This page left blank intentionally. City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ INTRODUCTORY SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2017 This page left blank intentionally. City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2017 Mayor Jerry Weiers Councilmembers Ian Hugh - Vice Mayor, Cactus District Bart Turner - Barrel District Lauren Tolmachoff - Cholla District Jamie Aldama - Ocotillo District Ray Malnar - Sahuaro District Joyce Clark - Yucca District Management Staff Kevin Phelps - City Manager Tom Duensing - Assistant City Manager Prepared by Finance Vicki Rios, Budget and Finance Director i This page left blank intentionally. ii City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2017 TABLE OF CONTENTS Page I. INTRODUCTORY SECTION Title Page ......................................................................................................................................... i Table of Contents ...........................................................................................................................iii Letter of Transmittal ....................................................................................................................... 1 GFOA Certificate of Achievement.................................................................................................. 5 Glendale, Arizona and Neighboring Communities ......................................................................... 6 Glendale City Officials ................................................................................................................... 7 Glendale Council District Boundaries ............................................................................................. 8 Organization Chart .......................................................................................................................... 9 II. FINANCIAL SECTION Independent Auditors’ Report .............................................................................................................. 11 A. MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) ............................................. 15 B. BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position.............................................................................................................. 27 Statement of Activities .................................................................................................................. 28 Fund Financial Statements: Balance Sheet – Governmental Funds........................................................................................... 30 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position ............................................................................................................................... 31 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds.................................................................................................................. 32 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities .............................................. 33 Statement of Net Position – Proprietary Funds ............................................................................. 34 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds ........ 35 Statement of Cash Flows – Proprietary Funds .............................................................................. 36 Notes to the Financial Statements ..................................................................................................... 38 C. REQUIRED SUPPLEMENTARY INFORMATION Schedule of Pension Liability ....................................................................................................... 95 iii City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2017 TABLE OF CONTENTS Schedule of OPEB Liability ......................................................................................................... 98 Schedule of Pension Contributions ............................................................................................. 100 Schedule of Funding Progress ..................................................................................................... 102 Notes to Pension Liability and Contributions ............................................................................. 103 Budgetary Comparison Schedule – General Fund ...................................................................... 104 Notes to Required Supplementary Information ........................................................................... 106 D. COMBINING STATEMENTS Budgetary Comparison Schedule – Municipal Property Corporation Debt Service Fund .......... 109 Non-Major Governmental Funds Combining Balance Sheet........................................................................................................ 112 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances ................ 116 Budgetary Comparison Schedules Transportation Fund ............................................................................................................. 119 Community Development Block Grants Fund ..................................................................... 120 Highway Users Gas Tax Fund ............................................................................................. 121 Police and Fire Sales Tax Fund ............................................................................................ 122 Other Special Revenue Fund ................................................................................................ 123 Highway User Debt Service Fund........................................................................................ 125 Transportation Debt Service Fund ....................................................................................... 126 Excise Tax Revenue Debt Service Fund .............................................................................. 127 General Obligation Debt Service Fund ................................................................................ 128 Cemetery Perpetual Care Fund ............................................................................................ 129 Development Impact Fees Fund........................................................................................... 130 Streets Construction Fund .................................................................................................... 131 Fire and Police Construction Fund ....................................................................................... 132 Parks Bond Construction Fund ............................................................................................ 133 Other Construction Fund ...................................................................................................... 134 Non-Major Proprietary Funds – Business-Type Activities Combining Statement of Net Position ..................................................................................... 136 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ................ 137 Combining Statement of Cash Flows ...................................................................................... 138 Budgetary Comparison Schedules Water and Sewer Fund (a Major Fund) ................................................................................ 140 Landfill Fund ....................................................................................................................... 142 Solid Waste Fund ................................................................................................................. 143 iv City of Glendale, Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2017 TABLE OF CONTENTS Housing Fund ....................................................................................................................... 144 Internal Service Funds Combining Statement of Net Position ..................................................................................... 145 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position ................ 146 Combining Statement of Cash Flows ...................................................................................... 147 Budgetary Comparison Schedules Risk Management Fund ....................................................................................................... 148 Workers’ Compensation Fund ............................................................................................. 149 Employee Benefits Fund ...................................................................................................... 150 Fleet Services Fund .............................................................................................................. 151 Technology Fund ................................................................................................................. 152 E. SUPPLEMENTARY INFORMATION Federal Financial Data Schedule .......................................................................................... 153 III. STATISTICAL SECTION Schedule Page Net Position by Component ............................................................................................... 1 ............. 160 Changes in Net Position ..................................................................................................... 2 ............. 162 Fund Balances – Governmental Funds ............................................................................... 3 ............. 165 Changes in Fund Balances – Governmental Funds ............................................................ 4 ............. 166 Assessed and Estimated Actual Value of Taxable Property ............................................... 5 ............. 168 Direct and Overlapping Governments Property Tax Rates ................................................ 6 ............. 169 Principal Property Taxpayers ............................................................................................. 7 ............. 170 Property Tax Levies and Collections ................................................................................. 8 ............. 171 City Transaction Privilege Taxes (Sales Tax) by Category................................................ 9 ............. 173 Ratio of Outstanding Debt by Type.................................................................................. 10 ............. 174 Ratios of Net General Bonded Debt Outstanding............................................................. 11 ............. 176 Net Direct and Overlapping Governmental Activities Debt............................................. 12 ............. 177 Legal Debt Margin Information ....................................................................................... 13 ............. 178 Pledged-Revenue Coverage ............................................................................................. 14 ............. 180 Demographic and Economical Statistics .......................................................................... 15 ............. 182 Principal Employers ......................................................................................................... 16 ............. 183 Full-Time Equivalent City Government Employees by Function/Program ..................... 17 ............. 184 Operating Indicators by Function/Program ...................................................................... 18 ............. 185 Capital Asset Statistics by Function/Program .................................................................. 19 ............. 186 Miscellaneous Water and Sewer Rate Statistics ............................................................... 20 ............. 187 Miscellaneous Water and Sewer Statistics ....................................................................... 21 ............. 188 v This page left blank intentionally. vi December 21, 2017 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Glendale, Arizona: The Budget and Finance Department is pleased to submit the City of Glendale, Arizona’s Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2017. The CAFR includes a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP). The financial statements are audited by a firm of licensed certified public accountants in accordance with generally accepted auditing standards (GAAS). City Management assumes full responsibility for the accuracy and completeness of the data, including all disclosures presented in this report. To provide a reasonable basis for making these representations, Management has established a comprehensive internal control framework that is designed to both protect the government’s assets from loss, theft, or misuse; and to compile sufficient reliable information for the preparation of the City’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements are free of material misstatement. To the best of our knowledge and belief, this financial report is complete and reliable in all material respects and is designed to fairly represent the financial position of the operations of the various funds of the City. This letter of transmittal is best reviewed in conjunction with the Management’s Discussion and Analysis (MD&A) beginning on page 15. The MD&A provides a narrative introduction, overview, and analysis of the basic financial statements of the City. Independent Audit The City’s financial statements have been audited by CliftonLarsonAllen LLP, a firm of licensed certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2017, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The City’s independent auditors also perform the Single Audit of the City’s federal grant programs. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements involving the administration of federal awards. The Single Audit Reporting Package is issued separately from this financial report and is available upon request. Budgetary Controls The annual budget serves as the foundation for the City’s financial planning and control. City departments are required to submit requests for appropriation to the City Manager on or before the last week of December each year. Management uses these requests to develop a budget to propose to the City Council for review and adoption. The City Council is required to hold public hearings on the proposed budget and adopt the final budget by the first Monday in August. The City maintains budgetary controls that are designed to ensure compliance with budgetary and legal provisions contained in the annually appropriated operating and capital project budgets approved by the City Council. The legal level of budgetary control (that is, the level at which expenditures cannot legally exceed the appropriated amount) is established at the city-wide level consisting of the total operating budget and the total capital projects budget, as adopted by 1 the City Council. For budget administrative purposes, the City maintains budgetary controls at the fund and department level. Department Heads may request transfers of appropriations within the same fund for his/her department. However, transfers of appropriations between funds and departments require approval of the City Council and can only occur in the last quarter of the fiscal year. Budget-to-actual comparisons are provided in this report for each individual fund for which an appropriated annual budget has been adopted. Arizona state law and Glendale City financial policies require that each annual city budget be a balanced budget. A balanced budget means the total expenditures cannot exceed the budgeted period’s total financial resources available. The adopted FY16-17 budget complies with the balanced budget requirement in all City funds. Additionally, the State of Arizona sets a limit on the expenditures of local jurisdictions. Compliance with these expenditure limitations is required. The City submits an audited expenditure limitation report as defined by the Uniform Expenditure Reporting System (A.R.S. Section 41-1279.07) along with audited financial statements to the State Auditor General within the required timeframe. City of Glendale Profile The City of Glendale, Arizona is the fifth largest city in the state with a population of approximately 238,000 people. Located in the northwestern part of the metropolitan Phoenix area and occupying approximately 60 square miles of land, the City is home to the Arizona Cardinals and the Arizona Coyotes. The City is also the owner of Camelback Ranch, the spring training facility for the Los Angeles Dodgers and the Chicago White Sox. The City was incorporated in 1910 and has operated under the council-manager form of government since its incorporation. Policy-making and legislative authority are vested in the City Council which consists of the Mayor and six other members. The City Council is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, and hiring the City Manager, Clerk, Attorney, Municipal Judge and City Auditor (Internal). The City Manager is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing the heads of the various departments. The Council is elected on a non-partisan basis. Council members serve four-year terms, with three Council members elected every two years. The Mayor is elected to serve a four-year term. The City provides a full range of services including: police and fire services; water, sewer, and solid waste services; the construction and maintenance of highways, streets, public facilities, and other infrastructure; and recreational activities and cultural events. Certain housing services are provided by the City’s public housing authority, which functions, in essence, as a department of the City and therefore has been included as an integral part of the City’s financial statements. The City also is financially accountable for the Municipal Property Corporation, a legally separate entity, that is reported within the City’s financial statements. Economic Conditions and Strategies Before reviewing the presented financial statements, it is important to consider the local and global economic factors that have impacted the City’s financial position. Primary Revenue Sources The City relies on local and state shared sales tax as well as state shared income tax as primary revenue sources for the City’s operating budget. Local sales tax revenues increased 3.7% this fiscal year when compared to the last fiscal year. The growth can be attributed to the improving economy and economic development activities which are expected to generate additional construction sales tax revenue. In addition, as the jobless claims continue to decline and the overall economy continues to improve, rising consumer confidence is expected to lead to increased spending, especially in retail sales. The city’s state shared sales tax revenues also increased 2.5% compared to last fiscal year. 2 Workforce and Unemployment Glendale’s unemployment rate for the month of June 2017 was 4.9% which is lower than the statewide unemployment rate of 5.3%. Glendale’s workforce is concentrated in the following nonfarm sectors: retail (11.41%), health care services (11.38%), consumer services (8.55%), government and social advocacy services (8.31%), education (7.99%), construction (5.89%), finance, insurance and real estate (4.27%), business services (4.06%), and transportation and distribution (2.94%). Arizona’s nonfarm employment grew 2.4% over last year with leisure & hospitality, education and health services, professional & business services leading the growth. Economic Development Business attraction, business retention & expansion, redevelopment, business assistance, and major events comprise the five pillars of Glendale’s economic development program. Business attraction is focused on five targeted industries: aerospace & defense, manufacturing, signature retail & entertainment, medical technology, and advanced business services. In fiscal year 2017, the City successfully hosted the 2017 NCAA Men’s Final Four Basketball Championship at the University of Phoenix Stadium, which was reported by the Arizona State University WP Carey School of Business as having a $324.5 million impact for Arizona. Major business attraction and retention projects in representative target industries include Lockheed Martin, H&M Metals, Ring Video Doorbell, AKDHC, Avanti Windows and Bechtel. Consumer-products manufacturer Conair Corporation completed construction of their $40 million, 1 million square foot state of the art e-commerce fulfillment center. This is the third building in the Glen Harbor Business Park, which increases the size of their corporate campus to approximately 2.3 million SF total, or 53 acres under roof. Conair plans to hire 300 new positions over the next couple of years bringing their campus total to 750 employees. BMW’s new $30 million, 80,000+ square foot high end full service dealership will employ up to 200 new positions paying an average of $65,000 annually plus benefits and bonuses. This project represents two of the most prominent goals of Economic Development, facilitating the creation of high quality jobs for citizens and an additional sales tax revenue source for the City of Glendale. Alaska USA Federal CU expanded their corporate foot print in Glendale’s Talavi Business Park with their $17 million purchase of the 185,000 square feet Talavi Tech building, which was formerly part of the Honeywell campus. This new facility along with their existing data center and newly acquired branch location will provide hundreds of new finance, IT, and customer service positions. Financial Strategy As part of the annual budget process, the city prepares a five-year financial forecast for each of the City’s major operating funds. The forecast provides a long-term view of current year budget decisions affecting the City and provide an estimate of fund balance and sensitivity to revenue and expenditure changes over the forecast period. Through sound financial planning and positive economic conditions, the City’s General Fund balance continues to improve and increased $2.4 million in fiscal year 2017. The City’s general obligation and general excise tax bond ratings were upgraded by Moody’s Investor Services in April 2017. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, 2016. This was the twenty-ninth consecutive year the City has received this prestigious award, and the thirty-first year overall. In order to be awarded a Certificate of Achievement, the government published an easily readable and efficiently organized CAFR. This report satisfied both GAAP and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. 3 In addition, the City also received the GFOA’s Distinguished Budget Presentation Award for its fiscal year beginning July 1, 2016. This was the thirtieth consecutive year that the City has received the highest form of recognition in governmental budgeting. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance Division. I would like to express appreciation to all members of the division who assisted and contributed to the preparation of this report. Credit also must be given to the Mayor, Council, and City Manager for their unfailing support in maintaining the highest standards of professionalism in the management of the City’s finances. Respectfully submitted, Vicki L. Rios, CPA Budget and Finance Director 4 5 Glendale, Arizona & Neighboring Communities To Flagstaff Cave Creek e fre re Ca 17 Scottsdale 60 El Mirage Peoria Sun City Surprise 303 Luke AFB Phoenix Glendale 51 Fountain Hills Paradise Valley 101 101 10 Goodyear 85 202 Sky Harbor Airport Mesa 89 60 Tempe Chandler 10 To Tucson 6 Gilbert GLENDALE CITY OFFICIALS Jerry Weiers Mayor Ian Hugh Bart Turner Lauren Tolmachoff Vice Mayor/ Councilmember Cactus Disrict Councilmember Barrell District Councilmember Cholla District Jamie Aldama Ray Malnar Joyce Clark Kevin Phelps Councilmember Ocotillo District Councilmember Sahuaro District Councilmember Yucca District City Manager 7 Glendale Council District Boundaries Pinnacle Peak Rd. Deer Valley Rd. Cholla Beardsley Rd. Union Hills Dr. Bell Rd. Saquaro Greenway Rd. Thunderbird Rd. Cactus Rd. Peoria Ave. Olive Ave. Barrell Cactus Yucca Yucca Northern Ave. Glendale Ave. Ocotillo Bethany Home Rd. 43rd Ave. 51st Ave. 59th Ave. 67th Ave. 75th Ave. 83rd Ave. 91st Ave. 99th Ave. 107th Ave. 115th Ave. El Mirage Rd. Dysart Rd. Litchfield Rd. Bullard Ave. Reems Rd. Sarival Ave. Cotton Ln. e. Av 8 nd ra G Citrus Rd. Camelback Rd. GLENDALE ORGANIZATIONAL CHART CITIZENS OF GLENDALE Mayor & Council Boards & Commission Police Department Rick St. John Police Chief Public Works Department Jack Friedline Director Public Fac., Rec & Special Events Erik Strunk Director City Attorney Michael D. Bailey Fire Department Terry Garrison Fire Chief Water Services Department Craig Johnson Director City Clerk Julie Bower City Manager Kevin Phelps Assistant City Manager Tom Duensing City Auditor Candace MacLeod Strategic Initiatives & Special Projects Jean Moreno Executive Officer Presiding City Judge Elizabeth Finn Budget & Finance Department Vicki Rios Director Office of Economic Development Brian Friedman Director Public Affairs Department Brent Stoddard Director Development Services Department Sam McAllen Director 9 Community Services Department Elaine Adamczyk Interim Director Human Resources Department Jim Brown Director Innovation & Technology Department Chuck Murphy Chief Info. Officer This page left blank intentionally. 10 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ FINANCIAL SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2017 This page left blank intentionally. CliftonLarsonAllen LLP CLAconnect.com INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of City Council City of Glendale, Arizona Glendale, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the businesstype activities, each major fund, and the aggregate remaining fund information of the City of Glendale, Arizona (City), as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 11 The Honorable Mayor and Members of City Council City of Glendale, Arizona Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Glendale, Arizona as of June 30, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and the required supplementary information for the City’s pension plans, other postemployment benefits, and budgetary comparison schedule for the general fund (as listed in the table of contents) be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary and Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements, supplementary information, and the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and the supplementary information (the federal financial data schedules) are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. 12 The Honorable Mayor and Members of City Council City of Glendale, Arizona Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2017, on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on the effectiveness of the City’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. a CliftonLarsonAllen LLP Phoenix, Arizona December 21, 2017 13 This page left blank intentionally. 14 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ MANAGEMENT’S DISCUSSION & ANALYSIS (Required Supplementary Information) ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2017 This page left blank intentionally. CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Management’s Discussion and Analysis The following discussion and analysis is provided to readers of the City’s financial statements as a narrative overview of the financial activities of the City for the fiscal year ended June 30, 2017. This discussion and analysis is designed to assist the reader in focusing on significant financial highlights; provide an overview of the City’s financial activity; identify changes in the City’s financial position; identify material deviations from the financial plan (the approved annual budget); and identify individual fund issues or concerns. The Management’s Discussion and Analysis (MD&A) has a different focus and purpose than the letter of transmittal presented on pages 1-4. It is designed to be read in conjunction with the transmittal letter, the financial statements beginning on page 27, and the accompanying notes to the financial statements. Significant Financial Highlights The financial statements illustrate the following significant financial highlights for FY 2016-17:  The City’s total net position decreased $29,896 or 4.0%. The governmental net position decreased by $29,460 or 7.8%, and the business-type net position decreased by $436 or 0.1%. The decrease in net position in governmental activities is primarily due to an increase in net pension obligations.  General revenues from governmental activities increased $5,237 or 2.2%. The primary reason for this increase was an increase of $5,578 or 3.7% in sales tax revenues. In addition, state shared income tax increased $2,081 or 7.6%, and state shared sales tax increased $542 or 2.5%.  Governmental activities program specific revenues in the form of charges for services, grants, and contributions increased $3,197 or 4.8%. Charges for services revenue increased $1,837 or 5.5%. This increase is due to an increase in development impact fee revenues.  The total cost of all City programs increased by $38,468 or 9.1%. The increase is attributed to an increase of $34,292 or 25.9% in public safety expenses in the governmental activities and an increase of 3,125 or 3.9% in water and sewer and $2,253 or 24.9% in landfill expenses for the business-type activities. The increase in public safety expenses is due to an increase in salaries and pension expenses. The increase in water and sewer is expenses is due to an increase in salaries and professional and contractual expenses. The increase in landfill expenses is due to an increase in professional and contractual expense.  The General Fund, a major governmental fund, collected $224,814 in revenues which is an increase of $4,822 or 2.2% from the prior year. This increase was primarily due to an increase in taxes and intergovernmental revenues. The total expenditures of the General Fund were $193,975, which is an increase of $8,536 or 4.6%. A significant portion of this increase related to an increase in public safety and community services expenditures.  In April 2017, the City’s general obligation and general excise tax bond ratings were upgraded by Moody’s Investor Services. 15 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Overview of the 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 are comprised of three components: 1) government-wide financial statements 2) fund financial statements, and 3) notes to the financial statements. This report also contains required supplementary information intended to provide additional detail to support the basic financial statements. 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 accrual basis of accounting is used for governmentwide financial statements. The Statement of Net Position presented on page 27, provides information on all the City’s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference reported as net position. Net position is categorized as net investment in capital assets, restricted by an outside party, and unrestricted. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The Statement of Activities found on page 28, presents information that illustrates how the City’s net position changed during the fiscal year. All changes in net position 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, such as revenues pertaining to uncollected taxes and expenses pertaining to earned but unused compensated absences. Both of the Government-Wide Financial Statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, community services, community environment, street maintenance, and interest on long-term debt. The business-type activities of the City include water and sewer services, landfill, solid waste, and housing. Fund Financial Statements The Fund Financial Statements found on page 30, provide more detailed information about the major funds within the City. 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, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All the funds of the City can be divided into two categories: governmental funds and proprietary 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 use the modified accrual basis of accounting and focus on near-term inflows and outflows 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 a government’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 decisions. 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. 16 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) The City maintains 16 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 2 major funds. Data from the other 14 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. Proprietary Funds The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water and sewer, landfill, solid waste, and housing services. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its fleet, technology, risk management, workers’ compensation and employee benefit activities. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. 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, while data from the other three enterprise funds is combined into a single, aggregated presentation. Individual fund data for each of the non-major enterprise funds is provided in the form of combining statements and schedules. Conversely, all five internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. Notes to the Financial Statements The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Additional Required Supplementary Information Following the basic financial statements is Required Supplementary Information (RSI) that further explains and supports the financial information in the financial statements. RSI presents the budgetary comparison schedules for the general fund, as well as other required supplementary information related to the City’s pensions and other postemployment benefits. Other The Combining Statements and Individual Fund Statements and Schedules section presents combining statements for non-major governmental funds, non-major enterprise funds, and non-major internal service funds, along with budget to actual comparisons on individual funds. Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a City’s financial position. In the case of the City, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $724,391 as of June 30, 2017. By far the largest portion of the City’s net position reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to 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. 17 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) 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. At the end of the current fiscal year, the City is able to report positive balances in the three categories of net position except for unrestricted net position for the governmental activities which decreased by $39,097 or 16.3% over the prior year. The City is addressing the negative unrestricted net position for the governmental activities by holding the line on expenditures and decreasing debt service payments as a result of bond refundings in fiscal years 2015, 2016 and 2017. The chart below is a comparison of the City’s net position for fiscal years 2017 and 2016: Condensed Statement of Net Position As of June 30, 2017, and 2016 (in thousands) Governmental Activities 2017 2016 Current and other assets Capital Assets: Non-depreciable Depreciable (net) Equity in joint venture $ Total assets Deferred Outflows of Resources Current liabilities Noncurrent liabilities Total liabilities Deferred Inflows of Resources Net position: Net investment in capital assets Restricted Unrestricted Total net position $ 299,556 $ T otal Primary Government 2017 2016 Business-T ype Activities 2017 2016 310,629 $ 137,420 $ 141,397 132,255 1,007,060 3,359 1,442,230 134,016 1,019,063 1,463,708 42,145 463,149 48,448 691,162 43,842 461,560 51,074 697,873 174,400 1,470,209 51,807 2,133,392 177,858 1,480,623 51,074 2,161,581 101,981 81,535 15,849 12,594 117,830 94,129 75,389 1,098,558 1,173,947 132,360 1,017,733 1,150,093 29,134 298,691 327,825 38,501 293,892 332,393 104,523 1,397,249 1,501,772 170,861 1,311,625 1,482,486 19,801 15,227 5,258 3,710 25,059 18,937 471,979 157,251 (278,767) 350,463 456,001 163,592 (239,670) 379,923 267,111 22,897 83,920 $ 373,928 256,488 21,576 96,300 $ 374,364 739,090 180,148 (194,847) 724,391 712,489 185,168 (143,370) 754,287 $ 18 $ $ 436,976 $ $ 452,026 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) The following presents a summary of the changes in net position compared to the prior year: Changes in Net Position As of June 30, 2017, and 2016 (in thousands) Governmental Activities 2017 2016 Reve nue s: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions T otal program revenues $ 35,163 27,519 6,669 69,351 $ 33,326 26,225 6,603 66,154 T otal Primary Government 2017 2016 Business-T ype Activities 2017 2016 $ 107,402 10,230 2,815 120,447 $ 109,848 9,809 815 120,472 $ 142,565 37,749 9,484 189,798 $ 143,174 36,034 7,418 186,626 General revenues: Property taxes Sales taxes State shared sales tax Urban revenue sharing (state shared income tax) Auto in-lieu taxes Investment earnings, unrestricted Miscellaneous T otal revenues 24,955 155,779 22,024 24,531 150,201 21,482 - - 24,955 155,779 22,024 24,531 150,201 21,482 29,378 9,458 (253) 1,400 312,092 27,297 9,351 1,225 3,417 303,658 883 114 121,444 614 63 121,149 29,378 9,458 630 1,514 433,536 27,297 9,351 1,839 3,480 424,807 Expe nses: General government Public safety Public works Community services Community environment Street maintenance Interest on long-term debt Water and sewer Landfill Solid Waste Housing Total expe nses Excess be fore transfe rs 61,373 166,790 24,768 33,752 3,930 21,848 27,827 340,288 (28,196) 64,228 132,498 24,859 32,796 4,262 21,219 27,932 307,794 (4,136) 83,500 11,302 15,698 12,644 123,144 (1,700) 80,375 9,049 15,016 12,730 117,170 3,979 61,373 166,790 24,768 33,752 3,930 21,848 27,827 83,500 11,302 15,698 12,644 463,432 (29,896) 64,228 132,498 24,859 32,796 4,262 21,219 27,932 80,375 9,049 15,016 12,730 424,964 (157) (1,264) (803) Transfers in (out) Increase (decrease ) in net position Net position beginning Net position e nding (29,460) 379,923 $ 350,463 $ (4,939) 384,862 379,923 19 1,264 $ 803 (436) 4,782 374,364 369,582 373,928 $ 374,364 - $ (29,896) 754,287 724,391 $ (157) 754,444 754,287 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Changes in Net Position The net position of the governmental activities decreased by $29,460 and business-type activities’ net position decreased by $436. Net Position 350,463 Governmental Activities 379,923 373,928 Business-Type Activities 374,364 335,000 340,000 345,000 350,000 355,000 360,000 365,000 370,000 375,000 380,000 385,000 2017 2016 Revenues and Expenditures The chart below shows the performance of the revenues in the governmental activities versus expenses: Expenses and Program Revenues Governmental Activities $180,000 $160,000 $140,000 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $General Public safety Public works Community Community Street Interest on government services environment maintenance long-term debt expenses program revenues 20 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) The City’s total revenues from governmental activities for the fiscal year ended June 30, 2017 increased $8,434 or 2.8%. The increase in revenues is due to an increase in local sales tax, state shared sales tax, and state shared income tax revenues. The cost of programs and services for governmental activities was $340,288, an increase of $32,494 or 10.6%. The increase is primarily due to an increase in public safety expenses related to pensions and an in increase in salaries expenses. The chart below shows the performance of the expenses and revenues in the business-type activities: Expenses and Program Revenues Business-Type Activities $100,000 $80,000 $60,000 $40,000 $20,000 $Water and sewer Landfill expenses Solid Waste Housing program revenues The City’s total revenues from business-type activities for the fiscal year ended June 30, 2017 were $121,444, an increase of $295 or 0.2%. The cost of programs and services was $123,144, an increase of $5,974 or 5.1%. Water and sewer expenses increased $3,125 or 3.9% and landfill expenses increased $2,253 or 24.9%. 