13 an increase in intergovernmental of 8 percent; and an increase in miscellaneous revenue of 14 percent. The increases were partially offset by a decrease in other taxes of 1 percent; and a decrease in charges for services of 1.6 percent. Interest earned on investments is positive $441,312 due to unrealized gains on investments.
General Fund expenditures show an increase of 7 percent as staffing and operations normalized from the COVID-19 reductions and due to salary increases per the 3nd year of the City bargaining unit Memoranda of Understandings (MOU’s). The increase is primarily due to Legislative, General Government, Public Safety, Community Development, Culture and Recreation, and Public Works.
General Fund Budgetary Highlights
The final amended budget for revenue other than transfers increased by 1 percent from the adopted budget, based on revenue trends from the first six months of the year. Actual revenue was over the final budget by $1,002,137 or 2 percent for the following reasons:
Property tax was up $95,141.
Other taxes were down $4,763.
Licenses and Permits were down $73,048 or 6 percent primarily due to building permit revenue, which came in under budget by $66,551.
Fines and forfeitures were up $13,561 or 1 percent primarily due to an increase in administrative citations.
Intergovernmental were up $41,871 or 23 percent primarily due to reimbursements received from State Mandated Costs for the prior fiscal years. Charges for Services were up $94,039 or 1 percent primarily due to an increase in parking meter revenue.
Interest was up $687,762 or 112 percent primarily due to the recording of unrealized gains on investments, which is not budgeted.
The final amended budget for appropriations other than Transfers Out increased over the original budget by 1 percent. Actual expenditures other than Transfers Out were less than the final appropriations by 4 percent primarily due to vacancies, underfilled positions, anticipated City street and park repairs that were appropriated but not required and unspent one-time appropriations which may be requested for reappropriation to the 2025–26 budget.
Capital Asset and Debt Administration
Capital assets. The City of Hermosa Beach’s net investment in capital assets for its governmental activities as of June 30, 2025, amounts to $82,379,137 (net of accumulated depreciation). This investment in capital assets includes land, buildings and structures, improvements, machinery and equipment, park facilities, roads, highways, and monuments.
Major capital asset events during the fiscal year included the following:
Governmental Activities
Bus Stop Improvements of $300,000
14 Annual Street Improvements of $3,000,618
Annual Sewer Improvements of $2,203,909
Greenbelt Pedestrian Trail of $765,016
South Park Slope Repairs of $443,920
Clark Building Renovations of $3,196,912
Parking Lot A Improvements of $344,276
Additional information on the City of Hermosa Beach’s capital assets can be found in Note 6.
Long-term Debt
In October 2020 the Hermosa Beach Public Financing Authority issued 2020 Lease Revenue Bonds to refund and defeased the 2015 Lease Revenue Bonds issued to fund oil settlement costs. The refunding will save approximately $965,000 through 2035. Other long-term liabilities include net pension liability and compensated absences. See Note 7 and Note 9.
Grants Special Revenue Fund
The Grants Special Revenue Fund, reported a June 30, 2025 fund balance of -$566,323 due to unavailable revenue of $540,511. The City received the final grant reimbursement related to CIP 629 Municipal Pier Structural Assessment and Repairs and CIP 660 Municipal Pier Electrical Repairs after the fiscal year in January 2026.
Tyco Special Revenue Fund
The Tyco Fund is a major fund in 2024–25 due to the recording of leases receivable of $2,936,846 and a corresponding deferred inflows of resources for lease revenue from Tyco that will be recognized over the lease term. This is a change in accounting rules due to the implementation of GASB 87 in FY 2021– 22 , Leases, referred to in the Transmittal Letter and Note 1, Section R. For more information on the lease agreement, see Note 4 Lease Revenue. During the year ended June 30, 2025, the City recognized $223,213 in lease revenue and $278,538 in interest revenue during the current fiscal year related to the lease. There were capital outlay expenditures of $533,517. The fund balance as of June 30, 2025 is $1,980,407.
RTI Undersea Cable Special Revenue Fund
The RTI Undersea Cable Special Revenue Fund is a major fund again in 2024–25 due to the recording of leases receivable of $3,739,526 and a corresponding deferred inflows of resources for lease revenue from MC Global that will be recognized over the lease term. This is a change in accounting rules due to the implementation of GASB 87 in FY 2021–22, Leases, referred to in the Transmittal Letter and Note 1, Section R. For more information on the lease agreement, see Note 4- Lease Revenue. The fund balance as of June 30, 2025 is $1,117,794.
Capital Improvement Capital Projects Fund
Projects funded from the Capital Improvement Fund, a major fund, in 2024-25 include: Bus Stop Improvements, Annual Street Improvements, Utility Box Wrappings, Annual City Sidewalk Improvements, Storm Drains, Pedestrian Crossing Safety Improvements, Annual Striping Improvements, Storm Drain Improvements, Annual Sewer Improvements, Storm Water Dry Wells, Greenbelt Pedestrian Trail, City Park Lighting, Citywide Park Master Plan, South Park Slope
15 Repairs, City Wide ADA Improvements, Facilities Condition Assessment, Police Facilities Improvements, New Corporate Yard Facilities, Civic Center Charging Stations, Kelly Courts Improvements, City Wide Roof Repairs, Comprehensive Downtown Lighting Design, Pier Structural Inspection, City Wide ADA Improvements ,Municipal Pier Structural Assessment and Repairs, Parking Lot A Improvements, Police Restroom Improvements, and Parking Structure (Lot C) Assessment. The ending fund balance of $13,089,113 includes $841,393 reserved for City Yard Construction.
Insurance Fund
The City’s established goal for net position in the Insurance Fund is $3,000,000 for unanticipated claims and catastrophic losses. The Insurance Fund beginning balance was $3,000,000. Claims expenses and adjustments for actuarially determined claims payable were higher than expected, resulting in the ending balance of $2,682,118.
Economic Factors and Next Year's Budgets and Rates
The 2025–26 Budget also includes the following:
o Contract fire services of $6,711,571 and an additional $1,162,506 for an annual CalPERS UAL payment. On April 25, 2017, the City Council voted to contract fire services in Hermosa Beach with the Los Angeles County Consolidated Fire District. FY 2026–27 will be the final year under the current contract.
o $10,647,370 is committed for Contingency in the General Fund, which is 20 percent of operating expenditures and in line with the City’s financial policy and the Council goal for a “Financially Sound City Government”.
o $728,200 is transferred from the General Fund for the 2020 Refunding Lease Revenue Bonds debt service. The 2015 Lease Revenue Bonds were refunded in 2020–21, saving approximately $1 million over the life of the bonds. The bonds will be paid off in December 2035.
o $33.9 million of Capital Improvement Projects are funded, which includes $15.4 million in new funding.
o Full-time personnel is budgeted to decease by .58 FTE. The part-time Account Clerk is reclassified to a full-time position. This is offset by the elimination of the vacant Deputy City Manager position. Additionally, .58 FTE of staffing overlap in 2024–25 is removed from the 2025–26 Budget.
Revenue Trends and Assumptions
Revenue for FY 2025–26 is estimated to increase 2 percent over FY 2024–25. The City is seeing revenue growth with property tax, the City’s largest and most stable revenue source. Secured property tax, is projected to increase by 7 percent FY 2025–26. While sales tax and transient occupancy tax are also budgeted to increase by 2 percent in FY 2025–26, revenue growth is being absorbed by the increased costs of providing services to the community. Like many Cities, Hermosa Beach is experiencing the impact of inflation.
The City has come through uncharted territory in the five years since the pandemic began in March of 2020 and subsequent worldwide uncertainty over the current 2026 Iran war (Operation Epic Fury), continued war in Ukraine, rising operational costs, and disruption in supply chains. No contingency
16 or “rainy day funds" were used during the pandemic. The City Council increased the level of contingency funds from the current policy of 16 percent of operating budget to 20 percent with the 2023–24 Adopted Budget. The City continues to maintain a 20 percent contingency balance.
Unemployment was higher in June 2025 when compared to June 2024. In June 2024, the City unemployment rate was 3.6 percent versus June 2025 of 4.7 percent. Los Angeles County remained the same at 5.9 percent . The State’s unemployment rate was 5.8 percent versus 5.2 percent in June 2024.
The U.S unemployment rate was unchanged from June 2024 at 4.1 percent.
The City’s FY 2025–26 Budget continues to prioritize foundational investments in organization and infrastructure, seeking to protect the City’s long-term fiscal sustainability within its current funding realities, and reflects the community’s values and spending priorities. Even though City has not grown substantially in population or size, the demands placed upon it—through state and federal mandates— continue to expand. At the same time, the cost of meeting those expectations is rising with inflation and market pressures. Since the 2025-26 Budget is tightly balanced with revenue and appropriations equal, avoiding a deficit in upcoming years will be challenging with Los Angeles County Fire negotiations, labor negotiations, and increasing pension costs pending as City expenditures are projected to outpace City revenue growth.
On November 5, 2024, Measure HB was placed on the ballot to enact a ¾ cent General Transactions and Use (TUT) Tax which was projected to generate approximately $3.0 million in sales TUT tax revenue.
Measure HB was not passed by the voters and the City must continue to explore different revenuegenerating approaches to protect Hermosa Beach’s future, maintain the current standard of service, and ensure a high quality of life for residents and businesses.
Requests for Information
This financial report is designed to provide a general overview of the City of Hermosa Beach’s finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Office of the Administrative Services Director, 1315 Valley Drive, Hermosa Beach, CA 90254.
BASIC FINANCIAL STATEMENTS
17 Page 175 of 874
GOVERNMENT-WIDE
FINANCIAL STATEMENTS
18 Page 176 of 874
Primary
Government
Governmental
Activities
ASSETS
Current assets:
Cash and investments 67,560,807 $
Accounts receivable 5,111,872
Property taxes receivable, net 1,327,321
Reimbursable grants receivable 420,433
Leases receivable 8,319,100
Interest receivable 379,458
Other assets 1,116,739
Total current assets 84,235,730
Noncurrent assets:
OPEB net asset 8,131,302
Capital assets:
Non-depreciable 40,519,191
Depreciable, net 42,187,371
Total capital assets 82,706,562
Total noncurrent assets 90,837,864
Total assets 175,073,594
DEFERRED OUTFLOWS OF RESOURCES
Pension related deferred outflows of resources 17,089,936 OPEB related deferred outflows of resources 2,207,185
Total deferred outflows of resources 19,297,121
CITY OF HERMOSA BEACH
Statement of Net Position
June 30, 2025
See accompanying notes to the basic financial statements. Page 177 of 874 19 Primary
Government
Governmental
Activities
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 6,581,068
Accrued salaries and benefits payable 1,165,382
Refundable deposits 506,318
Unearned revenue 640,039
Interest payable 86,067
Workers' compensation claims payable - due within one year 1,241,918 General liability claims payable - due within one year 965,072 Compensated absences - due within one year 1,256,644
Long-term debt - due within one year 712,339
Total current liabilities 13,154,847
Noncurrent liabilities:
Workers' compensation claims payable - due in more than one year 4,324,724 General liability claims payable - due in more than one year 1,244,122 Compensated absences - due in more than one year 1,987,300 Long-term debt 7,012,724
Aggregate net pension liability 58,222,968
Total noncurrent liabilities 72,791,838
Total liabilities 85,946,685
DEFERRED INFLOWS OF RESOURCES
Pension related deferred inflows of resources 3,679,937 OPEB related deferred inflows of resources 3,887,871
Leases related deferred inflows of resources 8,319,100
Total deferred inflows of resources 15,886,908
NET POSITION
Net investment in capital assets 82,379,137
Restricted for:
OPEB Asset 8,131,302
Capital projects 2,592,166
Street and sewer purposes 3,434,825
Transportation purposes 1,347,922
Public works 1,469,023
Public safety 1,067,479
Cultural and recreation 1,013,597
Undergrounding districts 67,173
Pension Trust 1,075,763
Total restricted 20,199,250
Unrestricted (Deficit) (10,041,265)
Total net position $ 92,537,122
CITY OF HERMOSA BEACH
Statement of Net Position (Continued)
June 30, 2025
See accompanying notes to the basic financial statements. Page 178 of 874 20 Operating Capital Total
Charges for Grants and Grants and Program
Expenses Services Contributions Contributions Revenue
Primary Government:
Governmental activities:
Legislative and legal 1,975,949 $ - $ - $ - $ - $
General government 8,259,843 1,413,053 757,079 - 2,170,132 Public safety 29,528,050 6,286,249 653,775 157,734 7,097,758 Community development 2,717,060 1,623,490 109,740 - 1,733,230 Cultural and recreation 2,831,827 1,063,840 - 22,478 1,086,318 Public works 15,992,436 1,597,155 4,392,171 1,440,448 7,429,774 Interest and fiscal charges 92,301 - - - -
Total governmental activities 61,397,466 $ 11,983,787 $ 5,912,765 $ 1,620,660 $ 19,517,212 $
CITY OF HERMOSA BEACH
Statement of Activities
For the Year Ended June 30, 2025
Functions/Programs
Program Revenues
See accompanying notes to the basic financial statements.
Net (expense)
Revenue and
Changes in
Net Position
Primary Government:
Governmental activities:
Legislative and legal (1,975,949) $
General government (6,089,711)
Public safety (22,430,292)
Community development (983,830)
Cultural and recreation (1,745,509)
Public works (8,562,662)
Interest and fiscal charges (92,301)
Total governmental activities (41,880,254)
General revenues:
Taxes:
Property taxes 26,327,991
Sales taxes 3,493,656
Real property transfer tax 392,143
Franchise fees 1,035,378
Transient occupancy tax 4,759,609
Business license 1,286,767
Utility users tax 2,151,044
½ cent sales tax for public safety 285,766
Total taxes 39,732,354
Grants and contributions not restricted to specific programs 2,501,482 Miscellaneous 4,096,277
Total general revenues 46,330,113
Change in net position 4,449,859
Net position - beginning of year 88,087,263
Net position - end of year 92,537,122 $
Functions/Programs
CITY OF HERMOSA BEACH
Statement of Activities (Continued)
For the Year Ended June 30, 2025
See accompanying notes to the basic financial statements.
FUND FINANCIAL STATEMENTS
Governmental Fund Financial Statements
Proprietary Fund Financial Statements
Fiduciary Fund Financial Statements
23
GOVERNMENTAL FUND
FINANCIAL STATEMENTS
The Governmental Funds of the City are outlined below:
General Fund - The General Fund accounts for all revenues and expenditures used to finance the traditional services associated with a municipal government which are not accounted for in the other funds. In Hermosa Beach, these services include general government, safety, community development, culture and recreation and public works.
Grants Special Revenue Fund - This fund is used to support eligible service agencies.
Tyco Special Revenue Fund - This fund is used to account for funds received from an easement granted for construction of a transpacific, submarine fiber optic cable system originating in Japan with a landing in Hermosa Beach. The project will provide additional capacity.
RTI Undersea Cable Special Revenue Fund - This fund is used to account for funds received from an easement granted for construction of a transpacific, submarine fiber optic cable system with a landing in Hermosa Beach. The project will provide additional capacity for global voice and data transmission and global access to planned and existing land-based communication networks in the project area.
Capital Improvement Capital Projects Fund - Funds set aside for capital improvement projects.
Nonmajor Governmental Funds - Nonmajor Governmental Funds is the aggregate of all the nonmajor governmental funds. 24
RTI Undersea
Grants Tyco Cable
Special Special Special
Revenue Revenue Revenue
General Fund Fund Fund
Cash and investments 16,954,945 $ - $ 1,972,234 $ 1,148,521 $ Accounts receivable 3,926,099 827,469 42,978 37,216
Property taxes receivable, net 1,290,919 - - -
Reimbursable grants receivable - 420,433 - -
Leases receivable 1,642,728 2,936,846 3,739,526
Interest receivable 169,140 - 16,164 9,280
Other assets 1,102,047 - - -
Due from other funds 1,862,027 - - -
Total assets $ 1,247,902 26,947,905 $ 4,968,222 $ 4,934,543 $ Liabilities:
Accounts payable and accrued liabilities 1,510,570 $ 53,658 $ 49,014 $ 1,225 $ Accrued wages and benefits payable 956,048 - 1,955 75,998 Refundable deposits 506,318 - - -
Unearned revenues 66,573 149,516 - -
Due to other funds - 1,070,493 - -
Compensated absences,
due within one year - 47 - -
Total liabilities 1,273,714 3,039,509 50,969 77,223
Deferred Inflows of Resources:
Unavailable revenue 1,972,129 540,511 - -
Leases 1,642,728 - 2,936,846 3,739,526
Total deferred inflows of resources 3,614,857 540,511 2,936,846 3,739,526 Fund Balances:
Nonspendable 1,102,047 - - -
Restricted 1,730,045 - - -
Committed 1,233,660 - 1,980,407 1,117,794
Assigned 13,283,523 - - -
Unassigned 2,944,264 (566,323) - -
Total fund balances (deficits) (566,323) 20,293,539 1,980,407 1,117,794 Total liabilities, deferred inflows
of resources and fund balances $ 1,247,902 26,947,905 $ 4,968,222 $ 4,934,543 $ Major Funds
June 30, 2025
ASSETS
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES, AND FUND BALANCES
CITY OF HERMOSA BEACH
Balance Sheet
Governmental Funds
See accompanying notes to the basic financial statements. 25
Major Funds
Capital
Improvements
Capital Nonmajor
Projects Governmental
Fund Funds Total
Cash and investments 13,912,021 $ 14,279,312 $ 48,267,033 $ Accounts receivable - 268,452 5,102,214
Property taxes receivable, net - 36,402 1,327,321
Reimbursable grants receivable - - 420,433
Leases receivable - - 8,319,100
Interest receivable 91,195 93,679 379,458
Other assets - 14,692 1,116,739
Due from other funds - - 1,862,027
Total assets $ 14,692,537 14,003,216 $ 66,794,325 $
Liabilities:
Accounts payable and accrued liabilities 871,899 $ 3,809,026 $ 6,295,392 Accrued wages and benefits payable 42,204 68,262 1,144,467 Refundable deposits - - 506,318
Unearned revenues - 423,950 640,039
Due to other funds - 791,534 1,862,027
Compensated absences,
due within one year - 188 235
Total liabilities 5,092,960 914,103 10,448,478
Deferred Inflows of Resources:
Unavailable revenue - 11,819 2,524,459
Leases - - 8,319,100
Total deferred inflows of resources - 11,819 10,843,559 Fund Balances:
Nonspendable - 14,692 1,116,739
Restricted - 10,337,903 12,067,948
Committed - - 4,331,861
Assigned 13,089,113 - 26,372,636
Unassigned - (764,837) 1,613,104
Total fund balances (deficits) 9,587,758 13,089,113 45,502,288 Total liabilities, deferred inflows
of resources and fund balances $ 14,692,537 14,003,216 $ 66,794,325 $
LIABILITIES, DEFERRED INFLOWS OF RESOURCES,
AND FUND BALANCES
CITY OF HERMOSA BEACH
Balance Sheet (Continued)
Governmental Funds
June 30, 2025
ASSETS
See accompanying notes to the basic financial statements. 26
Total Fund Balances - Total Governmental Funds $ 45,502,288 Nondepreciable, net of Internal Service Fund of $354,550 40,164,641 $ Depreciable, net of Internal Service Fund of $2,879,191 39,308,180 Total capital assets 79,472,821
Insurance Fund 2,682,118
Equipment Replacement Fund 11,452,929
Total Internal Service Funds 14,135,047
2,524,459
Lease revenue bonds and premium (7,397,638)
Subscription agreements (7,726)
Interest payable (86,067)
(10,735,140) (3,243,709)
Pension related deferred outflows of resources 17,089,936 Pension related deferred inflows of resources (3,679,937) (58,222,968)
OPEB related deferred outflows of resources 2,207,185
OPEB related deferred inflows of resources (3,887,871)
8,131,302
Net position of governmental activities $ 92,537,122
CITY OF HERMOSA BEACH
Reconciliation of the Governmental Funds Balance Sheet
to the Government-Wide Statement of Net Position
June 30, 2025
Amounts reported for governmental activities in the Statement of Net Position were reported differently because:
Deferred amounts relates to pension not available for current expenditures and are not reported in the governmental fund financial statements:
Net pension liability is not due and payable in the current period and therefore is not reported in the governmental funds.
Deferred amounts relates to other postemployment benefits not available for current expenditures and are not reported in the governmental fund financial statements:
Net OPEB asset is not due and payable in the current period and therefore is not reported in the governmental funds.
Capital assets used in governmental activities were not current financial resources.
Therefore, they were not reported in the Governmental Funds Balance Sheet.
Internal Service Funds were used by management to charge the costs of certain activities, such as insurance and equipment replacement to individual funds. The assets and liabilities of the Internal Service Funds were included in the governmental activities in the Government-wide Statement of Net Position.
Revenues in the Government-wide Statement of Activities that do not provide current financial resources and are not reported as revenue in the governmental funds.
Long-term liabilities are not due and payable in the current period and accordingly are not reported as fund liabilities. All liabilities, both current and long-term, are reported in the Statement of Net Position:
Compensated absences
See accompanying notes to the basic financial statements. 27 Page 185 of 874
RTI Undersea
Grants Tyco Cable
Special Special Special
Revenue Revenue Revenue
General Fund Fund Fund
REVENUES:
Property taxes 25,560,649 $ - $ - $ - $
Other taxes 13,404,363 - - -
Licenses and permits 1,063,710 - - -
Fines and forfeitures 1,638,586 - - -
Use of money and property 1,505,172 - 223,213 101,908
Intergovernmental 220,515 521,220 - -
Charges for services 9,934,898 - - -
Miscellaneous 378,000 630,327 120,611 150,404
Interest earned on investments 1,303,572 - 157,927 93,324 Total revenues 1,151,547 55,009,465 501,751 345,636
EXPENDITURES:
Current:
Legislative and legal 1,792,165 - - -
General government 6,642,229 493,289 - -
Public safety 27,956,795 12,618 - -
Community development 2,371,730 - - -
Culture and recreation 2,485,804 - - -
Public works 9,107,749 50,000 109,229 78,559
Capital outlay 2,785 861,296 533,517 307,150
Debt service:
Principal 10,615 - - -
Interest and fiscal charges 424 - - -
Total expenditures 1,417,203 50,370,296 642,746 385,709
REVENUES OVER (UNDER)
EXPENDITURES (265,656) 4,639,169 (140,995) (40,073)
OTHER FINANCING
SOURCES (USES):
Transfers in 439,939 - - -
Transfers out (1,835,025) - - -
Proceeds from subscriptions - - - -
Total other financing
sources (uses) (1,395,086) - - -
NET CHANGE IN FUND BALANCE (265,656) 3,244,083 (140,995) (40,073) Fund balances (deficit), beginning of year 17,049,456 (300,667) 2,121,402 1,157,867 Fund balances (deficit), end of year 20,293,539 $ (566,323) $ 1,980,407 $ 1,117,794 $ Major Funds
CITY OF HERMOSA BEACH
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds
For the Year Ended June 30, 2025
See accompanying notes to the basic financial statements. 28 Page 186 of 874
Major Funds
Capital
Improvements
Capital Nonmajor
Projects Governmental
Fund Funds Total
REVENUES:
Property taxes - $ 451,780 $ 26,012,429 $
Other taxes - 2,592,498 15,996,861
Licenses and permits - - 1,063,710
Fines and forfeitures - 15,963 1,654,549
Use of money and property - - 1,830,293
Intergovernmental - 1,295,568 2,037,303
Charges for services - 1,361,348 11,296,246
Miscellaneous 4,254 5,000 1,288,596
Interest earned on investments 931,888 1,038,420 3,525,131 Total revenues 6,760,577 936,142 64,705,118
EXPENDITURES:
Current:
Legislative and legal - - 1,792,165
General government - 283,162 7,418,680
Public safety - 154,601 28,124,014
Community development - 53,434 2,425,164
Culture and recreation - 67,880 2,553,684
Public works 312,661 4,827,829 14,486,027
Capital outlay 3,960,682 4,727,593 10,393,023
Debt service:
Principal - 450,000 460,615
Interest and fiscal charges - 267,200 267,624
Total expenditures 10,831,699 4,273,343 67,920,996
REVENUES OVER (UNDER)
EXPENDITURES (4,071,122) (3,337,201) (3,215,878)
OTHER FINANCING
SOURCES (USES):
Transfers in - 1,105,256 1,545,195
Transfers out - (439,939) (2,274,964)
Proceeds from subscriptions - - -
Total other financing
sources (uses) - 665,317 (729,769)
NET CHANGE IN FUND BALANCE (3,405,805) (3,337,201) (3,945,647) Fund balances, beginning of year 16,426,314 12,993,563 49,447,935 Fund balances, end of year 13,089,113 $ 9,587,758 $ 45,502,288 $
CITY OF HERMOSA BEACH
Statement of Revenues, Expenditures, and Changes in Fund Balances (Continued) Governmental Funds
For the Year Ended June 30, 2025
See accompanying notes to the basic financial statements. 29 Page 187 of 874
Net Change in Fund Balances - Total Governmental Funds $ (3,945,647) Governmental activities in the Statement of Activities were reported differently because:
Total capital outlay expenditures reported in governmental funds 10,393,023 $ Less: repair and maintenance expenditures 1,984,591
Total capital outlay 12,377,614
Total depreciation reported in Government-wide Statement of Activities (3,003,850) Less: depreciation reported in the Internal Service Fund 615,799 Total (2,388,051)
831,582
(3,079,763)
1,219,993
(854,911)
626,774
(337,732)
Change in net position of governmental activities $ 4,449,859 The issuance of long-term debt provides current financial resources to governmental funds. However, the repayment reduces long-term liabilities in the governmental activities Statement of Net Position.
Internal Service Funds are used by management to charge the costs of certain activities, such as insurance and equipment replacement, to individual funds. The net revenue of the Internal Service Funds is reported in governmental activities.
CITY OF HERMOSA BEACH
Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balance to the Governmental-wide Statement of Activities For the Year Ended June 30, 2025
Governmental Funds report capital outlay as expenditures. However, in the Government-wide Statement of Activities, the costs of those assets is allocated over their estimated useful lives as depreciation expense. The amount of capital assets recorded in the current period is listed below.
Depreciation expense of capital assets is reported in the Government-wide Statement of Activities, but Earned but unavailable revenues reported in the governmental funds balance sheet as deferred inflows of resources should be recognized in the Government-wide Statement of Activities as revenue regardless of availability.
Certain pension expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.
Certain other postemployment benefit expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds.
Compensated absences were reported in the Government-wide Statement of Activities, but they did not require the use of current financial resources. Therefore, compensated absences were not reported as expenditures in the governmental funds.
See accompanying notes to the basic financial statements. 30 Page 188 of 874
PROPRIETARY FUND
FINANCIAL STATEMENTS
Internal Service Funds - To account for the costs associated with the City's insurance and for funding equipment replacement.
