Accounting Book Cover 2010 11/4/10 12:13 PM Page 1 City of Chandler Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2010 GreenTips - Reduce, Reuse, Recycle CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2010 Boyd Dunn, Mayor Bob Caccamo, Vice-Mayor Rick Heumann, Councilmember Matt Orlando, Councilmember Jeff Weninger , Councilmember Trinity Donovan, Councilmember Jack Sellers, Councilmember Executive Staff: Rich Dlugas, Acting City Manager Patrick McDermott, Assistant City Manager Prepared by: Management Services Department Dennis Strachota, Director Dawn Lang, Assistant Director for Finance Penny Burczyk, Accounting Manager Derrick Beracy, Sr. Financial Reporting Analyst CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2010 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal ............................................................................................................................................... 1 Organizational Chart .............................................................................................................................................. 7 Certificate of Achievement .................................................................................................................................... 8 FINANCIAL SECTION Independent Auditors' Report .............................................................................................................................. 9 Management’s Discussion and Analysis (MD&A) .......................................................................................... 13 Basic Financial Statements: Government-wide Financial Statements Statement of Net Assets .......................................................................................................................... 24 Statement of Activities ............................................................................................................................ 26 Fund Financial Statements Balance Sheet – Governmental Funds ................................................................................................... 28 Reconciliation of the Balance Sheet Governmental Funds to the Statement of Net Assets .................................................................. 29 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds ........................................................................................................................ 30 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities ...................................................................................................................... 31 Statement of Net Assets - Proprietary Funds ....................................................................................... 32 Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds.............................................................................................................................. 34 Statement of Cash Flows - Proprietary Funds ..................................................................................... 36 Statement of Fiduciary Net Assets - Fiduciary Funds ........................................................................ 38 Statement of Changes in Fiduciary Net Assets - Fiduciary Funds ................................................... 39 Notes to Financial Statements ................................................................................................................... 41 Required Supplementary Information: Budgetary Comparison Schedule for the General Fund........................................................................ 76 Note to Required Supplementary Information ....................................................................................... 77 Arizona Public Safety Personnel Retirement System Schedules of Funding Progress ..................... 78 Post-employment Benefits Other than Pensions Schedule of Funding Progress............................... 78 Other Financial Statements: Budgetary Comparison Schedules for Other Major Fund Streets Capital Projects Fund .................................................................................................................. 80 i CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2010 TABLE OF CONTENTS, continued FINANCIAL SECTION, continued Non-Major Governmental Funds Combining Balance Sheet – All Non-Major Governmental Funds By Fund Type ........................................................................................................................................ 82 Combining Statement of Revenues, Expenditures and Changes in Fund Balances All Non-Major Governmental Funds - By Fund Type .................................................................... 83 Combining Balance Sheet ....................................................................................................................... 87 Combining Statement of Revenues, Expenditures and Changes in Fund Balances....................... 90 Budgetary Comparison Schedules: Highway User ......................................................................................................................................... 93 Local Transportation Assistance .......................................................................................................... 94 Grants-in-Aid .......................................................................................................................................... 95 Community Development .................................................................................................................... 96 Parks and Recreation ............................................................................................................................. 97 Library ...................................................................................................................................................... 98 Community Center Building ................................................................................................................ 99 Downtown Redevelopment ................................................................................................................ 100 Municipal Arts ...................................................................................................................................... 101 Public Works and General Government ........................................................................................... 102 Community Services ............................................................................................................................ 103 Public Safety Buildings and Improvements ..................................................................................... 104 Capital Equipment Acquisition and Replacement .......................................................................... 105 Special Assessments ........................................................................................................................... 106 Computer Purchases ............................................................................................................................ 107 Fleet Replacement ................................................................................................................................ 108 Non-Major Proprietary Funds: Combining Statement of Net Assets ................................................................................................... 112 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets .................................................................................................................................. 114 Combining Statement of Cash Flows .................................................................................................. 116 Fiduciary Funds: Statement of Changes in Assets and Liabilities - Agency Fund .................................................... 118 ii CITY OF CHANDLER, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2010 TABLE OF CONTENTS, continued FINANCIAL SECTION, continued Other Supplemental Information: HUD Programs: Combining Statement of Net Assets - All HUD Programs ............................................................ 122 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - All HUD Programs .................................................................................. 124 STATISTICAL SECTION Financial Trends Schedule 1 Net Assets by Component ................................................................................................ 128 Schedule 2a Changes in Net Assets ..................................................................................................... 130 Schedule 2b Changes in Net Assets..................................................................................................... 132 Schedule 2c Changes in Net Assets ..................................................................................................... 134 Schedule 3 Fund Balances of Governmental Funds .......................................................................... 136 Schedule 4 Governmental Funds Revenues ....................................................................................... 138 Schedule 5 Governmental Funds Expenditures and Debt Service Ratio ....................................... 140 Schedule 6 Other Financial Sources and Uses and Net Changes in Fund Balance, Governmental Funds .......................................................................................................................... 142 Revenue Capacity Schedule 7 Taxable Revenue by Category .......................................................................................... 144 Schedule 8 Direct and Overlapping Sales and Use Tax Rates ......................................................... 146 Schedule 9 Principal Sales and Use Taxpayers .................................................................................. 147 Debt Capacity Schedule 10 Ratios of Outstanding Debt by Type ............................................................................. 148 Schedule 11 Direct and Overlapping Governmental Activities Debt ............................................. 149 Schedule 12 Legal Debt Margin Information ..................................................................................... 150 Schedule 13a Pledged-Revenue Coverage ......................................................................................... 152 Schedule 13b Pledged-Revenue Coverage ......................................................................................... 153 Schedule 13c Pledged-Revenue Coverage .......................................................................................... 154 Demographic and Economic Information Schedule 14 Demographic and Economic Statistics .......................................................................... 155 Schedule 15 Principal Employers ........................................................................................................ 156 Operating Information Schedule 16 Employees by Function ................................................................................................... 158 Schedule 17 Operating Indicators by Function/Program ................................................................ 160 Schedule 18 Capital Asset Statistics by Function/Program............................................................. 162 iii Acct book inside tabs 11/9/10 8:55 AM Page 1 Introductory Section Use energy-efficient lights. Changing just one 75-watt bulb to a compact fluorescent light cuts roughly 1,300 pounds of global warming pollution. They also last up to 15 times as long and save you money. Introductory Section The introductory section includes the letter of transmittal, an organizational chart, and the Certificate of Achievement for Excellence in Financial Reporting. Introductory Section Acct book inside tabs 11/9/10 8:55 AM Page 2 The City boasts a strong labor market serving the high technology field’s demand for skilled workers. Resident population has a median age of 32.5 years and a median household income of $71,404. In addition, approximately 69 percent of the population has a college degree or some college education. This highly educated workforce explains in part why the City had highest average employee wages in the Phoenix metropolitan area, 120% of the statewide average. Over 75 percent of the City’s manufacturing employees are in high technology fields; the national average is 15 percent. The City’s unemployment averaged 6.7 percent for fiscal year 2009/10 compared with 8.7% for Maricopa County and 9.5% for the State of Arizona. The City’s sales tax revenues, which comprise over 40 percent of its general fund, dropped by 3.63 percent for 2009/10 from the prior year as the City begins to recover from the effect of the recession that was felt nationally and globally. In response to the economic recession and from the corresponding declining revenues, the City reduced its spending by $17 million in its General Fund for 2009/10 through a combination of spending cuts, revenue increases and reserves specifically set aside for revenue fluctuations. Further reductions were taken for next fiscal year to make up a continued drop in state shared and local own source revenues. To date, Chandler has weathered the recession better than many other communities through a combination of sound financial policies, healthy reserves and conservative budgeting. 2009/2010 Accomplishments Under the guidance and leadership of the Mayor and Council, along with the expertise and dedication of City management and staff, a number of accomplishments were achieved this last fiscal year. Listed below are just a few of those accomplishments.  Chandler received the 2010 All-America City Award, the nation’s oldest civic recognition award sponsored by the National Civic League;  Innovations Technology Incubator opened, paving the way for science and technology entrepreneurs to accelerate their path to success and grow their business in Chandler;  Implemented a multi-approach recruitment effort to assist employees targeted for layoff in securing internal positions. Approximately 18 layoffs were avoided;  Consolidated city owned mobile phones into one provider and pool of minutes;  Received a High Performing Housing Authority designation;  Completed two history kiosks in Park Manors Park and World War II Honor Billboard in Dr. A.J. Chandler Park;  Awarded the 2009 Arizona Parks and Recreation Association Outstanding Community Special Event Award for the “Woofstock” event;  Awarded 22nd consecutive Distinguished Budget Presentation Award from the Government Finance Officers Association;  Awarded the 5th consecutive Achievement in Excellence in Procurement Award from the National Purchasing Institute and 4th consecutive Fully Certified Office Award from the National Institute of Government Purchasing;  Implemented paperless payroll with self-service payslips for employee on-line retrieval;  Installed outbound reminder calls for past due accounts and implemented an E-Billing option for utility customers;  Received the Wastewater Project of the Year Award from the Arizona Water Association and the Arizona Public Works Project of the Year Award from American Public Works Association for the Five Million Gallon per Day Airport Water Reclamation Facility expansion project; and 2  Completed the construction of the new Fire Administration Building and the Fire and Police Memorial Plaza with dedication of the Memorial Plaza on September 11, 2009. Strategic Goals The City of Chandler’s continued goal is to provide the highest quality services to the community in the most cost-effective manner. The Council’s strategy to achieve these results is through goals to improve Chandler in a coordinated manner and to make fiscally responsible decisions that will ultimately strengthen the City. The City continued with the Council’s strategic goals by focusing on the following organizational priorities.  Downtown Downtown Chandler and the Historic Square have served as the focal point of community life since Chandler’s inception. Emerging today as a location for independent business and retail, the downtown also serves as the City’s cultural center providing the community with a sense of identity and uniqueness.  Economic Development The ability of the City to maintain and enhance the quality of life of its residents depends upon a successful economic development program. High paid quality jobs attract potential residents, and diversifying the employment and tax base provides revenue to support the amenities enjoyed by the community.  Neighborhoods As Chandler has grown rapidly from a community of 30,000 in 1980 to 250,000 today, neighborhoods have become increasingly important to help define the community’s quality of life and provide a sense of identity and place. The maintenance and long term care of our neighborhoods will become increasingly important as the community continues to age.  Sustainability In order to assure that Chandler’s quality of life is enjoyed by future generations, it is imperative that the City acts as an effective steward of our financial and environmental resources. This effort is even more critical as city resources are becoming increasingly limited, and as best practices throughout the country have provided ample evidence of the many benefits of doing business in a more sustainable fashion. The City Council is committed to the stewardship of the City’s resources through improved business practices and the conservation of our financial and environmental assets.  Transportation An effective multimodal transportation system is critical to the long-term vitality of the Chandler community. The City must maintain a viable transportation network that includes an efficient arterial street and transit system that is connected regionally, as well as a network that is bicycle and pedestrian friendly. FINANCIAL INFORMATION Internal Control Structure Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. 3 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 valuation of costs and benefits requires estimates and judgments by management. As a recipient of federal, state and county financial assistance, the City is also responsible for ensuring that an adequate internal control structure is in place to ensure and document compliance with applicable laws and regulations related to these programs. This internal control structure is subject to periodic evaluation by management and various other City staff, as needed. Single Audit As a part of the City’s single audit, described earlier, tests were made of the City’s internal control structure and of its compliance with applicable laws and regulations, including those related to federal financial assistance programs. The audit for the fiscal year ended June 30, 2010 disclosed no material internal control weaknesses or material violations of laws and regulations. Budgetary Controls The City maintains budgetary controls as an integral part of its overall system of internal controls. The objective of these budgetary controls is 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, capital projects funds, enterprise funds and internal service funds are included in the annual appropriated budget. The level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated amount) is the total budget, as adopted (FY 2009/2010, $797,894,348). The City additionally exercises management control and oversight of the budget at the department level within each fund and maintains an encumbrance accounting system as another method of maintaining budgetary control. Encumbered amounts do not lapse at fiscal year-end and subsequent year(s)’ expenditures against those encumbrances are charged against an encumbrance reserve established at the end of the preceding year(s). As demonstrated by the statements and schedules included in the financial section of this report, the City continues to meet its responsibility for sound financial management. Cash Management Policies and Practices The cash management program of the City provides for the continuous investment of all idle funds. Also, the City utilizes a pooled cash and investment concept for all funds. Each fund type’s portion of the pool is displayed in the financial statements as Equity in Pooled Cash and Investments. External investment management firms at the direction of City staff invested cash temporarily idle during the fiscal year. In addition, the City may invest in direct obligations of the United States of America or any agency thereof, or any obligation guaranteed by the United States of America or any of its agencies. It is the City’s investment policy to minimize credit and market risks while maintaining a competitive yield on its portfolio. Accordingly, all cash deposits were either insured by the Federal Depository Insurance Corporation (FDIC) or collateralized. Risk Management The City maintains and has substantially funded a self-insurance program for its liability, property, worker’s compensation and group insurance coverage needs. Public liability, property claims and worker’s compensation are administered by the City’s Risk Management division in the Management Services Department. Liabilities for these claims, as reported in the financial statements, are based on independently prepared actuarial reports and historical analyses performed by the City. Excess commercial coverage is purchased for claims above the City’s self-insurance retention and this coverage is obtained via a competitive bidding process. At June 30, 2010, the City’s reserve for self-insurance claims amounted to $36.9 million. 4 5 6 City of Chandler, Arizona Organizational Chart Citizens of Chandler Mayor/City Council Community Services Administration Center for the Arts Building & Facilities Museum Environmental Education General Government Library Communications & Public Affairs Park Operations (Video Production, Print, Mail & Graphics) Recreation Aquatics Downtown Redevelopment Real Estate Services Downtown Public Works Administration Engineering Transportation & Operations Real Estate Traffic Engineering Transit Services Streets Street Sweeping Airport Administration & Budget Purchasing Accounting Licensing & Tax Central Supply (Tourism) Human Resources Neighborhood Programs IT/GIS Utility Services Risk Management Environmental Management Fleet Services Police Department Administration Professional Standards Property & Evidence Forensic Services Water Resource & Conservation Water Quality Wastewater Collection Wastewater Reserve Osmosis Wastewater Treatment Wastewater Quality Airport Water Reclamation Water Production Facility Operations Criminal Investigation Planning & Research Communications Police Records Detention Services Community Services Planning & Development Administration Current Planning Long Range Planning Economic Development Management Services Municipal Utilities Administration Solid Waste Management Water Distribution Water Production City Magistrate City Attorney City Clerk City Manager Advisory Boards/Commissions Fire Department Housing & Redevelopment Civil Engineering Development Services Administration Emergency Medical Services Operations 7 Community Programs Prevention Support Services Training 8 Acct book inside tabs 11/9/10 8:55 AM Page 3 Financial Section The financial section includes the City’s independent auditors’ report, management’s discussion and analysis, basic financial statements, required supplementary information, and financial statements for individual funds. Financial Section Use a re-usable water bottle; if you fill it up with ice and water in the morning you will have cold water all day. Bottled water leads to a lot of waste, if you do buy/drink bottled water, recycle the bottle. Financial Section Acct book inside tabs 11/9/10 8:55 AM Page 4 HEINFELD, MEECH & CO., P.C. CERTIFIED PUBLIC ACCOUNT ANTS 10120 N. Oracle Road Tucson, Arizona 85704 Tel (520) 742-2611 Fax (520) 742-2718 INDEPENDENT AUDITORS' REPORT Honorable Mayor and Members of the City Council City of Chandler, Arizona We have audited the accompanying financial statements of the governmental activities, the business-type activities , each major fund , and the aggregate discretely presented component units and remaining fund information of the City of Chandler, Arizona (the "City") as of and for the year ended June 30, 2010, 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 discretely presented component units and remaining fund information of the City of Chandler, Arizona , as of June 30 , 2010, 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. In accordance with Government Auditing Standards, we have also issued our report dated December 16, 2010, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations , contracts , and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing , and not to provide an opinion on the internal control over financial reporting or on compliance . That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. 9 TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis, Budgetary Comparison Schedule for the General Fund and the Schedules of Funding Progress, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational , economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Ou( audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements as a whole. The Introductory Section, the Other Financial Statements of the Financial Section, Other Supplemental Information, and the Statistical Section are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. The information is presented for purposes of additional analysis and is not a required part of the basic financial statements. The Other Financial Statements and the Other Supplemental Information have been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America . In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. The Introductory Section and the Statistical Section have not been subjected to the auditing procedures applied in the audit of the basic financial statements and , accordingly, we express no opinion on them. HEINFELD, MEECH & CO. , P.C. Certified Public Accountants December 16, 2010 10 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) 11 12 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2010 As management of the City of Chandler (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2010. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal beginning on page one and the accompanying notes to the financial statements. FINANCIAL HIGHLIGHTS The financial statements, which follow the Management’s Discussion and Analysis, provide these significant, key financial highlights for 2010 as follows:       The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $1.292 billion (net assets). Of this amount, $361.2 million (unrestricted net assets) may be used to meet the City’s ongoing obligations to citizens and creditors. However, $78.8 million is invested in a joint venture with the Town of Gilbert. There was a decrease in the City’s total net assets by $17.0 million from the prior year due primarily due to drawdown of cash for construction of projects which were financed by prior years’ bond sales. At June 30, 2010, the City’s governmental funds reported combined ending fund balances of $286.0 million, a decrease of $62.8 million in comparison with the prior year. Approximately 57.8% of the total amount, $162.5 million, is available for designated projects and reserves (unreserved fund balance). At June 30, 2010, total unreserved fund balance for the General Fund was $137.0 million which represents a decrease of $57.4 million from the prior year. The undesignated portion of the unreserved fund balance is $23.6 million, which is 11.1% of total General Fund revenues of $211.8 million. General revenues from governmental activities accounted for $212.7 million or 80.6% of all revenues from governmental activities. Program specific revenues in the form of charges for services and grants and contributions accounted for $51.3 million or 19.4% of total governmental activity revenues. The City had $99.8 million of program revenues and $1.3 million in general revenues and transfers related to businesstype activities. At June 30, 2010, the City’s proprietary funds reported combined total net assets of $462.0 million, and total unrestricted net assets of $163.1 million. A total of $132.9 million of the unrestricted net assets are in the Water Fund. OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis are intended to serve as an introduction to the City’s basic financial statements. The City’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 themselves. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Net assets are categorized as capital assets less related debt, restricted by an outside third party, and unrestricted. 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 City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). 13 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2010 In the government-wide financial statements the City’s activities are presented in the following categories:  Governmental activities – Most of the City’s basic services are included here, such as general government, public safety, community services, community development, and public works. Sales taxes, state shared revenues, and charges for services finance most of these activities.  Business type activities – The services provided by the City included here are water, wastewater, solid waste, airport services, and housing services. The services are financed through user fees and charges.  Component units – The discretely presented component units are the Chandler Industrial Development Authority and the Chandler Cultural Foundation. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decision. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 22 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund and the Streets Fund, which are considered to be major funds. Data from the other 20 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules in the supplemental section of this report. The City adopts an annual appropriated budget for the General, Special Revenue (except Grants), General Obligation and Highway User Revenue Debt Service, Capital Projects and Proprietary Funds. Budgetary comparison statements have been provided in the basic financial statements for the General and Streets Capital Projects Funds to demonstrate compliance with the budget. Budgetary comparison schedules for other Non-major Special Revenue and Non-major Capital Projects Funds are also included in the financial section. Proprietary funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water, wastewater, solid waste, airport, and housing services. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses an internal service fund to account for its self-insurance fund. Because the self-insurance fund is funded predominantly by governmental functions rather than business-type functions, it has been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. 14 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2010 The proprietary fund financial statements provide separate information for the water and wastewater, which are considered to be major funds of the City. Data from the other three enterprise funds are combined into a single, aggregated presentation. Individual fund data for each of the non-major enterprise funds are provided in the form of combining statements and schedules in the financial section of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. 