21 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) City Revenue Categories REVENUES BY SOURCE FISCAL YEAR 2016-17 Urban revenue sharing (state shared income tax) 6.8% State shared sales tax 5.1% Auto in-lieu taxes 2.2% Miscellaneous 0.5% Charges for services 32.9% Grants and contributions 10.9% Sales taxes 35.8% Property taxes 5.8% The pie chart above shows the different types of revenue the City receives and the proportion of each. The majority (68.7%) of the total revenue the City receives comes from charges for services and local sales tax. The second most significant source is grants and contributions (10.9%). City Expense Categories EXPENSES BY FUNCTION FISCAL YEAR 2016-17 Landfill 2.4% Solid Waste 3.4% Water and sewer 18.1% Housing General 2.7% government 13.2% Interest on longterm debt 6.0% Street maintenance 4.7% Community environment 0.8% Public safety 36.1% Community services 7.3% Public works 5.3% The majority of the City’s expenses (54.2%) are incurred in the public safety and water and sewer categories. Public safety expenses include those related to police and fire protection services provided to the community and are funded by the general fund. Water and sewer expenses are paid by the enterprise fund which is funded primarily through user paid fees for services. 22 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) 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 As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $158,047, a decrease of $5,677 or 3.5% in comparison with the prior year. The City implemented Governmental Accounting Standards Board Statement (GASB) 54 during the 2011 fiscal year which impacted the presentation of fund balance components by more accurately classifying the fund balances into five categories: non-spendable, restricted, committed, assigned and unassigned; Note K. in the summary of significant accounting policies addresses this in greater detail. In fiscal year 2017 and 2016, $36,789 and $35,226 respectively, of the total fund balance constituted unassigned fund balance. Revenues for governmental functions overall totaled $306,503 in fiscal year 2017, an increase of $6,936 or 2.3% from the previous years’ total of $299,567. The increase is primarily due to an increase in taxes and special assessments revenue of $5,087 or 2.9% and an increase in intergovernmental revenue of $3,411 or 4%. Expenditures for governmental functions totaled $332,637 in fiscal year 2017, a decrease of $6,215 or 1.8% from the previous year total of $338,852. The decrease is primarily due to a decrease in capital expenditures of $20,136 or 34%. The General Fund is the main operating fund of the City. The General Fund balance increased $2,439 or 4.1%. At the end of the current fiscal year, the unassigned fund balance of the General Fund was $40,559 while total fund balance was $61,583. The General Fund has $2,934 of its fund balance as non-spendable; $7,443 as restricted; and $10,647 assigned. Per the City’s adopted financial policies, 10% of the general fund operating revenue which totals $22,481 has been earmarked as the Budget Stabilization Reserve and $18,078 has been earmarked as the Operating Reserve. Consistent with the requirements of GASB Statement No. 54, formal Council action was not taken prior to June 30, 2017 to commit these funds; therefore, the funds are reported as unassigned. Overall, the General Fund’s performance resulted in revenues over expenditures of $30,839 in fiscal year 2017. In the prior year, revenues exceeded expenditures by $34,553. The Municipal Property Corporation (MPC) debt service fund was established to account for the debt service payments on the bonds that were issued to finance the construction of a new municipal office complex, hockey arena, public safety training center, parking garage, media center, and convention center. The fund had a balance of $3,442 at the end of the fiscal year. Proprietary Funds Net position of the enterprise funds decreased $850 or 0.2%. The enterprise funds’ total net position was $22,897 restricted, $85,107 unrestricted, and $267,111 invested in capital assets. This decrease in net position is primarily due to an increase in landfill operating expenses. The water and sewer fund accounts for operations, maintenance and construction projects of city-owned water and sewer systems. The fund saw an increase in net position of $1,106 or 0.3% for the fiscal year ended June 30, 2017. The internal service funds account for fleet, technology, risk management, workers’ compensation, and employee benefits provided to other departments. The funds saw an increase in fund balance of $2,741 for the fiscal year ended June 30, 2017. The City’s policy is to fund the worker’s compensation and risk management funds at a 55% confidence level based on the most recent actuarial valuations. 23 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) General Fund Budgetary Highlights  The City’s budgeted revenues exceeded expectations and were $1,945 higher than the final budgeted amounts. Positive economic trends resulted in taxes and charges for services that were $1,666 and $1,282 greater than the final budget, respectively. Intergovernmental revenues were $467 lower than the final budget. Miscellaneous revenues were $988 lower than the final budget.  General Fund expenditures were lower than the final budget by $5,927. The most significant reduction was in public safety which was $2,051 lower than the budgeted amount due to savings in budgeted salaries expenditures. In addition, budgeted equipment purchases did not occur during the fiscal year resulting in general fund capital outlay expenditures that were $1,283 lower than the final budget.  General Fund budgetary fund balance increased by $643 or 1.2%. This increase is due to tax revenues being higher than originally expected. Capital Asset and Debt Administration Capital Assets The City’s investment in capital assets (net of accumulated depreciation) as of June 30, 2017, for its governmentaltype activities was $1,139,315 and for the business-type activities was $505,294. The investment in governmental and business-type capital assets consisted of land, buildings, machinery and equipment, and infrastructure for streets, parks, airport and street lighting, water, and wastewater treatment plants. Major capital asset projects capitalized during the current fiscal year included the following:         Parking Lot 91st and Maryland $4,718 PMP Mill & Overlay South of Peoria $8,375 Multi Use Pathway Grand Canal $1,583 47th Ave Storm Drain $971 Landfill Scale House and Road Location $5,916 City Wide Manhole Rehabilitation $1,639 Water Line Improvements $7,169 City Wide Large Meter Vault Repairs $1,329 24 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) The following table is a summary of capital assets reflected in the June 30, 2017, financial statements as compared to last year’s financial statements. Capital Assets at Year End (Net of depreciation) (in thousands) Governmental Act ivities 2017 2016 Construction in progress $ 10,459 $ 11,680 Land 119,381 119,941 Water storage rights Art work 2,415 2,395 Buildings 252,074 261,992 Improvements other than buildings 141,294 144,723 Infrast ructure-streets 457,766 456,425 Infrast ructure-parks 48,003 50,601 Infrast ructure-airport 8,628 7,888 Infrast ructure-flood/storm drains 67,439 67,551 Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment 10,599 11,954 Computer equipment 1,142 1,089 System Purchase Software 3,253 3,039 Aut omot ive equipment 16,862 13,801 T ot al $ 1,139,315 $ 1,153,079 Business-T ype Activities 2017 2016 $ 15,846 $ 17,543 26,299 26,299 7,222 7,401 6,219 6,644 45,644 42,384 79,463 70,821 75,133 74,169 138,830 146,624 85,028 88,599 14,073 14,839 2,463 2,562 790 1,395 71 323 477 883 7,736 $ 505,294 4,916 $ 505,402 T otal Primary Government 2017 2016 $ 26,305 $ 29,223 145,680 146,240 7,222 7,401 2,415 2,395 258,293 268,636 186,938 187,107 457,766 456,425 48,003 50,601 8,628 7,888 67,439 67,551 79,463 70,821 75,133 74,169 138,830 146,624 85,028 88,599 14,073 14,839 2,463 2,562 11,389 13,349 1,213 1,412 477 883 3,253 3,039 24,598 18,717 $ 1,644,609 $ 1,658,481 The construction commitments at June 30, 2017 were $38,749. Additional information on capital assets can be found in Note V of the financial statements. Long-Term Debt At the end of the current fiscal year, the City had total debt outstanding of $857,921 compared to $897,850 last year, a 4.4% net decrease. General obligation T ransportation revenue bond Highway users revenue bonds Excise tax revenue bonds Municipal Property revenue bonds Capital lease obligation Note payable Settlement obligation Water and sewer revenue bonds/obligations T otal $ Governmental Activities 2017 2016 120,000 $ 135,130 74,670 77,615 147,960 147,960 283,515 4,484 3,677 11,100 $ 645,406 $ Business-T ype Activities 2017 2016 $ $ - - 288,590 6,620 5,515 14,100 - - 675,530 212,515 $ 212,515 222,320 $ 222,320 25 $ T otal Primary Government 2017 2016 120,000 $ 135,130 74,670 77,615 147,960 147,960 283,515 4,484 3,677 11,100 $ 212,515 857,921 288,590 6,620 5,515 14,100 $ 222,320 897,850 CITY OF GLENDALE, ARIZONA Management’s Discussion and Analysis (MD&A) For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) The City received a “A+” underlying rating from Standard & Poor’s and an “A1” underlying rating from Moody’s Investor Services for its general obligation debt. The senior excise tax bonds are rated “AA+” by Standard and Poor’s and an “A1” by Moody’s. The subordinate excise tax bonds are rated “AA” by Standard and Poor’s and an “A1” by Moody’s. The subordinate lien water and sewer revenue bonds are rated “A1” by Moody’s and “AA” by Standard & Poor’s. Transportation bonds were assigned an underlying rating of “AA” by Standard & Poor’s and “A2” by Moody’s. The Arizona Constitution provides that the general obligation bonded indebtedness for a city for general municipal purposes, libraries, economic development, historic preservation, and cultural facilities may not exceed 6% of the total limited property value of the taxable property in that city. Cities may also issue general obligation bonds up to 20% of the total limited property value for supplying water, sewer, artificial light, public safety, law enforcement, fire and emergency services, streets and transportation facilities, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities. The City’s current unused 6% and 20% debt limitation on June 30, 2017, were $73,633 and $129,101, respectively. Additional information on long-term debt can be found in Note X of the financial statements. Next Year’s Budget and Economic Factors The City of Glendale is continuing its efforts to make sound financial decisions that focus on prudent long-range planning in order to achieve $50,000 in unrestricted fund balance by fiscal year 2020. The overall goals underlying the city’s financial policies include fiscal responsibility, flexibility, and adherence to the highest accounting and management practices. The adopted fiscal year 2017-18 budget is $672,000, a decrease of 3.0% from 2016-17. The decrease is due to a reduction in the city’s Capital Improvement Plan. The major sources of revenue for the City continue to be sales tax, state shared revenues and property taxes with projected revenues of $106,418, $30,139, and $22,824, respectively. For fiscal year 2017-18, City sales tax is expected to grow by 3.0% as the jobless claims continue to decline and the overall economy continues to improve and rising consumer confidence is expected to lead to increased spending, especially in retail sales. Total revenues for fiscal year 2017-18 are projected at $536,849. Request for information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the City’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Director of Budget & Finance, 5850 West Glendale Avenue, Suite 302, Glendale, Arizona 85301. 26 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ BASIC FINANCIAL STATEMENTS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2017 This page left blank intentionally. City of Glendale, Arizona Statement of Net Position June 30, 2017 (amounts expressed in thousands) Governmental Activities ASSETS Investments Equity in pooled cash and investments Receivables (net of allowance for uncollectibles) Property taxes Accounts Note Accrued interest Intergovernmental receivable Internal balances Inventories and prepaid items Restricted deposits Restricted cash and investments Capital assets: Non-depreciable Depreciable (net) Equity in joint venture Total assets $ 888 32,733 51,308 479 4,906 1,187 3,164 40,576 DEFERRED OUTFLOWS OF RESOURCES Debit amounts related to pensions Debit amounts resulting from refunded debt Total deferred outflows of resources LIABILITIES Vouchers payable Accounts payable Contract payable Retainage payable Matured bonds payable Accrued interest payable Intergovernmental payable Deposits payable Unearned revenue Noncurrent liabilities: Due within one year Due in more than one year Total liabilities DEFERRED INFLOW OF RESOURCES Credit amounts related to pensions Credit amounts resulting from OPEB Total deferred inflows of resources NET POSITION Net investment in capital assets Restricted for: Capital projects Debt service Transportation Highway and streets Revenue bond retirement, replacement, and extension Perpetual care - nonexpendable Police and Fire Other purposes Unrestricted Total net position 164,315 Primary Government Business-Type Activities $ 107,255 $ Total $ 13,316 31 (1,187) 2,579 2,948 12,478 271,570 888 46,049 51,308 479 4,937 5,743 2,948 53,054 132,255 1,007,060 3,359 1,442,230 42,145 463,149 48,448 691,162 174,400 1,470,209 51,807 2,133,392 80,324 21,657 101,981 6,980 8,869 15,849 87,304 30,526 117,830 25,524 169 1,125 545 23,755 14,782 490 3,344 5,655 7,983 56 534 9,805 5,160 375 5,207 14 33,507 225 1,125 1,079 33,560 19,942 865 8,551 5,669 61,560 1,036,998 1,173,947 17,244 281,447 327,825 78,804 1,318,445 1,501,772 15,930 3,871 19,801 4,316 942 5,258 20,246 4,813 25,059 471,979 267,111 739,090 17,992 59,556 45,015 17,945 5,809 7,443 3,491 (278,767) 350,463 9,805 9,579 3,513 83,920 373,928 17,992 69,361 45,015 17,945 9,579 5,809 7,443 7,004 (194,847) 724,391 The notes to the financial statements are an integral part of this statement. 27 $ $ City of Glendale, Arizona Statement of Activities For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Charges for Services Expenses Functions/Programs Primary government: Governmental activities: General government Public safety Public works Community services Community environment Street maintenance Interest on long-term debt Total governmental activities Business-type activities: Water and sewer Landfill Solid Waste Housing Total business-type activities Total primary government $ $ 61,373 166,790 24,768 33,752 3,930 21,848 27,827 340,288 $ 83,500 11,302 15,698 12,644 123,144 463,432 $ 15,027 5,445 536 13,490 308 357 35,163 80,219 9,451 14,856 2,876 107,402 142,565 Program Revenues Operating Grants and Contributions $ $ 2,277 4,434 47 963 4,047 15,751 27,519 1,068 9,162 10,230 37,749 General revenues: Taxes: Property taxes levied for: General purposes Debt service Sales taxes State shared sales tax Urban revenue sharing (state shared income tax) Auto in-lieu taxes Investment earnings, unrestricted Miscellaneous Transfers Total general revenues, special items, and transfers Change in net position Net position - beginning Net position - ending The notes to the financial statements are an integral part of this statement. 28 Capital Grants and Contributions $ $ 3,457 128 689 682 1,713 6,669 2,562 253 2,815 9,484 Net (Expense) Revenue and Changes in Net Position Primary Government Governmental Business-Type Activities Activities Total $ $ (40,612) (156,783) (23,496) (18,617) 425 (4,027) (27,827) (270,937) $ - $ (40,612) (156,783) (23,496) (18,617) 425 (4,027) (27,827) (270,937) (270,937) 349 (1,851) (842) (353) (2,697) (2,697) 349 (1,851) (842) (353) (2,697) (273,634) 5,557 19,398 155,779 22,024 29,378 9,458 (253) 1,400 (1,264) 241,477 (29,460) 379,923 350,463 883 114 1,264 2,261 (436) 374,364 373,928 5,557 19,398 155,779 22,024 29,378 9,458 630 1,514 243,738 (29,896) 754,287 724,391 $ 29 $ City of Glendale, Arizona Balance Sheet Governmental Funds June 30, 2017 (amounts expressed in thousands) Major Funds Municipal Property Corporation General Debt Service ASSETS Assets: Equity in pooled cash and investments Receivables, net of allowance for doubtful accounts: Property taxes Accounts Note Accrued interest Due from other funds Intergovernmental receivable Inventories and prepaid items Restricted cash and investments Total assets $ 43,547 $ 193 25,511 479 3,148 364 2,934 1,302 77,478 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: Vouchers payable $ Accounts payable Contract payable Retainage payable Compensated absences - current Intergovernmental payable Due to other funds Deposits Unearned revenue Matured interest payable Matured bonds payable Total liabilities 7,974 168 1,125 1,298 489 3,278 14,332 Deferred Inflows of Resources - Unavailable Revenue Fund Balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources and fund balances $ The notes to the financial statements are an integral part of this statement. 30 $ 458 $ 51,308 15,147 66,913 $ 7,088 5,075 12,163 1,563 51,308 2,934 7,443 10,647 40,559 61,583 77,478 3,442 3,442 66,913 $ Other Non-Major Governmental Funds $ 99,168 $ 695 7,213 4,542 121 22,552 134,291 $ 4,632 1 545 116 1 3,148 66 5,655 7,694 18,680 40,538 Total Governmental Funds $ 143,173 $ 888 32,724 51,308 479 3,148 4,906 3,055 39,001 278,682 $ 731 $ 5,861 88,466 2,295 170 (3,770) 93,022 134,291 12,606 169 1,125 545 1,414 490 3,148 3,344 5,655 14,782 23,755 67,033 53,602 $ 8,795 99,351 2,295 10,817 36,789 158,047 278,682 City of Glendale, Arizona Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position June 30, 2017 (amounts expressed in thousands) Amounts reported for governmental activities in the statement of net position are different because: Fund balances - total governmental funds balance sheet $ Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets Less accumulated depreciation $ 158,047 1,873,642 (735,594) 1,138,048 Adjustment to reflect the government joint venture 3,359 Deferred outflow of resouces related to pensions 78,270 Deferred outflow reacquisition price of refunding outstanding debt 21,657 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds and shown as an internal balance item. 1,187 Internal service funds are used by management to charge the costs of workers' compensation, risk management, employee benefits, fleet services and IT projects to individual funds. The assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the internal service funds are included in governmental activities in the statement of net position. 7,811 Long-term liabilities, including bonds payable are not due and payable in the current period and, therefore, are not reported in the funds. Bonds payable Net pension obligation Capital lease obligations Developer payable obligations Compensated absences Claims and judgements Bond discount OPEB obligations Settlement obligation Unamortized premium on debt issuance Note payable (626,145) (310,500) (4,484) (3,898) (22,923) (10,064) 1,277 (49,492) (11,100) (52,066) (3,677) (1,093,072) Deferred inflows of resources related to OPEB (3,729) Deferred inflows of resources related to pensions (14,717) Deferred inflows of resources is unavailable revenue that is measurable but not yet available for governmental fund activities is recognized as revenue for governmental-wide activities. Net position of governmental activities 53,602 $ The notes to the financial statements are an integral part of this statement. 31 350,463 City of Glendale, Arizona Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Major Funds Municipal Property Other Non-Major Total Corporation Governmental Governmental General Debt Service Funds Funds REVENUES Taxes and special assessments Licenses and permits Intergovernmental Local Charges for services Fines and forfeitures Investment income(loss) Miscellaneous Total revenues $ 135,837 9,068 60,945 88 12,058 3,254 (288) 3,852 224,814 EXPENDITURES Current: General government Public safety Public works Community services Community environment Street maintenance Debt service: Principal Interest Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures $ 26 26 $ 45,739 3,335 28,739 212 1,428 445 538 1,227 81,663 $ 181,576 12,403 89,684 300 13,486 3,699 276 5,079 306,503 28,844 125,450 9,476 16,917 800 10 - 677 6,126 8 13,742 3,979 10,395 29,531 131,576 9,484 30,659 3,979 11,195 12,488 193,975 5,075 14,117 19,202 41,381 16,587 26,565 119,460 46,456 30,704 39,053 332,637 30,839 (19,176) (37,797) (26,134) OTHER FINANCING SOURCES (USES) Refunding bonds issued Proceeds from equipment disposal Transfers in Transfers out Total other financing sources and uses 224 137 (28,761) (28,400) 19,251 19,251 19,330 2,167 29,062 (20,953) 29,606 19,330 2,391 48,450 (49,714) 20,457 Net change in fund balances 2,439 75 (8,191) (5,677) 59,144 61,583 3,367 3,442 Fund balances, July 1 Fund balances, June 30 $ 32 $ $ 101,213 93,022 $ 163,724 158,047 City of Glendale, Arizona Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Amounts for governmental activities in the statement of net position are different because: Net change in fund balances - total governmental funds $ 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. Expenditures for capitalized assets Less current year depreciation $ (5,677) 38,440 (49,992) (11,552) The net effect of various transactions involving capital is to increase net position. Capital contributions Disposals Gain (loss) on sales 623 (3,027) 151 (2,253) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds. The net effect of long-term obligatioins and the related transactions is to increase net assets. Long term debt issued Capital lease payments Net bond premium and discount amortized Settlement obligation Principal paid on bonds and notes (367) (19,330) 2,136 4,418 3,000 44,318 34,542 Compensated absences 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. (1,666) Other post employment benefits 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. 1,106 Net pension expense 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. (35,932) Internal service funds are used by management to charge the costs of workers' compensation, risk management, employee benefits, fleet services, and technology projects to individual funds. 2,403 Expenses on the statement of activities differ from governmental funds because of the portion not accrued on the governmental funds. Change in net position of governmental activities (10,064) $ The notes to the financial statements are an integral part of this statement. 33 (29,460) City of Glendale, Arizona Statement of Net Position Proprietary Funds June 30, 2017 (amounts expressed in thousands) Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total ASSETS Current assets: Equity in pooled cash and investments Receivables: Accounts Allowance for uncollectibles Intergovernmental receivable Inventories and prepaid items Total current assets $ 97,030 12,914 (2,133) 2,561 110,372 Noncurrent assets: Restricted deposits Restricted cash and investments Capital assets: Capital assets Accumulated depreciation Capital assets, net DEFERRED OUTFLOWS OF RESOURCES Debit amounts related to pensions Debit amounts resulting from refunded debt Total deferred outflows of resources LIABILITIES Current liabilities: Vouchers payable Accounts payable Retainage payable Compensated absences Matured bonds payable Intergovernmental payable Deposits Unearned rent Estimated claims payable Current portion of long-term debt: Unamortized premium on debt issuance Revenue bonds/obligations payable Interest payable Total current liabilities Noncurrent liabilities: Compensated absences Unamortized premium on debt issuance Revenue bonds/obligations payable Pension obligations OPEB long-term obligations Other long-term debt Estimated closure and post-closure costs Total noncurrent liabilities Total liabilities $ - 107,255 $ 21,142 15,918 (2,602) 31 2,579 123,181 10 109 21,261 2,948 12,478 1,575 - 814,504 (337,610) 476,894 61,389 (32,989) 28,400 875,893 (370,599) 505,294 4,693 (3,426) 1,267 48,448 540,768 651,140 28,400 41,209 48,448 569,168 692,349 2,842 24,103 4,586 8,869 13,455 2,394 2,394 6,980 8,869 15,849 2,054 2,054 7,135 1 534 1,608 9,805 341 4,907 - 848 55 606 34 300 14 - 7,983 56 534 2,214 9,805 375 5,207 14 - 2,854 539 9,840 2,250 12,780 5,160 44,521 1,857 2,250 12,780 5,160 46,378 13,233 852 22,482 199,735 20,838 6,788 250,695 295,216 558 11,177 4,295 25 14,697 30,752 32,609 1,410 22,482 199,735 32,015 11,083 25 14,697 281,447 327,825 307 3,400 50 3,757 16,990 2,800 619 3,419 1,515 324 1,839 4,315 943 5,258 1,214 142 1,356 238,711 28,400 267,111 1,267 9,805 9,579 3,513 104,352 365,960 (19,245) 9,155 9,805 9,579 3,513 85,107 375,115 6,544 7,811 DEFERRED INFLOWS Credit amounts related to pensions Credit amounts related to OPEB Total deferred inflows of resources $ 10,225 3,004 (469) 31 18 12,809 2,948 12,478 Equity in joint venture Total noncurrent assets Total assets NET POSITION Net investment in capital assets Restricted for: Debt service Revenue bond retirement, replacement and extension Other purposes Unrestricted Total net position $ Governmental Activities Internal Service Funds $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Net position of business-type activities $ The notes to the financial statements are an integral part of this statement. 34 (1,187) 373,928 $ City of Glendale, Arizona Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Operating revenues: Intergovernmental Metered water sales Sewer service charges Container service Curb service Landfill user fees Self-insurance premium Charges for Services Recycling sales Other fees Total operating revenues Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Governmental Activities Internal Service Funds $ $ Operating expenses: Water Sewer Landfill Housing Closure/post-closure care adjustment Solid Waste Administrative and general Insurance claims and premiums Amortization and depreciation Total operating expenses Operating income (loss) $ 22,845 12,822 13,338 22,649 71,654 9,807 Nonoperating revenues (expenses): Impact fees Investment income Interest expense Net loss from joint venture Gain on disposal of assets OPEB expense Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Capital contributions Transfers in Transfers out Change in net position Total net position - beginning Total net position - ending 1,068 45,748 32,337 2,308 81,461 $ 9,162 4,039 10,817 7,883 1,393 3,051 36,345 $ 10,119 12,243 438 14,377 2,463 39,640 (3,295) 10,230 45,748 32,337 4,039 10,817 7,883 1,393 5,359 117,806 22,845 12,822 10,119 12,243 438 14,377 13,338 25,112 111,294 6,512 34,594 16,921 617 52,132 16,255 32,690 370 49,315 2,817 1,170 811 (8,760) (3,311) 14 (209) (10,285) 72 51 (109) 14 1,170 883 (8,760) (3,311) 65 (318) (10,271) (478) (3,281) (3,759) 2,741 1,392 229 (37) 1,106 253 1,082 (10) (1,956) 1,645 1,311 (47) (850) 2,741 364,854 365,960 $ Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds Change in net position of business-type activities The notes to the financial statements are an integral part of this statement. 35 11,111 9,155 123 (199) (76) $ $ 414 (436) 5,070 7,811 City of Glendale, Arizona Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Cash flows from operating activities: Cash received from customers Cash received from federal operating grants Cash paid to suppliers: Internal city departments External vendors Cash paid for insurance and in settlement of claims Cash paid to employees for services Net cash provided (used) by operating activities $ Cash flows from noncapital financing activities: Transfers in Transfers out Due to / from other funds Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities: Principal payments on obligations Acquisition of capital assets and rights Impact fees Interest payments on obligations Contributions to Joint Venture Net cash (used) by capital and related financing activities 82,299 - $ 109,362 9,178 $ 52,132 - (9,578) (18,401) (17,632) (37,107) (255) (10,618) (18,737) 36,802 (9,566) (1,304) (28,303) 35,498 (31,458) (5,601) 4,200 229 (37) - 1,082 (10) (6) 1,311 (47) (6) - 192 1,066 1,258 - (9,415) (18,380) 1,170 (10,608) (685) (12) (4,168) - (9,427) (22,548) 1,170 (10,608) (685) (563) - (37,918) (4,180) (42,098) (563) 811 811 Net increase (decrease) in cash and cash equivalents during fiscal year (113) $ 27,063 9,178 (8,054) (18,706) Cash flows from investing activities: Interest received from investments Net cash provided by investing activities Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 $ Governmental Activities Internal Service Funds 109,621 109,508 72 72 (4,346) $ The notes to the financial statements are an integral part of this statement. 36 883 883 14,571 10,225 123 123 (4,459) $ 124,192 119,733 3,760 $ 17,382 21,142 Business-Type Activities - Enterprise Funds Other Major Funds Proprietary Water and Sewer Funds Total Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operations: Amortization and depreciation Net pension expense and contribution Net OPEB expense and contribution Changes in assets and liabilities: Accounts receivable Intergovernmental receivable Inventories and prepaid items Restricted deposits Vouchers and accounts payable Intergovernmental payable Deposits Unearned rent Compensated absences Claims payable Estimated closure and post-closure costs Net cash provided (used) by operating activities Reconciliation of statement of net position cash and investments to the statement of cash flows: Per combined statement of net position: Equity in pooled cash and investments Restricted cash and investments Total cash and cash equivalents Noncash investing, capital, and financing activities: Contributions of capital assets Loss on joint venture Amortization of bond premium/discount Amortization of debit amounts resulting from refunded debt $ $ $ $ $ 9,807 $ (3,295) $ 6,512 Governmental Activities Internal Service Funds $ 2,817 22,649 (610) (31) 2,463 (309) (15) 25,112 (919) (46) 370 (186) (6) 515 (394) (104) 4,256 18 427 269 - (101) 16 (455) (10) (25) 6 (17) - 414 16 (394) (104) 3,801 8 402 6 252 - (50) (129) 99 1,285 36,802 97,030 12,478 109,508 1,392 (3,311) 2,250 934 37 $ $ $ $ 438 (1,304) $ 10,225 10,225 $ 253 - $ - $ 438 35,498 107,255 12,478 119,733 1,645 (3,311) 2,250 934 $ $ $ $ 4,200 21,142 21,142 - CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Notes to the Financial Statements The Notes to the Basic Financial Statements include a summary of significant accounting policies and other disclosures considered necessary for a clear understanding of the accompanying financial statements. Index Note Page Summary of Significant Accounting Policies ............................................................................. I ............................. 39 Compliance – Excess of Expenditures Over Appropriations/Deficits in Fund Equity ............. II ............................. 49 Deposits and Investments ........................................................................................................ III ............................. 50 Note Receivable ....................................................................................................................... IV ............................. 52 Capital Assets ........................................................................................................................... V ............................. 53 Construction Commitments ..................................................................................................... VI ............................. 55 Internal Service Funds ............................................................................................................VII ............................. 55 Leases ................................................................................................................................... VIII ............................. 58 Short-Term Debt ...................................................................................................................... IX ............................. 59 Long-Term Debt ....................................................................................................................... X ............................. 59 Landfill Obligations ................................................................................................................. XI ............................. 69 Inter-fund Transactions...........................................................................................................XII ............................. 70 Encumbrances....................................................................................................................... XIII ............................. 72 Equity in Joint Venture ......................................................................................................... XIV ............................. 72 Jointly Governed Organizations ............................................................................................ XV ............................. 74 Governmental Fund Balance Components and Fund Type Definitions ............................... XVI ............................. 74 Employee Retirement Systems and Pension Plans .............................................................. XVII ............................. 76 Other Post-Employment Benefits (OPEB) ........................................................................ XVIII ............................. 88 Contingent Liabilities and Commitments ............................................................................. XIX ............................. 92 Tax Abatement ...................................................................................................................... XX ............................. 93 Implementation of New Accounting Principles .................................................................... XXI ............................. 94 Subsequent Events ............................................................................................................... XXII ............................. 94 38 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) I. Summary of significant accounting policies A. Reporting entity The City of Glendale, Arizona (City) was incorporated June 18, 1910, under the provisions of Article 13, Sections 1 through 6 of the Constitution of Arizona and Title 9 of the Arizona Revised Statutes. It is governed by a Mayor elected at large, and six district council members. The City operates under a Council-Manager form of government. The major operations of the City include providing police, fire, water, and sewer services to citizens. As required by GAAP, these financial statements present the government 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 a government’s operations, so data from these units are combined with data of the primary government. A discretely presented component unit, on the other hand, is reported in a separate column in combined financial statements to emphasize that it is legally separate from the government. The City has no discretely presented component units. Blended component units City of Glendale, Arizona, Municipal Property Corporation (MPC) is a non-profit corporation organized under the laws of the State of Arizona to assist the City in the acquisition and financing of municipal projects and facilities. MPC is governed by a board of directors who are responsible for approving the corporation’s bond sales. Bond sales must also be approved by the City Council. Although it is legally separate from the City, MPC is reported as if it is part of the primary government because its sole purpose is to finance and construct public facilities for the City. The total debt outstanding, including leases, of the MPC is expected to be repaid entirely or almost entirely with the resources of the primary government. MPC does not issue separate audited financial statements. However, it does file a tax return with the Internal Revenue Service. Copies of the tax return are available from the City’s Budget and Finance Department. B. Government-wide and fund financial statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. There are several types of transactions that are reported in the financial statements as inter-fund items. Transactions that would be treated as revenue, expenditures or expenses if they involved organizations external to the governmental unit, like the sale of water from the water and sewer fund to various functions of the general fund, are accounted for as revenue and expenditures or expenses in the funds involved. Transactions that constitute reimbursement to a fund for expenditures or expenses initially made from that fund, which are properly applicable to another fund, are recorded as expenditures or expenses in the reimbursing fund and as reductions of the expenditure or expense in the fund that is being reimbursed. Governmental Accounting Standards Board (GASB) Statement 34 also requires that administrative service fees charged to other operating funds to support general services used by the other operating funds (like purchasing, accounting and administration) should be treated as reimbursement transactions and the revenue and expenditures/expenses reduced in the allocating fund. Transfers between funds are included in the results of both governmental and proprietary funds (as other sources/uses in governmental funds). Activities between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are reported in the fund financial statements as “due to/from other funds.” 39 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Certain transactions occurring between funds that are combined within the same fund type or displayed in the same financial statement column for presentation in these annual financial statements have been eliminated from the financial statements. These transactions include transfers between funds and interdepartmental service charges. In the government-wide financial statements, only the net inter-fund activity and balances between governmental activities and business-type activities are shown (reported as “internal balances”). 