELECTORATE
CITY COUNCIL
PLANNING
COMMISSION
PUBLIC
WORKS
COMMISSION
CIVIL
SERVICE
BOARD
BOARD
OF
APPEALS
PARKS &
RECREATION
ADVISORY
COMMISSION
CITY TREASURER
CITY
MANAGER
COMMUNITY
RESOURCES
HUMAN
RESOURCES/
RISK
MANAGEMENT
FINANCE
COMMUNITY
DEVELOPMENT
FIRE
POLICE
PUBLIC
WORKS
CITY
ATTORNEY
Parks & Recreation
Facilities
Management
Cultural Recreational
Athletic
Programming
Special Events
ENGINEERING Plan Checks
Field Inspection
Code Enforcement
Encroachments
Traffic Engineering
Traffic Signals
Traffic Signage
Speed Survey
Capital
Improvement
Program
MAINTENANCE
Landscaping
Irrigation
Streets Sewers Storm Drains Building Maint. Vehicle Maint.
Enforcement Investigation Detention Emergency
Dispatch
Reserves
Records Bureau
Crossing Guard
Special
Investigations
COMMUNITY
SERVICES
Parking Enforcement Animal Control
Meter
Maintenance
Fire
Suppression
Fire
Prevention
Rescue
Public Education
Paramedics
Disaster
Preparedness
Reserves
Plan Checking
Ambulance
Transportation
Investigations
HUMAN RESOURCES Recruitment
Training
Labor Relations
RISK
MANAGEMENT
Workers’ Comp
Liability Claims
City Insurance
Secretarial Support
FINANCE
ADMINISTRATION
Budget
Accounting
Payroll
FINANCE
CASHIER
Citation Processing Animal Licenses
Parking Permits
Business License
Bus Passes
BUILDING AND
SAFETY
Plan Checking Field Inspection
Code Enforcement PLANNING
Current Planning
Advanced Planning
Sustainability Planning Environmental Assessment
Land Use
Entitlements
Enforcement
CITY CLERK
CITY
PROSECUTOR
CCIITTYY OOFF HHEERRMMOOSSAA BBEEAACCHH OORRGGAANNIIZZAATTIIOONNAALL CCHHAARRTT
xiii
PRINCIPAL OFFICIALS OF THE CITY OF HERMOSA BEACH, CALIFORNIA
June 30, 2010
Elected and Administrative Officials
City Council
Michael Di Virgilio Mayor
Pete Tucker Mayor Pro Tempore
Patrick “Kit” Bobko Councilmember
Jeff Duclos Councilmember
Howard Fishman Councilmember
Other Elected Officials
John Workman City Treasurer
Elaine Doerfling City Clerk
Administrative Officials
Stephen Burrell City Manager
Viki Copeland Finance Director
Ken Robertson Community Development
Director
Unfilled Community Resources
Director
Unfilled Personnel Director and
Risk Manager
Gregory Savelli Police Chief
Richard Morgan Public Works Director
David Lantzer Fire Chief
xiv
This page intentionally left blank.
C&L
Caporicci & Larson, Inc.
A Subsidiary of Marcum LLP
Certifi ed Public Accountants
www.c-lcpa.com
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, 2010, 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 opinions on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States. 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
consideration of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly,
we express no such opinion. An audit also includes 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, 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 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, 2010, and the
respective changes in financial position and cash flows, where applicable, thereof for the year
then ended in conformity with accounting principles generally accepted in the United States of
America.
In accordance with Government Auditing Standards, we have also issued our report dated
January 18, 2011, our consideration of the City’s internal control over financial reporting and on
our tests of its compliance with certain provisions of laws, regulations, contracts, and grant
agreements. That report is an integral part of an audit performed in accordance with
Government Auditing Standards and should be considered in assessing the results of our audit.
2
To the Honorable Mayor and Members of City Council
of the City of Hermosa Beach
Hermosa Beach, California
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, is not a required part of the basic financial statements but is supplementary
information required by the Governmental Accounting Standards Board. We have applied
certain limited procedures, which consisted principally of inquiries 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 the Required
Supplementary Information.
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City’s basic financial statements. The accompanying 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 basic 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 the
Introductory and Statistical Sections.
Caporicci & Larson, Inc.
A Subsidiary of Marcum LLP
Certified Public Accountants
Irvine, California
January 18, 2011
3
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, 2010. 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 - x 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 $80,738,000 (net assets). Of this amount, $9,698,000 (unrestricted net assets) may be used to meet
the government's ongoing obligations to citizens and creditors.
• The government's total net assets decreased by $253,000. Net assets of governmental activities
decreased $285,000 (.4%) while net assets of business type activities increased $32,000 (.4%).
• As of June 30, 2010, the City of Hermosa Beach’s governmental funds reported combined ending
fund balances of $10,726,000, a decrease of $973,000 in comparison with the prior year. The
decrease is primarily a result of the expenditure of Proposition C Transit Funds on the Upper
Pier Avenue Improvement Project. Approximately 33% of the fund balances are to indicate that
funds are not available because they are 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, or 3) committed for other specific projects. Another
3% is designated for specific uses, with the remainder available for a variety of purposes.
• As of June 30, 2010, the unreserved, undesignated 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 2009-10. The balance in the Contingency
Fund (or “rainy day fund”) is $3,651,000 or 13.7% of General Fund appropriations and serves as
the City’s cushion against economic uncertainties. The City’s financial policy is to retain a fund
balance of 15% of General Fund appropriations. These balances will be addressed as part of the
Midyear Budget Review process for 2010-11. The City’s financial goals and the progress toward
those goals is always reviewed at midyear.
• 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.
4
The statement of net assets presents information on all of the City of Hermosa Beach’s assets and
liabilities, with the difference between the two reported as net assets. Over time, increases or decreases
in net assets may serve as a useful indicator of whether the financial position of the City of Hermosa
Beach is improving or deteriorating.
The statement of activities presents information showing how the government's net assets changed
during the most recent fiscal year. All changes in net assets are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and
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 are in the
Downtown Enhancement Fund.
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-five individual governmental funds. Three
undergrounding improvement funds were closed because the projects were complete and two funds
for undergrounding districts that will not be formed were closed which reduces the number of funds
to thirty. 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:
5
General Fund Grants 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.
Data from the other thirty-two 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 in the Supplementary Information section 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 in the Required Supplementary
Information section to demonstrate compliance with this budget.
The basic governmental fund financial statements can be found on pages 23-31 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 an enterprise fund to account
for its downtown enhancement 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 equipment 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 which is considered to be a major fund of the City of Hermosa Beach
because it is the only proprietary fund. 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 35-38 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 are held as fiduciary funds. Other Post Employment Benefits (OPEB) funds
that were held previously as fiduciary funds by the City, were placed in a trust fund administered by
Public Agency Retirement Services in August 2007.
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 43-77 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 major
funds. Required supplementary information can be found on page 79 of this report.
6
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 90-100
of this report.
Government-wide Financial Analysis
As noted earlier, net assets may serve over time as a useful indicator of a government's financial
position. As of June 30, 2010, assets exceeded liabilities by $80,738,000.
By far the largest portion of the City of Hermosa Beach’s net assets, $66,527,000 (82%), 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.
2010 2009 2010 2009 2010 2009
Current and Other Assets $ 26,628 $ 27,312 $ (776) $ (991) $ 25,852 $ 26,321
Capital Assets 56,600 56,420 9,927 10,057 66,527 66,477
Total Assets 83,228 83,732 9,151 9,066 92,379 92,798
Long-term Liabilities
Outstanding 4,954 4,407 - - 4,954 4,407
Other Liabilities 6,388 7,154 299 246 6,687 7,400
Total Liabilities 11,342 11,561 299 246 11,641 11,807
Net Assets: 71,886 72,171 8,852 8,820 80,738 80,991
Invested in Capital Assets 56,600 56,420 9,927 10,057 66,527 66,477
Restricted 4,513 5,403 - - 4,513 5,403
Unrestricted 10,773 10,348 (1,075) (1,237) 9,698 9,111
Total Net Assets $ 71,886 $ 72,171 $ 8,852 $ 8,820 $ 80,738 $ 80,991
Activities Activities
Net Assets
June 30, 2010
(dollars in thousands)
Governmental Business-type Total
A portion of the City of Hermosa Beach’s net assets (5%) represents resources that are subject to external
restrictions on how they may be used. The remaining balance of unrestricted net assets ($9,698,000) 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
activities. The business-type activities show a deficit for unrestricted net assets due to the purchase of a
storage lot facility with internal loans from the Contingency Fund, the Insurance Fund and the Equipment
Replacement Fund. These loans are being repaid from revenue received from the lease of the facility and
unrestricted net assets when available.
The government’s net assets decreased by $253,000 during the current fiscal year. The following is the
condensed Statement of Activities and Changes in Net Assets for the fiscal years ending June 30, 2009 and
June 30, 2010.
7
Governmental activities. Governmental activities decreased the City of Hermosa Beach’s net assets by
$285,000. Key elements of this decrease are as follows:
2010 2009 2010 2009 2010 2009
Revenues:
Program Revenues:
Charges For Services $7,566 $7,843 $1,026 $1,021 $8,592 $8,864
Operating Grants and Contributions 544 540 - - 544 540
Capital Grants and Contributions 1,818 850 - - 1,818 850
General Revenues: - - - -
Property Taxes 11,408 11,188 - - 11,408 11,188
Other Taxes 8,076 8,460 - - 8,076 8,460
Grants and Contributions Not - - - -
Restricted to Specific Programs 1,242 1,454 - - 1,242 1,454
Other 608 733 7 21 615 754
Total Revenues 31,262 31,068 1,033 1,042 32,295 32,110
Expenses:
Legislative and Legal 980 1,060 - - 980 1,060
General Government 2,410 3,579 - - 2,410 3,579
Public Safety 17,842 17,471 - - 17,842 17,471
Community Development 1,244 1,417 - - 1,244 1,417
Culture and Recreation 1,252 1,421 - - 1,252 1,421
Public Works 7,823 6,861 - - 7,823 6,861
Downtown Enhancement - - 997 963 997 963
Total Expenses 31,551 31,809 997 963 32,548 32,772
Increase (Decrease) in Net Assets
Before Transfers (289) (741) 36 79 (253) (662)
Transfers 4 3 (4) (3) - -
Increase (Decrease) in Net Assets (285) (738) 32 76 (253) (662)
Net Assets - 7/1/09 72,171 72,909 8,820 8,744 80,991 81,653
Net Assets – 6/30/10 $71,886 $72,171 $8,852 $8,820 $80,738 $80,991
Changes in Net Assets
June 30, 2010
(dollars in thousands)
Governmental Activities Business-type Activities Total
Charges for services decreased $277,000 primarily due to a major reduction in development related
revenues as a result of the declining economy. Revenue received for facilities rentals and special
events was less due to continued renovations and construction at the Community Center.
Property Taxes overall increased by $220,000 or approximately 2%. Assessed valuations increased
3.03% overall.
Other Taxes decreased approximately 5% as a result of decreases in revenue from the transient
occupancy tax (tax on hotel stays) and sales tax.
Capital Grants and Contributions increased primarily because of four American Recovery and
Reinvestment Act (ARRA) grants received from the Federal Government for improvements of the
City’s main arterial street, an innovative water filtration system and repairs made to other
residential streets. Two of the grants are administered by the State of California Department of
Transportation and two by the California State Water Resources Control Board.
8
Grants and Contributions Not Restricted to Specific Programs decreased for the following reasons:
motor vehicle license fees decreased by $10,000; an increase of $11,000 to traffic congestion relief
funding; Proposition A and C Transit Funds decreased by $61,000 since they are collected as a
portion of the sales tax which is declining; the amount of State reimbursed claims for mandated
costs was $5,000 more. The City allocation of Proposition 1B funding was $205,000 less than 08-09
because the program was suspended by the State. Transit Development Act Revenue was $20,000
more for 09-10 as funds from the 08-09 reserve and the 09-10 allocation were drawn down for use on
a project to begin in early 2010-11. The first allocations of Measure R, a ½ cent sales tax passed by
Los Angeles County voters in November 2008 for transportation solutions for Los Angeles County,
were received beginning July 2009.
Other revenue decreased primarily due to a large donation for Community Center Theatre
Improvements that was received in 2008-09 and a decrease of nearly 73% for investment earnings
due to falling interest rates.
-
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
Legislative and Legal
General Government
Public Safety
Community Development
Culture and Recreation
Public Works
Expenses and Program Revenues
Governmental Activities
Expenses
Revenue
9
Revenue by Source - Government Activities
Other Taxes
11%
Utility User
Taxes 8%
Sales Taxes 7%
Charges for
Services 24%
Miscellaneous
2%
Investment
Earnings < 1%
Grants and
Contributions
Not Restricted
to Specific
Programs 4%
Property Taxes
36%
Capital Grants
and
Contributions
6%
Operating
Grants and
Contributions
2%
Expenses in total declined primarily due to a total of fourteen unfilled vacancies impacting all
categories except the Legislative and Legal function. The Legislative and Legal function decreased by
approximately 8% because of a decrease to legal costs related to the MacPherson Oil lawsuit and a one-
time contribution to the Hermosa Beach School District in 08-09. The General Government function
shows a decrease since changes in infrastructure assets were recorded in this category in 08-09. For 09-
10, increased infrastructure costs are reflected in the Public Works category. The Public Safety function
increased primarily due to the reinstatement of two employees. Community Development decreased
because costs for inspections and plan checks were less due to fewer building projects. Culture and
Recreation decreased because of vacancies, lower excursions and lower recreation class instructor
payments due to lower enrollment in classes. The remodel of the Community Center impacted many
activities. Legal costs for the ongoing MacPherson Oil Company litigation, discussed in Note 13 of the
Notes to the Basic Financial Statements, impacted all governmental functions since these costs,
recorded in the Insurance Fund, are allocated across all functions. The total amount for these legal
costs for 2009-10 was $795,000, a decrease from 2008-09 of approximately $19,000.
Business-type activities. Business-type activities increased the net assets by $32,000. The primary
contributing factors to this increase were:
Charges for Services increased slightly due to an increase in the renegotiated storage lot lease, the
cell-site license annual adjustment and increased revenue for services provided for special events.
Other revenue decreased due to the decrease in investment earnings from 2008-09 and fewer
participants in the City’s special event for St. Patrick’s Day.
The Downtown Enhancement operation shows increased expenses because of increased costs for
special events cleanup and steam cleaning. The Los Angeles County Beaches and Harbors share of
the parking structure net income also increased by 5% over 2008-09 due to reduced costs for the
facility.
10
980,000
990,000
1,000,000
1,010,000
1,020,000
1,030,000
Expenses and Program Revenue
Business-type Activities
Expenses 997,138
Program Revenue 1,026,185
Downtown Enhancement
Revenue by Source - Business-type Activities
Charges for
Services
99%
Miscellaneous
< 1%
Investment
Earnings
1%
Investment Earnings
Charges for Services
Miscellaneous
11
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 $10,726,000, a decrease of $973,000 (8%), in comparison with the prior year.
Approximately 67% of this total amount, $7,219,000, 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 ($2,889,000), 2) fund transportation development act projects ($20,000), 3) fund
traffic congestion relief projects ($302,000) 4) to account for an advance to the Downtown Enhancement
proprietary fund for the purchase of a storage lot facility ($237,000) , 5) to fund future parking facility projects
($10,000), and 6) for future Theatre Improvements donated by a local resident ($45,000) and 7) to fund future
street improvement projects ($4,000).
Three 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,
Grants Fund, and Contingency 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 $700,000, with $392,000 reserved for re-appropriations, $45,000
reserved for Theatre Improvements, $10,000 reserved for future parking facility projects and $253,000
unreserved, but designated for certain purposes. The City’s financial policies require that unspent
funds in the General Fund transfer to other funds to meet specific funding targets at year end. As those
targets or goals are met, transfers may be redirected where funds are needed. For 2009-10, the City
Council redirected that funds left unspent in the General Fund at year end transfer to the Insurance
Fund to help cover MacPherson Oil lawsuit legal costs and build equity in the fund. The transfer to the
Insurance Fund was $1,227,569. Funds were available at year end primarily because expenditures
were 5% less than budgeted, mainly due to fourteen vacant positions that remain unfilled.
The Grants Fund qualifies as a major fund in 2009-10 because of the receipt of four ARRA grants; one
for the improvement of the City’s main arterial street, Pier Avenue, one for an innovative water
filtration system and 2 for major repairs on other streets. The Pier Avenue project includes streetscape,
enhanced landscaping, new street lights, widened sidewalks and bus transit improvements. Project
construction began in January 2010 and was completed in October 2010.
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 unreserved,
undesignated balance of $3,400,000 represents 13% of appropriations and is less than the financial goal
because funds have been used for the MacPherson lawsuit. The status of financial goals is reviewed
during the Midyear Budget Review Process as explained earlier.
Proprietary funds. The City of Hermosa Beach’s proprietary fund financial statements for the
Downtown Enhancement Fund provide the same type of information found in the government-wide
financial statements, but in more detail.
12
Unrestricted net assets of the Downtown Enhancement operation at the end of the year were
($1,075,000). The deficit is due to the purchase of a storage lot facility with partial funding from internal
loans from the Contingency, Insurance and Equipment Replacement Funds. The loans were recorded
as if they were being made to the Downtown Enhancement Fund so that the balance payable is easily
tracked. These loans are being repaid from revenue received from the lease of the facility and any
unrestricted net assets that become available, which will ultimately eliminate the deficit.
General Fund Budgetary Highlights
The final amended budget for revenue is 3% less than the original budget. Actual revenue was higher
than the final budget by 2% for the following reasons:
Other tax revenue collections were 6% higher than budget primarily due to conservative
estimates for transient occupancy tax, sales tax, and utility users’ tax.
Licenses and Permits were 3% under budget as a result of lower building permit activity.
The final amended budget for appropriations other than Transfers Out is more than the original budget
by less than 1%.
Actual expenditures were less than the final appropriations by 5%. The largest variances can be
summarized as follows:
Public Safety expenditures were less than budget by $780,000 primarily due to the partial year
vacancy of one Police Lieutenant, elimination of one position in Community Services and lower
leave cash out costs for both the Police and Fire Departments.
Less coverage of the Senior Building Inspector vacancy and fewer plan check services were the
main factors for Community Development expenditures being under budget by $154,000.
Expenditures in the Public Works category were less than budgeted by $129,000 due to lower
than anticipated street sweeping and landscape maintenance costs and unspent street repair
funds that will be carried over to the following year.
Transfers Out increased due to funds remaining in the General Fund at year end, which transfer to
meet funding goals as explained previously.
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, 2010, amounts to $66,527,000 (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 2009-10 fiscal year was less than 1% (a .32% increase for
governmental activities and a 1.29% decrease for business-type activities) due to a freeze on vehicle
replacement because of economic conditions.
Major capital asset events during the fiscal year included the following:
13
Governmental Activities
A variety of street projects (widening and expansion of existing streets) and sewer projects were
completed during the fiscal year. A major renovation of the City’s main arterial street was begun
in January 2010 with an anticipated completion in October 2010.
Construction on the Community Center Electrical Upgrades, Community Center General
Improvements and the Community Center Senior Activity Center projects were completed
during the fiscal year.
Construction in progress on Beach Restroom Rehabilitation was $150,000 at the end of the fiscal
year.
Business type Activities
There were no significant changes to the capital assets in business type activities.
Additional information on the City of Hermosa Beach’s capital assets can be found in Note 6 on pages
62-64 of this report.
Economic Factors and Next Year's Budgets and Rates
Overall, property tax revenue, the highest source of revenue for Hermosa Beach, rose 2% for 2009-
10. Secured property tax, which is the tax on real property such as homes, grew by 4%. A decline of
2% is projected for 2010-11 due to the lower volume of sales, lower home prices and the -2% CPI
adjustment applied by the County Assessor to all properties. With many areas of California
showing double digit declines in value, Hermosa Beach is fortunate to still have positive growth.
Sales tax revenue decreased 12% from 2008-09 and is 22% lower than the highest year of 2000-01.
The highest sales tax producing category, Eating and Drinking Places, decreased 6% and represents
42% of the sales tax revenue.
City retirement rates increased 3 points or 3% of payroll for 2009-10. Rates are projected to increase
less than 1% for 2010-11 however rates for 2011-12 are projected to increase by 11% due to
amortization of PERS investment losses. A snapshot of CalPERS investment earnings is as follows:
2001, –7.2%; 2002, –5.9%; 2003, 3.9%; 2004, 16.7%; 2005, 12.7%; 2006, 12.3%; 2007, 19.1%; 2008, -2.5%;
2009, -23.4%; and 2010, 11.6%. While historically, CalPERS investment earnings have funded 65-85%
of pension costs, recent investment losses will reduce this percentage for the future. The City does
have its own Retirement Stabilization Fund to set aside funds for use in times of high retirement
rates and has used these funds to offset rate increases. The City is negotiating with all bargaining
units to implement a second tier for retirement benefits due to the high rates for the current plans.
Significant expenditures from the Insurance Fund continue for the ongoing MacPherson Oil lawsuit.
See the Notes to the Financial Statements for a complete history of this lawsuit.
Proposition 1A (passed in November 2004), provided some protection for local government in that
funds may only be borrowed twice in a 10 year period and only if previous loans have been repaid.
In September 2009, the State enacted the second borrowing, with the first occurring in 2004. For this
recent borrowing, at least the legislature provided a mechanism for local government to be
reimbursed through a no-cost securitization of the amounts owed by the State to local government.
Proposition 22, passed by voters in November 2010, further protects local government funds by
preventing the state from borrowing property tax, motor vehicle fuel tax, Proposition 42 sales tax on
gasoline and the public transportation account. The State of California’s structural deficit, however,
is still a source of great concern for local government.
