lmuda 2009 audit

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T HE L AKE M ERRITT UPTOWN DISTRICT ASSOCIATION

Financial StatementsFor the year ended December 31, 2009

With

Report of Independent Auditors



T HE L AKE M ERRITT UPTOWN DISTRICT ASSOCIATION

C ONTENTS

Page

Report of Independent Auditors 1

Statements of Financial Position as of December 31, 2009 2

Statements of Activities for the year ended December 31, 2009 3

Statements of Cash Flows for the year ended December 31, 2009 4

Statements of Functional Expenses for the year ended December 31, 2009 5

Notes to the Financial Statements 6-10



REPORT OF INDEPENDENT AUDITORS

To the Board of Directors,The Lake Merritt Uptown District AssociationOakland, California

We have audited the accompanying statement of financial position of The Lake Merritt UptownDistrict Association ( the Organization) as of December 31, 2009, and the related statements of activities, cash flows, and functional expenses for the year then ended. These financial statementsare the responsibility of the Organization's management. Our responsibility is to express anopinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United

States of America. Those standards require that we plan and perform the audit to obtainreasonable assurance about whether the financial statements are free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above, present fairly, in all material respects,the financial position of The Lake Merritt Uptown District Association as of December 31, 2009and the changes in its net assets and its cash flows for the year then ended in conformity withaccounting principles generally accepted in the United States of America.

PMB Helin Donovan LLP

San Francisco, CaliforniaNovember 4, 2011



2009

Current Assets:Cash and cash equivalents 790,827$Business improvement district assessments receivable 20,805Deposits 1,100

Total current assets 812,732$

Current Liabilities:Accounts payable and accrued expenses 50,525$Deferred revenue 503,079

Total current liabilities 553,604

Net AssetsUnrestricted net assets 259,128

Total net assets 259,128 Total liabilities and net assets 812,732$

LIABILITIES AND NET ASSETS

ASSETS

The Lake Merritt Uptown District AssociationStatement of Financial Position

As of December 31, 2009

The accompanying notes are an integral part of these financial statements.- 2 -



Unrestricted TotalRevenue:

Business improvementdistrict assessments 1,060,315$ 1,060,315$

Total revenue 1,060,315 1,060,315

Expenses:Program services 549,044 549,044 Management and general 252,143 252,143

Total Expenses 801,187 801,187

Changes in net assets 259,128 259,128

Net assets, beginning of year - -

Net assets, end of year 259,128$ 259,128$

The Lake Merritt Uptown District AssociationStatement of Activities

For the Year Ended December 31, 2009

2009




2009CASH FLOWS FROM OPERATING ACTIVITIES

Changes in net assets 259,128$Adjustments to reconcile changes in net assets

to net cash provided by operating activities:(Increase) / decrease in assets:

Business improvement district assessments receivable (20,805) Deposits (1,100)

Increase in liabilities:Accounts payable and accrued expenses 50,525 Deferred revenue 503,079

Net cash provided by operating activities 790,827

Net increase in cash and cash equivalents 790,827 Cash and cash equivalents, beginning of year - Cash and cash equivalents, end of year 790,827$

SUPPLEMENTAL INFORMATIONInterest paid -$Taxes paid -$

The Lake Merritt Uptown District AssociationStatement of Cash Flows





Program

services

Management

and general TotalAdvertising 15,800$ -$ 15,800$Directors & Officers - 2,202 2,202 District Formation Costs - 85,750 85,750 General Liability insurance - 2,663 2,663 Legal & Accounting - 4,216 4,216 Maintenance 182,542 - 182,542 Miscellaneous expenses 482 7,654 8,136 Occupancy: rent, parking, other occupancy - 14,638 14,638 Office furniture & equipment - 5,143 5,143

Postage, shipping, delivery - 1,304 1,304 Printing & copying - 2,182 2,182 Public Relations 3,921 - 3,921 Security 320,091 - 320,091 Service Coordinator 3,000 - 3,000 Special Events 18,162 - 18,162 Supplies - 4,180 4,180 Telephone & telecommunications - 2,213 2,213 Third-party services - 119,998 119,998 Website 5,046 - 5,046

Total Expenses 549,044$ 252,143$ 801,187$

The Lake Merritt Uptown District AssociationStatement of Functional Expenses


2009

The accompanying notes are an integral part of these financial statements.

-5-



The Lake Merritt Uptown District AssociationNotes to Financial Statements

For the year ended December 31, 2009

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1. O RGANIZATION

The Lake Merritt Uptown District Association (LMUDA) was incorporated in February 2008in the state of California. LMUDA is a Community Benefit District (CBD) Management

Corporation committed to revitalizing Oakland's historic downtown by maintainingcleanliness and order in the public rights-of-way, improving district identity, fosteringcultural opportunities, creating and maintaining new public spaces, and advocating on behalf of the district stakeholders.

