COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2013 425 10TH STREET, DOUGLAS, ARIZONA 85607 Telephone (520) 417-7333 Fax (520) 417-7162 THIS PAGE BLANK CITY OF DOUGLAS, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2013 Danny Ortega Jr. Mayor Councilmembers Margaret Morales Ray Shelton Mitchell Lindemann Luis Greer Carlos A. De La Torre City Manager Prepared by: Finance Department Ben LaForge Rudy Quiñones THIS PAGE BLANK CITY OF DOUGLAS, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS YEAR ENDED JUNE 30, 2013 INTRODUCTORY SECTION LETTER OF TRANSMITTAL 1 LIST OF PRINCIPAL OFFICIALS 7 ORGANIZATIONAL CHART 8 GFOA CERTIFICATE OF ACHIEVEMENT 9 FINANCIAL SECTION INDEPENDENT AUDITORS’ REPORT 10 REQUIRED SUPPLEMENTARY INFORMATION MANAGEMENT’S DISCUSSION AND ANALYSIS 13 BASIC FINANCIAL STATEMENTS STATEMENT OF NET POSITION 25 STATEMENT OF ACTIVITIES 27 BALANCE SHEET – GOVERNMENTAL FUNDS 29 RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION 30 STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES – GOVERNMENTAL FUNDS 31 RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE IN THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES 32 STATEMENT OF NET POSITION – PROPRIETARY FUNDS 33 STATEMENT OF REVENUES, EXPENSES, AND CHANGE IN NET POSITION – PROPRIETARY FUNDS 34 STATEMENT OF CASH FLOWS – PROPRIETARY FUNDS 35 NOTES TO BASIC FINANCIAL STATEMENTS 37 REQUIRED SUPPLEMENTARY INFORMATION PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM SCHEDULE OF FUNDING PROGRESS 71 BUDGETARY COMPARISON SCHEDULE – GENERAL FUND 72 NOTES TO BUDGETARY COMPARISON SCHEDULE – GENERAL FUND 74 COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET 76 CITY OF DOUGLAS, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS (CONTINUED) YEAR ENDED JUNE 30, 2013 NONMAJOR GOVERNMENTAL FUNDS (CONTINUED) COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES 78 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL – HURF FUND 80 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL – GRANTS FUND 81 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL – POLICE GRANTS FUND 82 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL – JCEF FUND 83 SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE – BUDGET AND ACTUAL – DEBT SERVICE FUND 84 STATISTICAL SECTION (UNAUDITED) FINANCIAL TRENDS NET POSITION BY COMPONENT 85 CHANGES IN NET POSITION 87 GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE 91 FUND BALANCES OF GOVERNMENTAL FUNDS 92 CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS 94 REVENUE CAPACITY TAXABLE SALES BY CATEGORY 96 DIRECT AND OVERLAPPING SALES TAX RATES 98 ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY 99 PROPERTY TAX RATES – DIRECT AND OVERLAPPING GOVERNMENTS 100 PRINCIPAL PROPERTY TAXPAYERS 101 PROPERTY TAX LEVIES AND COLLECTIONS 102 DEBT CAPACITY RATIOS OF OUTSTANDING DEBT BY TYPE 104 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT 105 LEGAL DEBT MARGIN INFORMATION 106 CALCULATION OF LEGAL DEBT MARGIN 108 PLEDGED-REVENUE COVERAGE 109 CITY OF DOUGLAS, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS (CONTINUED) YEAR ENDED JUNE 30, 2013 STATISTICAL SECTION (UNAUDITED)(CONTINUED) DEMOGRAPHIC AND ECONOMIC INFORMATION DEMOGRAPHIC AND ECONOMIC STATISTICS 111 PRINCIPAL EMPLOYERS 112 OPERATING INFORMATION FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION 113 OPERATING INDICATORS BY FUNCTION 114 CAPITAL ASSETS STATISTICS BY FUNCTION 116 THIS PAGE BLANK INTRODUCTORY SECTION THIS PAGE BLANK THE CITY OF DOUGLAS 425 10TH STREET, DOUGLAS, ARIZONA 85607 Telephone (520) 417-7333 Fax (520) 417-7162 FINANCE DEPARTMENT November 12, 2013 Mayor and City Council Citizens of the City of Douglas, Arizona The Arizona Auditor General Office requires all local government entities to file a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with the generally accepted auditing standards by a licensed certified public accounting firm with their office by October 31st or by February 28th of each year if an automatic extension is requested. Pursuant of that requirement, we hereby issue the comprehensive annual financial report of the City of Douglas, Arizona for the fiscal year ended June 30, 2013. The report consists of management’s representations concerning the finances of the City of Douglas, Arizona. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Douglas, Arizona has established a comprehensive internal control framework that is designed both to protect the government assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of City of Douglas’s financial statements in conformity with Generally Accepted Accounting Principles (GAAP). Because the cost of internal controls should not outweigh their benefits, the City of Douglas’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatements. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The financial statements contained herein have been audited by CliftonLarsonAllen LLP a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Douglas, Arizona for the Fiscal-Year-Ended June 30, 2013 are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statements presentation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion of City of Douglas’s financial statements for the Fiscal-Year-Ended June 30, 2013, and that they are fairly presented in conformity with GAAP. The independent auditors’ report is presented as the first component of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Douglas’s MD&A can be found immediately following the reports of the independent auditors. (1) Mayor and City Council Citizens of the City of Douglas, Arizona The City of Douglas, Arizona is required to undergo an annual single audit in conformity with the provisions of the Single Audit Act Amendments of 1996 and the U.S. Office of Management and Budget (OMB) Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Information related to this single audit, including the schedule of federal awards, findings and recommendations and auditors’ reports on the internal control structure and compliance with applicable laws and regulations are included in the single audit report which is available for review at the City of Douglas, Arizona offices. This report includes all funds of the City of Douglas, Arizona. The City of Douglas, Arizona provides a full range of services that includes police and fire protection; emergency medical services; water, sewer and sanitation services; the construction and maintenance of highways, streets, and infrastructure; recreational activities including an aquatic center, library, visitor center, golf course, public housing, and cultural events. In addition to general government activities, the City of Douglas, Arizona reports two governmental components units: Casa de Esperanza, and Pioneer Village and one business-type component unit Rancho La Perilla Apartments and, therefore, these activities are included as discretely presented component units. Profile of the City The City of Douglas is located in Southeastern Arizona 117 miles southeast of Tucson on the U.S./Mexico border. Although it has a population of 17,378 people, it serves a commercial market of approximately 160,000. Agua Prieta, Sonora, Mexico (just across the international border from Douglas) is a part of our market and has a population of approximately 125,000. Our two cities share an interdependent economy and culture. Government Structure The Douglas City government is comprised of a Mayor and six Council members, elected by City residents for four year terms. The Mayor is elected at-large, which means that registered voters from all City wards cast their ballots for the mayoral candidates. Council members are elected by registered voters from their respective wards. The Mayor and Council members have equal voting power to create, pass, or disapprove local laws, ordinances, and resolutions that govern the City. The Mayor Pro Tem is appointed by the Mayor. The City Manager, who is appointed by the City Council, is responsible for the overall operation and supervision of the government functions within the policy directives of the City Council. As the administrative head of the City government, he is responsible for the appointment and dismissal of all employees, except for the City Magistrate, City Clerk, City Treasurer, and City Attorney who are appointed by the Mayor and Council. Economic Condition and Outlook The City’s economy is primarily based on the commercial exchange with Mexico. The Douglas/Agua Prieta connection continues to strengthen with the coordinated efforts of both local governments for the expansion of the existing and development of a new commercial port of entry. The City’s major employers consist of governmental entities such as Arizona State Prison Complex, Customs and Border Protection, Douglas Unified School District, Cochise College and the City of Douglas. Private and major employers in our City include Advanced Call Center Technologies and Wal-Mart Stores. According to the Cochise College for Economic Research the City’s unemployment rate at the end of May 2013 was at 12.6%, which is significantly above the national and state unemployment rates of (2) Mayor and City Council Citizens of the City of Douglas, Arizona 7.9% and 7.7% respectively. However, the College believes that the Employment and Population Statistics model may be skewed and real unemployment is probably around 11.4%. Major Initiatives The construction of a new commercial port of entry in Douglas continues to be a common goal for the Mayor and Council. With the assistance of the Douglas Economic Development Corporation, the City has developed a strategic plan and assigned a consultant to represent the City in garnering support and advocacy for this project. The City has worked with the Mexican government to agree on a location that would be beneficial to both sides. Through our negotiations, the City and Agua Prieta have narrowed down the search to two locations, both located a few miles west of Douglas. In addition, formal commitment from the Mexican land owner has been obtained to donate the necessary land for the construction of the new port. Advocacy efforts continue as the City has reached out to Sonoran officials, Mexican government officials and our State and National representatives in the States as well. The Arizona Governor’s office has pledged support for this project as well as the Mexican government. The idea now going forward is to bring stakeholders into the same vision and develop a financing mechanism most likely through a private public partnership. A great initiative this year was the development of the Secure Electronic Network for Travelers Rapid Inspection (SENTRI) program in Douglas designed to rapidly process low risk travelers that choose to undergo a rigorous background and vehicle inspection and obtain a SENTRI card. Those travelers would experience very low waiting times at the border which increases the flow of travelers to our City. This project was made possible through the collaboration of agencies from both sides of the border. Signage and infrastructure necessary for the SENTRI lane was funded by the Douglas Industrial Development Authority, the Greater Douglas Chamber of Commerce, the Association de Maquiladoras de Agua Prieta, Canacintra de Agua Prieta and the Agua Prieta Chamber of Commerce. The City of Agua Prieta installed all signage and infrastructure and the City of Douglas provided office space to Customs and Border Protection (CBP) at no cost for the administration and enrollment of the SENTRI program. In another effort to facilitate international trade, the City entered into a no fee license agreement with CBP to use the City’s 1st Street parking lot for CBP employee parking. By designating the parking lot for CBP employee parking, it has alleviated the congestion at the commercial port inspection area, therefore making maneuvering of commercial vehicles easier and inspections performed much quicker. The City has received reports from the trade industry that the cleaner less congested commercial port has greatly assisted in facilitating its inspections of inbound and outbound commercial cargo. The City was awarded a federal grant passed through the Arizona Department of Transportation to operate a transit system for the Douglas community. The grant reimburses the City 80% of Administration costs, 58% of Operations costs and 93% of capital costs. Through the collection of ridership fees and contracting with the Southeastern Arizona Government’s Organization to provide transit services for elderly and disabled individuals, the City was able to minimize its match requirement. On October 1, 2012 the City began its first routes transporting citizens through different routes in Douglas including a route to transport students to Cochise Community College located about 10 miles outside of Douglas. The City obtained three buses from Catholic Community Services, who previously ran the program, and also obtained three additional buses through a no cost lease from the Yuma County Intergovernmental Public Transportation Authority. Through the end of June 2013, there were 34,251 riders that benefitted from this program. (3) Mayor and City Council Citizens of the City of Douglas, Arizona The City partnered with the Douglas Unified School District (DUSD) to enhance its Recreation program by sharing physical and human resources to make this possible. The City and DUSD developed an after school program using school facilities and staffing them with City personnel. Four schools were selected that were located throughout the City in order to give participants an opportunity to attend no matter where they lived. The program has been a great success as more than 4,400 participants have attended. In addition, the recreation program also hosts open gym for young adults and adults in one of the schools. Through grant funding from CDBG and matching funds from the Streets Fund, the City completed the paving of 20th Street from A Avenue to Washington Avenue. It also installed curbing and gutter and ADA ramps throughout this location. The City also completed the paving, curbing and sidewalks in the 3rd Street extension project located in the business district west of Pan American. This street is currently being used to take southbound traffic in to Mexico and relieving the congestion and lines from the heavily trafficked 5th Street. More street work was finalized on 9th and 10th Street between Florida and Rose surrounding our call center. The City acquired a Fire Aerial Ladder truck at the beginning of the Fiscal Year through a lease purchase for $1.1 million. It also acquired a sewer vacuum truck through a lease purchase for $291,000 and purchased a new sanitation truck for $218,000. Finally, two water production capital projects were completed this year. The City put into service a new well #17 and rehabbed two of its 300,000 gallon water reservoirs for an investment amount of $1.1 million and $638,000 respectively. The water reservoir rehab was partially grant funded through CDBG in the amount of $293,718. Upcoming Year The Arizona Department of Transportation recently conducted a study in our existing port of entry that confirmed that the current port configuration will be inadequate to meet short term demands placed by privately owned as well as commercial vehicles using the port. The study fortifies the need to expand the commercial port of entry as well as improve and expand the existing port for privately owned vehicles, pedestrians and buses. With the location of the new commercial port of entry narrowed down to two locations, the City is hopeful that by the Spring of 2014, both governments will have come to a consensus on the location of the port as well as applied for a presidential permit. The City continues searching for funding mechanisms for the construction of the port through federal funding programs and possible