31
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32
Governmental
Activities
Internal
Service Funds
ASSETS
Current assets:
Cash and investments $ 19,293,774
Account receivables 9,658
Total current assets 19,303,432
Noncurrent assets:
Nondepreciable capital assets 354,549
Depreciable capital assets, net of accumulated depreciation 2,879,192 Total noncurrent assets 3,233,741
Total assets 22,537,173
LIABILITIES
Current liabilities:
Accounts payable 285,676
Accrued wages and benefits payable 20,915
Workers' compensation claims payable - due within one year 1,241,918 General liability claims payable - due within one year 965,072 Subscription lease payable - due within one year 87,072 Total current liabilities 2,600,653
Long-term liabilities:
Workers' compensation claims payable - due in more than one year 4,324,724 General liability claims payable - due in more than one year 1,244,122 Subscription lease payable - due in more than one year 232,627 Total long-term liabilities 5,801,473
Total liabilities 8,402,126
NET POSITION
Net investment in capital assets 3,233,741
Unrestricted 10,901,306
Total net position $ 14,135,047
CITY OF HERMOSA BEACH
Statement of Net Position
Proprietary Funds
June 30, 2025
See accompanying notes to the basic financial statements. 33 Page 191 of 874
Governmental
Activities
Internal
Service Funds
OPERATING REVENUES:
Charges for services 5,936,193 $
Miscellaneous revenue 182,906
Total operating revenues 6,119,099
OPERATING EXPENSES:
Salaries and wages 496,353
Contract services 3,545,210
Supplies 317,898
Claims expense 2,239,307
Depreciation 615,799
Total operating expenses 7,214,567
OPERATING INCOME (1,095,468)
NON-OPERATING REVENUES (EXPENSES):
Interest expense (1,451)
Gain on disposal of capital assets 29,418
Total non-operating revenues (expenses) 27,967
INCOME BEFORE TRANSFERS (1,067,501)
Transfers in 729,769
Total transfers 729,769
Change in net position (337,732)
Net position, beginning of year 14,472,779
Net position, end of year 14,135,047 $
CITY OF HERMOSA BEACH
Statement of Revenues, Expenses, and Changes in Net Position Proprietary Funds
For the year ended June 30, 2025
See accompanying notes to the basic financial statements. 34 Page 192 of 874
Governmental
Activities
Internal
Service Funds
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received for services from other funds 5,935,972 $ Cash received from insurance recovery 240,470
Cash payments to suppliers for goods and services (4,027,912) Cash payments to employees for services (495,155)
Cash payments for insurance premiums and claims (1,853,023) Net cash provided (used by) operating activities (199,648) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES:
Transfers in 729,769
Net cash provided (used by) non-capital financing activities 729,769 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of capital assets (983,184)
Proceeds from subscription agreement 435,335
Interest paid (1,451)
Payment on subscription lease (115,636)
Net cash provided (used by) capital and related financing activities (664,936) Net increase (decrease) in cash and cash equivalents (134,815) Cash and equivalents, beginning of year 19,428,589
Cash and equivalents, end of year 19,293,774 $
RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH (USED BY) OPERATING ACTIVITIES:
Operating income (loss) (1,095,468) $
Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation 615,799
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 57,343
Increase (decrease) in accounts payable (164,805)
Increase (decrease) in accrued wages and benefits payable 1,199 Increase (decrease) in workers' compensation claims payable 44,128 Increase (decrease) in general liability claims payable 342,156 Total adjustments 895,820
Net cash provided (used) by operating activities $ (199,648)
CITY OF HERMOSA BEACH
Statement of Cash Flows
Proprietary Funds
For the year ended June 30, 2025
See accompanying notes to the basic financial statements. 35
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FIDUCIARY FUND
FINANCIAL STATEMENTS
Custodial Funds- are used to account for assets held by the City in the capacity of agent for individuals. Custodial Fund spending is controlled primarily through legal agreements and applicable State and Federal laws. The Custodial Funds of the City were established to account for transactions related to payments for limited obligation bonds for the Bayview Drive, the Lower Pier Avenue Assessment District, the Beach Drive Assessment District, the Myrtle Avenue Utility Undergrounding Assessment District, and the Loma Drive Utility Undergrounding Assessment District. 37
Custodial
Funds
ASSETS
Cash and investments $ 233,973
Interest receivable 775
Other receivables 1,196
Total assets 235,944
LIABILITIES
Assessment:
Installment account 216,372
Reserve requirement 13,000
Total Liabilities 229,372
NET POSITION $ 6,572
CITY OF HERMOSA BEACH
Statement of Fiduciary Net Position
Fiduciary Funds
June 30, 2025
See accompanying notes to the basic financial statements. 38 Page 196 of 874
Custodial
Funds
ADDITIONS:
Interest income 6,572 $
Other revenues 222,701
Total additions 229,273
DEDUCTIONS:
Miscellaneous 229,536
Total deductions 229,536
Change in net postion (263)
Net position, beginning of year 6,835
Net position, end of year 6,572 $
For the Year Ended June 30, 2025
All Custodial Funds
Statement of Changes in Fiduciary Net Position
CITY OF HERMOSA BEACH
See accompanying notes to the basic financial statements.
NOTES TO THE BASIC
FINANCIAL STATEMENTS
40
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41
City of Hermosa Beach
Index to the Notes to the Basic Financial Statements
For the Year Ended June 30, 2025
Page
Note 1 – Summary of Significant Accounting Policies .............................................................................................. 44 A. Financial Reporting Entity ........................................................................................................................... 44 B. Basis of Accounting and Measurement Focus .......................................................................................... 45 C. Cash and Investments ................................................................................................................................... 47 D. Fair Value Measurement ..............................................................................................................................47 E. Property Taxes Receivable .......................................................................................................................... 47 F. Interfund Transactions .................................................................................................................................. 48 G. Capital Assets ................................................................................................................................................ 48 H. Unearned and Unavailable Revenue ........................................................................................................... 48 I. Claims Payable .............................................................................................................................................. 49 J. Compensated Absences Payable ................................................................................................................. 49 K. Pensions .......................................................................................................................................................... 49 L. Other Postemployment Benefits (“OPEB”) .............................................................................................. 49 M. Net Position .................................................................................................................................................... 50 N. Fund Balances ................................................................................................................................................ 50 O. Spending Policy ............................................................................................................................................. 51 P. Use of Estimates ............................................................................................................................................ 51 Q. Leases Receivable ......................................................................................................................................... 52 R. Leases Payable and Subscription Agreements Payable ........................................................................... 52 S. Accounting Changes ...................................................................................................................................... 52 Note 2 – Cash and Investments ...................................................................................................................................... 53 A. Deposits .......................................................................................................................................................... 53 B. Investments ..................................................................................................................................................... 54 C. Investment in Los Angeles County Investment Pool ............................................................................... 54 D. Fair Value Measurement ..............................................................................................................................55 E. Risk Disclosures ............................................................................................................................................ 55 Note 3 – Receivables .......................................................................................................................................................... 56 A. Government-Wide Financial Statements ................................................................................................... 56 B. Fund Financial Statements ........................................................................................................................... 56 Note 4 – Lease Revenues .................................................................................................................................................. 57 Note 5 – Interfund Transactions .................................................................................................................................... 58 Note 6 – Capital Assets ..................................................................................................................................................... 60 Note 7 – Long-Term Liabilities ...................................................................................................................................... 60 Note 8 – Risk Management ............................................................................................................................................. 62 Note 9 – Defined Benefit Pension Plans ........................................................................................................................ 63 Note 10 – Other Postemployment Benefit Plan .......................................................................................................... 72 42
City of Hermosa Beach
Index to Notes to the Basic Financial Statements (Continued) For the Year Ended June 30, 2025
Page
Note 11 – Classification of Fund Balances ........................................................................................................... 76 Note 12 – Non-City Obligations ....................................................................................................................................... 77 Note 13 – Commitments and Contingencies ................................................................................................................. 77 A. Commitments ................................................................................................................................................. 77 B. Contingencies ................................................................................................................................................. 78 C. Grants .............................................................................................................................................................. 78 Note 14 – Prior Period Adjustments ............................................................................................................................... 78 Note 15 – Subsequent Events ............................................................................................................................................ 78 43
City of Hermosa Beach
Notes to the Basic Financial Statements
For the Year Ended June 30, 2025
Note 1 – Summary of Significant Accounting Policies
The basic financial statements of the City of Hermosa Beach, California, (the “City”) have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) as applied to governmental agencies. The Governmental Accounting Standards Board (“GASB”) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the City’s significant policies:
A. Financial Reporting Entity
The City was incorporated on January 14, 1907, under the General Laws of the State of California. The City operates under a Council-Manager form of government and provides the following services: public safety (police, crossing guards and fire), maintenance and construction of public improvements, cultural, recreation, community development (planning and zoning), and general administrative services.
The basic financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The City is considered to be financially accountable for an organization if the City appoints a voting majority of that organization’s governing body and either the City is able to impose its will on that organization or there is a potential for the organization to provide financial benefits to or impose specific financial burdens on the City. The City is also considered to be financially accountable for an organization if that organization is fiscally dependent (i.e., it is unable to adopt its budget, levy taxes, set rates or charges, or issue bonded debt without approval from the City). In certain cases, other organizations are included as component units if the nature and significance of their relationship with the City are such that their exclusion would cause the City’s financial statement to be misleading or incomplete. Blended component units, although legally separate entities, are in substance, part of the City’s operations and data from these units are combined with data of the City.
Management determined that the following entities should be reported as blended component units based on the criteria above. Each blended component unit has a June 30 year-end, has a governing board that is substantially the same as the City’s, there is a financial benefit or burden relationship between the City and the blended component unit, and the City is financially accountable for each of the blended component units.
Hermosa Beach Street Lighting and Landscaping District – The Hermosa Beach Street Lighting and Landscaping Assessment District was created for street lighting/median maintenance purposes pursuant to Street and Highway Code Sections 22500-22679.
Lower Pier Avenue Assessment District – The Lower Pier Avenue Assessment District was created for improvement of the assessment district in November 1997 pursuant to Street and Highway Code Section 10000.
Myrtle Avenue Underground Utility District – The Myrtle Avenue Underground Utility District was created in October 1999 pursuant to Street and Highway Code Section 10000.
Loma Drive Underground Utility District – The Loma Drive Underground Utility District was created in October 1999 pursuant to Street and Highway Code Section 10000.
Beach Drive Assessment District – The Beach Drive Assessment District was created in July 2004 pursuant to Street and Highway Code Section 10000.
Bayview Drive Underground District – The Bayview Drive Underground District was created in February 2005 pursuant to Street and Highway Code Section 10000.
Hermosa Beach Public Financing Authority – The Hermosa Beach Public Financing Authority was created on July 14, 2015 to authorize the issuance and sale of 2015 Lease Revenue Bonds.
The above component units do not issue separate financial statements. 44
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for by providing a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditures or expenses, as appropriate. City resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled.
The Statement of Net Position reports separate sections for Deferred Outflows of Resources, and Deferred Inflows of Resources, when applicable.
Deferred Outflows of Resources represent outflows of resources (consumption of net assets) that apply to future periods and that, therefore, will not be recognized as an expense until that time.
Deferred Inflows of Resources represent inflows of resources (acquisition of net assets) that apply to future periods and that, therefore, are not recognized as revenue until that time.
Government-Wide Financial Statements
The government-wide financial statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all of the City’s assets and liabilities, including capital assets, as well as infrastructure assets, and long-term liabilities, are included in the accompanying statement of net position. The statement of activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. Fiduciary activities of the City are not included in these statements.
Certain types of transactions are reported as program revenues for the City in three categories:
Charges for services
Operating grants and contributions
Capital grants and contributions
Certain eliminations have been made in regards to interfund activities, payables and receivables. All internal balances in the statement of net position have been eliminated. In the statement of activities, internal service fund transactions have been included in the governmental activities. The following interfund activities have been eliminated:
Due from and to other funds, which are short-term loans within the primary government Transfers in and out, which are flows of assets between funds without the requirement for repayment Governmental Fund Financial Statements
All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, only current assets and current liabilities are included on the balance sheet. The statement of revenues, expenditures and changes in fund balances presents increases (revenue and other financing sources) and decreases (expenditures and other financing uses) in fund balances.
Under the modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. 45
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Governmental Fund Financial Statements (Continued)
Revenues are recorded when received in cash, except those revenues subject to accrual (generally 60 days after year-end) which are recognized when due. The primary revenue sources, which have been treated as susceptible to accrual by the City, are property taxes, intergovernmental revenues and other taxes. Sales tax is received on a monthly basis. Business license fees are recorded as received, except at year-end when they are accrued pursuant to the modified accrual basis of accounting. The City recognizes business license revenue collected within 60 days as revenue at June 30. Expenditures are recorded in the accounting period in which the related fund liability is incurred.
Reconciliations of the fund financial statements to the government-wide financial statements are provided to explain the differences.
The City reports the following major governmental funds:
General Fund – The General Fund is the City’s principal operating fund. It accounts for all revenues and expenditures used to finance the traditional services associated with a municipal government except those required to be accounted for in another fund.
Grants Special Revenue Fund – This fund is used to support eligible service agencies.
Tyco Special Revenue Fund – This fund is used to account for funds received from an easement granted for construction of a transpacific, submarine fiber optic cable system originating in Japan with a landing in Hermosa Beach. The project will provide additional capacity.
RTI Undersea Cable Special Revenue Fund – This fund is used to account for funds received from an easement granted for construction of a transpacific, submarine fiber optic cable system with a landing in Hermosa Beach.
The project will provide additional capacity for global voice and data transmission and global access to planned and existing land-based communication networks in the project area.
Capital Improvements Capital Projects Fund – This fund is set aside for capital improvement projects.
Proprietary Fund Financial Statements
Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the statement of net position. The statement of revenues, expenses and changes in net position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned, while expenses are recognized in the period in which the liability is incurred.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the proprietary funds are charges to customers for sales and services. Operating expenses for the proprietary funds include the costs of sales and services, administrative expenses and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 46 Page 204 of 874
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) B. Basis of Accounting and Measurement Focus (Continued) Proprietary Fund Financial Statements (Continued)
Internal service funds are the only funds presented in the proprietary fund financial statements. However, internal service balances and activities have been combined with the governmental activities in the governmentwide financial statements. The internal service funds are used to account for equipment replacement and insurance provided to other City departments on a cost-reimbursement basis.
Fiduciary Fund Financial Statements
The City’s fiduciary funds represent custodial funds, which are custodial in nature (assets equal liabilities) and use the economic resources measurement focus. The fiduciary funds are accounted for using the accrual basis of accounting. The City maintains seven fiduciary funds which represent assets resulting from assessments to the property owners in four utility undergrounding districts, two reserve funds for utility undergrounding districts and a downtown improvement district (Lower Pier Avenue). The assets are used to repay bonds secured by the private property in the district.
C. Cash and Investments
The City’s cash and cash equivalents are comprised of cash on hand, demand deposits, and short-term investments with original maturity of three months or less from the date of acquisition. All cash and investments of proprietary funds are held in the City’s investment pool. These cash pools have the general characteristics of a demand deposit account, therefore, all cash and investments in the proprietary funds are considered cash and cash equivalents for statement of cash flows purposes.
D. Fair Value Measurement
Investments, unless otherwise specified, recorded at fair value in the financial statements, are categorized based upon the level of judgment associated with the inputs used to measure their fair value.
The three levels of the fair value measurement hierarchy are described below:
Level 1 – Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
Level 2 – Inputs, other than quoted prices included in Level 1, that are observable for the assets or liabilities through corroboration with market data at the measurement date. Level 3 – Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the assets or liabilities at the measurement date.
E. Property Taxes Receivable
Property taxes attach as an enforceable lien on property as of January 1 each year. The property tax year runs from July 1 to June 30. Property is taxed as of January 1 for payment in the following fiscal year. Taxes are payable in two installments: December 10 and April 10 of each year. The County of Los Angeles, California (the “County”) bills and collects the property taxes and remits them to the City according to a payment schedule established by the County. City property tax revenues are recognized, net of estimated refunds and uncollectible amounts, in the period for which the taxes are levied. The City recognizes available taxes, or those collected within 60 days, as revenue at June 30.
47
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) E. Property Taxes Receivable (Continued)
The County is permitted by State law to levy taxes at 1% of full market value (at time of purchase) and can increase the assessed valuation no more than 2% per year. The City receives a share of this basic levy, or .203 cents of each $1.00, proportionate to what it received during the years 1976 to 1978.
F. Interfund Transactions
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as “due from/to other funds” (i.e., current portion of interfund loans).
G. Capital Assets
In the government-wide financial statements, capital assets, which include land, buildings, improvements, equipment, furniture, and infrastructure assets (e.g., roads, sidewalks, and similar items), are recorded at historical cost or estimated historical if purchased or constructed (except for intangible right-to-use lease assets, the measurement of which is disclosed thereafter). Donated capital assets, donated works of art or similar items, and capital assets received in a service concession arrangement are reported at acquisition value on the date donated rather than fair value. City policy has set the capitalization threshold for reporting capital assets at $5,000 and infrastructure at $100,000.
The City defines infrastructure as the basic physical assets that allow the City to function. The assets include streets, sewers and storm drains, parking meters and monuments. Each major infrastructure system can be divided into subsystems. For example, the street system can be subdivided into pavement, curb and gutters, sidewalks, medians, streetlights and landscaping. These subsystems were not delineated in the basic financial statements. The Finance Department, with the assistance of the appropriate operating department, maintains information regarding the subsystems.
Interest incurred during capital assets construction, if any, is capitalized for the proprietary funds as part of the asset cost.
For all infrastructure systems, the City elected to use the “Basic Approach” and depreciate over its estimated useful life.
Capital assets used in operations are depreciated over their estimated useful lives using the straight-line method.
The lives used for depreciation purposes are as follows:
Buildings 50 years
Improvements other than buildings 20 years
Machinery and equipment 3-20 years
Infrastructure 15-50 years
Subscriptions 3-5 years
Leases 5-50 years
H. Unearned and Unavailable Revenue
In the government-wide and fund financial statements, unearned revenue is reported for transactions for which revenue has not yet been earned. Typical transactions recorded as unearned revenues in the government-wide financial statements are cell phone site license lease payments received in advance, prepaid charges for services, facility rentals paid in advance, quarterly encroachment fees, and advance registration for recreation classes.
In the governmental fund financial statements, unavailable revenue is reported when transactions have not yet met the revenue recognition criteria based on the modified accrual basis of accounting. The City reports an unavailable revenue when an asset is reported in governmental fund financial statements but the revenue is not available.
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) I. Claims Payable
The City records a liability to reflect an actuarial estimate of ultimate uninsured losses for both general liability claims (including property damage claims) and workers’ compensation claims. The estimated liability for workers’ compensation claims and general liability claims includes “incurred but not reported” (“IBNR”) claims. There is no fixed payment schedule to pay these liabilities.
J. Compensated Absences Payable
The City accounts for compensated absences in accordance with GASB Statement No. 101. This standard requires recognition of a liability for leave that is attributable to services already rendered, accumulated over time, and is more likely than not to be used for time off or otherwise compensated. It is the policy of the City to pay all accumulated vacation pay and all or a portion of sick pay when an employee retires or terminates. The long-term amount is included as a liability in the governmental activities of the government-wide financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. All of the liability for compensated absences applicable to proprietary funds is reported in those funds. The City’s goal is to accumulate 25% of the funding for the accrued liability for compensated absences in the assigned fund balance for compensated absences.
Compensated absences are liquidated principally by the General Fund.
K. Pensions
For purposes of measuring the aggregate net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the plans and additions to/deductions from the plans’ fiduciary net position have been determined on the same basis as they are reported by the plans (Note 9). For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value.
The following timeframes are used for pension reporting:
CalPERS
Valuation Date June 30, 2021
Measurement Date June 30, 2022
Measurement Period July 1, 2021 to June 30, 2022
Gains and losses related to changes in total pension liability and fiduciary net position are recognized in pension expense systematically over time. The first amortized amounts are recognized in pension expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to pensions and are to be recognized in future pension expense. The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized straight-line over 5 years.
All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) as of the beginning of the measurement period.
L. Other Postemployment Benefits (“OPEB”)
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the plans and additions to/deductions from OPEB Plan's fiduciary net position have been determined on the same basis as they are reported by the plan (Note 10). For this purpose, the OPEB Plan recognizes benefit payments when due and payable in accordance with the benefit terms. Investments are reported at fair value. 49
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) L. Other Postemployment Benefits (“OPEB”) (Continued)
The following timeframes are used for OPEB reporting:
OPEB
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
Gains and losses related to changes in total OPEB liability and fiduciary net position are recognized in OPEB expense systematically over time. The first amortized amounts are recognized in OPEB expense for the year the gain or loss occurs. The remaining amounts are categorized as deferred outflows and deferred inflows of resources related to OPEB and are to be recognized in future OPEB expense. The amortization period differs depending on the source of gain or loss. The difference between projected and actual earnings is amortized on a straight-line basis over 5 years. All other amounts are amortized on a straight-line basis over the average expected remaining service lives of all members that are provided with benefits (active, inactive, and retired) at the beginning of the measurement period.
M. Net Position
In the government-wide financial statements and proprietary fund financial statements, net position is classified as follows:
Investment in Capital Assets - This component of net position consists of capital assets, net of accumulated depreciation.
Restricted - This component of net position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets.
Unrestricted - This component of net position is the amount of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.
N. Fund Balances
In the governmental fund financial statements, fund balances are classified as follows:
Nonspendable – Nonspendable fund balances include amounts that cannot be spent because they are not in a spendable form, such as inventory or prepaid items, or because resources legally or contractually must remain intact.
Restricted – Restricted fund balances are the portion of fund balance that have externally enforceable limitations on their usage through legislation or limitations imposed by creditors, grantor, laws and regulations of other governments or enabling legislation.
Committed – Committed fund balances are self-imposed limitations by the highest level of decision-making authority, namely the City Council, prior to the end of the reporting period. City Council adoption of a resolution is required to commit resources or to rescind the commitment.
Assigned – Assigned fund balances are limitations imposed by management based on the intended use of the funds. Modifications or rescissions of the constraints can be removed by the same type of action that limited the use of the funds. Assignment of resources can be done by the highest level of decision making or by a committee or official designated for that purpose. The City Council has authorized the Finance Director for that purpose. 50
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) N. Fund Balances (Continued)
Unassigned – Unassigned fund balances represent the residual net resources in excess of the other classifications. The general fund is the only fund that reports a positive unassigned fund balance amount. In other governmental funds, it is not appropriate to report a positive unassigned fund balance amount. However, in governmental fund other than general fund, if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund.
O. Spending Policy
Government – Wide Financial Statements and Proprietary Fund Financial Statements When expenses are incurred for purposes for which both restricted and unrestricted components of net position are available, the City’s policy is to apply restricted component of net position first, then the unrestricted component of net position as needed.
Governmental Fund Financial Statements
When expenditures are incurred for purposes for which restricted, committed, assigned and unassigned fund balances are all available, the City’s policy is to use these balances in the following order unless an ordinance specifies the fund balance to be used: restricted, committed, assigned and unassigned.
Long-term financial planning
The City Council’s adopted financial policies relating to long-term financial planning for specific purposes are as follows:
Insurance Fund - Goal of $3,000,000 in net position for claims reserves and catastrophic losses.
Equipment Replacement Fund - Goal of net position equal to the accumulated amount calculated for all equipment, based on replacement cost and useful life of equipment.
Contingency - Goal equal to 20% of the General Fund appropriations for economic uncertainties, unforeseen emergencies.
Compensated Absences - Goal equal to 25% funding for accrued liabilities for employee vacation, sick and compensatory time.
The City also has a financial policy of transferring funds unspent in the General Fund at year-end to the Insurance Fund, Equipment Replacement Fund, and Capital Improvement Capital Projects Fund and to add to Contingency funds. The City Council makes changes as necessary to the year-end transfer, depending on the equity in the funds or based on other needs.
P. Use of Estimates
The preparation of the basic financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
51
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) Q. Leases Receivable
Lessor: The City is a lessor for noncancellable leases of a portion of real property, as well as, building and roof space. The City recognizes a lease receivable and a deferred inflow of resources in the government-wide and governmental fund financial statements.
At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of the lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.
Key elements and judgement include how the City determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts. The City uses it estimated incremental borrowing rate as the discount rate for leases. The lease term includes the noncancellable period of the lease. Lease receipts included In the measurement of the lease receivable is composed of fixed payments from the lessee.
The City monitors changes that would require a remeasurement of its lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable.
R. Leases Payable and Subscription Agreements Payable
Lessee: The City is a lessee for noncancellable leases of software subscriptions. The City recognizes a lease or subscription agreement liability and an intangible right-to-use lease or subscription agreement asset (lease asset) in the government-wide financial statements. The City recognizes lease liabilities with an initial, individual value of $50,000 or more.
At the commencement of a lease or subscription agreement, the City initially measures the lease liability at the present value of payments expected to be made during the lease or subscription agreement term. Subsequently, the liability is reduced by the principal portion of payments made. The lease or subscription agreement asset is initially measured as the initial amount of the liability, adjusted for payments made at or before the commencement date, plus certain initial direct costs. Subsequently, the asset is amortized on a straight-line basis over its useful life.
Key estimates and judgments related to leases include how the City determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) payments. The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, the City generally uses its estimated incremental borrowing rate as the discount rate for leases. The term includes the noncancellable period of the lease. Lease payments included in the measurement of the liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise.
The City monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.
Lease or subscription agreement assets are reported with other capital assets and lease or subscription agreement liabilities are reported with long-term debt on the Statement of Net Position. 52 Page 210 of 874
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 1 – Summary of Significant Accounting Policies (Continued) S. New Accounting Pronouncements
For the year ended June 30, 2025, the financial statements include the adoption of GASB Statement No. 101, Compensated Absences. The objective of this statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absences. The cumulative effect of adopting this standard was not significant, hence, no restatement of beginning net position was required.
Note 2 – Cash and Investments
The City maintains a cash and investment pool, which includes cash balances and authorized investments of all funds.
The City had the following cash and investments at June 30, 2025:
Government-Wide
Statement of
Net Position Statement of
Governmental Fiduciary
Activities Net Position Total
Cash and investments $ 67,560,807 $ 233,973 $ 67,794,780 The City’s cash and investments at June 30, 2025 in more detail:
Cash and cash equivalents:
Demand deposits $ 10,422,904
Petty cash 2,000
Total cash and cash equivalents 10,424,904
Investments:
Local Agency Investment Fund 24,633,987
Los Angeles County Pooled Investments Funds 21,352,194
US Government Treasuries 496,935
US Government Bonds 5,138,140
Negotiable Certificates of Deposit 4,672,857
Pension Trust 1,075,763
Total investments 57,369,876
Total cash and investments $ 67,794,780
A. Deposits
The carrying amounts of the City’s demand deposits were $10,422,904 at June 30, 2025. Bank balances at that date were $10,325,489, the total amount of which was collateralized or insured with accounts held by the pledging financial institutions in the City’s name as discussed below.
The California Government Code requires California banks and savings and loan associations to secure the City’s cash deposits by pledging securities as collateral. This Code states that collateral pledged in this manner shall have the effect of perfecting a security interest in such collateral superior to those of a general creditor.
Thus, collateral for cash deposits is considered to be held in the City’s name. 53
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 2 – Cash and Investments (Continued)
The fair value of pledged securities must equal at least 110% of the City’s cash deposits. California law also allows institutions to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the City’s total cash deposits. The City may waive collateral requirements for cash deposits, which are fully insured up to $250,000 by the Federal Deposit Insurance Corporation (“FDIC”). The City, however, has not waived the collateralization requirements.
The City follows the practice of pooling cash and investments of all funds, except for funds required to be held by fiscal agents under the provisions of bond indentures, if applicable. Interest income earned on pooled cash and investments is allocated on an accounting period basis to the various funds based on the period-end cash and investment balances, however, interest is not allocated to funds created to advance costs for utility undergrounding districts, reimbursable grant funds or internal service funds.
B. Investments
Under the provisions of the City’s investment policy, the City’s investments are limited to those authorized by the California Government Code, except as follows:
There is no maximum amount or maximum maturity period of the City’s idle funds that may be invested with the Local Agency Investment Fund (“LAIF”) or the Los Angeles County Pooled Investment Fund (“LACPIF”) Negotiable Certificates of Deposit shall not exceed 30 percent of the City’s surplus money and mature in 5 years or less. Medium-term corporate notes shall have a Moody or Standard & Poor’s rating of at least AA and mature in 5 years or less
The City is a participant in LAIF, which is regulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. The City’s investments with LAIF at June 30, 2025 included a portion of the pool funds invested in Structured Notes and Asset-Backed Securities, which included the following:
Structured Notes: debt securities (other than asset-backed securities) whose cash flow characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and/or that have embedded forwards or options.
Asset-Backed Securities: generally, mortgage-backed securities that entitle their purchasers to receive a share of the cash flows from a pool of assets such as principal and interest repayments from a pool of mortgages (for example, collateralized mortgage obligations), or credit card receivables.
As of June 30, 2025, the City had $24,633,987 invested in LAIF, which had invested 42.94% of the pool investment funds in Structured Notes and Asset-Backed Securities. The fair value of the City’s investment in this pool is reported in the accompanying financial statements at amounts based upon the City’s pro-rata share of the fair value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio).
C. Investment in Los Angeles County Investment Pool
The City is a voluntary participant in the Los Angeles County Investment Pool pursuant to Government Code Section 53684. The cash flow needs of participants are monitored daily to ensure that sufficient liquidity is maintained to meet the needs of those participants. At the time deposits are made, the Los Angeles County Investment Pool’s Treasurer may require the depositing entity to provide annual cash flow projections or an anticipated withdrawal schedule for deposits in excess of $1 million. Projections are to be performed no less than semi-annually. In accordance with Government Code Section 27136, all requests for withdrawal of funds for the purpose of investing or depositing the funds elsewhere shall be evaluated to ensure the proposed withdrawal will not adversely affect the principal deposits of the other participants. As of June 30, 2025, the City had $21,352,194 invested in the Los Angeles County Investment Pool. 54
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 2 – Cash and Investments (Continued)
D. Fair Value Measurement
At June 30, 2025, investments are reported at fair value. The following table presents the fair value measurement of investments on a recurring basis and the levels within fair value hierarchy in which the fair value measurements fall at June 30, 2025:
Investment Type Value Level 1 Level 2 Uncategorized
Local Agency Investment Fund $ 24,633,987 $ - $ - $ 24,633,987 Los Angeles County Pooled
Investments Fund 21,352,194 - - 21,352,194
US Government Treasuries 496,935 496,935 - -
US Government Bonds 5,138,140 5,138,140 - -
Negotiable Certificates of Deposit 4,672,857 - - 4,672,857 Pension Trust 1,075,763 - - 1,075,763
Total $ 57,369,876 $ 5,635,075 $ - $ 51,734,801
E. Risk Disclosures
Interest Rate Risk - As a means of limiting its exposure to fair value losses arising from rising interest rates, the City’s investment policy limits investments to a maximum maturity of five years.
