Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2003 City of Yuma, Arizona City of Yuma Arizona Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2003 Prepared by: CITY COUNCIL Lawrence K. Nelson, Mayor Bobby L. Brooks Edwin L. Hansberger Karen J. Hill Paul B. Johnson Norma A. Nelson Ema Lea Shoop City Administration Robert L. Wagner City Administrator Martha Dempsey Assistant City Administrator City Departments Administrative Services Robert L. Stull City Attorney Steven W. Moore Administrative Services Department Robert L. Stull Director Donald “Pat” Wicks, CPA Assistant Director for Financial Services City Clerk Brigitta K. Stanz Community Development Michael A. Steele Fire Department Gary L. Fisher, Chief Information Technology Laura S. Neinast Municipal Court Douglas S. Stanley, Judge Parks and Recreation Stephen D. Bills About the Cover: U.S. Highway 80, the “Ocean to Ocean” highway, ran from Savannah, Georgia to San Diego, California. Crossing the once-mighty Colorado River at Yuma, the bridge was the only bridged highway crossing of the river for 1,200 miles. Constructed in 1915, the bridge was rededicated in 2002 and opened to one-way vehicular traffic as part of the restoration of the Yuma Crossing National Heritage Area. Refurbishing the bridge was a joint project of the City of Yuma, the Quechan Indian Nation and Yuma County. Cover photo by Robert Herko ©Copyright Yuma Crossing National Heritage Area Corporation. Used with permission. Police Department William D. “Robby” Robinson, Chief Public Works Gary R. Burroughs Citizens of Yuma Assistant City Administrator/ Quality Initiatives Program Mayor and Council Communications/ Public Affairs Municipal Court Judge City Administrator City Clerk Municipal Court FIRE DEPARTMENT __________________ COMMUNITY DEVELOPMENT _____________________ Emergency Management Business Development Prevention Engineering Streets Training Planning and Neighborhood Services Utility Systems Special Operations Treatment Emergency Medical Services PUBLIC WORKS _______________ POLICE DEPARTMENT ___________________ Assistant Directors Field Services Vehicle Maintenance Support Services ADMINISTRATIVE SERVICES _______________ Assistant Director Parks/Mall Maintenance Support Services Solid Waste PARKS AND RECREATION _______________ Recreation Civic and Convention Center/Baseball Complex Arts and Culture Golf Courses INFORMATION TECHNOLOGY _______________ CITY ATTORNEY _______________ Business Applications and Support Assistant City Attorneys Financial Services Human Resources Materials Management Risk Management Telecommunications and Support City of Yuma, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2003 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal from the Director of Administrative Services Certificate of Achievement for Excellence in Financial Reporting Page v x FINANCIAL SECTION Independent Auditors' Report Management's Discussion and Analysis (Required Supplementary Information) BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS Statement of Net Assets Statement of Activities FUND FINANCIAL STATEMENTS Governmental Funds: Balance Sheet Reconciliation of the Balance Sheet-Governmental Funds to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund BalancesGovernmental Funds to the Statement of Activities Proprietary Funds: Statement of Net Assets Statement of Revenues, Expenses and Changes in Fund Net Assets Statement of Cash Flows NOTES TO THE FINANCIAL STATEMENTS REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress - Public Safety Personnel Retirement System Budgetary Comparison Schedules-General Fund and Major Special Revenue Funds: General Fund Highway User Revenue Fund Road Tax Fund Grants Fund Community Redevelopment Fund OTHER SUPPLEMENTARY INFORMATION Combining Balance Sheet-Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances-Nonmajor Governmental Funds Budgetary Comparison Schedules: Major Governmental Funds Not Included In Required Supplementary Information Municipal Property Corporation Bonds Debt Service Fund Capital Projects Fund Nonmajor Governmental Funds Local Transportation Assistance Special Revenue Fund Public Safety Tax Special Revenue Fund Solid Waste Special Revenue Fund Recreation Complex Special Revenue Fund Two Percent Tax Special Revenue Fund i 3 5 20 21 24 26 28 30 31 32 33 35 58 59 62 63 64 65 70 72 74 75 76 77 78 79 80 City of Yuma, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Year Ended June 30, 2003 TABLE OF CONTENTS (Concluded) FINANCIAL SECTION (Continued) Page Nonmajor Governmental Funds (continued) Yuma Mall Maintenance Special Revenue Fund Nonmajor Proprietary Funds: Enterprise Funds: Combining Statement of Net Assets Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Combining Statement of Cash Flows Budgetary Comparison Schedules: Water Enterprise Fund Wastewater Enterprise Fund Desert Hills Golf Course Enterprise Fund Arroyo Dunes Golf Course Enterprise Fund Internal Service Funds: Combining Statement of Net Assets Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Combining Statement of Cash Flows Budgetary Comparison Schedule - Equipment Replacement Internal Service Fund Capital Assets Used in the Operation of Governmental Funds: Schedule of Capital Assets by Source Schedule By Function and Activity Schedule of Changes by Function and Activity 81 84 85 86 87 88 89 90 92 93 94 95 98 99 100 STATISTICAL SECTION Government-wide Expenses by Function Government-wide Revenues General Governmental Expenditures by Function - Last Ten Fiscal Years General Revenues by Source - Last Ten Fiscal Years Tax Revenues by Source - Last Ten Fiscal Years Intergovernmental Shared Revenues - Last Ten Fiscal Years Intergovernmental Revenues - Grants and Other - Last Ten Fiscal Years Property Tax Levies and Collections - Last Ten Fiscal Years Assessed and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years Property Tax Rates per $100 of Assessed Valuation - Direct and Overlapping Governments - Last Ten Fiscal Years Computation of Direct and Overlapping Debt Ratio of General Bonded Debt to Assessed Value and General Bonded Debt per Capita - Last Ten Fiscal Years Special Assessments Collections - Last Ten Fiscal Years Computation of Legal Debt Limitation Ratio of Debt Service of General Bonded Debt to Total General Governmental Expenditures - Last Ten Fiscal Years Schedule of Water and Wastewater Revenue Bond Coverage - Last Ten Fiscal Years Pledged Tax Collections Schedule of Municipal Property Corporation Debt Service Requirements to Maturity Building Permits, Bank Deposits and Retail Sales - Last Ten Fiscal Years Assessed Valuation of Ten Major Property Taxpayers Miscellaneous Statistical Data ii Table I II III IV V VI VII VIII IX 103 104 105 106 107 108 109 110 111 X XI 112 113 XII XIII XIV 114 115 116 XV XVI XVII XVIII XIX XX XXI 117 118 119 120 121 122 123 INTRODUCTORY SECTION iii iv DEPARTMENT OF ADMINISTRATIVE SERVICES One City Plaza P.O. Box 13012 Yuma, Arizona 85366-3012 (928) 373-5087 Fax: (928) 373-5084 City of YUMA September 25, 2003 To the Citizens, Honorable Mayor and City Council, and City Administrator The Department of Administrative Services is pleased to present the Comprehensive Annual Financial Report (CAFR) of the City of Yuma, Arizona for the fiscal year ended June 30, 2003. The report includes the independent auditors’ report as required by City Charter Article XIII, Section 12, and by Arizona Revised Statutes, Section 9-481. The report is prepared in conformity with generally accepted accounting principles and standards set forth by the Governmental Accounting Standards Board (GASB). Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including disclosures, rests with the City. Management of the city is responsible for establishing and maintaining internal controls to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles as they apply to governmental units. Internal control is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that: 1) the cost of a control should not exceed the benefits likely to be derived; and, 2) the calculation of costs and benefits requires estimates and judgments by management. To the best of our knowledge and belief, the enclosed data is accurate, in all material respects, and is reported in a manner designed to present fairly the financial position and results of operations as measured by the financial activity of its various funds. All disclosures necessary to enable the reader to gain an understanding of the City’s financial activities have been included. Heinfeld, Meech & Co., P.C., a public accounting firm fully licensed and qualified to perform audits of local governments within the State of Arizona, have audited the City’s financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Yuma, Arizona for the fiscal year ended June 30, 2003, 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 independent auditors concluded, based upon the audit, that the City of Yuma’s financial statements for the fiscal year ended June 30, 2003, are fairly presented in conformity with accounting principles generally accepted in the United States. The independent auditors’ report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City was part of a broader, federally mandated “Single Audit” designed to meet the special needs of Federal grantor agencies. 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, with special emphasis on internal controls and legal requirements involving the administration of Federal awards. These reports are available in the City’s separately issued Single Audit Reporting Package. This report has been prepared using the new financial reporting requirements as outlined in GASB Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments. This new standard requires that management provide a narrative introduction, overview, and v analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The MD&A can be found immediately following the independent auditors’ report. The report is presented in three sections: The Introductory Section. The Introductory Section includes this letter of transmittal with its discussion on the City’s economy, financial planning and cash management and information on the City’s organizational structure. The Financial Section. The Financial Section begins with the Independent Auditors’ Report and MD&A. It then contains the basic financial statements, notes to the financial statements, required supplementary information, and other supplementary information. The basic financial statements include the new government-wide financial statements as well as fund financial statements for the City’s major governmental funds and major enterprise funds. The notes to the financial statements follow, after which can be found required supplementary information, including pension information and budgetary schedules of the General Fund and each major special revenue fund. The last portion of the financial section contains other supplementary information listing fund financial statements for the City’s nonmajor governmental and enterprise funds, internal service funds, governmental capital assets and budgetary schedules for each of its funds with legally adopted budgets that were not presented with the required supplementary information. The Statistical Section. The Statistical Section includes a number of tables containing ten-year revenue and expenditure information as well as other financial and economic data. PROFILE OF THE CITY OF YUMA The City of Yuma was incorporated in 1914 and adopted its first charter in June of that year. Yuma is the economic hub and county seat of Yuma County and is of one of the fastest growing areas in the United States. The City is located along the Colorado River in southwestern Arizona and is equidistant from the major population centers of Phoenix, Arizona and San Diego, California. The City operates under a council-manager form of government. The City Council consists of six members elected at large for staggered four-year terms. The elected Mayor is the seventh voting member of council, who, along with the remaining council members is elected on a non-partisan basis. The City Council is responsible for passing ordinances, adopting the budget, appointing members of commissions and hiring the City Administrator. The City Administrator carries out the policies and ordinances of the City Council, oversees the day-to-day operations of the City and appoints the various department heads. The City provides a full range of municipal services. These include public safety (police, fire and municipal court), street construction and maintenance, water and wastewater utility services, sanitation and residential refuse collection, parks, recreation and culture, planning and zoning, and general administrative and support services. This CAFR includes the financial activity of the primary government, which includes several enterprise activities, as well as its blended component units. Component units are legally separate units for which the primary government is financially accountable. Blended component units, while legally separate, are part of the City’s operations and are combined within the report. The Yuma Municipal Property Corporation and the City of Yuma Employee Benefits Trust have been included in the reporting entity. Conversely, the report does not include the City of Yuma Housing Authority as the City is not financially accountable for the authority, nor does the city directly or indirectly rely upon or benefit from the financial activity of the authority. ECONOMIC CONDITION AND OUTLOOK Industrial Expansion. Yuma’s economy is based primarily in agriculture, tourism and government, although further diversification continues. Agriculture remains the Yuma area’s dominant industry, producing almost $800 million in revenues annually1. During the upcoming winter season, the industry is expected to exceed the $1 billion mark for the first time. Several major agricultural companies, most notably Dole Food Company, maintain operations here. Their chief consumer products are packaged produce and salad mixes, popular products for 1 Source: Yuma County Chamber of Commerce vi today’s convenience-minded customers. The Yuma area’s stable allocation of Colorado River water will assure that agriculture remains the foundation of Yuma’s economy. The United States Marine Corps Air Station and United States Army Yuma Proving Ground help provide economic stability. These two installations are cornerstones in the military’s flight training and equipment testing programs and should survive any continued base closure efforts by the federal government. In fact, both installations are enjoying new construction and expansion to meet their needs into the 21st century. The importance of these two bases to the military establishment has been magnified by the conflict in Iraq and the continued fight against terrorism. Although manufacturing currently accounts for less than 10% of countywide employment, the City’s partnership with the Greater Yuma Economic Development Council continues to attract attention to the area. Several companies have located or expanded operations in Yuma in recent years. As part of Yuma’s economic development plan, a 47-acre business park now houses an addition to Arizona Western College and a new call center. 14 13 12 11 10 9 8 2003 2002 2001 2000 1999 1998 1997 1996 1995 6 1994 7 1993 Yuma’s basis as a regional retail center expanded during 2003 with the announcement of plans to construct a 1 million square foot shopping center. A number of nationally known retail operations will be coming to Yuma in recognition of its economic growth. The center is expected to open before Thanksgiving Day in 2004. G e n e ra l S a le s T a x Millions Economic Growth. Yuma’s most reliable indicator of the condition of its economy is sales tax. The graph at right reflects the last ten years of data. Until the last few years, collections averaged a better than 7% increase annually. Beginning after 2001,Yuma’s collections dipped slightly to a 1% growth, although Yuma escaped the dramatic downturns affecting the larger population centers. Planning for fiscal year 2004 includes growth of sales tax collections in the 5% range. F is c a l Y e a r E n d e d J u n e 3 0 , Tourism. Yuma has enjoyed an influx of seasonal residents for decades. Visitors from throughout the United States and Canada continue to call Yuma their winter home. Yuma continues to be a popular destination although surveys show that the winter population decreased slightly this year. This contributed to the softening of sales tax collections. A review of collections showed hesitation to purchase big-ticket items while showing strength in more routine transactions. LONG-TERM FINANCIAL PLANNING Yuma Crossing Heritage Area. Plans to restore, preserve and interpret the Yuma Crossing Heritage area began more than thirty years ago. A study at the time aimed at gaining full economic and recreational benefit from the Colorado River for the Yuma area. The river, once the primary reason for Yuma’s existence, had been ignored for years as community growth and new development moved away from the riverfront. Awareness of the river’s importance has re-emerged, culminating in the establishment of the Yuma Crossing Heritage Area in 2000, the first such National Heritage Area west of the Mississippi River. During fiscal year 2003, the Heritage area plan was approved. This plan means up to $10 million in federal funding over the next 10 years in developing the Heritage Area. Attention now turns to working with the federal government to fund the project in light of the pressures brought it by the conflict in Iraq and the continued slow vii economy. With continued diligence, the City is determined to continue development of historic and cultural activities so important in meeting the Council’s goals in enriching the area’s cultural attributes. Progress in providing opportunities for local residents and for attracting employers to the area to continue to diversify the economy is dependent on continuing these plans. Downtown redevelopment. Revitalization of the downtown area is a vital component of management of the Heritage Area. After purchasing the historic Yuma Theater during fiscal 2002, the City issued bonds during fiscal 2003 to finance the construction and renovation related to the center. Along with recent private developments in the area, the opening of the new art center in January 2004 will help the downtown area to grow into a cultural and recreational portion of the Heritage Area. East Mesa development. Construction of various components of the new East Mesa Wastewater Treatment plant is underway. The anticipated $40 million plant and infrastructure will enable continued growth of the eastern edge of the City on the Yuma Mesa. In addition, the new $60 million water treatment facility/expansion began during the fiscal year to allow continued growth of both residential and commercial developments already under construction or in the planning stages. The Water Infrastructure Financing Authority (WIFA) of the State of Arizona has been invaluable in providing lower-cost financing for these important projects. Rate structures for both the Water Fund and the Wastewater Fund have already been passed and put in place by the City Council to assure adequate funding for the project’s debt service. FINANCIAL INFORMATION Budgetary Controls. The annual budget serves as the foundation for City financial planning and control. The City maintains budgetary controls with the objectives to ensure compliance with legal provisions embodied in the annual appropriated budget, approved by the City Council. Activities of the General Fund, Special Revenue Funds, Debt Service Funds, Capital Projects Fund, Enterprise Funds, and one of the City’s Internal Service Funds are included in the annual appropriated budget. As with the governmental funds, the City’s proprietary funds are presented on a current financial resources basis to account for capital and debt-related expenditures. The City maintains an encumbrance accounting system as one technique of accomplishing budgetary controls. Encumbered amounts lapse at year-end. However, encumbrances generally are re-appropriated as part of the following year’s budget. As demonstrated by the budgetary schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. In addition to budgetary schedules, Note I-D in the Notes to the Financial Statements on page 37 describes in detail the budget process used by the City. Cash Management. The policy of the City of Yuma is to invest funds in a manner which will provide the maximum security of principal invested, provide the highest yield while conforming to applicable State statutes and City ordinances, and meet the daily cash flow needs of the City. Investments authorized by the City’s Investment Policy include: 1) Obligations of the U.S. Government; 2) Fully insured or collateralized certificates of deposits; 3) Bankers acceptances issued by the ten largest domestic banks and the twenty largest international banks; 4) Commercial paper rated A-1/P-1; 5) Repurchase agreements whose underlying collateral consists of the foregoing, provided a signed PSA Master Repurchase Agreement is on file with the counterpart bank or broker/dealer; 6) Money Market Funds whose portfolio consists of the foregoing; and, 7) the State of Arizona Local Government Investment Pool. Total investments increased to $87,634,643 at June 30, 2003 from $73,930,832 last year. The increase reflects the unexpended proceeds of the 2003 MPC Bond with which a new fire station and the new arts center are to be constructed. Following market conditions, average yield on investments declined at June 30, 2003, to 1.96%. A review of Note III A in the Notes to the Financial Statements, page 41, will provide a more complete review of investment policy and balances. Risk Management. The City is self insured for certain risks up to a maximum of $250,000 per occurrence. Primary insurance is then available for the next $1,000,000 per occurrence with a $5,000,000 annual aggregate loss. An excess policy follows to cover losses in excess of $1,000,000 per occurrence up to an additional $4,000,000 per occurrence with a $4,000,000 aggregate. The City self funds for workman’s compensation up to $100,000 per occurrence per year with a $250,000 lifetime maximum loss per occurrence. The City also selffunds its dental coverage while securing commercially provided health insurance for its employees. Coverage in excess of self-funded stop loss amounts is also provided through the purchase of commercial insurance. viii The City pursues an aggressive safety program providing a wide range of training opportunities for employees in promoting safety, managing materials, defensive driving and many other issues. This program helps to mitigate claims costs and reduce exposure. AWARDS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its comprehensive annual financial report for the fiscal year ended June 30, 2002. This is the twenty-first consecutive year the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City published an easily readable and efficiently organized comprehensive annual financial report. The report satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another award. I wish to express my sincere thanks to the employees of the Accounting Division for their dedicated service in preparing this report. Their work, along with those services provided by other members of the Department of Administrative Services, have made this report possible. The cooperation and assistance of the accounting firm of Heinfeld, Meech & Co., P.C., also contributed significantly to its production. Finally, I wish to thank the Mayor and Council, City Administrator, and the City Staff for their continued support. Respectfully submitted, Robert L. Stull Director of Administrative Services ix Certificate of Achievement for Excellence in Financial Reporting Presented to City of Yuma, Arizona For its Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2002 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and financial reporting. x FINANCIAL SECTION 1 2 HEINFELD, MEECH & CO., P.C. CERTIFIED PUBLIC ACCOUNTANTS Gary Heinfeld, CPA, CGFM Nancy A. Meech, CPA, CGFM Jennifer L. Shields, CPA C. Christopher Arvizu, CPA 3003 N. Central Avenue, Suite 1175 Phoenix, Arizona 85012 (602) 277-9449 Fax (602) 277-9297 www.heinfeldmeech.com INDEPENDENT AUDITORS’ REPORT The Honorable Mayor and Members of the City Council City of Yuma, Arizona We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Yuma, as of and for the year ended June 30, 2003, which collectively comprise the City’s basic financial statements, as listed in the table of contents. These financial statements are the responsibility of the City’s management. 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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 Yuma, as of June 30, 2003, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. The management’s discussion and analysis on pages 5 to 15 and the budgetary comparison information on pages 59 to 65 are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. 3 Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Yuma’s basic financial statements. The introductory section, other supplementary information and the statistical section as listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. The other supplementary information have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. In accordance with Government Auditing Standards, we have also issued our report dated September 25, 2003, on our consideration of City of Yuma’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. HEINFELD, MEECH & CO., P.C. Certified Public Accountants September 25, 2003 4 MANAGEMENT’S DISCUSSION AND ANALYSIS (Required Supplementary Information) As management of the City of Yuma, we offer readers of the City of Yuma's financial statements this narrative overview and analysis of the financial activities of the City of Yuma for the fiscal year ended June 30, 2003. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal in the introductory section of this report. FINANCIAL HIGHLIGHTS • On a government-wide basis, the City’s net assets grew by $21.3 million for the fiscal year, $16.9 million of which was generated by governmental activities while $4.4 million was due to businesstype activities of the City. • The City’s combined net assets total $239.8 million at June 30, 2003. Of this amount, $84.3 million is available (unrestricted) to finance ongoing programs, $61.8 million in governmental programs and $22.5 million in business activities. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the City of Yuma's basic financial statements. The City of Yuma's basic financial statements comprise three components: 1) government-wide financial statements; 2) fund financial statements; and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of Yuma's finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City's assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (uncollected taxes and earned but unused vacation leave are two examples). Both of the government-wide financial statements distinguish functions of the City of Yuma 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, streets, environmental health and welfare, community design and development and parks, recreation and culture. The business-type activities of the City include water, wastewater and golf course operations. The government-wide financial statements can be found on pages 20-21 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Yuma, like other local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. 5 MANAGEMENT’S DISCUSSION AND ANALYSIS Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows 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 government'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. Moreover, these latter statements provide a ready comparison to similar financial statements produced prior to the City’s implementation of GASB Statement No. 34. The City maintains thirteen 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 seven funds considered to be major funds. Data from the other six governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements beginning on page 70. Major Governmental Funds: General Highway User Revenue City Road Tax Grants Community Redevelopment Municipal Property Corporation Debt Service Capital Projects Nonmajor Governmental Funds: Local Transportation Assistance Public Safety Tax Solid Waste Recreation Complex Two Percent Tax Yuma Mall Maintenance The City adopts annual appropriated budgets for all of its governmental funds. Budgetary comparison statements have been provided to demonstrate compliance with these budgets. The basic governmental fund financial statements can be found starting on page 24 of this report. Proprietary funds. The City of Yuma 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 of Yuma uses enterprise funds to account for its Water and Sewer Authority and for its golf courses. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City's various functions. The City of Yuma uses internal service funds to account for its equipment replacement program and for its workers compensation and employee health insurance. Because these services predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Major Enterprise Funds: Water Fund Wastewater Fund Nonmajor Enterprise Funds: Desert Hills Golf Course Arroyo Dunes Golf Course Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements group major and nonmajor proprietary funds in a manner similar to governmental fund statements. Conversely, the 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, beginning on page 92. The City adopts annual appropriated budgets for all of its proprietary funds with the exception of two internal service funds: Employee Benefits Trust and Workers’ Compensation. Budgetary comparison statements for the remaining proprietary funds are included within the report to demonstrate compliance with these budgets. The basic proprietary fund financial statements can be found on pages 31-33 of this report. 6 MANAGEMENT’S DISCUSSION AND ANALYSIS Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found beginning on page 35 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City of Yuma's progress in funding its obligation to provide pension benefits to its employees. Required supplementary information can be found starting on page 58 of this report. The combining statements referred to earlier in connection with nonmajor governmental, proprietary and internal service funds are presented immediately following the required supplementary information on pensions and budgets. Combining and individual fund statements and schedules can be found starting on page 70. GOVERNMENT-WIDE FINANCIAL ANALYSIS Statement of Net Assets. As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City of Yuma, assets exceeded liabilities by $239.8 million at the close of the fiscal year. Governmental Activities Net Assets 2003 (m illions) Current and other assets $ Restricted assets Capital assets Total assets 63.4 Business-type Activities 2002 $ 58.9 2003 $ 15.1 Total 2002 $ 14.7 2003 $ 78.5 2002 $ 73.5 153.8 217.2 134.0 192.9 20.4 96.4 131.9 11.9 92.0 118.5 20.4 250.2 349.1 11.9 226.0 311.4 Long-term liabilities outstanding Other liabilities Total liabilities 72.6 12.7 85.3 64.7 13.2 77.9 20.7 3.3 24.0 11.2 3.9 15.1 93.4 15.9 109.3 75.9 17.0 92.9 Net assets: Invested in capital assets, net of related debt Restricted Unrestricted 70.1 61.8 69.3 1.5 44.2 85.4 22.5 80.2 23.3 155.5 84.3 149.5 1.5 67.5 107.9 $ 103.5 Total net assets $ 131.9 $ 115.0 $ $ 239.8 $ 218.5 The largest portion of the City of Yuma's net assets reflects its investment in capital assets (e.g., land, buildings, machinery), less any related outstanding debt used to acquire those assets. 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 pay these liabilities. The remaining balance of unrestricted net assets may be used to meet the government’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets, including the City as a whole, as well as for its separate governmental and business-type activities. The same held true for the previous fiscal year. Net assets rose to $239.8 million, up $21.3 million from the prior year. Governmental activities accounted for $16.9 million of the increase while business-type activities amounted to $4.4 million. Most of the increase would be attributable to capital asset acquisitions, particularly infrastructure, as governmental capital assets increased almost $20 million (net of depreciation), funded in part by the excess of revenues over operating expenses as reported in the Statement of Activities on page 21. These acquisitions are reflected in the portion of net assets shown above as ‘Invested in capital assets, net of related debt.’ Unrestricted net assets are those assets available to finance programs in the upcoming fiscal year and would increase when the portion of taxes and other revenues exceed operating expenses but are not invested in capital assets. 7 MANAGEMENT’S DISCUSSION AND ANALYSIS Statement of Activities. Already noted was the statement of activities’ purpose in presenting information in how the government's net assets changed during the most recent fiscal year. A chart of changes in net assets follows. Governmental acitivites Changes in Net Assets (millions) 2003 Business-type activities 2002 2003 Total 2002 2003 2002 17.2 6.3 $ 26.0 3.4 7.1 $ 23.3 2.8 7.9 .6 1.0 5.7 25.5 1.7 24.2 7.6 1.5 5.3 25.0 1.8 23.3 3.2 Revenues Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Property taxes Sales taxes Franchise taxes Shared revenues Unrestricted grants and contributions Unrestricted investment earnings $ Total revenues 7.1 3.4 1.7 $ 6.1 2.8 1.7 $ 18.9 5.4 $ 5.7 25.5 1.7 24.2 7.6 .9 5.3 25.0 1.8 23.3 2.2 - 77.7 68.2 24.9 24.5 102.6 92.7 6.9 25.5 7.9 8.9 2.9 6.4 2.9 - 3.5 23.6 9.1 8.5 3.3 5.2 3.2 - 10.3 7.0 2.5 9.8 6.5 2.5 6.9 25.5 7.9 8.9 2.9 6.4 2.9 10.3 7.0 2.5 3.5 23.6 9.1 8.5 3.3 5.2 3.2 9.8 6.5 2.5 61.4 56.4 19.9 18.8 81.3 75.2 Expenses: General government Public safety Streets Parks, recreation and culture Environmental health and protection Community design and development Interest on long-term debt Water Wastewater Golf courses Total expenses Changes in net assets before transfers and special item Transfers Special item-litigation Change in net assets .6 .4 $ 16.9 (.6) - $ 12.2 $ 4.4 (.4) (1.2) $ 4.1 $ 21.3 (1.2) $ 16.3 For the fiscal year, net assets increased $21.3 million, with $16.9 of the increase coming from governmental activities. The increase in assets in governmental activities is related in great part to construction of assets, rather than accumulation of cash or other liquid assets. The reader should remember that the basis of accounting used in the government-wide statement of activities excludes capital expenditures while its revenues include general taxes whose primary purpose is for the construction of those very assets or their related debt service (i.e., public safety or road sales taxes). Governmental Activities Revenues Governmental activities revenues totaled $77.7 million for fiscal year 2003, up 14% from 2002. Local sales taxes are the largest revenue source for the City and are comprised of the 1% general sales tax along with a .5% road tax and a .2% public safety tax. State-shared revenues are the City’s second largest revenue source. Stateshared revenues include state sales tax, urban revenue sharing (property tax), auto in-lieu tax and highway user funds (gas tax). Sales taxes and state shared revenues account for 64% of governmental revenues for the year, which is down from 71% in 2002. Charges for services, the third segment of governmental activities revenues, count building permits and inspections, fines, recreation fees, solid waste environmental fees, police services and civic center rental fees among its largest sources. The charges for services category amounts to 9% of governmental revenues. Property taxes represent 7% of governmental revenues. The large majority of property 8 MANAGEMENT’S DISCUSSION AND ANALYSIS taxes are levied for general purposes with a small levy for downtown mall maintenance. No property taxes are levied for debt service. Various grants and contributions and franchise taxes account for most of the remaining governmental revenues. Some of the more significant changes in governmental activities revenues are noted: • • Charges for services rose 16 percent to $7.1 million for the year. The increase reflects the City’s growth as building inspections and permit fees increased a combined $.8 million. Unrestricted grants and contributions in governmental activities relates primarily to infrastructure additions by subdivision developers. The contributions revenue was not recorded until the subdivisions were accepted into the city system. While a number of subdivisions were under construction in the previous fiscal year, none were accepted until fiscal year 2003. With the city’s continuing growth, it is more common to see additions each fiscal year. RevenuesGovernmental Activities Franchise taxes 2% Shared revenues 31% Sales taxes 34% Unrestricted grants and contributions 10% Property taxes 7% Capital grants and contributions 2% Operating grants and contributions 4% Unrestricted investment earnings 1% Charges for services 9% Expenses The chart at right compares governmental activities with their respective program revenues, if any. Because the ultimate beneficiary of services of these types is often difficult to ascertain or the services apply to a broad spectrum of users (such as in fire protection), Millions Governmental expenses totaled $61.4 million for the fiscal year. Of the expenditures, 42% or $25.5 million, is related to public safety for police, fire and municipal court services. Parks, recreation and culture expenses amounted to $8.9 million, or 14.5%, while streets and Expenses and Program Revenues-Governmental Activities community design and 25.0 development expenses amounted to 12.9% and 10% respectively. Interest 20.0 on long-term debt Expenses accounted for 4.7% of Program Revenues overall governmental 15.0 expenses. 10.0 5.0 General government Public safety 9 Streets Parks, recreation and culture Environmental health and protection Community design and development Interest on longterm debt MANAGEMENT’S DISCUSSION AND ANALYSIS user fees are not created and general revenues provide the funding support for most of these services. Moreover, where ultimate users of the services are determinable, program revenues may generate only a portion of the funding, such as in recreation programs. Business-type activities Revenues General revenues do not support the City’s business-type activities; thus, the largest source of revenues comes from charges for services. Of the $18.9 million in charges, 88% come from the City’s two utility operations, water and wastewater. The remaining charges are from the City’s two golf courses, Desert Hills and Arroyo Dunes. The $5.4 million in contributions are payments for capacity charges and development fees as well as constructed additions to the City’s water and wastewater infrastructure by subdivision and other developers. Finally, investment earnings make up the final 2.4% of revenues for the City’s business activities. Revenues-Business-like Activities Capital grants and contributions 22% Charges for services 76% Investment earnings 2% Expenses Water and wastewater services account for 87% of the City’s business-type activities with golf courses making up the remaining 13%. Water expenses amounted to $10.3 million while wastewater expenses totaled $7.0 million. Desert Hills Golf Course and Arroyo Dunes Golf Course recorded expenses of $2.3 million and $.2 million, respectively, for a total of $2.5 million. E x p e n s e s vs . P ro g ra m R e ve n u e s -B u s in e s s -ty p e A c tivitie s A B C D C h a rg e s fo r S e rvic e s 12 E xp e n s e s 10 Millions C o n trib uE tio n s F 8 6 4 2 0 W a te r W a s te w a te r G o lf Because the City’s business-type activities are supported by user charges, the chart above shows more reliance on program revenues. Moreover, for both water and wastewater, program revenues include capacity charges for new service and developer additions to the utility infrastructure. 10 MANAGEMENT’S DISCUSSION AND ANALYSIS FINANCIAL ANALYSIS OF THE CITY’S FUNDS Governmental funds. The combined fund balances of governmental funds for the fiscal year ended June 30, 2003, is $32.1 million. This represents a $4.2 million increase in fund balances, due in part to unexpended bond proceeds in the Capital Projects Fund and attrition and pension savings in other operating funds. A review of some of the more significant funds follows. General Fund The fund balance of the General Fund grew by $2 million for the fiscal year. Revenues increased by $1.9 million, led by a $.8 million increase in building permit and inspection fees. Expenditures for the fund came in more than $4.5 million under budget with General Government producing $2.1 million of the savings and Public Safety adding almost $1.8 million. The General Government savings were realized through unexpended Community Investment Trust monies. Public Safety savings occurred mostly in the Police Department through a combination of payroll-related attrition savings and a one-year reduction in the employer pension rate in the Arizona Public Safety Retirement System. Highway User Revenue Fund Another major operating fund to contribute to the increase in the overall governmental fund balance was the Highway User Revenue Fund (HURF), which accounts for the expenditure of state-shared gasoline taxes. The City’s portion of those taxes grew by 4.9% for the fiscal year, and coupled with a budget savings of $.5 million, produced an increase in the fund’s balance of $1.3 million. This fund also transferred $1.1 million into the Capital Projects Fund to continue the City’s streets program. City Road Tax Fund This fund accounts for the one-half cent sales tax for use on the City’s roadways in conjunction with HURF. Transfers to the Capital Projects Fund for streets projects decreased by $1 million this year; however, debt service payments of $700,000 on loans from the Arizona Department of Transportation led to a reduction in fund balance by $585,108. A fund balance of $2.7 million remains to help with the City’s roads program in subsequent years. Grants Fund The City continues to acquire much needed assistance from both the state and federal levels. During 2003, the fund included almost $1.4 million in assistance from the U.S. Fish and Wildlife Service and from the Bureau of Reclamation in continuing work on the West Wetlands Park. The City’s public safety efforts were also assisted by the U.S. Department of Justice through $1.8 million in grants for mobile data computing and the high intensity drug traffic program. Community Redevelopment Fund The City stepped up its expenditure of Community Development Block Grant funding this year and also received continued assistance from the U.S. Department of Justice and the Arizona Department of Commerce in the Action Grant Program of over $1 million. This assistance included work on the new Carver Park Community Center. Municipal Property Corporation Debt Service The Municipal Property Corporation (MPC) Debt Service Fund decreased its fund balance by some $1.4 million as the last capitalized interest payment was made from bond proceeds of the 2001 issue. In addition, the City partially refunded its 1995 A, B and C issues to gain savings in interest costs. In the same bond issue, additional bond proceeds were obtained to finance the construction of a new fire station and a new arts center. The remaining principal and interest expenditures of the fund matched transfers from the other operating funds. 11 MANAGEMENT’S DISCUSSION AND ANALYSIS Capital Projects Fund The Capital Projects Fund’s fund balance grew by $2.6 million this year as a result of additional bond proceeds for the construction noted previously. The $6.0 million remaining in the fund, made up of the aforementioned bond proceeds as well as balances in developer contribution accounts, is designated for these projects for fiscal 2004 and later. Proprietary funds. The City’s enterprise funds posted an overall increase in net assets of $3.3 million for the fiscal year ended June 30, 2003. The City’s utility funds, water and wastewater both recorded increases in net assets for the year while the golf courses combined for a $517,505 decrease in net assets. Even with the increase in net assets for the utilities, both funds would have shown decreases in net assets were it not for capital contributions during the year. This is reflected in a loss before contributions and transfers in the water and wastewater funds of $(71,371) and $(147,009), respectively. Water Enterprise Fund Operating revenues for the Water Fund increased by 6.8 percent for the year ending June 30, 2003. This is due in part to another increase in an ongoing series of 2½% rate increases and to a 3.2% growth in the customer base to 22,717. The rise in operating expenses matched the increase in revenues at 6.8% but the fund still managed operating income of $196,189. Falling investment rates caused interest income to decline by almost 44% leading to a loss before contributions and transfers of $71,371. Additional rate increases are in store for next fiscal year and beyond to finance the construction of a new water treatment facility on the East Mesa and improvements within the current water system needed to maintain service levels and system pressure. Wastewater Enterprise Fund With the end of fiscal 2003, the Wastewater Fund completed its third year in its five-year series of rate adjustments to finance the construction of its $40 million East Mesa wastewater treatment plant. Combined with similar growth noted in the Water Fund, operating revenues increased 17.8% over fiscal 2002. Operating expenditures increased by 9.5%, part of which was the result of a $167,000 write down of receivables from another local government. This left a loss before contributions and transfers of $147,009. Again like the Water Fund, contributions, which finance many of the additions to the plant that are now affecting depreciation expenses, more than covered this loss for the year ended June 30, 2003. Golf Courses Both of the City’s nonmajor enterprise funds, the Desert Hills Golf Course and the Arroyo Dunes Golf Course, suffered operating losses for the year ended June 30, 2003. Green fees for Desert Hills, voted “Best Municipal Golf Course in Arizona” by Golf Digest, suffered a 10% decrease and with a continuing decline in both the golf shop and the restaurant, dropped the operations into a loss. The City is still considering privatizing the restaurant operations to improve performance of the fund. GENERAL FUND BUDGETARY HIGHLIGHTS A detailed budgetary comparison schedule for the fiscal year ended June 30, 2003, can be found starting on page 59. A summary of that schedule follows: 12 MANAGEMENT’S DISCUSSION AND ANALYSIS Budget Final Original Revenues and Transfers In Taxes Intergovernmental Other Transfers In $ Total Expenditures and Transfers Out Expenditures Transfers Out Total $ Change in Fund Balance 21,632,455 16,820,854 3,996,300 906,467 $ Variance with Final Actual 21,632,455 16,820,854 3,996,300 906,467 $ 20,723,860 17,077,807 5,039,903 143,310 43,356,076 43,356,076 42,984,880 40,872,679 5,351,758 40,872,679 5,351,758 36,367,491 4,592,515 46,224,437 46,224,437 40,960,006 (2,868,361) $ (2,868,361) $ 2,024,874 $ (908,595) 256,953 1,043,603 (763,157) (371,196) 4,505,188 759,243 5,264,431 $ 4,893,235 Property taxes, city sales tax and franchise taxes ended the year below their expected amounts causing the negative variance in taxes. All but franchise taxes ended the year, however, posting gains in actual collections over fiscal 2002. Sales taxes showed a gain of 1% while property tax collections increased 6%. While the sales tax percentage increase is less than its ten-year average, the local economy’s performance remains relatively strong, in spite of the continued doldrums felt in the national economy. The chart shows no change in budgetary amounts; however, with the City Administrator’s ability to transfer appropriations within a fund, some changes in budget between departments occurred during the year. In each case, the transfers of budgetary authority were minor. Overall, expenditures remained below budgeted amounts, with no department exceeding its annual appropriation. CAPITAL ASSETS At June 30, 2003, the City of Yuma’s investment in capital assets in both governmental and business-type activities amounted to $250.2 million, net of depreciation. This includes land, buildings, equipment, and infrastructure (roadways and bridges). Capital assets for governmental activities increased by 14.7% while business-type capital assets increased 4.8%. These changes included the following: • • • • Land and right-of-way purchase for governmental activities exceeded $3 million. Land purchases included the new community center in the Carver Park neighborhood, the East Mesa Community Center (in conjunction with the new National Guard Armory) and right-of-way for the Avenue A and other projects. Construction began on the new East Mesa water treatment plant. Construction on the new East Mesa wastewater plant continued. Infrastructure additions included the Redondo/Interstate 8 exchange, the reconstruction of Madison Avenue and 1st Avenue and the construction of the glorietta on Giss Parkway. Change in Capital Assets (In Millions) Governmental Activities Business-type Activities July 1, 2002 Land Buildings Improvements Infrastructure Equipment Construction in Progress Accumulated Depreciation Total Net Additions/ Deletions $ 8.3 $ 54.8 13.9 104.4 29.2 16.0 (92.5) $ 134.0 $ June 30, 2003 July 1, 2002 3.3 $ 1.5 2.8 16.8 2.5 (1.0) (6.2) 11.6 $ 56.3 16.7 121.2 31.7 14.9 (98.7) 19.8 153.8 $ 13 $ Net Additions/ Deletions 1.2 $ 8.0 119.5 2.9 9.0 (48.5) 92.0 $ June 30, 2003 $ 4.2 .1 5.6 (5.5) 4.4 Total $ 1.2 $ 8.0 123.7 3.0 14.5 (54.0) 96.4 $ 12.7 64.3 140.4 121.2 34.7 29.5 (152.7) 250.2 MANAGEMENT’S DISCUSSION AND ANALYSIS Additional information on capital assets can be found in Note III-E starting on page 45. DEBT ADMINISTRATION For the year ended June 30, 2003, the City’s long-term debt increased by a net of $17.5 million, as noted below. The increases in debt for the fiscal year were related primarily to acquisition of capital assets through the issuance of long-term contracts payable and bonds payable, as follow: • • • • The City issued $27,990,000 in a combined refunding and new issue of $9 million for construction of a fire station and new arts center. The City enhanced its neighborhood revitalization program through a note from the U.S. Department of Housing and Urban Development Section 108 Program. To speed its roadways program, the City obtained financing from the Arizona Department of Transportation of $3 million. An additional $10 million from the Water Infrastructure Financing Authority was incurred in the continuing construction of the water and wastewater plants on the East Mesa. In each case, payments were made on the contracts during the fiscal year. The state limits the amount a municipality may issue in general obligation debt to 20% of the City’s secondary assessed valuation for combined water, wastewater, artificial light, parks, open space preserves, playgrounds and recreational facilities. Debt related to other projects is limited to 6% of the valuation. The current debt limitation for the former type is $61.1 million, well above the outstanding general obligation debt. No debt is outstanding for the other type of issuance. Because all the general obligation debt is related to the water system, and because water revenues are used to pay the debt service requirements of the issues, no secondary property taxes are assessed by the City for debt service. All of the bond issues have been upgraded to a “A+” rating by Fitch Investment Services. The General Obligation Bonds and the MPC Bonds are rated “A” by Moody’s Investor Services. Standard and Poors also rate the GO bonds “A”. All City bond issues ultimately enjoy a “AAA” rating as a result of insurance coverage. A summary of the City’s long-term debt follows. Additional information on the City’s long-term debt can be found in Note III-H on pages 48-52. General Obligation Bonds Yuma Municipal Property Corporation Bonds Revenue Bonds Contracts Payable Governmental activities 2003 2002 Business-type activities 2003 2002 $ $ Compensated Absences Total Long-Term Debt $ - $ - 67.4 3.3 62.3 .6 2.0 1.8 72.7 $ 64.7 $ 11.4 $ 10.4 21.8 12.2 Total 2003 $ .1 $ 12.3 11.4 2002 $ 67.4 13.7 2.0 $ 94.5 12.2 62.3 .6 1.8 $ 77.0 ECONOMIC FACTORS Yuma County is one of the fastest growing areas in the nation and the City of Yuma represents just under 50% of the county’s population. Since 1990, the City has grown by 43% to an estimated 81,380 at July 1, 2002, the most recent numbers available. The City’s economy is based on a triad of agriculture, tourism and military/government spending. Agriculture continues to lead the economy, contributing more than $800 million annually. The area’s 85,000-plus winter visitors add $450 million to the mix, while military/government spending infuses some $300 million to the economy. 