14
In balancing the budget for 2009-10, seven positions were left vacant, various line items such as
overtime and contract services were reduced and the life of all vehicles was extended to reduce
vehicle charges. For 2010-11, the vacant positions grew to fourteen, Fire Department minimum-
manning was reduced from six per shift to five, special events were dropped from the budget,
vehicle lives were extended another year, some parking rates were increased and parking lots were
converted to metered parking to increase revenue. With retirement rates increasing substantially in
2011-12 and an uncertain economy continuing, the 2011-12 budget will once again be a challenge to
prepare. While some revenue is flat rather than declining, we can not expect revenue to return to
levels achieved prior to the “great recession” of the past few years.
Hermosa Beach has no debt and therefore has no adverse affects in this area.
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.
BASIC FINANCIAL STATEMENTS
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16
GOVERNMENT-WIDE FINANCIAL STATEMENTS
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18
City of Hermosa Beach
Statement of Net Assets
June 30, 2010
Governmental Business-Type
Activities Activities Total
Current assets:
Cash and investments 22,144,316$ 426,751$ 22,571,067$
Property taxes receivable 432,307 - 432,307
Reimbursable grants receivable 1,238,310 - 1,238,310
Interest receivable on investments 39,841 1,789 41,630
Other accounts receivable 1,146,031 13,674 1,159,705
Internal balances 1,218,445 (1,218,445) -
Deposits 140,000 - 140,000
Other assets 269,085 - 269,085
Total current assets 26,628,335 (776,231) 25,852,104
Noncurrent assets:
Capital assets:
Non-depreciable 18,124,458 5,188,092 23,312,550
Depreciable, net 38,475,133 4,738,769 43,213,902
Total capital assets, net 56,599,591 9,926,861 66,526,452
Total noncurrent assets 56,599,591 9,926,861 66,526,452
Total assets 83,227,926 9,150,630 92,378,556
Current liabilities:
Accounts payable and accrued liabilities 1,969,968 239,873 2,209,841
Accrued wages and benefits payable 2,061,576 12,755 2,074,331
Refundable deposits 409,128 27,012 436,140
Unearned revenue 294,402 18,780 313,182
Other liabilities 78,365 - 78,365
Workers' compensation claims payable - due within one year 573,037 - 573,037
General liability claims payable - due within one year 407,146 - 407,146
Compensated absences - due within one year 594,761 - 594,761
Total current liabilities 6,388,383 298,420 6,686,803
Noncurrent liabilities:
Workers' compensation claims payable 3,644,410 - 3,644,410
General liability claims payable 714,504 - 714,504
Compensated absences 594,286 - 594,286
Total noncurrent liabilities 4,953,200 - 4,953,200
Total liabilities 11,341,583 298,420 11,640,003
Invested in capital assets 56,599,591 9,926,861 66,526,452
Restricted for:
Capital projects 237,482 - 237,482
Street and sewer purposes 930,157 - 930,157
Transportation purposes 2,468,569 - 2,468,569
Public safety 494,522 - 494,522
Other purposes 382,058 - 382,058
Total restricted assets 4,512,788 - 4,512,788
Unrestricted 10,773,964 (1,074,651) 9,699,313
Total net assets 71,886,343$ 8,852,210$ 80,738,553$
See accompanying Notes to Basic Financial Statements.
NET ASSETS
Primary Government
ASSETS
LIABILITIES
19
City of Hermosa Beach
Statement of Activities and Changes in Net Assets
For the year ended June 30, 2010
Charges Operating Capital Total
for Grants and Grants and Program
Functions/Programs Expenses Services Contributions Contributions Revenues
Primary government:
Governmental activities:
Legislative and legal 980,157$ -$ -$ -$ -$
General government 2,409,611 543,259 25,069 - 568,328
Public safety 17,841,984 4,674,410 142,021 77,314 4,893,745
Community development 1,243,490 650,962 9,088 - 660,050
Culture and recreation 1,252,037 856,135 15,000 - 871,135
Public works 7,823,275 840,740 352,353 1,740,324 2,933,417
Total governmental activities 31,550,554 7,565,506 543,531 1,817,638 9,926,675
Business-type activities:
Downtown enhancement 997,138 1,026,185 - - 1,026,185
Total business-type activities 997,138 1,026,185 - - 1,026,185
Total primary government 32,547,692$ 8,591,691$ 543,531$ 1,817,638$ 10,952,860$
General Revenues:
Taxes:
Property taxes
Sale taxes
Real property transfer tax
Franchise fees
Transient occupancy tax
Business license
Utility users tax
½ cent sales tax for public safety
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
See accompanying Notes to Basic Financial Statements.
Program Revenues
20
Governmental Business-type
Activities Activities Total
(980,157)$ -$ (980,157)$
(1,841,283) - (1,841,283)
(12,948,239) - (12,948,239)
(583,440) - (583,440)
(380,902) - (380,902)
(4,889,858) - (4,889,858)
(21,623,879) - (21,623,879)
- 29,047 29,047
- 29,047 29,047
(21,623,879) 29,047 (21,594,832)
11,407,964 - 11,407,964
2,112,971 - 2,112,971
162,562 - 162,562
650,115 - 650,115
1,559,048 - 1,559,048
863,781 - 863,781
2,559,369 - 2,559,369
168,103 - 168,103
19,483,913 - 19,483,913
1,242,064 - 1,242,064
135,423 5,609 141,032
473,559 1,550 475,109
4,356 (4,356) -
21,339,315 2,803 21,342,118
(284,564) 31,850 (252,714)
72,170,907 8,820,360 80,991,267
71,886,343$ 8,852,210$ 80,738,553$
Net (Expense) Revenue and
Changes in Net Assets
21
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22
FUND FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
23
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24
GOVERNMENTAL FUND FINANCIAL STATEMENTS
25
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26
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.
Grants Special Revenue Fund - The Grants Fund is used to account for State and Federal grants for specific
projects and for smaller grants from miscellaneous sources.
Contingency Special Revenue Fund - "Rainy day" funds set aside for unforeseen emergencies, unexpected
economic events, etc. City Council adopted goal is 15% of appropriations.
Other Governmental Funds - Other Governmental Funds is the aggregate of all the non-major governmental
funds.
27
City of Hermosa Beach
Balance Sheet
Governmental Funds
June 30, 2010
Contingency Other
Special Governmental
General Grants Revenue Funds Total
ASSETS
Cash and investments 2,482,105$ -$ 3,404,009$ 6,288,739$ 12,174,853$
Property taxes receivable 432,307 - - - 432,307
Reimbursable grants receivable - 1,142,145 - 96,165 1,238,310
Interest receivable on investments 10,686 - 9,623 19,532 39,841
Other accounts receivable 956,604 - - 141,623 1,098,227
Other assets 168,097 - - - 168,097
Due from other funds - - - 679,712 679,712
Advances to other funds - - 237,482 - 237,482
Total assets 4,049,799$ 1,142,145$ 3,651,114$ 7,225,771$ 16,068,829$
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable and accrued liabilities 600,366$ 533,796$ -$ 712,898$ 1,847,060$
Accrued wages and benefits payable 1,967,107 - - 66,986 2,034,093
Refundable deposits 409,128 - - - 409,128
Deferred revenue 294,402 - - - 294,402
Due to other funds - 583,562 - 96,150 679,712
Other liabilities 78,365 - - - 78,365
Total liabilities 3,349,368 1,117,358 - 876,034 5,342,760
Fund Balances:
Reserved for:
Re-appropriations 392,834 9,382 - 2,486,407 2,888,623
Greenwald Theatre Improv Donation 45,000 - - - 45,000
Capital Outlay/Parking Facilities 9,592 - - - 9,592
Bike paths - - - 19,758 19,758
Traffic congestion relief - - - 302,788 302,788
In-lieu fees for street pavement - - - 4,225 4,225
Storage lot purchase loan - - 237,482 - 237,482
Unreserved, designated for:
Sales tax in-lieu 161,351 - - - 161,351
Affordable housing 41,831 - - - 41,831
General plant maintenance fees 23,709 - - - 23,709
Beach Plaza for community events 10,000 - - - 10,000
Clark building future renovations 1,000 - - - 1,000
Verizon PEG grant 15,114 - - - 15,114
Justice and treasury department - - - 68,878 68,878
Unreserved, undesignated:
Special revenue - 15,405 3,413,632 3,467,681 6,896,718
Total fund balances 700,431 24,787 3,651,114 6,349,737 10,726,069
Total liabilities and fund balances 4,049,799$ 1,142,145$ 3,651,114$ 7,225,771$ 16,068,829$
See accompanying Notes to Basic Financial Statements.
Major Funds
28
City of Hermosa Beach
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Assets
June 30, 2010
Total Fund Balances - Total Governmental Funds 10,726,069$
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.
Governmental-
Wide Statement
of Net Assets
Internal Service
Funds
Non-depreciable 18,124,458$ (356,869)$ 17,767,589
Depreciable, net 38,475,133 (1,829,019) 36,646,114
Total capital assets 56,599,591$ (2,185,888)$ 54,413,703
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 2,248,455
Equipment Replacement Fund 5,687,163
Total internal service funds 7,935,618
Compensated absences were not due and payable in the current period. Therefore,
they were not reported in the Governmental Funds Balance Sheet.(1,189,047)
Net Assets of Governmental Activities 71,886,343$
See accompanying Notes to Basic Financial Statements.
29
City of Hermosa Beach
Statement of Revenues, Expenditures and Changes in Fund Balances
Governmental Funds
For the year ended June 30, 2010
Contingency Other
Special Governmental
General Grants Revenue Funds Total
REVENUES:
Property taxes 11,407,964$ -$ -$ 455,882$ 11,863,846$
Other taxes 8,075,947 - - 685,041 8,760,988
Licenses and permits 556,737 - - - 556,737
Fines and forfeitures 2,040,336 - - 35,423 2,075,759
Use of money and property 309,946 - - 312,900 622,846
Intergovernmental 164,496 1,816,753 - 670,708 2,651,957
Charges for services 3,998,342 - - 82,108 4,080,450
Miscellaneous 314,113 15,000 - (27,934) 301,179
Interest earned on investments 16,033 - 37,551 81,839 135,423 Total revenues 26,883,914 1,831,753 37,551 2,295,967 31,049,185
EXPENDITURES:
Current:
Legislative and legal 976,862 - - - 976,862
General government 2,205,661 - - 145,031 2,350,692
Public safety 17,065,312 102,920 - 83,454 17,251,686
Community development 1,198,904 - - 31,005 1,229,909
Culture and recreation 1,170,057 - - 31,000 1,201,057
Public works 2,871,141 8,189 - 1,279,615 4,158,945
Capital outlay 4,237 1,698,687 - 2,473,642 4,176,566
Total expenditures 25,492,174 1,809,796 - 4,043,747 31,345,717
REVENUES OVER
(UNDER) EXPENDITURES 1,391,740 21,957 37,551 (1,747,780) (296,532)
OTHER FINANCING SOURCES (USES):
Transfers in 699,726 - 755 1,616,517 2,316,998
Transfers out (2,052,288) - (265,590) (676,034) (2,993,912)
Total other financing sources (uses)(1,352,562) - (264,835) 940,483 (676,914)
Net change in fund balances 39,178 21,957 (227,284) (807,297) (973,446)
FUND BALANCES:
Beginning of year 661,253 2,830 3,878,398 7,157,034 11,699,515 End of year 700,431$ 24,787$ 3,651,114$ 6,349,737$ 10,726,069$
See accompanying Notes to Basic Financial Statements.
Major Funds
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, 2010
Net Change in Fund Balances - Total Governmental Funds (973,446)$
Governmental Activities in the Statement of Activities were reported differently because:
Governmental Funds report capital outlay as expenditures. However, in the Government-Wide Statement of
Activities and Changes in Net Assets, the cost of those assets is allocated over their estimated useful lives as
depreciation expense. This is the amount of capital assets recorded in the current period.
Total capital outlay expenditures reported in governmental funds 4,176,566
Less repair and maintenance expenditures reported in public works (1,440,860)
Total 2,735,706
The net effect of various miscellaneous adjustment involving capital assets.4,542
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 $418,029 which are reported below.
Total depreciation reported in Government-Wide Statement of Activities (2,865,761)
Less depreciation reported in Internal Service Funds 418,029
Total (2,447,732)
Compensated absences were reported in the Government-Wide Statement of Activities and Changes in Net
Assets, but they did not require the use of current financial resources. Therefore, compensated absences were
not reported as expenditures in governmental funds.(261,211)
Internal Service Funds are used by management to charge the costs of certain activities, such as insurance and
equipment replacement, to individual funds. The net revenue of the Internal Service Funds is reported with
Governmental Activities.657,577
Change in Net Assets of Governmental Activities (284,564)$
-
See accompanying Notes to Basic Financial Statements.
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PROPRIETARY FUND FINANCIAL STATEMENTS
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34
PROPRIETARY FUND FINANCIAL STATEMENTS
Downtown Enhancement Fund - All parking lot revenues are deposited to the Downtown Enhancement Fund in
order to promote business in general and improve the appearance of the downtown area.
35
City of Hermosa Beach
Statement of Net Assets
Proprietary Funds
June 30, 2010
Major Governmental
Enterprise Fund Activities
Downtown Internal
Enhancement Service Funds
Current assets:
Cash and investments 426,751$ 9,969,463$
Interest receivable on investments 1,789 -
Other accounts receivable 13,674 47,804
Advances to other funds - 980,963
Deposits - 140,000
Other assets - 100,988
Total current assets 442,214 11,239,218
Noncurrent assets:
Nondepreciable capital assets 5,188,092 356,869
Depreciable capital assets, net of accumulated depreciation 4,738,769 1,829,019
Total noncurrent assets 9,926,861 2,185,888
Total assets 10,369,075 13,425,106
Current liabilities:
Accounts payable 239,873 122,908
Accrued wages and benefits payable 12,755 27,483
Refundable deposit 27,012 -
Advances from other funds 1,218,445 -
Unearned revenue 18,780 -
Current portion of long-term liabilities - 980,183
Total current liabilities 1,516,865 1,130,574
Long-term liabilities:
Workers' compensation claims payable - 4,217,447
General liability claims payable - 1,121,650
Less current portion above - (980,183)
Total long-term liabilities - 4,358,914
Total liabilities 1,516,865 5,489,488
Investment in capital assets 9,926,861 2,185,888
Reserved:
Re-appropriations - -
Unrestricted (1,074,651) 5,749,730
Total net assets 8,852,210$ 7,935,618$
See accompanying Notes to Basic Financial Statements
LIABILITIES
ASSETS
NET ASSETS
36
City of Hermosa Beach
Statement of Revenues, Expenses and Changes in Net Assets
Proprietary Funds
For the year ended June 30, 2010
Major Governmental
Enterprise Fund Activities
Downtown Internal
Enhancement Service Funds
OPERATING REVENUES:
Lease revenues 251,391$ -$
Charges for services 774,794 3,722,724
Miscellaneous revenue 1,550 207,449
Total operating revenues 1,027,735 3,930,173
OPERATING EXPENSES:
Salaries and wages 67,185 255,464
Contractor services 553,185 1,852,102
Reimbursement agreement with Los Angeles County 156,353 -
Supplies 90,056 211,191
Claims expense - 1,224,345
Depreciation 130,359 418,029
Total operating expenses 997,138 3,961,131
OPERATING INCOME (LOSS)30,597 (30,958)
NONOPERATING REVENUES (EXPENSES):
Interest earned on investments 5,609 -
Gain on disposal of capital assets - 2,265
Total nonoperating revenues (expenses)5,609 2,265
INCOME (LOSS) BEFORE CONTRIBUTION AND TRANSFERS 36,206 (28,693)
Contribution - 5,000
Transfers in - 1,608,542
Transfers out (4,356) (927,272)
Total contribution and transfers (4,356) 686,270
Change in net assets 31,850 657,577
NET ASSETS:
Beginning of the year 8,820,360 7,278,041 End of the year 8,852,210$ 7,935,618$
See accompanying Notes to Basic Financial Statements.
37
City of Hermosa Beach
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2010
Major Governmental
Enterprise Fund Activities
Downtown Internal
Enhancement Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers 1,042,380$ -$
Cash received for services from other funds - 3,721,199
Cash payments to suppliers for goods and services (765,637) (2,285,979)
Cash payments to employees for services (67,471) (256,774)
Insurance premiums and settlements - (714,330)
Net cash provided by (used for) operating activities 209,272 464,116
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Contribution - 5,000
Transfers in - 1,608,542
Transfers out (4,356) (927,272)
Net cash provided by (used for) noncapital financing activities (4,356) 686,270
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Repayment of advances from other funds (193,397) -
Cash Receipts from advances to other funds - 128,931
Acquisition of capital assets - (305,512)
Proceed from sale of capital assets - 2,265
Net cash provided by (used for) capital and related financing activities (193,397) (174,316)
CASH FLOWS FROM INVESTING ACTIVITIES:
Interest receivable on investments 7,382 -
Net cash provided by (used for) investing activities 7,382 -
Net increase (decrease) in cash and cash equivalents 18,901 976,070
CASH AND CASH EQUIVALENTS:
Beginning of year 407,850 8,993,393
End of year 426,751$ 9,969,463$
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Operating income (loss)30,597$ (30,958)$
Adjustments to reconcile operating income (loss) to
net cash provided (used) by operating activities:
Depreciation 130,359 418,029
Changes in operating assets and liabilities:
Other accounts receivable (4,135) (1,525)
Other assets - (7,955)
Accounts payable 33,957 (214,731)
Accrued wages (286) (1,310)
Unearned revenue 18,780 -
Worker's compensation claims payable - 485,408
General liability claims payable - (182,842)
Total adjustments 178,675 495,074
Net cash provided by (used for) operating activities 209,272$ 464,116$
See accompanying Notes to Basic Financial Statements.
38
FIDUCIARY FUND FINANCIAL STATEMENTS
39
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40
FIDUCIARY FUND FINANCIAL STATEMENTS
Agency Funds are used to account for assets held by the City in the capacity of agent for individuals. Agency
Fund spending is controlled primarily through legal agreements and applicable State and Federal laws.
41
City of Hermosa Beach
Statement of Fiduciary Net Assets
Fiduciary Funds
June 30, 2010
Agency
Funds
Cash and investments 467,628$
Interest receivable 1,344
Other accounts receivable 18,375
487,347$
Assessment:
Installment account 470,489$
Reserve requirement 16,858
487,347$
See accompanying Notes to Basic Financial Statements.
NET ASSETS
Total assets
Total liabilities
ASSETS
LIABILITIES
42
City of Hermosa Beach
Index to Notes to Basic Financial Statements
For the year ended June 30, 2010
43
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 ................................................................................................................. 49
E. Property Tax Receivable ............................................................................................................. 50
F. Interfund Transactions ................................................................................................................ 50
G. Capital Assets ............................................................................................................................... 50
H. Claims Payable ............................................................................................................................. 51
I. Compensated Absences Payable ............................................................................................... 51
J. Unearned and Deferred Revenue .............................................................................................. 52
K. Long-Term Debt ........................................................................................................................... 52
L. Net Assets ..................................................................................................................................... 52
M. Fund Balances .............................................................................................................................. 53
N. Use of Estimates ........................................................................................................................... 53
Note 2 - Cash and Investments ....................................................................................................................... 53
Note 3 - Receivables .......................................................................................................................................... 57
Note 4 - Lease Revenues ................................................................................................................................... 59
Note 5 - Interfund Transactions ...................................................................................................................... 60
Note 6 - Capital Assets ...................................................................................................................................... 62
Note 7 - Long-Term Debt ................................................................................................................................. 65
Note 8 - Other Required Fund Disclosures .................................................................................................. 68
Note 9 - Risk Management .............................................................................................................................. 68
Note 10 -Retirement Plans ............................................................................................................................... 70
Note 11 - Commitments and Contingencies ................................................................................................. 74
Note 12 – Proposition 1A Borrowing by the State of California .............................................................. 75
Note 13 – Macpherson Oil Project Litigation ............................................................................................... 75
44
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City of Hermosa Beach
Notes to Basic Financial Statements
For the year ended June 30, 2010
45
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 Board (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 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.
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. Each
blended component unit has a June 30 year-end. 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 Sections 22500-
22679.
Myrtle Underground Utility District Improvement Fund
This fund was used to account for the funds of the utility underground assessment district, which was
created in October 1999 pursuant to Street and Highway Code Section 10000. The fund was closed out
in 2009-10 because the project is complete.
Bayview Drive Underground District Improvement Fund
This fund was used to account for the funds of the utility underground assessment district, which was
created in February 2005 pursuant to Street and Highway Code Section 10000. The fund was closed out
in 2009-10 because the project is complete.
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 Section 10000. The fund was closed out in
2009-10 because the project is complete.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
46
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for in a separate set of self-balancing accounts
that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses, as appropriate.
City resources are allocated to and accounted for in individual funds based upon the purpose for which
they are to be spent and the means by which spending activities are controlled.
Government - Wide Financial Statements
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 in regards to interfund activities, payables and receivables. All
internal balances in the Statement of Net Assets have been eliminated except those representing balances
between the governmental activities and the business-type activities, which are presented as internal
balances and eliminated in the total primary government column. In the Statement of Activities, internal
service fund transactions have been eliminated because their expenses are reported a second time as
expenditures/expenses in the funds that are billed for the goods or services they provide. However,
transactions between governmental and business-type activities have not been eliminated. The following
interfund activities, if applicable, have been eliminated:
Due to/from other funds - short-term loans within the primary government
Advances to/from other funds - long-term loans within the primary government
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 and proprietary funds, 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.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
47
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Governmental Fund Financial Statements, Continued
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.
The City has presented all major funds that met those qualifications. 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.