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 and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The internal service funds are eliminated on an entity-wide basis as per GASB Statement 34. C. Form of presentation – fund financial statements The City reports the following major governmental funds: The general fund is the City’s primary operating fund. It accounts for all financial resources of the City, except those required to be accounted for in another fund. The municipal property corporation debt service fund (MPC) accounts for the debt service payments for the bonds that were issued to finance the construction of a new municipal office complex, hockey arena, public safety training center, parking garage, media center and convention center. The City reports the following major proprietary fund: The water and sewer fund accounts for operations, maintenance and construction projects of the Cityowned water and sewer systems. Additionally, the City reports internal service funds. Internal service funds account for risk management, workers’ compensation, employee benefits, fleet and technology services provided to other departments. The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditures/expenses, as appropriate. Government resources are allocated to, and accounted for, in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The following funds are presented in the accompanying financial statements: 40 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Governmental funds Governmental funds are those through which most governmental functions of the City are financed. The acquisition, use and balances of the City’s expendable financial resources and related liabilities (except those accounted for in proprietary funds) are accounted for through governmental funds. The measurement focus is based upon determination of financial position and changes in financial position rather than upon the determination of net income. The following governmental funds are presented in the accompanying financial statements. General fund: The general fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Special revenue funds: Special revenue funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. Debt service funds: Debt service funds are used to account for the accumulation of financial resources for the payment of general long-term debt principal, interest, and related costs, except the debt service accounted for in the enterprise funds. Debt service funds also include the debt payable from highway user’s gas tax revenues and unrestricted excise tax revenues as well as debt funded by property taxes levied by the City on property located within the City. Capital projects funds: Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). Permanent fund: Permanent fund is used to account for financial resources to be used by the cemetery fund. Proprietary funds Proprietary funds are used to account for the City’s ongoing operations and activities, which are similar to those found in the private sector. The measurement focus is based upon the determination of net income. Enterprise funds: Enterprise funds are used to account for operations, including debt service, 1) that are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs (including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges, or 2) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The enterprise funds, which the City currently maintains, are the water and sewer, landfill, solid waste, and housing funds. Internal service funds: Internal service funds are used to account for the financing of self-insurance and fleet and technology services provided by one City department to other City departments on a costreimbursement basis. D. Measurement focus and basis of accounting The City-wide and proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. 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 revenue as soon as all eligibility requirements imposed by the provider have been met. 41 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) 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 except as described below in relation to grants. Revenues are considered to be available when they are collected 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, principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the related debt service fund for payments to be made shortly after fiscal year-end. Revenues susceptible to accrual because of their availability include property tax, sales tax, highway user’s tax, state shared sales tax, vehicle license tax, and interest earned on investments. Licenses and permits, charges for services, fines and forfeitures, and miscellaneous revenues are recorded as revenues when received in cash because they are generally not measurable until actually received. In applying the susceptible to accrual concept to intergovernmental revenues, the decision to accrue depends on the terms of the arrangement or agreement. Generally, these resources are reflected as revenue at the time of receipt or earlier if they meet the available criterion. Certain grant revenues are recognized based on expenditures recorded. Resources that have been received before time requirements are met but after all other eligibility requirements have been met are recorded as a deferred inflow. However, resources transmitted before time requirements are met but after eligibility requirements have been met are recorded as deferred outflows. This practice is defined and supported by GASB Statement 63, as it pertains to Financial reporting of deferred outflows of resources, deferred inflows of resources and net position. E. Statement of cash flows The City considers short-term investments (including restricted assets) in the State of Arizona Local Government Investment Pool (LGIP), mutual fund-money market, U.S. Treasury bills and notes with original maturities of three months or less at acquisition date to be cash equivalents. F. Inter-fund transactions Inter-fund transactions, consisting of services performed for other funds or costs billed to other funds are treated as expenditures in the fund receiving the services and as a reimbursement reducing expenditures in the fund performing the services, except for sales of water to other City departments, which are recorded as revenue in the Water Enterprise funds. In addition, operating transfers are made between funds to shift resources from a fund legally authorized to receive revenue to a fund authorized to expend the revenue. Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is classified as due to/from other funds (current portion of inter-fund advances) and advances to/from other funds (noncurrent portion of inter-fund advances). Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. G. Inventories and prepaid items Inventories of the governmental and enterprise funds consist primarily of expendable supplies held for consumption. These inventories are maintained on a perpetual system verified through cyclical physical counts and are valued using a weighted average cost. Generally, expenditures are recorded at the time 42 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) inventories are used (i.e., the consumption method) for both GAAP reporting and budgetary purposes. However, the City postage inventory is recorded as expenditure at time of purchase (i.e., the purchase method) for budgetary purposes. At June 30, 2017, the postage portion of the general fund supplies inventory was $8. Certain expenditures are recorded for financial reporting purposes as prepaid items. Special reporting treatment is applied to governmental fund inventories and prepaid items to indicate that they represent amounts that are not in spendable form, even though they are a component of current assets. Such amounts are presented as a component of non-spendable fund balance. H. Restricted assets Certain proceeds of the City’s bonds, as well as certain resources set aside for their repayment, are classified as restricted on the balance sheet, or statement of net position, because they are maintained in separate bank accounts and their use is limited by applicable debt covenants and the escrow agreement. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources, as they are needed. Restricted assets also include cash held at the Maricopa County Treasurer for the Racketeer Influenced and Corrupt Organizations Act (RICO). RICO funds are limited by state and federal law to qualified expenses related to fighting and preventing drug use and organized crime. I. Capital assets The City has chosen not to apply the modified approach to any networks or subsystems of infrastructure assets. No long-term assets or depreciation are shown in the governmental fund financial statements. Capital assets, including public domain infrastructure (e.g., roads, bridges, sidewalks and other assets that are immovable and of value only to the City) are defined as assets with an initial, individual cost of more than $5 and an estimated useful life greater than three years. Capital assets are recorded at cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the assets’ lives are not capitalized. Major improvements are capitalized and depreciated over the remaining useful lives of the related capital assets. 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. The total interest expense incurred by the enterprise funds during the current fiscal year was $8,760. In addition, $245 was included as part of the cost of capital assets under construction in connection with water and sewer projects. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Assets Buildings Improvements other than buildings Infrastructure Machinery and equipment Automotive equipment Software Computer equipment Useful Life (Years) 30 10-20 10-100 5-8 6-8 3 3-5 43 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Capital assets transferred between funds are transferred at their carrying value (cost less accumulated depreciation) as of the date of the transfer. J. Water rights The City has entered into a lease agreement with Salt River Pima-Maricopa Indian Community (SRPMIC) for the rights to 1,814 acre-feet of water each year through 2099. These rights, costing $2,693, are being amortized over 40 years on a straight-line basis starting January 1, 2000. Current year amortization was $67. The net book value of water rights as of June 30, 2017, is $1,514. In addition, the City will be responsible for paying for the cost of water delivered each year. The City participates in the Plan Six cost sharing agreement to construct the Waddell Dam on the Agua Fria River and modify the Roosevelt and Stewart Mountain Dams on the Salt River. The parties to this agreement include the United States government, State of Arizona, Central Arizona Water Conservation District, Salt River Project, and the cities of Phoenix, Chandler, Glendale, Mesa, Scottsdale, Tempe and Tucson. The federal government has determined that this agreement does not constitute a joint venture. As of June 30, 2017, the City has capitalized payment of $4,463 for these water rights. Current year amortization was $112. The net book value of these water rights as of June 30, 2017, is $3,681. The City purchased Central Arizona Project water rights as part of the Salt River Pima-Maricopa Indian Community Water Rights Settlement in November 2007. These rights, as of June 30, 2017, costing $2,027, are a permanent right and are considered to have an indefinite useful life. As such, they are not amortized; therefore, cost and net book value are equal to $2,027. K. Governmental fund balance components The components of governmental fund balance consist of the following: Non-spendable amounts are the portion of net resources that cannot be spent because of their form such as inventories and prepaid items. Also included is the portion of net resources that cannot be spent because they must be maintained intact pursuant to legal and contractual requirements such as the cemetery permanent fund. Restricted are amounts that are subject to externally enforceable legal restrictions imposed by parties outside the government such as creditors, grantors, contributors, and other governments through laws and regulations. Examples of restricted fund balance are amounts held to pay for bonded construction projects, debt service, and excise tax revenues collected for voter approved transportation expenditures. Committed are amounts that are constrained by limitations imposed by the highest level of decision making authority, namely Mayor and Council and require approval by the same level of authority through an ordinance to remove. Amounts must be committed prior to the fiscal year end. An example of committed fund balance is amounts for artwork. Assigned are amounts that are constrained by limitations imposed by management based on the intended use of the funds. The city manager and finance director are given authority to assign funds as needed through the financial policies adopted in the annual Budget Book approved by Mayor and Council. Examples include amounts intended for computer replacement or telephone or equipment management services. Unassigned are amounts for any other purpose. If resources were not assigned, they could not be properly reported in a fund other than the general fund. Therefore, only the general fund can report a 44 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) positive amount of unassigned fund balance. Any governmental fund in a deficit position could report a negative amount of unassigned fund balance. When both restricted and unrestricted resources are available for specific expenditures, restricted resources are considered spent before unrestricted resources. Within unrestricted resources, committed and assigned are considered spent (if available) before unassigned amounts. On the government-wide financial statements, only restrictions imposed by external sources are shown as restricted net position. L. Net position The government-wide and proprietary fund financial statements use a net position presentation. Net position is categorized as net investment in capital assets, restricted, and unrestricted. Net Investment in Capital Assets – This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation and the outstanding balances of debt that are attributable to the acquisition, construction, or improvement of these assets reduce the balance in this category. Restricted Net Position – This category represents net position that has external restrictions imposed by creditors, grantors, contributors, laws or regulations of other governments, and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Position – This category represents net position of the City not restricted for any project or other purpose. M. Property tax The City levies taxes on real and personal property located within its boundaries. Property values are assessed by the Maricopa County Tax Assessor. The tax levy is then approved by the State of Arizona Property Tax Oversight Commission. The County Treasurer bills and collects property taxes and remits them to the City monthly. City property tax revenues are recognized when levied to the extent that they are received within the current period, or soon enough thereafter (within 30 days of year-end), to pay liabilities of the current period. Remaining collectible taxes are accrued and reflected as deferred inflows of resources. Property Tax Calendar Lien date Levy (assessment) date (third Monday in August) Due dates: First half of assessment Second half of assessment Penalties and interest added (collection dates): First half of assessment Second half of assessment January 1, 2016 August 15, 2016 October 3, 2016 March 1, 2017 November 2, 2016 May 2, 2017 The City currently levies less than the maximum allowed by State Statutes for primary property taxes. The City is permitted to levy an increase of two percent over the previous year’s maximum allowable primary levy plus an increased dollar amount due to a net gain in property not taxed the previous year. The secondary property tax levy is made for the purpose of retiring the principal, interest and servicing fees on bonded indebtedness. The City may levy the amount deemed necessary to meet its bonded debt 45 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) service requirements. Assessed values are established by the Maricopa County Tax Assessor each year on a uniform basis ratio to full cash value of each property class as required by State Statutes. The distribution of the City’s levy (tax rate per $100 assessed value) to its funds for the year ended June 30, 2017, is as follows: Fund General fund General obligation debt service fund Total Rate $ 0.48 1.67 $ 2.15 N. Compensated absences Vacation time is accumulated up to a maximum of 10 workweeks and compensatory time is earned in lieu of cash payment for overtime. Both vacation and compensatory time can either be taken as time off from work, within certain limitations, or may be payable to employees upon termination or retirement. Employees who have ten or more years of service will receive upon retirement 100% of up to 160 hours of vacation accrued. Any remaining vacation time above 160 hours will be 100% contributed to a mandatory Retiree Health Savings plan for the employee. Employees separating from the City receive 100% of accrued vacation time. Sick leave is accumulated without limit and can be used in the event of an illness of the employee or their immediate family. Accumulated sick leave can be converted to a cash benefit on a biannual basis for employees based on one-third of the average hourly rate the last 36 months. Employees must maintain a minimum sick leave balance on the books. Employees who retire and have ten or more years of service will have 50% of their accrued sick time contributed to a mandatory Retiree Health Savings plan based on their average hourly wage over the last 36 months. Employees who separate from service and have five or more years of service will receive one-third of their sick leave balance based on their average hourly wage over the last 36 months in a cash payout. Represented Fire and Police MOU employees who retire and have ten or more years of service will have 50% of their accrued sick time contributed to a mandatory Retiree Health Savings plan based on their average hourly wage over the last 36 months. Represented Fire and Police MOU employees who retire are paid 100% of accrued vacation time. The current portion of the liability for compensated absences recorded in the governmental fund is equal to: 1) vacation and compensatory time taken and paid during the thirty days following the year ended June 30, 2017, and 2) sick leave, taken and paid for illness during that period, paid to terminating employees or paid under the optional annual declaration. Long-term liabilities of governmental funds are not shown on the fund financial statements. All of the outstanding vacation, compensatory time, and sick leave are recorded as a liability on the government-wide financial statements, and the proprietary fund financial statements, according to payment policy. O. Deferred outflow and deferred inflow of resources In addition to assets, the statement of net position will report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflow of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The government only has two items that qualify for reporting in this category. It is the deferred charge on refunded debt and deferred outflows related to pensions reported in the government-wide statement of net position. In addition to liabilities, the statement of net position will report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of 46 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) resources (revenue) until that time. The government only has two items that qualify for reporting in this category. It is unavailable revenue, which arises only under a modified accrual basis of accounting, and the deferred inflow related to pensions and other post-employment benefits. Amounts that are reported as deferred outflows are shown as a separate balance sheet section following the assets. Similarly, amounts shown as deferred inflows are shown in a separate balance sheet section following liabilities. P. Long-term obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are reported as a long-term liability and amortized over the life of the bonds using the straight-line method, which approximates the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Q. Operating revenues and expenses Proprietary funds distinguish operating revenues and expenses from non-operating 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 enterprise funds and the City’s internal service funds are charges to customers for sales and services, or housing operational grants from a federal agency. The water and sewer fund also recognizes as operating revenue the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. R. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the pension plan’s fiduciary net position and additions to/deductions from the plan’s fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. S. Deferred compensation Voluntary Deferred Compensation Plan for Employees of the City of Glendale, State of Arizona; Restated Plan Document (the “Plan document”) was adopted by the Mayor and City Council on November 10, 1998, and amended on January 8, 2002 to incorporate the Federal Economic Growth and Tax Relief Reconciliation Act of 2001. In addition, the Mayor and City Council adopted a defined contribution deferred compensation plan document on April 9, 2002, under the Internal Revenue Code Section 401(a). On February 12, 2013 the adoption of a new contract was approved by the Mayor and City Council which allowed the plan to be administered solely by the third-party administrator Empower 47 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Retirement (Empower) a division of Great West Life & Annuity Insurance Co (Great West). Through the Plan document, the City offers its employees a deferred compensation plan that permits them to defer a portion of their current salary until future years. Any contributions made to the deferred compensation plan, in compliance with Section 457 and 401(a) of the Internal Revenue Code, are not available to employees until termination of employment, retirement, death or an unforeseen emergency. The plan assets are in custodial or trust accounts for the exclusive benefit of the plans’ participants and beneficiaries. The City provides neither administrative services nor investment advice to the plans; therefore, no fiduciary relationship exists between the City and the deferred compensation pension plan. In addition, the plan assets are not included as a fund of the City. Retiree Health Savings (RHS) Plan was originally adopted on July 1, 2008, and amended and restated on February 12, 2013, by Mayor and Council. The purpose of the Plan is to provide certain Employees with an opportunity to receive reimbursement for certain Health Care Expenses as provided in this Plan. It is the intention of the Adopting Employer that the benefits payable under this Plan be eligible for exclusion from the gross income of Participants as provided by Sections 105(b) and 106 of the Code. In addition, it is the intention of the Adopting Employer that the Plan qualify as a Health Reimbursement Arrangement (HRA) under IRS Revenue Ruling 202-41 (June 26, 2002) and IRS Notice 2002-45 (June 26, 2002). The provider for this RHS plan is Educator Benefit Consultants (EBC). The contributions to this Plan are detailed in the Compensated Absences (N) section on this document. T. Elected Officials’ Defined Contribution Retirement System (EODCRS) HB 2608 signed in July of 2013 closed the Elected Officials’ Retirement Plan (EORP) to new members and established the new Elected Officials’ Defined Contribution Retirement System (EODCRS) effective January 1, 2014 (A.R.S. Title 38, Chapter 5, Article 3.1). In addition to this new plan, the EODCRS Disability Program was also established (A.R.S. Title 38, Chapter 5, Article 3.2). EODCRS is a nonERISA 401(a) plan type. If a person is elected, appointed, or hired on or after January 1, 2014, does not have money on account with EORP, does not have money on account with ASRS or does not timely opt out of the EODCRS to return to ASRS, if applicable, the elected official must be automatically enrolled in the EODCRS. This includes any elected official who has already retired from EORP and/or ASRS. The investment options available to EODCRS members will be administered by Nationwide Retirement Solutions (NRS). The elected official will also contribute to and participate in the EODCRS Disability Program administered by PSPRS. As prescribed in ARS § 38‐727, if a person is appointed, elected, or hired on or after January 1, 2014 and does not have money on account with the EORP, but has money on account with the ASRS, that person has the option to return to the ASRS. The member has the option to participate in either the EODCRS or the ASRS Plan with each term. That decision is irrevocable during the term in which that election was made. Additionally, the elected official will contribute to and participate in the Long‐Term Disability Program administered by ASRS. To choose the ASRS, the person must fill out a form provided by PSPRS opting out of the EODCRS. This election must be made within 30 days after that person’s term begins and returned to PSPRS. The City was required by statute to contribution 12.16 percent of elected officials participating as an ASRS members’ annual covered payroll to the ASRS Legacy As of January 1, 2014, the employer rate for all employers contributing on behalf of their elected officials, regardless of what plan they are in, will be 23.5%. However, pursuant to ARS § 38‐810, subsection C, and as described above, that rate may be split a number of ways depending on which plan (or path) your elected official will belong to. Employee rates will vary, also dependent upon the path your elected official is on, and all are pre‐tax contributions. The rates for the respective disability programs are separate from the 23.5% employer rate and are contributed on an after‐tax basis. The 23.5% employer rate is set by statute; however, the Board of Trustees of PSPRS is required to monitor this rate 48 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) to inform the Legislature annually of its continued ability to pay the unfunded liability of the EORP legacy costs, so there is the possibility of this rate changing from time‐to‐time. Additionally, the rate for the disability program will also be reviewed and revised annually to meet its actuarially determined costs. For the year ended June 30, 2017 active EODCRS members were required by statue to contribute at the rate of 8.125 percent (8 percent to the DC plan and .125 percent for the disability program) of the members’ annual covered payroll. The City was required by statue to contribute at the rate 6.125 percent (6 percent to the DC plan and .125 percent for the disability program) of the active members’ annual covered payroll. The maximum annual contribution limits are in accordance with the IRS regulation for defined contribution plans. Employee and employer contributions are immediately vested. In addition, the City was required by statute to contribution 17.50 percent of the EODC members’ annual covered payroll to the EORP Legacy. The Elected Officials Retirement Plan is not reported in the financial statements because of its relative insignificance to the financial statements. U. Investments The City uses the following methods and assumptions to account for its investments: 1. 2. 3. Aside from investments clearly identified as belonging to a specific fund, any unrealized gain/loss resulting from the valuation is recognized within the general fund as investment revenue. Investments are recorded at fair value, which is based on quoted market prices as of the valuation date. Pooled investment income is allocated to various funds monthly based on the average equity balances maintained during the month. Arizona Revised Statutes require the City to deposit certain crime-related forfeitures with the County Treasurer. The County Treasurer determines the fair value of those pooled investments. The structure of the pool does not provide for shares and the County has not provided or obtained any legally binding guarantees to support the value of the participants’ investments. The County Treasurer is not subject to custodial credit risk. The City’s investment in LGIP represents shares of the pool’s portfolio. The fair value of each share in the LGIP is one dollar. These shares are not identified with specific investments and are not subject to custodial credit risk. Neither the County nor LGIP are registered with the Securities and Exchange Commission as investment companies. The State Board of Deposits provides oversight, and the Local Government Investment Pool Advisory Committee provides consultation and advice to the LGIP. There is no regulatory oversight of the County Treasurer’s operations. The net decrease in the fair value of investments during the fiscal year ended June 30, 2017, was $919. II. Compliance - Excess of expenditures over appropriations/deficits in fund equity The City ended the fiscal year June 30, 2017, with a deficit fund balance/net position in the following funds: Streets Construction fund The deficit fund will be funded by bond proceeds in 2018 $ 3,770 Fleet services internal service fund Deficit will be funded by increase in user premium charges in next fiscal year. 2,867 Solid Waste fund A rate increase was approved by City Council in fiscal year 2017-18. 1,200 49 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) III. Deposits and investments The City maintains a cash management pool for its cash and cash equivalents in which each fund and/or account or sub-account of a fund participates on a dollar equivalent basis. Deposits At year-end, the carrying amount of the City’s deposits was $25,741 and the bank balances were $27,691. The difference of $1,950 represents deposits in transit, outstanding checks, and other reconciling items. At year-end, all of the City's deposits were covered by Federal depository insurance and collateral held in the City’s name. City deposits held with fiscal agents at June 30, 2017, were $65,025 and were uncollateralized. Investments State Statutes and the City’s investment policy authorize the City to invest in obligations of the U.S. Treasury, its agencies and instrumentalities, repurchase agreements, commercial paper (A-1/P-1 rated), interest-earning money market accounts, certificates of deposit, and the State of Arizona Local Government Investment Pool (LGIP). Investments may not exceed five years to maturity from the date of purchase. The City’s investment in the LGIP is stated at fair value, which also approximates the value of the investment upon withdrawal. As of June 30, 2017, the City had the following investments: Investment Type Corporate bonds U.S. Agencies U.S. Treasuries Arizona LGIP - State Pool Grand total investments Cash deposits Cash with fiscal agents Total deposits and investments Investment Maturities (in years) 1-2 2-3 Over 3 $ 5,027 $ 5,038 $ 20,031 40,085 30,011 9,979 $ 55,069 $ 55,102 $ - 0-1 $ 12,999 14,988 44,939 53,709 $ 126,635 Fair Value $ 23,064 75,104 84,929 53,709 $ 236,806 25,741 65,025 $ 327,572 Investment Fair Value Level: Investments using fair value measurement guidelines established by generally accepted accounting principles recognize a three-tiered fair value hierarchy as follows:  Level 1 – Quoted prices for identical investments in active markets,  Level 2 – Observable inputs other than quoted market prices, and  Level 3 – Unobservable inputs The remainder of this page left blank intentionally. 50 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) The City’s investments are classified as follows: Fair Value Measurements Using Investment at fair value level Level 1 Corporate Bonds $ U.S. Agencies U.S. Treasury Total Investments at fair value level $ - Level 2 $ 23,064 75,104 84,929 $ 183,097 Level 3 $ $ External Investment Pools Measured at Fair Value State Treauser's Investment Pool Total Investments - Totals $ 23,064 75,104 84,929 183,097 53,709 $ 236,806 Interest rate risk: As a means of limiting its exposure to interest rate risk the City’s investment policy requires all securities to mature in no more than five years. The City also purchases securities to be laddered with staggered maturity dates. Credit risk: The City’s investment policy requires commercial paper to have a rating of at least A-1 by Standard and Poor’s, P-1 by Moody’s, or F1 by Fitch. Corporate bonds must have a rating of at least A or better by Standard and Poor’s, A2 by Moody’s, or A by Fitch. As of June 30, 2017, the City’s investments were rated by Moody’s Investor Service and Standard & Poor’s as follows: Investment Type U.S. Agencies U.S. Treasury Arizona LGIP Corporate U.S. Treasury Corporate Corporate Corporate S&P Rating AA+ AA+ NR AAA-1+ AA AAA Moody's Rating Aaa Aaa NR Aa3 P-1 Aa2 Aa2 A2 % of Total Investments 31.72% 31.64% 22.68% 4.23% 4.22% 2.13% 2.11% 1.27% Weighted Average Maturity (Years) 1.87 1.28 0.10 0.79 0.04 2.12 0.38 0.55 The remainder of this page left blank intentionally. 51 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Concentration of credit risk: The investment policy of the City contains no limitations on the amount that can be invested in any one issuer. Investments in any one issuer (other than U.S. Treasury securities, mutual funds, and external investment pools) that represent 5% or more of the total investments are as follows: Issuer United States Treasury Total Arizona LGIP Total FNMA Total Freddie Mac Total Investment Type U.S. Treasury Arizona LGIP U.S. Agencies U.S. Agencies $ Amount 84,929 53,709 40,016 15,002 Custodial credit risk: To control custodial credit risk, the City’s investment policy requires all securities and collateral to be held by an independent third-party custodian in the City’s name. The custodian provides the City with monthly market values along with original safekeeping receipts. IV. Note receivable On October 22, 2008, the Western Loop 101 Public Facilities Corporation (PFC), a blended component of the City dissolved in fiscal year 2016, issued $199,750 in third lien excise tax revenue bonds to construct a baseball spring training facility. On October 1, 2009, the City finalized an Intergovernmental Agreement with the Arizona Sports and Tourism Authority (AZSTA) for the Glendale Spring Training Facility Project. The AZSTA agreed to contribute to the City $60,000 for the construction costs plus interest at 4.13% per annum payable semi-annually. A note receivable for the agreed upon contribution amount plus accrued interest on the note in the amount of $27,071 less an allowance for doubtful accounts in the amount of $35,763 has been recorded at June 30, 2017. No payments have been received by the City on the note as of June 30, 2017. At the Glendale City Council workshop session held on August 5, 2014, the AZSTA presentation included projections for the AZSTA to begin making payments to the City in the year 2021. On December 27, 2012, the City of Glendale Municipal Property Corporation (MPC), a blended component unit of the City, issued subordinate excise tax revenue bonds to refund the $199,750 third lien excise tax revenue bonds that were previously issued by the Western Loop 101 Public Facilities Corporation (PFC). The issuance of $183,405 in tax-exempt bonds and $16,850 in taxable bonds achieved debt service savings and lowered the next five fiscal years’ annual rental payments under the Lease Agreement. In fiscal year 2016, the AZSTA receivable was recorded in the MPC debt service fund. The remainder of this page left blank intentionally. 