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<br />Redevelopment Agency of the City of Redwood City <br />Notes to Basic Financial Statements, Continued <br />For the year ended June 30, 2006 <br /> <br />1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued <br /> <br />C. Cash and Investments, Continued <br /> <br />The City participates in an investment pool managed by the State of California titled Local Agency <br />Investment Fund (LAIF), which has invested a portion of the pool funds in Structured Notes and Asset- <br />Backed Securities. LA IF' s investments are subject to credit risk with the full faith and credit of the State of <br />California collateralizing these investments. In addition, these Structured Notes and Asset-Backed <br />Securities are subject to market risk as to change in interest rates. <br /> <br />D. Investment in Land Held for Redevelopment <br /> <br />The Agency has purchased parcels of land for redevelopment in order to develop or redevelop blighted <br />properties within the City limits. Such land parcels are accounted for at the lower of cost, estimated net <br />realizable value, or agreed-upon sales price if a disposition agreement has been made with a developer. <br /> <br />E. Capital Assets <br /> <br />Capital assets are valued at historical cost or estimated historical cost if actual historical cost was not <br />available. Contributed capital assets are valued at their estimated fair market value on the date contributed. <br />Agency's policy is to capitalize all assets with costs exceeding certain minimum thresholds, $5,000 for <br />machinery and equipment, $100,000 for buildings, improvements, and infrastructure, and with useful lives <br />exceeding two years. Depreciation is recorded on a straight-line basis over estimated useful lives of the <br />assets as follows: <br /> <br />Buildings <br />Improvements <br />Equipment <br />Streets <br />Parks <br />Bridges <br />Traffic Signals <br />Storm Drains <br /> <br />20-50 Years <br />33-60 Years <br />2-15 Years <br />20 Years <br />25 Years <br />30 Years <br />20 Years <br />40 Years <br /> <br />In June 1999, the Governmental Accounting Standards Board (GASB) issued Statement No. 34 which <br />requires the inclusion of infrastructure capital assets in local governments' basic financial statements. In <br />accordance with GASB Statement No. 34, the Agency has included all infrastructures into the current Basic <br />Financial Statements. <br /> <br />The Agency defines infrastructure as the basic physical assets that allow the Agency to function. The assets <br />include roads, bridges, curbs and gutters, streets and sidewalks, drainage systems, and lighting systems. <br />Each major infrastructure system can be divided into subsystems. These subsystems were not delineated in <br />the basic financial statements. The appropriate operating department maintains information regarding <br />subsystems. <br /> <br />24 <br />