land leasebacks. On August 2013, the Council approved the extension of the 0.3% sales tax for the use in capital improvement projects throughout the City. The sales tax was originally levied in September of 2008 for the purpose of generating jobs in Douglas and purchasing IT equipment for a call center operation. With the tax sun-setting on September 1, 2013, the Council voted unanimously to extend the tax for an additional four years and allocate the funds for capital projects throughout the City. Staff will bring a capital improvements plan to Council for their consideration, which will focus on streets improvements and City fleet inventory. The City was awarded a grant from Freeport McMoran Copper and Gold Foundation in the amount of $65,000. The use of the funds will be used for the “Making the Connection” bus route that will transport from Douglas to the College and from Bisbee to the College. A pilot program is currently in the works where there will be one morning and one afternoon route. (4) Mayor and City Council Citizens of the City of Douglas, Arizona The City entered into a $1.04 million lease with U.S. Bancorp Government Leasing and Finance, Inc. for a City wide network and infrastructure upgrade that included servers, hardware, licensing, software and professional services. The new technology is geared towards consolidating servers and replacing obsolete technology that reached the end of its useful life. Long-Term Financial Planning The City is cautious entering the new Fiscal Year and is aware of many economic factors on the national, state and local level that may affect our City. The City experienced an increase in state shared revenue in FY 2014, but with increasing pension costs on both PSPRS and ASRS, and uncertainty of health care costs, the City knows that local initiatives are necessary to increase its fund balance and be able to address capital and operational needs. With this in mind, the City is prepared to undertake these challenges and impact the essential services to our citizens as little as possible as well as it is determined to preserve our valuable workforce. The General Fund fund balance has increased every year since FY 2010, but not to desired levels. Our goal is to increase the fund balance every year and set aside funds for capital improvement projects as well as pay-as-you-go programs. With such a volatile economic environment it has become both hard but necessary to save in order to continue keeping the City in a financially stable position. Our enterprise funds continue to be stable due to the rate increases passed by Mayor and Council. The City is seeking new ways to make these funds more efficient through the use of new technology in the hopes of keeping rates stable. Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in financial Reporting to the City of Douglas for its comprehensive annual financial report for the fiscal year ended June 30th, 2012. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. (5) Mayor and City Council Citizens of the City of Douglas, Arizona Acknowledgement We would like to express our appreciation to each member of the Finance Department who has assisted in the preparation of this report. We are thankful for having the Finance Committee of the City of Douglas providing their support and having them evaluate this report. And also, thanks to our independent auditors CliftonLarsonAllen LLP for their assistance in this process. Finally to the Douglas Mayor and City Council we extend heartfelt thanks for their support. It is their commitment to financial reporting excellence that allows the citizens of Douglas to be fully informed about their municipal government finances. Respectfully Submitted, (6) CITY OF DOUGLAS, ARIZONA LIST OF PRINCIPAL OFFICIALS YEAR ENDED JUNE 30, 2013 ELECTED OFFICIALS Mayor Councilmember Councilmember Councilmember Councilmember Councilmember Councilmember Danny Ortega Jr. Margaret Morales Mitchell Lindemann Ben LaForge Ray Shelton Luis Greer Rudy Quiñones APPOINTED OFFICIALS City Manager City Clerk City Attorney City Treasurer City Magistrate Carlos A. De La Torre Brenda Aguilar Juan Pablo Flores Luis Pedroza Alma Vildosola DEPARTMENT DIRECTORS Finance Director Public Works Director Interim Police Chief Fire Chief Human Resources/Risk Management Housing Neighborhoods & Grants Director Librarian Information Technology Director (7) Luis Pedroza Lauren Ortega Kraig Fullen Mario Novoa Ana Urquijo Vacant Vacant Vacant City of Douglas Organizational Chart Fiscal Year 2012-2013 Account Clerk I (.5) Adm. Secretary Mayor & Council Account Clerk III (1) Executive Assistant City Magistrate HR Director Community Dev Dept. HR Analyst (1) Adm Secretary (1) City Treasurer Golf Manager (1) Bar Supervisor Parks & Rec Manager (1) Economic Dev Director (1) Tourism Specialist Adm. Secretary NHG Director (1) Recreation Coordinator (1) Code Enforcement Lead Rec Aide (1) Housing Rehab Golf Greenskeeper (1) Golf Laborer (1) Parks Supervisor Cemetery Crew Leader Cemetery Worker I (2) Parks Maint. Worker (10) Rec Coordinator A ti (1) Assistant Aq Sup (1) Maintenance Tech II (1) Housing Programs Specialist (1) Occupancy Specialist (1) Housing Property Mg Public Works Director (1) Eng. Associate (1) (1) Adm. Secretary Planning & Zoning Off (1) Maintenance Tech IV (1) Maintenance Tech III (1) Maintenance Tech I (2) HVAC Tech (1) Library Director (1) Deputy Director Chief Build. Insp (1) Bldg Maint Specialist (1) City Clerk (1) City Manager Fire Chief (1) Librarian (1) Library Sp II (3) Account Clerk I Fleet Maint. Supervisor (1) Equipment Mechanic III Airport Laborer Sanitation Supervisor (1) Eq. Mech. II (2) Equipment Operator III (3) Eq Mech. I (1) Hot Asphalt Operator (1) Crew Leader Equipment Operator III (2) Equipment Operator II (2) Equipment Operator I (1) Maintenance Tech III (1) Maintenance Tech II (2) Water Tech III (1) Water Tech II (1) Water Tech I (4) Special Pr Tech III (2) Special Pr Tech II (2) Maintenance Tech I (1) (8) Account Clerk III (1) Finance Manager (1) Clerk Typist (1) Purchasing Agent (1) Captain (3) Accounting Tech (1) Payroll Specialist Engineer (6) Accounts Payable Sp. Firefighter (12) Account Clerk I (.5) Customer Service S i (1) Utilities Superintendent (1) Water Tech IV (1) Finance Director (.5) Lead Engineer Equipment Operator I (4) Streets Supervisor (1) City Attorney Waste Water Supervisor (1) Customer Service Rep (3) Police Chief (1) IT Director IT Specialist Adm. Assistant (1) Lieutenant Patrol (1) Sergeant Patrol (5) Police Officer (23) Adm Assistant Lieutenant Detective Adm. Secretary Sergeant Detective Detective (5) Humane Officer (2) Meter Control/ Humane Clerk (1) Detention Officer (1) Senior Dispatcher Dispatcher (6) Clerk Typist (1) Collection Tech IV (1) Collection Tech I (2) WW Lead Plant Operator WW Plant Operator (2) Total FTE’s: 198 *not counted as FTEs (9) THIS PAGE BLANK FINANCIAL SECTION THIS PAGE BLANK INDEPENDENT AUDITORS’ REPORT The Honorable Mayor and the City Council City of Douglas, Arizona Douglas, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the businesstype activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Douglas, Arizona (City), as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Douglas Housing Corporation I (Casa de Esperanza), Douglas Housing Corporation II (Pioneer Village) and the Douglas Community Housing Corporation (Rancho La Perilla Apartments). The Douglas Housing Corporation I and II are presented as Governmental Component Units and those assets comprise 62% and 38% of the total Governmental Component Unit assets, 71% and 29% of total operating revenues and a negative 64% and 36% of total net position of the Governmental Component Unit revenues, respectively. Rancho La Perilla comprises 100% of the assets and operating revenues reported in the Proprietary Component Unit. Those financial statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for the Governmental Component Units and Proprietary Component Unit, is based solely on the reports of other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An independent member of Nexia International (10) The Honorable Mayor and the City Council City of Douglas, Arizona An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Douglas, Arizona as of June 30, 2013, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of a Matter During the fiscal year ended June 30, 2013, the City adopted the provisions of Governmental Accounting Standards Board Statement (GASBS) No. 61, The Financial Reporting Entity: Omnibus – an amendment of BASB Statement No. 14 and 24, GASBS No. 62, Codification of Accounting and Financial Reporting Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, GASBS No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources and Net Position, and GASBS No 65, Items Previously Reported as Assets and Liabilities. As a result of the implementation of GASBS No. 61, the City reported a change in accounting principle (See Note 3.G.) to report the inclusion of the Douglas Public Housing Corporation (DPHC) as a blended component unit. The DPHC was previously reported as a discretely presented component unit, resulting in a restatement of the governmental activities and governmental funds beginning net position/fund balance. The auditors’ opinion was not modified with respect to the restatement. GASBS No. 62, 63 and 65 did not have a material effect on the financial statements. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 13 through 24, the Public Safety Personnel Retirement System Schedule of Funding Progress on page 72, and the General Fund Budget and Actual Statement on pages 73 – 74 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for (11) The Honorable Mayor and the City Council City of Douglas, Arizona 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual nonmajor fund financial statements and schedules and the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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 taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 12, 2013, on our consideration of the City of Douglas, Arizona'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 result of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Douglas, Arizona’s internal control over financial reporting and compliance. Phoenix, Arizona November 12, 2013 (12) THIS PAGE BLANK REQUIRED SUPPLEMENTARY INFORMATION THIS PAGE BLANK CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 This section of the City of Douglas, Arizona’s (City) Comprehensive Annual Financial Report presents a narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2013. We encourage readers to consider the information presented here in conjunction with additional information presented in the financial statements. FINANCIAL HIGHLIGHTS  The assets of the City at the close of the most recent fiscal year exceed liabilities by $46.3 million (net position). Of this amount, $7.7 million is unrestricted and may be used to meet the government’s ongoing obligations to its citizens and creditors.  Total net position increased by $0.5 million during the fiscal year.  As of June 30, 2013, the City’s governmental funds reported a combined ending fund balance of $6.3 million. Of this amount, 67% is unassigned fund balance and available for spending at the government’s discretion.  At the close of the current fiscal year, unassigned fund balance for the General Fund was $4.3 million or 30.4% of the total General Fund expenditures of $14.0 million. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are separated into three component sections: 1. 2. 3. Government-wide financial statements. Fund financial statements and schedules. Notes to basic financial statements. In addition to the basic financial statements, this report also includes other supplementary information. 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 private sector business. The statement of net position presents information on all of the City’s assets and liabilities with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as useful indicators of whether the City’s financial position is improving or deteriorating. The statement of activities presents data showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs regardless of the timing of the related cash flows. Therefore, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal years, such as revenue from uncollected taxes or expenses from earned but unused vacation and sick leave. (13) CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 Both of the government-wide financial statements distinguish City functions that are principally supported by taxes and intergovernmental revenues (governmental activities) from those functions that intend to recover all or a significant portion of their costs from user fees and charges (business-type activities). The governmental activities of the City include general government, public safety (police, fire and emergency medical services), highways and streets, culture and recreation, and redevelopment and housing. The business-type activities of the City include water, sewer, and solid waste. The government-wide financial statements include not only the City (known as the primary government), but also three legally separate non-profit corporations - two governmental component units and one proprietary component unit. The governmental units consist of Douglas Housing Corporation I - Casa de Esperanza Apartments and Douglas Housing Corporation II - Pioneer Village providing HUD subsidized housing. The proprietary unit is the Douglas Municipal Housing Corporation market rate apartment complex known as Rancho La Perilla. Although legally separate from the City, these component units are discretely presented because of their governance or financial relationships to the City. Separate financial statements for these entities may be obtained at the City’s Finance Department at 425 Tenth Street, Douglas, Arizona 85607. The government-wide financial statements may be found on pages 25 - 28 of this report. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Like other state and local governments, the City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. All of the City funds can be divided into two categories: governmental funds and proprietary (business-type) 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 and outflows of spendable resources as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, the reader may better understand the long-term impact of the government’s nearterm financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate the comparison between governmental funds and governmental activities. (14) CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 The City of Douglas, Arizona maintains ten 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 MPC Debt Service Fund, which are considered to be major funds. Data from the other eight funds are combined into a single aggregate presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of the combining statements elsewhere in this report. The City of Douglas, Arizona adopts an annual appropriated budget for its General Fund by department. A budgetary comparison statement has been provided for the General Fund to demonstrate compliance with this budget. The City adopts a budget by fund for all Special Revenue Funds with the exception of the Public Housing and LTAF Funds; a budget for the MPC Debt Service Fund and the Nonmajor Capital Projects Funds is not adopted.  