ANEXO Nº 1: RESUMEN DE AREAS VERDES POR TIPO DE RIEGO DEL DISTRITO

B. Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are sup- ported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely, to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific func- tion or segment. Program revenues include 1) charges to customers or ap- plicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and con- tributions that are restricted to meeting the operational or capital require- ments of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, pro- prietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements (note that the City has no fiduciary funds). Major individual governmental funds and major indi- vidual enterprise funds are reported as separate columns in the fund finan- cial statements.

C. Measurement Focus, Basis of Accounting and Financial Statement Presentation

The government-wide financial statements are reported using the eco- nomic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, re- gardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements have been met.

Governmental fund financial statements are reported using the current fi- nancial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are col- lectible within the current period or soon enough thereafter to pay liabili-

ties of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is in- curred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, are recorded only when payment is due.

Property taxes and taxpayer-assessed tax revenues (e.g., franchise taxes, sales taxes, motor vehicle fees, etc.), net of estimated refunds and uncol- lectible amounts, and interest associated with the current fiscal period are all considered susceptible to accrual and so have been recognized as reve- nues of the current fiscal period. The City reports the following major governmental funds:

• The General Fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those re- quired to be accounted for in another fund.

• The Infrastructure Capital Projects Fund accounts for the construc- tion expenditures of certain public capital improvement projects, in- cluding, but not limited to, replacement of the City’s street lighting system, street improvements and other infrastructure projects.

The City reports the following major proprietary funds:

• The Water Enterprise Fund accounts for all financial aspects of the City’s water operations. The City currently obtains its water from the Metropolitan Water District of Southern California and distributes it throughout the City and portions of the City of West Hollywood. The City has completed construction of a water treatment facility through a lease-purchase-operate-finance arrangement to treat local well water that is anticipated to meet approximately 20% of its water needs. The acquisition and construction of water system facilities have primarily been financed through the issuance of general obligation and revenue bonds supported by water service charges established by City Council action.

• The Parking Facilities Enterprise Fund accounts for the City’s self- supporting parking operations. The acquisition and construction of parking facilities have primarily been financed through the issuance of revenue bonds supported by parking fees charged to the public and lease payments from retail facilities located in the parking structures. • The Solid Waste Enterprise Fund accounts for the collection and dis-

posal of solid waste generated by commercial and residential users in the City. Solid waste operations are primarily financed through user charges established by City Council action.

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• The Wastewater Enterprise Fund accounts for the collection and dis- posal of wastewater generated within the City. The acquisition and construction of wastewater facilities and capacity rights in the City of Los Angeles Hyperion Treatment Plant have primarily been financed through the issuance of revenue bonds supported by user charges es- tablished by City Council action.

• The Stormwater Enterprise Fund accounts for the certain standards for street sweeping, storm drain maintenance and other environmental quality programs mandated under the Federal “Clean Up the Bay” program. Stormwater operations are financed through user charges es- tablished by City Council action.

Additionally, the City reports the following fund type:

• Internal service funds account for a variety of services provided to other departments or agencies of the City on a cost reimbursement ba- sis. These services include information technology, capital assets (governmental capital assets excluding infrastructure assets and the City’s fine art collection) and related maintenance and financing, re- prographics, cable television, liability insurance, workers’ compensa- tion insurance, unemployment insurance and employee benefits. Rentals to user departments and divisions for internal service capital assets are based on 1) capital replacement, 2) repairs and maintenance costs and 3) fuel usage. The capital replacement charge, based on the estimated net replacement cost of the asset allocated over the asset’s estimated useful life, is used by the City to reduce budgetary swings in user departments for periodic capital replacement.

Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the GASB. The City also has the option of following subsequent private-sector guidance for its business-type activities and enterprise funds, subject to the same limita- tion. The City has elected not to follow subsequent private-sector guid- ance.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are internal service fund charges and charges for billing, legislative assis- tance and similar services to business-type activities, as well as certain other charges to business-type activities and various other functions of the City. Elimination of these charges would distort the direct costs and pro- gram revenues reported for the various functions concerned.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services or privileges provided, 2) operating grants and contributions and 3) capital grants and contributions. Internally dedi- cated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing goods and services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise and internal service funds are charges for sales and services. Operating expenses for enterprise and internal service funds include salaries and employee benefits, maintenance and operation of systems and facilities, administrative expenses and de- preciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses.

When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted re- sources, as they are needed.

D. Assets, Liabilities, Net Assets or Equity Cash and Investments

In order to maximize the flexibility of its investment program and to aid in cash budgeting, the City pools the cash of all funds, except for monies de- posited with fiscal agents in accordance with related bond indentures. The cash and investments balance in each fund represents that fund’s equity share of the City’s cash and investment pool. As the City places no re- strictions on the deposit or withdrawal of a particular fund’s equity in the pool, the pool operates like a demand deposit account for the participating funds.

Interest income earned on pooled cash and investments is allocated monthly to the various funds based on month-end balances and is adjusted at year-end. Interest income on restricted cash and investments with fiscal agents is credited directly to the related fund.

The City’s investments are carried at fair value, except for certain short- term money market investments, which are carried at amortized cost. The fair value of equity and debt securities is determined based on sales prices or bid-and-asked quotations from SEC-registered securities exchanges or NASDAQ dealers. LAIF determines the fair value of its portfolio quar- terly and reports a factor to the City; the City applies that factor to convert its share of LAIF from amortized cost to fair value. Changes in fair value are allocated to each participating fund on a quarterly basis. Based on management decision, investment income of certain funds has been as- signed to the General Fund. Such transfers are included in transfers to the

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General Fund. For purposes of the statement of cash flows, the City has defined cash and cash equivalents to be petty cash funds, equity in the City’s cash and investment pool, and restricted, non-pooled investments with initial maturities of three months or less. The City early imple- mented GASB Statement No. 40, Deposit and Investment Risk Disclo- sures—an Amendment of GASB Statement No. 3, effective July 1, 2002.