At June 30, 2025, the City had the following investment maturities:
Investment Maturities (in Years)
Investment Type Fair value Less than 1 1 to 2 2 to 3 3 to 4 4 to 5 Local Agency Investment Fund $ 24,633,987 $ 24,633,987 $ - $ - $ - $ - Los Angeles County Pooled
Investments Fund 21,352,194 21,352,194 - - - -
US Government Treasuries 496,935 - 496,935 - - -
US Government Bonds 5,138,140 1,464,930 723,448 464,200 2,485,562 - Negotiable Certificates of Deposit 4,672,857 - 1,200,318 1,466,284 2,006,255 - Pension Trust 1,075,763 1,075,763 - - - -
Total $ 57,369,876 $ 48,526,874 $ 2,420,701 $ 1,930,484 $ 4,491,817 $ - Credit Risk – State law limits investments in commercial paper and corporate bonds to the top two ratings issued by nationally recognized statistical rating organizations. It is the City’s policy to limit its investments in these investment types to the top rating issued by Standard & Poor’s and Moody’s Investor Service. At June 30, 2025, the City’s credit risks, expressed on a percentage basis, were as follows:
Credit Quality Distribution for Securities
with Credit Exposure as a Percentage of Total Investments Moody's S&P's % of Investments
Credit Credit with Interest
Investment Type Rating Rating Rate Risk
Local Agency Investment Fund Not Rated Not Rated 42.94% Los Angeles County Pooled Investments Fund Not Rated Not Rated 37.22% US Government Treasuries Aaa AA+ 0.87%
US Government Bonds Aaa AA+ 8.96%
Negotiable Certificates of Deposits Not Rated Not Rated 8.15% Pension Trust Not Rated Not Rated 1.88%
Total
100.00%
55
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 2 – Cash and Investments (Continued)
E. Risk Disclosures (Continued)
Custodial Risk – For deposits, custodial credit risk is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty (e.g. broker-dealer), the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party.
Concentration of credit risk – The City’s investment policy does not allow for investments in any one institution that is in excess of 5% of the City’s total portfolio, except for LAIF and LACIPIF, where there is no limit. The City is in compliance with the investment policy related to the concentration of credit risk for the year ended June 30, 2025.
Note 3 - Receivables
A. Government-Wide Financial Statements
At June 30, 2025, the government-wide financial statements show the following receivables, net of allowances for uncollectible amounts, if any:
Government-Wide
Statement of
Net Position Statement of
Governmental Fiduciary
Activities Net Position Total
Accounts receivable $ 5,111,872 $ - $ 5,111,872
Property taxes receivable, net 1,327,321 - 1,327,321
Reimbursable grants receivable 420,433 - 420,433
Leases receivable 8,319,100 - 8,319,100
Interest receivable on investments 379,458 775 380,233
Other receivables - 1,196 1,196
Total $ 15,558,184 $ 1,971 $ 15,560,155
B. Fund Financial Statements Receivables
Receivables consisted of amounts accrued in the ordinary course of operations. The total amount of accounts receivables for each major and nonmajor funds in the aggregate as of June 30, 2025, were as follows:
Governmental funds:
General $ 3,926,099
Grants 827,469
Tyco 42,978
RTI Undersea Cable 37,216
Nonmajor Funds 268,452
Total governmental funds 5,102,214
Total accounts receivable $ 5,102,214
56
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 3 – Receivables (Continued)
B. Fund Financial Statements (Continued)
Taxes Receivable
At June 30, 2025, the City had property taxes receivable, net of allowance for delinquent property taxes receivables, in the following major fund and nonmajor funds in the aggregate:
Allowance for Property
Property delinquent tax taxes, net
taxes receivables of allowance
Governmental Funds:
General Fund $ 1,797,939 $ (507,020) $ 1,290,919
Nonmajor funds 74,283 (37,881) 36,402
Total $ 1,872,222 $ (544,901) $ 1,327,321
Reimbursable Grants Receivable
Grants receivable consists of a variety of reimbursable grants from other agencies. The total amount of reimbursable grants receivable as of June 30, 2025 was as follows:
Governmental funds:
Reimbursable grants $ 420,433
Total governmental funds 420,433
Total grant receivables $ 420,433
Note 4 – Lease Receivable and Revenues
In March 2001, a 50-year lease for the retail space located in front of the North Pier Parking Structure was initiated.
The City receives a monthly lease payment in the amount of $2,985. The lease includes a negotiated increase to the monthly lease payment to be calculated every 60 months based on an amendment equal to the greater of the consumer price index or 12.5% of the gross effective sublease rent for the previous 60 month period. In February 2016, the lease was increased to $3,235. During the year ended June 30, 2025, the City recognized $13,727 in lease revenue and $25,049 in interest revenue during the current fiscal year related to the lease. As of June 30, 2025, the City’s receivable for lease payments was $619,729. Also, the City has a deferred inflow of resources associated with the lease that will be recognized as revenue over the lease term. As of June 30, 2025, the balance of the deferred inflow of resources was $619,729.
In February 2004, the City entered into a 5-year lease agreement with Sprint, a cellular telephone company, for placement of an antenna on the North Pier Parking Structure. The lease includes a provision for 5 lease extensions with a 5-year term for each. In February 2009, the lease was extended through January 31, 2015. In February 2016, the lease was extended through January 31, 2020. In February 2020, the lease was extended through January 31, 2025. During the year ended June 30, 2025, the City recognized $29,065 in lease revenue and $14,948 in interest revenue during the current fiscal year related to the lease. As of June 30, 2025, the City’s receivable for lease payments was $359,939. Also, the City has a deferred inflow of resources associated with the lease that will be recognized as revenue over the lease term. As of June 30, 2025, the balance of the deferred inflow of resources was $359,939.
57
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 4 – Lease Receivable and Revenues (Continued)
In June 2005, the City purchased property adjacent to City Hall that is used as a self - storage facility with Thielscher. The existing lease for the storage facility was transferred to the City as a condition of the sale. The original lease term was through January 31, 2009, and was extended beginning February 1, 2009 to April 30, 2015 through various amendments. In April 2015, the lease was amended to extend the term to April 30, 2020. In May 2020, the lease was extended through June 2025 and that lease can be terminated without cause at any time after July 2021 with one year of written notice to the City. The City receives a monthly lease payment in the amount of $20,600. During the year ended June 30, 2025, the City recognized $264,350 in lease revenue and $4,932 in interest revenue during the current fiscal year related to the lease. As of June 30, 2025, the City’s receivable for lease payments was $0. Also, the City has a deferred inflow of resources associated with the lease that will be recognized as revenue over the lease term. As of June 30, 2025, the balance of the deferred inflow of resources was $0.
In February 2014, the City entered into a 20-year lease agreement with Verizon wireless, a cellular telephone company. The annual lease rate is expected to increase at a rate of 3% with base monthly payment amount of $5,000.
During the year ended June 30, 2025, the City recognized $13,055 in lease revenue and $26,770 in interest revenue during the current fiscal year related to the lease. As of June 30, 2025, the City’s receivable for lease payments was $663,060. Also, the City has a deferred inflow of resources associated with the lease that will be recognized as revenue over the lease term. As of June 30, 2025, the balance of the deferred inflow of resources was $663,060.
In 2016, three 25-year lease agreements with MC Global were initiated. The City receives quarterly lease payments that range from $17,250 to $22,500. During the year ended June 30, 2025, the City recognized $79,806 in lease revenue and $150,404 in interest revenue during the current fiscal year related to the leases. As of June 30, 2025, the City’s receivable for lease payments was $3,739,526. Also, the City has a deferred inflow of resources associated with the lease that will be recognized as revenue over the lease term. As of June 30, 2025, the balance of the deferred inflow of resources was $3,739,526.
In 2002, a 25-year lease agreements with Tycom was initiated. The City receives quarterly lease payments of $75,000. During the year ended June 30, 2025, the City recognized $177,631 in lease revenue and $120,611 in interest revenue during the current fiscal year related to the lease. As of June 30, 2025, the City’s receivable for lease payments was $2,936,846. Also, the City has a deferred inflow of resources associated with the lease that will be recognized as revenue over the lease term. As of June 30, 2025, the balance of the deferred inflow of resources was $2,936,846.
Note 5 – Interfund Transactions
Due From/To Other Funds – At June 30, 2025, the City had the following due from/to other funds:
Due From Other Funds
Due To Other Funds
General
Fund Total
Grants $ 1,070,493 $ 1,070,493
Nonmajor Governmental funds 423,950 423,950
Total $ 1,862,027 $ 1,862,027
The above amount resulted from the time lag between the dates that reimbursable expenditures occur and payments are received from other agencies.
58
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 5 – Interfund Transactions (Continued)
Transfers
During the year ended June 30, 2025, the City had the following transfers:
Transfers in
Nonmajor Internal
General Governmental Service
Transfers out Fund Funds Funds Total
General Fund $ - $ 1,105,256 $ 729,769 $1,835,025
Nonmajor Governmental
Funds
439,939
-
-
439,939
Total $ 439,939 $ 1,105,256 $ 729,769 $2,274,964
In general, transfers are used to 1) use unrestricted revenues collected in one fund to finance various programs accounted for in other funds in accordance with budgetary authorizations, and 2) to transfer to the General Fund to fund administration services.
General Fund transferred $686,161 to the 2020 Lease Revenue Bond Fund for debt service payment.
General Fund transferred $392,882 to the Insurance Internal Service Fund to fund liability claims and $337,424 to the Equipment Replacement Internal Service Fund for the acquisition of capital assets . 59 Page 217 of 874
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 6 – Capital Assets
The following is a summary of changes in capital assets for the governmental activities for the year ended June 30, 2025:
Balance Balance
July 1, 2024 Additions Deletions June 30, 2025
Capital assets not being depreciated:
Land $ 22,740,168 $ - $ - $ 22,740,168
Construction in progress 7,018,834 12,690,951 (1,930,762) 17,779,023 Total capital assets not being depreciated 29,759,002 12,690,951 (1,930,762) 40,519,191 Capital assets being depreciated:
Buildings and structures 17,055,598 160,933 - 17,216,531 Improvements other than buildings 15,430,866 - - 15,430,866 Machinery and equipment 7,911,923 97,920 (81,259) 7,928,584 Vehicles 4,471,684 508,367 (206,020) 4,774,031
Right-to-use - Subscriptions 153,338 435,335 (84,018)- 504,655 Infrastructure 64,562,599 1,530,289 - 66,092,888
Total capital assets being depreciated 109,586,008 2,732,844 (371,297) 111,947,555 Less accumulated depreciation for:
Buildings and structures (7,011,843) (407,963) - (7,419,806) Improvements other than buildings (14,120,316) (149,632) - (14,269,948) Machinery and equipment (6,429,189) (370,980) 81,259 (6,718,910) Vehicles (3,368,526) (280,753) 187,221 (3,462,058)
Right-to-use - Subscriptions (117,978) (96,796) 84,018 (130,756) Infrastructure (35,976,962) (1,781,744) - (37,758,706)
Total accumulated depreciation (67,024,814) (3,087,868) 352,498 (69,760,184) Total capital assets being depreciated, net 42,561,194 (355,024) (18,799) 42,187,371 Total governmental activities $ 72,320,196 $ 12,335,927 $ (1,949,561) $ 82,706,562 Depreciation expense was charged to functions/programs of governmental activities for the year ended June 30, 2025 as follows:
Legislative and legal $ 97,430
General government 403,310
Public safety 1,528,938
Community development 131,842
Culture and recreation 138,828
Public works 787,520
Total depreciation expense $ 3,087,868
Note 7 – Long-Term Liabilities
Summary of changes in long-term liabilities for governmental activities for the year ended June 30, 2025 is as follows:
Classification
Balance Balance Due within Due in more
July 1, 2024 Additions Deletions June 30, 2025 One Year than One Year 2020 Lease revenue bond $ 6,905,000 $ - $ (450,000) $ 6,455,000 $ 470,000 $ 5,985,000 Bonds Premium 1,099,743 - (157,105) 942,638 157,105 785,533 Subscription agreements 21,395 435,335 (129,305) 327,425 85,234 242,191 Compensated absences 2,389,033 * 854,911 - 3,243,944 1,256,644 1,987,300 $ 10,415,171 $ 1,290,246 $ (736,410) $ 10,969,007 $ 1,968,983 $ 9,000,024 * The change in the compensated absences liability is presented as a net change. 60
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 7 – Long-Term Liabilities (Continued)
2020 Lease Revenue Bonds
In October 2020, the PFA issued $8,150,000 Hermosa Beach Public Financing Authority 2020 Lease Revenue Bonds to (i) refund and defease the 2015 Lease revenue bonds and (ii) pay the costs of issuing the 2020 Bonds.
Interest rate is 1.92% and is payable semiannually on May 1 and November 1 of each year, commencing May 1, 2021. Principal payments range from $395,000 to $715,000 commencing November 2021 through November 2035. The 2020 bonds are secured solely by the pledge revenues and certain funds held under the indenture. The 2020 bonds are not secured by a pledge of the taxing power of the City. Upon default, the payment in default will continue as an obligation of the City until the amount in default has been fully paid, and the City agrees to pay the same with interest thereon, from the date of default to the date of payment at the highest rate of interest on any Outstanding 2020 Bond. The outstanding balance at June 30, 2025 was $6,455,000.
The annual debt service requirements by year are as follows:
Year ending
June 30, Principal Interest Total
2026 $ 470,000 $ 245,667 $ 715,667
2027 490,000 226,333 716,333
2028 510,000 206,200 716,200
2029 535,000 185,133 720,133
2030 560,000 163,067 723,067
2031-2035 3,175,000 449,933 3,624,933
2036 715,000 9,533 724,533
$ 6,455,000 $ 1,485,866 $ 7,940,866
Subscription Agreement Payable
In May 2022, the City entered into a 66 month subscription for the use of budget software. An initial subscription liability was recorded in the amount of $64,378. As of June 30, 2025, the value of the subscription liability is $10,780. The City is required to make annual fixed payments ranging from $10,261 to $26,435. The subscription has an interest rate of 4.0%. The value of the right to use asset as of June 30, 2025 was $69,320 with accumulated amortization of $50,940.
In July 2024, the City entered into a 60 month subscription for the use of mobile video and body worn camera software. An initial subscription liability was recorded in the amount of $435,335. As of June 30, 2025, the value of the subscription liability is $316,645. The City is required to make annual fixed payments of $87,355 The subscription has an interest rate of 4.0%. The value of the right to use asset as of June 30, 2025 was $435,335 with accumulated amortization of $79,816.
The following future principal and interest payments on the leases payable and subscription agreements payable for June 30 are as follows:
Year ending
June 30, Principal Interest Total
2026 $ 85,234 $ 13,340 $ 98,574
2027 77,488 9,867 87,355
2028 80,644 6,711 87,355
2029 84,059 3,296 87,355
$ 327,425 $ 33,214 $ 360,639
61 Page 219 of 874
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 8 – Risk Management
The City maintains an internal service fund to account for the City’s general liability and workers’ compensation claims, automobile, property, and unemployment insurance.
The City is self-insured for each general liability claim up to $250,000. The City is insured above the self-insured retention for general liability insurance coverage, up to a maximum of $25,000,000 per occurrence, as a member of the California Joint Powers Insurance Authority (“CJPIA”).
The City purchases workers’ compensation coverage through a self-insured program available through CJPIA. The City maintains a $250,000 self-insured retention limit and participates in a self-insured risk sharing pool through the CJPIA of coverage up to statutory limits.
CJPIA is a joint exercise of powers authority organized and operating pursuant to the California Government Code.
CJPIA was formed in 1978 pursuant to joint exercise of power agreements for insurance and risk management purposes, which, as amended, enable CJPIA to provide programs of risk sharing, insurance and risk management services in connection with liability, property, and workers’ compensation claims.
CJPIA’s annual budget is based on estimated actuarially determined member losses within the risk sharing layer, administrative expenses and excess insurance.
The City’s premiums to CJPIA in the amount of $1,794,008 for the fiscal year 2024-2025 are in accordance with formulas established by CJPIA. The City is liable for possible additional assessments and withdrawal costs under terms of the membership agreement; however, there has never been an additional assessment since the pool was formed.
The City has entered into contracts with third party administrators who supervise and administer the City’s general liability and workers’ compensation insurance programs. Claim loss estimates are determined by the third party administrator based on the nature of an individual claim. The loss estimates include amounts for future compensation, medical, legal and administrative fees. The City also includes estimated claims incurred but not reported (“IBNR”) provided by an actuary. Reimbursement requests are submitted to the City on a monthly basis as claims are paid.
The City maintains a blend of self-insurance and reinsurance with the Independent Cities Risk Management Authority (ICRMA) and its third party administrators for liability and Workers' Compensation claims submitted to the risk pool prior to July 1, 2024. The City is insured self-insures up to $250,000 under the ICRMA liability excess insurance program with a maximum annual coverage of $50 million. The City also self-insures up to $500,000 under the ICRMA excess Workers’ Compensation, with excess coverage through Safety National.
The workers’ compensation and general liability claims payable of $7,775,836 reported at June 30, 2025 includes the liability for claims in which it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated.
Detailed financial information may be obtained from the CJPIA Program Administrator located at 8081 Moody Street, La Palma, CA 90623.
62
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 9 – Defined Benefit Pension Plans
The following is a summary of net pension liabilities, related deferred outflows and inflows of resources as of June 30, 2025 and pension expenses for the year then ended June 30, 2025:
Miscellaneous Safety Total
Deferred outflows of resources:
Pension contribution after measurement date $ 2,450,053 $ 4,602,994 $ 7,053,047 Difference between expected and actual experience 1,306,797 3,518,025 4,824,822 Change in assumptions 388,477 1,062,101 1,450,578
Change in employer’s proportion 51,034 353,695 404,729
Difference between City contributions and
proportionate share of contributions 84,093 318,876 402,969 Differences between projected and actual
investment earnings 870,130 2,083,661 2,953,791
Total deferred outflows of resources
$ 5,150,584 $ 11,939,352 $ 17,089,936
Aggregate Net pension liabilities:
Aggregate Net pension liabilities $ 15,114,615 $ 43,108,353 $ 58,222,968 Total net pension liabilities (1)
$ 15,114,615 $ 43,108,353 $ 58,222,968
Deferred inflows of Resources:
Difference between projected and actual
experience $ 50,990 $ 114,386 $ 165,376
Change in employer’s proportions 2,238,378 667,020 2,905,398 Difference between City contributions and
proportionate share of contributions 142,929 466,234 609,163 Total deferred inflows of Resources
$ 2,432,297 $ 1,247,640 $ 3,679,937
Pension expenses (credits):
$ 2,145,291 $ 7,987,518 $ 10,132,809
(1) Pension plan have typically been liquidated by the General Fund.
General Information about the Pension Plan
Plan Description
The City contributes to the California Public Employees’ Retirement System (“CalPERS”), a cost-sharing multipleemployer defined benefit pension plan. CalPERS provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. CalPERS acts as a common investment and administrative agent for participating public entities within the State of California. Benefit provisions and all other requirements are established by State statute and City ordinance. Copies of the CalPERS annual financial report may be obtained from their Executive Office located at 400 P Street, Sacramento, California 95814.
The City contracted with Los Angeles County for Fire Services (Fire District) on 12/30/2017. The City will continue to be responsible for paying the retirement costs for fire employees related to the value of past service benefits, referred to as the unfunded actuarial liability.
63
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 9 – Defined Benefit Pension Plans (Continued)
General Information about the Pension Plan (Continued)
Employees Covered by Benefit Terms
At June 30, 2025, the following employees were covered by the benefit terms:
Plans
Fire Tier 1 Fire Tier 2 Fire PEPRA Police Tier 1 Police Tier 2 Police PEPRA Active employees - - - 15 2 19
Transferred and terminated employees 8 1 3 4 2 8
Separated 4 1 1 4 2 4
Retired Employees and Beneficiaries 62 - - 96 2 2
Total 74 2 4 119 8 33
Plans
Misc. Tier 1 Misc. Tier 2 Misc. PEPRA
Active employees 24 18 57
Transferred and terminated employees 34 11 43
Separated 46 7 42
Retired Employees and Beneficiaries 154 3 1
Total 258 39 143
Benefit Provided
CalPERS provide retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Classic and PEPRA Safety CalPERS member becomes eligible for service retirement upon attainment of age 55 with at least 5 years of credited service. PEPRA miscellaneous members become eligible for service retirement upon attainment of age 62 with at least 5 years of service. The service retirement benefit is a monthly allowance equal to the product of the benefit factor, years of service, and final compensation. The final compensation is the monthly average of the member's highest 36 full-time equivalent monthly pay.
Following are the benefit provisions for each plan:
Fire Tier 1: 3% (at age 55) of the average final 12 months compensation (effective prior to 7/1/11) Fire Tier 2: 2% (at age 50) of the average final 12 months compensation (effective 7/1/11) Fire PEPRA: 2.7% (at age 57) of the average final 36 months compensation (effective 1/1/13) Police Tier 1: 3% (at age 50) of the average final 12 months compensation (effective prior to 7/1/11) Police Tier 2: 2% (at age 50) of the average final 12 months compensation (effective 7/1/11) Police Tier PEPRA: 2.7% (at age 57) of the average final 36 months compensation (effective 1/1/13) Miscellaneous Tier 1: 2% (at age 55) of the average final 12 months compensation (effective prior to 7/1/11) Miscellaneous Tier 2: 2% (at age 60) of the average final 12 months compensation (effective 7/1/11) PEPRA Miscellaneous: 2% (at age 62) of the average final 36 months compensation (effective 1/1/13) 64
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 9 – Defined Benefit Pension Plans (Continued)
General Information about the Pension Plan (Continued)
Benefit Provided (Continued)
Participant is eligible for non-industrial disability retirement if becomes disabled and has at least 5 years of credited service. There is no special age requirement. The standard non-industrial disability retirement benefit is a monthly allowance equal to 1.8 percent of final compensation, multiplied by service. Industrial disability benefits are not offered to miscellaneous employees.
An employee's beneficiary may receive the basic death benefit if the employee dies while actively employed. The employee must be actively employed with the City to be eligible for this benefit. An employee's survivor who is eligible for any other pre-retirement death benefit may choose to receive that death benefit instead of this basic death benefit. The basic death benefit is a lump sum in the amount of the employee's accumulated contributions, where interest is currently credited at 7.5 percent per year, plus a lump sum in the amount of one month's salary for each completed year of current service, up to a maximum of six months' salary. For purposes of this benefit, one month's salary is defined as the member's average monthly full-time rate of compensation during the 12 months preceding death.
Upon the death of a retiree, a one-time lump sum payment of $500 will be made to the retiree's designated survivor(s), or to the retiree's estate.
Benefit terms provide for annual cost-of-living adjustments to each employee’s retirement allowance. Beginning the second calendar year after the year of retirement, retirement and survivor allowances will be annually adjusted on a compound basis by 2 percent.
Contributions
Section 20814(c) of the California Public Employees’ Retirement Law (“PERL”) requires that the employer contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. The total plan contributions are determined through CalPERS’ annual actuarial valuation process. The Public agency cost-sharing plans covered by either the Safety risk pools, the Plan’s actuarially determined rate is based on the estimated amount necessary to pay the Plan’s allocated share of the risk pool’s costs of benefits earned by employees during the year, and any unfunded accrued liability. The employer is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. For the fiscal year ended June 30, 2024, the contributions recognized as part of pension expense(credit) for the plan totaled $10,132,809. For the measurement period ended June 30, 2024 (the measurement date), the average contribution rate were as follows:
Active Employee Employer
Plans Contribution Rate Contribution Rate
Fire Tier 1 0.000% $1,200,122
Fire Tier 2 0.000% $ 592
Fire PEPRA 0.000% $ 667
Police Tier 1 9.000% 29.30%
Police Tier 2 9.000% 23.13%
Police PEPRA 14.50% 14.72%
Misc. Tier 1 7.000% 12.52%
Misc. Tier 2 7.000% 10.71%
Misc. PEPRA 7.750% 7.87%
65
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 9 – Defined Benefit Pension Plans (Continued)
Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension
Actuarial Methods and Assumptions Used to Determine Total Pension Liability The June 30, 2023 valuation was rolled forward to determine June 30, 2023 total pension liability based on the following actuarial methods and assumptions:
Actuarial Cost Method Entry Age Normal
Actuarial Assumptions:
Discount Rate 6.90%
Inflation 2.50%
Salary Increases Varies by Entry Age and Service
Investment rate of return 7.15% net of pension plan investment expenses, includes inflation Mortality Rate Table Derived using CalPERS’ Membership Data for all Funds.
Post Retirement Benefit Increase Contract COLA up to 2.50% until Purchasing Power Protection Allowance Floor on Purchasing Power applies, 2.50% thereafter All other actuarial assumptions used in the June 30, 2017 valuation were based on the results of an actuarial experience study for the period from 1997 to 2011, including updates to salary increase, mortality and retirement rates. The Experience Study report can be obtained at CalPERS’ website under Forms and Publications.
Discount Rate
The discount rate used to measure the total pension liability was 6.90 percent. To determine whether the municipal bond rate should be used in the calculation of a discount rate for each plan, CalPERS stress tested plans that would most likely result in a discount rate that would be different from the actuarially assumed discount rate. Based on the testing of the plans, the tests revealed the assets would not run out. Therefore, the current 6.90 percent discount rate is appropriate and the use of the municipal bond rate calculation is not deemed necessary. The long-term expected discount rate of 6.90 percent is applied to all plans in the Public Employees Retirement Fund. The stress test results are presented in a detailed report called “GASB Crossover Testing Report” that can be obtained at CalPERS’ website under the GASB 68 section.
The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, staff took into account both short-term and long-term market return expectations as well as the expected pension fund (Public Employees’ Retirement Fund) cash flows. Such cash flows were developed assuming that both members and employers will make their required contributions on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one percent. 66
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 9 – Defined Benefit Pension Plans (Continued)
Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)
Discount Rate (Continued)
The table below reflects long-term expected real rate of return by asset class. The rate of return was calculated using the capital market assumptions applied to determine the discount rate and asset allocation. The target allocation shown was adopted by the Board effective on July 1, 2023.
New Strategic Real Return
Asset Class Allocation-% Years 1-101,2 -%
Global Equity – cap-weighted 30.00 4.54
Global Equity – non-cap-weighted 12.00 3.84
Private Equity 13.00 7.28
Treasury 5.00 0.27
Mortgage-backed Securities 5.00 0.50
Investment Grade Corporates 10.00 1.56
High Yield 5.00 2.27
Emerging Market Debt 5.00 2.48
Private Debt 5.00 3.57
Real Assets 15.00 3.21
Leverage (5.00) (0.59)
1 An expected inflation of 2.3% used for this period
2 Figures are based on the 2021-22 Asset Liability Management study.
Sensitivity of the City’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following presents the City’s proportionate share of the net pension liability of the Plan as of the measurement date, calculated using the discount rate of 6.90%, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage-point lower (5.90%) or 1 percentagepoint higher (7.90%) than the current rate:
Plan's Net Pension Liability/(Asset)
Discount Rate - 1% Current Discount Discount Rate + 1%
(5.90%) Rate (6.90%) (7.90%)
Miscellaneous $ 24,225,033 $ 15,114,615 $ 7,615,400
Safety
$ 62,882,655 $ 43,108,353 $ 26,935,753
67
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 9 – Defined Benefit Pension Plans (Continued)
Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)
Pension Plan Fiduciary Net Position
Detail information about the plan’s fiduciary net position is available in the separately issued CalPERS financial report and can be obtained from CalPERS’ website under Forms and Publications.
Proportionate Share of Net Pension Liability and Pension Expense The following table shows the plan’s proportionate share of the risk pool collective net pension liability over the measurement period:
Increase (Decrease)
Plan Total Pension Plan Fiduciary Net Net Pension
Liability Position Liability/(Asset)
Miscellaneous
Balance at: 6/30/23 (Valuation date) $ 68,726,969 $ 49,304,791 $ 19,421,905 Balance at: 6/30/24 (Measurement date) $ 67,514,387 $ 52,399,772 $ 15,114,615 Net Changes during 2023-2024 $ (1,212,309) $ 3,094,981 $ (4,307,290) Safety
Balance at: 6/30/23 (Valuation date) $ 140,193,592 $ 96,282,690 $ 43,910,902 Balance at: 6/30/24 (Measurement date) $ 144,761,652 $ 101,653,299 $ 43,108,353 Net Changes during 2023-2024 $ 4,568,060 $ 5,370,609 $ (802,549) 68
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 9 – Defined Benefit Pension Plans (Continued)
Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)
Proportionate Share of Net Pension Liability and Pension Expense (Continued) The following is the approach established by the plan actuary to allocate the net pension liability and pension expense to the individual employers within the risk pool. (1) In determining a cost-sharing plan’s proportionate share, total amounts of liabilities and assets are first calculated for the risk pool as a whole on the valuation date (June 30, 2022). The risk pool’s fiduciary net position (“FNP”) subtracted from its total pension liability (“TPL”) determines the net pension liability (“NPL”) at the valuation date.