52 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) V. Capital assets A summary of capital asset activity, for the government-wide financial statements, for the year ended June 30, 2017, is as follows: Balances Balances June 30, 2016 June 30, 2017 Increase Decrease Governmental activities Non-depreciable assets: 10,459 Construction in progress $ 11,680 $ 26,810 $ (28,031) $ Land 119,941 4,454 (5,014) 119,381 Artwork 2,395 20 2,415 Total non-depreciable assets 134,016 31,284 (33,045) 132,255 Depreciable assets: Buildings Improvements other than buildings Infrastructure - streets Infrastructure - parks Infrastructure - flood/storm drains Infrastructure - airport Machinery and equipment Computer equipment Software Automotive equipment Total depreciable assets at historical cost Less accumulated depreciation for: Buildings Improvements other than buildings Infrastructure - streets Infrastructure - parks Infrastructure - flood/storm drains Infrastructure - airport Machinery and equipment Computer equipment Software Automotive equipment Total accumulated depreciation 387,865 280,887 750,840 90,550 77,618 17,546 51,184 4,518 5,971 44,836 1,711,815 (125,873) (136,165) (294,415) (39,949) (10,067) (9,658) (39,228) (3,430) (2,932) (31,035) (692,752) Total depreciable assets, net 1,019,063 Governmental activities capital assets, net $ 1,153,079 53 $ 6,786 20,752 538 988 1,180 950 450 1,472 6,228 39,344 (24) (663) (405) (1,357) (2,630) (5,079) 387,865 287,649 771,592 91,088 78,606 18,726 51,471 4,563 6,086 48,434 1,746,080 (9,918) (10,214) (19,411) (3,136) (1,100) (440) (2,293) (396) (463) (2,991) (50,362) 24 649 405 562 2,454 4,094 (135,791) (146,355) (313,826) (43,085) (11,167) (10,098) (40,872) (3,421) (2,833) (31,572) (739,020) (11,018) (985) 1,007,060 20,266 $ (34,030) $ 1,139,315 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Balances June 30, 2016 Business-Type activities: Non-depreciable assets: Construction in progress - water and sewer $ Construction in progress - landfill Construction in progress - solid waste Construction in progress - housing authority Land Total non-depreciable assets Depreciable assets: Buildings Water rights Improvements other than buildings Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment Computer equipment System Purchase Automotive equipment Total depreciable assets at historical cost Less accumulated depreciation for: Buildings Water rights Improvements other than buildings Water lines Sewer lines Water treatment plant Sewer treatment plant Meters and services Fire hydrants Machinery and equipment Computer equipment System Purchase Automotive equipment Total accumulated depreciation Total depreciable assets, net Business-Type activities capital assets, net $ 11,654 5,446 443 26,299 43,842 Increase $ 18,828 1,142 35 295 20,300 Decrease $ (15,600) (6,231) (166) (21,997) Balances June 30, 2017 $ 14,882 357 35 572 26,299 42,145 16,846 9,183 71,511 118,585 137,324 253,374 139,202 29,734 5,187 5,477 925 1,163 21,040 809,551 118 6,165 11,262 4,291 1,373 32 78 4,963 28,282 (50) (1,443) (2,594) (4,087) 16,914 9,183 77,676 129,847 141,615 254,747 139,234 29,734 5,187 4,034 1,003 1,163 23,409 833,746 (10,202) (1,782) (29,127) (47,764) (63,155) (106,750) (50,603) (14,895) (2,625) (4,078) (606) (280) (16,124) (347,991) (543) (179) (2,905) (2,620) (3,327) (9,167) (3,603) (766) (99) (326) (406) (1,171) (25,112) 50 834 1,622 2,506 (10,695) (1,961) (32,032) (50,384) (66,482) (115,917) (54,206) (15,661) (2,724) (3,244) (932) (686) (15,673) (370,597) 461,560 3,170 (1,581) 463,149 505,402 54 $ 23,470 $ (23,578) $ 505,294 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Depreciation was charged to functions/programs as follows: Governmental activities: General Public safety Public works Street maintenance Community services Community environment Total depreciation expense $ $ Business-Type activities: Water and sewer Landfill Solid Waste Housing Total depreciation expense $ $ 15,631 4,961 14,698 10,829 4,239 4 50,362 22,649 743 1,313 407 25,112 Included in the water and sewer depreciation amount is $179 amortization of water storage rights. VI. Construction commitments The City has active construction projects as of June 30, 2017. The projects include street construction, park facilities, and the construction of additional water and sewer facilities. At year-end, the government’s commitments with contractors are as follows: Project General government Community services Public works Street maintenance Water and sewer facilities Landfill Solid Waste Housing Total primary government Spent-to-Date $ 760 305 4,578 4,816 14,882 357 35 572 $ 26,305 Construction Commitment $ 1,602 45 1,753 11,306 24,043 $ 38,749 VII. Internal service funds The City is exposed to various risks of loss. Certain of these risks are accounted for within the internal service fund type. A. Risk management On January 1, 1987, the City established a risk management fund for torts, and loss and destruction of assets. The City’s risk management fund purchases excess or commercial insurance as follows: automobile and general liability, errors and omissions, employment practices liability, employee benefit liability, employee benefits wrongful acts, and products completed operations hazards with limits up to 55 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) $50,000. The risk management fund was fully self-insured through June 30, 1998, for tort liability losses. Effective July 1, 1998, the City purchased excess insurance. Currently the excess insurance liability coverage has a $1,000 self-insured retention. The fund also purchased commercial insurance for airport owners and operators’ liability with limits up to $20,000 and no deductible, crime coverage with limits up to $10,000 with a $50 deductible, fiduciary liability covering the Deferred Compensation Committee with limits up to $5,000 and no deductible, and public employees blanket bond covering the Risk Management and Workers’ Compensation Trust Fund Board with limits up to $10. Property coverage for damage or destruction of city assets is up to $1,000,000 with varying deductibles from $25 up to $500. The property coverage includes builders risk, automobile physical damage, boiler and machinery, pollution and cyber. Funds receiving insurance coverage pay monthly premiums to the risk management fund based upon a budget model taking into consideration actuarial analysis and projections, prior loss experience, staffing, and operating budget. Premium payments to insurance carriers, loss control, and risk management expenses are made directly from the risk management fund. Insurance coverage has not been significantly reduced in recent years. B. Workers’ compensation On July 1, 1994, the City established a workers’ compensation fund for work-related injuries to employees. The workers’ compensation fund provides statutory coverage up to a maximum of $2,000 for each workers’ compensation claim with an $800 self-insured retention. Funds receiving insurance coverage pay monthly premiums to the workers’ compensation fund based upon a budget model taking into consideration actuarial analysis and projections prior loss experience, staffing level, operating budget and the National Council on Compensation Insurance workers’ compensation manual rates. Premium payments to insurance carriers and loss control and workers’ compensation expenses are made directly from the workers’ compensation fund. There have been no settlements paid in excess of insurance in any of the past three years. C. Employee benefits On July 1, 2000, the City established an employee benefits fund to meet future cost increases for healthrelated insurance. Premiums are collected through contributions from employee paychecks and department budgets. Retirees contribute 100% and COBRA participants contribute 100% of premiums for their insurance benefit coverage. Premiums for the medical, vision, dental, and life insurance plans are determined prior to each renewal period based on the actuarial valuation of the costs of claims, administration of the plan, demographics of the group, plan design changes and any new mandated benefits. These insurance benefits are provided through fully insured and self-insured insurance plans. The City is responsible for the first $200 in medical claims per individual per plan year. Claims exceeding $200 for an individual are paid by the reinsurance plan. Premiums for the self-insured medical plan are set prior to the beginning of each plan year equal to 125% of the expected claims liability. Premium payments to insurance carriers are made directly from the fund. There have been no settlements paid in excess of insurance in any of the past three years nor has insurance coverage been significantly reduced in recent years. 56 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) D. Estimated liability Based on information provided by the actuary, liabilities are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported, the effects of specific, incremental claim adjustment expenses, and other allocated claim adjustment expenses. The City’s workers’ compensation self-insurance program liability includes recoveries related to subrogation. Salvage and subrogation are immaterial to both risk management and employee benefits self-insurance programs and are not incorporated into the liability. The risk management trust fund and workers’ compensation self-insurance programs do include a provision for unallocated claim adjustment expenses. The workers’ compensation fund includes payment of Industrial Commission taxes and fees. The City claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and societal factors. The risk management fund and the workers’ compensation fund are funded to meet a 55% confidence level of the most recent actuarial report. The City reports the estimated liability in net present value dollars using a future investment yield assumption of .51%. These liabilities are reported in the internal service funds at their actuarial determined liability of $9,840 as of June 30, 2017. Changes in the balances of claims liabilities during the past two years are as follows: Risk Management 2017 2016 Workers' Compensation 2017 2016 Unpaid claims, beginning of fiscal year $ 2,810 Current year claims and changes in estimate 1,096 Claims payments (1,148) $ 2,857 $ 3,831 $ 3,518 2,284 (2,331) 2,548 (1,358) 1,374 (1,061) Balance at fiscal year end $ 2,810 $ 5,021 $ 3,831 $ 2,758 Employee Benefits 2017 2016 $ 1,914 $ 27,266 (27,119) $ 2,061 3,994 22,785 (24,865) $ E. Fleet Services The Fleet Services Fund was established to track income and expenses of the internal services provided to city departments. The Fleet Services Fund specifically covers vehicle maintenance needs and fuel purchased for city vehicles. F. Technology The Technology Fund and the Technology Projects Fund are used to track income and expenses of the internal services provided to city departments for telephone services, information technology services, and support. The Technology Fund specifically supports all the city’s computers, hardware, and software. The Technology Fund is designed to balance, with the rates (revenues) set to recover the actual expenses each year. The Technology Projects Fund may accrue a fund balance in anticipation of future upgrades and potential carry over of project funding 57 1,914 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) VIII. Leases A. Capital leases The City’s capital lease activity consists principally of leasing various types of light equipment such as radios for the Police Department and a photocopier for the Fire Department. Leases vary in terms of 3 to 5 years for photocopier and radios. Current year principal expenditures are $2,136 for governmental activities. The future minimum lease obligation and net present value of lease payments at June 30, 2017, are as follows: Year Ending June 30 2018 2019 Total minimum lease payments Less: Amount representing interest Present value of net minimum lease payments Governmental Activities $ 2,353 2,353 4,706 (222) $ 4,484 The assets acquired through capital leases are as follows: Governmental Activities $ 6,624 (668) $ 5,956 Class of Property Equipment Less: Accumulated depreciation Total B. Operating lease expenditures The City leases office space and vehicles under various cancelable operating lease agreements expiring at various dates. Certain leases contain provisions for possible future increased rentals based upon changes in the Consumer Price Index. Combined annual rental payments in fiscal year 2016-17 were $85. C. Operating lease revenue The City also leases various City-owned properties and buildings under cancelable and non-cancelable long-term lease agreements through fiscal year 2017 and beyond. The carrying value of leased assets is $299,669 (cost of $498,312 less accumulated depreciation of $198,643). The leased properties and buildings are included as capital assets in the government-wide financial statements. Certain leases contain provisions for future increased revenues based upon changes in the Consumer Price Index. The remainder of this page left blank intentionally. 58 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Scheduled minimum revenues for non-cancelable leases for succeeding fiscal years ending June 30 are as follows: Total Revenues $ 2,554 2,473 2,465 2,173 1,457 41,946 $ 53,068 Fiscal Year 2018 2019 2020 2021 2022 2023 and beyond Total IX. Short-term debt The City did not issue short-term debt for the year ended June 30, 2017. X. Long-term debt A. General obligation bonds (GO) The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. General obligation bonds are direct obligations and pledge the full faith and credit of the City and are repaid through the City’s levying of property taxes. Retirement of the general obligation bonds in the business-type activities are intended to be paid back by the revenues of the business-type activities. B. Revenue bonds Highway User Revenue Fund (HURF) bonds are used to construct street and highway projects. HURF bonds outstanding are special obligations of the City and secured by taxes, fees, charges or other monies collected by the state and returned to the City pursuant to Title 28, Chapter 18, Article 2, A.R.S. as amended. A special revenue fund called highway user gas tax fund has been set up by the City to collect HURF revenues from the state and transferred to the debt service fund to pay for HURF principal and interest. The remaining outstanding HURF bonds were paid off in fiscal year 2016. The State Legislature has in the past and may in the future alter the type and/or rate of taxes, fees, and charges as well as allocation of such monies. The transportation revenue bonds are special revenue obligations of the City and are used to construct various transportation projects such as roadway widening, intersection improvements, and right-of-way acquisitions. The $74,670 in bonds outstanding is secured by the City’s pledge of a 0.50% transportation excise tax approved by voters on November 6, 2001. The debt service payments are also secured by the same excise tax. The total remaining principal and interest to be paid to a trustee under a trust agreement is $102,009. The current year revenues of $26,362 collected in the transportation special revenue fund paid the current year principal and interest amounts of $3,550 and $3,594, respectively. For transportation revenue bonds, the pledged revenue coverage covenants in the purchase agreements require the transportation excise taxes received must be equal to or at least one and one-half times the total interest and principal payment required in the current fiscal year. The Excise Tax Revenue Refunding bonds are special obligations of the City and are not a general obligation of the City. Under a purchase agreement the City makes monthly payments to a trustee. The payments are secured by a senior claim and pledge by the City of all of the City’s unrestricted excise tax 59 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) revenues which comprise of all excise tax, transaction privilege, franchise and income tax which it collects or is apportioned by the State or political subdivision of the State. The $147,960 in bonds outstanding was issued to refund senior and subordinate excise tax revenue bonds issued by the MPC. The total principal and interest remaining on the bonds to be paid is $212,104. The current year interest amount of $6,916 was funded with a transfer from the General fund. The $212,515 in water and sewer revenue bonds/obligations outstanding has been issued for the construction, acquisition, and equipping of water and sewer facilities and related systems and infrastructure. These are special revenue obligations and are pledged and secured solely by the net revenues of the system. The net revenues of the system consist of revenues collected from customers including development impact fees and interest income less such necessary expenses of operation, maintenance, and repair of the system excluding depreciation, amortization and debt service. The total principal and interest remaining to be paid is $281,950. The current year principal and interest on the bonds were $20,126 and net revenues of the system were $34,437. For water and sewer revenue bond senior obligations, the pledged revenue coverage covenants in the purchase agreements require the revenues received must be equal to or at least one hundred twenty percent of the combined debt service on all outstanding senior obligations. For water and sewer revenue bond subordinate obligations, the pledged revenue coverage covenants in the purchase agreements require the revenues received must be equal to or at least one hundred twenty percent of the combined debt service on all outstanding senior obligations and subordinate obligations. C. Municipal Property Corporation (MPC) bonds In 1982, 2002, 2003, 2006 and 2008 the MPC, a non-profit corporation, issued bonds to finance the construction of a new municipal office complex, hockey arena, public safety training center, parking garage, media center, convention center and city infrastructure, respectively. On October 19, 1982, July 31, 2002, May 1, 2003, and June 1, 2006, the City entered into a lease purchase agreement with MPC, whereby, the City purchased the constructed municipal office complex, hockey arena, public safety training center, parking garage, media center, convention center and city infrastructure, respectively, from MPC. In addition, on April 1, 2004, the City entered into a lease agreement with the MPC to issue bonds to finance an escrow account to refund certain outstanding City improvement district bonds. In June 2008, the City entered into a lease agreement with the MPC to issue bonds to refund outstanding 2006B bonds. In February 2012, the City entered into a lease agreement with the MPC to issue bonds to partially refund outstanding maturities of the bond series 2003, 2004, and 2006. In December 2012, the City entered into a lease agreement with the MPC to issue bonds to partially refund outstanding maturities of the bond series 2003 and 2004, and to fully refund outstanding maturities of the Western Loop 101 Public Facilities Corporation bond series 2008. In March 2015, senior excise tax revenue bonds were issued to refund MPC bonds series 2002B, 2003B, 2006A, and series 2012D, respectively. In April 2016, senior excise tax revenue bonds were issued to refund MPC bond series 2003 D in full as well as several maturities of the MPC bond series 2008A. An amount equal to the MPC debt service and related miscellaneous fees, is payable to the MPC in monthly installments by the City. Under the provisions of the purchase agreement, the City has pledged for the payment of the purchase price: 1) all net revenues derived from the municipal office complex and arena, and 2) all excise, transaction, privilege and franchise taxes which the City currently collects, may collect or are allocated to the City by any other governmental unit or municipal corporation, except the City’s share of such amounts which by state law, rule or regulation must be expended for other purposes. However, under no circumstances shall such pledge constitute a general obligation of the City nor will the purchase price be payable from the proceeds of ad valorem taxes. The total principal and interest remaining to be paid is $467,486. Excise tax revenues pledged for repayment of MPC was $160,534. The current year principal and interest paid was $19,192. 60 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) For senior liens, the pledged revenue coverage covenants in the lien agreements require the unrestricted excise taxes received must be equal to or at least three times the senior excise tax obligation payment required in any current fiscal year. The requirement for subordinate liens is the unrestricted excise taxes received must be equal to at least two times the combined total payment on senior excise tax obligations and subordinate lien excise tax obligations in any current fiscal year. D. Changes in long-term liabilities The following is a summary of changes in long-term liabilities reported in the governmental activities financial statements for the year ended June 30, 2017: June 30, 2016 General obligation (GO) bonds Revenue bonds: Excise Tax Revenue bonds Transportation bonds M unicipal Property Corporation Total bonds payable $ Other long-term obligations: Capital lease obligations Note payable Net OPEB liabilities Settlement obligations Compensated absences Claims and judgments Unamortized premium on debt issuance Discount on debt issuance Net pension obligation Developer payable obligations Total other long-term obligations Total Increases 135,130 Decreases - $ (15,130) $ Amounts Due Within One Year 120,000 $ 14,810 147,960 77,615 288,590 649,295 19,330 19,330 (22,275) (5,075) (42,480) 147,960 74,670 283,515 626,145 1,115 3,925 4,990 24,840 6,620 5,515 52,298 14,100 23,502 8,555 7,320 30,910 (2,136) (1,838) (2,756) (3,000) (5,639) (29,625) 4,484 3,677 49,542 11,100 25,183 9,840 2,206 1,838 3,000 15,718 9,840 56,547 - (4,481) 52,066 4,118 56,338 259 94,827 63 (49,412) (1,277) 313,900 3,898 472,413 36,720 (1,340) 257,562 3,639 426,998 $ $ June 30, 2017 1,076,293 $ 114,157 $ (91,892) $ 1,098,558 $ 61,560 General, transportation, and police and fire sales tax special revenue funds typically have been used to liquidate compensated absences in prior years, since most employees engaged in governmental activities are paid from those funds. Paychecks include payment for leave taken during the current pay period. Of the $1,098,558 in the total liabilities, $688,993 is related to net position for the City’s net investment in capital assets. Other obligations not included in the calculation of net position for the City’s net investment in capital assets are OPEB obligations, compensated absences, and claims and judgments. No governmental funds cash has been used to fund the net other post-employment benefit obligation (OPEB). The net annual OPEB cost for the current fiscal year was funded by the employee benefits internal service fund. This fund receives money from employee contributions as well as general and water and sewer fund contributions. 61 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) The following is a summary of changes in long-term liabilities reported in the business-type activities financial statements for the year ended June 30, 2017: June 30, 2016 Water and sewer revenue/obligation bonds $ Total bonds payable Other long-term obligations: Estimated closure and post-closure costs Unamortized premium on debt issuance Net Pension obligations Net OPEB liabilities Compensated absences Housing noncurrent liabilities Total other long-term obligations Total $ 222,320 222,320 Amounts Due Within One Year $ 212,515 212,515 $ 12,780 12,780 14,697 - 24,732 32,015 11,083 3,624 25 86,176 2,250 2,214 4,464 (13,685) $ 298,691 $ 17,244 Additions Reductions $ $ - 14,259 438 26,982 29,350 11,754 3,372 37 85,754 2,665 1,199 4,302 308,074 June 30, 2017 $ 4,302 (9,805) (9,805) (2,250) (671) (947) (12) (3,880) $ Of the $298,691 in total liabilities, $247,052 (including matured bonds payable) is included in the calculation of net position for the City’s net investment in capital assets. Other obligations not included in the calculation of net position for the City’s net investment in capital assets are estimated landfill closure and post-closure costs, OPEB obligations, compensated absences, and housing noncurrent liabilities. The remainder of this page left blank intentionally. 62 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) E. Current and advance refunded bonds The City issued refunding bonds to defease certain outstanding bonds, thus achieving debt service savings. The City has placed the proceeds from the refunding issues in an irrevocable escrow account with a trust agent, which will provide amounts sufficient for future payment of principal and interest of the issue refunded. Accordingly, the trust account assets and liabilities for the defeased bonds are not included in the City’s financial statements. Although defeased, the refunded debt from this issue will not be actually retired until the call dates have come due or until maturity if they are not callable issues. Issue Refunded Date Refunded Western Loop 101 Public Facilities Corporation Bonds Series 2008C December 27, 2012 Transportation Excise Tax Bonds 2007 Transportation Excise Tax Bonds 2007 February 25, 2015 59,110 June 22, 2017 18,725 Water and Sewer Revenue Bonds 2007 March 3, 2015 28,970 Water and Sewer Revenue Bonds 2008 March 3, 2015 39,340 General Obligation Bonds 2007 March 10, 2015 20,300 Municipal Property Corporation Bonds Series 2008A April 25, 2016 The remainder of this page left blank intentionally. 63 Remaining Balance $ 450 27,760 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) F. Bonds payable Bonds payable at June 30, 2017, are comprised of the following: Classified in governmental activities on the government-wide financial statements: Purpose Issued Fiscal Year Ending June 30 Interest Rate Year Series M atures Amount of Original Issue Bonds Outstanding June 30, 2017 $ $ GO bonds payable from secondary assessed property taxes Various Tax-Exempt 1.50-5.00 2003 Various Tax-Exempt 4.00-5.00 2007 Various Taxable Direct Pay BAB 1.50-5.63 2010 Refunding Tax-Exempt 4.00-5.00 2011 Refunding Tax-Exempt 2.00-5.00 2015 Various Tax-Exempt(A), Taxable(B) 1.54-4.00 2016 Total 2018 2022 2030 2022 2022 2036 Revenue bonds payable from the 0.5% transportation sales tax Refunding Tax-Exempt Excise Tax Rev 2.00-5.00 2015 Refunding Tax-Exempt Excise Tax Rev 2.62 2017 Total 2032 2032 Excise Tax bonds payable from general fund sales tax Refunding Tax-Exempt 2015A 5.00 Refunding Taxable 2015B 3.93-4.03 Refunding Tax-Exempt 2016 3.00-5.00 Total 2031 2033 2033 100,430 13,700 33,830 100,430 13,700 33,830 147,960 M unicipal Property Corporation payable from general fund lease payments M PC Taxable excise tax 2003B 1.46-5.58 2003 2033 M PC Tax-Exempt excise tax 2008A 3.00-5.00 2008 2032 M PC Taxable excise tax 2008B 5.45-6.16 2008 2033 M PC Tax-Exempt refunding 2012A 3.00-5.00 2012 2021 M PC Tax-Exempt refunding 2012B 5.00 2013 2033 M PC Tax-Exempt refunding 2012C 5.00 2013 2038 M PC Taxable refunding 2012D 1.30-3.125 2013 2020 Total 105,260 32,315 52,780 8,665 39,620 183,405 16,850 1,480 1,465 44,570 6,490 39,620 183,405 6,485 283,515 2015 2015 2016 Total bonds payable recorded in governmental activities Less current portion Long-term portion of bonds payable recorded in governmental activities 64 52,525 61,000 41,650 38,300 39,490 27,285 55,635 19,330 4,335 4,485 31,355 16,930 35,610 27,285 120,000 55,340 19,330 74,670 $ 626,145 (24,840) 601,305 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Classified in business-type activities on the government-wide financial statements: Issued Fiscal Year Ending June 30 Year Series Matures Amount of Original Issue Revenue bonds/obligations payable from water and sewer fund Various 3.00-5.00 2008 2018 Various 6.20-6.55 2011 2030 Various refunding 2.00-5.00 2012 2028 Various refunding 2.50-5.00 2015 2028 Total 65,500 25,685 77,635 121,245 Purpose Interest Rate Bonds Outstanding June 30, 2017 3,070 25,685 62,515 121,245 212,515 Total bonds payable recorded in business-type activities Less current portion Long-term portion of bonds payable recorded in business-type activities $ 212,515 (12,780) 199,735 The Arizona Constitution provides that the general obligation bonded indebtedness for a city for general municipal purposes may not exceed 6% of the limited assessed valuation of the taxable property in that city. In addition to the 6% limitation for general municipal purpose bonds, cities may issue general obligation bonds up to 20% of the limited assessed valuation for supplying such city with water, sewer, artificial light, public safety, law enforcement, fire and emergency services, streets and transportation facilities, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities. The City’s unused bonded debt borrowing capacity as of June 30, 2017, is as follows: 6% Capacity to incur bonded debt Less: Bonded debt applicable to limit Unused bonded debt capacity $ $ 73,633 73,633 20% $ $ 245,444 (116,343) 129,101 The various bond indentures contain significant limitations and restrictions on annual debt service requirements, maintenance and flow of monies through various restricted accounts, and minimum revenue and bond coverage. The City is in compliance with all such significant limitations and restrictions. 65 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) G. Bonds authorized, issued and unissued Bonds authorized but not fully issued as of June 30, 2017, are shown below: GO bonds Authorized Amount Issued through June 30, 2017 Authorized but Unissued Voter authorized October 20, 1981 Operations center $ $ $ 6,750 Voter authorized March 10, 1987 Library 550 6,200 9,698 8,000 1,698 18,215 50,500 4,494 28,453 13,721 22,047 40,910 16,910 24,000 17,000 15,398 53,700 64,801 1,460 3,175 62,966 15,540 15,398 50,525 1,835 6,935 185 6,750 20,554 16,155 102,638 79,065 502,319 10,522 1,518 28,532 166,765 10,032 14,637 102,638 50,533 335,554 Voter authorized November 2, 1999 (1) Cultural facility Economic development Governmental facilities Landfill development Library Open spaces Public safety Transit (1) (1) (1) Voter authorized May 15, 2007 Flood control Parks and recreation Public safety Streets and parking Total GO bonds $ $ $ Revenue bonds Voter authorized November 2, 1999 (1) Water and sewer Total revenue bonds $ 10,000 10,000 $ - $ 10,000 10,000 Total bonds $ 512,319 $ 166,765 $ 345,554 (1) Certain general obligation bonds or revenue bonds can be issued as general obligation bonds, revenue bonds or a combination thereof. 66 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) H. Other debt (developer, notes, long-term) Classified in the governmental activities in the government-wide financial statements: Developer Payable Obligation - On December 1, 2005, the City entered into a development and ground lease agreement with Cabela’s whereby Cabela’s has the option to purchase the City owned property 90 days after the expiration of the 20-year ground lease (option date). In addition, the City entered into a site improvement management agreement on July 1, 2006, whereby Cabela’s accrues a management compensation amount for their actual costs of operation, maintenance, and repair of site improvements. The management compensation amount accrues annually with interest. At the option date Cabela’s can purchase the property at Fair Market Value and receive a credit against the purchase price for the accrued management compensation amount. $ Note Payable Obligation - On December 16, 2015, the City entered into an agreement with Conair Corporation which determined compensation for the transfer of fee title interest of about 38.5 acres of Conair Property for an Airport runway protection zone and related purposes. The first of four annual payments was made on January 14, 2016. 3,898 $3,677 Less current portion Note payable long-term portion ($1,838) $1,839 Settlement Obligation - On November 14, 2016, the City entered into a settlement agreement with the Arizona Sports and Tourism Authority, the Arizona Cardinals Football Club, LLC, the New Cardinals Stadium LLC, and the Stadium Development LLC, which determined compensation for the City's failure to provide adequate assurance for Stadium parking. The first of five payments was made on November 15, 2016. Three additional $3,000 payments are due annually in July and a $2,100 payment is due prior to July 1, 2019, with an option for later payment. $11,100 Total settlement obligation Less current portion Settlement obligation long-term portion $ 67 11,100 (3,000) 8,100 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) I. Future year debt service requirements Fiscal Year Ending Transportation Bonds MPC Bonds Excise Tax Bonds G.O. Bonds Water and Sewer Revenue Bonds/ Obligations Total 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 Total 7,039 7,034 7,033 6,700 6,699 6,694 6,699 6,703 6,700 6,701 6,699 6,699 6,696 6,699 7,214 102,009 18,950 19,702 20,708 22,562 22,506 21,121 20,459 20,370 20,306 22,898 22,824 23,488 23,392 23,326 24,391 27,821 22,533 22,533 22,532 22,532 22,532 467,486 8,031 13,560 13,655 13,731 13,783 15,172 15,832 15,918 15,988 13,392 13,465 12,804 12,902 12,966 11,902 9,003 212,104 19,878 19,202 19,199 19,178 16,831 5,596 5,559 5,523 5,483 5,436 5,387 5,518 5,286 2,150 2,150 2,151 2,155 2,151 2,150 150,983 22,640 25,448 25,080 24,409 24,079 25,290 25,288 25,285 25,289 24,162 20,302 7,411 7,267 281,950 76,538 84,946 85,675 86,580 83,898 73,873 73,837 73,799 73,766 72,589 68,677 55,920 55,543 45,141 45,657 38,975 24,688 24,684 24,682 22,532 22,532 1,214,532 Less interest 27,339 183,971 64,144 30,983 69,435 375,872 $ 74,670 $ 283,515 $ 147,960 $ 120,000 $ 212,515 Principal The remainder of this page left blank intentionally. 68 $ 838,660 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) The following table discloses the debt service requirements as of June 30, 2017, segregating principal and interest, for the next five years and in five-year increments thereafter. Fiscal Year 2018 2019 2020 2021 2022 2023-2027 2028-2032 2033-2037 2038 Total J. Principal 37,620 47,420 50,190 53,290 53,140 247,890 211,405 116,150 21,555 $ 838,660 Interest 38,918 37,526 35,485 33,290 30,758 119,974 59,533 19,411 977 $ 375,872 $ $ Total 76,538 84,946 85,675 86,580 83,898 367,864 270,938 135,561 22,532 $ 1,214,532 $ New bonds On June 22, 2017, the City issued $19,330 in Transportation Excise Tax revenue refunding obligations. Proceeds of the bonds current refunded $18,725 of Transportation Excise Tax revenue bond series 2007 with bonds maturing in 2018-2032. The 2017 bonds mature on various dates starting 2018 to 2032 with a fixed interest rate of 2.62%. The bonds were purchased as a single obligation by Compass Mortgage Corp, an Alabama corporation. The bonds are not a general obligation of the City, but are limited obligations of the City and are payable as to both principal and interest solely from and secured by a pledge of various revenues derived by the City from collection of a dedicated 0.5% excise tax for transportation infrastructure. The refunding resulted in an insignificant economic gain and future cash flow savings of $1,819. XI. Landfill obligations The City operates a municipal sanitary landfill under an Aquifer Protection Permit and Solid Waste Facility Plan approval issued by the Arizona Department of Environmental Quality requiring future closure work and post-closure monitoring. The permit meets federal and state regulations. These laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Although closure and postclosure care costs will not be paid until near or after the date that the landfill stops accepting waste, the City reports a portion of these closure and post-closure costs as an operating expense in each period based on landfill capacity used. The remainder of this page left blank intentionally. 69 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) The landfill closure and post-closure care liability at June 30, 2017, calculated below, represents the cumulative amount reported to date based on the use of estimated capacity of the landfill. North Cell South Cell 29,598 - 24,215 20,575 85% Capacity (cubic yards) Capacity used to date Percentage of capacity used Total closure and post-closure costs in present dollars: as of June 30, 2017 as of June 30, 2016 $ $ 18,419 18,258 $ $ 17,297 17,146 Closure and post-closure care costs: Amount remaining to be recognized as of June 30, 2017 $ 18,419 $ 2,600 Liability recognized as of June 30, 2017 $ - $ 14,697 These amounts are based on what it would cost to perform all closure and post-closure care in fiscal year 2016-17. The estimated costs are subject to changes due to inflation, deflation, new technology, and applicable laws and regulations. Assets are not restricted to fund the obligations. The estimated remaining life of the landfill is approximately 50 years. According to state and federal laws and regulations, the City must comply with the local government financial test requirements that assure the City can meet the cost of landfill closure, post-closure, and corrective action when needed. The City is in compliance with these requirements. XII. Inter-fund transactions Inter-fund balances at June 30, 2017, consisted of the following: A. Due to/due from Due to general fund from: Other non-major governmental funds Community development block grant Other special revenue Capital Project Street Construction Total due to general fund $ $ 907 335 1,906 3,148 The inter-fund balances at June 30, 2017, include short-term loans to cover temporary cash deficits in various funds. This occasionally occurs prior to bond sales or grant reimbursements. All inter-fund balances outstanding at June 30, 2017, are expected to be repaid within one year. 70 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) B. Inter-fund transfers Inter-fund transfers for the year ended June 30, 2017, consisted of the following: Transfers to general fund from: Other Special Revenue Fund 131 Water and Sewer fund 6 Total transfers to general fund 137 Transfers to municipal property corporation debt service from: General fund 19,251 Total transfers to municipal property corporation debt service 19,251 Transfers to non-major special revenue fund from: General fund 1,196 Capital Projects Funds 147 Water and Sewer 119 Other Proprietary Funds 10 Total transfers to non-major special revenue fund 1,472 Transfers to non-major debt service funds from: General fund 6,915 Development impact fees 210 Transportation fund 7,144 Total transfers to non-major debt service funds 14,269 Transfers to non-major capital projects fund from: Transportation fund 6,318 Highway users gas tax 7,003 Total transfers to non-major capital projects fund 13,321 Transfers to non-major proprietary funds from: General fund 1,170 Water and sewer (88) Total transfers to other non-major proprietary fund 1,082 Transfers to Water and Sewer from: General fund 229 Total transfers to water and sewer fund 229 Grand total all transfers $ 71 49,761 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Transfers are used to: 1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them; 2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due; and 3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. The inter-fund transfers are all classified as transfers and are included in the results of operations of both governmental and proprietary funds. XIII. Encumbrances The Arizona Revised Statutes allow cities to encumber unused appropriations for up to sixty days after the end of the fiscal year. However, effective July 1, 1987, the City adopted a policy of not recognizing encumbrances at year-end. All appropriations lapse on the last day of the fiscal year. Any outstanding commitments that the City intends to honor are budgeted in the new fiscal year. At June 30, 2017, the City intended to honor $5,770 of outstanding encumbrances in the new fiscal year. Fund Major: General Water and sewer Non-Major: Other special revenue Streets capital Other capital Landfill Total XIV. $ $ 55 3,296 40 2,130 9 240 5,770 Equity in joint ventures A. Sub-Regional Operating Group (SROG) The City, along with the cities of Phoenix, Mesa, Scottsdale and Tempe participates in the Sub-Regional Operating Group (SROG), a joint venture. SROG constructs, operates and maintains jointly used facilities including the 91st Avenue Waste Water Treatment Plant (Plant) and certain sewage transportation facilities. The City of Phoenix acts as lead agency, and as such, is responsible for the planning, budgeting, construction, operation and maintenance of the Plant. In addition, the City of Phoenix provides all management personnel and financing arrangements and accepts federal grants on behalf of the participants. Each participant pays for its costs of operation and maintenance based on relative sewage flows and strengths and for purchased capacity in the plant and related transportation facilities based on ownership. The latest available audited financial information on the joint venture is as of and for the fiscal year ended June 30, 2016. The City accounts for its approximate 6.8% investment using the equity method in the water and sewer fund. For the year ended June 30, 2016, the City recognized a loss in the joint venture of $3,311. The City has financed its share of construction costs through the issuance of revenue bonds, development fees and grants. The bonds are collateralized by a pledge of water revenues and are reflected in the financial statements of the water and sewer fund. The joint venture itself has not issued any debt. 72 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) A summary of the audited financial information on the joint venture as of and for the fiscal year ended June 30, 2016, is as follows: Assets Current assets Capital assets, net of accumulated depreciation Total assets Liabilities Net assets $ $ Total revenues Total expenses Decrease in net assets $ $ 49,316 706,590 755,906 34,002 721,904 48,202 (85,241) (37,039) Copies of separate financial statements of the joint venture can be obtained from Arizona Municipal Water Users Association, 4041 North Central Avenue, Phoenix, Arizona 85012. B. Regional Wireless Cooperative (RWC) The City currently participates with twenty Arizona cities and districts in the Regional Wireless Cooperative agreement for the construction, operation and maintenance of a regional communications network, a joint venture. The City of Phoenix is both the Network and the Administrative Managing Member. As the Network Managing Member, Phoenix operates and maintains the network. As the Administrative Managing Member, Phoenix is responsible for accounting, budgeting, procurement and contracting for the RWC. The City has an ongoing financial responsibility as a result of the agreement to participate in the cost to construct, operate and maintain the network. The city’s share of costs is determined based on the proportionate number of subscriber units in use at the time of assessment. The latest available audited financial information on the joint venture is as of and for the fiscal year ended June 30, 2016. The equity interest for the City at June 30, 2016, was $3,359. The City accounts for its approximate 3.8% investment using the equity method in the Public Safety fund. For the year ended June 30, 2016, the City recognized a loss in the joint venture of $274. The remainder of this page left blank intentionally. 