STATE of CALIFORNIA
COMPREHENSIVE ANNUAL
FINANCIAL REPORT
Year Ended June 30, 2012
Prepared by the Staff of the Administrative Services Department
Comprehensive Annual Financial Report
Year Ended June 30, 2012
Table of Contents
Statement/
Exhibit
Page
i
INTRODUCTORY SECTION
Letter of Transmittal ...
1
Principal City Officials ...
11
City Organizational Chart ...
12
Administrative Services Department Organizational Chart ...
12
Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting ...
13
FINANCIAL SECTION
Independent Auditors’ Report ...
15
Management’s Discussion and Analysis (Unaudited) ...
17
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Assets ...
A-1
29
Statement of Activities ...
A-2
31
Fund Financial Statements:
Balance Sheet – Governmental Funds ...
A-3
32
Reconciliation of Total Governmental Fund Balances to Net Assets of Governmental Activities
in the Statement of Net Assets...
A-4
33
Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ...
A-5
34
Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of
Governmental Funds to the Statement of Activities ...
A-6
35
Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General Fund ...
A-7
36
Statement of Net Assets – Proprietary Funds ...
A-8
38
Statement of Revenues, Expenses and Changes in Fund Net Assets – Proprietary Funds ...
A-9
40
Statement of Cash Flows – Proprietary Funds ...
A-10
41
Notes to Basic Financial Statements:
(1) Summary of Significant Accounting Policies ...
43
(2) Reconciliation
of
Government-wide
and Fund Financial Statements ...
49
(3) Stewardship,
Compliance and Accountability ...
55
(4) Cash
and
Investments ...
55
(5) Receivables
and
Deferred Revenues ...
60
(6) Interfund
Receivables/Payables ...
62
(7) Transfers
...
63
(8) Capital
Assets ...
65
(9) Long-Term Liabilities ...
70
CITY OF BEVERLY HILLS, CALIFORNIA
Comprehensive Annual Financial Report
Year Ended June 30, 2012
Table of Contents, Continued
Statement/
Exhibit
Page
ii
(11) Related Party Transaction – Sale/Leaseback ...
81
(12) Postemployment Health Care Benefits ...
81
(13) Commitments and Contingencies ...
85
(14) Net Assets Invested in Capital Assets, Net of Related Debt ...
87
(15) Fund Balance ...
91
Required Supplementary Information – Schedule of Funding Progress of the City’s Defined Benefit Pension Plans (Unaudited) ...
93
Required Supplementary Information – Schedule of Funding Progress of the City’s Other Postemployment Benefits Plan (Unaudited)..
94
Additional Financial Information:
Combining and Individual Fund Statements and Schedules:
Nonmajor Governmental Funds:
Combining Balance Sheet ...
B-1
95
Combining Statement of Revenues, Expenditures and Changes in Fund Balances ...
B-2
98
Combining Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual ...
B-3 101
Infrastructure Capital Projects Fund –Schedule of Revenues, Expenditures and Changes in
Fund Balance – Budget and Actual ...
C-1 112
Internal Service Funds:
Combining Statement of Net Assets ...
D-1
113
Combining Statement of Revenues, Expenses and Changes in Fund Net Assets ...
D-2
115
Combining Statement of Cash Flows ...
D-3
116
Capital Assets Used in the Operation of Governmental Funds:
Comparative Schedule by Source ...
E-1
118
Schedule by Function and Activity ...
E-2
119
Schedule of Changes by Function and Activity ...
E-3
120
STATISTICAL SECTION (Unaudited)
Narrative...
121
Financial Trends Information:
Net Assets by Component ...
S-1
122
Changes in Net Assets ...
S-2 123
Comprehensive Annual Financial Report
Year Ended June 30, 2012
Table of Contents, Continued
Statement/
Exhibit
Page
iii
Fund Balances of Governmental Funds ...
S-3
126
Changes in Fund Balances of Governmental Funds ...
S-4
127
Revenue Capacity Information:
Revenue Bases and Rates of Business Tax ...
S-5
128
Principal
Business Tax Payers ...
S-6 136
Property Tax Levies and Collections ...
S-7
137
Assessed and Estimated Actual Value of Taxable Property ...
S-8
138
Property Tax Rates for Direct and Overlapping Governments ...
S-9
139
Property Tax Levies for All Overlapping Governments ...
S-10
140
Principal Property Taxpayers ...
S-11
141
Debt Capacity Information:
Ratios
of
Outstanding Debt by Type ...
S-12 142
Computation of Direct and Overlapping Debt ...
S-13 143
Legal Debt Margin Information ...
S-14
144
Ratio of Annual Debt Service Expenditures of Governmental Funds to Total Governmental Fund Expenditures and Ratio of Total
Debt Service Expenditures to Total Governmental Activities Expenses ...
S-15 145
Ratios of General Bonded Debt Outstanding...
S-16 146
Water Enterprise Fund Long-Term Debt Coverage ...
S-17
147
Wastewater Enterprise Fund Long-Term Debt Coverage ...
S-18 148
Demographic and Economic Information:
Demographic and Economic Statistics ...
S-19 149
Demographic
Statistical Data ...
S-20 150
Principal
Employers ...
S-21
151
Operating Information:
Full-time Equivalent City Government Employees by Function...
S-22 152
Operating
Indicators
...
