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SAN LEANDRO REDEVELOPMENT AGENCY Notes to the Financial Statements For the Year Ended June 30, 2011 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Secured taxes are secured by liens on the property being taxed. Unsecured taxes refer to taxes on personal property other than land and buildings. Property tax returns and receivables are recognized to the extent that they are measurable and will be received within 60 days of year -end. 1. Deferred or Unearned Revenues Deferred revenues represent an off -set for revenue in which asset recognition criteria have been met, but where revenue recognition criteria has not been met. The Agency has reported as deferred revenues, receivables from project developer and notes receivable from homeowners and related accrued interest; as such amounts are measurable but are not available. .I. Net Assets and Fund Balances In the Govemment -Wide Financial Statements, net assets are classified in the following categories Restricted Net Assets — This amount is restricted by external creditors, grantors, contributors, or laws or regulations of governments. Unrestricted Net Assets — This amount is all net assets that do not meet the definition of "invested in capital assets, net of related debt" or "restricted" net assets as defined above. The Agency's fund balances are classified in accordance with Governmental Accounting Standards Board Statement Number 54 (GASB 54), Fund Balance Reporting and Governmental Fund Type Definitions, which requires the Agency to classify its fund balances based on spending constraints imposed on the use of resources. For programs with multiple funding sources, the Agency prioritizes and expends funds in the following order: Restricted, Committed, Assigned, and Unassigned. Each category in the following hierarchy is ranked according to the degree of spending constraint: Nonspendables represents balances set aside to indicate items do not represent available, spendable resources even though they are a component of assets. Fund balances required to be maintained intact, such as Permanent Funds, and assets not expected to be converted to cash, such as prepaids, notes receivable, and land held for resale are included. However, if proceeds realized from the sale or collection of nonspendable assets are restricted, committed or assigned, then Nonspendable amounts are required to be presented as a component of the applicable category. Restricted fund balances have external restrictions imposed by creditors, grantors, contributors, laws, regulations, or enabling legislation which requires the resources to be used only for a specific purpose. Encumbrances and nonspendable amounts subject to restrictions are included along with spendable resources.6 Committed fund balances have constraints imposed by formal action of the Agency Board which may be altered only by formal action of the City Council. Encumbrances and nonspendable amounts subject to council commitments are included along with spendable resources. 32