73 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) A summary of the audited financial information on the joint venture as of and for the fiscal year ended June 30, 2016, is as follows: Assets Current assets Capital assets, net of accumulated depreciation Total assets Liabilities and Deferred Inflows of Resources Net assets $ $ Total revenues Total expenses Decrease in net assets $ $ 10,847 86,472 97,319 8,667 88,652 23,646 (30,877) (7,231) Copies of separate financial statements of the joint venture can be obtained from RWC Director’s Office, 200 W. Washington Street, 12th Floor, Phoenix, Arizona 85003 XV. Jointly governed organizations The Regional Public Transit Authority (RPTA) is a voluntary association of local governments, including Glendale, Phoenix, Mesa, Tempe, Scottsdale, and Maricopa County. Its purpose is to ensure that a viable public transportation system is provided as an alternative for regional mobility and to ease the traffic congestion and air pollution caused by over-reliance on the single occupant vehicle. The Board of Directors consists of the mayors of those cities and a member of the County Board of Supervisors. Arizona Municipal Water Users Association (AMWUA) is a non-profit corporation established and funded by cities in Maricopa County for the development of an urban water policy and to represent the cities' interests before the Arizona legislature. In addition, AMWUA contracts with the cities jointly using the 91st Avenue Waste Water Treatment Plant to perform certain accounting, administrative and support services. XVI. Governmental fund balance components and fund type definitions The City has a formally adopted minimum fund balance policy for the general fund. This policy was adopted though the annual budget process. The policy states that the general fund should maintain a minimum unrestricted (the total amount of the committed, assigned, and unassigned) fund balance of 25% of the projected annual ongoing revenues. The City’s general fund, unrestricted fund balance at June 30, 2017 is $51,206. Per the City’s adopted financial policies, 10% of the general fund operating revenue which totals $22,481 has been earmarked as the Budget Stabilization Reserve and $18,078 has been earmarked as the Operating Reserve. Consistent with the requirements of GASB Statement No. 54, formal Council action was not taken prior to June 30, 2017 to commit these funds; therefore, the funds are reported as unassigned. 74 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) M unicipal Property Corporation Debt Service General Nonspendable Inventories and prepaid items Cemetery perpetual care Total Nonspendable Restricted Public transit State drug enforcement U.S. drug enforcement Debt service Court security Court time payments Court computer upgrade HOM E program Highway user gas tax Police activities Fire activities Development impact fees Fire and police construction Park bond construction Economic development Open space/trails Cultural and historical projects Government facilities Garden for visually impaired Neighborhood stabilization Flood control construction Total restricted Committed Artwork Pool/park repair Other Total committed Assigned Equipment replacement General government capital projects Bed tax/tourism Public safety training facility Total assigned Unassigned fund balance $ $ 2,934 2,934 $ Other Non-M ajor Governmental Funds - $ 121 5,740 5,861 Total Governmental Funds $ 3,055 5,740 8,795 6,447 996 7,443 3,442 3,442 44,818 2,183 265 4,363 302 60 91 158 17,945 14,974 257 122 1,007 226 255 37 60 229 1,114 88,466 44,818 2,183 265 7,805 302 60 91 158 17,945 6,447 996 14,974 257 122 1,007 226 255 37 60 229 1,114 99,351 - - 1,154 127 1,014 2,295 1,154 127 1,014 2,295 55 3,442 9,225 1,367 10,647 40,559 61,583 75 $ $ 170 170 (3,770) 93,022 55 $ 9,225 1,367 170 10,817 36,789 158,047 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Enterprise Fund Type Water and Sewer Fund Restricted for debt service XVII. $ 9,805 Restricted for revenue bond retirement/replacement and extension Two percent of net water revenues must be, by bond ordinance, reserved for the replacement and extension of the City’s water distribution system, or for the retirement of water revenue bonds. The reservation is only required to the extent that the reserve equals two percent of the value of net capital assets of the water and sewer fund. 9,579 Restricted for other purposes 3,513 Total restricted for water and sewer $ 22,897 Total restricted for enterprise fund types $ 22,897 Employee retirement systems and pension plans The City contributes to the Arizona State Retirement System (ASRS), the Public Safety Personnel Retirement System (PSPRS) for police officers and fire fighters, and the Elected Officials Retirement Plan (EORP) for City elected officials who are elected, appointed, or hired prior to January 1, 2014. The Elected Officials Retirement Plan is not described below because of its relative insignificance to the financial statements. At June 30, 2017, the City reported the following aggregate amounts related to pensions for all plans to which it contributes: Statement of Net Position and Statement of Activities Net pension liabilities Deferred outflows of resources Deferred inflows of resources Pension expense Governmental Activities $ 313,900 80,324 15,930 61,341 Business-Type Activities $ 32,015 6,980 4,316 1,280 $ Total 345,915 87,304 20,246 62,621 A. Arizona State Retirement System (ASRS) Plan Description - City employees not covered by the other pension plans described on the following pages participate in the Arizona State Retirement System (ASRS). The ASRS administers a costsharing multiple-employer defined benefit pension plan, a cost-sharing multiple-employer defined benefit health insurance premium benefit (OPEB) plan, and a cost-sharing multiple-employer defined benefit long-term disability (OPEB) plan. The Arizona State Retirement System Board governs the ASRS according to the provisions of A.R.S. Title 38, Chapter 5, Articles 2 and 2.1. ASRS is a component unit of the State of Arizona. The ASRS issues a publicly available financial report that includes its financial statements and required supplementary information. The report is available on its Web site at www.azasrs.gov. Benefits Provided - The ASRS provides retirement, disability, health insurance premium supplemental benefits, and survivor benefits. State statute establishes benefits terms. Retirement 76 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) benefits are calculated on the basis of age, average monthly compensation, and total credited service as follows: Retirement initial membership date: Before July 1, 2011 On or after July 1, 2011 Sum of years and age equals 80 30 years age 55 10 years age 62 25 years age 60 5 years age 50* 10 years age 62 any years age 65 5 years age 50* any years age 65 Years of service and age required to receive benefit Final average salary is based on Benefit percent per year of service Highest 36 consecutive months of last 120 months Highest 60 consecutive months of last 120 months 2.1% to 2.3% 2.1% to 2.3% *With actuarially reduced benefits Retirement benefits for members who joined the ASRS prior to September 13, 2013, are subject to automatic cost-of-living adjustments based on excess investment earnings. Members with a membership date on or after September 13, 2013, are not eligible for cost-of-living adjustments. Survivor benefits are payable upon a member’s death. For retired members, the survivor benefit is determined by the retirement benefit option chosen. For all other members, the beneficiary is entitled to the member’s account balance that includes the member’s contributions and employer’s contributions, plus interest earned. Contributions - In accordance with state statutes, annual actuarial valuations determine active member and employer contribution requirements. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. For the year ended June 30, 2017, active ASRS members were required by statute to contribute at the actuarially determined rate of 11.48 percent (11.34 percent for retirement and 0.14 percent for long-term disability) of the members’ annual covered payroll. The City was required by statute to contribute at the actuarially determined rate of 11.48 percent (10.78 percent for retirement, 0.56 percent for health insurance premium benefit, and 0.14 percent for long-term disability) of the active members’ annual covered payroll. In addition, the City was required by statute to contribute at the actuarially determined rate of 9.47 percent (9.17 percent for retirement, 0.21 percent for health insurance premium benefit and 0.09 percent for longterm disability) of annual covered payroll of retired members who worked for the city in positions that would typically be filled by an employee who contributes to the ASRS. Contributions to the pension plan for the year ended June 30, 2017, were $7,073. The City’s contributions for the current and two preceding years for OPEB, all of which were equal to the required contributions, were as follows: Health Benefit Supplement Fund Year Ended June 30, 2017 2016 2015 $ 365 298 325 77 Long-Term Disability Fund $ 91 71 66 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Pension Liability - At June 30, 2017, the City reported a liability of $102,830 for its proportionate share of the net pension liability of the ASRS. The net pension liability was measured as of June 30, 2016. The total pension liability used to calculate the net pension liability was determined using generally accepted actuarial procedures to roll forward the total pension liability from an actuarial valuation as of June 30, 2015, to the measurement date of June 30, 2016. The City’s reported liability at June 30, 2017, increased by $8,552 from the City’s prior year liability of $94,278 because of changes in the ASRS’ net pension liability and the City’s proportionate share of that liability. The ASRS’ publicly available financial report provides details on the change in the net pension liability. The City’s proportionate share of the net pension liability was based on the City’s fiscal year 2016 contributions. The City’s proportion measured as of June 30, 2016, was 0.63706 percent, which was an increase of 0.0318 from its proportion measured as of June 30, 2015. Pension Expense and Deferred Outflows/Inflows of Resources - For the year ended June 30, 2017, the City recognized pension expense for ASRS of $4,109. At June 30, 2017 the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between City contributions and proportionate share of contributions City contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 623 - $ Deferred Inflows of Resources $ 7,074 5,440 11,143 - 3,600 7,073 22,439 1,464 13,978 $ The $7,073 reported as deferred outflows of resources related to ASRS pensions resulting from the City’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to ASRS pensions will be recognized in pension expense as follows: Year Ended June 30, 2017 2018 2019 2020 Thereafter $ (4,515) (2,088) 4,868 3,123 - Actuarial Assumptions – The total pension liability was determined by an actuarial valuation as of June 30, 2015 and rolled forward using generally accepted actuarial procedures to June 30, 2016. The significant actuarial assumptions used to measure the total pension liability are as follows: 78 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Actuarial valuation date Actuarial roll forward date Actuarial cost method Amortization method: Plan amendments Investment gain/loss Assumption gain/loss Experience gain/loss Asset valuation Discount Rate Projected salary increases Inflation Permanent benefit increase Mortality rates June 30, 2015 June 30, 2016 Entry age normal Immediate 5 Years Average future service life Average future service life Fair value 8% 3 - 6.75% 3% Included 1994 GAM Scale BB The actuarial assumptions related to funding were selected on the basis of an experience study which was performed for the five-year period ending June 30, 2012. The ASRS board adopted the experience study which recommended changes and those changes were effective as of June 30, 2013 actuarial valuation. The long-term expected rate of return on ASRS pension plan investments was determined to be 8.75 percent using a building block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Actual returns may be lower due to the volatility of returns. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Real Target Return Asset Class Allocation Arithmetic Basis Equity 58% 6.73% Fixed income 25% 3.70% Real estate 10% 4.25% Multi-asset class 5% 3.41% Commodities 2% 3.84% Total 100% Discount Rate - The discount rate used to measure the ASRS total pension liability was 8 percent, which is less than the long-term expected rate of return of 8.75 percent. The projection of cash flows used to determine the discount rate assumed that contributions from participating employers will be made based on the actuarially determined rates based on the ASRS Board’s funding policy, which establishes the contractually required rate under Arizona statutes. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 79 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Sensitivity of the City’s Proportionate Share of the ASRS Net Pension Liability to Changes in the Discount Rate - The following table presents the City’s proportionate share of the net pension liability calculated using the discount rate of 8 percent, as well as what the City’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (7 percent) or 1 percentage point higher (9 percent) than the current rate. City's proportionate share of the net pension liability 1% Decrease (7%) Current Discount Rate (8%) 1% Increase (9%) $ $ $ 131,113 102,828 80,149 Pension Plan Fiduciary Net Position - Detailed information about the pension plan’s fiduciary net position is available in the separately issued ASRS financial report. B. Public Safety Personnel Retirement System (PSPRS) Plan Description - City public safety personnel who are regularly assigned hazardous duty participate in the Public Safety Personnel Retirement System (PSPRS). The PSPRS administers an agent multiple-employer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium benefit (OPEB) plan (agent plans). A seven-member board known as the Board of Trustees and the participating local boards govern the PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. The PSPRS issues a publicly available financial report that includes their financial statements and required supplementary information. The reports are available on the PSPRS Web site at www.psprs.com. The remainder of this page left blank intentionally. 80 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Benefits Provided - The PSPRS provides retirement, health insurance premium supplement, disability, and survivor benefits. State statute establishes benefit terms. Retirement, disability, and survivor benefits are calculated on the basis of age, average monthly compensation, and service credit as follows: Initial Membership Date Retirement and Disability Years of service and age required to receive benefit Before January 1, 2012 20 years, any age 15 years, age 62 On or After January 1, 2012 and Before July 1,2017 25 years and age 52.5 Final average salary is based on Highest 36 consecutive months of last 20 years Highest 60 consecutive months of last 20 years Benefit percentage Normal Retirement 50% less 2.0% for each year of credited service less than 20 years OR plus 2.0% to 2.5% for each year of credited service over 20 years, not to exceed 80% 2.5% for each year of credited service, not to exceed 80% Accidental Disability Retirement Catastrophic Disability Retirement Ordinary Disability Retirement Survivor Benefit Retired Members Active Members 50% or normal retirement, whichever is greater 90% for the first 60 months then reduced to either 62.5% or normal retirement, whichever is greater Normal retirement calculated with actual years of credited service or 20 years of credited service, whichever is greater, multiplied by years of credited service (not to exceed 20 years) divided by 20 80% to 100% of retired member's pension benefit 80% to 100% of accidental disability retirement benefit or 100% of average monthly compensation if death was the result of injuries received on the job Retirement and survivor benefits are subject to automatic cost-of-living adjustments based on excess investment earning. In addition, the Legislature may enact permanent one-time benefits increases after a Joint Legislative Budge Committee analysis of the increases effects on the plan. PSPRS also provides temporary disability benefits of 50 percent of the member’s compensation for up to 12 months. 81 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Employees Covered by Benefit Terms - At June 30, 2017, the following employees were covered by the agent pension plans’ benefit terms: PSPRS Police PSPRS Firefighters Inactive employees or beneficiaries currently receiving benefits 186 92 Inactive employees entitled to but not yet receiving benefits 48 30 Active employees 388 221 Total 622 343 Contributions and Annual OPEB Cost - State statutes establish the pension contribution requirements for active PSPRS employees. In accordance with state statutes, annual actuarial valuations determine employer contribution requirements for PSPRS pension and health insurance premium benefits. The combined active member and employer contribution rates are expected to finance the costs of benefits employees earn during the year, with an additional amount to finance any unfunded accrued liability. Contribution rates for the year ended June 30, 2017, are indicated below. Rates are a percentage of active members’ annual covered payroll. Active Members - Pension City: Pension Health Insurance Premium Benefit PSPRS Police 7.65% PSPRS Firefighters 7.65% 36.41% 0.54% 31.46% 0.00% For the agent plans, the City’s contributions to the pension plan and annual OPEB cost and contributions for the health insurance premium benefit which equaled required contributions for the year ended June 30, 2017, were: PSPRS Police Contributions Made: Pension Health Insurance Premium Benefit $ 12,841 190 PSPRS Firefighters $ 6,649 - During fiscal year 2017, the City paid for PSPRS pension and OPEB contributions 100 percent from the General Fund. Pension Liability - At June 30, 2017, the City reported the following net pension liabilities: PSPRS Police PSPRS Firefighters $ Liability 159,608 83,477 82 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) The net pension liabilities were measured as of June 30, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The total pension liabilities as of June 30, 2016, reflect the following changes of benefit terms and actuarial assumptions. Pension Actuarial Assumptions - The significant actuarial assumptions used to measure the total pension liability are as follows: Actuarial valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method Discount rate Projected salary increases Inflation June 30, 2016 Individual entry age normal Level percentage of payroll, closed 22 years 7 year smoothed market, 20% corridor 7.50% 4.0% - 8.0% including inflation 3%, no explicit price inflation is used Permanent benefit increase Members retired on or before July 1, 2011: 2% of overall average benefits compounded annually. All member receive the same dollar amount of increases, members retired on or after August 1, 2011: 0.5% of overall average benefits compounded annually. All members receive the same dollar amount of increase Mortality rates RP-2000 mortality table (adjusted by 105% for both males and females) Actuarial assumptions used in the June 30, 2016, valuation was based on the results of an actuarial experience study for the 5-year period ended June 30, 2012. The long-term expected rate of return on PSPRS pension plan investments was determined to be 7.50 percent using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expenses and inflation) are developed for each major asset class. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Asset Class Short Term Investments Risk Parity Absolute Return Fixed Income Real Assets GTAA Real Estate Private Equity Credit Opportunities Non-U.S. Equity U.S. Equity Total Target Allocation 2% 4% 5% 7% 8% 10% 10% 11% 13% 14% 16% 100% Long-Term Expected Real Rate of Return 0.75% 5.13% 4.11% 2.92% 4.77% 4.38% 4.48% 9.50% 7.08% 8.25% 6.23% 83 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Pension Discount Rates - The following discount rates were used to measure the total pension liabilities: Discount rates PSPRS Police 7.50% PSPRS Firefighters 7.50% The projection of cash flows used to determine the PSPRS discount rates assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between the actuarially determined contribution rate and the member rate. Based on those assumptions, the pension plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Changes in the Agent Plans Net Pension Liability - The following tables present changes in the City’s net pension liability for the PSPRS pension plan (Police and Firefighters): PSPRS - Police Balance at June 30, 2016 Changes for the year: Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expenses Other changes Net changes Balance as of June 30, 2017 Total Pension Liability (Asset) (a) $ 243,876 $ Plan Fiduciary Net Position (b) $ 115,207 6,644 18,964 16,926 - 6,644 18,964 16,926 (3,593) 10,446 - 13,527 4,299 729 (3,593) 10,446 (13,527) (4,299) (729) (11,246) 38,141 282,017 (11,246) (105) (2) 7,202 122,409 105 2 30,939 159,608 $ The remainder of this page left blank intentionally. 84 Net Pension Liability (Asset) (a) - (b) $ 128,669 $ CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) PSPRS - Firefighters Balance at June 30, 2016 Changes for the year: Service cost Interest on the total pension liability Changes of benefit terms Differences between expected and actual experience in the measurement of the pension liability Changes of assumptions or other inputs Contributions - employer Contributions - employee Net investment income Benefit payments, including refunds of employee contributions Administrative expenses Other changes Net changes Balance as of June 30, 2017 Total Pension Liability (Asset) (a) $ 152,392 $ Plan Fiduciary Net Position (b) $ 90,476 Net Pension Liability (Asset) (a) - (b) $ 61,916 4,065 11,801 12,497 - 4,065 11,801 12,497 (2,923) 6,345 - 7,339 2,649 547 (2,923) 6,345 (7,339) (2,649) (547) (8,199) 23,586 175,978 (8,199) (79) (232) 2,025 92,501 79 232 21,561 83,477 $ $ Sensitivity of the City’s Net Pension Liability to Changes in the Discount Rate - The following table presents the City’s net pension liabilities calculated using the discount rates noted above, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current rate: 1% Decrease PSPRS Police Rate Net Pension Liability PSPRS Firefighters Rate Net Pension Liability $ 6.50% 198,413 6.50% 107,267 Current Discount Rate $ 7.50% 159,608 7.50% 83,477 1% Increase $ 8.50% 127,830 8.50% 63,853 Pension Plan Fiduciary Net Position - Detailed information about the pension plans’ fiduciary net position is available in the separately issued PSPRS financial report. Pension Expense - For the year ended June 30, 2016, the City recognized the following pension expense: PSPRS Police PSPRS Firefighters Pension Expense $ 36,417 22,095 85 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Pension Deferred Outflows/Inflows of Resources - At June 30, 2017, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PSPRS - Police Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments City contributions subsequent to the measurement date Total PSPRS - Firefighters Differences between expected and actual experience Changes of assumptions or other inputs Net difference between projected and actual earnings on pension plan investments City contributions subsequent to the measurement date Total Deferred Outflows of Resources $ 2,050 17,992 $ Deferred Inflows of Resources $ 3,040 - 7,501 - 12,841 40,384 3,040 Deferred Outflows of Resources $ 856 11,218 $ Deferred Inflows of Resources $ 3,228 - 5,758 $ 6,649 24,481 - $ 3,228 The amounts reported as deferred outflows of resources related to pensions resulting from City contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows: PSPRS Police Year Ending June 30, 2018 2019 2020 2021 2022 Thereafter $ 6,882 6,882 6,919 3,057 784 - PSPRS Firefighters $ 3,015 3,015 3,871 3,162 799 759 Agent Plan OPEB Actuarial Assumptions - The health insurance premium benefit contribution requirements for the year ended June 30, 2016, were established by the June 30, 2015 actuarial valuations, and those actuarial valuations were based on the following actuarial methods and assumptions. Actuarial valuations involve estimates of the reported amounts’ value and assumptions about the probability of events in the future. Amounts determined regarding the funded status of the plans and the annual required contributions are subject to continual revision as actual results are compared to past expectations and new estimates are made. The required schedule of funding progress for the health insurance premium benefit presented as required supplementary information provides multiyear 86 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) trend information that shows whether the actuarial value of the plans’ assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Projections of benefits are based on (1) the plans as understood by the City and the plans’ members and include the types of benefits in force at the valuation date, and (2) the pattern of sharing benefit costs between the City and the plans’ members to that point. Actuarial calculations reflect a long-term perspective and employ methods and assumptions that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets. The significant actuarial methods and assumptions used are the same for all PSPRS plans and related benefits (unless noted), and the actuarial methods and assumptions used to establish the fiscal year 2016, contribution requirements, are as follows: PSPRS - OPEB Contribution Requirements Actuarial Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Inflation Projected Salary Increases Wage Growth June 30, 2015 Entry Age Normal Level percentage of payroll, closed 21 years for unfunded actuarial accrued liability, 20 years for excess 7-year smoothed market value; 80%/120% Corridor 7.85% 3.0% 4.0% - 8.0% 4.00% Agent Plan OPEB Trend Information - The following table presents the annual OPEB cost information for the health insurance premium benefit for the current and 2 preceding years: Year Ended June 30 PSPRS Police 2017 2016 2015 PSPRS Firefighters 2017 2016 2015 Annual OPEB Cost Percentage of Annual Cost Contributed Net OPEB Obligation $ 190 222 488 100.00% 100.00 100.00 $ - $ 223 100.00% 100.00 100.00 $ - The remainder of this page left blank intentionally. 87 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) Agent Plan OPEB Funded Status - The funded status of the health insurance premium benefit plans as of the most recent valuation date, June 30, 2016 is as follows: PSPRS PSPRS Police Firefighters 5,042 $ 4,366 6,312 3,285 Actuarial Value of Assets (a) $ Actuarial Accrued Liability (b) Unfunded Actuarial Accrued Liability (Funding Excess) (b) - (a) $ Funded Ratio (a) / (b) Annual Covered Payroll (c) $ Unfunded Actuarial Accrued Liability (Funding Excess) as a Percentage of Covered Payroll (b) - (a) / (c) 1,270 $ 79.9% 34,196 $ 3.71% (1,081) 132.9% 20,296 0.00% The funded status of the all the PSPRS health insurance premium benefit plans in the June 30, 2016, actuarial valuation was determined using the following actuarial methods and assumptions, applied to all periods included in the measurement: PSPRS - OPEB Funded Status Actuarial Valuation Date Actuarial Cost Method Amortization Method Remaining Amortization Period Asset Valuation Method Actuarial Assumptions: Investment Rate of Return Inflation Projected Salary Increases Wage Growth June 30, 2016 Entry Age Normal Level percentage of payroll, closed 20 years 7-year smoothed market value; 80%/120% market 7.50% 3.0% 4.0% - 8.0% 4.0% XVIII. Other Post-Employment Benefits (OPEB) A. Plan description and Benefits Provided The City of Glendale post-employment healthcare plan is a single-employer defined benefit plan administered by the City of Glendale. The plan provides medical, dental, and vision coverage for eligible retirees and their dependents through the City’s group health insurance plans. By continuing to provide eligible retirees with access to the City’s healthcare plans based on the same rates it charges to active employees, the City is in effect providing a blended rate to eligible retirees. This blended rate or implicit rate exists because on average retiree healthcare costs are higher than active employee healthcare costs. Retirees can also continue their basic life insurance benefit. Retirees pay 100% their own insurance premiums. In order for employees to be eligible for this benefit, they need 5 years of service if they were hired prior to July 1, 2005, and 10 years of service if they were hired after July 1, 2005. The Mayor and Council have authority each budget year to establish, eliminate, or amend 88 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) benefit provisions through the annual budget process. A separate report is not provided as the plan financial information is included in the governmental-wide basis and proprietary funds as part of the City of Glendale reporting entity. B. Funding policy and employees covered The City pays for and reports retiree health care benefits on a pay-as-you-go basis, which is the practice of paying for these benefits as they become due each year. Contributions to the plan by retirees are established at the beginning of each fiscal year through the annual budget process. The City makes no contribution to the retirees’ premiums other than allowing them to participate through the City’s pooled benefits. For the fiscal year ending June 30, 2017, the number of employees covered by the plan totaled 2,329. Inactive employees or beneficiaries currently receiving benefits Active employees Total 626 1,703 2,329 C. Actuarial methods and assumptions Projections of benefits for financial reporting purposes are based on the substantive plan and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between employer and plan members at that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and actuarial value of assets, consistent with the long-term perspective of the calculations. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Healthcare costs were derived from age-neutral premiums, trended to the valuation date and adjusted for the risk characteristics of the group. Medical healthcare trends were projected at 7.75%, decreasing annually by 0.25%, down to an ultimate rate of 5.0%. For June 30, 2017, the last actuarial valuation, the actuarial cost method used is the entry age normal method. A 3.43% pay as you go discount/investment rate was used. This represents a 0.58% increase over the discount rate used in the prior valuation. No actuarial valuation of assets was done as there were no assets at the valuation date. The amortization method is level percent of payroll amortized over 30 years and the period is open. Actuarial valuation date Inflation Salary Increases Discount rate Mortality rates June 30, 2017 2.4% 3.5% including inflation 3.43% RPH-2014 employee mortality table & RPH-2014 healthy annuitant table (for both males and females) 89 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) D. Change in total OPEB liability A change in the net OPEB liability was determined by an actuarial valuation as of June 30, 2017. The following table shows the changes in OPEB liability as of June 30, 2017. Total OPEB Liability balance at June 30, 2016 $ 64,052 Changes for the Year Service Cost Interest Changes of benefit terms Differences betweeen expected and actual experience Changes in assumptions or other inputs Benefit payments Net Changes 3,494 2,311 (3,580) (2,463) (2,952) (237) (3,427) Total OPEB Liability balance at June 30, 2017 $ 60,625 Multi-year schedule of changes in the net OPEB liability is available in the Required Supplementary Information. E. Discount rate sensitivity The discount rate of 3.43% was used to measure the total OPEB liability. This discount rate is the average of the S&P Municipal Bond 20 Year High Grade Rate Index of 3.29% and the Fidelity General Obligation AA 20 Year Yield of 3.65% as of June 30, 2017. The following table presents the City’s net OPEB liability calculated using the discount rate noted above, as well as what the City’s OPEB liability would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher than the current rate. Current Discount 1% Decrease Rate 1% Increase Discount Rate Total OPEB Liability 2.43% 71,872 $ $ 3.43% 60,625 4.43% 52,089 $ F. Healthcare cost trend rate sensitivity The following table presents the total OPEB liability of the City, as well as the City’s total OPEB liability if it were calculated using healthcare cost trend rates that are 1 percentage point lower or higher than current rates. 6.75% Total OPEB Liability $ Healthcare Cost Trend Rates 7.75% 8.75% 45,126 90 $ 60,625 $ 83,147 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) G. OPEB expense The following table shows the components of the City’s annual OPEB expense for the year. Service Cost Interest Difference between Actual and Expected Experience Changes in Assumptions/Inputs Change in Benefit Terms Total FY17 OPEB Expense $ $ 3,494 2,311 (274) (328) (3,580) 1,623 H. Deferred outflows/inflows of resources At June 30, 2017, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB as shown in the following table. Differences between expected and actual experience Changes of assumptions or other inputs Total Deferred Outflows of Resources $ $ - Deferred Inflows of Resources $ (2,189) (2,624) $ (4,813) Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: OPEB Expense Year Ending June 30, 2018 2019 2020 2021 2022 Thereafter $ $ (602) (602) (602) (601) (601) (1,805) (4,813) The remainder of this page left blank intentionally. 91 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) XIX. Contingent liabilities and commitments Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures that may be disallowed by the grantor cannot be determined at this time, although the city expects such amounts, if any, to be immaterial. The City is subject to claims and litigation, which arise in the ordinary course of its operations. In the opinion of City management, based on the advice of the City attorney, the resolution of such claims and litigation are believed to either have no material adverse effect on the financial position or the future operations of the City or likelihood of a negative outcome to the City is not determinable. The City, under the memorandum of agreement with the Arizona Sports and Tourism Authority (AZSTA) and B & B Holdings (DBA Arizona Cardinals), irrevocably assigns, transfers, and pledges unrestricted excise taxes collected at the Multipurpose Facility site (Stadium) to AZSTA. In consideration for the pledge of unrestricted excise tax revenues, the AZSTA issued bonds to improve the Stadium infrastructure. The City’s obligation is to make monthly payments to the AZSTA for sales tax payments collected from the site only. The AZSTA bonds do not constitute a legal debt of the City. The remainder of this page left blank intentionally. 92 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) XX. Tax Abatement The City implemented GASB Statement No. 77. This statement requires government’s that enter into tax abatement agreements to disclose information about the agreements. The tax abatement is listed by program for the year ended June 30,2017. Primary Government City of Glendale, AZ Purpose of Program Economic Development Tax being abated Sales tax reimbursements Authority under which the abatement agreement is entered Criteria to be eligible to receive abatement Mechanism by which the taxes are abated How amount of abatement is determined The City is authorized pursuant to Article 1, Section3 of its Charter and ARS 9-500.05 and 9-500.11, ARS 11-952 to enter into economic development agreements with businesses located in the City and to appropriate and spend public monies for and in conjunction with economic development activities. The City analyses the economic development benefits and determines that such public benefits support and justify the economic development incentives provided by each agreement. The public benefits anticipated are indirect economic and non-economic benefits such as increasing City's residents access to goods and services, enhancing public infrastructure, increasing the City's employment base, increasing the City's assessed property valuation and increasing the City's general tax revenues. The City shall make periodic payments based on a percentage of transaction privilege taxes received by the City for a certain length of time as entered into the agreement after occupancy. Based on a percentage of transaction privilege taxes received by the City for a certain length of time as entered into the agreement or capped at a certain dollar amount. City will abandon real property adjacent to the property for Types of commitments made by the right of way , modifying and rezoning use permit of City other than to reduce taxes property. Amount of sales tax reimbursements for the fiscal year ended June 30,2017 $ 2,354 93 CITY OF GLENDALE, ARIZONA Notes to the Financial Statements June 30, 2017 (amounts expressed in thousands) XXI. Implementation of new accounting principle GASB statement No. 77, Tax Abatement Disclosures, addresses accounting and financial reporting issues related to tax abatements. The requirements of this Statement improve financial reporting by giving users of financial statements essential information that is not consistently or comprehensively reported to the public at present. Disclosure of information about the nature and magnitude of tax abatements will make these transactions more transparent to financial statement users. As a result, users will be better equipped to understand (1) how tax abatements affect a government’s future ability to raise resources and meet its financial obligations and (2) the impact those abatements have on a government’s financial position and economic condition. XXII. Subsequent events On October 4, 2017, $65,385 in subordinate excise tax revenue refunding bonds were sold by the City to refinance a portion of City of Glendale, Arizona Municipal Property Corporation bonds. This transaction resulted in a $15,761 cash flow savings for the general fund over the next fifteen years, a net present value savings of $12,851 and will not increase the original term of the bonds. On December 12, 2017, the city council approved an ordinance authorizing the issuance and sale of General Obligation Refunding Bonds in one or more series for the purpose of providing for the cross-over refunding of General Obligation Bonds, Series 2009B (Taxable Direct Pay Build America Bonds, Series 2009B). The remainder of this page left blank intentionally. 