(2) Using standard actuarial roll forward methods, the risk pool TPL is then computed at the measurement date (June 30, 2022). Risk pool FNP at the measurement date is then subtracted from this number to compute the NPL for the risk pool at the measurement date. For purposes of FNP in this step and any later reference thereto, the risk pool’s FNP at the measurement date denotes the aggregate risk pool’s FNP at June 30, 2022 less the sum of all additional side fund (or unfunded liability) contributions made by all employers during the measurement period (2021-2022).
(3) The individual plan’s TPL, FNP and NPL are also calculated at the valuation date. TPL is allocated based on the rate plan’s share of the actuarial accrued liability. FNP is allocated based on the rate plan’s share of the fair value assets.
(4) Two ratios are created by dividing the plan’s individual TPL and FNP as of the valuation date from (3) by the amounts in step (1), the risk pool’s total TPL and FNP, respectively. (5) The plan’s TPL as of the Measurement Date is equal to the risk pool TPL generated in (2) multiplied by the TPL ratio generated in (4). The plan’s FNP as of the Measurement Date is equal to the FNP generated in (2) multiplied by the FNP ratio generated in (4) plus any additional side fund (or unfunded liability) contributions made by the employer on behalf of the plan during the measurement period. (6) The plan’s NPL at the Measurement Date is the difference between the TPL and FNP calculated in (5).
Deferred outflows of resources, deferred inflows of resources, and pension expense is allocate based on the City’s share of contributions during measurement period.
The City’s proportionate share of the net pension liability was as follows:
Miscellaneous Safety
June 30, 2025 0.31250% 0.59127%
June 30, 2024 0.38841% 0.58744%
Change - Increase (Decrease) (0.07590)% 0.00383%
69
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 9 – Defined Benefit Pension Plans (Continued)
Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)
Proportionate Share of Net Pension Liability and Pension Expense (Continued) For the year ended June 30, 2025, the City recognized pension expense(credit) as follows:
Miscellaneous $ 2,145,291
Safety 7,987,518
$ 10,132,809
The amortization period differs depending on the source of the gain or loss. The difference between projected and actual earnings is amortized over 5-years straight line. All other amounts are amortized straight-line over the average expected remaining service lives of all members that are provided with benefits (active, inactive and retired) as of the beginning of the measurement period.
The expected average remaining service lifetime (“EARSL”) is calculated by dividing the total future service years by the total number of plan participants (active, inactive, and retired) in the risk pool. The EARSL for risk pool for the 2023-2024 measurement period is 3.8 years, which was obtained by dividing the total service years of 630,177 (the sum of remaining service lifetimes of the active employees) by 166,163 (the total number of participants: active, inactive, and retired).
At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Miscellaneous
Deferred outflows
of Resources
Deferred inflows
of Resources
Pension contribution after measurement date $ 2,450,053 $ - Difference between expected and actual experience 1,306,797 (50,990) Changes of assumptions 388,477 -
Difference between projected and actual earning on
pension plan investments 870,130 -
Adjustment due to differences in proportions 51,034 (2,238,378) Difference between City contributions and
proportionate share of contributions 84,093 (142,929)
Total $ 5,150,584 $ (2,432,297)
70
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 9 – Defined Benefit Pension Plans (Continued)
Pension Liabilities, Pension Expenses, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pension (Continued)
Proportionate Share of Net Pension Liability and Pension Expense (Continued) At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Safety
Deferred outflows
of Resources
Deferred inflows
of Resources
Pension contribution after measurement date $ 4,602,994 $ - Difference between expected and actual experience 3,518,025 (114,386) Changes of assumptions 1,062,101 -
Difference between projected and actual earning on
pension plan investments 2,083,661 -
Adjustment due to differences in proportions 353,695 (667,020) Difference between City contributions and
proportionate share of contributions 318,876 (466,234)
Total $ 11,939,352 $ (1,247,640)
Deferred outflows of resources related to pensions resulting from the City’s contributions made after to the measurement date of the net pension liability but before the end of the employer’s or governmental nonemployer contributing entity’s reporting period will be recognized as a reduction of the net pension liability in the subsequent fiscal period. Deferred inflows of resources represent an acquisition of net position that applies to future periods.
Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:
Measurement Period Deferred Outflows/ (Inflows) of Resources Ended June 30, Miscellaneous Safety
2026 $ (38,622) $ 2,268,954
2027 1,185,800 4,647,293
2028 (580,760) (114,595)
2029 (298,184) (712,934)
2030 - -
Thereafter - -
$ 268,234 $ 6,088,718
71
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 10 – Other Postemployment Benefit Plan
General Information about the Plan
On June 12, 2007, the City Council adopted a resolution authorizing participation in a post retirement health care plan trust to be administered by Public Agency Retirement Services (“PARS”) and Union Bank of California. In July 2007, the City signed an agreement with Public Agency Retirement Services to create and administer an irrevocable trust fund for the payment of other postemployment benefits for city employees. Funds in the amount of $1,401,000 that were previously set aside were forwarded to Union Bank pursuant to the agreement to establish the trust during the year ended June 30, 2008. In Fiscal Year 2025, the administration of the plan was changed from PARS and Union Bank of California to Shuster Advisory Group and Charles Schwab. Contributions are made on a monthly basis.
Plan Description
The City participates in a post retirement health care plan trust (“Plan”) administered by Shuster Advisory Group and Charles Schwab. The Plan provides medical insurance benefits to eligible retirees, which is a single-employer defined benefit plan. PARS issues a publicly available financial report that includes financial statements and required supplementary information for the Plan. That report may be obtained by contacting the City at 1315 Valley Drive, Hermosa Beach, CA 90254.
The Plan is comprised of employees and retirees from several bargaining units, including General and Supervisory; Professional and Administrative Employees Association; Hermosa Beach Management Association; Police Management Association; Police Officers Association and Firefighters Association.
The range of monthly benefits to be paid by the City ranges from $40 to $1,059 per month based on years of service from 10 years to 20 years provided to the City.
The monthly benefits paid by the City are subject to change with increases provided based on age at retirement and years of service.
Post-Retirement Health Care Coverage for Fire Employees The City contracted with Los Angeles County for Fire Services (“Fire District”) on 12/30/2017. Fire District employees are provided post-retirement health coverage. The current vesting period is 10 years of Fire District service. Service with the City does not count towards coverage, only time actually worked in Fire District service counts towards the vesting period. Hermosa Beach Fire Association (HBFA) members who transfer to the Fire District and who take a service retirement before reaching 10 years of Fire District service are ineligible for the Fire District's retiree health benefit.
For those HBFA members who have 19 plus years of service with the City at the time of transfer to Fire District employment and who take a service retirement from the Fire District prior to vesting in the Fire District's retiree health plan, the City agrees to create a new Tier to the City's retiree health program as follow: the retired HBFA member will be eligible to receive from the City the $ 350 per month benefit set forth in Article 42(D) of the MOU.
This benefit is limited to the first four HBFA members who qualify for the benefit. 72
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 10 – Other Postemployment Benefit Plan (Continued) General Information about the Plan (Continued) Eligibility All of the Plan’s employees became participants in accordance with negotiated Memorandum of Understanding (“MOU”) as negotiated by each group or bargaining unit. In order to receive benefits, eligible employees must meet the minimum requirements defined in their MOU. Participants of the Plan as of June 30, 2025 were as follows:
Participants Total
Active employees 143
Retirees 81
Retirees not receiving benefits -
Total 224
Net OPEB Liability
The City’s net OPEB liability was measured as of June 30, 2024, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of July 1, 2024.
Actuarial Assumptions
The total OPEB liability, measured as of June 30, 2024, was determined using the following actuarial assumptions:
Actuarial Cost Method Entry Age Normal
Actuarial Assumptions:
Discount Rate 5.50% Pre-funded in PARS Moderate Strategy Inflation 2.50% per annum
Salary Increases 3.00% Aggregate
Merit: 1997-2015 CalPERS Experience Study
Investment Rate of Return 6.00%
Healthcare Trend Rate Non-Medicare: 7.5% in 2019, to 4.0% in 2076 and thereafter Medicare: 6.5% in 2019 to 4.0% in 2076 and thereafter
Mortality, Retirement, Disability, Termination CalPERS 1997-2015 Experience Study Service Requirement 100% at 20 Years of Service
Participation Rate Currently covered: 100%
The actuarial assumptions used in the July 1, 2024 valuation were based on the results of an actuarial experience study for the period July 1, 2023 through June 30, 2024. 73
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 10 – Other Postemployment Benefit Plan (Continued) Net OPEB Liability (Continued)
Actuarial Assumptions (Continued)
The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table:
Target Allocation Expected Real
Asset Class PARS-Moderate Rate of Return
Global Equity 50.00% 4.560%
Fixed Income 45.00% 0.780%
Cash 5.00% (0.500)%
100.00%
Discount Rate
The discount rate used to measure the total OPEB liability was 5.50 percent. The actuarial assumptions used to determine the discount rate was based on the current funding practice and assumed the fiduciary net position was projected to be available to make all projected future benefit payments of current active and inactive employees.
Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability
Sensitivity of the Total OPEB Liability to Changes in the Discount Rate The following presents the total OPEB liability of the City, as well as what the total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage point higher than the current rate, for the measurement period ended June 30, 2024:
Plan's OPEB Liability/(Asset)
Discount Rate - 1% Current Discount Discount Rate + 1%
(4.50%) Rate (5.50%) (6.50%)
$ (6,825,104) $ (8,131,302) $ (9,244,997)
Sensitivity of the Total OPEB Liability to Changes in Healthcare Cost Trend Rates The following presents the total OPEB liability of the City, as well as what the total OPEB liability would be if it were calculated using a health care cost trend rates that are one percentage point lower or one percentage point higher than the current rates, for the measurement period ended June 30, 2024:
Plan's OPEB Liability/(Asset)
Healthcare
-1.00% Trend Rate +1.00%
$ (9,108,099) $ (8,131,302) $ (6,970,565)
74 Page 232 of 874
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 10 – Other Postemployment Benefit Plan (Continued) Change in Net OPEB Liability
Total Net
OPEB Plan OPEB
Liability Fiduciary Liability
(Asset) Net Position (Asset)
Balance at June 30, 2023 (Valuation Date)
$ 11,556,604 $ 17,404,488 $ (5,847,884)
Changes Recognized for the Measurement Period:
Service Cost 239,381 - 239,381
Interest on the total OPEB liability 630,277 - 630,277
Changes of benefit terms - - -
Difference between expected and actual experience - - - Changes of assumptions - - -
Contributions from the employer - 1,141,418 (1,141,418) Contributions from employees - - -
Net investment income, net of administrative expense - 2,051,474 (2,051,474) Benefit payments, including refunds of employee contributions (672,818) (672,818) - Administrative Expense - (39,816) 39,816
Net Changes during July 1, 2023 to June 30, 2024 196,840 2,480,258 (2,283,418) Balance at June 30, 2024 (Measurement Date) $ 11,753,444 $ 19,884,746 $ (8,131,302) OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB For the year ended June 30, 2025, OPEB credit in the amount of $337,062 is included in the accompanying statement of activities.
At June 30, 2025, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:
Deferred Outflows
of resources
Deferred Inflows
of resources
Employer contribution after measurement date $ 882,931 $ - Differences between expected and actual experience 119,701 (3,712,064) Changes in assumptions 1,204,553 -
Difference between projected and actual earning
on plan investments - (175,807)
$ 2,207,185 $ (3,887,871)
The $882,931 reported as deferred outflows of resources related to contributions subsequent to the measurement date of the OPEB liability but before the end of the employer’s or governmental nonemployer contributing entity’s reporting period will be recognized as a reduction of the net OPEB asset in the year June 30, 2026. Other amounts reported as deferred inflows of resources related to OPEB will be recognized as OPEB expense as follows:
Year Ending
June 30 Amount
2026 $ (341,402)
2027 (2,861)
2028 (748,258)
2029 (740,618)
2030 (561,907)
Thereafter (168,571)
Total $ (2,563,617)
75
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 11 – Classification of Fund Balances
At June 30, 2025, fund balances are classified in the governmental funds as follows:
General
Fund
Grants
Special
Revenue
Fund
Tyco
Special
Revenue
Fund
RTI
Undersea
Cable
Special
Revenue
Fund
Capital
Improvements
Capital
Projects
Nonmajor
Governmental
Funds
Total
Nonspendable
Prepaid items $ 1,102,047 $ - $ - $ - $ - $ 14,692 $ 1,116,739 Total nonspendable 1,102,047 - - - - 14,692 1,116,739
Restricted
Verizon PEG Grant 225,599 - - - - - 225,599
General Plan
Maintenance Fees 362,674
-
-
-
-
-
362,674
Chamber Marquee
Donation 50,000
-
-
-
-
-
50,000
CASP Fees 5,934 - - - - - 5,934
Nuisance Abatements 10,075 - - - - - 10,075
Pension Trust 1,075,763 - - - - - 1,075,763
Light Landscape District - - - - - 24,424 24,424
Gas Tax - - - - - 368,082 368,082
Source Reduction/
Recycling -
-
-
-
-
169,195
169,195
Greenwich Underground - - - - - 58,573 58,573
Parks/Rec Facility Projects - - - - - 349,497 349,497
Assessment Districts - - - - - 8,600 8,600
Prop A, C and Measure
R Transit Projects -
-
-
-
-
1,347,922
1,347,922
Air Quality
Improvement Projects -
-
-
-
-
140,244
140,244
Supplemental Law
Enforcement Services
Funds -
-
-
-
-
522,395
522,395
Asset Forfeiture – Drug
Enforcement and
Education -
-
-
-
-
528,889
528,889
Fire Protection - - - - - 16,195 16,195
Community Development
Block Grant -
-
-
-
-
3,192
3,192
Measure M and W - - - - - 746,636 746,636
RTI Undersea Cable
Tidelands -
-
-
-
-
385,332
385,332
Sewers - - - - - 3,066,743 3,066,743
Lease Revenue Bond - - - - - 9,818 9,818
Storm Drain - - - - - 2,592,166 2,592,166
Total restricted 1,730,045 - - - - 10,337,903 12,067,948 Committed
In Lieu Fee- Parking
Facilities 404,600
-
-
-
-
-
404,600
Tyco & RIT Tidelands - - 1,980,407 1,117,794 - - 3,098,201 Retirement Trust 829,060 - - - - - 829,060
Total committed 1,233,660 - 1,980,407 1,117,794 - - 4,331,861 Assigned
Capital Projects - - - - 12,247,720 - 12,247,720
Capital Facility Reserve - - - - 841,393 - 841,393
Grant Claims Reserve 926,345 - - - - - 926,345
24-25 Midyear End
Balance 269,305
-
-
-
-
-
269,305
Reappropriations 242,336 - - - - - 242,336
Contingencies 10,560,684 - - - - - 10,560,684
Compensated absences 294,170 - - - - - 294,170
Prop A Exchange 990,683 - - - - - 990,683
Total assigned 13,283,523 - - - 13,089,113 - 26,372,636 Unassigned 2,944,264 (566,323) - - - (764,837) 1,613,104 $20,293,539 $ (566,323) $1,980,407 $1,117,794 $13,089,113 $ 9,587,758 $45,502,288 76
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 12 – Non-City Obligations
2005 Bayview Drive Utility Underground Assessment District Improvement Bonds In February 2005, limited obligation improvement bonds in the amount of $951,667 were issued for the Bayview Drive Utility Underground Assessment District for the undergrounding of utilities within the district. The City is not financially obligated for payment of the bonds, which are secured by private property in the district. The bonds will be repaid from assessments to the property owners as part of their annual property tax bill.
The annual debt service requirements by year are as follows:
Year ending
June 30, Principal Interest Total
2026 $ 58,666 $ 1,247 $ 59,913
Total $ 58,666 $ 1,247 $ 59,913
Note 13 – Commitments and Contingencies
A. Commitments
In January 2000, the North Pier Parking Structure was completed. The parking structure contains 400 parking spaces and was funded in part by a downtown developer in exchange for the use of 100 spaces in the structure.
The remainder of the funding was provided by the City’s former Downtown Enhancement Enterprise Fund and Prop A Open Space funding contributed by the Los Angeles County Department of Beaches and Harbors (“County”). In consideration of the County contribution, 50% of the annual net income derived from the parking structure must be shared with the County each year by September 1. The payment made to the County for fiscal year June 30, 2025 was $362,866.
B. Contingencies
The City is a defendant in a number of lawsuits, which have arisen in the normal course of business. While substantial damages are alleged in some of these actions, their outcome cannot be predicted with certainty.
C. Grants
Amounts received or receivable from granting agencies are subject to audit and adjustment by grantor agencies.
While no matters of noncompliance were disclosed by the audit of the financial statements or single audit of the Federal grant programs, grantor agencies may subject grant programs to additional compliance tests, which may result in disallowed costs. In the opinion of management, future disallowances of current or prior grant expenditures, if any, would not have a material adverse effect on the financial position of the City. 77 Page 235 of 874
City of Hermosa Beach
Notes to the Basic Financial Statements (Continued)
For the Year Ended June 30, 2025
Note 14 – Subsequent Events
2025 Greenwich Utility Underground District Special Assessment Bonds In August 2025, limited obligation improvement bonds in the amount of $3,584,665 were issues for the Greenwich Village North Underground Utilities Assessment District for the undergrounding of utilities within the district. The City is in no way financially obligated for payment of the bonds, which are secured by private property in the district.
The bonds will be repaid from assessments to the property owners as part of their annual property tax bill.
The annual debt service requirements be as follows;
Year Ending
June 30, Principal Interest Total
2026 - 101,536 101,536
2027 98,184 182,082 280,266
2028 112,472 176,658 289,130
2029 118,265 170,716 288,981
2030 124,355 164,469 288,824
2031-2035 724,696 716,772 1,441,468
2036-2040 931,542 504,601 1,436,143
2041-2045 1,197,428 231,869 1,429,297
2046 277,723 7,151 284,874
Total 3,584,665 2,255,854 5,840,519
Management has evaluated subsequent events through March 31, 2026 which is the date the financial statements were available to be issued, and has determined that there are no other transactions that would have a significant impact on the City.
REQUIRED SUPPLEMENTARY
INFORMATION (UNAUDITED)
79
Actual Variance with
Original Final Amounts Final Budget
Fund balance, July 1, 2024 $ 17,049,456 17,049,456 $ 17,049,456 $ - $ Revenues (inflows):
Property taxes 25,112,254 25,465,508 25,560,649 95,141
Other taxes 13,950,490 13,409,126 13,404,363 (4,763)
Licenses and permits 829,966 1,136,758 1,063,710 (73,048) Fines and forfeitures 1,739,040 1,625,025 1,638,586 13,561 Use of money and property 977,468 1,552,632 1,505,172 (47,460) Intergovernmental 139,944 178,644 220,515 41,871
Charges for services 9,957,984 9,840,859 9,934,898 94,039 Miscellaneous 122,351 172,351 378,000 205,649
Interest earned on investments 726,595 615,810 1,303,572 687,762 Transfers in 439,939 439,939 439,939 -
Amount available for appropriations 53,996,031 54,436,652 55,449,404 1,012,752 Charges to appropriations (outflows):
Legislative and legal 1,843,898 1,854,883 1,792,165 62,718 General government 6,896,691 7,086,624 6,642,229 444,395 Public safety 29,295,556 28,902,562 27,956,795 945,767
Community development 2,604,685 2,500,110 2,371,730 128,380 Culture and recreation 2,364,586 2,421,570 2,485,804 (64,234) Public works 9,217,526 9,861,340 9,107,749 753,591
Capital outlay - 2,632 2,785 (153)
Principal - - 10,615 (10,615)
Interest and fiscal charges - - 424 (424)
Transfers out 1,835,025 1,835,025 1,835,025 -
Total charges to appropriations 54,057,967 54,464,746 52,205,321 2,259,425 Fund balance, June 30, 2025 16,987,520 $ 17,021,362 $ 20,293,539 $ 3,272,177 $
CITY OF HERMOSA BEACH
Required Supplementary Information
Budgetary Comparison Schedule - General Fund
For the Year Ended June 30, 2025
Budgeted Amounts
80 Page 238 of 874
Actual Variance with
Original Final Amounts Final Budget
Fund balance (deficit), July 1, 2024 $ (300,667) (300,667) $ (300,667) $ - $ Revenues (inflows):
Intergovernmental 1,370,006 3,368,544 521,220 (2,847,324) Miscellaneous 1,543,985 618,737 630,327 11,590
Amount available for appropriations 2,913,991 3,987,281 1,151,547 (2,835,734) Charges to appropriations (outflows):
General government 1,000,942 1,245,690 493,289 752,401
Public safety 41,889 121,889 12,618 109,271
Community development 56,740 92,993 - 92,993
Public works 202,349 64,500 50,000 14,500
Capital outlay 1,820,600 2,670,738 861,296 1,809,442
Total charges to appropriations 3,122,520 4,195,810 1,417,203 2,778,607 Fund balance (deficit), June 30, 2025 (509,196) $ (509,196) $ (566,323) $ (57,127) $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Budgetary Comparison Schedule - Grants Special Revenue Fund For the Year Ended June 30, 2025
Budgeted Amounts
81 Page 239 of 874
Actual Variance with
Original Final Amounts Final Budget
Fund balance, July 1, 2024 $ 2,121,402 2,121,402 $ 2,121,402 $ - $ Revenues (inflows):
Use of money and property 223,213 223,213 223,213 -
Miscellaneous 120,611 120,611 120,611 -
Interest earned on investments 113,763 102,615 157,927 55,312 Amount available for appropriations 457,587 446,439 501,751 55,312 Charges to appropriations (outflows):
Public works 539,664 447,193 109,229 337,964
Capital outlay 2,004,264 2,092,996 533,517 1,559,479
Total charges to appropriations 2,543,928 2,540,189 642,746 1,897,443 Fund balance, June 30, 2025 35,061 $ 27,652 $ 1,980,407 $ 1,952,755 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Budgetary Comparison Schedule - Tyco Special Revenue Fund For the Year Ended June 30, 2025
Budgeted Amounts
Actual Variance with
Original Final Amounts Final Budget
Fund balance, July 1, 2024 $ 1,157,867 1,157,867 $ 1,157,867 $ - $ Revenues (inflows):
Use of money and property 85,033 85,033 101,908 16,875
Miscellaneous 400,843 150,404 150,404 -
Interest earned on investments 53,398 53,398 93,324 39,926 Amount available for appropriations 539,274 288,835 345,636 56,801 Charges to appropriations (outflows):
Public works 76,942 79,811 78,559 1,252
Capital outlay 1,457,640 1,362,640 307,150 1,055,490
Total charges to appropriations 1,534,582 1,442,451 385,709 1,056,742 Fund balance, June 30, 2025 162,559 $ 4,251 $ 1,117,794 $ 1,113,543 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Budgetary Comparison Schedule - RTI Undersea Cable Special Revenue Fund For the Year Ended June 30, 2025
Budgeted Amounts
City of Hermosa Beach
Required Supplementary Information (Unaudited) (Continued) Notes to the Budgetary Comparison Schedule For the Year Ended June 30, 2025
Budgetary Control and Accounting Policy
Budgets are annually adopted for all governmental fund types (with the exception of the Greenwich Underground Special Revenue Fund) and all proprietary fund types on a basis consistent with generally accepted accounting principles. The City is required by its municipal code to adopt an annual budget on or before June 30 for the ensuing fiscal year. From the effective date of the budget, the amounts become the “annual appropriated budget.” The appropriated budget is prepared by fund, department and division. The City Council may amend the budget by motion during the fiscal year. Expenditures may not legally exceed appropriations at the fund level. The City Manager is authorized to transfer budgeted amounts between departments within the same fund; however, any transfers between funds or revisions that alter total appropriations of any fund require City Council approval. The legal level of control is therefore at the fund level.
Supplemental appropriations, which increase appropriations, were made during the fiscal year, therefore, “final” budgeted revenue and appropriation amounts shown in the financial statements represent the original budget, modified for adjustments during the year. Appropriations lapse at the end of the fiscal year.
Encumbrances - Under encumbrance accounting, purchase orders, contracts and other commitments for expenditures are recorded to reserve that portion of the applicable appropriation. Encumbrance accounting is employed as an extension of formal budgetary accounting. Unexpended appropriations lapse at year-end. 84 Page 242 of 874
June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2024-25 2023-24 2022-23 2021-22 2020-21
City's Proportion of the Net
Pension Liability/(Asset) 0.31250% 0.38841% 0.38672% 0.47112% 0.37245% City's Proportionate share
of the Net Pension Liability/(Asset) $ 19,421,905 15,114,615 $ 18,095,347 $ 8,945,705 $ 15,710,118 $ City's Covered payroll 9,983,830 $ 8,730,570 $ 7,661,955 $ 7,613,425 $ 7,191,189 $ City's Proportionate Share of the Net
Pension Liability/(Asset) as a
Percentage of its covered payroll 151.39% 222.46% 236.17% 117.50% 218.46% Plan's Proportionate Share of the
Fiduciary Net Position as a
Percentage of the Total Pension Liability 77.61% 71.74% 78.19% 85.66% 74.14% June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2019-20 2018-19 2017-18 2016-17 2015-16
City's Proportion of the Net
Pension Liability/(Asset) 0.37079% 0.37090% 0.14664% 0.14882% 0.15099% City's Proportionate share
of the Net Pension Liability/(Asset) $ 13,978,150 14,848,242 $ 14,452,712 $ 12,877,883 $ 10,364,015 $ City's Covered payroll $ 7,402,032 7,192,641 $ 6,785,443 $ 6,540,869 $ 5,700,485 $ City's Proportionate Share of the Net
Pension Liability/(Asset) as a
Percentage of its covered payroll 206.44% 188.84% 213.00% 196.88% 181.81% Plan's Proportionate Share of the
Fiduciary Net Position as a
Percentage of the Total Pension Liability 75.95% 74.50% 72.80% 73.59% 78.00%
CITY OF HERMOSA BEACH
Schedule of City's Proportionate Share of the Net Pension Liability and Related Ratios For the Year Ended June 30, 2025
Last Ten Fiscal Years
California Public Employees' Retirement System ("CalPERS") Miscellaneous Plan Required Supplementary Information
85 Page 243 of 874
June 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 June 30, 2020 Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2024-25 2023-24 2022-23 2021-22 2020-21
City's Proportion of the Net
Pension Liability/(Asset) 0.59127% 0.58744% 0.60049% 0.65417% 0.53686% City's Proportionate share
of the Net Pension Liability/(Asset) 43,108,353 $ 43,910,902 $ 41,263,238 $ 22,957,889 $ 35,767,664 $ City's Covered payroll $ 4,520,539 5,103,285 $ 4,516,727 $ 4,516,727 $ 4,130,518 $ City's Proportionate Share of the Net
Pension Liability/(Asset) as a
Percentage of its covered payroll 844.72% 971.36% 913.57% 508.29% 865.94% Plan's Proportionate Share of the
Fiduciary Net Position as a
Percentage of the Total Pension Liability 70.22% 68.68% 75.53% 82.03% 71.20% June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015 Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year 2019-20 2018-19 2017-18 2016-17 2015-16
City's Proportion of the Net
Pension Liability/(Asset) 0.54687% 0.57283% 0.35213% 0.37217% 0.40019% City's Proportionate share
of the Net Pension Liability/(Asset) 34,138,671 $ 33,611,333 $ 34,921,802 $ 32,204,127 $ 27,469,000 $ City's Covered payroll $ 5,320,583 4,108,280 $ 5,597,657 $ 5,342,937 $ 5,492,822 $ City's Proportionate Share of the Net
Pension Liability/(Asset) as a
Percentage of its covered payroll 830.97% 631.72% 623.86% 602.74% 500.09% Plan's Proportionate Share of the
Fiduciary Net Position as a
Percentage of the Total Pension Liability 71.77% 71.23% 69.01% 68.78% 72.40% California Public Employees' Retirement System ("CalPERS") Safety Plan
CITY OF HERMOSA BEACH
Required Supplementary Information
Schedule of City's Proportionate Share of the Net Pension Liability and Related Ratios For the Year Ended June 30, 2025
Last Ten Fiscal Years
86 Page 244 of 874
2024-25 2023-24 2022-23 2021-22 2020-21
Actuarially determined
contribution 995,169 $ 918,769 $ 742,817 $ 690,001 $ 693,322 $ Contributions in relation to
the actuarially determined
contributions (2,456,680) $ (2,161,264) $ (2,025,370) $ (1,769,850) $ (1,632,690) $ Contribution deficiency
(excess) (1,461,511) $ (1,242,495) $ (1,282,553) $ (1,079,849) $ (939,368) $ Covered payroll 1 $ 9,983,830 10,856,026 $ 8,730,570 $ 7,661,955 $ 7,613,425 $ Contributions as a
percentage of covered
employee payroll 22.63% 21.65% 23.20% 23.10% 21.44%
2019-20 2018-19 2017-18 2016-17 2015-16
Actuarially determined
contribution 618,021 $ 575,931 $ 527,115 $ 518,722 $ 469,656 $ Contributions in relation to
the actuarially determined
contributions (1,907,072) $ (1,682,561) $ (1,516,745) $ (1,379,151) $ (1,245,120) $ Contribution deficiency
(excess) (1,289,051) $ (1,106,630) $ (989,630) $ (860,429) $ (775,464) $ Covered payroll 1 $ 7,192,641 7,191,189 $ 7,402,032 $ 6,785,443 $ 6,540,869 $ Contributions as a
percentage of covered
employee payroll 26.52% 23.39% 20.49% 20.33% 19.04%
1 Covered Payroll represented above is based on pensionable earnings provided by the employer.
Notes to Schedule
None.