Grants Special Revenue Fund. This fund is used to account for State and Federal grants for specific
projects and for smaller grants from miscellaneous sources.
Contingency Special Revenue Fund. This fund accounts for “Rainy Day” funds set aside for unforeseen
emergencies, unexpected economic events, etc.
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.
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. Beginning in 2004-05, the State took sales tax revenue (Sales Tax In
Lieu) from cities and counties, 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 2010. 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,
except at year-end when they are accrued pursuant to the modified accrual basis of accounting. The City
recognizes business license revenue collected within 60 days as revenue at June 30.
Expenditures are recorded in the accounting period in which the related fund liability is incurred.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
48
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Governmental Fund Financial Statements, Continued
Deferred 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 deferred 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 fund:
Downtown Enhancement Fund. This fund accounts for downtown parking lot and parking structure
operations and expenses related to the promotion of business in general.
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, if applicable.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
49
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
B. Basis of Accounting and Measurement Focus, Continued
Fiduciary Fund Financial Statements
Fiduciary Fund Financial Statements include a Statement of Net Assets. The City’s Fiduciary funds
represent Agency Funds, which are custodial in nature (assets equal liabilities) and do not involve
measurement of results of operations. Fiduciary fund types are accounted for according to the nature of
the fund. Funds held as fiduciary funds represent assets resulting from assessments to the property
owners in 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.
C. Use of Restricted/Unrestricted Net Assets
When both restricted and unrestricted net assets are available for an expense item, the City’s policy is to
apply restricted net assets first.
D. Cash and Investments
The City pools cash resources of its various funds to facilitate cash management. Cash in excess of current
requirements is invested and reported as investments. It is the City’s intent to hold investments until
maturity. However, the City may, in response to market conditions, sell investments prior to maturity in
order to improve the quality, liquidity or yield of the portfolio. Interest earnings are apportioned among
funds based on ending accounting period cash and investment balances.
The City’s cash and cash equivalent 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.
Highly liquid market investments with maturities of one year or less at time of purchase are stated at
amortized cost. All other investments are stated at fair value. Market value is used as fair value for those
securities for which market quotations are readily available.
The City participates in the Local Agency Investment Fund (LAIF), an investment pool managed by the
State of California. LAIF has invested a portion of the pool funds in Structured Notes and Asset-Backed
Securities. LAIF’s investments are subject to credit risk with the full faith and credit of the State of
California collateralizing these investments. In addition, these Structured Notes and Asset-Backed
Securities are subject to market risk as a result of changes in interest rates.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
50
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
E. Property Tax Receivable
Property taxes attach as an enforceable lien on property as of July 1 each year. Taxes are levied on January
1 and are payable in two installments: December 10 and April 10 of each year. The County of Los Angeles,
California (County) bills and collects the property taxes and remits them to the City according to a payment
schedule established by the County. City property tax revenues are recognized when received in cash
except at year-end when they are accrued pursuant to the modified accrual basis of accounting. The City
recognizes available taxes or those collected within 60 days as revenue at June 30.
The County is permitted by State law to levy taxes at 1% of full market value (at time of purchase) and can
increase the assessed valuation no more than 2% per year. The City receives a share of this basic levy, or
.203 cents of each $1.00, 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.”
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 capital assets are valued at their
estimated fair value on the date donated. City policy has set the capitalization 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.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
51
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
G. Capital Assets, Continued
The City defines infrastructure as the basic physical assets that allow the City to function. The assets
include streets, sewers and storm drains, parking meters and monuments. Each major infrastructure
system can be divided into subsystems. For example the street system can be subdivided into pavement,
curb and gutters, sidewalks, medians, streetlights and landscaping. These subsystems were not delineated
in the basic financial statements. The Finance Department, with the assistance of the appropriate operating
department, maintains information regarding the subsystems.
Interest accrued during capital assets construction, if any, is capitalized for the business-type and
proprietary funds as part of the asset cost.
For all infrastructure systems, the City elected to use the Basic Approach as defined by GASB Statement
No. 34 for infrastructure reporting. Under the Basic Approach, the City reports depreciation in connection
with infrastructure systems. The City commissioned an appraisal of City owned infrastructure and
property as of June 30, 2003. This appraisal determined the original cost, which is defined as the actual cost
to acquire new property in accordance with market prices at the time of first construction/acquisition.
Original costs were developed in one of three ways: (1) historical records; (2) standard unit costs
appropriate for the construction/acquisition date; or (3) present cost indexed by a reciprocal factor of the
price increase from the construction/acquisition date to the current date. The accumulated depreciation,
defined as the total depreciation from the date of construction/acquisition to the current date on a straight
line, unrecovered cost method was computed using industry-accepted life expectancies for each
infrastructure subsystem. The book value was then computed by deducting the accumulated depreciation
from the original cost.
H. Claims Payable
The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general
liability claims (including property damage claims) and workers’ compensation claims. The estimated
liability for workers’ compensation claims and general liability claims includes “incurred but not reported”
(IBNR) claims. There is no fixed payment schedule to pay these liabilities.
I. 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 all or 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 “Fund Balances Policies,” the City’s goal is to accumulate
funding in the Compensated Absences Fund for 25% of the accrued liability for compensated absences.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
52
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
J. 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.
L. Net Assets
Government-Wide Financial Statements
In the government-wide financial statements, net assets are reported in one of three categories:
Invested in Capital Assets - This amount consists of capital assets net of accumulated depreciation.
Restricted Net Assets - This amount is restricted by external creditors, grantors, contributors, or laws or
regulations of other governments.
Unrestricted Net Assets - This amount represents remaining net assets that do not meet the definition of
“invested in capital assets” or “restricted net assets.”
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
53
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
M. Fund Balances
In 2001 - 2002, the City established financial goals for the following funds:
Contingency Fund - Goal of fund balance equals to 15% of the General Fund operating budget
appropriations for economic uncertainties, unforeseen emergencies.
Insurance Fund - Goal of $3,000,000 in net assets for claims reserves and catastrophic losses.
Equipment Replacement Fund - Goal of net assets equals to the accumulated amount calculated for all
equipment, based on replacement cost and useful life of equipment.
Compensated Absences Fund - Goal of fund balance equals to 50% funding for accrued liabilities for
employee vacation, sick and compensatory time. In 2005-2006, the goal for this fund was changed to
25% 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.
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.
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. The City had the following cash and investments at June 30, 2010:
Fiduciary Funds
Governmental Business-type Statement of
activities activities Total Net Assets Total
Cash and investments 22,144,316$ 426,751$ 22,571,067$ 467,628$ 23,038,695$
Government-Wide Statement of Net Assets
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
54
2. CASH AND INVESTMENTS, Continued
The City’s cash and investments at June 30 in more detail:
Fair value
City Treasury
Cash deposits
Demand accounts 992,607$
Petty cash 1,900
Investments
Local Agency Investment Fund 20,525,118
U.S. government notes 1,519,070
Total investments 22,044,188
Total cash and investments 23,038,695$
A. Cash Deposits
The carrying amounts of the City’s cash deposits were $992,607 at June 30, 2010. Bank balances at June 30,
2010, were $1,133,558 which were fully insured or 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 $250,000 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.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
55
2. CASH AND INVESTMENTS, Continued
B. Investments
The City’s investment policy is more restrictive than the State’s, by design. Under the provisions of the
City’s investment policy, and in accordance with California Government Code, the investments below are
authorized.
US Treasury Bills and US Treasury Notes
US Government Sponsored Enterprise Securities
Banker’s Acceptances
Time Certificates of Deposits
Negotiable Certificates of Deposit
California Local Agency Investment Fund
Corporate Medium-Term Notes
Los Angeles County Pooled Investment Fund
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 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, 2010, amounted to an unrealized decrease of $2,795.
The City’s investments with the Local Agency Investment Fund (LAIF), the State of California’s investment
pool, at June 30, 2010, included a portion of the pooled funds invested in Structured Notes and Asset-
Backed Securities. These investments included the following:
Structured Notes, which are debt securities (other than asset-backed securities) whose cash flow
characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices
and/or that have embedded forwards or options.
Asset-Backed Securities, the bulk of which are mortgage-backed securities, and which entitle their
purchasers to receive a share of the cash flows from a pool of assets such as principal and interest
repayments from a pool of mortgages, such as collateralized mortgage obligations (CMO’s), or credit
card receivables.
As of June 30, 2010, the City had $20,525,118 invested in LAIF. 5.42% of pool investment funds were
invested in Structured Notes and Asset-Backed Securities.
The City valued its investments in LAIF as of June 30, 2010 by multiplying its account balance with LAIF by
a fair value factor determined by LAIF. This fair value factor was determined by dividing all LAIF
participants’ total aggregate fair value by total aggregate amortized cost resulting in a factor of 1.001643776.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
56
2. CASH AND INVESTMENTS, Continued
C. Risk Disclosures
Interest Rate Risk - As a means of limiting its exposure to fair value losses arising from rising interest rates,
the City’s investment policy limits investments to a maximum maturity of five years. At June 30, 2010, the
City had the following investment maturities:
Investment Type Fair value Less than 1 1 to 2
Federal Home Loan Banks 502,970$ 502,970$ -$
Federal Home Loan Mortgage Corporate Notes 501,725 - 501,725
Federal Farm Credit Bank 514,375 514,375 -
Local Agency Investment Fund 20,525,118 20,525,118 -
Total 22,044,188$ 21,542,463$ 501,725$
Investment maturities (in years)
Custodial Risk – For deposits, custodial credit risk is the risk that, in the event of the failure of a deposit
financial institution, a government will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The City’s investment policy requires
that all securities purchased from brokers/dealers shall be held in third party safekeeping. All Treasury
bills and most other Treasury securities are “book entry” securities that are held at the Federal Reserve
Union Bank of California. Collateral for time deposits in banks, savings and loans are held by the Federal
Home Loan Bank or an approved agency of depository of the financial institution. The City’s investment
policy does not contain legal or policy requirements that would limit the exposure to custodial credit risk
for deposits or investments, other than the provision for deposits stated in Note 2A. $883,558 of the City’s
deposits with financial institutions in excess of federal depository insurance limits was held in
collateralized accounts.
Credit Risk – The City’s investment policy recognizes the risk of potential loss of principal, interest or a
combination of these amounts on investments. As such, the policy allows for investments only in
instruments that are considered very safe. The City’s investments are rated by the nationally recognized
statistical rating organizations as follows:
Standard
Moody's & Poor's
U.S. Agencies
Federal Home Loan Banks Aaa AAA
Federal Home Loan Mortgage Corporate Notes Aaae AAAe
Federal Farm Credit Bank Aaa AAA
External Pool
State of California - Local Agency Investment Fund Not Rated Not Rated
Concentration of credit risk – The City’s investment policy does not allow for investments in Time Certificates
of Deposits and Negotiable Certificates of Deposits in any one institution that is in excess of 5% of the
government’s total portfolio. The City’s investment policy also does not allow more than 5% of the City’s
surplus fund be invested in the Banker’s Acceptance of any one commercial bank. The City is in
compliance with the investment policy related to the concentration of credit risk for the year ended June 30,
2010.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
57
3. RECEIVABLES
Government-Wide Financial Statements
At June 30, 2010, the Government-Wide Financial Statements show the following miscellaneous receivables
net of allowances for uncollectible amounts, if any:
Fiduciary Funds
Governmental Business-type Statement of
activities activities Net Assets Total
Accounts 1,146,031$ 13,674$ 18,375$ 1,178,080$
Taxes 432,307 - - 432,307
Interest 39,841 1,789 1,344 42,974
Grants 1,238,310 - - 1,238,310
Total 2,856,489$ 15,463$ 19,719$ 2,891,671$
Government-Wide
Statement of Net Assets
Fund Financial Statements
At June 30, 2010, the Fund Financial Statements show the following receivables:
A. Accounts Receivable
Accounts receivable consisted of amounts accrued in the ordinary course of operations. The total amount
of accounts receivable for each major and non-major fund in the aggregate as of June 30, 2010, were as
follows:
Governmental funds:
General Fund 956,604$
Non-major Funds 141,623
Internal Service funds 47,804
Total governmental funds 1,146,031
Enterprise fund:
Downtown Enhancement Fund 13,674
Total Enterprise fund 13,674
Total 1,159,705
Agency funds 18,375
Total account receivable 1,178,080$
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
58
3. RECEIVABLES, Continued
B. Taxes Receivable
At June 30, 2010, the City had property taxes receivable, net of allowance for delinquent property taxes
receivables, in the following major funds and non-major funds in the aggregate:
Allowance for Property
Property delinquent tax taxes, net
taxes receivables of allowance
Governmental Funds:
General Fund 1,552,085$ (1,119,778)$ 432,307$
Non-major funds 20,949 (20,949) -
Total 1,573,034$ (1,140,727)$ 432,307$
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, 2010, was as follows:
City pooled
investments
Governmental funds:
General Fund 10,686$
Contingency Fund 9,623
Non-major Funds 19,532
Total governmental funds 39,841
Enterprise fund:
Downtown Enhancement Fund 1,789
Total Enterprise fund 1,789
Total 41,630
Agency funds 1,344
Total interest receivable 42,974$
D. Reimbursable Grants Receivable
Grants receivable consists of a variety of reimbursable grants from other agencies. The total amount of
reimbursable grants for each major and non-major funds in the aggregate as of June 30, 2010 were as
follows:
Governmental Funds:
Grants Fund 1,142,145$
Non-major funds 96,165
Total governmental funds 1,238,310$
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
59
4. LEASE REVENUES
In January 2000, the North Pier Parking Structure was completed. The parking structure contains 400
parking spaces and was funded in part by a downtown developer in exchange for the use of 100 spaces in
the structure. The remainder of the funding was provided by the City’s Downtown Enhancement Fund
and Prop A Open Space funding contributed by the Los Angeles County Department of Beaches and
Harbors. In consideration of the County contribution, 50% of the annual net income derived from the
parking structure must be shared with the County each year by September 1. The payment to the County
for fiscal year 2009-2010 is $156,353.
In February 2001, a 50 year lease for the retail space located in front of the North Pier Parking Structure was
initiated. The City receives a monthly lease payment in the amount of $2,376. The lease includes a
negotiated increase to the monthly lease payment to be calculated every 60 months based on the consumer
price index. The next increase is due in January 2011.
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 lease includes a provision for 5 lease
extensions with a 5 year term for each. In February 2009, the lease was extended through January 31, 2014.
The City receives a monthly lease payment in the amount of $2,499.
In June 2005, the City purchased property adjacent to City Hall that is used as a self-storage facility. The
existing lease for the storage facility was transferred to the City as a condition of the sale. The original lease
term was through January 31, 2009, however the lease was extended for 3 years beginning February 1, 2009.
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 $16,116.
The City leases a portion of the Hermosa Beach Community Center to nonprofit and cultural organizations.
The leases are renegotiated annually.
All of the above leases are accounted for as operating leases by the City. The future minimum rental
revenues under these leases are as follows:
Year ending
June 30,
2011 266,575
2012 172,605
2013 60,729
2014 47,630
2015 28,512
2016-2020 142,560
2021-2025 142,560
2026-2030 142,560
2031-2035 142,560
2036-2040 142,560
2041-2045 142,560
2046-2050 142,560
2051 14,256
Total 1,588,227$
Lease revenue for fiscal year 2010 was $302,588 with $51,197 reflected in the General Fund and $251,391 in
the Downtown Enhancement Fund, an enterprise fund.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
60
5. INTERFUND TRANSACTIONS
A. Government-Wide Financial Statements
Transfers
At June 30, 2010, the City had the following transfers:
Transfers out
Business-type
activities
Governmental activities 4,356$ Transfersin
B. Fund Financial Statements
Due To/From Other Funds
The composition of due to/from other funds at June 30, 2010 is as follows:
Due to other
funds
Non-major
Governmental
Funds
Grants Fund 583,562$
Non-major governmental Funds 96,150
Total 679,712$ Due from other funds
The balance of $583,562 in the Grants Fund and $96,150 in non-major governmental funds resulted from the
time lag between the dates that reimbursable expenditures occur and payments are received from other
agencies. All balances are scheduled to be collected in the subsequent year.
Advances From/To Other Funds
At June 30, 2010, the composition of advances to other funds is as follows:
Downtown
Enhancement
Fund
Contingency Fund 237,482$
Internal Service Funds 980,963
Total 1,218,445$ Advances to other fundsAdvances from other funds
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
61
5. INTERFUND TRANSACTIONS, Continued
B. Fund Financial Statements, Continued
Advances From/To Other Funds, Continued
The balance of $237,482 and $980,963 from the Contingency Fund and Internal Service funds, respectively,
to the Downtown Enhancement Fund, represents the balance owed to these funds for the purchase of real
property. The advances will be repaid from lease proceeds from a storage facility located on the property
and unrestricted net assets available at year end.
Transfers
At June 30, 2010, the City had the following transfers:
Non-major Internal
Contingency Governmental Service
General Fund funds funds Total
General Fund -$ -$ 824,719$ 1,227,569$ 2,052,288$
Contingency Fund - - 265,590 - 265,590
Non-major
Governmental funds 395,370 755 279,909 - 676,034
Downtown Enhancement Fund 4,356 - - - 4,356
Internal Service Funds 300,000 - 246,299 380,973 927,272
Total 699,726$ 755$ 1,616,517$ 1,608,542$ 3,925,540$ Transfers inTransfers out
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, 2010, the following one-time transfers were made:
The Contingency Special Revenue Fund transferred $65,520 to the Beach Drive 2 Underground
District and $200,000 to the Prospect Utility Underground District Special Revenue funds to close
the funds because the districts will not be formed.
The Insurance Internal Service Fund made a transfer in the amount of $300,000 to the General Fund
to provide funding for employee reinstatement costs.
The Equipment Replacement Internal Service Fund transferred $380,073 to the Insurance Internal
Service Fund to provide funding for the MacPherson Oil lawsuit legal costs.
The Equipment Replacement Internal Service Fund transferred $246,299 to the Retirement
Stabilization Special Revenue Fund to provide for future retirement cost increases.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
62
6. CAPITAL ASSETS
In accordance with GASB Statement No. 34, the City reports all capital assets, including infrastructure, in
the Government-Wide Statement of Net Assets. The City elected to use the “Basic Approach” as defined by
GASB Statement No. 34 for infrastructure reporting. The basic approach records accumulated depreciation
and depreciation expense.
A. Government-Wide Financial Statements
At June 30, 2010, the City’s capital assets consisted of the following:
Government Business-Type
Activities Activities Total
Non-Depreciable Assets:
Land 17,552,077$ 5,188,092$ 22,740,169$
Construction in progress 572,381 - 572,381
Total non-depreciable assets 18,124,458 5,188,092 23,312,550
Depreciable Assets:
Buildings and structures 5,577,213 5,879,099 11,456,312
Improvements other than buildings 14,058,737 5,610 14,064,347
Machinery and equipment 3,318,869 19,267 3,338,136
Vehicles 3,274,445 - 3,274,445
Infrastructure 44,056,239 59,650 44,115,889
Total depreciable assets 70,285,503 5,963,626 76,249,129
Less accumulated depreciation for:
Buildings and structures (2,012,136) (1,203,383) (3,215,519)
Improvements other than buildings (7,463,934) (1,403) (7,465,337)
Machinery and equipment (2,219,108) (14,106) (2,233,214)
Vehicles (2,104,824) - (2,104,824)
Infrastructure (18,010,368) (5,965) (18,016,333)
Total accumulated depreciation (31,810,370) (1,224,857) (33,035,227)
Total depreciable assets, net 38,475,133 4,738,769 43,213,902
Total capital assets 56,599,591$ 9,926,861$ 66,526,452$
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
63
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, 2010:
Balance Deletions/ Balance
July 1, 2009 Additions Adjustments June 30, 2010
Capital assets not being depreciated:
Land 17,552,077$ -$ -$ 17,552,077$
Construction in progress 2,507,226 30,051 (1,964,896) 572,381
Total capital assets not being depreciated 20,059,303 30,051 (1,964,896) 18,124,458
Capital assets being depreciated:
Buildings and structures 5,327,863 249,350 - 5,577,213
Improvements other than buildings 13,257,411 801,326 - 14,058,737
Machinery and equipment 3,114,284 251,440 (46,855) 3,318,869
Vehicles 3,090,564 208,881 (25,000) 3,274,445
Infrastructure 40,591,173 3,465,066 - 44,056,239
Total capital assets being depreciated 65,381,295 4,976,063 (71,855) 70,285,503
Less accumulated depreciation for:
Buildings and structures (1,897,876) (114,260) - (2,012,136)
Improvements other than buildings (6,460,084) (1,003,850) - (7,463,934)
Machinery and equipment (1,976,223) (289,740) 46,855 (2,219,108)
Vehicles (1,859,933) (269,891) 25,000 (2,104,824)
Infrastructure (16,826,890) (1,188,020) 4,542 (18,010,368)
Total accumulated depreciation (29,021,006) (2,865,761) 76,397 (31,810,370)
Total capital assets being depreciated, net 36,360,289 2,110,302 4,542 38,475,133
Total governmental activities 56,419,592$ 2,140,353$ (1,960,354)$ 56,599,591$
The City allocated the depreciation expenses to departments/functions of the government as follows:
General government 65,417$
Public safety 143,713
Community development 7,511
Culture and recreation 51,489
Public works 991,582
Infrastructure 1,188,020
Capital assets held by the governments internal
service funds are charged to the various functions
based on their usage of the assets 418,029
Total depreciation expenses 2,865,761$
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
64
6. CAPITAL ASSETS, Continued
A. Government-Wide Financial Statements, Continued
The following is a summary of capital assets for business-type activities:
Balance Balance
July 1, 2009 Additions Deletions June 30, 2010
Capital assets not being depreciated:
Land 5,188,092$ -$ -$ 5,188,092$
Total capital assets not being depreciated 5,188,092 - - 5,188,092
Capital assets being depreciated:
Buildings and structures 5,879,099 - - 5,879,099
Improvements other than buildings 5,610 - - 5,610
Machinery and equipment 19,267 - - 19,267
Infrastructure 59,650 - - 59,650
Total capital assets, being depreciated 5,963,626 - - 5,963,626
Less accumulated depreciation for:
Buildings and structures (1,077,604) (125,779) - (1,203,383)
Improvements other than buildings (1,122) (281) - (1,403)
Machinery and equipment (12,790) (1,316) - (14,106)
Infrastructure (2,982) (2,983) - (5,965)
Total accumulated depreciation (1,094,498) (130,359) - (1,224,857)
Total capital assets being depreciated, net 4,869,128 (130,359) - 4,738,769
Total business-type activities 10,057,220$ (130,359)$ -$ 9,926,861$
Business-type activities depreciation expenses for capital assets for the year ended June 30, 2010 are as
follows:
Downtown Enhancement 130,359$
Total depreciation expense 130,359$
B. Fund Financial Statements
The fund financial statements do not present general government capital assets. They are shown in the
Reconciliation of the Governmental Funds Balances Sheet to the Government-Wide Statement of Net Assets
located after the governmental fund balance sheet in the fund financial statements.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
65
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,
2010:
Balance Balance Due in Due in more
July 1, 2009 Additions Retirements June 30, 2010 one year than one year
Governmental activities:
Compensated absences 927,836$ 1,208,632$ (947,421)$ 1,189,047$ 594,761$ 594,286$
Classification
The 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, 2010, was $1,189,047.
