CITY OF GOODYEAR, ARIZONA ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2005 TABLE OF CONTENTS I. INTRODUCTORY SECTION Letter of Transmittal City of Goodyear Officials Organizational Chart v xviii xix II. Financial Section Independent Auditors’ Report 1 A. Management’s Discussion & Analysis 5 B. Basic Financial Statements Government-wide Financial Statements Statement of Net Assets Statement of Activities 17 18 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet Reconciliation of the Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Statement of Revenues. Expenditures, and Changes in Fund Balances Of Governmental Funds to the Statement of Activities Budgetary Comparison Statements – General Fund Proprietary Fund Financial Statements Statement of Net Assets Statement of Revenues, Expenses and Changes in Fund Net Assets Statement of Cash Flows 20 23 24 26 27 28 29 30 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets Statement of Changes in Fiduciary Net Assets Notes to Financial Statements Note 1. Summary of Significant Accounting Policies 2. Cash and Investments 3. Receivables 4. Capital Assets 5. Loans Payable 6. Bonds Payable 7. Revenue Bonds Payable 8. Community Facilities Districts Bonds Payable 9. Amortization of Bond Costs, Bond Discounts and Bond Premiums 10. Changes in Long-term Liabilities 11. Interfund Receivables, Payables, and Transfers 12. Contingent Liabilities 13. Risk Management 32 33 37 43 45 46 47 48 49 51 52 53 54 54 55 i Notes to Financial Statements (continued) 14. Retirement Plans 15. Fund Balance/Net Reservations and Designations 55 58 C. Other Supplementary Information Budgetary Comparison Schedules - Major Governmental Funds Community Facilities Districts – Debt Service Capital Improvement Projects Community Facilities Districts – Capital Projects 61 62 63 Combining Fund Financial Statements Combining Balance Sheet Combining Statement of Revenues, Expenses and Changes in Fund Net Assets 66 70 Budgetary Comparison Schedules - Non-Major Governmental Funds Highway User Revenue Fund Grants Community Facilities District – General Fund Community Facility Impact Fees General Government Impact Fees Public Works Impact Fees Fire Impact Fees Police Impact Fees Transportation Impact Fees Library Impact Fees Debt Service 76 77 78 79 80 81 82 83 84 85 86 III. Statistical Section Government-wide Expenses by Function Government-wide Revenues Property Tax Levies and Collections Assessed and Estimated Actual Value of Taxable Property Property Tax Rates – Direct and Overlapping Governments Ratio of Net General Bonded Debt to Assessed Value and Net Bonded Debt per Capita Computation of Legal Debt Margin Principal Taxpayers Major Employers 88 90 92 93 94 96 97 98 99 IV. Compliance Report Report on Compliance and Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 103 ii INTRODUCTORY SECTION December 7, 2005 Honorable Mayor, City Council, City Manager and Citizens of the City of Goodyear, Arizona: We are pleased to submit to you the 2005 Comprehensive Annual Financial Report (CAFR) of the City of Goodyear, Arizona. The report is prepared by the Finance Department. This report represents management's report to its governing body, constituents, legislative and oversight bodies, and investors and creditors. Copies of this report will be sent to elected officials, management personnel, bond rating agencies, Nationally Recognized Municipal Securities Information Repositories, and other agencies, which have expressed interest in the City's financial matters. Responsibility for the accuracy of the presented data and the completeness and fairness of the presentations, including all disclosures, rests with the management of the City. The City has established and maintains a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft or misuse and to allow the compilation of sufficient reliable information for the preparation of financial statements. We believe the data, as presented in this report, are accurate in all material respects and are presented in a manner which fairly sets forth the financial position and results of operations of the City on both a city-wide and fund basis. Furthermore, we believe that all disclosures necessary to enable the reader to gain an understanding of the City's financial activity and financial stability have been included. These financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States of America for local governments as prescribed by the Governmental Accounting Standards Board (GASB) and the American Institute of Certified Public Accountants (AICPA). The basic financial statements and related notes have been audited by an independent firm of certified public accountants, Henry & Horne, LLP, whose report is included herein. As stated in the independent auditors' report, the goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Goodyear, Arizona for the fiscal year ended June 30, 2005, are free from material misstatement. The independent Proud past. Vibrant future! City of Goodyear Finance- Finance Department 190 N. Litchfield Road PO Box 5100 Goodyear, AZ 85338-0601 623-932-3015 623-932-3003 Fax audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the financial statements of the City of Goodyear, Arizona for the fiscal year ended June 30, 2005, are fairly presented, in all material respects, in conformity with GAAP. The independent auditors' report is presented as the first component of the financial section of this report. The City is not required to have an independent audit ("Single Audit") of federal financial assistance received by the City directly from federal agencies, or passed through to the City by the State of Arizona or other governmental entities during the fiscal year. The City received less than $500,000 in federal financial assistance during the year ended June 30, 2005 and therefore was below the Single Audit threshold. Presentation The comprehensive annual financial report is presented in three sections. The Introductory Section includes a list of principal officials, an organizational chart, and this transmittal letter which highlights significant aspects of the City and particular financial issues. The Financial Section includes the independent auditors' report, Management's Discussion and Analysis, the basic financial statements (government-wide statements and fund statements), notes to the financial statements, other required supplementary information (RSI), combining financial statements and other financial schedules. The Statistical Section includes exhibits and tables of unaudited data depicting the financial history of the City, as well as demographic and other miscellaneous statistics, generally presented on a multi-year basis. THE FINANCIAL REPORTING ENTITY The City of Goodyear, incorporated in 1946, and chartered in 1988, has a Council-Manager form of government consisting of the Mayor and six Council Members. The Mayor is elected at-large for a four-year term. Council members are elected for four-year terms. The City Council is vested with policy and legislative authority and is responsible for passing ordinances, adopting the budget, appointing committee, commission, and board members, and appointing the positions of City Manager, City Attorney, and Judge. The City Manager is responsible for carrying out the policies and ordinances of the City Council, as well as overseeing the day-to-day operations of the City. The City encompasses approximately 117 square miles in the western portion of Maricopa County, and is approximately 17 miles west of the downtown Phoenix business district. Between 1990 and 2000, the City's population increased from 6,300 to 19,695. The estimated July 2005 population is 41,240. The City's tremendous growth is attributable to excellent housing, small-town atmosphere, convenient access to the central Valley, and excellent school districts. Based on current projections, population growth trends are expected to continue. While having a positive impact, this growth will continue to present challenges to the City in providing its current high level of services. vi The City provides a full range of municipal services, including police and fire protection, sanitation services, water and sewer services, construction and maintenance of streets, recreational, parks, and cultural events, public transportation, planning and zoning services, and general administrative services. Goodyear offers a wide range of community facilities including a community center, a swimming pool, and nine parks encompassing 175 acres. This report includes financial statements on both a government-wide and fund basis for the primary government, as well as its component units. Component units are separate legal entities that are included in the reporting entity due to the significance of their financial or operational relationship with the City. Criteria used by the City for inclusion of activities in preparing its financial statements are in conformity with GASB Statement No. 14, The Financial Reporting Entity. Blended component units, although legally separate entities, are, in substance, part of the primary government's operations and are included as part of the primary government. Accordingly, the financial reporting entity consists of the City and nine blended component units, the Goodyear Community Facilities General District No. 1, Palm Valley Community Facilities District No. 3, Goodyear Community Facilities Utilities District No. 1, Wildflower Ranch Community Facilities General District No. 1, Wildflower Ranch Community Facilities General District No. 2, Estrella Mountain Ranch Community Facilities District No. 1, Cottonflower Community Facilities District, Centerra Community Facilities District, and Cortina Community Facilities District. FINANCIAL CONTROLS Internal Controls The management of the City of Goodyear is responsible for establishing and maintaining a system of internal control. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: 1) the safeguarding of assets against loss from unauthorized use or disposition, and 2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes: 1) the cost of a control should not exceed the benefits likely to be derived, and 2) the valuation of costs and benefits requires estimates and judgments by management. The system of internal control is subject to periodic evaluation by management and is also considered by the independent auditors in connection with the annual audit of the City's financial statements. All internal control evaluations occur within the above framework. The City's internal accounting controls are considered to adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Budgetary Controls The City of Goodyear, like all cities in the State of Arizona, is subject to numerous budget and related legal requirements. Article IX, Section 20 (1) of the Arizona Constitution sets limits on the City's legal budget capacity. The voters approved a permanent Expenditure vii Limitation increase that allows the City to operate our budget in line with our growth. The current budget complies with the voter approved Alternative Local Expenditure Limitation. The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the Mayor and Council. Activities of the general fund, special revenue funds, debt service funds, capital project funds, and enterprise funds are included in the annual appropriated budget. The legal level of budgetary control (i. e., the level at which expenditures cannot legally exceed the appropriated amount) is the total budget, as adopted by the City Council. The City additionally exercises management control and oversight of the budget at the department level within each fund. LOCAL ECONOMIC CONDITION AND OUTLOOK Goodyear continues to face many important growth issues, and its citizens and municipal government are committed to finding solutions for the future. This commitment helped make FY 04-05 another successful year and will provide for continued success in the years to come. A continued trend of new housing starts during the year increased the size of our community, the third fastest growing city in the Phoenix-Metro area. The city permitted over 2,200 single-family-residential permits in FY 04-05. The city is expected to permit an equal number of permits in FY 05-06. The City's retail, industrial, and commercial activities are expected to continue strongly including the following: Retail & Hospitality The following retail and service stores opened this past fiscal year: Chick-fil -A Play it Again Sports Jack in the Box El Paso BBQ Dunn Edwards Paint Native New Yorker Sportsman’s Warehouse Streets of New York Massage Envy Take Five Dance Studio Pulseboard Shop Ulta Diamondback Spas Scrap Therapy Safeway Macoyo’s Chipotle Carls Jr Green Burrito Kawasaki Rosati’s Pizza Kindercare Avalon Nails & Spa Curves for Women Dr. Coil Footwear Lane Bryant Oreck Vacuums Presidential Pools Suki’s Bridal Hi-Health viii Industrial and Commercial RBD built six industrial Speculation buildings totaling 180,000 square feet on Bullard north of Van Buren. Economic Outlook Goodyear continues to benefit from residential, retail and industrial growth. The city is less than 15% built out. Total City operating revenues grew approximately 13% from FY 03-04 to FY 04-05. Total operating revenues for FY 05-06 are expected to grow 24% above FY 04-05 levels. This increase is based on the continued issuance of building permits and continued growth in the City's taxable retail sales, and new utility connections. Retail Sales. The City of Goodyear, like all Arizona cities, places a heavy reliance on City sales tax revenues. Overall, City sales tax revenues comprise approximately 31% of operating revenues. The City's sales tax rate is currently at 2%, with an additional 2.5% charge on lodging/restaurant/bar services. For single item purchases of tangible personal property greater than $5,000 there is a 1.2% tax rate while construction activities are taxed at 3.5%. Overall, City's sales tax revenues are expected to increase by 21% in FY 05-06. State Shared Revenues. The City of Goodyear receives revenue allocations from the State. These "State Shared Revenues" include allocations of the state-collected income tax, sales tax, gas tax, motor vehicle in-lieu taxes, and state lottery proceeds. A significant portion of this revenue is placed in the City's General Fund, where it is used to support a large portion of the City's day-to-day activities. The City currently projects an increase of 15% in these revenues for fiscal year 2006. Property Tax. The City's combined (secondary and primary) property tax rate is $1.60 per $100 of assessed valuation for fiscal year 2006. Of this, $0.78 is for the secondary levy. The secondary levy can only be used for voter approved debt service on general obligation bonded indebtedness. The voter approved general obligation bond proceeds are used for construction of public facilities (parks, public safety, streets, etc.). The secondary assessed valuation is expected to grow 20% in FY 05-06. The primary property tax rate is $.82 for 2006. The primary levy can be used for any general government purpose (such as supplies, personnel, maintenance, utilities, etc.) but is limited in size by State statute. The primary tax raised $3.5 million in fiscal year 2005. The primary property tax revenues are expected to be $3.0 million dollars in FY 05-06. While this amount is less than 5% of the operating revenues, it is nonetheless an important component for the stability and revenue diversity of the City's operating revenues. Labor Force. Goodyear has a well-educated and available labor force. The median income level is $57,492 as of the 2000 census. This economic resource is at the forefront of our economic development efforts. The City is a member of the Greater Phoenix Economic Council (GPEC) which has been successful introducing new businesses to the City. The ix City maintains an economic development department "in-house" which has been very instrumental in locating retail/hospitality/office/industrial locates to the City. MAJOR INITIATIVES AND SERVICE EFFORTS AND ACCOMPLISHMENTS For The Year During fiscal year 2005, the City continued to invest in programs and amenities that keep Goodyear a very livable community. Emphasis was placed on public safety, parks and open space, basic infrastructure projects, and support services. The following are a few of the departments' service