Proprietary Funds – Proprietary funds are used to account for services for which the City charges its customers. Enterprise funds are used to report the same functions as presented in the business-type activities in the government-wide financial statements. There are three funds reported under business-type activities and those include the water, sewer, and solid waste funds. The water, sewer and solid waste funds are considered major funds. Notes to Basic Financial Statements The notes to basic financial statements provide additional information that is essential to the full understanding of the data provided in the government-wide and fund financial statements. The notes to basic financial statements may be found on pages 37 - 71 of this report. Required Supplementary Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding its obligation to provide pension benefits to its employees and the budgetary schedule of the General Fund. Required supplementary information may be found on pages 72 – 76 of this report. Combining Statements The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information. Government-Wide Financial Analysis Comparative data is presented on the following pages for both the governmental activities and the business-type activities along with an analysis of significant variances between the current and prior year. Net Position As noted earlier, net position may serve as useful indicators of a government’s financial position. For the City of Douglas, Arizona, assets exceeded liabilities by $46.3 million. (15) CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 The largest portion of the City’s net position (80%) reflects its investment in capital assets (e.g. land, buildings, and equipment), less any debt used to acquire those assets. The City uses these capital assets to provide services to its citizens; therefore, these assets are not available for future spending. Although the City’s investment in capital assets is reported net of related debt, resources needed to repay this debt must be provided from other sources since the assets themselves cannot be liquidated for these liabilities. Table A-1 The City’s Net Position Governmental Activities 2013 ASSETS Current and Other Assets Capital Assets: Non-depreciable Depreciable (net) Total Assets DEFERRED OUTFLOWS Deferred Amount on Refunding LIABILITIES Current and Other Liabilities Non-Current Liabilities: Due Within One Year Due in More Than One Year Total Liabilities NET POSITION Net Investment in Capital Assets Restricted Unrestricted Total Net Position $ 7,778,936 Business-Type Activities 2012 Restated $ 7,755,243 2013 $ Total 2013 2012 Restated 4,557,406 $ 12,501,749 $ 12,312,649 2012 4,722,813 $ 1,487,410 29,126,288 38,392,634 1,515,112 30,132,544 39,402,899 924,647 21,662,649 27,310,109 1,552,711 20,297,189 26,407,306 2,412,057 50,788,937 65,702,743 3,067,823 50,429,733 65,810,205 38,536 - - - 38,536 - 1,318,301 1,325,512 423,721 506,165 1,742,022 1,831,677 1,967,586 9,831,615 13,117,502 2,356,449 9,735,970 13,417,931 668,595 5,223,019 6,315,335 569,954 5,529,575 6,605,694 2,636,181 15,054,634 19,432,837 2,926,403 15,265,545 20,023,625 20,087,841 1,234,695 3,991,132 $ 25,313,668 20,767,156 1,293,822 3,923,990 $ 25,984,968 16,866,077 443,520 3,685,177 $ 20,994,774 15,921,451 3,880,161 $ 19,801,612 36,953,918 1,678,215 7,676,309 $ 46,308,442 36,688,607 1,293,822 7,804,151 $ 45,786,580 As of June 30, 2013 the City of Douglas, Arizona was able to report positive balances in all categories of net position. As previously discussed, approximately 80% of net position represents the City’s net investment in capital assets. Another 4% of the resources are subject to external restrictions on how they may be used. The remaining unrestricted net position may be used to meet the government’s ongoing obligations to citizens and creditors. The City’s net position increased approximately $0.5 million over the prior fiscal year. Net investment in capital assets increased $0.3 million due to the net effect of a reduction in current year debt outstanding used to acquire the assets, current year depreciation and current year capital additions and contributions. Current year debt payments (including discount) were approximately $2.1 million (including payments on capital leases). (16) CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 Changes in Net Position As described above, the City’s net position overall increased by $0.5 million during the current fiscal year. The decrease in the governmental activities and increase in the business-type activities are discussed on the following pages. Table A-2 Changes in Net Position Governmental Activities 2013 REVENUES Program Revenues: Fees, Fines and Charges for Services Operating Grants and Contributions Capital Grants and Contributions General Revenues: Property Taxes Local Taxes State Shared Revenues Grants and Contributions Not Restricted to Specific Programs Investment Earnings Gain on Sale of Asset Other Total Revenues EXPENSES General Government Public Safety Highways and Streets Culture and Recreation Redevelopment and Housing Interest on Long-Term Debt Water Sewer Solid Waste Total Expenses $ 2,810,121 $ 3,071,208 2013 $ 2012 5,067,198 $ 2012 Restated 2013 5,034,099 $ 7,877,319 $ 8,105,307 3,168,076 5,622,718 8,196 19,578 592,435 274,140 3,349,023 1,019,748 3,760,511 5,896,858 563,698 5,678,392 3,951,575 533,742 6,159,476 3,628,090 - - 563,698 5,678,392 3,951,575 533,742 6,159,476 3,628,090 70,074 39,423 596,739 18,051,019 42,590 44,827 6,769 421,874 22,699,370 23,470 5,118,442 8,052 5,908,726 70,074 62,893 596,739 23,169,461 42,590 52,879 6,769 421,874 28,608,096 4,989,484 7,799,983 2,605,395 1,868,116 1,041,957 579,592 18,884,527 4,840,153 7,186,954 2,555,331 1,827,388 1,122,840 664,519 18,197,185 1,666,863 1,310,421 785,788 3,763,072 1,698,669 1,313,976 765,647 3,778,292 4,989,484 7,799,983 2,605,395 1,868,116 1,041,957 579,592 1,666,863 1,310,421 785,788 22,647,599 4,840,153 7,186,954 2,555,331 1,827,388 1,122,840 664,519 1,698,669 1,313,976 765,647 21,975,477 4,502,185 1,355,370 2,130,434 521,862 6,632,619 - - (833,508) Transfers 162,208 CHANGE IN NET POSITION (671,300) NET POSITION - END OF YEAR 2012 Restated Total 3,340,827 1,000,170 CHANGE IN NET POSITION BEFORE TRANSFERS Net Position - Beginning of Year Business-Type Activities 477,751 (162,208) (477,751) 4,979,936 1,193,162 1,652,683 521,862 6,632,619 25,984,968 21,005,032 19,801,612 18,148,929 45,786,580 39,153,961 $ 25,313,668 $ 25,984,968 $ 20,994,774 $ 19,801,612 $ 46,308,442 $ 45,786,580 (17) CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 Governmental Activities – Governmental activities decreased the City’s net position by $0.7 million. Key factors of the overall decrease in net position are as follows:  Fees, fines and charges for services decreased 7.6% over the prior fiscal year. The decrease was largely due to a decline in golf course sales including a decline in food and beverage sales since the restaurant operation was closed during the fiscal year.  Capital grants and contributions decreased $4.6 million over the prior fiscal year. The decrease was primarily the result of contributed capital recognized last year for the completion of the government center.  State shared revenues and local tax revenues had a net decrease of 1.6% due to decreased consumer spending. The City experienced a steep decline of $0.3 million in construction sales tax compared to last year.  Expenses remained relatively unchanged over the prior fiscal year, with the exception of an increase in public safety expenses in the amount of $0.6 million and a decrease in interest of long term debt. The increase in public safety expenses was attributed to an increase of 6.2% in police and 6.5% in fire retirement contributions compared to last year. The decrease in interest on long term debt was due to the retirement of three leases during the fiscal year. City of Douglas – Fiscal Year 2012/13 Governmental Activities Revenues Expenses 8,000 7,000 Thousands 6,000 5,000 4,000 3,000 2,000 1,000 Gen. Gov't Public Safety Highway/St. Cult./Rec. Housing/Redev. Program Revenues and Expenses (18) Int. Long term Debt CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 City of Douglas Revenue by Source Governmental Activities Fiscal Year 2012/13 Charges for Services, 16% State Shared Rev., 22% Operating Grants, 19% Other, 4% Property Taxes, 3% Capital Grants, 6% Local Taxes, 30% The charts on the previous page and above illustrate the City’s governmental expenses and revenues by function and the City’s revenues by source. As shown, Public Safety (police, fire, and emergency medical services) is the largest function in expenses (41%), followed by General Government (26%), Highway/Streets (14%), Culture/Recreation (10%), Redevelopment and Housing (6%) and the remaining attributable to Interest. General revenues such as property taxes, state shared revenues, and sales taxes are not shown by program but are effectively used to support program activities of the City as a whole. For governmental activities as a whole, sales tax revenues is the largest source of funds (30%) followed by state shared revenues (22%) as illustrated in the above chart. Business-Type Activities – Business-type activities increased the City’s net position by $1.2 million. The most significant factor accounting for the increase is the increase in water and sewer rates while holding expenses consistent with prior years. The City received grant funding in fiscal year 2012 to rehabilitate a water reservoir. In addition, federal funds were received to cover principal and interest payments in the amount of $0.5 million. No similar grants were received in the current fiscal year. (19) CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 City of Douglas 2012/13 Business-type Activities Revenues Expenses 3,000 Thousands 2,500 2,000 1,500 1,000 500 Water Sewer Solid Waste Program Revenues and Expenses City of Douglas Revenue by Source Business-type Activities Fiscal Year 2012/13 Solid Waste Charges, 24% Capital Contributions, 0% Sewer Charges, 35% Operating Grants, 0% Miscellaneous, 2% Investment Income, 0% Water Charges, 39% (20) CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 As shown in the charts on the previous page, the largest of the City’s business-type activities are water and sewer utilities. Sewer Fund operating expenses were just over $1.3 million, with Water operating expenses at $1.7 million, followed by Solid Waste at approximately $0.8 million. For this fiscal year, the change in net position in the Sewer Fund was a positive $0.5 million while the change in net position in the Water Fund was a positive $0.3 million and the Solid Waste Fund was a positive $0.4 million. The positive change in net position in the Enterprise Funds was due to the City increasing rates to cover operating costs and a decrease in the amount transferred to other funds. FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with financerelated legal requirements. Governmental Funds – The focus of the City’s governmental funds is to provide information on nearterm inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Douglas, Arizona’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Types of governmental funds reported by the City include the General Fund, Special Revenue Funds, Debt Service Funds, and Capital Projects Fund. As of the end of the current fiscal year, the City’s governmental funds reported a combined ending fund balance of $6.3 million, an increase of $62,859 from the prior year. The change was not significant. Revenues for governmental funds overall totaled approximately $17.7 million for the fiscal year ended June 30, 2013 which represents an increase of 4.6% or approximately $0.6 million from the prior fiscal year. This increase is primarily due to an increase in state shared revenues. The General Fund is the chief operating fund of the City. At the end of the fiscal year, the unassigned fund balance of the General Fund was $4.3 million. As a measure of the General Fund’s liquidity, it may be useful to compare the fund balance to total fund expenditures. Unassigned General Fund balance represents 30.4% of the total General Fund expenditures of $14.0 million. The MPC Debt Service Fund did not significantly change during the fiscal year. The MPC Debt Service Fund accounts for the principal and interest requirements on debt issued by the City’s Municipal Property Corporation, a blended component unit. The debt is repaid through transfers from the HURF Fund and the General Fund. The Nonmajor Governmental Funds decrease was largely due to the use of carryforward in the LTAF and capital projects fund, which was offset by an increase in the Debt Service Fund. Proprietary Funds – The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. At the end of the fiscal year, unrestricted net position for the Water Fund was $2.0 million, Sewer $0.6 million, and Solid Waste $1.0 million. The total increase in net position for the enterprise funds was $1.2 million largely due to increases in the water and sewer user fees. (21) CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 GENERAL FUND BUDGETARY HIGHLIGHTS The City did not revise the budget during the current fiscal year. Actual revenues were less than the budget by $1.1 million and actual expenditures were less than budget by $1.0 million. The actual revenues were less than budget largely due to local sales tax collections not coming in as projected. The City was able to realize a savings of 7.4% in actual expenditures versus the budget due to substantial savings in the General Government and Transit departments as well as overall departmental health insurance savings. Transfers from the General fund to the HURF fund saw a savings as it was not necessary to provide the transfer this year since HURF revenues alone were enough to cover operations. The Transit department saw substantial savings from the budget as the City entered its first year operating the program. The City was able to reach savings in operations due to only operating the program for 9 months as it began in October 2012. The personnel department saw a savings of $645,287 from the budget, accounting for a majority of the savings in the general government function, due to the City budgeting for all self insurance costs out of that department, but allocating actual expenditures to the applicable department that incurred the clams. The savings in personnel is offset by over-expenditures in the public safety department due to the allocation of actual claim expenditures, but not budgeted for those claims in public safety. The City experienced $176,357 in savings from its health insurance line compared to the budget. The City entered into a self-funded insurance plan this year and claims came in lower than projected. The legal level of budgetary control is at the departmental level in the General Fund; however, the City Council monitors the General Fund as a whole and the City Manager has the authority to make budget transfers between departments in the General Fund as long as the General Fund in total does not exceed the budget. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The City’s capital assets for its governmental and business-type activities as of June 30, 2013 amount to $53.2 million (net of accumulated depreciation). Capital assets include land and improvements, infrastructure, buildings and improvements, machinery equipment, and vehicles, and construction in progress. Table A-3 Capital Assets (Net) Governmental Activities Land and Land Improvements Streets and Storm Drains Buildings and Improvements Water System Wastewater System Machinery, Equipment and Vehicles Construction In Progress Total Capital Assets $ 2013 3,297,168 6,503,545 16,450,558 3,940,327 422,100 $ 30,613,698 $ Business-Type Activities 2012 3,475,776 6,691,896 16,814,530 4,215,652 449,802 $ 31,647,656 (22) 2013 $ 5,074,059 7,485,046 8,302,447 801,097 924,647 $ 22,587,296 Total 2012 $ 5,244,025 6,089,290 8,578,370 385,504 1,552,711 $ 21,849,900 $ 2013 3,297,168 6,503,545 21,524,617 7,485,046 8,302,447 4,741,424 1,346,747 $ 53,200,994 $ 2012 3,475,776 6,691,896 22,058,555 6,089,290 8,578,370 4,601,156 2,002,513 $ 53,497,556 CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 Major capital asset events during the current fiscal year include the following: Governmental Activities  Completion of Street pavement and curbing in 20th Street for a total project cost of $0.4 million.  