III PAVIMENTACIÓN

CAPÍTULO II. INFRAESTRUCTURA DE CALZADA

Fund and no Parking Authority financial transactions occurred in subsequent fiscal years. However, The Parking Authority still remained a legal entity. On September 30, 2011, the majority of the assets of the City’s Parking Enterprise Fund were transferred to The Parking Au- thority in order to show a total separation between The Parking Author- ity and the City. (See Note 14 for additional explanation.) The Parking Authority is blended as an Enterprise Fund of the City.

Beverly Hills Public Financing Authority

The City of Beverly Hills Public Financing Authority (Public Financ- ing Authority) is a joint powers authority, organized pursuant to a Joint Exercise of Powers Agreement, dated November 10, 1992 between the City and The Parking Authority. The Joint Powers Agreement was en- tered into pursuant to the provisions of Article 1 of Chapter 5 of the California Government Code (the Act). The Public Financing Authori- ty was created for the purpose of providing financing for public capital improvements for the City through the acquisition by the Public Fi- nancing Authority of such public capital improvements and/or the purchase by the Public Financing Authority of local obligations within the meaning of the Act. Under the Act, the Public Financing Authority has the power to issue bonds to pay the costs of public capital improvements.

Required lease payments between the City and the Public Financing Authority exactly match debt service requirements of the underlying debt. Accordingly, the leases between the City and the Public Financ- ing Authority are eliminated and the underlying debt is reported as debt of the City. Separate financial statements are not prepared for the Pub- lic Financing Authority. Activities of the Public Financing Authority are presented within the debt service fund, as well as within Long-Term Liabilities Note 9. Please contact the Director of Administrative Ser- vices/Chief Financial Officer for more information.

City of Beverly Hills Community Charitable Foundation

On January 20th, 2012, the Internal Revenue Service recognized the City’s newly formed 501(c)(3) not-for-profit corporation entitled, “City of Beverly Hills Community Charitable Foundation” (Foundation). This corporation is a nonprofit public benefit corporation and is not organized for the private gain of any person. It is organized under the Nonprofit Public Benefit Corporation Law for public and charitable purposes. The specific purposes of the Foundation are to enhance the services and programs to the Beverly Hills community and its citizens, as well as augment the physical and cultural environment of the City of Beverly Hills.

The property of the Foundation is irrevocably dedicated to charitable purposes. No part of the net earnings or assets of this corporation shall inure to the benefit of any of its directors, trustees, officers, private shareholders or members, or to any private individual. There are five authorized directors of the Foundation and all must be residents of the City of Beverly Hills. Three of the five directors are comprised of the following: The Treasurer, Vice Mayor and a Councilmember of the City chosen by the Mayor and ratified by the City Council (collectively “Elected Official Directors”). The remaining two directors are selected by the City Council of the City (each, a “Resident Director”).

Upon the dissolution or winding up of the Foundation, its assets remaining after payment, or provision for payment, of all debts and liabilities of the Foundation shall be distributed to the City of Beverly Hills for public purposes or to a nonprofit fund, foundation or corporation which is organized and operated exclusively for charitable or educa- tional purposes that benefit the residents of the City of Beverly Hills and which has established its tax exempt status under Internal Revenue Code Section 501(c)(3).

The City maintains a fiduciary fund for the City of Beverly Hills Community Charitable Foundation. A fiduciary fund is used to report the assets held by the City in trust for the Foundation because these assets cannot be used for the City’s own programs. Therefore, such funds are excluded from the government-wide financial statements. They are reported, however, as part of the basic financial statements to ensure fiscal accountability.

B. Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been re- moved from these statements. Governmental activities, which normal- ly are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely, to a significant extent, on fees and charges for support.