94 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ REQUIRED SUPPLEMENTARY INFORMATION (other than MD&A) ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2017 This page left blank intentionally. CITY OF GLENDALE, ARIZONA Schedule of Pension Liability June 30, 2017 (amounts expressed in thousands) Reporting Fiscal Year Arizona State Retirement System: City's Proportion of the Net Pension Liability City's Proportionate Share of the Net Pension Liability City's Covered-Employee Payroll City's Proportionate Share of the Net Pension Liability as a Percentage of its Covered -Employee Payroll Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 2017 (2016) 0.637060% $ 102,830 $ 58,301 (Measurement Date) 2016 2015 2014 (2015) (2014) (2013) 0.605260% 0.619749% 0.656524% $ 94,278 $ 91,702 $ 109,143 $ 54,853 $ 54,523 $ 57,475 176.38% 171.87% 168.19% 189.90% 67.06% 68.35% 69.49% N/A The remainder of this page left blank intentionally. 95 2013 - 2008 (2012 - 2007) Information Not Available CITY OF GLENDALE, ARIZONA Schedule of Pension Liability June 30, 2017 (amounts expressed in thousands) Public Safety Personnel Retirement System - Police: Reporting Fiscal Year 2017 (2016) $ 6,644 18,964 16,926 Total Pension Liability: Service Cost Interest on the Total Pension Liability Changes of Benefit Terms Differences Between Expected and Actual Experience in the Measurement of the Pension Liability Changes of Assumptions or Other Inputs Benefit Payments, Including Refunds of Employee Contributions Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending (a) $ Plan Fiduciary Net Position: Contributions - Employer Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expenses Other Changes Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) $ $ City's Net Pension Liability (Asset) - Ending (a) - (b) (Measurement Date) 2016 2015 (2015) (2014) $ 6,083 $ 5,483 17,857 14,973 3,331 (3,593) 10,446 1,067 - 2,845 19,686 (11,246) 38,139 243,876 282,015 (11,143) 13,864 230,012 243,876 (8,616) 37,702 192,310 230,012 13,527 4,299 729 (11,246) (105) (2) 7,202 115,207 122,409 $ $ $ 9,691 4,009 4,023 (11,143) (99) (6) 6,475 108,732 115,207 $ $ $ 8,221 3,432 12,960 (8,616) (104) (124) 15,769 92,963 108,732 159,606 128,669 121,280 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 43.40% 47.24% 47.27% Covered-employee Payroll 34,196 33,350 31,815 466.74% 385.81% 381.20% City's Net Pension Liability (Asset) as a Percentage of Covered-employee Payroll 96 2014 - 2008 (2013 - 2007) Information Not Available CITY OF GLENDALE, ARIZONA Schedule of Pension Liability June 30, 2017 (amounts expressed in thousands) Public Safety Personnel Retirement System - Fire: Reporting Fiscal Year Total Pension Liability: Service Cost Interest on the Total Pension Liability Changes of Benefit Terms Differences Between Expected and Actual Experience in the Measurement of the Pension Liability Changes of Assumptions or Other Inputs Benefit Payments, Including Refunds of Employee Contributions Net Change in Total Pension Liability Total Pension Liability - Beginning Total Pension Liability - Ending (a) Plan Fiduciary Net Position: Contributions - Employer Contributions - Employee Net Investment Income Benefit Payments, Including Refunds of Employee Contributions Administrative Expenses Other Changes Net Change in Plan Fiduciary Net Position Plan Fiduciary Net Position - Beginning Plan Fiduciary Net Position - Ending (b) 2017 (2016) $ 4,065 11,801 12,497 $ $ $ (Measurement Date) 2016 2015 (2015) (2014) $ 3,858 $ 3,805 11,230 9,672 1,658 (2,923) 6,345 (823) - 1,452 9,623 (8,199) 23,586 152,392 175,978 (5,996) 8,269 144,123 152,392 (6,800) 19,410 124,713 144,123 7,339 2,649 547 (8,199) (79) (232) 2,025 90,476 92,501 $ $ $ 4,942 2,380 3,189 (5,996) (78) (389) 4,048 86,428 90,476 $ $ $ 4,630 2,265 10,457 (6,800) (84) 10,468 75,960 86,428 City's Net Pension Liability (Asset) - Ending (a) - (b) 83,477 61,916 57,695 Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 52.56% 59.37% 59.97% Covered-employee Payroll 20,296 20,570 19,291 411.30% 301.00% 299.08% City's Net Pension Liability (Asset) as a Percentage of Covered-employee Payroll 97 2014 - 2008 (2013 - 2007) Information Not Available CITY OF GLENDALE, ARIZONA Schedule of OPEB Liability June 30, 2017 (amounts expressed in thousands) Total OPEB Liability June 30, 2017 June 30, 2016 Service Cost Interest Changes of benefit terms Differences betweeen expected and actual experience Changes in assumptions or other inputs Benefit payments Net Changes $ 3,494 2,311 (3,580) (2,463) (2,952) (237) (3,427) $ 3,376 1,792 (620) 4,548 Total OPEB Liability balance at June 30, 2016 $ 64,052 $ 59,504 Total OPEB Liability balance at June 30, 2017 $ 60,625 $ 64,052 Covered Employee Payroll $ 113,677 $ 93,944 Total OPEB Liability as a percentage of covered employee payroll 53.3% 68.2% Discount Rate 3.43% 2.85% The remainder of this page left blank intentionally. 98 2015 - 2008 Information Not Available This page left blank intentionally. 99 CITY OF GLENDALE, ARIZONA Schedule of Pension Contributions June 30, 2017 (amounts expressed in thousands) Arizona State Retirement System: Statutorily Required Contribution City's Contribution in Relation to the Statutorily Required Contribution City's Contribution Deficiency (Excess) City's Covered-Employee Payroll City's Contributions as a Percentage of CoveredEmployee Payroll $ 2017 7,073 $ 2016 6,472 $ 2015 6,071 $ $ 7,073 64,059 $ $ 6,472 58,301 $ $ 6,071 54,853 11.04% 11.10% 11.07% Reportin Public Safety Personnel Retirement System - Police: Statutorily Required Contribution City's Contribution in Relation to the Statutorily Required Contribution City's Contribution Deficiency (Excess) City's Covered-Employee Payroll City's Contributions as a Percentage of CoveredEmployee Payroll 2017 $ 12,841 $ $ 12,841 37,615 2016 $ 13,527 $ $ 34.14% 13,527 34,196 2015 $ 9,691 $ $ 39.56% 9,691 33,350 29.06% Reportin Public Safety Personnel Retirement System - Fire: Statutorily Required Contribution City's Contribution in Relation to the Statutorily Required Contribution City's Contribution Deficiency (Excess) City's Covered-Employee Payroll City's Contributions as a Percentage of CoveredEmployee Payroll $ 2017 6,649 $ 2016 7,339 $ 2015 4,942 $ $ 6,649 21,372 $ $ 7,339 20,296 $ $ 4,942 20,570 31.11% 100 36.16% 24.03% 2014 $ 5,978 $ $ 5,978 54,523 Reporting Fiscal Year 2013 2012 $ 5,971 $ 5,743 $ $ 10.96% 5,971 57,475 10.39% Reporting Fiscal Year 2014 2013 $ 8,221 $ 6,787 $ $ 8,221 31,815 $ $ 25.84% 6,787 28,336 4,630 19,291 24.00% $ $ 3,454 18,547 18.62% 5,743 65,443 2011 5,685 $ 2010 6,479 $ 2009 6,045 $ 2008 5,269 $ $ 5,685 65,143 $ $ 6,479 71,338 $ $ 6,045 81,655 $ $ 5,269 79,680 8.77% 8.73% $ 2012 5,907 $ 2011 5,248 $ $ 5,907 29,356 $ $ 5,248 27,576 23.95% Reporting Fiscal Year 2014 2013 $ 4,630 $ 3,454 $ $ $ $ $ 20.12% 2010 - 2008 Information Not Available 19.03% $ 2012 2,828 $ 2011 2,546 $ $ 2,828 18,406 $ $ 2,546 16,811 15.36% 9.08% 15.14% 101 2010 - 2008 Information Not Available 7.40% 6.61% CITY OF GLENDALE, ARIZONA Schedule of Funding Progress June 30, 2017 (amounts expressed in thousands) GASB Statement No. 45 Supplementary Information The schedule of funding progress for the Public Safety Personnel Retirement System post-retirement health insurance subsidy is as follows: Valuation Date June 30 Fire 2016 2015 2014 Police 2016 2015 2014 Actuarial Value of Assets Actuarial Accrued Liability (AAL) Unfund AAL (UAAL) Annual Covered Payroll Funded Ratio UAAL as a % of Covered Payroll $ 4,366 4,219 3,916 $ 3,285 3,108 3,104 $ (1,081) (1,111) (812) 132.9 % 135.8 126.2 $ 20,296 20,570 19,291 0.00 % 0.00 0.00 $ 5,042 4,799 4,369 $ 6,312 6,034 5,928 $ 1,270 1,235 1,559 79.9 % 79.5 73.7 $ 34,196 33,350 31,816 3.71 % 3.70 4.90 The remainder of this page left blank intentionally. 102 CITY OF GLENDALE, ARIZONA Notes to Pension Liability and Contributions June 30, 2017 (amounts expressed in thousands) PSPRS Actuarial Methods and Assumptions: Actuarial Cost Method Entry age normal Amortization Level Level percentage of payroll, closed Remaining Amortization Period as of the 2015 Actuarial Valuation 20 years for unfunded actuarial accrued liability, 20 years for excess Asset Valuation Method 7-year smoothed market value; 80%/120% market Actuarial Assumptions: Investment Rate of Return 7.50%; net of investment and administrative expense Projected Salary Increases 4.0% to 8.0% including inflation Wage Growth 4.0% Retirement Age Experience-based table of rates that is specific to the type of eligibility condition. Last updated for the 2012 valuation pursuant to an experience study of the period July 1, 2006 - June 30, 2011 Mortality RP-2000 mortality table (adjusted by 105% for both males and females) The remainder of this page left blank intentionally. 103 City of Glendale, Arizona Budgetary Comparison Schedule General Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Taxes Licenses and permits Intergovernmental Charges for services Fines and forfeitures Investment income (loss) Proceeds from disposal of assets Local revenue Miscellaneous Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation 51,125 Final $ 110,599 9,124 61,412 20,476 3,021 420 250 5,245 210,547 29,292 (32,781) 258,183 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government 38,477 Public safety 127,299 Public works 12,550 Community services 17,349 Street maintenance 950 Contingencies 5,000 Debt service: Principal 50 Interest 1 Capital outlay 14,579 Total charges to appropriations 216,255 Budgetary fund balance, June 30, 2017 $ 41,928 104 $ 51,125 Actual Amounts (budgetary basis) $ 55,521 Variance with Final Budget Positive (Negative) $ 4,396 110,599 9,124 61,412 20,476 3,021 420 250 5,245 210,547 29,292 (32,781) 258,183 112,265 9,068 60,945 21,758 3,253 634 224 88 4,257 212,492 30,938 (34,375) 264,576 1,666 (56) (467) 1,282 232 214 (26) 88 (988) 1,945 1,646 (1,594) 6,393 41,084 127,297 12,503 17,357 920 1,241 40,124 125,246 12,435 17,202 802 - 960 2,051 68 155 118 1,241 50 1 13,886 214,339 12,603 208,412 50 1 1,283 5,927 43,844 $ 56,164 $ 12,320 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Indirect cost allocation Interest earned on restricted investments not available for appropriation Proceeds from disposal of assets. Revenue reported on a GAAP basis. Police and fire sales tax revenue. Less: Transfers in. Add: Transfers out. Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay funded by long-term debt. Salaries payable. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. The notes to the financial statements are an integral part of this statement. 105 $ 264,576 (55,521) (9,700) (922) (224) (1,090) 24,258 (30,938) 34,375 224,814 208,412 (115) (14,322) $ 193,975 CITY OF GLENDALE, ARIZONA Notes to Required Supplementary Information June 30, 2017 (amounts expressed in thousands) I. Basis of accounting The City prepares its annual budget on a basis which differs from the GAAP basis. A budgetary comparison schedule for the general fund is included as required supplementary information to provide a meaningful comparison of actual results to budget on a budget basis. Budgetary comparison schedules for all other funds are presented as other supplemental information after the combining statements. In all cases, the budgetary schedules include a reconciliation of the adjustments required to convert the budgetary revenues and expenditures or changes in net position on a budgetary basis, to revenues and expenditures/expenses or changes in net position on a GAAP basis. In the fund financial statements, the revenues and expenses relating to police and fire sales tax is included in general fund and reflected as a reconciling item in the budgetary comparison schedule for the general fund. II. Budgetary information The City utilizes the following procedures in establishing the budgetary data reflected in the financial statements. 1. 2. 3. 4. 5. 6. III. Prior to the first of June of each year, the City Manager submits to the Mayor and Council a proposed operating budget for the fiscal year commencing the following July 1. The budget includes proposed operating, capital and debt service expenditures and the means of financing them. The projected beginning budgeted fund balances for each fund are based on preliminary estimates of the June 30th ending actual budget basis fund balances rather than the June 30th ending budgeted fund balances. These two amounts will differ because of differences in actual results for the year versus planned results and by unused contingency appropriations. The legal level of budgetary control is the total budget as adopted. This is the level at which expenditures cannot legally exceed the appropriated amount. Prior to July 1, after receiving comments in a public hearing, a tentative budget is adopted by the City Council, which sets an upper-dollar limit for all funds combined, beyond which the City may not increase appropriations. After two weeks of legal advertising, the City Council legally adopts a final budget ordinance, which sets appropriations for each fund. Budget basis expenditures may not exceed appropriations for each fund, except in conjunction with the transfer of contingency funds and/or unused appropriation authority from another fund that is backed by additional revenue or fund balance in the fund receiving the appropriation. Contingency funds are appropriated for several funds as identified in the budget basis schedules and may only be transferred with City Council approval. The City Council may reallocate appropriations through budget amendments, but may not increase total appropriations above the total budget, which was legally adopted for the fiscal year. The City Council may authorize a transfer of unencumbered appropriation balanced within an individual city office, department or agency at any time during the fiscal year. During the last three months of the fiscal year, the City Council may approve transfers among city offices, departments, and agencies as necessary. Interfund transfers (i.e., transfers between funds) must be specifically approved by City Council. Procedures for requesting City Council approval of appropriation transfers and delegation of budget responsibility will be set by the City Manager. Budgetary authorization and spending management controls are employed during the year for all funds. Contingency appropriation The principal purpose of a contingency appropriation is to cover any unforeseen expenditure, which may arise after the budget is adopted. It is impossible to estimate revenues exactly or to determine in a prior year the exact expenditures of each program or activity for the ensuing year. Thus, a contingency is essential for budgetary purposes. 106 CITY OF GLENDALE, ARIZONA Notes to Required Supplementary Information June 30, 2017 (amounts expressed in thousands) Contingency appropriation is re-established each fiscal year based on available fund balance and balancing needs of the budget year. The unused balances of contingency appropriations are reflected in the budget basis financial statements. The remainder of this page left blank intentionally. 107 This page left blank intentionally. 108 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ COMBINING STATEMENTS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2017 This page left blank intentionally. City of Glendale, Arizona Budgetary Comparison Schedule Municipal Property Corporation Debt Service Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Investments Add: Transfers in Less: Transfers out Amounts available for appropriation 2,654 Final $ 19,251 21,905 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration 30 Debt service: Principal 5,075 Interest 14,176 Total charges to appropriations 19,281 Budgetary fund balance, June 30, 2017 $ 2,624 Actual Amounts (budgetary basis) $ 2,654 $ 3,367 Variance with Final Budget Positive (Negative) $ 713 19,251 21,905 26 19,251 22,644 26 739 30 10 20 5,075 14,176 19,281 5,075 14,117 19,202 59 79 2,624 $ 3,442 $ 818 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 22,644 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (3,367) Less: Transfers in. (19,251) Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 26 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 109 $ 19,202 $ 19,202 NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special revenue funds are used to account for revenues from specific taxes or other earmarked revenue sources, which by law are designated to finance particular functions or activities of government and which, therefore, cannot be diverted to other uses. Transportation Fund This fund accounts for the City’s public transit program and transportation improvement projects. Community Development Block Grants Fund This fund accounts for a series of ongoing entitlements received directly from the U. S. Department of Housing and Urban Development (HUD). This fund also includes the HUD Rental Rehabilitation and HOME programs. Highway User Gas Tax Fund This fund accounts for capital outlay and maintenance of municipal streets and highways, as mandated by the Arizona Revised Statutes. Financing for this fund is provided by state-shared fuel taxes. Other Special Revenue Fund This fund accounts for various activities, including the airport, miscellaneous grants, and other recreation programs. Debt Service Funds Debt service funds are used to account for the accumulation of resources for, and the payment of, general long-term debt principal, interest and related costs. Highway User Debt Service Fund This fund accumulates monies for payment of all street and highway revenue bonds of the City. Highway user fuel taxes are transferred from other funds to fund this debt. Transportation Debt Service Fund This fund accumulates monies for payment of the transportation revenue bonds. Transportation excise taxes are transferred from a special revenue fund to fund this debt. Excise Tax Revenue Debt Service Fund This fund accounts for the debt that was issued to refund the senior and subordinate excise tax revenue bonds issued by the Municipal Property Corporation. General Obligation Debt Service Fund This fund accounts for the resources received from a secondary property tax levy used to repay general obligation debt. 110 Permanent Fund Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting City’s programs. Cemetery Perpetual Care Fund This fund is used to account for the revenues received by the City from the sale of cemetery lots and other related services. Capital Projects Funds Capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary funds and trust funds). Development Impact Fees Fund This fund accounts for fees covered by Chapter 28, Article VI of the Municipal Code and is restricted in use by ARS 9-463.05. The fees are used exclusively to provide the necessary public facilities and services for development. Residential development impact fees may be spent only in the district (residential development district, not political district) in which they are collected. Streets Construction Fund This fund accounts for the construction of streets, sidewalks, streetlights, traffic signals, and street landscaping funded through GO and revenue bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999. In addition, this fund accounts for transportation projects funded by transportation excise tax revenue bonds issued on October 27, 2007. Fire and Police Construction Fund This fund accounts for the construction of fire and police department facilities. Funding is provided through GO bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999. Parks Bond Construction Fund This fund accounts for the construction of parks and recreation improvements. Other Construction Fund This fund accounts for the construction of various City projects. Funding is provided through GO bonds issued under authorizations approved by voters on March 10, 1987, and November 2, 1999, and the Federal Aviation Administration.        Flood control facilities Library Transit projects Economic development Open space/trails Government facilities Cultural facilities 111 1 of 3 City of Glendale, Arizona Combining Balance Sheet Non-Major Governmental Funds June 30, 2017 (amounts expressed in thousands) ASSETS Assets: Equity in pooled cash and investments Receivables, net of allowance for doubtful accounts: Property taxes Accounts Intergovernmental receivable Inventories and prepaid items Restricted cash and investments Total assets Transportation Special Revenue Funds Community Highway Development User Block Gas Grants Tax $ 42,093 $ 281 $ 16,892 $ 2,498 752 121 45,464 $ 4,396 1,231 5,908 211 6 6 907 4,391 5,521 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: $ Vouchers payable Accounts payable Retainage payable Compensated absences - current Intergovernmental payable Due to other funds Deposits Unearned revenue Matured interest payable Matured bonds payable Total liabilities Deferred Inflows of Resources Fund balances: Nonspendable Restricted Committed Assigned Unassigned Total fund balances Total liabilities, deferred inflows of resources $ and fund balances 401 33 15 449 $ Other $ 2,552 97 1,418 $ 18,407 $ 153 1,141 3,275 7,121 $ $ 434 28 462 261 1 49 1 335 66 839 1,552 76 - - 143 121 44,818 44,939 387 387 17,945 17,945 2,961 2,295 170 5,426 5,908 $ 18,407 45,464 $ 112 $ 7,121 2 of 3 Highway User $ 43 $ 43 $ $ Permanent Fund Debt Service Funds Western Loop 101 Excise Tax Transportation Revenue - $ 4,247 $ 1,298 5,545 $ 1,387 3,550 4,937 $ 3,513 $ 3,513 $ Cemetery Perpetual Care General Obligation 3,458 3,458 $ 3,405 $ 695 17,979 22,079 $ 2,849 15,130 17,979 $ 5,740 $ 69 5,809 $ - - - - 443 69 43 43 608 608 55 - 3,657 3,657 5,740 5,740 43 $ 5,545 55 $ 3,513 $ 22,079 $ 5,809 (Continued) 113 3 of 3 City of Glendale, Arizona Combining Balance Sheet (continued) Non-Major Governmental Funds June 30, 2017 (amounts expressed in thousands) Capital Project Funds Fire Total Development and Parks Non-Major Impact Streets Police Bond Other Governmental Fees Construction Construction Construction Construction Funds ASSETS Assets: Equity in pooled cash and investments Receivables, net of allowance for doubtful accounts: Property taxes Accounts Intergovernmental receivable Inventories and prepaid items Restricted cash and investments Total assets $ 15,089 $ 15,089 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities: $ Vouchers payable Accounts payable Retainage payable Compensated absences - current Intergovernmental payable Due to other funds Deposits Unearned revenue Matured interest payable Matured bonds payable Total liabilities Deferred Inflows of Resources 115 115 $ 1,870 $ 1,870 $ 2,833 491 1,906 410 5,640 - Fund balances: Nonspendable 14,974 Restricted Committed Assigned Unassigned 14,974 Total fund balances Total liabilities, deferred outflows of resources $ 15,089 and fund balances $ $ 257 $ 257 $ - $ 122 $ 122 $ - $ 3,064 $ 99,168 $ 3,064 $ 695 7,213 4,542 121 22,552 134,291 $ 377 $ 48 425 4,632 1 545 116 1 3,148 66 5,655 7,694 18,680 40,538 731 - - - - (3,770) (3,770) 257 257 122 122 2,639 2,639 1,870 114 $ 257 $ 122 $ 3,064 5,861 88,466 2,295 170 (3,770) 93,022 $ 134,291 This page left blank intentionally. 115 City of Glendale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Non-Major Governmental Funds For the Fiscal Year Ended June 30, 2017 (amounts expressed is thousands) Special Revenue Funds Community Highway Development User Block Gas Grants Tax Transportation REVENUES Taxes and special assessments Licenses and permits Intergovernmental Local Charges for services Fines and forfeitures Investment income Miscellaneous Total revenues $ EXPENDITURES Current: General government Public safety Public works Community services Community environment Street maintenance Debt service: Principal Interest Capital outlay: Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Refunding bonds issued Proceeds from equipment disposal Transfers in Transfers out Total other financing sources and uses $ $ 15,463 98 15,561 $ 5 7,100 212 1,318 445 31 592 9,703 46 2,734 - 9,877 459 5,608 8 1,385 1,245 - 468 12,823 2 292 3,074 48 9,925 1,375 10,080 16,595 79 5,636 (377) - (7,003) (7,003) 110 572 (131) 551 79 (1,367) 174 4,049 $ 2,890 263 3,153 Other 11,884 471 16 900 (13,462) (12,546) Net change in fund balances Fund balances, July 1 Fund balances, June 30 26,362 2,453 110 326 167 29,418 1 of 3 40,890 44,939 $ 116 308 387 $ 19,312 17,945 $ 5,252 5,426 2 of 3 Permanent Fund Debt Service Funds Highway User $ $ Excise Tax Revenue Transportation - $ - $ Cemetery Perpetual Care General Obligation 8 11 19 $ 19,377 552 7 19,936 $ 47 47 - 197 - 3 - 9 - - - 22,275 3,594 26,066 6,916 6,919 15,130 5,861 21,000 - - (26,066) (6,900) (1,064) - 19,330 7,144 26,474 6,915 6,915 - 408 15 43 43 $ 200 608 $ 40 55 47 210 210 - (854) $ 4,511 3,657 47 $ 5,693 5,740 (Continued) 117 City of Glendale, Arizona Combining Statement of Revenues, Expenditures, and Changes in Fund Balances (continued) Non-Major Governmental Funds For the Fiscal Year Ended June 30, 2017 (amounts expressed is thousands) REVENUES Taxes and special assessments Licenses and permits Intergovernmental Local Charges for services Fines and forfeitures Investments Miscellaneous Total revenues Development Impact Fees Capital Projects Funds Fire and Parks Streets Police Bond Other Construction Construction Construction Construction Total Non-Major Governmental Funds $ $ $ EXPENDITURES Current: General government Public safety Public works Community services Community environment Street maintenance Debt service: Principal Interest Capital outlay: Total expenditures Excess (deficiency) of revenues over expenditures OTHER FINANCING SOURCES (USES) Refunding bonds issued Proceeds from equipment disposal Transfers in Transfers out Total other financing sources and uses Net change in fund balances Fund balances, July 1 Fund balances, June 30 3 of 3 $ 3,330 125 89 3,544 518 343 1,043 106 1,212 3,222 281 1 282 $ $ - $ - 45,739 3,335 28,739 212 1,428 445 538 1,227 81,663 84 47 - - - 677 6,126 8 13,742 3,979 10,395 1,838 19,808 21,786 1,093 110 99 1,302 - 3,263 3,263 41,381 16,587 26,565 119,460 322 (21,504) (1,302) - (3,263) (37,797) (210) (210) 13,321 (136) 13,185 (1) (1) - 2,041 (10) 2,031 19,330 2,167 29,062 (20,953) 29,606 112 (8,319) (1,303) - (1,232) (8,191) 14,862 14,974 9 - - $ 4,549 (3,770) 118 $ 1,560 257 $ 122 122 $ 3,871 2,639 $ 101,213 93,022 City of Glendale, Arizona Budgetary Comparison Schedule Transportation Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Taxes Intergovernmental Charges for services Investments Proceeds from disposal of assets Miscellaneous revenues Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation 35,399 Final $ 25,053 1,000 124 140 15,143 41,460 900 (20,901) 56,858 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Community services 15,050 Street maintenance 716 Capital outlay 15,724 Total charges to appropriations 31,490 Budgetary fund balance, June 30, 2017 $ 25,368 $ 35,399 Actual Amounts (budgetary basis) $ 40,656 Variance with Final Budget Positive (Negative) $ 5,257 25,053 1,000 124 140 15,143 41,460 900 (20,901) 56,858 26,505 2,453 110 326 16 167 29,577 900 (13,462) 57,671 1,452 1,453 (14) 186 16 (14,976) (11,883) 7,439 813 14,890 954 15,322 31,166 11,859 471 468 12,798 3,031 483 14,854 18,368 25,692 $ 44,873 $ 19,181 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 57,671 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (40,656) Proceeds from disposal of assets. (16) Revenue reported on a GAAP basis. (143) Less: Transfers in. (900) Add: Transfers out. 13,462 Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 29,418 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Internal charges for services provided. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 119 $ 12,798 25 $ 12,823 City of Glendale, Arizona Budgetary Comparison Schedule Community Development Block Grants Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Intergovernmental Miscellaneous Total revenues Amounts available for appropriation Actual Amounts (budgetary basis) Final - $ - $ 313 Variance with Final Budget Positive (Negative) $ 313 5,647 168 5,815 5,815 5,647 168 5,815 5,815 2,890 263 3,153 3,466 (2,757) 95 (2,662) (2,349) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Community environment 5,813 Community services Principal paid 2 Capital Outlay Total charges to appropriations 5,815 5,813 2 5,815 2,734 46 2 292 3,074 3,079 (46) (292) 2,741 Budgetary fund balance, June 30, 2017 $ - $ - $ 392 $ 392 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 3,466 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (313) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fundbalance - governmental funds. $ 3,153 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 120 $ 3,074 $ 3,074 City of Glendale, Arizona Budgetary Comparison Schedule Highway Users Gas Tax Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Intergovernmental Miscellaneous Total revenues Amounts available for appropriation 20,562 Final $ Actual Amounts (budgetary basis) 20,562 $ 19,456 Variance with Final Budget Positive (Negative) $ (1,106) 14,289 22 14,311 34,873 14,289 22 14,311 34,873 15,463 98 15,561 35,017 1,174 76 1,250 144 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Community Services Street maintenance 11,023 Capital outlay Transfers out 21,039 Total charges to appropriations 32,062 10,623 21,039 31,662 9,877 48 7,003 16,928 746 (48) 14,036 14,734 Budgetary fund balance, June 30, 2017 $ 2,811 $ 3,211 $ 18,089 $ 14,878 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 35,017 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (19,456) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 15,561 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Transfers out Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 121 $ 16,928 (7,003) $ 9,925 City of Glendale, Arizona Budgetary Comparison Schedule Police and Fire Sales Tax Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Taxes Total revenues Less: Transfers out Amounts available for appropriation Budgetary fund balance, June 30, 2017 7,462 Final $ 24,187 24,187 (25,187) 6,462 $ 6,462 7,462 Actual Amounts (budgetary basis) $ 24,187 24,187 (25,187) 6,462 $ 6,462 8,220 Variance with Final Budget Positive (Negative) $ 24,258 24,258 (25,187) 7,291 $ 7,291 758 71 71 829 $ 829 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 7,291 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (8,220) Revenue reported on a GAAP basis. (143) Add: Transfers out. 25,187 Total revenues of the police and fire sales tax fund included in the general fund. $ 24,115 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 122 $ - $ - City of Glendale, Arizona Budgetary Comparison Schedule Other Special Revenue Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Licenses and permits Intergovernmental Charges for services Fines and Forteitures Investments Proceeds from equipment disposal Local Miscellaneous Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation 3,432 Final $ 3,432 Actual Amounts (budgetary basis) $ 4,793 Variance with Final Budget Positive (Negative) $ 1,361 5 8,263 1,393 384 6 16,454 26,505 477 30,414 5 8,263 1,393 384 6 16,454 26,505 477 30,414 5 6,878 1,309 445 31 110 49 709 9,536 572 (131) 14,770 (1,385) (84) 61 25 110 49 (15,745) (16,969) 95 (131) (15,644) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government 664 Public safety 15,057 Public works 38 Community services 1,641 Community environment 1,534 Capital outlay 8,767 Total charges to appropriations 27,701 755 13,352 38 1,713 1,534 13,618 31,010 457 5,603 8 1,375 1,245 1,323 10,011 298 7,749 30 338 289 12,295 20,999 Budgetary fund balance, June 30, 2017 $ 2,713 123 $ (596) $ 4,759 $ 5,355 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 14,770 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (4,793) Intergovernmental. 183 Local 202 Charges for services. 9 Procceds from equipment disposal. (110) Miscellaneous. (117) Less: Transfers in. (572) Add: Transfers out. 131 Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 9,703 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay Salaries payable Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 124 $ 10,011 52 17 $ 10,080 City of Glendale, Arizona Budgetary Comparison Schedule Highway User Debt Service Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Add: Transfers in Amounts available for appropriation Actual Amounts (budgetary basis) Final - $ - $ 43 Variance with Final Budget Positive (Negative) $ 43 - - 43 43 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Miscellaneous Debt service: Principal Interest Total charges to appropriations - - - - - - - - Budgetary fund balance, June 30, 2017 - $ $ - $ 43 $ 43 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 43 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (43) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 125 $ - $ - City of Glendale, Arizona Budgetary Comparison Schedule Transportation Debt Service Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Add: Transfers in Amounts available for appropriation 200 Final $ 7,144 7,344 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government 5 Debt service: Principal 3,550 Interest 3,594 Total charges to appropriations 7,149 Budgetary fund balance, June 30, 2017 $ 195 Actual Amounts (budgetary basis) $ 200 $ 200 Variance with Final Budget Positive (Negative) $ - 7,144 7,344 7,144 7,344 - 5 3 2 3,550 3,594 7,149 3,550 3,183 6,736 411 413 195 $ 608 $ 413 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 7,344 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (200) Less: Transfers in. (7,144) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Refunding principal paid General administration Interest Expense Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 126 $ 6,736 18,725 194 411 $ 26,066 City of Glendale, Arizona Budgetary Comparison Schedule Excise Tax Revenue Debt Service Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Investments Miscellaneous revenue Total revenues Add: Transfers in Amounts available for appropriation 33 Final $ 6,916 6,949 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government 10 Debt service: Interest 6,916 Total charges to appropriations 6,926 Budgetary fund balance, June 30, 2017 $ 23 Actual Amounts (budgetary basis) $ 33 $ 40 Variance with Final Budget Positive (Negative) $ 7 6,916 6,949 8 11 19 6,915 6,974 10 3 7 6,916 6,926 6,916 6,919 7 23 $ 55 8 11 19 (1) 25 $ 32 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 6,974 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (40) Less: Transfers in. (6,915) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 19 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 127 $ 6,919 $ 6,919 City of Glendale, Arizona Budgetary Comparison Schedule General Obligation Debt Service Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Taxes Intergovernmental Miscellaneous Total inflows Add: Transfers in Amounts available for appropriation 3,984 Final $ 19,588 570 20,158 210 24,352 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General government 320 Miscellaneous 993 Debt service: Principal 15,130 Interest 4,869 Total charges to appropriations 21,312 Budgetary fund balance, June 30, 2017 $ 3,040 $ 3,984 Actual Amounts (budgetary basis) $ 4,510 19,588 570 20,158 210 24,352 19,377 552 7 19,936 210 24,656 320 993 9 - 15,130 4,869 21,312 15,130 5,861 21,000 3,040 $ 3,656 Variance with Final Budget Positive (Negative) $ 526 (211) (18) 7 (222) 304 311 993 (992) 312 $ 616 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 24,656 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (4,510) Less transfers in. (210) Total revenues as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 19,936 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 128 $ 21,000 $ 21,000 City of Glendale, Arizona Budgetary Comparison Schedule Cemetery Perpetual Care Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Investments Total revenues Amounts available for appropriation Actual Amounts (budgetary basis) Final 5,684 $ 5,684 $ 5,693 Variance with Final Budget Positive (Negative) $ 9 26 26 5,710 26 26 5,710 47 47 5,740 21 21 30 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Public works 5,710 Total charges to appropriations 5,710 5,710 5,710 - 5,710 5,710 Budgetary fund balance, June 30, 2017 $ - $ - $ 5,740 $ 5,740 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 5,740 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (5,693) Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 47 129 City of Glendale, Arizona Budgetary Comparison Schedule Development Impact Fees Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Licenses and permits Investments Total revenues Less: Transfers out Amounts available for appropriation Final 8,298 $ 1,681 88 1,769 (210) 9,857 $ 9 8,298 $ 1,681 88 1,769 (210) 9,857 CHARGES TO APPROPRIATIONS (OUTFLOWS): General administration 162 Public safety 315 Community services 5,507 Principal paid Interest Capital outlay 3,864 Total charges to appropriations 9,848 Budgetary fund balance, June 30, 2017 Actual Amounts (budgetary basis) 163 833 4,578 4,793 10,367 $ (510) $ 14,862 Variance with Final Budget Positive (Negative) $ 6,564 3,330 125 3,455 (210) 18,107 1,649 37 1,686 8,250 518 343 1,043 106 1,124 3,134 163 315 4,235 (1,043) (106) 3,669 7,233 14,973 $ 15,483 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 18,107 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (14,862) Revenue reported on a GAAP basis. 89 Add: Transfers out. 210 Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 3,544 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay reported on a GAAP basis Principal retirement reported on a GAAP basis Interest expense reported on a GAAP basis Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fundbalances - governmental funds. 130 $ 3,134 (1,061) 1,043 106 $ 3,222 City of Glendale, Arizona Budgetary Comparison Schedule Streets Construction Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Investments Intergovernmental Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation Final 7,213 $ 34,796 42,009 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration Community services Street maintenance Principal Paid Capital outlay 42,009 Total charges to appropriations 42,009 Budgetary fund balance, June 30, 2017 $ - $ 7,213 Actual Amounts (budgetary basis) $ 4,489 Variance with Final Budget Positive (Negative) $ (2,724) 34,796 (107) 41,902 1 281 282 13,321 (136) 17,956 1 281 282 (21,475) (29) (23,946) 350 39,599 39,949 9 84 47 1,838 19,808 21,786 (9) (84) 303 (1,838) 19,791 18,163 1,953 $ (3,830) $ (5,783) Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 17,956 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (4,489) Less: Transfers In. (13,321) Add: Transfers out. 136 Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances - governmental funds. $ 282 Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the statement of revenues, expenditures, and changes in fund balances - governmental funds. 131 $ 21,786 $ 21,786 City of Glendale, Arizona Budgetary Comparison Schedule Fire and Police Construction Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Less: Transfers out Amounts available for appropriation Actual Amounts (budgetary basis) Final 1,560 $ 1,560 $ 1,560 1,560 1,560 (1) 1,559 CHARGES TO APPROPRIATIONS (OUTFLOWS): Public safety 357 Principal Paid Interest Capital outlay 1,203 Total charges to appropriations 1,560 357 1,203 1,560 1,093 110 99 1,302 Budgetary fund balance, June 30, 2017 $ - $ - $ 257 Variance with Final Budget Positive (Negative) $ - (1) (1) 357 (1,093) (110) 1,104 258 $ 257 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 1,559 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (1,560) Add: Transfers out. 1 Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 132 $ 1,302 $ 1,302 City of Glendale, Arizona Budgetary Comparison Schedule Parks Bond Construction Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Amounts available for appropriation Actual Amounts (budgetary basis) Final 142 $ 142 $ 122 142 142 122 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration 92 Capital outlay 50 Total charges to appropriations 142 92 50 142 - Budgetary fund balance, June 30, 2017 $ - $ - $ 122 Variance with Final Budget Positive (Negative) $ (20) 92 50 142 $ Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fundbalances - governmental funds. 