S-23 153
Capital
Asset
Statistics by Function ...
S-24
154
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Beverly Hills, Californ
Honorable Mayor,
Citizens of the C
State law requires t
six months of the
statements present
principles (GAAP
auditing standards
Pursuant to that re
financial report (C
the fiscal year ende
This report consi
finances of the
management assum
of all of the inform
basis for making
established a comp
both to protect the
sufficient reliable
statements in confo
should not outweig
internal controls h
absolute assurance
misstatement. As m
and belief, this fin
respects.
The City’s financia
Evans, a public ac
audits of the State
The goal of the ind
the financial statem
nia 90210-4817
City Council and
City of Beverly Hill
that all general-pur
close of each fis
ted in conformity
) and audited in
s by a firm of l
quirement, we her
AFR) of the City
ed June 30, 2012.
ists of manageme
City of Beverly
mes full responsibil
mation presented in
these representat
prehensive interna
City’s assets from
information for th
ormity with GAAP
gh their benefits, th
has been designed
that the financial
management, we a
nancial report is c
al statements have
ccounting firm ful
e and local govern
dependent audit wa
ments of the City of
ls:
rpose local governm
scal year a compl
with generally a
accordance with
icensed certified
reby submit the co
of Beverly Hills, C
ent’s representatio
y Hills, Californi
lity for the complet
n this report. To p
tions, managemen
al control framewo
m loss, theft or mi
he preparation of
P. Because the cost
he City’s comprehe
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statements will be
ssert that, to the be
complete and reli
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lly licensed and q
nments within the
as to provide reaso
f Beverly Hills, Cal
February 6, 201
ments publish with
lete set of financi
accepted accountin
generally accepte
public accountant
omprehensive annu
California (City) fo
ons concerning th
ia. Consequentl
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provide a reasonab
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ork that is designe
suse and to compi
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sonable rather tha
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qualified to perfor
State of Californi
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y Hills, California
0, 2012, are fairly p
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ed as the first comp
requires that mana
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ement’s Discussion
gned to complemen
City’s MD&A can
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of the City of
orated in 1914 unde
tablished residentia
s County in South
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ty operates under a
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The Mayor is sele
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ate – State of Calif
012, are free of
ed examining, on a
sures in the finan
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verall financial s
ncluded, based upo
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presented in confor
United States. The
ponent of the finan
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ny the basic finan
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he financial section
f Beverly Hills.
er the general laws
al city and comme
hern California. T
os Angeles City
e miles and serv
mates that service
150,000 persons du
a Council-Manager
members elected at
ected from the City
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our years. The City
fornia Dept. of Fina
FAX:
material misstate
a test basis, eviden
ncial statements; a
estimates made by
statement presenta
on the audit, that
ified opinion that
ments for the fisca
rmity with accounti
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ncial section of this
narrative introducti
ncial statements in
D&A). This letter
ould be read in con
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of the CAFR.
The City of B
s of the State of C
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(310) 285-2411 (310) 285-2441ement. The
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n the form of
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Beverly Hills,
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land area of
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to a daytime
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ping four-year
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advisory Commissi
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Human Relation
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Traffic & Parkin
In addition to sittin
also acts as the B
Authority of the
Financing Authorit
continues as a b
appointment and
September 30, 20
Enterprise Fund we
a total separation b
Hills Public Financ
unit. The City Ma
ordinances of the C
the City, and for ap
offices.
The City provides
statute. Services
construction and m
utilities, culture-rec
general administrat
The annual budget
and control. The
resolution by July
revenue funds and
presented for repo
accepted accountin
The Honorable M
Citizens of the C
Letter of Transmit
February 6, 2013
passing ordinanc
ppointing a City M
City Council appo
ions and Boards:
ommission
•
ge Commission
•
mission
•
ns Commission
•
Commission
•
ng Commission
ng as the governin
oard of Directors
City of Beverly
ty. The Parking A
blended componen
financial burden
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ere transferred to t
between the Parking
cing Authority con
anager is responsib
City Council, for o
ppointing the heads
the full range of m
provided include
maintenance, sanitat
creation, public im
tive and support ser
serves as the found
e City Council is
y 1 of each fiscal
d permanent fund
orting purposes o
ng principles.
ayor, City Council
City of Beverly Hil
ttal
es, adopting the
Manager, City Attor
oints the member
Charitable Solicita
Design Review Co
Health & Safety C
Planning Commis
Recreation & Park
ng body of the Cit
of two componen
Hills and the B
Authority of the C
nt unit under the
on the primary
of the assets of
the Parking Author
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ntinues to remain a
ble for carrying o
verseeing the
day-s of the City’day-s vario
municipal services
public safety (pol
tion, refuse collecti
mprovements, plann
rvices.
dation for the City
required to adop
l year for the Ge
ds. These budget
on a basis consis
and
lls, California
budget, appointin
rney and City Cler
rs of the followin
ations Commission
ommission
Commission
ssion
ks Commission
ty, the City Counc
nt units: the Parkin
everly Hills Publ
City of Beverly Hil
e criteria of boar
government. O
the City’s Parkin
rity in order to sho
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blended compone
out the policies an
to-day operations o
ous departments an
as contemplated b
lice and fire), stre
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ning and zoning, an
’s financial plannin
t an annual budg
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the year must
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by action of the C
whereby commitm
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mental fund for w
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financial statement
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and begin on pag
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an be found on page
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dopts annual financ
and five-year cap
or primarily in pro
for on an economi
mandated to repor
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ore, budgetary data
d budgetary contr
tal budget for all fu
ments approved by
n. The City Mana
e adopted budget.