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 function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

CITY OF BEVERLY HILLS, CALIFORNIA

Notes to Basic Financial Statements For the year ended June 30, 2013

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,

CONTINUED

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds even though the latter are excluded from the government-wide financial statements (note that the City has one fiduciary fund, the City of Beverly Hills Community Charitable Foundation). Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

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

The accounting and financial reporting treatment is determined by the applicable measurement focus and basis of accounting. The measurement focus describes what type of information a given fund represents. The basis of accounting describes when changes are recognized. The government-wide financial statements are reported using the economic 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 when all eligibility requirements have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both meas- urable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City con- siders 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 incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compen- sated absences, and claims and judgments, are recorded only when payment is due. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital lease are reported as other financing sources. Property taxes and taxpayer-assessed tax revenues (e.g., franchise taxes, sales taxes, motor vehicle fees, etc.), net of estimated refunds and uncollectible amounts, and interest associated with the current fiscal period are all considered susceptible to accrual and so have been recognized as revenues of the current fiscal period. Expenditure driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other eligibility requirements have been met, and the

amount is received during the period or within the availability period for this revenue source (within 60 days of year-end). All other revenue items are considered to be measureable and available only when cash is received by the government.

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 required to be accounted for in another fund.

 The Infrastructure Capital Projects Fund accounts for the construc- tion expenditures of certain public capital improvement projects, including, but not limited to, replacement of the City’s street light- ing 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 distrib- utes it throughout the City and portions of the City of West Holly- wood. 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 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 struc- tures.

 The Solid Waste Enterprise Fund accounts for the collection and disposal of solid waste generated by commercial and residential us- ers in the City. Solid waste operations are primarily financed through user charges established by City Council action.

 The Wastewater Enterprise Fund accounts for the collection and disposal 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 financedthrough the issuance of revenue bonds supported by user charges established by City Council action.

For the year ended June 30, 2013

46  (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,

CONTINUED

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

 The Parking Authority of the City of Beverly Hills (Parking Au- thority) is a public financing agency established by the City under the State of California Parking Law of 1949 to provide public parking facilities on a citywide basis. The Parking Authority provides for the acquisition and/or construction of parking facilities that are leased to the City for the general benefit of its citizens. The Parking Authority is a blended component unit. See Note 1, Section A for more information about The Parking Authority.

Additionally, the City reports the following fund type:

 The Debt Service Fund accounts for the accumulation of resources that are restricted, committed, or assigned for the payment of principal and interest on long-term obligations of governmental funds.  The Special Revenue Funds are used to account for specific reve-

nues that are legally restricted to expenditure for a particular purpose.

 Internal service funds account for a variety of services provided to other departments or agencies of the City on a cost reimbursement basis. 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, reprographics, cable television, liability insurance, workers’ com- pensation 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.

 Fiduciary funds are used to report assets held in a trustee or agency capacity for others and therefore cannot be used to support the government's own programs.

 Permanent funds are used to account for and report resources that are restricted to the extent that only earnings, and not principal, may

be used for purposes that support the reporting government’s programs—that is, for the benefit of the government or its citizenry. 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 limitation. The City has elected not to follow subsequent private-sector guidance.

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 assistance 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 program 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. Inter- nally dedicated 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 depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating 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 resources, as they are needed.

D. Assets, Liabilities, Net Position 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 deposited with fiscal agents in accordance with related bond in- dentures. The cash and investments balance in each fund represents that fund’s equity share of the City’s cash and investment pool.

CITY OF BEVERLY HILLS, CALIFORNIA

Notes to Basic Financial Statements For the year ended June 30, 2013

47 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,

CONTINUED

As the City places no restrictions 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. 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. Local Agency Investment Fund (LAIF) determines the fair value of its portfolio quarterly 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 man- agement decision, investment income of certain funds has been assigned to the General Fund. Such assignments are included in transfers to the 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 follows the disclosure requirements of GASB Statement No. 40, De- posit and Investment Risk Disclosures—an Amendment of GASB State- ment No. 3.

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 interfund receivables/interfund payables (i.e., the current portion of interfund loans) or advances to/from other funds (the noncurrent portion of interfund loans). All other outstanding balances between funds are reported as interfund receivables or interfund payables. Any residual balances outstanding between the governmental activities and the business-type activities 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 non-spendable account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.

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

Assessed values for purposes of property taxes are determined on an annual basis for the period July 1 to June 30 by the Los Angeles Coun- ty Assessor as of March 1. Taxes are levied annually on July 1 and be- come a lien on real property at January 1. Taxes are due November 1 and February 1 and are delinquent if not paid by December 10 and April 10, respectively, at which time applicable penalties and interest are assessed.

Inventories and Prepaid Expenses

All materials and supplies inventories are valued at cost using the aver- age cost method. Inventories in governmental funds are recorded as

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