California Public Employees' Retirement System ("CalPERS") Miscellaneous Plan
CITY OF HERMOSA BEACH
Required Supplementary Information
Schedule of City's Contributions - Pensions
For the Year Ended June 30, 2025
Last Ten Fiscal Years
87
2024-25 2023-24 2022-23 2021-22 2020-21
Actuarially determined
contribution 1,062,431 $ 1,082,912 $ 896,751 $ 1,119,497 $ 996,107 $ Contributions in relation to
the actuarially determined
contributions (4,601,776) $ (4,195,950) $ (3,982,811) $ (3,813,932) $ (3,342,664) $ Contribution deficiency
(excess) (3,539,345) $ (3,113,038) $ (3,086,060) $ (2,694,435) $ (2,346,557) $ Covered payroll 1 $ 4,103,285 5,294,642 $ 4,520,539 $ 5,171,993 $ 4,516,727 $ Contributions as a
percentage of covered
employee payroll 86.91% 102.26% 88.10% 73.74% 74.01%
2019-20 2018-19 2017-18 2016-17 2015-16
Actuarially determined
contribution 753,728 $ 804,633 $ 1,016,858 $ 1,029,129 $ 1,033,371 $ Contributions in relation to
the actuarially determined
contributions (2,799,261) $ (3,878,196) $ (4,226,782) $ (3,921,179) $ (3,698,115) $ Contribution deficiency
(excess) (2,045,533) $ (3,073,563) $ (3,209,924) $ (2,892,050) $ (2,664,744) $ Covered payroll 1 $ 4,108,280 4,130,518 $ 5,320,583 $ 5,597,651 $ 5,342,937 $ Contributions as a
percentage of covered
employee payroll 67.77% 94.40% 79.44% 70.05% 69.22%
1 Covered Payroll represented above is based on pensionable earnings provided by the employer.
Notes to Schedule
None.
California Public Employees' Retirement System ("CalPERS") Safety Plan
CITY OF HERMOSA BEACH
Required Supplementary Information
Schedule of City's Contributions - Pensions
For the Year Ended June 30, 2025
Last Ten Fiscal Years
88
For the Measurement Period: 2024-25 2023-24 2022-23 2021-22 2020-21 Total OPEB Liability
Service cost 239,381 $ 337,924 $ 328,880 $ 396,550 $ 385,000 $ Interest on the total OPEB Liability 630,277 848,939 819,527 818,124 779,630 Actual and expected experience difference - (4,287,883) - (1,303,579) - Changes in assumptions - 185,963 - 2,010,094 -
Changes in benefit terms - (309,542) - - -
Benefit payments (672,818) (632,228) (613,220) (563,618) (505,591) Net change in total OPEB liability 196,840 (3,856,827) 535,187 1,357,571 659,039 Total OPEB liability - beginning 11,556,604 15,413,431 14,878,244 13,520,673 12,861,634 Total OPEB liability - ending (a) 11,753,444 $ 11,556,604 $ 15,413,431 $ 14,878,244 $ 13,520,673 $ Plan Fiduciary Net Position
Contribution - employer 1,141,418 $ 1,081,220 $ 1,047,488 $ 982,442 $ 870,427 $ Net investment income 2,051,474 1,202,440 (2,363,706) 3,126,022 504,213 Benefit payments (672,818) (632,228) (613,220) (563,618) (505,591) Administrative expense (39,816) (36,932) (38,864) (36,347) (32,328) Net change in plan fiduciary net position 2,480,258 1,614,500 (1,968,302) 3,508,499 836,721 Plan fiduciary net position - beginning 17,404,488 15,789,988 17,758,290 14,249,791 13,413,070 Plan fiduciary net position - ending (b) 19,884,746 17,404,488 15,789,988 17,758,290 14,249,791 Net OPEB liability (asset) - ending (a)-(b) (8,131,302) $ (5,847,884) $ (376,557) $ (2,880,046) $ (729,118) $ Fiduciary net position as a % of
total OPEB liability 169.18% 150.60% 102.44% 119.36% 105.39% Covered payroll 17,217,134 15,230,981 14,578,182 13,037,862 12,297,066 Net OPEB liability as a
percentage of payroll -47.23% -38.39% -2.58% -22.09% -5.93% * 2017 is the first year of implementation, therefore only nine years are available for the required 10-year schedule.
CITY OF HERMOSA BEACH
Schedule of Changes in the Net OPEB Liability and Related Ratios For the Year Ended June 30, 2025
Required Supplementary Information
Last Ten Fiscal Years
For the Measurement Period: 2019-20 2018-19 2017-18 2016-17 Total OPEB Liability
Service cost 385,000 $ 327,066 $ 317,540 $ 326,000 $
Interest on the total OPEB Liability 779,630 661,475 631,597 624,000 Actual and expected experience difference - 632,713 - - Changes in assumptions - 771,624 - -
Changes in benefit terms - - - (381,000)
Benefit payments (505,591) (457,550) (463,831) (399,000) Net change in total OPEB liability 659,039 1,935,328 485,306 170,000 Total OPEB liability - beginning 12,861,634 10,926,306 10,441,000 10,271,000 Total OPEB liability - ending (a) 13,520,673 $ 12,861,634 $ 10,926,306 $ 10,441,000 $ Plan Fiduciary Net Position
Contribution - employer 870,427 $ 1,486,916 $ 1,569,307 $ 1,050,000 $ Net investment income 504,213 838,766 645,729 906,000
Benefit payments (505,591) (457,550) (463,831) (399,000) Administrative expense (32,328) (29,410) (26,857) (23,000) Net change in plan fiduciary net position 836,721 1,838,722 1,724,348 1,534,000 Plan fiduciary net position - beginning 13,413,070 11,574,348 9,850,000 8,316,000 Plan fiduciary net position - ending (b) 14,249,791 13,413,070 11,574,348 9,850,000 $ Net OPEB liability (asset) - ending (a)-(b) (729,118) $ (551,436) $ (648,042) $ 591,000 $ Fiduciary net position as a % of
total OPEB liability 105.39% 104.29% 105.93% 94.34%
Covered payroll 12,297,066 10,461,266 11,551,135 11,551,135 Net OPEB liability as a
percentage of payroll -5.93% -5.27% -5.61% 5.12%
CITY OF HERMOSA BEACH
Required Supplementary Information (Continued)
Schedule of Changes in the Net OPEB Liability and Related Ratios For the Year Ended June 30, 2025
Last Ten Fiscal Years
For the Measurement
Period: 2024-25 2023-24 2022-23 2021-22 2020-21
Actuarially determined
contributions - $ 243,000 $ 224,000 $ 367,000 $ 373,000 $ Contributions in relation to
the actuarially determined
contribution (882,931) (1,141,418) (1,081,220) (1,047,488) (982,447) Contribution deficiency
(excess) (882,931) $ (898,418) $ (857,220) $ (680,488) $ (609,447) $ Covered payroll 18,498,471 $ 17,217,134 $ 15,230,981 $ 14,578,182 $ 13,037,862 $ Contributions as a percentage
of covered payroll 4.77% 6.63% 7.10% 7.19% 7.54%
For the Measurement
Period: 2019-20 2018-19 2017-18 2016-17
Actuarially determined
contributions 314,000 $ 324,000 $ 818,000 $ 818,000 $
Contributions in relation to
the actuarially determined
contribution (870,427) (1,486,916) (1,569,000) (1,050,000) Contribution deficiency
(excess) (556,427) $ (1,162,916) $ (751,000) $ (232,000) $ Covered payroll 12,297,066 $ 10,461,266 $ 11,551,135 $ 10,955,041 $ Contributions as a percentage
of covered payroll 7.08% 14.21% 13.58% 9.58%
* 2017 is the first year of implementation, therefore only nine years are available for the required 10-year schedule.
CITY OF HERMOSA BEACH
Required Supplementary Information
Schedule of City's Contributions - OPEB
For the Year Ended June 30, 2025
Last Ten Fiscal Years
SUPPLEMENTARY INFORMATION
92
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93
NON MAJOR
GOVERNMENTAL FUNDS
Special Revenue Funds:
Lighting and Landscaping District Fund - This fund is used to account for the Lighting Assessment District, which was created for street lighting/median maintenance purposes pursuant to Street and Highway Code 22500-22679.
State Gas Tax Fund - This fund is used to account for the City's share of state gasoline tax, which is restricted for use on public streets. Restricted Transportation Development Act funds from Los Angeles County Transportation Commission for the Strand Walkway Project and Bicycle Path Project are also accounted for in this fund.
AB 939 Fund - This fund is used to account for the fees collected in connection with solid waste collection. The fees are used to implement a Source Reduction and Recycling Element and a Household Waste Element.
Prop A Open Space Fund - This fund is used to account for funds generated by passage of the L.A. County Safe Neighborhood Parks Bond Act by County voters for the purpose of improving parks and recreational facilities.
Parks/Recreation Facilities Tax Fund - This fund is used to account for revenue from subdivision fees and park or recreation facility tax fees on new dwellings. Generally, the funds are to be used for acquisition, improvements and expansion of park or recreational facilities.
Bayview Drive Administrative Expense Fund - This fund is used to account for all administrative expenditures required for the Bayview Utility Underground Special Assessment District.
Loma District Administrative Expense Fund - This fund is used to account for all administrative expenditures required for the Loma Drive Utility Underground Special Assessment District.
Beach Drive Assessment District Administrative Expense Fund - This fund is used to account for all administrative expenditures required for the Loma Drive Utility Underground Special Assessment District.
Proposition "C" Fund - This is a fund which was added during 1992 to account for funds allocated from the voter-approved 1/2 cent sales tax. Funds must be used for transit purposes.
Measure "R" Fund - This is a fund which was added July 1, 2009 to account for a 1/2 cent sales tax approved by Los Angeles County voters in November 2008 to meet the transportation needs of Los Angeles County. The program is to be used for transportation projects that have been approved by the Los Angeles County Metropolitan Transit Authority.
Air Quality Management District Fund - This fund is used to account for funds distributed by the South Coast Air Quality Management district. The revenues are restricted to programs which promote reduction in air pollution from motor vehicles.
Supplemental Law Enforcement Services Fund - This fund is used to account for funds received from the Citizen Option for Public Safety ("COPS") program, established by the State Legislature in fiscal year 1996-1997. Funds must be used for front line municipal police services and must supplement and not supplant existing funding.
NON MAJOR
GOVERNMENTAL FUNDS (Continued)
Special Revenue Funds (Continued):
Asset Seizure and Forfeiture Fund - This fund is used to account for property seized as a result of illegal activity and forfeited to the Police Department. Funds must be used for law enforcement purposes to supplement, not replace or decrease, existing appropriations.
Fire Protection Fund - This fund is used to account for fire flow fees which are used to upgrade and enhance the fire flow capabilities of the fire protection system in the City and for upgrades to fire facilities.
Community Development Block Grant (CDBG) Fund - This fund is used to track the costs related to community development block grant.
Measure "M" Fund - This fund is used to account for voter-approved 1/2 cent sales tax for a Los Angeles County Traffic Improvement Plan to improve freeway traffic flow/safety; repair potholes/sidewalks; repave local streets; earthquake-retrofit bridges; synchronize signals; keep senior/disabled/student fares affordable; expand rail/subway/bus systems; improve job/school/airport connections; and create jobs.
FEMA Fund – This fund is used to account for emergency response related expenditures reimbursed by the Federal Emergency Management Agency.
RTI Undersea Cable Tidelands Fund - This fund is used to account for funds set aside according to the MC Global (now RTII) easement agreement for easement within tidelands and submerged lands.
Proposition "A" Transit Fund - Transit revenue consists primarily of Proposition A fund (the 1/2 cent sales tax for Los Angeles County transportation purposes). The City currently operates a Dial-a-Ride program for seniors, a taxi voucher program, a commuter bus, special event and after school program shuttles and subsidizes bus passes for senior citizens and students.
TDA Fund – TDA Article 3, or SB 821, is a Bicycle and Pedestrian Facilities program funded through a ¼ cent of the general sales tax collected statewide. The City receives the revenue from LA Metro transportation agency as a pass through.
Measure “W” Fund - This fund is used to account for projects dedicated to increase local water supply, improve water quality, and protect public health.
Sewer Fund - This fund is used to account for funds derived from a portion of the 6% utility user tax and miscellaneous service charges. Funds are spent on the Sewer/Strom Drain Department and capital sewer projects.
Storm Drain Fund - This fund is used to account for maintenance of the City's storm drains. This includes administration of the national Pollution Discharge Elimination System Program.
Debt Service Fund:
2015 Lease Revenue Bonds - This fund is used to account for 2015 Lease Revenue Bond.
Capital Project Funds:
Capital Improvements - This fund is set aside for capital improvement projects.
Greenwich Underground - This fund is set aside for capital improvement projects. 95
Lighting and Prop A
Landscaping State Open
District Gas Tax AB 939 Space
Cash and investments 69,114 $ 916,723 $ 164,773 $ - $
Accounts receivable 10,516 136,422 3,551 26,697
Property taxes receivable, net 11,819 - - -
Reimbursable grants receivable - - - -
Interest receivable 609 7,465 1,369 -
Other assets - - - -
Total assets $ 1,060,610 92,058 $ 169,693 $ 26,697 $
Liabilities:
Accounts payable and accrued liabilities 49,162 $ 687,306 $ - $ - $ Accrued wages and benefits payable 6,653 5,222 498 -
Unearned revenues - - - -
Due to other funds - - - 167,783
Compensated absences, due within one year - - - -
Total liabilities 692,528 55,815 498 167,783
Deferred inflows of resources:
Unavailable revenue 11,819 - - -
Total deferred inflows of resources - 11,819 - -
Fund Balances:
Nonspendable - - - -
Restricted 24,424 368,082 169,195 -
Unassigned - - - (141,086)
Total fund balances (deficits) 368,082 24,424 169,195 (141,086) Total liabilities, deferred inflows
and fund balances $ 1,060,610 92,058 $ 169,693 $ 26,697 $ Special Revenue Funds
CITY OF HERMOSA BEACH
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2025
ASSETS
AND FUND BALANCES
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
96 Page 254 of 874
Parks/ Bayview Loma Beach Drive
Recreation Drive District Assessment
Facilities Administrative Administrative District
Tax Expense Expense Admin Expense
Cash and investments 410,864 $ 7,337 $ - $ 1,595 $
Accounts receivable - - - -
Property taxes receivable, net - - - -
Reimbursable grants receivable - - - -
Interest receivable 3,285 59 - 14
Other assets - - - -
Total assets $ 7,396 414,149 $ - $ 1,609 $
Liabilities:
Accounts payable and accrued liabilities 64,652 $ 405 $ - $ - $ Accrued wages and benefits payable - - - -
Unearned revenues - - - -
Due to other funds - - 91 -
Compensated absences, due within one year - - - -
Total liabilities 405 64,652 91 -
Deferred inflows of resources:
Unavailable revenue - - - -
Total deferred inflows of resources - - - -
Fund Balances:
Nonspendable - - - -
Restricted 349,497 6,991 - 1,609
Unassigned - - (91) -
Total fund balances (deficits) 6,991 349,497 (91) 1,609 Total liabilities, deferred inflows
and fund balances $ 7,396 414,149 $ - $ 1,609 $
CITY OF HERMOSA BEACH
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2025
Special Revenue Funds
AND FUND BALANCES
ASSETS
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
97 Page 255 of 874
Air Supplemental
Quality Law
Proposition Measure Management Enforcement
"C" "R" District Services
Cash and investments 895,549 $ 1,142,884 $ 133,049 $ 519,832 $ Accounts receivable - - 6,644 -
Property taxes receivable, net - - - -
Reimbursable grants receivable - - - -
Interest receivable 7,665 9,189 1,083 4,198
Other assets - - - -
Total assets $ 1,152,073 903,214 $ 140,776 $ 524,030 $
Liabilities:
Accounts payable and accrued liabilities 89,172 $ 744,704 $ 397 $ 1,635 $ Accrued wages and benefits payable 965 44 135 -
Unearned revenues - - - -
Due to other funds - - - -
Compensated absences, due within one year - 188 - -
Total liabilities 744,936 90,137 532 1,635
Deferred inflows of resources:
Unavailable revenue - - - -
Total deferred inflows of resources - - - -
Fund Balances:
Nonspendable - - - -
Restricted 813,077 407,137 140,244 522,395
Unassigned - - - -
Total fund balances (deficits) 407,137 813,077 140,244 522,395 Total liabilities, deferred inflows
and fund balances $ 1,152,073 903,214 $ 140,776 $ 524,030 $ Special Revenue Funds
ASSETS
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
AND FUND BALANCES
CITY OF HERMOSA BEACH
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2025
98 Page 256 of 874
Asset
Seizure
and Fire Measure
Forfeiture Protection CDBG "M" FEMA
Cash and investments 579,843 $ 16,074 $ 1 $ 574,356 $ - $ Accounts receivable 241 - 3,191 - -
Property taxes receivable, net - - - - -
Reimbursable grants receivable - - - - -
Interest receivable 4,742 121 - 4,894 -
Other assets - - - - -
Total assets $ 16,195 584,826 $ 3,192 $ 579,250 $ - $
Liabilities:
Accounts payable and accrued liabilities 55,937 $ - $ - $ 545,400 $ - $ Accrued wages and benefits payable - - - - -
Unearned revenues - - - - -
Due to other funds - - - - 623,660
Compensated absences, due within one year - - - - -
Total liabilities - 55,937 - 545,400 623,660
Deferred inflows of resources:
Unavailable revenue - - - - -
Total deferred inflows of resources - - - - -
Fund Balances:
Nonspendable - - - - -
Restricted 528,889 16,195 3,192 33,850 -
Unassigned - - - - (623,660)
Total fund balances (deficits) 16,195 528,889 3,192 33,850 (623,660) Total liabilities, deferred inflows
and fund balances $ 16,195 584,826 $ 3,192 $ 579,250 $ - $ Special Revenue Funds
AND FUND BALANCES
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
ASSETS
CITY OF HERMOSA BEACH
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2025
99 Page 257 of 874
RTI
Undersea
Cable Proposition Measure
Tidelands "A" Transit TDA "W"
Cash and investments 451,267 $ 1,007,080 $ - $ 1,128,529 $ Accounts receivable - - - -
Property taxes receivable, net - - - -
Reimbursable grants receivable - - - -
Interest receivable 3,711 8,102 - 8,902
Other assets - 14,692 - -
Total assets $ 1,029,874 454,978 $ - $ 1,137,431 $
Liabilities:
Accounts payable and accrued liabilities 69,646 $ 887,247 $ - $ - $ Accrued wages and benefits payable - 227 - 695
Unearned revenues - - - 423,950
Due to other funds - - - -
Compensated absences, due within one year - - - -
Total liabilities 887,474 69,646 - 424,645
Deferred inflows of resources:
Unavailable revenue - - - -
Total deferred inflows of resources - - - -
Fund Balances:
Nonspendable - 14,692 - -
Restricted 385,332 127,708 - 712,786
Unassigned - - - -
Total fund balances (deficits) 142,400 385,332 - 712,786 Total liabilities, deferred inflows
and fund balances $ 1,029,874 454,978 $ - $ 1,137,431 $
CITY OF HERMOSA BEACH
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2025
AND FUND BALANCES
ASSETS
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
Special Revenue Funds
100 Page 258 of 874
Capital Debt
Project Service
Fund Fund
Total
2015 Lease Nonmajor
Storm Greenwich Revenue Governmental
Sewer Drain Underground Bonds Funds
Cash and investments 3,540,358 $ 2,651,693 $ 58,573 $ 9,818 $ 14,279,312 $ Accounts receivable 81,190 - - - 268,452
Property taxes receivable, net 24,583 - - - 36,402
Reimbursable grants receivable - - - - -
Interest receivable 28,271 - - - 93,679
Other assets - - - - 14,692
Total assets $ 2,651,693 3,674,402 $ 58,573 $ 9,818 $ 14,692,537 $ Liabilities:
Accounts payable and accrued liabilities 567,774 $ 45,589 $ - $ - $ 3,809,026 $ Accrued wages and benefits payable 39,885 13,938 - - 68,262 Unearned revenues - - - - 423,950
Due to other funds - - - - 791,534
Compensated absences, due within one year - - - - 188
Total liabilities 59,527 607,659 - - 5,092,960
Deferred inflows of resources:
Unavailable revenue - - - - 11,819
Total deferred inflows of resources - - - - 11,819
Fund Balances:
Nonspendable - - - - 14,692
Restricted 3,066,743 2,592,166 58,573 9,818 10,337,903
Unassigned - - - - (764,837)
Total fund balances (deficits) 2,592,166 3,066,743 58,573 9,818 9,587,758 Total liabilities, deferred inflows
and fund balances $ 2,651,693 3,674,402 $ 58,573 $ 9,818 $ 14,692,537 $
CITY OF HERMOSA BEACH
Combining Balance Sheet (Continued)
Nonmajor Governmental Funds
June 30, 2025
Special Revenue Funds
ASSETS
LIABILITIES, DEFERRED
INFLOWS OF RESOURCES,
AND FUND BALANCES
101 Page 259 of 874
Lighting and Prop A
Landscaping State Open
District Gas Tax AB 939 Space
REVENUES:
Property taxes 451,780 $ - $ - $ - $
Other taxes - - - -
Fines and forfeitures - - - -
Use of money and property - - - -
Intergovernmental - 1,089,657 - -
Charges for services - - 61,464 -
Miscellaneous - - - -
Interest earned on investments 4,389 79,493 13,836 -
Total revenues 1,169,150 456,169 75,300 -
EXPENDITURES:
Current:
General government - - 275,322 -
Public safety - - - -
Community development - - - -
Culture and recreaction - - - -
Public works 815,361 1,296,342 - -
Capital outlay - 79,183 - -
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 1,375,525 815,361 275,322 -
REVENUES OVER
(UNDER) EXPENDITURES (359,192) (206,375) (200,022) -
OTHER FINANCING
SOURCES (USES):
Transfers in 419,095 - - -
Transfers out (11,054) (357,865) - (65,520)
Total other financing
sources (uses) (357,865) 408,041 - (65,520)
CHANGE IN FUND BALANCES (564,240) 48,849 (200,022) (65,520) Fund balances (deficits), beginning of year (24,425) 932,322 369,217 (75,566) Fund balances (deficits), end of year 24,424 $ 368,082 $ 169,195 $ (141,086) $ Special Revenue Funds
CITY OF HERMOSA BEACH
Nonmajor Governmental Funds
For the Year Ended June 30, 2025
Combining Statement of Revenues, Expenditures and Changes in Fund Balances 102 Page 260 of 874
Parks/ Bayview Loma Beach Drive
Recreation Drive District Assessment
Facilities Administrative Administrative District
Tax Expense Expense Admin Expense
REVENUES:
Property taxes - $ - $ - $ - $
Other taxes - - - -
Fines and forfeitures - - - -
Use of money and property - - - -
Intergovernmental - - - -
Charges for services 19,044 - - -
Miscellaneous - 5,000 - -
Interest earned on investments 30,018 538 2 173
Total revenues 5,538 49,062 2 173
EXPENDITURES:
Current:
General government - 1,680 - -
Public safety - - - -
Community development - - - -
Culture and recreaction - - - -
Public works - - - -
Capital outlay 67,764 - - -
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 1,680 67,764 - -
REVENUES OVER
(UNDER) EXPENDITURES (18,702) 3,858 2 173
OTHER FINANCING
SOURCES (USES):
Transfers in - - - -
Transfers out - (3,000) - (2,500)
Total other financing
sources (uses) (3,000) - - (2,500)
CHANGE IN FUND BALANCES 858 (18,702) 2 (2,327)
Fund balances (deficits), beginning of year 368,199 6,133 (93) 3,936 Fund balances (deficits), end of year 349,497 $ 6,991 $ (91) $ 1,609 $ Special Revenue Funds
CITY OF HERMOSA BEACH
Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2025
103 Page 261 of 874
Air Supplemental
Quality Law
Proposition Measure Management Enforcement
"C" "R" District Services
REVENUES:
Property taxes - $ - $ - $ - $
Other taxes 413,914 310,378 - 161,014
Fines and forfeitures - - - -
Use of money and property - - - -
Intergovernmental - - 31,841 -
Charges for services - - - -
Miscellaneous - - - -
Interest earned on investments 88,359 80,064 9,670 40,628 Total revenues 390,442 502,273 41,511 201,642
EXPENDITURES:
Current:
General government - - 6,030 -
Public safety - - - 61,168
Community development - - - -
Culture and recreaction - - - -
Public works 31,383 746,307 - -
Capital outlay 924,549 - - 120,792
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 746,307 955,932 6,030 181,960
REVENUES OVER
(UNDER) EXPENDITURES (355,865) (453,659) 35,481 19,682
OTHER FINANCING
SOURCES (USES):
Transfers in - - - -
Transfers out - - - -
Total other financing
sources (uses) - - - -
CHANGE IN FUND BALANCES (355,865) (453,659) 35,481 19,682 Fund balances (deficits), beginning of year 1,266,736 763,002 104,763 502,713 Fund balances (deficits), end of year 813,077 $ 407,137 $ 140,244 $ 522,395 $ Special Revenue Funds
CITY OF HERMOSA BEACH
Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2025
104 Page 262 of 874
Asset
Seizure
and Fire Measure
Forfeiture Protection CDBG "M" FEMA
REVENUES:
Property taxes - $ - $ - $ - $ - $
Other taxes - - - 351,648 -
Fines and forfeitures 15,963 - - - -
Use of money and property - - - - -
Intergovernmental - - 109,740 - 27,846
Charges for services - 4,092 - - -
Miscellaneous - - - - -
Interest earned on investments 45,670 1,015 - 40,193 -
Total revenues 5,107 61,633 109,740 391,841 27,846
EXPENDITURES:
Current:
General government - - - - -
Public safety 76,552 - - - -
Community development - - - - -
Culture and recreaction - - - - -
Public works - - - 545,400 -
Capital outlay 39,420 - 109,740 - -
Debt service:
Principal - - - - -
Interest and fiscal charges - - - - -
Total expenditures - 115,972 109,740 545,400 -
REVENUES OVER
(UNDER) EXPENDITURES 5,107 (54,339) - (153,559) 27,846
OTHER FINANCING
SOURCES (USES):
Transfers in - - - - -
Transfers out - - - - -
Total other financing
sources (uses) - - - - -
CHANGE IN FUND BALANCES 5,107 (54,339) - (153,559) 27,846 Fund balances (deficits), beginning of year 583,228 11,088 3,192 187,409 (651,506) Fund balances (deficits), end of year 528,889 $ 16,195 $ 3,192 $ 33,850 $ (623,660) $
CITY OF HERMOSA BEACH
Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2025
Special Revenue Funds
105 Page 263 of 874
RTI
Undersea
Cable Proposition Measure
Tidelands "A" Transit TDA "W"
REVENUES:
Property taxes - $ - $ - $ - $
Other taxes - 499,008 - 156,536
Fines and forfeitures - - - -
Use of money and property - - - -
Intergovernmental - - 18,499 -
Charges for services - 748 - -
Miscellaneous - - - -
Interest earned on investments 34,566 67,687 - 75,003
Total revenues 567,443 34,566 18,499 231,539
EXPENDITURES:
Current:
General government - 130 - -
Public safety - 16,881 - -
Community development - 53,434 - -
Culture and recreaction - 67,880 - -
Public works - - 18,499 21,116
Capital outlay 71,479 800,640 - -
Debt service:
Principal - - - -
Interest and fiscal charges - - - -
Total expenditures 938,965 71,479 18,499 21,116
REVENUES OVER
(UNDER) EXPENDITURES (371,522) (36,913) - 210,423
OTHER FINANCING
SOURCES (USES):
Transfers in - - - -
Transfers out - - - -
Total other financing
sources (uses) - - - -
CHANGE IN FUND BALANCES (371,522) (36,913) - 210,423
Fund balances (deficits), beginning of year 422,245 513,922 - 502,363 Fund balances (deficits), end of year 385,332 $ 142,400 $ - $ 712,786 $ Special Revenue Funds
CITY OF HERMOSA BEACH
Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2025
106 Page 264 of 874
Capital Debt
Project Service