be approved by
ing amendments t
ationship to the
bered appropriation
priations are reapp
City Council. The
tments such as pur
reserved fund balan
sons are provided i
which an appropr
n, beginning on pag
ts for the Genera
or governmental f
the Nonmajor Gov
ge 101. The budg
ojects Fund, a Ma
e 112.
ncial Condition.
bdivision in 1906, B
ent years, much ha
lt, the City has esta
visitors with a su
nrichment opportun
cial plans for the e
pital budget plans
oprietary funds. A
ic resources measur
rt the results of op
ry fund types o
a related to these fu
rol is the total ad
funds and divisions
the City Council s
ager may authoriz
Supplemental a
y the City Coun
to the budget dur
original budget
ns lapse at the end
propriated in the en
e City utilizes an
rchase orders and
nces at year-end.
in this report for ea
riated annual budg
ge 36, is presented
al Fund. The bud
funds with approp
vernmental Funds s
get-to-actual compa
ajor governmental
From the beginni
Beverly Hills was
as changed, but not
ablished a tradition
uperior level of p
nities and a renow
enterprise and
s for capital
All proprietary
rement focus.
perations and
on a budget
unds have not
dopted budget
s and includes
subsequent to
ze transfers of
appropriations
ncil. These
ing the year,
as adopted.
d of the fiscal
nsuing year’s
encumbrance
unperformed
ach individual
get has been
as part of the
dget-to-actual
priated annual
section of this
arison for the
l fund of the
ing when the
designed as a
t the desire to
n of providing
public safety
wned physical
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The City Council c
2012/2013 based o
projected a broader
the world wide e
tourism trade.
With that stated, th
In developing th
commitment to the
– such as increas
increases, the full
furniture, and the re
from last year – w
responsible budge
community while
generation.
City Council Goal
Development of th
City Council, throu
December 2010. C
three general goals
1.
maintain c
2.
keep overa
3.
preserve th
These objectives,
which were refine
priorities exercise,
Minimize
rating and
Monitor p
services, p
and fire
Use the g
resulting d
Letter of Transmit
February 6, 2013
continued to adopt
on the current eco
r and flatter recove
conomic downturn
he FY 2012/2013 bu
he FY 2012/2013
e challenge of align
sed retirement cos
funding of replac
estoration of certai
ith steadily recove
et that meets the
at the same time
ls and Budget Dir
e FY 2012/2013 bu
ugh goals reflecting
City staff was char
:
core public safety s
all core service stan
he City’s economic
which continue to
ed as a result of
included specific s
e the use of reser
d save reserves for e
public safety cuts
particularly the th
lide path model
–
dramatic drop in se
ttal
a conservative bu
onomic conditions
ery of revenues bas
n on the City’s r
udget is balanced.
3 budget, City s
ning and curbing e
sts, MOU-related
cement costs for sm
n charges to the Ge
ering revenues. Th
e quality-of-life e
e exploring new o
ection
udget was guided b
g the community’s
rged to produce a b
services,
ndards at present le
c viability.
o be carried over
f last year’s City
strategies:
rves
– preserve the
emergencies only
s
– any reductions
hree-minute respon
– avoid layoffs if at
ervice
udget for Fiscal Ye
s. Overall the Ci
sed on the impact o
retail, business an
staff continued i
scalating fixed cos
salary and benef
mall equipment an
eneral Fund deferre
he result is a fiscal
expectations of th
options for revenu
by the Beverly Hil
values stated durin
budget that achieve
evels, and
from last year, an
Council goals an
e City’s AAA bon
must preserve co
nse times for polic
t all possible and th
3
ar
ty
of
nd
its
sts
fit
nd
ed
ly
he
ue
lls
ng
ed
nd
nd
nd
re
ce
he
In addit
found i
Strategi
City Co
not limi
•
•
•
•
•
•
Progra
A usefu
program
justifica
and pro
program
informa
City’s p
and brin
Staff co
2012/20
the prio
City Co
to make
consiste
decision
Investigate reve
present new and i
tion to these guidep
in the revised Ge
ic Plan. All staff w
ouncil goals and pr
ited to:
Subway Monitori
Beverly Hills Bra
Fiscal Sustainabi
gaps between re
city facility main
Economic Susta
Sustainability obj
Technology – e
initiatives includ
programs
Revitalize Southe
m-Based Budgetin
ful tool in prepar
m-based budget
ation for every pro
oviding value for
m costs and effectiv
ation. With narra
program-based form
ng transparency to
ontinued to implem
013. This addition
or fiscal year (FY 2
ouncil and the comm
e cuts during a bu
ent framework for
ns.