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 immediately following the basic financial statements in this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s budget process. The City adopts an annual budget for all governmental and enterprise funds. A budgetary comparison schedule has been provided for the General Fund as required supplementary information. GOVERNMENT-WIDE FINANCIAL ANALYSIS Net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $1,292.1 million as of June 30, 2010. A significant portion of the City’s net assets (64.7% percent) reflects its investment in capital assets (e.g., land and improvements, buildings and improvements, improvements other than buildings, vehicles, machinery and equipment and construction in progress), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to its citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net assets (7.3% percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets (28.0% percent) includes $78.8 million which is invested in a joint venture with the Town of Gilbert that may not be used to meet the City’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, both for the City as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. There was a decrease of $16.3 million in unrestricted net assets reported in connection with the City’s business type activities. A large percentage of this decrease was a result of unfunded depreciation expense. 15 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2010 The following table presents a condensed statement of the City’s net assets for the fiscal years ended June 30, 2010 and 2009. Governmental Activities Current assets Capital assets, net Non-current assets Total assets $ 2010 383,639,670 820,163,912 4,021,042 1,207,824,624 $ Business-type Activities 2009 457,085,839 756,199,899 4,613,830 1,217,899,568 $ 2010 98,986,038 591,162,165 81,807,829 771,956,032 $ Total (Primary Govt.) 2009 121,703,908 686,468,986 3,260,776 811,433,670 $ 2010 482,625,708 1,411,326,077 85,828,871 1,979,780,656 $ 2009 578,789,747 1,442,668,885 7,874,606 2,029,333,238 Current liabilities Non-current liabilities Total liabilities 54,288,921 323,459,370 377,748,291 57,420,810 337,224,162 394,644,972 26,602,357 283,311,071 309,913,428 30,520,113 295,097,643 325,617,756 80,891,278 606,770,441 687,661,719 87,940,923 632,321,805 720,262,728 Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets 537,576,346 94,440,806 198,059,181 830,076,333 433,851,899 117,712,539 271,690,158 823,254,596 298,938,820 163,103,784 462,042,604 306,451,979 179,363,935 485,815,914 836,515,166 94,440,806 361,162,965 1,292,118,937 740,303,878 117,712,539 451,054,093 1,309,070,510 $ $ $ $ $ $ Total assets Governmental Activities Total liabilities Business-type Activities Total net assets $- $500 $1,000 $1,500 $2,000 Millions Changes in net assets. The City’s total revenues for the fiscal year ended June 30, 2010 were $365.9 million. The total cost of all programs and services was $382.9 million. The following table presents a summary of the changes in net assets for the fiscal years ended June 30, 2010 and 2009. 16 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2010 Governmental Activities 2010 Business-type Activities 2009 2010 Total (Primary Govt.) 2009 2010 2009 Revenues: Program revenues Charges for services $ 37,609,321 $ 33,195,803 $ 84,911,736 $ 79,729,536 $ 122,521,057 $ 112,925,339 Operating grants and contributions 5,510,710 2,337,910 6,367,024 6,225,928 11,877,734 8,563,838 Capital grants and contributions 8,159,960 23,902,360 8,484,239 9,110,319 16,644,199 33,012,679 Property taxes 40,617,269 38,957,986 - - 40,617,269 38,957,986 Sales taxes 83,019,726 85,897,334 - - 83,019,726 85,897,334 3,174,390 3,264,093 - - 3,174,390 3,264,093 Highway user taxes 13,116,481 13,849,284 - - 13,116,481 13,849,284 Other taxes 13,965,973 7,921,275 - - 13,965,973 7,921,275 State shared revenues 54,492,427 61,211,289 - - 54,492,427 61,211,289 3,487,145 10,045,274 756,641 2,536,237 4,243,786 12,581,511 850,191 995,606 1,422,790 788,478 2,272,981 1,784,084 264,003,593 281,578,214 101,942,430 98,390,498 365,946,023 379,968,712 52,293,004 General revenues Franchise fees Investment income Miscellaneous Total revenues Expenses: General government 48,920,813 52,293,004 - - 48,920,813 Public safety 92,421,801 87,609,165 - - 92,421,801 87,609,165 Community development 11,715,276 10,429,826 - - 11,715,276 10,429,826 Public works 56,155,939 47,180,197 - - 56,155,939 47,180,197 Community services 35,299,676 34,278,998 - - 35,299,676 34,278,998 Interest and fiscal charges 13,541,708 12,938,524 - - 13,541,708 12,938,524 Water - - 62,556,496 53,201,379 62,556,496 53,201,379 Wastewater - - 38,227,999 36,079,767 38,227,999 36,079,767 Solid waste - - 14,605,448 12,076,998 14,605,448 12,076,998 Airport - - 1,797,991 2,269,691 1,797,991 2,269,691 Housing authority - - 7,654,449 7,239,185 7,654,449 7,239,185 258,055,213 244,729,714 124,842,383 110,867,020 382,897,596 355,596,734 5,948,380 36,848,500 (22,899,953) (12,476,522) (16,951,573) 24,371,978 Total expenses Increase (decrease) before transfers Transfers in (out) 873,357 Increase (decrease) in net assets 6,821,737 Beginning net assets as restated Ending net assets (1,542,346) 35,306,154 823,254,596 $ 830,076,333 (873,357) (23,773,310) 787,948,442 $ 823,254,596 17 1,542,346 (10,934,176) 485,815,914 $ 462,042,604 (16,951,573) 496,750,090 $ 485,815,914 24,371,978 1,309,070,510 $ 1,292,118,937 1,284,698,532 $ 1,309,070,510 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2010 Revenue Sources - Fiscal Year 2010 Other taxes 3.8% State shared revenues 14.9% Investment income 1.2% Miscellaneous 0.6% Highway user taxes 3.6% Charges for services 33.5% Operating grants and contributions 3.2% Franchise fees 0.9% Sales taxes 22.7% Property taxes 11.1% Capital grants and contributions 4.5% Functional Expenses - Fiscal Year 2010 Solid waste 3.8% Airport 0.5% Wastewater 10.0% Housing authority General 2.0% government 12.8% Water 16.3% Public safety 24.1% Interest expense on long-term debt 3.5% Community services 9.2% Public works 14.7% 18 Community development 3.1% CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2010 Governmental Activities. The increase in governmental net assets totaled $6.8 million for the year ended June 30, 2010 compared with an increase of $35.3 million in the prior year. Although governmental net assets increased, there was decrease of $15.7 million in capital grants and contributions. This decrease was primarily due to completion of street projects and the corresponding decreases in revenues received. Also, as a result of the economic downturn, unrestricted investment earnings continued to decrease by $6.6 million or 188.1% over the prior year. Business-type Activities. The decrease in business-type net assets totaled $23.8 million for the year ended June 30, 2010 compared with a decrease of $10.9 million in the prior year. This is due primarily to the increased revenue of $3.6 million or 3.6% but a larger increase in expenses of $14.0 million or 12.6%. Also, as a result of the economic downturn, unrestricted investment earnings continued to decrease by $1.8 million over the prior year. As evident in the previous graph the largest financing source for the City is charges for services at 33.5% associated with the user fees and charges for services in the business-type activities. Sales taxes also comprise a significant portion of the City’s revenues at 22.7% of the total revenues with state shared revenues accounting for an additional 14.9% of the City’s total revenues. The City as a whole uses the largest amount of resources for public safety at 24.1% of the total functional expenses of the City. The next largest users of resources are water services and general government functions at 16.3% and 12.8%, respectively, with wastewater services accounting for 10.0% of the City’s total expenses. FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unreserved fund balance may serve as a useful measure of the City’s net resources available for spending at the end of the fiscal year. The financial performance of the City as a whole is reflected in its governmental funds. As the City completed the year, its governmental funds reported a combined fund balance of $286.0 million, a decrease of $62.8 in comparison with the prior year. Approximately 57.8% of the total amount, $162.5 million constitutes unreserved fund balance; the remainder of fund balance (43.2%) is reserved and already committed to encumbrances, debt service, legal restrictions and capital improvements in progress. The General Fund is the chief operating fund of the City. At the end of the current fiscal year, unreserved fund balance of the General Fund was $137.0 million, while total fund balance reached $199.2 million. As a measure of the General Fund’s liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 64.2% of total General Fund expenditures, while total fund balance represents 93.4% of that same amount. The City’s General Fund balance decreased by $25.8 million during the current fiscal year. A key factor in this decrease was the construction of City Hall, which was financed from General Fund resources. The Street Fund accounts for the acquisition, construction and improvements of the City’s streets’ projects. At the end of the current fiscal year total fund balance was $49.2 million. The fund balance of the City’s Street Fund decreased by $15.8 million during the current fiscal year. A key factor in this decrease was the expenditure of 2009 bond proceeds. 19 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2010 Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Net assets for the Enterprise Funds and the Internal Service Funds at the end of the fiscal year amounted to $462.0 million and $36.9 million, respectively. Net assets after investments in capital assets and net of related debt are 35.3% unrestricted. Unrestricted net assets of the Water Fund at the end of the year amounted to $132.9 million, and those for the Wastewater Fund amounted to $18.5 million. The total decline in net assets for both funds was $16.4 million and $6.7 million, respectively. These decreases were a result of unfunded depreciation expense. BUDGETARY HIGHLIGHTS In the midst of consecutive years of a worldwide economic recession, the City of Chandler held strong to its commitment to consistently engage in fiscally responsible practices. The City Council adopted a balanced budget for 2009-2010, reducing expenditures to meet the lower level of revenue. As revenues continued to decline in 2009-10 beyond even the most conservative of estimates, the City was quick to respond, engaging stakeholders at every level to prepare for the potential of a further drop in General-purpose revenues going into 2010-11. Fortunately, by the fourth quarter of 2009-10 the City began to see a sustained rebound in local sales tax revenues, the single largest source of General Fund revenues. Distinguishing between ongoing and one-time revenues and spending has been critical to the City’s success in preventing more serious budget difficulties. Ongoing expenses, such as salaries or lease payments, must have an identified ongoing revenue source. However, to offset dramatic downward spikes, the City has established a revenue fluctuation fund and a budget stabilization reserve, significant provisional measures to help the City weather temporary and uncharacteristically uncertain economic times. The City adheres to strong financial policies, and continues to maintain an ongoing 12% contingency reserve in the General Fund for emergency use. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets. As of June 30, 2010, the City had invested $836.5 million in capital assets net of related debt, including buildings, facilities, vehicles, computers, equipment, and infrastructure assets. Total depreciation expense for the year was $73.3 million. Major capital asset events during the current fiscal year included the following:  Completed construction renovations at the Chandler Center for the Arts at a cost of $6.0 million.  Completed construction renovations at the Boys and Girls Club at a cost of $8.5 million.  Completed existing community park improvements at eight different locations at a cost of $9.1 million  Completed construction of the new Fire Administration Building which includes the Fire and Police Memorial Plaza and Emergency Operations Center at a cost of $7.7 million.  Expansion of Water Reclamation Facility at a cost of $4.7 million.  Improvements of Water Production Facility at a cost of $3.4 million.  Replacement of Sewer Mains at a cost of $2.5 million. 20 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2010 The following table presents capital asset balances net of accumulated depreciation for the fiscal years, ended June 30, 2010 and 2009. Governmental Activities 2010 Land $ Infrastructure Construction in progress $ 41,256,107 $ 2010 41,256,107 $ 2009 122,407,421 $ 121,245,720 685,527 744,511 685,527 744,511 375,725,796 351,508,864 - - 375,725,796 351,508,864 - - 505,119,327 529,528,298 505,119,327 529,528,298 - - - 80,950,007 - 80,950,007 199,837,823 176,877,733 9,349,426 9,243,097 209,187,249 186,120,830 23,977,172 25,268,878 2,014,705 2,573,053 25,991,877 27,841,931 139,471,807 $ Total 79,989,613 2009 - System improvement s - Joint Vent ure Machinery and equipment $ 2010 - System improvement s Buildings and improvements 2009 81,151,314 Land improvements Total (Primary Govt.) Business-type Activities 820,163,912 122,554,811 $ 756,199,899 $ 32,737,073 22,173,913 172,208,880 144,728,724 591,162,165 $ 686,468,986 $ 1,411,326,077 $ 1,442,668,885 Additional information on the City’s capital assets can be found in Note 4 of the financial statements. Long-term Debt. At the end of the current fiscal year, the City of Chandler had total bonded debt outstanding of $608.7 million in long-term debt outstanding with $30.2 million due within one year. The following table presents a summary of the City’s outstanding long-term obligations for the fiscal years ended June 30, 2010 and 2009. Governmental Activities 2010 General Obligation Bonds $ Revenue Bonds Excise Tax Revenue Obligations Total Bonds Payable 2009 282,888,000 $ 31,800,000 Arbitrage Payable 322,003,000 $ - 7,315,000 $ 2010 294,588,000 34,690,000 - Special Assessment Bonds Business-type Activities 7,820,000 $ 337,098,000 2009 185,032,000 $ 2010 2009 188,612,000 $ 467,920,000 67,580,000 76,415,000 99,380,000 111,105,000 34,040,000 34,040,000 34,040,000 34,040,000 $ Total (Primary Govt.) 286,652,000 $ 299,067,000 $ 7,315,000 $ 608,655,000 483,200,000 7,820,000 $ 636,165,000 111,099 249,439 29,898 97,026 140,997 346,465 Deferred Bond Premiums 5,482,398 5,721,872 5,027,052 5,548,723 10,509,450 11,270,595 Claims Payable 1,811,045 3,624,854 Landfill Closure/Post Closure - Compensated Absences Post Employment Benefits Total Long Term Liabilities $ - - 1,811,045 3,624,854 4,340,000 2,786,191 - 4,340,000 2,786,191 8,444,691 10,131,319 7,595,169 991,531 849,522 11,122,850 3,863,996 2,031,825 269,574 133,663 4,133,570 308,482,125 $ 640,712,912 343,402,857 $ 356,321,159 $ 297,310,055 $ 2,165,488 $ 664,803,284 The City of Chandler’s total debt decreased by $24.1 million during the current fiscal year. The key factor of the decrease was the principal payments made during the fiscal year. During the current fiscal year the City of Chandler issued highway user revenue bonds to refinance previously outstanding highway user revenue bonds in order to take advantage of favorable interest rates. State statutes currently limit the amount of general obligation debt a city may issue to 20 percent of its total assessed valuation for water, sewer, artificial lighting, open space, parks, public safety and emergency services, streets, transportation, and recreational facilities. The current debt limitation for the City is $701.6 million. The City has $458.4 million of outstanding general obligation debt for these purposes. 21 CITY OF CHANDLER, ARIZONA Management’s Discussion and Analysis (MD&A) Year Ended June 30, 2010 State statutes also currently limit the amount of general obligation debt a city may issue to 6 percent of its total assessed valuation for all other purposes. The current debt limitation for the City is $210.5 million. The City has $9.5 million of outstanding general obligation debt for this purpose. As of year-end, the City’s current bond ratings on general obligation bonds were Aaa from Moody’s Investor Services, AAA from Standard & Poor’s, and AAA from Fitch Ratings. Ratings for the street and highway users were Aa2 from Moody’s, AA from Standard & Poor’s, and AA from Fitch. Water and wastewater revenue bonds were Aa1 from Moody’s Investor Services, AA from Standard & Poor’s, and AA+ from Fitch. Excise Tax bonds were Aa1 from Moody’s Investor Services, AAA from Standard & Poor’s, and AAA from Fitch. Additional information on the City’s long-term debt can be found in Note 6 of the financial statements. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET While many revenue sources have been impacted by the sagging economy, the most significant drivers remain local and state-shared sales tax, urban revenue (state-shared income tax), and property tax. In developing the budget for fiscal year 2010-11, the Chandler City Council recognized that the lingering recession had affected not only the City’s revenues, but those of the taxpayer as well. Every effort was made to maintain reasonable rates and fees and reduce expenses, while continuing to provide excellent public service. Adopting a balanced budget for fiscal year 2010-11 required the combined efforts of citizens, the City Council, executive leadership, and staff members throughout the organization. The City’s overall budget was reduced from $797.9 million in 2009-10 to $671 million for 2010-11, ultimately reflecting the highest priorities given the limited availability of resources. The total property tax rate remained at $1.1814 per $100 of assessed value, with $0.3292 allocated to the primary rate, and $0.8522 to the secondary rate. CONTACTING THE CITY’S FINANCE OFFICE This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. If you have questions about this report or need additional information, contact the Management Services Department, City of Chandler, P.O. Box 4008, MS 609, Chandler, AZ 85244-4008. 22 BASIC FINANCIAL STATEMENTS 23 City of Chandler Statement of Net Assets June 30, 2010 Component Units Chandler Industrial Chandler Development Cultural Foundation Authority Governmental Activities Business-Type Activities $ 364,232,398 869,854 180,004 1,745,571 572,070 5,131,362 1,027,691 6,620,868 568,342 2,691,510 383,639,670 $ 87,044,850 11,812,723 451,218 (572,070) 33,319 215,998 98,986,038 4,021,042 - 394,450 2,580,660 78,832,719 394,450 6,601,702 78,832,719 - 1,329,172 6,000 - 220,623,121 599,540,791 820,163,912 824,184,954 1,207,824,624 73,993,180 517,168,985 591,162,165 672,969,994 771,956,032 294,616,301 1,116,709,776 1,411,326,077 1,497,154,948 1,979,780,656 469,539 89,520 89,520 1,424,692 2,223,961 13,962,389 4,361,624 9,307,702 6,689,469 24,250 88,369 575,076 3,674,520 497,250 2,012,392 5,846,707 572,503 2,628 55,582 17,636,909 4,858,874 11,320,094 12,536,176 596,753 90,997 630,658 - 21,672 140,972 - Total ASSETS Current assets: Equity in pooled cash and investments Cash and investments Accounts receivable Interest receivable Prepaid items Property taxes receivable Internal balances Due from other governments Inventories Special assessments receivable Notes receivable - current Other receivables Total current assets Noncurrent assets: Cash and investments - restricted Notes receivable - long term Other assets Investment in joint venture Capital assets: Non-depreciable Depreciable, net Total capital assets Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable Accrued payroll Trust liabilities and deposits Accrued interest Unearned revenue Arbitrage liability - current Compensated absences payable - current 24 $ 451,277,248 12,682,577 631,222 1,745,571 5,164,681 1,243,689 6,620,868 568,342 2,691,510 482,625,708 $ 467,539 2,000 469,539 $ 748,141 7,757 43,144 227 799,269 Bonds payable - current Deferred bond premium - current Landfill closure and postclosure liability - current Claims and judgements payable - current Total current liabilities Noncurrent liabilities: Compensated absences payable - long term Bonds payable - long term Deferred bond premium - long term OPEB liability - long term Arbitrage liability - long term Landfill closure and postclosure liability - long term Claims and judgements payable - long term Total noncurrent liabilities Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Capital improvements Debt service Legal restrictions Total restricted Unrestricted Total net assets 17,150,000 530,042 1,600,000 54,288,921 13,085,000 521,671 334,104 26,602,357 30,235,000 1,051,713 334,104 1,600,000 80,891,278 - 162,644 9,556,243 304,853,000 4,952,356 3,863,996 22,730 211,045 323,459,370 377,748,291 935,949 273,567,000 4,505,382 269,574 27,270 4,005,896 283,311,071 309,913,428 10,492,192 578,420,000 9,457,738 4,133,570 50,000 4,005,896 211,045 606,770,441 687,661,719 - 162,644 537,576,346 298,938,820 836,515,166 - 89,520 60,682,560 22,093,911 11,664,335 94,440,806 198,059,181 $ 830,076,333 163,103,784 $ 462,042,604 60,682,560 22,093,911 11,664,335 94,440,806 361,162,965 $ 1,292,118,937 469,539 469,539 1,329,172 1,329,172 642,625 2,061,317 See accompanying Notes to Basic Financial Statements. 25 $ $ City of Chandler Statement of Activities and Changes in Net Assets For the year ended June 30, 2010 Program Revenues Functions/Programs Expenses Operating Capital Charges for Grants and Grants and Services Contributions Contributions $ $ Total Primary government: Governmental activities: General government $ 48,920,813 $ 16,621,003 2,209,304 - $ 92,421,801 7,110,304 1,795,719 Community development 11,715,276 3,336,188 1,101,069 - 4,437,257 Public works 56,155,939 6,025,846 170,274 8,159,960 14,356,080 Community services 35,299,676 4,515,980 234,344 - 4,750,324 Interest on long-term debt 13,541,708 - - - - 258,055,213 37,609,321 5,510,710 8,159,960 51,279,991 Water 62,556,496 42,276,145 - 2,952,223 45,228,368 Wastewater 38,227,999 28,406,808 - 3,985,084 32,391,892 Solid waste 14,605,448 12,891,628 - 59,772 12,951,400 Airport 1,797,991 815,751 - 871,364 1,687,115 Community services - housing authority 7,654,449 521,404 6,367,024 615,796 7,504,224 124,842,383 84,911,736 6,367,024 8,484,239 99,762,999 $ 382,897,596 $ 122,521,057 $ 11,877,734 $ 16,644,199 $ 151,042,990 $ $ $ - $ - Total governmental activities - 18,830,307 Public safety 8,906,023 Business-type activities: Total business-type activities Total primary government Component units Chandler Industrial Development Authority Chandler Cultural Foundation Total component units 8,445 833,158 $ 841,603 78,427 498,698 $ 577,125 196,002 $ 196,002 $ General revenues and transfers: Taxes: Property taxes, levied for general purposes Sales taxes Franchise fees Highway user taxes Other taxes Total taxes State shared revenues (unrestricted) Investment income Miscellaneous Transfers Total general revenues and transfers Change in net assets Net assets - beginning of year Net assets - end of year See accompanying Notes to Basic Financial Statements. 26 $ - 78,427 694,700 $ 773,127 Net (Expense) Revenue and Changes in Net Assets Primary Government Component Units Chandler Industrial Governmental Business-Type Activities Activities $ (30,090,506) - (83,515,778) - $ (30,090,506) Cultural Authority Foundation $ - $ - (83,515,778) - - (7,278,019) - (7,278,019) - - (41,799,859) - (41,799,859) - - (30,549,352) - (30,549,352) - - (13,541,708) - (13,541,708) - - (206,775,222) - (206,775,222) - - - (17,328,128) (17,328,128) - - - (5,836,107) (5,836,107) - - - (1,654,048) (1,654,048) - - - (110,876) (110,876) - - - (150,225) (150,225) - - - (25,079,384) (25,079,384) - - (206,775,222) (25,079,384) (231,854,606) - - - - - 69,982 - - - - - (138,458) - - - 69,982 (138,458) 40,617,269 - 40,617,269 - - 83,019,726 - 83,019,726 - - 3,174,390 - 3,174,390 - - 13,116,481 - 13,116,481 - - 13,965,973 - 13,965,973 - - 153,893,839 - 153,893,839 - - 54,492,427 - 54,492,427 - - 3,487,145 756,641 4,243,786 2,281 19,619 850,191 1,422,790 2,272,981 2,250 - - - - 873,357 213,596,959 6,821,737 $ $ Total Chandler Development (873,357) 1,306,074 214,903,033 4,531 19,619 (23,773,310) (16,951,573) 74,513 (118,839) 823,254,596 485,815,914 830,076,333 $ 462,042,604 1,309,070,510 $ 1,292,118,937 395,026 $ 469,539 27 2,180,156 $ 2,061,317 City of Chandler Balance Sheet Governmental Funds June 30, 2010 Major Funds Other General Streets Governmental Capital Projects Funds Total ASSETS Equity in pooled cash and investments $ 188,989,769 $ 59,189,358 $ 76,946,315 $ 325,125,442 Accounts receivable 869,854 - - 869,854 Prepaid items 144,856 - 33,299 178,155 Property taxes receivable 1,745,571 - - 1,745,571 Special assessments receivable - - 6,620,868 6,620,868 Notes receivable - - 568,342 568,342 31,158,420 - 8,806,156 39,964,576 Due from other funds 1,284,072 - - 1,284,072 Due from other governments 2,706,978 - 2,424,384 5,131,362 Inventories 1,027,691 - - 1,027,691 Other receivables 2,669,405 - 22,105 2,691,510 Advances to other funds Total assets $ 230,596,616 $ 59,189,358 $ 95,421,469 $ 385,207,443 9,291,105 $ 2,115,767 $ 2,278,119 $ 13,684,991 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ Accrued payroll 4,067,635 Trust liabilities and deposits 9,307,702 - - 9,307,702 - - 6,689,469 6,689,469 Accrued interest Due to other funds - 267,352 4,334,987 - - 1,284,072 1,284,072 7,496,428 7,870,000 24,026,078 39,392,506 Arbitrage liability - 33,763 54,606 88,369 Bonds payable (matured) - - 16,755,000 16,755,000 Advances from other funds Deferred revenue 1,243,056 - 6,397,913 7,640,969 31,405,926 10,019,530 57,752,609 99,178,065 - 49,169,828 11,512,732 60,682,560 Debt service 21,420,809 - 673,102 22,093,911 Encumbrances 29,064,502 - - 29,064,502 Legal restrictions 11,664,335 - - 11,664,335 113,433,728 - - 113,433,728 Total liabilities Fund Balances: Reserved for: Capital improvements Unreserved designated for: General purposes Unreserved, undesignated: General fund 23,607,316 - - 23,607,316 Special revenue funds - - 18,103,651 18,103,651 Capital projects funds - - 7,379,375 7,379,375 Total fund balances Total liabilities and fund balances 199,190,690 $ 230,596,616 See accompanying Notes to Basic Financial Statements. 28 49,169,828 $ 59,189,358 37,668,860 $ 95,421,469 286,029,378 $ 385,207,443 City of Chandler Reconciliation of the Governmental Funds Balance Sheet to the Government-Wide Statement of Net Assets June 30, 2010 Total Fund Balances - Total Governmental Funds $ 286,029,378 Amounts reported for governmental activities in the Statement of Net Assets were reported differently because: Capital assets used in governmental activities are not current financial resources. Therefore, they were not reported in the Governmental Funds Balance Sheet. Non-depreciable 220,623,121 Depreciable buildings, property, equipment and infrastructure, net 599,540,791 Total capital assets 820,163,912 Certain revenues are not available to pay for current period expenditures and, therefore, are deferred in the funds. 7,616,719 The internal service fund is used by management to charge the costs of certain activities to individual funds. The assets and liabilities of the internal service fund is included in governmental activities in the Government-Wide Statement of Net Assets. 36,925,692 Long-term liabilities are not due and payable in the current period. Therefore, they were not reported in the Governmental Funds Balance Sheet. Except for the internal service funds amounts of $1,880,133 which are included above, the long-term liabilities were adjusted as follows: Bonds payable (305,248,000) Bonds premium (5,482,398) Bond issuance costs 4,021,042 OPEB liability (3,848,547) Arbitrage liability (22,730) Compensated absences (10,078,735) Total long-term liabilities (320,659,368) Net Assets of Governmental Activities $ See accompanying Notes to Basic Financial Statements. 29 830,076,333 City of Chandler Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the year ended June 30, 2010 Major Funds Other General Streets Governmental Capital Projects Funds Total REVENUES: Property taxes $ Sales taxes Franchise fees Highway user taxes Regional transportation tax 40,259,579 $ - $ - $ 40,259,579 83,019,726 - - 3,174,390 - - 83,019,726 3,174,390 - - 13,116,481 13,116,481 - 13,965,973 - 13,965,973 54,492,427 - - 54,492,427 Grants and entitlements - - 10,377,502 10,377,502 System development fees - 906,828 3,861,478 4,768,306 Special assessments - - 663,209 663,209 Licenses and permits 2,758,392 - - 2,758,392 Charges for services 19,382,426 - 38,008 19,420,434 Fines and forfeitures 5,336,294 - - 5,336,294 101,322 - - 101,322 50,000 - - 50,000 1,890,982 654,723 625,603 3,171,308 State shared Rentals Contributions Interest revenue Miscellaneous 1,307,782 70,720 535,069 1,913,571 211,773,320 15,598,244 29,217,350 256,588,914 General government 43,959,558 - 703,533 44,663,091 Public safety 84,380,718 - 1,009,585 85,390,303 8,754,480 - 2,859,734 11,614,214 Total revenues EXPENDITURES: Current: Community development Public works Community services Capital improvements 9,743,304 - 7,921,329 17,664,633 29,617,539 - 461,317 30,078,856 36,881,744 33,267,720 36,217,273 106,366,737 17,260,000 Debt service: Principal - - 17,260,000 Bond issuance costs - 183,969 - 183,969 Interest and fiscal charges - - 13,646,479 13,646,479 213,337,343 33,451,689 80,079,250 326,868,282 (17,853,445) (50,861,900) (70,279,368) Total expenditures (1,564,023) REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Bond premium - 290,569 - 290,569 Face amount of bonds issued - 10,450,000 - 10,450,000 - 11,187 Proceeds from disposal of capital assets 86,422 Payment to escrow agent - Transfers in 9,923,945 Transfers out (34,195,526) Total other financing sources (uses) NET CHANGE IN FUND BALANCE (10,556,600) 97,609 - 2,107,773 (216,000) (10,556,600) 34,277,298 46,309,016 (4,732,796) (39,144,322) (24,185,159) 2,075,742 29,555,689 7,446,272 (25,749,182) (15,777,703) (21,306,211) (62,833,096) FUND BALANCES: Beginning of year End of year 224,939,872 $ 199,190,690 64,947,531 $ 49,169,828 See accompanying Notes to Basic Financial Statements. 30 58,975,071 $ 37,668,860 348,862,474 $ 286,029,378 City of Chandler Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Government-Wide Statement of Activities and Changes in Net Assets For the year ended June 30, 2010 Net Change in Fund Balances - Total Governmental Funds $ (62,833,096) Governmental activities in the Statement of Activities were reported differently because: Governmental funds report capital outlay as expenditures. However, in the GovernmentWide Statement of Activities and Changes in Net Assets, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount of capital assets recorded and transfered in the current period. 93,932,077 Depreciation expense on capital assets is reported in the Government-Wide Statement of Activities and Changes in Net Assets, but they do not require the use of current financial resources. Therefore, depreciation expense is not reported as an expenditure in governmental funds. (32,897,456) Some items reported in the governmental funds are sources and uses of current financial resources and therefore are not reported as revenues or expenses in Statement of Activities. These items include: Bond proceeds $ (10,450,000) Principal payments on debt 17,260,000 Payment to escrow agent 10,556,600 Bond premium (290,569) Other postemployment benefits obligation (1,825,414) Loss on disposal of capital assets (183,774) 15,066,843 Bond issuance costs are recognized as debt service expenditures in the governmental funds, however these costs are capitalized on the Statement of Assets and amortized in the Statement of Activities. 