efforts and accomplishments of the City during fiscal year 2005: Police • Instituted Compstat program to track crimes more efficiently, assign accountability, and provide better reports • Participated in Glendale Police Departments Regional Data Sharing Initiative. This allows police departments in the west valley to share crucial data on persons, locations, and vehicles. • Coordinated West Valley DUI Task Force and hosted 5 DUI Task Forces • 50 public safety events including fingerprinting, bike rodeos, paint over of trotter track graffiti and placing alarms in facility • K-9 Unit responded to 131 deployments to include 55 building searches, 40 drug sniffs, 13 tracks, 40 area searches, 7 article searches, 18 suspect apprehensions and only two bites Fire • • • • • • • • • • • Completed design of Fire Station 184 at Wildflower Drive and Yuma Road. Placed order for a new fire engine for Station 184. Created a career path guide for all positions within the fire department and conducted training for all supervisors. Conducted site study for City Training Facility. Replaced emergency generator at Station No. 1 to provide back up power to entire facility. Hired an Emergency Management Coordinator to oversee all emergency management activities for the City. Hired a Deputy Fire Chief to fill vacancy created by internal transfer. Took delivery of the replacement 100' aerial platform ladder truck. Took delivery of the hazardous materials vehicle. Received $90,000 grant from the Arizona Office of Homeland Security to purchase personal protective equipment and a chemical identifier for the Hazardous Materials Team. Received four Automated External Defibrillators (AEDs) for City facilities from the Arizona Department of Administration Risk Management. x • • • • • • • • • • • • • • Received the Operation Life Safety award for zero fire deaths in the year 2003. Held open houses at all three fire stations for Fire Prevention Week. Conducted the first-ever Officer Development course for all GFD officers Provided HIPAA training for all department employees. Sponsored seven fire cadets through Glendale Community College’s Fire Operations class. For the first time, conducted recruitment for recruit (uncertified) firefighters. Partnered with Legal Services, Human Resources, and Finance to determine that firefighters do not need to contribute to Social Security, saving the employees and the City tens of thousands of dollars annually. Conducted an Emergency Operations Center drill and field exercise at the Phoenix/Goodyear Airport. Conducted a live demonstration of a burn building for City Council and other stakeholders at Luke Air Force Base. Council approved the location of PebbleCreek Parkway and Clubhouse Drive for a future fire station. Phoenix Fire Department upgraded all Mobile Data Terminals (MDTs) to Mobile Computing Terminals (MCTs) in all fire department apparatus at no charge. Reallocated funds from MCT replacement to fund two additional Plymovent (vehicle exhaust removal system) drops for Station 181 (to complete system). Council adopted the 2003 International Fire Code that included Firefighter Air Systems for refilling SCBAs in multi-story buildings; provisions aimed at increased firefighter safety. ISO conducted an audit of the City’s fire protection services and the City was upgraded to a “4” rating. Parks • Provided maintenance and support services at the new Community Park. • Provided support to Community Initiatives at GAIN events scheduled for Fall 2004 • Provided technical support during construction of the new Dog Park, and ensured that the same high standards of maintenance are carried out now that the park is open. • Developed a new inspection process for all playgrounds within the City of Goodyear. • Completed a Citywide asset inventory for all landscaping within the City of Goodyear owned rights-of-way, parks, and facilities. • Three employees attended and passed the Certified Pool Operator training • Changed work schedules to provide 7-day coverage in the parks. Recreation • Coordinated adult and youth sports leagues at the new Community Park. • Coordinated a Spring Fling Event and two concert series at the new Community Park. • Created four new special interest classes: Youth Golf, Belly Dancing, Dog Obedience, and Take a Hike with the Mayor. • Developed and coordinated Goodyear Little League. xi • • • • • Developed a new employee orientation program for lifeguards. Planned and budgeted for a study and design of a new city aquatic facility. Improved backwash drainage at the Loma Linda Pool. Offered year round dive lessons. Received $5,000 from Southwest Ambulance for swim lessons. Streets • Modified vehicle number 253 to be an exclusive sign installation and maintenance truck complete with toolboxes, hydraulic system and tools. • Upgraded 13 controllers with components compatible with fiber-optic coordination. • Replaced lighted metro signs at six intersections with new signs that include Lexar anti-graffiti film. • Activated a new traffic signal at Estrella Pkwy and I-10. • Purchased furniture and equipment for two additional signalized intersections. • Replaced damaged mast arms and supports at Palm Valley Blvd and Litchfield and at Indian School Rd and Litchfield Rd. • Milled and overlaid Litchfield Rd from Western/Yuma to Indian School Rd. with rubberized asphalt. • Received grant funding for the purchase of two new PM-10 certified street sweepers. • Received grant funding for National Pollution Discharge Elimination System (NPDES) training and education. • Modified sweeper routes to reduce cycle time from 3 weeks to 2 weeks. • Completed and turned in the Phase II Storm Water prevention report. Water • • • • • • • • • • • Completed department organization Monitored department expenses and cost effectiveness Met or exceeded all state and federal drinking water regulations Developed new potable water sources bringing an additional 660,000 gallons per day into the system. Evaluated system storage capacity and brought new 2 MGD tank on line Developed Reverse Osmosis (RO) Treatment Facility Met or exceeded all state and federal wastewater treatment regulations. Completed construction of the Rainbow Valley WRF Evaluated the feasibility of re-permitting the current SAT Site from 3. 0 mgd to 4. 0 mgd (million gallons per day) Developed a baseline distribution system maintenance program Evaluated lost water sources and formulated a plan to reduce lost water Sanitation • Designed and implemented a 500 residential home, commingled curbside recycling pilot program. • Conducted two regional Household Hazardous Waste (HHW) collection day events. The Cities of Goodyear, Avondale and Litchfield Park, as well as Luke Air Force Base participated in these events. xii • • • • • • • • • • • Performed public recycling outreach at the 2005 Women’s Expo, City of Goodyear Spring Spectacular, Billy Moore Parade, Western Heritage Parade, KMOR FM recycling interview and Public Works Appreciation Week at Desert Thunder Elementary school. Continue to provide data and feedback to the Solid Waste Advisory Committee assigned to identify and recommend Goodyear solid waste needs. Acquired the Maricopa County 2005 tire permit which allows Goodyear resident tire disposal at zero tipping fees. Entered into an Intergovernmental Agreement with the City of Glendale Materials Recovery Facility, which enables the City to deliver commingled recycling commodities at zero tipping fees. The IGA also enables Goodyear residents to deliver beverage, commingled glass to a drop off center within the Facility. Recycled 8 tons of Christmas trees. Chippings were used as ground cover by Duncan Farms. Extended the Residential Solid Waste Collection Agreement for one year. Sanitation staff member received the SWANA Collections Systems Manager certification. Two (2) Sanitation staff members received the SWANA Recycling Systems Manager certification Successfully added E-Waste (electronics) as an acceptable HHW material. Completed the Sanitation Account Billing Field Survey Synchronized the residential uncontained bulk collection holiday schedule with the residential contained holiday schedule. Community Initiatives • Seek additional revenue for the City of Goodyear through federal and state funding sources • Maintain Goodyear representation on regional boards and quasi-governmental councils • Preserve the Mission of Luke Air Force Base (AFB) • Draft and recommend policy and code changes that better coordinate and match existing codes • Continued to educate the community about voluntary code compliance • Improved customer advocacy by improving department database and reporting methodology and therefore turnaround times • Initiated formalized public participation training for City staff • Improved awareness of City services/projects/image through City’s website • Determined citizen satisfaction with City services and our customer service delivery • Enhanced the quality of all printed City communications • Identified “Target Area” neighborhoods for additional City resources and attention to needs. • Assisted neighborhoods through organizing new neighborhood associations (NAs) and enhancing learning for HOAs and NAs to become better equipped in governing their neighborhoods xiii • • Worked to establish G.A.I.N.(Getting Arizonans Involved) activities in all neighborhoods Facilitated the start-up of a citizen mediation program Community Development • Completed the development of a City Center Specific Area Development Plan. • Implemented the Housing Rehabilitation Program funded by HOME funds. • Implemented the planning and zoning HTE Module for better monitoring and tracking of development proposals. • Developed and implemented an incentive program for hot water re-circulating pumps for residential dwelling units. • Developed standards for regulating mobile mini-storage units in commercial developments. • Expanded the City Center Gateway overlay district landscape standards from the City Center to MC 85. • Implemented rubberized asphalt standards for new arterial and collector roads. • Consolidated and streamlined the landscape plan review and inspection process within the Engineering Division. • Initiated new outdoor lighting standards for non-residential private properties as well as public uses. • Partnered with Maricopa County Department of Transportation (MCDOT) to design the Cotton Lane Bridge over the Gila River. • Partnered with ADOT and MCDOT with the Design Concept Report for the future SR303 Freeway. • Implemented ARC-IMS software to provide access to GIS maps to all city departments. Completed the Water Utility Rates and Impact Fee study. For a complete listing of all the City departments and their accomplishments for FY 04-05, please contact the City's Budget and Research Office for a copy of the FY 05-06 budget book. For The Future The City's financial and operational plans will continue to support basic government services including roads, police, fire, water, sewer, solid waste management, building safety, code enforcement, and parks and recreation. In addition, the Council has begun a process to assist in the identification, prioritization, and management of emerging strategic issues that, by virtue of their scope, complexity, and/or potential impact, requires a coordinated multi-departmental action plan and budget. The City Council works closely with City management to implement specific objectives and tasks designed to meet these goals. The following major goals were identified by the City Council as important priorities for the future: • • Improve the quality level of City services to its citizens Reduce crime in the City xiv • • • Improve the quality and level of public safety services to citizens Promote City's economic development through retention, expansion and recruitment of current and future businesses Continue, within financial constraints, the physical development of the City Employee Pension Plans The City participates in two employee pension plans. The general employee plan is administered through the Arizona State Retirement System. The Public Safety Pension Plan is administered by the Arizona Public Safety Personnel Retirement System. Both the employee and the employer make contributions directly to these organizations. Financial information about these plans can be found in the notes to the financial statements included in the Financial Section of this report. The City also administers a small pension fund that provides retirement income for volunteer firemen. The City no longer utilizes volunteer firemen, and only one former member currently receives payments under the plan. Debt Administration The Arizona Constitution provides that the general obligation bonded indebtedness for a city for general municipal purposes may not exceed six percent (6%) of the secondary assessed valuation of the taxable property in that city. In addition cities may issue general obligation bonds up to an additional twenty percent (20%) of the secondary assessed valuation for supplying water, artificial light, or sewers, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities. As of June 30, 2005, the City's net general obligation debt of $58,265,000 was below the combined legal limit of $85,069,821. The City of Goodyear anticipates selling an additional $29,000,000 in General Obligation Bonds in FY 05-06. The following is a summary of the City's outstanding debt, excluding the Community Facilities District Bonds of $69,452,600, as of June 30, 2005. • General Obligation Bonds • Water & Sewer Revenue Bonded Debt • Public Improvement Corporation Bonded Debt • Greater Arizona Development Authority Loan Total $58,265,000 $13,717,624 $ 3,640,000 $ 4,085,000 $79,707,624 Cash Management The Finance Department manages the City's investment portfolio. The City's investment policy is to invest public funds with maximum security in a manner which will provide the highest return while meeting the daily cash flow demands of the City and conform to all applicable state and local statutes. The primary objectives, in priority order, are safety of principal, liquidity, and attaining a market rate of return. xv xvi CITY OF GOODYEAR LIST OF PRINCIPAL OFFICIALS MAYOR James M. Cavanaugh VICE MAYOR Frank Cavalier COUNCIL MEMBERS Richard A. Sousa Rob Antoniak Fred Scott Brenda Holland Georgia Lord SENIOR MANAGEMENT STAFF Stephen S. Cleveland City Manager Michael Simonson Presiding Judge Roric Massey City Attorney Brian J. Dalke Deputy City Manager James R. Nichols Deputy City Manager Dee Cockrum City Clerk Kay Wilkinson Human Resources Director Holly Childs Economic Development Director Mark K. Brown Police Chief Mark Gaillard Fire Chief Harvey Krauss Community Development Director Larry Lange Finance Director Jack Blonksi Information Technology Director Cato Esquivel Public Works Director Jerene Watson Community Services Director Charles McDowell Acting Water Resources Director xviii xix Mark Brown Chief of Police POLICE DEPARTMENT Jack Blonski Director INFORMATION TECHNOLOGY Larry Lange Director Charles McDowell Acting Director WATER RESOURCES Cato Esquivel Director PUBLIC WORKS Mark Gaillard Fire Chief FINANCE FIRE DEPARTMENT Dave Ramirez City Engineer ENGINEERING Jerene Watson Director COMMUNITY SERVICES Holly Childs Director Kay Wilkinson Director HUMAN RESOURCES Dee Cockrum ECONOMIC DEVELOPMENT Jeff Fine Court Administrator COURTS Harvey Krauss Director CITY CLERK Jim Nichols COMMUNITY DEVELOPMENT DEPUTY CITY MANAGER COUNCIL SUPPORT Michael Simonson MUNICIPAL JUDGE Brian Dalke Paula Ilardo Communications Manager COMMUNICATIONS Stephen Cleveland OFFICE OF CITY MANAGER DEPUTY CITY MANAGER Roric Massey CITY ATTORNEY MAYOR & CITY COUNCIL CITY OF GOODYEAR STRATEGIC PLANNING and CIP FINANCIAL SECTION FINANCIAL SECTION MANAGEMENT’S DISCUSSION & ANALYSIS MANAGEMENT’S DISCUSSION AND ANALYSIS As management of the City of Goodyear, Arizona (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2005 (2005). We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages v-xvi of this report. FINANCIAL HIGHLIGHTS The financial statements which follow the Management’s Discussion and Analysis provide those significant key financial highlights for 2005 as follows: • • • • The City’s total net assets of governmental activities increased $16.2 million to $245.9 million and business-type activities increased $8.0 million to $59.1 million representing 80.6% and 90.4% respectively, of the total net assets of $305.0 million. General revenues from governmental activities accounted for $40.2 million in revenue, or 58.5% of all revenues from governmental activities. Program specific revenues in the form of charges for services and grants and contributions accounted for $28.4 million or 41.5% of total governmental activities revenues. The City had $26.3 million of program revenues and $96,000 in general revenues related to business-type activities. The City had $53.1 million in expenses related to governmental activities; of which $28.5 million of these expenses were offset by program specific charges for services or grants and contributions. General revenues of $40.2 million were adequate to provide for the remaining costs of these programs. The City had $17.7 million in expenses related to business-type activities. Program specific charges for services or grants and contributions of $26.3 million were adequate to offset the costs. Among major governmental funds, the General Fund had $44.6 million in revenues, which primarily consisted of taxes, licenses and permits, charges for services and intergovernmental revenues. The total expenditures of the General Fund were $33.2 million. The General Fund’s fund balance increased from $18.7 million to $29.4 million. This increase was primarily due to revenues increasing faster than operating expenditures. The Community Facilities District – Debt Service Fund had revenues of $5.6 million, which consisted of taxes and special assessments, and expenditures of $7.0 million. The Capital Improvement Projects Fund had revenue of $.5 million, which consisted mainly of developer reimbursements, and expenditures of $1.8 million. The fund balance of the Capital Improvement Projects Fund increased by $28.5 million from the prior year due to the issuance of general obligation bonds. The Community Facilities District – Capital Projects Funds fund balance increased by $6.1 million primarily due to the debt issuance. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) governmentwide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private sector business. The statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. 5 The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). In the government-wide financial statements the City’s activities are presented in the following categories: • • Governmental activities – Most of the City’s basic services are included here, such as general government, public safety, highways and streets, public works, culture and recreation, and community development. Sales taxes, intergovernmental, and charges for services revenue finance most of these activities. Business-type activities – The services provided by the City included here are water, wastewater, and sanitation services. These services are financed through user fees and charges. The government-wide financial statements can be found on pages 17-19 of this report. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decision. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. These reconciliations are on pages 23 and 26, respectively. The City maintains 15 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Community Facilities Districts – Debt Service, Capital Improvement Projects and Community Facilities Districts – Capital Projects Funds, all of which are considered to be major funds. Data from the other 11 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules beginning on page 66 of this report. The governmental fund financial statements can be found on pages 20 – 27 of this report. Proprietary funds. The City maintains one type of proprietary fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses separate enterprise funds to account for its water and sewer 6 services and its sanitation services. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide information for the water and sewer fund and the sanitation fund, both of which are considered to be major funds of the City. The proprietary fund financial statements can be found on pages 28 – 31 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary fund financial statement can be found on pages 32 – 33 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 37 – 58 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s budget process. The City adopts an annual budget for all governmental funds. A budgetary comparison schedule has been provided for the General Fund as required supplementary information. The required supplementary information can be found on pages 61 – 63 of this report. The combining statements referred to earlier in connection with non-major governmental funds is presented immediately following the required supplementary information on budgets. Combining and individual fund statements and schedules can be found on pages 66 – 73 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $305.0 million as of June 30, 2005. By far the largest portion of the City’s net assets (59.9%) reflect its investment in capital assets (e.g., land, infrastructure, buildings, improvements other than buildings, vehicles, machinery and equipment and construction in progress), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. In addition, a portion of the City net assets (6.2%) are restricted for the specified purposes of debt service repayment. The City’s financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition and disposal of capital assets, and the depreciation of capital assets. 7 The following tables present a summary of the City’s net assets for the fiscal year ended June 30, 2005 and 2004. Current assets Restricted assets Capital assets, net Total assets Current liabilities Noncurrent liabilities Total liabilities Governmental Activities $ 122,362,399 9,713,144 262,880,205 394,955,748 2005 Business-type Activities $ 10,558,674 70,357,124 80,915,798 Total $ 132,921,073 9,713,144 333,237,329 475,871,546 12,327,711 136,735,337 149,063,048 6,917,516 14,836,776 21,754,292 19,245,227 151,572,113 170,817,340 Net assets Invested in capital assets, net of related debt Restricted for: Special revenue purposes Debt service Capital projects Unrestricted Total net assets 127,120,944 55,662,610 182,783,554 14,475,469 19,013,124 58,902,675 26,380,488 $ 245,892,700 $ 3,498,896 59,161,506 14,475,469 19,013,124 58,902,675 29,879,384 $ 305,054,206 Current assets Internal balances Restricted assets Capital assets, net Total assets Governmental Activities $ 55,288,445 12,336,547 10,401,695 261,064,851 339,091,538 2004 Business-type Activities Total $ 10,871,602 $ 66,160,047 (12,336,547) 10,401,695 62,461,518 323,526,369 60,996,573 400,088,111 Current liabilities Noncurrent liabilities Total liabilities Net assets Invested in capital assets, net of related debt Restricted for grant purposes Restricted for debt service Restricted for capital projects Unrestricted Total net assets 9,609,204 99,785,293 109,394,497 6,075,115 3,792,958 9,868,073 15,684,319 103,578,251 119,262,570 162,387,951 121,571 6,388,963 21,129,201 39,669,358 $ 229,697,044 46,277,707 4,850,793 51,128,500 208,665,658 121,571 6,388,963 21,129,201 44,520,151 $ 280,825,544 $ 8 The following are significant current year transactions that have had an impact on the Statement of Net Assets. • • • • The issuance of $29.3 million in general obligation bonds. The issuance of $12.7 million in community facilities district bonds. The addition of $9.6 million in governmental activities capital assets through continued construction of system infrastructure, including developer contributions, equipment additions. The addition of $10.2 million in business-type activities capital assets through continued construction of system infrastructure, including developer contributions, equipment additions. the and the and Changes in net assets. The City’s total revenues for the fiscal year ended June 30, 2005 were $95.1 million. The total cost of all programs and services was $70.9 million. The following table presents a summary of the changes in net assets for the fiscal year ended June 30, 2005. 2005 Governmental Business-type Activities Activities Revenues Program revenues Charges for services Operating grants and contributions Capital grants and contributions General revenues: Sales taxes Property taxes Franchise taxes State shared revenue Investment income Miscellaneous Total Revenues Expenses General government Public safety Highways and streets Public works Culture and recreation Community development Interest on long-term debt Water and sewer Sanitation Total expenses Transfers Increase in net assets Total $ 11,459,192 $ 15,457,023 $ 26,916,215 523,405 - 523,405 16,472,105 10,853,019 27,325,124 21,747,851 8,583,676 1,166,525 5,973,538 1,079,720 1,641,295 $ 68,647,307 88,211 7,666 $ 26,405,919 21,747,851 8,583,676 1,166,525 5,973,538 1,167,931 1,648,961 $ 95,053,226 $ 8,602,993 16,054,895 8,007,969 6,398,665 2,591,911 6,861,768 4,567,604 53,085,805 634,153 $ 16,195,655 $ - $ 8,602,993 16,054,895 8,007,969 6,398,665 2,591,911 6,861,768 4,567,604 15,150,219 15,150,219 2,588,541 2,588,541 17,738,760 70,824,565 (634,153) $ 8,033,006 $ 24,228,661 9 2004 Governmental Business-type Activities Activities Revenues Program revenues Charges for services Operating grants and contributions Capital grants and contributions General revenues: Sales taxes Property taxes Franchise taxes State shared revenue Investment income Miscellaneous Total Revenues Expenses General government Public safety Highways and streets Public works Culture and recreation Community development Interest on long-term debt Water and sewer Sanitation Total expenses Transfers Increase (decrease) in net assets $ 8,541,514 $ 14,739,539 4,217,554 2,744,892 1,716,362 5,386,786 5,649,175 13,696,021 2,133,917 42,995,822 15,829,938 (799,999) 799,999 $ 45,941,107 $ 14,352,362 Total $ 10,555,004 $ 16,492,071 $ 27,047,075 109,956 - 109,956 46,863,563 12,702,625 59,566,188 17,342,116 7,187,270 958,006 5,756,754 556,145 408,114 $ 89,736,928 119,849 67,756 $ 29,382,301 17,342,116 7,187,270 958,006 5,756,754 675,994 475,870 $ 119,119,229 $ 8,541,514 14,739,539 4,217,554 2,744,892 1,716,362 5,386,786 5,649,175 13,696,021 2,133,917 58,825,760 $ 60,293,469 Governmental and Business-type activities. The following table presents the cost of the nine major City functional activities. The table also shows each function’s net cost (total cost less charges for services generated by the activities and intergovernmental aid provided for specific programs). The net cost shows the financial burden that was placed on the State and City’s taxpayers by each of these functions. 10 Total Expenses Governmental Activities General government Public safety Highways and streets Public works Culture and recreation Community development Interest on long-term debt Total expenses Business-Type Activities Water and Sewer Sanitation Total expenses Total • $ 2005 Net (Expense)/ Revenue 8,602,993 16,054,895 8,007,969 6,398,665 2,591,911 6,861,768 4,567,604 53,085,805 15,150,219 2,588,541 17,738,760 $ 70,824,565 $ (7,647,915) (15,369,676) (2,103,969) 3,746,894 (2,458,718) 3,769,885 (4,567,604) (24,631,103) 8,373,675 197,607 8,571,282 $ (16,059,821) The cost of all governmental activities this year was $53.1 million. business-type activities this year was $17.7 million. The cost of all FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of the City’s net resources available for spending at the end of the fiscal year. The financial performance of the City as a whole is reflected in its governmental funds. As the City completed the year, its governmental funds reported a combined fund balance of $106.2 million. The General Fund is the principal operating fund of the City. The increase in fund balance of $10.7 million in the General Fund to $29.4 million as of June 30, 2005 was a result of increased revenues from tax revenues. The Community Facilities Districts – Debt Service Fund balance showed an increase of $.1 million to $6.5 million as of June 30, 2005. The Capital Improvement Projects Fund showed a fund balance increase of $28.5 million to $37.7 million as of June 30, 2005 due to the issuance of general obligation bonds. Proprietary funds. Net assets of the Enterprise Funds at the end of the year amounted to $59.2 million. The increase of $8.0 million in the Enterprise Funds for the fiscal year ended June 30, 2005 is due primarily from the contribution of $6.4 million in infrastructure by developers. 11 BUDGETARY HIGHLIGHTS The City’s annual budget is the legally adopted expenditure control document of the City. The schedules filed with the Auditor General’s office list the original budget adopted for the prior year, estimated expenditures through the end of the fiscal year and the adopted current year’s budget. The City did not revise the annual operating budget during the year. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. As of June 30, 2005, the City had invested $333.2 million in capital assets including land, buildings, facilities, vehicles, computers, equipment, and infrastructure assets. Total depreciation expense for the year was $10.1 million. The following schedule presents capital asset balances and accumulated depreciation for the fiscal year ended June 30, 2005. Land Right of way Streetscape Infrastructure Buildings and improvements Vehicles, furniture and equipment Improvements other than buildings Construction in progress Accumulated depreciation Total 2005 Governmental Business-type Activities Activities Total $ 16,579,557 $ 3,158,615 $ 19,738,172 112,808,609 112,808,609 5,771,420 5,771,420 139,143,127 139,143,127 18,591,509 18,591,509 21,403,138 11,317,890 32,721,028 72,112,362 72,112,362 192,020 192,020 (51,609,175) (16,231,743) (67,840,918) $ 262,880,205 $ 70,357,124 $ 333,237,329 Additional information on the City’s capital assets can be found in Note 4 of this report. Debt Administration. As year-end, the City had $135.4 million in governmental long-term debt outstanding with $792,600 due within one year. The City had $13.8 million in business-type longterm debt outstanding. The following table presents a summary of the City’s outstanding longterm debt for the fiscal years ended June 30, 2005. General obligation bonds payable Community facilities districts bonds payable Loan payable Revenue bonds payable Total 2005 Governmental Business-type Activities Activities $ 58,265,000 $ 69,452,600 4,085,000 11,007,624 3,640,000 2,710,000 $ 135,442,600 $ 13,717,624 The Arizona constitution limits the amount of general obligation debt a city may issue to 20 percent of its total assessed valuation for water, sewer, lights, open space preserves, parks, playgrounds and recreational facilities. The current debt limitation for the City is $65.4 million. The City has $48.9 million outstanding general obligation debt for these purposes. State statutes also currently limit the amount of general obligation debt a city may issue to 6 percent of its total assessed valuation for all other purposes. The current debt limitation for the City is $19.6 million less direct bonded debt outstanding of $9.4 million. 12 Additional information on the City’s long-term debt can be found in Notes 5 – 10 of this report. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The unemployment rate in the metropolitan Phoenix region for June 2005 was 3.9%, which remains below both the state (4.6%) and national average (5.0%). While the regional economy remains strong, it is traditionally largely driven by construction, due to the continued population growth of the state and metropolitan area, as well as the financial services and tourism sectors. Arizona cities remain dependant on sales taxes and other economically sensitive tax revenues and are susceptible to slowdowns in the economy. Because of the continued growth of the community, Goodyear’s revenues have continued to increase. Goodyear continues to attract new retail businesses, restaurants, and employment businesses, helping to increase the City’s sales tax base. The adopted fiscal year 2005-06 budget expects sales tax revenues to increase 116.2%, while total General Fund operating revenues are expected to increase 29.4%. To ensure the City remains financially strong, the adopted fiscal year 2005-06 budget is $223.7million (up 45.9% from 2004-05). It includes a $57.9 million operating budget (an increase of 25.2% from 2004-05) and a $131.4 million capital projects budget (up 22.7% from 2004-05). The fiscal year 2005-06 budget included 72 new staff positions to support City services. The City has continued to build cash balances over the last few years, both for financial stability and in anticipation of the capital and ongoing operational needs of a growing city. The City has established reserves within the General Fund in accordance with the City’s adopted financial policies. CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the resources it receives. If you have questions about this report or need additional information, contact the City’s Controller, City of Goodyear, 190 N. Litchfield Road, Goodyear, Arizona 85338 or by mail at P.O. Box 5100, Goodyear, Arizona 85338. 