enue-increasing op
innovative ideas
posts, the FY 2012
eneral Plan, Econ
work is directed by
riorities. Some of t
ring – support exten
and – develop bran
ility – develop so
evenues and expen
ntenance and Parkin
ainability – coordi
jectives into work
expand technology
ding communicati
east Beverly Hills
ng
ring the FY 2012
format. This a
ogram, including i
r dollars. Depar
veness, and make
atives and financia
rmat helped to iden
funding sources an
ment a relatively ne
was to detail the
2011/2012) to the n
munity can see the
udget process, a pr
leaders who are co
ptions
– staff is e
2/2013 budget refle
nomic Sustainabili
y these plans and r
these objectives inc
nsion and preferred
nd enhancement pro
olutions to long te
nses, including pen
ng Enterprise Fund
inate integration
plans
y to improve effic
ions infrastructure
2/2013 budget wa
approach requires
its record in meeti
rtments were able
recommendations
al figures for each
ntify areas for cos
nd uses.
w addition to the b
changes in each p
new one (FY 2012/
e impacts. While it
rogram-based appr
ompelled to reach
encouraged to
ects objectives
ity Plan, and
refers back to
clude, but are
d alignment
ograms
erm financial
nsion reform,
d balance
of Economic
ciency in all
e and safety
as the City’s
s an annual
ng objectives
e to evaluate
based on this
h service, the
st adjustments
budget for FY
program from
/2013) so that
t is never easy
roach offers a
such difficult
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Revenue and Expe
General Fund
Preliminary projec
projection of an ap
budget cuts, deferr
the Council was pr
General Fund reve
are expected to be $
At the time that
operating expense
efforts done to mai
for FY 2011/2012 w
the result by the
conservative meth
revenues, the FY 2
higher than the FY
At the time the bud
at 5.4% higher than
penalties and asse
occupancy tax also
luxury retail sales a
trends, while still m
for FY 2012/2013
projections.
Enterprise Funds
Enterprise fund re
water, and wastew
charges to cover its
rise in fixed costs a
current customer se
The Water Enterpr
forecast resulting
The Honorable M
Citizens of the C
Letter of Transmit
February 6, 2013
enditure Review
ctions for the FY
proximately $5.2 m
red equipment rep
resented with a bal
enues were projecte
$172.6 million.
the budget was p
s for FY 2011/20
intain conservatism
were necessary to
end of FY 2011/2
hodology, but stil
012/2013 General
2011/2012 budget
dget was prepared,
n budgeted due to h
essed valuation.
o came in higher t
and increased touri
maintaining a cons
3 are 2.3% below
evenues, which fun
ater operations, co
s expenditures. Ce
and the cost of reso
ervice levels.
rise Fund anticipa
in lower revenue
ayor, City Council
City of Beverly Hil
ttal
Y 2012/2013 budg
million budget gap
placement and rev
lanced budget. For
ed at $173.5 millio
prepared the proje
012 were $166.6
m during the budget
produce a balanced
2012. While con
ll recognizing a
Fund operating bu
t.
property tax was p
higher collections f
Additionally, sale
than expected due
ism. Assuming a s
ervative approach,
the adopted FY
nd storm-water, so
ontinue to depend o
rtain rates must be
ources (i.e., water, g
ates selling less wa
es even though a
and
lls, California
get resulted in th
. However, with th
enue enhancement
r FY 2012/2013, th
on and expenditure
ected General Fun
million. All of th
t preparation proce
d budget, which wa
ntinuing to follow
broad recovery
dget is 3.6% perce
projected to come
for prior years taxe
es tax and transie
to strong growth
slight dip in revenu
revenue projection
2011/2012 revenu
olid waste, parkin
on the rates the Ci
increased due to th
gas, etc.) to mainta
ater than previous
a rate increase wa
4
he
he
ts,
he
es
nd
he
ss
as
a
in
nt
in
es,
nt
in
ue
ns
ue
ng,
ty
he
ain
ly
as
effectiv
in futur
deficit i
facilitie
cuts and
year.
support
approva
Total ap
all ope
Improve
amount
appropr
about 3
appropr
Recogn
prolong
its targe
FY 201
maximi
and asse
to the
helps to
for the
synchro
with pla
materia
expansi
hydrant
as it ha
budgets
and thro
Cost Sa
As requ
expendi
ve July 1, 2012. It
re years for water.
in order to continu
es. The Solid Wa
d will be able to l
The fees charged
the fund at this t
al by an election wh
ppropriations for F
erating expenses (
ement Program (C
ing to a total of $4
riations for the Gen
3.8% percent less
riations and budget
nizing the need to c
g the lives of City f
eted spending progr
12/13. While con
ize the effectivenes
et enhancement pro
Infrastructure, Inf
o support critical pr
coming year in
onization, improve
ans and outreach
ls handling system
ion of eGov init
ts. The CIP has be
as been for the pa
s, and timelines ca
oughout the year.
aving Measures
uired by law, the
itures supported by
t is anticipated that
The Parking Ente
ue to offer two hou
aste Enterprise Fun
live within an auto
d for the Stormwa
time. Imposition
hich staff is curren
FY 2012/2013 were
(all funds) and $
CIP) – most of wh
415 million for all
neral Fund and tot
and 6.8 percent
t, respectively.
continue to provide
facilities and infras
gram for CIPs, thou
nstruction costs are
ss of its capital dol
ojects. An $8.5 mi
formation Technol
rojects in the 5-yea
nclude: installation
ement of Santa M
in FY 2011/12, in
m, improvement of
tiatives, and repla
een separated into
ast several years, s
an be easily referen
he FY 2012/2013
y available resourc
t rate increases wil
erprise Fund has be
urs of free parking
nd has made signi
omatic CPI rate ad
ater Fund are not
of fee increases w
ntly researching and
e budgeted at $373
$41.2 million for
hich are grant or bo
requested appropri
tal budget for FY2
more than the FY
e for maintenance a
structure, the City
ugh reduced by $14
e still down, the C
llars by advancing
illion General Fund
logy, and Capital
ar CIP. Major capi
n of traffic signa
Monica Boulevard
nstallation of autom
f Greystone Mansi
acement of water
a second volume o
so that the project
nced during budge
budget is balanc
ces. In crafting th
ll be required
een running a
g at most City
ificant budget
djustment this
sufficient to
would require
d evaluating.