183,969 Accrued interest payable related to long-term debt is recognized as an expense in the Statement of Activities, however is not recognized in the governmental funds because it is not payable from current financial resources. 104,771 Arbitrage liability expenses reported in the Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds. (22,730) Compensated absence expenses reported in the Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds. (2,537,905) Certain revenues in the governmental funds that provide current financial resources are not included in the Statement of Activities because they were recognized in a prior period. However, other revenues that are deferred in the governmental funds because they do not provide current financial resources due to unavailability are recognized in the Statement of Activities. 115,160 Capital assets contributed by developers to the City are not recorded in the governmental funds as they do not provide current financial resources but are recognized in the Statement of Activities as program revenues. 3,113,168 The internal service fund is used by management to charge the costs of certain activities, such as insurance, to individual funds. The net loss of the internal service fund is reported with governmental activities. Change in Net Assets of Governmental Activities (7,403,064) $ See accompanying Notes to Basic Financial Statements. 31 6,821,737 City of Chandler Statement of Net Assets Proprietary Funds June 30, 2010 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund ASSETS Current assets: Equity in pooled cash and investments $ 47,111,672 $ 25,238,673 $ 14,694,505 $ 87,044,850 $ 39,106,956 Accounts receivable 6,423,614 3,496,595 1,892,514 11,812,723 - Advances to other funds 3,900,000 - - 3,900,000 - Due from other governments Inventories Prepaid items Total current assets - - 33,319 33,319 206,359 - 9,639 215,998 - 73,601 - 377,617 451,218 1,849 57,715,246 28,735,268 17,007,594 103,458,108 39,108,805 1,364,168 1,215,049 1,443 2,580,660 - - - 394,450 394,450 - 78,832,719 - - 78,832,719 - Noncurrent assets: Other assets Notes receivable - long term Investment in joint venture Capital assets: Non-depreciable 23,846,759 22,055,809 28,090,612 73,993,180 - Depreciable, net 249,438,691 238,261,718 29,468,576 517,168,985 - Total capital assets 273,285,450 260,317,527 57,559,188 591,162,165 - Total noncurrent assets 353,482,337 261,532,576 57,955,081 672,969,994 - Total assets 411,197,583 290,267,844 74,962,675 776,428,102 39,108,805 1,460,601 1,364,363 849,556 3,674,520 277,398 LIABILITIES Current liabilities: Accounts payable 247,039 142,956 107,255 497,250 26,637 Trust liabilities and deposits 1,105,910 680,555 225,927 2,012,392 - Accrued interest 3,483,764 2,359,849 3,094 5,846,707 - 252,492 143,690 176,321 572,503 - Accrued payroll Unearned revenue Compensated absences payable - current Bonds payable - current Deferred bond premium - current 31,032 14,503 10,047 55,582 2,985 9,699,756 3,365,244 20,000 13,085,000 - 316,384 205,091 196 521,671 - 32 2,628 - - 2,628 - Landfill closure and postclosure liability - current - - 334,104 334,104 - Claims and judgements payable - current - - - - 1,600,000 16,599,606 8,276,251 1,726,500 26,602,357 1,907,020 Arbitrage liability - current Total current liabilities Noncurrent liabilities: Compensated absences payable - long term 523,238 244,577 168,134 935,949 49,599 Advances from other funds 195,276 4,242,283 34,511 4,472,070 - 157,198,714 116,187,286 181,000 273,567,000 - 2,557,950 1,944,102 3,330 4,505,382 - 149,512 90,199 29,863 269,574 15,449 - Bonds payable - long term Deferred bond premium - long term OPEB liability - long term 7,262 20,000 8 27,270 Landfill closure and postclosure liability - long term - - 4,005,896 4,005,896 - Claims and judgements payable - long term - - - - 211,045 Total noncurrent liabilities 160,631,952 122,728,447 4,422,742 287,783,141 276,093 Total liabilities 177,231,558 131,004,698 6,149,242 314,385,498 2,183,113 Invested in capital assets, net of related debt 101,016,635 140,764,997 57,157,188 298,938,820 - Unrestricted 132,949,390 18,498,149 11,656,245 163,103,784 36,925,692 Arbitrage liability - long term NET ASSETS Total net assets $ 233,966,025 $ 159,263,146 See accompanying Notes to Basic Financial Statements. 33 $ 68,813,433 $ 462,042,604 $ 36,925,692 City of Chandler Statement of Revenues, Expenses, and Changes in Net Assets Proprietary Funds For the year ended June 30, 2010 Major Funds Water Wastewater Other Governmental Proprietary Activities: Internal Funds Total Service Fund OPERATING REVENUES: Service fees $ 42,276,145 $ 28,406,808 $ 13,704,437 $ 84,387,390 $ - Grants and entitlements - - 6,367,024 6,367,024 Rentals - - 524,346 524,346 - Self insurance premiums - - - - 3,298,608 501,421 3,462 396,237 901,120 169,599 42,777,566 28,410,270 20,992,044 92,179,880 3,468,207 General and administrative 4,705,000 2,572,827 1,516,800 8,794,627 - Personal services 8,030,541 4,077,143 3,501,515 15,609,199 1,198,275 Miscellaneous Total operating revenues - OPERATING EXPENSES: Contractual services 5,002,270 4,824,756 9,238,062 19,065,088 721,826 13,399,346 4,347,213 1,706,391 19,452,950 1,427,239 Claims expense - - - - 1,571,159 Housing assistance payments - - 4,601,036 4,601,036 - Landfill closure and postclosure expense - - 1,553,810 1,553,810 - 21,017,303 17,470,784 1,926,988 40,415,075 - 52,154,460 33,292,723 24,044,602 109,491,785 4,918,499 (9,376,894) (4,882,453) (3,052,558) (17,311,905) (1,450,292) Commodities Depreciation and amortization expense Total operating expenses OPERATING INCOME (LOSS) NONOPERATING REVENUES (EXPENSES): Interest revenue 406,491 Interest and fiscal charges Accretion of bond premium Amortization of bond issuance costs Gain (loss) on disposal of capital assets Equity interest in joint venture 158,829 191,321 (6,967,529) (4,793,699) 316,383 205,091 (158,382) (127,194) (15,253) (14,383) - (3,260,872) 756,641 338,565 (6,188) (11,767,416) - 196 (91) (7,007) 521,670 (285,667) (36,643) - - (3,260,872) - 145,739 (14,072,287) 338,565 - Total nonoperating revenues (expenses) (9,679,162) (4,538,864) (19,056,056) (9,421,317) (2,906,819) (31,384,192) 2,952,223 3,985,084 1,546,932 8,484,239 - 680,000 72,000 683,787 1,435,787 2,436,763 (55,158) (2,309,144) (8,728,100) 7,610,882 (6,291,337) (23,773,310) (7,403,064) 485,815,914 44,328,756 INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS (1,111,727) CAPITAL CONTRIBUTIONS AND TRANSFERS: Capital contributions Transfers in Transfers out (927,935) Total capital contributions and transfers Change in net assets (1,326,051) 2,704,288 2,731,033 (16,351,768) (6,690,284) 2,175,561 (731,258) NET ASSETS: Beginning of year End of year 250,317,793 $ 233,966,025 69,544,691 165,953,430 $ See accompanying Notes to Basic Financial Statements. 34 159,263,146 $ 68,813,433 $ 462,042,604 $ 36,925,692 35 City of Chandler Statement of Cash Flows Proprietary Funds For the year ended June 30, 2010 Other Proprietary Funds Major Funds Water Wastewater CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers Cash received from grantors Cash payments to suppliers Cash payments to employees for services Net cash provided (used) by operating activities $ CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out Net cash provided (used) by noncapital financing activities CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets 42,659,571 (25,083,439) (7,855,158) 9,720,974 Principal paid on bond maturities 28,985,833 (14,958,337) (3,983,215) 10,044,281 $ Total 14,624,594 6,358,335 (17,098,590) (3,450,613) 433,726 $ 86,269,998 6,358,335 (57,140,366) (15,288,986) 20,198,981 $ 3,468,207 (5,478,654) (1,179,824) (3,190,271) 680,000 (927,935) (247,935) 72,000 (1,326,051) (1,254,051) 683,787 (55,158) 628,629 1,435,787 (2,309,144) (873,357) 2,436,763 (8,728,100) (6,291,337) (9,887,206) (14,256,390) (1,731,141) (25,874,737) - - - 51 (1,143,584) - - (1,143,584) - - Proceeds from sales of capital assets Investment in Joint Venture $ Governmental Activities: Internal Service Fund 51 - (8,161,413) (4,253,587) (12,415,000) - Interest paid on bonds Cash payments to other funds Capital contributions Net cash provided (used) by capital and related financing activities (7,091,056) (118,237) 2,843,226 (23,558,270) (4,693,394) (63,778) 3,873,863 (19,393,286) (5,711) (16,213) 1,546,932 (206,082) (11,790,161) (198,228) 8,264,021 (43,157,638) - CASH FLOWS FROM INVESTING ACTIVITIES: Investment income Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents 406,491 406,491 (13,678,740) 191,321 191,321 (10,411,735) 158,828 158,828 1,015,101 756,640 756,640 (23,075,374) 338,565 338,565 (9,143,043) CASH AND CASH EQUIVALENTS: Beginning of year End of year $ 60,790,412 47,111,672 $ 35,650,408 25,238,673 $ 13,679,404 14,694,505 $ 110,120,224 87,044,850 $ 48,249,999 39,106,956 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) $ (9,376,894) $ (4,882,453) $ (3,052,558) $ (17,311,905) $ (1,450,292) 36 Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation Landfill closure and postclosure costs Changes in assets and liabilities: (Increase) decrease in receivables (Increase) decrease in inventories (Increase) decrease in prepaid items (Increase) decrease in other assets Increase (decrease) in payables Increase (decrease) in accrued payroll and compensated absences Increase (decrease) in deposits Increase (decrease) in claims payable Increase (decrease) in unearned revenue Increase (decrease) in other liabilities Total adjustments Net cash provided (used) by operating activities NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES: Contributions of capital assets from developers Loss on disposal of assets Accretion of bond premiums Amortization of bond issuance costs $ $ 21,017,303 - 17,470,784 - 1,926,988 1,553,810 40,415,075 1,553,810 (269,870) (121,341) (73,601) 158,382 (1,781,881) 103,662 (33,877) 27,370 71,721 19,097,868 9,720,974 511,616 127,194 (3,213,541) 48,830 (102,626) 39,379 45,098 14,926,734 10,044,281 (179,022) 2,974 (29,942) 41,589 33,312 8,641 108,842 19,092 3,486,284 433,726 62,724 (118,367) (73,601) 255,634 (4,953,833) 185,804 (127,862) 175,591 135,911 37,510,886 20,198,981 108,997 15,253 316,383 158,382 See accompanying Notes to Basic Financial Statements. 37 $ $ 111,221 14,383 205,091 127,194 $ $ 7,058 196 91 $ - $ (1,849) 11,694 (1,756,581) 6,757 (1,739,979) (3,190,271) - City of Chandler Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2010 Volunteer Fireman's Pension and Relief Trust Fund Agency Funds ASSETS Equity in pooled cash and investments Total assets $ 34,963 $ 9,500 $ 34,963 $ 9,500 $ - $ 9,500 $ - $ 9,500 LIABILITIES Due to others Total liabilities NET ASSETS Assets held in trust for pension benefits 34,963 Total net assets $ See accompanying Notes to Basic Financial Statements. 38 34,963 City of Chandler Statement of Changes in Fiduciary Net Assets Fiduciary Funds - Trust Funds For the year ended June 30, 2010 Volunteer Fireman's Pension and Relief Trust Fund ADDITIONS: Interest revenue $ Total additions 151 151 DEDUCTIONS: Benefits paid to plan members and suppliers 4,800 Change in net assets (4,649) NET ASSETS: Beginning of year 39,612 End of year $ See accompanying Notes to Basic Financial Statements. 39 34,963 40 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 The City of Chandler (City) was incorporated on February 17, 1920. On May 25, 1964, voters ratified a city charter providing for a Council-Manager form of government. The government of the City is operated by authority of its charter, as limited by the state legislature. A seven-member council including a separately elected mayor governs the City. The following notes to the financial statements are an integral part of the City’s financial statements. NOTE 1 - Summary of Significant Accounting Policies The accounting policies and procedures of the City conform to accounting principles generally accepted in the United States of America (GAAP) as applied to governmental entities. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below. A. Reporting Entity As required by GAAP, these financial statements present the City and its component units, i.e., entities for which the City is considered to be financially accountable and/or exercise significant influence over operations. Blended component units, although legally separate entities, are in substance part of the City’s operations, and therefore data from these units are combined with data of the City. The City’s discretely presented component units, on the other hand, are reported in a separate column in the basic financial statements, to emphasize that they are legally separate from the City. The component units discussed below are included in the City’s reporting entity because of the significance of their operational and/or financial relationships with the City. Each component unit has a June 30 year-end. 1. Blended Component Unit The City of Chandler Municipal Property Corporation (Corporation) is a nonprofit corporation which exists solely for the purpose of constructing or otherwise acquiring or equipping buildings, structures or improvements on land owned by the City for the benefit, common good and general welfare of the City and its citizens. The Chandler City Council appoints the five members of the Board, who are responsible for approving the Corporation’s bond sales. Additionally, all bond sales must be submitted to and approved by the City Council. All financial activities are reported within the enterprise funds of the City. Unaudited financial statements for the Corporation are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. 2. Discretely Presented Component Units The component unit column in the basic financial statements includes the financial data of the Chandler Industrial Development Authority (Authority). The Authority is responsible for the issuance of tax-exempt bonds for qualified projects approved by the Authority and the City Council. The Authority has a seven-member board of directors appointed by the City Council. The City is able to impose its will on the Authority inasmuch as the City Council must vote to ratify the actions of the Authority with regard to the issuance of bonds. The accounting records of the Authority are maintained by the City and are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. The Chandler Cultural Foundation (Foundation) oversees the operations of the Chandler Center for the Arts for the selection and scheduling of performances, other facility use and general policy setting activities. The City is able to significantly influence its operations. Specifically, the Foundation’s budget is annually reviewed and approved by the City Council and the Foundation’s nine-member Board is appointed by the City Council. Financial statements for the Foundation are available from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. 41 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 1 - Summary of Significant Accounting Policies, continued B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the Statement of Net Assets and the Statement of Activities) present financial information about the City as a whole. The reported information includes all of the nonfiduciary activities of the City and its component units. For the most part, the effect of interfund activity has been removed from these statements. These statements are to distinguish between the governmental and business-type activities of the City. Governmental activities normally are supported by taxes and intergovernmental revenues, and are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment 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 or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, state shared revenues, investment income, and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation Government-wide Financial Statements - The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Agency fund financial statements have no measurement focus. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements, the exception is any interfund activity between governmental and business-type activities, such as transfers. Interfund services provided and used are not eliminated. Fund Financial Statements - Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service resources are provided during the current year for payment of long-term debt principal and interest due early in the following year (not to exceed one month) and, therefore, the expenditures and related liabilities have been recognized. Compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise fees, licenses and permits, charges for services, special assessments and investment income associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Miscellaneous revenues are not susceptible to accrual because generally they are not measurable until received in cash. 42 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 1 - Summary of Significant Accounting Policies, continued Delinquent property taxes 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. The City reports the following major governmental funds: General Fund – This fund accounts for all financial resources of the City, except those required to be accounted for in other funds. Streets Fund – This fund is used to account for the acquisition, construction and improvements of City streets’ projects. The City reports the following major enterprise funds: Water Services Fund – This fund is used to account for the provision of water services to the residents of the City and certain county residents within the City’s boundaries. All activities necessary to provide such service are accounted for in this fund. Wastewater Services Fund – This fund is used to account for the provision of wastewater services to the residents of the City and certain county residents within the City’s municipal boundaries. All activities necessary to provide such service are accounted for in this fund. Additionally, the City reports the following fund types: Internal Service Fund - Internal Service Funds are established to account for financing of goods and services provided by one department or agency to other departments or agencies of the City on a cost reimbursement basis. The Internal Service Fund consists of a Self Insurance Fund that administers the City’s self-insured property, liability and workers’ compensation insurance program. Fiduciary Funds – Fiduciary funds account for assets held by the City on behalf of the Volunteer Firefighter’s Relief and Pension Trust Fund and agency funds, which account for resources held by the City in a custodial capacity for marriage licenses and peddler bonds. The Volunteer Firefighter’s Relief and Pension Trust Fund is a single-employer defined benefit pension plan established to provide pension benefits for volunteer firemen of the City. All applicable pronouncements of the Financial Accounting Standards Board (FASB) issued on or before November 30, 1989, as well as the FASB Statements and Interpretations, Accounting Principles Board Opinions and Accounting Research Bulletins are followed in both the government-wide business-type and enterprise fund financial statements, unless these pronouncements conflict with or contradict GASB pronouncements. Under this requirement, the City is given the option whether or not to apply all FASB Statements and Interpretations issued after November 30, 1989, except for those that conflict with or contradict GASB pronouncements. Accordingly, the City has elected not to implement FASB Statements and Interpretations issued after November 30, 1989. 43 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 1 - Summary of Significant Accounting Policies, continued Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s internal service fund are interfund transfers from the general fund and water fund for property and liability insurance and charges to user departments for premiums related to worker’s compensation and short term disability self-insurance. The principal operating revenues of the City’s enterprise funds are user fees and charges to customers for water, wastewater, solid waste, and airport services. Operating expenses for these funds include the cost of sales and services, administrative expenses, depreciation, claims and premiums. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, and then unrestricted resources, as they are needed. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. Internal service funds are combined and the totals are presented in a single column on the face of the proprietary fund statements. Fiduciary funds are reported by fund type. D. Budgeting and Budgetary Control The City Council formally adopts an annual operating budget for the General, Special Revenue, Capital Projects, Enterprise and Internal Service Funds. Formal budgetary integration is not employed for the Debt Service Funds because effective budgetary control is alternately achieved through bond indenture provisions. The level of control at which expenditures may not exceed budget is by department, except for bond and grants-inaid funds, which are exempted by Arizona Revised Statutes. Upon written request by the City Manager, the City Council has the authority to transfer part or all of any unencumbered appropriation balance from one department to another per City Charter requirement. The City Manager and Department heads have the authority to transfer appropriations between divisions and expenditure categories within departments. Appropriations totaling $9,491,719 were transferred from the contingency reserves within the General, Proprietary, Internal Service, and Capital Projects funds. All appropriations expire at the end of the fiscal year except for encumbered and capital improvements carry forward appropriations. Encumbrance accounting, under which purchase orders, contracts and other commitments for the future expenditure of funds are recorded in order to reserve that portion of the related fund balance, is employed in the governmental fund types. Encumbrances outstanding and capital improvement carry forward appropriations at year-end are reported as reservations of fund balances. The budgets are adopted on a basis differing from GAAP in that for budgetary purposes: (1) current year encumbrances are treated as expenditures; (2) bond proceeds for proprietary funds are considered revenue; (3) capital outlays for enterprise funds are treated as expenditures; (4) debt service principal payments are treated as expenditures for enterprise funds; (5) accrued compensated absences are not recognized as expenditures; (6) depreciation and amortization are not recognized as expenditures; (7) estimated landfill closure and post closure costs are not recognized as expenditures until incurred; and (8) sales tax collected by merchants but not yet required to be remitted at the end of the fiscal year is not recorded as revenue. 44 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 1 - Summary of Significant Accounting Policies, continued On June 3, 1980, the voters of Arizona approved an expenditure limitation for all local governments. This limitation restricts the growth of expenditures to a percentage determined by population and inflation, with certain expenditures excluded from the limitation. Through a Home Rule option, any city can adopt its own alternative expenditure limitation if a majority of the qualified electors vote in favor of the issue at a regular election. On May 18, 2010, the City of Chandler voters approved a one-time override of the State-Imposed Expenditure Limitation for fiscal year 2010-2011. The Home Rule option, currently in effect must be submitted to the electorate for renewal no later than 2010 at which time an additional four-year period can be implemented. E. Pooled Cash and Investments City Charter, Ordinance and Trust Agreements authorize the City to invest in obligations of the U.S. Treasury, its agencies, and instrumentalities, certificates of deposit in eligible depositories, repurchase agreements, and the State of Arizona’s Local Government Investment Pool (LGIP). The City of Chandler Municipal Property Corporation is additionally authorized to invest in bankers acceptances, U.S. Corporate obligations rated Aa3 and AA-, or better, full faith and credit general obligations or special revenue bonds of any state or political subdivision rated AAA and Aaa, Refcorp interest strips and money market funds. Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest investment contracts with a remaining maturity of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. Cash resources of the City are combined to form a pool of cash and investments. Excluded from this pool are the cash and investments of the Chandler Industrial Development Authority and the Chandler Cultural Foundation. Interest earned on the pooled cash and investments is distributed each month on the basis of average monthly equity in the pool. F. Restricted Assets Certain proceeds of the City’s enterprise funds revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the Statement of Net Assets because their use is limited by applicable bond covenants. G. Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All trade and property tax receivables are shown net of an allowance for uncollectibles. Trade accounts receivable in excess of 90 days comprise the trade accounts receivable allowance for uncollectibles. H. Inventories Inventories are stated at average cost using the first-in/first-out (FIFO) method. Inventories are recorded as expenses/expenditures when consumed in the government-wide financial statements and governmental and proprietary fund financial statements, respectively. I. Prepaid Items Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items. 45 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 1 - Summary of Significant Accounting Policies, continued J. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of $5,000 or more and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value at the date of donation. The City defines general government infrastructure capital assets included in capital improvement projects completed at year’s end in excess of $100,000. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are completed. Estimated useful lives for capital assets were determined based on the City’s historical experience and the various industry standards. Capital assets of the City are depreciated using the straight-line method over the following estimated useful lives: Years 20-40 20 12-50 25 4-7 5-15 Assets Buildings Building improvements Infrastructure System improvements Vehicles Machinery and equipment K. Compensated Absences Vacation leave vests with the employee as it is earned. All employees may carry forward only the amount of vacation benefits equal to the maximum allowable earned credits for the preceding calendar year. Upon termination or retirement, an employee will be compensated for accumulated vacation leave dependent on accumulated time and the individual's vacation benefits associated with their rank within the City. Payment will be based on the individual's rate of pay at termination or retirement. Upon death, the same benefits shall be paid to the employee's beneficiary. The amount, including related benefits, for accumulated vacation leave is reported on the governmentwide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee leave, resignations or retirements. Generally, resources from the general fund are used to pay for compensated absences. Sick leave benefits provided for ordinary sick pay are not vested with the employee. Upon retirement, an employee will be compensated for 50 percent of accumulated sick leave. Payment will be based on the monthly compensation paid to the employee at the time of retirement. Upon death, the same benefits shall be paid to the employee's beneficiary. L. Long-Term Obligations In the government-wide financial statements and proprietary fund statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental or business-type activities and proprietary fund statement of net assets. Bond related charges and credits, such as premiums, discounts and issuance costs, are deferred and amortized over the life of the bonds using the straight-line method. 46 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 1 - Summary of Significant Accounting Policies, continued In the fund financial statements, governmental funds 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. The debt service funds are specifically established to account for and service the long-term obligations for the governmental funds and special assessment debt. Each enterprise fund individually accounts for and services the applicable bonds and lease purchase obligations, which benefit these funds. Long-term obligations are recognized as a liability of a governmental fund when due, or when resources have been accumulated for payment early in the following year. For other long-term obligations, only that portion is expected to be financed from expendable available financial resources is reported as a fund liability of a governmental fund. M. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for use for a specific purpose. Restrictions of retained earnings are limited to outside third-party restrictions. Designations of fund balance represent tentative management plans that are subject to change. N. Capital Contributions - Enterprise Funds Capital contributions as shown in the enterprise funds represent Federal and State grants received, subdividers’ costs of installing water mains, water service connections installed at the customers’ expense, and transfers of equipment from governmental funds. Capital contributions are shown as an inflow of resources in both the government-wide and fund financial statements. O. Post-Employment Health Care and Life Insurance Benefits In addition to providing pension benefits, the City allows for continuance of certain health care and life insurance benefits for retired employees. Substantially all of the City's employees may become eligible for those benefits if they are eligible to receive a retirement pension when leaving employment with the City. The cost of retiree health care and life insurance premiums is borne both by the retiree and the specific retirement plan under which they participated. There is no direct cost paid by the City. P. Statements of Cash Flows The City considers all highly liquid investments (including restricted assets) with an original maturity of three months or less to be cash equivalents. In the statements of cash flows, cash receipts and payments are classified according to whether they stem from operating, noncapital financing, capital and related financing, or investing activities. Q. Interfund Activity Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the Statement of Activities. Interfund transfers in the fund statements are reported as other financing sources/uses in governmental funds and after nonoperating revenues/expenses in proprietary funds. 