13 FINANCIAL SECTION BASIC FINANCIAL STATEMENTS City of Goodyear Statement of Net Assets June 30, 2005 ASSETS Cash and cash equivalents Receivables (net of allowance for uncollectibles) Due from other governments Inventories Prepaid items Deferred charges Restricted cash and cash equivalents Capital assets: Land and construction in progress Other capital assts (net of accumulated depreciation) Total assets LIABILITIES Accounts payable and other current liabilities Accrued payroll and employee benefits Accrued interest payable Deposits held for others Unearned revenue Noncurrent liabilities: Due within one year: Compensated absences Bonds payable Due in more than one year: Compensated absences Loans payable Bonds payable Interest payable Deferred amount on refunding Bond discount Bond premium Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Special revenue purposes Debt service Capital projects Unrestricted Total net assets Governmental Activities $ 101,242,713 Business-type Activities $ 8,559,756 19,966,588 5,457 86,499 48,741 1,012,401 9,713,144 1,787,093 142,292 69,533 135,351,606 3,158,615 138,510,221 127,528,599 394,955,748 67,198,509 80,915,798 194,727,108 475,871,546 7,243,057 975,338 1,674,697 371,839 788,010 1,753,927 97,312 247,422 4,767,620 8,996,984 1,072,650 1,674,697 619,261 5,555,630 482,170 792,600 51,235 - 533,405 792,600 - Total $ 109,802,469 21,753,681 5,457 228,791 118,274 1,012,401 9,713,144 1,768,676 4,085,000 130,565,000 (82,874) (79,896) 479,431 149,063,048 142,262 11,007,624 2,710,000 942,822 34,068 21,754,292 1,910,938 15,092,624 133,275,000 942,822 (82,874) (79,896) 513,499 170,817,340 127,120,944 55,662,610 182,783,554 14,475,469 19,013,124 58,902,675 26,380,488 $ 245,892,700 3,498,896 $ 59,161,506 14,475,469 19,013,124 58,902,675 29,879,384 $ 305,054,206 245,892,700 17 City of Goodyear Statement of Activities For The Year Ended June 30, 2005 Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Public works Culture and recreation Community development Interest on long-term debt Total governmental activities Business-type activities: Water and sewer Sanitation Total business-type activities Total primary government Expenses $ 8,602,993 16,054,895 8,007,969 6,398,665 2,591,911 6,861,768 4,567,604 53,085,805 Program Revenues Operating Capital Charges for Grants and Grants and Services Contributions Contributions $ 133,367 434,179 126,800 133,193 10,631,653 11,459,192 15,150,219 2,588,541 17,738,760 12,670,875 2,786,148 15,457,023 $ 70,824,565 $ 26,916,215 $ 272,365 251,040 523,405 $ 523,405 $ 549,346 5,904,000 10,018,759 16,472,105 10,853,019 10,853,019 $ 27,325,124 General revenues: Sales taxes Property taxes Franchise taxes State shared revenues Investment income Miscellaneous Transfers in (out) Total general revenues and transfers Changes in net assets Net assets, beginning of year Net assets, end of year 18 Net (Expense) Revenue and Changes in Net Assets Governmental Activities $ (7,647,915) (15,369,676) (2,103,969) 3,746,894 (2,458,718) 3,769,885 (4,567,604) (24,631,103) Business-type Activities $ (24,631,103) $ - Totals $ (7,647,915) (15,369,676) (2,103,969) 3,746,894 (2,458,718) 3,769,885 (4,567,604) (24,631,103) 8,373,675 197,607 8,571,282 8,373,675 197,607 8,571,282 8,571,282 (16,059,821) 21,747,851 8,583,676 1,166,525 5,973,538 1,079,720 1,641,295 88,211 7,666 21,747,851 8,583,676 1,166,525 5,973,538 1,167,931 1,648,961 634,153 40,826,758 (634,153) (538,276) 40,288,482 16,195,655 8,033,006 24,228,661 229,697,045 51,128,500 280,825,545 245,892,700 - $ 59,161,506 $ 305,054,206 59,161,506 19 City of Goodyear Balance Sheet Governmental Funds June 30, 2005 ASSETS Cash and cash equivalents Taxes receivable Interest receivable Accounts receivable Special assessments receivable Due from other governments Due from other funds Inventories Prepaid items Restricted cash and cash equivalents Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll and employee benefits Accrued interest payable Deposits held for others Due to other funds Deferred revenue Total liabilities Fund balances: Reserved: Debt service Capital improvements Unreserved: Designated for capital replacement Unreserved, reported in: General fund Special revenue funds Capital improvements Total fund balances Total liabilities and fund balances General $ 27,896,785 3,879,233 169,623 324,830 754,334 27,995 31,741 $ 33,084,541 $ 1,793,596 1,168,098 132,666 596,724 3,691,084 Community Facilities DistrictsDebt Service $ 6,650,156 40,934 9,218 15,044,810 701 - Capital Improvement Projects $ 37,928,183 12,877 - $ 21,745,819 $ $ 163,093 15,063,457 15,226,550 $ - 6,519,269 - 3,053,108 $ 33,084,541 - - 6,519,269 $ 21,745,819 - 236,809 1,479 238,288 - - 26,340,349 29,393,457 8,411 37,949,471 37,711,183 37,711,183 $ 37,949,471 - 20 Community Facilities DistrictsCapital Projects $ 12,738,554 6,568 3,825 9,704,731 $ 22,453,678 Non-Major Governmental Funds $ 16,029,037 223,649 18,912 232,109 5,457 58,504 17,000 $ 16,584,668 Total Governmental Funds $ 101,242,715 4,143,816 217,198 560,764 15,044,810 5,457 755,035 86,499 48,741 9,713,142 $ 131,818,177 $ $ $ 4,439,935 701 4,440,636 9,704,731 123,863 - - - 8,308,311 18,013,042 $ 22,453,678 - 772,717 21,438 87,177 76,082 754,334 273,588 1,985,336 $ 7,243,057 1,189,536 87,177 371,841 755,035 15,935,248 25,581,894 6,643,132 9,704,731 3,053,108 14,475,469 14,599,332 26,340,349 14,475,469 46,019,494 106,236,283 16,584,668 $ 131,818,177 - - 21 City of Goodyear Reconciliation of the Balance Sheet to the Statement of Net Assets Governmental Funds June 30, 2005 Total governmental fund balances $ 106,236,283 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Governmental capital assets Less accumulated depreciation $ 314,489,380 (51,609,175) 262,880,205 Certain revenues earned but not received within 60 days of year-end are deferred for the governmental statements, but are recognized as revenue for the government-wide statements. Property taxes Special assessments 102,428 15,044,810 15,147,238 Interest payable on long-term debt is not reported in the governmental funds. (1,587,520) Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. Compensated absences payable Bond issuance cost Bond refunding amount Bond discount Bond premiums Loan payable Bonds payable Net assets of governmental activities (2,036,646) 1,012,401 82,874 79,896 (479,431) (4,085,000) (131,357,600) (136,783,506) $ 245,892,700 245,892,700 23 City of Goodyear Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For The Year Ended June 30, 2005 REVENUES Taxes Licenses and permits Intergovernmental revenues Charges for services Fines and forfeits Investment income Special assessments Contributions Miscellaneous Total revenues $ EXPENDITURES Current: General government Public safety Highways and streets Public works Culture and recreation Community development Capital outlay Debt service: Principal retirement Interest and debt cost Total expenditures Excess (deficiency) of revenues over (under) expenditures General 26,463,250 7,899,726 4,338,976 3,056,440 364,301 600,945 525,933 1,395,386 44,644,957 Community Facilities Districts Debt Service $ 2,044,858 114,100 2,580,510 879,154 5,618,622 7,306,201 13,477,055 2,126 1,828,399 2,128,218 6,615,281 1,485,935 Capital Improvement Projects $ 44,705 459,044 503,749 - 1,366,809 145,000 178,685 33,166,900 3,377,354 3,578,607 6,955,961 387,561 1,754,370 11,478,057 (1,337,339) (1,250,621) OTHER FINANCING SOURCES (USES) Debt issuance Debt premium Transfers in Transfers out Total other financing sources and uses 1,503,077 (2,288,830) (785,753) 1,455,000 2,755 10,389 1,468,144 29,260,000 476,838 29,736,838 Net change in fund balances 10,692,304 130,805 28,486,217 Fund balances, beginning of year 18,701,153 6,388,464 9,224,966 Fund balances , end of year $ 29,393,457 $ 6,519,269 $ 37,711,183 24 Community Facilities Districts Capital Projects $ 202,562 516,063 718,625 Non-Major Governmental Funds $ 2,993,592 1,949,981 6,837,848 117,407 20,913 245,909 12,165,650 Total Governmental Funds $ 31,501,700 7,899,726 6,288,957 9,894,288 364,301 1,079,719 2,580,510 2,401,107 1,641,295 63,651,603 5,642,660 453,340 245,398 2,126,282 89,326 21,244 1,544,128 7,759,541 13,722,453 2,128,408 1,917,725 2,128,218 6,636,525 10,039,532 246,769 5,889,429 1,805,000 1,433,730 7,718,448 5,327,354 5,825,352 55,485,108 (5,170,804) 4,447,202 8,166,495 11,290,000 (10,389) 11,279,611 1,419,906 1,419,906 42,005,000 479,593 2,933,372 (2,299,219) 43,118,746 6,108,807 5,867,108 51,285,241 11,904,235 8,732,224 54,951,042 14,599,332 $ 106,236,283 $ 18,013,042 $ 25 City of Goodyear Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds To the Statement of Activities For The Year Ended June 30, 2005 Net change in fund balances - total governmental funds $ 51,285,241 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives as depreciation expense. Also, assets contributed to the City are not reported in the fund statement and are reported in the Statement of Activities. Contributions Expenditures for capitalized assets Less current year depreciation $ 5,904,000 3,742,930 (7,831,575) 1,815,355 Revenues received in the current year that were accrued in the Statement of Activities in prior years. Property taxes Special assessments (641) (907,656) Bond proceeds provide current financial resources to the governmental funds, but issuing debt increases long-term liabilities in the Statement of Activities. (42,005,000) Interest expense in the Statement of Activities differs from the amount reported in governmental funds because accrued interest was calculated for bonds and notes payable for the Statement of Activities, but is expensed when due for the governmental fund statements. 170,469 Governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. 695,740 Repayment of long-term debt are expenditures in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets. Debt principal retirement 5,239,300 Compensated absences expenses reported in the Statement of Activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. Change in net assets of governmental activities (97,153) $ 16,195,655 26 City of Goodyear General Fund Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Original $ 22,447,005 7,624,454 3,993,596 1,533,384 314,993 4,854 145,561 151,635 36,215,482 Final $ 22,447,005 7,624,454 3,993,596 1,533,384 314,993 4,854 145,561 151,635 36,215,482 Actual $ 26,463,250 7,899,726 4,338,976 3,056,440 364,301 600,945 525,933 1,395,386 44,644,957 Variance with Final Budget Positive (Negative) $ 4,016,245 275,272 345,380 1,523,056 49,308 596,091 380,372 1,243,751 8,429,475 13,399,330 14,437,661 265,036 1,859,564 2,412,311 7,783,260 3,075,407 13,399,330 14,437,661 265,036 1,859,564 2,412,311 7,783,260 3,075,407 7,306,201 13,477,055 2,126 1,828,399 2,128,218 6,615,281 1,485,935 6,093,129 960,606 262,910 31,165 284,093 1,167,979 1,589,472 135,000 186,785 43,554,354 135,000 186,785 43,554,354 145,000 178,685 33,166,900 (10,000) 8,100 10,387,454 (7,338,872) (7,338,872) 11,478,057 18,816,929 Budgeted Amounts REVENUES Taxes Licenses and permits Intergovernmental revenues Charges for services Fines and forfeits Investment income Contributions Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Highways and streets Public works Culture and recreation Community development Capital outlay Debt service: Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers out Total other financing sources (uses) - - 1,503,077 (2,288,830) 1,503,077 (2,288,830) - - (785,753) (785,753) Net change in fund balance (7,338,872) (7,338,872) 10,692,304 Fund balance, beginning of year 18,701,153 18,701,153 18,701,153 $ 11,362,281 $ 11,362,281 $ 29,393,457 Fund balance, end of year 18,031,176 $ 18,031,176 27 City of Goodyear Statement of Net Assets Proprietary Funds June 30, 2005 Enterprise Funds ASSETS Current assets: Cash and cash equivalents Interest receivable Accounts receivable Prepaid items Inventories Total current assets Water & Sewer $ Noncurrent assets: Non-depreciable capital assets Depreciable capital assets Total noncurrent assets Total assets 8,425,472 18,279 1,477,108 69,533 142,292 10,132,684 Sanitation $ 134,284 388 291,318 425,990 Total $ 8,559,756 18,667 1,768,426 69,533 142,292 10,558,674 3,158,615 67,097,108 70,255,723 80,388,407 101,401 101,401 527,391 3,158,615 67,198,509 70,357,124 80,915,798 1,231,799 74,804 344,788 247,422 4,767,620 41,248 6,707,681 177,340 22,508 9,987 209,835 1,409,139 97,312 344,788 247,422 4,767,620 51,235 6,917,516 Noncurrent liabilities: Accrued interest payable Compensated absences payable Loan payable Bonds payable Bond premium Total noncurrent liabilities Total liabilities 942,822 119,876 11,007,624 2,710,000 34,068 14,814,390 21,522,071 22,386 22,386 232,221 942,822 142,262 11,007,624 2,710,000 34,068 14,836,776 21,754,292 NET ASSETS Invested in capital assets, net of related debt Unrestricted Total net assets 55,561,209 3,305,127 58,866,336 101,401 193,769 295,170 55,662,610 3,498,896 59,161,506 LIABILITIES Current liabilities: Accounts payable Accrued payroll and employee benefits Accrued liabilities Deposits held for others Unearned revenue Compensated absences payable Total current liabilities $ 58,866,336 (58,866,336) $ $ 295,170 295,170 - 28 City of Goodyear Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For The Year Ended June 30, 2005 Enterprise Funds Water & Sewer Operating revenues: Charges for service Miscellaneous Total operating revenue $ Operating expenses: Administration Costs of sales and services Depreciation Total operating expenses $ 856,039 11,690,943 2,239,357 14,786,339 Operating income Nonoperating revenues (expenses): Investment income Interest expense Total nonoperating revenues Income before capital contributions and transfers Capital contributions Transfers out Change in net assets Net assets, beginning of year Net assets, end of year 12,670,875 7,666 12,678,541 Sanitation $ 2,786,148 2,786,148 Total $ 466,311 2,063,800 58,430 2,588,541 15,457,023 7,666 15,464,689 1,322,350 13,754,743 2,297,787 17,374,880 (2,107,798) 197,607 (1,910,191) 86,501 (363,880) (277,379) 1,710 1,710 88,211 (363,880) (275,669) (2,385,177) 199,317 (2,185,860) 10,853,019 (172,374) (461,779) 10,853,019 (634,153) 8,295,468 (262,462) 8,033,006 50,570,868 557,632 51,128,500 58,866,336 $ 295,170 $ 59,161,506 29 City of Goodyear Statement of Cash Flows Proprietary Funds For The Year Ended June 30, 2005 Enterprise Funds Cash flows from operating activities: Received from customers Payments to vendors Payments to employees Net cash provided (used) by operating activities Water & Sewer Sanitation Total $ 12,157,489 (25,822,174) (763,714) $ 2,815,112 (2,031,215) (450,416) $ 14,972,601 (27,853,389) (1,214,130) (14,428,399) 333,481 (14,094,918) Cash flows from noncapital and related financing activities: Interfund transfers (172,374) (461,779) (634,153) Net cash used for noncapital and related financing activities (172,374) (461,779) (634,153) Cash flows from capital and related financing activities: Acquisition and construction of capital assets Proceeds from capital debt Principal paid on long-term debt Interest paid on long-term debt Development impact fees received (7,498,803) 12,399,551 (757,540) (309,254) 10,853,019 - (7,498,803) 12,399,551 (757,540) (309,254) 10,853,019 Net cash provided for capital and related financing activities 14,686,973 - 14,686,973 Cash flows from investing activities: Investment income received Net cash provided by investing activities Net change in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year 97,834 2,021 99,855 97,834 2,021 99,855 184,034 (126,277) 8,241,438 $ 8,425,472 8,425,472 $ 57,757 260,561 8,501,999 134,284 $ 8,559,756 134,284 30 City of Goodyear Statement of Cash Flows Proprietary