B. Long-Term Debt without City Commitment
At June 30, 2010, 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 $400,000 were issued for the
Lower Pier Avenue Assessment District for street and sidewalk improvements in the downtown area. The
City is not financially obligated for payments of the bonds, which are secured by private property in the
district. The bonds will be repaid from assessments to the property owners as part of their annual property
tax bill.
The annual debt service requirements by year are as follows:
Year ending Balance
June 30, Principal Interest total
2011 20,000$ 13,975$ 33,975$
2012 25,000 12,512 37,512
2013 25,000 10,888 35,888
2014 25,000 9,263 34,263
2015 30,000 7,475 37,475
2016-2018 100,000 10,075 110,075
Total 225,000$ 64,188$ 289,188$
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
66
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 $1,159,114 were issued for the
Myrtle Avenue Utility Underground Assessment District for the undergrounding of utilities within the
district. The City is not financially obligated for payment of the bonds, which are secured by private
property in the district. The bonds will be repaid from assessments to the property owners as part of their
annual property tax bill.
The annual debt service requirements by year are as follows:
Year ending Balance
June 30, Principal Interest total
2011 50,000$ 35,330$ 85,330$
2012 55,000 32,573 87,573
2013 55,000 29,630 84,630
2014 60,000 26,495 86,495
2015 65,000 23,025 88,025
2016-2020 370,000 54,555 424,555
Total 655,000$ 201,608$ 856,608$
1999 Loma Utility Underground District Special Assessment Bonds
In October 1999, limited obligation improvement bonds in the amount of $1,324,653 were issued for the
Loma Drive Utility Underground Assessment District for the undergrounding of utilities within the
district. The City is not financially obligated for payment of the bonds, which are secured by private
property in the district. The bonds will be repaid from assessments to the property owners as part of their
annual property tax bill.
The annual debt service requirements by year are as follows:
Year ending Balance
June 30, Principal Interest total
2011 55,000$ 38,578$ 93,578$
2012 55,000 35,690 90,690
2013 60,000 32,612 92,612
2014 65,000 29,205 94,205
2015 70,000 25,458 95,458
2016-2020 410,000 60,871 470,871
Total 715,000$ 222,414$ 937,414$
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
67
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 $404,341 were issued for the Beach
Drive Utility Underground Assessment District for the undergrounding of utilities within the district. The
City is not financially obligated for payment of the bonds, which are secured by private property in the
district. The bonds will be repaid from assessments to the property owners as part of their annual property
tax bill.
The annual debt service requirements by year are as follows:
Year ending Balance
June 30, Principal Interest total
2011 15,828$ 15,770$ 31,598$
2012 16,588 14,992 31,580
2013 17,385 14,177 31,562
2014 18,219 13,322 31,541
2015 19,094 12,427 31,521
2016-2020 110,126 47,123 157,249
2021-2025 139,219 17,332 156,551
336,459$ 135,143$ 471,602$
2005 Bayview Drive Utility Underground Assessment District Improvement Bonds
In February 2005, limited obligation improvement bonds in the amount of $951,667 were issued for the
Bayview Drive Utility Underground Assessment District for the undergrounding of utilities within the
district. The City is not financially obligated for payment of the bonds, which are secured by private
property in the district. The bonds will be repaid from assessments to the property owners as part of their
annual property tax bill.
The annual debt service requirements by year are as follows:
Year ending Balance
June 30, Principal Interest total
2011 31,779$ 28,392$ 60,171$
2012 33,342 27,009 60,351
2013 34,972 25,557 60,529
2014 36,670 24,035 60,705
2015 38,442 22,438 60,880
2016-2020 196,522 88,098 284,620
2021-2025 253,553 40,480 294,033
2026 58,666 1,247 59,913
Total 683,946$ 257,256$ 941,202$
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
68
8. OTHER REQUIRED FUND DISCLOSURES
A. Deficit Fund Balances
At June 30, 2010, the following fund had deficit unrestricted net assets:
Downtown Enhancement (1,074,651)$ The deficit in this fund represents advances from the Contingency Special Revenue Fund, the Insurance
Internal Service Fund and the Equipment Replacement Internal Service Fund for the purchase of property
adjacent to City Hall that is used as a storage facility. The deficit will be eliminated with future revenues
received from an operating lease on the facility.
B. Fund Closures
Seven funds were permanently closed during the fiscal year ending June 30, 2010. The Building
Improvement Special Revenue Fund was closed because building maintenance costs are now being
captured in the Equipment Replacement Internal Service Fund. The California Law Enforcement
Equipment Program Special Revenue Fund was closed because no future revenues are anticipated and the
existing funds have been depleted.
The Myrtle Utility Underground Improvement, the Bayview Drive Underground District Improvement and
the Beach Drive Underground District Special Revenue funds were closed because pursuant to Section
10427 of the California Municipal Improvement Act of 1913, the funds were deemed to be surplus funds for
the districts. To close funds, a one-time credit was processed for all outstanding assessments and refunds
were processed for those parcels that had been paid in full.
The Beach Drive 2 Underground District and the Prospect Utility Underground District Special Revenue
funds were closed because property owners no longer have an interest in forming these districts. Transfers
were made from the Contingency Special Revenue Fund to cover all costs for the projects.
C. Expenditures Exceeding Appropriations
For the year ended June 30, 2010, expenditures exceeded appropriation in the Proposition “A” Transit
Special Revenue Fund in public safety and community development functions in amount of $2,852 and
$4,856, respectively.
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 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 $20,000,000 per occurrence,
as a member of the Independent Cities Risk Management Authority (ICRMA).
The City of Hermosa Beach purchases workers’ compensation coverage through a self-insured program
available through ICRMA. The City maintains a $500,000 self-insured retention limit and participates in a
self-insured risk sharing pool through the ICRMA and the California State Association of Counties
(CSAC). Together, these two joint powers authorities provide a shared limit of coverage up to a maximum
of $200 million.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
69
9. RISK MANAGEMENT, Continued
ICRMA is a joint exercise of powers authority organized and operating pursuant to the California
Government Code. ICRMA was formed in 1980 pursuant to joint exercise of power agreements for
insurance and risk management purposes, which, as amended, enable ICRMA to provide programs of risk
sharing, insurance and risk management services in connection with liability, property, and workers’
compensation claims.
ICRMA’s annual budget is based on estimated actuarially determined member losses within the risk
sharing layer, administrative expenses and excess insurance.
The City’s premiums to ICRMA in the amount of $502,802 for the fiscal year 2009-2010 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 $5,339,097 reported at June 30, 2010, are
based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires
that a liability for claims be reported if information prior to the issuance of the financial statements
indicates that it is probable that a liability has been incurred at the date of the financial statements and the
amount of the loss can be reasonably estimated. Changes in the Fund’s claims liability amounts were as
follows:
Current Year Amounts
Beginning Claims and End Amounts Due in
of Year Changes in Claim of Year Due within More Than
Liability Estimates Payments Liability One Year One Year
Workers' Compensation
2007-2008 2,788,431$ 2,014,658$ (1,191,871)$ 3,611,218$ 538,526$ 3,072,692$
2008-2009 3,611,218 921,435 (800,614) 3,732,039 711,902 3,020,137
2009-2010 3,732,039 1,229,619 (744,211) 4,217,447 573,037 3,644,410
General Liability
2007-2008 1,109,734 1,334,987 (899,509) 1,545,212 626,436 918,776
2008-2009 1,545,212 499,302 (740,022) 1,304,492 471,313 833,179
2009-2010 1,304,492 (18,415) (164,427) 1,121,650 407,146 714,504
Detailed financial information may be obtained from the ICRMA Program Administrator located at 3780
Kilroy Airport Way, Suite 470, Long Beach, California 90806.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
70
10. RETIREMENT PLANS
A. Public Employee Retirement System
Plan Description
The City contributes to the California Public Employees Retirement System (CalPERS), a cost-sharing
multiple-employer defined benefit pension plan. CalPERS 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 CalPERS 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 $886,352 for the year ended
June 30, 2010. The City, as the employer, is required to contribute for fiscal year 2009-2010 at actuarially
determined rates which are applied to annual covered payroll. The 2009-2010 rate is 14.767% for
miscellaneous employees, 47.822% for police employees and 37.618% for fire employees. The contribution
requirements of City employees and the City employer are established and may be amended by CalPERS.
Annual Pension Cost
For fiscal year 2009-2010, the City’s annual pension cost of $3,304,797 for CalPERS was equal to the City’s
required and actual contributions, of which $820,766 is for the miscellaneous plan, $1,642,334 for the police
plan and $841,697 for the fire plan. The required contribution was originally determined as part of the June
30, 2007, actuarial valuation using the entry age normal actuarial cost method as described below.
The following actuarial assumptions, while not required, are included to provide information deemed
useful to the City Council: (a) 7.75% investment rate of return (net of administrative expenses); (b) projected
salary increases ranging from 3.25% to 14.45% depending on age, service, and type of employment, and (c)
3.25% per year cost-of-living adjustments. Both (a) and (b) included an inflation component of 3%. The
actuarial value of PERS assets was determined using techniques that smooth the effects of short-term
volatility in the market value of investments over a fifteen year period. PERS unfunded actuarial accrued
liability (or surplus) is being amortized as a level percentage of projected payroll over a closed period equal
to the average amortization period at the plan’s date of entry into the CalPERS Risk Pool. The amortization
period at June 30, 2007 was 16 years for prior and current service unfunded liability.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
71
10. RETIREMENT PLANS, Continued
A. Public Employee Retirement System, Continued
Annual Pension Cost, Continued
THREE-YEAR TREND INFORMATION FOR PERS
Miscellaneous Plan
Pension Cost APC Net Pension
Fiscal Year (APC) Contributed Obligation
6/30/2008 849,334$ 100% -$
6/30/2009 819,860 100% -
6/30/2010 820,766 100% -
Police Plan
Annual Percentage of
Pension Cost APC Net Pension
Fiscal Year (APC) Contributed Obligation
6/30/2008 1,950,264$ 100%-$
6/30/2009 1,702,907 100%-
6/30/2010 1,642,334 100%
Fire Plan
Annual Percentage of
Pension Cost APC Net Pension
Fiscal Year (APC) Contributed Obligation
6/30/2008 663,857$ 100% -$
6/30/2009 742,265 100% -
6/30/2010 841,697 100%
B. Other Post-Employment Benefits
On June 12, 2008, the City Council adopted a resolution authorizing participation in a post retirement
health care plan trust to be administered by Public Agency Retirement Services (PARS) and Union Bank of
California. In July 2007, the City signed an agreement with Public Agency Retirement Services to create
and administer an irrevocable trust fund for the payment of other post employment benefits for city
employees in compliance with Governmental Accounting Standards Board Statement 43, Financial
Reporting for Postemployment Benefit Plans Other Than Pension Plans. Funds in the amount of $1,401,000 that
were previously set aside were forwarded to Union Bank pursuant to the agreement to establish the trust.
Contributions were forwarded on a monthly basis.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
72
10. RETIREMENT PLANS, Continued
B. Other Post-Employment Benefits, Continued
Plan Description. The City of Hermosa Beach (City) participates in a post retirement health care plan trust
(Plan) administered by Public Agency Retirement Services (PARS) and Union Bank of California. The Plan
provides medical insurance benefits to eligible retirees. The City issues a publicly available financial report
that includes financial statements and required supplementary information for the Plan. That report may
be obtained by writing to City of Hermosa Beach, 1315 Valley Drive, Hermosa Beach, CA 90254.
The Plan is comprised of employees and retirees from several bargaining units, including General and
Supervisory; Professional and Administrative Employees Association; Hermosa Beach Management
Association; Police Management Association; Police Officers Association; and Firefighters Association.
The range of monthly benefits to be paid by the City ranges from $40 to $612 per month based on years of
service from 10 years to 20 years provided to the City.
The monthly benefits paid by the City are subject to change with increases provided based on age at
retirement and years of service.
Eligibility. All of the Plan’s employees became participants in accordance with negotiated Memorandum
of Understanding (MOU) as negotiated by each group or bargaining unit. In order to receive benefits,
eligible employees must meet the minimum requirements defined in their MOU. Participants of the Plan as
of June 30, 2010 were as follows:
Participants Total
Active employees 134
Retirees 30
Total 164
Funding Policy. The contribution requirements for Plan members and the City are established by a
Memorandum of Understanding as negotiated by each group or bargaining unit. The City is funding 100%
of the annual required contribution as calculated based on the actuarial valuation prepared in accordance
with GASB statement 45. For fiscal year 2010, the City contributed $595,482. Plan members receiving
benefits contributed $164,949 of the total premiums, as their required contributions.
Annual OPEB Cost and Net OPEB Obligation. The City’s Annual Other Postemployment Benefit (OPEB)
cost (expense) is calculated based on the Annual Required Contribution of the Employer (ARC), an amount
actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a
level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize
any unfunded actuarial liabilities (or funding excesses) over a period not to exceed thirty years. The City
has elected to amortize its Unfunded Actuarial Accrued Liability (UAAL) during the current fiscal year.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
73
10. RETIREMENT PLANS, Continued
B. Other Post-Employment Benefits, Continued
The following table shows the components of the City’s Annual OPEB cost for the year, the amount actually
contributed to the plan, and changes in the City’s net OPEB Obligation to the Plan:
Total
Annual required contribution 475,000$
Interest on net OPEB obligation -
Adjustment to annual required contribution 120,482
Annual OPEB cost (expense) 595,482
Contribution Plan:
2010 contribution 595,482
Contributions made (595,482)
Increase in net OPEB obligation -
Net OPEB obliation - beginning of year -
Net OPEB obliation - end of year -$
The City’s Annual OPEB cost, the percentage of Annual OPEB cost contributed to the Plan and the net
OPEB obligation for years ended June 30, 2010 are as follows:
Fiscal Annual % of Annual Net
Year OPEB OPEB Cost OPEB
Ended Cost Contributed Obligation
6/30/2008 475,000$ 100.00% -$
6/30/2009 475,000 100.00% -
6/30/2010 595,482 100.00% -
Funded Status and Funding Progress. In August 2007, the City made an initial contribution of $1,401,000.
As of June 30, 2008, the Actuarial Accrued Liability for benefits was $5,830,000 and the actuarial value of
assets was $2,637,242, resulting in an UAAL of $3,192,758. The funded ratio was 45.2 percent. The covered
payroll (annual payroll of active employees covered by the Plan) was $10,930,488, and the ratio of UAAL to
the covered payroll was 29.2 percent.
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare costs trend. Amounts determined
regarding the funded status of the Plan and the Annual Required Contributions of the employer are subject
to continual revision as actual results are compared with past expectations and new estimates are made
about the future. The schedule of funding progress, presented as Required Supplementary Information
following the notes to the basic financial statements, presents multi-year trend information about whether
the actuarial value of Plan Assets is increasing or decreasing over time relative to the Actuarial Accrued
Liabilities for benefits.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
74
10. RETIREMENT PLANS, Continued
B. Other Post-Employment Benefits, Continued
Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on
the substantive Plan (the Plan as understood by the employer and the plan members) and include the types
of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs
between the employer and Plan members. The actuarial methods and assumptions used include techniques
that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the
actuarial value of assets, consistent with the long-term perspective of the calculations.
In the June 30, 2008, actuarial valuation, the entry age actuarial cost method was used. The actuarial
assumptions include a 7.0 percent investment rate of return (net of administrative expenses), which is based
on the expected return on funds invested, and an annual healthcare cost trend rate of 10 percent initially
reduced by decrements to an ultimate rate of 5 percent thereafter. The actuarial assumption for inflation
was 3 percent, and the aggregate payroll increases was 3.25 percent used in the actuarial valuation.
The next actuarial valuation will take place in fiscal year 2010-2011.
11. COMMITMENTS AND CONTINGENCIES
A. Commitments
The City had several outstanding or planned construction projects as of June 30, 2010. These projects are
evidenced by contractual commitments with contractors and include:
Commitment
Project Spent to Date Remaining
Infrastructure - sewer 169,599$ 20,224$
City Yard Renovation 253,027 22,922
Beach Restroom Rehabilitation 149,755 16,998
Total 572,381$ 60,144$
The infrastructure project is a sewer project that is funded by multiple funds including the Capital
Improvement Fund and the Sewer Fund. The City Yard Renovation is funded by the Equipment
Replacement Fund. The Beach Restroom Rehabilitation Project is funded by a grant recorded in the
Proposition A Open Space Fund, the Tyco Fund and the Tyco Tidelands Fund.
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.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
75
11. COMMITMENTS AND CONTINGENCIES, Continued
C. Grants
Amounts received or receivable from granting agencies are subject to audit and adjustment by grantor
agencies. While no matters of non-compliance were disclosed by the audit of the financial statements or
single audit of the Federal grant programs, grantor agencies may subject grant programs to additional
compliance tests, which may result in disallowed costs. In the opinion of management, future
disallowances of current or prior grant expenditures, if any, would not have a material adverse effect on
the financial position of the City.
12. PROPOSITION 1A BORROWING BY THE STATE OF CALIFORNIA
Under the provisions of Proposition 1A and as part of the 2009-10 budget package passed by the California
state legislature on July 28, 2009, the State of California borrowed 8% of the amount of property tax
revenue, including those property taxes associated with the in-lieu motor vehicle license fee, the triple flip
in lieu sales tax, and supplemental property tax, apportioned to cities, counties and special districts
(excluding redevelopment agencies). The state is required to repay this borrowing plus interest by June 30,
2013. After repayment of this initial borrowing, the California legislature may consider only one additional
borrowing within a ten-year period. The amount of this borrowing pertaining to the City of Hermosa
Beach was $951,144.
Authorized with the 2009-10 State budget package, the Proposition 1A Securitization Program was
instituted by the California Statewide Communities Development Authority (“California Communities”), a
joint powers authority sponsored by the California State Association of Counties and the League of
California Cities, to enable local governments to sell their Proposition 1A receivables to California
Communities. Under the Securitization Program, California Communities simultaneously purchased the
Proposition 1A receivables and issued bonds (“Prop 1A Bonds”) to provide local agencies with cash
proceeds in two equal installments, on January 15, 2010 and May 3, 2010. The purchase price paid to the
local agencies equaled 100% of the amount of the property tax reduction. All transaction costs of issuance
and interest were paid by the State of California. The City participated in the securitization program and
accordingly property taxes have been recorded in the same manner as if the State had not exercised its
rights under Proposition 1A. The receivable sale proceeds were equal to the book value and, as a result, no
gain or loss was recorded.
13. MACPHERSON OIL PROJECT LITIGATION
The City entered into a lease with MacPherson Oil in 1992 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.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
76
13. MACPHERSON OIL PROJECT LITIGATION, Continued
MacPherson then 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 $500 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, it is limited to
restitution, and not lost profits.
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 returned to the trial court in early 2006 and
was assigned to a new judge, JoAnne O'Donnell, because MacPherson filed a timely objection to the
previous Superior Court judge. The City engaged new trial counsel to defend it in the trial of this case, the
Century City law firm of Bird Marella.
MacPherson filed a motion to amend its cross-complaint to add causes of action for inverse condemnation
and civil rights. Judge O'Donnell denied the motion, ruling that it was barred by laches due to the passage
of time since the original cross-complaint was filed. The City filed a motion to bifurcate the trial, so that
liability issues can be litigated first, and the damages phase litigated only if MacPherson prevails in the
liability phase. Judge O’Donnell granted the motion over MacPherson’s strenuous objections. Thereafter,
the parties actively engaged in pretrial discovery regarding liability, including production of documents,
exchanges of interrogatories, and depositions of witnesses.
Cross-motions for summary judgment on liability were filed and heard, and in early 2008 Judge O'Donnell
denied the City's motion and granted MacPherson’s motion, ruling that the City bore the risk of a breach by
way of Proposition E and that the "compliance with all laws" clause in the lease does not provide the City
with a defense. The City's petitions to the Court of Appeal and the California Supreme Court seeking
review of that decision were both denied. On October 16, 2008, Judge O'Donnell scheduled a trial date for
the damages phase of the trial for August 12, 2009 (later continued to September 2, 2009). In July, 2009, the
City brought another motion for summary adjudication on the issue of causation in order to limit the City's
liability in damages; the basis of the motion was that the City Council had a contractual right to terminate
the oil project in September, 1998 on the ground that it was hazardous. Judge O'Donnell denied the motion
and the City petitioned the Court of Appeal for a writ, which was granted. The Court of Appeal vacated the
trial date, ordered further briefing and scheduled an oral argument on the writ for December 7, 2009.