3.8 million for
r the Capital
ond funded –
iations. Total
2012/2013 are
Y 2010/2011
and repairs to
will continue
4.7 million for
City can still
infrastructure
d contribution
Asset Funds
ital initiatives
als for signal
commencing
mated library
ion and Park,
r mains and
of the Budget,
descriptions,
et discussions
ced, with all
his document,
Letter of Transmit
February 6, 2013
ry conservative app
conomic growth sp
l’s objectives, the
ssed in the budget
mplemented in 2010
ntinued in this bud
ts and considering
re eliminated hav
es have been added
13 budget are:
the General Fund
replacement
he General Fund co
t replacement
he General Fund c
services
he General Fund con
he General Fund c
ntributions
nds available from
d Fiscal Context
ly Hills traditional
downturns. We ha
ognized retail and
mployment rate, hi
und and financial
bility and growth.
ll three rating agen
ary impacts and mu
alth.
conomic outlook i
for more managea
police, fire, com
d our internal and
ttal
proach, making no
purt in the near futu
e City’s approxim
through the follow
0/2011 to deal with
dget. The strategy
g various alternati
ve not been re-in
d. New cost-savin
contribution for sm
ontribution for Info
ontribution for Po
ntribution for Vehi
contribution for C
the budget stabiliz
ly holds up very w
ave a vibrant busin
d corporate brands
gh personal incom
policies and proc
We hold the rare a
ncies. We are, how
ust deal with these r
is one of modest g
able growth and su
mmunity services
d enterprise service
assumptions that w
ure.
mately $5.2 millio
wing reductions:
h the City’s revenu
included reviewin
ives. Non-essenti
nstated and no ne
g measures include
mall equipment an
rmation Technolog
licy, Administratio
icle replacement
Capital Improveme
ation fund
well during state an
ness community wi
s, a strong housin
me levels, a relative
cedures that ensu
and prestigious AA
wever, not immune
rapidly to assure ou
growth. This budg
ustainability, but ou
s, and communi
es remain funded
5
we
on
ue
ng
ial
ew
ed
nd
gy
on
nt
nd
th
ng
ly
ure
AA
to
ur
get
ur
ty
at
levels to
said, it
organiz
It was n
fiscal y
million
million
speak to
from th
remarka
and bus
diligenc
standing
Revenu
The fou
Sales Ta
The gra
conditio
0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 M i l l i o n so ensure excellent
must be noted tha
ation leaner, with s
no small feat to cl
ear 2008/2009. T
for FY 2009/2010
for FY 2011/2012
o the fiscal will p
hat effort with to
able. Credit is due
sinesses of Beverly
ce, cooperation and
g as one of the fine
ues:
ur major sources
ax, Business Tax a
aph illustrates ho
ons. The current e
0 0 0 0 0 0 0 0 0 0 91 /9 2 92 /9 3 93 /9 4 94 /9 5 95 /9 6 96 /9 7
t public safety and
at three consecutiv
some areas more sp
lose a funding gap
To follow that with
0 and FY 2010/20
2 and FY 2012/20
power and strength
op-tier community
e to the City Coun
y Hills. During th
d creativity have st
est small cities in th
of General Fund
and Transient Occu
ow property tax r
economic cycle be
96 /9 7 97 /9 8 98 /9 9 99 /0 0 00 /0 1 01 /0 2 02 /0 3 Property Taxd a top-tier quality
ve years of cuts le
parsely covered.
p of more than $1
h further budget red
011, and $4.5 mill
013 respectively. T
h of Beverly Hills
services intact i
ncil, City staff and
hese fiscally trying
trengthened Beverl
he nation.
revenue include P
upancy Tax (TOT).
revenues respond
egan in FY 2007/20
02 /0 3 03 /0 4 04 /0 5 05 /0 6 06 /0 7 07 /0 8 08 /0 9 xof life. This
eave the City
18 million for
duction of $9
lion and $5.2
These actions
. To emerge
s even more
d the residents
g times, their
ly Hills’ solid
Property Tax,
to economic
008 when we
08 /0 9 09 /1 0 10 /1 1 11 /1 2The Honorable M
Citizens of the C
Letter of Transmit
February 6, 2013
off consumer based
ntinued to grow f
ear 10/11 saw prop
% decrease over t
se we are still below
tax revenues can ta
mic conditions, th
ening the immediac
responds much fa
As the accompa
immediately to the
vents of Septembe
venue declined at
began responding
wth until the Septem
ontinued until the
93/94 94/95 95/96 96/97 97/98 98/99 99/00
Sale
ayor, City Council
City of Beverly Hil
ttal
d taxes like sales a
for two more yea
perty tax revenues
the prior year. W
w the FY 2009/201
ake as long as two
hey help the City
cy of revenue loss.