Funds For The Year Ended June 30, 2005 Enterprise Funds Water & Sewer Sanitation Total $ (2,107,798) $ 197,607 $ (1,910,191) Reconciliation of operating income (loss) to net cash provided (used) by operating activities Operating income (loss) Adjustment to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation (Increase) decrease in: Accounts receivable Inventories Increase (decrease) in: Accounts payable Accrued payroll and employee benefits Accrued liabilities Due to other funds Deposits held for others Compensated absences payable 2,239,357 58,430 2,297,787 (570,852) (8,457) 28,964 - (541,888) (8,457) (1,930,812) 22,282 144,585 (12,336,547) 49,800 70,043 32,585 8,908 6,987 (1,898,227) 31,190 144,585 (12,336,547) 49,800 77,030 Net cash provided (used) by operating activities $ (14,428,399) $ 333,481 $ (14,094,918) 31 City of Goodyear Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2005 Pension Trust ASSETS Cash and cash equivalents Interest receivable Total assets $ LIABILITIES Accrued liabilities Total liabilities NET ASSETS Held in trust for pension benefits 301,957 2 301,959 17,026 17,026 $ 284,933 32 City of Goodyear Statement of Changes in Fiduciary Net Assets Pension Trust Fund For The Year Ended June 30, 2005 Pension Trust ADDITIONS Contributions: Total contributions $ Investment income Interest Total investment income Total additions 968 968 968 DEDUCTIONS Benefits Total deductions 47,730 47,730 Net decrease Net assets, beginning of year Net assets, end of year - (46,762) $ 331,695 284,933 33 FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Goodyear, Arizona (City) have been prepared in conformity with accounting principles generally accepted in the United Sates of America as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. A. Reporting Entity The City is a municipal entity governed by an elected Mayor and council. As required by accounting principles generally accepted in the United States of America, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are in substance, part of the City’s operations and so data from these units are combined with data from the City, the primary government. The financial reporting entity consists of a primary government, and its component units. The City is a primary government that has a separately elected governing body, is legally separate, and is fiscally independent of other state or local governments. Furthermore, component units are combined with the City for financial statement presentation purposes, and are not included in any other governmental reporting entity. Consequently, the City’s financial statements include the funds of those organizational entities for which its elected governing body is financially accountable. Blended Component Units - The Goodyear Community Facilities General District No. 1, Goodyear Community Facilities Utilities District No. 1, Wildflower Ranch Community Facilities General District No. 1, Wildflower Ranch Community Facilities General District No. 2, Estrella Mountain Ranch Community Facilities District No.1, Cottonflower Community Facilities District, Centerra Community Facilities District, Cortina Community Facilities District and Palm Valley Community Facilities District were formed for the purpose of acquiring and improving public infrastructure in specified land areas. As special purpose districts and separate political subdivision under the Arizona Constitution, the District can levy taxes and issue bonds independently of the City. Property owners in the designated areas are assessed for District taxes and thus for the cost of operating the Districts. The City Council serves as the Board of Directors; however, the City has no liability for the Districts’ debt. For financial reporting purposes, transactions of the Districts are combined together and included as if they were part of the City’s operations. Complete financial statements for each of the individual component units may be obtained at the entities administrative offices. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e. the statement of net assets and the statement of activities) present financial information about the City as a whole. For the most part, the effect of interfund activity has been removed from these statements. These statements are to distinguish between the governmental and business-type activities of the City. Governmental activities normally are supported by taxes and intergovernmental revenues, and are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. 37 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, state-shared revenues, investment income and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government-wide Financial Statements - The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule the effect internal activity has been eliminated from the government-wide financial statements. Fund Financial Statements - Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt services expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise taxes, licenses and permits, charges for service, special assessments and investment income associated with the current fiscal period are considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenues as soon as all eligibility requirements imposed by the grantor or provider have been met. Miscellaneous revenue is not susceptible to accrual because generally they are not measurable until received in cash. Deferred revenues also arise when the City receives resources before it has legal claim to them, as when grant monies are received prior to meeting all eligibility requirements imposed by the provider. Delinquent property taxes have been recorded as deferred revenue. Receivables that will not be collected within the available period have also been reported as deferred revenue on the governmental fund financial statements. 38 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The City reports the following major governmental funds: General Fund - This fund is the general operating fund of the City. It accounts for all financial resources of the City, except those required to be accounted for in other funds. Community Facilities District - Debt Service Fund - This fund accounts for the debt portion of the City’s Community Facilities Districts which are component units that provide general infrastructure and capital assets for the property within each District’s boundaries. Capital Improvement Projects Funds - This fund accounts for all the acquisition and construction of major capital facilities other than those financed by proprietary funds. Community Facilities District - Capital Project’s Funds - This fund accounts for all the acquisition and construction portion of the City’s Community Facilities District which are component units that provide general infrastructure and capital assets for the property within each District’s boundaries. The City reports the following major proprietary funds: Water and Sewer Fund - This fund accounts for the city’s water and sewer utility operations. Sanitation Fund - This fund is used to account for the activities of the City’s sanitation operations. The City reports the following fiduciary fund: Pension Trust Fund - This Pension Trust Fund is used to account for the City’s Volunteer Firefighter’s Relief and Pension Fund, a defined contribution plan for which the assets are held by the City in a trustee capacity. The City, as well as, the City’s firefighters make contributions to the fund. Pursuant to GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities that use Proprietary Fund Accounting, the City follows GASB guidance as applicable to its proprietary funds, and Financial Accounting Standards Boards Statements and Interpretations, Accounting Principals Board Opinions, and Accounting Research Bulletins issued on or before November 30, 1989 that do not conflict with or contradict GASB Pronouncements. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprises fund are charges to customers for water, wastewater, and sanitation services. Operating expenses for these funds include the cost of sales and services, administrative expenses and depreciation. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, and then unrestricted resources, as they are needed. 39 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. The City’s non-major funds are as follows: Special Revenue Funds Highway User Revenue Fund (HURF) Community Facilities Districts General Government Impact Fees Fire Impact Fees Transportation Impact Fees Grants Fund Community Facilities Impact Fees Public Works Impact Fees Police Impact Fees Library Impact Fees Debt Service Fund Debt Service Fund Fiduciary funds are reported by fund type. D. Cash and Cash Equivalents Cash represents amounts in demand deposits and amounts held in trust by financial institutions. The funds held in trust are available to the City upon demand. Cash equivalents are defined as short-term (original maturities of three months or less), highly liquid investments that are 1) readily convertible to known amounts of cash and 2) so near maturity that they present insignificant risk of changes in value because of changes in interest rates. E. Investments Arizona Revised Statutes (ARS) authorize the City to invest public monies in the State Treasurer’s Local Government Investment Pool, interest-bearing savings account, certificates of deposit, and repurchase agreements in eligible depositories; bonds or other obligations of the U.S. government that are guaranteed as to principle and interest by the U.S. government; and bonds of the State of Arizona counties, cities, school districts, and special districts as specified by statute. F. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of the interfund loans). All trade and property tax receivables are shown net of allowance for uncollectibles. Trade accounts receivable in excess of 180 days comprise the trade accounts receivables allowance for uncollectibles. 40 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property taxes are levied by the City and collected by the Maricopa County Treasurer. Property taxes are levied no later than the third Monday in August and are payable in two installments due October 1 of the current year and March 1 of the subsequent year. Taxes become delinquent after the first business day of November and May, respectively. Interest attaches on installments after the delinquent date. Pursuant to ARS, a lien against assessed real and personal property attaches on the first day of January preceding assessment and levy; however according to case law, an enforceable legal claim to the asset does not arise. G. Inventory Inventories are stated at average cost using the first-in/first-out (FIFO) method. Governmental funds maintain inventories using the consumption method of accounting. H. Prepaid Items Certain payments to vendors reflect the cost applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. I. Restricted Assets Certain proceeds of the City’s bonds, as well as certain resources set aside for their repayment, are classified as restricted cash and investments on the balance sheet because their use is limited by applicable bond covenants. J. Capital Assets Capital assets, which include land, buildings, improvements other than buildings, vehicles, machinery, equipment, construction in progress, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The City defines capital assets as assets with an initial, individual cost of $5,000 or more and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. 41 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Certain capital assets of the City are depreciated using the straight-line method over the following estimated useful lives: Assets Infrastructure Buildings Improvement other than buildings Vehicles, machinery and equipment K. Years 20-65 50 7-50 3-7 Compensated Absences The City’s employee vacation and sick leave policies provide for granting vacation and sick leave with pay. Sick leave and vacation benefits vest at the employee’s current rate of pay. The current and long-term liabilities for accumulated vacation and sick leave are reported on the government-wide financial statements and in the proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee leave, resignation and retirements. Resources from the General Fund are generally used to liquidate the governmental funds liabilities compensated absences. L. Long-term Obligations In the government-wide financial statements and proprietary fund financial statements, longterm debt and other long-term obligations are reported as liabilities in the statement of net assets. M. Fund Equity In the fund financial statements, governmental funds report reservations of the fund balance for amounts that are not available for expenditures or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent management’s intended use of resources and reflect actual plans approved by the government’s senior management. At June 30, 2005, the City reserved and designated fund balance for several various purposes. N. Interfund Activity Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the Statement of Activities. Interfund transfers in the fund statements are reported as other financing sources/uses in governmental funds and after nonoperating revenues/expenses in proprietary funds. O. Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. 42 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 2 – CASH AND INVESTMENTS At June 30, 2005 cash and cash equivalents consisted of the following: Cash on hand Cash equivalents-investments Cash in bank $ 41,276 117,932,150 1,844,144 Total cash and cash equivalents $ 119,817,570 Cash and cash equivalents Restricted cash and cash equivalents Governmental Activities $ 101,242,713 Business Activities $ 8,559,756 9,713,144 $ 110,955,857 $ 8,559,756 Fiduciary Fund $ 301,957 $ 301,957 Total $ 110,104,426 9,713,144 $ 119,817,570 Deposits At June 30, 2005, the City had $41,276 of cash on hand. The carrying amount of the City’s cash in bank totaled $1,844,144 and the bank balance was $2,679,012. The City’s deposits at June 30, 2005 were covered by Federal Depository Insurance to the extent of $603,116. Deposits of $1,421,361 were collateralized with securities held by the pledging financial institution or by its trust department or agent but not in the depositor-government’s name. Deposits of $654,535 are uninsured and uncollateralized. Investments ARS authorize the City to invest public monies in the State Treasurer’s Local Government Investment Pool, interest-bearing savings account, certificates of deposit, and repurchase agreements in eligible depositories; bonds or other obligations of the U.S. government that are guaranteed as to principal and interest by the U.S. government; and bonds of the State of Arizona counties, cities, school districts, and special districts as specified by statute. The City invests in the Local Government Investment Pool 5 (LGIP), an investment pool managed by the State Treasurer’s Office that allows governments within the State to pool their funds for investment purposes. The LGIP is not registered with the Securities Exchange Commission under the 1940 Investment Advisors Act. The State Board of Investment has oversight responsibilities of the investment pool in accordance with ARS 35-311. The pool’s policy is to invest in fixed-rate securities with a final maturity less than 36 months from the settlement date of the purchase and variable-rate securities with final maturity less than 5 years. The dollar weighted average portfolio maturity is less than 240 days. The net asset value per share of the pool at June 30, 2005 was $1.00. The Arizona State Treasurer issues a publicly available financial report that includes financial statements and required supplementary information. Copies may be obtained by contacting the Arizona State Treasurer, 1700 West Washington, Phoenix, Arizona 85007. 