14 MANAGEMENT’S DISCUSSION AND ANALYSIS Property taxes are limited constitutionally in Arizona, so other local revenues make up the most significant reflectors of the condition of the economy. Sales tax, the City’s primary source of general revenues, continued this year with a low 1% growth, down somewhat from its historical growth rate of 7%. Compared to a slight downturn in the large metropolitan areas of the state, Yuma’s steady growth is positive. For fiscal year 2004, revenues were projected using slightly increased trends of 5% growth in sales taxes. Not all economic statistics reflect positive results; however, in that the City continues to suffer higher unemployment figures than most of the state. Hovering under 10% during the winter crop growing season, the rate surges into the 20% range for the summer, primarily because of lower agriculture employment. To combat this problem, the City helps to support the Greater Yuma Economic Development Corporation in its activities to encourage new employers to the area. CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to familiarize our citizens, taxpayers and customers with the City’s finances and to demonstrate the City’s fiscal accountability for its operations. Questions concerning this report, or requests for additional financial information, should be directed to Mr. Donald “Pat” Wicks, Financial Services Manager, One City Plaza, PO Box 13012, Yuma, AZ 85366-3012, telephone (928) 373-5087. The reader may also visit the City’s website at www.ci.yuma.az.us for an electronic version of this report. 15 16 BASIC FINANCIAL STATEMENTS 17 18 GOVERNMENT-WIDE FINANCIAL STATEMENTS 19 City of Yuma, Arizona Statement of Net Assets June 30, 2003 Governmental Activities Assets Cash and Investments Receivables, Net of Allowances for Uncollectibles: Internal Balances Inventory, at cost Prepaid Items Restricted Assets: Cash and Investments Accrued Interest Deferred Charges Capital Assets: Land Buildings and Improvements Infrastructure Equipment Accumulated Depreciation Construction in Progress Total Assets and Other Debits $ 55,711,861 7,096,932 11,975 487,429 86,933 11,576,484 73,042,977 121,214,375 31,693,349 (98,658,809) 14,926,264 217,189,770 Business-type Activities $ Total 11,704,506 $ 3,060,221 (11,975) 152,363 17,124 67,416,367 10,157,153 639,792 104,057 20,380,118 57,892 172,210 20,380,118 57,892 172,210 1,171,030 131,639,314 3,047,246 (54,011,375) 14,528,591 131,907,265 12,747,514 204,682,291 121,214,375 34,740,595 (152,670,184) 29,454,855 349,097,035 Liabilities Accounts Payable Accrued Liabilities Accrued Interest Payable Deferred Revenue Liabilities Payable from Restricted Assets Long-Term Debt: Due within one year Due in more than one year Total Liabilities 2,161,471 2,598,945 1,900,548 6,000,390 - 1,434,270 509,117 73,374 1,748 1,250,523 3,595,741 3,108,062 1,973,922 6,002,138 1,250,523 5,215,000 67,391,107 85,267,461 224,609 20,522,547 24,016,188 5,439,609 87,913,654 109,283,649 81,688,533 85,380,449 167,068,982 121 50,233,655 $ 131,922,309 22,510,628 $ 107,891,077 121 72,744,283 $ 239,813,386 Net Assets Invested in Capital Assets, Net of Related Debt Restricted for: Debt Service Unrestricted Total Net Assets The accompanying notes are an integral part of these financial statements 20 City of Yuma, Arizona Statement of Activities For the Year Ended June 30, 2003 Net (Expense) Revenue and Changes in Net Assets Program Revenues Functions/Programs Government Activities: General Government Public Safety Streets Parks, Recreation and Culture Environmental Health and Protection Community Design and Development Interest on Long-Term Debt Total Governmental Activities Expenses $ 6,949,944 25,454,716 7,943,638 $ 8,862,044 $ 1,058,141 2,076,540 - Operating Grants and Contributions $ 1,240,263 - 2,936,066 864,491 1,188,391 15,343 374,998 6,368,629 1,906,030 2,053,034 2,877,856 Business-type Activities: Water Wastewater Golf Courses Total Business-type Activities Total Charges for Services - Capital Grants and Contributions $ 109,471 - - - (2,409,565) - (2,409,565) - (2,877,856) - (2,877,856) (49,218,144) - (49,218,144) 19,874,122 18,862,584 - 5,439,328 1,397,518 $ 6,836,846 1,879,350 2,859,477 (311,037) - 4,427,790 4,427,790 5,678,356 25,484,486 1,719,272 24,225,246 - 7,576,850 876,667 65,560,877 586,836 66,147,713 16,929,569 114,992,740 $ 21 - (49,218,144) General Revenues: Property taxes Sales taxes Franchise taxes Shared revenues Grants and contributions not restricted to specific programs Unrestricted investment earnings Total general revenues Transfers Total general revenues, special item and transfers Change in net assets Net assets-beginning The accompanying notes are an integral part of these financial statements (5,891,803) (22,028,442) (7,943,638) (84,630) 2,191,976 3,247,352 - Net assets-ending $ - - 3,683,638 - (7,982,210) 10,013,015 6,636,162 2,213,407 $ (5,891,803) $ (22,028,442) (7,943,638) Total - 10,325,641 7,024,037 2,524,444 25,956,177 3,683,638 Business-type Activities (7,982,210) (84,630) 7,093,593 $ $ 1,288,047 61,392,893 81,267,015 Governmental Activities 131,922,309 575,147 575,147 (586,836) (11,689) 4,416,101 103,474,976 $ 107,891,077 1,879,350 2,859,477 (311,037) 4,427,790 (44,790,354) 5,678,356 25,484,486 1,719,272 24,225,246 7,576,850 1,451,814 66,136,024 66,136,024 21,345,670 218,467,716 $ 239,813,386 22 FUND FINANCIAL STATEMENTS 23 City of Yuma, Arizona Balance Sheet Governmental Funds June 30, 2003 Major Special Revenue Funds General Assets Cash and Investments Cash with Fiscal Agents Receivables, Net of Allowances for Uncollectibles: Accounts Receivable Intergovernmental Special Assessments Delinquent Property Taxes Accrued Interest Due from Other Funds Inventory, at cost Prepaid Items Total Assets and Other Debits Highway Users Revenue $ $ 14,714,083 $ - 4,665,565 - 297,461 1,950,419 20,169 234,422 53,330 672,032 479,270 10,081 18,431,267 $ 3,146 562,022 16,609 5,247,342 City Road Tax Grants $ 2,710,325 $ 522,556 8,898 3,241,779 $ $ 322,853 497,318 2,143 822,314 Liabilities and Fund Balances Accounts Payable Accrued Payroll, Taxes and Benefits Payable Long-Term Debt - Current Portion Due to Other Funds Accrued Interest Payable Deposits Deferred Revenue Total Liabilities Fund Balance: Reserved for: Inventory Prepaid Items Debt Service Unreserved: Designated for Uncompleted Projects Designated for Subsequent Years' Expenditures Designated for Future Community Improvements Undesignated, reported in: General Fund Special Revenue Funds Total Fund Balances Total Liabilities and Fund Balances $ 597,051 1,909,732 97,959 250,627 2,855,369 $ 479,270 10,081 - $ 90,248 104,490 173,877 368,615 $ 2,907 7,980 500,000 13,081 523,968 $ 87,771 9,987 715,888 813,646 - - - 1,414,405 829,494 81,284 - - - 12,842,648 15,575,898 4,797,443 4,878,727 18,431,267 $ 5,247,342 The accompanying notes are an integral part of these financial statements 24 2,717,811 2,717,811 $ 3,241,779 8,668 8,668 $ 822,314 Community Redevelopment Municipal Property Corporation Debt Service $ 269 $ $ 1,660,388 746,292 2,406,949 $ 135,059 8,636 $ $ 602,416 1,660,838 2,406,949 $ 7,130 5,876,459 $ 10,105,965 $ - 2,553,470 - 5,883,589 45,732 $ 10,151,697 $ 163,462 226,629 14,372 221,477 8,159 76,852 3,264,421 7,150 $ 3,995,000 1,881,318 5,883,468 - 121 - - - 121 2,406,949 $ Capital Projects Other Nonmajor Governmental Funds 5,883,589 737,044 18,825 3,428,614 4,184,483 $ - 130,712 82,775 54,616 21,171 289,274 Total $ $ $ 35,079,660 5,876,459 2,170,189 4,505,236 20,169 234,422 95,352 893,509 487,429 86,933 49,449,358 1,787,942 2,123,600 4,495,000 657,032 1,894,399 116,784 6,251,015 17,325,772 8,159 76,852 - 487,429 86,933 121 5,967,214 - 41,779 - 5,967,214 1,537,468 829,494 5,967,214 2,848,357 2,975,147 12,842,648 10,372,279 32,123,586 $ 10,151,697 $ 3,264,421 25 $ 49,449,358 City of Yuma, Arizona Reconciliation of the Balance Sheet-Governmental Funds to the Statement of Net Assets June 30, 2003 Amounts reported for governmental activities in the statement of net assets are different because: Total Fund Balances per the Balance Sheet-Governmental Funds: $ Property taxes receivable that are not financial resources are not reported in the funds. 32,123,584 4,450 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. 143,632,564 Property tax revenue deferred to later years recognized in year levied in governmental activities. 250,625 Interest payments accrued in government-wide not recorded until payment in governmental activities. (6,149) Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds: Compensated absences Contracts payable MPC bonds payable Unamortized deferred costs (1,980,387) (2,820,000) (63,440,000) 129,280 Net assets of internal service funds that are used by management to charge the cost of equipment replacement and employee-related insurance to individual funds are included in governmental activities in the statement of net assets. 24,028,340 $ 131,922,307 Net assets of governmental activities The accompanying notes are an integral part of these financial statements 26 27 City of Yuma, Arizona Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2003 Major Special Revenue Funds Highway City User Road Revenue Tax Grants General Revenues: Taxes Licenses and Permits Intergovernmental Charges for Services Fines and Forfeitures Use of Money and Property Contributions and Donations Miscellaneous Total Revenues $ Expenditures: Current: General Government Public Safety Streets Parks, Recreation and Culture Environmental Health and Protection Community Design and Development Capital Outlay Debt Service Principal Interest and Fiscal Agent Fees Total Expenditures Revenues Over/(Under) Expenditures Other Financing Sources/(Uses): Proceeds From Long-Term Debt Payment to Refunded Bond Escrow Transfers In Transfers Out Total Other Financing Sources/(Uses) Net Change in Fund Balances Fund Balances - Beginning Fund Balances - Ending $ 20,723,860 2,062,847 17,077,807 1,673,223 801,121 366,519 136,193 42,841,570 $ 6,732,659 97,695 82,406 6,912,760 $ 6,617,396 37,755 372 6,655,523 $ 4,732,282 22,374,867 5,220,829 748,292 4,273,885 - 100,160 14,748 - 3,662,949 256,404 53,784 14,426 1,306 - 20,000 36,367,491 5,090,709 700,000 36,286 1,360,867 1,639,888 6,474,079 1,822,051 5,294,656 1,401,075 143,310 (4,592,515) (4,449,205) 1,110,817 (1,622,742) (511,925) (5,879,764) (5,879,764) (1,401,075) (1,401,075) 2,024,874 1,310,126 13,551,024 3,568,601 15,575,898 $ The accompanying notes are an integral part of these financial statements 28 4,878,727 610,155 - 3,026,444 12,474 2,045 3,040,963 1,240,862 14,509 383,211 (585,108) - 3,302,919 $ 2,717,811 8,668 $ 8,668 Community Redevelopment $ - Municipal Property Corporation Debt Service $ 2,027,047 269 32,689 2,060,005 Capital Projects $ 129,010 361,022 25,000 515,032 $ 5,471,232 434,212 1,180,390 545,849 25,620 59,504 7,716,807 Total Governmental Funds $ 32,812,488 2,062,847 29,298,169 2,982,623 801,121 1,429,019 27,665 336,164 69,750,096 - - - 2,529,906 4,732,282 24,364,021 4,884,040 7,765,244 - - - 2,502,126 3,000,245 18,739,602 461,788 84,924 6,337,964 19,197,677 3,995,000 2,811,695 6,806,695 533,334 16,636 19,289,572 5,578,744 5,248,334 2,871,708 78,401,515 (207,544) (6,799,259) (18,774,540) 2,138,063 (8,651,419) 500,000 (292,456) 207,544 18,990,000 (19,199,277) 5,524,445 5,315,168 12,000,000 10,842,535 (1,455,800) 21,386,735 3,495,451 (5,285,370) (1,789,919) 31,490,000 (19,199,277) 21,116,558 (20,529,722) 12,877,559 - (1,484,091) 2,612,195 348,144 4,226,140 - 1,484,212 3,355,019 2,627,003 27,897,446 2,211,921 48,537 - 7,091 2,267,549 $ 7,436 7,436 Other Nonmajor Governmental Funds - $ 121 $ 5,967,214 29 $ 2,975,147 $ 32,123,586 City of Yuma, Arizona Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances-Governmental Funds to the Statement of Activities For the Year Ended June 30, 2003 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances-governmental funds $ A portion of property tax revenues recorded on the statement of activities does not provide current financial resources are not recorded as revenues in the funds Governmental funds report capital outlays as expenditures. In the statement of activities, however, the cost of those assets is allocated over their useful lives as depreciation Depreciation recorded in statement of activities Capital outlay expenditures reported as additions to assets: Capital outlay expenditures-governmental funds Infrastructure maintenance expenditures recorded as capital outlay but not capitalized as asset additions Governmental funds report debt principal service payments as expenditures. The reduction in liability is recorded on the statement of net assets in the government-wide statements Increase in compensated absences expense not recorded in governmental funds Other financing uses in governmental funds reflecting payment to escrow agent in refunding debt are recorded on the statement of net assets as reduction in long-term liability Long-term debt proceeds are recorded as other financing sources in governmental funds Investment earnings of the internal service funds are general revenues on the statement of activities Interest payments accrued in government-wide statements not recorded in governmental activities until paid Net revenues of internal service funds in excess of expenses reduce governmental activities expenses on the statement of activities Contributions of infrastructure assets not recorded as revenues in the governmental funds 4,226,138 10,752 (6,332,012) 19,197,677 (1,373,106) 5,248,334 (149,820) 19,199,277 (31,490,000) 335,475 (6,148) 482,570 7,580,431 $ 16,929,567 Change in net assets of governmental activities The accompanying notes are an integral part of these financial statements 30 City of Yuma, Arizona Statement of Net Assets Proprietary Funds June 30, 2003 Assets Current Assets: Cash and Investments Receivables, Net of Allowance for Uncollectibles: Accounts Receivable Intergovernmental Contracts Receivable Accrued Interest Inventory, at cost Prepaid Expenses Total Current Assets Restricted Assets: Cash and Investments: Current Debt Service Advancement for Future Expansion Customer Deposits Receivables: Accrued Interest Total Restricted Assets Capital Assets: Land Buildings Improvements Other than Buildings Equipment Gross Capital Assets Less Accumulated Depreciation Capital Assets Net of Depreciation Construction In Progress Total Capital Assets Other Assets: Deferred Charges Total Assets Business-Type Activities-Enterprise Funds Water Wastewater Other Fund Fund Funds Totals $ Liabilities Current Liabilities Payable from Current Assets: Accounts Payable Accrued Payroll and Related Taxes Current Portion-Long-Term Contracts Current Portion-Bonds Payable Estimated Claims and Judgements Due to Other Funds Accrued Interest Payable Deferred Revenue Total Current Liabilities Payable from Current Assets Current Liabilities Payable from Restricted Assets: Deposits Deferred Revenue Current Portion-Long-Term Contracts-Interest Current Portion-Bonds Payable Accrued Bond Interest Payable Total Current Liabilities Payable from Restricted Assets Long-Term Liabilities: Long-Term Contracts Payable Bonds Payable Total Long-Term Liabilities Total Liabilities Net Assets Invested in capital assets, net of related debt Unrestricted Total Net Assets $ 10,396,723 $ 1,177,555 1,644,146 505 36,048 67,766 12,865 12,158,053 953,793 410,069 4,609 3,468 62 2,549,556 1,173,492 3,734,229 225,127 $ 130,228 $ 11,704,506 Governmental Activities Internal Service Funds $ 14,755,742 6,484 544 555 84,597 4,197 226,605 2,604,423 411,118 4,609 40,071 152,363 17,124 14,934,214 15,247,270 - - 1,173,492 18,981,499 225,127 - 11,600 5,144,448 46,292 15,293,562 - 57,892 20,438,010 - 1,043,951 2,911,198 74,537,973 1,636,014 80,129,136 32,452,993 47,676,143 5,554,177 53,230,320 127,079 1,931,134 46,140,477 1,163,262 49,361,952 19,305,379 30,056,573 8,973,957 39,030,530 3,102,865 3,015,667 247,970 6,366,502 2,253,003 4,113,499 457 4,113,956 1,171,030 7,945,197 123,694,117 3,047,246 135,857,590 54,011,375 81,846,215 14,528,591 96,374,806 21,340,249 21,340,249 11,178,173 10,162,076 10,162,076 172,210 70,705,031 56,873,648 4,340,561 172,210 131,919,240 24,984,932 909,296 230,264 220,000 73,374 1,432,934 449,580 184,456 634,036 75,394 94,397 4,609 221,477 1,748 397,625 1,434,270 509,117 4,609 220,000 221,477 73,374 1,748 2,464,595 256,745 475,345 15,000 747,090 225,127 48,810 660,000 220,119 1,154,056 32,338 64,129 96,467 - 225,127 32,338 112,939 660,000 220,119 1,250,523 - 3,696,541 10,114,357 13,810,898 16,397,888 6,711,649 6,711,649 7,442,152 397,625 10,408,190 10,114,357 20,522,547 24,237,665 747,090 42,235,963 12,071,180 39,030,530 10,400,966 4,113,956 (171,020) 85,380,449 22,301,126 10,162,076 14,075,766 54,307,143 $ 49,431,496 107,681,575 $ 3,942,936 209,502 Adjustment to reflect consolidation of internal service fund activities related to enterprise funds $ Net assets of business-type activities The accompanying notes are an integral part of these financial statements 31 107,891,077 11,559 55,555 14,822,856 $ 24,237,842 City of Yuma, Arizona Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds For the Year Ended June 30, 2003 Business-Type Activities-Enterprise Funds Water Fund Operating Revenues: Metered Water Sales Commercial Raw Water Wastewater Charges Meters, Connections and Services Green Fees and Concessions Equipment Rental Miscellaneous Charges Total Operating Revenues $ Operating Expenses: Operations and Maintenance Depreciation and Amortization Total Operating Expenses 9,458,111 224,666 - Wastewater Fund $ 6,577,667 Other Funds $ - Totals $ 9,458,111 224,666 6,577,667 Governmental Activities Internal Service Funds $ - 232,602 404 9,915,783 52,150 6,629,817 1,936,540 276,867 2,213,407 284,752 1,936,540 276,867 404 18,759,007 2,858,351 5,113,287 7,971,638 6,384,173 3,335,421 9,719,594 4,923,500 2,075,842 6,999,342 2,270,012 276,155 2,546,167 13,577,685 5,687,418 19,265,103 5,311,731 2,212,857 7,524,588 196,189 (369,525) (332,760) (506,096) 447,050 276,649 (641,441) 97,232 295,463 (79,292) 6,345 3,033 (645) (186) 575,145 (721,378) 103,391 335,475 158,639 (10,574) (267,560) 222,516 2,202 (42,842) 483,540 (71,371) (147,009) (330,558) (548,938) 930,590 2,191,976 (64,047) 3,247,352 (335,842) 50,841 (237,788) 5,439,328 50,841 (637,677) - Change in Net Assets 2,056,558 2,764,501 (517,505) 4,303,554 930,590 Net Assets - Beginning 52,250,585 46,666,995 54,307,143 $ 49,431,496 Operating Income/(Loss) Non-Operating Revenues/(Expenses): Interest Gain/(Loss) on Disposal of Assets Interest and Fiscal Agent Fees Miscellaneous Revenues/(Expenses) Total Non-Operating Revenues/(Expenses) Income/(Loss) before Contributions and Transfers Capital Contributions Transfers In Transfers Out Net Assets - Ending $ 4,460,441 $ 23,307,252 3,942,936 $ 112,547 Adjustment to reflect consolidation of internal service fund activities related to enterprise funds $ Net assets of business-type activities The accompanying notes are an integral part of these financial statements 32 4,416,101 24,237,842 City of Yuma, Arizona Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2003 Business-Type Activities-Enterprise Funds Other Water Wastewater Fund Fund Funds Totals Cash Flow from Operating Activities: Cash Received from Customers Cash Paid to Employees Cash Paid to Suppliers Other Operating Activity Revenue/(Expense) Net Cash Provided by Operating Activities $ 9,872,473 $ 6,282,165 $ 2,203,582 $ (2,288,414) (1,683,934) (951,767) (5,014,010) (3,155,486) (1,244,355) 97,232 6,345 (186) 2,667,281 Cash Flows from Noncapital Financing Activities: Cash Received from Other Funds Cash Paid to Other Funds Net Cash Provided by/(Used for) Noncapital Financing Activities Cash Flow from Capital and Related Financing Acitivities: Contributions of Capital Acquisition and Construction of Assets Proceeds from Sale of Capital Assets Principal Payments on Bonds WIFA - Contracted Loan Interest and Fiscal Agent Fee Payments Net Cash Provided by/(Used for) Capital and Related Financing Activities Cash Flows from Investing Activities: Receipt of Interest Net Cash Provided by Investing Activities Net Increase/(Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, July 1 1,449,090 4,123,645 7,892,747 (106,365) (4,929,065) 2,857,317 52,984 (335,842) 272,318 (291,417) 325,302 (691,306) - (64,047) (282,858) (19,099) (366,004) - 1,773,072 (3,075,428) (825,000) 3,696,541 (614,666) 2,081,126 (5,191,850) 6,711,649 (15,163) (42,852) - 3,854,198 (8,310,130) (825,000) 10,408,190 (629,829) (2,902,795) 166,079 - 954,519 3,585,762 (42,852) 4,497,429 (2,736,716) 286,908 286,908 365,639 365,639 3,844,661 5,117,634 11,684,910 11,307,191 $ 15,529,571 $ 16,424,825 $ Reconciliation of Operating Income/(Loss) to Net Cash Provided by Operating Activities: Operating Income/(Loss) $ Noncash Transactions Affecting Financial Position Purchase of Assets with Vendor Provided Financing Contributions of Fixed Assets Total Noncash Transactions Affecting Financial Position $ (64,047) Cash and Cash Equivalents, June 30 Adjustments to Reconcile Operating Income/(Loss) Depreciation and Amortization Expense (Increase) in Accounts Receivables (Increase)/Decrease in Inventories Increase/(Decrease) in Accounts Payable (Increase)/Decrease in Prepaid Items Increase/(Decrease) in Accrued Wages and Taxes Payable Increase/(Decrease) in Claims Incurred but Not Reported Increase/(Decrease) in Customer Deposits Other Operating Activity Revenue/(Expense) Total Adjustments $ Net Cash Provided by Operating Activities 7,274 18,358,220 (4,924,115) (9,413,851) 103,391 Governmenta Activities Internal Service Funds 196,189 $ (369,525) $ 4,123 4,123 656,670 656,670 338,594 338,594 (50,554) 8,911,741 459,195 180,782 23,172,883 14,296,548 130,228 $ 32,084,624 (332,760) $ (506,096) $ 14,755,742 $ 447,050 3,335,421 (62,715) (7,831) (919,000) (3,043) 2,075,842 (347,655) 78,872 488 276,153 (1,991) 66,953 9,124 (768) 5,687,416 (412,361) 59,122 (831,004) (3,323) 2,212,857 (3,275) 34,643 - 10,223 20,805 97,232 2,471,092 2,667,281 $ 4,898 (175) 6,345 1,818,615 1,449,090 $ (1,415) (166) (7,670) (186) 340,034 7,274 $ 13,706 (166) 12,960 103,391 4,629,741 4,123,645 166,042 2,410,267 2,857,317 $ 421,953 $ 418,904 249,685 $ 1,166,227 - $ 671,638 1,585,131 $ 129,255 - $ 840,857 $ 1,415,912 $ - $ 2,256,769 $ 129,255 The accompanying notes are an integral part of these financial statements 33 $ 34 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 I. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Yuma (City) was incorporated April 14, 1914 under Arizona Revised Statute Chapter 9, Section 101, and adopted its first charter on June 11, 1914. The City presently operates under a charter that was last amended on January 2, 2002. The Charter provides for a Council-Manager form of government and provides such services as are authorized by the Charter. Among these services are general government services, public safety (police and fire), parks, recreation, culture, streets, environmental health and protection, and community design and development. The accounting policies of the City conform to generally accepted accounting principles (GAAP) as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. With respect to proprietary activities, the City has adopted GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities That Use Proprietary Fund Accounting. The City has elected to apply all applicable GASB pronouncements as well as Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) opinions, issued on or before November 30, 1989, unless those pronouncements conflict with or contradict GASB pronouncements. The following is a summary of the more significant policies. A. Reporting Entity The City is a municipal entity governed by an elected mayor and council. As required by generally accepted accounting principles, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City’s operations and so data from these units are combined with data of the City, the primary government. The component units presented have a June 30 year-end. Blended Component Units Yuma Municipal Property Corporation. The Yuma Municipal Property Corporation's board members are appointed by the City Council. The Corporation was formed to finance the acquisition of certain improvements such as the Yuma Civic and Convention Center, Baseball Complex and Desert Hills Golf Course. The Corporation was also used to finance the acquisition of three public safety buildings, (the police headquarters, a fire station and the Municipal Court facility) and Public Works facilities, along with a clubhouse for the municipal golf course and the new Municipal Complex. The Corporation conducts no business other than with the City and that business is solely the retirement of debt related to the aforementioned acquisitions. Complete financial statements may be obtained at the City of Yuma, City Clerk’s Office, One City Plaza, PO Box 13012, Yuma, AZ 85366-3012. City of Yuma Employee Benefits Trust. The City of Yuma Employee Benefits Trust is responsible for providing health insurance for the City employees. The City Council appoints the Trust’s Board of Directors. The Trust provides services entirely to the City and therefore has been included as an Internal Service Fund as of June 30, 1997 in accordance with the criteria established in GASB Statement No. 14, The Financial Reporting Entity. Complete financial statements may be obtained at the City of Yuma Employee Benefit Trust’s administrative offices, One City Plaza, PO Box 13012, Yuma, AZ 85366-3012. B. Government-wide and fund financial statements The government-wide financial statements report financial information on all the activities of the City of Yuma and its component units. These financial statements include the Statement of Net Assets and the Statement of Activities, a statement showing changes in net assets. Most interfund activities have been removed from these statements to avoid duplicating the information with some exceptions such as proprietary fund sales to governmental funds (i.e., water bills paid by a governmental fund). Eliminating these transactions would distort both the measurement of income generated in serving proprietary customers as well as the direct cost of governmental functions serving the citizenry. In these government-wide statements, governmental activities, 35 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 normally supported by taxes and intergovernmental revenues, are separated from business-type activities that rely on fees and charges for services. The statement of activities presents direct expenses of a given function or segment and the degree to which these expenses are 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 who use or directly benefit from the services of the function; and 2) grants and contributions that are restricted to the operational or capital needs of a particular function. Taxes and other revenues that are identifiable with a particular function or segment are reported as general revenues. In addition to government-wide presentations, fund financial statements are provided for all governmental and proprietary funds. The financial statements are segregated by their respective significance to City operations with individual major governmental and proprietary funds separated from nonmajor funds (aggregate nonmajor financial activity is reported as a column on the major funds presentation for both governmental and proprietary funds). The City uses GASB Statement No. 34 to determine which funds are to be presented as major funds. In addition to those minimum requirements, the City will, from time to time, include within its major funds presentations other funds, that because of their significance preclude aggregate reporting outside the basic financial statements. The City of Yuma reports the following funds: GOVERNMENTAL FUNDS General Fund - The General Fund is the general operating fund of the City. It is used to account for all financial resources except those for which another fund is required or used. Highway User Revenue Fund – This fund accounts for the receipt and expenditure of the state-shared Highway User Revenue Fund (primarily gas tax) for maintenance and construction of roadways. City Road Tax Fund – This fund accounts for the collection and expenditure of a local one-half percent transaction privilege tax approved by voters in 1994 for maintenance and construction of roadways. While some operating expenditures related to retention basins are recorded within the fund, most revenues are eventually transferred to the Capital Projects Fund where construction expenditures for roadways are recorded. Grant Fund - The Grant Fund accounts for all of the federal and state grants provided to the City with the exception of the Community Development Block Grant. Community Redevelopment Fund – This fund accounts for the financial activities of Community Development Block Grant funds. Municipal Property Corporation Debt Service – This fund accounts for expenditures to service the debt of the City of Yuma Municipal Property Corporation, a blended component unit. Pledged excise tax and other revenues are transferred to this fund for payments of long-term bonded debt of the corporation. Capital Projects Fund – The Capital Projects Fund accounts for the expenditure of monies for purchase or construction of long-lived capital assets including land and buildings and streets infrastructure. Other Governmental Funds – Other nonmajor governmental funds of the City of Yuma are aggregated and are presented in a combining statement in the Other Supplementary Information section. These include the Local Transportation Assistance; Public Safety Tax; Solid Waste; Recreation Complex; Two Percent Tax; and Yuma Mall Maintenance Special Revenue Fund. PROPRIETARY FUNDS Water Fund – The operations of the City’s drinking water treatment and distribution system are accounted for in this enterprise fund. 36 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 Wastewater Fund – This enterprise fund accounts for the City’s wastewater collection and treatment system. Other Enterprise Funds – Other nonmajor enterprise funds of the City of Yuma are aggregated along with the major enterprise funds and are also presented in a combining statement in the Other Supplementary Information section. These funds include the Desert Hills Golf Course and Arroyo Dunes Golf Course Funds. Internal Service Funds - Internal Service Funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the City on a cost-reimbursement basis. They are also presented in the aggregate with major enterprise funds and are included in a combining internal service fund presentation in the Other Supplementary Information section. Because they service primarily governmental funds, they are not included within the business-type activities of the Statement of Net Assets. Rather, they are combined with the governmental activities on that statement. Moreover, because of their essentially duplicative nature in accounting for their operations (revenues of the internal service funds are expenses of the operating funds), the operations of the internal service funds have been eliminated from the operations of the Statement of Activities. Internal service funds include the Equipment Replacement, Workers Compensation Trust and Employee Benefits Trust Funds. C. Measurement focus and basis of accounting The government-wide financial statements, as well as the proprietary fund financial statements, use the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when the liability is incurred. Property taxes are recognized as revenue in the year levied. Grants are recognized as revenue when all eligibility requirements are met and the underlying expenses have been recorded. Governmental fund financial statements are presented using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period (within 60 days). Expenditures are recorded when the liability is incurred. Exceptions include debt service expenditures (recorded when the payment is due) and compensated absences (recorded when earned exclusive of long-term portions not expected to be paid within one year). Property taxes, along with franchise taxes, licenses and sales taxes are susceptible to accrual and have been recognized as revenues of the current period. Delinquent property taxes and property taxes for which there is an enforceable legal claim as of the fiscal year, but which were levied to finance operations of the subsequent fiscal year, have been recorded as deferred revenue. Grants and similar awards received before the eligibility requirements are met are also recorded as deferred revenue. Receivables that will not be collected within the available period have also been reported as deferred revenue on the governmental fund financial statements. All other revenue items are considered measurable and available only when cash is received. Proprietary funds classify revenues and expenses as operating or nonoperating items. Operating revenues and expenses relate to the fund’s ongoing operations in providing goods and services. Operating revenues for the City’s proprietary funds are customer charges for sales and services. Operating expenses include the cost of sales or services, administrative expenses and depreciation. All other revenues and expenses are classified as nonoperating revenues and expenses. D. Budgets and Budgetary Accounting 1) The City follows these procedures in establishing the budgetary data reflected in the financial statements: i. On or before the first Monday in June, the City Administrator submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. 37 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 ii. Two public hearings are held prior to the budget's final adoption in order to obtain taxpayer comments. iii. On or before the third Monday in August, the budget is legally enacted through passage of an ordinance. iv. At any time during the fiscal year, the City Administrator may transfer part or all of any unencumbered appropriation balance among programs within a fund. Upon written request by the City Administrator, the Council may, by ordinance, transfer part or all of any unencumbered appropriation balance from one fund to another. v. Formal budgetary integration is employed as a management control device during the fiscal year for all funds with legally adopted budgets (only the Workers Compensation Trust and Employee Benefits Trust Internal Services Funds are not budgeted). The budgets are adopted on a basis substantially consistent with generally accepted accounting principles (GAAP) with the exception of the Enterprise Funds and the Internal Service Fund-Equipment Replacement Fund. For these proprietary funds, the expenditures related to debt service and capital acquisition are budgeted in the same manner as governmental funds. Appropriations not expended at fiscal year end lapse. vi. Budgetary amounts include those as originally adopted, and as amended by Council or City Administrator through the end of the fiscal year. Arizona State Statute does not allow supplemental budgets. vii. Expenditures incurred during the fiscal year may not legally exceed the publicly published budget. The maximum legal expenditure permitted for the fiscal year is the total adopted budget. 2) Budgetary Reporting and Budgetary Basis of Accounting: The City has opted to display budgetary information schedules in a manner similar to its adopted budget; therefore, the information is displayed outside its basic financial statements. Budgetary comparisons are presented for the General Fund and the major Special Revenue Funds in the Required Supplementary Information section. Budgetary comparisons for the Municipal Property Corporation Debt Service Fund, the Capital Projects Fund, the nonmajor governmental funds and the proprietary funds are presented in the Other Supplementary Information sections. For proprietary funds, the budgetary comparison includes a reconciliation to the accrual-based operating statements. Total expenditures on the budgetary schedules of the General and Capital Projects Funds exclude capital outlay expenditures for assets acquired by long-term contracts. E. Assets, Liabilities and Fund Equity Disclosures 1) Transactions between Funds: Interfund transactions consisting of identified 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. Exceptions to this include: (1) sales of water and wastewater treatment are treated as revenue by the Enterprise Fund, and in-lieu property taxes are recorded as revenues in the General Fund and expenses in the Enterprise Funds; (2) operating transfers are made in certain other funds to shift resources from a fund legally required to receive revenue to a fund authorized to expend the revenue; and (3) charges for services of the Internal Service Funds are recorded as expenditures in the funds receiving the service. For purposes of government-wide presentation, these latter transactions are eliminated. 2) Cash and Investments: Cash balances of the City’s funds are pooled and invested by the City. The policy of the City is to invest public funds in a manner which will provide the maximum security of principal invested and conform to all applicable State statutes and City ordinances while providing the highest yield and meeting the City’s daily cash flows. Income earned or loss arising from the investment of the pooled cash is allocated on a weekly basis to the individual funds based upon average daily balance. 38 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 In accordance with GASB Statement 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools, the City reports its investments at fair value based on quoted market information obtained from fiscal agents or other sources. 3) Inventories: Inventories of the General Fund, Special Revenue Funds and Enterprise Funds consist primarily of expendable supplies held for consumption. These inventories are maintained on a perpetual inventory basis verified through annual physical counts. Items are valued using the weighted average method. Expenditures are recorded at the time inventories are used in the governmental funds; therefore, the reserve for inventory is equal to the inventory level needed to maintain adequate operating supplies and indicates that a portion of fund balance is not available for future expenditures. 4) Grants Revenue: The City follows the policy that, grants and similar items are recognized as revenue or contributed revenue as soon as all eligibility requirements imposed by the provider have been met. 5) Unbilled Accounts Receivable: The City records as receivables and as revenues the amount of water sales, sewer service charges and commercial refuse collection charges accrued but unbilled at fiscal year end. At June 30, 2003, the estimated amounts of unbilled revenues for the Water and Wastewater Enterprise Funds and the Solid Waste Special Revenue Fund are $1,032,381, $534,608, and $102,505, respectively. 6) Capital Assets: Capital assets are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets include property, plant, equipment and infrastructure (e.g., roads, bridges and similar items) and are defined as assets with an individual cost of more than $5,000 and a useful life exceeding one year. These assets are valued at cost or estimated historical cost if original cost is not available. Gifts or contributions are stated at fair market value at the date received. Depreciation and amortization have been provided over the estimated useful lives using the group life method on a straightline basis and the following useful lives: Buildings Improvements 33 to 100 years 20 to 50 years Infrastructure Equipment 35 years 2 to 50 years For proprietary fund assets constructed with bond proceeds, interest costs have been capitalized, net of interest revenue. Gains or losses are recognized when assets are retired from service or are otherwise disposed. 7) Contributions: Contributions, as shown in the Enterprise Funds, represent Federal and State grants received, sub-dividers' costs of installing water and sewer mains, water service connections installed at the customers' expense, transfers of equipment from other City funds, and contributions from customers to defray future expansion costs. 8) Long-term obligations: In the government-wide financial statements, and proprietary fund types in the fund financial statements, longterm 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 assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. 39 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 Bonds payable are reported net of the applicable bond premium or bond discount. Bond issuance costs are reported as deferred charges and amortized over the life of the debt. 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. 9) Reserves and Designated Fund Balances: In the governmental fund financial statements, reserves are recorded to signify that a portion of the fund equity is segregated for future use and is not available for appropriation or expenditure. Designated fund balances are recorded to represent resources available to finance intended future expenditures based upon managerial plans. F. Revenues, Expenditures, Expenses and Other Disclosures 1) Property Tax Revenue Recognition: Yuma County is responsible for billing and collecting property taxes. Collections by the County in one month are remitted to the City in the next month. For government-wide presentation, revenues equal the taxes levied for the fiscal year. No allowance for uncollectible taxes has been recorded as the City’s experience shows that after five years the amount uncollected represents less than one-half percent of the original levy. For governmental fund statement purposes, at fiscal year end, delinquent property taxes expected to be collected within 60 days are recognized as revenue and recorded as receivable. The balance of delinquent taxes is recorded in the property tax receivable account with a corresponding entry to the deferred revenue account. 2) Compensated Absences: The City's administrative regulations provide permanent City employees with general and major illness leave in varying amounts based on years of service. In addition, employees may accrue hours worked on holidays for absences or payment in the future. General leave vests with the employee as it is earned. At fiscal year end, the Governmental Funds include an accrual of general and holiday leave pay and related benefits that would normally be liquidated with expendable available financial resources. All governmental funds (excepting the Capital Projects, MPC Debt Service, Local Transportation Assistance and Two Percent Tax Funds), to varying degrees, liquidate these benefits. General and holiday leave with related benefits in excess of this accumulation, $1,472,851, are recorded in the governmental activities column of the government-wide financial statements. The amounts of general and holiday leave pay and related benefits attributable to the Water, Wastewater, Desert Hills, and Arroyo Dunes Enterprise Funds are $140,416, $120,718, $54,369 and $3,324 respectively, and are recorded in those funds and in the business-type activities of the government-wide statements and accrued as earned. Major illness leave benefits provided for ordinary sick pay are not vested with the employee. Unused benefits are payable only upon the death or retirement of the employee. At June 30, 2003, the amount accumulated in sick pay and related benefits is $5,855,559, including $720,760 attributable to the Enterprise Funds. Under GASB Statement No. 16, Accounting for Compensated Absences, the City uses the “termination payment” method to determine its provision for major illness leave liability. The portion of the major illness leave liability related to governmental fund types, $507,536, is reported within the governmental activities column of the government-wide financial statements, as current amounts of that liability have been determined to be immaterial and are not recorded within the respective governmental funds. The provision for probable future major illness leave and related benefits attributable to the Water, Wastewater, and Desert Hills and Arroyo Dunes Golf Course Enterprise Funds of $39,041, $27,887, $13,922 and $951 respectively, are recorded in those funds and are accrued as earned. 40 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 G. Investment Income Investment income is composed of interest and net changes in the fair value of applicable investments. H. Use of Estimates The preparation of general purpose financial statements, in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. II. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Excess of Expenditures Over Appropriations The City’s expenditures exceeded appropriations in three funds. Within the Municipal Property Corporation (MPC) Bonds Debt Service Fund, the City had not budgeted for its annual interest payment on the 2001 MPC Issue. As a result, the City exceeded its appropriations by $1,465,941. In the City Road Tax Fund, the debt service payments to the newly incurred Arizona State Department of Transportation Highway Expansion and Extension Program (HELP) loan (see Note III H) were not budgeted causing that fund to exceed its budget by $727,190. Finally, the the Two Percent Tax Fund, taxes uncollected due to taxpayer bankruptcy resulted in expenditures exceeding the budget by $3,861. III. DETAIL NOTES ON ALL FUNDS A. Cash and Investments The City maintains a cash and investments pool that is available to all funds. Each fund type’s portion of the cash and investment pool is shown in the accompanying balance sheet as “Cash and Investments”, including the portion listed under “Restricted Assets”. The City also records cash and investments, held by fiscal agents, which are restricted by bond indenture requirements for the payment of principal and interest at the end of the fiscal year. The policy of the City of Yuma is to invest public funds in a manner which will provide the maximum security of principal invested while providing the highest yield which will also meet the daily cash flow needs of the City while conforming to all applicable State statutes and City ordinances governing the investment of public funds. The primary objectives, in priority order, of the City of Yuma’s investment activities are: 1. SAFETY OF PRINCIPAL: Safety of principal is the foremost objective of the City of Yuma. Investments of the City shall be undertaken in a manner that seeks to insure the preservation of capital in the overall portfolio. To obtain this goal, diversification is required in the portfolio’s composition consistent with the other provisions of the policy. 2. LIQUIDITY: The City of Yuma’s investment portfolio will remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated. 3. YIELD: The City of Yuma’s investment portfolio shall be designed with the objective of attaining the highest yield of return throughout budgetary and economic cycles, taking into account the City’s risk constraints and the cash flow of the portfolio. Investments authorized by the City’s Investment Policy include: 1. Obligations of the United States Government, its agencies and instrumentalities, excluding mortgagebacked securities; 41 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 2. Fully insured or collateralized certificates of deposit and other evidence of deposit at banks and savings and loan associations; 3. Bankers acceptances issued by the ten largest domestic banks; 4. Commercial paper rated A-1/P-1; 5. Repurchase agreements whose underlying collateral consists of the foregoing, provided a signed PSA Master Repurchase Agreement is on file with the counter party bank or broker/dealer; 6. Money Market Funds whose portfolio consists of the foregoing; 7. The State of Arizona Local Government Investment Pool. If additional types of securities are approved for investment of public funds by State Statutes, they will not be eligible for investment by the City of Yuma until the policy is amended and the amendment passed by the City Council. It is the policy of the City to diversify its investment portfolio. Invested funds are diversified to minimize the risk of loss resulting from over concentration of assets in a specific maturity, specific issuer, or specific class of security. Diversification strategies are established and periodically reviewed by the investment committee. Diversification standards by security type and issuer do not exceed the following: U. S. Treasuries and securities having principal and interest guaranteed by the U.S. Government ............................................................................................... 100% U. S. Government agencies, instrumentalities and government sponsored enterprises ............................................................................No more than 80% Fully insured or collateralized CD’s ........................................................No more than 30% Banker’s Acceptances ............................................................................No more than 25% A-1/P-1 Commercial Paper.....................................................................No more than 35% Maximum per issuer...........................................................................10% of total C. P. Repurchase Agreements.............................................................................................. 100% Money Market Funds.................................................................................................... 100% Local Government Investment Pool ............................................................................. 