aster to changing e
anying chart shows
e economic downtu
er 2001. From FY
the rate of about 6
to local economic
mber 2001. Growt
e recent economic
00/01 01/02 02/03 03/04 04/05 05/06 06/07 es Taxand
lls, California
and TOT. Howeve
ars before we see
decrease slightly
While FY 2011/201
0 collections.
o years to respond
adjust to econom
economic condition
s, sales tax revenu
urn of the early 90
Y 91/92 through F
6.3%. In FY 93/9
c improvements an
th began again in F
c downturn in F
06/07 07/08 08/09 09/10 10/11 11/126
er,
a
to
12
to
mic
ns
ue
0’s
FY
94
nd
FY
FY
Sales ta
and 23.
Busines
on the t
based o
they do
busines
being b
much b
of overa
As the
econom
econom
revenue
the econ
reflect
negative
a decrea
saw an
0. 5. 10. 15. 20. 25. 30. 35. 40. M i l l i o n sax revenues ended F
1 million (4.7% inc
ss tax is paid by al
type of business.
on their gross receip
o in the City (Co
ses pay the tax bas
ased on all busines
broader based than
all economic activi
chart illustrates,
mic climate in Bev
mic climate. Reco
es are based on gro
nomy impact City
revenue from rea
ely impact busines
ase of 4.25% (tota
increase of 8.9% ($
00 00 00 00 00 00 00 00 00 91 /9 2 92 /9 3 93 /9 4 94 /9 5 95 /9 6FY 2010/2011 at $
crease).
ll local businesses.
Most Beverly Hil
pts, which is a me
orporate offices, p
sed on their numbe
ss activity in the Ci
sales taxes and as
ity in the City.
business taxes h
verly Hills, respon
ognizing that signi
oss receipts, we ca
y revenues. Vacan
al estate rentals)
ss tax revenues. Fi
al revenues of $34.
$$37 million in rev
96 /9 7 97 /9 8 98 /9 9 99 /0 0 00 /0 1 01 /0 2 Business Ta$22.1 million (11.9%
. The tax rate vari
ls businesses pay
asure of the amoun
professionals and
er of employees.).
ity rather than just
s such may be a be
have been a barom
nding rapidly to
ificant portions of
an see how downw
nt office and retail
or reductions in
iscal year 2010/201
0 million) while F
venue).
02 /0 3 03 /0 4 04 /0 5 05 /0 6 06 /0 7 07 /0 8 08 /0 9 ax%% increase)
ies depending
Business Tax
nt of business
some service
Business tax,
retail sales, is
etter indicator
meter of the
the changing
f business tax
ward trends in
space (which
n retail sales
11 ended with
FY 2011/2012
08 /0 9 09 /1 0 10 /1 1 11 /1 2Letter of Transmit
February 6, 2013
cupancy tax (bed ta
hotel closures and
rly Hills Hotel a
Y 1992/1993. The
4/1995. The L’Er
1/1992, the City ra
% to improve re
munities. In Febr
mber of Commerce
ent occupancy tax
tion campaigns.
mber 2001, transien
17.8 million in r
fell about 18% to
ghtly to $14.8 milli
ed 12.7% to recove
16.7 million. Fisc
% ($2.6 million in
8% ($3.6 million
ely, far greater than
93/ 94 94/ 95 95/ 96 96/ 97 97/ 98 98/ 99 99/ 00 Transient O
ttal
ax) chart the variati
d tax rate changes
and the L'Ermitag
e Beverly Hills Hot
rmitage had its gra
aised the transient
evenues and rema
ruary 1994, the C
and the City's hote
rate from 12% to
From that point
nt occupancy taxes
revenues in FY 2
$14.6 million in
ion in FY 2002/200
er some of their pr
cal year 2004/2005
ncrease for total
increase for total
n anticipated and b
00/ 01 01/ 02 02/ 03 03/ 04 04/ 05 05/ 06 06/ 07 ccupancy Taxons beginning in F
s. Two world cla
ge were closed fo
tel had its reopenin
and opening in Jun
t occupancy tax ra
ain consistent wi
City Council, at th
el operators, voted
o 14% to fund loc
t until the terrori
s experienced stead
2000/2001, transie
FY 0201/2002 an
03. Revenue for F
rior strength and en
5 and 2005/2006 ha
revenues of $19.2
l revenues of $22
back on track to p
07/ 08 08/ 09 09/ 10 10/ 11 11/ 127
FY
ass
for
ng
ne,
ate
th
he
to
cal
ist
dy
nt
nd
FY
nd
ad
26
.8
re
9/11 gr
greater
of 2008
result o
$24 mil
2.5% d
signific
Game t
hotels d
see a la
continu
By revi
the City
When n
reductio
Chambe
enhance
In the T
taxes re
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 45.0 M i l l i o n srowth. Fiscal yea
than anticipated at
8 the City’s newest
f the current econo
llion and FY 2009
down. During FY
antly, which is part
that contributed to
during the month of
arge increase of 12
ed improvements i
iewing the previou
y’s revenues and h
necessary, the Ci
ons in activity. C
er of Commerce
e the City’s econom
Total Revenues ch
esponded almost im
00 00 00 00 00 00 00 00 00 00 92 /9 3 93 /9 4 94 /9 5 95 /9 6 96 /9 7 Propertyar 2007/2008 exce
t 29.1 million (a 1
t five star hotel, M
omic cycle, FY 20
9/2010 continued
Y 2010/2011 tran
rtly due to a non-re
o greatly increase
f February 2011. I
2.1% ($29.80 millio
in the European and
us charts one can se
how that impacts
ity acted promptly
Concurrently, the C
and the business
mic climate.
hart, it is clear that
mmediately to the d
97 /9 8 98 /9 9 99 /0 0 00 /0 1 01 /0 2 02 /0 3Total Tax Reven
Shown IndividualTax Sales Tax Be
eeded all records
2.48% increase).