133 (20) 122 122 (122) - $ - $ - City of Glendale, Arizona Budgetary Comparison Schedule Other Construction Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Long-term debt issued Total revenues Less: Transfers out Amounts available for appropriation Final 2,615 $ 10,545 10,545 (117) 13,043 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: 302 Community services 12,741 Capital outlay Total charges to appropriations 13,043 Budgetary fund balance, June 30, 2017 $ Actual Amounts (budgetary basis) - $ 2,615 $ 3,871 Variance with Final Budget Positive (Negative) $ 1,256 10,545 10,545 (117) 13,043 (10) 3,861 (10,545) (10,545) 107 (9,182) 302 12,741 13,043 1,221 1,221 302 11,520 11,822 - $ 2,640 $ 2,640 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenditures Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 3,861 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (3,871) Add: Transfers out 10 Total revenues as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. $ Uses/outflows of resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay recognized on a GAAP basis only Total expenditures as reported in the combining statement of revenues, expenditures, and changes in fund balances - governmental funds. 134 $ 1,221 2,042 $ 3,263 NON-MAJOR PROPRIETARY FUNDS – BUSINESS-TYPE ACTIVITIES Proprietary funds are used to account for City operations that are run like a business. These funds are responsible for providing enough operational revenue to cover all expenses. Landfill This fund accounts for the operation of the City owned landfill and recycling operations. Fees charged for the use of the landfill are used to maintain and improve the landfill operations as well as fund future closure costs. Solid Waste This fund accounts for the City’s trash collection services including curb, roll-off, bulk, and front-load services to individuals and businesses. Revenues collected are used to keep the City clean. Housing This fund accounts for operations to provide affordable housing to those who cannot afford it in the private market. This is done through administration of Federal Section 8 Housing Choice and Conventional Public Housing programs. 135 City of Glendale, Arizona Combining Statement of Net Position Non-Major Proprietary Funds - Business-Type Activities June 30, 2017 (amounts expressed in thousands) Landfill ASSETS Current assets: Equity in pooled cash and investments Receivables: Accounts Allowance for uncollectibles Intergovernmental receivable Inventories and prepaid items Total current assets $ Noncurrent assets: Capital assets: Capital assets Accumulated depreciation Capital assets, net Total noncurrent assets Total assets DEFERRED OUTFLOWS OF RESOURCES LIABILITIES Current liabilities: Vouchers payable Accounts payable Compensated absences Intergovernmental payable Deposits Unearned Rent Total current liabilities Noncurrent liabilities: Compensated absences Pension obligations OPEB long-term obligations Other long-term debt Estimated closure and post-closure costs Total noncurrent liabilities Total liabilities DEFERRED INFLOWS OF RESOURCES Credit amounts related to pensions Credit amounts related to OPEB Total deferred inflows of resources NET POSITION Net investment in capital assets Unrestricted Total net position $ Solid Waste 7,542 $ 113 Housing $ 2,570 Total $ 10,225 813 (7) 8,348 2,190 (462) 1,841 1 31 18 2,620 3,004 (469) 31 18 12,809 32,106 (13,702) 18,404 18,404 26,752 796 14,581 (8,990) 5,591 5,591 7,432 1,228 14,702 (10,297) 4,405 4,405 7,025 370 61,389 (32,989) 28,400 28,400 41,209 2,394 668 288 145 1,101 180 294 1 110 585 55 24 33 45 14 171 848 55 606 34 300 14 1,857 193 3,667 1,181 14,697 19,738 20,839 145 5,721 2,428 8,294 8,879 220 1,789 686 25 2,720 2,891 558 11,177 4,295 25 14,697 30,752 32,609 459 89 548 802 179 981 254 56 310 1,515 324 1,839 4,405 (211) 4,194 28,400 (19,245) 9,155 18,404 (12,243) 6,161 $ 136 5,591 (6,791) (1,200) $ $ City of Glendale, Arizona Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Non-Major Proprietary Funds - Business-Type Activities For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Business-Type Activities Enterprise Funds Landfill Operating revenues: Intergovernmental Container service Curb service Landfill user fees Recycling sales Other fees Total operating revenues $ Operating expenses: Landfill Housing Closure/post-closure care adjustment Solid Waste Depreciation Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Investment income Gain (loss) on disposal of assets OPEB expense Total nonoperating revenue (expenses) Income (loss) before contributions and transfers Capital contributions Transfers in Transfers out 7,883 1,393 175 9,451 $ $ 9,162 2,876 12,038 Total $ 9,162 4,039 10,817 7,883 1,393 3,051 36,345 14,377 1,313 15,690 (834) 12,243 407 12,650 (612) 10,119 12,243 438 14,377 2,463 39,640 (3,295) 66 (11) (30) 25 3 62 (60) 5 3 (19) (16) 72 51 (109) 14 (1,824) (829) (628) (3,281) 125 - 253 387 - 253 1,082 (10) (704) 12 (1,956) (1,264) $ 4,039 10,817 14,856 Housing 10,119 438 743 11,300 (1,849) 570 (10) Change in net position Total net position - beginning Total net position - ending Solid Waste 7,425 6,161 137 $ (496) (1,200) $ 4,182 4,194 $ 11,111 9,155 City of Glendale, Arizona Combining Statement of Cash Flows Non-Major Proprietary Funds - Business-Type Activities For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Landfill Cash flows from operating activities: Cash received from customers Cash received from federal operating grants Cash paid to suppliers: Internal city departments External vendors Cash paid to employees for services Net cash provided (used) by operating activities $ 9,214 - $ (1,343) (5,670) (3,410) (1,209) Cash flows from noncapital financing activities: Transfers in Transfers out Due to / from other funds Net cash provided (used) by noncapital financing activities Cash flows from capital and related financing activities: Payment on principal obligations Acquisition of capital assets and rights Net cash used capital and related financing activities Total 2,881 9,178 $ 27,063 9,178 (11,041) (1,207) (189) (9,578) (18,401) (9,566) (1,304) 570 (10) - 125 - 387 (6) 1,082 (10) (6) 560 125 381 1,066 (2,889) (12) (28) (12) (4,168) (1,251) (2,889) (40) (4,180) 3 3 (1,834) $ $ (8,235) (1,690) (4,949) 94 66 66 Net increase (decrease) in cash and cash equivalents during fiscal year 14,968 - Housing (1,251) Cash flows from investing activities: Interest received from investments Net cash provided by investing activities Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 Solid Waste 9,376 7,542 138 3 3 (2,667) $ 2,780 113 72 72 155 $ 2,415 2,570 (4,346) $ 14,571 10,225 Landfill Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operations: Depreciation Net pension expense and contributions Net OPEB expense and contributions Changes in assets and liabilities: Accounts receivable Intergovernmental receivable Vouchers payable Accounts payable Intergovernmental payable Deposits Unearned rent Compensated absences Estimated closure and post-closure costs Net cash provided by (used) operating activities $ Solid Waste (1,849) $ (834) Housing $ (612) Total $ (3,295) 743 (107) (4) 1,313 (157) (9) 407 (45) (2) 2,463 (309) (15) $ (214) (122) (23) (71) 438 (1,209) $ 114 (347) (6) (2) 22 94 $ (1) 16 14 (4) 6 32 (189) $ (101) 16 (469) 14 (10) (25) 6 (17) 438 (1,304) Reconciliation of statement of net position cash and investments to the statement of cash flows: Per combining statement of net position: Equity in pooled cash and investments Total cash and cash equivalents $ $ 7,542 7,542 $ $ 113 113 $ $ 2,570 2,570 $ $ 10,225 10,225 Noncash investing, capital, and financing activities: Contributions of capital assets $ - $ - $ 253 $ 253 139 City of Glendale, Arizona Budgetary Comparison Schedule Water and Sewer Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Intergovernmental Charges for services: Metered water sales Sewer service charges Impact fees Other fees Investments Miscellaneous Proceeds from equipment disposal Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation Final 99,036 $ 400 44,328 32,215 1,820 1,889 254 10,104 10 91,020 229 (37) 190,248 $ 24,845 140 99,036 $ 400 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General administration 13,726 Water 23,328 Sewer 14,783 Contingencies 2,000 Capital outlay 91,440 Debt service: Principal 9,805 Interest 10,321 Total charges to appropriations 165,403 Budgetary fund balance, June 30, 2017 Actual Amounts (budgetary basis) $ 99,108 Variance with Final Budget Positive (Negative) $ 1,068 72 668 44,328 32,215 1,820 1,889 254 10,104 10 91,020 229 (37) 190,248 45,656 32,337 1,170 1,764 811 626 22 83,454 229 (37) 182,754 1,328 122 (650) (125) 557 (9,478) 12 (7,566) (7,494) 13,726 23,328 14,783 4,783 88,642 13,880 22,797 13,083 19,674 (154) 531 1,700 4,783 68,968 9,805 10,321 165,388 9,805 10,321 89,560 75,828 24,860 $ 93,194 $ 68,334 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. Revenues offset directly by bad debt expense on budgetary basis. Proceeds from equipment disposals. Gain on disposal of assets. Internal staff and administrative charges reported as revenue only on budgetary basis. Capital asset transfer to general fund Less: Transfers in. Add: Transfers out. Total revenues as reported on the statement of revenues, expenses, and changes in fund net position, excluding capital contributions. Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay expenditure. Change in compensated absences liability. Amortization and depreciation expense. Loss on Joint Venture. Principal payments on long-term obligations. OPEB expense. Interest expense. Indirect cost allocation. Total expenses as reported in the statement of revenues, expenses, and changes in fund net position. 141 $ 182,754 (99,108) 92 14 (22) (82) (229) 37 $ 83,456 $ 89,560 (19,674) (29) 22,649 3,311 (9,805) 209 (1,561) (726) $ 83,934 City of Glendale, Arizona Budgetary Comparison Schedule Landfill Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Charges for services: Landfill user fees Recycling fees Other fees Proceeds from equipment disposal Proceeds from interfund loan Investments Total revenues Add: Transfers in Less: Transfers out Amounts available for appropriation 9,146 Final $ 7,922 1,566 737 19 45 10,289 658 (10) 20,083 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Contingencies 500 Landfill 10,042 Capital outlay 8,033 Total charges to appropriations 18,575 Budgetary fund balance, June 30, 2017 $ 1,508 $ 9,146 Actual Amounts (budgetary basis) $ 9,049 Variance with Final Budget Positive (Negative) $ (97) 7,922 1,566 737 19 45 10,289 658 (10) 20,083 7,883 1,393 606 2 66 9,950 658 (10) 19,647 (39) (173) (131) (17) 21 (339) (436) 12,073 7,501 19,574 10,723 1,271 11,994 1,350 6,230 7,580 509 $ 7,653 $ 7,144 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 19,647 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (9,049) Internal staff and administrative charges reported as revenue only on budgetary basis. (431) Proceeds from disposal of capital assets. (2) Less: Transfers in (658) Add: Transfers out. 10 Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 9,517 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay expenditures. Change in compensated absences liability. Change in estimated landfill post-closure liability. Depreciation expense. Loss on disposal of assets. Pension expense. OPEB expense. Internal staff and administrative charges reported as revenue only on budgetary basis. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 142 $ 11,994 (1,271) (495) 438 743 11 149 30 (258) $ 11,341 City of Glendale, Arizona Budgetary Comparison Schedule Solid Waste Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Charges for services: Container service Curb service Investments Proceeds from equipment disposal Total revenues Add: Transfers in Amounts available for appropriation 3,938 Final $ 3,938 Actual Amounts (budgetary basis) $ 4,279 Variance with Final Budget Positive (Negative) $ 341 3,868 10,717 7 32 14,624 125 18,687 3,868 10,717 7 32 14,624 125 18,687 4,039 10,780 3 159 14,981 125 19,385 171 63 (4) 127 357 698 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Solid Waste 14,126 Capital outlay 3,823 Total charges to appropriations 17,949 14,126 3,823 17,949 14,465 3,048 17,513 (339) 775 436 Budgetary fund balance, June 30, 2017 $ 738 $ 738 $ 1,872 $ 1,134 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 19,385 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (4,279) Revenues offset directly by bad debt expense on budgetary basis. 37 Proceeds from disposal of capital assets. (159) Gain on disposal of assets. 62 Less: Transfers in. (125) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 14,921 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Bad debt expense. Capital outlay. Change in compensated absences liability. Depreciation expense. Pension expense. OPEB expense. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position 143 $ 17,513 37 (3,048) (345) 1,313 220 60 $ 15,750 City of Glendale, Arizona Budgetary Comparison Schedule Housing Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Intergovernmental Miscellaneous Investments Total revenues Add: Transfers in Amounts available for appropriation 200 Final $ 200 Actual Amounts (budgetary basis) $ 2,505 Variance with Final Budget Positive (Negative) $ 2,305 15,959 15,959 387 16,546 15,959 15,959 387 16,546 9,415 2,876 3 12,294 387 15,186 (6,544) 2,876 3 (3,665) (1,360) CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: Housing 15,849 Capital outlay 198 Total charges to appropriations 16,047 15,849 198 16,047 12,292 12,292 3,557 198 3,755 Budgetary fund balance, June 30, 2017 $ 499 $ 499 $ 2,894 $ 2,395 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 15,186 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (2,505) Less: Transfers in. (387) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 12,294 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Depreciation expense. Pension expense. OPEB expense. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 144 $ 12,292 407 (49) 19 $ 12,669 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ INTERNAL SERVICE FUNDS ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2016 This page left blank intentionally. City of Glendale, Arizona Combining Statement of Net Position Internal Service Funds June 30, 2017 (amounts expressed in thousands) Risk Management ASSETS Current assets: Equity in pooled cash and investments Accounts receivable, net Inventories and prepaid items Total current assets $ Noncurrent assets: Restricted deposits Capital assets: Capital assets Accumulated depreciation Capital assets, net Workers' Compensation 4,468 51 4,519 $ Employee Benefits 8,490 8,490 $ Fleet Services 3,682 3,682 - 150 1,425 - - - 4,519 8,640 73 LIABILITIES Current liabilities: Vouchers payable Compensated absences Estimated claims payable Total current liabilities Noncurrent liabilities: Compensated absences Pension obligations OPEB long-term obligations Total noncurrent liabilities Total liabilities Total assets Deferred Outflows of Resources DEFERRED INFLOWS Amounts related to pensions Amounts related to OPEB Total deferred inflows of resources NET POSITION Net investment in capital assests Unrestricted Total net position $ $ Technology 337 10 58 405 $ - Total 4,165 4,165 $ - 21,142 10 109 21,261 1,575 862 (769) 93 3,831 (2,657) 1,174 4,693 (3,426) 1,267 5,107 498 5,339 24,103 34 - 1,028 919 2,054 24 19 2,758 2,801 34 18 5,021 5,073 2,145 2,061 4,206 311 231 542 340 271 611 2,854 539 9,840 13,233 7 45 6 58 2,859 11 14 2 27 5,100 4,206 140 2,798 32 2,970 3,512 149 543 10 702 1,313 307 3,400 50 3,757 16,990 30 3 33 12 4 16 - 815 66 881 357 69 426 1,214 142 1,356 1,700 3,558 901 1,174 3,345 1,267 6,544 1,700 $ 3,558 145 $ 901 93 (2,960) $ (2,867) $ 4,519 $ 7,811 City of Glendale, Arizona Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Risk Management Operating revenues: Self-insurance premiums Charges for Service Other fees Total operating revenues $ Operating expenses: Administrative and general Insurance claims and premiums Amortization and depreciation Total operating expenses Operating income (loss) Nonoperating revenues: Investment income (loss) OPEB expense Total nonoperating revenues 3,051 Workers' Compensation $ $ 29,279 Fleet Services $ Technology $ 8,606 10 8,616 Total 396 3,447 4 2,268 179 29,458 8,315 28 8,343 212 2,262 2,474 119 2,960 3,079 59 27,468 27,527 8,290 14 8,304 7,575 356 7,931 16,255 32,690 370 49,315 973 (811) 1,931 39 685 2,817 67 (6) 61 19 19 (102) (102) 7 (82) (75) 30 (9) 21 2,264 Employee Benefits $ 34,594 16,921 617 52,132 123 (199) (76) Income (loss) before transfers 994 (750) 1,950 (63) 610 2,741 Change in net position 994 (750) 1,950 (63) 610 2,741 Net position - beginning Net position - ending $ 706 1,700 $ 4,308 3,558 146 $ (1,049) 901 $ (2,804) (2,867) $ 3,909 4,519 $ 5,070 7,811 City of Glendale, Arizona Combining Statement of Cash Flows Internal Service Funds For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Risk Management Cash flows from operating activities: Cash received from customers Cash paid to suppliers: Internal city departments External vendors Cash paid for insurance and in settlement of claims Cash paid to employees for services $ Cash flows from investing activities: Interest received from investments Net increase (decrease) in cash during fiscal year Reconciliation of statement of net position cash and investments to the statement of cash flows: Per combined statement of net position: Equity in pooled cash and investments Total cash and cash equivalents 2,268 Employee Benefits $ - (2,383) (216) Cash flows from capital and related financing activities: Acquisition of capital assets and rights Reconciliation of operating income (loss) to net cash provided by (used for) operating activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by (used for) operations: Amortization and depreciation Net pension and OPEB expense and contribution Changes in assets and liabilities: Change in inventories and prepaid items Change in vouchers payable Change in compensated absences Change in claims payable Net cash provided by (used for) operating activities $ - Net cash provided by (used for) operating activities Cash and cash equivalents, July 1 Cash and cash equivalents, June 30 3,447 Workers' Compensation Fleet Services 29,458 $ - (1,779) (116) (27,296) - Technology 8,343 (2,387) (2,882) (31,458) (5,601) - - - - 30 67 19 - 878 440 2,181 $ 973 $ 8,050 8,490 (811) 52,132 (255) (10,618) 2,162 $ $ (41) (4,782) 373 3,590 4,468 8,616 (214) (5,836) 848 $ $ Total (94) 911 4,200 (563) (94) (563) 7 123 355 3,760 $ 1,501 3,682 $ 431 337 $ 3,810 4,165 $ 17,382 21,142 $ 1,931 $ 39 $ 685 $ 2,817 (8) (3) - 14 (82) 356 (99) 370 (192) (45) (24) 4 (52) (9) 6 1,190 84 147 (5) (74) 14 - (106) 75 - (50) (129) 99 1,285 $ 848 $ 373 $ 2,162 $ (94) $ 911 $ 4,200 $ $ 4,468 4,468 $ $ 8,490 8,490 $ $ 3,682 3,682 $ $ 337 337 $ $ 4,165 4,165 $ $ 21,142 21,142 147 City of Glendale, Arizona Budgetary Comparison Schedule Risk Management Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Self-insurance premiums Investments Other Total revenues Amounts available for appropriation 3,107 Final $ 3,107 Actual Amounts (budgetary basis) $ 3,546 3,058 20 130 3,208 6,315 3,058 20 130 3,208 6,315 3,051 30 396 3,477 7,023 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration 1,617 Insurance and claims 2,734 Total charges to appropriations 4,351 1,617 2,734 4,351 214 2,360 2,574 Budgetary fund balance, June 30, 2017 $ 1,964 $ 1,964 $ 4,449 Variance with Final Budget Positive (Negative) $ 439 (7) 10 266 269 708 1,403 374 1,777 $ 2,485 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 7,023 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (3,546) Total revenues as reported on the combining statement of revenues, expenses, and changes in fund net position. $ 3,477 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Change in OPEB. Insurance and claims recorded gaap basis only. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 148 $ 2,574 6 (97) $ 2,483 City of Glendale, Arizona Budgetary Comparison Schedule Workers' Compensation Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Investments Other Total revenues Amounts available for appropriation 7,503 Final $ 7,503 Actual Amounts (budgetary basis) $ 8,159 Variance with Final Budget Positive (Negative) $ 656 2,300 26 30 2,356 9,859 2,300 26 30 2,356 9,859 2,264 4 67 2,335 10,494 (36) 4 41 (30) (21) 635 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration 101 Insurance and claims 2,104 Total charges to appropriations 2,205 111 2,093 2,204 114 1,770 1,884 (3) 323 320 Budgetary fund balance, June 30, 2017 $ 7,654 $ 7,655 $ 8,610 $ 955 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriation" from the budgetary comparison schedule. $ 10,494 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource but is not a current year revenue for financial reporting purposes. (8,159) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 2,335 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Insurance and claims recorded gaap basis only. Change in OPEB. Change in compensated absences liability. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 149 $ 1,884 1,189 7 5 $ 3,085 City of Glendale, Arizona Budgetary Comparison Schedule Employee Benefits Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Investments Total revenues Amounts available for appropriation Actual Amounts (budgetary basis) Final - $ - $ 865 Variance with Final Budget Positive (Negative) $ 865 26,719 106 1 26,826 26,826 26,719 106 1 26,826 26,826 29,279 179 19 29,477 30,342 2,560 73 18 2,651 3,516 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration 169 Insurance and claims 26,657 Total charges to appropriations 26,826 169 26,657 26,826 59 27,321 27,380 110 (664) (554) Budgetary fund balance, June 30, 2017 $ - $ - $ 2,962 $ 2,962 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 30,342 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource, but is not a current year revenue for financial reporting purposes. (865) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 29,477 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Insurance and claims recorded gaap basis only. Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 150 $ 27,380 147 $ 27,527 City of Glendale, Arizona Budgetary Comparison Schedule Fleet Services Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Total revenues Amounts available for appropriation 998 Final $ 998 Actual Amounts (budgetary basis) $ 102 9,178 9,178 10,176 9,178 9,178 10,176 8,316 28 8,344 8,446 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration 9,164 Total charges to appropriations 9,164 9,164 9,164 8,345 8,345 Budgetary fund balance, June 30, 2017 $ 1,012 $ 1,012 $ 101 Variance with Final Budget Positive (Negative) $ (896) (862) 28 (834) (1,730) 819 819 $ (911) Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 8,446 Differences - budget to GAAP: Miscellaneous. (1) Beginning fund balance restated (102) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 8,343 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Miscellaneous Amortization and depreciation expense. Pension contributions that were reclassified as deferred outflows of resources. Change in compensated absences liability. OPEB Expense Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 151 $ 8,345 2 14 (82) 25 102 $ 8,406 City of Glendale, Arizona Budgetary Comparison Schedule Technology Fund For the Fiscal Year Ended June 30, 2017 (amounts expressed in thousands) Budgeted Amounts Original Budgetary fund balance, July 1, 2016 $ RESOURCES (INFLOWS): Self-insurance premiums Miscellaneous Investments Proceeds from equipment disposal Total revenues Amounts available for appropriation Final 3,884 $ 3,884 Actual Amounts (budgetary basis) $ 3,380 8,647 8,647 12,531 8,647 8,647 12,531 8,607 9 7 8,623 12,003 CHARGES TO APPROPRIATIONS (OUTFLOWS): Current: General Administration 11,835 Capital outlay 696 Total charges to appropriations 12,531 11,602 696 12,298 7,583 562 8,145 Budgetary fund balance, June 30, 2017 $ - $ 233 $ 3,858 Variance with Final Budget Positive (Negative) $ (504) (40) 9 7 (24) (528) 4,019 134 4,153 $ 3,625 Explanation of differences between budgetary inflows and outflows and GAAP revenues and expenses Sources/inflows of resources: Actual amounts (budgetary basis) "available for appropriations" from the budgetary comparison schedule. $ 12,003 Differences - budget to GAAP: The fund balance at the beginning of the year is a budgetary resource, but is not a current year revenue for financial reporting purposes. Beginning fund balance restated (3,380) Total revenues as reported in the combining statement of revenues, expenses, and changes in fund net position. $ 8,623 Uses/outflows or resources: Actual amounts (budgetary basis) "total charges to appropriations" from the budgetary comparison schedule. Differences - budget to GAAP: Capital outlay expenditure. Amortization and depreciation expense. Pension contributions that were reclassified as deferred outflows of resources. Change in compensated absences liability. OPEB Expense Total expenses as reported in the combining statement of revenues, expenses, and changes in fund net position. 152 $ 8,145 (562) 356 (99) 91 82 $ 8,013 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ SUPPLEMENTARY INFORMATION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2017 This page left blank intentionally. City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2017 (rounded to nearest dollar) 1 of 6 The following is the schedule of Federal Financial Data as required by the United States Department of Housing and Urban Development under the Uniform Financial Reporting Standards Rule implementing requirements of 24 CFR, Part 5, Subpart H. Balance Sheet Line Item No. 111 112 113 114 115 100 Account Description ASSETS: Current assets: Cash: Cash - unrestricted Cash - restricted - modernization and development Cash - other restricted Cash - tenant security deposits Cash - restricted for payment of current liability Total cash 121 122 124 125 126 126.1 126.2 127 128 128.1 129 120 Accounts receivables: Accounts receivable - PHA projects Accounts receivable - HUD other projects Accounts receivable - other government Accounts receivable - miscellaneous Accounts receivable - tenants Allowance for doubtful accounts - tenants Allowance for doubtful accounts - other Notes, loans, & mortgages receivable - current Fraud recovery Allowance for doubtful accounts - fraud Accrued interest receivable Total receivables, net of allowances for doubtful accounts 131 132 135 142 143 143.1 144 145 150 Current investments: Investments - unrestricted Investments - restricted Investments - restricted for payment of current liability Prepaid expenses and other assets Inventories Allowance for obsolete inventories Inter program - due from Assets held for sale Total current assets 161 162 163 164 165 166 167 168 160 171 172 173 174 176 180 190 200 290 Project Total $ 1,048,421 44,791 1,093,212 Housing Choice Vouchers $ 31,291 1,148 32,439 638 18,706 (935) 1,144,060 Non-current assets: Capital assets: Land Buildings Furniture, equipment & machinery - dwellings Furniture, equipment & machinery - administration Leasehold improvements Accumulated depreciation Construction in progress Infrastructure Total capital assets, net of accumulated depreciation 135,533 10,696,556 555,354 196,482 2,293,168 (10,117,840) 571,529 4,330,782 Notes, loans, & mortgages receivable - non-current Notes, loans, & mortgages receivable - non-current - past due Grants receivable - non-current Other assets Investment in joint venture Total non-current assets Total assets Deferred outflow of resources Total assets and deferred outflow of resources $ 4,330,782 5,474,842 129,520 5,604,362 1,279,057 197,532 1,476,589 Eliminations $ - - 1,476,589 - 149,998 102,908 (178,812) 74,094 $ - 74,094 1,550,683 240,537 1,791,220 $ Total $ 2,327,478 197,532 44,791 2,569,801 31,291 1,148 32,439 - 638 18,706 (935) 2,620,649 - 135,533 10,846,554 555,354 299,390 2,293,168 (10,296,652) 571,529 4,404,876 - 4,404,876 7,025,525 370,057 7,395,582 $ (continued) 153 City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2017 (rounded to nearest dollar) 2 of 6 (continued) Balance Sheet Line Item No. Account Description 311 312 313 321 322 324 325 331 332 333 341 342 343 344 345 346 347 348 310 LIABILITIES AND EQUITY-NET ASSETS/POSITION: LIABILITIES: Current liabilities: Bank Overdraft Accounts payable <= 90 days Accounts payable > 90 days past due Accrued wage/payroll taxes payable Accrued compensated absences - current portion Accrued contingency liability Accrued interest payable Accounts payable - HUD PHA Programs Accounts payable - PHA projects Accounts payable - other government Tenant security deposits Unearned revenues Total current portion of L/T debt - capital projects/mortgage revenue Current portion of L/T debt - operating borrowings Other current liabilities Accrued liabilities - other Inter program - due to Loan liability - current Total current liabilities 351 352 353 354 355 356 357 350 300 Noncurrent liabilities: Long-term debt, net of current - capital projects/mortgage revenue Long-term debt, net of current - operating borrowings Noncurrent liabilities - other Accrued compensated absences - noncurrent Loan liability - noncurrent FASB 5 liabilities Accrued pension and OPEB liabilities Total noncurrent liabilities Total liabilities 400 Deferred inflow of resources 508.4 511.4 512.4 513 600 Project Total $ EQUITY - NET ASSETS/POSITION: Net investment in capital assets Restricted net position Unrestricted net position Total equity - net assets/position Total liabilities, deferred inflow of resources and equity - net assets/position $ 32,559 10,904 44,791 13,978 102,232 Housing Choice Vouchers $ 23,500 13,519 33,222 70,241 Eliminations $ - Total $ 56,059 24,423 33,222 44,791 13,978 172,473 98,132 865,912 964,044 1,066,276 25,067 121,668 1,608,122 1,754,857 1,825,098 - 25,067 219,800 2,474,034 2,718,901 2,891,374 108,593 201,672 - 310,265 74,094 172,465 (482,109) (235,550) 1,791,220 - 4,404,876 172,465 (383,398) 4,193,943 7,395,582 4,330,782 98,711 4,429,493 5,604,362 $ $ $ (continued) 154 City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2017 (rounded to nearest dollar) 3 of 6 (continued) Income Statement Line Item No. Account Description 70300 70400 70500 REVENUE: Net tenant rental revenue Tenant revenue - other Total tenant revenue 70600 70610 HUD PHA operating grants Capital grants 70710 70720 70730 70740 70750 70700 Management fee Asset management fee Bookkeeping fee Front line service fee Other fees Total fee revenue 70800 71100 71200 71300 71310 71400 71500 71600 72000 70000 Project Total $ Other government grants Investment income - unrestricted Mortgage interest income Proceeds from disposition of assets held for sale Cost of sale of assets Fraud recovery Other revenue Gain or loss on sale of capital assets Investment income - restricted Total revenue $ 354,056 16,636 370,692 Housing Choice Vouchers $ - Eliminations $ - Total $ 354,056 16,636 370,692 598,101 253,202 8,563,735 - - 9,161,836 253,202 - - - - 1,503 21,107 1,244,605 1,805 5,538 2,478,683 $ 11,049,761 - 3,308 5,538 2,499,790 $ 12,294,366 $ (continued) 155 City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2017 (rounded to nearest dollar) 4 of 6 (continued) Income Statement Line Item No. Account Description 91100 91200 91300 91310 91400 91500 91600 91700 91800 91810 91900 91000 EXPENSES: Administrative salaries Auditing fees Management fee Bookkeeping fee Advertising and marketing Employee benefit contributions - administrative Office expenses Legal expense Travel Allocated overhead Other Total operating - administrative 92000 92100 92200 92300 92400 92500 Asset management fee Tenant services - salaries Relocation costs Employee benefit contributions - tenant services Tenant services - other Total Tenant services 93100 93200 93300 93400 93500 93600 93700 93800 93000 94100 94200 94300 94500 94000 Project Total $ 222,372 66,566 35,832 150 75,907 400,827 Housing Choice Vouchers $ 565,994 198,593 43,679 1,050 74,416 883,732 Eliminations $ - Total $ 788,366 265,159 79,511 1,200 150,323 1,284,559 7,036 7,036 - - 7,036 7,036 Water Electricity Gas Fuel Labor Sewer Employee benefit contributions - utilities Other utilities expense Total utilities 60,398 26,608 2,583 32,233 121,822 - - 60,398 26,608 2,583 32,233 121,822 Ordinary maintenance and operations - labor Ordinary maintenance and operations - materials & other Ordinary maintenance and operations - contract costs Employee benefit contributions - ordinary maintenance Total maintenance 269,299 106,696 194,743 76,767 647,505 2,634 2,634 - 269,299 109,330 194,743 76,767 650,139 $ $ $ $ (continued) 156 City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2017 (rounded to nearest dollar) 5 of 6 (continued) Income Statement Line Item No. Account Description Project Total Housing Choice Vouchers Eliminations Total 95100 95200 95300 95500 95000 Protective services - labor Protective services - other contract costs Protective services - other Employee benefit contributions - protective services Total protective services 96110 96120 96130 96140 96100 Property insurance Liability insurance Workmen's compensation All other insurance Total insurance premiums 9,271 7,112 16,383 6,180 4,741 10,921 - 15,451 11,853 27,304 96200 96210 96300 96400 96500 96600 96800 96000 Other general expenses Compensated absences Payments in lieu of taxes Bad debt - tenant rents Bad debt - mortgages Bad debt - other Severance expense Total other general expenses - 6,813 6,813 - 6,813 6,813 96710 96720 96730 96700 Interest on mortgage (or bonds) payable Interest on notes payable (short and long term) Amortization of bond issue costs Total Interest expense and amortization cost - - - - 96900 Total operating expenses 1,193,573 904,100 - 2,097,673 51,032 10,145,661 - 10,196,693 8,994 - - - 8,994 - - 7,840,477 - 7,840,477 402,626 1,605,193 2,315,118 4,061 $ 11,063,756 - 2,315,118 406,687 $ 12,668,949 97000 Excess of operating revenue over operating expenses 97100 97200 Extraordinary maintenance Casualty losses - non-capitalized 97300 Housing assistance payments 97350 97400 97500 97600 97700 97800 90000 $ HAP Portability-in Depreciation expense Fraud losses Capital outlays - governmental funds Debt principal payment - governmental funds Dwelling units rent expense Total expenses $ - $ - $ $ - $ - (continued) 157 City of Glendale, Arizona Federal Financial Data Schedule (PHA: AZ003) For the Fiscal Year Ended June 30, 2017 (rounded to nearest dollar) 6 of 6 (continued) Income Statement Line Item No. Account Description 10010 10020 OTHER FINANCING SOURCES (USES) Operating transfers in Operating transfers out 10030 10040 10050 10060 10070 10080 10091 10092 10093 10094 10100 10000 Operating transfers from/to primary government Operating transfers from/to component unit Proceeds from notes, loans and bonds Proceeds from property sales Extraordinary items, net gain/loss Special items, net gain/loss Inter project excess cash transfer in Inter project excess cash transfer out Transfers between program and project - in Transfers between program and project - out Total other financing sources (uses) Excess (deficiency) of total revenues over (under) total expenses Project Total $ $ 23,645 (23,645) 175,115 175,115 (185,473) Housing Choice Vouchers $ - $ 211,448 211,448 197,453 $ - Eliminations $ (23,645) 23,645 Total $ $ - $ 386,563 386,563 11,980 $ - $ - MEMO ACCOUNT INFORMATION 11020 Required annual debt principal payments 11030 Beginning equity 11040 11050 11060 11070 11080 11090 11100 11170 11180 11190 11210 11270 11610 11620 11630 11640 11650 11660 13510 13901 $ 4,370,536 (188,573) - Prior period adjustments, equity transfers & correction of errors Changes in compensated absence balance Changes in contingent liability balance Changes in unrecognized pension transition liability Changes in special term/severance benefits liability Changes in allowance for doubtful accounts - dwelling rents Changes in allowance for doubtful accounts - other Administrative fee equity Housing assistance payments equity Unit months available Unit months leased Excess cash 244,430 1,817 1,749 926,179 (244,430) (408,015) 172,465 12,648 12,455 - - (408,015) 172,465 14,465 14,204 926,179 Land purchases Building purchases Furniture & equipment - dwelling purchases Furniture & equipment - administrative purchases Leasehold improvements purchases Infrastructure purchases CFFP debt service payments Replacement housing factor funds 236,867 12,135 4,200 - - 236,867 12,135 4,200 - 158 - 4,181,963 City of Glendale, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT _________________________________________________________ STATISTICAL SECTION ___________________________ FOR THE FISCAL YEAR ENDED JUNE 30, 2017 This page left blank intentionally. STATISTICAL SECTION This part of the City of Glendale’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city’s overall financial health. Contents Pages Financial Trends These schedules contain trend information to help the reader understand how the city’s financial performance and well-being have changed over time. 160-167 Revenue Capacity These schedules contain information to help the reader assess the city’s local revenue source, the property tax and sales tax. 168-173 Debt Capacity These schedules present information to help the reader assess the affordability of the city’s current levels of outstanding debt and the city’s ability to issue additional debt in the future. 174-181 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the city’s financial activities take place. 182-184 Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the city’s financial report relates to the services the city provides and the activities it performs. 