47 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 1 - Summary of Significant Accounting Policies, concluded R. Use of Estimates The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - Cash and Investments The City maintains a cash and investment pool that is available for use by all funds, except for the Chandler Industrial Development Authority and the Chandler Cultural Foundation. Each fund’s portion of this pool is displayed on the financial statements as Equity in Pooled Cash and Investments. Pooled cash and investments are stated at fair value with accrued interest shown separately. Restricted cash and investments are amounts held separately by trustees and amounts segregated due to their source and future intent. In addition, the Industrial Development Authority and the Chandler Cultural Foundation separately hold investments. Deposits At year-end, the carrying amount of the City deposits was $1,727,865, and the bank balance was $1,990,425. The entire bank balance was covered by the FDIC’s Transaction Account Guarantee Program. Investments At June 30, 2010, the City had the following investments and maturities: Investment Maturities (in Years) Investment Type U.S. Treasuries U.S. Agencies: Federal Home Loan Bank Federal Home Loan Mortgage Corp. Federal National Mortgage Assn Federal Farm Credit Bank Tennessee Valley Authority Gov't Guaranteed-Corp: Bank of America Citibank General Elec Cap Corp JP Morgan Chase Morgan Stanley Goldman Sachs Group Inc.-(FDIC)Frn Keycorp-(FDIC)Frn U.S. Agency Discount Notes: Federal Home Loan Bank Federal Home Loan Mortgage Corp. Federal National Mortgage Assn Money Market - U.S. Treasuries & Agencies Total 1-5 54,240,751 Concentration of Credit Risk % 24.61 % Fair Value $ 110,613,964 Less than 1 $ 56,373,213 52,313,186 56,887,748 73,736,478 10,761,215 7,906,431 20,314,995 52,164,513 38,072,166 10,761,215 7,906,431 31,998,191 4,723,235 35,664,312 - 11.64 12.66 16.40 2.39 1.76 7,046,317 5,080,973 7,106,260 7,079,776 7,088,261 5,082,089 5,073,266 7,046,317 7,106,260 7,079,776 7,088,261 - 5,080,973 5,082,089 5,073,266 1.57 1.13 1.58 1.58 1.58 1.13 1.13 5,983,200 19,964,000 15,964,800 51,805,201 $ 449,493,165 5,983,200 19,964,000 15,964,800 51,805,201 $ 307,630,348 $ 141,862,817 48 $ 1.33 4.44 3.55 11.53 100.00 % CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 2 - Cash and Investments, concluded Interest Rate Risk. In accordance with its investment policy, the City manages its exposure to declines in fair values by limiting the maturities of its investment portfolio to five years. Credit Risk. The City’s investment policy allows for investments in obligations guaranteed by the full faith and credit of the United States of America, government sponsored enterprises, government bonds with minimum credit ratings of Aa or AA, commercial paper with a minimum short term rating of P1 or A1, negotiable certificates of deposit, corporate bonds carrying a minimum credit rating of A, and the Local Government Investment Pool. The City’s investment in U.S. Agencies, Government Guaranteed Corporate Bonds, Government Guaranteed Commercial Paper, U.S. Agency Discount Notes and Money Market Funds were rated AAA, AAA, A1+, A1+, and AAA by Standard & Poor’s respectively as of June 30, 2010. Concentration of Credit Risk. The City’s investment policy does not allow for an investment in any one issuer that is in excess of five percent of the City’s total investments. Securities issues by the United States of America or its agencies are exempt from this provision. More than 5% of the City’s investments are in the U.S. Agencies, Government Guaranteed Corp., U.S. Agency Discount Notes, U.S. Treasuries and Agencies money market funds. See percentages in above table. NOTE 3 - Property Taxes The City’s property tax is levied and collected by the Maricopa County Treasurer. Property taxes are levied on or before the third Monday in August based upon the previous January 1 full cash value of property as determined by the Maricopa County Assessor. Under Arizona Revised Statutes (A.R.S.), 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). 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. Delinquent amounts bear interest at the rate of 16 percent. The City also levies various personal property taxes during the year, which are due the second Monday of the month following receipt of the tax notice, and become delinquent 30 days thereafter. Pursuant to A.R.S. a lien against assessed real and personal property attaches on the first day of January preceding assessment and levy; however according to case law, an enforceable legal claim to the asset does not arise. The State Constitution and State law specify a property tax levy limitation system. The system consists of two levies, a limited levy known as the primary property tax levy and an unlimited levy referred to as the secondary levy, which may only be used to retire bonded indebtedness. There is also a control on the assessed value of property for primary tax purposes. The base year for the new tax system is fiscal year 1979-80. From this base year, two assessed values evolve. The primary assessed values are allowed to increase by no more than 10 percent a year. The dollar amount of the secondary property tax levy is "unlimited" and the actual full cash value of property is used in determining the tax rate. The primary tax levy is limited to an increase of 2 percent over the previous year's maximum allowable primary levy, plus an increased dollar amount because of a net gain in property not taxed the previous year. Also, the primary property tax from all taxing jurisdictions for homeowners may not exceed 1 percent of the market value of their homes. If the combined primary property tax (for the City, County, School District, etc.) exceeds 1 percent of the market value of the homes, the school districts will reduce their rate until the homeowners' aggregate rate is equal to or less than the allowable 1 percent. The State will then subsidize the school districts for the reduced revenue. This 1 percent limitation applies to primary property taxes only and does not affect the secondary property tax levy. In fiscal year 2009-10, current property tax collections were $39,808,816 or 99.6% percent of the tax levy, and were recognized as revenue when received. At fiscal year end, the delinquent property tax expected to be collected within 60 days is recognized as revenue and recorded as a receivable. Property taxes levied in August 2009 are not available for fiscal year 2009-10; accordingly, such taxes will not be recognized as revenue until fiscal year 2010-2011. 49 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 4 – Capital Assets A summary of changes in capital assets for governmental activities is as follows: Balance July 1,2009 Government Activitites Capital assets, not being depreciated: Land Construction in progress $ 79,989,613 122,554,811 Additions and Transfers In Deletions and Transfers Out $ $ 1,161,701 92,215,940 (75,298,944) Balance June 30, 2010 $ 81,151,314 139,471,807 Total capital assets not being depreciated 202,544,424 93,377,641 (75,298,944) 220,623,121 Capital assets, being depreciated: Infrastructure Building and improvements Machinery and equipment 491,847,729 226,018,101 50,860,482 42,267,954 33,409,981 3,288,613 (501,085) 534,115,683 259,428,082 53,648,010 768,726,312 78,966,548 (501,085) 847,191,775 (140,338,865) (49,140,368) (25,591,604) (18,051,022) (10,449,891) (4,396,543) 317,309 (158,389,887) (59,590,259) (29,670,838) (215,070,837) (32,897,456) 317,309 (247,650,984) 553,655,475 46,069,092 (183,776) 599,540,791 Total capital assets being depreciated Less accumulated depreciation for: Infrastructure Building and improvements Machinery and equipment Total accumulated depreciation Total capital assets, being depreciated, net Governmental activities capital assets, net $ 756,199,899 $ 139,446,733 $ (75,482,720) $ 820,163,912 Construction in progress in the governmental activities capital assets is comprised of the following: Expended to June 30, 2010 $ 52,758,947 18,759,670 67,953,190 $ 139,471,807 Streets Parks and recreation Buildings and related improvements Total 50 Remaining Commitments $ 13,259,908 566,021 25,640,060 $ 39,465,989 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 4 – Capital Assets, continued A summary of changes in capital assets for business-type activities is as follows: Balance July 1, 2009 Business-Type Activities Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated $ Capital assets, being depreciated: System improvements Building and improvements Vehicles, machinery and equipment Land improvements Total capital assets being depreciated Less accumulated depreciation for: System improvements Buildings and improvements Vehicles, machinery and equipment Land improvements Total accumulated depreciation Total capital assets, being depreciated, net Business-type activities capital assets, net Additions and Transfers In Deletions and Transfers Out Balance June 30, 2010 $ $ (15,668,073) (15,668,073) $ 41,256,107 32,737,073 73,993,180 41,256,107 22,173,913 63,430,020 26,231,233 26,231,233 866,834,939 19,632,123 15,182,361 2,057,548 903,706,971 14,744,706 726,246 16,461 59,688 15,547,101 (104,700) (104,700) 881,579,645 20,358,369 15,094,122 2,117,236 919,149,372 (337,306,641) (10,389,026) (12,609,308) (1,313,037) (361,618,012) 542,088,959 (39,153,677) (619,917) (522,809) (118,672) (40,415,075) (24,867,974) 52,700 52,700 (52,000) (376,460,318) (11,008,943) (13,079,417) (1,431,709) (401,980,387) 517,168,985 $ 605,518,979 $ 1,363,259 $ (15,720,073) $ 591,162,165 Construction in progress in the business-type activities is comprised of the following: Expended to June 30, 2010 Sewer system improvements Water system improvements Airport improvements Total $ $ 51 16,229,534 15,982,117 525,422 32,737,073 Remaining Commitments $ $ 4,841,163 2,390,712 473,297 7,705,172 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 4 – Capital Assets, concluded Depreciation expense was charged to functions/programs as follows: Governmental activities: General government Public safety Community services Community development Public works $ 1,776,845 4,829,825 7,277,226 37,020 18,976,540 Total depreciation expense - governmental activities $ 32,897,456 Business-type activities: Water Wastewater Solid waste Airport Chandler housing authority $ 21,017,303 17,470,784 608,827 748,928 569,233 Total depreciation expense - business-type activities $ 40,415,075 NOTE 5 - Operating Leases The City leases approximately 73,000 square feet of office and library space under noncancelable operating leases expiring through June 2020. Total costs for such leases were $1,281,632 for the year ended June 30, 2010. The future payments for these leases are as follows: Year Ending June 30 2011 2012 2013 2014 2015 2016-2020 Total $ 718,053 444,378 459,932 476,029 492,690 2,726,094 5,317,176 NOTE 6 - Long-Term Liabilities A. General Obligation Bonds The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities. Bonds issued for business-type activities are reported in the proprietary funds as they are to be repaid from proprietary revenues. In addition, general obligation bonds have been issued to refund other general obligation bonds. General obligation bonds are direct obligations and pledge the full faith and credit of the City. These bonds are generally issued as 10 to 15 year serial bonds, except for refunding issues, with varying amounts of principal maturing each year. 52 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 6 - Long-Term Liabilities, continued The City has pledged future ad valorem tax revenues to repay a total of $467,920,000 in outstanding general obligation bonds. Proceeds of the bonds were used for general governmental purposes. The bonds are payable solely from ad valorem taxes and are payable through July 1, 2028. Annual principal and interest payments on the bonds are expected to require less than 93% of total 2009-10 ad valorem taxes. The total principal and interest remaining to be paid on the bonds is $663,526,354. Principal and interest paid for the current year and total ad valorem property taxes were $37,683,204 and $40,623,069, respectively. General obligation bonds outstanding as reported in governmental and business-type activities at June 30, 2010 were as follows: Governmental Activities General Obligation Bonds: $8,275,000 Capital Improvement Bonds, Series 1994, due in an annual installment of $1,450,000 at 7/1/10; interest at 8 percent. $6,650,000 Capital Improvement Bonds, Series 1996, due in annual installments of $200,000 to $250,000 through 7/1/13; interest at 6.5 percent. $8,205,000 Capital Improvement Bonds, Series 1996B, due in annual installments of $430,000 to $550,000 through 7/1/13; interest at 7.2 percent to 7.25 percent. $9,730,000 Refunding Bonds, Series 1997, due in an annual installment of $150,000 through 7/1/10; interest at 5 percent. $3,590,000 Capital Improvement Bonds, Series 1998, due in an annual installment of $225,000 through 7/1/10; interest at 4.7 percent. $6,950,000 Capital Improvement Bonds, Series 1999, due in annual installments of $575,000 to $875,000 through 7/1/18; interest at 4.35 percent to 6.25 percent. $8,520,000 Capital Improvement Bonds, Series 2000, due in an annual installment of $600,000 through 7/1/10; interest at 7 percent. $8,040,000 Capital Improvement Bonds, Series 2001, due in annual installments of $505,000 to $640,000 through 7/1/14; interest at 4.3 percent to 5.5 percent. $23,000,000 Capital Improvement Bonds, Series 2002, due in annual installments of $700,000 to $2,000,000 through 7/1/15; interest at 4.25 percent to 4.5 percent. $21,375,000 Capital Improvement Bonds, Series 2003, due in annual installments of $500,000 to $2,775,000 through 7/1/17; interest at 2.75 percent to 4 percent. $16,265,000 Refunding Bonds, Series 2003, due in annual installments of $730,000 to $2,775,000 through 7/1/16; interest at 2.75 percent to 5 percent. 53 Outstanding June 30, 2010 $ 1,450,000 925,000 1,905,000 150,000 225,000 4,175,000 600,000 2,850,000 8,125,000 13,575,000 8,935,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 6 - Long-Term Liabilities, continued Outstanding June 30, 2010 $24,800,000 Capital Improvement Bonds, Series 2005, due in annual installments of $1,750,000 to $2,900,000 through 7/1/15; interest at 4 percent. $30,905,000 Capital Improvement Bonds, Series 2006, due in annual installments of $2,000,000 to $6,675,000 through 7/1/17; interest at 4 percent to 4.5 percent. $111,045,000 Capital Improvement Bonds, Series 2007, due in annual installments of $1,000,000 to $6,6000,000 through 7/1/26; interest at 3 percent to 5 percent. $22,960,000 Refunding Bonds, Series 2007, due in annual installments of $30,000 to $4,240,000 through 7/1/20; interest at 4 percent to 5 percent. $252,000,000 Capital Improvement Bonds, Series 2009, due in annual installments of $500,000 to $17,000,000 through 7/1/28; interest at 2.25 percent to 5 percent. Total Governmental Activities General Obligation Bonds Business-Type Activities General Obligation Bonds: $17,225,000 Refunding Bonds, Series 2001, due in annual installments of $1,040,000 to $2,290,000 through 7/1/11; interest at 4.75 percent. $16,265,000 Refunding Bonds, Series 2003, due in annual installments of $2,225,000 to $2,580,000 through 7/1/15; interest at 4 percent to 5 percent. $111,045,000 Capital Improvement Bonds, Series 2007, due in annual installments of $1,475,000 to $3,275,000 through 7/1/26; interest at 3 percent to 5 percent. $252,000,000 Capital Improvement Bonds, Series 2009, due in annual installments of $1,520,000 to $11,086,000 through 7/1/28; interest at 2.25 percent to 5 percent. Total Business-Type Activities General Obligation Bonds 54 13,400,000 25,025,000 58,100,000 22,935,000 120,513,000 $ 282,888,000 Outstanding June 30, 2010 $ 3,330,000 7,190,000 43,025,000 131,487,000 $ 185,032,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 6 - Long-Term Liabilities, continued B. Street and Highway Revenue Bonds Street and highway revenue bonds are issued specifically for the purpose of constructing street and highway projects. These bonds are payable solely from the revenues derived by the City from highway user taxes, including motor vehicle fuel taxes and all other taxes, fees and charges relating to registration, operation or use of vehicles on public highways or streets or to fuels or any other energy source used for the vehicles collected by the State and returned to the City. The City has pledged future highway user revenues to repay a total of $31,800,000 in outstanding street and highway user revenue bonds. Proceeds of the bonds were used for improvements and expansions to the City’s streets and highways. The bonds are payable solely from state shared gasoline tax revenues and are payable through July 1, 2019. Annual principal and interest payments on the bonds are expected to require less than 31% of total 2009-10 street and highway user revenues. The total principal and interest remaining to be paid on the bonds is $37,349,094. Principal and interest paid for the current year and street and highway user revenue taxes were $4,378,194 and $14,372,187, respectively. Street and highway revenue bonds outstanding as reported in governmental activities at June 30, 2010 were as follows: Governmental Activities Revenue Bonds: $2,500,000 Street & Highway User Bonds, Series 1993, due in an annual installment of $800,000 at 7/1/11; interest at 6 percent. $5,750,000 Street & Highway User Bonds, Series 1994, due in an annual installment of $1,100,000 at 7/1/11; interest at 8 percent. $1,250,000 Street & Highway User Bonds, Series 1996B, due in annual installments of $25,000 through 7/1/15; interest at 5.5 percent to 7.5 percent. $5,280,000 Street & Highway User Refunding Bonds, Series 1997, due in annual installments of $50,000 through 7/1/11; interest at 5.39 percent to 8 percent. $3,300,000 Street & Highway User Bonds, Series 1999, due in an annual installment of $175,000 at 7/1/10; interest at 4.3 percent. $2,250,000 Street & Highway User Bonds, Series 2000, due in an annual installment of $125,000 at 7/1/10; interest at 5.35 percent. $6,830,000 Street & Highway User Bonds, Series 2001, due in an annual installment of $330,000 at 7/1/10; interest at 4.4 percent. 55 Outstanding June 30, 2010 $ 800,000 1,100,000 150,000 100,000 175,000 125,000 330,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 6 - Long-Term Liabilities, continued Outstanding June 30, 2010 $10,540,000 Street & Highway User Refunding Bonds, Series 2002, due in annual installments of $880,000 to $1,845,000 through 7/1/13; interest at 3.75 percent to 4.25 percent. $5,000,000 Street & Highway User Bonds, Series 2003, due in annual installments of $1,000,000 to $1,500,000 starting 7/1/16 through 7/1/19; interest at 3.5 percent to 5 percent. $10,920,000 Street & Highway User Refunding Bonds, Series 2004, due in annual installments of $200,000 to $3,360,000 through 7/1/18; interest at 3 percent to 5 percent. $10,450,000 Street & Highway User Refunding Bonds, Series 2010, due in annual installments of $105,000 to $2,965,000 through 7/1/19; interest at 2 percent to 3.5 percent. Total Governmental Activities Revenue Bonds 3,565,000 5,000,000 10,005,000 10,450,000 $ 31,800,000 C. Water and Sewer Revenue Bonds Water and sewer revenue bonds are issued as authorized by the voters to provide funds to acquire and construct certain improvements to the water and sewer systems of the City and to pay the costs incurred in connection with the issuance of the bonds. These bonds are secured by a pledge of revenues from these systems, and do not constitute a general obligation of the City backed by the general taxing authority. The City has pledged future water and wastewater system revenues, net of operating expenses, to repay a total of $67,580,000 in outstanding water and wastewater system revenue bonds. Proceeds of the bonds were used for improvements and expansions to the City’s water and wastewater systems. The bonds are payable solely from net water and wastewater system revenues and are payable through July 1, 2020. Annual principal and interest payments on the bonds are expected to require less than 52% of net 2009-10 water and wastewater system revenue. The total principal and interest remaining to be paid on the bonds is $82,583,334. Principal and interest paid for the current year and net water and wastewater system revenues were $12,370,790 and $23,723,857, respectively. 56 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 6 - Long-Term Liabilities, continued Water and sewer revenue bonds outstanding as reported in business-type activities at June 30, 2010 were as follows: Business-Type Activities Revenue Bonds: $5,150,000 Water & Sewer Bonds, Series 1994, due in an annual installment of $2,150,000 at 7/1/14; interest at 8 percent. $16,890,000 Water & Sewer Bonds, Series 1996, due in annual installments of $250,000 to $400,000 through 7/1/13; interest at 7.25 percent. $7,770,000 Water & Sewer Refunding Bonds, Series 1997, due in annual installments of $100,000 through 7/1/13; interest at 6.25 percent to 6.5 percent. $5,985,000 Water & Sewer Bonds, Series 1999, due in annual installments of $400,000 to $410,000 through 7/1/11; interest at 4.3 percent to 4.4 percent. $12,500,000 Water & Sewer Bonds, Series 2001, due in annual installments of $665,000 to $1,045,000 through 7/1/18; interest at 4.25 percent to 4.5 percent. $26,145,000 Water & Sewer Refunding Bonds, Series 2001, due in annual installments of $1,595,000 to $3,485,000 through 7/1/11; interest at 4.75 percent. $10,970,000 Water & Sewer Refunding Bonds, Series 2002, due in annual installments of $1,480,000 to $3,755,000 through 7/1/13; interest at 4 percent to 5 percent. $17,830,000 Water & Sewer Refunding Bonds, Series 2003, due in annual installments of $30,000 to $7,515,000 through 7/1/16; interest at 3 percent to 5 percent. $10,000,000 Water & Sewer Bonds, Series 2003, due in annual installments of $ 400,000 to $4,200,000 through 7/1/13; interest at 2.75 percent to 4 percent. $10,000,000 Water & Sewer Bonds, Series 2005, due in annual installments of $100,000 to $2,500,000 starting 7/1/12 through 7/1/20; interest at 4 percent to 5 percent. $15,485,000 Water & Sewer Refunding Bonds, Series 2005, due in annual installments of $490,000 to $5,725,000 through 7/1/17; interest at 3.25 percent to 5 percent. Total Business-Type Activities Revenue Bonds 57 Outstanding June 30, 2010 $2,150,000 1,150,000 400,000 810,000 3,935,000 5,080,000 8,385,000 11,705,000 8,725,000 10,000,000 15,240,000 $ 67,580,000 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 6 - Long-Term Liabilities, continued D. Excise Tax Revenue Obligations Excise tax revenue obligations are issued to provide funds to acquire and construct certain improvements to the water and sewer systems of the City and to pay the costs incurred in connection with the issuance of the obligations. The City has collateralized the obligations by the pledge of all unrestricted excise taxes (transaction, franchise fees, privilege, business taxes, state-shared sales and income taxes, fees for licenses and permits, and state revenue sharing), including all fines and forfeitures, which the City presently or in the future imposes or receives from other entities and which are not earmarked by the contributor for a contrary or inconsistent purpose. The City covenants and agrees that, so long as any of the obligations remain outstanding and the principal and interest thereon shall be unpaid or unprovided for or any other amounts remain unpaid or unprovided for thereunder, it will not further encumber the excise taxes on a basis equal to the pledge thereunder unless the excise taxes received by the City in the immediately preceding fiscal year shall have amounted to at least three times the highest combined debt service for the current or any succeeding fiscal year for all outstanding parity obligations, including the additional parity obligations proposed be secured by a pledge of the same excise taxes. The City shall have the right to incur additional parity obligations payable from and secured by the excise taxes on parity with the obligations. Annual principal and interest payments on the obligations are expected to require less than 2% of net 2009-10 excise tax revenue. The total principal and interest to be paid on the obligations is $46,490,343. Principal and interest paid for the current year and excise tax revenues were $1,633,063 and $141,025,083, respectively. Business-Type Activities Excise Tax Revenue Obligations: $34,040,000 Water & Sewer Excise Tax Obligations, Series 2009, due in annual installments of $500,000 to $5,455,000 through 7/1/28; interest at 2.25 percent to 4.375 percent. Total Business-Type Activities Excise Tax Revenue Obligations Outstanding June 30, 2010 $ 34,040,000 $ 34,040,000 E. Special Assessment Bonds with Governmental Commitment As trustee for improvement districts, the City is responsible for collection of assessments levied against the owners of property within the improvement districts and for disbursement of these amounts for retirement of the respective bonds issued to finance the improvements. At June 30, 2010, the special assessments receivable, together with amounts paid in advance and interest to be received over the life of the assessment period, are adequate for the scheduled maturities of the bonds payable and related interest. Special assessment bonds are collateralized by properties within the districts. In the event of default by the property owner, the City may enforce an auction sale to satisfy the debt service requirements of the bonds. The City is contingently liable on special assessment bonds to the extent that proceeds from auction sales are insufficient to retire outstanding bonds. Special assessment bonds payable with governmental commitment outstanding as reported in governmental activities at June 30, 2010 were as follows: 58 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 6 - Long-Term Liabilities, continued Outstanding June 30, 2010 Governmental Activities Special Assessment Bonds: $1,760,000 Improvement District #89 Bonds, due in annual installments of $135,000 to $160,000 through 1/1/15; interest at 4.75 percent. $7,370,000 Spectrum Improvement District Bonds, due in annual installments of $395,000 to $635,000 through 1/1/23; interest at 4 percent. $ 730,000 6,585,000 Total Special Assessment Bonds with Governmental Commitment $ 7,315,000 Changes in Long-Term Liabilities Balance July 1, 2009 Governmental Activities: Compensated absences Bonds payable: $ General obligation bonds 7,595,169 Additions $ Balance June 30, 2010 Reductions 6,497,779 $ (3,961,629) $ 10,131,319 Due Within One Year $ 575,076 294,588,000 - (11,700,000) 282,888,000 12,845,000 34,690,000 10,450,000 (13,340,000) 31,800,000 3,180,000 7,820,000 - (505,000) 7,315,000 1,125,000 337,098,000 10,450,000 (25,545,000) 322,003,000 17,150,000 249,439 10,000 (148,340) 111,099 88,369 Claims payable 3,624,854 1,571,159 (3,384,968) 1,811,045 1,600,000 Post employment benefits 2,031,825 1,832,171 3,863,996 - Deferred bond premiums 5,721,872 290,568 (530,042) 5,482,398 530,042 20,651,677 $ (33,569,979) $ 343,402,857 $ 19,943,487 Reductions Balance June 30, 2010 Due Within One Year Revenue bonds Special assessment bonds Total bonds payable Arbitrage liability Totals $ 356,321,159 Balance July 1, 2009 Business-Type Activities: Compensated absences $ $ 849,522 Additions $ 634,801 - $ (492,792) $ 991,531 $ 55,582 Bonds payable: General obligation bonds 188,612,000 - (3,580,000) 185,032,000 5,285,000 Revenue bonds 76,415,000 - (8,835,000) 67,580,000 7,300,000 Excise tax revenue obligations 34,040,000 - 34,040,000 500,000 299,067,000 - (12,415,000) 286,652,000 13,085,000 97,026 - (67,128) 29,898 2,628 Post employment benefits 133,663 135,911 269,574 - Deferred bond premiums 5,548,723 - (521,671) 5,027,052 521,670 Landfill closure/post closure 2,786,191 3,204,109 (1,650,300) 4,340,000 334,104 3,974,821 $ (15,146,891) $ 297,310,055 $ 13,998,984 Total bonds payable Arbitrage liability Totals $ 308,482,125 $ 59 - - CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 6 - Long-Term Liabilities, continued Statutory Debt Limitation In the absence of more restrictive bond authorization ballot limitations, the City is subject to state limitations on the amount of net bonded debt (exclusive of revenue bonds, excise tax revenue obligations and improvement district bonds), it may have outstanding. The statutory debt limitation is 20 percent of the secondary assessed valuation for purposes of water, wastewater, artificial light, acquisition and development of land for open space preserves, recreation facilities, public safety and emergency services, streets and transportation, and 6 percent of the secondary assessed valuation for all other purposes (e.g., library, museum, center for the arts). At June 30, 2010, the 6 percent debt limitation was $210,484,297, providing a debt margin of $200,990,297 and the 20 percent debt limitation was $701,614,322, providing a debt margin of $243,188,322. Bond Covenants Pursuant to certain bond indenture agreements, the City is obligated to various limitations and restrictions on annual debt service requirements, maintenance and flow of monies through various restricted accounts, minimum amounts to be maintained in various sinking funds and minimum revenue bond coverages. The City is in compliance with all such significant limitations and restrictions in the opinion of City’s management. Debt Service Requirements to Maturity The following is a summary of debt service requirements to maturity for all bonds payable as of June 30, 2010: GOVERNMENTAL ACTIVITIES Years Ended June 30 2011 2012 2013 2014 2015 2016-2020 2021-2025 2026-2029 Total General Obligation Principal $ 12,845,000 $ 11,820,000 11,850,000 14,105,000 14,015,000 74,054,000 76,345,000 67,854,000 General Obligation Interest Highway Users Revenue Highway Users Improvement Improvement Revenue Districts Districts Interest Principal Interest 11,842,773 11,303,326 10,809,827 10,253,375 9,670,231 38,915,672 22,609,338 5,553,581 $ 3,180,000 2,875,000 3,700,000 3,830,000 3,975,000 14,240,000 - $ 1,092,756 1,022,350 885,225 767,725 637,000 1,144,038 - $ 530,000 550,000 575,000 595,000 625,000 2,610,000 1,830,000 - $ 298,075 275,863 252,813 228,725 203,800 687,800 148,400 - $ 282,888,000 $ 120,958,123 $ 31,800,000 $ 5,549,094 $ 7,315,000 $ 2,095,476 60 Total $ 29,788,604 27,846,539 28,072,865 29,779,825 29,126,031 131,651,510 100,932,738 73,407,581 $ 450,605,693 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 6 - Long-Term Liabilities, concluded BUSINESS-TYPE ACTIVITIES Years Ended June 30 2011 2012 2013 2014 2015 2016-2020 2021-2025 2026-2029 Total General Obligation Principal $ 5,285,000 8,760,000 9,420,000 10,595,000 10,900,000 50,186,000 48,600,000 41,286,000 $ 185,032,000 General Obligation Interest $ Revenue Principal Revenue Interest Excise Tax Principal 7,310,562 7,013,963 6,640,063 6,247,862 5,862,113 24,148,156 13,906,719 3,518,793 $ 7,300,000 7,610,000 7,930,000 8,260,000 4,485,000 29,495,000 2,500,000 - $ 2,984,634 2,669,226 2,350,558 1,999,818 1,671,026 3,276,509 51,563 - $ 74,648,231 $ 67,580,000 $ 15,003,334 $ Excise Tax Interest Total 500,000 1,100,000 1,100,000 1,100,000 5,455,000 8,960,000 7,965,000 7,860,000 $ 1,125,563 1,105,687 1,080,938 1,056,187 982,444 3,887,569 2,508,188 703,767 $ 24,505,759 28,258,876 28,521,559 29,258,867 29,355,583 119,953,234 75,531,470 53,368,560 $ 34,040,000 $ 12,450,343 $ 388,753,908 Compensated Absences The City’s policy relating to compensated absences is described in Note 1. As shown in the table below, the long-term portion of this debt, amounting to $10,131,319 for governmental activities and $991,531 for business-type activities at June 30, 2010 is expected to be paid in future years from future resources. Compensated absences for governmental activities have been liquidated primarily by the General Fund. Balance July 1, 2009 Incurred Satisfied Balance June 30, 2010 Due Within One Year Governmental Activities Compensated Absences $ 7,595,169 $ 6,497,779 $ 3,961,629 $ 10,131,319 $ 575,076 Business-Type Activities Compensated Absences $ $ $ $ $ 55,582 849,522 634,801 492,792 991,531 NOTE 7 - Defeased Debt Current Year Defeasance On April 6, 2010, the City issued $10,450,000 in Street and Highway User Revenue Refunding Bonds with an average interest rate of 2.33 percent. This issuance was used to advance refund $4,735,000 of Series 1997 Street and Highway User Revenue Refunding Bonds with an average interest rate of 5.38 percent; $1,550,000 of Series 1999 Street and Highway User Revenue Bonds with an average interest rate of 4.60 percent; and $4,005,000 of Series 2001 Street and Highway User Revenue Bonds with an average interest rate of 4.69 percent. The refunding portion of net proceeds of $10,556,600 (after payment of $183,969 in underwriting fees, insurance, and other issuance costs and receipt of $290,569 in original issue premium) was used to purchase U.S. government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for future debt service payments on the 1997, 1999 and 2001 bonds. Only a portion of the future debt service payments for the 1997, 1999 and 2001 bonds were defeased. 