LMUDA receives property tax assessment revenue from the city of Oakland.

2. S UMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

The financial statements are prepared on the accrual basis of accounting in accordance withgenerally accepted accounting principles.

Basis of PresentationThe financial statements are presented in accordance with the provisions of AccountingStandards Codification 958, Financial Statements of Not-For-Profit Organizations . Underthe provisions of Codification 958, net assets and revenues, expenses, gains and losses areclassified based on the existence or absence of donor-imposed restrictions. Accordingly, thenet assets of LMUDA and changes therein are classified and reported as follows:

Unrestricted Net Assets – Net assets that are not subject to donor-imposed restrictions or

otherwise limited by contractual arrangements with outside parties, but may be designated forspecific purposes by action of the Board of Directors.

Temporarily Restricted Net Assets – Net assets that are subject to donor-imposed restrictionsthat can be fulfilled either by actions of LMUDA pursuant to those stipulations and/or expirewith the passage of time. At December 31, 2009, LMUDA had no temporarily restricted netassets.

Permanently Restricted Net Assets – Net assets that are subject to donor-imposed restrictionsthat LMUDA maintains. At December 31, 2009, LMUDA had no permanently restricted netassets.

Cash and Cash Equivalents

For purposes of the statement of cash flows, cash and cash equivalents are defined as cash onhand, cash in demand deposit accounts at banks and investments with initial maturities of lessthan ninety days.





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2. S UMMARY OF SIGNIFICANT ACCOUNTING POLICIES (C ONTINUED )

Contributions

Contribution revenue is recognized when a donor makes a promise to give that is, insubstance, unconditional. Contributions of assets other than cash are recorded at fair value atthe date of donation. In accordance with the provision of Accounting Standards Codification958-605-25-2, Accounting for Contributions Received and Contributions Made , contributionsthat are restricted by the donor are reported as increases in unrestricted net assets if therestriction expires in the fiscal year in which the contributions are recognized. All otherdonor-restricted contributions are reported as increases in temporarily or permanentlyrestricted net assets, depending on the nature of the restriction. When a restriction expires,temporarily restricted net assets are reclassified to unrestricted net assets. All unconditionalpromises to give, which are expected to be received beyond one year, are discounted to theirnet present value.

Donated services

Contribution of donated assets are recorded at fair value in the period received.Contributions of donated services that create or enhance non-financial assets or that requirespecialized skills, are provided by individuals possessing those skills, and would typicallyneed to be purchased if not provided by donation, are recorded at fair value in the periodreceived. Donated services amounted to $2,100 At December 31, 2009.

Business Improvement District Assessments Receivable

LMUDA ’s primary source of revenue is from property tax assessments, which are billed on asemi-annual basis. LMUDA considers all receivables collectible as funds will eventuallycome through liens when the property is sold.

Estimates

The preparation of financial statements in conformity with generally accepted accountingprinciples requires management to make estimates and assumptions that affect certainreported amounts and disclosures. Accordingly, actual results could differ from thoseestimates. Significant estimates include the fair value of donated services.

Income Taxes

The Internal Revenue Service and the California Franchise Tax Board have determined thatLMUDA is exempt from federal and state income taxes under the Internal Revenue CodeSection 501(c)(3) and the California Revenue and Taxation Code Section 23701d.Accordingly, there is no provision for income taxes in the financial statements.





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Fair Value of Financial Instruments

The carrying value of certain financial instruments, including cash and cash equivalents,assessments receivable, accounts payable and accrued expenses approximate fair value due totheir short-term nature.

LMUDA has adopted Accounting Standards Codification 820, Fair Value Measurements .This Standard defines fair value, establishes a framework for measuring fair value ingenerally accepted accounting principles (GAAP), and expands disclosures about fair valuemeasurements. This Standard applies under other accounting pronouncements that require orpermit fair value measurements. In February 2008, the FASB Staff Position (FSP) delayedthe effective dates of Accounting Standards Codification 820 for all non-financial assets andnon-financial liabilities, excluding those assets that are recognized or disclosed at fair valueon a recurring basis for fiscal years beginning after November 15, 2008, and interim periodswithin those fiscal years.