Additional infrastructure projects on 3rd and 10 Street that included sidewalk and street repairs for a total cost of $64,103.  Acquisition through donation of YMCA building with a total value of $0.2 million.  Acquisition of a new Fire Ladder Truck through a lease purchase with a value of $1.1 million and three transit buses with a cumulative value of $0.1 million.  Acquisition of $0.3 million in equipment including a backhoe through a lease purchase. Business-type Activities  Completion of the rehabilitation of our two three hundred thousand gallon water reservoirs. Total project costs were $0.6 million with $0.3 million incurred this fiscal year.  Completion of Well #17 was done late in the fiscal year for a total cost of $1.1 million with $0.6 million incurred this year.  Acquisition of heavy equipment including a new sewer vacuum truck with a cost of $0.3 million and a new sanitation vehicle with a cost of $0.2 million.  Acquired $55,856 in small equipment for the water and sewer departments. For government-wide financial statement purposes, capital assets were depreciated from acquisition date to the end of the current fiscal year. Fund financial statements record capital asset purchases as expenditures. Additional information on the City of Douglas, Arizona’s capital assets may be found in the Notes to the Basic Financial Statements in note 3.A.4. on pages 51 - 54 of this report. Debt Administration At the end of the fiscal year, the City of Douglas, Arizona had total long-term obligations outstanding of $16.3 million. On June 30, 2013, the City retired the Call Center IT $2.4 million loan financed through the 0.3% sales tax enacted in September 2008. The City also retired a $595,000 IT Network Infrastructure loan and entered into a $1.2 million short term leases for a fire ladder truck and a backhoe. The current year decrease was the net effect of the issuance of debt, offset by the required principal due on outstanding debt. The State constitution imposes certain debt limits on the issuance of General Obligation Bonds at six percent (6%) and twenty percent (20%) of the secondary assessed valuation of the City. The City has not issued any general obligation bonds. Therefore, the City’s available debt margin at June 30, 2013 is $3.3 million in the 6% capacity and $11.0 million in the 20% capacity. (23) CITY OF DOUGLAS, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 Table A-4 Outstanding Debt Loans Payable Revenue Bonds Capital Lease Total Outstanding Debt Governmental Activities 2013 2012 $ 8,260,000 $ 9,155,000 925,000 1,365,000 1,345,057 431,731 $ 10,530,057 $ 10,951,731 Business-Type Activities 2013 2012 $ 5,457,668 $ 5,928,449 263,551 $ 5,721,219 $ 5,928,449 Total 2013 2012 $ 13,717,668 $ 15,083,449 925,000 1,365,000 1,608,608 431,731 $ 16,251,276 $ 16,880,180 Additional information on the City’s debt can be found in Note 3.E. on pages 56 - 61. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The following factors were considered when preparing the 2013-14 budgets:  A conservative economic forecast and limited revenue growth.  A focus on preventing layoffs and furloughs.  Continued investment in the City’s basic infrastructure and public facilities combined with a careful analysis of operating costs.  An emphasis on a “pay-as-you-go” approach to funding water and wastewater capital investments.  Sustained funding to the General Fund and Enterprise contingency/reserve funds to ensure that the City will be able to provide basic services during economic downturns and major emergencies.  Increased contributions for Arizona State Retirement, Public Safety Retirement and increased health insurances rates. The focus continues to be the planning for the construction of a new commercial port of entry that would enhance the trade between Agua Prieta and Douglas. Additionally, the City is taking measures to facilitate border crossings in the existing port by introducing a speedy lane for low risk vehicles and also leasing a City parking lot to Customs and Border Protection for their employees in order to relieve congestion in the commercial port and make inspections quicker. The City allocated $120,000 in the FY 13/14 budget for the planning of the new port. The City also expects to sell the government center to the County, but retain some space for City use. The expected contribution would be $300,000 the first year and an additional $300,000 the next. The City expects a re-organization of the current operational structure. The current organizational chart shows 198 FTEs, while the City only has 172 employees filling those positions. The City plans to reorganize in accordance to current staffing capacity and eliminate or consolidate departments to achieve efficiencies and savings. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City’s finances for all those interested in the government’s finances. If you have any questions about this report or need additional financial information, contact: City of Douglas Finance Department 425 Tenth Street Douglas, Arizona 85607 (520) 417-7333 (24) BASIC FINANCIAL STATEMENTS CITY OF DOUGLAS, ARIZONA STATEMENT OF NET POSITION JUNE 30, 2013 Primary Government Governmental Activities ASSETS Cash and Investments Receivables, Net: Accounts Receivable Taxes Receivable Intergovernmental Receivables Due from Component Unit Inventories Prepaid Items Other Assets Restricted Assets Capital Assets: Non-Depreciable Depreciable (net) $ Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred Amount on Refunding LIABILITIES Accounts Payable Accrued Wages and Benefits Insurance Claims Payable Interest Payable Intergovernmental Payable Customer Deposits Payable Unearned Revenue Due to Primary Government Prepaid Rents Matured Debt Principal Payable Noncurrent Liabilities Due Within One Year Due in More Than One Year Total Liabilities NET POSITION Net Investment in Capital Assets Restricted for: Other Federal and State Grants Court Administration Public Safety Highways, Streets and Local Transportation Redevelopment and Housing Repair and Replacement Unrestricted Total Net Position $ See accompanying Notes to Basic Financial Statements. (25) 5,371,448 Business-Type Activities $ Total 3,762,123 $ 9,133,571 214,081 564,504 899,982 634,106 44,382 8,000 42,433 517,170 443,520 731,251 564,504 899,982 634,106 44,382 8,000 485,953 1,487,410 29,126,288 924,647 21,662,649 2,412,057 50,788,937 38,392,634 27,310,109 65,702,743 38,536 - 38,536 318,412 384,170 105,618 23,053 16,410 9,666 20,972 440,000 307,482 45,901 10,738 59,600 - 625,894 430,071 116,356 82,653 16,410 9,666 20,972 440,000 1,967,586 9,831,615 668,595 5,223,019 2,636,181 15,054,634 13,117,502 6,315,335 19,432,837 20,087,841 16,866,077 36,953,918 202,485 69,449 288,682 150,419 523,660 3,991,132 25,313,668 443,520 3,685,177 20,994,774 202,485 69,449 288,682 150,419 523,660 443,520 7,676,309 46,308,442 $ $ Component Unit Governmental Component Units Proprietary Type Component Units $ $ $ 172,392 13,306 19,919 24,406 235,058 238,219 766 35,056 110,836 388,587 91,150 1,122,193 265,000 3,604,156 1,903,337 4,417,707 - - 44,351 16,338 95,108 11,125 - 35,374 1,732 15,343 18,800 634,106 3,312 - 23,766 2,574,611 49,268 5,124,416 2,765,299 5,882,351 (1,385,034) (1,304,528) 523,072 (861,962) (160,116) (1,464,644) $ (26) CITY OF DOUGLAS, ARIZONA STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2013 Program Revenues Functions/Programs Primary Government Governmental Activities: General Government Public Safety Highways and Streets Culture and Recreation Redevelopment and Housing Interest and Fiscal Charges Total Governmental Activities Business-Type Activities: Water Sewer Solid Waste Total Business-Type Activities Total Primary Government Component Units: Governmental Component Units Proprietary Type Component Units Expenses $ 4,989,484 7,799,983 2,605,395 1,868,116 1,041,957 579,592 18,884,527 Fees, Fines and Charges for Services Operating Grants and Contributions $ $ 1,666,863 1,310,421 785,788 $ $ $ 3,763,072 22,647,599 627,945 669,703 1,297,648 1,825,479 895,111 89,531 2,810,121 2,025,752 1,835,771 1,205,675 $ $ $ 5,067,198 7,877,319 100,101 601,133 701,234 249,304 1,091,444 1,103,680 7,377 889,022 3,340,827 Capital Grants and Contributions $ 6,536 1,660 $ $ $ 8,196 3,349,023 398,904 398,904 19,578 $ $ $ General Revenues Taxes: Sales Taxes Property Taxes Franchise Taxes State Revenue Sharing State Sales Tax Revenue Sharing Auto Lieu Tax Revenue Sharing Grants and Contributions not Restricted Investment Income Other Transfers Total General Revenues and Transfers Change in Net Position Net Position - Beginning, As Restated Net Position - Ending See accompanying Notes to Basic Financial Statements. (27) 338,808 53,026 531,040 77,296 1,000,170 19,578 1,019,748 - Net (Expense) Revenue and Changes in Net Position Primary Government Component Units Governmental Activities $ Business-Type Activities (2,575,893) (5,760,402) (970,675) (1,693,912) (152,935) (579,592) (11,733,409) $ $ 5,364,312 563,698 314,080 1,775,125 1,419,048 757,402 70,074 39,423 596,739 162,208 $ 385,003 527,010 419,887 $ Governmental Component Units Proprietary Type Component Units $ $ (2,575,893) (5,760,402) (970,675) (1,693,912) (152,935) (579,592) (11,733,409) 385,003 527,010 419,887 1,331,900 1,331,900 (11,733,409) 11,062,109 (671,300) 25,984,968 25,313,668 Total 1,331,900 (10,401,509) (128,940) (128,940) 23,470 (162,208) 5,364,312 563,698 314,080 1,775,125 1,419,048 757,402 70,074 62,893 596,739 - 222 11,818 - (138,738) 1,193,162 19,801,612 20,994,774 10,923,371 521,862 45,786,580 46,308,442 12,040 (116,900) (745,062) (861,962) $ $ (28) (68,570) (68,570) 14,273 - $ 14,273 (54,297) (1,410,347) (1,464,644) CITY OF DOUGLAS, ARIZONA BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2013 MPC Debt Service Fund General Fund ASSETS Cash and Investments Receivables: Accounts Receivable Taxes Receivable Intergovernmental Receivables Component Unit Long Term Note Inventory Prepaid Items Restricted Assets Total Assets LIABILITIES, DEFERRED INFLOWS, AND FUND BALANCES Liabilities Accounts Payable Accrued Wages and Benefits Insurance Claims Payable Interest Payable Intergovernmental Payable Unearned Revenue Customer Deposits Payable Matured Debt Principal Payable $ 3,744,458 $ 207,821 514,866 574,532 634,106 44,382 8,000 5,728,165 $ 259,769 351,794 97,510 16,410 932 - Total Liabilities Nonmajor Governmental Funds $ 463,053 $ 463,053 $ 23,053 440,000 $ 1,163,937 $ 6,260 49,638 325,450 42,433 1,587,718 $ 58,643 32,376 8,108 20,040 9,666 - Totals $ 5,371,448 $ 214,081 564,504 899,982 634,106 44,382 8,000 42,433 7,778,936 $ 318,412 384,170 105,618 23,053 16,410 20,972 9,666 440,000 726,415 463,053 128,833 1,318,301 54,283 - 60,190 114,473 686,488 4,260,979 - 1,174,505 224,190 - 686,488 1,174,505 224,190 4,260,979 4,947,467 - 1,398,695 6,346,162 Deferred Inflows of Resources Unavailable Revenue Fund Balances Nonspendable Restricted Assigned Unassigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 5,728,165 See accompanying Notes to Basic Financial Statements. (29) $ 463,053 $ 1,587,718 $ 7,778,936 CITY OF DOUGLAS, ARIZONA RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2013 Total Fund Balances for Governmental Funds $ 6,346,162 Total net position reported for governmental activities in the statement of net position is different because: Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds. Those assets consist of: Land Construction in Progress Land Improvements Streets and Storm Drains Buildings and Improvements Machinery, Equipment and Vehicles Total Capital Assets Less: Accumulated Depreciation $ 1,065,310 422,100 4,680,684 16,333,916 22,316,606 15,556,486 60,375,102 (29,761,404) 30,613,698 Some of the City's property taxes and special assessments will be collected after year-end, but are not available soon enough to pay for the current period's expenditures and, therefore, are reported as unavailable revenue in the governmental funds. 54,283 Some loans receivable through the City's housing rehabilitation program are recorded as a receivable and unavailable revenue in the City's Governmental Fund financial statements, but are recognized as revenue in the government-wide financial statements. 60,190 Long-term liabilities that pertain to governmental funds, including bonds payable, are not due and payable in the current period and, therefore, are not reported as fund liabilities. All liabilities - both current and long-term are reported in the statement of net position. Loans Payable Revenue Bonds Deferred Amount on Refunding Bond Discount Capital Lease Payable Compensated Absence Payable (8,260,000) (925,000) 38,536 4,200 (1,345,057) (1,273,344) Total Net Position of Governmental Activities (11,760,665) $ See accompanying Notes to Basic Financial Statements. (30) 25,313,668 CITY OF DOUGLAS, ARIZONA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2013 MPC Debt Service Fund General Fund REVENUES Taxes: Sales Taxes Property Taxes Franchise Taxes Intergovernmental Revenues Fines and Forfeitures Licenses and Permits Charges for Services Rents and Royalties Investment Income Other $ Total Revenues EXPENDITURES Current: General Government Public Safety Highways and Streets Culture and Recreation Redevelopment and Housing Debt Service: Principal Retirement Interest on Long-Term Debt Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over Expenditures $ Net Change in Fund Balances $ $ 560,802 2,851,254 7,487 18,330 167,869 $ 5,364,312 556,456 314,080 8,031,863 273,475 162,571 1,605,657 768,418 39,423 596,739 - 3,605,742 17,712,994 3,447,316 7,051,544 736,145 1,406,207 - - 22,681 87,590 1,043,726 882 1,035,816 3,469,997 7,139,134 1,779,871 1,407,089 1,035,816 28,475 5,772 1,341,395 440,000 46,106 - 1,159,110 499,219 666,270 1,627,585 551,097 2,007,665 14,016,854 486,106 4,515,294 19,018,254 (486,106) (909,552) (1,305,260) 486,106 - 1,569,151 (783,066) - 2,480,730 (2,318,522) 1,205,911 95,928 486,106 786,085 1,368,119 186,326 - 4,761,141 4,947,467 - 425,473 (1,535,456) 1,205,911 Total Other Financing Sources (Uses) - Totals 14,107,252 90,398 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Proceeds from Capital Leases FUND BALANCES Beginning of Year, As Restated End of Year 4,803,510 556,456 314,080 5,180,609 265,988 162,571 1,605,657 768,418 21,093 428,870 Nonmajor Governmental Funds See accompanying Notes to Basic Financial Statements. (31) $ (123,467) $ 1,522,162 1,398,695 62,859 $ 6,283,303 6,346,162 CITY OF DOUGLAS, ARIZONA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES IN THE GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2013 Net Change in Fund Balances-Total Governmental Funds $ 62,859 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which depreciation exceeded capital outlays in the current period. Expenditures for Capital Assets Depreciation Expense $ 1,790,562 (3,227,520) (1,436,958) 403,000 Capital asset donations. Loan receivable recorded as revenue in the government-wide statement of net position, but not yet available. Intergovernmental Receivables - June 30, 2012 Intergovernmental Receivables - June 30, 2013 68,215 60,190 (8,025) The governmental funds report bond proceeds as financing sources, while repayment of bond principal is reported as an expenditure. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities and repayment of principal reduces the liability. Interest costs are recognized as an expenditure in the governmental funds when it is due. In the statement of activities, however, interest expense is recognized as it accrues. The net effect of these differences in the treatment of general obligation bonds and related items is as follows: Issuance of Long-Term Debt Eliminate Bond Issue Costs Amortization of Deferred Amounts on the Refunding Amortization of Bond Discount Repayment of Long-Term Debt (1,205,911) (31,172) (25,693) (2,802) 1,627,585 362,007 Delinquent property taxes receivable will be collected subsequent to year-end, but are not available soon enough to pay for the current period’s expenditures, and therefore reported as unavailable in the governmental funds. Unavailable Revenue - June 30, 2012 Unavailable Revenue - June 30, 2013 47,041 54,283 7,242 In the statement of activities, compensated absences are measured by the amounts earned during the year. In the governmental funds, however, expenditures for these items are measured by the amount of financial resources used (essentially, the amounts actually paid). Change in Net Position of Governmental Activities (61,425) $ See accompanying Notes to Basic Financial Statements. (32) (671,300) CITY OF DOUGLAS, ARIZONA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2013 Business-Type Activities Water ASSETS Current Assets: Cash and Cash Equivalents Receivables, Net: Accounts Receivable Total Current Assets Noncurrent Assets: Restricted Cash and Cash Equivalents Capital Assets: Non-Depreciable Depreciable (Net) Total Noncurrent Assets Total Assets $ 2,180,691 Total Liabilities NET POSITION Net Investment in Capital Assets Restricted Unrestricted Total Net Position $ 633,875 Solid Waste $ Totals 947,557 $ 3,762,123 236,155 2,416,846 170,526 804,401 110,489 1,058,046 517,170 4,279,293 99,098 344,422 - 443,520 336,483 7,650,766 8,086,347 588,164 13,756,828 14,689,414 255,055 255,055 924,647 21,662,649 23,030,816 10,503,193 15,493,815 1,313,101 27,310,109 253,999 18,720 5,303 16,827 63,010 70,801 428,660 26,841 15,144 1,638 42,773 48,328 56,516 409,955 601,195 26,642 12,037 3,797 19,985 62,461 307,482 45,901 10,738 59,600 131,323 56,516 480,756 1,092,316 17,250 1,125,096 1,142,346 21,822 207,035 3,851,816 4,080,673 - 39,072 207,035 4,976,912 5,223,019 1,571,006 4,681,868 62,461 6,315,335 6,791,352 99,098 2,041,737 9,819,670 344,422 647,855 255,055 995,585 16,866,077 443,520 3,685,177 $ 8,932,187 $ 10,811,947 $ 1,250,640 $ 20,994,774 LIABILITIES Current Liabilities: Accounts Payable Accrued Wages and Benefits Insurance Claims Payable Interest Payable Compensated Absences Capital Leases Payable Loans Payable Total Current Liabilities Noncurrent Liabilities: Compensated Absences Payable Capital Leases Payable Loans Payable Total Noncurrent Liabilities Sewer See accompanying Notes to Basic Financial Statements. (33) CITY OF DOUGLAS, ARIZONA STATEMENT OF REVENUES, EXPENSES, AND CHANGE IN NET POSITION PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2013 Business-Type Activities Water OPERATING REVENUES Charges for Services Sewer Solid Waste 1,814,469 $ 1,205,675 1,206,461 30,185 430,217 1,666,863 814,899 23,985 468,582 1,307,466 709,673 21,143 54,972 785,788 2,731,033 75,313 953,771 3,760,117 297,727 507,003 419,887 1,224,617 $ 1,964,590 OPERATING EXPENSES Cost of Sales and Services Insurance Claims Depreciation Total Operating Expenses Operating Income NONOPERATING REVENUES (EXPENSE) Impact Fees Intergovernmental Revenue Investment Income Interest Expense Miscellaneous Nonoperating Revenues Total Nonoperating Revenues $ 7,979 6,536 15,828 53,183 83,526 6,800 1,660 4,259 (2,955) 14,502 24,266 Totals $ 3,383 3,383 4,984,734 14,779 8,196 23,470 (2,955) 67,685 111,175 Income Before Contributions and Transfers 381,253 531,269 423,270 Capital Contributions Transfers Out 19,578 (68,909) (64,883) (28,416) Change in Net Position 331,922 466,386 394,854 1,193,162 8,600,265 10,345,561 855,786 19,801,612 10,811,947 $ 1,250,640 Total Net Position - Beginning of Year TOTAL NET POSITION - END OF YEAR $ 8,932,187 See accompanying Notes to Basic Financial Statements. (34) $ 1,335,792 19,578 (162,208) $ 20,994,774 CITY OF DOUGLAS, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2013 Business-type Activities - Enterprise Funds CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers Payments to Suppliers Payments to Employees Payment for Claims Other Receipts Net Cash Flows Provided by Operating Activities Water Sewer Solid Waste Totals $ 1,958,689 (978,547) (336,398) (24,882) 53,183 $ 1,804,127 (485,304) (309,452) (22,347) 14,502 $ 1,206,419 (463,306) (246,904) (17,346) - $ 4,969,235 (1,927,157) (892,754) (64,575) 67,685 672,045 1,001,526 478,863 2,152,434 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers Out Intergovernmental Revenue Net Cash Flows Used by Noncapital Financing Activities (68,909) 6,536 (64,883) 1,660 (28,416) - (162,208) 8,196 (62,373) (63,223) (28,416) (154,012) CASH FLOWS FROM CAPITAL AND FINANCING ACTIVITIES Capital Grants Impact Fees Purchases of Capital Assets Issuance of Long-Term Debt Principal Paid on Capital Debt Interest Paid on Capital Debt Net Cash Flows Used by Capital and Related Financing Activities 223,859 7,979 (944,906) (68,864) (34,334) 6,800 (408,975) 291,384 (429,750) (92,522) (218,374) - 223,859 14,779 (1,572,255) 291,384 (498,614) (126,856) (816,266) (633,063) (218,374) (1,667,703) CASH FLOWS FROM INVESTING ACTIVITIES Investment Income NET CHANGE IN CASH AND CASH EQUIVALENTS Cash and Cash Equivalents - Beginning of Year 15,828 (190,766) 2,470,555 4,259 3,383 23,470 309,499 235,456 354,189 668,798 712,101 3,851,454 CASH AND CASH EQUIVALENTS END OF YEAR $ 2,279,789 $ 978,297 $ 947,557 $ 4,205,643 Reconciliation of Cash and Cash Equivalents to the Statement of Net Position Cash and Cash Equivalents Restricted Cash and Cash Equivalents Total Cash and Cash Equivalents $ 2,180,691 99,098 $ 2,279,789 $ 633,875 344,422 978,297 $ 947,557 947,557 $ 3,762,123 443,520 $ 4,205,643 $ $ (Continued) See accompanying Notes to Basic Financial Statements. (35) CITY OF DOUGLAS, ARIZONA STATEMENT OF CASH FLOWS (CONTINUED) PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2013 Business-type Activities - Enterprise Fund Water RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES Operating Income Adjustments to Reconcile Operating Income to Net Cash Provided by Operating Activities: Depreciation Miscellaneous Nonoperating Revenues Change in Assets/Liabilities: Receivables, Net Accounts Payable Accrued Wages and Benefits Insurance Claims Payable Compensated Absences Net Cash Provided by Operating Activities $ 297,727 430,217 53,183 (5,901) (104,727) (1,895) 5,303 (1,862) $ 672,045 . See accompanying Notes to Basic Financial Statements. (36) Sewer $ 507,003 Solid Waste $ 468,582 14,502 (10,342) 16,430 (864) 1,638 4,577 $ 1,001,526 $ Totals 419,887 $ 1,224,617 54,972 - 953,771 67,685 744 (342) 3,205 3,797 (3,400) 478,863 (15,499) (88,639) 446 10,738 (685) $ 2,152,434 THIS PAGE BLANK NOTES TO BASIC FINANCIAL STATEMENTS THIS PAGE BLANK CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying financial statements of the City of Douglas, Arizona (City) have been prepared in conformity with accounting principles generally accepted in the United States of America applicable to governmental units adopted by the Governmental Accounting Standards Board (GASB). A summary of the City’s more significant accounting policies follows. For the year ended June 30, 2013, the City implemented the provisions of GASB Statements No. 61, 62, 63 and 65. GASB Statement 61, The Financial Reporting Entity: Omnibus – an amendment of GASB Statement No. 14 and No. 24, modifies certain requirements for inclusion of component units in the financial reporting entity. GASB Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements, incorporates into the GASB’s authoritative literature certain accounting and financial reporting guidance that is included in FASB and AICPA Pronouncements issued on or before November 30, 1989 which does not conflict with or contradict GASB Pronouncements. GASB Statement No. 63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, provides financial reporting guidance for deferred outflows of resources and deferred inflows or resources. GASB Statement No. 65 Items Previously Reported as Assets and Liabilities establishes accounting and financial reporting standards that were previously reported as assets and liabilities. A. Reporting Entity The City is a municipal government that is governed by a separately elected governing body. It is legally separate from and fiscally independent of other state and local governments. The accompanying financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City’s operations. The governmental component units are combined into one column in the government-wide financial statements and condensed financial information is presented in Note 3.H. in the notes to the financial statements. Douglas Housing Corporation I and Douglas Housing Corporation II, are not included in the combining statements because they are audited by other auditors and have separately issued financial statements. The business-type component unit consists of only Rancho La Perilla and is presented in one column of the government-wide financial statements. See the descriptions below of each of the blended and discretely presented component units. (37) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. Reporting Entity (Continued) Blended component unit: Douglas Municipal Property Corporation – The Douglas Municipal Property Corporation’s (DMPC) board of directors consists of six members which are appointed by the Douglas City Council. The DMPC, which is a nonprofit corporation incorporated under the laws of the State of Arizona, was formed for the sole purpose of assisting the City in obtaining financing for various projects of the City. The City has a “moral obligation” for the repayment of the Douglas Municipal Property Corporation’s bonds. All related receivables and payables between the City and the DMPC have been eliminated. Separate financial statements for the Douglas Municipal Property Corporation are not prepared. Douglas Housing Authority – The Douglas Housing Authority (Authority) is a public benefit corporation created by the City to provide subsidized public housing in accordance with federal legislation. The City Council acts as the governing body of the Authority and as such employs executives, authorizes contracts of subsidy with the U.S. Department of Housing and Urban Development pursuant to the latter agency’s regulations and statutory authorizations, and causes the corporation to construct, own and operate public housing facilities within the boundaries of the City. The financial liability of the housing agency is essentially supported by the operating and debt service subsidies received under contract from the federal government, although services or cash subsidies may be, and from time to time, are received from the City as well. Separate financial statements for the Douglas Housing Authority are not prepared. Discretely presented component units: Douglas Housing Corporation I (Casa De Esperanza Apartments) – The Douglas Housing Corporation I is a non-profit corporation created by the City to eliminate the financial burden on the City to provide financing for the construction of a low-income apartment complex. The City Council appoints members of the Governing Board for staggered terms; they, in turn, elect a chairman. The Governing Board employs executives, authorizes contracts of subsidy with the U.S. Department of Housing and Urban Development pursuant to the latter agency’s regulations and statutory authorizations, and causes the corporation to construct and operate a low-income apartment complex of fifty units for families under Section 221(d)(3) of the National Housing Act. Such projects are regulated by the United States Department of Housing and Urban Development (HUD) as to rent charges and operating methods. The financial liability of the corporation is supported by the operating subsidies received under contract from HUD. The audited financial statements of the Douglas Housing Corporation I may be obtained at the offices of the corporation. (38) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) A. Reporting Entity (Continued) Douglas Housing Corporation II (Pioneer Village) – The Douglas Housing Corporation II is a non-profit corporation created by the City to eliminate the financial burden on the City to provide financing for the construction of a low-income apartment complex. The City Council appoints members of the Governing Board for staggered terms; they, in turn, elect a chairman. The Governing Board employs executives, authorizes contracts of subsidy with the U.S. Department of Housing and Urban Development pursuant to the latter agency’s regulations and statutory authorizations, and causes the corporation to construct and operate a low-income apartment complex of twenty-eight units for the elderly under Section 221(d)(3) of the National Housing Act. Such projects are regulated by the United States Department of Housing and Urban Development (HUD) as to rent charges and operating methods. The financial liability of the corporation is supported by the operating subsidies received under contract from HUD. The audited financial statements of the Douglas Housing Corporation II may be obtained at the offices of the corporation. Douglas Community Housing Corporation (Rancho La Perilla Apartments) – The Douglas Community Housing Corporation is a non-profit 501(c)(3) corporation created by the City to eliminate the financial burden on the City to provide financing for the construction and operation of apartments. The City Council appoints members of the Governing Board; they, in turn, elect a chairman. The Governing Board employs executives, authorizes contracts, and causes the corporation to construct and operate an apartment complex of 80 units. The Community Housing Corporation has appointed a management corporation to promote the apartments and manage the daily activities of the apartments. The financial liability of the Corporation is solely dependent upon the rental revenue received from the tenants. Financial statements of the Douglas Community Housing Corporation may be obtained at the offices of the corporation. Separately issued financial statements for Casa de Esperanza, Pioneer Village and Rancho La Perilla have been prepared in conformity with the Statement of Financial Accounting Standards No. 117, “Financial Statements of Not-for-Profit Organizations” and are available from the Essex Corporation. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the activities of the primary government and its component units. The effect of interfund activity has been removed from these statements except for interfund services provided and used, which are not eliminated in the consolidation. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain legally separate component units for which the primary government is financially accountable. (39) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) B. Government-Wide and Fund Financial Statements (Continued) 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 and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 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, except expenditures related to compensated absences and claims and judgments, which are recorded only when payment is due. However, since debt service resources are provided during the current year for payment of long-term principal and interest due early in the following year, the expenditures and related liabilities have been recognized in the Debt Service Funds. Property taxes, intergovernmental grants and aid, and interest 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. All other revenue items are considered to be measurable and available only when cash is received by the government. (40) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation (Continued) The City reports the following major governmental funds: Major Governmental Funds General Fund The General Fund is the City’s primary operating fund. It accounts for all financial resources of the City, except those required to be accounted for in another fund. MPC Debt Service Fund The MPC Debt Service Fund accounts for the accumulation of resources for, and the payments of, the MPC debt service principal, interest and related debt. The City reports the following major proprietary funds: Major Proprietary Funds Water Fund The Water Fund accounts for the costs to operate, construct and finance the City’s water system. Sewer Fund The Sewer Fund accounts for the costs to operate, construct and finance the wastewater treatment system. Solid Waste Fund The Solid Waste Fund accounts for the costs to operate, construct and finance the City’s solid waste operations. 