61 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 7 - Defeased Debt, concluded As a result, this part of the debt service payments for the bonds is considered to be defeased and the liability for that portion of the bonds has been removed from the government-wide and statement of net assets. The advance refunding resulted in a difference between the reacquisition price and the net carrying amount of the old debt of $266,600. This difference, reported in the accompanying financial statements as a component of other assets, is being charged to operations through the year 2019 using the straight-line amortization method. The City completed the advance refunding to decrease its total debt service payments over the next 10 years by $874,345 and to obtain an economic gain (difference between the present values of the old and new debt service payments) of $855,460. Prior Year Defeasance In prior years, the City defeased certain general obligation, water and sewer revenue, and street and highway user revenue bonds by placing the proceeds of new bonds in an irrevocable trust to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the City’s financial statements. Bonds that have been advance refunded (defeased) as of June 30, 2010 are as follows: Refunded Debt Outstanding Water and Sewer Revenue Bonds, Series 2000 Water and Sewer Revenue Bonds, Series 2001 Streets and Highway User Revenue Bonds, Series 2000 General Obligation Bonds, Series 1996B General Obligation Bonds, Series 2000 General Obligation Bonds, Series 2001 General Obligation Bonds, Series 2002 General Obligation Refunding Bonds, Series 2003 Total Refunded Bonds Outstanding Amount $ $ 1,225,000 3,625,000 1,250,000 2,910,000 7,345,000 4,715,000 6,975,000 140,000 28,185,000 NOTE 8 – Landfill Closure and Postclosure Costs State and federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for thirty years after closure. In addition to operating expenses related to landfill activities through its closure date (October 1, 2005), an expense provision and related liability has been recognized based on the future closure and postclosure care costs to be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the amount of the landfill used during the year. As of June 30, 2010, the City estimates total costs related to landfill closure and postclosure care is $15,245,944 and has recognized that entire amount since the landfill no longer accepts waste. To date, $10,905,944 has been paid. The remaining balance of $4,340,000 consists of a current liability of $334,104 and $4,005,896 recorded as a non-current liability on the City’s financial statements. The estimated total current cost of the landfill closure and postclosure, $15,245,944, is based on the amount that would be paid if all equipment, facilities and services required to care, monitor and maintain the landfill were acquired as of June 30, 2010. However, the actual cost of closure and postclosure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. 62 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 8 – Landfill Closure and Postclosure Costs, concluded The City is required by state and federal regulations to comply with local government financial test requirements that assure the City can meet the costs of landfill closure, postclosure care and, if necessary, corrective action when needed. The City complied with all local government financial test requirements for the year ended June 30, 2009. It is anticipated that future inflation costs will be financed in part from earnings on investments. The remaining portion of anticipated future inflation costs and any additional costs that might arise from changes in postclosure requirements, e.g., due to changes in technology or more rigorous environmental regulations, may need to be covered by additional charges to future taxpayers. NOTE 9 - Capital Contributions Capital contributions in the Water, Wastewater, Solid Waste, Airport, and Housing Authority funds amounted to the following: Water Wastewater Solid Waste Airport Housing Authority Total System Development Developer Government Fees Contributions Contributions 2,843,226 3,873,863 59,772 6,776,861 $ $ $ $ 108,997 111,221 220,218 $ $ 871,364 615,796 1,487,160 Total $ $ 2,952,223 3,985,084 59,772 871,364 615,796 8,484,239 NOTE 10 – Fund Equity Only restrictions imposed by external sources are shown as restricted net assets on the government-wide financial statements. In addition, reserves for encumbrances and inventories are shown on the governmental fund financial statements. The City may also designate through administrative policy portions of fund balance to demonstrate the government’s intended use of those net assets. Designations of fund balances at June 30, 2010, were as follows: General Fund Balance: Unreserved: Designated: Economic Developmemt & Capital Improvements Compensated Absences Personnel Services & Retirement Incentives One Time Citywide Requirements (non-capital) Self-Insurance Operating Deficit Budget Stabilization Reserve Revenue Fluctuation Reserve City Council 12% Contigency Reserve Total Designated Fund Balance 63 $ 60,698,375 9,827,917 7,767,874 3,115,936 1,176,094 8,389,921 3,000,000 19,457,611 $ 113,433,728 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 10 – Fund Equity, concluded Reservations of Fund Balances At June 30, 2010, reserved amounts of general fund balance represent the following: 1) Encumbrances - comprises purchase obligations outstanding at the end of the fiscal year for operating and capital; 2) Debt Service - payment of future principal and interest unpaid at the end of the fiscal year and/or amounts accumulated and reserved/restricted for improvement district debt and general obligation debt; and Legal Restrictions - comprises domestic violence fees and court/judicial enhancement funds. In addition, the City is prefunding a Health Benefits Self Insurance Trust for $10,705,000. Deficit Fund Balances The City plans to remove the deficits in the Grants-in-Aid Special Revenue Fund of $1,107,382, Public Works and General Government Fund of $1,010,395, and Public Safety Buildings and Improvements Fund of $6,156,453 by receiving revenues from other governments. NOTE 11 - Retirement and Pension Plans All full-time employees of the City, the Mayor and City Council are covered by one of three pension plans. All fulltime City employees, except public safety personnel, participate in the Arizona State Retirement System, a multipleemployer cost-sharing pension plan. Public safety personnel participate in the Public Safety Personnel Retirement System, which is an agent multiple-employer plan. The Mayor and City Council participate in the Elected Officials’ Retirement Plan, a multiple-employer cost sharing pension plan. All three pension plans are administered by the State of Arizona. Arizona State Retirement System A. Plan Description All full-time City employees (except public safety personnel) participate in the Arizona State Retirement System (the System), a multiple-employer cost sharing defined benefit pension, health insurance premium, and long-term disability plan. The System was established by the State of Arizona to provide pension benefits for employees of the state and employees of participating political subdivisions and school districts. The System is administered in accordance with Title 38, Chapter 5, of Arizona Revised Statutes. The System provides for retirement, disability, health insurance premium benefits, and death and survivor benefits. The System issues a publicly available financial report that includes financial statements and required supplementary information for the System. That report may be obtained by writing to Arizona State Retirement System, P.O. Box 33910, Phoenix, AZ 85067-3910, or by calling 1-800621-3778. B. Funding Policy Arizona Revised Statutes provide statutory authority for determining the employees' and employers' contribution amounts as a percentage of covered payroll. Employers are required to contribute at the same rate as employees. Although Arizona Revised Statutes prescribe the basis of making the actuarial calculation, the Arizona Legislature is able to legislate a contribution rate other than the actuarially determined rate. The actuarially determined contribution rate for the year ended June 30, 2010 was 9.40 percent (9.00 percent retirement and 0.40 percent longterm disability) for active members and the City was required to contribute 9.40 percent (8.34 percent for retirement, 0.66 percent for health insurance premium, and 0.40 percent for long-term disability) of the members’ annual covered payroll. The City’s contributions to the System for the years ended June 30, 2010, 2009 and 2008, were $6,480,656, $6,627,159, and $6,311,856, respectively, equal to the required contributions for each year. 64 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 11 - Retirement and Pension Plans, continued Arizona Public Safety Personnel Retirement System (Full-time Police and Fire Employees) A. Plan Description All full-time sworn police officers and fire fighters are eligible to participate in the Public Safety Personnel Retirement System (PSPRS) in separate agent multiple-employer defined benefit retirement and health insurance premium plans. PSPRS was established by Title 38, chapter 5, Article 4 of the Arizona Revised Statutes to provide pension benefits for public safety employees of certain state and local governments. The PSPRS is jointly administered by the fund manager and participating local boards. The fund manager is a five-member board appointed by the Governor and the State Legislature. The fund manager is responsible for establishing contribution rates in accordance with an Actuarial study. The PSPRS provides retirement benefits, as well as death and disability and health insurance premium benefits. The PSPRS of the State of Arizona issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Public Safety Personnel Retirement System, 3010 East Camelback Road, Ste 200, Phoenix, AZ 85016 or by calling (602) 255-5575. B. Funding Policy The System is funded through a member contribution of 7.65 percent of gross payroll, an employer contribution set by an actuarial valuation expressed as a percent of gross payroll, and a distribution of the net earnings of the Fund. The City’s current aggregate contribution rate for police is 17.55 percent of annual covered payroll of which 0.49 percent was the health insurance premium portion. The current aggregate contribution rate for firefighters is 16.35 percent of annual covered payroll of which 0.43 percent was the health insurance premium portion. C. Annual Pension Cost For fiscal year ended June 30, 2010, the City’s annual pension cost of $4,619,048 for police and $2,519,584 for firefighters for PSPRS was equal to the City’s required and actual contributions. The required contributions were determined as part of the June 30, 2008, actuarial valuations using the projected unit credit actuarial cost method. The contribution requirements for the year ended June 30, 2010 were established by the June 30, 2008 actuarial valuations. Those valuations were based on the following. For police, the actuarial assumptions include (a) a rate of return on the investment of present and future assets of 8.5 percent per year compounded annually, attributable to inflation and other across-the-board increases, (b) projected salary increases of 5.5 percent compounded annually attributable to inflation and other across-the-board increases, and (c) additional projected salary increases of 0 percent to 3 percent per year attributable to seniority/merit. For firefighters, the actuarial assumptions include (a) a rate of return on the investment of present and future assets of 8.5 percent per year compounded annually, attributable to inflation and other across-the-board increases, (b) projected salary increases of 5.5 percent compounded annually attributable to inflation and other across-the-board increases, and (c) additional projected salary increases of 0 percent to 3 percent per year attributable to seniority/merit. For both police and firefighters, included in (b) is an inflation component of 5 percent. The actuarial value of PSPRS assets was determined using techniques that smooth the market value of assets over a four-year period. PSPRS’s unfunded accrued liability is being amortized as a level percent of projected payroll over a closed period of 30 years. If the actuarial value of assets exceeded the actuarial accrued liability, the excess was amortized over an open period of 20 years. The remaining amortization period at July 1, 2009, was 28 years for unfunded actuarial accrued liability and 20 years for excess contributions. 65 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 11 –Retirement and Pension Plans, continued Arizona Public Safety Personnel Retirement System - Police Three-Year Trend Information Fiscal Annual Percent Net Pension Year Pension of APC Obligation Ended Cost (APC) Contributed 2008 (Pension) $ 2,871,567 100% 2008 (Health) $ 95,474 100% 2009 (Pension) $ 4,941,860 100% 2009 (Health) $ 28,330 100% 2010 (Pension) $ 4,596,415 100% 2010 (Health) $ 22,633 100% Arizona Public Safety Personnel Retirement System - Firefighters Three-Year Trend Information Fiscal Annual Percent Net Pension Year Pension of APC Obligation Ended Cost (APC) Contributed 2008 (Pension) $ 1,563,938 100% 2008 (Health) $ 50,966 100% 2009 (Pension) $ 2,609,678 100% 2009 (Health) $ 11,533 100% 2010 (Pension) $ 2,508,750 100% 2010 (Health) $ 10,834 100% D. Funded Status and Funding Progress As of June 30, 2009, the most recent actuarial calculation date, the firefighters plan was 81 percent funded and police was 72 percent funded. The actuarial accrued liability for benefits was $62.9 million and $102.7 million, and the actuarial value of assets was $51.2 million and $74 million, resulting in an unfunded actuarial accrued liability (UAAL) of $11.7 million and $28.7 million respectively. The covered payrolls (annual payrolls of active employees covered by the plans) were $15.4 million and $26.9 million, and the ratio of the UAAL to the covered payroll was 76 percent and 107 percent. The schedule of funding progress, presented as Required Supplementary Information following the Notes to the Financial Statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Elected Officials’ Retirement Plan (Mayor and City Council) A. Plan Description The City’s Mayor and Council participate in the Elected Officials’ Retirement Plan (EORP), a multiple-employer cost sharing defined benefit pension and health insurance premium plan. The EORP was established and is administered by the State of Arizona to provide pension benefits for state and county elected officials, judges, and certain Cityelected officials. The fund manager of the PSPRS is also the administrator for the EORP. EORP provides retirement benefits, as well as death and disability benefits. The Elected Officials’ Retirement Plan issues a publicly available financial report that includes financial statements and required supplementary information for EORP. The report may be obtained by writing to Elected Officials’ Retirement Plan, 3010 East Camelback Road, Ste 200, Phoenix, AZ 85016 or by calling (602) 255-5575. 66 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 11 –Retirement and Pension Plans, concluded B. Funding Policy Covered employees are required by state statute to contribute an amount equal to 7 percent of gross salary. Incorporated city or town employers are required to contribute an amount sufficient to meet both the normal cost of a level-cost method attributable to the EORP, plus the amount required to amortize the unfunded accrued liability for the employer. Such amount is to be determined each year by actuarial valuation and paid as a level percent of compensation. The contribution requirements for plan members are established and may be amended by the Fund Manager, a five-member board. The City’s rate for fiscal year ended June 2010 was 26.25 percent of the members’ annual covered payroll, of which 1.89 percent was the health insurance premium portion. The city’s contributions to EORP for the years ended June 30, 2010, 2009, and 2008, were $40,950, $37,757, and $23,105 respectively, equal to the required contributions for each year. Volunteer Firemen's Pension And Relief Fund A. Plan Description The Volunteer Firemen’s Pension Plan (VFPP) is a single-employer defined benefit pension plan administered by the City. The last actuarial valuation of the Volunteer Firemen's Pension and Relief Fund was made as of November 19, 2004, at which time the actuarial liability was fully funded. As of June 30, 2010, there was one retiree and/or beneficiary of a retiree receiving retirement benefits under the plan. There were no terminated employees entitled to benefits and not yet receiving them. Additionally there are no non-vested active employees and no partially vested employees covered by the plan. The VFPP issues a publicly available financial report that may be obtained from the City of Chandler, Management Services Department, P.O. Box 4008, MS 702, Chandler, AZ 85244-4008. B. Funding Policy There were no contributions to the Volunteer Firemen's Pension and Relief Fund by the City in fiscal year 2009/10. Pursuant to the November 19, 2004, actuarial valuation, the present value of all benefits payable in future years was $57,222 based upon a 6 percent rate of return and the pension obligation was deemed to be fully funded. NOTE 12 – Post-employment Benefits Other Than Pensions The cost of post-employment healthcare benefits, from an accrual accounting perspective, similar to the cost of pension benefits, should be associated with the periods in which the cost occurs, rather than in the future year when it will be paid. A. Plan Description The City provides post-employment medical care (OPEB) for retired employees through a single employer defined benefit medical plan. The plan provides medical benefits for eligible retirees, their spouses and dependents though the City’s group health insurance plans, which covers active and retired members. The benefits, benefit levels and contribution rates are determined annually by the City’s Human Resources Department and approved by the City Council. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate financial report. 67 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 12 – Post-employment Benefits Other Than Pensions, continued The City also provides a Retirement Health Savings Plan (RHSP) for active employees that may be used upon separation from City employment. The City funds $15 per pay period during the term of employment. The plan provides medical expense reimbursements eligible under Internal Revenue Code Section 213, other than direct longterm care expenses. The plan is not accounted for as a trust fund, as an irrevocable trust has not been established to account for the plan. The plan does not issue a separate financial report. B. Benefits Provided The City provides post-employment medical care benefits to its retirees. To be eligible for benefits, an employee must qualify for retirement under one of the state retirement plans for public employees and be covered under the City’s medical plan during their active status. Upon retirement, the City deposits a one-time payment of $800 per year of City service in the retiree’s account. The retiree must have a minimum of five years of City service to receive this contribution. C. Funding Policy The plan premium rates are determined annually by the City’s Human Resources Department, in collaboration with an outside consulting firm, and approved by the City Council. The retiree’s contribution is 100% of the actuarially determined blended premium rate. The City makes no contribution to the retirees’ premiums other than allowing them to participate through the City’s pooled benefits. By providing retirees with access to the City’s healthcare plans based on the same rates it charges to active employees, the City is in effect providing a subsidy to retirees. This implied subsidy exists because, on average, retiree healthcare costs are higher than active employee healthcare costs. By not contributing anything toward this plan in advance, the City employs a pay-as-you-go method through paying the higher rate for active employees each year. As of June 30, 2010, retirees contributed $963,222 and the City contributed $1,325,055 (implied subsidy). D. Annual OPEB Costs and Net OPEB Obligation The City’s annual other post-employment benefit (OPEB) cost for each plan is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The City’s annual OPEB cost for the current year and related information for each plan are as follows at June 30, 2010: Annual Required Contribution (ARC) ARC Adjustment Interest Adjustment to Net OPEB Obligation $ 3,291,374 (106,511) 108,274 Annual OPEB Cost Contributions Made $ 3,293,137 (1,325,055) Increase in Net OPEB Obligation $ 1,968,082 Net OPEB Obligation - Beginning of year Net OPEB Obligation - End of year 68 2,165,488 $ 4,133,570 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 12 – Post-employment Benefits Other Than Pensions, concluded The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2010 were as follows: Fiscal Year E nd ed Ju ne, 30 2010 2009 2008 Annu al OP EB Cost $ 3,29 3,137 2,13 6,825 2,12 5,569 E mp loyer Contri bu tions $ 1,325,055 1,188,119 908,785 P ercentage of OP EB Cost Contribu ted 40.2% 55.6 0% 42.7 5% Net OP EB Obligation $ 4,133 ,570 2,165 ,488 1,216 ,784 E. Funded Status and Funding Progress The funded status of the plan as of June 30, 2010 was as follows: Actuarial Accrued Liability Actuarial Value of Plan Assets $ 26,120,095 - Unfunded Actuarial Accrued Liability (UAAL) $ 26,120,095 Funded Ratio 0.0% 98,508,058 Covered Payroll UAAL as a percentage of covered payroll 26.5% Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Calculations are based on the types of benefits provided under the terms of the substantive plan at the time of each valuation and on the pattern of sharing of costs between the employer and plan members to that point. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and plan members in the future. Actuarial calculations reflect a long-term perspective. The actuarial methods and significant assumptions used to determine the ARC for the current year are as follows: 1. 2. 3. The actuarial cost method used is the unit credit method. As of the valuation date, July 1, 2009, there are no assets, hence no need for an actuarial value of assets. The amortization method is level percent of payroll. The amortization period is 30 years. The period is open. In the June 30, 2009 actuarial valuation, the unit credit actuarial cost method was used along with a discount rate of 5.0%. In addition, the actuarial assumptions included: an annual medical healthcare cost trend rate of 10% initially, reduced by decrements to an ultimate rate of 6.0% after 8 years; an annual dental healthcare cost trend rate of 5% initially, reduced to 3% after 9 years; and an annual projected salary increase of 2%. 69 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 13 - Commitments and Contingencies The City is subject to a number of lawsuits, investigations, and other claims (some of which involve substantial amounts) that are incidental to the ordinary course of its operations, including those related to wrongful death and personal injury matters. Although the City Attorney does not currently possess sufficient information to reasonably estimate the amounts of the liabilities to be recorded upon the settlement of such claims and lawsuits, some claims could be significant to the City’s operations. While the ultimate resolution of such lawsuits, investigations, and claims cannot be determined at this time, in the opinion of City management, based on the advice of the City Attorney, the resolution of these matters will not have a material adverse effect on the City’s financial position. NOTE 14 - Risk Management The City is exposed to various risks of loss related to litigation, claims and torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters (for which the City carries commercial insurance). The City established a Self-Insurance Fund (an Internal Service Fund) to account for and finance its uninsured risks of loss. In fiscal year 2009/2010, the Self-Insurance Fund provided coverage for up to a maximum of $2,000,000 per occurrence for liability claims and $50,000 for each property damage claim. The City purchases commercial insurance for claims in excess of coverage provided by the Self-Insurance Fund and for all other risks of loss. During fiscal year 2009/2010, there were no significant reductions in the amounts of excess coverage purchased, nor has the City experienced any settlements in excess of insurance coverage over the past three fiscal years. Premiums are paid into the Internal Service Fund by all other funds and are available to pay claims, claim reserves and administrative costs of the program. As with any risk retention program, the City is contingently liable with respect to claims beyond those actuarially projected. Interfund premiums are used to reduce the amount of claim expenditures reported in the Internal Service Fund. In the opinion of City management, based on the advice of the City Attorney, the outcome of such litigation and claims will not have materially adverse effect on the City’s financial position. The claims liability of $1,811,045 reported as claims payable in the Self-Insurance Fund at June 30, 2010, is based on the requirements of Governmental Accounting Standards Board Statement No. 10, which requires that liabilities be reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. An excess coverage insurance policy covers individual claims in excess of $2,000,000 for general liability and $500,000 for worker’s compensation. Liabilities include an amount for claims that have been incurred but not reported (IBNR). Claim liabilities are calculated considering the effects of inflation, recent claim settlement trends including frequency and amount of payouts and other economic and social factors. Changes in the Fund’s claims liability amount in fiscal years 2009 and 2010 were: Years Ended June 30, 2009 2010 Current Year Claims and Changes in Estimates Beginning of Fiscal Year Liability $ $ 3,431,530 3,624,854 $ $ 4,603,604 1,571,159 70 Balance at Fiscal Year End Claim Payments ($4,410,280) (3,384,968) $ $ 3,624,854 1,811,045 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 15 – Interfund Transfers The interfund transfers in a nd out at June 30, 2010 are as follows: Fund Transfer Detail General Capital Projects-Streets Transfers In $ Non-major Governmental Enterprise-Water Enterprise-Wastewater Non-major Enterprise 1,036,000 - 504,194 Internal Service-Self Insurance 7,768,000 2,436,763 9,923,945 34,195,526 General 2,107,773 216,000 2,107,773 216,000 29,146,796 4,581,258 222,935 99,051 55,158 172,100 7,945 4,581,258 143,593 - 34,277,298 4,732,796 680,000 705,000 222,935 - 680,000 927,935 General Non-major governmental Internal Self-Service Insurance 72,000 1,227,000 99,051 - Total Wastewater Fund 72,000 1,326,051 General Non-major Governmental Internal Service-Self Insurance 504,194 143,593 36,000 55,158 - 683,787 55,158 General Non-major Governmental Enterprise-Water Enterprise-Wastewater Non-major Enterprise 2,436,763 - 7,768,000 172,100 680,000 72,000 36,000 Total Internal Service 2,436,763 8,728,100 General Non-major Governmental Enterprise-Water Enterprise-Wastewater Non-major Enterprise Internal Service-Self Insurance Total Non-major Governmental Funds Water General Non-major Governmental Internal Service-Self Insurance Total Water Fund Wastewater Non-major Enterprise Funds Total Non-major Enterprise Funds Internal Service 2,107,773 29,146,796 - Total Capital Projects-Streets Non-major Governmental Funds Transfers Out $ 7,945 896,000 Total General Fund Capital Projects-Streets 216,000 Total 71 $ 50,181,566 $ 50,181,566 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 15 – Interfund Transfers, concluded Interfund transfers are made from various funds and cost centers to fund costs including dental insurance, computer replacement, capital equipment purchases and debt service. NOTE 16 – Interfund Receivables and Payables A. Interfund Advances To/Advances From Advances To General Advances From Total Capital Projects-Community Services Capital Projects-Public Safety Capital Projects-Streets Capital Projects-Public Works/General Govt. Total General Fund Capital Projects Capital Equipment Enterprise Water $ 3,429,287 15,654,706 7,870,000 4,204,427 31,158,420 General Special Revenue-Highway User Revenue Enterprise-Water Enterprise-Wastewater Enterprise-Solid Waste Enterprise-Airport 7,496,428 737,658 195,276 342,283 29,777 4,734 Total Capital Projects-Capital Equipment 8,806,156 Enterprise-Wastewater 3,900,000 Total $ 43,864,576 Interfund advances are made from the general fund to capital projects funds to cover expenditures in impact fee funds until impact fees are received. None will be repaid within one year. Interfund advances are made from the capital projects capital equipment fund to various funds to finance the purchase of capital assets. Amounts to be repaid within one year total $1,611,560. The interfund advance was made from the water enterprise fund to the wastewater system development fees fund of the wastewater enterprise to cover expenditures until system development fees are collected. Amounts to be repaid within one year total $650,000. B. Interfund Due To/Due From Due from other funds General Due to other funds Total Special Revenue-Grants in Aid Total 72 $ 1,284,072 $ 1,284,072 CITY OF CHANDLER, ARIZONA Notes to the Financial Statements June 30, 2010 NOTE 17 – Joint Venture The City and the Town of Gilbert entered into an Intergovernmental Agreement (Agreement) for the design, construction and operation of a Joint Water Treatment Plant. Under the Agreement, the real property, plant infrastructure and raw water pipelines will be jointly owned with each party entitled to 50% of the plant capacity, and each party paying 50% of the construction costs. The Town of Gilbert acts as the Lead Agent, overseeing construction activities, which were substantially complete at June 30, 2010, and operating the plant. The City’s investment in the joint venture is reflected as a separate line item in the proprietary funds financial statements. Separate financial statements for the joint venture are not prepared. Total Investment as of June 30, 2010, was: City of Chandler's Share Town of Gilbert's Share $78,832,719 74,080,401 $152,913,120 73 74 REQUIRED SUPPLEMENTARY INFORMATION 75 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Property taxes $ Sales taxes Franchise fees State shared 39,287,682 $ 39,287,682 $ 40,259,580 $ 971,898 83,550,000 83,550,000 83,019,726 3,412,000 3,412,000 3,174,390 (237,610) 55,904,000 55,904,000 54,492,427 (1,411,573) (530,274) Licenses and permits 2,606,650 2,606,650 2,758,393 151,743 Charges for services 10,794,481 10,794,481 19,382,428 8,587,947 Fines and forfeitures 5,798,500 5,798,500 5,324,932 96,400 96,400 101,322 100,000 100,000 50,000 (50,000) Interest revenue 3,502,318 3,502,318 1,890,982 (1,611,336) Miscellaneous 2,629,550 2,629,550 1,307,782 (1,321,768) 207,681,581 207,681,581 211,761,962 4,080,381 18,588,223 21,891,315 17,424,095 4,467,220 736,766 867,612 603,857 263,755 Communications and public affairs 2,545,327 2,830,657 2,455,395 375,262 Law 3,335,345 3,430,448 3,209,595 220,853 City Magistrate 4,175,558 4,252,328 3,987,845 264,483 153,542,783 142,067,329 59,860,487 82,206,842 978,228 1,059,397 775,599 283,798 Fire 27,007,727 27,298,596 26,383,620 914,976 Police 63,903,071 64,699,136 61,191,256 3,507,880 Community development 10,290,837 11,003,103 8,911,379 2,091,724 Public works 14,342,692 16,734,057 13,390,555 3,343,502 Community services 35,148,296 37,225,888 35,322,728 1,903,160 334,594,853 333,359,866 233,516,411 99,843,455 (126,913,272) (125,678,285) (21,754,449) 103,923,836 Rentals Contributions Total revenues (473,568) 4,922 EXPENDITURES: General government City manager City clerk Management services Mayor and council Public safety Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers in Transfers out 25,000 86,422 19,725,065 9,923,945 (9,801,120) (19,719,433) (19,648,453) (34,195,526) (14,547,073) (24,185,159) (24,286,771) 79,637,065 30,632 Total other financing sources (uses) Change in fund balance Fund balances, July 1, 2009 Fund balances, June 30, 2010 25,000 19,725,065 $ 101,612 (126,882,640) (125,576,673) (45,939,608) 169,476,795 169,476,795 169,476,795 42,594,155 See accompanying notes to this schedule. 