Receivables and Payables

Activity between funds that are representative of lending/borrowing ar- rangements outstanding at the end of the fiscal year is referred to as inter- fund receivables/interfund payables (i.e., the current portion of interfund loans) or advances to/from other funds (the noncurrent portion of inter- fund loans). All other outstanding balances between funds are reported as interfund receivables or interfund payables. Any residual balances out- standing between the governmental activities and the business-type activi- ties are reported in the government-wide financial statements as internal balances.

Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not ex- pendable available financial resources.

All trade and tax receivables are shown net of an allowance for uncollect- ible accounts and estimated refunds due.

Assessed values for purposes of property taxes are determined on an an- nual basis for the period July 1 to June 30 by the Los Angeles County As- sessor as of March 1. Taxes are levied annually on July 1 and become a lien on real property at March 1. Taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respec- tively, at which time applicable penalties and interest are assessed.

Inventories and Prepaid Items

All materials and supplies inventories are valued at cost using the average cost method. Inventories in governmental funds are recorded as expendi- tures when consumed rather than when purchased.

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

Restricted Assets

Certain proceeds of the City’s revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the bal-

ance sheet because they are maintained in separate bank accounts and their use is limited by applicable bond covenants. The proceeds of certain endowments, together with cumulative unspent earnings thereon, are also classified as restricted assets on the balance sheet because their use is lim- ited by the terms of the endowments.

In the absence of specific statutory provisions governing the issuance of bonds, certificates or leases, these bond monies may be invested in accor- dance with the ordinance, resolutions or indentures specifying the types of investments its trustees or fiscal agents may make. These ordinances, resolutions and indentures are generally more restrictive than the City’s general investment policy. In no instance have additional types of in- vestments been authorized that are not permitted by the City’s general in- vestment policy.

Capital Assets

Capital assets, which include property, plant, equipment, fine art and in- frastructure assets (e.g., roads, bridges, sidewalks, traffic lights and sig- nals, street lights and similar items), are reported in the applicable gov- ernmental or business-type activities columns in the government-wide fi- nancial statements. Capital assets are defined by the City as assets with an initial, individual cost of $5,000 or more and an estimated useful life in excess of one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are re- corded at estimated fair market value at the date of donation. The cost of- normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized.

Major outlays for capital assets are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of busi- ness-type activities is included as part of the capitalized value of the assets constructed. No interest was capitalized during the year ended June 30, 2006.

Property, plant and equipment of the City is depreciated using the straight-line method over the following estimated useful lives:

Assets Years

Buildings 20 to 45

Improvements other than buildings 10 to 45

Infrastructure 15 to 50

Utility systems 20 to 50

Vehicles 3 to 10

Computer equipment 2 to 10

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The City’s fine art collection is not depreciated. It is the City’s opinion that such assets are not wasting and are not subject to periodic decrease in value. Periodic restoration and maintenance costs on particular items are charged to expense as incurred.

Compensated Absences

It is the City’s policy to permit employees to accumulate earned but un- used vacation and sick leave benefits. All vacation and sick leave benefits are accrued as earned by employees. A portion of unused sick leave bene- fits, varying by employee bargaining unit, vests and is payable upon re- tirement. For proprietary funds, a current liability is reported for that por- tion of the estimated value of vacation and sick leave benefits to be used during the subsequent year, and the estimated value of vested sick leave benefits of employees approaching or at their respective retirement ages. The balance is considered a long-term obligation. For governmental funds the estimated compensated absences liability due within one year is in- cluded as a current liability in the Employee Benefits Internal Service Fund and the balance is included as a long-term liability in the Employee Benefits Internal Service Fund.

Long-Term Obligations

In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obli- gations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Initial-issue bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. The difference between the reacquisition price of refunding bonds and the net carrying amount of refunded debt (deferred amount on refunding) is amortized over the shorter of the lives of the refunding debt or remaining life of the refunded debt. Bonds payable are reported net of the unamortized portion of applicable premium, discount or deferred amount on refunding. Bond issuance costs, including underwriters’ dis- count, are reported as deferred bond issuance costs.

In the fund financial statements, governmental fund types recognize bond premiums, discounts and issuance costs during the period issued. The face amount of debt issued is reported as other financing sources. Premi- ums received are reported as other financing sources, while discounts are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service ex- penditures.

Net Assets and Fund Equity

In the government-wide financial statements and proprietary fund finan- cial statements, net assets are reported in three categories: net assets in- vested in capital assets, net of related debt; restricted net assets and unre- stricted net assets. Restricted net assets represent net assets restricted by parties outside of the City (such as creditors, grantors, contributors, laws and regulations of other governments). The nonexpendable portion of permanent fund trusts and endowments is reported as permanently re- stricted. The City’s other restricted net assets are temporarily restricted (ultimately expendable assets). All other net assets are considered unre- stricted.

In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are le- gally restricted by outside parties for use for a specific purpose. Designa- tions of fund balance represent tentative management plans that are sub- ject to change.

Estimates

The preparation of financial statements in conformance with GAAP re- quires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates.

Self-Insurance Programs

The City has initiated self-insurance programs to provide for general li- ability, workers’ compensation claims and unemployment insurance claims. These activities are accounted for in self-insurance internal ser- vice funds.

Fund revenues are primarily premium charges to other funds and are