Following oral argument, the Court of Appeal ruled that the City possessed the legal authority in 1998 to
stop the oil project for safety reasons, but further held that the question of whether there was substantial
evidence to support that decision (or whether the safety justification in support of that decision was merely
pretextual) was a matter to be tried before a jury.
City of Hermosa Beach
Notes to Basic Financial Statements, Continued
For the year ended June 30, 2010
77
13. MACPHERSON OIL PROJECT LITIGATION, Continued
The City filed a petition with the California Supreme Court seeking review of that decision, arguing that
relegation of that decision to a jury necessarily involved an invasion of the deliberative process privilege in
contravention of established law, and that the City’s 1998 decision to stop the project should be affirmed
based on the record. Review was not granted, and the case is back on track for a jury trial. The trial judge
has yet to set a trial date.
The City continues to vigorously defend the case. To date, the City's effort to limit its damages liability
through legislation has not succeeded, and neither have settlement negotiations. A two-day mediation in
June 2009 presided over by retired federal bankruptcy court judge John Ryan failed to yield a settlement.
Both the cost of defense and a potential adverse judgment in this case could have a material effect on the
financial picture of the City.
78
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79
REQUIRED SUPPLEMENTARY INFORMATION
(UNAUDITED)
City of Hermosa Beach
Required Supplementary Information (Unaudited)
For the year ended June 30, 2010
80
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.
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.
City of Hermosa Beach
Required Supplementary Information (Unaudited), Continued
For the year ended June 30, 2010
81
BUDGETS AND BUDGETARY ACCOUNTING, Continued
Budgetary Comparison Schedule - General Fund
Actual Variance with
Original Final Amounts Final Budget
Fund Balance, July 1, 2009 379,198$ 661,253$ 661,253$ -$
Resources (inflows):
Property taxes 11,301,193 11,377,422 11,407,964 30,542
Other taxes 8,804,110 7,601,531 8,075,947 474,416
Licenses and permits 766,383 568,668 556,737 (11,931)
Fines and forfeitures 2,070,835 2,100,211 2,040,336 (59,875)
Use of money and property 332,950 329,500 309,946 (19,554)
Intergovernmental 218,043 150,131 164,496 14,365
Charges for services 4,108,913 4,047,910 3,998,342 (49,568)
Miscellaneous 54,027 280,811 314,113 33,302
Interest earned on investments 35,561 12,075 16,033 3,958
Transfers in 435,069 699,727 699,726 (1)
Amount available for appropriation 28,506,282 27,829,239 28,244,893 415,654
Charges to appropriations (outflows):
Legislative and legal 1,045,354 1,046,854 976,862 69,992
General government 2,149,857 2,222,103 2,205,661 16,442
Public safety 17,807,946 17,845,609 17,065,312 780,297
Community development 1,439,094 1,352,977 1,198,904 154,073
Culture and recreation 1,278,228 1,183,456 1,170,057 13,399
Public works 2,964,260 3,000,050 2,871,141 128,909
Capital outlay 150,000 167,380 4,237 163,143
Transfers out 1,396,401 2,052,288 2,052,288 -
Total charges to appropriations 28,231,140 28,870,717 27,544,462 1,326,255
Fund Balance, June 30, 2010 275,142$ (1,041,478)$ 700,431$ 1,741,909$
Budgeted Amounts
City of Hermosa Beach
Required Supplementary Information (Unaudited), Continued
For the year ended June 30, 2010
82
BUDGETS AND BUDGETARY ACCOUNTING, Continued
Budgetary Comparison Schedule – Grants Fund
Actual Variance with
Original Final Amounts Final Budget
Fund Balance, July 1, 2009 657$ 2,830$ 2,830$ -$
Resources (inflows):
Intergovernmental 8,709 3,069,987 1,816,753 (1,253,234)
Miscellaneous - 15,000 15,000 -
Amount available for appropriation 9,366 3,087,817 1,834,583 (1,253,234)
Charges to appropriations (outflows):
Public Safety 3,600 128,567 102,920 25,647
Public Works 5,109 8,463 8,189 274
Capital outlay - 2,950,787 1,698,687 1,252,100
Total charges to appropriations 8,709 3,087,817 1,809,796 1,278,021
Fund Balance, June 30, 2010 657$ -$ 24,787$ 24,787$
Budgeted Amounts
City of Hermosa Beach
Required Supplementary Information (Unaudited), Continued
For the year ended June 30, 2010
83
BUDGETS AND BUDGETARY ACCOUNTING, Continued
Budgetary Comparison Schedule - Contingency Fund
Actual Variance with
Original Final Amounts Final Budget
Fund Balance, July 1, 2008 3,873,619$ 3,878,398$ 3,878,398$ -$
Resources (inflows):
Interest earned on investments 103,336 47,884 37,551 (10,333)
Transfers in - - 755 755
Amount available for appropriation 3,976,955 3,926,282 3,916,704 (9,578)
Charges to appropriations (outflows):
Transfers out 265,520 265,520 265,590 (70)
Total charges to appropriations 265,520 265,520 265,590 (70)
Fund Balance, June 30, 2009 3,711,435$ 3,660,762$ 3,651,114$ (9,648)$
Budgeted Amounts
City of Hermosa Beach
Required Supplementary Information (Unaudited), Continued
For the year ended June 30, 2010
84
Schedule of Funding Progress for the City’s OPEB Plan
Unfunded
Actuarial
Actuarial Unfunded Liability as
Actuarial Actuarial Accrued Actuarial Percentage of
Valuation Asset Liability Accrued Funded Covered Covered
Date Value Entry Age Liability Ratio Payroll Payroll
6/30/2008 2,637,242$ 5,830,000$ 3,192,758$ 45.2% 10,930,488$ 29.2%
SUPPLEMENTARY INFORMATION
85
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86
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 optic cable system originating in Japan with a landing in Hermosa Beach. The project
will provide additional capacity.
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/Recreation Facilities Tax 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.
Building Improvement Fund - This fund was intended to provide funds for ongoing building maintenance. The
fund was closed in 2009-10 as the Equipment Replacement Internal Service Fund is now accumulating these costs.
Bayview Drive Administrative Expense Fund - This fund is used to account for all administrative expenditures
required for the Bayview Utility Underground Special Assessment District.
Lower Pier Administrative Expense Fund - This fund is used to account for all administrative expenditures
required for the Lower Pier District. These funds are invested but interest is not allocated to this fund because it is
not required by the bond documents.
Myrtle District Administrative Expense Fund - This fund is used to account for all administrative expenditures
required for the Myrtle Avenue Utility Underground Special Assessment District.
Loma District Administrative Expense Fund - This fund is used to account for all administrative expenditures
required for the Loma Drive Utility Underground Special Assessment District.
87
NON-MAJOR GOVERNMENTAL FUNDS, Continued
Special Revenue Funds, Continued:
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 for seniors, a
taxi voucher program, a commuter bus, special event and after school program shuttles and subsidizes bus passes
for senior citizens and students.
Proposition "C" Fund -This 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.
Measure R Fund -This is a fund which was added July 1, 2009 to account for a 1/2 cent sales tax approved by Los
Angeles County voters in November 2008 to meet the transportation needs of Los Angeles County. The program
is to be used for transportation projects that have been approved by the Los Angeles County Metropolitan Transit
Authority.
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
California Law Enforcement Equipment Program Fund (CLEEP)- Funds received for the purchase of high
technology law enforcement equipment. The fund was closed in 2009-10 as no future revenues are anticipated and
existing funds were depleted.
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
Asset Seizure and Forfeiture Fund - This fund is used to account for property seized as a result of illegal activity
and forfeited to the Police Department. Funds must be used for law enforcement purposes to supplement, not
replace or decrease, existing appropriations.
Fire Protection Fund - This fund is used to account for fire flow fees which are used to upgrade and enhance the
fire flow capabilities of the fire protection system in the City and for upgrades to fire facilities.
Retirement Stabilization Fund - This fund is used to account for funds set aside for use when retirement rates are
unstable and have therefore increased beyond expectations.
88
NON-MAJOR GOVERNMENTAL FUNDS, Continued
Special Revenue Funds, Continued:
Capital Improvement Special Revenue Fund - Funds set aside for Capital Improvement Projects.
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 Contingency Special Revenue Fund transferred monies to close this fund
in 2009-10 because the district will not be formed.
Myrtle Utility Underground Improvement Fund - This fund is used to account for expenditures relating to the cost
for utility undergrounding in the special assessment district. It is also used to account for proceeds from bonds
sold to finance the cost of the undergrounding. The bonds are secured by liens against real property within the
district and will be repaid from assessments against the property. The City is not obligated in any way with
respect to the bonds. The fund was closed in 2009-10 because the project is complete.
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 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. The fund was closed in 2009-10 because the project is complete.
Beach 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 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. The fund was closed in 2009-10 because the project is complete.
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. The Contingency Special Revenue fund transferred monies to close this fund in 2009-10 because the
district will not be formed.
89
City of Hermosa Beach
Combining Balance Sheet
Non-Major Governmental Funds
June 30, 2010
Lighting and Prop A
Landscaping State Compensated Open
District Gas Tax AB 939 Absences Space
ASSETS
Cash and investments 95,238$ 534,603$ 283,857$ 136,635$ -$
Reimbursable grants receivable - - - - 94,388
Interest receivable
on investments 272 1,533 816 - -
Other accounts receivable 20,619 81,872 4,648 - -
Due from other funds - - - - -
Total assets 116,129$ 618,008$ 289,321$ 136,635$ 94,388$
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable 32,206$ 16,588$ 31,505$ -$ -$
Accrued wages and benefits payable 19,165 - 8,168 - -
Due to other funds - - - - 94,384
Total liabilities 51,371 16,588 39,673 - 94,384
Fund Balances:
Reserved:
Re-appropriations - - - - -
Bike paths - 19,758 - - -
Traffic congestion relief - 302,788 - - -
In-lieu fees for street pavement
Unreserved, designated:
Special revenue
Justice and
treasury department - - - - -
Unreserved, undesignated:
Special revenue 64,758 278,874 249,648 136,635 4
Total fund balances 64,758 601,420 249,648 136,635 4
Total liabilities
and fund balances 116,129$ 618,008$ 289,321$ 136,635$ 94,388$
Special Revenue Funds
90
Parks/ Bayview Dr Lower Pier Myrtle Dist Loma Dist
Tyco Recreation Building Admin Admin Admin Admin
Tyco Tidelands Facilities Tax Improvement Expense Expense Expense Expense
653,483$ 191,924$ 4,198$ -$ 1,718$ 4,723$ 14,467$ 18,569$
- - - - - - - -
1,924 550 - - 5 - 42 53
- - - - - - - -
- - - - - - - -
655,407$ 192,474$ 4,198$ -$ 1,723$ 4,723$ 14,509$ 18,622$
-$ 3,921$ -$ -$ 352$ 301$ 406$ 476$
- - - - - - - -
- - - - - - - -
- 3,921 - - 352 301 406 476
542,137 187,313 - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - - - -
113,270 1,240 4,198 - 1,371 4,422 14,103 18,146
655,407 188,553 4,198 - 1,371 4,422 14,103 18,146
655,407$ 192,474$ 4,198$ -$ 1,723$ 4,723$ 14,509$ 18,622$
(Continued)
Special Revenue Funds
91
City of Hermosa Beach
Combining Balance Sheet, Continued
Non-Major Governmental Funds, Continued
June 30, 2010
Beach Drive Community Air
Assessment Development Quality
Dist Admin Block Proposition "A" Management
Expense Grant Transit Proposition "C" Measure "R" District
ASSETS
Cash and investments 1,636$ -$ 1,096,065$ 1,604,658$ 124,297$ 58,514$
Reimbursable grants receivable - 1,777 - - - -
Interest receivable
on investments 5 - 3,148 4,566 358 167
Other accounts receivable - - - - - 5,927
Due from other funds - - - - - -
Total assets 1,641$ 1,777$ 1,099,213$ 1,609,224$ 124,655$ 64,608$
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable 339$ -$ 104,820$ 239,965$ 19,420$ -$
Accrued wages and benefits payable - - 318 - - 3
Due to other funds - 1,766 - - - -
Total liabilities 339 1,766 105,138 239,965 19,420 3
Fund Balances:
Reserved:
Re-appropriations - - 256,648 1,369,259 19,420 -
Bike paths - - - - - -
Traffic congestion relief - - - - - -
In-lieu fees for street pavement - - - - - -
Unreserved, designated:
Special revenue
Justice and
treasury department - - - - - -
Unreserved, undesignated:
Special revenue 1,302 11 737,427 - 85,815 64,605
Total fund balances 1,302 11 994,075 1,369,259 105,235 64,605
Total liabilities
and fund balances 1,641$ 1,777$ 1,099,213$ 1,609,224$ 124,655$ 64,608$
Special Revenue Funds
92
Supplemental California Law Artesia
Law Enforcement Asset Blvd.
Enforcement Equipment Seizure and Fire Retirement Capital Relinquish-
Services Program Sewer Forfeiture Protection Stabilization Improvement ment
303,034$ -$ 172,182$ 181,177$ 8,067$ 750,986$ 37,101$ 11,607$
- - - - - - - -
868 - 1,373 521 - 2,163 1,121 47
7,548 - 13,688 7,321 - - - -
- - 300,000 - - - 379,712 -
311,450$ -$ 487,243$ 189,019$ 8,067$ 753,149$ 417,934$ 11,654$
14,014$ -$ 131,052$ -$ -$ -$ 116,031$ 1,502$
- - 27,454 - - - 11,878 -
- - - - - - - -
14,014 - 158,506 - - - 127,909 1,502
65,937 - 25,814 1,500 7,500 - 10,879 -
- - - - - - - -
- - - - - - - -
- - - - - - 4,225 -
- - - 68,878 - - - -
231,499 - 302,923 118,641 567 753,149 274,921 10,152
297,436 - 328,737 189,019 8,067 753,149 290,025 10,152
311,450$ -$ 487,243$ 189,019$ 8,067$ 753,149$ 417,934$ 11,654$
(Continued)
Special Revenue Funds
93
City of Hermosa Beach
Combining Balance Sheet, Continued
Non-Major Governmental Funds, Continued
June 30, 2010
Prospect
Beach Drive 2 Myrtle Utility Bayview Beach Drive Utility Total Other
Underground Underground Underground Underground Underground Governmental
District Improvement District District District Funds
ASSETS
Cash and investments -$ -$ -$ -$ -$ 6,288,739$
Reimbursable grants receivable - - - - - 96,165
Interest receivable
on investments - - - - - 19,532
Other accounts receivable - - - - - 141,623
Due from other funds - - - - - 679,712
Total assets -$ -$ -$ -$ -$ 7,225,771$
LIABILITIES AND
FUND BALANCES
Liabilities:
Accounts payable -$ -$ -$ -$ -$ 712,898$
Accrued wages and benefits payable - - - - - 66,986
Due to other funds - - - - - 96,150
Total liabilities - - - - - 876,034
Fund Balances:
Reserved:
Re-appropriations - - - - - 2,486,407
Bike paths - - - - - 19,758
Traffic congestion relief - - - - - 302,788
In-lieu fees for street pavement - - - - - 4,225
Unreserved, designated:
Special revenue
Justice and
treasury department - - - - - 68,878
Unreserved, undesignated:
Special revenue - - - - - 3,467,681
Total fund balances - - - - - 6,349,737
Total liabilities
and fund balances -$ -$ -$ -$ -$ 7,225,771$
(Concluded)
Special Revenue Funds
94
This page intentionally left blank.
95
City of Hermosa Beach
Combining Statement of Revenues, Expenditures and Changes in Fund Balances
Non-Major Governmental Funds
For the year ended June 30, 2010
Lighting and Prop A
Landscaping State Compensated Open
District Gas Tax AB 939 Absences Space
REVENUES:
Property taxes 455,882$ -$ -$ -$ -$
Other taxes - - - - -
Fines and forfeitures - - - - -
Use of money and property - - - - -
Intergovernmental - 516,891 - - 20,557
Charges for services - - 57,183 - -
Miscellaneous - - - - -
Interest earned on investments 574 4,496 3,341 - -
Total revenues 456,456 521,387 60,524 - 20,557
EXPENDITURES:
Current:
General government - - 78,436 - -
Public safety - - - - -
Community development - - - - -
Culture & recreation - - - - -
Public works 529,126 2,094 - - -
Capital outlay - 57,145 - - -
Total expenditures 529,126 59,239 78,436 - -
REVENUES OVER
(UNDER) EXPENDITURES (72,670) 462,148 (17,912) - 20,557
OTHER FINANCING
SOURCES (USES):
Transfers in 98,871 - - - -
Transfers out (11,002) (314,592) - - (20,557)
Total other financing
sources (uses)87,869 (314,592) - - (20,557)
CHANGE IN
FUND BALANCES 15,199 147,556 (17,912) - -
FUND BALANCES:
Beginning of year 49,559 453,864 267,560 136,635 4
End of year 64,758$ 601,420$ 249,648$ 136,635$ 4$
Special Revenue Funds
96
Parks/ Bayview Dr Lower Pier Myrtle Dist Loma Dist
Tyco Recreation Building Admin Admin Admin Admin
Tyco Tidelands Facility Tax Improvement Expense Expense Expense Expense
-$ -$ -$ -$ -$ -$ -$ -$
- - 6,517 - - - - -
- - - - - - - -
312,900 - - - - - - -
- - - - - - - -
- - - - - - - -
- - - - - 3,324 9,391 10,337
7,352 2,417 50 - 12 - 191 246
320,252 2,417 6,567 - 12 3,324 9,582 10,583
- - - - 1,481 1,334 4,022 4,271
- - - - - - - -
- - - - - - - -
- - 3,977 - - - - -
- - 11,198 - - - - -
13 33,958 115,614 - - - - -
13 33,958 130,789 - 1,481 1,334 4,022 4,271
320,239 (31,541) (124,222) - (1,469) 1,990 5,560 6,312
- - 99,999 - 4,621 - - -
(175,000) - - (882) (2,718) (1,143) (3,310) (3,783)
(175,000) - 99,999 (882) 1,903 (1,143) (3,310) (3,783)
145,239 (31,541) (24,223) (882) 434 847 2,250 2,529
510,168 220,094 28,421 882 937 3,575 11,853 15,617
655,407$ 188,553$ 4,198$ -$ 1,371$ 4,422$ 14,103$ 18,146$
(Continued)
Special Revenue Funds
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, 2010
Beach Drive Community Air
Assessment Development Quality
Dist Admin Block Proposition "A" Management
Expense Grant Transit Proposition "C" Measure "R" District
REVENUES:
Property taxes -$ -$ -$ -$ -$ -$
Other taxes - - 248,436 206,089 123,999 -
Fines and forfeitures - - - - - -
Use of money and property - - - - - -
Intergovernmental - 9,088 - - - 22,069
Charges for services - - 5,772 - - -
Miscellaneous - - 14 - - -
Interest earned on investments 13 - 12,984 24,189 656 874
Total revenues 13 9,088 267,206 230,278 124,655 22,943
EXPENDITURES:
Current:
General government 1,499 - 52,878 - - 1,110
Public safety - - 52,852 - - -
Community development - 9,087 21,918 - - -
Culture & recreation - - 27,023 - - -
Public works - - - - - -
Capital outlay - - 160,494 1,050,692 19,420 55,481
Total expenditures 1,499 9,087 315,165 1,050,692 19,420 56,591
REVENUES OVER
(UNDER) EXPENDITURES (1,486) 1 (47,959) (820,414) 105,235 (33,648)
OTHER FINANCING
SOURCES (USES):
Transfers in 2,958 - - - - -
Transfers out (1,155) - - - - -
Total other financing
sources (uses)1,803 - - - - -
CHANGE IN
FUND BALANCES 317 1 (47,959) (820,414) 105,235 (33,648)
FUND BALANCES:
Beginning of year 985 10 1,042,034 2,189,673 - 98,253
End of year 1,302$ 11$ 994,075$ 1,369,259$ 105,235$ 64,605$
Special Revenue Funds
98
California Law Artesia
Supplemental Enforcement Asset Blvd.