100% The Investment Officer is required to diversify maturities. The Investment Officer, to the extent possible, attempts to match investments with anticipated cash flow requirements. Matching maturities with cash flow dates reduces the need to sell securities prior to maturity, thus reducing market risk. Unless matched to a specific requirement, the Investment Officer may not invest more than 25% of the portfolio for a period greater than three years. Unless matched to a specific requirement, the Investment Officer may not invest any portion of the portfolio for a period greater than five years. All security transactions, including collateral for repurchase agreements, entered into by the City are conducted on a delivery versus payment basis. A third party custodian designated by the Investment Officer holds all securities. The third party custodian is required to issue a safekeeping receipt to the City listing the specific instrument, rate, maturity and other pertinent information. In order to anticipate market changes and provide a level of additional security for all funds, the collateralization level will be 102% of market value of principal and accrued interest on Certificates of Deposit and Repurchase Agreements. Deposits. At June 30, 2003, the carrying amount of the City’s deposits was $140,357 and the bank balance was $261,737. The difference of $121,380 relates to outstanding checks and unrecorded deposits in transit. The City’s deposits of $261,737 are categorized to indicate the level of custodial risk assumed by the City. Category 1 includes deposits that are insured or collateralized with securities held by the City or by its agent in the City’s name. Category 2 includes deposits collateralized with securities held by the bank’s trust department or its agent 42 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 in the City’s name. Category 3 includes deposits that are not collateralized or that are collateralized with securities held by the bank’s trust department or its agent but not in the City’s name. The bank balance includes $100,000 covered by federal depository insurance, which is Category 1, and $161,737 covered by collateral held by the bank’s agent in the City’s name, which is Category 2. Deposits in both categories are covered by collateral arrangements with the bank in which the bank pledges collateral in the form of government securities. The amount of collateral pledged is monitored both by the City and by the bank to insure that the collateral exceeds actual and anticipated deposits. Investments. The City’s investments are also categorized according to the level of risk assumed by the City at year-end. Category 1 includes investments that are insured or registered or for which the City or its agent in the City’s name holds the securities. Category 2 includes uninsured and unregistered investment for which the counter party’s trust department or agent in the City’s name holds the securities. Category 3 includes uninsured and unregistered investments for which the securities are held by the counter party, or by its trust department or agent, but not in the City's name. The City’s investments in the State Treasurer’s investment pool represents shares of the pool’s portfolio. Those shares are not identified with specific investments and are not subject to custodial risk. The fair value of the position in the pool is the same as the value of the pool shares. The pool is overseen by the State Board of Investment in accordance with Arizona Revised Statutes. Reported Amount Category 1 U.S. Treasuries Federal Agencies $ 20,319,829 42,187,280 $ 62,507,109 $ Money Market Investments in State Investment Pool $ 20,319,829 42,187,280 62,507,109 8,759,147 16,368,387 87,634,643 Fair Value $ $ 20,319,829 42,187,280 62,507,109 8,759,147 16,368,387 87,634,643 Cash and Investments are presented on the Statement of Net Assets as follows: Cash and Investments Restricted Cash and Investments $ $ 67,416,367 On Hand 20,380,118 Deposits Investments Total $ Total $ 87,796,485 21,485 140,357 87,634,643 87,796,485 For purposes of the statements of cash flows, the City considers all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash equivalents. B. Property Tax The City's property tax is levied by the Yuma County Treasurer on or before the third Monday in August based upon the previous January 1 full cash value as determined by the Yuma County Assessor. Under Arizona law two assessed valuations are used. One is for primary taxes (used to fund operating expenditures) and the other is for secondary taxes (used to meet general obligation debt service requirements). The primary tax levy is limited to a two percent increase over the previous year with adjustments for growth and annexation. Secondary taxes are tied to the annual debt service requirements of voter-approved general obligation bonds. Taxes are due in two equal installments on October 1 and March 1 following the levy date and are delinquent on the first day of November and May, respectively. Liens are filed when taxes are delinquent for two years. Assessed values, levies and collections for fiscal year 2001-02 (Tax Year 2001) and fiscal year 2002-03 (Tax Year 2002), follow: 43 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 Tax Year 2001 Tax Year 2002 $271,369,779 1.9192 $5,240,594 $278,555,470 None $5,071,973 $121,102 $181,788 Primary Assessed Valuation Primary Tax Rate Primary Tax Levy Secondary Assessed Valuation Secondary Tax Rate/Levy Current Tax Collections Delinquent Tax Collections Delinquent Taxes Outstanding as of June 30 $299,108,816 1.8621 $5,569,705 $305,708,909 None $5,339,296 $186,250 $234,420 C. Accounts Receivable Receivable balances are stated net of an allowance for doubtful accounts. Within the Special Revenue Solid Waste Fund, an allowance account is established to record the estimated uncollectible refuse collection billings. Within the Water and Wastewater Enterprise Funds, allowance accounts have been established to record estimated uncollectible water and wastewater billings. No allowance account has been made for other types of receivables. The balances of these accounts are as follow: Gross Receivable Allowance Amount June 30, 2003 Special Revenue Funds - Solid Waste Enterprise Funds: Water Wastewater $ 2002 158,815 $ 2003 142,510 1,687,517 975,090 $ 1,617,392 770,377 2002 4,551 $ 43,371 21,297 3,391 35,994 15,918 D. Due from Other Governments (Intergovernmental Receivables) Amounts due from other government units at June 30, 2003, are as follows: Fund Governmental Funds Major Funds General Highway User Revenue City Road Tax Community Redevelopment Grants Non-major Funds Public Safety Tax Recreation Complex Solid Waste Mall Maintenance Enterprise Funds Water Wastewater Federal $ - Desert Hills Golf Course Total 381,518 70,170 $ State $ 1,788,171 553,948 522,556 364,774 168,448 Agencies County $ 139,173 8,074 258,700 Local $ Total 23,075 - $ 1,950,419 562,022 522,556 746,292 497,318 208,951 73 - 630 16,975 - 208,951 16,975 73 630 173,305 - 505 544 122,508 - 114,256 - 505 410,069 544 624,993 $ 3,607,970 154,306 $ 4,916,354 44 $ 529,085 $ City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 E. Capital Assets Capital asset activity for governmental activities for the year ended June 30, 2003, follows: Balance June 30, 2002 Capital Assets Not Being Depreciated: Land Construction in Progress Total Capital Assets Not Being Depreciated $ Other Capital Assets: Buildings Improvements Infrastructure Equipment Total Other Capital Assets Less Accumulated Depreciation for: Buildings Improvements Infrastructure Equipment Total Accumulated Depreciation Other Capital Assets, Net Total Capital Assets, Governmental Activities $ 8,306,918 15,955,409 Increases $ 3,269,566 5,781,643 Decreases $ 6,810,788 Balance June 30, 2003 $ 11,576,484 14,926,264 24,262,327 9,051,209 6,810,788 26,502,748 54,765,424 13,933,118 104,370,724 29,180,236 202,249,502 1,530,254 2,815,799 17,867,844 3,927,778 26,141,675 1,618 1,024,193 1,414,665 2,440,476 56,295,678 16,747,299 121,214,375 31,693,349 225,950,701 7,421,194 5,245,611 64,958,796 14,867,206 92,492,807 1,826,034 1,131,046 1,982,408 3,605,381 8,544,869 1,618 974,736 1,402,513 2,378,867 9,247,228 6,375,039 65,966,468 17,070,074 98,658,809 109,756,695 17,596,806 61,609 127,291,892 26,648,015 $ 6,872,397 134,019,022 $ $ 153,794,640 Government activities capital assets net of accumulated depreciation at June 30, 2003, are comprised of the following: General Capital Assets, Net Internal Service Fund Capital Assets, Net Total $ $ 143,632,564 10,162,076 153,794,640 Depreciation was charged to governmental functions as follows: General Government Public Safety Parks, Recreation, and Culture Environmental Health and Protection Community Design and Development Streets Assets held by Internal Service Funds are charged based on usage of assets $ 1,765,234 1,227,305 1,254,820 20,300 77,789 1,986,564 2,212,857 Total $ 45 8,544,869 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 Business-like activities: Balance June 30, 2002 Capital Assets Not Being Depreciated: Land Construction in Progress $ Total Capital Assets Not Being Depreciated 1,171,030 8,951,776 Increases $ 5,584,720 Decreases $ 7,905 Balance June 30, 2003 $ 1,171,030 14,528,591 10,122,806 5,584,720 7,905 15,699,621 7,945,197 119,483,509 2,927,882 4,210,608 189,311 69,947 7,945,197 123,694,117 3,047,246 130,356,588 4,399,919 69,947 134,686,560 Less Accumulated Depreciation for: Buildings Improvements Equipment 3,396,278 43,337,655 1,754,261 203,223 5,119,307 270,598 69,947 3,599,501 48,456,962 1,954,912 Total Accumulated Depreciation 48,488,194 5,593,128 69,947 54,011,375 81,868,394 (1,193,209) - 80,675,185 Other Capital Assets: Buildings Improvements Equipment Total Other Capital Assets Other Capital Assets, Net Total Capital Assets, Business-like activities $ 91,991,200 $ 3,241,133 2,075,842 276,155 $ 5,593,130 $ 4,391,511 $ 7,905 $ 96,374,806 Depreciation was charged to programs as follows: Water Wastewater Golf courses Total Construction in progress is comprised mainly of water projects and a wastewater treatment plant project. F. Retirement Plans The City has adopted GASB Statement No. 27, Accounting for Pensions by State and Local Governmental Employers. This statement requires the following disclosures. Plan Descriptions - The City contributes to the three plans described below. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor and health insurance premium benefits. The Arizona State Retirement System (ASRS) administers a cost-sharing multiple-employer defined benefit pension plan that covers general employees of the City. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The Public Safety Personnel Retirement System (PSPRS) is an agent multiple-employer defined benefit pension plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or one of its political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a five-member board, known as The Fund Manager, and 167 local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. 46 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 The Elected Officials Retirement Plan (EORP) is a cost-sharing multiple-employer defined benefit pension plan that covers elected officials and judges of certain state and local governments. The EORP is governed by The Fund Manager of PSPRS according to the provisions of A.R.S. Title 38, Chapter 5, Article 3. Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report may be obtained by writing or calling the applicable plan. ASRS PSPRS and EORP 3300 North Central Avenue 1020 E. Missouri Avenue P.O. Box 33910 Phoenix, AZ 85014 Phoenix, AZ 85067-3910 (602)240-2200 or (800)621-3778 (602)255-5575 Funding Policy - The Arizona State Legislature establishes and may amend active plan members’ and the City’s contribution rate. Cost-sharing plans - For the year ended June 30, 2003, active ASRS members and the City were each required by statute to contribute at the actuarially determined rate of 2.49 percent (2.00 percent retirement and 0.49 percent long-term disability) of the members’ annual covered payroll. The City’s contribution to ASRS for the years ended June 30, 2003, 2002, and 2001 were $538,377, $500,530, and $407,230, respectively, which were equal to the required contributions for the year. In addition, active EORP members were required by statute to contribute 7 percent of the members’ annual covered payroll while the City was required to contribute at the actuarially determined rate of 6.67 percent. The City’s contributions to EORP for the years ended June 30, 2003, 2002 and 2001 were $11,103, $8,027, and $11,221, respectively, which were equal to the required contributions for the year. Agent plans - For the year ended June 30, 2003, active PSPRS members were required by statute to contribute 7.65 percent of the members’ annual covered payroll, and the City was required to contribute at the actuarially determined rate of 2.00 percent for police and 3.86 percent for fire. Annual Pension Cost - The City’s pension cost for the two agent plans for the year ended June 30, 2003, follows: Contribution Rates Annual Pension Cost Contributions Made Actuarial Valuation Date Actuarial Cost Method Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Inflation projection Cost-of-Living Adjustments Amortization Method Remaining Amortization Period Asset Valuation Method Police Fire 2.00% $133,141 $133,141 June 30, 2002 Entry Age 3.86% $168,473 $168,473 June 30, 2002 Entry Age 9% 6.5% - 9.5% 5.5% None Level Percentage Open 20 years Smoothed market 9% 6.5% - 9.5% 5.5% None Level Percentage Open 20 years Smoothed market 47 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 Trend Information - Information for each of the agent plans as of the most recent actuarial valuations follows: POLICE FIRE Annual Percent Net Pension Pension Cost Contributed Obligation 2000 2001 2002 2000 2001 2002 223,767 86,526 133,141 255,074 251,685 168,473 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% - G. Other Employee Benefit Plan In addition to the leave plans described under compensated absences, the City maintains a self funded insurance plan for employee and dependent related health, life, and dental claims. An Internal Service Fund is established to record employee and employer contributions. No minimum level of reserve has been established for the Fund; however, incurred but unreported claims have been accrued within the fund that amount to $51,775. At June 30, 2003, unrestricted net assets amounted to $283,931. H. Long-Term Liabilities The following changes occurred in long-term liabilities during the fiscal year ended June 30, 2003: Governmental activities: Yuma Municipal Property Corporation Contracts Payable Compensated Absences Total Governmental Activity Long-Term Debt Balance July 1, 2002 Additions $ 62,315,000 573,334 1,830,567 $ 27,990,000 3,500,000 242,229 $ 22,870,000 753,334 92,409 $ 67,435,000 3,320,000 1,980,387 $ 3,995,000 1,220,000 1,283,188 $ 64,718,901 $ 31,732,229 $ 23,715,743 $ 72,735,387 $ 6,498,188 $ 12,210,000 57,593 $ 10,408,190 $ 825,000 52,984 $ 11,385,000 10,412,799 $ 880,000 4,609 $ 12,267,593 $ 10,408,190 $ 877,984 $ 21,797,799 $ 884,609 Retirements Balance June 30, 2003 Due Within One Year Business-type activities: General Obligation Bonds Contracts Payable Total Business-type Activity Long-Term Debt On the Statement of Net Assets, the current portion of governmental activity long-term debt of $5,215,000 excludes the current portion of compensated absences of $1,283,188 that is recorded within accrued liabilities. The long-term portion of governmental activity long-term debt is net of $129,280 of unamortized deferred charges. For business-type activities, long-term debt excludes the current portion of bonds payable of $660,000 that is recorded within liabilities payable from restricted assets. Also, the long-term portion is net of $390,643 of unamortized issuance costs. Contracts Payable Governmental Activities - During fiscal year 2003, the City entered into three loans recorded as long-term contracts payable. The first was a $500,000 note with the U.S. Department of Housing and Urban Development Section 108 program for use in neighborhood revitalization. Proceeds will generate loans to qualified 48 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 neighborhood residents and future payments will be fund by loan repayments of the recipients. Two loans were obtained from the Arizona State Department of Transportation Highway Expansion and Extension Program (HELP). Proceeds of $2,000,000 and $1,000,000 were used for two street projects. Payments will originate from the City Road Tax Fund. Finally, one payment remains from the FY 2002 purchase of the historic Yuma Theater. The General Fund will make this payment. Annual debt service requirements under these contracts are as follow: Contracts Payable July 1, Section 108 Interest Principal 2003 2004 2005 2006 2007 $ 85,000 92,000 99,000 107,000 117,000 Total $ 500,000 HELP $ 7,091 12,758 10,666 7,822 4,274 $ 42,611 Principal $ Theater Interest Principal Total Interest Principal 700,000 700,000 700,000 700,000 - $ 36,367 30,323 18,193 6,064 - $ 20,000 - $ - $ 805,000 792,000 799,000 807,000 117,000 $ 2,800,000 $ 90,947 $ 20,000 $ - $ 3,320,000 Interest $ 43,458 43,081 28,859 13,886 4,274 $ 133,558 Business-type activities – During fiscal year 2003, the City began construction of major additions to its utility infrastructure, including new, additional treatment plants for its water and wastewater systems. Financing for these additions comes from the Arizona Water Infrastructure Financing Authority (WIFA) in the form of long-term loans. The City will draw from these approved loans until their limits are reached, presently approved at $10 million for water and $44 million for wastewater. Debt service requirements are not presented, as repayment terms are not finalized until the loans are depleted. Moreover, the City has applied for additional loan amounts for each project. Bonded Debt - Excluding Refunded Debt New Debt Issue – On February 18, 2003, the Yuma Municipal Property Corporation issued $27,990,000 in bonds with an average interest of 4.11 percent. A portion of the issue, $9,000,000, was for construction of a new fire station and for renovation of the historic Yuma Theater and an art center addition. The remaining proceeds partially refunded the 1995 Series A through C MPC Bonds, issued at rates of 5.55 percent, 5.38 percent and 5.25 percent, respectively. The proceeds $29,964,787, including $103,797 of accrued interest, provided $9 million of new money, paid closing costs of $177,055 and current interest costs of $484,657, and refunded $19,070,000 (excluding the July 2003 principal payment of $1,195,000) and call premium of $190,700. The refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $129,280. This difference, reported in the accompanying financial statements as a deduction from bonds payable, will be charged to operations through the year 2015 using the effective-interest method. The City completed the refunding to reduce its total debt service payments over the next 12 years by $1.7 million and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $1.4 million. The following is a description of bonded indebtedness at June 30, 2003. In each instance, all bonds have been issued. For each issue, a number of covenants and restrictions are included in the bond indentures. The City is in compliance with these covenants and restrictions. Municipal Property Corporation Bonds – In 1970, the City created the Municipal Property Corporation to finance the acquisition or construction of various City projects. Bonds are issued by the corporation and are repaid through unrestricted revenues, primarily excise taxes, by the City. For each issue, the City has pledged its excise tax collections as follows: Excise Taxes – transaction privilege taxes, license fees and franchise fees, along with transaction privilege taxes, income taxes and excise taxes imposed by the State and distributed to the City (except public safety and special sales taxes); Public Safety Taxes – a special two-tenths of one percent (.2%) privilege license tax approved by qualified voters in 1994 for public safety and criminal justice facilities and 49 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 equipment; and Special Sales Taxes – a special two percent (2%) privilege license tax approved by qualified voters in 1993 on the gross proceeds of sales or gross income from the business of bars, restaurants and hotels. For each bond series, the corresponding pledged tax was: 1995 – Series A 1995 – Series B 1995 – Series C 1996 Issue 1998 Issue 2001 Issue 2003 – Series A 2003 – Series B 2003 – Series C Excise and Public Safety Taxes Excise Taxes Excise and Special Sales Taxes Excise Taxes Excise Taxes Excise Taxes Excise and Public Safety Taxes Excise Taxes Excise and Special Sales Taxes In addition to, or in lieu of, excise taxes, the City may use other operational revenues to repay the debt, as budgeted in each fund. These include payments from the Water, Wastewater and Desert Hills Golf Course Enterprise Funds, and Highway User Revenue and Solid Waste Special Revenue Funds, as determined by the projects acquired or constructed by the debt proceeds. General Obligation Bonds – These bonds are backed by the full faith and credit of the City and may be repaid through the levying of property taxes. However, because the bonds were issued for the construction or expansion of the City’s water treatment and delivery system, the bonds are recorded in the Water Enterprise Fund and are repaid through that fund. Interest Rate Issue Date Maturity Date Authorized and Issued Outstanding General Obligation Bonds: 1992 Project 6.13% 12/16/1992 2012 1997 Refunding 4.90% 12/1/1997 2012 5.55% 5.38% 5.25% 5.07% 3.74% 4.94% 4.21% 3.67% 2.97% 4.18% 14,370,000 $ 8,085,000 11/1/1995 11/1/1995 11/1/1995 9/1/1996 12/1/1998 3/21/2001 2/18/2003 2/18/2003 2/18/2003 2/18/2003 Total MPC Bonds 2003 2003 2003 2003 2004 2025 2015 2015 2010 2022 (390,643) 22,455,000 10,994,357 20,400,000 3,900,000 2,500,000 9,600,000 6,020,000 34,150,000 14,640,000 2,905,000 1,445,000 9,000,000 865,000 165,000 165,000 1,550,000 2,550,000 34,150,000 14,640,000 2,905,000 1,445,000 9,000,000 104,560,000 67,435,000 $ 127,015,000 Total Bonds Authorized and Issued 3,575,000 7,810,000 - Unamortized deferred amount on refunding Yuma Municipal Property Corporation Bonds: 1995 - Series A 1995 - Series B 1995 - Series C 1996 Issue 1998 Issue 2001 Issue 2003 - Series A Refunding 2003 - Series B Refunding 2003 - Series C Refunding 2003 - Series B Addition $ $ 78,429,357 Legal Debt Margin Under Arizona's Constitution, outstanding general obligation bonded debt for combined water, sewer, artificial light, parks, open space preserves, playgrounds and recreational facilities may not exceed 20% of a City's net secondary assessed valuation. Outstanding general obligation debt for all other purposes may not exceed 6% of a City's net secondary assessed valuation. The legal borrowing capacity of the City of Yuma at June 30, 2003 follows: 50 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 Water, Etc. (20%) All Other (6%) Legal Limit Outstanding G.O. Debt $ 61,141,782 10,505,000 $ 18,342,535 - Available Debt Margin $ 50,636,782 $ 18,342,535 Advanced Refunding of Bonded Debt in Prior Years In prior years, the City issued new debt through an advanced refunding bond issue resulting in the defeasance of old debt. Under an advanced refunding arrangement, refunded bonds are issued and the new proceeds, plus additional resources that may be required, are used to purchase securities issued or guaranteed by the United States Government. These securities are then deposited in an irrevocable trust under an escrow agreement which provides that all proceeds from the trust will be used to fund the principal and interest payments of the previously issued bonded debt being refunded. The trust deposits have been computed so that the securities in the trust, along with future cash flow generated by the securities, will be sufficient to service the previously issued bonds. The outstanding balance of the refunded debt and the related assets are not included in the accompanying financial statements. At June 30, 2003, the only refunded issue outstanding is a portion of the City’s 1992 General Obligation Bonds refunded on December 1, 1997 for $7,250,000, due on July 1, 2003. 51 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 Annual Debt Service Requirements to Maturity July 1 2003 2004 2005 2006 G.O. Bonds 1992 Issue Interest Total Principal MPC Bonds 1996 Series Interest Total MPC Bonds 1998 Series Principal Interest Total $ 815,000 865,000 920,000 975,000 $ 209,405 162,950 112,780 58,500 $ 1,024,405 1,027,950 1,032,780 1,033,500 $ 1,550,000 - $ 75,175 - $ 1,625,175 - $ 1,250,000 1,300,000 - $ 96,925 50,050 - $ 1,346,925 1,350,050 - $ 3,575,000 $ 543,635 $ 4,118,635 $ 1,550,000 $ 75,175 $ 1,625,175 $ 2,550,000 $ 146,975 $ 2,696,975 MPC Bonds 1995A 865,000 $ 820,199 $ 1,685,199 $ 165,000 MPC Bonds 1995B $ 154,347 $ 319,347 $ MPC Bonds 1995C $ 78,470 $ 243,470 1997 Refunding Bonds 65,000 $ 377,580 $ 65,000 374,622 70,000 371,665 75,000 368,480 1,115,000 365,067 1,170,000 312,105 1,210,000 257,115 1,275,000 196,615 1,345,000 134,140 1,420,000 69,580 - 442,580 439,622 441,665 443,480 1,480,067 1,482,105 1,467,115 1,471,615 1,479,140 1,489,580 - $ 1,647,825 1,647,825 2,537,825 2,537,225 2,540,225 2,536,625 2,534,125 2,529,925 2,534,025 2,531,000 2,532,250 2,530,500 2,525,750 2,858,000 2,855,250 2,858,250 2,856,500 2,855,000 2,858,500 2,856,500 2,859,000 2,855,500 2,856,000 $ 2003 $ 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 $ $ 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Principal $ 7,810,000 $ 2,826,969 $ 10,636,969 MPC Bonds 2003 Refunding 1995A - $ 242,595 $ 242,595 980,000 582,228 1,562,228 1,005,000 557,728 1,562,728 1,030,000 532,603 1,562,603 1,060,000 506,853 1,566,853 1,095,000 477,703 1,572,703 1,150,000 422,953 1,572,953 1,210,000 365,453 1,575,453 1,285,000 304,953 1,589,953 1,350,000 240,703 1,590,703 1,425,000 173,203 1,598,203 1,490,000 119,765 1,609,765 1,560,000 62,400 1,622,400 $ 14,640,000 $ 4,589,140 $ 19,229,140 MPC Bonds 2001 Series $ 1,647,825 $ 1,647,825 890,000 1,647,825 925,000 1,612,225 965,000 1,575,225 1,000,000 1,536,625 1,040,000 1,494,125 1,080,000 1,449,925 1,130,000 1,404,025 1,175,000 1,356,000 1,235,000 1,297,250 1,295,000 1,235,500 1,355,000 1,170,750 1,755,000 1,103,000 1,840,000 1,015,250 1,935,000 923,250 2,030,000 826,500 2,130,000 725,000 2,240,000 618,500 2,350,000 506,500 2,470,000 389,000 2,590,000 265,500 2,720,000 136,000 $ 34,150,000 $ $ $ 25,583,625 $ 59,733,625 MPC Bonds 2003 Refunding 1995B - $ 40,634 $ 40,634 205,000 97,523 302,523 210,000 92,397 302,397 210,000 87,147 297,147 215,000 81,897 296,897 230,000 75,985 305,985 235,000 69,085 304,085 245,000 61,448 306,448 250,000 53,485 303,485 260,000 44,735 304,735 270,000 35,375 305,375 280,000 25,250 305,250 295,000 14,750 309,750 2,905,000 $ 52 779,711 $ 3,684,711 165,000 MPC Bonds 2003 Series $ 144,524 $ 345,000 346,858 355,000 338,232 365,000 329,358 375,000 320,233 385,000 309,920 395,000 298,370 410,000 285,532 420,000 272,207 435,000 257,507 450,000 241,847 470,000 224,973 490,000 207,347 515,000 182,847 535,000 157,098 560,000 134,628 585,000 110,828 610,000 85,672 635,000 58,833 665,000 30,258 - $ 9,000,000 $ $ 4,337,072 144,524 691,858 693,232 694,358 695,233 694,920 693,370 695,532 692,207 692,507 691,847 694,973 697,347 697,847 692,098 694,628 695,828 695,672 693,833 695,258 - $ 13,337,072 MPC Bonds 2003 Refunding 1995C - $ 17,094 $ 17,094 190,000 41,025 231,025 195,000 36,275 231,275 200,000 31,400 231,400 205,000 26,400 231,400 210,000 20,763 230,763 220,000 14,463 234,463 225,000 7,313 232,313 - $ 1,445,000 $ 194,731 $ 1,639,733 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 I. Interfund Transfers Transfers Out From / Into General Fund MPC Debt Service Capital Projects Capital Projects HURF Road Tax Grants Capital Projects Community Redevelopment Capital Projects Capital Projects General Fund HURF Public Safety Tax Capital Projects LTAF Public Safety Tax Solid Waste Recreation Complex Two Percent Tax MPC Debt Service Capital Projects MPC Debt Service Capital Projects Recreation Complex MPC Debt Service Capital Projects Desert Hill G.C. Total Governmental Activities Desert Hills G.C. Water Wastewater Transfers In Into / From Governmental activities - major funds: HURF $ 14,747 General Fund Solid Waste 1,335,283 Mall Maintenance 293,748 HURF MPC Debt Service 1,612,784 Capital Projects 1,335,953 MPC Debt Service MPC Debt Service MPC Debt Service MPC Debt Service Total Enterprise Funds Total Transfers Out $ Capital Projects $ General Fund Capital Projects General Fund HURF Two Percent Tax 467,143 Public Safety Tax 1,155,599 Solid Waste 5,879,764 Desert Hills G.C. Wastewater 1,401,075 Water General Fund Capital Projects HURF 292,456 Road Tax Community Redevelopment 143,310 1,096,070 Grants LTAF 216,420 Public Safety Tax Two Percent Tax Recreation Complex Nonmajor funds: General Fund 383,949 Solid Waste 2,549,439 229,383 21,548 20,624 1,650,000 235,854 143,732 50,841 20,529,722 Recreation Complex Mall Maintenance Public Safety Tax 14,747 1,096,070 1,612,784 467,143 235,854 2,549,439 21,548 237,788 335,842 64,047 1,335,953 1,155,599 5,879,764 292,456 1,401,075 383,949 229,383 143,732 20,624 1,335,283 Two Percent Tax General Fund Capital Projects 1,650,000 293,748 216,420 Total Governmental Activities 21,116,558 Business-like activities: 237,788 Desert Hills G.C. 64,047 335,842 Two Percent Tax 50,841 637,677 21,167,399 143,310 50,841 Total Transfers In $ 21,167,399 The majority of the transfers listed above are for capital projects expenditures or for debt service requirements and are recognizable by the fund to which the transfer is made. This includes Enterprise Fund transfers to debt service as the majority of the related bond debt service is governmental in nature and is recorded in the MPC Debt Service Fund rather than within the Enterprise Funds. As for the remaining transfers, they include operating subsidies from the General Fund to HURF ($14,747), Solid Waste Fund ($1,335,283) and Mall Maintenance ($293,748); and from the Two Percent Tax Fund to Recreation Complex Fund ($1,650,000) and Desert Hills Golf Course ($50,841). Also included is a transfer from the Capital Projects Fund to HURF ($1,096,070) to replace monies transferred for street projects in fiscal year 2002 that were covered by proceeds from a loan from the Arizona Department of Transportation during fiscal year 2003. 