Montage, began ope
08/2009 revenue f
the declining to $
nsient occupancy t
curring event, the N
gross receipts in B
In FY 2011/2012 w
on in TOT revenue
d Pacific Rim econ
ee the effect of the
our ability to prov
y in reducing co
City moved, in con
s community, to
t transient occupan
downturn of the ec
03 /0 4 04 /0 5 05 /0 6 06 /0 7 07 /0 8 08 /0 9nues
llyed Tax Business Tax
and was far
In November
erations. As a
fell 17.53% to
$23.4 million,
tax improved
NBA All-Star
Beverly Hills
we once again
es) due to the
nomies
e economy on
vide services.
sts to match
ncert with the
promote and
ncy and sales
conomy. The
08 /0 9 09 /1 0 10 /1 1 11 /1 2The Honorable M
Citizens of the C
Letter of Transmit
February 6, 2013
f property and busi
nd to economic co
raph shows, the Ci
ce cuts that could
illustrate that wh
d started falling, th
rovements that inc
rt examines the Cit
es how the cost con
within available reso
of clarification for
raphs do not repres
. As noted, they
Fund tax revenue
res is for the cate
ecial Revenue Fun
e intended to show
94/95 95/96 96/97 97/98 98/99 99/00 00/01
overnmental Op
(Shown CuGovt. Public Safety P
ayor, City Council
City of Beverly Hil
ttal
iness taxes provide
nditions in an edu
ity was able to con
d have further wor
en property taxes
he City had, throug
creased business,
ty’s expenditures o
ntrol measures imp
ources.
r readers of this le
sent total City reve
represent only the
e sources. The
egories shown for
nds and Debt Ser
w the trends that
00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08perating Expens
umulatively)Public Service Culture &
and
lls, California
ed some cushion fo
ucated and reasone
ntrol the process an
rsened the situatio
caught up with th
gh actions describe
transient occupanc
over the past sever
plemented were ab
etter. The previou
enues for the period
e City’s four large
graph representin
the City’s Gener
rvice Funds. The
developed over th
07/08 08/09 09/10 10/11 11/12
ses
& Rec. Debt
8
for
ed
nd
n.
he
ed
cy
ral
ble
us
ds
est
ng
ral
se
he
The con
econom
balance
City is
increase
employ
litigatio
governm
continu
health.
Perhaps
econom
ability t
sufficien
1 2 3 4 5 6 7economic period
available resourc
Further, it should
program based b
as General Gover
total overhead co
ntinued improvem
mic base to build
ed budget for FY 2
still required to
es expected in pe
ees (especially pub
on and workers’ c
ment as the State
es to pursue strate
s the best measur
mic downturn and
to build fund reser
nt reserves to we
0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 92/ 93 93/ 94 94/ 95 95/ 96 96/ 97 Ratio of t to Totad discussed. Th
ces or compare them
d be noted that as a
budget, much of th
rnment in prior pe
osts associated with
ments in revenues p
upon for the futu
012/2013. Howev
address and fill b
ension and health
blic safety), the soa
compensation, and
attempts to balanc
egies that maintain
re of the City’s e
building sustaine
rves. As a rule of
eather the worst p
97/ 98 98/ 99 99/ 00 00/ 01 01/ 02 02/ 03 03/ 04 he General Fund al General Fund
ey are not intend
m to uses
.
a result of the City’
he expenses that w
riods have become
h each program.
provide the City w
ure. The City ha
ver, this budget ass
budget gaps. Wit
care contribution
aring costs of man
the unknown imp
ce its budget, the
n the City govern
effectiveness in w
ed growth for the
f thumb, a city sho
potential emergen
03/ 04 04/ 05 05/ 06 06/ 07 07/ 08 08/ 09 09/ 10 d's Fund Balanc Expendituresded to show
’s change to a
were identified
e a part of the
with a strong
as adopted a
sumes that the
th significant
costs for its
naging claims,
pact on local
City Council
nment’s fiscal
weathering an
future is its
ould maintain
ncy scenarios.