Law Equipment Seizure and Fire Retirement Capital Relinquish-
Enforcement Program Sewer Forfeiture Protection Stabilization Improvement ment
-$ -$ -$ -$ -$ -$ -$ -$
100,000 - - - - - - -
- - - 35,423 - - - -
- - - - - - - -
- - 28,953 - - - 73,150 -
- - 19,153 - - - - -
- - - 3,974 24,258 - 4,225 -
2,974 - 4,530 2,274 - 7,595 6,863 208
102,974 - 52,636 41,671 24,258 7,595 84,238 208
- - - - - - - -
17,981 - - 5,121 7,500 - - -
- - - - - - - -
- - - - - - - -
- - 515,117 - - - - 4,000
12,282 - 209,164 46,361 3,432 - 709,586 -
30,263 - 724,281 51,482 10,932 - 709,586 4,000
72,711 - (671,645) (9,811) 13,326 7,595 (625,348) (3,792)
412 - 700,000 - 22,767 246,299 175,000 -
- (412) - - (36,228) - (96,918) -
412 (412) 700,000 - (13,461) 246,299 78,082 -
73,123 (412) 28,355 (9,811) (135) 253,894 (547,266) (3,792)
224,313 412 300,382 198,830 8,202 499,255 837,291 13,944
297,436$ -$ 328,737$ 189,019$ 8,067$ 753,149$ 290,025$ 10,152$
(Continued)
Special Revenue Funds
99
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, 2010
Prospect
Beach Drive 2 Myrtle Utility Bayview Beach Drive Utility Total Other
Underground Underground Underground Underground Underground Governmental
District Improvement District District District Funds
REVENUES:
Property taxes -$ -$ -$ -$ -$ 455,882$
Other taxes - - - - - 685,041
Fines and forfeitures - - - - - 35,423
Use of money and property - - - - - 312,900
Intergovernmental - - - - - 670,708
Charges for services - - - - - 82,108
Miscellaneous - (3,425) (60,962) (19,070) - (27,934)
Interest earned on investments - - - - - 81,839
Total revenues - (3,425) (60,962) (19,070) - 2,295,967
EXPENDITURES:
Current:
General government - - - - - 145,031
Public safety - - - - - 83,454
Community development - - - - - 31,005
Culture & recreation - - - - - 31,000
Public works - 6,628 141,000 70,452 - 1,279,615
Capital outlay - - - - - 2,473,642
Total expenditures - 6,628 141,000 70,452 - 4,043,747
REVENUES OVER
(UNDER) EXPENDITURES - (10,053) (201,962) (89,522) - (1,747,780)
OTHER FINANCING
SOURCES (USES):
Transfers in 65,520 70 - - 200,000 1,616,517
Transfers out - - (5,149) (3,185) - (676,034)
Total other financing
sources (uses)65,520 70 (5,149) (3,185) 200,000 940,483
CHANGE IN
FUND BALANCES 65,520 (9,983) (207,111) (92,707) 200,000 (807,297)
FUND BALANCES:
Beginning of year (65,520) 9,983 207,111 92,707 (200,000) 7,157,034
End of year -$ -$ -$ -$ -$ 6,349,737$
(Concluded)
Special Revenue Funds
100
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Lighting and Landscaping District
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 49,559$ 49,559$ -$
Resources (inflows):
Property taxes 453,645 455,882 2,237
Interest earned on investments 531 574 43
Transfers in 98,871 98,871 -
Amount available for appropriation 602,606 604,886 2,280
Charges to appropriations (outflows):
Public works 568,138 529,126 39,012
Transfers out 11,002 11,002 -
Total charges to appropriations 579,140 540,128 39,012
Fund balance, June 30, 2010 23,466$ 64,758$ 41,292$
101
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
State Gas Tax
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 453,864$ 453,864$ -$
Resources (inflows):
Intergovernmental 495,143 516,891 21,748
Interest earned on investments 4,395 4,496 101
Amount available for appropriation 953,402 975,251 21,849
Charges to appropriations (outflows):
Public Works 2,094 2,094 -
Capital outlay 571,248 57,145 514,103
Transfers out 314,592 314,592 -
Total charges to appropriations 887,934 373,831 514,103
Fund balance, June 30, 2010 65,468$ 601,420$ 535,952$
102
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
AB 939
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 267,560$ 267,560$ -$
Resources (inflows):
Charges for services 58,860 57,183 (1,677)
Interest earned on investments 4,111 3,341 (770)
Amount available for appropriation 330,531 328,084 (2,447)
Charges to appropriations (outflows):
General government 103,346 78,436 24,910
Total charges to appropriations 103,346 78,436 24,910
Fund balance, June 30, 2010 227,185$ 249,648$ 22,463$
103
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Compensated Absences
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 136,635$ 136,635$ -$
Amount available for appropriation 136,635 136,635 -
Fund balance, June 30, 2010 136,635$ 136,635$ -$
104
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Prop A Open Space
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 4$ 4$ -$
Resources (inflows):
Intergovernmental 270,557 20,557 (250,000)
Amount available for appropriation 270,561 20,561 (250,000)
Charges to appropriations (outflows):
Capital outlay 250,000 - 250,000
Transfers out 20,557 20,557 -
Total charges to appropriations 270,557 20,557 250,000
Fund balance, June 30, 2010 4$ 4$ -$
105
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Tyco
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 510,168$ 510,168$ -$
Resources (inflows):
Use of money and property 312,900 312,900 -
Interest earned on investments 8,535 7,352 (1,183)
Amount available for appropriation 831,603 830,420 (1,183)
Charges to appropriations (outflows):
Capital outlay 542,151 13 542,138
Transfers out 175,000 175,000 -
Total charges to appropriations 717,151 175,013 542,138
Fund balance, June 30, 2010 114,452$ 655,407$ 540,955$
106
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Tyco Tidelands
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 220,094$ 220,094$ -$
Resources (inflows):
Interest earned on investment 3,118 2,417 (701)
Amount available for appropriation 223,212 222,511 (701)
Charges to appropriations (outflows):
Capital outlay 221,271 33,958 187,313
Total charges to appropriations 221,271 33,958 187,313
Fund balance, June 30, 2010 1,941$ 188,553$ 186,612$
107
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Parks/Recreation Facilities Tax
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 28,421$ 28,421$ -$
Resources (inflows):
Other taxes 6,517 6,517 -
Interest earned on investments 225 50 (175)
Transfers in 99,999 99,999 -
Amount available for appropriation 135,162 134,987 (175)
Charges to appropriations (outflows):
Culture and recreation 3,977 3,977 -
Public works 11,198 11,198 -
Capital outlay 116,907 115,614 1,293
Total charges to appropriations 132,082 130,789 1,293
Fund balance, June 30, 2010 3,080$ 4,198$ 1,118$
108
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Building Improvement
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 882$ 882$ -$
Charges to appropriations (outflows):
Transfers out 882 882 -
Total charges to appropriations 882$ 882$ -$
Fund balance, June 30, 2010 -$ -$ -$
109
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Bayview Drive Administrative Expense
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 937$ 937$ -$
Resources (inflows):
Miscellaneous 4,620 - (4,620)
Interest earned on investments 10 12 2
Transfers in 4,621 4,621
Amount available for appropriation 5,567 5,570 3
Charges to appropriations (outflows):
General government 1,950 1,481 469
Transfers out 2,718 2,718 -
Total charges to appropriations 4,668 4,199 469
Fund balance, June 30, 2010 899$ 1,371$ 472$
110
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Lower Pier Administrative Expense
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 3,575$ 3,575$ -$
Resources (inflows):
Miscellaneous 3,324 3,324 -
Amount available for appropriation 6,899 6,899 -
Charges to appropriations (outflows):
General government 1,650 1,334 316
Transfers out 1,143 1,143 -
Total charges to appropriations 2,793 2,477 316
Fund balance, June 30, 2010 4,106$ 4,422$ 316$
111
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Myrtle District Administrative Expense
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 11,853$ 11,853$ -$
Resources (inflows):
Miscellaneous 9,391 9,391 -
Interest earned on investments 202 191 (11)
Amount available for appropriation 21,446 21,435 (11)
Charges to appropriations (outflows):
General government 6,250 4,022 2,228
Transfers out 3,310 3,310 -
Total charges to appropriations 9,560 7,332 2,228
Fund balance, June 30, 2010 11,886$ 14,103$ 2,217$
112
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Loma District Administrative Expense
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 15,617$ 15,617$ -$
Resources (inflows):
Miscellaneous 10,337 10,337 -
Interest earned on investments 264 246 (18)
Amount available for appropriation 26,218 26,200 (18)
Charges to appropriations (outflows):
General government 6,800 4,271 2,529
Transfers out 3,783 3,783 -
Total charges to appropriations 10,583 8,054 2,529
Fund balance, June 30, 2010 15,635$ 18,146$ 2,511$
113
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Beach Drive Assessment District Administrative Expense
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 985$ 985$ -$
Resources (inflows):
Miscellaneous 2958 - (2,958)
Interest earned on investments 14 13 (1)
Transfers in 2,958 2,958
Amount available for appropriation 3,957 3,956 (1)
Charges to appropriations (outflows):
General government 1,975 1,499 476
Transfers out 1,155 1,155 -
Total charges to appropriations 3,130 2,654 476
Fund balance, June 30, 2010 827$ 1,302$ 475$
114
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Community Development Block Grant
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 10$ 10$ -$
Resources (inflows):
Intergovernmental 9,241 9,088 (153)
Amount available for appropriation 9,251 9,098 (153)
Charges to appropriations (outflows):
Community development 9,241 9,087 154
Total charges to appropriations 9,241 9,087 154
Fund balance, June 30, 2010 10$ 11$ 1$
115
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Proposition "A" Transit
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 1,042,034$ 1,042,034$ -$
Resources (inflows):
Other taxes 317,658 248,436 (69,222)
Charges for services 5,410 5,772 362
Miscellaneous - 14 14
Interest earned on investments 15,510 12,984 (2,526)
Amount available for appropriation 1,380,612 1,309,240 (71,372)
Charges to appropriations (outflows):
General government 58,843 52,878 5,965
Public safety 50,000 52,852 (2,852)
Community development 17,062 21,918 (4,856)
Culture and recreation 30,000 27,023 2,977
Capital outlay 417,143 160,494 256,649
Total charges to appropriations 573,048 315,165 257,883
Fund balance, June 30, 2010 807,564$ 994,075$ 186,511$
116
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Proposition "C"
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 2,189,673$ 2,189,673$ -$
Resources (inflows):
Other taxes 259,238 206,089 (53,149)
Interest earned on investments 31,748 24,189 (7,559)
Amount available for appropriation 2,480,659 2,419,951 (60,708)
Charges to appropriations (outflows):
Capital outlay 2,480,659 1,050,692 1,429,967
Total charges to appropriations 2,480,659 1,050,692 1,429,967
Fund balance, June 30, 2010 -$ 1,369,259$ 1,369,259$
117
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Measure R
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 -$ -$ -$
Resources (inflows):
Other taxes 100,565 123,999 23,434
Interest earned on investments 421 656 235
Amount available for appropriation 100,986 124,655 23,669
Charges to appropriations (outflows):
Capital outlay 100,000 19,420 80,580
Total charges to appropriations 100,000 19,420 80,580
Fund balance, June 30, 2010 986$ 105,235$ 104,249$
118
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Air Quality Management District
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 98,253$ 98,253$ -$
Resources (inflows):
Intergovernmental 23,000 22,069 (931)
Interest earned on investments 1,145 874 (271)
Amount available for appropriation 122,398 121,196 (1,202)
Charges to appropriations (outflows):
General government 3,600 1,110 2,490
Capital outlay 55,593 55,481 112
Total charges to appropriations 59,193 56,591 2,602
Fund balance, June 30, 2010 63,205$ 64,605$ 1,400$
119
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Supplemental Law Enforcement Services
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 224,313$ 224,313$ -$
Resources (inflows):
Other taxes 100,000 100,000 -
Interest earned on investments 2,820 2,974 154
Transfers In - 412 412
Amount available for appropriation 327,133 327,699 566
Charges to appropriations (outflows):
Public safety 50,269 17,981 32,288
Capital outlay 51,063 12,282 38,781
Total charges to appropriations 101,332 30,263 71,069
Fund balance, June 30, 2010 225,801$ 297,436$ 71,635$
120
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
California Law Enforcement Equipment Program
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 412$ 412$ -$
Resources (inflows):
Interest earned on investments 23 - (23)
Amount available for appropriation 435 412 (23)
Charges to appropriations (outflows):
Transfers out - 412 (412)
Total charges to appropriations - 412 (412)
Fund balance, June 30, 2010 435$ -$ (435)$
121
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Sewer
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 300,382$ 300,382$ -$
Resources (inflows):
Intergovernmental 30,125 28,953 (1,172)
Charges for services 22,000 19,153 (2,847)
Interest earned on investments 5,162 4,530 (632)
Transfers in 700,000 700,000 -
Amount available for appropriation 1,057,669 1,053,018 (4,651)
Charges to appropriations (outflows):
Public works 623,285 515,117 108,168
Capital outlay 234,979 209,164 25,815
Total charges to appropriations 858,264 724,281 133,983
Fund balance, June 30, 2010 199,405$ 328,737$ 129,332$
122
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Asset Seizure and Forfeiture
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 198,830$ 198,830$ -$
Resources (inflows):
Fines and forfeitures 32,300 35,423 3,123
Miscellaneous 3,974 3,974
Interest earned on investments 2,653 2,274 (379)
Amount available for appropriation 233,783 240,501 6,718
Charges to appropriations (outflows):
Public Safety 17,121 5,121 12,000
Capital Outlay 49,000 46,361 2,639
Total charges to appropriations 66,121 51,482 14,639
Fund balance, June 30, 2010 167,662$ 189,019$ 21,357$
123
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Fire Protection
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 8,202$ 8,202$ -$
Resources (inflows):
Miscellaneous 45,000 24,258 (20,742)
Interest earned on investments 1,459 - (1,459)
Transfers in 22,767 22,767
Amount available for appropriation 77,428 55,227 (22,201)
Charges to appropriations (outflows):
Public Safety 15,000 7,500 7,500
Capital outlay 3,433 3,432 1
Transfers out 36,228 36,228 -
Total charges to appropriations 54,661 47,160 7,501
Fund balance, June 30, 2010 22,767$ 8,067$ (14,700)$
124
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Retirement Stabilization
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 499,255$ 499,255$ -$
Resources (inflows):
Interest earned on investments 8,186 7,595 (591)
Transfers in 246,299 246,299 -
Amount available for appropriation 753,740 753,149 (591)
Fund balance, June 30, 2010 753,740$ 753,149$ (591)$
125
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Capital Improvement
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 837,291$ 837,291$ -$
Resources (inflows):
Intergovernmental 73,150 73,150 -
Miscellaneous - 4,225 4,225
Interest earned on investments 10,956 6,863 (4,093)
Transfers in 175,000 175,000 -
Amount available for appropriation 1,096,397 1,096,529 132
Charges to appropriations (outflows):
Capital outlay 954,416 709,586 244,830
Transfers out 96,918 96,918 -
Total charges to appropriations 1,051,334 806,504 244,830
Fund balance, June 30, 2010 45,063$ 290,025$ 244,962$
126
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Artesia Boulevard Relinquishment
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 13,944$ 13,944$ -$
Resources (inflows):
Interest earned on investments 273 208 (65)
Amount available for appropriation 14,217 14,152 (65)
Charges to appropriations (outflows):
Public works 4,000 4,000 -
Total charges to appropriations 4,000 4,000 -
Fund balance, June 30, 2010 10,217$ 10,152$ (65)$
127
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Beach Drive 2 Underground District
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 (65,520)$ (65,520)$ -$
Resources (inflows):
Transfers in 65,520 65,520 -
Amount available for appropriation - - -
Fund balance, June 30, 2010 -$ -$ -$
128
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Myrtle Utility Underground Improvement
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 9,983$ 9,983$ -$
Resources (inflows):
Miscellaneous (3,425) (3,425) -
Transfers in - 70 70
Amount available for appropriation 6,558 6,628 70
Charges to appropriations (outflows):
Public works 6,628 6,628 -
Total charges to appropriations 6,628 6,628 -
Fund balance, June 30, 2010 (70)$ -$ 70$
129
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Bayview Drive Underground District
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 207,111$ 207,111$ -$
Resources (inflows):
Miscellaneous (60,963) (60,962) 1
Amount available for appropriation 146,148 146,149 1
Charges to appropriations (outflows):
Public works 141,000 141,000 -
Transfers out 4,620 5,149 (529)
Total charges to appropriations 145,620 146,149 (529)
Fund balance, June 30, 2010 528$ -$ (528)$
130
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Beach Drive Underground District
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 92,707$ 92,707$ -$
Resources (inflows):
Miscellaneous (19,070) (19,070) -
Amount available for appropriation 73,637 73,637 -
Charges to appropriations (outflows):
Public works 70,452 70,452 -
Transfers out 2,958 3,185 (227)
Total charges to appropriations 73,410 73,637 (227)
Fund balance, June 30, 2010 227$ -$ (227)$
131
City of Hermosa Beach
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Prospect Utility Underground District
For the year ended June 30, 2010
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2009 (200,000)$ (200,000)$ -$
Resources (inflows):
Transfers in 200,000 200,000 -
Amount available for appropriation - - -
Fund balance, June 30, 2010 -$ -$ -$
132
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.
133
City of Hermosa Beach
Combining Statement of Net Assets
All Internal Service Funds
June 30, 2010
Equipment
Insurance Replacement
Fund Fund Total
ASSETS
Current assets:
Cash and investments 6,888,909$ 3,080,554$ 9,969,463$
Other accounts receivables 44,306 3,498 47,804
Deposits 140,000 - 140,000
Advances to other funds 490,481 490,482 980,963
Other assets 79,942 21,046 100,988
Total current assets 7,643,638 3,595,580 11,239,218
Capital assets
Nondepreciable - 356,869 356,869
Depreciable, net - 1,829,019 1,829,019
Total capital assets - 2,185,888 2,185,888
Total assets 7,643,638 5,781,468 13,425,106
LIABILITIES
Current liabilities:
Accounts payable 49,930 72,978 122,908
Accrued wages and benefits payable 6,156 21,327 27,483
Current portion of long-term liabilities 980,183 - 980,183
Total current liabilities 1,036,269 94,305 1,130,574
Long-term liabilities:
Workers' compensation claims payable 4,217,447 - 4,217,447
General liability claims payable 1,121,650 - 1,121,650
Less current portion above (980,183) - (980,183)
Total long-term liabilities 4,358,914 - 4,358,914
Total liabilities 5,395,183 94,305 5,489,488
NET ASSETS
Invested in capital assets - 2,185,888 2,185,888
Unrestricted 2,248,455 3,501,275 5,749,730
Total net assets 2,248,455$ 5,687,163$ 7,935,618$
134
City of Hermosa Beach
Combining Statement of Revenues, Expenses, and Changes in Net Assets
All Internal Service Funds
For the year ended June 30, 2010
Equipment
Insurance Replacement
Fund Fund Total
OPERATING REVENUES:
Charges for services 2,279,925$ 1,442,799$ 3,722,724$
Miscellaneous 187,895 19,554 207,449
Total operating revenues 2,467,820 1,462,353 3,930,173
OPERATING EXPENSES:
Salaries and wages 50,543 204,921 255,464
Contractor services 1,453,306 398,796 1,852,102
Supplies 157 211,034 211,191
Claims expense 1,224,345 - 1,224,345
Depreciation - 418,029 418,029
Total operating expenses 2,728,351 1,232,780 3,961,131
OPERATING INCOME (LOSS)(260,531) 229,573 (30,958)
NONOPERATING REVENUES (EXPENSES):
Gain on disposal of capital assets - 2,265 2,265
Total nonoperating revenues (expenses)- 2,265 2,265
INCOME (LOSS) BEFORE CONTRIBUTION AND TRANSFERS (260,531) 231,838 (28,693)
Contribution - 5,000 5,000
Transfers in 1,608,542 - 1,608,542
Transfers out (300,000) (627,272) (927,272)
Total contribution and transfers 1,308,542 (622,272) 686,270
Change in net assets 1,048,011 (390,434) 657,577
NET ASSETS
Beginning of the year 1,200,444 6,077,597 7,278,041
.
End of the year 2,248,455$ 5,687,163$ 7,935,618$
135
City of Hermosa Beach
Combining Statement of Cash Flows
All Internal Service Funds
For the year ended June 30, 2010
Equipment
Insurance Replacement
Fund Fund Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received for services from other funds 2,281,898$ 1,439,301$ 3,721,199$
Cash payments to suppliers of goods and services (1,685,670) (600,309) (2,285,979)
Cash payments to employees for services (49,250) (207,524) (256,774)
Insurance premiums, settlements and recovery (733,884) 19,554 (714,330)
Net cash provided by (used for) operating activities (186,906) 651,022 464,116
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES:
Contribution - 5,000 5,000
Transfers in 1,608,542 - 1,608,542
Transfers out (300,000) (627,272) (927,272)
Net cash provided by (used for) noncapital financing activities 1,308,542 (622,272) 686,270
Repayment of advances to other funds 64,465 64,466 128,931
Acquisition of capital assets - (305,512) (305,512)
Proceed from sale of capital assets - 2,265 2,265
Net cash provided by (used for) capital and related financing activities 64,465 (238,781) (174,316)
Net increase (decrease) in cash and cash equivalents 1,186,101 (210,031) 976,070
CASH AND CASH EQUIVALENTS:
Beginning of year 5,702,808 3,290,585 8,993,393
End of year 6,888,909$ 3,080,554$ 9,969,463$
RECONCILIATION OF OPERATING INCOME (LOSS) TO NET
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES:
Operating income (loss)(260,531)$ 229,573$ (30,958)$
Adjustments to reconcile net operating income (loss)
to net cash provided (used) by operating activities:
Depreciation - 418,029 418,029
Changes in current assets and liabilities:
Other accounts receivable 1,973 (3,498) (1,525)
Other assets 11,900 (19,855) (7,955)
Accounts payable (244,107) 29,376 (214,731)
Accrued wages 1,293 (2,603) (1,310)
Worker's compensation claims payable 485,408 - 485,408
General liability claims payable (182,842) - (182,842)
Total adjustments 73,625 421,449 495,074
Net cash provided by (used for) operating activities (186,906)$ 651,022$ 464,116$
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
136
FIDUCIARY FUNDS
The Agency Funds of the City was established to account for transactions related to payments for limited
obligation bonds for the Bayview Drive, the Lower Pier Avenue Assessment District, the Beach Drive Assessment
District, the Myrtle Avenue Utility Undergrounding Assessment District, and the Loma Drive Utility
Undergrounding Assessment District.