LMUDA has adopted Accounting Standards Codification 825, The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of AccountingStandards Codification 320. A provision of Codification 825 permits an entity to measurefinancial instruments and certain other items at estimated fair value. Most of the provisionsof Codification 825 are elective; however, the amendment to Accounting StandardsCodification 320, Accounting for Certain Investments in Debt and Equity Securities , appliesto all entities that own trading and available-for-sale securities. The fair value option createdby Accounting Standards Codification 825 permits an entity to measure eligible items at fairvalue as of specified election dates. The fair value option (a) may generally be appliedinstrument by instrument, (b) is irrevocable unless a new election date occurs, and (c) mustbe applied to the entire instrument and not to only a portion of the instrument.

Revenue and Deferred Revenue

LMUDA recognizes revenue from district assessments in the period in which it is measurable(earned) and available (cash received). If cash is received in advance before it is earned,LMUDA recognizes the amounts received as deferred revenue.

Functional Classification of Expenses

Costs are allocated between program services and management and general based onmanagement’s evaluation of the related benefits .





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Recent Accounting Pronouncements

In January 2010, the FASB issued guidance to improve disclosures about fair valuemeasurements. The guidance provides amendments to require new disclosures regardingtransfers in and out of Levels 1 and 2 of the fair value measurement hierarchy, and activity inLevel 3, and to clarify existing disclosures regarding the level of disaggregation, inputs andvaluation techniques. The guidance is effective for interim and annual reporting periodsbeginning after December 15, 2009, except for the new disclosures regarding purchases,sales, issuances, and settlements in the roll forward of activity in Level 3 fair valuemeasurements, which are effective for fiscal years beginning after December 15, 2010, andfor interim periods within those fiscal years. LMUDA does not expect this guidance to have amaterial impact on our financial statements.

In June of 2009, the FASB issued guidance now codified as FASB ASC Topic 105,Generally Accepted Accounting Principles , as the single source of authoritativenongovernmental U.S. GAAP. FASB ASC Topic 105 does not change current U.S. GAAP,but is intended to simplify user access to all authoritative U.S. GAAP by providing allauthoritative literature related to a particular topic in one place. All existing accountingstandard documents will be superseded and all other accounting literature not included in theFASB Codification will be considered non-authoritative. These provisions of FASB ASCTopic 105 are effective for interim and annual periods ending after September 15, 2009 and,accordingly, are effective for LMUDA for the current fiscal reporting period. The adoption of this pronouncement did not have an impact on LMUDA ’s financial condition or results of operations, but will impact the financial reporting process by eliminating all references topre-codification standards.

In May 2009, the FASB issued guidance on subsequent events. The guidance establishesgeneral standards of accounting for and disclosure of events that occur after the balance sheetdate but before financial statements are issued or are available to be issued. In addition, underthe guidance, an entity is required to disclose the date through which subsequent events havebeen evaluated, as well as whether that date is the date the financial statements were issued orthe date the financial statements were available to be issued. The guidance does not apply tosubsequent events or transactions that are within the scope of other applicable GAAP thatprovide different guidance on the accounting treatment for subsequent events or transactions.The guidance is effective for interim or annual financial periods ending after June 15, 2009,and shall be applied prospectively. LMUDA adopted the guidance as of December 31, 2009.The adoption of the guidance did not have a material impact on our financial statements.





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3. L EASE C OMMITMENTS

LMUDA association leases shared office space in Oakland under an operating leaseagreement that expires on January 31, 2010. Rent expense amounted to $14,638 for the year

ended December 31, 2009.Future minimum lease payments under the lease agreements as of December 31, 2009 are asfollows:

Year ending December 31,2010 $ 1,100Total $ 1,100

4. C ONCENTRATION

LMUDA maintains its cash in one insured commercial accounts at a major financialinstitution. The Federal Deposit Insurance Corporation (FDIC) insures account balances up to$250,000. Under the FDIC Transaction Account Guarantee Program (TAGP), all non-interestbearing transaction accounts are fully guaranteed by the FDIC for the entire amount in theaccount. Coverage under TAGP is in addition to and separate from the coverage availableunder the FDIC’s gen eral deposit insurance rules. There were no amounts in excess of federalinsurance at December 31, 2009.

5. S UBSEQUENT E VENTS

On August 20, 2010, The LMUDA signed an amendment to its original lease that included anexpansion to its existing office space in Oakland. The lease commences on February 1, 2010

and ends on January 31, 2012. The monthly base rent is as follows: $2,257 from February 1,2010 to August 31, 2010; $3,182 from September 1, 2010 to January 31, 2011; $3,227 fromFebruary 1, 2011 to January 31, 2012.

LMUDA has evaluated the existence of any other subsequent events through November 4,2011 and has determined that there were no additional subsequent events to recognize ordisclose in these financial statements.

lmuda 2009 audit

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