76 $ 43,900,122 $ 123,537,187 61,422 $ 79,637,065 CITY OF CHANDLER, ARIZONA Required Supplementary Information June 30, 2010 NOTE 1 – Budgetary Basis of Accounting The adopted budget of the City is prepared on a basis consistent with accounting principles generally accepted in the United States of America with the following exception: reserved encumbrances at year end are recognized as expenditures. Consequently, the following adjustment is necessary to present the change in fund balance on a budgetary basis in order to provide a meaningful comparison. Change in Fund Balances Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds $ Reserved encumbrances at June 30, 2010 recognized as budgetary expenditures in fiscal year ended June 30, 2010 Budgetary Comparison Schedule for the General Fund (20,190,426) $ 77 (25,749,182) (45,939,608) CITY OF CHANDLER, ARIZONA Required Supplementary Information June 30, 2010 Arizona Public Safety Personnel Retirement System - Police Schedule of Funding Progress (1) Actuarial Value of Assets Valuation Date 30-Jun 2006 2007 2008 2009 (2) Projected Unit Credit Actuarial Accrued Liability (AAL) $ 58,256,719 59,909,235 66,242,859 74,018,711 $ 73,363,294 91,534,641 95,361,375 102,681,147 (3) Percent Funded (1)/(2) (4) Unfunded AAL (2) - (1) (5) Annual Covered Payroll (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) 79.4% 65.4% 69.5% 72.1% $ 15,106,575 31,625,406 29,118,516 28,662,436 $ 19,977,231 23,460,954 25,093,684 26,862,925 75.6% 134.8% 116.0% 106.7% (5) Annual Covered Payroll (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) Arizona Public Safety Personnel Retirement System - Firefighters Schedule of Funding Progress (2) Projected Unit Credit Actuarial Accrued Liability (AAL) (1) Actuarial Value of Assets Valuation Date 30-Jun 2006 2007 2008 2009 $39,694,142 41,392,622 45,433,395 51,154,097 $ 44,956,349 56,735,431 58,745,529 62,888,943 (3) Percent Funded (1)/(2) 88.3% 73.0% 77.3% 81.3% (4) Unfunded AAL (2) - (1) $ 5,262,207 15,342,809 13,312,134 11,734,846 $12,235,917 14,050,999 14,906,063 15,408,927 43.0% 109.2% 89.3% 76.2% Post-employment Benefits Other than Pensions Schedule of Funding Progress (1) Actuarial Value of Assets Valuation Date 01-Jul 2007 2009 (2) Unit Credit Actuarial Accrued Liability (AAL) $ - $ 17,961,768 26,120,095 (3) Percent Funded (1)/(2) 0.0% 0.0% 78 (4) Unfunded AAL (2) - (1) 17,961,768 26,120,095 (5) Annual Covered Payroll 87,610,241 98,508,058 (6) Unfunded AAL as a Percentage of Covered Payroll (4)/(5) 20.5% 26.5% OTHER FINANCIAL STATEMENTS 79 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Streets Capital Projects For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ 581,000 $ 581,000 $ 654,724 $ 73,724 System development fees 2,000,000 2,000,000 906,828 Regional transportation tax 8,850,000 8,850,000 13,965,973 5,115,973 - - 70,720 70,720 11,431,000 11,431,000 15,598,245 4,167,245 - - 183,969 Miscellaneous Total revenues (1,093,172) EXPENDITURES: Bond issuance costs General government (183,969) 734,145 17,176,485 - Public works 70,929,639 - - - Capital improvements 20,638,557 73,368,344 53,169,671 20,198,673 Total expenditures 92,302,341 90,544,829 53,353,640 37,191,189 (80,871,341) (79,113,829) (37,755,395) 41,358,434 Excess (deficiency) of revenues over expenditures 17,176,485 Other financing sources (uses): Bond premium - - 290,569 1,600,000 1,600,000 10,450,000 8,850,000 - - (10,556,600) (10,556,600) Transfers in 12,018,583 12,018,583 2,107,773 (9,910,810) Transfers out (7,534,583) (7,534,583) 6,084,000 6,084,000 2,075,742 (4,008,258) (74,787,341) (73,029,829) (35,679,653) 37,350,176 3,284,806 3,284,806 3,284,806 Face amount of bonds issued Payment to escrow agent Total other financing sources (uses) Change in fund balances Fund balances (deficits), July 1, 2009 Fund balances (deficits), June 30, 2010 $ (71,502,535) 80 $ (69,745,023) 290,569 (216,000) $ (32,394,847) 7,318,583 $ 37,350,176 81 City of Chandler Combining Balance Sheet All Non-Major Governmental Funds - By Fund Type June 30, 2010 Total Non-Major Special Debt Capital Governmental Revenue Service Projects Funds 18,565,508 $ 23,722,622 $ 34,658,185 $ 76,946,315 - - - - ASSETS Equity in pooled cash and investments $ Receivables (net of allowance for uncollectible): Accounts - 6,620,868 - 6,620,868 Notes Special assessments 568,342 - - 568,342 Other 22,105 - - 22,105 Prepaid Items 3,057 - 30,242 33,299 2,424,384 - - 2,424,384 - - 8,806,156 8,806,156 $ 21,583,396 $ 30,343,490 $ 43,494,583 $ 95,421,469 $ 1,014,439 $ $ Due from other governments Advances to other funds Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 8,006 $ 1,255,674 263,576 - 3,776 - 6,689,469 - 6,689,469 1,284,072 - - 1,284,072 737,658 - 23,288,420 24,026,078 - - 54,606 54,606 Accrued payroll Accrued interest Due to other funds Advances from other funds Arbitrage liability Bonds payable 2,278,119 267,352 - 16,755,000 - 16,755,000 Deferred revenue 180,000 6,217,913 - 6,397,913 Total liabilities 3,479,745 29,670,388 24,602,476 57,752,609 Capital improvements - - 11,512,732 11,512,732 Debt service - 673,102 - 673,102 Special revenue funds 18,103,651 - - 18,103,651 Capital projects funds - - 7,379,375 7,379,375 18,103,651 673,102 18,892,107 37,668,860 21,583,396 $ 30,343,490 $ 43,494,583 $ 95,421,469 Fund Balances: Reserved: Unreserved, undesignated: Total fund balances Total liabilities and fund balances $ 82 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances All Non-Major Governmental Funds - By Fund Type For the year ended June 30, 2010 Total Non-Major Special Debt Capital Governmental Revenue Service Projects Funds REVENUES: Highway user taxes $ Grants and entitlements 13,116,481 $ - $ - $ 13,116,481 10,377,502 - - 10,377,502 - - 3,861,478 3,861,478 Special assessments - 663,209 - 663,209 Charges for services 38,008 - - 38,008 Interest income 218,958 11,483 395,162 625,603 Miscellaneous 204,734 - 330,335 535,069 23,955,683 674,692 4,586,975 29,217,350 System development fees Total revenues EXPENDITURES: Current: General government 146,099 - 557,434 703,533 Public safety 1,009,585 - - 1,009,585 Community development 2,859,734 - - 2,859,734 Public works 7,921,329 - - 7,921,329 Community services 461,317 - - 461,317 Capital improvements 7,693,083 - 28,524,190 36,217,273 Principal - 17,260,000 - 17,260,000 Bond issuance costs - - - - Interest and fiscal charges - 13,646,479 - 13,646,479- 20,091,147 30,906,479 29,081,624 80,079,250 3,864,536 (30,231,787) (24,494,649) (50,861,900) - - - - Debt service: Total expenditures REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES): Bond premium Face amount of bonds issued Proceeds from disposal of capital assets Transfers in Transfers out Total other financing sources (uses) - - - - 5,858 - 5,329 11,187 144,000 29,362,835 4,770,463 34,277,298 (4,697,483) - (4,547,625) 29,362,835 (35,313) (4,732,796) 4,740,479 29,555,689 (19,754,170) (21,306,211) 38,646,277 58,975,071 REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (683,089) (868,952) FUND BALANCES: Beginning of year 18,786,740 $ End of year 83 18,103,651 1,542,054 $ 673,102 $ 18,892,107 $ 37,668,860 84 City of Chandler Non-Major Governmental Funds NON-MAJOR SPECIAL REVENUE FUNDS A Special Revenue Fund is used to finance particular activities and is created out of receipts of specific taxes or other earmarked revenues. Such funds are authorized by statutory or charter provisions to pay for certain activities with some special form of continuing revenues. Highway User Used to account for the receipt and expenditure of the City’s allocation of State highway user taxes. State law restricts the use of these monies to maintenance, construction and reconstruction of streets, and repayment of transportation-related debt. Local Transportation Assistance Used to account for the receipt and expenditure of the City’s allocation of State lottery monies. State law restricts the use of these monies to street and highway projects in the public right-of-way and to mass transportation purposes. Grants-in-Aid Used to account for the receipt and expenditure of miscellaneous federal and state grants awarded to the City for various, specific purposes. Community Development Used to account for monies received from the U.S. Department of Housing and Urban Development and Maricopa County for affordable housing activities including housing rehabilitation and redevelopment activities. Parks and Recreation Use to account for donations for park improvements and programs restricted pursuant to donor covenants. Library Used to account for donations for library improvements and programs restricted pursuant to donor covenants. Community Center Building Used to account for donations restricted for improvements to the City's Community Services Building and facilities. Downtown Redevelopment Used to account for contributions earmarked for downtown improvements. Municipal Arts Used to account for amounts earmarked for municipal arts. NON-MAJOR DEBT SERVICE FUNDS General Obligation Bonds Accumulates monies for the payment of principal and interest requirements of the City's tax-supported General Obligation Bonds. Revenues for repayment are generated from secondary property taxes. 85 City of Chandler Non-Major Governmental Funds, Continued NON-MAJOR DEBT SERVICE FUNDS, CONTINUED Highway User Revenue Bonds Accumulates monies for the payment of principal and interest requirements of the City's Highway User Revenue Bonds. Revenues for repayment are generated from gas tax generated within the State of Arizona. Special Assessment Bonds Accumulates monies for the payment of principal and interest on Special Assessment Bonds that were issued to finance costs of improvements applicable to benefiting properties within certain improvement districts. CAPITAL PROJECTS FUNDS Public Works and General Government Used to account for the acquisition, construction, reconstruction, improvement and renovation of general government projects. Community Services Used to account for the acquisition of land and equipment, development, construction and improvement of community parks and projects. Public Safety Buildings and Improvements Used to account for public safety, e.g., police and fire department, building construction, renovation and improvements and equipment purchases Capital Equipment Acquisition and Replacement Used to account for the purchase and/or replacement of general equipment-type assets, e.g., vehicles, furniture, office equipment. Special Assessments Used to account for expenditures related to special assessment districts within the City. Computer Purchases Used to account for the purchase and/or replacement of computer equipment. Fleet Replacement Used to account for the replacement of vehicle fleet. 86 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2010 Special Revenue Highway Local Grants User Transportation in Fund Assistance Aid Community Community Parks and Center Development Recreation Library $ $ 35,549 Building ASSETS Equity in pooled cash and investments $ 14,898,593 $ 2,659,803 $ - 43,016 $ 268,450 $ - Receivables (net of allowance for uncollectible): Special assessments receivable - - - - - - - Notes receivable - current - - - 568,342 - - - - - 22,105 - - - - 225 212 2,470 - 150 - - 1,209,237 - 1,107,565 107,582 - - - - - - - - - - $ 16,108,055 $ 2,660,015 $ 1,132,140 $ 718,940 $ 268,600 $ 35,549 $ $ $ $ $ 84,495 $ $ Other receivables Prepaid items Due from other governments Advances to other funds Total assets - LIABILITIES AND FUND BALANCES Liabilities: 630 $ 4,056 25,784 25,022 - - - - - - - - - - 1,284,072 - - - - 737,658 - - - - - - Deferred revenue - - 180,000 - - - - Total liabilities 1,125,143 148 2,239,522 109,517 630 4,056 - Capital improvements - - - - - - - Debt service - - - - - - - Special revenue funds 14,982,912 2,659,867 (1,107,382) 609,423 267,970 31,493 - Capital projects funds - - - - - - - 14,982,912 2,659,867 (1,107,382) 609,423 267,970 31,493 - Total liabilities and fund balances $ 16,108,055 $ 2,660,015 718,940 $ 268,600 $ 35,549 Accounts payable 174,715 148 Accrued payroll 212,770 - Accrued interest - Due to other funds - Advances from other funds Arbitrage liability - current Bonds payable - current 749,666 - Fund Balances: Reserved: Unreserved, undesignated: Total fund balances (deficits) $ 1,132,140 $ $ - (Continued) 87 City of Chandler Combining Balance Sheet Non-Major Governmental Funds June 30, 2010 Special Revenue Debt Service Special General Downtown Municipal Obligation Highway User Assessment Redevelopment Arts Bonds Revenue Bonds Bonds 18,914,821 $ ASSETS Equity in pooled cash and investments $ - $ 660,097 $ 3,650,610 $ 1,157,191 Receivables (net of allowance for uncollectible): Special assessments - - - - 6,620,868 Notes - - - - - Other - - - - - Prepaid items - - - - - Due from other governments - - - - - Advances to other funds - - - - - Total assets $ - $ 660,097 $ 18,914,821 $ 3,650,610 $ 7,778,059 $ - $ 729 $ - $ - $ 8,006 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll - - - - - Accrued interest - - 6,069,821 470,610 149,038 Due to other funds - - - - - Advances from other funds - - - - - Arbitrage liability - current Bonds payable - current Deferred revenue - - 12,845,000 - 3,180,000 - 730,000 6,217,913 Total liabilities - 729 18,914,821 3,650,610 7,104,957 Capital improvements - - - - - Debt service - - - - 673,102 Special revenue funds - 659,368 - - - Capital projects funds - - - - - Total fund balances (deficits) - 659,368 - - 673,102 Fund Balances: Reserved: Unreserved, undesignated: Total liabilities and fund balances $ - $ 660,097 $ 18,914,821 $ 3,650,610 $ 7,778,059 (Continued) 88 Capital Projects Capital Public Works Public Safety Equipment and General Community Buildings and Acquisition and Special Computer Fleet Governmental Government Services Improvements Replacement Assessments Purchases Replacement Funds $ 4,813,816 $ 2,263,677 $ $ $ 9,521,582 $ Total Other 4,009,132 $ 13,240,185 327,324 482,469 $ 76,946,315 - - - - - - - 6,620,868 - - - - - - - 568,342 - - - - - - - 22,105 - - - - - 30,242 - 33,299 - - - - - - - 2,424,384 - - - 8,806,156 - - - 8,806,156 $ 4,009,132 $ 13,240,185 $ 9,521,582 $ 9,133,480 $ 4,813,816 $ 2,293,919 $ 482,469 $ 95,421,469 $ 815,100 $ $ 22,293 $ 4,734 $ $ $ - $ 2,278,119 - $ 206,494 - - - 1,168 205,885 3,776 - - 267,352 - - - - - - - 6,689,469 - - - - - - - 1,284,072 4,204,427 3,429,287 15,654,706 - - - - 24,026,078 - 53,570 - 1,036 - - - - - 54,606 16,755,000 5,019,527 3,689,351 15,678,035 4,734 4,944 205,885 - 57,752,609 (1,010,395) 9,550,834 (6,156,453) 9,128,746 - - - 11,512,732 - - - - - - - 673,102 6,397,913 - - - - - - - 18,103,651 - - - - 4,808,872 2,088,034 482,469 7,379,375 (1,010,395) 9,550,834 (6,156,453) 9,128,746 4,808,872 2,088,034 482,469 37,668,860 9,133,480 $ 4,813,816 $ 2,293,919 4,009,132 $ 13,240,185 $ 9,521,582 $ $ 482,469 $ 95,421,469 (Concluded) 89 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2010 Special Revenue Highway Local User Transportation Fund Assistance Community Grants-in-Aid Development Community Parks and Recreation Library Center Building REVENUES: Highway user taxes $ Grants and entitlements 13,116,481 - $ - $ 929,239 - $ 8,347,194 - $ 1,101,069 - $ - - $ - - System development fees - - - - - - - Special assessments - - - - - - - Charges for services Interest revenue Miscellaneous Total revenues 4,194 - - - - - - 172,045 30,688 6,338 162 2,863 569 - 7,043 112,388 200 - 58,553 26,550 - 13,299,763 1,072,315 8,353,732 1,101,231 61,416 27,119 - EXPENDITURES: Current: General government - - 146,099 - - - - Public safety - - 1,009,585 - - - - - - 1,871,072 988,662 - - - 7,103,566 817,763 - - - - - Community development Public works Community services - - 178,607 - 67,679 21,124 139 Capital improvements 1,915,032 283,086 5,494,965 - - - - Debt service: Principal - - - - - - - Interest and fiscal charges - - - - - - - 9,018,598 1,100,849 8,700,328 988,662 67,679 21,124 139 112,569 (6,263) 5,995 (139) Total expenditures REVENUES OVER (UNDER) 4,281,165 EXPENDITURES (28,534) (346,596) OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets Transfers in Transfers out Total other financing sources (uses) 5,858 - - - - - - 144,000 - - - - - - (4,544,420) (1,525) - (143,593) - - - (4,394,562) (1,525) - (143,593) - - - (113,397) (30,059) REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (346,596) (31,024) 640,447 (6,263) 5,995 (139) 25,498 139 FUND BALANCES (DEFICITS): Beginning of year End of year $ 15,096,309 2,689,926 (760,786) 14,982,912 $ 2,659,867 $ (1,107,382) $ 609,423 274,233 $ 267,970 $ 31,493 $ (Continued) 90 Debt Service Capital Projects Special General Public Works Downtown Municipal Obligation Highway User Assessments and General Community Redevelopment Arts Bonds Revenue Bonds Bonds Government Services $ - $ $ - $ - $ - $ - $ - - - - - - - - - - - - 218,678 3,024,979 - - - - 663,209 - - - 33,814 - - - - - 30 6,263 - - 11,483 7,556 110,096 - - - - - - 234,218 30 40,077 - - 674,692 226,234 3,369,293 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 193,768 - - - - - - - - - - 8,458,983 12,785,250 - - 12,845,000 3,180,000 1,235,000 - - - - 12,139,641 1,198,194 308,644 - - - 193,768 24,984,641 4,378,194 1,543,644 8,458,983 12,785,250 (153,691) (24,984,641) (4,378,194) (8,232,749) (9,415,957) 30 $ - - (868,952) - - - - - - - - - 24,984,641 4,378,194 - - - (7,945) - - - - - - (7,945) - 24,984,641 4,378,194 - - - (7,915) (153,691) - - 7,915 813,059 - - - $ 659,368 $ - $ - (868,952) 1,542,054 $ 91 673,102 $ (8,232,749) (9,415,957) 7,222,354 18,966,791 (1,010,395) $ 9,550,834 City of Chandler Combining Statement of Revenues, Expenditures and Changes in Fund Balances Non-Major Governmental Funds For the year ended June 30, 2010 Capital Projects Capital Public Safety Equipment Total Other Buildings and Acquisition and Special Computer Fleet Governmental Improvements Replacement Assessments Purchases Replacement Funds REVENUES: Highway user taxes $ Grants and entitlements - $ - System development fees - $ - - $ - - $ - - $ 13,116,481 - 10,377,502 617,821 - - - - 3,861,478 Special assessments - - - - - 663,209 Charges for services - - - - - 38,008 80,762 116,537 49,672 23,424 7,115 625,603 - 67,995 - 28,122 - 535,069 698,583 184,532 49,672 51,546 7,115 29,217,350 Interest income Miscellaneous Total revenues EXPENDITURES: Current: General government - - 126,668 430,766 - 703,533 Public safety - - - - - 1,009,585 Community development - - - - - 2,859,734 Public works - - - - - 7,921,329 Community services - - - - - 461,317 Capital improvements 4,546,525 220,131 - 2,513,301 - 36,217,273 Debt service: Principal - - - - - 17,260,000 Interest and fiscal charges - - - - - 13,646,479- 4,546,525 220,131 126,668 2,944,067 - 80,079,250 (3,847,942) (35,599) (76,996) (2,892,521) Total expenditures REVENUES OVER (UNDER) EXPENDITURES 7,115 (50,861,900) OTHER FINANCING SOURCES (USES): Proceeds from disposal of capital assets - - - - 5,329 11,187 Transfers in - 2,302,427 - 2,407,791 60,245 34,277,298 Transfers out - - - - - 2,407,791 65,574 29,555,689 72,689 (21,306,211) 409,780 58,975,071 (35,313) - Total other financing sources (uses) 2,267,114 (4,732,796) REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER FINANCING USES (3,847,942) 2,231,515 (2,308,511) 6,897,231 (76,996) (484,730) FUND BALANCES (DEFICITS): Beginning of year End of year $ (6,156,453) $ 9,128,746 4,885,868 $ 4,808,872 2,572,764 $ 2,088,034 $ 482,469 $ 37,668,860 (Concluded) 92 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Highway User Special Revenue For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Highway user taxes $ Charges for services Interest revenue 13,950,955 $ 13,950,955 17,000 17,000 4,194 (12,806) 243,000 243,000 172,045 (70,955) - - 7,044 14,210,955 14,210,955 13,299,764 5,368,758 6,818,499 - 6,818,499 10,154,010 8,243,226 7,376,658 866,568 2,636,707 3,084,208 2,886,537 197,671 18,159,475 18,145,933 10,263,195 7,882,738 (3,948,520) (3,934,978) 3,036,569 6,971,547 5,858 Miscellaneous Total revenues $ 13,116,481 $ (834,474) 7,044 (911,191) EXPENDITURES: Current: General government Public works Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Proceeds from disposal of capital assets - - 5,858 144,000 144,000 144,000 (285,655) (285,655) (4,544,420) (4,258,765) (141,655) (141,655) (4,394,562) (4,252,907) Change in fund balances (4,090,175) (4,076,633) (1,357,993) 2,718,640 Fund balances, July 1, 2009 15,590,590 15,590,590 15,590,590 11,500,415 $ 11,513,957 Transfers in Transfers out Total other financing sources (uses) Fund balances, June 30, 2010 $ 93 $ 14,232,597 - $ 2,718,640 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Local Transportation Assistance Special Revenue For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ 1,573,600 $ 1,573,600 $ 929,240 $ (644,360) Interest revenue 40,000 40,000 30,688 Miscellaneous 60,000 60,000 112,389 1,673,600 1,673,600 1,072,317 800,200 476,872 - 476,872 1,327,709 1,485,751 1,073,847 411,904 430,000 608,828 522,028 86,800 2,557,909 2,571,451 1,595,875 975,576 Total revenues (9,312) 52,389 (601,283) EXPENDITURES: Current: General government Public works Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures (884,309) (897,851) (523,558) 374,293 (5,377) (5,377) (1,525) 3,852 (5,377) (5,377) (1,525) 3,852 (889,686) (903,228) (525,083) 378,145 Other financing sources (uses): Transfers out Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2009 Fund balances, June 30, 2010 2,134,839 $ 1,245,153 94 2,134,839 $ 1,231,611 2,134,839 $ 1,609,756 $ 378,145 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Grants-in-Aid Special Revenue For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ 25,556,857 $ 25,571,857 $ 8,347,196 $ (17,224,661) Interest revenue - - 6,338 Miscellaneous - - 200 200 25,556,857 25,571,857 8,353,734 (17,218,123) General government 4,256,800 5,010,859 151,192 4,859,667 Public safety 2,171,000 2,409,935 1,083,189 1,326,746 Public works 12,646,157 145,000 - 145,000 Community development 2,809,246 2,824,366 2,815,989 8,377 Community services 1,014,901 1,074,431 203,624 870,807 13,485,462 27,592,586 14,138,017 13,454,569 36,383,566 39,057,177 18,392,011 20,665,166 (10,826,709) (13,485,320) (10,038,277) 3,447,043 (8,744,815) (8,744,815) (8,744,815) - (22,230,135) $ (18,783,092) Total revenues 6,338 EXPENDITURES: Current: Capital improvements Total expenditures Change in fund balances Fund balances (deficits), July 1, 2009 Fund balances (deficits), June 30, 2010 $ (19,571,524) 95 $ $ 3,447,043 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Community Development Special Revenue For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Grants and entitlements $ 4,600,000 Interest revenue $ 4,585,000 $ 1,101,068 $ (3,483,932) - - 162 162 4,600,000 4,585,000 1,101,230 (3,483,770) Capital improvements 474,995 488,882 217,916 270,966 General government 712,281 40,273 - 40,273 4,124,274 4,767,395 2,510,824 2,256,571 5,311,550 5,296,550 2,728,740 2,567,810 Total revenues EXPENDITURES: Current: Community development Total expenditures Excess (deficiency) of revenues over expenditures (711,550) (711,550) (1,627,510) (915,960) - - (143,593) (143,593) - - (143,593) (143,593) (711,550) (711,550) (1,771,103) (1,059,553) 173,708 173,708 Other financing sources (uses): Transfers out Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2009 Fund balances (deficits), June 30, 2010 $ (537,842) 96 $ (537,842) 173,708 $ (1,597,395) $ (1,059,553) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Parks and Recreation Special Revenue For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ Miscellaneous 4,000 $ 4,000 $ 2,863 $ (1,137) 89,500 89,500 58,554 (30,946) 93,500 93,500 61,417 (32,083) General government 4,100 - - - Community services 165,550 172,499 68,218 104,281 169,650 172,499 68,218 104,281 Change in fund balances (76,150) (78,999) (6,801) 72,198 Fund balances, July 1, 2009 267,570 267,570 Total revenues EXPENDITURES: Current: Total expenditures Fund balances, June 30, 2010 $ 191,420 97 $ 188,571 267,570 $ 260,769 $ 72,198 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Library Special Revenue For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ Miscellaneous Total revenues 1,000 $ 1,000 $ 569 $ (431) 55,000 55,000 26,550 (28,450) 56,000 56,000 27,119 (28,881) 5,063 1,883 - 1,883 54,000 54,331 21,125 33,206 59,063 56,214 21,125 35,089 5,994 6,208 39,496 - EXPENDITURES: Current: General government Community services Total expenditures Change in fund balances (3,063) Fund balances, July 1, 2009 39,496 Fund balances, June 30, 2010 $ 36,433 98 (214) 39,496 $ 39,282 $ 45,490 $ 6,208 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Community Center Building Special Revenue For the year ended June 30, 2010 Total Budgeted Amounts Original Final Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget EXPENDITURES: Current: Community services $ - Total expenditures Change in fund balances Fund balances, July 1, 2009 Fund balances (deficit), June 30, 2010 $ - $ 139 $ (139) - - 139 (139) - - (139) (139) 93 93 93 99 $ $ 93 93 $ (46) $ (139) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Downtown Redevelopment - Special Revenue Fund For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ Total revenues 100 $ 100 $ 30 $ (70) 100 100 30 (70) 100 100 - 100 100 100 - 100 - - 30 30 - - (7,945) (7,945) - - (7,945) (7,945) - - 7,975 (7,915) 7,899 7,899 7,899 EXPENDITURES: Current: General government Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers out Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2009 Fund balances, June 30, 2010 $ 7,899 100 $ 7,899 $ 15,874 $ (7,915) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Municipal Arts - Special Revenue Fund For the year ended June 30, 2010 Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget Budgeted Amounts Original Final REVENUES: Charges for services $ Interest revenue 33,816 $ 33,816 $ 33,814 $ (2) 1,000 1,000 6,262 5,262 34,816 34,816 40,076 5,260 General government 37,000 - - - Community services 250,000 322,584 318,699 3,885 287,000 322,584 318,699 3,885 (252,184) (287,768) (278,623) 9,145 693,967 693,967 693,967 Total revenues EXPENDITURES: Current: Total expenditures Change in fund balances Fund balances , July 1, 2009 Fund balances , June 30, 2010 $ 441,783 101 $ 406,199 $ 415,344 $ 9,145 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Public Works and General Government - Capital Projects Fund For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees $ Interest revenue Total revenues 375,000 $ 375,000 $ 218,678 $ (156,322) 92,000 92,000 7,556 (84,444) 467,000 467,000 226,234 (240,766) 13,189,992 95,291 - 95,291 EXPENDITURES: Current: General government Capital improvements 1,298,465 14,791,984 11,189,950 3,602,034 14,488,457 14,887,275 11,189,950 3,697,325 (14,021,457) (14,420,275) (10,963,716) 3,456,559 6,335,000 6,335,000 - (6,335,000) 6,335,000 6,335,000 - (6,335,000) Change in fund balances (7,686,457) (8,085,275) (10,963,716) (2,878,441) Fund balances (deficits), July 1, 2009 (1,691,809) (1,691,809) (1,691,809) - (9,777,084) $ (12,655,525) Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Fund balances (deficits), June 30, 2010 $ (9,378,266) 102 $ $ (2,878,441) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Community Services - Capital Projects Fund For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees Interest revenue $ 1,607,500 $ 1,607,500 $ 3,024,979 $ 1,417,479 286,000 286,000 110,097 (175,903) - - 234,218 234,218 1,893,500 1,893,500 3,369,294 1,475,794 Community services General government 31,803,570 1,161,068 14,194,006 - 14,194,006 Capital improvements 14,455,000 32,460,544 13,580,216 18,880,328 47,419,638 46,654,550 13,580,216 33,074,334 (45,526,138) (44,761,050) (10,210,922) 34,550,128 14,257,500 14,257,500 - (14,257,500) (4,286,149) Miscellaneous Total revenues EXPENDITURES: Current: Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Face amount of bonds issued Transfers in 4,286,149 4,286,149 - (5,286,149) (5,299,971) - 5,299,971 13,257,500 13,243,678 - (13,243,678) Change in fund balances (32,268,638) (31,517,372) (10,210,922) 21,306,450 Fund balances (deficits), July 1, 2009 (83,118,640) (83,118,640) (83,118,640) - $ (115,387,278) $ (114,636,012) Transfers out Total other financing sources (uses) Fund balances (deficits), June 30, 2010 103 $ (93,329,562) $ 21,306,450 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Public Safety Buildings and Improvements - Capital Projects Fund For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: System development fees $ Interest revenue Total revenues 520,000 $ 520,000 $ 617,821 $ 97,821 208,000 208,000 80,764 (127,236) 728,000 728,000 698,585 (29,415) 445,971 28,344,197 7,545,176 - - 7,545,176 - - 20,846,174 12,077,762 8,768,412 28,790,168 28,391,350 12,077,762 16,313,588 (28,062,168) (27,663,350) (11,379,177) 16,284,173 EXPENDITURES: Current: General government Public safety Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Proceeds from the issuance of debt 13,950,000 13,950,000 - (13,950,000) 13,950,000 13,950,000 - (13,950,000) Change in fund balances (14,112,168) (13,713,350) (11,379,177) 2,334,173 Fund balances (deficits), July 1, 2009 (25,003,442) (25,003,442) (25,003,442) - (39,115,610) $ (38,716,792) Total other financing sources (uses) Fund balances (deficits), June 30, 2010 $ 104 $ (36,382,619) $ 2,334,173 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Capital Equipment Acquisition and Replacement - Capital Projects Fund For the year ended June 30, 2010 Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget Budgeted Amounts Original Final REVENUES: Interest revenue $ Miscellaneous 60,000 $ 60,000 $ 116,538 $ 56,538 10,000 10,000 68,193 58,193 70,000 70,000 184,731 114,731 General government 2,700,000 2,452,580 - 2,452,580 Capital improvements 1,787,300 2,036,700 259,808 1,776,892 4,487,300 4,489,280 259,808 4,229,472 (4,417,300) (4,419,280) (75,077) 4,344,203 Total revenues EXPENDITURES: Current: Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Proceeds from disposal of capital assets Transfers in Transfers out 100,000 3,072,750 3,072,750 (35,313) Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2009 Fund balances, June 30, 2010 100,000 $ (35,313) (198) (100,198) 2,302,427 (770,323) (35,313) - 3,137,437 3,137,437 2,266,916 (1,279,863) (1,281,843) 2,191,839 3,473,682 4,716,797 4,716,797 4,716,797 - 3,436,934 $ 3,434,954 $ 6,908,636 105 (870,521) $ 3,473,682 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Special Assessments - Capital Projects Fund For the year ended June 30, 2010 Positive Budgeted Amounts Original Final Non-GAAP (Negative) Actual Variance with Amounts Final Budget REVENUES: Interest revenue $ Total revenues 72,000 $ 72,000 $ 49,671 $ (22,329) 72,000 72,000 49,671 (22,329) 139,308 139,308 126,667 12,641 139,308 139,308 126,667 12,641 (67,308) (67,308) (76,996) (9,688) EXPENDITURES: Current: General government Total expenditures Change in fund balances Fund balances, July 1, 2009 Fund balances, June 30, 2010 4,867,052 $ 4,799,744 106 4,867,052 $ 4,799,744 4,867,052 $ 4,790,056 $ (9,688) City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Computer Purchases - Capital Projects Fund For the year ended June 30, 2010 Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget Budgeted Amounts Original Final REVENUES: Interest revenue $ 41,000 Miscellaneous Total revenues $ 41,000 $ 23,424 $ 17,576 - - 28,122 28,122 41,000 41,000 51,546 45,698 EXPENDITURES: Current: General government 1,287,701 590,742 435,478 155,264 Capital improvements 3,778,810 4,484,006 3,009,261 1,474,745 5,066,511 5,074,748 3,444,739 1,630,009 (5,025,511) (5,033,748) (3,393,193) 1,675,707 2,354,610 2,354,610 2,407,791 53,181 2,354,610 2,354,610 2,407,791 53,181 (2,670,901) (2,679,138) 1,680,145 1,680,145 Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2009 Fund balances (deficits), June 30, 2010 $ (990,756) 107 $ (998,993) (985,402) 1,728,888 1,680,145 $ 694,743 $ 1,728,888 City of Chandler Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual Fleet Replacement - Capital Projects Fund For the year ended June 30, 2010 Positive Non-GAAP (Negative) Actual Variance with Amounts Final Budget Budgeted Amounts Original Final REVENUES: Interest revenue $ Total revenues 6,000 $ 6,000 $ 7,115 $ 1,115 6,000 6,000 7,115 1,115 174,490 174,490 - 174,490 29,000 29,000 - 29,000 203,490 203,490 - 203,490 (197,490) (197,490) 7,115 204,605 - - 5,329 5,329 EXPENDITURES: Current: General government Capital improvements Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Proceeds from disposal of capital assets Transfers in Total other financing sources (uses) Change in fund balances Fund balances, July 1, 2009 Fund balances, June 30, 2010 $ 60,245 60,245 60,245 - 60,245 60,245 65,574 5,329 (137,245) (137,245) 72,689 209,934 409,780 409,780 409,780 - 272,535 108 $ 272,535 $ 482,469 $ 209,934 109 110 City of Chandler Non-Major Proprietary Funds Solid Waste Used to account for the provision of solid waste (refuse) services to the residential customers of the City. All activities necessary to provide such service are accounted for in this fund. Airport Used to account for the provision of airport services at the City's municipal airport. All activities necessary to provide such service are accounted for in this fund, including but not limited to administration, operation, maintenance, financing, and related debt service, billing, and collection. Chandler Housing Authority Used to account for expenditures of the City's housing assistance programs which consist of housing owned and operated by the City and rent subsidy payments to private sector owners of dwelling units. Financing for this fund is derived from tenants and the United States Department of Housing and Urban Development. 