19D - EXHIBIT FY 10-11 RDA Annual Report

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COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA Notes to the Basic Financial Statements (Continued) Year Ended June 30, 2011 (g) Capital Assets Capital assets, which include computers, office furniture, equipment and land are reported in the government -wide financial statements. The current threshold for recording capital assets is $10,000. Such assets are recorded at historical cost, or estimated historical cost, if purchased or constructed. Donated capital assets are valued at their estimated fair market value on the date received. Depreciable assets are depreciated using the straight -line method over the following estimated useful lives: Computer equipment 3 years Office furniture and equipment 5 years Land, except for land held for resale as discussed below, is capitalized regardless of cost. The Agency's depreciable capital assets are fully depreciated at June 30, 2011. (h) Project Costs The Agency may construct or purchase capital assets for the City and developers. The Agency does not retain ownership of these assets; therefore, these costs are recorded as community redevelopment and low and moderate income housing expenses on the statement of activities, and as project costs on the statement of revenues, expenditures, and changes in fund balance. Project costs include salaries and benefits, contractual services, capital outlay, and residential rehabilitation loans. (i) Disposition and Development Agreements The Agency may enter into disposition and development agreements with entities, in which the Agency may sell parcels to the developer for improvement. The developer maintains the capital asset associated with the development and disposition agreement. Therefore, the asset is not capitalized by the Agency. All other improvement of the City's assets are capitalized by the City under the City's capitalization policy as noted in the City's notes to the basic financial statements. (j) Land Held for Resale Land held for resale is carried at the lower of cost or estimated net realizable value, as determined by appraisal prior to the execution of a sale or transfer agreement. (k) Compensated Absences The Agency is allocated amounts to accumulate earned but unused vacation and sick pay benefits for City employees who provide services to the Agency. A liability for unpaid accumulated sick leave is accrued for employees who have attained ten (10) years or more of continuous service equivalent to one -third (1/3) the total accumulated sick leave benefit credited to the employee, to a maximum of 200 hours for each employee. Vacation, compensated time, and vested sick leave pay is accrued when incurred in the government -wide financial statements. A liability for these amounts is reported in the governmental funds only if they have matured, for example, as a result of employee resignations and retirements. 25