137
City of Hermosa Beach
Combining Statement of Fiduciary Net Assets
All Agency Funds
June 30, 2010
Myrtle Avenue Loma Drive
Lower Pier Utility Utility
Bayview Avenue Beach Drive Beach Drive UndergroundingUndergrounding
Bayview Drive Assessment Assessment Assessment Assessment Assessment
Drive Reserve District District Reserve District District Total
ASSETS
Cash and investments 136,849$ 12,886$ 41,905$ 65,687$ 3,924$ 97,977$ 108,400$ 467,628$
Interest receivable 396 37 120 187 11 282 311 1,344
Other accounts receivable - - - 787 - 7,525 10,063 18,375
137,245$ 12,923$ 42,025$ 66,661$ 3,935$ 105,784$ 118,774$ 487,347$
LIABILITIES
Assessment:
Installment account 137,245$ -$ 42,025$ 66,661$ -$ 105,784$ 118,774$ 470,489$
Reserve requirement - 12,923 - - 3,935 - - 16,858
137,245$ 12,923$ 42,025$ 66,661$ 3,935$ 105,784$ 118,774$ 487,347$
Total assets
Total liabilities
138
City of Hermosa Beach
Combining Statement of Changes in Assets and Liabilities
All Agency Funds
For the year ended June 30, 2010
Balance Balance
July 1, 2009 Additions Deletions June 30, 2010
ASSETS
Bayview Drive Redemption Fund:
Cash and investments 53,949$ 149,147$ (66,247)$ 136,849$
Interest receivable 319 396 (319) 396
Other accounts receivable 555 844 (1,399) -
Bayview Drive Reserve Fund
Cash and investments 12,676 284 (74) 12,886
Interest receivable 75 37 (75) 37
Lower Pier District Redemption Fund:
Cash and investments 38,695 39,681 (36,471) 41,905
Interest receivable 229 120 (229) 120
Other accounts receivable 3,027 - (3,027) -
Beach Drive Assessment District Redemption Fund:
Cash and investments 21,352 79,284 (34,949) 65,687
Interest receivable 126 187 (126) 187
Other accounts receivable 5,205 787 (5,205) 787
Beach Drive Assessment District Reserve Fund:
Cash and investments 3,860 87 (23) 3,924
Interest receivable 23 11 (23) 11
Myrtle Avenue Assessment Fund:
Cash and investments 99,260 89,025 (90,308) 97,977
Interest receivable 589 282 (589) 282
Other accounts receivable 5,102 7,525 (5,102) 7,525
Loma Drive Assessment Fund:
Cash and investments 101,950 101,759 (95,309) 108,400
Interest receivable 605 311 (605) 311
Other accounts receivable 6,539 10,063 (6,539) 10,063
Total assets 354,136$ 479,830$ (346,619)$ 487,347$
LIABILITIES
Bayview Drive Redemption Fund:
Assessment installment account 54,823$ 150,387$ (67,965)$ 137,245$
Bayview Drive Reserve Fund
Reserve requirement 12,751 321 (149) 12,923
Lower Pier District Redemption Fund:
Assessment installment account 41,951 39,801 (39,727) 42,025
Beach Drive Assessment District Redemption Fund:
Assessment installment account 26,683 80,258 (40,280) 66,661
Beach Drive Assessment District Reserve Fund:
Reserve requirement 3,883 98 (46) 3,935
Myrtle Avenue Assessment Funds:
Assessment installment account 104,951 96,832 (95,999) 105,784
Loma Drive Assessment Fund:
Assessment installment account 109,094 112,133 (102,453) 118,774
Total liabilities 354,136$ 479,830$ (346,619)$ 487,347$
139
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140
CAPITAL ASSETS USED IN THE OPERATING
OF GOVERNMENTAL FUNDS
141
City of Hermosa Beach
Capital Assets Used in the Operation of Governmental Funds
Schedule By Source*
For the year ended June 30, 2010
GOVERNMENTAL FUNDS CAPITAL ASSETS:
Land 17,448,235$
Buildings and improvements 5,305,361
Improvements other than buildings 14,054,192
Machinery and equipment 1,994,280
Vehicles 64,708
Construction in progress 319,354
Infrastructure 44,056,239
Total governmental funds capital assets 83,242,369
Accumulated depreciation (28,828,669)
Total governmental funds capital assets, net 54,413,700$
INVESTMENTS IN GOVERNMENTAL FUNDS CAPITAL ASSETS BY SOURCE:
1,819,789$
General fund revenues 32,394,299
48,553,063
475,218
Total governmental funds capital assets 83,242,369
Accumulated depreciation (28,828,669)
Total governmental funds capital assets, net 54,413,700$
* 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.
State grants
Special revenue funds revenues
Donated assets
142
City of Hermosa Beach
Capital Assets Used in the Operation of Governmental Funds
Schedule by Function and Activity*
For the year ended June 30, 2010
Buildings Improvements Machinery
and Other than and Construction
Land Structures Buildings Equipment Vehicles Infrastructure in Progress Total
GOVERNMENTAL FUNDS
CAPITAL ASSETS
General government 307,349$ 2,111,825$ 97,728$ 301,702$ -$ -$ -$ 2,818,604$
Public safety - 534,812 751,295 1,332,635 64,708 - - 2,683,450
Community development - - 99,858 12,755 - - - 112,613
Culture and recreation 650,000 1,713,398 1,004,480 131,157 - - - 3,499,035
Public works 16,490,886 945,326 12,100,831 216,031 - 44,056,239 319,354 74,128,667
17,448,235 5,305,361 14,054,192 1,994,280 64,708 44,056,239 319,354 83,242,369
Accumulated depreciation - (1,990,388) (7,461,322) (1,339,162) (27,429) (18,010,368) - (28,828,669)
17,448,235$ 3,314,973$ 6,592,870$ 655,118$ 37,279$ 26,045,871$ 319,354$ 54,413,700$
Total governmental funds capital assets
Total governmental funds capital assets
* 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.
143
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, 2010
Capital Capital
Assets Assets
July 1, 2009 Additions Deletions June 30, 2010
Function and Activity:
General government 2,818,604$ -$ -$ 2,818,604$
Public safety 2,547,868 135,582 - 2,683,450
Community development 112,613 - - 112,613
Culture and recreation 2,447,558 1,051,477 - 3,499,035
Public works 72,580,021 3,513,543 (1,964,897) 74,128,667
Total governmental funds capital assets 80,506,664 4,700,602 (1,964,897) 83,242,369
Accumulated depreciation (26,385,479) (2,447,732) 4,542 (28,828,669)
Total governmental funds capital assets, net 54,121,185$ 2,252,870$ (1,960,355)$ 54,413,700$
* 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.
144
Contents Page
Financial Trends 146
Revenue Capacity 154
Debt Capacity 160
Demographic and Economic Information 164
Operating Information 166
1
Ratios of Outstanding Debt by Type
Ratios of General Bonded Debt Outstanding
Pledged-Revenue Coverage
STATISTICAL SECTION
This part of the City of Hermosa Beach's comprehensive annual financial report presents detailed
information as a context for understanding what the information in the financial statements, note disclosures
and required supplementary information says about the government' overall financial health.
These schedules contain trend information to help the reader understand how the
government's financial performance and well being have changed over time.
These schedules contain information to help the reader assess the government's most
significant local revenue source, the property tax.
Since the City of Hermosa Beach has no debt, the following schedules are not included in the Statistical
Section:
These schedules present information to help the reader assess the affordability of the
government's current levels of outstanding debt and the government's ability to issue
additional debt in the future.1
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the government's financial activities take
place.
These schedules contain service and infrastructure data to help the reader understand
how the information in the government's financial report relates to the services the
government provides and the activities it performs.
145
City of Hermosa Beach
Net Assets by Component
Last Eight Fiscal Years
(accrual basis of accounting)
2003 2004 2005 2006 2007 2008 2009 2010
Governmental activities:
Invested in capital assets,
net of related debt 52,434,822$ 54,115,206$ 57,049,484$ 56,667,910$ 58,249,212$ 57,117,532$ 56,419,592$ 56,599,591$
Restricted 524,561 2,217,823 3,305,478 3,590,623 3,813,004 5,171,642 5,403,000 4,518,727
Unrestricted 15,165,745 15,218,039 14,932,486 15,221,233 12,424,195 10,619,806 10,348,315 10,768,025
Total governmental activities net assets 68,125,128$ 71,551,068$ 75,287,448$ 75,479,766$ 74,486,411$ 72,908,980$ 72,170,907$ 71,886,343$
Business-type activities:
Invested in capital assets,
net of related debt 6,796,868$ 6,880,925$ 8,081,080$ 8,297,790$ 10,311,365$ 10,187,758$ 10,057,219$ 9,926,861$
Restricted 864,024 - - - - - - -
Unrestricted 780,346 827,781 502,758 237,824 (1,604,154) (1,443,914) (1,236,859) (1,074,651)
Total business-type activities net assets 8,441,238$ 7,708,706$ 8,583,838$ 8,535,614$ 8,707,211$ 8,743,844$ 8,820,360$ 8,852,210$
Primary government:
Invested in capital assets,
net of related debt 59,231,690$ 60,996,131$ 65,130,564$ 64,965,700$ 68,560,577$ 67,305,110$ 66,476,811$ 66,526,450$
Restricted 1,388,585 2,217,823 3,305,478 3,590,623 3,813,004 5,171,642 5,403,000 4,518,727
Unrestricted 15,946,091 16,045,820 15,435,244 15,459,057 10,820,041 9,175,892 9,111,456 9,693,374
Total primary government net assets 76,566,366$ 79,259,774$ 83,871,286$ 84,015,380$ 83,193,622$ 81,652,644$ 80,991,267$ 80,738,551$
with the implementation of GASB 34.
The City of Hermosa Beach has elected to show only eight years of data for this schedule to coincide
Fiscal Year
146
City of Hermosa Beach
Changes in Net Assets
Last Eight Fiscal Years
(accrual basis of accounting)
2003 2004 2005 2006
Expenses:
Governmental activities:
Legislative and legal 810,589$ 755,591 737,903 962,682
General government 1,415,000 1,816,801 1,727,484 1,999,234
Public safety 10,415,111 11,219,997 12,855,036 15,167,715
Community development 968,000 1,115,600 1,355,888 1,349,891
Culture and recreation 1,045,567 965,440 996,021 1,149,070
Public works 4,136,564 4,592,460 6,687,811 7,980,811
Total governmental activities expenses 18,790,831 20,465,889 24,360,143 28,609,403
Business-type activities:
Downtown Enhancement 909,137 939,576 166,732 1,130,499
Parking 1,525,371 1,632,093 1,701,775 - 2
Proposition "A" Transit 302,907 310,113 - 1 -
Proposition "C" Transit 103,091 48,119 - 1 -
Total business-type activities expenses 2,840,506 2,929,901 1,868,507 1,130,499
Total primary government expenses 21,631,337 23,395,790 26,228,650 29,739,902
Program revenues:
Governmental activities:
Charges for services:
General government 89,037 84,745 88,375 458,900
Public safety 833,755 914,655 1,063,594 3,891,881 2
Community development 768,241 929,695 1,245,622 1,393,212
Culture and recreation 708,296 793,748 874,111 986,137
Public works 203,533 689,457 2,368,076 808,091
Operating grants and contributions 642,214 674,451 721,198 725,136
Capital grants and contributions 475,933 665,806 2,465,698 1,042,854
Total governmental activities
program revenues: 3,721,009 4,752,557 8,826,674 9,306,211
Business-type activities:
Charges for services:
Downtown Enhancement 774,865 879,495 906,857 1,187,249
Parking 2,503,330 2,895,143 3,247,478 - 2
Proposition A Transit 14,381 14,384 - 1 -
Proposition C Transit - - - 1 -
Operating grants and contributions - - - -
Capital grants and contributions - - - -
Total business-type activities
program revenues: 3,292,576 3,789,022 4,154,335 1,187,249
Total primary government
program revenues: 7,013,585 8,541,579 12,981,009 10,493,460
Fiscal Year
147
City of Hermosa Beach
Changes in Net Assets, Continued
Last Eight Fiscal Years
(accrual basis of accounting)
2003 2004 2005 2006
Net revenues (expenses):
Governmental activities (15,069,822) (15,713,332) (15,533,469) (19,303,192)
Business-type activities 452,070 859,121 2,285,828 56,750
Total net revenues (expenses) (14,617,752) (14,854,211) (13,247,641) (19,246,442)
General revenues and other changes in net assets:
Governmental activities:
Taxes:
Property taxes 5,282,147 5,885,480 6,221,535 8,361,888
Sales tax 2,508,346 2,596,135 2,584,015 2,511,004
Other taxes 5,166,212 5,559,070 5,897,908 6,186,641
Grants and contributions not restricted to
specific programs 3,111,569 1,229,911 2,318,501 1,537,667
Investment income 439,050 177,757 467,923 753,746
Other general revenues 400,658 615,309 272,664 113
Transfers 990,593 2,356,585 1,507,304 144,451
Total governmental activities 17,898,575 18,420,247 19,269,850 19,495,510
Business-type activities:
Investment income 96,117 73,519 96,365 33,154
Other general revenues 498,276 530,773 - 1 -
Miscellaneous 10,812 12,966 243 6,323
Transfers (990,593) (2,356,585) (1,507,304) (144,451)
Total business-type activities (385,388) (1,739,327) (1,410,696) (104,974)
Total primary government 17,513,187 16,680,920 17,859,154 19,390,536
Changes in net assets
Governmental activities: 2,828,753 2,706,915 3,736,381 192,318
Business-type activities: 66,682 (880,206) 875,132 (48,224)
Total primary government 2,895,435$ 1,826,709 4,611,513 144,094
The City of Hermosa Beach has elected to show only eight years of data for this schedule to coincide
with the implementation of GASB 34.
1 Transit operations were transferred to special revenue funds in fiscal year 2005.
2 The Parking Fund was combined with the General Fund in fiscal year 2006.
Fiscal Year
148
City of Hermosa Beach
Changes in Net Assets, Continued
Last Eight Fiscal Years
(accrual basis of accounting)
2007 2008 2009 2010
Expenses:
Governmental activities:
Legislative and legal 867,481 990,342 1,059,528 980,157
General government 2,523,060 2,544,004 3,579,453 2,409,611
Public safety 17,237,156 19,569,031 17,471,578 17,841,984
Community development 1,424,766 1,358,051 1,416,714 1,243,490
Culture and recreation 1,253,882 1,343,223 1,420,956 1,252,037
Public works 7,106,083 6,942,529 6,860,854 7,823,275
Total governmental activities expenses 30,412,428 32,747,180 31,809,083 31,550,554
Business-type activities:
Downtown Enhancement 1,096,039 1,133,746 963,304 997,138
Parking - - 2 - 2 - 2
Proposition "A" Transit - - - 1 - 1
Proposition "C" Transit - - - 1 - 1
Total business-type activities expenses 1,096,039 1,133,746 963,304 997,138
Total primary government expenses 31,508,467 33,880,926 32,772,387 32,547,692
Program revenues:
Governmental activities:
Charges for services:
General government 497,423 563,583 569,772 543,259
Public safety 4,078,709 4,423,335 4,633,478 4,674,410
Community development 1,179,786 1,262,109 782,904 650,962
Culture and recreation 944,229 1,092,512 949,439 856,135
Public works 835,845 877,367 907,579 840,740
Operating grants and contributions 755,716 731,097 539,518 543,531
Capital grants and contributions 286,930 68,862 850,357 1,817,638
Total governmental activities
program revenues: 8,578,638 9,018,865 9,233,047 9,926,675
Business-type activities:
Charges for services:
Downtown Enhancement 1,144,666 1,088,298 1,021,114 1,026,185
Parking - - 2 - 2 - 2
Proposition A Transit - - - 1 - 1
Proposition C Transit - - - 1 - 1
Operating grants and contributions - - - -
Capital grants and contributions - - - -
Total business-type activities
program revenues: 1,144,666 1,088,298 1,021,114 1,026,185
Total primary government
program revenues: 9,723,304 10,107,163 10,254,161 10,952,860
Fiscal Year
149
City of Hermosa Beach
Changes in Net Assets, Continued
Last Eight Fiscal Years
(accrual basis of accounting)
2007 2008 2009 2010
Net revenues (expenses):
Governmental activities (21,833,790) (23,728,315) (22,576,036) (21,623,879)
Business-type activities 48,627 (45,448) 57,810 29,047
Total net revenues (expenses) (21,785,163) (23,773,763) (22,518,226) (21,594,832)
General revenues and other changes in net assets:
Governmental activities:
Taxes:
Property taxes 9,383,544 10,458,034 11,188,377 11,407,964
Sales tax 2,395,390 2,500,659 2,390,658 2,112,971
Other taxes 6,414,534 6,456,786 6,069,339 5,962,978
Grants and contributions not restricted to
specific programs 1,273,625 1,472,191 1,454,006 1,242,064
Investment income 1,097,128 850,176 429,087 135,423
Other general revenues 170,325 503,414 303,035 473,559
Transfers 11,255 4,259 3,461 4,356
Total governmental activities 20,745,801 22,245,519 21,837,963 21,339,315
Business-type activities:
Investment income 48,113 28,320 17,749 5,609
Other general revenues - - - -
Miscellaneous 86,112 57,840 4,597 1,550
Transfers (11,255) (4,259) (3,461) (4,356)
Total business-type activities 122,970 81,901 18,885 2,803
Total primary government 20,868,771 22,327,420 21,856,848 21,342,118
Changes in net assets
Governmental activities: (1,087,989) (1,482,796) (738,073) (284,564)
Business-type activities: 171,597 36,453 76,695 31,850
Total primary government (916,392) (1,446,343) (661,378) (252,714)
The City of Hermosa Beach has elected to show only eight years of data for this schedule to coincide
with the implementation of GASB 34.
1 Transit operations were transferred to special revenue funds in fiscal year 2005.
2 The Parking Fund was combined with the General Fund in fiscal year 2006.
Fiscal Year
150
City of Hermosa Beach
Governmental Activities Tax Revenues By Source
Last Eight Years
(accrual basis of accounting)
1/2 cent
Fiscal Real sales tax
year property extension Transient Utility
ended Property Sales transfer Franchise for public occupancy user's Business
June 30 tax tax tax fees safety tax tax license Total
2003 5,282,147$ 2,508,346$ 194,035$ 517,907$ 150,453$ 1,054,272$ 2,137,975$ 689,270$ 12,534,405$
2004 5,885,480 2,596,135 243,390 514,403 162,902 1,291,689 2,652,821 693,865 14,040,685
2005 6,221,535 2,584,015 279,627 590,372 178,539 1,477,612 2,675,196 696,562 14,703,458
2006 8,361,888 2,511,004 305,018 597,754 188,644 1,628,394 2,726,085 740,746 17,059,533
2007 9,383,544 2,395,390 279,219 606,572 189,852 1,769,015 2,769,113 800,763 18,193,468
2008 10,458,034 2,500,659 226,349 634,421 187,277 1,892,363 2,714,029 802,347 19,415,479
2009 11,188,377 2,390,658 140,113 674,947 167,427 1,645,571 2,575,209 866,072 19,648,374
2010 11,407,964 2,112,971 162,562 650,115 168,103 1,559,048 2,559,369 863,781 19,483,913
The City of Hermosa Beach has elected to show only eight years of data for this schedule to coincide
with the implementation of GASB 34.
151
City of Hermosa Beach
Fund Balances of Governmental Funds
Last Eight Fiscal Years
(modified accrual basis of accounting)
2003 2004 2005 2006 2007 2008 2009 2010
General Fund:
Reserved 231,701$ 230,527$ 103,014$ 158,854$ 142,604$ 241,142$ 312,880$ 447,426$
Unreserved 461,115 403,455 373,817 211,191 168,089 257,599 348,373 253,005
Total general fund 692,816 633,982 476,831 370,045 310,693 498,741 661,253 700,431
All other governmental funds:
Reserved 909,806 1,459,679 4,107,762 3,845,091 3,875,682 1,734,658 1,273,762 3,060,042
Unreserved, reported in:
Special revenue funds 11,053,526 12,038,695 10,516,612 10,900,400 8,864,333 11,135,309 9,764,500 6,965,596
Total all other governmental funds 11,963,332$ 13,498,374$ 14,624,374$ 14,745,491$ 12,740,015$ 12,869,967$ 11,038,262$ 10,025,638$
The City of Hermosa Beach has elected to show only eight years of data for this schedule to coincide
with the implementation of GASB 34.