Fund Fund
Total
2015 Lease Nonmajor
Storm Greenwich Revenue Governmental
Sewer Drain Underground Bonds Funds
REVENUES:
Property taxes - $ - $ - $ - $ 451,780 $
Other taxes - 700,000 - - 2,592,498
Fines and forfeitures - - - - 15,963
Use of money and property - - - - -
Intergovernmental 17,985 - - - 1,295,568
Charges for services 1,276,000 - - - 1,361,348
Miscellaneous - - - - 5,000
Interest earned on investments 296,411 130,705 - - 1,038,420 Total revenues 830,705 1,590,396 - - 6,760,577
EXPENDITURES:
Current:
General government - - - - 283,162
Public safety - - - - 154,601
Community development - - - - 53,434
Culture and recreaction - - - - 67,880
Public works 813,588 539,833 - - 4,827,829
Capital outlay 2,109,822 404,204 - - 4,727,593
Debt service:
Principal - - - 450,000 450,000
Interest and fiscal charges - - - 267,200 267,200
Total expenditures 944,037 2,923,410 - 717,200 10,831,699
REVENUES OVER
(UNDER) EXPENDITURES (113,332) (1,333,014) - (717,200) (4,071,122)
OTHER FINANCING
SOURCES (USES):
Transfers in - - - 686,161 1,105,256
Transfers out - - - - (439,939)
Total other financing
sources (uses) - - - 686,161 665,317
CHANGE IN FUND BALANCES (113,332) (1,333,014) - (31,039) (3,405,805) Fund balances (deficits), beginning of year 4,399,757 2,705,498 58,573 40,857 12,993,563 Fund balances (deficits), end of year 3,066,743 $ 2,592,166 $ 58,573 $ 9,818 $ 9,587,758 $ Special Revenue Funds
CITY OF HERMOSA BEACH
Combining Statement of Revenues, Expenditures and Changes in Fund Balances (Continued) Nonmajor Governmental Funds
For the Year Ended June 30, 2025
107 Page 265 of 874
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance (deficit), July 1, 2024 $ (24,425) (24,425) $ - $ Revenues (inflows):
Property taxes 461,555 451,780 (9,775)
Interest earned on investments 3,366 4,389 1,023
Transfers in 419,095 419,095 -
Amount available for appropriations 884,016 875,264 (8,752) Charges to appropriations (outflows):
Public works 844,129 815,361 28,768
Transfers out 11,054 11,054 -
Total charges to appropriations 855,183 826,415 28,768
Fund balance (deficit), June 30, 2025 4,408 $ 24,424 $ 20,016 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Lighting and Landscaping District Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 932,322 932,322 $ - $
Revenues (inflows):
Intergovernmental 1,052,849 1,089,657 36,808
Interest earned on investments 43,577 79,493 35,916
Amount available for appropriations 1,096,426 1,169,150 72,724 Charges to appropriations (outflows):
Public works 1,456,070 1,296,342 159,728
Capital outlay 203,912 79,183 124,729
Transfers out 357,865 357,865 -
Total charges to appropriations 2,017,847 1,733,390 284,457 Fund balance, June 30, 2025 10,901 $ 368,082 $ 357,181 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual State Gas Tax Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 369,217 369,217 $ - $
Revenues (inflows):
Charges for services 64,000 61,464 (2,536)
Interest earned on investments 13,776 13,836 60
Amount available for appropriations 77,776 75,300 (2,476) Charges to appropriations (outflows):
General government 281,643 275,322 6,321
Total charges to appropriations 281,643 275,322 6,321
Fund balance, June 30, 2025 165,350 $ 169,195 $ 3,845 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual AB 939 Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance (deficit), July 1, 2024 $ (75,566) (75,566) $ - $ Revenues (inflows):
Intergovernmental 127,258 - (127,258)
Amount available for appropriations 127,258 - (127,258) Charges to appropriations (outflows):
Transfers out 65,520 65,520 -
Total charges to appropriations 65,520 65,520 -
Fund balance (deficit), June 30, 2025 (13,828) $ (141,086) $ (127,258) $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Prop A Open Space Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 368,199 368,199 $ - $
Revenues (inflows):
Other taxes 57,526 - (57,526)
Charges for services 60,000 19,044 (40,956)
Interest earned on investments 16,569 30,018 13,449
Amount available for appropriations 134,095 49,062 (85,033) Charges to appropriations (outflows):
Public works 310,000 - 310,000
Capital outlay 121,545 67,764 53,781
Total charges to appropriations 431,545 67,764 363,781
Fund balance, June 30, 2025 70,749 $ 349,497 $ 278,748 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Parks/Recreation Facilities Tax Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 6,133 6,133 $ - $
Revenues (inflows):
Miscellaneous 5,000 5,000 -
Interest earned on investments 300 538 238
Amount available for appropriations 5,300 5,538 238
Charges to appropriations (outflows):
General government 1,800 1,680 120
Transfers out 3,000 3,000 -
Total charges to appropriations 4,800 4,680 120
Fund balance, June 30, 2025 6,633 $ 6,991 $ 358 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Bayview Drive Administrative Expense Special Revenue Fund For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance (deficit), July 1, 2024 $ (93) (93) $ - $
Revenues (inflows):
Interest earned on investments 1 2 1
Amount available for appropriations 1 2 1
Charges to appropriations (outflows):
Transfers out - - -
Total charges to appropriations - - -
Fund balance (deficit), June 30, 2025 (92) $ (91) $ 1 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Loma District Administrative Expense Special Revenue Fund For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 3,936 3,936 $ - $
Revenues (inflows):
Miscellaneous 4,000 - (4,000)
Interest earned on investments 189 173 (16)
Amount available for appropriations 4,189 173 (4,016)
Charges to appropriations (outflows):
General government 1,600 - 1,600
Transfers out 2,500 2,500 -
Total charges to appropriations 4,100 2,500 1,600
Fund balance, June 30, 2025 4,025 $ 1,609 $ (2,416) $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Beach Drive Assessment District Administrative Expense Special Revenue Fund For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 1,266,736 1,266,736 $ - $
Revenues (inflows):
Other taxes 443,697 413,914 (29,783)
Interest earned on investments 68,168 88,359 20,191
Amount available for appropriations 511,865 502,273 (9,592) Charges to appropriations (outflows):
Public works 32,314 31,383 931
Capital outlay 1,776,325 924,549 851,776
Total charges to appropriations 1,808,639 955,932 852,707 Fund balance (deficit), June 30, 2025 (30,038) $ 813,077 $ 843,115 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Proposition "C" Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 763,002 763,002 $ - $
Revenues (inflows):
Other taxes 332,772 310,378 (22,394)
Interest earned on investments 41,897 80,064 38,167
Amount available for appropriations 374,669 390,442 15,773 Charges to appropriations (outflows):
Public works 1,094,066 746,307 347,759
Capital outlay 31,751 - 31,751
Total charges to appropriations 1,125,817 746,307 379,510 Fund balance, June 30, 2025 11,854 $ 407,137 $ 395,283 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Measure "R" Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 104,763 104,763 $ - $
Revenues (inflows):
Intergovernmental 25,000 31,841 6,841
Interest earned on investments 5,237 9,670 4,433
Amount available for appropriations 30,237 41,511 11,274 Charges to appropriations (outflows):
General government 10,000 6,030 3,970
Capital outlay 125,000 - 125,000
Total charges to appropriations 135,000 6,030 128,970
Fund balance, June 30, 2025 - $ 140,244 $ 140,244 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Air Quality Management District Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 502,713 502,713 $ - $
Revenues (inflows):
Other taxes 145,000 161,014 16,014
Interest earned on investments 23,310 40,628 17,318
Amount available for appropriations 168,310 201,642 33,332 Charges to appropriations (outflows):
Public safety 140,169 61,168 79,001
Capital outlay 139,281 120,792 18,489
Total charges to appropriations 279,450 181,960 97,490
Fund balance, June 30, 2025 391,573 $ 522,395 $ 130,822 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Supplemental Law Enforcement Services Special Revenue Fund For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 583,228 583,228 $ - $
Revenues (inflows):
Fines and forfeitures - 15,963 15,963
Interest earned on investments 27,081 45,670 18,589
Amount available for appropriations 27,081 61,633 34,552 Charges to appropriations (outflows):
Public safety 67,097 76,552 (9,455)
Capital outlay 10,250 39,420 (29,170)
Total charges to appropriations 77,347 115,972 (38,625) Fund balance, June 30, 2025 532,962 $ 528,889 $ (4,073) $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Asset Seizure and Forfeiture Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 11,088 11,088 $ - $
Revenues (inflows):
Charges for services 4,000 4,092 92
Interest earned on investments 265 1,015 750
Amount available for appropriations 4,265 5,107 842
Charges to appropriations (outflows):
Public safety - - -
Total charges to appropriations - - -
Fund balance, June 30, 2025 15,353 $ 16,195 $ 842 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Fire Protection Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 3,192 3,192 $ - $
Revenues (inflows):
Intergovernmental 147,148 109,740 (37,408)
Amount available for appropriations 147,148 109,740 (37,408) Charges to appropriations (outflows):
Capital outlay 147,148 109,740 37,408
Total charges to appropriations 147,148 109,740 37,408
Fund balance, June 30, 2025 3,192 $ 3,192 $ - $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Community Development Block Grant Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 187,409 187,409 $ - $
Revenues (inflows):
Other taxes 377,141 351,648 (25,493)
Interest earned on investments 25,987 40,193 14,206
Amount available for appropriations 403,128 391,841 (11,287) Charges to appropriations (outflows):
Public works 574,105 545,400 28,705
Total charges to appropriations 574,105 545,400 28,705
Fund balance, June 30, 2025 16,432 $ 33,850 $ 17,418 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Measure "M" Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance (deficit), July 1, 2024 $ (651,506) (651,506) $ - $ Revenues (inflows):
Intergovernmental 27,846 27,846 -
Amount available for appropriations 27,846 27,846 -
Charges to appropriations (outflows):
General government - - -
Total charges to appropriations - - -
Fund balance (deficit), June 30, 2025 (623,660) $ (623,660) $ - $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual FEMA Special Revenue Fund
For the Year Ended June 30, 2025
124 Page 282 of 874
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 422,245 422,245 $ - $
Revenues (inflows):
Interest earned on investments 19,768 34,566 14,798
Amount available for appropriations 19,768 34,566 14,798 Charges to appropriations (outflows):
Capital outlay 409,337 71,479 337,858
Total charges to appropriations 409,337 71,479 337,858
Fund balance, June 30, 2025 32,676 $ 385,332 $ 352,656 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual RTI Undersea Cable Tidelands Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 513,922 513,922 $ - $
Revenues (inflows):
Other taxes 534,912 499,008 (35,904)
Charges for services 900 748 (152)
Interest earned on investments 25,909 67,687 41,778
Amount available for appropriations 561,721 567,443 5,722 Charges to appropriations (outflows):
General government 500 130 370
Public safety 32,500 16,881 15,619
Community development 56,758 53,434 3,324
Culture and recreation 81,000 67,880 13,120
Capital outlay 809,600 800,640 8,960
Total charges to appropriations 980,358 938,965 41,393
Fund balance, June 30, 2025 95,285 $ 142,400 $ 47,115 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Proposition "A" Transit Special Revenue Fund
For the Year Ended June 30, 2025
126 Page 284 of 874
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ - - $ - $
Revenues (inflows):
Intergovernmental 18,000 18,499 499
Amount available for appropriations 18,000 18,499 499
Charges to appropriations (outflows):
Public works 18,000 18,499 (499)
Total charges to appropriations 18,000 18,499 (499)
Fund balance, June 30, 2025 - $ - $ - $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Transportation Development Act (TDA) Special Revenue Fund For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 502,363 502,363 $ - $
Revenues (inflows):
Other taxes 376,992 156,536 (220,456)
Interest earned on investments 25,662 75,003 49,341
Amount available for appropriations 402,654 231,539 (171,115) Charges to appropriations (outflows):
Public works 21,619 21,116 503
Capital outlay 644,265 - 644,265
Total charges to appropriations 665,884 21,116 644,768
Fund balance, June 30, 2025 239,133 $ 712,786 $ 473,653 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Measure "W" Special Revenue Fund
For the Year Ended June 30, 2025
128 Page 286 of 874
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 4,399,757 4,399,757 $ - $
Revenues (inflows):
Intergovernmental - 17,985 17,985
Charges for services 1,240,578 1,276,000 35,422
Interest earned on investments 193,284 296,411 103,127
Amount available for appropriations 1,433,862 1,590,396 156,534 Charges to appropriations (outflows):
Public works 932,692 813,588 119,104
Capital outlay 4,148,655 2,109,822 2,038,833
Total charges to appropriations 5,081,347 2,923,410 2,157,937 Fund balance, June 30, 2025 752,272 $ 3,066,743 $ 2,314,471 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Sewer Special Revenue Fund
For the Year Ended June 30, 2025
129 Page 287 of 874
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 2,705,498 2,705,498 $ - $
Revenues (inflows):
Other taxes 700,000 700,000 -
Intergovernmental 25,000 - (25,000)
Interest earned on investments 122,050 130,705 8,655
Amount available for appropriations 847,050 830,705 (16,345) Charges to appropriations (outflows):
Public works 700,650 539,833 160,817
Capital outlay 2,664,876 404,204 2,260,672
Total charges to appropriations 3,365,526 944,037 2,421,489 Fund balance, June 30, 2025 187,022 $ 2,592,166 $ 2,405,144 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Storm Drain Special Revenue Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 40,857 40,857 $ - $
Revenues (inflows):
Transfers in 686,161 686,161 -
Amount available for appropriations 686,161 686,161 -
Charges to appropriations (outflows):
Principal 450,000 450,000 -
Interest and fiscal charges 267,200 267,200 -
Total charges to appropriations 717,200 717,200 -
Fund balance, June 30, 2025 9,818 $ 9,818 $ - $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual 2015 Lease Revenue Bonds Debt Service Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 16,426,314 16,426,314 $ - $ Revenues (inflows):
Miscellaneous 250,000 4,254 (245,746)
Interest earned on investments 615,459 931,888 316,429
Amount available for appropriations 865,459 936,142 70,683 Charges to appropriations (outflows):
Public works 308,367 312,661 (4,294)
Capital outlay 10,306,980 3,960,682 6,346,298
Total charges to appropriations 10,615,347 4,273,343 6,342,004 Fund balance, June 30, 2025 6,676,426 $ 13,089,113 $ 6,412,687 $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Capital Improvements Capital Project Fund
For the Year Ended June 30, 2025
Budgeted
Amounts Actual Variance with
Final Amounts Final Budget
Fund balance, July 1, 2024 $ 58,573 58,573 $ - $
Revenues (inflows):
Use of money and property - - -
Amount available for appropriations - - -
Charges to appropriations (outflows):
Capital outlay - - -
Total charges to appropriations - - -
Fund balance, June 30, 2025 58,573 $ 58,573 $ - $
CITY OF HERMOSA BEACH
Schedule of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual Greenwich Underground Capital Project Fund
For the Year Ended June 30, 2025
INTERNAL SERVICE FUNDS
Insurance Fund - This fund was created to account for costs associated with the City's insurances: liability, workers' compensation, unemployment, auto, property and officials' bonds and settlement losses.
Equipment Replacement Fund - This fund was created to provide ongoing funds to replace assets at the end of the assets' useful life.
134 Page 292 of 874
Equipment
Insurance Replacement
Fund Fund Total
ASSETS
Current assets:
Cash and investments 10,653,127 $ 8,640,647 $ 19,293,774 $ Account receivables 9,437 221 9,658
Total current assets 10,662,564 8,640,868 19,303,432
Noncurrent assets:
Nondepreciable capital assets - 354,549 354,549
Depreciable capital assets, net of accumulated depreciation - 2,879,192 2,879,192 Total noncurrent assets - 3,233,741 3,233,741
Total assets 11,874,609 10,662,564 22,537,173
LIABILITIES
Current liabilities:
Accounts payable 194,486 91,190 285,676
Accrued wages and benefits payable 10,124 10,791 20,915 Workers' compensation claims payable - due within one year 1,241,918 - 1,241,918 General liability claims payable - due within one year 965,072 - 965,072 Subscription lease payable - due within one year - 87,072 87,072 Total current liabilities 2,411,600 189,053 2,600,653
Long-term liabilities:
Workers' compensation claims payable - due in more than one year 4,324,724 - 4,324,724 General liability claims payable - due in more than one year 1,244,122 - 1,244,122 Subscription lease payable - due in more than one year - 232,627 232,627 Total long-term liabilities 5,568,846 232,627 5,801,473 Total liabilities 421,680 7,980,446 8,402,126
NET POSITION
Net investment in capital assets - 2,917,096 2,917,096
Unrestricted 2,682,118 8,535,833 11,217,951
Total net position $ 11,452,929 2,682,118 $ 14,135,047 $
CITY OF HERMOSA BEACH
Combining Schedule of Net Position
All Internal Service Funds
June 30, 2025
Equipment
Insurance Replacement
Fund Fund Total
OPERATING REVENUES:
Charges for services 3,927,895 $ 2,008,298 $ 5,936,193 $ Miscellaneous revenue 182,906 - 182,906
Total operating revenues 2,008,298 4,110,801 6,119,099
OPERATING EXPENSES:
Salaries and wages 161,666 334,687 496,353
Contract services 2,420,054 1,125,156 3,545,210
Supplies 1 317,897 317,898
Claims expense 2,239,307 - 2,239,307
Depreciation - 615,799 615,799
Total operating expenses 2,393,539 4,821,028 7,214,567
OPERATING INCOME (385,241) (710,227) (1,095,468)
NON-OPERATING REVENUES (EXPENSES):
Interest expense - (1,451) (1,451)
Gain on disposal of capital assets - 29,418 29,418
Total non-operating revenues (expenses) 27,967 - 27,967 INCOME BEFORE TRANSFERS (357,274) (710,227) (1,067,501) Transfers in 392,345 337,424 729,769
Total transfers 337,424 392,345 729,769
Change in net position (19,850) (317,882) (337,732)
Net position, beginning of year 3,000,000 11,472,779 14,472,779 Net position, end of year 2,682,118 $ 11,452,929 $ 14,135,047 $
CITY OF HERMOSA BEACH
Combining Schedule of Revenues, Expenses, and Changes in Net Position All Internal Service Funds
For the year ended June 30, 2025
Equipment
Insurance Replacement
Fund Fund Total
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received for services from other funds 3,927,895 $ 2,008,077 $ 5,935,972 $ Cash received From insurance recovery 240,470 - 240,470 Cash payments to suppliers for goods and services (2,479,486) (1,548,426) (4,027,912) Cash payments to employees for services (156,528) (338,627) (495,155) Cash payments for insurance premiums and claims (1,853,023) - (1,853,023) Net cash provided (used by) operating activities (320,672) 121,024 (199,648) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES:
Transfers in 392,345 337,424 729,769
Net cash provided (used by) non-capital financing activities 337,424 392,345 729,769 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:
Acquisition of capital assets - (983,184) (983,184)
Proceeds from subscription agreement - 435,335 435,335
Interest paid - (1,451) (1,451)
Payment on subscription lease - (115,636) (115,636)
Net cash provided (used by) capital and related financing activities - (664,936) (664,936) Net increase (decrease) in cash and cash equivalents 71,673 (206,488) (134,815) Cash and equivalents, beginning of year 10,581,454 8,847,135 19,428,589 Cash and equivalents, end of year 10,653,127 $ 8,640,647 $ 19,293,774 $
RECONCILIATION OF OPERATING INCOME (LOSS) TO
NET CASH (USED BY) OPERATING ACTIVITIES:
Operating income (loss) (710,227) $ (385,241) $ (1,095,468) $ Adjustments to reconcile operating income (loss)
to net cash provided (used) by operating activities:
Depreciation - 615,799 615,799
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 57,564 (221) 57,343 Increase (decrease) in accounts payable (59,432) (105,373) (164,805) Increase (decrease) in accrued wages and benefits payable 5,139 (3,940) 1,199 Increase (decrease) in workers' compensation claims payable 44,128 - 44,128 Increase (decrease) in general liability claims payable 342,156 - 342,156 Increase (decrease) in compensated absences - - -
Total adjustments 389,555 506,265 895,820
Net cash provided (used) by operating activities $ (320,672) 121,024 $ (199,648) $
CITY OF HERMOSA BEACH
Combining Schedule of Cash Flows
All Internal Service Funds
For the year ended June 30, 2025
FIDUCIARY FUND
FINANCIAL STATEMENTS
The Custodial Funds of the City were established to account for transactions related to payments for limited obligation bonds for the Bayview Drive, the Lower Pier Avenue Assessment District, the Beach Drive Assessment District, the Myrtle Avenue Utility Undergrounding Assessment District, and the Loma Drive Utility Undergrounding Assessment District. 138 Page 296 of 874
Lower Pier
Avenue Beach Drive
Assessment Assessment
Bayview Drive Bayview Drive District District
Redemption Reserve Redemption Redemption
Cash and investments 65,957 $ 16,810 3,556 528
Interest receivable 550 137 28 18
Other receivables 387 - - 809
Total assets $ 16,947 66,894 3,584 1,355
Installment account 62,412 $ 5,674 3,320 1,191
Reserve requirement - 10,000 - -
Total liabilities 15,674 62,412 3,320 1,191
NET POSITION $ 1,273 4,482 $ 264 $ 164 $
CITY OF HERMOSA BEACH
Combining Schedule of Fiduciary Net Position
All Custodial Funds
ASSETS
LIABILITIES
June 30, 2025
Myrtle Avenue Loma Drive
Beach Drive Utility Utility
Assessment Underground Underground
District Assessment Assessment
Reserve District District Total
Cash and investments 5,183 $ 51,709 90,230 233,973
Interest receivable 42 - - 775
Other receivables - - - 1,196
Total assets $ 51,709 5,225 90,230 235,944
Installment account 1,836 $ 51,709 90,230 216,372
Reserve requirement 3,000 - - 13,000
Total liabilities 51,709 4,836 90,230 229,372
NET POSITION $ - 389 $ - $ 6,572 $
CITY OF HERMOSA BEACH
Combining Schedule of Fiduciary Net Position
All Custodial Funds
ASSETS
LIABILITIES
June 30, 2025
Bayview Bayview
Drive Drive
Redemption Reserve
Additions:
Interest income 4,482 $ 1,273
Other revenues 58,220 14,823
Total additions 62,702 16,096
Deductions:
Miscellaneous 62,412 15,674
Total deductions 62,412 15,674
Changes in net position 290 422
Net position, beginning of year 4,192 851
Net position, end of year 4,482 $ 1,273
CITY OF HERMOSA BEACH
Combining Schedule of Changes in Fiduciary Net Position All Custodial Funds
For the Year Ended June 30, 2025
Beach
Lower Pier Ave Drive
Assessment Assessment
District District
Redemption Redemption
Additions:
Interest income 264 $ 164
Other revenues 3,143 -
Total additions 3,407 164
Deductions:
Miscellaneous 3,320 1,355
Total deductions 3,320 1,355
Changes in net position 87 (1,191)
Net position, beginning of year 177 1,355
Net position, end of year 264 $ 164
CITY OF HERMOSA BEACH
Combining Schedule of Changes in Fiduciary Net Position All Custodial Funds
For the Year Ended June 30, 2025
Myrtle Ave
Beach Drive Utility
Assessment Underground
District Assesment
Reserve District
Additions:
Interest income 389 $ -
Other revenues 4,576 51,709
Total additions 4,965 51,709
Deductions:
Miscellaneous 4,836 51,709
Total deductions 4,836 51,709
Changes in net position 129 -
Net position, beginning of year 260 -
Net position, end of year 389 $ -
CITY OF HERMOSA BEACH
Combining Schedule of Changes in Fiduciary Net Position All Custodial Funds
For the Year Ended June 30, 2025
Loma Drive
Utility
Underground
Assessment
District Totals
Additions:
Interest income - $ 6,572
Other revenues 90,230 222,701
Total additions 90,230 229,273
Deductions:
Miscellaneous 90,230 229,536
Total deductions 90,230 229,536
Changes in net position - (263)
Net position, beginning of year - 6,835
Net position, end of year - $ 6,572
CITY OF HERMOSA BEACH
Combining Schedule of Changes in Fiduciary Net Position All Custodial Funds
For the Year Ended June 30, 2025
STATISTICAL SECTION
145 Page 303 of 874
STATISTICAL SECTION
This part of the City of Hermosa Beach's annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the government' overall financial health.
Contents Pages
Financial Trends 147-152
These schedules contain trend information to help the reader understand how the government's financial performance and well being have changed over time.
Revenue Capacity 153-159
These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax.
Debt Capacity 160-171
These schedules present information to help the reader assess the affordability of the government's current levels of outstanding debt and the government's ability to issue additional debt in the future.
Demographic and Economic Information 172-174
These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place.
Operating Information 175-176
These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs.
146 Page 304 of 874
2016 2017 2018 2019 2020
Governmental activities:
Net investment in capital assets 66,933,796 $ 66,417,072 $ 66,333,070 $ 64,375,911 $ 66,556,499 $ Restricted 3,774,552 5,260,908 5,584,794 5,056,977 6,399,646 Unrestricted (18,769,530) (13,287,058) (10,942,703) (8,841,583) (12,400,420) Total governmental activities net position 51,938,818 $ 58,390,922 $ 60,975,161 $ 60,591,305 $ 60,555,725 $ Business-type activities:
Net investment in capital assets - $ - $ - $ - $ - $
Restricted - - - - -
Unrestricted - - - - -
Total business-type activities net position - $ - $ - $ - $ - $ Primary government:
Net investment in capital assets 66,933,796 $ 66,417,072 $ 66,333,070 $ 64,375,911 $ 66,556,499 $ Restricted 3,774,552 5,260,908 5,584,794 5,056,977 6,399,646 Unrestricted (18,769,530) (13,287,058) (10,942,703) (8,841,583) (12,400,420) Total primary government net position 51,938,818 $ 58,390,922 $ 60,975,161 $ 60,591,305 $ 60,555,725 $
