SEGURIDAD CIUDADANA

quent 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 Authority in order to show a total separation between the Parking Authority and the City, see Note 14. 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 Financing Authority) is a joint powers authority, organized pursuant to a Joint Exer- cise of Powers Agreement, dated November 10, 1992 between the City and the Parking Authority. The Joint Powers Agreement was entered into pursuant to the provisions of Article 1 of Chapter 5 of the California Gov- ernment Code (the Act). The Public Financing Authority was created for the purpose of providing financing for public capital improvements for the City through the acquisition by the Public Financing 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 Au- thority exactly match debt service requirements of the underlying debt. Accordingly, the leases between the City and the Public Financing Au- thority are eliminated and the underlying debt is reported as debt of the City. Separate financial statements are not prepared for the Public Financ- ing 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 Services/Chief Financial Officer for more information.

City of Beverly Hills Charitable Community 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 Bev- erly Hills Community Charitable Foundation” (Foundation). This corpora- tion 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 phys- ical and cultural environment of the City of Beverly Hills.

The property of the Foundation is irrevocably dedicated to charitable pur- poses. 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 direc- tors 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 Di- rectors”). 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 pur- poses or to a nonprofit fund, foundation or corporation which is organized and operated exclusively for charitable or educational purposes that bene- fit 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 Foundation is a Fiduciary fund of the City. 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 generally reported, however, as part of the basic financial statements to endure fiscal accountability. In Fiscal Year 2011-2012 there were no Foundation assets or financial transactions, therefore, there was no presen- tation of fiduciary fund statements within the basic financial statements.

B. Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduci- ary 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 supported by taxes and intergovernmental revenues, are reported separately from busi- ness-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 ex- penses of a given function or segment are offset by program revenues. Di- rect expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or appli- cants who purchase, use, or directly benefit from goods, services, or privi- leges provided by a given function or segment and 2) grants and contribu- tions 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. Separate financial statements are provided for governmental funds and proprietary funds. Major individual

For the year ended June 30, 2012

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(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,

CONTINUED

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 ap- plicable measurement focus and basis of accounting. The measurement fo- cus 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 proprie- tary fund, financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless 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 fi- nancial resources measurement focus and the modified accrual basis of ac- counting. 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, 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 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. 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 re- quired to be accounted for in another fund.

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

• 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 revenues that are legally restricted to expenditure for a particular purpose. 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 park- ing 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.

• 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

CITY OF BEVERLY HILLS, CALIFORNIA

Notes to Basic Financial Statements For the year ended June 30, 2012

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(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,