Fiscal Year
152
City of Hermosa Beach
Changes in Fund Balances of Governmental Funds
Last Eight Fiscal Years
(modified accrual basis of accounting)
2003 2004 2005 2006 2007 2008 2009 2010
Revenues:
Property taxes 5,736,937$ 6,339,123$ 6,668,515$ 8,818,051$ 9,834,400$ 10,907,119$ 11,639,348$ 11,863,846$
Other taxes 7,323,267 8,262,205 9,085,304 9,404,925 9,488,447 9,630,365 9,079,246 8,760,988
Licenses and permits 571,682 664,169 701,468 868,085 772,832 877,775 678,477 556,737
Fines and forfeitures 278,334 371,802 459,106 1,627,274 1,615,777 1,994,522 2,111,467 2,075,759
Use of money and property 2,185,382 590,605 871,782 612,248 656,966 679,528 716,215 622,847
Intergovernmental 2,175,932 2,168,077 4,333,949 2,278,769 1,299,426 1,277,080 1,788,584 2,578,807
Charges for services 1,254,917 1,414,665 1,852,726 3,905,640 4,125,954 4,171,165 4,102,959 4,080,450
Miscellaneous 645,335 793,633 2,053,250 388,532 349,856 737,112 436,138 301,179
Interest earned on investments 450,116 177,757 467,925 753,746 1,097,128 850,176 429,092 135,423
Total revenues 20,621,902 20,782,036 26,494,025 28,657,270 29,240,786 31,124,842 30,981,526 30,976,036
Expenditures
Current:
Legislative and legal 832,157 752,541 727,026 963,031 858,017 967,423 1,057,092 976,862
General government 1,245,306 1,259,275 1,340,435 2,220,062 2,426,179 2,433,226 2,513,647 2,350,692
Public safety 10,040,618 10,555,169 12,139,133 14,444,334 16,236,080 17,374,613 16,974,820 17,251,686
Community development 951,856 1,089,056 1,325,219 1,346,996 1,417,596 1,283,317 1,400,933 1,229,909
Culture and recreation 966,621 932,447 940,158 1,124,347 1,205,653 1,249,251 1,372,611 1,201,057
Public works 3,082,096 3,189,361 3,374,363 3,785,554 3,895,291 3,993,055 4,288,179 4,158,945
Capital outlay 4,281,144 3,119,265 6,425,895 3,406,570 4,722,412 1,672,441 3,294,817 4,176,566
Debt service: n/a n/a n/a n/a n/a n/a n/a n/a
Total expenditures 21,399,798 20,897,114 26,272,229 27,290,894 30,761,228 28,973,326 30,902,099 31,345,717
Excess (deficiency) of revenues
over (under) expenditures (777,896) (115,078) 221,796 1,366,376 (1,520,442) 2,151,516 79,427 (369,681)
Other financing sources (uses)
Transfers in 4,016,062 6,962,841 7,368,202 4,273,743 2,550,370 1,755,358 1,919,303 2,316,998
Transfers out (3,625,668) (5,371,555) (6,621,149) (5,625,788) (3,094,756) (3,588,874) (3,667,923) (2,993,912)
Total other financing
sources (uses) 390,394 1,591,286 747,053 (1,352,045) (544,386) (1,833,516) (1,748,620) (676,914)
Net change in fund balances (387,502)$ 1,476,208$ 968,849$ 14,331$ (2,064,828)$ 318,000$ (1,669,193)$ (1,046,595)$
Debt service as a percentage of
noncapital expenditures 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
The City of Hermosa Beach has elected to show only eight years of data for this schedule, to coincide
with the implementation of GASB 34. The City has no debt, therefore Debt Service as a percentage
of noncapital expenditures is 0.0% for all years.
Fiscal Year
153
City of Hermosa Beach
General Government Tax Revenues By Source
Last Eight Fiscal Years
(modified accrual basis of accounting)
Fiscal Real
year property Transient Utility
ended Property Sales transfer Franchise occupancy user's
June 30 tax tax tax fees tax tax Other Total
2003 5,736,937$ 2,508,346$ 194,035$ 517,907$ 1,054,272$ 2,137,975$ 910,732$ 13,060,204$
2004 6,339,123 2,596,135 243,390 514,403 1,291,689 2,652,821 963,767 14,601,328
2005 6,668,515 2,584,015 279,627 590,372 1,477,612 2,675,196 1,478,482 15,753,819
2006 8,818,051 2,511,004 305,018 597,754 1,628,394 2,726,085 1,636,670 18,222,976
2007 9,834,400 2,395,390 279,219 606,572 1,769,015 2,769,113 1,669,138 19,322,847
2008 10,907,119 2,500,659 226,349 634,421 1,892,363 2,714,029 1,662,544 20,537,484
2009 11,639,348 2,390,658 140,113 674,947 1,645,571 2,575,209 1,652,748 20,718,594
2010 11,863,846 2,112,971 162,562 650,115 1,559,048 2,559,369 1,716,923 20,624,834
The City of Hermosa Beach has elected to show only eight years of data for this schedule, to coincide
with the implementation of GASB 34. The City has no debt, therefore Debt Service as a percentage
154
City of Hermosa Beach
Assessed Value and Estimated Actual Value of Taxable Property
Last Ten Fiscal Years
(In Thousands)
Fiscal Total Estimated
year Total taxable direct actual
ended Residential Commercial Industrial Less assessed tax taxable Percentage
June 30 property property property Other exemptions value rate value increase
2001 1,959,668$ 148,003$ 7,004$ 105,278$ (30,692)$ 2,189,260$ 1.00 2,219,952$
2002 2,163,509 163,177 7,552 91,586 (26,278) 2,399,546 1.00 2,425,824 9.61%
2003 2,342,017 175,517 7,340 101,252 (29,039) 2,597,087 1.00 2,626,126 8.23%
2004 2,581,409 191,355 7,867 93,753 (27,925) 2,846,459 1.00 2,874,384 9.60%
2005 2,834,252 201,708 7,276 98,635 (31,158) 3,110,712 1.00 3,141,870 9.28%
2006 3,158,374 228,948 7,853 102,802 (29,415) 3,468,562 1.00 3,497,977 11.50%
2007 3,579,546 258,573 8,653 83,453 (35,325) 3,894,900 1.00 3,930,225 12.29%
2008 3,978,216 305,364 11,695 108,583 (45,501) 4,358,357 1.00 4,403,858 11.90%
2009 4,261,900 355,516 12,724 96,991 (45,381) 4,681,750 1.00 4,705,847 7.42%
2010 4,350,467 378,930 12,442 128,227 (46,338) 4,823,728 1.00 4,870,066 3.03%
NOTE:
Source: Los Angeles County Auditor-Controller
Note: Assessed valuations available from the County of Los Angeles are based on 100% of full value
per Section 135 of the California Revenue and Taxation Code.
In 1978, the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1% based upon the assessed value of the
property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum of 2%). With few exceptions,
property is only reassessed as a result of new construction activity or at the time it is sold to a new owner. At that point, the property is reassessed based
upon the added value of the construction or at the purchase price (market value) or economic value of the property sold. The assessed valuation data shown
above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above.
155
City of Hermosa Beach
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
(rate per $100 of assessed value)
City
direct rate Overlapping rates
El Camino Flood
Fiscal Basic Hermosa Beach Community Los Angeles Control Metropolitan
Year rate School District College District County District Water District Total
2001 1.000000 0.001314 0.001552 0.008800 1.011666
2002 1.000000 0.001033 0.000881 0.006700 1.008614
2003 1.000000 0.001033 0.000881 0.006700 1.008614
2004 1.000000 0.019308 0.019025 0.000992 0.000462 0.006100 1.045887
2005 1.000000 0.016685 0.016558 0.000923 0.000245 0.005800 1.040211
2006 1.000000 0.014660 0.018380 0.000800 0.000050 0.005200 1.039090
2007 1.000000 0.020430 0.035700 0.000660 0.000050 0.004700 1.061540
2008 1.000000 0.017139 0.016467 - - 0.004500 1.038106
2009 1.000000 0.016398 0.017026 - - 0.004300 1.037724
2010 1.000000 0.017250 0.014868 - - 0.004300 1.036418
Source: Los Angeles County Auditor-Controller
156
City of Hermosa Beach
Principal Property Tax Payers
Current Year and Nine Years Ago
Percent of Percent of
total city total city
Taxable taxable Taxable taxable
assessed assessed assessed assessed
value value value value
Crico of Fountain Place Limited Partnership (1) 73,026,747$ 1.51%
EQR Gallery Apartments Limited Partnership (1) 67,128,838 1.39%
Diana Albergate Trust (4) 24,906,150 0.52%
Barbara K. Robinson (4) 20,798,407 0.43%
Hermosa Hotel Investments 16,463,287 0.34%
Regency Centers Limited Partnership (7) 14,304,448 0.30% 11,985,000$ 0.55%
Time Warner Cable (1) 12,351,868 0.26%
Beta Group (2) 12,351,698 0.26% 9,290,367 0.42%
Robert J. & Ranae R. Desantis Trust (1) 11,935,338 0.25%
Sepulveda Blvd Properties, LLC (5) 11,765,700 0.24%
Playa Pacifica Limited (2)11,110,584 0.51%
International Church of the Foursquare (7) 7,617,690 0.35%
Cheng Yi and Ying Yin Chang (1) 6,934,460 0.32%
Roger E. Bacon (5)5,485,396 0.25%
SII Trust (1)5,200,000 0.24%
Vasek Polak Properties, Incorporated (12) 4,792,422 0.22%
Shook Development Corporation (2) 4,559,116 0.21%
California Water Service Company (4) 4,524,576 0.21%
62,709,052$ 5.50% 71,499,611 3.28%
Source: HdL Coren & Cone, Los Angeles County Assessor Combined Tax Rolls
Numbers in parentheses represent the number of parcels owned by the tax payer.
Taxpayer
2010 2001
157
City of Hermosa Beach
Property Tax Levies and Collections
Last Ten Fiscal Years
Fiscal Taxes levied Collections in
year ended for the Percent subsequent Percent
June 30 fiscal year Amount of levy years Amount of levy
2001 4,370,463$ 4,239,808$ 97.01% 130,655$ 4,370,463$ 100.00%
2002 4,790,920 4,576,910 95.53% 214,010 4,790,920 100.00%
2003 5,193,796 5,017,148 96.60% 176,648 5,193,796 100.00%
2004 5,688,428 5,489,332 96.50% 199,096 5,688,428 100.00%
2005 6,215,435 5,708,000 91.84% 359,852 6,067,852 97.63%
2006 6,938,764 6,717,516 96.81% 142,471 6,859,987 98.86%
2007 8,256,383 7,778,209 94.21% 209,018 7,987,227 96.74%
2008 9,192,162 8,237,323 89.61% 406,013 8,643,336 94.03%
2009 9,859,343 8,065,980 81.81% 8,065,980 81.81%
2010 10,210,015 9,165,388 89.77% 9,165,388 89.77%
Source: Los Angeles County Auditor-Controller
fiscal year of levy Total collections to date
Collected within the
158
City of Hermosa Beach
Construction Value and Property Value
Last Ten Fiscal Years
Fiscal
year ended Number of Number of Total assessed
June 30 permits Valuation permits Valuation value
2001 540 32,136,129$ 56 7,402,324$ 2,219,952,219$
2002 591 19,260,802 43 2,142,566 2,425,823,846
2003 630 23,174,222 65 2,499,590 2,626,125,947
2004 596 28,114,344 75 6,713,988 2,874,383,847
2005 610 33,433,982 74 4,388,664 3,141,870,060
2006 696 41,088,855 66 4,101,562 3,497,977,443
2007 526 26,041,241 52 4,595,140 3,894,900,286
2008 531 29,341,001 73 4,600,100 4,358,356,873
2009 416 16,284,748 72 5,004,689 4,705,847,448
2010 377 9,596,415 64 2,454,027 4,823,727,991
Source: City of Hermosa Beach Community Development Department
Los Angeles County Auditor-Controller
Residential Commercial
159
City of Hermosa Beach
Direct and Overlapping Debt
June 30, 2010
City assessed valuation 4,823,727,991$
Redevelopment agency incremental valuation -
Total assessed valuation 4,823,727,991$
Estimated
share of
Percentage Outstanding debt overlapping
applicable 6/30/10 debt
Overlapping debt repaid with property taxes:
West Basin Water District debt service 0.560% 121,475,156 679,728
El Camino Community College District 2002 series 2003A 5.999% 6,680,000 400,703
El Camino Community College District 2005 refunding 5.999% 29,413,943 1,764,410
El Camino Community College District 2002 series 2006B 5.999% 139,150,000 8,346,982
Total overlapping debt repaid with property taxes 296,719,099$ 11,191,823
City direct debt
Hermosa Beach City School District debt service 2002 100.000% 1,449,401
Hermosa Beach School District debt service 2005 100.000% 3,994,298
Hermosa Beach School District debt service 2005 refunding 100.000% 5,985,074
Total city direct debt 11,428,773
Total direct and overlapping debt 22,620,596$
Source: HdL Coren & Cone
Los Angeles County Assessor's Office
160
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161
City of Hermosa Beach
Legal Debt Margin Information
Last Ten Fiscal Years
2001 2002 2003 2004
Assessed valuation 2,219,952,219$ 2,425,823,846$ 2,626,125,947$ 2,874,383,847$
Conversion percentage 25% 25% 25% 25%
Adjusted assessed valuation 554,988,055$ 606,455,962$ 656,531,487$ 718,595,962$
Debt limit percentage 15% 15% 15% 15%
Debt limit 83,248,208$ 90,968,394$ 98,479,723$ 107,789,394$
Total net debt applicable to limit -$ -$ -$ -$
Legal debt margin 83,248,208$ 90,968,394$ 98,479,723$ 107,789,394$
Total debt applicable to the limit
as a percentage of debt limit 0% 0% 0% 0%
valuation. This provision was enacted when assessed valuation was based on 25% of market value. Effective
fiscal year 1981-82, each parcel was assessed based on 100% of market value as of the most recent change
in ownership. The computations shown above convert the assessed valuation data for each fiscal year from
the full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was
enacted.
Source: City of Hermosa Beach Finance Department
County of Los Angeles, Auditor-Controller
Fiscal Year
California Government Code section 43605 provides for a legal debt limit of 15% of gross assessed
162
2005 2006 2007 2008 2009 2010
3,141,870,060$ 3,497,977,443$ 3,930,224,784$ 4,382,493,918$ 4,705,847,448$ 4,823,727,991$
25% 25% 25% 25% 25% 25%
785,467,515$ 874,494,361$ 982,556,196$ 1,095,623,480$ 1,176,461,862$ 1,205,931,998$
15% 15% 15% 15% 15% 15%
117,820,127$ 131,174,154$ 147,383,429$ 164,343,522$ 176,469,279$ 180,889,800$
-$ -$ -$ -$ -$ -$
117,820,127$ 131,174,154$ 147,383,429$ 164,343,522$ 176,469,279$ 180,889,800$
0% 0% 0% 0% 0% 0%
Fiscal Year
163
City of Hermosa Beach
Demographic and Economic Statistics
Last Ten Calendar Years
Personal income Per capita City per capita Unemployment School
Calendar Population (in thousands) personal income personal income rate enrollment
Year (1) (2) (2) (3) (4) (5)
2001 18,912 294,508,314$ 30,503$ 54,184$ 1.4% 1,430
2002 19,175 301,002,945 30,828 51,979 1.4% 1,471
2003 19,365 310,043,501 31,452 1.7% 1,489
2004 19,549 329,048,068 33,179 58,927 1.8% 1,498
2005 19,608 342,231,121 34,426 70,777 2.3% 1,475
2006 19,435 369,174,348 37,362 124,479 1.9% 1,462
2007 19,474 390,295,865 39,794 102,630 2.0% 1,449
2008 19,527 413,316,582 42,265 - 2.9% 1,518
2009 19,491 - - - 4.7% 1,521
2010 19,599 - - - 5.5% 1,278
Source:
(1) State of California Department of Finance.
(2) U.S. Department of Commerce, Bureau of Economic Analysis (data shown is for Los Angeles County). Not available
for 2009 or 2010.
(3) Personal Income figures for 2001, 2002, 2004, 2005, 2006 and 2007 are from the Internal Revenue Service individual income
tax statistics by zip code and for 2000 from the U.S. Census Bureau, Census 2000. Internal Revenue Service figures
are not an ongoing statistical project therefore all years are not available. Census information is available every
10 years.
(4) State of California Employment Development Department.
(5) State of California Department of Education.
164
City of Hermosa Beach
Principal Employers
Current Year and Nine Years Ago
Percent of Percent of
Number of total Number of total
Employer employees employment employees employment
1
24 Hour Fitness 185 4.64%
City of Hermosa Beach 176 4.54% 194 0.00%
Von's Companies 118 3.25% 105 0.00%
Hope Chapel 99 2.28% 130 0.00%
Hermosa Beach School District 91 1.54% 100 0.00%
Shorewood Realtors, Incorporated 87 2.16%
Hennesey's Tavern 79 100 0.00%
Ralph's Grocery 74 1.59% 65 0.00%
Intensive Behavior Intervention 59 1.37%
Comedy & Magic Club 52 1.29% 55 0.00%
Albertson's 65 0.00%
Brewski's 50 0.00%
Rocky Cola 47 0.00%
Source: City of Hermosa Beach Finance Department
1Percent of total employment is not available for 2000.
2010 2001
165
City of Hermosa Beach
Full-time and Part-time City Employees by Function
Last Ten Fiscal Years
Function 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
General government 19 19 20 20 19 18 19 23 19 16
Public safety 88 95 88 89 98 89 90 87 92 95
Community development 9 8 9 9 8 8 9 6 8 8
Culture and recreation 4 5 4 5 5 5 4 4 4 2
Public works 22 22 23 20 23 20 20 24 20 20
Total 142 149 144 143 153 140 142 144 143 141
Function 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
General government - - - - - - - - - -
Public safety 17 14 26 17 17 23 13 9 14 13
Community development 1 1 2 2 3 3 1 2 2 -
Culture and recreation 38 21 25 27 32 35 32 29 24 22
Public works - - - 1 - 2 1 - - -
Total 56 36 53 47 52 63 47 40 40 35
Source: City of Hermosa Beach Finance Department
Full-time employees as of June 30
Part-time employees as of June 30
166
City of Hermosa Beach
Operating Indicators by Function
Last Ten Fiscal Years
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Public safety
Police:
Physical arrests 873 1,027 1,343 1,413 1,064 887 896 933 648 665
Traffic citations issued 2,870 3,086 3,631 3,372 2,101 1,518 1,681 2,490 2,503 2,798
Parking citations issued 43,139 45,339 46,342 49,379 54,010 47,770 48,329 59,656 52,080 47,620
Fire:
Number of emergency calls - 1,681 1,717 1,923 2,023 2,136 2,255 2,088 2,273 2,162
Inspections - - 391 28 182 467 751 312 965 908
Community development:
Building permits issued 594 636 691 676 696 762 597 637 511 451
Culture and recreation:
Number of recreation classes 115 139 139 135 159 165 186 171 138 165
Total enrollment 4,039 5,112 4,778 4,616 5,969 5,228 5,128 4,272 3,744 3,776
Public works:
Graffiti removal (hours) 422 285 410 456 217 414 474 461 341 540
Permits issued 1,335 528 567 529 706 875 821 1,071 643 611
Source: Various city departments.
Note:
Indicators are not available for Fire emergency calls in 2001 or Fire inspections in 2001 and 2002.
Emergency calls for 2003-2008 were only available for January through June.
Fire Inspection totals for 2003 through 2005 were only available for January through June.
Fiscal Year Fiscal Year
167
City of Hermosa Beach
Capital Asset Statistics by Function
Last Ten Fiscal Years
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Public safety
Police:
Police stations 1 1 1 1 1 1 1 1 1 1
Parking meters1 - 1,611 1,611 1,666 1,666 1,666 1,666 1,666 1,666 1,663
Fire:
Fire stations 1 1 1 1 1 1 1 1 1 1
Culture and recreation
Community centers 1 1 1 1 1 1 1 1 1 1
Community theatres 1 1 1 1 1 1 1 1 1 1
Public works:
Beach (acres) 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5
Greenbelt (acres) 19.5 19.5 19.5 19.5 19.5 19.5 19.5 19.5 19.5 19.5
Parks 20 20 20 20 20 20 20 20 20 20
Parks (acres) 21.7 21.7 21.7 21.7 21.7 21.7 21.7 21.7 21.7 21.7
Sanitary sewers (miles) 33 33 33 34 34 34 34 34 34 34
Streets (miles) 40 40 40 40 40 40 40 40 40 40
Streetlights 399 399 399 399 399 392 392 392 392 392
Storm drains (miles) 1 1 1 1 1 1 1 1 1 1
Traffic Signals 17 17 17 17 17 17 17 18 18 18
Source: City of Hermosa Beach Finance Department
1Number of parking meters is not available for fiscal years 1997-2001.
Fiscal Year
168
C&L
Caporicci & Larson, Inc.
A Subsidiary of Marcum LLP
Certifi ed Public Accountants
www.c-lcpa.com
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN
AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE
WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Mayor and City Council
of the City of Hermosa Beach
Hermosa Beach, California
We have audited the basic financial statements of the City of Hermosa Beach, California (City),
as of and for the year ended June 30, 2010, and have issued our report thereon dated January 18,
2011. We conducted our audit in accordance with auditing standards generally accepted in the
United States of America and the standards applicable to financial audits contained in
Government Auditing Standards, issued by the Comptroller General of the United States.
Internal Control over Financial Reporting
In planning and performing our audit, we considered the City’s internal control over financial
reporting as a basis for designing our audit procedures for the purpose of expressing our
opinions on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of the City’s basic internal control over financial reporting. Accordingly, we do
not express an opinion on the effectiveness of the City’s internal control over financial
reporting.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct misstatements on a timely basis. A material weakness is a
deficiency, or a combination of deficiencies, in internal control such that there is a reasonable
possibility that a material misstatement of the City’s financial statements will not be prevented,
or detected and corrected on a timely basis.
Our consideration of the internal control over financial reporting was for the limited purpose
described in the first paragraph and was not designed to identify all deficiencies in internal
control over financial reporting that might be deficiencies, significant deficiencies, or material
weaknesses. We did not identify any deficiencies in internal control over financial reporting that
we consider to be material weakness, as defined above. We did not identify any deficiencies in
internal control over financial reporting that we consider to be material weaknesses, as defined
above.
170
To the Honorable Mayor and City Council
of the City of Hermosa Beach
Hermosa Beach, California
Page 2
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City’s financial statements are free of
material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements, noncompliance with which could have a direct and
material effect on the determination of financial statement amounts. However, providing an
opinion on compliance with those provisions was not an objective of our audit, and accordingly we
do not express such an opinion. The results of our tests disclosed no instances of noncompliance
or other matters that are required to be reported under Government Auditing Standards.
This report is intended solely for the information and use of management, the City Council and
others within the City and is not intended to be and should not be used by anyone other than
these specified parties. However, this report is a matter of public record and its distribution is
not limited.
Caporicci & Larson, Inc.
A Subsidiary of Marcum LLP
Certified Public Accountants
Irvine, California
January 18, 2011