1. The Downtown Enhancement Fund was combined with the General Fund at the end of June 30, 2012.
Fiscal Year
Last Ten Fiscal Years
(accrual basis of accounting)
CITY OF HERMOSA BEACH
Net Position by Component
147
2021 2022 2023 2024 2025
Governmental activities:
Net investment in capital assets 65,145,247 $ 66,545,127 $ 67,871,420 $ 72,320,196 $ 82,379,137 $ Restricted 8,376,641 10,995,392 13,556,867 20,141,771 20,199,250 Unrestricted (13,440,076) (11,325,466) (729,396) (4,374,704) (10,041,265) Total governmental activities net position 60,081,812 $ 66,215,053 $ 80,698,891 $ 88,087,263 $ 92,537,122 $ Business-type activities:
Net investment in capital assets - $ - $ - $ - $ - $
Restricted - - - - -
Unrestricted - - - - -
Total business-type activities net position - $ - $ - $ - $ - $ Primary government:
Net investment in capital assets 65,145,247 $ 66,545,127 $ 67,871,420 $ 72,320,196 $ 82,379,137 $ Restricted 8,376,641 10,995,392 13,556,867 20,141,771 20,199,250 Unrestricted (13,440,076) (11,325,466) (729,396) (4,374,704) (10,041,265) Total primary government net position 60,081,812 $ 66,215,053 $ 80,698,891 $ 88,087,263 $ 92,537,122 $
1. The Downtown Enhancement Fund was combined with the General Fund at the end of June 30, 2012. (accrual basis of accounting) (Continued)
Fiscal Year
CITY OF HERMOSA BEACH
Net Position by Component
Last Ten Fiscal Years
148
2016 2017 2018 2019 2020
Expenses:
Governmental activities:
Legislative and legal 2,083,297 $ 2,043,740 $ 1,869,599 $ 1,563,872 $ 1,644,044 $ General government 2,262,107 3,598,512 4,129,246 4,257,735 6,023,648 Public safety 20,034,932 18,911,734 25,496,398 21,257,544 25,546,098 Community development 1,347,087 1,787,364 2,264,015 2,054,759 3,215,102 Culture and recreation 1,108,749 1,310,740 1,769,893 1,565,784 1,867,143 Public works 9,131,490 7,957,044 9,176,521 12,847,372 7,515,310 Interest and fiscal charges - - - 375,815 295,723
Total governmental activities expenses 35,967,662 35,609,134 44,705,672 43,922,881 46,107,068 Business-type activities:
Downtown Enhancement - - - - -
Parking
Proposition "A" Transit
Proposition "C" Transit
Total business-type activities expenses - - - - -
Total primary government expenses 35,967,662 35,609,134 44,705,672 43,922,881 46,107,068 Program revenues:
Governmental activities:
Charges for services:
General government 2,414,955 2,433,987 2,538,028 476,403 685,320 Public safety 5,254,859 4,993,104 4,957,188 3,137,319 4,857,617 Community development 1,996,538 1,664,132 1,691,752 1,735,699 1,532,538 Culture and recreation 1,178,323 1,341,455 1,223,789 974,306 546,379 Public works 2,217,610 2,374,774 2,292,254 3,426,223 1,426,203 Operating grants and contributions 755,650 601,816 517,244 3,505,669 3,419,173 Capital grants and contributions 203,033 327,534 27,821 526,421 833,644 Total governmental activities
program revenues: 14,020,968 13,736,802 13,248,076 13,782,040 13,300,874 Business-type activities:
Charges for services:
Downtown Enhancement - - - - -
Parking - - - - -
Proposition A Transit - - - - -
Proposition C Transit - - - - -
Operating grants and contributions - - - - -
Capital grants and contributions - - - - -
Total business-type activities
program revenues: - - - - -
Total primary government
program revenues: 14,020,968 13,736,802 13,248,076 13,782,040 13,300,874 Last Ten Fiscal Years
(accrual basis of accounting)
CITY OF HERMOSA BEACH
Changes in Net Position
Fiscal Year
149
2016 2017 2018 2019 2020
Net revenues (expenses):
Governmental activities (21,946,694) (21,872,332) (31,457,596) (30,140,841) (32,806,194) Business-type activities - - - - -
Total net revenues (expenses) (21,946,694) (21,872,332) (31,457,596) (30,140,841) (32,806,194) General revenues and other changes in net position:
Governmental activities:
Taxes:
Property taxes 15,317,458 15,714,094 17,097,712 18,640,303 19,584,959 Sales tax 2,895,794 2,816,289 3,151,207 3,133,311 2,722,468 Other taxes 7,527,467 7,930,375 7,878,400 7,107,116 7,134,010 Grants and contributions not restricted to
specific programs 1,369,042 1,304,880 1,315,223 2,346,524 1,829,299 Investment income 455,234 - - - -
Other general revenues 267,849 564,798 982,343 2,701,560 1,499,878 Transfers - - - - -
Settlement (Note 14) - - - - -
Total governmental activities 27,832,844 28,330,436 30,424,885 33,928,814 32,770,614 Business-type activities:
Investment income - - - - -
Other general revenues - - - - -
Miscellaneous - - - - -
Transfers - - - - -
Total business-type activities - - - - -
Total primary government 27,832,844 28,330,436 30,424,885 33,928,814 32,770,614 Changes in net position
Governmental activities: 5,886,150 6,458,104 (1,032,711) 3,787,973 (35,580) Business-type activities: - - - - -
Total primary government 5,886,150 $ 6,458,104 $ (1,032,711) $ 3,787,973 $ (35,580) $ 1 Transit operations were transferred to special revenue funds in fiscal year 2005. 2 The Parking Fund was combined with the General Fund in fiscal year 2006. (accrual basis of accounting) (Continued)
Fiscal Year
CITY OF HERMOSA BEACH
Changes in Net Position
Last Ten Fiscal Years
150
2021 2022 2023 2024 2025
Expenses:
Governmental activities:
Legislative and legal 1,868,411 $ 1,541,621 $ 1,450,333 $ 1,828,651 $ 1,975,949 $ General government 6,183,616 5,787,890 5,522,123 7,293,441 8,259,843 Public safety 26,942,447 26,720,959 24,019,361 29,781,399 29,528,050 Community development 2,725,596 2,364,948 1,962,635 2,655,249 2,717,060 Culture and recreation 1,571,300 2,476,406 1,878,360 2,485,981 2,831,827 Public works 7,272,166 8,721,736 9,693,424 11,018,772 15,992,436 Interest and fiscal charges 400,465 149,145 257,618 124,125 92,301 Total governmental activities expenses 46,964,001 47,762,705 44,783,854 55,187,618 61,397,466 Business-type activities:
Downtown Enhancement - - - - -
Parking
Proposition "A" Transit
Proposition "C" Transit
Total business-type activities expenses - - - - -
Total primary government expenses 46,964,001 47,762,705 44,783,854 55,187,618 61,397,466 Program revenues:
Governmental activities:
Charges for services:
General government 650,066 1,039,464 475,489 1,184,159 1,413,053 Public safety 4,602,983 4,464,241 4,664,069 6,175,263 6,286,249 Community development 1,494,412 1,634,826 2,210,691 1,512,639 1,623,490 Culture and recreation 849,247 1,045,006 1,022,525 1,064,165 1,063,840 Public works 1,578,604 1,417,059 1,597,076 1,584,914 1,597,155 Operating grants and contributions 2,640,033 4,964,468 7,956,332 4,096,793 5,912,765 Capital grants and contributions 45,817 60,645 (47,367) 2,824,689 1,620,660 Total governmental activities
program revenues: 11,861,162 14,625,709 17,878,815 18,442,622 19,517,212 Business-type activities:
Charges for services:
Downtown Enhancement - - - - -
Parking - - - - -
Proposition A Transit - - - - -
Proposition C Transit - - - - -
Operating grants and contributions - - - - -
Capital grants and contributions - - - - -
Total business-type activities
program revenues: - - - - -
Total primary government
program revenues: 11,861,162 14,625,709 17,878,815 18,442,622 19,517,212 1 Transit operations were transferred to special revenue funds in fiscal year 2005. 2 The Parking Fund was combined with the General Fund in fiscal year 2006.
CITY OF HERMOSA BEACH
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting) (Continued)
Fiscal Year
151
2021 2022 2023 2024 2025
Net revenues (expenses):
Governmental activities (35,102,839) (33,136,996) (26,905,039) (36,744,996) (41,880,254) Business-type activities - - - - -
Total net revenues (expenses) (35,102,839) (33,136,996) (26,905,039) (36,744,996) (41,880,254) General revenues and other changes in net position:
Governmental activities:
Taxes:
Property taxes 20,966,460 21,886,313 23,145,983 24,975,484 26,327,991 Sales tax 3,192,853 3,848,960 3,621,875 3,772,564 3,493,656 Other taxes 7,233,903 9,991,454 10,592,183 9,791,653 9,910,707 Grants and contributions not restricted to
specific programs 2,490,562 2,212,461 2,200,305 2,716,844 2,501,482 Investment income - - - - -
Other general revenues 745,148 1,331,049 1,828,531 2,876,823 4,096,277 Transfers - - - - -
Settlement (Note 14) - - - - -
Total governmental activities 34,628,926 39,270,237 41,388,877 44,133,368 46,330,113 Business-type activities:
Investment income - - - - -
Other general revenues - - - - -
Miscellaneous - - - - -
Transfers - - - - -
Total business-type activities - - - - -
Total primary government 34,628,926 39,270,237 41,388,877 44,133,368 46,330,113 Changes in net position
Governmental activities: (473,913) 6,133,241 14,483,838 7,388,372 4,449,859 Business-type activities: - - - - -
Total primary government (473,913) $ 6,133,241 $ 14,483,838 $ 7,388,372 $ 4,449,859 $ 1 Transit operations were transferred to special revenue funds in fiscal year 2005. 2 The Parking Fund was combined with the General Fund in fiscal year 2006.
CITY OF HERMOSA BEACH
Changes in Net Position
Last Ten Fiscal Years
(accrual basis of accounting) (Continued)
Fiscal Year
152
1/2 cent
Fiscal Real sales tax
year property extension Transient Utility
ended Property Sales transfer Franchise for public occupancy user's Business June 30 tax tax tax fees safety tax tax license Total
2016 15,317,458 2,895,795 320,731 776,316 212,511 2,762,444 2,388,825 1,058,663 25,732,743 2017 15,714,094 2,886,298 345,603 720,338 218,092 3,237,026 2,302,024 1,098,421 26,521,896 2018 17,097,712 3,151,207 326,224 722,316 233,291 3,295,207 2,229,906 1,061,130 28,116,993 2019 18,640,303 3,133,311 272,138 720,853 244,252 3,251,349 2,195,815 1,107,723 29,565,744 2020 19,584,959 2,722,468 313,331 717,191 239,965 2,599,810 2,093,903 1,162,017 29,433,644 2021 20,966,460 3,192,853 453,596 721,090 261,051 2,552,964 2,171,538 1,065,762 31,385,314 2022 21,886,313 3,848,960 685,820 757,448 299,037 4,730,760 2,369,269 1,149,120 35,726,727 2023 23,145,983 3,621,875 338,528 823,981 294,525 5,151,136 2,761,918 1,222,095 37,360,041 2024 24,975,484 3,772,564 319,702 927,439 290,699 4,942,254 2,041,200 1,270,359 38,539,701 2025 26,327,991 3,493,656 392,143 1,035,378 285,766 4,759,609 2,151,044 1,286,767 39,732,354 (accrual basis of accounting)
CITY OF HERMOSA BEACH
Governmental Activities Tax Revenues By Source
Last Ten Years
153
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154
2016 2017 2018 2019 2020
General Fund:
Reserved
Unreserved
Non-spendable 21,261 $ 66,700 $ 478,479 $ - $ - $
Restricted 329,890 158,149 170,336 - -
Committed 28,900 1,115,600 1,144,500 - -
Assigned 8,529,250 8,322,103 7,781,460 - -
Unassigned - - - 10,514,092 13,122,873
Total general fund 8,909,301 $ 9,662,552 $ 9,574,775 $ 10,514,092 $ 13,122,873 $ All other governmental funds:
Reserved
Unreserved, reported in:
Special revenue funds
Non-spendable 5,835 $ 7,083 $ 9,280 $ 2,310 $ - $
Restricted 3,430,617 5,102,759 7,677,889 5,561,493 6,399,757 Committed 1,305,276 879,008 1,144,884 1,024,954 1,405,179 Assigned 11,348,565 12,706,958 13,068,691 16,241,139 5,327,702 Unassigned - (24,138) - (111) 9,446,109
Total all other governmental funds 16,066,155 $ 18,695,808 $ 21,900,744 $ 22,829,785 $ 22,578,747 $ Total governmental funds 24,975,456 $ 28,358,360 $ 31,475,519 $ 33,343,877 $ 35,701,620 $ Note: GASB 54 was implemented in year ended June 30, 2011; prior years have no comparable data.
CITY OF HERMOSA BEACH
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
Fiscal Year
155
2021 2022 2023 2024 2025
General Fund:
Reserved
Unreserved
Non-spendable 560,718 $ 15,408 $ 622,095 $ 954,276 $ 1,102,047 $ Restricted 437,326 454,115 513,248 567,910 1,730,045
Committed 1,995,135 2,255,235 2,255,235 2,255,235 1,233,660 Assigned 10,669,958 13,879,982 13,059,368 13,272,035 13,283,523 Unassigned 5,834,252 4,046,666 2,700,989 - 2,944,264
Total general fund 19,497,389 $ 20,651,406 $ 19,150,935 $ 17,049,456 $ 20,293,539 $ All other governmental funds:
Reserved
Unreserved, reported in:
Special revenue funds
Non-spendable 15,179 $ - $ 18,325 $ 19,176 $ 14,692 $
Restricted 9,989,766 12,260,261 14,971,332 13,725,977 10,337,903 Committed 2,592,712 2,741,002 2,852,821 3,279,269 3,098,201 Assigned 10,646,352 9,412,839 12,331,476 16,426,314 13,089,113 Unassigned (1,059,597) (827,043) (2,138,529) (1,052,257) (1,331,160) Total all other governmental funds 22,416,966 $ 23,354,505 $ 28,035,425 $ 32,398,479 $ 25,208,749 $ Total governmental funds 41,914,355 $ 44,005,911 $ 47,186,360 $ 49,447,935 $ 45,502,288 $ Note: GASB 54 was implemented in year ended June 30, 2011; prior years have no comparable data.
CITY OF HERMOSA BEACH
Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting) (Continued)
Fiscal Year
156
2016 2017 2018 2019 2020
Revenues:
Property taxes 15,113,479 $ 16,209,008 $ 17,530,492 $ 18,565,796 $ 19,573,354 $ Other taxes 11,302,910 11,821,528 12,248,900 12,306,567 11,188,808 Licenses and permits 1,111,366 967,956 1,055,631 850,059 729,622 Fines and forfeitures 2,412,554 2,122,335 2,809,367 2,373,432 2,237,802 Use of money and property 965,738 1,047,084 1,340,018 1,952,941 1,069,049 Intergovernmental 949,255 1,031,191 358,523 1,062,434 1,333,882 Charges for services 8,130,681 8,412,322 9,259,210 8,303,529 7,346,217 Miscellaneous 679,937 540,021 249,152 634,114 673,546
Interest earned on investments 445,260 6,175 152,359 1,380,012 1,173,125 Total revenues 41,111,180 42,157,620 45,003,652 47,428,884 45,325,405 Expenditures
Current:
Legislative and legal 1,958,940 1,448,509 1,313,261 1,499,065 1,300,018 General government 3,458,191 3,722,659 3,751,020 4,274,743 4,850,826 Public safety 21,272,474 21,392,637 21,468,409 22,087,381 21,604,659 Community development 1,806,130 1,869,018 2,034,235 2,063,502 2,601,067 Culture and recreation 1,291,808 1,395,915 1,446,996 1,600,519 1,587,893 Public works 6,622,698 6,106,648 6,343,525 6,756,773 6,685,858 Capital outlay 2,953,123 1,644,253 2,164,817 6,058,710 4,863,984 Debt service:
Principal - 335,000 434,992 460,000 480,000
Interest 233,425 375,332 355,738 332,497 310,107
Total expenditures 39,363,364 38,289,971 39,312,993 45,133,190 44,284,412 Excess (deficiency) of revenues
over (under) expenditures 1,747,816 3,867,649 5,690,659 2,295,694 1,040,993 Other financing sources (uses)
Proceeds from sale of assets 11,799,905 - - - -
Transfers in 5,733,408 1,942,014 1,271,842 4,155,801 3,930,602 Transfers out (16,392,700) (2,356,750) (3,915,326) (4,583,137) (2,613,852) Proceeds from Subscriptions - - - - -
Total other financing
sources (uses) 1,140,613 (414,736) (2,643,484) (427,336) 1,316,750 Net change in fund balances 2,888,429 $ 3,452,913 $ 3,047,175 $ 1,868,358 $ 2,357,743 $ Debt service as a percentage of
noncapital expenditures 0.6% 2.0% 2.2% 2.1% 2.1%
Fiscal Year
CITY OF HERMOSA BEACH
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting)
157
2021 2022 2023 2024 2025
Revenues:
Property taxes 20,968,403 $ 21,922,948 $ 23,174,289 $ 24,973,329 $ 26,012,429 $ Other taxes 11,972,339 15,687,716 16,595,064 16,181,568 15,996,861 Licenses and permits 904,362 867,849 1,049,519 870,207 1,063,710 Fines and forfeitures 2,133,603 1,643,056 1,436,162 1,449,099 1,654,549 Use of money and property 1,542,571 1,461,133 1,951,194 1,218,084 1,830,293 Intergovernmental 1,324,163 3,427,949 3,877,989 3,648,226 2,037,303 Charges for services 7,543,716 8,585,682 8,920,954 11,501,579 11,296,246 Miscellaneous 196,138 850,282 637,368 887,555 1,288,596 Interest earned on investments 10,289 (1,015,424) (211,644) 2,512,545 3,525,131 Total revenues 46,595,584 53,431,191 57,430,895 63,242,192 64,705,118 Expenditures
Current:
Legislative and legal 1,474,436 1,329,719 1,538,192 1,536,996 1,792,165 General government 4,882,989 5,251,041 5,856,643 6,299,059 7,418,680 Public safety 22,155,535 24,971,084 25,474,408 27,020,271 28,124,014 Community development 2,177,790 2,146,386 2,081,527 2,329,128 2,425,164 Culture and recreation 1,338,693 1,913,671 1,992,148 2,233,376 2,553,684 Public works 6,581,335 7,945,832 9,070,353 10,468,773 14,486,027 Capital outlay 853,530 4,671,131 5,433,171 6,625,573 10,393,023 Debt service:
Principal 491,542 395,000 430,839 462,144 460,615
Interest 229,987 309,638 304,178 285,519 267,624
Total expenditures 40,185,837 48,933,502 52,181,459 57,260,839 67,920,996 Excess (deficiency) of revenues
over (under) expenditures 6,409,747 4,497,689 5,249,436 5,981,353 (3,215,878) Other financing sources (uses)
Proceeds from sale of assets - - - - -
Transfers in 4,504,242 6,933,843 7,278,839 7,499,745 1,545,195 Transfers out (4,504,242) (9,339,976) (9,412,204) (11,248,348) (2,274,964) Proceeds from Subscriptions - - 64,378 28,825 -
Total other financing
sources (uses) - (2,406,133) (2,068,987) (3,719,778) (729,769) Net change in fund balances 6,409,747 $ 2,091,556 $ 3,180,449 $ 2,261,575 $ (3,945,647) $ Debt service as a percentage of
noncapital expenditures 1.9% 1.4% 1.6% 1.5% 1.3%
Fiscal Year
CITY OF HERMOSA BEACH
Changes in Fund Balances of Governmental Funds
Last Ten Fiscal Years
(modified accrual basis of accounting) (Continued)
158
Fiscal Real
year property Transient Utility
ended Property Sales transfer Franchise occupancy user's June 30 tax tax tax fees tax tax Other Total
2016 15,113,479 2,895,794 320,731 776,316 2,762,444 2,388,824 2,290,061 26,547,649 2017 16,209,008 2,886,298 345,603 720,338 3,237,026 2,302,024 2,330,238 28,030,538 2018 17,530,492 3,151,207 326,224 722,316 3,295,207 2,229,906 2,524,040 29,779,392 2019 18,565,796 3,133,311 272,138 720,853 3,251,349 1,495,815 3,433,101 30,872,363 2020 19,573,354 2,722,468 313,331 717,191 2,599,810 2,093,903 2,742,105 30,762,162 2021 20,968,403 3,192,853 453,596 721,090 2,552,964 2,171,538 3,580,298 33,640,742 2022 21,922,948 3,848,960 685,820 757,448 4,730,760 2,369,269 3,332,094 37,647,299 2023 23,174,289 3,621,875 338,528 823,981 5,151,136 2,761,918 3,897,626 39,769,353 2024 24,973,329 3,772,564 319,702 927,439 4,942,254 2,741,200 3,478,409 41,154,897 2025 26,012,429 3,493,656 392,143 1,035,378 4,759,609 2,851,044 3,465,031 42,009,290 (modified accrual basis of accounting)
CITY OF HERMOSA BEACH
General Government Tax Revenues By Source
Last Ten Fiscal Years
159
Fiscal Total Estimated
year Total taxable direct actual
ended Residential Commercial Industrial Less assessed tax taxable Percentage June 30 property property property Other exemptions value rate value increase 2016 5,522,546 484,979 13,186 111,635 (43,260) 6,089,089 1.00 6,045,828 6.62% 2017 5,994,296 508,160 13,921 120,700 (43,295) 6,593,784 1.00 6,550,489 8.29% 2018 6,432,195 532,168 14,242 145,238 (41,125) 7,082,716 1.00 7,041,591 7.42% 2019 6,837,257 566,389 15,437 162,374 (41,043) 7,540,415 1.00 7,499,372 6.46% 2020 7,218,636 599,922 16,254 181,411 (26,930) 7,989,293 1.00 7,962,363 5.95% 2021 7,682,189 624,581 17,697 149,144 (34,812) 8,459,799 1.00 8,424,987 5.89% 2022 7,995,527 658,655 16,545 197,187 (31,914) 8,836,000 1.00 8,804,087 4.45% 2023 8,501,986 686,782 16,876 207,849 (33,766) 9,379,727 1.00 9,345,962 6.15% 2024 9,180,945 758,520 17,214 238,817 (29,748) 10,174,748 1.00 10,145,000 8.48% 2025 9,637,781 821,050 20,400 226,765 (32,710) 10,673,285 1.00 10,640,575 4.90% NOTE:
Source: Los Angeles County Auditor-Controller
Note: Assessed valuations available from the County of Los Angeles are based on 100% of full value per Section 135 of the California Revenue and Taxation Code.
CITY OF HERMOSA BEACH
Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years
(In Thousands)
In 1978, the voters of the State of California passed Proposition 13 which limited taxes to a total maximum rate of 1% based upon the assessed value of the property being taxed. Each year, the assessed value of property may be increased by an "inflation factor" (limited to a maximum of 2%). With few exceptions, property is only reassessed as a result of new construction activity or at the time it is sold to a new owner. At that point, the property is reassessed based upon the added value of the construction or at the purchase price (market value) or economic value of the property sold. The assessed valuation data shown above represents the only data currently available with respect to the actual market value of taxable property and is subject to the limitations described above. 160
City
direct rate Overlapping rates
El Camino Flood
Fiscal Basic Hermosa Beach Community Los Angeles Control Metropolitan Year rate * School District College District County District Water District Total 2016 1.000000 0.015746 0.017447 - - 0.003500 1.036693
2017 1.000000 0.014928 0.022942 - - 0.003500 1.041370
2018 1.000000 0.040245 0.021199 - - 0.003500 1.064944
2019 1.000000 0.025942 0.022229 - - 0.003500 1.051671
2020 1.000000 0.039696 0.021555 - - 0.003500 1.064751
2021 1.000000 0.039111 0.023624 - - 0.003500 1.066235
2022 1.000000 0.035275 0.022639 - - 0.003500 1.061414
2023 1.000000 0.034923 0.022989 - - 0.003500 1.061412
2024 1.000000 0.034953 0.021160 - - 0.003500 1.059613
2025 1.000000 0.033242 0.021012 - - 0.007000 1.061254
Source: Los Angeles County Auditor-Controller
CITY OF HERMOSA BEACH
Direct and Overlapping Property Tax Rates
Last Ten Fiscal Years
(rate per $100 of assessed value)
Note: In 1978 California voters passed Proposition 13 which set the property tax rate at a 1.00% fixed amount. The 1.00% is shared by all taxing agencies wherein the subject property resides. In addition to the 1.00% fixed amount, property owners are charged taxes as a percentage of assessed property values for the payment of any voter approved bonds. * The Basic rate for all years is comprised of the following:
0.2774 - Los Angeles County
0.2030 - Tax District # 1
0.1602 - Educational Augmentation Fund Impound
0.0849 - Educational Revenue Augmentation Fund
0.0541 - Hermosa Beach City School District
0.0526 – Redondo Beach Unified School District
0.0281 - Development Center Handicapped Minor – Redondo Beach
0.0275 - El Camino Community College District
0.0264 – Manhattan Beach Unified School District
0.0210 - Los Angeles County Library
0.01410 – Development Center Handicapped Minor – Manhattan Beach
0.01203 - South Bay Cities Sanitation District Operating
0.00861 - Los Angeles County Flood Control Maintenance
0.00859 - County School Service Fund – Hermosa Beach
0.00827 - Beach Cities Hospital District
0.00637 – Los Angeles County FFW
0.00258 - Childrens Instil. Tuition Fund
0.00152 - Los Angeles Flood Drain Improvement District Maintenance
0.00130 - County School Services
0.00094 – Development Center Handicapped Minor – Hermosa Beach C
0.00019 - Los Angeles County West Vector Control District
0.00016 - Water Replenishment District of Southern California
0.00010 - Los Angeles County Accumulated Capital Outlay
1.0000000
161
Percent of total
Taxable city taxable
assessed value assessed value
415 Herondo Street Ground Owner LP (1) 169,303,792 $ 1.59% 414 2nd Street Ground Owner LP (1) 117,362,138 1.10%
Manhattan Avenue Properties LLC (5) 39,238,307 0.37%
Park Pacific Realty Partners LP (3) 37,397,219 0.35%
Hermosa Pier and Strand LLC (7) 31,803,402 0.30%
South Bay LLC (7) 29,474,223 0.28%
1601 PCH LP (1) 28,837,704 0.27%
Sailfish Holdings LLC (3) 22,887,833 0.21%
Skechers USA Inc (1) 22,094,434 0.21%
Hermosa Hotel Investments LLC (1) 20,843,328 0.20%
$ 4.86% 519,242,380
Percent of total
Taxable city taxable
assessed value assessed value
$ 1.28% 78,024,766
EQR Gallery Apartments LPp (1) 69,853,155 1.15%
1601 PCH LP (1) 24,518,113 0.40%
Strand and Pier Hermosa Parent LLC (4) 20,019,902 0.33% Hermosa Hotel Investments LLC (1) 17,259,731 0.28%
Sepulveda Blvd Properties LLC (6) 16,962,712 0.28%
South Bay III LLC (1) 16,218,688 0.27%
Reg8 Plaza Hermosa LLC (7) 15,326,982 0.25%
Johnny and Elizabeth Lopez Trust (1) 15,095,704 0.25%
IWF Hotel Hermosa LP (1) 15,063,966 0.25%
$ 4.74% 288,343,719
Source: HdL Coren & Cone, Los Angeles County Assessor Combined Tax Rolls Numbers in parentheses represent the number of parcels owned by the tax payer.
CITY OF HERMOSA BEACH
Principal Property Tax Payers
Current Year and Ten Years ago
Taxpayer
Crico of Fountain Place LP (1)
Taxpayer
2016
2025
162
Fiscal Taxes levied Collections in
year ended for the Percent subsequent Percent
June 30 fiscal year Amount of levy years Amount of levy 2016 12,879,664 12,577,259 97.65% 12,577,259 97.65%
2017 13,875,400 13,547,393 97.64% 13,547,393 97.64%
2018 14,957,019 14,575,846 97.45% 14,575,846 97.45%
2019 15,894,003 15,455,825 97.24% 15,455,825 97.24%
2020 16,884,378 16,257,197 96.29% 16,257,197 96.29%
2021 17,849,937 17,293,022 96.88% 17,293,022 96.88%
2022 18,585,314 18,052,702 97.13% 18,052,702 97.13%
2023 19,634,765 19,105,717 97.31% 19,105,717 97.31%
2024 20,796,127 21,450,615 96.95% 20,796,127 96.95%
2025 21,645,101 22,510,277 96.16% 21,645,101 96.16%
Source: Los Angeles County Auditor-Controller
fiscal year of levy Total collections to date
CITY OF HERMOSA BEACH
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected within the
163
Fiscal
year ended Number of Number of Total assessed
June 30 permits Valuation permits Valuation value
2016 554 44,224,105 68 9,283,387 6,089,089,031
2017 448 37,467,738 40 4,791,924 6,593,783,921
2018 475 30,748,372 44 6,234,344 7,082,716,558
2019 422 40,170,245 38 2,785,223 7,540,414,646
2020 388 31,076,905 43 4,961,480 7,989,293,188
2021 806 24,132,281 63 27,325,785 8,459,798,643
2022 384 37,378,630 30 6,463,748 8,836,000,467
2023 538 40,525,944 58 35,274,799 9,379,727,251
2024 564 38,975,840 58 4,823,196 10,174,748,050
2025 572 44,935,145 59 4,847,187 10,174,748,050
Source: City of Hermosa Beach Community Development Department Los Angeles County Auditor-Controller
Residential Commercial
CITY OF HERMOSA BEACH
Construction Value and Property Value
Last Ten Fiscal Years
164
City assessed valuation 10,673,285,822 $
Redevelopment agency incremental valuation -
Total assessed valuation 10,673,285,822 $
Estimated
share of
Percentage Outstanding debt overlapping
applicable 6/30/25 debt
Overlapping debt repaid with property taxes:
West Basin Water District debt service 0.262% 17,155,000 44,946 Hermosa Beach School District debt service 100.000% 56,706,348 56,706,348 El Camino Community College District debt service 6.753% 480,045,366 32,417,464 Total overlapping debt repaid with property taxes 553,906,714 $ 89,168,758 City direct debt:
2015 Lease Revenue Bonds (including premiums) 7,397,638 $ Subscription Agreements 327,425
Total City direct debt 7,725,063
Total direct and overlapping debt $ 96,893,821
Direct Debt 0.072%
Overlapping Debt 0.835%
Total Debt 0.908%
Source: HdL Coren & Cone
Los Angeles County Assessor's Office
The percentage of overlapping debt applicable is estimated by using taxable assessed values. Applicable percentages were estimated by determining the portion of another governmental unit's taxable assessed value that is within the city's boundaries and dividing it by each unit's total taxable assessed value.
CITY OF HERMOSA BEACH
Direct and Overlapping Debt
June 30, 2025
165
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166
2016 2017 2018 2019 2020
Assessed valuation 6,089,089,031 $ 6,593,783,921 $ 7,082,716,558 $ 7,540,414,646 $ 7,989,293,188 $ Conversion percentage 25% 25% 25% 25% 25%
Adjusted assessed valuation 1,522,272,258 $ 1,648,445,980 $ 1,770,679,140 $ 1,885,103,662 $ 1,997,323,297 $ Debt limit percentage 15% 15% 15% 15% 15%
Debt limit 228,340,839 $ 247,266,897 $ 265,601,871 $ 282,765,549 $ 299,598,495 $ Total net debt applicable to limit 11,500,000 $ 11,265,000 $ 10,830,000 $ 10,370,000 $ 9,890,000 $ Legal debt margin 239,840,839 $ 236,001,897 $ 254,771,871 $ 272,395,549 $ 289,708,495 $ Total debt applicable to the limit
as a percentage of debt limit 5.3% 4.7% 4.3% 3.8% 3.4%
valuation. This provision was enacted when assessed valuation was based on 25% of market value. Effective fiscal year 1981-82, each parcel was assessed based on 100% of market value as of the most recent change in ownership. The computations shown above convert the assessed valuation data for each fiscal year from the full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted.