111 City of Chandler Combining Statement of Net Assets Non-Major Proprietary Funds June 30, 2010 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds ASSETS Current assets: Equity in pooled cash and investments $ 11,124,221 $ 280,784 $ 3,289,500 $ 14,694,505 1,870,500 4,775 17,239 1,892,514 Due from other governments - - 33,319 33,319 Inventories - 9,639 - 9,639 Prepaid items - - 377,617 377,617 12,994,721 295,198 3,717,675 17,007,594 Other assets - 1,443 - 1,443 Notes receivable - long term - - 394,450 394,450 7,088,918 19,403,797 1,597,897 28,090,612 Accounts receivable Total current assets Noncurrent assets: Capital assets: Non-depreciable Depreciable, net 10,338,411 11,512,350 7,617,815 29,468,576 Total capital assets 17,427,329 30,916,147 9,215,712 57,559,188 17,427,329 30,917,590 9,610,162 57,955,081 30,422,050 31,212,788 13,327,837 74,962,675 Total noncurrent assets Total assets LIABILITIES Current liabilities: Accounts payable 796,448 902 52,206 849,556 Accrued payroll 43,274 15,628 48,353 107,255 Trust liabilities and deposits 16,512 46,415 163,000 225,927 - 3,094 - 3,094 176,321 - - 176,321 3,722 2,076 4,249 10,047 Accrued interest Unearned revenue Compensated absences payable - current 112 Bonds payable - current Deferred bond premium - current - 20,000 - 20,000 - 196 - 196 334,104 - - 334,104 1,370,381 88,311 267,808 1,726,500 Compensated absences payable - long term 62,621 34,913 70,600 168,134 Advances from other funds 29,777 4,734 - 34,511 - 181,000 - 181,000 Landfill closure and postclosure liability - current Total current liabilities Noncurrent liabilities: Bonds payable - long term Deferred bond premium - long term OPEB liability - long term Arbitrage liability - long term Landfill closure and postclosure liability - long term Total noncurrent liabilities Total liabilities - 3,330 - 3,330 21,090 8,773 - 29,863 - 8 - 8 4,005,896 - - 4,005,896 4,119,384 232,758 70,600 4,422,742 5,489,765 321,069 338,408 6,149,242 17,427,329 30,514,147 9,215,712 57,157,188 7,504,956 377,572 3,773,717 11,656,245 NET ASSETS Invested in capital assets, net of related debt Unrestricted Total net assets $ 24,932,285 $ 30,891,719 113 $ 12,989,429 $ 68,813,433 City of Chandler Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets Non-Major Proprietary Funds For the year ended June 30, 2010 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds OPERATING REVENUES: $ Service fees 12,891,628 $ 812,809 $ - $ 13,704,437 Grants and entitlements - - 6,367,024 6,367,024 Rentals - 2,942 521,404 524,346 Miscellaneous - 3,827 392,410 396,237 12,891,628 819,578 7,280,838 20,992,044 1,516,800 Total operating revenues OPERATING EXPENSES: General and administrative 1,416,800 100,000 - Personal services 1,402,634 531,162 1,567,719 3,501,515 Contractual services 8,880,028 37,056 320,978 9,238,062 736,291 374,617 595,483 1,706,391 4,601,036 Commodities Housing assistance payments Landfill closure and postclosure expense Depreciation and amortization expense Total operating expenses - - 4,601,036 1,553,810 - - 1,553,810 608,827 748,928 569,233 1,926,988 14,598,390 1,791,763 7,654,449 24,044,602 (1,706,762) OPERATING INCOME (LOSS) (972,185) (373,611) (3,052,558) NONOPERATING REVENUES (EXPENSES): 119,099 Interest expense - Accretion of bond premium - 196 - (91) - (91) 51 - (7,007) Amortization of bond issuance costs Gain (loss) on disposal of capital assets 1,193 158,829 Interest revenue (7,058) 112,041 Total nonoperating revenues (expenses) (6,188) - (4,839) (1,594,721) INCOME (LOSS) BEFORE CAPITAL CONTRIBUTIONS AND TRANSFERS 38,537 (6,188) 196 38,537 145,739 (977,024) (335,074) (2,906,819) CAPITAL CONTRIBUTION AND TRANSFERS: Capital contributions 59,772 871,364 615,796 1,546,932 Transfers in 36,000 219,193 428,594 683,787 Transfers out (50,908) (4,250) 44,864 Total transfers (1,549,857) Net income (loss) - 1,086,307 1,044,390 109,283 709,316 30,782,436 12,280,113 (55,158) 2,175,561 (731,258) NET ASSETS Beginning of year End of year 26,482,142 $ 114 24,932,285 $ 30,891,719 $ 12,989,429 69,544,691 $ 68,813,433 115 City of Chandler Combining Statement of Cash Flows Non-Major Proprietary Funds For the year ended June 30, 2010 Solid Waste Airport Chandler Total Other Housing Proprietary Authority Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash received from customers $ 12,828,243 Cash received from grantors $ 816,956 - Cash payments to suppliers Cash payments to employees for services Net cash provided (used) by operating activities $ - 979,395 $ 14,624,594 6,358,335 6,358,335 (10,965,270) (529,601) (5,603,719) (17,098,590) (1,365,792) (515,600) (1,569,221) (3,450,613) 497,181 (228,245) 164,790 433,726 36,000 219,193 428,594 683,787 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers in Transfers out (50,908) (4,250) (14,908) Net cash provided (used) by noncapital financing activities - 214,943 428,594 (954,814) (777,034) (55,158) 628,629 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Acquisition and construction of capital assets 707 Proceeds from sales of capital assets - Interest paid on bonds Cash payments to other funds Capital contributions - 51 (20,947) (1,731,141) (5,711) 4,734 51 - (5,711) (16,213) 59,772 871,364 615,796 39,532 (84,376) (161,238) (206,082) 119,099 1,193 38,536 158,828 Net cash provided (used) by investing activities 119,099 1,193 38,536 158,828 Net increase (decrease) in cash and cash equivalents 640,904 (96,485) 470,682 1,015,101 Net cash provided (used) by capital and related financing activities 1,546,932 CASH FLOWS FROM INVESTING ACTIVITIES: Investment income CASH AND CASH EQUIVALENTS: Beginning of year End of year 377,269 2,818,818 $ 11,124,221 10,483,317 $ 280,784 $ 3,289,500 $ 14,694,505 13,679,404 $ $ (972,185) $ $ (3,052,558) RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Operating income (loss) (1,706,762) (373,611) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 608,827 748,928 116 569,233 1,926,988 Landfill closure and postclosure costs 1,553,810 - - 1,553,810 Changes in assets and liabilities: (Increase) decrease in receivables (172,227) (4,759) (Increase) decrease in inventories - 2,974 (Increase) decrease in other assets - 90 (2,036) (179,022) - 2,974 (30,032) (29,942) (5,358) 41,589 Increase (decrease) in payables 67,849 (20,902) Increase (decrease) in accrued payroll and compensated absences 22,412 10,900 - - 2,047 6,594 8,641 108,842 - - 108,842 Increase (decrease) in deposits Increase (decrease) in unearned revenue Increase (decrease) in other liabilities Total adjustments Net cash provided (used) by operating activities 33,312 14,430 4,662 - 19,092 2,203,943 743,940 538,401 3,486,284 $ 497,181 $ $ 7,058 $ (228,245) $ 164,790 $ 433,726 - $ 7,058 NONCASH INVESTING, CAPITAL, AND FINANCING ACTIVITIES: Loss on disposal of assets - $ Accretion of bond premiums - 196 - 196 Amortization of bond issuance costs - 91 - 91 117 City of Chandler Statement of Changes in Assets and Liabilities - Agency Fund Fiduciary Funds For the year ended June 30, 2010 Balance Balance July 1, 2009 Additions Deletions June 30, 2010 Miscellaneous Deposit Fund Assets: Equity in pooled cash and investments Total assets $ 18,014 $ 60,714 $ (69,228) $ 9,500 $ 18,014 $ 60,714 $ (69,228) $ 9,500 $ 18,014 $ 59,714 $ (68,228) $ 9,500 $ 18,014 $ 59,714 $ (68,228) $ 9,500 Liabilities: Due to others Total liabilities 118 119 120 City of Chandler Financial Data Schedule Housing and Redevelopment For the year ended June 30, 2010 AS SUBMITTED ELECTRONICALLY TO: U.S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT REAL ESTATE ASSESSMENT CENTER (REAC) The Financial Data Schedule is a required electronic submission to the U.S. Department of Housing and Urban Development by all Housing Authorities receiving HUD funding. Financial data on each of the grant programs is presented in a combining schedule. The Financial Data Schedule presented herein has been submitted electronically to HUD. The activities of the City of Chandler Housing and Redevelopment Division are reported as an enterprise fund in the City's Comprehensive Annual Financial Report. 121 City of Chandler Financial Data Schedule Housing and Redevelopment June 30, 2010 COMBINING STATEMENT OF NET ASSETS - ALL HUD PROGRAMS Low Rent Public Housing FDS Line # AMP 1 AMP 2 All AMPs 14.850a 14.850a 14.850a Account Description ASSETS 111 Cash - Unrestricted 113 Cash - Restricted for FSS Escrow Accounts 114 $ 462,958 $ 84,735 $ 547,693 - - - Cash - Security Deposits 53,253 56,500 109,753 122 Accounts Receivable - HUD Other Projects 17,924 15,395 33,319 124 Accounts Receivable - Other Governments - - - 125 Accounts Receivable - Miscellaneous - - - 4,171 11,549 15,720 126 126.1 Accounts Receivable - Tenants - Dwelling Rents Allowance for Doubtful Accounts - Dwelling Rents (835) (975) - - (1,810) - 4,509 5,576 10,085 127 Notes and Mortgages Receivable - current 142 Prepaid Expenses and Other Assets 161 Land 1,932,844 1,582,289 3,515,133 162 Buildings 4,914,894 8,514,493 13,429,387 164 Furniture, Equipment, Machinery - Admin 166 Accumulated Depreciation 175,545 71,601 (4,891,661) 247,146 (3,887,121) (8,778,782) 167 Construction in Progress - - - 171 Notes and Mortgages Receivable - non-current - - - TOTAL ASSETS $ 2,673,602 $ 6,454,042 $ 9,127,644 $ 24,167 $ 20,623 $ 44,790 LIABILITIES 312 Accounts Payable 321 Accrued Wage/Payroll Taxes Payable 322 Accrued Compensated Absences - Current 341 Tenant Security Deposits 342 Deferred Revenues 345 Other Current Liabilities 353 Noncurrent Liabilities - Other 354 Accrued Compensated Absences - Noncurrent TOTAL LIABILITIES 14,617 9,247 1,042 361 23,864 1,403 53,253 56,500 109,753 - - - 3,746 4,369 8,115 - - - 17,310 6,004 23,314 114,135 97,104 211,239 2,131,622 6,281,262 8,412,884 - - - 427,845 75,676 503,521 2,559,467 6,356,938 8,916,405 NET ASSETS 508.1 Invested in Capital Assets, net of related debt 511.1 Restricted Net Assets 512.1 Unrestricted Net Assets TOTAL NET ASSETS TOTAL LIABILITIES AND NET ASSETS $ 2,673,602 $ 6,454,042 $ 9,127,644 (Continued) 122 Business Activities Central $ $ $ $ Housing Formula Total Choice Capital Fund Office Other Business Vouchers Stimulus Grant 14.850a Business Activities 14.871 14.885 474,571 $ 1,652,065 $ 2,126,636 $ 462,536 $ Total - $ 3,136,865 - - - 40,382 - 40,382 - 2,500 2,500 - - 112,253 33,319 - - - - - - - - - - - - - - 3,329 - 3,329 - - - - - 15,720 - - - - - (1,810) - - - - - - - - - 367,532 - 377,617 - 200,000 200,000 - - 3,715,133 - 520,613 520,613 - - 13,950,000 32,718 129,670 162,388 35,470 - (12,656) (73,897) (86,553) (29,090) - 445,004 (8,894,425) - - - - - - - 394,450 394,450 - - 394,450 494,633 $ 2,825,401 $ 4,480 $ 18 $ 3,320,034 $ 4,498 $ 880,159 $ 2,918 $ - - $ 13,327,837 $ 52,206 14,142 - 14,142 10,347 - 2,330 - 2,330 516 - 48,353 4,249 - 2,500 2,500 - - 112,253 - - - - - - - 2,250 2,250 - - 10,365 - - - 40,382 - 40,382 38,713 - 38,713 8,573 - 70,600 59,665 4,768 64,433 62,736 - 338,408 20,062 776,386 796,448 6,380 - 9,215,712 - - - 683,305 - 683,305 414,906 2,044,247 2,459,153 127,738 - 3,090,412 434,968 2,820,633 3,255,601 817,423 - 12,989,429 494,633 $ 2,825,401 $ 3,320,034 $ 880,159 $ - $ 13,327,837 (Concluded) 123 City of Chandler Financial Data Schedule Housing and Redevelopment For the year ended June 30, 2010 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS - ALL HUD PROGRAMS Low Rent Public Housing AMP 1 14.850a FDS Line # AMP 2 14.850a All AMPs 14.850a Account Description REVENUES 70300 70400 70600 70610 70710 70720 70730 71100 713 713.1 71400 71500 72000 Net Tenant Rental Revenue Tenant Revenue - Other HUD Operating Grants HUD Capital Grants Management Fees Earned Asst Management Fees Earned Bookkeeping Fees Earned Investment Income - Unrestricted Proceeds from disposition of assets held for sale Cost of Sale of Assets Fraud Recovery Other Revenue Investment Income - Restricted $ TOTAL REVENUES 188,438 7,611 1,006,891 3,217 18,334 - $ 299,216 120 556,035 23,454 5,362 23,939 - $ 487,654 7,731 1,562,926 23,454 8,579 42,273 - 1,224,491 908,126 2,132,617 Administrative Salaries Auditing Fees Management Fees Bookkeeping Fees Employee Benefit Contributions - Administrative Office Expenses Other Operating - Administrative Asset Management Fees Tenant Services - Salaries Employee Benefit Contributions - Tenant Services Tenant Services - Other Water Electricity Gas Other Utility Expenditures Ordinary Maintenance and Operations - Labor Ordinary Maintenance and Operations - Materials Ordinary Maintenance and Operations - Contract Costs Ordinary Maintenance and Operations - Ordinary Maintenance Insurance Other General Expenditures Compensated Absences Bad Debt - Tenant rents Total Operating Expenditures 162,539 1,500 116,110 14,513 58,752 3,634 15,743 19,560 45,611 15,898 1,810 35,175 43,762 1,412 34,853 173,258 175,852 158,151 62,978 10,994 10,969 2,188 4,783 1,170,045 110,153 1,500 99,907 12,495 39,627 1,729 12,745 16,800 3,128 5,595 3,310 101,756 123,973 146,059 36,155 17,741 3,022 429 4,191 740,315 272,692 3,000 216,017 27,008 98,379 5,363 28,488 36,360 45,611 15,898 1,810 38,303 49,357 1,412 38,163 275,014 299,825 304,210 99,133 28,735 13,991 2,617 8,974 1,910,360 Other Expenditures: Housing Assistance Payments HAP Portability-In Depreciation TOTAL EXPENDITURES 258,844 1,428,889 270,137 1,010,452 528,981 2,439,341 EXPENSES 91100 91200 91300 91301 91500 91600 91900 92000 92100 92300 92400 93100 93200 93300 93800 94100 94200 94300 94500 96100 96200 96210 96400 97300 97350 97400 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES BEFORE OTHER FINANCING SOURCES (USES) (204,398) (102,326) (306,724) 103,960 483,723 39,632 (461,243) 143,592 22,480 587,683 (421,611) 166,072 OTHER FINANCING SOURCES (USES) 10030 11040 Operating Transfers In from Primary Government Equity Transfers TOTAL OTHER FINANCING SOURCES (USES) CHANGE IN NET ASSETS 383,285 TOTAL NET ASSETS, BEGINNING OF YEAR NET ASSETS, END OF YEAR (523,937) 2,176,182 $ 2,559,467 (140,652) 6,880,875 $ 6,356,938 9,057,057 $ 8,916,405 OTHER MEMORANDUM AMOUNTS 70600 11190 11210 Maximum Annual Contributions Commitment Unit Months Available Number of Unit Months Leased 1,956 1,935 124 1,680 1,666 3,636 3,601 (Continued) Business Activities Central Office 14.850a $ $ Other Business 286,753 36,360 70,298 3,980 - $ Housing Choice Vouchers 14.871 Total Business Activities 33,750 15,629 - $ 33,750 286,753 36,360 70,298 19,609 - $ 4,804,098 2,050 6,029 336,379 8,298 Formula Capital Fund Stimulus Grant 14.885 $ 592,343 - Eliminations $ (286,753) (36,360) (70,298) - Total $ 521,404 7,731 6,367,024 615,797 30,238 6,029 378,652 8,298 397,391 49,379 446,770 5,156,854 592,343 (393,411) 7,935,173 279,800 98,014 10,487 46,486 477 17,331 2,990 455,585 291 2,012 337 178 43 333 62 129 719 5,312 9,733 19,149 280,091 2,012 337 98,014 10,665 43 333 62 129 47,205 5,789 9,733 17,331 2,990 474,734 157,482 3,000 68,724 42,953 76,317 5,360 42,892 46,898 21,151 18,633 9,088 492,498 - (286,753) (70,298) (36,360) (393,411) 710,265 6,000 272,710 10,723 82,045 92,509 37,049 1,810 38,346 49,690 1,474 38,292 322,219 305,614 313,943 116,464 28,735 32,624 14,695 8,974 2,484,181 3,674 459,259 34,949 54,098 38,623 513,357 4,286,404 314,632 1,629 5,095,163 - (393,411) 4,286,404 314,632 569,233 7,654,450 (61,868) (4,719) (66,587) 61,691 592,343 - 280,723 135,000 - 569,863 135,000 569,863 150,000 - (592,343) - 428,592 - 135,000 569,863 704,863 150,000 (592,343) - 428,592 73,132 565,144 638,276 211,691 - - 709,315 361,836 2,255,489 2,617,325 605,732 - - 12,280,114 434,968 - $ 2,820,633 - $ 3,255,601 - $ 817,423 $ 4,804,098 5,760 5,756 - $ - $ 12,989,429 (Concluded) 125 126 Acct book inside tabs 11/9/10 8:55 AM Page 5 Statistical Section The statistical section includes various statistical schedules including historical expenditure comparisons, property taxes, debt service, and demographic information about the City. Carpool and use public transportation when possible. An average 2005 passenger car costs about 31 cents per mile in fuel, maintenance and depreciation to drive. If you share rides and use other means to get to work, you'll save yourself money, reduce congestion on the roads and cut your global warming pollution. Statistical Section Statistical Section Acct book inside tabs 11/9/10 8:55 AM Page 6 CITY OF CHANDLER, ARIZONA Statistical Section This part of the City of Chandler’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city’s overall financial health. Contents Page Financial Trends 128 Schedules 1-6 contain information to help the reader understand how the city’s financial performance and well-being have changed over time. Revenue Capacity 144 Schedules 7-9 contain information to help the reader assess the factors affecting the city’s ability to generate its sales and use tax. Debt Capacity 148 Schedules 10-13 present information to help the reader assess the affordability of the city’s current levels of outstanding debt and the city’s ability to issue additional debt in the future. Demographic and Economic Information 155 Schedules 14-15 offer demographic and economic indicators to help the reader understand the environment within which the city’s financial activities take place and to help make comparisons over time and with other governments. Operating information 158 Schedules 16-18 contain information about the city’s operations and resources to help the reader understand how the city’s financial information relates to the services the city provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The city implemented Statement 34 in 2002; schedules presenting government-wide information include information beginning in that year. 127 CITY OF CHANDLER, ARIZONA NET ASSETS BY COMPONENT LAST NINE FISCAL YEARS (accrual basis of accounting) Fiscal Year 2002 2003 2004 Governmental activities Invested in capital assets, net of related debt $ Restricted Unrestricted Total governmental activities net assets (62,026,075) $ 55,963,968 $ 101,665,063 22,296,791 117,111,402 90,046,996 346,949,775 186,420,301 224,309,216 307,220,491 359,495,671 416,021,275 207,918,704 232,259,546 252,117,283 76,248,944 70,198,611 63,985,390 Business-type activities Invested in capital assets, net of related debt Restricted Unrestricted Total business-type activities net assets 71,248,431 70,831,613 82,444,533 355,416,079 373,289,770 398,547,206 145,892,629 288,223,514 353,782,346 98,545,735 187,310,013 154,032,386 418,198,206 662,636,570 257,251,914 732,785,441 Primary government Invested in capital assets, net of related debt Restricted Unrestricted Total primary government net assets $ $ $ (1) The significant increase in this year is due to the addition of the retroactive infrastructure. The city implemented Statement 34 in 2002; schedules presenting government-wide information include information beginning in that year. 128 306,753,749 814,568,481 Schedule 1 Fiscal Year 2005 $ $ 162,790,025 $ 2006 2007 2008 $ 353,996,843 2009 $ 2010 260,653,345 (1) $ 288,893,354 110,932,310 106,396,966 115,343,816 56,979,639 433,851,899 117,712,539 $ 537,576,346 94,440,806 214,663,854 208,727,675 265,645,323 341,971,306 271,690,158 198,059,181 488,386,189 575,777,986 669,882,493 752,947,788 823,254,596 830,076,333 275,991,278 325,992,618 347,306,362 427,130,654 387,401,986 298,938,820 72,538,299 52,511,899 57,835,328 24,319,427 - - 78,334,422 76,090,729 78,718,941 45,300,009 98,413,928 163,103,784 426,863,999 454,595,246 483,860,631 496,750,090 485,815,914 462,042,604 438,781,303 586,645,963 636,199,716 781,127,497 821,253,885 836,515,166 183,470,609 158,908,865 173,179,144 81,299,066 117,712,539 94,440,806 292,998,276 915,250,188 284,818,404 1,030,373,232 344,364,264 1,153,743,124 387,271,315 1,249,697,878 370,104,086 1,309,070,510 361,162,965 1,292,118,937 $ $ $ 129 $ $ CITY OF CHANDLER, ARIZONA CHANGES IN NET ASSETS LAST NINE FISCAL YEARS (accrual basis of accounting) Fiscal Year 2002 2003 2004 Expenses Governmental activities: General government $ Public safety 32,159,571 $ 50,221,565 Community development 30,610,529 $ 54,854,074 32,925,516 59,666,119 6,760,718 7,067,675 7,457,073 Public works 20,516,230 161,195,319 21,309,408 Community services 17,668,011 19,823,356 20,200,390 Interest and fiscal charges 12,398,031 10,858,078 11,426,919 139,724,126 284,409,031 152,985,425 Water 33,004,765 35,992,958 40,544,967 Wastewater 21,800,113 22,986,319 24,505,362 Solid waste 8,675,676 14,414,774 9,705,932 Airport 1,305,935 1,420,574 1,458,068 Community services - housing authority 6,584,884 7,082,747 8,977,049 71,371,373 81,897,372 85,191,378 Total governmental activities expenses Business-type activities: Total business-type activities expenses Total primary government expenses $ 211,095,499 $ The city implemented Statement 34 in 2002; schedules presenting government-wide information include information beginning in that year. 130 366,306,403 $ 238,176,803 Schedule 2a Fiscal Year 2005 $ 38,116,265 2006 $ 56,022,025 $ 36,669,140 2007 $ 63,840,179 42,317,392 2008 $ 54,459,719 2009 $ 52,293,004 2010 $ 48,920,813 76,200,082 80,860,917 87,609,165 92,421,801 6,973,474 8,706,473 9,154,407 11,692,559 10,429,826 11,715,276 17,175,426 31,940,075 32,402,242 39,241,652 47,180,197 56,155,939 19,017,024 24,087,695 29,464,039 33,086,565 34,278,998 35,299,676 10,649,133 11,658,090 11,479,112 14,880,604 12,938,524 13,541,708 147,953,347 176,901,652 201,017,274 234,222,016 244,729,714 258,055,213 41,689,649 38,582,431 40,687,283 53,554,653 53,201,379 62,556,496 25,825,966 25,294,189 27,230,862 30,657,939 36,079,767 38,227,999 9,598,287 8,154,317 9,843,824 6,845,979 12,076,998 14,605,448 1,582,079 1,765,772 1,757,279 1,602,268 2,269,691 1,797,991 7,773,223 6,713,829 9,133,427 7,593,242 7,239,185 7,654,449 86,469,204 80,510,538 88,652,675 100,254,081 110,867,020 124,842,383 234,422,551 $ 257,412,190 $ 289,669,949 $ 131 334,476,097 $ 355,596,734 $ 382,897,596 CITY OF CHANDLER, ARIZONA CHANGES IN NET ASSETS LAST NINE FISCAL YEARS (accrual basis of accounting) Fiscal Year 2002 2003 2004 Program Revenues Governmental activities: Charges for services: General government $ 13,215,733 $ 10,972,432 $ 14,339,606 Public safety 2,045,039 2,962,608 2,515,026 Community development 7,980,393 8,407,356 7,833,679 11,087,995 11,764,790 12,879,966 1,713,889 Public works Community services 1,339,966 1,950,792 1,691,043 3,323,489 1,488,369 32,016,067 29,223,045 22,107,766 69,376,236 68,604,512 62,878,301 Water 32,210,935 34,895,930 36,148,220 Wastewater 18,627,080 19,253,061 19,849,892 Solid waste 9,850,919 Operating grants and contributions Capital grants and contributions Total governmental activities program revenues Business-type activities: Charges for services: 8,575,815 9,290,021 Airport 737,950 832,232 896,968 Community services - housing authority 698,274 684,758 1,744,088 Operating grants and contributions Capital grants and contributions Total business-type activities program revenues Total primary government program revenues 5,588,924 6,165,984 6,655,089 32,752,908 29,607,826 34,348,267 99,191,886 100,729,812 109,493,443 $ 168,568,122 $ 169,334,324 $ 172,371,744 $ (70,347,890) $ (70,804,519) $ (90,107,124) Net (expense)/revenue Governmental activities Business-type activities Total primary government net expense 27,820,513 $ (42,527,377) 18,742,440 $ (52,062,079) (1) System development fees were reclassed to charges for services under program revenues. The City implemented Statement 34 in 2002; schedules presenting government-wide information include information beginning in that year. 132 24,302,065 $ (65,805,059) Schedule 2b Fiscal Year 2005 $ 11,770,912 2006 $ 2007 12,359,183 $ 12,793,179.00 2008 $ 12,629,779 2009 $ 14,349,483 2010 $ 16,621,003 2,921,707 3,303,895 4,178,941 4,317,843 4,802,272 7,110,304 10,119,322 8,338,156 10,405,425 5,488,535 3,581,458 3,336,188 14,037,835 24,529,838 13,145,192 15,831,165 5,226,726 6,025,846 1,988,832 2,272,309 2,272,826 2,699,469 5,235,864 4,515,980 1,041,858 2,167,327 3,707,115 1,897,300 2,337,910 5,510,710 13,880,993 12,751,519 26,428,112 36,104,151 23,902,360 8,159,960 55,761,459 65,722,227 72,930,790 78,968,242 59,436,073 51,279,991 36,860,006 38,112,680 39,054,531 40,613,727 39,707,910 42,276,145 20,541,547 20,499,458 21,083,587 25,145,258 25,922,530 28,406,808 9,787,298 12,218,720 12,769,423 12,979,695 12,762,120 12,891,628 931,547 1,005,728 974,190 773,449 741,556 815,751 631,494 648,766 661,509 1,061,658 595,420 521,404 (1) 6,839,056 6,634,435 6,312,438 6,114,138 6,225,928 6,367,024 35,817,247 23,547,210 28,014,518 19,782,193 9,110,319 8,484,239 111,408,195 102,666,997 108,870,196 106,470,118 95,065,783 99,762,999 $ 167,169,654 $ 168,389,224 $ 181,800,986 $ 185,438,360 $ 154,501,856 $ 151,042,990 $ (92,191,888) $ (111,179,425) $ (128,086,484) $ (155,253,774) $ (185,293,641) $ (206,775,222) $ (231,854,606) 24,938,991 $ (67,252,897) 22,156,459 $ (89,022,966) 20,217,521 $ (107,868,963) 6,216,037 $ 133 (149,037,737) (15,801,237) $ (201,094,878) (25,079,384) CITY OF CHANDLER, ARIZONA CHANGES IN NET ASSETS LAST NINE FISCAL YEARS (accrual basis of accounting) Fiscal Year 2002 2003 2004 Governmental Revenues and Other Changes in Net Assets Governmental activities: Taxes: Property taxes $ Sales taxes Franchise taxes 16,001,578 $ 17,953,164 $ 20,818,622 55,070,562 60,614,779 66,671,049 1,957,618 2,249,190 2,365,749 Highway user taxes - - - Other taxes - - - 37,850,975 39,559,356 37,903,674 8,105,353 15,165,191 State shared revenues System development fees 8,320,712 Investment income (loss) 7,677,017 Miscellaneous 162,714 261,069 - - Westcor contract payment Transfers (4,895,290) (1) 690,493 Total governmental activities 2,391,875 695,312 - (767,922) 127,731,669 621,256 123,079,699 146,632,728 Business-type activities: Investment income (loss) 4,007,601 Miscellaneous Transfers 639,190 (690,493) Total business-type activities: Total primary government (2,624,182) (1) 3,956,298 $ 131,687,967 $ $ 57,838,779 $ 31,776,811 89,615,590 1,199,710 897,511 767,922 376,917 (621,256) (958,749) 955,371 122,120,950 $ 147,588,099 $ 52,275,180 $ 56,525,604 $ 17,873,691 70,148,871 $ 25,257,436 81,783,040 Change in Net Assets Governmental activities Business-type activities Total primary government (1) The negative income this year is the result of the City's share of a loss recognized by the State of Arizona's Local Government Investment Pool. (2) System development fees were reclassed to charges for services under program revenues. The City implemented Statement 34 in 2002; schedules presenting government-wide information include information beginning in that year. 134 Schedule 2c Fiscal Year 2005 $ 2006 22,743,537 $ 2007 25,016,760 $ 2008 26,921,292 $ 95,410,460 34,063,123 $ 97,226,841 2010 38,957,986 $ 85,897,334 40,617,269 75,702,332 82,327,461 3,032,260 2,198,738 3,230,429 3,937,952 3,264,093 3,174,390 - - 16,490,129 15,856,863 13,849,284 13,116,481 83,019,726 - - 3,481,086 3,786,677 7,921,275 13,965,973 40,050,636 45,853,506 57,716,644 62,970,459 61,211,289 54,492,427 13,878,663 - - - - - 7,862,804 12,286,630 17,868,181 20,823,059 10,045,274 3,487,145 362,343 10,736 1,822,070 767,221 995,606 850,191 - 34,500,000 - - - 924,227 478,441 469,201 534,086 164,556,802 202,672,272 223,409,492 239,966,281 220,599,795 213,596,959 4,069,440 6,424,600 6,876,399 5,906,545 2,536,237 756,641 1,043,407 (469,200) 1,792,816 (534,086) 788,478 1,542,346 1,422,790 (873,357) 7,450,606 7,165,275 4,867,061 1,306,074 232,589 (924,227) (2) 532,354 (478,441) 3,377,802 6,478,513 $ 167,934,604 $ 209,150,785 $ 230,860,098 $ $ 72,364,914 $ 22,796,183 $ 95,323,008 $ 28,316,793 $ 2009 100,681,707 28,634,972 $ 51,431,155 27,668,127 $ 247,131,556 $ 84,712,507 $ 13,381,312 122,991,135 $ 135 98,093,819 - (1,542,346) 873,357 225,466,856 $ 35,306,154 $ (10,934,176) $ 24,371,978 214,903,033 6,821,737 (23,773,310) $ (16,951,573) CITY OF CHANDLER, ARIZONA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2001 General fund Reserved $ Unreserved Total general fund 2002 20,504,156 $ 146,099,948 2003 27,158,273 $ 149,678,534 2004 34,328,283 $ 135,307,858 50,644,739 126,091,872 $ 166,604,104 $ 176,836,807 $ 169,636,141 $ 176,736,611 $ 12,041,889 $ 74,230,663 $ 91,320,181 $ 76,703,585 All other governmental funds Reserved Unreserved, reported in: Special revenue funds 6,187,316 7,022,854 5,677,614 5,648,789 Capital projects funds 56,774,094 - - - Total all other governmental funds $ 75,003,299 136 $ 81,253,517 $ 96,997,795 $ 82,352,374 Schedule 3 Fiscal Year 2005 $ 2006 56,325,826 $ 124,519,771 15,211,490 2007 $ 148,606,301 12,349,638 2008 $ 189,087,760 28,237,521 2009 $ 196,093,067 30,482,311 2010 $ 194,457,561 62,149,646 137,041,044 $ 180,845,597 $ 163,817,791 $ 201,437,398 $ 224,330,588 $ 224,939,872 $ 199,190,690 $ 99,267,829 $ 100,167,158 $ 109,777,210 $ 43,039,742 $ 97,267,450 $ 61,355,662 $ 9,259,261 8,089,144 14,064,542 17,752,306 18,786,740 18,103,651 - 253,903 9,158,971 11,608,190 7,868,412 7,379,375 108,527,090 $ 108,510,205 $ 133,000,723 $ 137 72,400,238 $ 123,922,602 $ 86,838,688 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS REVENUES LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2001 Taxes - local $ Taxes - intergovernmental 2002 69,079,352 $ 2003 72,951,061 $ 2004 82,591,633 $ 91,492,704 43,772,423 48,797,917 49,850,293 50,173,867 Property taxes - - - - Sales taxes - - - - Franchise fees - - - - Highway user taxes - - - - Other taxes - - - - State shared - - - - Grants and entitlements 10,377,193 7,748,473 3,983,091 4,217,697 System development fees 9,394,230 8,320,712 8,105,353 15,165,191 Special assessments 187,819 175,152 513,242 251,608 License and permits 6,627,557 5,651,522 6,386,478 7,500,437 11,987,802 12,373,053 12,843,147 13,386,852 2,233,173 2,796,157 3,975,613 3,517,080 608,896 17,625 93,630 18,012 - - - 5,980 13,735,770 6,885,010 1,526,134 1,151,110 Charges for current services Fines and forfeitures Rentals Contributions Investment income (loss) Miscellaneous Total revenues $ 169,530,349 $ 166,867,792 (4,330,308) (1) 2,170,414 1,538,830 $ 165,551,002 2,204,555 $ 190,104,397 (1) The negative income in this year is the result of the City's share of a loss recognized by the State of Arizona's Local Government Investment Pool. (2) As of fiscal year ended June 30, 2007 the City reclassed the governmental funds revenues local and intergovernmental taxes to Property, Sales, and Other taxes. 