43 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 2 – CASH AND INVESTMENTS (Continued) Funds held in the State Treasurer’s Local Government Investment Pool represent a proportionate interest in the pool’s portfolio; however, the City’s portion is not identified with specific investments and is not subject to custodial credit risk. At June 30, 2005, the City’s funds invested with the State Treasurer totaled $93,329,623. The City is invested in multiple mutual funds through the trust department of Wells Fargo. The mutual funds have a value of $24,318,593 at June 30, 2005. The City also owns investments that belong to the City’s Volunteer Fire Department. These funds are held by Linsco Private Ledger Investment Services and consist of multiple money market funds and mutual funds. The maturities of these investments are usually less than 30 days. The pension account had a value of $283,934 at June 30, 2005. Interest Rate Risk Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. All of the City’s investments have maturities of less than 12 months. Credit Risk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of year-end for each investment type. Ratings as of Year-End Investment Type LGIP Money market mutual funds Money market funds (fiduciary) Total $ 93,329,623 24,318,593 283,934 $ 117,932,150 AAA $ 24,318,593 $ 24,318,593 Unrated $ 93,329,623 283,934 $ 93,613,557 44 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 3 – RECEIVABLES Receivables, net of allowance for uncollectibles, as of year-end for the City’s individual major governmental funds and nonmajor governmental funds in the aggregate are as follows: Receivables: Taxes Interest Accounts Special assessments Less: Allowance Net receivables General Fund $ 3,879,233 169,623 326,689 Community Facilities DistrictsDebt Service Fund $ 40,934 9,218 - 4,375,545 15,044,810 15,094,962 (1,859) $ 4,373,686 $ 15,094,962 Capital Improvement Projects Fund $ 12,877 - Community Facilities DistrictsCapital Projects Fund $ 6,568 3,825 Non-Major Governmental Fund $ 223,649 18,912 232,109 12,877 10,393 474,670 12,877 $ $ 10,393 $ 474,670 $ Total 4,143,816 217,198 562,623 15,044,810 19,968,447 (1,859) $ 19,966,588 The following table summarizes the City’s receivables for the enterprise funds as of June 30, 2005. Receivables: Interest Accounts Less: Allowance Net receivables Water and Sewer Fund $ 18,279 1,695,108 1,713,387 $ (218,000) 1,495,387 Sanitation Fund $ 388 291,318 291,706 $ 291,706 $ $ Total 18,667 1,986,426 2,005,093 (218,000) 1,787,093 Revenues of the Water and Sewer Fund and Sanitation Fund are reported net of uncollectible amounts. Total uncollectible amounts related to revenues of the current period are as follows: Uncollectibles related to water and sewer Uncollectibles related to sanitation $ 74,866 17,240 Total uncollectibles for the current year $ 92,106 45 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 4 – CAPITAL ASSETS A summary of capital assets activity for the fiscal year ended June 30, 2005 follows. Governmental Activities Capital assets, not being depreciated: Land Construction in progress Right of way Streetscape Total capital assets not being depreciated Capital assets, being depreciated: Infrastructure Buildings and improvements Vehicles, furniture and equipment Total capital assets being depreciated Less accumulated depreciation for: Infrastructure Buildings and improvements Vehicles, furniture and equipment Total accumulated depreciation Total capital assets, being depreciated, net Governmental activities capital assets, net Business-Type Activities Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets, being depreciated: Improvements other than buildings Vehicles, machinery and equipment Total capital assets being depreciated Less accumulated depreciation for: Improvements other than buildings Vehicles, machinery and equipment Total accumulated deprecation Total capital assets, being depreciated, net Business-Type activities capital assets, net Beginning Balance $ 16,574,557 112,808,609 5,771,420 Increases $ - $ - 16,579,557 192,020 112,808,609 5,771,420 - 135,351,606 197,020 133,239,127 17,109,277 19,339,460 169,687,864 5,904,000 1,484,593 2,063,678 9,452,271 (2,361) (2,361) 139,143,127 18,591,509 21,403,138 179,137,774 (25,611,615) (1,982,080) (16,183,905) (43,777,600) (3,377,093) (357,851) (4,096,631) (7,831,575) - (28,988,708) (2,339,931) (20,280,536) (51,609,175) 125,910,264 1,620,696 (2,361) 127,528,599 (2,361) $ 262,880,205 $ Beginning Balance 3,158,615 6,848,089 10,006,704 $ $ 135,154,586 $ 261,064,850 $ 5,000 192,020 - Ending Balance Decreases 1,817,716 $ Increases $ - Ending Balance Decreases $ (6,848,089) $ (6,848,089) 3,158,615 3,158,615 55,328,608 11,060,162 66,388,770 16,783,754 257,728 17,041,482 - 72,112,362 11,317,890 83,430,252 (7,549,128) (6,384,828) (13,933,956) (1,925,951) (371,836) (2,297,787) - (9,475,079) (6,756,664) (16,231,743) 52,454,814 14,743,695 - 67,198,509 62,461,518 $ 14,743,695 $ (6,848,089) $ 70,357,124 46 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 4 – CAPITAL ASSETS (Continued) Depreciation expense was charged to functions/programs as follows: Governmental activities: General government Public safety Highway and streets Culture and recreation Public works Total depreciation expense Business-type activities Water and wastewater Sanitation Total depreciation expense $ 1,029,348 2,227,999 3,377,093 339,888 857,247 $ 7,831,575 $ 2,239,357 58,430 $ 2,297,787 NOTE 5 – LOANS PAYABLE The City received a loan from the Greater Arizona Development Authority for the fire facilities and street and highway improvements. In addition, the City received two loans from the Water Infrastructure Finance Authority. The first loan will be used to acquire the rights and make improvements to existing capacity in the wastewater treatment plant owned by Litchfield Park Service Company (LPSCO). The second loan will be used to finance the planning and design of a pilot recharge project and to construct a well distribution line. The loans payable at June 30, 2005, are as follows: Description Governmental activities: Greater Arizona Development Authority Loan Total Governmental activities Business-type activities: Water Infrastructure Finance Authority Loan Water Infrastructure Finance Authority Loan Total Business-type activities Total Interest Rate (Including Fees) Outstanding Principal June 30, 2005 Maturity Due Within One Year 4.1 - 5.75% 7/1/06 - 13 $ 4,085,000 $ 4,085,000 $ $ - 4.06% 07/01/06 - 21 $ 3,796,585 $ - 4.06% 07/01/06 - 21 7,211,039 $ 11,007,624 $ - $ 15,092,624 $ - 47 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 5 – LOANS PAYABLE (Continued) Annual debt service requirements to maturity on the loans payable at June 30, 2005 are summarized as follows: Fiscal year ending June 30, 2006 2007 2008 2009 2010 2011-2015 2016-2020 2021-2025 Total Governmental Activities Principal Interest $ $ 88,371 440,000 167,723 460,000 149,273 475,000 129,986 495,000 109,611 2,215,000 206,020 $ 4,085,000 $ 850,984 Business-Type Activities Principal Interest $ $ 223,235 502,112 436,286 522,477 415,508 543,669 393,886 565,721 371,387 3,191,976 1,486,198 3,893,991 769,943 1,787,678 73,229 $11,007,624 $ 4,169,672 NOTE 6 – BONDS PAYABLE Bonds payable at June 30, 2005, consisted of the outstanding general obligation and refunding bonds presented below. The bonds are generally callable with interest payable semiannually. Of the total amounts originally authorized, $254,765,449 remains unissued. The bonds payable at June 30, 2005 are presented below. Description General Obligation Bonds Project of 1988, Series 1992 General Obligation Bonds Series 1998 Refunding Bonds Series 2002 General Obligation Bonds Series 2002 General Obligation Bonds Series 2003 General Obligation Bonds Series 2005 Total Interest Rate Maturity Outstanding Principal June 30, 2005 6.00 - 8.00% 7/1/2006 $ 4.00 - 6.00% 3.25 - 5.25% 7/1/06 - 13 7/1/06 - 08 6,185,000 1,620,000 - 3.65 - 4.25% 7/1/06 - 17 10,250,000 - 3.00 - 4.50% 7/1/08 - 18 10,800,000 - 3.50 - 5.00% 7/1/06 - 20 29,260,000 $ 58,265,000 150,000 Due Within One Year $ $ - - 48 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 6 – BONDS PAYABLE (Continued) Annual debt service requirements to maturity on governmental bonds payable at June 30, 2005 are summarized as follows: Fiscal year ending June 30, 2006 2007 2008 2009 2010 2011-2015 2016-2020 2021-2025 Total Governmental Activities Principal Interest $ $ 1,474,008 1,995,000 2,299,677 2,825,000 2,193,780 3,740,000 2,058,357 3,885,000 1,904,312 22,255,000 6,810,105 20,325,000 2,532,058 3,240,000 64,800 $ 58,265,000 $ 19,337,097 In prior years, the City defeased certain bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all further debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City’s financial statements. As of June 30, 2005, the total outstanding on the defeased bonds was $900,000. NOTE 7 - REVENUE BONDS PAYABLE Revenue bonds payable at June 30, 2005 consisted of the outstanding revenue bonds presented below. The bonds are generally callable with interest payable semiannually. Governmental activities: Description Public Improvement Corporation Municipal Facilities Revenue Bonds, Series 2002 Interest Rate Maturity Outstanding Principal June 30, 2005 4.00 - 6.00% 7/1/06 - 21 $ 3,640,000 $ Maturity 7/1/06 - 18 Outstanding Principal June 30, 2005 $ 2,710,000 Due Within One Year $ - Business-type activities: Description Revenue Bonds, Series 1999 Interest Rate 4.47 - 6.73% Due Within One Year - 49 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 7 - REVENUE BONDS PAYABLE (Continued) Revenue bond debt service requirements to maturity are as follows: Fiscal Year Ending June 30, 2006 2007 2008 2009 2010 2011-2015 2016-2020 2021-2025 Total Governmental Activities Principal Interest $ $ 84,993 155,000 165,335 165,000 155,735 175,000 145,535 180,000 136,685 1,030,000 561,714 1,310,000 302,492 625,000 29,253 $ 3,640,000 $ 1,581,742 Business-Type Activities Principal Interest $ $ 130,000 70,000 120,000 80,000 115,000 70,000 300,000 175,000 1,290,000 1,100,000 755,000 1,020,000 $ 2,710,000 $ 2,515,000 Revenue bonds in the business-type activities include $34,068 of unamortized bond premium. 50 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 8 – COMMUNITY FACILITIES DISTRICTS BONDS PAYABLE Community facilities district bonds payable at June 30, 2005 consisted of outstanding general obligation and special assessment bonds. The bonds are generally callable with interest payable semiannually. The community facilities district bonds payable at June 30, 2005, are presented below. Description General District No. 1: G.O. Bonds, Series 1994 G.O. Bonds, Series 1996 (A) G.O. Bonds, Series 1998 G.O. Bonds, Series 2000 G.O. Bonds, Series 2003 Assessment Bonds, Series 1996(C) Utilities District No. 1: G.O. Bonds, Series 1998 G.O. Bonds, Series 2000 G.O. Bonds, Series 2003 G.O. Bonds, Series 2005 Refunding G.O. Bonds, Series 2005 Wildflower Ranch General District 1: G.O. Bonds, Series 1997 G.O. Bonds, Series 1998 Wildflower Ranch General District 2: G.O. Bonds, Series 2000 G.O. Bonds, Series 2001 Estrella Mountain Ranch: G.O. Bonds, Series 2001 Assessment Bonds, Series 2001(A) Assessment Bonds, Series 2002 Cottonflower: G.O. Bonds, Series 2003 G.O. Bonds, Series 2004 Cortina: G.O. Bonds, Series 2005 Centerra: G.O. Bonds, Series 2005 Total Interest Rate Maturity 7.50% 6.5 - 7.0% 4.55 - 5.25% 4.6 - 5.3% 3.3 - 5.75% 6.75 - 7.25% 7/15/05 - 09 7/15/10 - 21 7/15/05 - 23 7/15/06 - 25 7/15/09 - 28 7/01/05 - 15 4.55 - 5.25% 4.7 - 5.2% 3.3 - 5.75% 3.0 - 4.3% 3.5 - 4.5% Outstanding Principal Due Within June 30, 2005 One Year $ 110,000 500,000 2,035,000 5,725,000 5,295,000 3,438,000 $ 20,000 60,000 - 7/15/05 - 23 7/15/06 - 25 7/15/09 - 28 7/15/07 - 21 7/15/10 - 29 6,585,000 7,075,000 7,870,000 1,455,000 7,190,000 210,000 - 5.875 - 6.5% 7/15/05 - 22 5.2 - 5.75% 7/15/05 - 23 575,000 665,000 20,000 15,000 6.0 - 7.0% 4.5 - 5.9% 7/15/04 - 25 7/15/04 - 26 675,000 735,000 15,000 20,000 8.00% 7.88% 7.38% 7/15/05 - 25 7/01/05 - 25 7/01/05 - 27 179,600 7,268,000 4,892,000 3,600 222,000 167,000 4.1 - 5.7% 3.7 - 6.75% 7/15/05 - 28 7/15/06 - 28 1,760,000 1,325,000 40,000 - 5.0 - 5.7% 7/15/06 - 29 1,700,000 - 5.50% 7/15/06 - 29 2,400,000 $ 69,452,600 $792,600 51 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 8 – COMMUNITY FACILITIES DISTRICTS BONDS PAYABLE (Continued) Community Facilities District bonds debt service requirements to maturity are as follows: Fiscal year ending June 30, 2006 2007 2008 2009 2010 2011-2015 2016-2020 2021-2025 2026-2030 Total Governmental Activities Principal Interest $ 792,600 $ 3,626,259 1,301,800 3,848,284 1,299,200 3,772,040 1,823,500 3,678,690 2,167,800 3,560,713 12,725,600 15,670,596 13,753,200 12,069,191 18,055,300 7,527,183 17,533,600 2,116,331 $ 69,452,600 $ 55,869,287 On March 31, 2005, Community Facilities Utilities District #1 issued $1,455,000 of General Obligation Bonds to do an advance refunding of the 1996(B) bonds. Under the terms of the refunding issue, sufficient assets to pay all principal and interest on the refunded bonds issue have been placed in irrevocable trust accounts at commercial banks and invested in U.S. Government Securities which, together with interest earned thereon, will provide amounts sufficient for future payment of principal and interest of the issue refunded. The amount outstanding on those bonds as of June 30, 2005 is $1,350,000. These bonds have been fully defeased. The difference between the cash flows required to service the refunded debt and the new debt resulted in a savings to the City of $230,805. The net present value cash flow for savings on issuing the refunding bonds at a 4.59% bond yield was $171,450. The $88,054 deferred amount on retirement of bonds is being amortized over the lives of the refunding bonds on the straight-line basis. Amortization for the year ended June 30, 2005 of $5,180 was taken on the deferred amount. Legal Debt Limit- General obligation bonded indebtedness for each District cannot exceed 60 percent of the market value of the property in the District after the infrastructure is completed plus the value of the infrastructure improvement made. NOTE 9 – AMORTIZATION OF BOND COSTS, BOND DISCOUNTS AND BOND PREMIUMS Bond costs, discounts and premiums are being amortized over the life of the bonds on the straight-line basis. Amortization has been offset against interest expense. A summary of the amortizations are as follows: 52 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 9 – AMORTIZATION OF BOND COSTS, BOND DISCOUNTS AND BOND PREMIUMS (Continued) Beginning Balance Bond Costs: Governmental Activities General Obligation Bonds Series 2005 Community Facilities District Bonds Payable Utilities District #1 Series 2005 Utilities District #1 Series 2005 Refunding Cortina Series 2005 Centerra Series 2005 $ - $ Additions $ - 385,280 19,000 115,241 131,528 - $ 1,038,801 Beginning Balance Bond Premiums (Discounts) Governmental Activities General Obligation Bonds Series 2005 Community Facilities District Bonds Payable Utilities District #1 Series 2005 Utilities District #1 Series 2005 Refunding Business-type Activities Revenue Bonds, Series 1999 $ $ 387,752 - Additions $ 476,838 Ending Balance Reductions $ - $ $ 15,411 1,118 4,610 5,261 369,869 17,882 110,631 126,267 26,400 $ 1,012,401 Ending Balance Reductions $ 387,752 - $ 476,838 - (83,225) 2,755 (3,329) 162 (79,896) 2,593 36,689 - 2,621 34,068 36,689 $ 396,368 $ (546) $ 433,603 NOTE 10 – CHANGES IN LONG-TERM LIABILITIES Long-term liabilities activity for the year ended June 30, 2005 was as follows: Beginning Balance Governmental activities: Compensated absences General obligation bonds payable Loans payable Community Facilities District bonds payable Revenue bonds payable Governmental activities long-term liabilities $ 2,074,097 Additions $ 913,757 Ending Balance Reductions $ 737,008 $ 2,250,846 Due Within One Year $ 482,170 30,395,000 4,500,000 29,260,000 - 1,390,000 415,000 58,265,000 4,085,000 - 59,996,900 3,785,000 12,745,000 - 3,289,300 145,000 69,452,600 3,640,000 792,600 - $ 100,750,997 $ 42,918,757 $ 5,976,308 $ 137,693,446 $ 1,274,770 53 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 10 – CHANGES IN LONG-TERM LIABILITIES (Continued) Beginning Balance Business-type activities Compensated absences Revenue bonds payable Loans payable Business-type activities long-term liabilities Additions $ 116,466 2,985,000 - $ 144,400 12,399,551 $ 3,101,466 $ 12,543,951 Ending Balance Reductions $ Due Within One Year 67,369 275,000 1,391,927 $ 193,497 2,710,000 11,007,624 $ 51,235 - $ 1,734,296 $ 13,911,121 $ 51,235 NOTE 11 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS At June 30, 2005, interfund balances were as follows: Interfund receivable/payable: Fund General Fund Community Facilities Districts-Debt Service Community Facilities Districts-Capital Projects Non-Major Governmental Funds Total Receivable Amount $ 754,334 701 $ 755,035 Payable Amount $ 701 754,334 $ 755,035 All interfund borrowing resulted from the borrowing of funds to cover deficit cash. Interfund transfers: Fund General Fund Community Facilities Districts-Debt Service Community Facilities Districts-Capital Projects Non-Major Governmental Funds Water and Sewer Fund Sanitation Fund Total Transfers Out $ 2,288,830 10,389 172,374 461,779 $ 2,933,372 Transfers In $ 1,503,077 10,389 1,419,906 $ 2,933,372 All transfers made during the year were routine in nature and consistent with the activities of the fund making the transfer. NOTE 12 – CONTINGENT LIABILITIES Federal and State grants and loans- The City has received a number of grants and loans from both the Federal and State governments. Although the programs have been audited, not all audits have been approved as of June 30, 2005, however, the City expects no material disallowances of expenditures. 