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 (Z) Long -Term Obligations Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. (m) Fund Equity/Net Assets In March 2009, GASB issued Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The objective to this Statement is to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. This Statement establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. At June 30, 2011, the Agency's governmental funds' fund balances include the following classifications: Nonspendable Fund Balance — includes amounts that are (a) not in spendable form, or (b) legally or contractually required to be maintained intact. The "not in spendable form" criterion includes items that are not expected to be converted to cash, for example: inventories, prepaid amounts, and long -term notes receivable. Restricted Fund Balance — includes amounts that can be spent only for the specific purposes stipulated by external resource providers, constitutionally or through enabling legislation. Restrictions may effectively be changed or lifted only with the consent of resource providers. Committed Fund Balance — includes amounts that can only be used for the specific purposes determined by a formal action of the Agency's highest level of decision- making authority, the Board of Directors. Commitments may be changed or lifted only by the Agency taking the same formal action that imposed the constraint originally. Assigned Fund Balance — comprises amounts intended to be used by the Agency for specific purposes that are neither restricted nor committed. Intent is expressed by (1) the Board of Directors or (b) a official to which the Board of Directors has delegated the authority to assign amounts to be used for specific purposes. 26