138 Schedule 4 Fiscal Year 2005 $ $ 2006 102,701,196 $ 2007 109,141,434 $ 2008 $ 2009 - (2) 51,677,502 60,107,031 - (2) - - - - - 26,909,841 (2) 33,844,181 38,677,156 40,259,579 - - 95,410,460 (2) 97,226,841 85,897,334 83,019,726 - - 3,230,429 3,937,952 3,264,093 3,174,390 - - 16,490,129 15,856,863 13,849,284 13,116,481 - - 3,481,086 3,786,677 7,921,275 13,965,973 - - 57,716,644 62,970,459 61,211,289 54,492,427 (2) - $ 2010 - $ - 14,100,944 9,296,423 7,610,807 10,553,680 18,168,904 10,377,502 13,878,663 10,322,313 11,871,969 8,111,597 4,475,029 4,768,306 439,565 303,336 309,386 426,428 863,747 663,209 7,262,403 5,541,215 6,728,309 3,894,368 2,667,720 2,758,392 15,133,670 15,475,362 18,216,653 17,254,859 19,492,740 19,420,434 4,136,342 4,231,306 4,058,090 4,342,621 4,912,159 5,336,294 19,580 8,363 89,875 94,575 138,667 101,322 250 500 50,000 50,000 50,000 50,000 6,987,824 10,699,944 15,589,318 18,334,581 8,825,695 3,171,308 2,667,611 1,632,785 1,830,328 1,255,681 1,661,772 1,913,571 219,005,550 $ 226,760,012 $ 269,593,324 $ 139 281,941,363 $ 272,076,864 $ 256,588,914 CITY OF CHANDLER, ARIZONA GOVERNMENTAL FUNDS EXPENDITURES AND DEBT SERVICE RATIO LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2001 General government $ 2002 19,919,757 $ 2003 28,858,549 $ 2004 29,448,025 $ 31,024,154 Public safety 42,355,666 49,910,766 53,885,322 Community development 15,217,991 6,757,787 7,061,116 58,407,246 7,449,114 Public works 13,593,511 20,314,406 19,096,782 23,028,537 Community services 16,560,173 17,575,610 20,310,994 21,048,659 Capital improvements 21,296,370 32,346,642 33,211,184 36,794,139 Debt service: Principal retirement Interest and fiscal charges Bond issuance costs Total expenditures Debt service as a percentage of noncapital expenditures $ 420,000 3,679,500 6,614,500 8,689,500 9,747,597 9,730,214 8,515,445 9,641,321 - - 100,000 - 139,111,065 8.6% 140 $ 169,173,474 10.1% $ 178,243,368 11.1% $ 196,082,670 12.4% Schedule 5 Fiscal Year 2005 $ $ 2006 41,135,736 $ 2007 33,729,455 $ 2008 38,124,478 $ 2009 51,261,849 $ 2010 40,503,113 $ 44,663,091 57,630,321 64,090,649 75,800,634 78,306,604 84,493,816 85,390,303 7,438,317 8,740,380 8,989,308 11,593,642 10,509,467 11,614,214 38,421,485 32,555,171 22,987,692 19,306,381 19,283,643 17,664,633 20,893,626 22,738,420 25,714,032 28,830,926 29,916,002 30,078,856 33,828,009 49,884,875 75,524,840 104,836,442 124,680,957 106,366,737 8,329,500 17,122,071 12,374,500 16,659,500 15,275,000 17,260,000 9,180,338 10,465,983 10,669,877 14,437,346 13,059,295 13,646,479 174,917 135,437 189,840 179,201 961,100 183,969 217,032,249 11.1% $ 239,462,441 15.9% $ 270,375,201 $ 325,411,891 12.1% 14.1% 141 $ 338,682,393 12.5% $ 326,868,282 13.3% CITY OF CHANDLER, ARIZONA OTHER FINANCING SOURCES AND USES AND NET CHANGES IN FUND BALANCE, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting) Fiscal Year 2001 2002 2003 2004 Other Financing Sources (Uses) Bond premium $ Face amount of bonds issued Proceeds from sale of capital assets - $ 212,486 14,870,000 23,000,000 $ 1,026,142 $ - 45,850,000 - 91,245 680,019 131,450 159,247 Payment to escrow agent - - (20,488,542) Westcor contract payment - - - - 15,790,022 20,152,263 32,480,447 26,072,155 (18,885,745) (23,649,139) (37,723,314) (28,318,852) 11,905,727 19,874,857 21,235,978 (1,566,678) Transfers in Transfers out Total other financing sources and (uses) Net change in fund balances $ 42,325,011 $ 142 17,569,175 $ 8,543,612 - $ (7,544,951) Schedule 6 Fiscal Year 2005 $ 2006 852,671 $ 515,129 35,720,000 30,905,000 264,352 205,936 (11,228,422) $ 2007 $ - 2008 1,975,876 $ 2009 165,431 $ 2010 2,348,878 88,405,000 7,370,000 120,513,000 173,742 280,969 219,793 - - (24,335,292) $ 290,569 10,450,000 97,609 (10,556,600) - 34,500,000 - - - - 33,226,080 37,204,132 31,525,563 38,442,603 40,593,319 46,309,016 (35,170,013) (39,584,767) (34,246,951) (41,108,342) (44,937,903) (39,144,322) 23,664,668 63,745,430 63,497,938 5,150,661 118,737,087 7,446,272 25,637,969 $ (17,956,999) $ 62,716,055 $ (38,319,867) 143 $ 52,131,648 $ (62,833,096) CITY OF CHANDLER, ARIZONA TAXABLE REVENUE BY CATEGORY LAST TEN FISCAL YEARS Fiscal Year 2001 2002 2003 2004 Amusements Contracting General Retail Hotel/Motel Miscellaneous Related Revenue 1 Publishing Rentals - Personal Property Rentals - Real Property Restaurant/Bar Telecommunications Use Tax Utilities $ 326,154 11,563,422 18,152,267 1,299,873 2,053,581 626,200 1,573,050 3,759,161 3,416,147 2,931,529 807,287 6,058,546 $ 347,405 11,290,014 19,596,953 1,161,330 1,440,490 586,054 1,760,707 4,530,384 3,921,958 2,869,467 837,932 6,417,518 $ 410,039 11,467,704 22,261,109 1,212,328 2,201,668 669,702 2,008,711 5,207,175 4,482,235 3,124,021 634,029 6,648,449 $ 477,089 13,008,527 25,638,223 1,309,463 1,583,458 711,215 1,994,513 5,454,033 5,015,335 3,006,992 750,291 7,448,823 Total Sales and Use Taxes $ 52,567,217 $ 54,760,212 $ 60,327,170 $ 66,397,962 City Direct Sales Tax Rate 2 1.75% 1.76% 1.73% Source: Tax & License Division 1 Includes license application fees, annual license fees, audit assessments, penalties, and interest. 2 The direct tax rate was calculated using a weighted average of the actual revenues collected for each category. 144 1.74% Schedule 7 Fiscal Year 2005 2006 2007 2008 2009 2010 $ 499,388 14,966,943 28,835,490 1,508,509 3,156,782 754,016 1,807,806 6,074,236 5,618,535 3,336,576 1,132,268 7,929,178 $ 611,352 16,580,509 38,501,000 1,716,055 1,898,671 699,456 1,743,393 7,141,065 6,994,533 3,603,977 989,767 8,910,538 $ 679,666 15,665,738 41,719,797 1,938,442 2,765,527 723,532 1,935,981 7,883,794 7,655,093 3,709,781 1,044,225 9,688,886 $ 660,985 15,519,590 41,253,934 2,103,714 3,329,891 492,770 2,177,125 8,449,059 7,908,883 3,978,715 950,808 10,401,302 $ 623,159 9,352,480 36,851,140 1,672,893 2,774,033 389,046 2,474,464 8,520,878 7,267,718 4,057,982 930,636 10,982,905 $ 602,027 6,573,348 36,560,075 1,611,912 2,911,821 382,080 2,389,241 8,921,788 7,436,900 3,974,448 869,092 10,786,994 $ 75,619,727 $ 89,390,316 $ 95,410,462 $ 97,226,776 $ 85,897,334 $ 83,019,726 1.70% 1.72% 1.72% 1.72% 145 1.75% 1.75% CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING SALES AND USE TAX RATES LAST TEN FISCAL YEARS Schedule 8 Overlapping Rates City Direct Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Tax Rate 1.75% 1.76% 1.73% 1.74% 1.70% 1.72% 1.72% 1.72% 1.75% 1.75% 1 Maricopa County Tax Rate 0.68% 0.67% 0.68% 0.68% 0.67% 0.68% 0.68% 0.68% 0.67% 0.67% 2 State of Arizona Tourism & Sports Authority Tax Rate 3 Tax Rate 4 4.64% 4.63% 5.10% 5.13% 5.13% 5.14% 5.12% 5.09% 5.02% 5.05% 0.00% 0.00% 0.01% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% 0.02% Source: Tax & License Division 1 The City's direct tax rate was calculated using a weighted average of the actual revenues collected for each category. Tax rates vary by category, currently ranging from 1.5% to 4.4%. City tax rates were last increased effective 5/01/1994. 2 The overlapping County tax rate was calculated using a weighted average of the actual revenues the City collected for each category. Tax rates vary by category, currently ranging from 0.5% to 0.77%. No rate changes in the past ten fiscal years. 3 The overlapping State tax rate was calculated using a weighted average of the actual revenues the City collected for each category. Tax rates vary by category, currently ranging from 6.5% to 6.6%. State tax rate increases during the past ten fiscal years: 0.6% effective 6/01/2002; 1.0% effective 6/01/2010. 4 The Tourism & Sports Authority (TSA) was authorized by Maricopa County voters on November 7, 2000. An additional tax rate of 1.0% is to be levied from March 1, 2001 through February 28, 2031. The only category the overlapping tax rate applies to is the Hotel/Motel category. The overlapping tax rate is calculated using a weighted average of the actual revenues the City collected for this category. 146 CITY OF CHANDLER, ARIZONA PRINCIPAL SALES AND USE TAXPAYERS CURRENT YEAR AND TEN YEARS AGO Schedule 9 Fiscal Year 2010 Taxpayer Business Type Taxpayer A Taxpayer B Taxpayer C Taxpayer D Taxpayer E Taxpayer F Taxpayer G Taxpayer H Taxpayer I Taxpayer J Taxpayer K Taxpayer L Taxpayer M Taxpayer N Taxpayer O Utility Department Store Grocery Store Department Store Home Imp. Store Telecommunications Utility Department Store Department Store Utility Grocery Store Vehicle Dealer General Contractor Telecommunications Vehicle Dealer Sales and Use Tax Payments $ $ 7,467,639 2,569,725 2,212,406 1,515,144 1,267,563 1,224,106 1,164,105 1,159,962 1,050,680 919,916 - Rank Fiscal Year 2001 Percentage of Total Sales and Use Tax Payments 1 2 3 4 5 6 7 8 9 10 9.00% 3.10% 2.66% 1.83% 1.53% 1.47% 1.40% 1.40% 1.27% 1.11% - 20,551,246 24.77% Sales and Use Tax Payments $ $ 4,277,123 1,172,918 1,092,517 803,861 812,630 1,226,445 1,211,901 1,066,473 1,022,998 998,433 13,685,299 Rank 1 4 5 10 9 2 3 6 7 8 Percentage of Total Sales and Use Tax Payments 8.14% 2.23% 2.08% 1.53% 1.55% 2.33% 2.31% 2.03% 1.95% 1.90% 26.05% Source: Tax & License Division Notes: The identities of the ten largest revenue payers are prohibited from disclosure per State statute. Alternatively, the business type of the top ten taxpayers for each period has been disclosed along with the appropriate data. 147 CITY OF CHANDLER, ARIZONA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Schedule 10 Governmental Activities - General Obligation Bonds Fiscal Year General Obligation Bonds Estimated Actual Taxable Value of Property 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 121,796,310 87,250,000 106,970,000 102,480,000 120,805,000 140,130,000 197,075,000 187,645,000 294,588,000 282,888,000 7,361,557,694 8,368,335,959 8,981,174,789 10,999,084,221 12,256,368,621 13,936,132,832 15,180,800,679 26,166,428,389 30,523,597,506 31,011,422,761 Percentage of Estimated Actual Taxable Value of Property 1.65% 1.04% 1.19% 0.93% 0.99% 1.01% 1.30% 0.72% 0.97% 0.91% Other Governmental Activities Debt Special Assessment Bonds Per Capita 1 Revenue Bonds 641 434 505 456 510 579 798 749 1,169 1,111 67,413,061 45,300,000 48,725,000 46,700,000 45,015,000 42,920,000 40,480,000 37,655,000 34,690,000 31,800,000 2,372,449 1,647,000 1,547,500 1,443,000 1,333,500 1,219,000 1,099,500 8,345,000 7,820,000 7,315,000 Percentage of Personal Income 1 Accrued Interest Capital Appreciation Bonds 24,345,650 27,102,208 29,147,730 30,928,390 32,426,569 33,620,916 34,505,099 35,000,654 - Business-type Activities Fiscal Year General Obligation Bonds 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 35,203,528 25,770,000 25,395,000 23,705,000 21,270,000 19,415,000 62,410,000 60,395,000 188,612,000 185,032,000 Revenue Bonds Certificates of Participation Excise Tax Revenue Obligations Intergovernmental Loans Total Primary Government 2 154,190,353 117,540,000 122,735,000 116,140,000 114,800,000 108,870,000 101,095,000 93,000,000 76,415,000 67,580,000 19,148,890 12,510,000 11,035,000 10,210,000 9,335,000 - 34,040,000 34,040,000 126,972 110,755 93,706 75,783 56,942 37,135 16,304 - 424,597,213 317,229,963 345,648,936 331,682,173 345,042,011 346,212,051 436,680,903 422,040,654 636,165,000 608,655,000 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. 1 Population and personal income data can be found in Schedule 14. 2 Includes general bonded debt, other governmental activities debt and business-type activities debt. 148 9.08% 6.17% 6.51% 5.71% 5.82% 5.45% 6.81% 5.81% 8.59% 8.67% Per Capita 1 2,234 1,576 1,631 1,476 1,457 1,431 1,767 1,684 2,524 2,391 CITY OF CHANDLER, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2010 Schedule 11 Governmental Unit Debt Outstanding Estimated Percentage Applicable Estimated Share of Overlapping Debt Debt repaid with property taxes State of Arizona Maricopa County Maricopa County Community College District EastValley Institute of Technology Chandler Unified School District No. 80 Mesa Unified School District No. 4 Gilbert Unified School District No. 41 Kyrene Elementary School District No. 28 Tempe Union High School District No. 213 None None $ 653,040,000 None 201,310,000 289,165,000 201,790,000 120,945,000 107,465,000 4.05% 5.96 5.96 13.52 75.59 4.98 2.96 29.87 16.21 None None $ Subtotal, overlapping debt City direct debt 38,934,245 None 152,162,177 14,388,850 5,964,912 36,126,272 17,414,703 264,991,159 322,003,000 Total direct and overlapping debt 100.00 322,003,000 $ 586,994,159 Source: J.P Morgan Trust Company Note: The applicable percentage of overlap for each type of debt was computed on the ratio of secondary assessed valuation as calculated for fiscal year 2009/10 for the overlapping jurisdiction to the amount of such valuation which lies within the City of Chandler. 149 CITY OF CHANDLER, ARIZONA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS Fiscal Year 2001 2002 2003 2004 6% General Obligation Bond Limitation Debt limit $ Total net debt applicable to limit Legal debt margin 65,967,141 $ 23,160,000 $ 42,807,141 74,634,001 $ 34,020,000 $ 40,614,001 98,302,556 $ 45,475,000 $ 52,827,556 108,344,928 37,575,000 $ 70,769,928 Total net debt applicable to the limit as a percentage of the debt limit 35% 46% 46% 35% 20% General Obligation Bond Limitation Debt limit $ Total net debt applicable to limit Legal debt margin 219,890,471 $ 66,860,000 $ 153,030,471 248,780,004 $ 76,970,000 $ 171,810,004 327,675,186 $ 80,710,000 $ 246,965,186 361,149,760 72,120,000 $ 289,029,760 Total net debt applicable to the limit as a percentage of the debt limit 30% 31% 25% Source: Peacock, Hislop, Staley & Given, Inc. for 1997 - 2001, Piper Jaffray, Inc. for 2002-2006. (1) In November 2006, Arizona Revised Statutes were amended to more public safety and emergency services, streets and transportation from the 6% category to the 20% category. Notes: Under Arizona law, cities may issue general obligation bonds for purposes of water, wastewater, artificial light, open space preserves, parks, public safety and emergency services, streets, transportaiton, playgrounds and recreational facilities up to an amount not to exceed 20% of secondary assessed valuation. Cities may issue general obligation bonds for any other purpose up to an amount not to exceed 6% of secondary assessed valuation. 150 20% Schedule 12 Legal Debt Margin Calculation for Fiscal Year 2010 Net secondary assessed valuation as of June 30, 2010 $ Debt limit (6% of assessed value) 3,508,071,609 210,484,297 Debt applicable to limit: 6% general obligation bonds 9,494,000 Legal 6% debt margin $ 200,990,297 Debt limit (20% of assessed value) $ 701,614,322 $ 243,188,322 Debt applicable to limit: 20% general obligation bonds 458,426,000 Legal 20% debt margin Fiscal Year 2005 $ 118,749,422 2006 $ 61,660,000 $ 57,089,422 395,831,408 $ 315,416,408 20% 41,729,443 $ 388,164,810 $ 303,339,810 22% 179,351,393 $ $ $ (1) 597,837,975 $ 199,515,517 691,035,056 $ (1) 450,790,056 35% 151 210,484,297 2010 $ 10,934,000 $ 199,550,297 $ 701,614,322 $ 229,348,322 67% 200,990,297 5% $ 472,266,000 $ 210,484,297 9,494,000 5% 240,245,000 404,812,975 32% $ 4% 193,025,000 $ 207,310,517 2009 7,795,000 112,891,393 37% 84,825,000 $ 2008 66,460,000 64% 80,415,000 $ $ 74,720,000 52% $ 116,449,443 2007 701,614,322 458,426,000 $ 243,188,322 65% CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13a Street & Highway Revenue Bonds Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Highway User Taxes 9,865,633 10,946,942 11,443,762 12,225,100 12,852,329 13,870,790 16,490,129 15,856,863 13,849,284 13,116,481 Less: Operating Expenses 6,338,691 6,859,931 7,453,094 7,125,374 8,302,871 7,731,437 8,527,904 8,299,229 10,599,041 9,018,598 Net Available Revenue 3,526,942 4,087,011 3,990,668 5,099,726 4,549,458 6,139,353 7,962,225 7,557,634 3,250,243 4,097,883 Debt Service Principal Interest 420,000 1,910,000 2,025,000 2,110,000 2,095,000 2,440,000 2,825,000 2,965,000 3,050,000 3,180,000 2,763,717 2,460,983 2,021,322 2,255,270 1,863,289 1,870,433 1,735,306 1,628,797 1,572,829 1,198,194 Coverage 1.11 0.94 0.99 1.17 1.15 1.42 1.75 1.65 0.70 0.94 Water Revenue Bonds Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Utility Service Charges 31,348,875 32,210,935 34,895,930 36,148,220 36,860,006 38,112,680 39,054,531 40,613,727 39,707,910 42,276,145 Less: Operating Expenses 15,231,413 18,245,708 21,435,429 24,536,695 25,371,528 22,633,168 23,844,731 32,812,618 31,084,108 31,137,157 Net Available Revenue 16,117,462 13,965,227 13,460,501 11,611,525 11,488,478 15,479,512 15,209,800 7,801,109 8,623,802 11,138,988 Debt Service Principal Interest 3,087,800 3,561,504 7,255,900 3,853,756 4,282,606 4,275,097 4,447,321 4,643,032 4,854,151 5,471,256 3,116,390 3,366,721 2,965,187 3,232,596 2,798,390 3,181,666 2,881,971 2,700,799 2,419,526 2,205,623 Coverage 2.60 2.02 1.32 1.64 1.62 2.08 2.08 1.06 1.19 1.45 Excise Tax Revenue Obligations Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Excise Tax Collections 148,768,677 141,025,083 Less: Operating Expenses Net Available Revenue - 148,768,677 141,025,083 Debt Service Principal Interest 500,000 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest, depreciation or amortization expenses. See Note 6 for breakdown of revenue pledged for Excise Tax Revenue Obligations first pledged February 4, 2009 152 462,667 1,133,063 Coverage 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 321.55 86.36 CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13b Wastewater Revenue Bonds Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Utility Service Charges 17,812,204 18,627,080 19,253,061 19,849,892 20,541,547 20,499,458 21,083,587 25,145,258 25,922,530 28,406,808 Less: Operating Expenses 11,502,384 10,878,826 11,701,023 11,845,344 12,802,253 14,217,466 14,349,752 17,923,089 17,663,644 15,821,939 Net Available Revenue 6,309,820 7,748,254 7,552,038 8,004,548 7,739,294 6,281,992 6,733,835 7,222,169 8,258,886 12,584,869 Debt Service Principal Interest 1,342,200 1,548,496 10,714,100 1,296,244 3,207,394 3,499,903 3,647,679 3,786,968 3,915,849 3,678,744 1,696,904 2,098,401 2,295,089 1,713,875 1,592,081 1,828,920 1,691,169 1,554,504 1,341,752 1,104,530 Coverage 2.08 2.12 0.58 2.66 1.61 1.18 1.26 1.35 1.57 2.63 Solid Waste Revenue Bonds Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Utility Service Charges 8,173,254 8,571,736 9,257,218 9,825,572 9,773,505 - Less: Operating Expenses 6,423,477 7,781,800 13,627,896 9,035,882 8,703,517 - Net Available Revenue 1,749,777 789,936 (4,370,678) 789,690 1,069,988 - Debt Service Principal Interest 100,000 125,000 125,000 125,000 - 222,688 215,750 206,969 152,469 71,844 - Coverage 5.42 2.32 -13.17 2.85 14.89 0.00 0.00 0.00 0.00 0.00 (1) (2) Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest, depreciation or amortization expenses. (1) Expenses for FY 03 include $5,323,714 in landfill closure and post closure costs. The amount expensed in FY 02 was $812,319. The increase in comparable amounts is due to an increase in costs related to a change in the planned usage of the property following closure. (2) All debt was defeased June 29, 2005. 153 CITY OF CHANDLER, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS Schedule 13c Municipal Property Corporation Certificates of Participation Fiscal Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Water & Sewer Utility Service Charges 49,161,079 50,838,015 54,148,991 55,998,112 57,401,553 - Less: Operating Expenses 26,733,797 29,124,534 33,136,452 36,382,039 38,173,781 - Debt Service Net Available Revenue 22,427,282 21,713,481 21,012,539 19,616,073 19,227,772 - Principal 650,000 700,000 775,000 825,000 875,000 - (1) All remaining debt was defeased in 2006. Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Operating expenses do not include interest, depreciation or amortization expenses. 154 Interest 959,470 915,595 867,295 813,045 755,295 - Coverage 13.93 13.44 12.79 11.98 11.79 (1) - CITY OF CHANDLER, ARIZONA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Schedule 14 Total Fiscal Year Population (1) Per Capita Personal Median Unemployment Personal Income (2) Age (2) Rate (3) Income (4) 2001 190,019 4,677,887,742 31.2 2.8% 24,618 2002 201,262 5,139,225,170 31.2 4.2% 25,535 2003 211,984 5,310,835,152 31.2 4.0% 25,053 2004 224,644 5,805,699,536 31.2 3.1% 25,844 2005 236,877 5,928,557,556 30.8 3.3% 25,028 2006 241,910 6,351,347,050 31.6 3.0% 26,255 2007 247,097 6,412,414,247 31.1 2.5% 25,951 2008 250,619 7,269,204,095 31.2 3.2% 29,005 2009 252,056 7,409,186,120 32.8 6.2% 29,395 2010 254,602 7,016,321,916 32.5 6.9% 27,558 Sources: 1 City's Long Range Planning Division 2 City's Economic Development Division 3 Arizona Department of Economic Security 4 SitesUSA Notes: Total personal income is composed of earned income, dividends, interest and rents, and government transfer payments. Per capita personal income is calculated by dividing total personal income by population; amounts may not be exact due to rounding. 155 CITY OF CHANDLER, ARIZONA PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO 2010 Percentage Employer Employees Rank of Total City Employment Intel Corporation 9,400 1 7.92% Bank of America 3,500 2 2.95% Chandler Unified School District 3,000 3 2.53% Wells Fargo Ocotillo Corp. Campus 2,243 4 1.89% Verizon Wireless 2,000 5 1.68% City of Chandler 1,652 6 1.39% Chandler Regional Hospital 1,600 7 1.35% Microchip Technology 1,538 8 1.30% Orbital Sciences 1,625 9 1.37% Freescale Semiconductors 1,400 10 1.18% Bank First - - MCI Worldcom - - Motorola - - Ryobi Outdoor Products, Inc. - - Innovex - - Speedfam/IPEC - - Orbital Sciences - - Durel Corporation - - 27,958 23.56% Total Source: City's Economic Development Division and City of Chandler Human Resources 156 Schedule 15 2001 Percentage Employees 5,500 Rank of Total City Employment 1 5.41% - - - - - - - - - - 690 6 0.68% - - 250 10 0.25% 700 4 0.69% 2,330 2 2.29% 1,000 3 0.98% 680 7 0.67% 700 5 0.69% 480 8 0.47% 300 9 0.29% 12,630 12.42% 157 CITY OF CHANDLER, ARIZONA EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS Fiscal Year 2001 2002 2003 2004 Mayor and council 4 City clerk City manager Communications/public affairs 6 26 10 City magistrate Law Management services 39 21 127 4 6 30 11 40 23 124 4 6 69 17 41 25 97 4 6 71 17 41 23 99 Total General Government 233 238 259 261 Total Planning and Development 124 115 117 117 Total Community Services 162 170 178 183 Public works administration Streets 7 57 Airport Engineering, development and Real estate Total Public Works 6 5 53 6 2 53 5 3 53 6 85 155 75 139 72 132 78 140 Police Fire Total Public Safety 420 160 580 423 174 597 440 181 621 438 179 617 6 81 27 22 136 4 81 38 24 147 5 90 39 24 158 5 85 29 20 139 1,390 1,406 1,465 1,457 Full Time Equivalent Personnel Municipal utilities administration Water Wastewater Solid waste Total Municipal Utilities Total Primary Government (1) (1) Source: City's Human Resources Division (1) The significant change in this year is a result of the Information Technology Division moving from the Management Services Department to the City Manager Department. (2) The significant change in this year is a result of the Neighborhood Programs moving from the Mayor and Council to the City Manager Department. The Code Enforcement, Tourism, and Real Estate Services Downtown are new to the City Manager Department. (3) The significant change in this year is a result of the City offering a retirement incentive, voluntary separation packages, and movement between departments to retain employees. Notes: The calculation of full time equivalent personnel includes full time and part time regular employees as of the last pay period of the fiscal year. 158 Schedule 16 Fiscal Year 2005 2006 2007 2008 2009 2010 5 6 70 18 40 24 96 5 5 74 18 39 25 95 5 5 5 5 6 79 17 6 104 18 6 103 18 6 96 15 44 27 101 48 29 106 43 28 105 41 27 95 259 261 279 316 308 285 111 108 111 114 103 80 (3) 178 182 219 243 207 226 (3) 3 48 6 3 55 6 3 59 3 64 3 57 3 50 6 6 6 6 74 131 71 135 76 144 85 158 80 146 74 133 436 195 631 460 207 667 487 219 706 496 228 724 483 223 706 478 219 697 5 85 41 18 149 5 85 41 21 152 5 5 5 6 85 42 21 153 88 43 20 156 86 41 18 150 80 42 20 148 1,459 1,505 1,612 1,711 1,620 1,569 159 (2) (3) CITY OF CHANDLER, ARIZONA OPERATING INDICATORS BY FUNCTION / PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function/Program General Government Privilege tax licenses issued Meeting notices posted City council actions and agenda items prepared Grant awards received Inventory turnover ratio Planning & Development Building permits issued Community Services Library circulation Center for the arts events & exhibits Public Safety Crime rate (per 1,000 population) Total calls for police services (estimated) Total calls for fire services Fire inspections Fire investigations Municipal Utilities Water connections Operating wells Daily pumping capacity - wells (gallons) Daily pumping capacity - plants (gallons) Sewer connections Sanitary sewer (miles) Solid waste customers served Solid waste refuse collected (tons) Solid waste refuse recycled (tons) 2001 2002 2003 2004 2,749 * * * * 13,437 450 1,109 43 2.95 14,843 501 947 46 3.72 15,713 504 996 47 3.77 8,779 8,737 9,723 11,688 1,257,387 * 1,501,217 523 1,700,786 535 1,817,536 1,010 * 107,999 355 3,155 43 51.8 125,817 13,646 2,386 86 54.1 126,710 13,614 3,705 49 48.1 113,501 14,560 2,236 33 58,114 * 67,110,000 58,310,000 * 708 49,670 106,259 19,664 58,962 23 62,090,000 45,000,000 56,313 712 52,615 110,495 19,490 64,862 21 55,800,000 45,000,000 61,911 755 55,526 125,158 20,417 68,757 21 55,800,000 45,000,000 62,107 780 59,107 134,571 21,678 Source: City of Chandler Departments (1) The 2010 Center for the arts events & exhibits is the result of renovations within the Center for the Arts (2) The 2010 increase in Daily pumping capacity-plants (gallons) is the result of the completion of the San Tan Water Treatment Plant and the Chandler Water Treatment Plant * The city implemented Statement 34 in 2002, therefore, some of the information presented on this schedule was unavailable before that year. 160 Schedule 17 Fiscal Year 2005 2006 2007 2008 2009 2010 16,663 534 1,542 49 3.46 20,464 505 1,292 57 2.78 20,652 721 1,292 57 3.32 22,980 470 1,188 61 3.94 23,460 479 1,055 66 2.5 22,715 481 977 40 2.1 8,951 7,909 6,474 5,750 3,800 3,883 1,967,446 1,027 2,004,000 1,024 2,082,000 1,024 2,349,232 989 2,506,602 977 38.0 160,355 16,682 4,878 74 34.9 159,535 16,709 3,585 57 35.2 157,039 18,474 3,891 49 74,406 23 58,400,000 45,000,000 70,169 828 66,451 97,646 25,877 74,841 26 65,100,000 60,000,000 70,863 837 67,433 94,633 25,555 77,596 29 66,020,000 60,000,000 71,880 857 67,902 89,408 24,596 40.7 136,942 15,310 3,767 58 70,375 23 57,400,000 45,000,000 66,750 796 62,591 117,813 23,379 39.9 151,941 16,662 4,375 73 73,822 23 59,900,000 45,000,000 68,515 814 65,173 99,547 25,017 161 2,592,243 335 (1) 31.8 146,508 16,904 3,208 43 76,894 31 70,700,000 72,000,000 (2) 73,042 862 68,362 85,160 22,245 CITY OF CHANDLER, ARIZONA CAPITAL ASSET STATISTICS BY FUNCTION / PROGRAM LAST TEN FISCAL YEARS Fiscal Year Function/Program Community Services Developed parks Developed acres Undeveloped acres 2001 2002 2003 2004 45 702 * 48 752 432 49 796 405 51 870 333 5 5 5 5 36 356,678 32 373,527 32 405,986 32 422,841 710 18,890 101 * 743 20,400 118 415 762 22,154 136 411 768 23,140 153 433 Public Safety Police stations Fire stations * 5 1 5 1 7 1 8 Municipal Utilities Water mains (miles) Fire hydrants The ciAverage daily treament (mgd) * * * 985 8,617 19 1,000 9,393 19 1,021 10,368 21 Swimming pools Other recreational facilities (lighted fields) Library bookstock Public Works Total miles streets (center line) Street lights Signalized intersections Based aircraft Source: City of Chandler Departments (1) The 2006 increase in Undeveloped Acres is due to the purchasing of more land at the following sites: Tumbleweed, Landfill and Veteran Oasis. (2) The 2010 decrease in Fire Hydrants is due to the City adjusting the count to include only hydrants owned and maintained by the City. * The city implemented Statement 34 in 2002, therefore, some information presented on this schedule was unavailable before that year. 162 Schedule 18 Fiscal Year 2005 2006 51 874 349 2007 53 889 535 (1) 2008 2009 2010 54 959 468 58 1,099 455 59 1,133 407 61 1,198 336 5 5 5 5 6 6 32 450,068 33 469,000 34 483,128 34 469,023 34 472,266 34 446,675 775 24,218 166 434 785 25,100 189 457 812 25,307 192 499 822 26,326 200 442 832 26,500 205 449 829 26,600 208 449 1 9 2 9 2 10 3 10 3 10 3 10 1,051 10,799 21 1,063 10,952 22 1,080 12,291 24 1,117 13,033 24 1,189 13,750 24 163 1,194 12,318 (2) 22 Accounting Book BKCover 2010 11/4/10 12:35 PM Page 1 Phone (480) 782-2333 www.chandleraz.gov Mailing Address Mail Stop 702 P.O. Box 4008 Chandler, Arizona 85244-4008 Management Services Accounting Division, 4th Floor 175 South Arizona Avenue Chandler, Arizona 85225