53 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 Interfund activity is eliminated within the governmental activities column of the Statement of Activities. Only transfers between governmental and business-type activities appear on that statement. The net transfers out of $586,836 are for debt service. J. Interfund Receivables and Payables Interfund balances at June 30, 2003, follow: Interfund Receivable Nonmajor Major Funds Fund Two Percent Interfund Payable Major Governmental Funds: Community Redevelopment Fund Nonmajor Governmental Funds: Solid Waste Fund Nonmajor Enterprise Funds: Desert Hills Golf Course Fund Internal Service Funds: Employee Benefits Trust Total Receivable Tax General 602,416 - 602,416 54,616 - 54,616 - 221,477 221,477 15,000 $ Total 672,032 $ 221,477 15,000 $ 893,509 Because they serve primarily governmental funds, the interfund activity noted above in the Internal Service Employee Benefits Trust is combined within the governmental activities for government-wide reporting. As such, the interfund activity is eliminated in the governmental activities column of the Statement of Net Assets. The internal balances amount appearing on that statement, $11,975, represents net balances allocated to businesstype activities for consolidation of internal service funds net profits. K. Fund Equity Unreserved Fund Balances – Designations - Uncompleted Projects - $5,967,212 is the uncompleted portion of capital projects for which Council has authorized the funding from current year available resources. Expenditures for these projects are rebudgeted in the subsequent fiscal year since unexpended appropriations lapse at yearend. Subsequent Years’ Expenditures – Insurance reserve - $1,037,199 for subsequent year expenditures for insurance purposes, of which $400,000 is designated for the Yuma Fine Arts Center fire loss; an additional $500,000 reserve for the new Yuma Performing Arts Center; and, public/educational/government (PEG) Facility $269 remaining for continuing development of the channel on the local cable system. Future Community Improvements - $829,494 represents special projects in subsequent years as designated by City Council. L. Risk Management The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; job-related illnesses and injuries to employees; natural disasters; and health and accident, dental and other medical benefits provided to employees. The City uses the Employee Benefits Trust Fund, an Internal Service Fund, to account for the financing of its risks of loss relating to dental claims and its insured health programs. The City purchases commercial insurance for employee health coverage but retains the risk for its dental coverage. Dental coverage claims have annual limits per employee, making unlikely the prospect that claims would be incurred in excess of the fund’s ability to pay. All funds of the City participate in the program and make payments to the Internal Service Fund based on the number of full time employees who receive health benefits assigned to the individual funds. The Employee Benefits Trust Fund Board set the amount to be charged per employee based upon contracts with the insurance provider for health coverage and based upon prior year claims for dental coverage. The claims liability of $51,775 54 City of Yuma, Arizona NOTES TO THE FINANCIAL STATEMENTS For the Year Ended June 30, 2003 reported in the Internal Service Fund, Employee Benefits Trust Fund at June 30, 2003 is based on the requirements of GASB Statement No. 10, Accounting and Financial Reporting for Risk Financing and Related Insurance Issues, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. The City uses an application of historical experience to determine claims payable. Changes in the Employee Benefits Trust Fund claims liability amounts in fiscal year 2003, 2002, and 2001 were: Beginning Claims and of Year Liability Changes In Estimates Fiscal Year 2002-03 2001-02 2000-01 $ 47,642 42,000 39,600 $ 400,801 382,920 326,109 End Claim Payments $ 396,668 377,278 323,709 of Year Liability $ 51,775 47,642 42,000 The City is self-insured for Workman’s Compensation. The changes to claims liability amounts in fiscal years 2003, 2002, and 2001 were: Beginning Claims and of Year Liability Changes In Estimates Fiscal Year 2002-03 2001-02 2000-01 $ 261,661 336,656 131,638 $ 582,648 203,460 494,820 End Claim Payments $ 420,739 278,455 289,802 of Year Liability $ 423,570 261,661 336,656 The City carries commercial insurance for all other risks of loss, including property and liability. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. M. Construction Commitments As of June 30, 2003, the City is involved in several construction projects. The estimated cost to complete the construction projects is $5,967,212. N. Subsequent Event On September 17, 2003, the Council adopted Resolution R2003-65 authorizing a development agreement with Yuma Palms, LLC., related to the company’s development of a regional shopping center in Yuma. The agreement calls for the developer to construct approximately $10 million in public improvements of street and utility infrastructure. In return, the City agrees to fund its agreed-upon share of 70% of the public improvements through the creation of an improvement district and subsequent issuance of bonds during fiscal year 2004. . IV. CONTINGENT LIABILITIES A. Pending Litigation The City is contingently liable in respect to lawsuits and other claims incidental to the ordinary course of its operations. It is the opinion of the City management, based on the advice of the City Attorney, that such matters will not have a material adverse effect on the City's financial position at June 30, 2003. B. Compliance The City participates in federally-funded and state-funded programs administered by various government agencies. The programs included in these financial statements may be subject to program compliance and/or financial monitoring by the granting agency or its representatives. The amount, if any, of expenditures that may be disallowed by the granting agencies cannot be determined at this time. 55 56 REQUIRED SUPPLEMENTARY INFORMATION 57 Schedule of Funding Progress Public Safety Personnel Retirement System Unfunded Actuarial Funding Annual Liability as Actual Value Accrued Liability Funded Covered Percentage of Plan Assets Liability (Excess) Ratio Payroll of Payroll POLICE 2000 2001 2002 FIRE 36,064,305 38,686,969 38,521,463 25,623,095 26,356,089 30,716,985 (10,441,210) (12,330,880) (7,804,478) 140.7% 146.8% 125.4% 5,703,337 5,888,020 6,766,977 -% -% -% 2000 2001 2002 29,687,106 31,549,536 30,698,121 24,894,069 25,790,543 29,078,933 (4,793,037) (5,758,993) (1,619,188) 119.3% 122.3% 105.6% 4,056,042 4,141,659 4,466,840 -% -% -% 58 City of Yuma, Arizona Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2003 Budgetary Fund Balance, July 1 Resources (inflows): Taxes: Property Tax - Primary Property Tax - Delinquent City Sales Tax Public Enterprise In-Lieu Franchise Tax Total Taxes Licenses: Business Licenses Liquor Licenses Building Permits Alcohol Permits Total Licenses Intergovernmental: Sales Tax - State State Revenue Sharing Auto Lieu Tax County Emergency Services Total Intergovernmental Charges for Services: Building Inspection Fees Recreation Fees Police Services Other Charges Total Charges for Services Fines and Forfeitures: City Court Fines Total Fines and Forfeitures Use of Money and Property: Interest Rental Receipts Total Use of Money and Property Miscellaneous Sales of Surplus Property Other Total Miscellaneous Total Revenues Transfers From Other Funds Amounts Available for Appropriation Budget Final Original $ 11,007,290 $ 11,007,290 Actual Amounts $ 13,551,024 Variance with Final Budget Positive (Negative) $ 2,543,734 5,569,705 140,000 13,833,000 248,000 1,841,750 21,632,455 5,569,705 140,000 13,833,000 248,000 1,841,750 21,632,455 5,339,296 186,250 13,237,042 242,000 1,719,272 20,723,860 (230,409) 46,250 (595,958) (6,000) (122,478) (908,595) 260,000 28,000 1,146,500 4,500 1,439,000 260,000 28,000 1,146,500 4,500 1,439,000 297,643 27,765 1,731,630 5,809 2,062,847 37,643 (235) 585,130 1,309 623,847 6,039,610 8,364,244 2,400,000 17,000 16,820,854 6,039,610 8,364,244 2,400,000 17,000 16,820,854 6,062,278 8,250,011 2,746,086 19,432 17,077,807 22,668 (114,233) 346,086 2,432 256,953 333,000 310,000 638,000 43,450 1,324,450 333,000 310,000 638,000 43,450 1,324,450 611,589 355,658 644,398 61,578 1,673,223 278,589 45,658 6,398 18,128 348,773 626,000 626,000 626,000 626,000 801,121 801,121 175,121 175,121 440,000 71,350 511,350 440,000 71,350 511,350 243,955 122,564 366,519 (196,045) 51,214 (144,831) 7,000 88,500 95,500 42,449,609 906,467 7,000 88,500 95,500 42,449,609 906,467 54,363,366 38,158 98,035 136,193 42,841,570 143,310 56,535,904 31,158 9,535 40,693 391,961 (763,157) 2,172,538 54,363,366 Continued on next page 59 City of Yuma, Arizona Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2003 Budget Original Charges to Appropriations (outflows): General Government: Mayor and Council Elections City Administrator Communications Quality Initiatives General Government City Clerk Community Investment Trust City Attorney Litigation Administrative Services Accounting Customer Services Information Technology Services Materials Management Human Resources Facilities Maintenance Intragovernmental Charges Total General Government Expenditures Less Capital Outlay Less Debt Service Principal Total General Government Deductions General Government Operating Expenditu Public Safety: Police Administration - Field Operations Police Reserve Unit Police Support Services Police Communication Center Fire Administration Fire Training Fire Suppression Fire Prevention Fire Maintenance Fire Special Operations Fire Emergency Medical Services Fire Emergency Management Animal Control Municipal Court Total Public Safety Expenditures Less Capital Outlay Public Safety Operating Expenditures Final Actual Amounts Variance with Final Budget Positive (Negative) 214,120 41,000 261,588 104,566 534,538 1,043,705 215,307 906,467 905,626 291,300 335,573 644,280 394,946 2,238,408 574,127 783,987 (2,784,800) 6,704,738 189,225 214,120 41,000 247,334 104,566 545,792 768,792 218,307 906,467 897,264 291,300 201,896 663,968 400,158 2,240,408 574,960 783,987 534,454 (2,784,800) 6,849,973 450,249 224,235 19,466 251,950 97,001 490,130 339,963 199,895 10,754 972,983 383,143 192,795 644,901 371,980 1,411,888 552,284 703,015 649,545 (2,758,886) 4,757,042 4,760 (10,115) 21,534 (4,616) 7,565 55,662 428,829 18,412 895,713 (75,719) (91,843) 9,101 19,067 28,178 828,520 22,676 80,972 (115,091) (25,914) 2,092,931 445,489 189,225 6,515,513 450,249 6,399,724 20,000 24,760 4,732,282 (20,000) 425,489 1,667,442 11,145,362 7,750 2,525,435 1,687,475 470,711 197,438 5,675,517 396,583 497,845 110,261 131,210 74,961 393,916 1,012,080 24,326,544 285,925 24,040,619 11,129,203 7,750 2,520,194 1,687,475 456,050 195,148 5,674,483 395,113 497,845 105,961 139,790 74,961 393,916 1,008,904 24,286,793 346,778 23,940,015 10,333,432 3,205 2,206,982 1,316,971 404,965 173,055 5,602,888 354,119 482,741 62,145 115,796 49,742 393,916 1,028,450 22,528,407 153,540 22,374,867 795,771 4,545 313,212 370,504 51,085 22,093 71,595 40,994 15,104 43,816 23,994 25,219 (19,546) 1,758,386 193,238 1,565,148 Continued on next page 60 City of Yuma, Arizona Budgetary Comparison Schedule General Fund For the Year Ended June 30, 2003 Budget Final Original Parks, Recreation and Culture: Parks and Recreation Administration Parks Maintenance Parks Development Recreation Administration Senior Adult Activities Adult Activities Youth Activities Aguatics Yuma Theatre Arts and Culture Intragovernmental Charges Total Parks, Recreation and Culture Less Capital Outlay Parks, Recreation and Culture Operating Expenditures Environmental Health and Protection: Environmental Management Intragovernmental Charges Total Environmental Health and Protection Less Capital Outlay Environmental Health and Protection Operating Expenditures Community Design and Development: Community Development Administration Engineering Business Development Planning and Neighborhood Services Heritage Area Development Outside Agencies Total Community Design and Development Less Capital Outlay Community Design and Development Operating Expenditures Total Operating Expenditures Capital Outlay Debt Service Principal Total Expenditures Transfers to Other Funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Actual Amounts Variance with Final Budget Positive (Negative) 560,870 2,927,769 300,971 523,312 163,756 202,538 239,623 523,900 85,681 316,504 (119,087) 5,725,837 51,350 403,794 3,006,626 301,586 537,976 166,756 203,324 228,433 523,900 79,767 235,418 (119,087) 5,568,493 94,130 372,148 2,752,482 383,244 497,315 156,578 221,017 203,088 556,974 14,935 200,211 (119,087) 5,238,905 18,076 31,646 254,144 (81,658) 40,661 10,178 (17,693) 25,345 (33,074) 64,832 35,207 329,588 76,054 5,674,487 5,474,363 5,220,829 253,534 942,752 (799,124) 143,628 46,000 942,532 (799,124) 143,408 29,127 920,661 (799,124) 121,537 21,377 21,871 21,871 7,750 97,628 114,281 100,160 14,121 664,829 998,392 458,000 1,508,761 341,950 3,971,932 68,700 581,404 1,037,405 458,000 1,320,644 185,419 441,140 4,024,012 72,939 579,620 853,267 431,533 1,251,258 189,347 416,575 3,721,600 58,651 3,903,232 40,231,479 641,200 3,951,073 39,879,456 993,223 3,662,949 36,091,087 256,404 288,124 3,788,369 736,819 40,872,679 5,351,758 40,872,679 5,351,758 20,000 36,367,491 4,592,515 46,224,437 46,224,437 40,960,006 (20,000) 4,505,188 759,243 5,264,431 $ 61 8,138,929 $ 8,138,929 1,784 184,138 26,467 69,386 (3,928) 24,565 302,412 14,288 $ 15,575,898 $ 7,436,969 Concluded City of Yuma, Arizona Budgetary Comparison Schedule Highway User Revenue Fund For the Year Ended June 30, 2003 Budgetary Fund Balance, July 1 Resources (inflows): Intergovernmental State Gasoline Tax Use of Money and Property Interest Miscellaneous Other Total Revenues Transfers From Other Funds Amounts Available for Appropriation Charges to Appropriations (outflows): Current: Public Safety Traffic Signals, Signs, and Striping Streets Street Maintenance Street Lighting Street Sweeping Storm Drain Maintenance Curbs, Gutters, and Sidewalks Environmental Health Lot Cleaning Capital Outlay Total Expenditures Transfers To Other Funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Budget Final Original $ 4,208,030 $ 4,208,030 Actual Amounts $ 3,568,601 Variance with Final Budget Positive (Negative) $ (639,429) 6,532,000 6,532,000 6,732,659 130,000 130,000 97,695 10,000 6,672,000 23,790 10,903,820 10,000 6,672,000 23,790 10,903,820 82,406 6,912,760 1,110,817 11,592,178 72,406 240,760 1,087,027 688,358 848,918 857,918 748,292 109,626 2,740,882 469,563 461,836 470,495 410,671 2,753,882 515,227 461,836 493,040 410,671 2,555,556 513,561 437,022 398,277 369,469 198,326 1,666 24,814 94,763 41,202 23,790 198,938 5,625,093 3,258,897 8,883,990 23,840 108,679 14,748 53,784 5,625,093 3,258,897 8,883,990 5,090,709 1,622,742 6,713,451 9,092 54,895 534,384 1,636,155 2,170,539 $ 2,019,830 62 $ 2,019,830 $ 4,878,727 200,659 (32,305) $ 2,858,897 City of Yuma, Arizona Budgetary Comparison Schedule City Road Tax Fund For the Year Ended June 30, 2003 Original $ 3,335,658 Final $ 3,335,658 Actual Amounts $ 3,302,919 6,916,500 6,916,500 6,617,396 (299,104) 150,000 150,000 37,755 (112,245) 7,066,500 10,402,158 7,066,500 10,402,158 372 6,655,523 9,958,442 372 (410,977) (443,716) 298,010 343,828 - 298,010 317,653 18,014 301,714 308,441 14,426 (3,704) 9,212 3,588 641,838 8,507,484 9,149,322 633,677 8,507,484 9,141,161 700,000 36,286 1,360,867 5,879,764 7,240,631 (700,000) (36,286) (727,190) 2,627,720 1,900,530 $ 1,252,836 $ 1,260,997 $ 2,717,811 Budget Budgetary Fund Balance, July 1 Resources (inflows): Taxes Special Road Sales Tax Use of Money and Property Interest Miscellaneous Other Total Revenues Amounts Available for Appropriation Charges to Appropriations (outflows): Current: Streets Street Maintenance Retention Basin Maintenance Capital Outlay Debt Service Principal Interest and Fiscal Agent Fees Total Expenditures Transfers to Other Funds Total Charges to Appropriations Budgetary Fund Balance, June 30 Variance with Final Budget Positive (Negative) $ (32,739) 63 $ 1,456,814 City of Yuma, Arizona Budgetary Comparison Schedule Grants Fund For the Year Ended June 30, 2003 Budget Budgetary Fund Balance, July 1 Resources (inflows): Intergovernmental Federal Government State Government Budget Authority Reserve Use of Money and Property Interest Contributions/Donations Total Revenues Charges to Appropriations (outflows): Current: Public Safety Parks, Recreation and Culture Environmental Health and Protection Community Design & Development Capital Outlay Total Expenditures Operating Transfers Out Total Charges to Appropriations Budgetary Fund Balance, June 30 Final 8,668 Actual Amounts $ 8,668 12,027,167 2,788,216 600,000 12,027,167 2,788,216 600,000 2,851,825 174,619 - (9,175,342) (2,613,597) (600,000) 87,657 15,503,040 15,511,708 87,657 15,503,040 15,511,708 12,474 2,045 3,040,963 3,049,631 12,474 (85,612) (12,462,077) (12,462,077) 1,375,151 44,657 7,187,500 1,000 50,000 8,658,308 8,230,400 16,888,708 1,425,094 53,087 7,129,127 1,000 50,000 8,658,308 8,230,400 16,888,708 1,240,862 14,509 383,211 1,306 1,639,888 1,401,075 3,040,963 184,232 38,578 6,745,916 (306) 50,000 7,018,420 6,829,325 13,847,745 Original $ 8,668 Amounts Available for Appropriation $ Variance with Final Budget Positive (Negative) $ - $ (1,377,000) $ (1,377,000) $ 64 8,668 $ 1,385,668 City of Yuma, Arizona Budgetary Comparison Schedule Community Redevelopment Fund For the Year Ended June 30, 2003 Budget Budgetary Fund Balance, July 1 Resources (inflows): Intergovernmental Federal Government State Government Use of Money and Property Rental Receipts Miscellaneous Loan Repayments Other Sale of Real Property Original $ - $ 3,817,846 300,000 Charges to Appropriations (outflows): Current: Community Design and Development Capital Outlay Debt Service Interest and Fiscal Agent Fees Total Expenditures Operating Transfers Out Total Charges to Appropriations $ - Actual Amounts $ - 3,817,846 300,000 - Total Revenues Increase in Long-Term Contracts Amounts Available for Appropriation Budgetary Fund Balance, June 30 Final Variance with Final Budget Positive (Negative) $ - 1,459,468 567,579 - (2,358,378) 267,579 269 269 15,000 515,000 4,647,846 4,647,846 15,000 515,000 4,647,846 4,647,846 (7,276) 39,965 2,060,005 500,000 2,560,005 (22,276) (475,035) (2,587,841) 500,000 (2,087,841) 3,333,855 13,991 3,326,355 21,491 2,211,921 48,537 1,114,434 (27,046) 3,347,846 1,300,000 4,647,846 3,347,846 1,300,000 4,647,846 7,091 2,267,549 292,456 2,560,005 (7,091) 1,080,297 1,007,544 2,087,841 - 65 $ - $ - $ - 66 OTHER SUPPLEMENTARY INFORMATION 67 68 NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds account for the proceeds of special revenue sources that are used to finance projects or activities as required by law or contractual agreements. Local Transportation Assistance To record the receipts and uses of monies originating from Arizona Lottery sales. These monies are restricted to transportation uses. Public Safety Tax To account for the two-tenths percent sales tax designated for public safety and criminal justice facilities and equipment. Solid Waste To record the financial activities of the city-owned and operated residential garbage collection service. Expenditures in excess of fees are financed by a transfer from the General Fund. Recreation Complex Baseball Complex. To record the financial activities of the Civic Center and Two Percent Tax To record the financial activities of the Two Percent Special Revenue Excise Tax on hotel, motel, restaurant and bar sales. This tax can finance the operations of the Civic and Convention Center, Baseball Complex, Golf Courses, the Yuma Crossing Area and Convention and Tourism. Yuma Mall Maintenance To record the special maintenance levy for the Yuma Downtown Mall District. The assessment supports cleaning, maintenance, landscaping and utility costs of common areas. Costs in excess of the assessment are financed by a transfer from the General Fund. 69 City of Yuma, Arizona Combining Balance Sheet Nonmajor Governmental Funds June 30, 2003 Special Revenue Assets Cash and Investments Receivables (Net of Allowances for Uncollectibles): Accounts Receivable Intergovernmental Accrued Interest Due From Other Funds Inventory, at cost Prepaid Items Total Assets Liabilities Liabilities: Accounts Payable Accrued Payroll and Related Taxes Due to Other Funds Deferred Revenue Total Liabilities Local Transportation Assistance $ 17,269 $ 1,487,795 $ 1,062 18,331 $ 142 - $ 208,951 9,111 1,705,857 $ 1,181 18,331 $ 154,264 73 154,337 $ 8,777 16,975 2,083 8,159 1,852 826,508 $ 66,678 $ 42,260 33,043 54,616 154,337 1,704,676 1,704,676 $ 1,705,857 The accompanying notes are an integral part of these financial statements 70 788,662 - 18,189 18,189 Recreation Complex $ 1,181 - $ Solid Waste $ 142 Fund Balances Reserved for: Inventory Prepaid Items Unreserved: Designated for Subsequent Years' Expenditures Undesignated Total Fund Balance Total Liabilities and Fund Balance Public Safety Tax $ 41,914 21,171 105,345 - 8,159 1,852 - 41,779 669,373 721,163 154,337 $ 826,508 Special Revenue Yuma Two Percent Mall Tax Maintenance $ 232,809 $ 26,935 $ 2,116 221,477 75,000 531,402 $ 421 630 27,986 $ 283 $ 20,168 283 $ Total Nonmajor Governmental Funds $ 2,553,470 $ 163,462 226,629 14,372 221,477 8,159 76,852 3,264,421 $ 130,712 7,818 27,986 82,775 54,616 21,171 289,274 75,000 - 8,159 76,852 456,119 531,119 - 41,779 2,848,357 2,975,147 531,402 $ 27,986 $ 3,264,421 71 City of Yuma, Arizona Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2003 Local Transportation Assistance Revenues: Taxes Intergovernmental Charges for Services Use of Money and Property Contributions/Donations Miscellaneous Total Revenues $ Expenditures: Current: Parks, Recreation and Culture Environmental Health and Protection Community Design and Development Capital Outlay Debt Service: Principal Retirement Interest and Fiscal Agent Fees Total Expenditures Revenues Over/(Under) Expenditures Other Financing Sources/(Uses): Transfers In Transfers Out Total Other Financing Sources/(Uses) $ 434,212 7,341 25,620 467,173 - - - 85,423 - - 85,423 - - 481,091 20,426 501,517 1,797,880 2,502,126 - - 71,925 2,502,126 1,869,805 381,750 2,691,979 (1,313,735) (1,368,288) (383,949) 216,420 (2,778,822) 1,335,283 (21,548) 1,650,000 (20,624) (383,949) (2,562,402) 1,313,735 1,629,376 (2,199) Fund Balances, July 1 $ Recreation Complex 2,646,059 $ $ 1,180,390 45,920 8,001 2,691,979 1,188,391 - Revenues and Other Financing Sources Over/(Under) Expenditures and Other Uses Fund Balances, June 30 Special Revenue Public Safety Solid Tax Waste 129,577 - 261,088 20,388 1,575,099 - 460,075 18,189 $ 1,704,676 $ - The accompanying notes are an integral part of these financial statements 72 $ 721,163 Special Revenue Yuma Two Percent Mall Tax Maintenance $ $ 2,741,989 $ 11,497 18,645 2,772,131 83,184 12,432 95,616 Total Nonmajor Governmental Funds $ 5,471,232 434,212 1,180,390 545,849 25,620 59,504 7,716,807 732,026 - 2,529,906 - - 2,502,126 - 376,365 12,999 461,788 84,924 732,026 389,364 5,578,744 2,040,105 (293,748) 2,138,063 (2,080,427) 293,748 - 3,495,451 (5,285,370) (2,080,427) 293,748 (1,789,919) (40,322) - 348,144 571,441 - 2,627,003 531,119 $ - $ 2,975,147 73 City of Yuma, Arizona Budgetary Comparison Schedule Municipal Property Corporation Bonds Debt Service Fund For the Year Ended June 30, 2003 Budget Budgetary Fund Balance, July 1 Resources (inflows): Use of Money and Property: Interest Total Revenues Proceeds from Refunding Bonds Transfers In from Other Funds Amounts Available for Appropriation Charges to Appropriations (outflows): Debt Service: Bond Principal Bond Interest Fiscal Agent Fees Total Expenditures Payment to Refunded Bond Escrow Total Charges to Appropriations Budgetary Fund Balance, June 30 Final Original $ - $ - Actual Amounts $ 1,484,212 Variance with Final Budget Positive (Negative) $ 1,484,212 5,340,756 5,340,756 5,340,756 5,340,756 7,436 7,436 18,990,000 5,524,445 26,006,093 7,436 7,436 18,990,000 183,689 20,665,337 3,995,000 1,235,226 110,528 5,340,754 5,340,754 3,995,000 1,235,226 110,528 5,340,754 5,340,754 3,995,000 2,701,167 110,528 6,806,695 19,199,277 26,005,972 (1,465,941) (1,465,941) 19,199,277 (1,465,941) $ 2 74 $ 2 $ 121 $ 119 City of Yuma, Arizona Budgetary Comparison Schedule Capital Projects Fund (Non-GAAP Budgetary Basis) For the Year Ended June 30, 2003 Final 5,139,019 Actual Amounts $ 3,355,019 Variance with Final Budget Positive (Negative) $ (1,784,000) 150,000 150,000 129,010 (20,990) 50,000 2,962,498 3,162,498 14,966,900 23,422,784 46,691,201 50,000 2,962,498 3,162,498 14,966,900 23,422,784 46,691,201 295,230 65,792 25,000 515,032 12,000,000 10,842,535 26,712,586 245,230 65,792 (2,937,498) (2,647,466) (2,966,900) (12,580,249) (19,978,615) 5,888,700 4,573,400 14,694,699 12,818,564 4,432,800 6,015,249 4,547,257 14,276,620 12,576,803 4,440,900 3,799,661 461,003 7,837,624 6,064,992 576,322 2,215,588 4,086,254 6,438,996 6,511,811 3,864,578 42,408,163 42,408,163 523,334 17,000 42,397,163 42,397,163 533,334 16,636 19,289,572 1,455,800 20,745,372 (10,000) 364 23,107,591 (1,455,800) 21,651,791 Budget Budgetary Fund Balance, July 1 Resources (inflows): Charges for Services Developer Charges Use of Money and Property Rents Interest Miscellaneous Total Revenues Proceeds from Long-Term Debt Transfers From Other Funds Amounts Available for Appropriation $ Charges to Appropriations (outflows): Capital Outlay: General Government Public Safety Streets Parks, Recreation and Culture Environmental Health and Safety Debt Service: Principal Interest and Fiscal Agent Fees Total Expenditures Operating Transfers Out Total Charges to Appropriations Budgetary Fund Balance, June 30 $ Original 5,139,019 4,283,038 75 $ $ 4,294,038 $ 5,967,214 $ 1,673,176 City of Yuma, Arizona Budgetary Comparison Schedule Local Transportation Assistance Special Revenue Fund For the Year Ended June 30, 2003 Budgetary Fund Balance, July 1 Resources (inflows): Intergovernmental State Lottery Distribution Use of Money and Property Interest Contributions/Donations Total Revenues Budget Final Original $ 20,000 $ 20,000 Amounts Available for Appropriation Charges to Appropriations (outflows): Current: Community Design and Development Outside Agencies - Cultural Council Total Expenditures Operating Transfers Out Total Charges to Appropriations Budgetary Fund Balance, June 30 $ Actual Amounts $ 20,388 Variance with Final Budget Positive (Negative) $ 388 418,000 418,000 434,212 16,212 2,400 40,000 460,400 480,400 2,400 40,000 460,400 480,400 7,341 25,620 467,173 487,561 4,941 (14,380) 6,773 7,161 105,423 105,423 354,977 460,400 105,423 105,423 354,977 460,400 85,423 85,423 383,949 469,372 20,000 20,000 (28,972) (8,972) 20,000 76 $ 20,000 $ 18,189 $ (1,811) City of Yuma, Arizona Budgetary Comparison Schedule Public Safety Tax Special Revenue Fund For the Year Ended June 30, 2003 Original $ 2,191,680 Final $ 2,191,680 Actual Amounts $ 1,575,099 2,766,600 2,766,600 2,646,059 (120,541) 105,000 2,871,600 5,063,280 105,000 2,871,600 5,063,280 45,920 2,691,979 216,420 4,483,498 (59,080) (179,621) 216,420 (579,782) 2,807,926 2,807,926 2,807,926 2,807,926 2,778,822 2,778,822 29,104 29,104 $ 2,255,354 $ 2,255,354 Budget Budgetary Fund Balance, July 1 Resources (inflows): Taxes Public Safety Sales Tax Use of Money and Property Interest Total Revenues Transfers from Other Funds Amounts Available for Appropriation Charges to Appropriations (outflows): Operating Transfers Out Total Charges to Appropriations Budgetary Fund Balance, June 30 Variance with Final Budget Positive (Negative) $ (616,581) 77 $ 1,704,676 $ 550,678 City of Yuma, Arizona Budgetary Comparison Schedule Solid Waste Special Revenue Fund For the Year Ended June 30, 2003 Budgetary Fund Balance, July 1 Resources (inflows): Charges for Service Collection Fees Miscellaneous Other Total Revenues Transfers from Other Funds Budget Final Original $ $ - Amounts Available for Appropriation Charges to Appropriations (outflows): Current: Environmental Health and Protection Residential Services Uncontained Waste Recycling Capital Outlay Total Expenditures Transfers to Other Funds Total Charges to Appropriations Budgetary Fund Balance, June 30 $ Actual Amounts $ - Variance with Final Budget Positive (Negative) $ - 1,134,000 1,134,000 1,180,390 46,390 5,000 1,139,000 1,530,871 2,669,871 5,000 1,139,000 1,530,871 2,669,871 8,001 1,188,391 1,335,283 2,523,674 3,001 49,391 (195,588) (146,197) 2,135,463 341,211 60,581 105,000 2,642,255 27,616 2,669,871 2,135,463 341,211 60,581 105,000 2,642,255 27,616 2,669,871 2,152,325 306,761 41,919 2,502,126 21,548 2,523,674 (16,862) 34,450 18,662 105,000 140,129 6,068 146,197 - 78 $ - $ - $ - City of Yuma, Arizona Budgetary Comparison Schedule Recreation Complex Special Revenue Fund For the Year Ended June 30, 2003 Budgetary Fund Balance, July 1 Resources (inflows): Use of Money and Property Rents and Concessions Interest Miscellaneous Other Total Revenues Transfers from Other Funds Budget Final Original $ 287,482 $ 287,482 Amounts Available for Appropriation Charges to Appropriations (outflows): Current: Parks, Recreation and Culture Civic and Convention Center Baseball Complex Capital Outlay Total Expenditures Transfers to Other Funds Total Charges to Appropriations Budgetary Fund Balance, June 30 $ Actual Amounts $ 460,075 Variance with Final Budget Positive (Negative) $ 172,593 423,500 7,000 423,500 7,000 469,762 11,329 46,262 4,329 5,000 435,500 1,650,000 2,372,982 5,000 435,500 1,650,000 2,372,982 20,426 501,517 1,650,000 2,611,592 15,426 66,017 238,610 1,377,867 582,210 115,500 2,075,577 215,000 2,290,577 1,391,968 583,231 141,356 2,116,555 215,000 2,331,555 1,239,700 558,180 71,925 1,869,805 20,624 1,890,429 152,268 25,051 69,431 246,750 194,376 441,126 82,405 79 $ 41,427 $ 721,163 $ 679,736 City of Yuma, Arizona Budgetary Comparison Schedule Two Percent Tax Special Revenue Fund For the Year Ended June 30, 2003 Budgetary Fund Balance, July 1 Resources (inflows): Taxes Two PercentTax Use of Money and Property Interest Miscellaneous Other Total Revenues Budget Final Original $ 465,344 $ 465,344 Amounts Available for Appropriation Charges to Appropriations (outflows): Current: Parks, Recreation and Culture Administration Outside Agencies Total Expenditures Operating Transfers Out Total Charges to Appropriations Budgetary Fund Balance, June 30 $ Actual Amounts $ 571,441 Variance with Final Budget Positive (Negative) $ 106,097 16,989 2,725,000 2,725,000 2,741,989 25,000 25,000 11,497 2,750,000 3,215,344 2,750,000 3,215,344 18,645 2,772,131 3,343,572 18,165 710,000 728,165 2,155,639 2,883,804 18,165 710,000 728,165 2,155,639 2,883,804 22,026 710,000 732,026 2,080,427 2,812,453 331,540 80 $ 331,540 $ 531,119 (13,503) 18,645 22,131 128,228 (3,861) (3,861) 75,212 71,351 $ 199,579 City of Yuma, Arizona Budgetary Comparison Schedule Yuma Mall Maintenance Special Revenue Fund For the Year Ended June 30, 2003 Budget Budgetary Fund Balance, July 1 Resources (inflows): Taxes Mall Assessments Miscellaneous Other Total Revenues Transfers from Other Funds Original $ - Amounts Available for Appropriation Charges to Appropriations (outflows): Current: Community Design and Development Mall Maintenance Capital Outlay Total Expenditures Total Charges to Appropriations Budgetary Fund Balance, June 30 $ Final $ - Actual Amounts $ - Variance with Final Budget Positive (Negative) $ - 74,000 74,000 83,184 9,184 7,000 81,000 357,043 438,043 7,000 81,000 357,043 438,043 12,432 95,616 293,748 389,364 5,432 14,616 (63,295) (48,679) 390,457 390,457 390,457 392,035 46,008 438,043 438,043 376,365 12,999 389,364 389,364 15,670 33,009 48,679 48,679 47,586 81 $ - $ - $ - 82 NONMAJOR ENTERPRISE FUNDS Enterprise funds are used to account for activities that are financed and operated in a manner similar to private businesses. The intent of the City Council is that the costs of providing the goods or services be recovered primarily through user charges. Enterprise funds are designed so that creditors, legislators and the general public can evaluate the performance of the municipal enterprise on the same basis as commercial enterprises in the same industry. Desert Hills Golf Course To account for the financial activity of the operation of the Desert Hills Municipal Golf Course. Arroyo Dunes Golf Course To account for the financial activity of the operation of the Arroyo Dunes Municipal Golf Course. 83 City of Yuma, Arizona Combining Statement of Net Assets Nonmajor Proprietary Funds June 30, 2003 Total Nonmajor Proprietary Funds Enterprise Funds Desert Hills Arroyo Dunes Golf Course Golf Course Assets Current Assets: Cash and Investments Receivables, Net of Allowance for Uncollectibles: Accounts Receivable Intergovernmental Accrued Interest Inventory, at cost Prepaid Expenses Total Current Assets $ Fixed Assets: Buildings Improvements Other than Buildings Equipment Gross Fixed Assets Less Accumulated Depreciation Fixed Assets Net of Depreciation Construction In Progress Total Fixed Assets Total Assets 2,751 $ 127,477 $ 130,228 6,484 544 82,434 4,197 96,410 555 2,163 130,195 6,484 544 555 84,597 4,197 226,605 3,102,865 2,370,096 226,104 5,699,065 645,571 21,866 667,437 3,102,865 3,015,667 247,970 6,366,502 1,891,713 361,290 2,253,003 3,807,352 457 3,807,809 3,904,219 306,147 306,147 436,342 4,113,499 457 4,113,956 4,340,561 70,208 88,025 221,477 1,748 5,186 6,372 4,609 - 75,394 94,397 4,609 221,477 1,748 381,458 381,458 16,167 16,167 397,625 397,625 306,147 114,028 420,175 4,113,956 (171,020) 3,942,936 Liabilities Current Liabilities: Accounts Payable Accrued Payroll and Related Taxes Current Portion-Long-Term Contracts Due to Other Funds Deferred Revenue Total Current Liabilities Payable from Current Assets Total Liabilities Net Assets Invested in capital assets, net of related debt Unrestricted Total Net Assets 3,807,809 (285,048) $ 3,522,761 $ The accompanying notes are an integral part of these financial statements 84 $ City of Yuma, Arizona Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Nonmajor Proprietary Funds For the Year Ended June 30, 2003 Total Nonmajor Proprietary Funds Enterprise Funds Desert Hills Arroyo Dunes Golf Course Golf Course Operating Revenues: Green Fees Cart and Club Rental Pro Shop Sales Restaurant Sales Total Operating Revenues $ Operating Expenses: Operations and Maintenance Depreciation and Amortization Total Operating Expenses 974,484 266,883 344,285 386,114 1,971,766 $ 2,035,705 246,902 2,282,607 Operating Loss Non-Operating Revenues/(Expenses): Interest Interest and Fiscal Agent Fees Miscellaneous Revenues/(Expenses) Net Non-OperatingRevenues/(Expenses) Deficit before Contributions and Transfers Transfers In Transfers Out Change in Net Assets $ Net Assets-ending 1,203,843 276,867 346,583 386,114 2,213,407 2,270,012 276,155 2,546,167 (310,841) (21,919) (332,760) (245) (245) 3,033 (645) 59 2,447 3,033 (645) (186) 2,202 (311,086) (19,472) (330,558) 50,841 (237,788) - 50,841 (237,788) (498,033) (19,472) (517,505) 3,522,761 The accompanying notes are an integral part of these financial statements 85 $ 234,307 29,253 263,560 439,647 4,020,794 Net Assets-beginning 229,359 9,984 2,298 241,641 $ 420,175 4,460,441 $ 3,942,936 City of Yuma, Arizona Combining Statement of Cash Flows Nonmajor Proprietary Funds For the Year Ended June 30, 2003 Total Nonmajor Proprietary Funds Enterprise Funds Desert Hills Arroyo Dunes Golf Course Golf Course Cash Flow from Operating Activities: Cash Received from Customers Cash Paid to Employees Cash Paid to Suppliers Other Operating Activity Revenue/(Expense) Net Cash Provided by/(Used for) Operating Activities $ 1,961,941 $ (836,695) (1,126,758) (245) (1,757) Cash Flows from Noncapital Financing Activities: Cash Received from Other Funds Cash Paid to Other Funds Net Cash Provided by/(Used for) Noncapital Financing Activities Cash Flow from Capital and Related Financing Acitivities: Acquisition and Construction of Assets Net Cash Used for Capital and Related Financing Activities Cash Flows from Investing Activities: Receipt of Interest Net Cash Provided by Investing Activities Net Decrease in Cash and Cash Equivalents Cash and Cash Equivalents, July 1 Cash and Cash Equivalents, June 30 $ Reconciliation of Operating Income/(Loss) to Net Cash Provided by Operating Activities: Operating Income/(Loss) Adjustments to Reconcile Operating Income/(Loss) Depreciation and Amortization Expense (Increase)/Decrease in Accounts Receivables (Increase)/Decrease in Inventories Increase/(Decrease) in Accounts Payable (Increase)/Decrease in Prepaid Items Increase/(Decrease) in Accrued Wages and Taxes Payable (Decrease) in Due to Other Funds Increase/(Decrease) in Deferred Revenue Other Operating Activity Revenue/(Expense) Total Adjustments Net Cash Provided by Operating Activities 272,318 (237,788) (53,629) 272,318 (291,417) 34,530 (53,629) (19,099) (42,852) - (42,852) (42,852) - (42,852) - 4,123 4,123 4,123 4,123 (10,079) (40,475) (50,554) 12,830 2,751 $ 167,952 127,477 $ 180,782 130,228 $ (310,841) $ (21,919) $ (332,760) $ 246,901 (1,991) 67,095 6,698 (768) (770) (166) (7,670) (245) 309,084 (1,757) $ 29,252 (142) 2,426 (645) 59 30,950 9,031 $ 276,153 (1,991) 66,953 9,124 (768) (1,415) (166) (7,670) (186) 340,034 7,274 The accompanying notes are an integral part of these financial statements 86 241,641 $ 2,203,582 (115,072) (951,767) (117,597) (1,244,355) 59 (186) 9,031 7,274 City of Yuma, Arizona Budgetary Comparison Schedule Water Enterprise Fund (Non-GAAP Budgetary Basis) For the Year Ended June 30, 2003 Actual Amounts Budget Final Original Resources (inflows): Inside City Outside City Commercial Raw Water Meters, Connections and Services Capital Contributions: System Development Capacity Rights Proceeds from Long-Term Debt Interest Miscellaneous Total Revenues Transfers from Other Funds Amounts Available for Appropriation Charges to Appropriations (outflows): Current: Administration Treatment Water Transmission Customer Services Water Transfer Laboratory Capital Outlay: Capital Outlay Capital Projects Debt Service: Principal Retirement Interest and Fiscal Agent Fees Total Expenditures Transfers to Other Funds Total Charges to Appropriations Excess/(Deficiency) of Resources Over Charges to Appropriations $ 7,570,800 1,270,600 212,000 226,704 $ 7,570,800 1,270,600 212,000 226,704 $ 8,030,928 1,427,183 224,666 232,602 Variance with Final Budget Positive (Negative) $ 460,128 156,583 12,666 5,898 170,000 1,200,000 13,470,840 449,000 21,000 24,590,944 24,590,944 170,000 1,200,000 13,470,840 449,000 21,000 24,590,944 24,590,944 285,659 1,487,413 3,696,541 276,649 97,636 15,759,277 15,759,277 2,189,816 3,600,571 1,017,405 407,737 37,710 275,836 1,885,750 3,700,816 1,038,115 412,121 53,894 324,742 1,569,014 3,300,334 901,171 392,654 38,858 182,142 316,736 400,482 136,944 19,467 15,036 142,600 253,337 20,639,840 366,974 20,650,840 68,716 3,152,825 298,258 17,498,015 948,117 608,238 29,978,607 342,222 30,320,829 948,117 608,238 29,989,607 342,222 30,331,829 880,000 641,441 11,127,155 64,047 11,191,202 68,117 (33,203) 18,862,452 278,175 19,140,627 $ (5,729,885) $ (5,740,885) 4,568,075 Reconciliation to Change in Net Assets: Capital Outlay Capital Projects Principal Retirement Proceeds from Long-Term Debt Capital Contributions for Subdivider Additions to System Depreciation and Amortization Change in Net Assets 115,659 287,413 (9,774,299) (172,351) 76,636 (8,831,667) (8,831,667) $ 10,308,960 68,716 3,152,825 880,000 (3,696,541) 418,904 (3,335,421) $ 2,056,558 NOTE: This exhibit is prepared on the modified accrual basis to correspond with the City's budget practices. It is not intended to present the operations in accordance with generally accepted accounting principles. 87 City of Yuma, Arizona Budgetary Comparison Schedule Wastewater Enterprise Fund (Non-GAAP Budgetary Basis) For the Year Ended June 30, 2003 Budget Final Original Resources (inflows): Inside City Outside City Contractual/Industrial Services Meters, Connections and Services Capital Contributions: Capacity Rights Wastewater Interceptor Wastewater Trunk Line Charges Proceeds from Long-Term Debt Interest Miscellaneous $ Total Revenues Amounts Available for Appropriation Current: Administration Treatment Pretreatment Collection Laboratory Capital Outlay: Capital Outlay Capital Projects Debt Service: Interest and Fiscal Agent Fees Total Expenditures Transfers To Other Funds Total Charges to Appropriations Excess/(Deficiency) of Resources Over Charges to Appropriations 4,891,500 317,500 649,900 41,000 $ Actual Amounts Variance with Final Budget Positive (Negative) 4,891,500 317,500 649,900 41,000 $ 5,366,427 331,498 879,742 52,150 500,000 166,000 2,800 27,509,400 481,400 5,500 34,565,000 34,565,000 500,000 166,000 2,800 27,509,400 481,400 5,500 34,565,000 34,565,000 1,674,141 384,097 22,888 6,711,649 295,463 6,345 15,724,400 15,724,400 1,174,141 218,097 20,088 (20,797,751) (185,937) 845 (18,840,600) (18,840,600) 1,090,287 2,989,986 292,850 466,369 245,810 862,878 3,116,315 297,850 474,869 245,810 991,288 3,057,041 266,776 468,058 140,337 (128,410) 59,274 31,074 6,811 105,473 204,095 29,409,100 248,158 29,409,100 77,760 5,047,265 170,398 24,361,835 34,698,497 342,125 35,040,622 34,654,980 342,125 34,997,105 79,292 10,127,817 335,842 10,463,659 (79,292) 24,527,163 6,283 24,533,446 (475,622) $ $ Reconciliation to Change in Net Assets: Capital Outlay Capital Projects Proceeds from Long-Term Debt Capital Contributions for Subdivider Additions to System Depreciation and Amortization Change in Net Assets (432,105) 5,260,741 $ $ 474,927 13,998 229,842 11,150 5,692,846 77,760 5,047,265 (6,711,649) 1,166,226 (2,075,842) $ 2,764,501 NOTE: This exhibit is prepared on the modified accrual basis to correspond with the City's budget practices. It is not intended to present the operations in accordance with generally accepted accounting principles. 88 City of Yuma, Arizona Budgetary Comparison Schedule Desert Hills Golf Course Enterprise Fund (Non-GAAP Budgetary Basis) For the Year Ended June 30, 2003 Budget Resources (inflows): Green Fees Cart and Club Rental Pro Shop Sales Restaurant Sales Miscellaneous Total Revenues Transfers From Other Funds Amounts Available for Appropriation Charges to Appropriations (outflows): Current: Maintenance Concession Restaurant Capital Outlay: Capital Outlay Capital Projects Total Expenditures Transfers To Other Funds Total Charges to Appropriations Excess/(Deficiency) of Resources Over Charges to Appropriations Original Final $ 1,118,000 255,000 412,000 535,000 2,320,000 50,841 2,370,841 $ 1,118,000 255,000 412,000 535,000 2,320,000 50,841 2,370,841 1,053,285 531,374 569,222 105,488 55,000 2,314,369 250,841 2,565,210 $ (194,369) $ Actual Amounts $ Variance with Final Budget Positive (Negative) 974,484 266,883 344,285 386,114 2,223 1,973,989 50,841 2,024,830 $ (143,516) 11,883 (67,715) (148,886) 2,223 (346,011) (346,011) 1,055,785 531,374 569,222 931,468 703,909 402,796 124,317 (172,535) 166,426 102,988 55,000 2,314,369 250,841 2,565,210 42,835 5,000 2,086,008 237,788 2,323,796 60,153 50,000 228,361 13,053 241,414 (298,966) $ (104,597) (194,369) Reconciliation to Change in Net Assets: Capital Outlay Capital Projects Depreciation and Amortization 42,835 5,000 (246,902) $ Change in Net Assets (498,033) NOTE: This exhibit is prepared on the modified accrual basis to correspond with the City's budget practices. It is not intended to present the operations in accordance with generally accepted accounting principles. 89 City of Yuma, Arizona Budgetary Comparison Schedule Arroyo Dunes Golf Course Enterprise Fund (Non-GAAP Budgetary Basis) For the Year Ended June 30, 2003 Budget Final Original Resources (inflows): Green Fees Cart and Club Rental Pro Shop Sales Interest Miscellaneous $ Total Revenues Amounts Available for Appropriation Charges to Appropriations (outflows): Current: Maintenance Concession Debt Service: Principal Retirement Interest Total Expenditures Total Charges to Appropriations Excess/(Deficiency) of Resources Over Charges to Appropriations $ 251,200 9,400 2,500 4,700 600 268,400 268,400 $ 251,200 9,400 2,500 4,700 600 268,400 268,400 Actual Amounts $ 229,359 9,984 2,298 3,033 59 244,733 244,733 Variance with Final Budget Positive (Negative) $ (21,841) 584 (202) (1,667) (541) (23,667) (23,667) 225,517 72,485 225,517 72,485 176,597 57,710 48,920 14,775 53,000 2,200 353,202 353,202 53,000 2,200 353,202 353,202 52,984 645 287,936 287,936 16 1,555 65,266 65,266 (84,802) $ (84,802) (43,203) $ 41,599 Reconciliation to Change in Net Assets: Principal Retirement Depreciation and Amortization 52,984 (29,253) $ Change in Net Assets (19,472) NOTE: This exhibit is prepared on the modified accrual basis to correspond with the City's budget practices. It is not intended to present the operations in accordance with generally accepted accounting principles. 90 INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing of goods and services provided by one department to other departments of the City and to other governmental units, on a costreimbursement basis. Equipment Replacement Fund To account for the associated costs of purchasing vehicles and equipment for rental to other departments. Employee Benefits Trust Fund To record the financial activity of a self funded insurance trust fund that covers eligible employees and dependent health, life, and dental claims. Workman’s Compensation Trust Fund To record the financial activity of a self-funded worker’s compensation insurance trust fund. 91 City of Yuma, Arizona Combining Statement of Net Assets Internal Service Funds June 30, 2003 Assets Current Assets: Cash and Investments Accounts Receivable Accrued Interest Total Current Assets Capital Assets: Equipment Less Accumulated Depreciation Total Fixed Assets Total Assets Equipment Replacement $ Liabilities Liabilities: Accounts Payable Estimated Claims and Judgements Due to Other Funds Total Liabilities Net Assets Invested in capital assets, net of related debt Unrestricted Total Net Assets $ Employee Workman's Benefits Compensation Trust Fund Trust Fund 13,835,346 $ 1,714 51,892 13,888,952 466,425 9,845 1,894 478,164 21,340,249 11,178,173 10,162,076 24,051,028 453,971 1,769 455,740 $ 14,755,742 11,559 55,555 14,822,856 478,164 455,740 21,340,249 11,178,173 10,162,076 24,984,932 129,255 129,255 127,458 51,775 15,000 194,233 32 423,570 423,602 256,745 475,345 15,000 747,090 10,162,076 13,759,697 23,921,773 $ 283,931 283,931 32,138 32,138 10,162,076 14,075,766 $ 24,237,842 92 $ Totals $ City of Yuma, Arizona Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds For the Year Ended June 30, 2003 Employee Benefits Trust Fund Equipment Replacement Operating Revenue: Contributions Employees City Equipment Rental Miscellaneous Total Operating Revenues $ Operating Expenses: Claims Incurred Premiums to Insurance Carriers Administration Depreciation Total Operating Expenses Operating Income/(Loss) $ 1,264,404 3,444,577 2,126 4,711,107 75,618 2,212,857 2,288,475 569,876 Non-Operating Revenue/(Expenses): Interest Miscellaneous Expense Gain on the Sale of Assets Total Non-Operating Revenues 317,548 158,639 476,187 Change in Net Assets 1,046,063 Net Assets, Beginning Net Assets, Ending 2,858,351 2,858,351 $ $ 396,688 4,298,073 32,160 4,726,921 (15,814) 385,508 16,672 402,180 420,739 60,695 27,758 509,192 (107,012) Totals $ 1,264,404 3,830,085 2,858,351 18,798 7,971,638 817,427 4,358,768 135,536 2,212,857 7,524,588 447,050 10,757 10,757 7,170 (10,574) (3,404) 335,475 (10,574) 158,639 483,540 (5,057) (110,416) 930,590 22,875,710 288,988 23,921,773 $ 283,931 The accompanying notes are an integral part of these financial statements 93 Workman's Compensation Trust Fund $ 142,554 23,307,252 32,138 $ 24,237,842 City of Yuma, Arizona Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2003 Equipment Replacement Cash Flows from Operating Activities: Cash Received from Customers Cash Paid to Employees Cash Paid to Suppliers Net Cash Flows Provided by/(Used for) Operating Activities $ Cash Flows from Capital and Related Financing Activities: Proceeds from Sale of Capital Assets Payments for Capital Acquisitions Net Cash Flows Used for Capital and Related Financing Activities 2,781,019 - Workman's Compensation Trust Fund $ 4,709,333 $ (106,365) (4,581,644) Totals 402,395 $ (347,421) 7,892,747 (106,365) (4,929,065) 2,781,019 21,324 54,974 2,857,317 166,079 (2,902,795) - - 166,079 (2,902,795) (2,736,716) - - (2,736,716) 9,719 9,719 31,043 (4,350) (4,350) 50,624 Cash Flows from Investing Activities Receipt of Interest Net Cash Flows Provided by Investing Activities Net Increase/(Decrease) in Cash and Cash Equivalents Cash and Cash Equivalents, July 1, 2002 Cash and Cash Equivalents, June 30, 2003 Employee Benefits Trust Fund 333,225 333,225 377,528 13,457,818 $ 13,835,346 $ 435,382 466,425 $ (15,814) $ $ 403,348 453,972 338,594 338,594 459,195 14,296,548 $ 14,755,742 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) Operating Activities: Depreciation Expense (Increase)/Decrease in Accounts Receivable Increase/(Decrease) in Accounts Payable Increase in Claims Incurred but Not Reported Total Adjustments Net Cash Provided by/(Used for) Operating Activities 569,876 $ 2,212,857 (1,714) 2,211,143 (1,776) 34,781 4,133 37,138 (107,012) $ 215 (138) 161,909 161,986 447,050 2,212,857 (3,275) 34,643 166,042 2,410,267 $ 2,781,019 $ 21,324 $ 54,974 $ 2,857,317 Noncash Transactions Affecting Financial Position: Purchase of Capital Assets with $ Financing Provided by Vendor Total Noncash Transactions Affecting Financial Position $ 129,255 129,255 $ - $ - $ 129,255 $ - $ - $ 129,255 The accompanying notes are an integral part of these financial statements. 94 City of Yuma, Arizona Budgetary Comparison Schedule Equipment Replacement Internal Service Fund (Non-GAAP Budgetary Basis) For the Year Ended June 30, 2003 Actual Amounts Budget Final Original Resources (inflows): Charges for Services Interest Total Revenues $ $ 3,456,588 Amounts Available for Appropriation Charges to Appropriations (outflows): Current Administration Capital Outlay Total Expenditures Total Charges to Appropriations Excess of Resources Over Charges to Appropriations 2,856,588 600,000 3,456,588 75,618 3,887,300 3,962,918 3,962,918 $ (506,330) $ Reconciliation to Change in Net Assets: Capital Outlay Gain on Sale of Assets Depreciation and Amortization Change in Net Assets 2,856,588 600,000 3,456,588 3,456,588 75,618 3,887,300 3,962,918 3,962,918 (506,330) $ 2,858,351 317,548 3,175,899 3,175,899 Variance with Final Budget Positive (Negative) $ 75,618 2,926,504 3,002,122 3,002,122 173,777 1,763 (282,452) (280,689) (280,689) 960,796 960,796 960,796 $ 680,107 2,926,504 158,639 (2,212,857) $ 1,046,063 NOTE: This exhibit is prepared on the modified accrual basis to correspond with the City's budget practices. It is not intended to present the operations in accordance with generally accepted accounting principles. 