54 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 12 – CONTINGENT LIABILITIES (Continued) Lawsuits – The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City’s legal counsel, the resolution of these matters will not have a material adverse effect on the financial condition of the City. NOTE 13 – RISK MANAGEMENT The City is exposed to various risk of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters. The City’s insurance protection is provided by the Arizona Municipal Risk Retention Pool, of which the City is a participating member. The Arizona Municipal Risk Retention Pool is structured such that member premiums are based on an actuarial review that will provide adequate reserves to allow the pool to meet its expected financial obligations. The pool has authority to assess its members additional premiums should reserve and annual premiums be insufficient to meet the pool’s obligations. The City is insured by the Workers’ Compensation Insurance Fund for potential workerrelated accidents. NOTE 14 – RETIREMENT PLANS All full-time City employees are covered by one of two contributory retirement and pension plans, which are administered by the State of Arizona under State Statute. Arizona State Retirement Plan Plan Description - The Arizona State Retirement System (ASRS) administers a cost-sharing multiple-employer defined benefits pension plan that covers general employees of the City. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of ARS Title 38, Chapter 5, Article 2. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. ASRS issues a publicly available report that includes financial statements and required supplementary information. The report may be obtained in writing at ASRS, 3300 Central Avenue, P.O. Box 33910, Phoenix, Arizona 85067-3910 or by calling 602-2402200 or 1-800-621-3778. Funding Policy – The Arizona State Legislature establishes and may amend active plan members’ and the City’s contribution rates. For the year ended June 30, 2005, active ASRS members and the City were each required by statute to contribute at the actuarially determined rate of 5.7 percent (5.2 percent retirement and .49 percent long-term disability) of the member’s annual covered payroll. The City’s contributions to ASRS for the years ended June 30, 2005, 2004, and 2003 were $645,078, $528,675, and $211,962, respectively, which were equal to the required contributions for the year. 55 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 14 – RETIREMENT PLANS (Continued) Arizona Public Safety Personnel Retirement System Plan Description - The Public Safety Personal Retirement System (PSPRS) is an agent multiple-employer defined benefit pension plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or one of its political subdivisions. The PSPRS acting as a common investment and administrative agent, is governed by a five-member board, known as The Fund Manager, and 167 local boards according to the provisions of ARS Title 38, Chapter 5, Article 4. The City contributes to one PSPRS plan for police and one for firefighters. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. PSPRS issues a publicly available report that includes financial statements and required supplementary information. The report may be obtained in writing at PSPRS, 1020 East Missouri Avenue, Phoenix, Arizona 85014 or by calling 602-255-5575. Funding Policy – The Arizona State Legislature establishes and may amend active plan members’ and the City’s contribution rates. For the year ended June 30, 2005, active PSPRS members were required by statute to contribute 7.65 percent of the members’ annual covered payroll, and the City was required to contribute at the actuarially determined rate of 8.89% and 7.23% of the covered payroll to the Plan for the Police and Firefighters, respectively. Annual Pension Cost - The City’s pension cost for the agent plan for the year ended June 30, 2005, and related information follows: Contribution Rates: City Plan members Annual pension cost Contributions made Actuarial valuation date Actuarial cost method Actuarial assumptions: Investment rate of return Projected salary increases Includes inflation at cost-of-living adjustment Amortization method Remaining amortization period Asset valuation method Post retirement benefit increases PSPRS – Police 8.89% 7.65% $298,580 $298,580 June 30, 2005 Entry Age PSPRS - Fire 7.23% 7.65% $89,277 $89,277 June 30, 2005 Entry Age 8.5% 6.0% - 9.0% 8.5% 6.0% - 9.0% 5.0% Level Percent Open Open 20 Years Smoothed Market Based on Income 5.0% Level Percent Open Open 20 Years Smoothed Market Based on Income 56 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 14 – RETIREMENT PLANS (Continued) Trend Information - Information for the PSPRS plan as of the most recent actuarial valuations follows: Plan PSPRS - Police PSPRS - Fire Year Ended June 30, 2005 2004 2003 2005 2004 2003 Annual Pension Cost (APC) $ 298,580 274,670 237,104 89,277 268,224 234,027 Percentage of APC Contributed 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Net Pension Obligation - Funding Progress - An analysis of funding progress for each of the agent plan as most recent actuarial valuations, June 30, 2005 follows: PSPR - Goodyear Police Plan: Actuarial Valuation Actuarial Accrued Date Value of Liability June 30, Assets (a) (AAL) (b) 2005 $6,372,349 $8,017,990 2004 5,499,466 6,111,357 2003 4,937,802 4,925,456 Funding Liability Funded (a-b) Ratio (a/b) $(1,645,641) 79.5% (611,891) 90.0% 12,346 100.3% Annual Covered Payroll (c) $3,407,937 2,933,985 2,708,779 Unfunded AAL as a Percent of Covered Payroll ([b-a]/c) 48.3% 20.9% 0% PSPR - Goodyear Fire Plan: Actuarial Actuarial Valuation Value of Accrued Date Plan Assets Liability June 30, (a) (AAL) (b) 2005 $4,580,344 $4,826,980 2004 3,846,596 3,201,957 2003 3,065,496 2,520,831 Funding Liability Funded (a-b) Ratio (a/b) $ (246,636) 94.9% 644,639 120.1% 544,665 121.6% Annual Covered Payroll (c) $3,561,253 2,916,393 2,666,015 Unfunded AAL as a Percent of Covered Payroll ([b-a]/c) 6.9% 0% 0% 57 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2005 NOTE 15 – FUND BALANCE/NET RESERVATIONS AND DESIGNATIONS Only restrictions imposed by external resources are shown as Restricted Net Assets on the government-wide financial statements. Reservation or designation of fund balances imposed by the reporting government, whether by administrative policy or legislative action of the reporting government, is shown in aggregate on the governmental fund financial statements, but not on the proprietary fund financial statements. The City does, however, reserve or designate portions of net assets in other funds to demonstrate the government’s intended use of those net assets. Reservations are created by legislative action of the City Council while designations are created by administrative policy. The following are the reservations or designations of the fund balance included in unreserved fund balance at June 30, 2005: General Fund: Designated for capital replacement Community Facilities Districts-Debt Service Fund: Reserved for debt service Community Facilities Districts-Capital Projects Fund: Reserved for capital improvements Non-Major Governmental Funds: Reserved for debt service $ 4,347,756 6,519,269 9,704,731 123,863 58 OTHER SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULES MAJOR GOVERNMENTAL FUNDS City of Goodyear Community Facilities Districts - Debt Service Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts REVENUES Taxes Investment income Special assessments Contributions Total revenues EXPENDITURES Debt service Principal retirement Interest and debt costs Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Debt issuance Debt premium Transfers in Total other financing sources Net change in fund balances Fund balances, beginning of year Fund balances, end of year Variance with Final Budget Positive (Negative) Original Final Actual $ 2,117,587 44,162 1,550,896 1,433,617 5,146,262 $ 2,117,587 44,162 1,550,896 1,433,617 5,146,262 $ 2,044,858 114,100 2,580,510 879,154 5,618,622 826,300 4,355,342 5,181,642 826,300 4,355,342 5,181,642 3,377,354 3,578,607 6,955,961 (2,551,054) 776,735 (1,774,319) (1,337,339) (1,301,959) 1,455,000 2,755 10,389 1,468,144 1,454,700 2,755 10,389 1,467,844 130,805 165,885 (35,380) 300 300 (35,080) (35,380) 300 300 (35,080) 6,388,464 6,388,464 6,388,464 $ 6,353,384 $ 6,353,384 $ 6,519,269 $ (72,729) 69,938 1,029,614 (554,463) 472,360 $ 165,885 61 City of Goodyear Capital Improvement Projects Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts Original REVENUES Intergovernmental Charges for service Investment income Contributions Total revenues EXPENDITURES Capital outlay Debt service Interest and debt cost Total expenditures $ 135,061 40,000,000 40,135,061 Final $ 135,061 40,000,000 40,135,061 Actual $ 44,705 459,044 503,749 Variance with Final Budget Positive (Negative) $ (135,061) 44,705 (39,540,956) (39,631,312) 24,379,174 24,379,174 1,366,809 23,012,365 24,379,174 24,379,174 387,561 1,754,370 (387,561) 22,624,804 Excess (deficiency) of revenues over (under) expenditures 15,755,887 15,755,887 (1,250,621) (17,006,508) OTHER FINANCING SOURCES Debt issuance Debt premium Transfer in Transfers out Total other financing sources 20,050,000 20,050,000 20,050,000 20,050,000 29,260,000 476,838 29,736,838 9,210,000 476,838 9,686,838 Net change in fund balances 35,805,887 35,805,887 28,486,217 (7,319,670) 9,224,966 9,224,966 9,224,966 $ 45,030,853 $ 45,030,853 $ 37,711,183 Fund balances, beginning of year Fund balances, end of year $ (7,319,670) 62 City of Goodyear Community Facilities Districts - Capital Projects Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts Original REVENUES Investment income Contributions Total revenues EXPENDITURES Capital outlay Debt service: Interest and debt cost Total expenditures $ 54,500 4,867,976 4,922,476 Final $ 54,500 4,867,976 4,922,476 Actual $ 202,562 516,063 718,625 Variance with Final BudgetPositive (Negative) $ 148,062 (4,351,913) (4,203,851) 65,059,141 65,059,141 5,642,660 59,416,481 489,880 65,549,021 489,880 65,549,021 246,769 5,889,429 243,111 59,659,592 Excess (deficiency) of revenues over (under) expenditures (60,626,545) (60,626,545) (5,170,804) 55,455,741 OTHER FINANCING SOURCES (USES) Debt issuance Transfers out Total other financing sources 36,327,353 36,327,353 36,327,353 36,327,353 11,290,000 (10,389) 11,279,611 (25,037,353) (10,389) (25,047,742) (24,299,192) (24,299,192) 6,108,807 30,407,999 11,904,235 11,904,235 11,904,235 Net change in fund balance Fund balance, beginning of year Fund balance, end of year $ (12,394,957) $ (12,394,957) $ 18,013,042 $ 30,407,999 63 OTHER SUPPLEMENTARY INFORMATION COMBINING FUND FINANCIAL STATEMENTS City of Goodyear Combining Balance Sheet Non-Major Governmental Funds June 30, 2005 Special Revenue ASSETS Cash and cash equivalents Taxes receivable Interest receivable Accounts receivable Due from other governments Inventories Prepaid items Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll and employee benefits Accrued interest payable Deposits held for others Due to other funds Deferred revenue Total liabilities Fund balances: Reserved: Debt service Unreserved, reported in Special revenue Total fund balances Total liabilities and fund balances Highway User Revenue $ 491,647 139,415 2,082 58,504 $ 691,648 $ $ $ 299,882 20,423 71,082 231,425 622,812 $ - 691,648 27,085 $ $ 187,961 525,776 525,776 $ $ (326) 35,659 5,000 684,334 8,239 733,232 - 103,152 103,152 $ 13,794 1,015 70,000 84,809 - 68,836 68,836 $ Grants 51,488 131,016 5,457 187,961 Community Facilities Districts $ 1,140,623 13,809 3,483 101,093 $ 1,259,008 1,259,008 - $ 289,919 66 Special Revenue Community Facilities Impact Fees $ 2,447,534 2,188 $ 2,449,722 General Government Impact Fees $ 1,605,378 1,571 $ 1,606,949 Public Works Impact Fees $ 2,156,043 2,309 $ 2,158,352 Fire Impact Fees $ 1,407,741 1,696 $ 1,409,437 Police Impact Fees $ 2,181,612 1,591 $ 2,183,203 Transportation Impact Fees $ 3,150,653 2,787 $ 3,153,440 $ $ $ $ $ $ 323,098 323,098 - - 2,126,624 2,126,624 $ 2,449,722 $ (691) 1,606,949 $ 842 2,158,352 $ (2,498) 1,409,437 $ 4,220 2,183,203 3,122,246 3,122,246 $ $ (166) 31,194 31,194 - 2,183,203 2,183,203 $ - - 1,409,437 1,409,437 $ - - 2,089,262 2,089,262 $ 69,090 69,090 - 1,606,949 1,606,949 $ - 3,153,440 - $ (23,932) 67 City of Goodyear Combining Balance Sheet Non-Major Governmental Funds (Continued) June 30, 2005 Special Revenue ASSETS Cash and cash equivalents Taxes receivable Interest receivable Accounts receivable Due from other governments Inventories Prepaid items Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll and employee benefits Accrued interest payable Deposits held for others Due to other funds Deferred revenue Total liabilities Fund balances: Reserved: Debt service Unreserved: Special revenue Total fund balances Total liabilities and fund balances Library Impact Fees $ 1,238,779 1,205 $ 1,239,984 Debt Services $ 157,539 70,425 17,000 $ 244,964 Total Non-Major Governmental Funds $ 16,029,037 223,649 18,912 232,109 5,457 58,504 17,000 $ 16,584,668 $ $ $ - 1,239,984 1,239,984 $ 1,239,984 $ 87,177 33,924 121,101 772,717 21,438 87,177 76,082 754,334 273,588 1,985,336 123,863 123,863 123,863 14,475,469 14,599,332 244,964 #REF! $ 16,584,668 #REF! 69 City of Goodyear Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non-Major Governmental Funds For The Year Ended June 30, 2005 Special Revenue REVENUES Taxes Intergovernmental Charges for services Investment income Contributions Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Highway and streets Public works Community development Capital outlay Debt service: Principal retirement Interest and debt costs Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfer in Total other financing sources (uses) Net change in fund balances Fund balances, beginning of year Fund balances, end of year 315,984 63,237 379,221 Community Facilities Districts $ 567,984 12,000 33,074 20,913 113,822 747,793 2,126,282 - 245,398 6,925 145,317 453,340 - 2,126,282 397,640 453,340 (415,108) (18,419) 294,453 483,860 483,860 - 68,752 (18,419) 294,453 121,571 231,323 Highway User Revenue $ 1,633,997 8,327 68,850 1,711,174 Grants $ 84 $ 68,836 $ 103,152 - $ 525,776 70 Special Revenue Community Facilities Impact Fees $ 1,147,923 13,119 1,161,042 General Government Impact Fees $ 821,840 9,757 831,597 Public Works Impact Fees $ 766,221 12,767 778,988 Fire Impact Fees $ 878,971 7,806 886,777 Police Impact Fees $ 1,200,301 8,276 1,208,577 Transportation Impact Fees $ 1,564,512 16,359 1,580,871 349,014 344 14,319 232,748 88,982 109,646 554,443 145 152,815 349,014 247,411 198,628 554,443 145 152,815 812,028 584,186 580,360 332,334 1,208,432 1,428,056 - - - - - - 812,028 584,186 580,360 332,334 1,208,432 1,428,056 1,314,596 1,022,763 1,508,902 1,077,103 974,771 1,694,190 $ 2,126,624 $ 1,606,949 $ 2,089,262 $ 1,409,437 $ 2,183,203 $ 3,122,246 71 City of Goodyear Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non-Major Governmental Funds (Continued) For The Year Ended June 30, 2005 Special Revenue REVENUES Taxes Intergovernmental Charges for services Investment income Contributions Miscellaneous Total revenues Library Impact Fees $ 446,080 7,482 453,562 EXPENDITURES Current: General government Public safety Highway and streets Public works Community development Capital outlay Debt service: Principal retirement Interest and debt costs Total expenditures $ - - - Excess (deficiency) of revenues over (under) expenditures 453,340 245,398 2,126,282 89,326 21,244 1,544,128 1,805,000 1,433,730 3,238,730 453,562 OTHER FINANCING SOURCES (USES) Transfer in Total other financing sources (uses) Debt Service 2,425,608 440 2,426,048 Total Non-Major Government Funds $ 2,993,592 1,949,981 6,837,848 117,407 20,913 245,909 12,165,650 - 1,805,000 1,433,730 7,718,448 (812,682) 4,447,202 936,046 936,046 1,419,906 1,419,906 Net change in fund balances 453,562 123,364 5,867,108 Fund balances, beginning of year 786,422 499 8,732,224 Fund balances, end of year $ 1,239,984 $ 123,863 $ 14,599,332 73 OTHER SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULES NON – MAJOR GOVERNMENTAL FUNDS City of Goodyear Highway User Revenue Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Variance with Final Budget Positive (Negative) Budgeted Amounts REVENUES Intergovernmental Investment income Miscellaneous Total revenues EXPENDITURES Current: Highway and streets Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfer in Total other financing sources Net change in fund balance Fund balance, beginning of year Fund balance, end of year Original Final Actual $ 1,455,760 1,455,760 $ 1,455,760 1,455,760 $ 1,633,997 8,327 68,850 1,711,174 2,596,022 2,596,022 2,596,022 2,596,022 2,126,282 2,126,282 (1,140,262) (1,140,262) - - (1,140,262) 84 $ (1,140,178) (1,140,262) 84 $ (1,140,178) 178,237 8,327 68,850 255,414 469,740 469,740 (415,108) 725,154 483,860 483,860 483,860 483,860 68,752 1,209,014 84 $ $ 68,836 $ 1,209,014 76 City of Goodyear Grants Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts Original REVENUES Intergovernmental Miscellaneous Total revenues $ 242,000 242,000 Final $ 242,000 242,000 Actual $ 315,984 63,237 379,221 Variance with Final Budget Positive (Negative) $ 73,984 63,237 137,221 EXPENDITURES Current: Public safety Community development Capital outlay Total expenditures 200,000 200,000 200,000 200,000 245,398 6,925 145,317 397,640 (245,398) (6,925) 54,683 (197,640) Net change in fund balance 42,000 42,000 (18,419) (60,419) 121,571 121,571 121,571 - Fund balance, beginning of year Fund balance, end of year $ 163,571 $ 163,571 $ 103,152 $ (60,419) 77 City of Goodyear Community Facilities Districts - General Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts Original REVENUES Taxes Charges for services Investment income Contributions Miscellaneous Total revenues EXPENDITURES Current General government Total expenditures Net change in fund balance Fund balance, beginning of year Fund balance, end of year $ 574,240 3,900 42,309 55,000 675,449 1,029,214 1,029,214 Final $ 574,240 3,900 42,309 55,000 675,449 Actual $ 1,029,214 1,029,214 567,984 12,000 33,074 20,913 113,822 747,793 648,218 294,453 231,323 231,323 231,323 $ (6,256) 12,000 29,174 (21,396) 58,822 72,344 575,874 575,874 (353,765) $ (122,442) $ 453,340 453,340 (353,765) $ (122,442) Variance with Final BudgetPositive (Negative) 525,776 $ 648,218 78 City of Goodyear Community Facilities Impact Fees Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts Original REVENUES Charges for services Investment income Total revenues EXPENDITURES Capital outlay Total expenditures Net change in fund balance Fund balance, beginning of year Fund balance, end of year $ 512,727 512,727 515,000 515,000 (2,273) Final $ Actual Variance with Final Budget Positive (Negative) 512,727 512,727 $ 1,147,923 13,119 1,161,042 515,000 515,000 349,014 349,014 165,986 165,986 812,028 814,301 (2,273) 1,314,596 1,314,596 1,314,596 $ 1,312,323 $ 1,312,323 $ 2,126,624 $ 635,196 13,119 648,315 $ 814,301 79 City of Goodyear General Government Impact Fees Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts Original REVENUES Charges for services Investment income Total revenues $ 450,000 450,000 Final $ 450,000 450,000 Actual $ 821,840 9,757 831,597 Variance with Final Budget Positive (Negative) $ 371,840 9,757 381,597 EXPENDITURES Current: Public works Community development Capital outlay Total expenditures 500,000 500,000 500,000 500,000 344 14,319 232,748 247,411 (344) (14,319) 267,252 252,589 Net change in fund balance (50,000) (50,000) 584,186 634,186 Fund balance, beginning of year Fund balance, end of year 1,022,763 $ 972,763 $ 1,022,763 1,022,763 972,763 $ 1,606,949 $ 634,186 80 City of Goodyear Public Works Impact Fees Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts Original REVENUES Charges for services Investment income Total revenues $ EXPENDITURES Current: Public works Capital outlay Total expenditures Net change in fund balance Fund balance, beginning of year Fund balance, end of year 432,295 432,295 Final $ $ 766,221 12,767 778,988 $ 333,926 12,767 346,693 190,000 800,000 990,000 190,000 800,000 990,000 88,982 109,646 198,628 101,018 690,354 791,372 (557,705) (557,705) 580,360 1,138,065 1,508,902 $ 432,295 432,295 Actual Variance with Final Budget Positive (Negative) 951,197 $ 1,508,902 1,508,902 951,197 $ 2,089,262 $ 1,138,065 81 City of Goodyear Fire Impact Fees Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts Original REVENUES Charges for services Investment income Total revenues $ EXPENDITURES Current: Capital outlay Total expenditures $ 1,375,200 1,375,200 Net change in fund balance (963,219) 1,077,103 $ 113,884 411,981 411,981 1,375,200 1,375,200 (963,219) Fund balance, beginning of year Fund balance, end of year 411,981 411,981 Final $ Actual $ 878,971 7,806 886,777 Variance with Final Budget Positive (Negative) $ 466,990 7,806 474,796 554,443 554,443 820,757 820,757 332,334 1,295,553 1,077,103 1,077,103 113,884 $ 1,409,437 $ 1,295,553 82 City of Goodyear Police Impact Fees Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts Original REVENUES Charges for services Investment income Total revenues $ 271,686 271,686 Final $ Actual 271,686 271,686 $ 1,200,301 8,276 1,208,577 Variance with Final Budget Positive (Negative) $ 928,615 8,276 936,891 EXPENDITURES Current: Capital outlay Total expenditures 160,000 160,000 160,000 160,000 145 145 159,855 159,855 Net change in fund balance 111,686 111,686 1,208,432 1,096,746 Fund balance, beginning of year 974,771 974,771 974,771 $ 1,086,457 $ 1,086,457 $ 2,183,203 Fund balance, end of year $ 1,096,746 83 City of Goodyear Transportation Impact Fees Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts Variance with Final Budget Positive (Negative) Original Final Actual $ 1,143,985 1,143,985 $ 1,143,985 1,143,985 $ 1,564,512 16,359 1,580,871 EXPENDITURES Current: Capital outlay Total expenditures 900,000 900,000 900,000 900,000 152,815 152,815 747,185 747,185 Net change in fund balance 243,985 243,985 1,428,056 1,184,071 1,694,190 1,694,190 1,694,190 $ 1,938,175 $ 1,938,175 $ 3,122,246 REVENUES Charges for services Investment income Total revenues Fund balance, beginning of year Fund balance, end of year $ 420,527 16,359 436,886 $ 1,184,071 84 City of Goodyear Library Impact Fees Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts Original REVENUES Charges for services Investment income Total revenues EXPENDITURES Capital outlay Total expenditures $ 372,075 372,075 - Final $ Actual 372,075 372,075 - $ 446,080 7,482 453,562 Variance with Final Budget Positive (Negative) $ - 74,005 7,482 81,487 - Net change in fund balance 372,075 372,075 453,562 81,487 Fund balance, beginning of year 786,422 786,422 786,422 - $ 1,158,497 $ 1,158,497 $ 1,239,984 Fund balance, end of year $ 81,487 85 City of Goodyear Debt Service Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual For The Year Ended June 30, 2005 Budgeted Amounts REVENUES Taxes Investment income Total revenues EXPENDITURES Debt service: Principal retirement Interest and debt costs Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES Transfers in Total other financing sources Net change in fund balance Fund balance, beginning of year Fund balance, end of year Original Final Actual $ 2,451,787 2,451,787 $ 2,451,787 2,451,787 $ 2,425,608 440 2,426,048 2,579,749 489,318 3,069,067 2,579,749 489,318 3,069,067 1,805,000 1,433,730 3,238,730 (617,280) (617,280) 499 $ (616,781) (617,280) (617,280) 499 $ (616,781) Variance with Final Budget Positive (Negative) $ (26,179) 440 (25,739) 774,749 (944,412) (169,663) (812,682) (195,402) 936,046 936,046 936,046 936,046 123,364 740,644 499 $ 123,863 $ 740,644 86 STATISTICAL SECTION City of Goodyear Government-Wide Expenses By Function 1 For The Years Ended June 30 (Unaudited) Fiscal General Year Government(a) % 2003 $ 11,683,171 2004 13,928,300 2005 15,464,761 29.35 32.39 29.13 Public Safety $ 12,198,244 14,739,539 16,054,895 % Public Works and Highways and Streets % Culture and Recreation 30.65 34.28 30.25 $ 9,842,863 6,962,446 14,406,634 24.73 16.19 27.14 $ 1,925,726 1,716,362 2,591,911 Schedule includes General, Special Revenue, Debt Services, and Capital Projects Funds 1 Source: City records * Implementation of GASB 34 was in fiscal year 2003. As a result, prior year data is not available. (a) Includes Community Development 88 % Interest on Long-Term Debt % Total Governmentwide Expenses 4.84 4.00 4.88 $ 4,153,359 5,649,175 4,567,604 10.43 13.14 8.60 $ 39,803,363 42,995,822 53,085,805 89 City of Goodyear Government-Wide Revenues 1 For The Years Ended June 30 (Unaudited) Fiscal Year Charges for Services 2003 $ 11,223,001 2004 10,555,004 2005 11,459,192 Operating Capital Grants Grants and and Contributions Contributions $ 397,092 109,956 523,405 $ 9,475,823 46,863,563 16,472,105 State Shared Taxes $ 21,111,029 25,487,392 31,498,052 $ 5,587,983 5,756,754 5,973,538 Investment Income (Loss) $ (499,021) 556,145 1,079,720 Schedule includes General, Special Revenue, Debt Services, and Capital Projects Funds 1 Source: City records * Implementation of GASB 34 was in fiscal year 2003. As a result, prior year data is not available. 90 Total Government-wide Miscellaneous Revenues $ 233,858 408,114 1,641,295 $ 47,529,765 89,736,928 68,647,307 91 City of Goodyear Property Tax Levies and Collection1 Last Ten Fiscal Years (Unaudited) Fiscal Total Tax Year Levy Ratio of Percent of Delinquent Total Total Tax Levy Total Current Tax Current Taxes Tax Tax Collections to Property Tax Collection Collected Collections Collections Total Tax Levy Revenues 1996 1,061,068 1,051,239 99.07% - 1,051,239 99.07% 1,051,239 1997 1,173,156 1,168,884 99.64% - 1,168,884 99.64% 1,168,884 1998 1,418,131 1,414,046 99.71% - 1,414,046 99.71% 1,414,046 1999 1,682,349 1,663,764 98.90% - 1,663,764 98.90% 1,663,764 2000 1,977,135 1,967,017 99.49% 277 1,967,294 99.50% 1,967,294 2001 2,541,008 2,484,965 97.79% 2,469 2,487,434 97.89% 2,487,434 2002 3,204,131 3,102,195 96.82% 51,203 3,153,398 98.42% 3,153,398 2003 4,287,085 4,112,585 95.93% - 4,112,585 95.93% 4,112,585 2004 5,096,682 4,982,963 97.77% - 4,982,963 97.77% 4,982,963 2005 6,049,416 5,974,482 98.76% - 5,974,482 98.76% 5,974,482 Schedule includes General and Debt Service Funds 1 Source: City records 92 City of Goodyear Assessed and Estimated Actual Value Taxable Property1 Last Ten Fiscal Years (Unaudited) Assessment Year 1 Assessed Value Estimated Actual Value Percent of Assessed Value To Estimated Actual Value 1996 53,323,611 386,104,649 13.81% 1997 57,976,454 418,994,590 13.84% 1998 72,104,817 547,923,202 13.16% 1999 88,767,663 666,631,042 13.32% 2000 103,618,251 785,915,672 13.18% 2001 136,713,813 1,046,255,320 13.07% 2002 174,404,952 1,412,131,409 12.35% 2003 222,388,265 1,807,280,114 12.31% 2004 264,638,241 2,222,833,697 11.91% 2005 327,191,619 2,683,850,075 12.19% Source: Maricopa County Assessor's Office 93 City of Goodyear Property Tax Rates Direct and Overlapping Governments1 Last Ten Fiscal Years (Unaudited) 1 Fiscal Year City of Goodyear Primary City of City of Goodyear Goodyear Secondary Total Maricopa County Primary Library District Secondary 1996 0.20290 1.89160 1997 0.40490 1998 Fire District Flood Assistance Tax Control Secondary Secondary 2.09450 1.6880 0.0099 0.0108 0.3332 1.72120 2.12610 1.6354 0.0421 0.0109 0.3425 1.00440 1.10470 2.10910 1.1265 0.0421 0.0105 0.3425 1999 1.29760 0.79190 2.08950 1.1472 0.0421 0.0103 0.3270 2000 1.07990 1.01680 2.09670 1.1884 0.0421 0.0100 0.2858 2001 1.34030 0.74130 2.08160 1.1641 0.0421 0.0096 0.2534 2002 1.36740 0.57820 1.94560 1.1832 0.0421 0.0091 0.2319 2003 1.28660 0.75490 2.04150 1.2108 0.0421 0.0091 0.2119 2004 1.22390 0.74930 1.97320 1.2108 0.0521 0.0069 0.2119 2005 0.82220 0.77780 1.60000 1.1971 0.0521 0.0069 0.2119 Source: Maricopa County Assessor's Office * Information is not available 94 School Community Community Central Arizona Maricopa Equalization College College Project Special Health Primary Primary Secondary Secondary Care District * 0.9455 * 0.1400 * * 0.9772 * 0.1400 * * 0.9747 * 0.1400 * * 0.9866 * 0.1400 * * 0.9741 * 0.1400 * * 0.9691 * 0.1300 * * 0.9583 * 0.1300 * * 0.9634 * 0.1300 * 0.4560 0.9211 0.1161 0.1200 * 0.4358 0.8936 0.1379 0.1200 0.1206 95 City of Goodyear Ratio of Net General Bonded Debt To Assessed Value and Net Bonded Debt Per Capita Last Ten Fiscal Years (Unaudited) Ratio of Net Bonded Debt Net Bonded Gross Bonded Less: Debt Net Bonded To Assessed Debt Per Debt1 Service Fund1 Debt Value Capita Fiscal 2 Year Population Assessed Value3 1996 10,215 53,323,611 * * * * * 1997 12,205 57,976,454 * * * * * 1998 14,305 72,104,817 * * * * * 1999 17,085 88,767,663 * * * * * 2000 19,695 103,618,251 * * * * * 2001 22,820 136,713,813 * * * * * 2002 26,715 174,404,952 11,210,000 - 11,210,000 6.43% 420 2003 30,395 222,388,265 22,270,000 - 10.01% 733 2004 35,810 264,638,241 30,395,000 499 22,270,000 30,394,501 11.49% 849 2005 41,240 327,191,619 58,265,000 123,863 58,141,137 17.77% 1410 1 Source: City records (Does not include Enterprise or Special Assessment bonds) 2 Source: Arizona Department of Commerce 3 Source: Maricopa County Assessor's Office * Information is not available. 96 City of Goodyear Computation of Legal Debt Margin June 30, 2005 (Unaudited) The computation of the Town's legal debt margins as of June 30, 2005 is as follows: City of Goodyear Secondary Assessed Valuation1: Allowable 6% Debt* Less 6% Bonds Outstanding Unused 6% Debt Capacity $ 19,631,497 (9,405,000) Allowable 20% Debt** Less 20% Bonds Outstanding Unused 6% Debt Capacity 65,438,324 (48,860,000) $ 10,226,497 16,578,324 Legal debt margin Amount of debt outstanding2: Total bonded debt Total loans Less: Municipal facilities revenue bonds Water revenue bonds Community facilities districts bonds Greater Arizona Development Authority Water Infrastructure Authority Loan General obligation bonds 1 $ 327,191,619 $ 26,804,821 $ 134,067,600 15,092,624 149,160,224 (3,640,000) (2,710,000) (69,452,600) (4,085,000) (11,007,624) $ 58,265,000 Source: Maricopa County Assessor's Office 2 Source: City records * Under Arizona law, cities can issue general obligation bonds for general municipal purposes up to an amount not exceeding 6% of assessed valuation. ** under Arizona law, cities can issue additional general obligation bonds for supplying specific services as water, sewer, lighting, parks and recreational facilities up to an amount not exceeding 20% of assessed valuation. 97 City of Goodyear Principal Taxpayers June 30, 2005 (Unaudited) Taxpayer1 Assessed Valuation of Property2 Type of Business Sun MP LLC Vacant Land Suncor Development Company Vacant Land Rubbermaid, Inc. 15,914,506 4.85% 11,126,565 3.39% Industrial Parks 8,893,205 2.71% Arizona Public Service Company Electric Utility 7,213,544 2.20% VHS of South Phoenix Inc. Hospital 6,845,325 2.09% First American Title Insurance Co. Vacant Land 5,128,082 1.56% McLane/Sunwest Inc. Warehouses 3,941,499 1.20% PVPW Corporation Shopping Center 3,773,693 1.15% Snyders of Hanover Industrial Parks 3,445,821 1.05% Qwest Corporation Communication 3,082,120 0.94% 69,364,360 21.14% Total 1 Source: Arizona Department of Revenue 2 Source: Maricopa County Assessor's Office $ Percentage of Total Assessed Valuation $ 98 City of Goodyear Major Employers1 June 30, 2005 (Unaudited) Major Corporation Approximate Number of Employees * Type of Company Arizona State Prison/Perryville 825 Correctional Facility Lockheed Martin 732 Aviation/Technology McLane Sunwest 500 Distribution Cavco Industries, Inc. 475 Modular Homes Timco 430 Aircraft Maintenance, Modification and Repair City of Goodyear 410 Government Rubbermaid, Inc. 261 Manufacturing Plastic Consumer Products Rudolpho Brothers 260 Plastering Target 175 Department Store Lufthansa-German Airlines 170 Training Center 1 Source: City Records 99 COMPLIANCE REPORT