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 proprietary funds are charges for services. Operating expenses for the proprietary funds include the cost of sales and services and depreciation on capital assets. 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, for governmental activities it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed. For business-type activities, the use of restricted resources is governed by the applicable bond covenants. (41) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, and Net Position or Equity 1. Deposits and Investments The primary government and component unit cash and cash equivalents are considered to be cash on hand, demand deposits, cash and investments held by the State Treasurer, and highly liquid investments with maturities of three months or less from the date of acquisition. Cash and investments are pooled except for funds required to be held by fiscal agents or restricted under provisions of bond indentures. Interest earned from investments purchased with such pooled monies is allocated to each of the funds based on the average daily cash balances. The City Council-approved investment policy authorizes the City to invest in obligations of the U.S. government which do not exceed three years in maturity and are guaranteed by the U.S. Treasury; Certificates of Deposit or other deposits in FDIC insured banks; obligations of FNMA and FHMA which mature the next business day; repurchase agreements of less than $5,000 which mature on the next business day; and the Local Government Investment Pools managed by the State Treasurer. Additionally, the trustee of the City’s employee retirement plan holds certain City funds in a money market mutual fund. The State Board of Deposit provides oversight for the State Treasurer’s pools, and the Local Government Investment Pool Advisory Committee provides consultation and advice to the Treasurer. The fair value of a participant’s position in the pool approximates the value of that participant’s pool shares. No comparable oversight is provided for the County Treasurer’s investment pool and that pool’s structure does not provide for shares. The governmental and business-type component units invest cash and investments in local financial institutions and the state’s Local Government Investment Pools managed by the State Treasurer. 2. Receivables All trade and property taxes receivables are shown net of an allowance for uncollectible accounts. All revenues of governmental activities were considered collectible and therefore there was no provision, the business-type activities reported an allowance of $44,415. (42) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, and Net Position or Equity (Continued) 2. Receivables (Continued) Cochise County levies real and personal property taxes on or before the third Monday in August that become due and payable in two equal installments. The first installment is due on the first day of October and becomes delinquent after the first business day of November. The second installment is due on the first day of March of the next year and becomes delinquent after the first business day of May. However, a lien against real and personal property assessed attaches on the first day of January preceding assessment and levy thereof. 3. Intergovernmental Receivables Intergovernmental receivables include state shared revenues and federal and state grants. 4. Short-Term Interfund Receivables/Payables During the course of operations, individual funds within the City’s pooled cash accounts may borrow money from the other funds within the pool on a short-term basis. These receivables and payables are classified as “due from other funds” or “due to other funds” on the balance sheet of the fund financial statements and are eliminated in the preparation of the government-wide financial statements. 5. Inventories and Prepaid Items Inventories consist of expendable supplies held for consumption. Inventories are valued at cost using the first-in/first-out (FIFO) method. Inventories are recorded as expenditures at the time of purchase in the governmental funds and are expensed in the governmental activities, business-type activities and proprietary funds when the resources are used. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 6. Restricted Assets As required by applicable loan documents, certain resources are set aside for debt service requirements on loans and the repair and replacement of utility infrastructure. The City’s component units also record restrictions on certain assets for replacement reserves, residual receipts and funds with the escrow agent for requirements set forth by the holder of the mortgage notes payable. (43) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, and Net Position or Equity (Continued) 7. Capital Assets Capital assets, which include property, plant, and equipment, are reported in the governmental activities column in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $1,000 and an estimated useful life in excess of one year. Upon implementation of GASB Statement No. 34, all phase I and II governments were required to report infrastructure assets acquired by the government since 1980. The City reports all infrastructure acquired since 1980, as well as pre-1980 infrastructure assets acquired or constructed by the City and report those assets at cost, if available, or the estimated fair value of the asset at the time of acquisition or construction. Property, plant and equipment purchased or acquired is carried at historical cost or estimated historical cost. Contributed assets are recorded at fair market value as of the date received. Additions, improvements and other capital outlays that significantly extend the useful life of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Depreciation on all assets is provided on a straight-line basis over the following estimated useful lives: Buildings and improvements Improvements other than buildings Wastewater system Water system Infrastructure Furniture, machinery and equipment Vehicles 30 Years 6 to 50 Years 6 to 50 Years 6 to 50 Years 6 to 50 Years 3 to 6 Years 5 to 7 Years 8. Compensated Absences The liability for compensated absences reported in the government-wide and proprietary statements consists of unpaid, accumulated leave balances. The liability has been calculated using the vesting method, in which leave amounts for both employees who currently are eligible to receive termination payments and other employees who are expected to become eligible in the future to receive such payments upon termination are included. (44) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, and Net Position or Equity (Continued) 9. Long-Term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities or proprietary fund type statements of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are recognized in the period incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. 10. Net Position In the government-wide financial statements, net position is reported in three categories: net investment in capital assets; restricted net position; and unrestricted net position. Net investment in capital assets is separately reported because capital assets make up a significant portion of total net position. Restricted net position account for the portion of net position restricted by parties outside the City. Unrestricted net position is the remaining net position not included in the previous two categories. None of the restricted net position was restricted by enabling legislation. (45) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) D. Assets, Liabilities, and Net Position or Equity (Continued) 11. Fund Balance Classifications Fund balances of the governmental funds are reported separately within classifications based on a hierarchy of the constraints placed on the use of those resources. The classifications are based on the relative strength of the constraints that control how the specific amounts can be spent. The classifications are nonspendable and spendable fund balances. Spendable fund balances include restricted, committed, assigned and unassigned fund balance classifications. The nonspendable fund balance classification includes amounts that cannot be spent because they are either not in spendable form such as inventories, or are legally or contractually required to be maintained intact. Restricted fund balances are those that have externally imposed restrictions on their usage by creditors (such as through debt covenants), grantors, contributors, or laws and regulations. The committed fund balances are self-imposed limitations approved by the City’s Council, through formal resolution. The City Council is the highest level of decision-making authority within the City and the formal commitment must occur prior to fiscal year end. Only the City Council can remove or change the constraints placed on committed fund balances through formal council action. Assigned fund balances are resources constrained by the City’s intent to be used for specific purposes, but are neither restricted nor committed. The City Council, through formal resolution, has authorized the City Manager to make assignments of resources for a specific purpose. The unassigned fund balance is the residual classification for the General Fund and includes all spendable amounts not reported in the other classifications. Also, deficits in fund balances of the other governmental funds are reported as unassigned. When an expenditure is incurred, for purposes for which both restricted and unrestricted fund balance is available, the City’s policy is to use restricted fund balance first, then unrestricted fund balance. When an expenditure is incurred for purposes for which committed, assigned and unassigned are available, the City uses, committed, assigned and finally unassigned amounts. (46) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. Budgetary Information The City Council follows these procedures in establishing the budgetary data reflected in the financial statements: 1. In accordance with Arizona Revised Statutes, the City Manager submits a proposed budget for the fiscal year commencing the following July 1, to the City Council. The operating budget includes proposed expenditures and the means of financing them for the upcoming year. 2. Public hearings are conducted to obtain taxpayer comment. 3. Prior to the third Monday in August, the expenditure limitation for the City is legally enacted through passage of an ordinance. To ensure compliance with the expenditure limitation, a uniform expenditure report must be filed with the State each year. This report, issued under a separate cover, reconciles total City expenditures from the audited basic financial statements to total expenditures for reporting in accordance with the State’s uniform expenditure reporting system (A.R.S. §41-1279.07). 4. Expenditures may not legally exceed the expenditure limitation of all fund types as a whole. For management and legal purposes, the City Council adopts a budget by department for the General Fund and in total by other funds. The City Manager, subject to City Council approval, may at any time transfer any unencumbered appropriation balance or portion thereof between a department or activity. 5. Formal budgetary integration is employed as a management control device during the year for the General and Special Revenue Funds on essentially the same modified accrual basis of accounting used to record actual revenues and expenditures. No budget was appropriated for the MPC Debt Service, Public Housing, LTAF, and Capital Projects Fund during the fiscal year. The City is subject to the State of Arizona’s Spending Limitation Law for Towns and Cities. This law does not permit the City to spend more than budgeted revenues plus the carryover unrestricted cash balance from the prior fiscal year. The limitation is applied to the total of the combined funds. The City complied with this law during the year. No supplementary budgetary appropriations were necessary during the year. (47) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS A. Assets 1. Deposits and Investments Deposits and investments at June 30, 2013 consist of the following: Deposits: Cash on Hand Cash in Bank Cash on Deposit with County Attorney Investments: State Treasurer's Investment Pool Cash on Deposit with Trustee Total Cash and Investments Less Restricted Assets $ 2,836 4,858,914 379,330 3,915,391 463,053 9,619,524 (485,953) Cash and Investments - Statement of Net Position $ 9,133,571 Deposits The carrying value of the City’s deposits at June 30, 2013 was $4,858,914 and the bank balance was $5,162,868. Of the bank balance, $2,140,981 was covered by federal depository insurance and $3,021,887 was covered by collateral held by the City’s custodial bank in the City’s name. The deposits held by the trustee were insured by federal depository insurance or were collateralized by securities held by the pledging financial institution in the trustee’s name. Investments The State Board of Deposit provides oversight for the State Treasurer’s pools, and the Local Government Investment Pool Advisory Committee provides consultation and advice to the Treasurer. The fair value of a participant’s position in the pool approximates the value of that participant’s pool shares. The shares are not identified with specific investments and are not subject to custodial credit risk. The City’s cash on deposit with the trustee are invested in U.S. Government securities. The securities were not rated and were not subject to credit risk. Interest Rate Risk – In accordance with the City’s investment policy, the City manages its exposure to declines in fair value by limiting the City’s investment portfolio in maturities of more than one year to less than 20% of total investments. (48) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) A. Assets (Continued) 1. Deposits and Investments (Continued) The City’s investments at June 30, 2013 consist of the following: Investment Type Amount State Treasurer's Investment Pool 5 State Treasurer's Investment Pool 500 $ 3,237,420 677,971 $ 3,915,391 Interest - Risk: Maturity in Years Less than 1 1-2 2-3 $ 3,237,420 $ 3,237,420 $ $ 677,971 677,971 $ $ Concentration of Credit Risk – The City does not have a formal investment policy regarding the concentration of credit risk. However, the City invests in funds authorized by Arizona state law and currently only invests in the State Treasurer Investment Pool. Custodial Credit Risk – For an investment, this is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City does not have a formal investment policy regarding custodial credit risk. Credit Risk – The City does not have a policy related to credit risk. The City’s deposits and investments consist of insured or collateralized deposits and investments in U.S. Government Securities, U.S. Treasury Notes and the State Treasurer’s Investment Pool. The City’s investment in the State Treasurer’s investment pool did not receive a credit quality rating from a national rating agency. Cash and investments of the component unit’s at June 30, 2013 consist of the following: Deposits: Cash on Hand Cash in Bank Investments: Funds Held by Mortgage Restricted Assets Total Cash and Cash Equivalents $ 100 215,523 596,881 (626,806) $ 185,698 The carrying value of the component unit’s deposits at June 30, 2013 was $215,473 which was entirely covered by federal depository insurance. (49) - CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) A. Assets (Continued) 2. Restricted Assets Restricted assets in the Governmental Activities, Water Fund and the Sewer Fund at June 30, 2013 consisted of the following: Business-Type Activities Governmental Activities Loan Debt Service Reserve Requirement Customer Deposits Grantor Reserve Requirement Total $ $ 9,666 32,767 42,433 Water Fund $ 99,098 $ 99,098 Sewer Fund $ 344,422 $ 344,422 $ $ Total 443,520 9,666 32,767 485,953 Restricted assets of the discretely presented component units at June 30, 2013 consisted of the following: Funds Held by Mortgage Tenant Deposits Total Restricted Assets of the Component Units $ $ 596,881 29,925 626,806 3. Receivables Governmental funds report unavailable revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also record deferred inflows in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of unavailable revenue and unearned revenue reported in the governmental funds were as follows: Unavailable Delinquent Property Taxes Receivable: (General Fund) Unavailable Grant Revenue: (Nonmajor Governmental Funds) Unearned Grant Revenue: (General Fund) (Grants Fund) $ $ (50) 54,283 Unearned $ - 60,190 - 114,473 932 20,040 20,972 $ CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) A. Assets (Continued) 4. Capital Assets Capital asset activity for the primary government’s governmental activities for the year ended June 30, 2013 was as follows: Beginning Balance as Restated Governmental Activities: Capital Assets, Not Being Depreciated: Land Construction in Progress Total Capital Assets, Not Being Depreciated $ Capital Assets, Being Depreciated: Land Improvements Streets and Storm Drains Buildings and Improvements Machinery and Equipment Vehicles Total Capital Assets, Being Depreciated Accumulated Depreciation for: Land Improvements Streets and Storm Drains Buildings and Improvements Machinery and Equipment Vehicles Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Governmental Activities Capital Assets, Net 1,065,310 449,802 $ 332,590 Ending Balance Decreases $ (360,292) 1,065,310 422,100 332,590 4,673,188 15,911,232 22,010,699 10,841,467 3,229,842 7,496 422,684 305,907 273,016 1,212,161 - 4,680,684 16,333,916 22,316,606 11,114,483 4,442,003 56,666,428 2,221,264 - 58,887,692 (2,262,722) (9,219,336) (5,196,169) (7,446,095) (2,409,562) (26,533,884) (186,104) (611,035) (669,879) (1,374,540) (385,962) (3,227,520) - (2,448,826) (9,830,371) (5,866,048) (8,820,635) (2,795,524) (29,761,404) 30,132,544 (1,006,256) - 29,126,288 $ (673,666) (360,292) $ 1,515,112 $ 31,647,656 (51) Increases $ (360,292) 1,487,410 $ 30,613,698 CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) A. Assets (Continued) 4. Capital Assets (Continued) Capital assets activity for the primary government’s business-type activities for the year ended June 30, 2013 was as follows: Beginning Balance Business-Type Activities: Capital Assets, Not Being Depreciated: Construction in Progress $ Capital Assets, Being Depreciated: Buildings and Improvements Water System Wastewater System Machinery, Equipment, and Vehicles Total Capital Assets, Being Depreciated Accumulated Depreciation for: Buildings and Improvements Water System Wastewater System Machinery, Equipment, and Vehicles Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Business-Type Activities Capital Assets, Net 1,552,711 Increases $ $ (1,753,617) $ 924,647 7,648,482 13,747,312 13,720,106 1,973,370 1,770,563 548,668 - 7,648,482 15,517,875 13,720,106 2,522,038 37,089,270 2,319,231 - 39,408,501 - (2,574,423) (8,032,829) (5,417,659) (1,720,941) (17,745,852) - 21,662,649 (2,404,457) (7,658,022) (5,141,736) (1,587,866) (16,792,081) (169,966) (374,807) (275,923) (133,075) (953,771) 20,297,189 $ 21,849,900 (52) 1,125,553 Ending Balance Decreases 1,365,460 $ 2,491,013 $ (1,753,617) $ 22,587,296 CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) A. Assets (Continued) 4. Capital Assets (Continued) The activity for the governmental component units for the year ended June 30, 2013 was as follows: Beginning Balance as Restated Capital Assets, Not Being Depreciated: Land $ 91,150 Capital Assets, Being Depreciated: Buildings and Improvements Furniture and Equipment Total Capital Assets, Being Depreciated Accumulated Depreciation for: Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Business-Type Activities Capital Assets, Net $ Increases $ Ending Balance Decreases - $ - $ 91,150 3,614,923 157,419 12,500 7,186 - 3,627,423 164,605 3,772,342 19,686 - 3,792,028 (2,533,090) (136,745) - (2,669,835) 1,239,252 (117,059) - 1,122,193 1,330,402 $ (117,059) $ - $ 1,213,343 The activity for the business-type component units for the year ended June 30, 2013 was as follows: Beginning Balance Capital Assets, Not Being Depreciated: Land $ Capital Assets, Being Depreciated: Buildings and Improvements Furniture and Equipment Total Capital Assets, Being Depreciated Accumulated Depreciation for: Buildings and Improvements Furniture and Equipment Total Accumulated Depreciation Total Capital Assets, Being Depreciated, Net Business-Type Activities Capital Assets, Net $ (53) 265,000 Increases $ Ending Balance Decreases - $ - $ 265,000 5,207,564 24,021 - - 5,207,564 24,021 5,231,585 - - 5,231,585 (1,473,718) (23,067) (1,496,785) (130,189) (455) (130,644) - (1,603,907) (23,522) (1,627,429) 3,734,800 (130,644) - 3,604,156 3,999,800 $ (130,644) $ - $ 3,869,156 CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) A. Assets (Continued) 4. Capital Assets (Continued) Depreciation expense was charged to functions/programs as follows: Primary Government Governmental Activities: General Government Public Safety Highways and Streets Culture and Recreation Redevelopment and Housing Total Depreciation Expense, Governmental Activities Business-Type Activities: Water Sewer Solid Waste Total Depreciation Expense, Business-Type Activities $ 1,452,762 616,330 689,499 462,788 6,141 $ 3,227,520 $ 430,217 468,582 54,972 $ 953,771 $ 93,355 43,390 $ 136,745 $ 130,644 Component Units Governmental Activities: Casa de Esperanza Pioneer Village Total Depreciation Expense Governmental Activities Business-type Activities: Rancho La Perilla (54) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) B. Interfund Receivables, Payables and Transfers Interfund transfers for the year ended June 30, 2013 consisted of the following: General Fund Transfers Out General Fund Nonmajor Governmental Funds Water Fund Sewer Fund Solid Waste Fund Transfers In MPC Debt Nonmajor Service Governmental Fund Funds $ - $ 325,691 269,479 66,424 62,398 27,172 $ 425,473 160,415 $ 486,106 Total $ 1,209,765 $ 1,535,456 $ 353,172 2,485 2,485 1,244 1,569,151 783,066 68,909 64,883 28,416 $ 2,480,730 Transfers were used to fund debt service and to fund capital outlay and indirect administrative costs. General Fund transfers were also used to subsidize the operating costs of Nonmajor Governmental Funds. The Business-type funds were used to allocate a percentage of their costs of goods sold to the General Fund for indirect administrative costs and to allocate the cost of the use of certain facilities owned and operated by the General Fund. C. Obligations Under Capital Leases The City has acquired communication equipment, vehicles and equipment, lawn mowers, and golf carts under the provisions of long-term lease agreements classified as capital leases. Accordingly, the principal amount of the assets totaling $2,402,263 and 291,384 capitalized as governmental activities and business-type activities, respectively. The assets acquired through capital leases are as follows: Asset: Furniture, Equipment and Vehicles Less: Accumulated Depreciation Total Governmental Activities Business-type Activities $ $ $ 2,402,263 (789,660) 1,612,603 $ 291,384 (2,728) 288,656 Amortization expense on the capital leases is included in depreciation expense. (55) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) C. Obligations Under Capital Leases (Continued Year Ended June 30, 2014 2015 2016 2017 2018 2019-2020 Total Governmental Activities Principal Interest $ 266,480 $ 25,492 201,404 24,157 198,042 19,169 178,115 14,839 170,830 10,940 330,186 10,985 $ 1,345,057 $ 105,582 Business-type Activities Principal Interest $ 56,516 $ 5,060 57,668 3,896 58,844 2,732 60,043 1,533 30,480 309 $ 263,551 $ 13,530 D. Call Center Lease Revenue During fiscal year 2009, the City established a lease agreement for the City’s new call center. Revenue related to this lease totaled $715,478 during this fiscal year. Future minimum lease payments related to the call center lease are as follows: Year Ended June 30, 2014 2015 2016 2017 2018 2019 - 2023 2024 Amount $ $ 670,182 647,076 647,076 647,076 647,076 3,027,372 300,426 6,586,284 E. Long-Term Obligations The City has long-term bonds and loans payable issued to provide funds for the acquisition and construction of major capital facilities. The debt is being repaid by the Highway User Revenue and Debt Service Funds. Compensated absences are paid by the applicable fund where each employee is regularly paid, primarily the General Fund. The City of Douglas, Arizona reports the following outstanding bonds: Description Revenue Bonds Municipal Property Corporation Excise Tax Refunding Bond, Series 2004; original issue $4,165,000 (56) Maturity Interest Rate (%) 7/1/13-15 2.00-3.50% Outstanding at June 30, 2013 $ 925,000 CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) E. Long-Term Obligations (Continued) The City has pledged future excise taxes to repay $4.2 million in governmental excise tax refunding bonds issued in 2004. Proceeds of the bonds were used to refund and refinance the outstanding excise tax revenue bonds, series 1995 and highways and streets revenue bonds, Series 1996. The bonds are payable solely from excise taxes and are payable through 2015. Annual principal and interest payments on the bonds are expected to require approximately 12 percent of excise tax revenues recorded in the HURF and Debt Service Funds. The total principal and interest remaining to be paid on the bonds is $973,256. Principal and interest paid for the current year and total excise taxes were $486,106 and $5,364,312, respectively. The City of Douglas, Arizona reports the following outstanding loans: Description Governmental Activities Loans Payable: Greater Arizona Development Authority, Series 2008A; original issue $3,000,000 The Industrial Development Authority of the City of Douglas, Arizona. Original issue $400,000 Call Center Purchase Agreement; collateralized by the building and equipment acquired with the debt; original issue $9,000,000 Total Governmental Loans Payable Business-Type Activities Water Infrastructure Finance Authority of Arizona Issued 2009-2010 Water Infrastructure Finance Authority of Arizona Issued 2009-2010 Total Business-Type Loans Payable Maturity Interest Rate (%) 8/1/13-28 4.00-5.25% 7/1/13-14 0% 7/31/13-28 4.29-5.63% Outstanding at June 30, 2013 $ 2,495,000 140,000 $ 5,625,000 8,260,000 4,261,771 7/1/13-29 2.00% $ 7/1/13-27 2.814% 1,195,897 $ 5,457,668 The City has pledged future state shared revenue tax, state shared sales tax, City sales tax, transaction privilege tax and other miscellaneous revenues to repay $3.0 million in GADA loans, Series 2008A. Proceeds of the loan provided financing for the development center project, including the purchase and renovation of buildings, land purchase, and upgrades and renovations to the existing City Hall. The loan is payable solely from pledged revenues discussed previously and are payable through 2029. Annual principal and interest payments on the bonds are expected to require less than 3 percent of pledged revenues. The total principal and interest remaining to be paid on the loan is $3,479,469. Principal and interest paid for the current year and total excise taxes were $236,264 and $9,243,530. (57) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) E. Long-Term Obligations (Continued) In 2009, the City issued loans totaling $9,000,000 for the acquisition and construction of a call center. The loan is payable from a 0.3 percent City sales tax, plus unused lease revenues received on the lease agreement with a third party. The lease of the call center is a 13 year lease with annual payments of $693,288 plus taxes and utilities. The lease revenues are to be used for maintenance and operations costs, then for payment of the debt. Annual principal and interest payments on the loans are expected to require more than 100 percent of the committed sales tax and 83 percent of the lease revenues through the fiscal year 2014. For fiscal years 2015 through 2029, the annual principal and interest payments on the loans are expected to require 95 percent of the City sales tax in 2015, declining each year to 53 percent in 2029. The call center lease agreement expires fiscal year 2023; however, the City does not anticipate using any lease revenue to fund the debt service payments after fiscal year 2014. The total principal and interest remaining to be paid on the loan is $7,873,359. Principal and interest paid for the current year and the City sales tax and lease revenues were $1,096,805 and $1,215,652. The City has two loans through the Water Infrastructure Financing Authority of Arizona (WIFA). The loans are structured where the City draws on the loans as funds are needed. To-date, the City has drawn down $0.9 million and $5.1 million from the total authorized loan of $1.5 million and $9.0 million, respectively, for the acquisition and construction of water and sewer facilities and improvements. The loans are payable from water and sewer charges for services through the fiscal year 2025. The City draws the loan as funds are utilized and pays interest on the outstanding principal balance. Annual principal and interest payments on the bonds are expected to require approximately 65-75% percent of net available revenue. The total principal and interest remaining to be paid on the loan is $6,074,421. Principal and interest paid for the current year and total pledged revenues were $594,970 and $804,730. The City’s component units have outstanding mortgage notes payables collateralized by an insured mortgage on the projects land and buildings. The notes are being repaid through federal subsidies and tenant rents. The governmental component units’ outstanding debt consisted of interest only mortgage notes payable at 1% per annum. The future principal payments are scheduled based on estimated principal retirement. The component units pay principal as cash is available; the maturity date of the outstanding debt is May 1, 2042. (58) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) E. Long-Term Obligations (Continued) Changes in long-term obligations for the year ended June 30, 2013 are as follows: Beginning of Year Governmental Activities: Loans Payable Revenue Bonds Discount Total Bonds and Loans Other Liabilities: Capital Leases Compensated Absences Total Governmental Activities $ 9,155,000 1,365,000 (7,002) 10,512,998 Additions $ 431,731 1,211,919 End of Year Retirements - $ (895,000) (440,000) 2,802 (1,332,198) $ 8,260,000 925,000 (4,200) 9,180,800 Due within One Year $ 535,000 455,000 990,000 1,205,911 695,850 (292,585) (634,425) 1,345,057 1,273,344 $ (2,259,208) $ 11,799,201 $ 1,967,586 $ $ $ 480,756 $ 12,156,648 $ 1,901,761 $ $ - 266,480 711,106 Business-Type Activities: Loans Payable Other Liabilities: Capital Lease Compensated Absences Total Business-Type Activities $ 6,099,529 $ 400,453 $ (608,368) $ 5,891,614 $ 668,595 Governmental Component Units: Notes Payable $ 2,612,175 $ - $ (13,798) $ 2,598,377 $ 23,766 Business-Type Component Units: Notes