95 96 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS 97 City of Yuma, Arizona Capital Assets Used in the Operation of Governmental Funds Schedule of Capital Assets by Source June 30, 2003 Governmental funds capital assets: Land Buildings and Improvements Infrastructure Construction in Progress Equipment Total governmental funds fixed assets $ 11,576,484 73,042,977 121,214,375 14,926,264 10,353,100 $ 231,113,200 $ 85,847,930 134,103,099 7,494,045 3,668,126 $ 231,113,200 Investments in governmental funds capital assets by source: From Current Revenues From Special Revenues From Grant-in-Aid From Gifts Total governmental funds fixed assets NOTE: This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 98 City of Yuma, Arizona Capital Assets Used in the Operation of Governmental Funds Schedule By Function and Activity June 30, 2003 Land General Government: Mayor and Council General Government City Administrator City Attorney Administrative Services Information Technology Total General Government $ Public Safety Police Fire Municipal Court Building Safety Total Public Safety Parks, Recreation and Culture General Recreation and Administration Recreation Complex Environmental Health and Protection Public Works Administration Equipment Maintenance Shop Solid Waste Total Environmental Health and Protection Community Design and Development Engineering, Planning and Administration Mall Maintenance Total Community Design and Development Streets Total Governmental Funds Capital Assets 3,403,645 10,732 3,414,377 Buildings and Improvements Infrastructure Construction In Progress $ $ $ 25,092,309 484,433 270,162 74,870 25,921,774 - 839,636 839,636 Equipment $ 12,088 5,480,258 22,298 14,493 105,679 699,129 6,333,945 Total $ 12,088 34,815,848 517,463 14,493 375,841 773,999 36,509,732 602,254 602,254 20,289,009 5,170,659 25,459,668 - 109,471 1,383 251,493 362,346 637,378 2,209,079 38,904 51,648 2,937,009 21,035,858 7,983,375 290,397 51,648 29,361,277 1,064,214 1,064,214 17,193,946 3,403,256 20,597,202 - 3,255,888 3,255,888 477,088 145,240 622,328 21,991,136 3,548,496 25,539,632 84,098 263,225 - 220,309 19,251 50,738 - - 76,649 55,544 1,797 381,056 338,020 52,535 347,323 290,298 - - 133,990 771,611 217,358 6,200 774,035 - - - 178,245 12,999 1,169,638 19,199 223,558 774,035 - - 191,244 1,188,837 5,924,758 $ 11,576,484 - $ 73,042,977 121,214,375 10,468,394 134,584 137,742,111 $ 121,214,375 $ 14,926,264 $ 10,353,100 $ 231,113,200 NOTE: This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 99 City of Yuma, Arizona Capital Assets Used in the Operation of Governmental Funds Schedule of Changes By Function and Activity For the Year Ended June 30, 2003 Balance June 30, 2002 General Goverment Mayor and Council General Government City Administrator City Attorney Administrative Services Information Technology Total General Government $ 12,088 $ 30,998,282 514,869 14,493 375,841 779,376 32,694,949 Additions 3,817,565 2,594 2,166 3,822,326 Deletions $ 7,544 7,544 Balance June 30, 2003 $ 12,088 34,815,848 517,463 14,493 375,841 773,999 36,509,732 Public Safety Police Fire Municipal Court Building Safety Total Public Safety 20,824,716 7,839,220 79,502 46,516 28,789,954 211,142 165,802 210,895 5,132 592,971 21,647 21,647 21,035,858 7,983,375 290,397 51,648 29,361,277 Parks, Recreation and Culture General Recreation and Administration Recreation Complex Total Parks, Recreation and Culture 15,936,263 3,478,190 19,414,453 6,094,008 71,924 6,165,932 39,135 1,618 40,753 21,991,136 3,548,496 25,539,632 359,679 338,020 52,535 21,377 - - 381,056 338,020 52,535 750,234 21,377 - 771,611 1,118,475 6,200 59,806 12,999 8,643 - 1,169,638 19,199 1,124,675 72,805 8,643 1,188,837 123,986,124 14,780,181 1,024,194 137,742,111 $ 206,760,389 $ 25,455,592 $ 1,102,781 $ 231,113,200 Environmental Health and Protection Public Works Administration Equipment Maintenance Shop Solid Waste Total Environmental Health and Protection Community Design and Development Engineering, Planning and Administration Mall Maintenance Total Community Design and Development Streets Total Governmental Funds Capital Assets NOTE: This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. Generally, the capital assets of internal service funds are included as governmental activities in the statement of net assets. 100 STATISTICAL SECTION 101 102 City of Yuma, Arizona Table I Government-wide Expenses by Function Two Fiscal Years Fiscal Year 2001-02 2002-03 General Government $ 3,477,585 6,949,944 103 Source: Statement of Activities Public Safety $ Streets 23,566,887 $ 9,098,421 25,454,716 7,943,638 Parks Environmental Recreation and Health and Culture Protection Community Design and Development $ $ 8,526,230 $ 3,250,679 8,862,044 2,936,066 5,246,150 6,368,629 Interest on Long-Term Debt $ Total 3,227,438 $ 56,393,390 2,877,856 $ 61,392,893 City of Yuma, Arizona Table II Government-wide Revenues Two Fiscal Years Program Revenues Fiscal Year Charges for Services 2001-02 $ 23,302,928 2002-03 25,956,177 104 Source: Statement of Activities Operating Grants and Contributions $ General Revenues Grants and contributions not restricted to Shared specific Revenues programs Capital Grants and Contributions Taxes 2,794,501 $ 7,910,255 $ 32,212,207 $ 23,257,853 3,431,138 7,089,346 32,882,114 24,225,246 $ 7,576,850 Unrestricted Investment Earnings $ Total 2,227,028 $ 91,704,772 1,451,812 $ 102,612,683 City of Yuma, Arizona Table III General Governmental Expenditures by Function Last Ten Fiscal Years Fiscal Year General Government Public Safety Streets 2,966,622 $ 13,390,672 $ 3,390,811 1994-95 3,310,521 14,540,768 1995-96 3,507,223 1996-97 1993-94 $ Parks Environmental Recreation and Health and Culture Protection Community Design and Development $ $ Capital Outlay Debt Service Total 2,686,705 $ 4,061,308 $ 635,823 $ 34,141,661 105 4,393,630 $ 2,616,090 3,818,333 4,927,496 2,936,146 2,540,748 6,268,560 311,743 38,654,315 15,414,741 4,087,147 5,295,885 2,679,826 3,065,678 14,233,788 2,102,423 50,386,711 2,892,817 16,598,461 4,333,310 5,716,071 3,459,715 2,804,504 21,141,249 4,356,132 61,302,259 1997-98 3,201,449 17,159,134 3,525,923 5,557,476 2,933,404 2,598,481 26,763,764 4,555,709 66,295,340 1998-99 3,431,900 17,695,284 3,421,245 5,798,588 2,313,673 4,241,837 19,101,666 4,499,767 60,503,960 1999-00 3,833,734 19,422,879 4,156,528 6,541,240 2,400,834 4,826,992 12,773,991 5,699,179 59,655,377 2000-01 3,498,091 20,732,963 4,163,416 6,704,068 2,823,020 4,810,570 23,091,843 6,047,871 71,871,842 2001-02 4,001,300 22,659,901 4,393,203 7,427,950 3,174,722 5,330,885 37,311,007 7,572,940 91,871,908 2002-03 4,732,282 24,364,021 4,884,040 7,765,244 3,000,245 6,337,964 19,197,677 8,120,042 78,401,515 Source: General, Special Revenue, Debt Service and Capital Projects Funds City of Yuma, Arizona Table IV General Revenues by Source Last Ten Fiscal Years Fiscal Year 1993-94 $ Taxes Licenses and Permits Intergovernmental Charges for Services 15,350,018 $ 346,468 $ 16,134,529 $ 1,954,112 Fines and Forfeitures $ 444,465 Use of Money and Property Miscellaneous Revenue $ $ 879,535 725,476 Total $ 35,834,603 106 1994-95 18,985,947 448,347 18,226,966 1,933,434 384,598 1,268,540 647,741 41,895,573 1995-96 21,524,540 1,277,644 20,711,518 1,855,171 525,982 2,100,613 745,012 48,740,480 1996-97 23,198,296 708,271 18,929,681 1,685,051 420,915 2,639,263 1,532,728 49,114,205 1997-98 24,710,870 681,672 19,635,508 1,528,534 486,047 2,291,095 1,063,783 50,397,509 1998-99 25,666,570 947,752 23,329,979 1,671,621 511,115 1,634,317 274,530 54,035,884 1999-00 28,412,684 1,249,632 24,683,344 2,110,970 447,813 1,922,970 371,053 59,198,466 2000-01 31,994,899 1,464,096 24,587,495 2,411,318 587,620 2,630,216 354,744 64,030,388 2001-02 32,131,817 1,438,768 27,698,796 2,875,958 670,837 2,493,973 284,348 67,594,497 2002-03 32,812,488 2,062,847 29,298,169 2,982,623 801,121 1,429,018 363,829 69,750,095 Source: General, Special Revenue, Debt Service and Capital Projects Funds City of Yuma, Arizona Table V Tax Revenues by Source Last Ten Fiscal Years Property Tax General Sales Tax City Road Sales Tax 1993-94 $3,670,845 $ 7,855,849 $ 913,222 1994-95 3,579,519 8,172,410 3,903,429 1995-96 3,962,082 8,497,121 1996-97 4,050,744 1997-98 Fiscal Year Public Safety Sales Tax Civic Center Two Percent Excise Tax Tax $ $ Mall District Levy Total 107 940,775 $ 806,815 $ 1,024,123 $ 42,000 $ 96,389 $15,350,018 391,077 17,793 1,766,817 1,025,146 42,000 87,756 18,985,947 4,146,044 1,701,619 10,902 1,997,930 1,028,738 42,000 138,104 21,524,540 9,190,489 4,470,925 1,838,760 721 2,097,687 1,447,845 42,030 59,095 23,198,296 4,355,377 9,848,292 4,836,428 2,002,155 3,301 2,187,192 1,392,706 42,000 43,419 24,710,870 1998-99 4,486,819 10,354,676 5,088,978 2,105,780 1,263 2,313,453 1,224,830 42,000 48,771 25,666,570 1999-00 4,730,665 11,342,233 5,574,996 2,306,895 5,674 2,363,269 1,796,281 242,000 50,671 28,412,684 2000-01 5,243,984 12,836,934 6,417,376 2,566,078 - 2,490,071 2,135,544 242,000 62,912 31,994,899 2001-02 5,193,075 13,116,950 6,448,954 2,578,704 - 2,652,152 1,835,810 242,000 64,172 32,131,817 2002-03 5,525,546 13,237,042 6,617,396 2,646,059 - 2,741,989 1,719,272 242,000 83,184 32,812,488 Source: General and Special Revenue Funds - Utility Franchise Public Enterprise In-Lieu City of Yuma, Arizona Table VI Intergovernmental Shared Revenues Last Ten Fiscal Years Fiscal Year Sales Tax 1993-94 $ 3,889,282 1994-95 Revenue Sharing Highway Users $ 5,110,653 Grants and Others (Table VII) Total $ 435,468 $ 1,906,031 $ 16,134,529 108 3,580,336 $ 1,212,759 4,350,840 4,056,699 1,267,830 5,258,881 430,730 2,861,986 18,226,966 1995-96 4,595,727 4,350,984 1,488,372 5,575,537 435,038 4,265,860 20,711,518 1996-97 4,267,201 4,577,465 1,654,496 5,115,826 428,877 2,885,816 18,929,681 1997-98 4,506,916 5,171,767 1,595,995 5,768,654 439,556 2,152,620 19,635,508 1998-99 5,002,193 6,212,451 2,030,291 6,038,703 424,669 3,621,672 23,329,979 1999-00 5,515,532 6,958,385 2,075,329 6,715,766 418,463 2,999,869 24,683,344 2000-01 5,779,653 7,303,100 2,235,482 6,157,241 425,571 2,686,448 24,587,495 2001-02 5,973,339 8,084,914 2,345,195 6,414,401 440,004 4,440,943 27,698,796 2002-03 6,062,278 8,250,011 2,746,086 6,732,659 434,212 5,072,923 29,298,169 Source: General and Special Revenue $ Auto In-Lieu Local Transportion Assistance City of Yuma, Arizona Table VII Intergovernmental Revenues - Grants and Other Last Ten Fiscal Years State of Arizona Federal Housing/Urban Economic Development Development (CDBG) Administration Other Local Government Total - $ 284,242 $ 89,927 $ 1,906,031 109 Fiscal Year Justice 1993-94 $ 797,712 1994-95 771,975 - 595,269 634,827 - - - 99,252 - 162,102 598,561 2,861,986 1995-96 780,737 - 1,857,444 1,429,672 - - 5,160 92,927 - 430 99,490 4,265,860 1996-97 986,309 405,521 857,700 453,001 - - - 17,907 - - 165,378 2,885,816 1997-98 855,001 119,355 794,492 35,766 - - 3,935 - 257,318 50,753 2,152,620 1998-99 869,432 109,421 1,372,433 9,234 - 1999-00 948,716 172,030 1,215,765 - 2000-01 970,255 158,271 706,783 2001-02 1,010,764 405,198 2002-03 1,309,351 1,398,560 Interior $ - $ 734,150 $ - Other HUD $ - Other $ - Parks $ - 36,000 Commerce Transportation $ $ - 38,543 - 286,709 600,000 275,869 60,031 3,621,672 82,536 89,525 169,567 20,339 40,000 46,535 214,856 2,999,869 - 199,998 156,327 393,823 10,054 - 90,937 - 2,686,448 640,280 - 229,712 507,488 753,502 264,684 240,890 366,161 22,264 4,440,943 991,044 - 169,579 413,527 96,498 441,101 - 233,831 19,432 5,072,923 Source: General, Special Revenue, and Capital Projects Funds City of Yuma, Arizona Table VIII Property Tax Levies and Collections Last Ten Fiscal Years Percent of Levy Collected Fiscal Year Tax Levy Current Tax Collections 1993-94 $ 3,541,505 $ 3,414,770 96.42% 1994-95 3,726,867 3,427,048 1995-96 3,857,407 1996-97 Delinquent Tax Collections 110 256,075 $ 3,670,845 103.65% 91.96% 152,471 $ 3,579,519 96.05% 3,750,005 97.22% 212,077 $ 3,962,082 102.71% 4,081,166 3,869,125 94.80% 181,689 $ 4,050,814 99.26% 1997-98 4,285,195 4,163,448 97.16% 191,929 $ 4,355,377 101.64% 1998-99 4,463,402 4,334,970 97.12% 151,849 $ 4,486,819 100.52% 1999-00 4,711,704 4,569,886 96.99% 160,779 $ 4,730,665 100.40% 2000-01 4,988,638 5,099,285 102.22% 144,699 $ 5,243,984 105.12% 2001-02 5,240,594 5,071,973 96.78% 121,102 $ 5,193,075 99.09% 2002-03 5,569,705 5,339,296 95.86% 186,250 $ 5,525,546 99.21% Source: Collections - General Fund Levy - Yuma County Assessor $ Total Tax Collections Total Collection as Percent of Current Levy City of Yuma, Arizona Table IX Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Type Tax Year 1993 Primary Secondary 1994 Primary Secondary 1995 Assessed Value 182,561,196 193,571,175 $ Ratio of Assessed to Estimated Value 111 1,372,800,939 1,467,556,166 13.30% 13.19% 189,877,024 193,571,175 1,439,167,745 1,467,556,166 13.19% 13.19% Primary Secondary 196,326,119 199,659,445 1,509,609,831 1,632,866,550 13.01% 12.23% 1996 Primary Secondary 206,526,304 208,341,336 1,594,672,075 1,609,362,821 12.95% 12.95% 1997 Primary Secondary 215,315,388 218,762,985 1,671,162,740 1,691,827,028 12.88% 12.93% 1998 Primary Secondary 224,268,102 232,397,991 1,734,925,006 1,780,360,890 12.93% 13.05% 1999 Primary Secondary 236,744,301 245,008,969 1,852,024,345 1,902,825,605 12.78% 12.88% 2000 Primary Secondary 250,659,103 256,612,102 1,930,815,864 1,969,848,043 12.98% 13.03% 2001 Primary Secondary 271,369,779 278,555,470 2,141,691,122 2,201,668,090 12.67% 12.65% 2002 Primary Secondary 299,108,816 305,708,909 2,343,016,774 2,395,671,220 12.77% 12.76% Source: Collections - General Fund Levy - Yuma County Assessor $ Estimated Actual Value City of Yuma, Arizona Table X Property Tax Rates Per $100 of Assessed Valuation-Direct and Overlapping Governments Last Ten Fiscal Years Tax Year Type State County City $ 2.4642 0.3128 $ 1.9399 - Yuma Union High School District No. 70 School District No. 13 2.3915 0.6185 $ 2.2567 0.9094 $ 2.3420 1.5269 Community College District $ 1.8400 0.3772 Library District Flood Control District $- $- 112 1993 Primary $ 0.4700 Secondary - 1994 Primary Secondary 0.4700 - 2.4642 - 1.9628 - 2.5603 1.1109 2.4097 1.1627 2.2080 1.6386 1.8722 0.3517 0.4352 1995 Primary Secondary 0.4700 - 2.4500 - 1.9771 - 2.5636 1.1041 2.2795 1.1892 2.3105 1.4128 1.8356 0.3301 1996 Primary Secondary - 2.4500 - 1.9771 - 2.5670 1.1058 2.2859 1.2157 2.3071 1.4367 1997 Primary Secondary - 2.8480 - 1.9902 - 2.3610 0.9954 2.2923 1.3415 1998 Primary Secondary - 2.8480 - 1.9902 - 2.3759 0.9307 1999 Primary Secondary - 2.8397 - 1.9902 - 2000 Primary Secondary - 2.8303 - 2001 Primary Secondary - 2002 Primary Secondary - Source: Yuma County Assessor $ School District No. 1 Total Within School School District District No. 1 No. 13 $ 11.3623 2.2179 $ 11.4476 2.8354 0.5000 11.7392 3.5605 11.5375 4.0364 0.4831 0.5000 11.5758 3.6065 11.6068 3.8301 1.4106 0.3454 0.4831 0.5000 10.6906 3.6500 10.7118 3.8710 2.6132 1.1248 1.8218 0.3305 0.5040 0.2490 11.3133 3.4204 11.6342 3.2037 2.5027 1.3002 2.6191 1.3949 1.8072 0.3138 0.5040 0.3500 11.5240 3.3987 11.6404 3.4934 2.2269 0.9121 2.5612 1.5049 2.1935 1.2755 1.8216 0.3012 0.5040 0.3500 11.4396 3.5722 11.0719 3.3428 1.9902 - 2.2387 0.8793 2.4934 1.5377 2.0975 1.4225 1.8181 0.2815 0.5040 0.3500 11.3707 3.5525 10.9748 3.4373 2.3180 - 1.9192 - 2.4303 0.8753 2.8157 1.2510 2.5481 1.3288 1.8267 0.2759 0.5040 0.3500 11.3099 3.2562 11.0423 3.3340 2.3180 - 1.8621 - 2.4792 0.7880 2.2718 1.4277 2.5445 1.2473 1.7542 0.2550 0.5040 0.3500 10.6853 3.3247 10.9580 3.1443 City of Yuma, Arizona Table XI Computation of Direct and Overlapping Debt June 30, 2003 Debt Jurisdiction City of Yuma Outstanding $ - Allocable to City of Yuma Percent Amount 100.00% $ - 113 Yuma County 40,265,000 50.14% 20,190,468 Yuma County Community College District 11,155,000 50.14% 5,593,559 Yuma Union High School District No. 70 15,610,000 54.04% 8,435,135 Yuma School District No. 1 27,740,000 56.13% 15,571,718 Yuma School District No. 13 10,575,000 64.49% 6,819,846 Total Overlapping Debt Source: Yuma County Treasurer and Yuma County Assessor $ 56,610,726 City of Yuma, Arizona Table XII Ratio of General Bonded Debt to Assessed Value and General Bonded Debt Per Capita Last Ten Fiscal Years Fiscal Year Population (1)(2) Assessed Value General Bonded Debt Ratio of General Bonded Debt to Assessed Value General Bonded Debt per Capita $ $ $ $ 114 1993-94 60,125 185,073,619 1994-95 60,457 193,571,175 - - - 1995-96 63,150 198,439,931 - - - 1996-97 65,130 208,341,336 - - - 1997-98 68,160 218,762,985 - - - 1998-99 69,055 232,397,991 - - - 1999-00 71,000 245,008,969 - - - 2000-01 77,515 256,612,102 - - - 2001-02 79,530 278,555,470 - - - 2002-03 80,300 305,708,909 - - - Source: (1) Census data (2) City of Yuma, Department of Community Development - - - City of Yuma, Arizona Table XIII Special Assessments Collections Last Ten Fiscal Years Fiscal Year 1993-94 Current Assessments Due Assessments Collected $ $ 352,611 Ratio of Collections to Amount Due 352,611 100% Outstanding Delinquent Assessments (1) $ - 115 1994-95 296,000 296,000 100% - 1995-96 278,052 278,052 100% - 1996-97 243,965 243,965 100% - 1997-98 234,868 234,868 100% - 1998-99 12,480 12,480 100% - 1999-00 12,701 13,094 103% - 2000-01 6,181 6,181 100% - 2001-02 - - - - 2002-03 - - - - (1) All assessments are either paid when due or sold to independent bidders when delinquent. In the event there are no interested bidders, the delinquency must be satisfied from available funds of the City; therefore, all assessments are considered collected currently. Fiscal year 1999-00 included $393 prepaid for the subsequent fiscal year, reducing FY 2000-01 assessments due from $6,574 to $6,181. City of Yuma, Arizona Table XIV Computation of Legal Debt Limitation June 30, 2003 General Obligation Bonds Legal Debt Limitation 2002 Tax Year Secondary Assessed Valuation 116 Outstanding General Obligation Debt: Project 1992 Project 1997 Total General Obligation Debt $ 305,708,909 Water, Sewer Lights, Parks (20%) All Others (6%) $ 61,141,782 $ 18,342,535 2,760,000 7,745,000 10,505,000 $ 50,636,782 $ 18,342,535 (1) Under the Arizona Constitution, cities may issue General Obligation Bonds for purposes of water, sewer, artificial light and parks, open space preserves, playgrounds and recreational facilities up to an amount not exceeding 20% of secondary assessed valuation. (2) Under the Arizona Constitution, cities may issue General Obligation Bonds for all purposes other than those listed in (1) above up to an amount not to exceed 6% of secondary assessed valuation. City of Yuma, Arizona Table XV Ratio of Debt Service of General Bonded Debt to Total General Governmental Expenditures Last Ten Fiscal Years Fiscal Year 1993-94 Principal $ - Interest $ - Total Debt Service Total General Governmental Expenditures $ $ - Ratio of Debt Service to General Governmental Expenditures 34,141,661 - 117 1994-95 - - - 38,654,315 - 1995-96 - - - 50,386,711 - 1996-97 - - - 61,302,259 - 1997-98 - - - 66,568,726 - 1998-99 - - - 60,503,960 - 1999-00 - - - 59,655,377 - 2000-01 - - - 71,871,842 - 2001-02 - - - 91,871,908 - 2002-03 - - - 78,401,515 - Source: City of Yuma Comprehensive Annual Financial Report City of Yuma, Arizona Table XVI Schedule of Water and Wastewater Revenue Bond Coverage Last Ten Fiscal Years Fiscal Year Gross Revenues 1993-94 $ 11,632,799 1994-95 12,019,211 1995-96 Operating Expenses (1) Net Revenues Available for Debt Service $ $ Debt Service Requirements 118 Principal Interest 5,079,668 $ 785,000 $ 273,588 7,130,005 4,889,206 860,000 206,863 1,066,863 13,051,001 7,610,591 5,440,410 935,000 131,612 1,066,612 1996-97 13,940,833 8,075,960 5,864,873 650,000 59,150 709,150 1997-98 13,497,421 8,011,547 5,485,874 - - - 1998-99 13,382,190 8,267,029 5,115,161 - - - 1999-00 14,433,719 8,902,681 5,531,038 - - - 2000-01 15,114,842 9,562,567 5,552,275 - - - 2001-02 15,952,585 10,139,060 5,813,525 - - - 2002-03 17,221,289 11,307,682 5,913,607 - - - 6,553,131 (1) Excludes depreciation, amortization and other water expenses subordinate to debt service. Total $ 1,058,588 City of Yuma, Arizona Table XVII Pledged Tax Collections 1996-97 119 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 $ 9,848,292 1,434,706 $ 10,354,676 1,266,830 $ 11,342,233 2,038,281 $ 12,836,934 2,377,544 $ 13,116,950 2,077,810 $ 13,237,042 1,961,272 5,171,767 4,506,916 1,595,995 17,702 6,212,451 5,002,193 2,030,291 18,079 6,958,385 5,515,532 2,075,329 21,856 7,303,100 5,779,653 2,235,482 19,675 8,084,914 5,973,339 2,345,195 22,264 8,250,011 6,062,278 2,746,086 19,432 288,771 32,342 286,644 32,395 273,704 26,560 262,991 27,990 210,565 27,185 297,643 27,765 499,810 267,065 434,843 912,959 286,838 253,442 1,318,636 305,014 423,643 1,543,648 332,466 495,782 1,550,072 341,523 482,394 2,343,219 355,658 705,976 149,523 174,856 278,612 457,415 461,606 243,955 486,047 24,733,779 511,115 27,342,769 447,813 31,025,598 587,620 34,260,300 670,837 35,364,654 801,121 37,051,458 2,002,155 26,735,934 2,105,780 29,448,549 2,306,895 33,332,493 2,566,078 36,826,378 2,578,704 37,943,358 2,646,059 39,697,517 2,190,493 2,313,453 2,363,269 2,490,071 2,652,152 2,741,989 Total Series C Pledged Taxes $ 25,286,954 $ 26,924,272 $ 29,656,222 $ 33,388,867 $ 36,750,371 $ 38,016,806 $ 39,793,447 Gross Excise Tax Pledged Revenues $ 27,125,714 $ 28,926,427 $ 31,762,002 $ 35,695,762 $ 39,316,449 $ 40,595,510 $ 42,439,506 Local Taxes Sales Tax (1%) $ 9,190,489 Franchise Fee 1,489,875 Intergovernmental Revenues: State Revenue Sharing 4,577,465 State Sales Tax 4,267,201 Auto In-Lieu Tax 1,654,496 Emergency Services and Other 14,634 Licenses: Business Licenses 282,976 Liquor Licenses 34,020 Fees for Services: Building Permits and Inspection Fees 537,079 Recreation Fees 282,596 Police Services and Other Public Safety Fees 210,534 Use of Money and Property: Investment Income 226,266 Fines, Forfeitures and Penalties: City Court Fines 420,915 Total Series B Pledged Taxes 23,188,546 Additional Series A Pledged Taxes City Public Safety Taxes (.2%) 1,838,760 Total Series A Pledged Taxes 25,027,306 Additional Series C Pledged Taxes City Special Taxes (2%) 2,098,408 The Series C Pledged Taxes consist of the Excise Taxes and the City Special Taxes. Source: City of Yuma Administrative Services Department City of Yuma, Arizona Table XVIII Schedule of Municipal Property Corporation Debt Service Requirements to Maturity and Coverage Series 1998, 2001, and 2003 Refunding 1995 Covenants 2003 Ref 1995A 2003 Ref 1995B 2003 Ref 1995C 2002-03 Pledged Taxes 120 2003-04 Debt related to pledge: 2003 Ref 1995 Series A 2003 Ref 1995 Series B 2003 Ref 1995 Series C 1998 Series 2001 Series Total Debt Coverage Required Coverage Collective Coverage 2002-03 Pledged Taxes Total 2003-04 Debt Coverage Required Coverage $ 39,697,517 $ 37,051,458 $ $ 1,562,228 1,562,228 25.4 4.0 $ 994,381 1,350,050 1,647,825 3,992,256 9.3 3.0 $ . 39,697,517 5,785,509 6.9 4.0 $ $ 37,051,458 5,785,509 6.4 3.0 $ $ $ $ $ $ $ 39,793,447 231,025 231,025 172.2 3.5 Total $ 1,562,228 994,381 231,025 1,350,050 1,647,825 $ 5,785,509 39,793,447 5,785,509 6.9 3.5 1998, 2001, and 2003 Refunding 1995 Series: Bond covenants require that each series cover both its related debt and the collective debt for the succeeding year. City of Yuma, Arizona Table XIX Building Permits, Bank Deposits and Retail Sales Last Ten Fiscal Years Building Permits (1) Tax Year No. 1993 286 1994 Commercial Value $ Yuma County No. 28,456,506 619 605 20,795,722 1995 265 1996 Residential Value $ Bank Retail Deposits(2) Sales(3) In Thousands 121 23,480,659 $ 599,336 $ 535,681 239 19,313,100 606,842 590,452 17,613,928 620 23,915,670 651,312 626,043 582 26,664,589 391 34,298,598 538,041 650,114 1997 430 40,281,141 373 20,370,303 606,965 671,821 1998 247 17,236,498 431 37,795,329 782,120 715,746 1999 241 25,249,505 633 26,625,914 740,482 762,778 2000 186 24,818,824 466 49,925,047 725,000 820,348 2001 343 42,381,125 568 60,363,660 792,000 855,556 2002 313 29,838,982 66,248,737 922,000 866,972 576 (1) Calendar year permits issued by City of Yuma Community Development Department (2) Arizona Banker's Association, 2001 N. Third Street, Ste 205, Phoenix, AZ (602)258-1200 (3) Arizona Department of Revenue website, Annual Report (excludes restaurants, bars, hotels and motor fuel) City of Yuma, Arizona Table XX Assessed Valuation of Ten Major Property Taxpayers June 30, 2003 Primary Assessed Valuation Taxpayer 122 Dole Fresh Vegetables HPI-FW West Partners (Super WalMart Center) Reynolds Robert L. Trust Agreement Shaw Industries Shilo Inn YCAM Ltd AZ (limited partnership) Dayton-Hudson Corporation (Target Stores) Simon Real Estate Group (Southgate Mall) Global Crossing North American Network Tanimura and Antle, Inc. Total Taxpayers Total Assessed Valuation Percentage of Total $ 3,921,777 1,954,997 1,854,160 1,499,893 1,418,394 1,370,367 1,347,772 1,347,311 1,342,627 1,337,052 $ 17,394,350 1.45% 0.72% 0.68% 0.55% 0.52% 0.50% 0.50% 0.50% 0.49% 0.49% 6.41% $ 271,369,779 100.00% Source: Yuma County Assessor Note: Excluded from the list are centrally-assessed utility and railroad values. These properties represent approximately 10% of total assessed valuation. City of Yuma, Arizona Table XXI Miscellaneous Statistical Data June 30, 2003 Incorporated: First Charter: Last Charter Amendment: Form of Government: Year 123 2003 2000 1995 1990 1985 1980 1975 1970 1960 April 14, 1914 June 11, 1914 January 2, 2002 Council-Manager Square Miles Population 108.49 106.60 22.90 21.74 21.55 18.46 8.00 7.92 7.79 Public Safety: Fire Protection: Stations: Employees: Police Protection: Units-marked: Units-unmarked Motorcycles: Employees: 80,300 77,515 60,457 56,966 46,400 43,057 30,081 29,007 23,974 5 103 63 53 7 228 Most Recent Election: General: November 6, 2001 Registered Voters: 23,099 Votes Cast: 4,380 Percentage Voting: 19.00% Schools: (Estimated) Schools Teachers (est) Enrollment (est) Parks: Park acreage Municipal golf courses (acres) Swimming Pools Activity Centers Cemetery (acres) Retention Basins (acres) 38 1,361 24,352 Public Works: Streets (Miles est.) Paved Unpaved Alleys Street lights Refuse Collection: Accounts Quantity Collected (tons) Water Services: Connections Customers Miles of Lines Storage Capacity (million gallons) Daily Treatment Capacity (million gallons) Annual Quantity Processed (billion gallons) Wastewater Services: Sanitary Sewers Miles of Lines Processing Capacity (million gallons daily) Quantity Processed (million gallons daily) 553 175 3 7 40 150 City of Yuma 300 5 45 4,250 18,229 33,993 22,723 21,877 427 13.5 41 9.32 261 12.26 8.31 124