185-189 159 City of Glendale, Arizona Net Position by Component Last Ten Fiscal Years (amounts expressed in thousands) 2017 Government activities Net investment in capital assets Restricted Unrestricted Total governmental activities net position $ Business-type activities Net investment in capital assets Restricted Unrestricted Total business-type activities net position Primary government Net investment in capital assets Restricted Unrestricted Total primary government net position $ 471,979 157,251 (278,767) 2016 $ 456,001 163,592 (239,670) 2015 $ 456,897 168,714 (240,749) 2014 $ 448,083 161,027 (277,093) 350,463 379,923 384,862 332,017 267,111 22,897 83,920 256,488 21,576 96,300 253,134 24,090 92,357 256,164 22,300 123,699 373,928 374,364 369,581 402,163 739,090 180,148 (194,847) 712,489 185,168 (143,370) 710,031 192,804 (148,392) 704,247 183,327 (153,394) 724,391 $ 160 754,287 $ 754,443 $ 734,180 Schedule 1 2013 $ $ 438,366 186,106 (59,797) 2012 $ 460,639 183,829 (73,375) 2011 $ 463,961 204,645 (22,532) 2010 $ 457,773 176,400 11,684 2009 $ 471,484 144,422 51,500 2008 $ 499,322 133,695 51,850 564,675 571,093 646,074 645,857 667,406 684,867 251,765 12,264 161,999 262,554 12,921 139,934 271,708 29,988 112,323 271,969 13,988 124,550 286,452 13,249 114,814 297,329 12,836 107,384 426,028 415,409 414,019 410,507 414,515 417,549 690,131 198,370 102,202 723,193 196,750 66,559 735,669 234,633 89,791 729,742 190,388 136,234 757,936 157,671 166,314 796,651 146,531 159,234 986,502 $ 1,060,093 $ 1,056,364 $ 1,081,921 $ 1,102,416 990,703 $ 161 $ 340,288 Total governmental activities expenses $ 69,351 6,669 Total governmental activities program revenues 27,519 Operating grants and contributions 357 Capital grants and contributions 308 Community environment Street maintenance 13,490 536 Public works Community services 5,445 15,027 Public safety General government Charges for services: Governmental activities: Program revenues $ $ 12,730 123,144 463,432 12,644 Total business-type activities expenses Total primary government expenses Housing 15,016 15,698 Solid Waste 66,154 6,603 26,225 193 305 9,649 650 6,148 16,381 117,170 424,964 9,049 83,500 11,302 Landfill 80,375 307,794 27,932 - 21,219 4,262 Water and sewer Business-type activities: 27,827 - 21,848 3,930 Interest on long-term debt Other Street maintenance Community environment 24,859 32,796 24,768 33,752 64,228 Public works $ Community services 61,373 2016 132,498 $ 2017 166,790 Public safety General government Governmental activities: Expenses City of Glendale, Arizona Changes in Net Position Last Ten Fiscal Years (amounts expressed in thousands) 162 $ $ $ 74,319 11,403 25,665 25 309 11,704 631 6,084 18,498 110,752 408,171 13,159 15,059 7,727 74,807 297,419 32,106 - 19,180 4,980 31,311 21,482 127,870 60,490 2015 $ $ $ 71,563 10,748 25,168 - - 10,486 1,126 6,369 17,666 112,356 419,293 13,088 14,471 7,554 77,243 306,937 34,808 - 25,207 5,895 30,796 20,524 116,070 73,637 2014 $ $ $ 63,510 7,904 25,156 - - 11,003 1,149 5,778 12,520 111,105 385,375 14,037 16,122 7,486 73,460 274,270 42,413 - 20,000 5,655 33,831 19,230 115,694 37,447 2013 $ $ $ 69,290 5,274 27,636 - - 17,910 512 5,624 12,334 116,783 392,133 14,827 15,437 7,602 78,917 275,350 41,913 - 20,045 6,828 39,478 18,435 112,689 35,962 2012 $ $ $ 139,833 70,552 27,137 - - 11,733 495 5,094 24,822 116,225 405,659 14,687 14,814 7,280 79,444 289,434 41,967 - 21,721 7,061 41,136 20,099 111,217 46,233 2011 $ $ $ 72,774 3,755 29,596 2 - 11,918 7,447 5,824 14,232 118,637 402,286 14,180 14,093 8,454 81,910 283,649 42,286 - 23,058 6,316 44,524 16,627 108,308 42,530 2010 $ $ $ 62,625 2,600 24,146 36 3,045 15,661 588 4,670 11,879 108,348 386,711 11,840 14,039 8,045 74,424 278,363 38,982 - 23,978 3,539 48,143 15,040 109,136 39,545 2009 $ $ $ 88,960 14,491 33,191 - - 22,859 543 5,744 12,132 107,719 389,007 9,862 15,209 8,067 74,581 281,288 28,475 - 26,175 5,164 52,185 16,006 113,285 39,998 2008 Schedule 2 $ 2,876 $ 2,980 14,856 Solid Waste Transfers $ $ Governmental activities Business-type activities Total primary government Changes in net position Total business-type activities Total primary government (436) (29,896) (29,460) $ $ 803 4,782 (157) (4,939) 1,480 238,181 1,264 2,261 243,738 63 - - 614 114 - Loss on joint venture Miscellaneous - 883 Gain (loss) on disposal of capital assets Investment earnings, unrestricted Business-type activities: 236,701 - 241,477 - Total governmental activities Special item (803) 3,417 - 1,225 9,351 27,297 21,482 (1,264) $ 24,531 150,201 Transfers - (253) 9,458 29,378 22,024 $ 1,400 $ 24,955 155,779 3,302 (238,338) (241,640) 186,626 Miscellaneous Gain (loss) on disposal of capital assets Investment earnings, unrestricted Auto in-lieu taxes (state shared income tax) Unrestricted urban revenue sharing Unrestricted state shared sales tax Sales taxes Property taxes Taxes: Governmental activities: $ (2,697) (273,634) Business-type activities Total primary government net expense General revenues and other changes in net position (270,937) Governmental activities Net (expense)/revenue 189,798 Total primary government program revenues 815 120,472 2,815 120,447 9,809 10,230 Total business-type activities program revenues Capital grants and contributions Operating grants and contributions Housing 15,181 9,451 9,858 80,219 81,829 2016 Landfill 2017 Water and sewer Charges for services: Business-type activities: 163 $ $ $ $ $ (34,499) 10,362 44,861 (41,671) 226,290 (39,198) 86 (3,329) 127 643 267,961 - 39,198 520 (688) 1,070 8,664 27,446 20,695 147,175 23,881 7,172 (215,928) (223,100) 192,243 117,924 2,562 8,855 3,265 14,944 9,757 78,541 2015 $ $ $ $ $ 8,236 (17,060) (25,296) 761 210,839 64 67 - 167 463 210,078 - (64) 687 78 726 8,086 25,271 19,734 131,983 23,577 7,475 (227,899) (235,374) 191,394 119,831 2,423 9,357 3,504 14,836 8,646 81,065 2014 $ $ $ $ $ 10,619 4,201 (6,418) 2,632 206,974 641 70 - 43 1,878 204,342 - (641) 367 353 716 7,586 23,159 18,558 132,872 21,372 7,987 (202,773) (210,760) 182,602 119,092 831 9,376 4,137 14,791 7,994 81,963 2013 $ $ $ $ $ 4,173 (63,863) (68,036) 1,465 139,489 307 72 - (40) 1,126 138,024 (25,000) (307) 489 56 975 7,277 19,135 17,716 97,451 20,232 2,708 (203,352) (206,060) 188,781 119,491 705 9,423 4,886 14,562 7,185 82,730 2012 $ $ $ $ $ 3,512 3,729 217 1,138 150,956 317 70 - 137 614 149,818 (25,000) (317) 3,936 (677) 1,482 7,917 23,590 18,438 93,260 27,189 2,374 (147,227) (149,601) 258,432 118,599 1,155 9,342 4,829 14,733 8,027 80,513 2011 $ $ $ $ $ (4,008) (25,557) (21,549) 1,100 190,426 370 83 - 187 460 189,326 - (370) 5,406 330 286 8,130 31,292 17,786 92,717 33,749 (5,108) (215,983) (210,875) 186,303 113,529 690 9,331 4,870 15,048 6,987 76,603 2010 $ $ $ $ $ (3,034) (20,495) (17,461) 2,992 201,269 551 90 - 282 2,069 198,277 - (551) 2,872 (52) 1,668 8,808 36,267 19,321 97,054 32,890 (6,026) (221,764) (215,738) 164,947 102,322 1,207 8,701 2,042 15,258 7,304 67,810 2009 $ $ $ $ $ 774 13,937 13,163 4,787 210,278 509 108 - 126 4,044 205,491 - (509) 302 879 4,742 9,730 34,109 22,237 105,175 28,826 (4,013) (196,341) (192,328) 192,666 103,706 4,346 8,348 816 14,684 9,196 66,316 2008 This page left blank intentionally. 164 165 $ $ $ $ $ $ $ $ 5,861 91,908 2,295 170 (3,770) 96,464 - 2,934 7,443 10,647 40,559 61,583 - $ $ $ $ $ $ $ $ - 5,818 97,170 1,273 319 104,580 - 2,940 8,495 12,483 35,226 59,144 2016(1) $ $ $ $ $ $ $ $ - 5,768 99,970 1,945 107,683 - 216 10,313 1,114 8,563 26,033 46,239 2015(1) $ $ $ $ $ $ $ $ - 5,801 102,241 123 202 108,367 - 600 688 1,554 (4,835) (1,993) 2014(1) $ $ $ $ $ $ $ $ - 5,774 103,772 115 144 109,805 - 650 311 1,676 (14,438) (11,801) 2013(1) Note: (1) Changes made per GASB 54 requirement fund balance reporting, effective June 30, 2011. All other governmental funds Nonspendable Restricted Committed Assigned Unassigned Total all other governmental funds All other governmental funds Reserved Unreserved, report in: Special revenue funds Capital projects funds Total all other governmental funds General fund Nonspendable Restricted Committed Assigned Unassigned Total general fund General fund Reserved Unreserved Total general fund 2017(1) City of Glendale, Arizona Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts expressed in thousands) $ $ $ $ $ $ $ $ - 5,829 117,964 129 82 124,004 - 197 368 2,351 (29,565) (26,649) 2012(1) $ $ $ $ $ $ $ $ - 5,822 129,635 11,464 199 147,120 - 463 5,403 1,965 9,253 (5,414) 11,670 2011(1) $ $ $ $ $ $ $ $ $ $ $ 50,478 41,046 167,579 - $ $ $ $ $ 76,055 - 9,383 29,463 38,846 2010 - 57,555 27,474 168,995 83,966 - 10,450 42,180 52,630 2009 $ $ $ $ $ $ $ $ - 76,493 18,436 153,075 58,146 - 9,271 57,117 66,388 2008 Schedule 3 166 Total expenditures Excess of revenues over (under) expenditures General government Public safety Public works Community services Community environment Street maintenance Miscellaneous Capital outlay Debt service: Principal Interest Expenditures Total revenues Taxes and special assessments Licenses and permits Intergovernmental Local revenues Charges for services Fines and forfeitures Investment income (loss) Miscellaneous Revenues $ 338,852 (39,285) 332,637 (26,134) 35,650 30,382 46,456 30,704 299,567 176,489 11,951 86,273 17 12,613 3,857 1,517 6,850 34,671 126,498 9,429 28,461 4,285 10,260 27 59,189 $ 2016 29,531 131,576 9,484 30,659 3,979 11,195 39,053 306,503 181,576 12,403 89,684 300 13,486 3,699 276 5,079 2017 City of Glendale, Arizona Changes in Fund Balances - Governmental Funds Last Ten Fiscal Years (amounts expressed in thousands) $ 4,535 292,478 37,251 32,870 33,494 114,143 8,673 26,379 4,977 7,951 5,791 20,949 297,013 170,605 10,610 87,112 525 17,685 3,556 1,258 5,662 2015 $ 8,252 267,896 30,043 35,628 29,666 108,397 7,463 25,536 5,826 8,352 2,323 14,662 276,148 159,328 11,522 81,364 18 14,781 3,735 900 4,500 2014 $ (852) 257,435 26,441 43,038 16,065 103,610 7,859 27,966 5,554 8,305 4,617 13,980 256,583 149,705 10,373 76,520 36 11,896 3,469 762 3,822 2013 $ (33,947) 263,713 24,947 42,515 18,147 100,368 7,709 33,597 6,703 8,311 1,782 19,634 229,766 118,218 10,798 73,009 11,487 3,374 1,180 11,700 2012 $ (23,215) 271,478 31,640 42,593 19,668 95,270 8,859 33,887 6,853 9,038 1,577 22,093 248,263 120,974 9,367 79,760 10,461 3,806 1,841 22,054 2011 $ (60,262) 322,800 29,451 42,913 23,085 96,161 11,569 37,518 6,160 10,388 2,026 63,529 262,538 126,291 9,734 90,047 13,640 4,052 774 18,000 2010 $ (196,139) 455,499 29,670 39,571 26,048 103,624 11,072 42,294 3,478 11,901 1,666 186,175 259,360 130,119 10,503 91,642 9,881 4,064 3,805 9,346 2009 $ (120,924) 407,409 32,151 32,294 25,364 100,384 11,743 44,767 4,972 13,045 1,629 141,060 286,485 133,746 17,385 101,821 14,125 4,507 9,986 4,915 2008 Schedule 4 167 26.28% 23.61% $ 25.82% 48,256 43,721 (131,966) (110,145) (1,022) 240,694 (201,496) - 209,255 35,751 2,650 - 2015 $ 25.93% 8,370 118 48,704 (48,768) - 174 8 2014 $ 28.54% 649 1,501 (256,054) 52,136 (53,267) - (1,557) 239,875 19,779 589 - 2013 $ 27.64% (59,100) (25,153) (9,320) 32,977 (33,919) (25,000) 8,665 898 546 - 2012 $ 29.77% (34,138) (10,923) (41,251) 38,728 (39,045) (25,000) 11,503 38,300 (11,355) 3,369 331 - 2011 $ 27.91% (15,200) 45,062 36,306 (33,430) - 41,650 10 482 44 2010 $ 25.71% 2,162 198,301 21,914 (22,465) - (3,136) 199,750 1,894 344 - 2009 $ 24.20% 9,753 130,677 (83,521) 51,626 (52,135) - 109,986 93,815 2,192 8,714 - 2008 Note: The debt service percentage of noncapital expenditures does not include other financing sources/uses. The percentage equals the total principal and interest expenditures divided by the total expenditures less capital outlay. Debt service as a percentage of noncapital expenditures (5,677) Net change in fund balances 9,802 49,087 20,457 $ (30,470) 84,460 (85,263) - 48,450 (49,714) - $ 27,285 33,830 4,948 329 6,615 7,353 2016 19,330 2,391 - 2017 Refunding lease issued Discount on long-term debt Long-term debt issued Refunding bonds issued Payment to redeem lease Premium on long-term debt issued Proceeds from equipment disposal Capital lease proceeds Proceeds from loans Payment to redeem/refunded bonds escrow agent Current bond refunding principal Current bond refunding interest Transfers in Transfers out Special item Total other financing sources (uses) Other financing sources (uses) 168 1,130,460 304,041 316,206 379,087 403,055 499,308 2012-13 2013-14 2014-15 2015-16 2016-17 $ 37,350 40,431 40,191 41,750 45,507 49,391 59,049 60,888 56,528 51,889 Personal (3) $ 60,892 59,918 55,687 53,581 53,158 53,746 56,217 62,176 61,347 60,680 Utilities Rails and Wires $ 579,745 529,361 518,191 477,258 485,894 473,388 609,782 576,051 485,193 285,374 Less: Tax Exempt Property $ 1,653,175 1,520,229 1,408,099 1,148,108 1,047,273 1,149,524 1,753,570 2,130,907 2,193,675 1,827,019 Net Assessed Value (1) 2.14 2.20 2.15 2.29 1.90 1.59 1.59 1.59 1.59 1.62 Total Direct Tax Rate $ 13,617,839 13,046,428 12,452,875 12,489,163 11,471,039 12,040,482 17,333,074 20,635,557 21,034,639 16,733,846 Estimated Actual Value(1) 16.397 15.708 15.469 13.014 13.366 13.479 13.635 13.118 12.736 12.624 % Assessed Value as a Percentage of Actual Value(2) Schedule 5 Source: Maricopa County Assessor's Office and Maricopa County's Department of Finance Notes: (1) Assessed values are established each year by the County. The tax rate is $100 per assessed value (reference note I. L). (2) The assessed value as a percentage of actual value does not include tax exempt property. (3) The Assessor's Office no longer breaks down the secured and unsecured personal property as of 2013. All prior years secured and unsecured have been combined. 1,635,370 1,546,186 1,451,325 1,213,829 1,189,718 330,057 1,593,536 654,550 2010-11 2011-12 1,844,506 739,388 1,406,513 2009-10 $ 1,821,057 593,311 Improvements 739,936 $ Real Estate 2008-09 2007-08 Fiscal Year Major Components City of Glendale, Arizona Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (amounts expressed in thousands) 169 0.22 0.50 0.49 0.49 0.48 2012-13 2013-14 2014-15 2015-16 2016-17 1.67 1.71 1.66 1.79 1.68 1.37 1.37 1.37 1.35 1.35 2.15 2.20 2.15 2.29 1.90 1.59 1.59 1.59 1.59 1.62 City of Glendale 23.29 22.54 23.58 25.06 22.93 20.69 16.35 15.18 15.85 17.74 Glendale Elementary and High School Districts 20.82 20.66 19.64 19.82 18.08 15.54 14.13 13.81 14.09 15.33 Peoria Unified School Districts Overlapping Rates* * Overlapping rates are those of local and county governments that apply to property owners within the City of Glendale. Not all overlapping rates apply to all City of Glendale property owners (e.g., the rates for special districts apply only to the proportion of the government's property owners whose property is located within the geographic boundaries of the special district). Source: Maricopa County 2016 Tax Rates Note: The City rounds the rates to two digits from the four presented by the county. 0.22 0.22 2009-10 2011-12 0.24 2008-09 0.22 0.27 2007-08 2010-11 Basic Rate Fiscal Year General Obligation Debt Service City of Glendale, Arizona Direct and Overlapping Governments Property Tax Rates Last Ten Fiscal Years Per $100 Assessed Valuation 19.16 18.86 18.85 18.91 17.75 16.47 14.18 12.74 13.03 13.97 Deer Valley Unified School Districts Schedule 6 170 Rank 1 2 3 4 5 6 7 8 9 10 $ $ 100,458 Assessed Valuation 18,224 17,677 11,311 10,377 8,133 7,261 7,153 7,048 6,796 6,478 6.07 % Percentage of Total City Taxable Assessed Value 1.10 % 1.07 0.68 0.63 0.49 0.44 0.43 0.43 0.41 0.39 Tax Year 2017 85,197 6,326 12,758 10,147 6,259 6,392 4,916 4,887 7 2 3 8 6 9 10 $ 10,125 4 16,404 6,983 $ 5 1 Rank Assessed Valuation Schedule 7 6.23 % 0.46 0.93 0.74 0.46 0.47 0.36 0.36 0.74 0.51 1.20 % Percentage of Total City Taxable Assessed Value Tax Year 2007(2) Notes: (1) The Salt River Project Agriculture Improvement and Power District assessed valuation is not reflected in the total assessed valuation of the City of Glendale. The Project is subject to "voluntary contribution" in lieu of ad valorem taxation. The percentage of Total City Taxable Assessed Value is based on the Net Assessed Value. (2) 2008 information is unavailable Source: Maricopa County Treasurer's Office Total principal taxpayers Taxpayer New Westgate LLC Arizona Public Service Company Arrowhead Towne Center LLC VHS of Arrowhead, Inc. American Furniture Warehouse Outlets At Westgate LLC JQH-Glendale Az Development LLC Wal-Mart Stores, Inc. Stadium Development LLC Lexington Glendale LLC Qwest Corporation (US West) New River Associates Southwest Gas Corporation Toys DC South LLC 51 Bell Limited Partnership Coyote Center Development LLC City of Glendale, Arizona Principal Property Taxpayers Current Year and Nine Years Ago June 30, 2017 (amounts expressed in thousands) 171 21,841 23,943 24,429 24,850 25,253 2012-13 2013-14 2014-15 2015-16 2016-17 (1) Total levy includes only secured property. (2) Includes collections and resolutions. Source: Maricopa County Treasurer's Office 20,787 2011-12 33,617 2009-10 27,534 33,927 2008-09 2010-11 28,728 Tax Levy Year (1) 2007-08 Total Fiscal City of Glendale, Arizona Property Tax Levies and Collections Last Ten Fiscal Years (amounts expressed in thousands) 24,638 24,255 23,729 23,490 21,268 20,090 26,469 32,260 32,411 27,823 Amount 97.56 97.61 97.13 98.11 97.38 96.65 96.13 95.96 95.53 96.85 Levy Percent of Collected within the Fiscal Year of Levy Years (2) - 243 242 141 (9) 66 66 533 997 546 in Subsequent Collections 24,638 24,498 23,971 23,631 21,259 20,194 26,535 32,793 33,408 28,369 Amount 97.56 98.58 98.13 98.70 97.34 97.15 96.37 97.55 98.47 98.75 % Levy Percent of Total Collections to Date Schedule 8 This page left blank intentionally. 172 173 $ Total 3.0 % 4.8 % 15.6 4.9 2.7 (17.0) 6.9 (13.4) (16.5) 155,087 88,804 5,559 17,394 8,775 3,523 20,070 3,615 7,347 $ $ 3.8 % 7.1 % (25.5) 2.7 (1.5) (11.1) 6.3 (26.4) 31.6 150,634 84,710 4,810 16,581 8,544 4,244 18,767 4,176 8,802 2016 $ $ 8.4 % 7.0 % (18.8) 11.3 (0.6) (5.9) 11.4 168.9 15.1 145,126 79,062 6,457 16,146 8,678 4,773 17,651 5,673 6,686 2015 $ $ 8.9 % 10.1 % 38.9 2.3 8.8 (8.4) 10.9 (2.0) (1.8) 133,938 73,924 7,948 14,502 8,732 5,072 15,842 2,110 5,808 2014 $ $ 27.3 % 35.2 % 10.7 22.8 25.6 7.7 19.3 (25.6) 55.1 122,986 67,157 5,724 14,182 8,028 5,540 14,284 2,154 5,917 2013 $ $ (1.3) % 3.3 % (23.3) (2.6) (0.9) (15.6) 6.9 55.7 (31.5) 96,630 49,686 5,170 11,550 6,393 5,144 11,975 2,896 3,816 2012 $ $ 0.1 % (2.0) % 51.0 (7.0) (6.0) (1.0) 4.0 (50.0) 39.0 97,862 48,089 6,742 11,854 6,449 6,093 11,207 1,860 5,568 2011 $ $ (0.1) % 1.6 % (30.1) 10.6 5.9 (8.4) (0.7) 1.0 0.4 97,805 49,127 4,458 12,729 6,829 6,156 10,791 3,697 4,018 2010 $ $ (6.9) % (11.1) % (33.1) (4.7) 20.3 8.9 (1.2) 20.6 11.9 97,937 48,353 6,378 11,511 6,449 6,722 10,863 3,659 4,002 2009 Note: The 2012 and prior years tax rate for City activities is 2.2% except for telecommunications which is 5.4%, restaurant bars 3.2%, hotel/motel 5.6%, and retail sales food for home consumption 1.8%. The 2013 and later years tax rate for City activities is 2.9% except for telecommunications which is 6.1%, restaurant/bars 3.9%, hotel/motel 7.9%, retail sales food for home consumption 2.5%, and retail sales of individual items over $5,000 2.2% The amounts represent sales tax dollars collected for the fiscal year presented. Source: City of Glendale Tax and License Division Total % Growth by year Retail sales Contracting Rentals Utilities Telecom/cable TV Restaurant/bar Amusement Other $ Retail sales Contracting Rentals Utilities Telecom/cable TV Restaurant/bar Amusement Other 2017 City of Glendale, Arizona City Transaction Privilege Taxes (Sales Tax) by Category Last Ten Fiscal Years (amounts expressed in thousands) $ $ 7.5 % 7.3 % (9.0) 22.1 13.4 4.4 17.8 (7.7) 3.5 105,175 54,416 9,540 12,082 5,359 6,174 10,995 3,034 3,575 2008 Schedule 9 174 212,524 2007-08 151,206 133,168 141,553 125,384 2014-15 2015-16 2016-17 179,010 2011-12 2013-14 194,270 2010-11 163,130 225,595 2009-10 2012-13 197,738 2008-09 $ General Obligation Bonds Fiscal Year 8,055 3,736 1,912 - (4) (4) (5) (4) (5) (4) (5) (4) (5) 12,250 (4) 23,910 27,480 30,895 16,290 $ Street and Highway Revenue Bonds (4) City of Glendale, Arizona Ratio of Outstanding Debt by Type(1) Last Ten Fiscal Years (amounts expressed in thousands) (4) (5) (4) (5) (4) (5) (4) (5) (4) (4) (4) $ 468,431 475,918 477,747 477,736 468,875 474,840 481,705 487,305 493,880 298,050 Excise Tax Revenue Bonds (4) (5) (4) (5) (4) (5) (4) (5) $ 83,119 87,031 91,047 89,317 91,140 97,035 99,815 102,490 105,035 109,110 Transportation Bonds Government Activities (4) (5) (4) (5) (4) (5) (4) (5) $ 4,484 6,620 57 10,361 11,094 11,667 11,833 7,493 9,076 10,838 Capital Leases $ 3,677 5,515 - - - - - 6,288 7,637 9,045 Notes Payable Schedule 10 175 10,805 2007-08 - - - 2014-15 2015-16 2016-17 - (4) - - - - - - - 132 331 (4) $ Landfill G.O. Bonds $ 237,247 249,302 260,967 267,254 273,080 282,625 289,175 273,140 282,345 288,950 - (4) (5) (4) (5) (4) (5) - 708 11,901 14,278 12,425 10,240 (4) (5) $ Notes Payable $ - - - - - - 151 592 1,080 1,688 Capital Leases $ 922,342 965,939 964,898 999,610 1,020,889 1,064,620 1,113,440 1,150,251 1,146,823 982,476 Total Primary Government 4,694 (1) (5) (5) (5) (5) 3,875 4,255 4,141 4,327 4,471 4,901 (1) (1) 4,601 (1) 3,946 % 4,587 $ (1) (1) Total Debt per Capita(3) 9.14 10.81 10.18 11.52 12.21 13.27 14.12 13.56 13.11 11.32 Percentage of Personal Income(2) (1) Does not include other long-term obligations such as compensated absences, unamortized premiums, claims/judgments, arbitrage, post-closure costs, etc. (2) Calculate by dividing Glendale population with Maricopa County population and multiplying by total personal income to arrive at Glendale personal income (data from Schedule 15). Then divide total primary government amount by Glendale personal income to arrive at percentage of personal income. (3) Numbers not expressed in thousands. (4) Amounts outstanding less July 1. (5) Includes unamortized premiums of debt issuance and discount on debt issuance. - 6,485 2011-12 2013-14 8,300 2010-11 5,515 9,160 2009-10 2012-13 9,995 2008-09 $ Water Sewer G.O. Bonds Fiscal Year Business Activities Water Sewer Revenue Bonds City of Glendale, Arizona Ratios of Net General Bonded Debt Outstanding Last Ten Fiscal Years (amounts expressed in thousands) Less: Amounts Available in Debt Service General Obligation Fiscal Year Schedule 11 Bonds Percentage of Net Assessed Funds Total Per (6) Capita(3) Value of Property 223,660 (1) 2008-09 207,865 (1) 37,418 170,447 7.77 682.30 2009-10 234,755 (1) 41,934 192,821 9.05 770.75 2010-11 201,680 (1) 21,250 (2) 180,430 10.29 794.09 2011-12 185,495 (1) (4) 16,765 (2) 168,730 14.68 744.22 2012-13 168,645 (1) (4) 12,641 (2) 156,004 14.90 681.22 2013-14 147,810 (4) 9,310 (2) 138,500 12.06 599.28 2014-15 126,305 (4) 8,270 (2) 118,035 10.43 (5) 507.29 2015-16 135,130 (4) 4,511 (2) 130,619 11.12 (5) 556.38 2016-17 120,000 (4) 3,657 (2) 116,343 7.04 (5) 488.84 2007-08 $ $ 30,145 $ 193,515 10.59 % $ 778.01 Source: Maricopa County - Abstract by tax authority and class ADOA Office of Employment and Population Statistics - Population estimates for July 1, 2016 Notes: (1) (2) (3) (4) (5) (6) Includes general obligation water and sewer bonds. Includes the general obligation debt service fund balance at June 30. Per capita is in actual dollars. Population estimates per ADOA. Includes the July 1 payment. Beginning with FY 2015, based on limited assessed value instead of secondary full cash value. Beginning with FY 2017, calculation uses Feb State Abstract instead of Aug State Abstract. 176 City of Glendale, Arizona Net Direct and Overlapping Governmental Activities Debt Schedule 12 June 30, 2017(3) (amounts expressed in thousands) Jurisdiction Peoria Unified School District No. 11 Net Debt Percentage Applicable Amount Applicable Outstanding to Glendale to Glendale (2) $ 236,725 27.7473 % $ 65,685 Glendale Elementary School District No. 40 27,380 141.2802 38,683 Deer Valley Unified School District No. 97 214,410 23.5154 50,419 Alhambra Elementary School District No. 68 - 22.5619 - Glendale Union High School District No. 205 117,150 29.3460 34,379 - 3.8900 - Maricopa County Community College District 534,225 3.8900 20,781 Phoenix Union High School District No. 210 256,230 1.4811 3,795 Pendergast Elementary School District No. 92 25,350 36.7235 9,309 Tolleson Union High School District No. 214 28,600 10.4621 2,992 Washington Elementary School District No. 6 79,200 4.0466 3,205 227,738 0.1046 238 Agua Fria Union High School District No. 216 60,520 0.1944 118 Litchfield Elementary School District No. 79 44,425 0.2852 127 Cartwright Elementary School District No. 83 24,140 Maricopa County Dysart Unified School District No. 89 - - Total Overlapping Debt 1,876,093 229,731 City of Glendale Debt(1) 677,290 677,290 Total $ 2,553,383 $ 907,021 Source: Maricopa County - Abstract by tax authority and class, Abstract by tax area code and Annual Report of Bonded Indebtedness. (1) (2) (3) The City of Glendale debt includes total General Obligation (GO) and revenue bonds debt outstanding (not including water & sewer bonds), capital leases, notes payable, premiums and discounts, less debt service fund balances. Calculation based on Net Debt Outstanding multiplied by Percentage Applicable to Glendale, which is determined by dividing the tax area code net secondary assessed value by the tax authority net secondary assessed value. Prior fiscal year data used due to unavailability of current fiscal year Bonded Indebtedness Report from ADOA. 177 178 41.09% 31.53% $ 300,409 138,326 150,157 $ 215,247 $ 438,735 2009 24.40% $ 365,404 2008 39.55% 2010 22.69% 98,844 38.44% $ 262,370 163,811 $ 426,181 $ 29,010 $ 127,854 2010 2011(1) 13.69% 90,815 47.34% $ 184,683 166,031 $ 350,714 $ 14,399 $ 105,214 2011(1) $ $ 11.63% 55,527 7,309 62,836 $ 69.29% 70,599 159,306 $ 229,905 2012(1) $ 70.99% 60,760 148,695 $ 209,455 2013(1) (3) Beginning in FY 2017, the assessed value is from Maricopa County Assessor's Office February State Abstract report (2) Beginning in FY 2015, based on limited assessed value instead of secondary full cash value. 16.61% 57,516 11,455 68,971 2013(1) $ $ 3.51% 66,471 2,415 68,886 2014(1) $ $ -0.24% 68,042 (165) 67,877 2015(1) (2) $ $ 59.26% 93,537 136,085 229,622 2014(1) $ $ 52.24% 108,057 118,200 226,257 2015(1) (2) 0.00% 70,496 $ $ 55.59% 104,367 130,619 234,986 2016(1) (2) $ - 70,496 2016(1) (2) $ Assessed value Debt limit (20% of assessed value) Debt applicable to limit: General obligation bonds Less: Amount set aside for repayment of general obligation debt Total net debt applicable to limit Legal debt margin $ $ 2012(1) Schedule 13 0.00% 73,633 - 73,633 $ $ 47.40% 129,101 116,343 245,444 2017(1)(2)(3) $ 1,227,221 245,444 120,000 (3,657) 116,343 $ 129,101 $ $ 2017(1)(2)(3) $ 1,227,221 73,633 $ 73,633 Legal Debt Margin Calculation for Fiscal Year 2017 Assessed value Debt limit (6% of assessed value) Debt applicable to limit: General obligation bonds Less: Amount set aside for repayment of general obligation debt Total net debt applicable to limit Legal debt margin (1) Debt applicable to limit: General obligation bonds net of July 1 payment made prior to June 30. Total net debt applicable to the limit as a percentage of debt limit Legal debt margin Debt limit Total net debt applicable to limit 20% Type Bonds Total net debt applicable to the limit as a percentage of debt limit 99,500 66,263 Legal debt margin $ 32,121 43,358 $ $ 131,621 2009 $ 109,621 2008 Debt limit Total net debt applicable to limit 6% Type Bonds City of Glendale, Arizona Legal Debt Margin Information Last Ten Fiscal Years (amounts expressed in thousands) This page left blank intentionally. 179 180 Utility Service Charges(1) 69,490 69,300 76,987 81,127 83,496 83,454 81,733 79,325 83,088 83,442 Fiscal Year 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 City of Glendale, Arizona Pledged-Revenue Coverage Last Ten Fiscal Years (amounts expressed in thousands) 49,005 45,431 41,712 42,544 39,203 41,555 41,550 43,628 40,175 44,247 Less: Operating Expenses(2) 34,437 37,657 37,613 39,189 44,251 41,941 39,577 33,359 29,125 25,243 9,805 9,415 13,170 10,210 9,755 9,545 11,107 10,347 9,876 7,252 13,539 13,082 13,598 13,306 (3) (3) (3) (5) 10,321 10,719 10,918 12,706 13,152 11,918 (3) Water and Sewer Revenue Bonds Net Available Debt Service Revenue Principal Interest (3) (3) (3) (3) (3) 1.71 1.87 1.56 1.71 1.93 1.84 1.60 1.42 1.24 1.32 Coverage Schedule 14 181 20,875 19,488 19,486 20,665 21,691 23,112 24,690 25,566 26,362 2008-09 2009-10 2010-11 2011-12 2012-13 2014-15 2014-15 2015-16 2016-17 3,550 3,380 3,545 3,125 3,005 2,890 2,780 2,675 2,545 4,075 3,594 3,763 3,597 4,201 4,321 4,437 4,548 4,655 4,782 3,255 Debt Service Principal Interest 3.69 3.58 3.46 3.15 2.96 2.82 2.66 2.66 2.85 3.23 Coverage 160,534 156,210 151,963 141,674 131,931 100,081 102,962 109,536 118,277 127,373 Excise Tax Revenue 2,590 2,790 6,500 2,585 10,025 5,075 (6) (6) (6) (6) (6) (6) 6,585 5,600 6,575 7,399 (5) (5) 21,033 20,984 21,175 22,951 30,713 27,279 27,612 27,812 24,074 17,617 Debt Service Principal Interest Excise Tax Revenue Bonds (4) (7) Source: City of Glendale Finance Department Notes: (1) Operating revenues and nonoperating revenues excluding non-cash contributions, gains and losses. (2) Excluding depreciation. (3) Principal and interest amounts include debt service on the note payable to the Water Infrastructure Financing Authority of Arizona for the 00-01 loan and the 09-10 loan for fiscal years through 2011-12. (4) Excise tax revenue bonds include the Municipal Property Corporation and the Western Loop 101 Public Facilities Corporation (FY 2008-09 to FY 2012-13). (5) Excluding reductions to principal by refunded bonds - 2011-12 Water & Sewer Revenue Bond $74,050 and Excise Tax Revenue Bonds $8,945; and 2012-13 Excise Tax Revenue Bonds $243,250. (6) Excise tax revenue amounts include state shared revenues. (7) Includes interest expense from refunding the Western Loop 101 Public Facilities Bonds in December 2012. 23,672 Transportation Sales Tax 2007-08 Fiscal Year Transportation Bonds 6.15 5.04 6.40 4.81 3.94 3.35 3.01 3.28 3.86 5.09 Coverage City of Glendale, Arizona Demographic and Economical Statistics Last Ten Fiscal Years (amounts expressed in thousands) Schedule 15 Fiscal Year City of Glendale Population( 2 ) Maricopa County Population( 6 ) 2007-08 249 3,988 2008-09 250 4,116 2009-10 250 2010-11 227 2011-12 229 (5) 3,885 2012-13 231 (5) 2013-14 233 2014-15 233 2015-16 227 4,137 2016-17 238 4,137 Personal Income $ Per Capita Personal Income( 1 ) ( 4 ) ( 1) 145,880,680 $ Unemployment Rate 36,580 3.6 146,898,132 35,690 8.4 4,023 140,351,646 34,887 9.1 3,817 147,724,392 (3) 38,701 9.2 (3) 156,763,179 (3) 40,350 8.6 (5) 3,934 (3) 160,497,824 (3) 40,798 7.6 (5) (5) 3,945 (3) 167,439,604 (3) 42,443 6.6 (5) (5) 4,076 (3) 175,437,829 (3) 43,042 5.6 (5) 175,437,829 42,407 5.6 (5) 175,437,829 42,407 4.9 (5) Note: (1) Personal Income and Per Capita Income figures are for Maricopa County. City of Glendale is one of several Valley cities that comprise Maricopa County, including Phoenix, Mesa and Scottsdale. (2) Estimate provided by City of Glendale Planning Department. (3) The previous fiscal year Maricopa County CAFR provides the most current number. (4) Calculation based on personal income divided by Maricopa County population. (5) Estimate provided by Arizona Department of Administration, Office of Employment and Population Statistics website for the prior fiscal year. (6) Maricopa County population extracted from Maricopa County CAFR statistical section. 182 % City of Glendale, Arizona Principal Employers Current Year and Nine Years Ago Schedule 16 2007(1) 2017 Employer Luke Air Force Base Banner Thunderbird Health System Arrowhead Towne Center Walmart Glendale Union High School District Glendale Community College City of Glendale Deer Valley Unified School District Glendale Elementary School District Tanger Outlets Schuck and Sons AAA Total Employees 5,100 3,000 2,650 2,175 1,974 1,948 1,685 1,594 1,400 1,200 Rank 1 2 3 4 5 6 7 8 9 10 Percentage of Total City Employment 4.22 % 2.49 2.20 1.80 1.64 1.61 1.40 1.32 1.16 0.99 22,726 18.83 % Source: City of Glendale Economic Development Department Department of Economic Security, Research Administration City of Glendale Human Resources Department Notes: (1) 2008 information is unavailable 183 Employees 8,400 2,500 2,500 Rank 1 3 2 Percentage of Total City Employment 4.50 % 1.34 1.34 1,862 1,220 2,100 1,432 1,684 5 8 4 7 6 1.00 0.65 1.12 0.77 0.90 1,150 808 9 10 0.62 0.43 23,656 12.67 % 184 29.00 55.00 14.00 22.00 71.00 68.00 530.00 282.00 54.00 73.00 35.00 183.00 24.00 59.00 186.00 1,685.00 General government Management services Finance Planning Building Legal Other Police Fire Homeland security Community service Parks and recreation Library Public works Engineering Transportation Utilities Total 28.00 53.00 13.00 22.00 67.00 68.00 522.00 262.00 55.00 66.00 34.00 184.00 18.00 57.00 184.00 1,633.00 2016 Sources: City Budget Division for 2008 City of Glendale Human Resources Department for 2009-17 2017 Function/Program 24.00 56.00 11.00 22.00 69.00 66.00 517.00 259.00 57.00 58.00 31.00 180.00 19.00 56.00 185.00 1,610.00 2015 City of Glendale, Arizona Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years 31.00 49.00 10.00 21.00 69.00 63.00 534.00 253.00 48.00 59.00 32.00 173.00 17.00 57.00 176.00 1,592.00 34.00 54.00 13.00 21.00 67.00 73.00 505.00 260.00 56.00 75.00 32.00 165.00 18.00 60.00 172.00 1,605.00 36.00 57.00 14.00 24.00 66.00 77.00 534.00 269.00 60.00 92.00 48.00 179.00 19.00 65.00 185.00 1,725.00 45.00 59.00 15.00 26.00 70.00 90.00 544.00 270.00 72.00 123.00 56.00 203.00 26.00 69.00 167.00 1,835.00 Full-Time Equivalent Employees as of June 30 2014 2013 2012 2011 43.00 61.00 24.00 32.00 73.00 96.00 554.00 276.00 72.00 122.00 57.00 225.00 27.00 63.00 170.00 1,895.00 2010 38.00 69.00 33.00 43.00 70.00 104.00 567.00 278.00 6.00 69.00 85.00 65.00 256.00 39.00 67.00 171.00 1,960.00 2009 35.00 86.75 28.50 53.75 78.00 108.50 557.50 263.50 7.00 93.75 99.25 87.76 281.00 45.00 89.25 186.00 2,100.51 2008 Schedule 17 185 57,089 6,229 48,971 46,086 78,977 5,488 568,653 74,256 57,584 6,289 48,346 41,026 75,561 6,234 514,197 71,912 77,318 528,835 5,449 74,217 48,993 45,693 59,960 6,117 61,117 12,057 3,467 32,250 174,535 17,871 31,873 2015 78,271 408,516 4,799 70,679 45,942 41,879 56,791 6,244 60,932 13,768 3,461 30,262 146,538 18,939 31,481 2014 Note: Water and sewer statistics are contained in Schedule 20 and 21. (1) Fire department figures are on a calendar year. (2) Departures/arrivals are based on fiscal year as of 2009-2010. 2009 figures are through October 30, 2009. (3) Includes all formats: books, magazines, CD's, DVD's and electronic/downloadable collection. Source: Various city departments and FAA ATADS report 61,329 13,864 3,371 34,518 190,074 8,445 32,732 2016 61,846 13,672 3,093 Fire calls Water Number of billed accounts Water produced (millions gallons) Sewer Number of billed accounts Treated influent (millions gallons) Refuse collection Residential curb service (tons per year) Commercial container service (tons per year) Airport Departures/arrivals (2) General government Building permits Library Volumes in collection (3) Transit Dial-A-Ride passengers 31,502 187,645 9,030 30,146 Police Calls for service Bookings Criminal offense reports Fire EMS calls 2017 Function/Program City of Glendale, Arizona Operating Indicators by Function/Program Last Ten Fiscal Years 85,798 415,695 6,383 76,390 46,833 40,272 56,357 6,065 60,450 13,667 3,478 30,082 90,577 446,010 5,304 80,416 48,187 39,722 55,987 5,970 60,109 14,064 3,495 29,321 127,829 7,083 33,938 Fiscal Year 2012 127,333 8,588 34,995 2013 92,134 529,113 5,619 80,291 49,784 40,451 55,609 5,998 59,732 13,569 3,573 27,751 129,161 9,902 27,304 2011 89,808 523,512 5,194 69,834 52,634 41,797 55,439 6,405 59,579 14,284 3,847 26,591 129,868 11,015 29,765 2010 91,841 540,352 5,289 91,998 53,493 44,600 56,709 6,570 59,079 15,375 3,900 24,419 137,586 11,990 32,599 2009 88,638 546,136 6,931 137,762 58,865 48,267 54,936 6,661 59,807 14,943 4,216 25,851 146,489 12,902 32,918 2008 (1) (1) Schedule 18 186 Source: Various city departments Note: Landfill capacity in thousands Police Stations Patrol vehicles Fire stations General government City square miles Water Treatment capacity (millions gallons per day) Storage capacity (millions gallons) Miles of water mains Sewer Treatment capacity (millions gallons per day) Miles of sewer lines Landfill Landfill capacity - south cell Landfill capacity used - south cell Other public works Streets (miles) Parks and recreation Number of parks/retention basins/facilities Acres of parks Transit Dial-A-Ride minibuses Function/Program City of Glendale, Arizona Capital Asset Statistics by Function/Program Last Ten Fiscal Years 3 193 9 60 104.1 67 994 29.2 707 24,215 20,137 718 101 2,192 20 60 104.1 67 994 29.2 707 24,215 20,575 748 102 2,192 22 2016 3 183 9 2017 22 100 2,189 718 22,429 19,687 29.2 707 104.1 67 994 59 3 178 9 2015 20 100 2,189 718 21,493 19,220 29.2 707 104.1 67 994 59 3 176 9 2014 21 100 2,189 718 21,218 18,849 29.2 707 104.1 67 994 59 3 139 9 21 100 2,189 717 22,065 19,257 29.2 700 104.1 67 994 59 3 154 9 Fiscal Year 2013 2012 21 100 2,189 802 21,912 18,444 29.2 690 104.1 67 994 59 3 174 9 2011 22 100 2,189 736 21,666 18,529 29.2 680 94.1 67 994 59 3 157 9 2010 23 99 2,199 736 21,666 18,126 29.2 670 94.1 67 850 59 3 159 9 2009 22 99 2,125 736 22,594 17,776 29.2 659 81.6 62 800 58 3 158 9 2008 Schedule 19 City of Glendale, Arizona Miscellaneous Water and Sewer Rate Statistics June 30, 2017 Schedule 20 WATER RATES PER METER SIZE Commercial and Residential Monthly Base Charge Inside Outside City City Meter Size (inch) 5/8 3/4 1 1 1/2 2 3 4 6 8 10 12 $ 9.70 12.30 17.40 35.30 62.90 106.00 189.00 376.00 557.00 896.00 1,326.00 $ 12.61 15.99 22.62 45.89 81.77 137.80 245.70 488.80 724.10 1,164.80 1,723.80 Residential Commercial 3/4 inch Meter Size Meter Size and Greater (1) Gallons per Month All Year Inside Outside City City All Year Inside Outside City City 0 - 6,000 7,000 - 15,000 16,000 - 30,000 over 31,000 $ 2.14 2.68 3.76 5.27 $ 2.28 2.28 2.28 2.28 $ 2.79 3.49 4.89 6.86 $ 2.97 2.97 2.97 2.97 Summer Excess Rate Inside Outside City City $ 2.85 2.85 2.85 2.85 SEWER SERVICE RATES Type of Service Single Family Dwelling Unit Office Building Apartment - Average 5 units Apartment - Average 35 units Retail/Wholesale Inside City 31.22 55.40 82.41 566.87 63.75 (1) Per 1,000 gallons SOURCE: City of Glendale Finance as of May 2017 187 Outside City 34.13 N/A 124.37 182.03 N/A $ 3.71 3.71 3.71 3.71 City of Glendale, Arizona Miscellaneous Water and Sewer Statistics June 30, 2017 HISTORICAL AVERAGE NUMBER OF WATER ACCOUNTS (1) Fiscal Year Ending June 30 2008 2009 (3) 2010 (3) 2011 (3) 2012 (4) 2013 (3) 2014 (3)(5) 2015 (3) 2016 (3) 2017 (3) Residential 54,396 53,523 53,522 53,663 53,858 54,056 53,914 54,126 54,266 54,448 Multi-Family (2) 1,672 1,674 1,673 1,680 1,799 1,800 1,800 1,799 Commercial 5,411 5,556 4,247 4,264 4,281 4,296 4,264 4,379 4,492 4,632 Sprinkler (2) 1,647 1,655 1,666 1,669 1,819 1,862 1,885 1,910 Total 59,807 59,079 61,088 61,256 61,478 61,701 61,796 62,167 62,443 62,789 (1) Total meters in the system being read monthly. Slightly lower figure for active accounts due to vacant properties. (2) In 2010, the schedule was revised to separate into their own categories Sprinkler from Residential and MutiFamily from Commercial. (3) As of October following the fiscal year ended. (4) As of August 2012. (5) Reclassified 269 residential connections to multifamily or sprinkler. SOURCE: City of Glendale Water Services Department WATER DELIVERIES Acre Feet Calendar Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Residential (1) 34,594 32,278 31,457 27,537 27,409 27,695 26,921 26,946 26,595 27,193 Commercial 11,281 10,764 10,122 10,482 11,143 11,278 10,634 10,587 11,031 11,329 (1) Residential includes both single and multi-family housing. (2) Starting in 2005, Other represents unbilled water and system loses. SOURCE: Annual Report of Arizona Department of Water Resources. 188 Other (2) 3,937 2,818 5,606 4,455 9,558 3,683 3,050 2,467 2,092 2,743 Total 49,812 45,860 47,185 42,474 48,110 42,656 40,605 40,000 39,718 41,265 Schedule 21 SEWERAGE ACCOUNTS BILLED AND SEWAGE TREATED Fiscal Year Ending June 30 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 No. of Sewer (1) Accounts Billed 54,662 54,936 56,709 56,868 57,087 57,300 57,385 57,588 57,089 57,953 91st Ave WWTP (2) (MGD) Actual 7.8 6.8 6.8 8.3 7.9 7.3 8.4 6.9 7.5 7.4 Arrowhead (MGD) 2.9 2.8 2.8 2.3 2.3 2.5 2.7 2.7 2.7 2.7 West (MGD) 9.1 8.6 8.4 5.4 4.4 5.8 6.0 7.2 6.9 7.2 Total Treated 19.8 18.2 18.0 16.0 14.6 15.6 17.1 16.8 17.1 17.3 (1) The number of billed accounts is less than the number of connections due to vacant properties. (2) The 91st Avenue Wastewater Treatment Plant is a regional plant servicing five cities. Previously listed as "Multi-City Plant" (SROG). SOURCE: City of Glendale Water Services Department 189 This page left blank intentionally. 190 City of Glendale Finance Division 5850 West Glendale Avenue, Suite 302 Glendale, Arizona 85301 (623) 930-2480