10/ 11 11/ 12 eI
t
t
f
t
p
e
C
L
n
m
•
•
•
•
Ideally, municipali
their annual Genera
that would equate
fiscal year 2011/12
the fund balance
presented. As this
effectively improv
City to increase its
Long-Term Finan
number of significa
millennium:
•
The City has m
substantially r
follows:
Benefit
Cafeteria Bene
Defined contri
Alternative Re
Two-Tier PER
PERS cost sha
•
The City ha
implement mu
slow the growt
•
The City has
Sustainability
prioritize and
economic vita
available on th
•
The City has s
which is a pla
with input fro
intended to gu
including indiv
Economic Sust
Letter of Transmit
February 6, 2013
ities would mainta
al Fund operating e
to reserves betwee
2. In the accompa
of the City’s Ge
s chart demonstrate
ved revenues, cont
reserves for future
ncial and Strategic
ant projects and lo
made major chang
reduce current ope
efit Plan
bution retiree medi
etiree Medical Plan
RS
aring
as successfully n
ulti-year Memoran
th of increasing em
successfully comp
Plan which prov
focus its progra
ality and attractive
he City’s website at
uccessfully comple
n developed to hel
om City staff to m
uide and inform s
vidual department
tainability Plan, an
ttal
ain a reserve equal
expenditure budget
en $38.4 million an
anying chart, the ch
eneral Fund to to
es, the actions take
trolled expenditure
e needs.
c Planning.
The C
ng term strategies
ges to employee be
erating costs and
$2.1 – $4.8 mi
ical $66.2
mil
$27.0 mill
$4.3 m
$3.5
mill
egotiated with b
ndums of Underst
mployee costs.
pleted and implem
vides a framewor
ams on those that
eness of Beverly
t http://www.bever
eted and implemen
lp the City Counci
make informed dec
several existing Ci
reorganization and
nd the City’s Succe
l to 25% to 50% o
t. For Beverly Hill
nd $76.8 million fo
hange in the ratio o
otal expenditures
en by the City hav
es and allowed th
City is investing in
as it begins the ne
enefit programs th
future liabilities a
Saving
illion over five yea
llion over forty yea
ion over forty` yea
million over ten yea
lion over five yea
bargaining units
tanding, which wi
mented an Econom
rk for the City
t most support th
Hills. This plan
lyhills.org/
nted a Strategic Pla
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cisions. The plan
ity strategic effort
d strategic plans, th
ssion Plan.
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Awards
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June 30
City pu
annual
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The Ca
reviews
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year. W
continu
submitt
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2012 C
the larg
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program
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innovat
that ex
practica
promote
conside
technica
analysis
e City has succes
an. Succession plan
mployees, through m
mployees when they
ure position vacanc
ty government. T
veloping a pool o
ganization.
s.
The Governmen
ficate of Achievem
r its comprehensiv
0, 2011. In order
ublished an easily r
financial report.
ting principles and
lifornia Society of
s or issues a Ce
unication to cities th
rtificate of Achieve
We believe that ou
es to meet the Cer
ing it to the GFOA
onally, the City of B
s Association (GFO
SMFO Innovation
gely successful an
m (ARMP). (Pleas
m.)
FOA's Awards for
ive programs – co
xemplify outstandi
al, documented wo
es improved publ
ering an applicatio
al significance, t
s, efficiency, origin
sfully completed a
nning is a systemat
mentoring, training
y retire. Having com
cies is crucial to B
The City will pro
of competent cand
nt Finance Officer
ment for Excellenc
ve annual financial
to be awarded a C
readable and effici
The report sati
applicable legal re
f Municipal Financ
ertificate of Awa
that receive the GF
ement from the GF
ur current compre
rtificate of Achiev
A to determine its e
Beverly Hills was
OA)’s 2011 Awar
n Award, for its ex
nd ground-breakin
se see page 84 fo
or Excellence in G
ontributions to the
ding financial ma
ork that offers lea
lic finance. Eight
on for the award:
transferability, do
nality, and durabilit
and implemented
tic process of prep
and job rotation, t
mpetent candidates
everly Hills’ future
oactively devote
didates for position
rs Association (GF
ce in Financial Rep
report for the fisc
Certificate of Achi
iently organized co
isfied both genera
equirements.
ce Officers (CSMF
ard for Excellenc
OA award.
FOA is valid for a
ehensive annual fin
vement requirement
ligibility for anothe
given the Governm
rd of Excellence, a
xcellent design and
ng Alternative Ret
or more details on
Government Finan
practice of govern
nagement. The a
adership to the pr
t criteria are exa
: local significanc
ocumentation, the
ty.
a Succession
aring suitable
to replace key
s in-house for
e success as a
resources to
ns within the
OA) awarded
porting to the
al year ended
ievement, the
omprehensive
ally accepted
FO) no longer
ce in Public
period of one
nancial report
ts and we are
er certificate.
ment Finance
as well as the
d execution of
tiree Medical
n the ARMP
nce recognize
nment finance
awards stress
rofession and
amined when
ce and value,
cost/benefit
N The Honorable Mayor, City Council and
Citizens of the City of Beverly Hills, California Letter of Transmittal
° ~ ? February 6, 2013
~T ~.L ~
Further, in regards to the CSMFO Innovation Award, the purpose of this award is to recognize innovation in public sector finance in the areas of accounting, budgeting, treasury, debt administrationlissuance, procurement, risk management, and technology. No more than three awards are granted in any one year.
Acknowledgments.
The preparation of the comprehensive annual financial report was made possible by the dedicated service of the entire staff of the Administrative Services department. Each member of the department has our sincere appreciation for the contribution made in the preparation of this report.In closing, without the leadership and support of the City Council of the City, preparation of this report, as well as the favorable financial results of the past year, would not have been possible.
//
oel Marquis
A cling ChiefFinancial 0 Icer