Source: City of Hermosa Beach Finance Department
County of Los Angeles, Auditor-Controller
California Government Code section 43605 provides for a legal debt limit of 15% Fiscal Year
CITY OF HERMOSA BEACH
Legal Debt Margin Information
Last Ten Fiscal Years
167
2021 2022 2023 2024 2025
Assessed valuation 8,459,798,643 $ 8,836,000,467 $ 9,379,727,251 $ 10,174,748,050 $ 10,673,285,822 $ Conversion percentage 25% 25% 25% 25% 25%
Adjusted assessed valuation 2,114,949,661 $ 2,209,000,117 $ 2,344,931,813 $ 2,543,687,013 $ 2,668,321,456 $ Debt limit percentage 15% 15% 15% 15% 15%
Debt limit 317,242,449 $ 331,350,018 $ 351,739,772 $ 381,553,052 $ 400,248,218 $ Total net debt applicable to limit 8,150,000 $ 7,755,000 $ 7,340,000 $ 6,905,000 $ 6,455,000 $ Legal debt margin 309,092,449 $ 323,595,018 $ 344,399,772 $ 374,648,052 $ 393,793,218 $ Total debt applicable to the limit
as a percentage of debt limit 2.6% 2.4% 2.1% 1.8% 1.6%
valuation. This provision was enacted when assessed valuation was based on 25% of market value. Effective fiscal year 1981-82, each parcel was assessed based on 100% of market value as of the most recent change in ownership. The computations shown above convert the assessed valuation data for each fiscal year from the full valuation perspective to the 25% level that was in effect at the time that the legal debt margin was enacted.
Source: City of Hermosa Beach Finance Department
County of Los Angeles, Auditor-Controller
Fiscal Year
California Government Code section 43605 provides for a legal debt limit of 15% of gross assessed
CITY OF HERMOSA BEACH
Legal Debt Margin Information
Last Ten Fiscal Years (Continued)
168
Fiscal Year Ended
June 30
Lease Revenue
Bonds
Subscription
Liabilities
Total Government
Activities
Total Primary
Government
Percentage of
Personal
Income1
Per Capita
Debt2
2016 11,464,040 $ - $ 11,464,040 $ 11,464,040 $ 0.97% 579 2017 11,008,280 $ - $ 11,008,280 $ 11,008,280 $ 1.01% 561 2018 10,537,892 $ - $ 10,537,892 $ 10,537,892 $ 1.15% 536 2019 10,047,508 $ - $ 10,047,508 $ 10,047,508 $ 1.24% 506 2020 9,537,124 $ - $ 9,537,124 $ 9,537,124 $ 1.43% 486
2021 9,721,058 $ - $ 9,721,058 $ 9,721,058 $ 1.47% 500
2022 9,168,953 $ - $ 9,168,953 $ 9,168,953 $ 1.57% 478
2023 8,596,848 $ 91,969 $ 8,688,817 $ 8,688,817 $ 1.72% 452 2024 8,004,743 $ 21,395 $ 8,026,138 $ 8,026,138 $ 1.38% 420 2025 7,397,638 $ 327,425 $ 7,725,063 $ 7,725,063 $ 2.15% 406 Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements 1 This ratio is calculated using the median household income for the prior calendar year. 2 This ratio is calculated using the population total as of January 1 of the calendar year.
Governmental Activities
CITY OF HERMOSA BEACH
Ratios of Outstanding Debt by Type
Last Ten Calendar Years
169
Fiscal Year Ended
June 30
Lease Revenue
Bonds Total
Percent Assessed
Value1 Per Capita
2016 11,464,040 $ 11,464,040 $ 0.17% 579
2017 11,008,280 $ 11,008,280 $ 0.16% 561
2018 10,537,892 $ 10,537,892 $ 0.14% 536
2019 10,047,508 $ 10,047,508 $ 0.13% 506
2020 9,537,124 $ 9,537,124 $ 0.11% 486
2021 9,721,058 $ 9,721,058 $ 0.11% 500
2022 9,168,953 $ 9,168,953 $ 0.10% 478
2023 8,596,848 $ 8,596,848 $ 0.08% 452
2024 8,004,743 $ 8,004,743 $ 0.07% 419
2025 7,397,638 $ 7,397,638 $ 0.07% 389
1 Assessed value has been used because actual value of taxable property is not readily available in the State of California.
CITY OF HERMOSA BEACH
Ratios of General Bonded Debt Outstanding
Last Ten Calendar Years
Outstanding General Bonded Debt
(In thousands, except per capita)
Note: General bonded is debt payable with government fund resources and general obligation bonds recorded in enterprise funds (of which, the City has none).
170
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171
Personal income Per capita City per capita Unemployment School Calendar Population (in thousands) personal income personal income rate enrollment Year (1) (2) (2) (3) (4) (5)
2016 19,801 544,324,900 53,521 - 2.2% 1,765
2017 19,616 563,907,868 55,624 - 1.9% 1,672
2018 19,673 593,741,110 58,419 - 2.2% 1,576
2019 19,847 628,808,732 62,224 - 2.2% 1,568
2020 19,614 653,482,910 65,094 - 10.2% 1,593
2021 19,451 678,829,092 68,272 - 7.0% 1,414
2022 19,171 728,772,915 74,141 - 3.2% 1,432
2023 19,018 720,740,528 74,142 - 3.2% 1,513
2024 19,088 756,659,481 78,302 - 3.6% 1,578
2025 19,014 818,509,319 83,888 - 4.7% 1,655
Source:
(1) State of California Department of Finance.
(2) U.S. Department of Commerce, Bureau of Economic Analysis (data shown is for Los Angeles County), which was last updated in 2023.
(3) Personal Income figures for 2008 are from the Internal Revenue Service individual income tax statistics by zip code and for Internal Revenue Service figures are not an ongoing statistical project therefore all years are not available. Census information is available every 10 years, however 2010 information is not yet available. (4) State of California Employment Development Department. (5) State of California Department of Education.
CITY OF HERMOSA BEACH
Demographic and Economic Statistics
Last Ten Calendar Years
172
Number of Percent of total
Employer employees employment
City of Hermosa Beach 183 4.30%
Hermosa Beach City School District 161 3.78%
Killian Communications 126 2.96%
Lazy Acres 2.82% 120
Von's 2.63% 112
Trader Joe's 2.58% 110
Sunrise Assisted Living 81 1.90%
Hennessey's Tavern 1.62% 69
Marlin Equity Partners 69 1.62%
Hammitt Los Angeles 1.43% 61
Number of Percent of total
Employer employees employment
City of Hermosa Beach 189 4.75%
24 Hour Fitness 4.57% 182
Von's 2.89% 115
Sangira / American Junkie 94 2.36%
Hermosa Beach City School District 89 2.24%
Hennessey's Tavern 2.13% 85
Intensive Behavior Intervention Consultants LLC 81 2.03% Firststeps for Kids, Inc. 78 1.96%
HYFN 1.61% 64
Patrick Molloy's 1.38% 55
Source: City of Hermosa Beach Administrative Services Department 2025
2016
CITY OF HERMOSA BEACH
Principal Employers
Current Year and Ten Years Ago
173
Function 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 General government 20 21 21 20 20 20 21 24 26 27
Public safety 82 76 63 1 64 1 65 1 71 1 57 1 61 1 62 1 65 1 Community development 10 11 12 11 12 12 10 12 13 12
Culture and recreation 4 4 4 4 4 4 3 6 6 8
Public works 23 23 21 20 22 22 26 27 34 32
Total 139 135 121 119 123 129 117 130 141 144
Function 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 General government 6 4 5 10 5 9 11 3 3 5
Public safety 14 5 3 1 3 1 2 1 1 1 2 1 6 1 3 1 4 1
Community development 2 3 2 4 3 2 1 - - -
Culture and recreation 27 29 25 40 9 23 22 24 27 28
Public works 1 3 2 3 3 5 3 5 3 2
Total 50 44 37 60 22 40 39 38 36 39
Source: City of Hermosa Beach Finance Department
1 Beginning 12/30/17, Fire Services are now provided by Los Angeles Co. Fire Department.
CITY OF HERMOSA BEACH
Full-time and Part-time City Employees by Function
Last Ten Fiscal Years
Full-time employees as of June 30
Part-time employees as of June 30
174
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Public safety
Police:
Physical arrests 739 615 589 536 389 492 1,029 1,223 996 955 Traffic citations issued 1,966 1,826 1,408 1,154 498 629 1,838 1,843 2,287 2,880 Parking citations issued 62,957 56,398 57,206 66,029 66,029 59,861 44,907 46,526 43,307 47,894 Fire:
Number of emergency calls1 2,427 2,678 1,965 1,549 2,344 2,506 2,578 1,991 1,962 1,553 Inspections2 611 540 227 - - - - - - -
Community development:
Building permits issued 622 488 519 460 431 977 3 414 3 596 3 622 3 631 3 Culture and recreation:
Number of recreation classes 526 498 617 422 431 598 662 702 636 415 Total enrollment 4,947 4,817 5,271 5,109 3,050 3,530 5,564 5,521 5,341 5 5,537 Public works:
Graffiti removal 200 112 201 4 148 4 49 4 36 4 19 4 17 4 35 4 21 4 Permits issued 1,406 1,496 1,617 1,615 2,717 3,482 4,971 2,342 809 801 Source: Various city departments.
Note:
1 Beginning 12/30/17, Fire Services are now provided by Los Angeles Co. Fire Department 2 Fire Department Inspections were done by the City from 7/1/17 through 12/29/17. As of 12/30/17, these inspections are no longer provided by the City.
3 A new software program was added to issue permits in the 2020-21 fiscal year. The software does not break down by type of permit issued at this time.
4 Beginning in 2017-18, Graffit removal reflects the number of services calls due to a change in reporting software. All prior fiscal years reflect graffiti removal hours.
5 The total for FY24 has been corrected. The original total listed (10,511) was incorrect due to a software issue.
Fiscal Year
CITY OF HERMOSA BEACH
Operating Indicators by Function
Last Ten Fiscal Years
175
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Public safety
Police:
Police stations 1111111111
Parking meters 1,553 1,557 1,558 1,558 1,558 1,558 1,570 1,599 1,599 1,595 Fire:
Fire stations 1111111111
Culture and recreation
Community centers 1111111111
Community theatres 1111111111
Public works:
Beach (acres) 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 36.5 Greenbelt (acres) 19.5 19.5 19.5 19.5 19.5 19.5 19.5 19.5 19.5 19.5 Parks 20 20 20 20 20 20 20 20 20 20
Parks (acres) 21.7 21.7 21.7 21.7 21.7 21.7 21.7 21.7 21.7 21.7 Sanitary sewers (miles) 40 40 40 40 40 37 37 37 37 37
Streets (miles) 40 40 40 40 40 40 40 40 40 40
Streetlights 400 400 400 400 400 400 400 400 400 400
Storm drains (miles) 2222222222
Traffic Signals 19 19 19 19 19 19 19 19 19 19
Infiltration (miles)1 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Source: City of Hermosa Beach Finance Department
1 This is a system for monitoring the water quality before it reached the Pacific Ocean. The project was funded by a Federal ARRA Grant passed through the California State Water Control Board. Grant approval required the submission on an ongoing monitoring plan that was accepted by the grantor.
The project received an award from the American Public Works Association in 2010.
CITY OF HERMOSA BEACH
Capital Asset Statistics by Function
Last Ten Fiscal Years
Fiscal Year
176
OTHER REPORTS
177
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178
438 Old Newport Blvd – Newport Beach, CA 92663
Phone (949) 346-2900 – www.gruberlopezinc.com
179
Honorable Mayor and City Council
City of Hermosa Beach
Hermosa Beach, California
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND
ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Hermosa Beach, California as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise City of Hermosa Beach’s basic financial statements, and have issued our report thereon dated March 31, 2026.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City of Hermosa Beach's internal control over financial reporting (internal control) as a basis for designing the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Hermosa Beach’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of Hermosa Beach’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
180
Honorable Mayor and City Council
City of Hermosa Beach
Page Two
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Hermosa Beach's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Gruber and Lopez, Inc.
Newport Beach, California
March 31, 2026
Gruber and Lopez, Inc.
City of Hermosa Beach
Single Audit Report on Schedule of Expenditures of Federal Awards June 30, 2025
CITY OF HERMOSA BEACH
Single Audit Report on Schedule of Expenditures of Federal Award Programs June 30, 2025
TABLE OF CONTENTS
Page
Report on Internal Control Over Financial Reporting
and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in
Accordance with Government Auditing Standards 1
Report on Compliance for Each Major
Program and on Internal Control Over Compliance
Required by the Uniform Guidance 3
Schedule of Expenditures of Federal Awards 6
Notes to Schedule of Expenditures of Federal Awards 7
Schedule of Findings and Questioned Costs 8
Summary Schedule of Prior Audit Findings 9
438 Old Newport Blvd, Newport Beach, CA 92663
Phone (949) 346-2900 –www.gruberlopezinc.com
1 Honorable Mayor and City Council
City of Hermosa Beach
Hermosa Beach, California
INDEPENDENT AUDITORS’ REPORT ON INTERNAL CONTROL OVER FINANCIAL
REPORTING AND ON COMPLIANCE AND
OTHER MATTERS BASED ON AN AUDIT OF
FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of City of Hermosa Beach, California (City) as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise City of Hermosa Beach’s basic financial statements, and have issued our report thereon dated March 31, 2026.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City of Hermosa Beach’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Hermosa Beach’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of Hermosa Beach’s internal control.
A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses.
However, material weaknesses may exist that have not been identified.
2 Honorable Mayor and City Council
City of Hermosa Beach
Page Two
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Hermosa Beach’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.
Gruber and Lopez, Inc.
Newport Beach, California
March 31, 2026
Gruber and Lopez, Inc.
438 Old Newport Blvd, Newport Beach, CA 92663
Phone (949) 346-2900 –www.gruberlopezinc.com
3 Honorable Mayor and City Council
City of Hermosa Beach
Hermosa Beach, California
INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON
INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Report on Compliance for Each Major Federal Program
Opinion on Each Major Federal Program
We have audited City of Hermosa Beach CA’s compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of City of Hermosa Beach CA’s major federal programs for the year ended June 30, 2025.
City of Hermosa Beach CA’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs.
In our opinion, City of Hermosa Beach CA complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2025.
Basis for Opinion on Each Major Federal Program
We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor’s Responsibilities for the Audit of Compliance section of our report.
We are required to be independent of City of Hermosa Beach CA and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of City of Hermosa Beach CA’s compliance with the compliance requirements referred to above.
Responsibilities of Management for Compliance
Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to City of Hermosa Beach CA’s federal programs.
Auditor’s Responsibilities for the Audit of Compliance
Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on City of Hermosa Beach CA’s compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
4 Honorable Mayor and City Council
City of Hermosa Beach
Page Two
Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about City of Hermosa Beach CA’s compliance with the requirements of each major federal program as a whole.
In performing an audit in accordance with generally accepted auditing standards, Government Auditing Standards, and the Uniform Guidance, we:
Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding City of Hermosa Beach CA’s compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances.
Obtain an understanding of City of Hermosa Beach CA’s internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of City of Hermosa Beach CA’s internal control over compliance. Accordingly, no such opinion is expressed.
We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit.
Report on Internal Control over Compliance
A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in the Auditor’s Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified.
Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed.
5 Honorable Mayor and City Council
City of Hermosa Beach
Page Three
Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, each major fund, and the aggregate remaining fund information of City of Hermosa Beach CA, as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise City of Hermosa Beach CA’s basic financial statements. We issued our report thereon dated March 31, 2026, which contained unmodified opinions on those financial statements. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is not a required part of the basic financial statements.
Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole.
The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of Uniform Guidance. Accordingly, this report is not suitable for any other purpose.
Gruber and Lopez, Inc.
Newport Beach, California
March 31, 2026
Gruber and Lopez, Inc.
Federal Program Federal Amount
Federal Grantor/ Assistance Identification Award Provided to Pass-through Grantor/Program Listing Number Expenditures Subrecipients U.S. Department of Housing and Urban Development
Passed through the Los Angeles County Development Auhtority:
Community Development Block Grant/ Entitlement Grant Cluster 14.218 B-25-UC-06-0505 $ 109,740 - Total U.S. Department of Housing and Urban Development 109,740 - U.S. Department of Justice
Direct assistance:
Public Safety Partnership and Community Policing Grants 16.710 15JCOPS-24-GG-02110-TECP 151,939 Equitable Sharing Programs 16.922 CA-0192900 100,009
Total U.S. Department of Justice 251,948 -
U.S. Department of Treasury
Direct assistance:
Equitable Sharing Programs 21.016 CA-0192900 15,963 -
Total U.S. Department of Treasury 15,963 -
U.S. Department of Health and Human Services
Direct assistance:
Community Funded Project Flex Grant 93.493 6H79FG000946-01M002 * 464,819 464,819 Total U.S. Department of Health and Human Services 464,819 464,819 Total Federal Awards $ 842,470 464,819
*
Denotes major federal program.
CITY OF HERMOSA BEACH
Schedule of Expenditures of Federal Awards
For the Year Ended June 30, 2025
6 See accompanying notes to schedule of expenditures of federal awards.
7 CITY OF HERMOSA BEACH
Notes to the Schedule of Expenditures of Federal Awards June 30, 2025
(1) Summary of Significant Accounting Policies Applicable to the Schedule of Expenditures of Federal Awards
The financial reporting entity, as defined by Governmental Accounting Standard Board (GASB), consists of the primary government, which is the City of Hermosa Beach, California (City), entities for which the primary government is financially accountable, and other entities for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity’s financial statements to be misleading or incomplete.
The City Council acts as the governing body and is able to impose its will on the following entities by establishing financial accountability:
Hermosa Beach Public Financing Authority
(a) Scope of Presentation
The accompanying schedule presents only the expenditures incurred by the City of Hermosa Beach (City) that are reimbursable under federal programs of federal agencies providing financial assistance. For purposes of this schedule, financial assistance includes both federal financial assistance received directly from a federal agency and expended, as well as federal funds received indirectly by City of Hermosa Beach from a non-federal agency and expended. Only the portion of program expenditures reimbursable with such federal funds are reported in the accompanying schedule.
Program expenses in excess of the maximum federal reimbursement authorized or the portion of program expenses that were funded with state, local or other non-federal funds are excluded from the accompanying schedule.
(b) Basis of Accounting
Funds received under the various grant programs have been recorded within the general fund and special revenue funds of the City. The City utilizes the modified accrual basis of accounting for governmental funds. The accompanying schedule of expenditures of federal awards is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Office of Management and Budget Uniform Grant Guidance).
(c) De Minimus Indirect Cost Rate
The City elected to use the 10% de minimus indirect cost rate for the year ended June 30, 2025, however, no indirect cost rates were charged to any federal programs. (d) Subrecipients
The following payments were made to subrecipients for the year ended June 30, 2025:
HB Cares (Assistance Listing #93.493) $464,819
8 CITY OF HERMOSA BEACH
Schedule of Findings and Questioned Costs
Year ended June 30, 2025
Summary of Auditors’ Results
A) Findings Related to the Financial Statements which are Required to be Reported in Accordance with GAGAS
1. An unmodified report was issued by the auditors on the financial statements of the auditee.
2. There were no material weaknesses in internal control nor were there any significant deficiencies.
3. There were no instances of noncompliance or other matters that were required to be reported under Government Auditing Standards.
(B) Findings and Questioned Costs for Federal Awards as Defined in 2 CFR 200.515(d)
4. There were no material weaknesses or significant deficiencies in internal control over federal major programs of the auditee.
5. An unmodified report was issued by the auditors on compliance for federal major programs.
6. The audit disclosed no audit findings of federal awards required by the auditors to be reported under 2 CFR 200.515(d)
7. The major federal program of the auditee was Assistance Listing #93.493 U.S. Department of Health and Human Services – Community Funded Project Flex Grant.
8. The dollar threshold used to distinguish Type A and Type B programs was $750,000 under 2 CFR 200.518 (b) (1).
9. The auditee was not considered a low risk auditee as defined by 2 CFR 200.518 for the year ended June 30, 2025 for purposes of determining major programs.
9 CITY OF HERMOSA BEACH
Summary Schedule of Prior Year Audit Findings
Year ended June 30, 2025
There were no findings noted for fiscal year June 30, 2024 that required follow up procedures.
City of Hermosa Beach | Page 1 of 4
Meeting Date: April 14, 2026
Staff Report No. 26-PW-019
Honorable Mayor and Members of the Hermosa Beach City Council
ADOPT A RESOLUTION AND AWARD A CONSTRUCTION CONTRACT FOR CAPITAL IMPROVEMENT PROJECT (CIP) 626 COMMUNITY DEVELOPMENT
BLOCK GRANT (CDBG) IMPROVEMENTS (PROJECT)
CEQA: Determine that the Project is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301 (Existing Facilities), Class 1.
The proposed work involves the repair and minor alteration of existing sidewalks and curb ramps to ensure Americans with Disabilities Act (ADA) compliance without expanding its use or capacity, and staff further recommends that the City file a Notice of Exemption in accordance with CEQA Guidelines Section 15062. (Public Works Director Joe SanClemente)
Recommended Action:
Staff recommends City Council:
1. Determine that the Project is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15301 (Existing Facilities), Class 1. The proposed work involves the repair and minor alteration of existing sidewalks and curb ramps to ensure Americans with Disabilities Act (ADA) compliance without expanding its use or capacity, and staff further recommends that the City file a Notice of Exemption in accordance with CEQA Guidelines Section 15062;
2. Award a construction contract for the Project to TVR Construction Engineering, LLC (TVR) in the amount of $89,285 (Attachment 1);
3. Authorize the Director of Public Works to establish a Project contingency amount of $17,857 (approximately 20% of the contract amount) and approve contract change orders up to the amount of the approved Project contingency;
4. Adopt the attached Resolution approving the construction of the Project, awarding a public works contract, and establishing a Project payment account” (Attachment 2);
5. Authorize the City Manager to execute the construction contract and proposed contract amendment, approve minor modifications if necessary, and execute all related documents, with the City Clerk attesting the agreements subject to approval by the City Attorney;
6. Authorize the Director of Public Works to file a Notice of Completion following final completion of the project; and
City of Hermosa Beach | Page 2 of 4
7. Authorize the Director of Public Works, or designee, to file a Notice of Exemption with the Los Angeles County Clerk in accordance with CEQA Guidelines Section 15062.
Executive Summary:
The Project involves the reconstruction of 11 curb ramps and 419 square feet of existing sidewalk along Monterey Boulevard. This Project will improve pedestrian safety and accessibility along Monterey Boulevard by upgrading infrastructure to comply with ADA requirements. Staff received 11 bids for the construction of the project and recommends City Council award a construction contract to the lowest responsible and responsive bidder (TVR).
Background:
The Project is located along Monterey Boulevard, between Herondo Steet and 10th Street.
The existing curb ramps and sidewalks do not meet current ADA standards and pose potential trip hazards. This Project will improve pedestrian safety and accessibility along Monterey Boulevard by upgrading infrastructure to comply with ADA requirements. These improvements will benefit the public, particularly those with mobility challenges, ensuring safer and more inclusive pedestrian access.
Analysis:
On January 22, 2026, the City issued Notice Inviting Bids 26-001 inviting experienced contractors to submit a bid for the Project. The Project was advertised for formal competitive bids in the local newspaper, on the City’s electronic bidding platform Planet Bids, and in relevant construction trade journals for a period of three weeks. On February 12, 2026, the City Clerk received a total of 11 bids, which were opened and read aloud by the City Clerk. The bid results are provided in (Attachment 3) and summarized below.
BIDDER BID AMOUNT
TVR Construction Engineering, LLC $89,285.00
S&H Civilworks $105,123.00
C J Concrete Construction, Inc $105,823.00
SAVI Construction Inc. $109,408.50
Pavement Rehab Company $117,400.00
All American Building Services $130,460.00
Gentry General Engineering Inc. $132,851.00
Jerusalem Construction Inc $139,979.74
Global Builders Inc $149,880.00
POLO Engineering, Inc $150,131.00
Mendoza Engineering Company, Inc $177,053.00
City of Hermosa Beach | Page 3 of 4
Staff reviewed the bids received and found TVR (the lowest bidder) to be the responsive and responsible bidder, with a bid in the amount of $89,285 (Attachment 4). Staff confirmed that TVR’s contractor license is active and in good standing with the Contractor’s State License Board. Staff contacted references and confirmed competency through completion of recent projects of similar types of work within the past five years.
Staff also verified that TVR meets applicable public works requirements, including registration with the California Department of Industrial Relations, and is not listed on any state of Federal debarment lists. Overall, staff finds TVR to be a qualified contractor to complete the Project and recommends City Council approve award of the construction contract.
Environmental Analysis:
This Project is exempt under CEQA Class 15301 (“Existing Facilities”) because it involves the repair and minor alteration of existing sidewalks and curb ramps to ensure ADA compliance. The work is focused on maintaining and improving current infrastructure without expanding its use or capacity. The Project will occur within the existing public right-of-way and does not expand the footprint, capacity, or use of the existing facilities.
Additionally, staff has determined that none of the exceptions to categorical exemptions under CEQA Guidelines Section 15300.2 apply (including exceptions related to cumulative impacts, unusual circumstances, scenic highways, hazardous waste sites, or historical resources).
Fiscal Impact:
The Project budgeted in the Fiscal Year (FY) 2025-26 Adopted Budget and funded with the (140) CDBG Fund with a total CIP budget of $184,000. The lowest, responsive and responsible bidder (TVR) submitted its bid at $89,285. Staff recommends establishing a contingency of $17,857 to cover any unforeseen conditions or additional work required during construction for a total construction contract budget not to exceed $107,142.
Sufficient funds are available in the CDBG Fund to cover construction costs for the Project.
Agreement Request
Contract Request
Amount
FY 2025-26 Budget
Dept. Account #
Total Contract
Amount
TVR $89,285 140-8626-4201 $89,285
20% Project Contingency $17,857 140-8626-4201 $17,857
Total $107,142 $107,142
Attachments:
1. Draft Construction Contract.
City of Hermosa Beach | Page 4 of 4
2. Draft Resolution
3. Bid Opening Log
4. Bid Documents for TVR Construction Engineering, LLC
5. CIP 626 Project Plans
6. CIP 626 Project Specifications
Respectfully Submitted by: Magvern By, Assistant Engineer Concur: Randy Nyguen, Senior Engineer
Concur: Joe SanClemente, Public Works Director
Noted for Fiscal Impact: Henry Chao, Finance Manager
Reviewed by: Brandon Walker, Administrative Services Director Legal Review: Jason Baltimore, Interim City Attorney
Approved: Steve Napolitano, City Manager
65270.00021\44884509.1
CONTRACT AGREEMENT
This Construction Agreement (“Agreement”) is made and entered into as of the date executed by the Acting Pursuant to Authority Delegated by the City Council and attested to by the City Clerk, by and between TVR Construction Engineering LLC (hereinafter referred to as "CONTRACTOR") and the City of Hermosa Beach, California, a municipal corporation (hereinafter referred to as "CITY").
R E C I T A L S
CDBG Project 602732-25
Monterey Boulevard ADA Sidewalks & Access Ramps Cycle 2 CIP NO. 626
A. Pursuant to the Notice Inviting Sealed Bids for CIP NO. 626 CDBG PROJECT 602732-25 MONTEREY BOULEVARD ADA SIDEWALKS AND ACCESS RAMPS, bids were received, publicly opened, and declared on the date specified in the notice; and B. On April 14, 2026, the City Council declared CONTRACTOR to be the lowest responsible Bidder and accepted the bid of CONTRACTOR; and
C. The City Council has authorized the City Manager pursuant to authority delegated by the City Council to execute a written Contract with CONTRACTOR for furnishing labor, equipment, and material for the CIP NO. 626 CDBG PROJECT 602732-25 MONTEREY BOULEVARD ADA SIDEWALKS AND ACCESS RAMPS in the City of Hermosa Beach.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, it is agreed:
1. GENERAL SCOPE OF WORK: CITY agrees to engage CONTRACTOR and CONTRACTOR agrees to furnish all necessary labor, tools, materials, appliances, and equipment for and do the work for the CIP NO. 626 CDBG PROJECT 602732-25 MONTEREY BOULEVARD ADA SIDEWALKS AND ACCESS RAMPS in the City of Hermosa Beach. The work shall be performed in accordance with the Plans and Specifications dated January 2026, (the “Specifications”) on file in the office of the City Clerk and in accordance with bid prices set forth in CONTRACTOR’S Bid Proposal and in accordance with the instructions of the City Engineer.
2. INCORPORATED DOCUMENTS TO BE CONSIDERED COMPLEMENTARY: The Contract documents for the aforesaid project shall consist of the Notice Inviting Bids, Instructions to Bidders, Bid Proposal, Builders General Provisions, Standard Specifications 2021 edition, Special Provisions, Exhibit A and Exhibit B, and all referenced specifications, details, standard drawings, and appendices; together with this Agreement and all required bonds, insurance certificates, permits, notices and affidavits; and also, including any and all addenda or supplemental agreements clarifying, amending, or extending the work contemplated as may be required to insure its completion in an acceptable manner. All of the provisions of said Contract documents are made a part hereof as though fully set forth herein. This Contract is intended to require a complete and finished piece of work and anything necessary to complete the work properly and in accordance