Payable $ 5,220,998 $ - $ (47,314) $ 5,173,684 $ 49,268 5,928,449 171,080 (59) 291,384 109,069 (470,781) (27,833) (109,754) 5,457,668 263,551 170,395 56,516 131,323 CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) E. Long-Term Obligations (Continued) Debt service requirements on long-term debt at June 30, 2013 are as follows: Primary Government Governmental Activities Principal Interest Years 2014 2015 2016 2017 2018 2019-2023 2024-2028 2029-2033 2034-2038 2039-2043 Thereafter Totals Component Units Governmental Business-type Activities Activities Business-Type Activities Principal Interest Principal $ 990,000 1,010,000 545,000 530,000 520,000 2,690,000 2,900,000 - $ 444,403 402,092 358,487 331,757 304,002 1,095,072 345,271 - $ 480,756 490,947 501,359 511,995 522,862 2,785,709 164,040 - $ 109,009 98,597 87,961 77,034 65,993 161,173 16,986 - $ $ 9,185,000 $ 3,281,084 $ 5,457,668 $ 616,753 $ 23,766 12,708 13,525 14,395 15,321 2,518,662 2,598,377 Principal $ $ 49,268 51,300 53,417 55,621 57,916 627,700 4,278,462 5,173,684 F. Fund Balance Classifications of Governmental Funds The City has classified its fund balances as follows: General Fund Fund Balances: Nonspendable: Inventory Prepaid Items Due from Component Unit Total Nonspendable Restricted: Federal and State Programs Court Administration Public Safety Programs Highways and Streets Housing and Redevelopment Total Restricted Assigned for Debt Service Unassigned: Total Fund Balance $ $ MPC Debt Service 44,382 8,000 634,106 686,488 $ - - - - - 4,260,979 - 4,947,467 (60) $ - Total Nonmajor Governmental Funds Governmental Funds $ $ 303,281 69,449 288,682 150,419 362,674 1,174,505 224,190 - $ 1,398,695 44,382 8,000 634,106 686,488 303,281 69,449 288,682 150,419 362,674 1,174,505 224,190 4,260,979 $ 6,346,162 CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) G. Change in Accounting Principle During the fiscal year ended June 30, 2013, the City adopted the provisions of Governmental Accounting Standards Board Statement (GASBS) No. 61, The Financial Reporting Entity: Omnibus – an amendment of BASB Statement No. 14 and 24. As a result of the implementation of GASBS No. 61, the beginning net position/fund balance was restated in the Government-wide and Nonmajor Governmental Fund financial statements, respectively, as the Douglas Public Housing Corporation (DPHC) is presented as a blended component unit for the year ended June 30, 2013. The DPHC was previously reported as a discretely presented component unit. Net Position/ Governmental Activities Governmental Funds General Fund MPC Debt Service Fund Nonmajor Governmental Funds Total Governmental Funds Governmental Component Unit (61) Net Position/ Fund Balance Beginning of Year Restatement Fund Balance as Restated $ 25,530,727 $ 454,241 $ 25,984,968 $ 4,761,141 1,099,850 $ 422,312 $ 4,761,141 1,522,162 $ 5,860,991 $ 422,312 $ 6,283,303 Net Position Beginning of Year Restatement $ $ (290,821) (454,241) Net Position as Restated $ (745,062) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) H. Component Units Condensed Financial Information The City includes within its reporting entity two governmental component units and one business-type component unit. Separately issued financial statements for Rancho La Perilla (the business-type component unit) have been prepared in conformity with the Statement of Financial Accounting Standards No. 117, “Financial Statements for Notfor-Profit Organizations” and are available from the City. Summary financial information for the two governmental component units is presented below: Casa De Esperanza Condensed Statement of Net Position Assets: Current Assets: Cash and Equivalents Accounts Receivable Prepaid Items Other Assets Restricted Assets Capital Assets Non-depreciable Depreciable (Net) Total Assets $ Liabilities: Current Liabilities: Accounts Payable Accrued Wages and Benefits Interest Payable Customer Deposits Payable Notes Payable Noncurrent Liabilities: Due in More Than One Year Total Liabilities Net Position: Net Investment in Capital Assets Restricted for Redevelopment and Housing Total Net Position (62) $ 118,784 15,954 15,263 82,224 104,820 Pioneer Village $ 53,608 3,965 9,143 152,834 133,399 Totals $ 172,392 19,919 24,406 235,058 238,219 74,696 766,803 1,178,544 16,454 355,390 724,793 91,150 1,122,193 1,903,337 30,319 11,657 35,733 6,620 19,164 14,032 4,681 59,375 4,505 4,602 44,351 16,338 95,108 11,125 23,766 1,626,600 1,730,093 948,011 1,035,206 2,574,611 2,765,299 (804,265) 252,716 (551,549) $ (580,769) 270,356 (310,413) $ (1,385,034) 523,072 (861,962) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 DETAILED NOTES ON ALL FUNDS (CONTINUED) H. Component Units Condensed Financial Information (Continued) Casa De Esperanza Condensed Statement of Activities Expenses: Current: Redevelopment and Housing Depreciation Debt Service: Interest on Long-Term Debt Total Expenses $ 281,309 93,355 Pioneer Village $ 131,598 43,390 Totals $ 412,907 136,745 54,127 428,791 24,166 199,154 78,293 627,945 Program Revenues: Operating Grants and Contributions Charges for Services Total Program Revenues 307,790 48,260 356,050 91,114 51,841 142,955 398,904 100,101 499,005 Net Program (Expense) (72,741) (56,199) (128,940) 59 9,893 9,952 163 1,925 2,088 222 11,818 12,040 (62,789) (54,111) (116,900) (488,760) (256,302) (745,062) General Revenues: Investment Income Other Total General Revenues Change in Net Assets Net Position, Beginning of Year Net Position, End of Year $ (551,549) $ (310,413) $ (861,962) The deficits reported in Casa de Esperanza and Pioneer Village net investment in capital assets on the previous page and above was due to the entities debt exceeding the investment in capital assets. Separately issued financial statements for Casa de Esperanza and Pioneer Village have been prepared in conformity with the Statement of Financial Accounting Standards No. 117, “Financial Statements of Not-for-Profit Organizations” and are available from the Essex Corporation. (63) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 4 OTHER INFORMATION A. Risk Management The City of Douglas, Arizona, is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters. The City’s insurance protection is provided by a private carrier (Travelers), of which the City is a participating member. The limit for basic coverage is for $1,000,000 per occurrence on a claims made basis. Excess coverage is for an additional $5,000,000 per occurrence on a follow form, claims made basis. No significant reduction in insurance coverage occurred during the year and no settlements exceeded insurance coverage during any of the past three fiscal years. The City is also insured by State Compensation Fund for workers compensation for potential worker related accidents. During fiscal year 2013, the City began financing its uninsured risks of loss. The City is self-insured for individual health claims up to $50,000 per covered person. Coverage in excess of this amount is provided through the purchase of commercial insurance. Settlements for the past fiscal year did not exceed the City’s excess insurance coverage amounts for any claims. The City reports its self-insurance activity in all funds. The City allocates the cost of claims by charging a premium to each fund based on a percentage of each funds estimated current-year payroll. Claim expenditures and liabilities are reported when it is probable that a loss has occurred and the amount of that loss can be reasonably estimated. These losses include an estimate of claims that have been incurred but not reported. The liability claims amount recorded in the accompanying financial statements is based on reported pending claims, effects of inflation, recent claim settlement trends and other economic and social trends. At June 30, 2013, the self-insured benefit claims payable, including amounts incurred, but not yet reported totaled $116,356. As of June 30, 3013, unpaid claims were as follows: 2013 Beginning unpaid claims Claims incurred and changes in estimates Payments made $ 698,134 (581,778) Ending unpaid claims $ 116,356 The self-insurance program began in August of 2012 and therefore there is no prior year data. (64) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 4 OTHER INFORMATION (CONTINUED) B. Contingent Liabilities Lawsuits The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City’s legal counsel, the City has some exposure to loss; however, the City is vigorously defending these claims and any loss or dollar value of the loss is not determinable. C. Commitments The City has two committed projects that will be funded through the Water Infrastructure Authority of Arizona (WIFA) in the amount of $1.5 million and $9.0 million. The projects are for drinkwater and wastewater, respectively. As of June 30, 2013, the City had no construction commitments related to either project, but spent and drew down $6.0 million; the WIFA funds, negotiated as a loan, have an available balance in the amount of $0.6 million and $3.9 million. Annual principal and semi-annual interest payment will be due through 2027 on the outstanding loan balance. The City entered into a loan agreement in the amount of $400,000 to fund the acquisition of the Hidden Treasurers RV Park. The City has not drawn on the available $400,000; however, principal and interest will be due on any outstanding balance drawn by the City. In prior years, the City entered into a settlement agreement related to on-going litigation related to a civil matter. The settlement agreement releases either party of any continued litigation. Under the settlement agreement, the City is required to pay $350,000; however, the party receiving payment has credited the City $23,100 under the settlement agreement for sewer development fees. The settlement is structured such that the remaining $326,900 on the $350,000 settlement will be paid by the City in installments; the first installment of $75,000 was paid on October 27, 2011, the second installment of $70,000 was paid on October 27, 2012, and two annual payments of $70,000 will be made on October 27,2013 and 2014 and the final payment will be due on October 27, 2015. There will be no interest on the settlement amount of the unpaid balance. (65) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 4 OTHER INFORMATION (CONTINUED) D. Subsequent Events Subsequent to June 30, 2013 the City entered into a lease purchase agreement for the purchase of a dump truck and street sweeper. The Lease has a total principal amount of $292,169 with an annual interest rate of 2.28%. The lease requires semi-annual principal and interest payments of $30,730 through July 2018. In September 2013, the City entered into a lease purchase agreement for the purchase of Information Technology and Infrastructure upgrades. The lease has a total principal amount of $1,041,474 with an annual interest of 1.53%. The lease requires semi-annual principal and interest payments of $107,765 through March 2018. E. Retirement Plans Arizona State Retirement System Plan Descriptions The City of Douglas, Arizona contributes to a cost-sharing, multiple-employer defined benefit pension plan; a cost-sharing, multiple-employer defined benefit health care plan; and a cost-sharing, multiple-employer defined benefit long-term disability plan, all of which are administered by the Arizona State Retirement System. The Arizona State Retirement System (through its Retirement Fund) provides retirement (i.e., pension), death, and survivor benefits; the Health Benefit Supplement Fund provides health insurance premium benefits (i.e., a monthly subsidy); and the Long-Term Disability Fund provides long-term disability benefits. Benefits are established by state statute. The System is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The System issues a comprehensive annual financial report that includes financial statements and required supplementary information. The most recent report may be obtained by writing the System, 3300 North Central Avenue, P.O. Box 33910, Phoenix, AZ 85067-3910 or by calling (602) 240-2000 or (800) 621-3778. (66) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 4 OTHER INFORMATION (CONTINUED) E. Retirement Plans (Continued) Arizona State Retirement System (Continued) Funding Policy The Arizona State Legislature establishes and may amend active plan members’ and the City of Douglas, Arizona’s contribution rates. For the year ended June 30, 2013, active plan members were required by statute to contribute at the actuarially determined rate of 11.14 percent (10.25 percent for retirement, 0.65% for health insurance premium, and 0.24 percent for long-term disability) of the members’ annual covered payroll and the City of Douglas, Arizona was required by statute to contribute at the actuarially determined rate of 11.14 percent (10.25 percent for retirement, 0.65 percent for health insurance premium, and 0.24 percent for long-term disability) of the members’ annual covered payroll. The City’s contributions to the ASRS for the years ended June 30, 2013, 2012, and 2011, which were equal to 100 percent of the required contributions for each year, were as follows: Year Ended June 30, 2013 2012 2011 Retirement Fund $ 440,157 404,836 396,381 Health Benefit Supplement Fund $ 27,912 26,715 25,956 Long-Term Disability Fund $ 10,306 9,864 10,998 Public Safety Personnel Retirement System (PSPRS) Plan Description The City contributes to the Public Safety Personnel Retirement System (PSPRS), an agent multiple-employer, public employee retirement system that acts as a common investment and administrative agent to provide retirement and death and disability benefits for public safety personnel who are regularly assigned hazardous duty in the employ of the State of Arizona or a political subdivision thereof. All benefit provisions and other requirements are established by State statute. The Public Safety Personnel Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for PSPRS. That report may be obtained by writing to Public Safety Personnel, 1020 E. Missouri Ave., Phoenix, AZ 85014 or by calling (602) 255-5575. Funding Policy Covered employees are required to contribute 7.65 percent of their annual salary to the PSPRS. The City is required to contribute the remaining amounts necessary to fund the PSPRS, as determined by the actuarial basis specified by statute. The current rate is 36.09 and 41.77 percent of annual covered payroll for Police and Fire, respectively. (67) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 4 OTHER INFORMATION (CONTINUED) E. Retirement Plans (Continued) Public Safety Personnel Retirement System (PSPRS) (Continued) Annual Pension Cost During the year ended June 30, 2013, the City of Douglas, Arizona’s annual pension cost of $679,993 for police and $519,131 for fire was equal to the City of Douglas, Arizona’s required and actual contributions. The required contribution was determined as part of the June 30, 2011 actuarial valuation using an entry age actuarial funding method. Significant actuarial assumptions used in determining the entry age actuarial accrued liability related to the PSPRS plan and related OPEB health insurance subsidy include (a) a rate of return on the investment of present and future assets of 8.5% per year compounded annually, (b) projected salary increases of 6.5% (including inflation at 5.0%) per year compounded annually, and (c) additional projected salary increases of 0.0% to 3.0% per year attributable to seniority/merit. Funded Status and Funding Progress As of June 30, 2012, the most recent actuarial valuation date, the plan for police was 44.0 percent funded and the plan for fire was 38.0 percent funded. The actuarial accrued liability for benefits was $16.8 million and $11.9 million for police and fire, respectively; and the actuarial value of assets was $7.4 million and $4.5 million, respectively; resulting in an unfunded actuarial accrued liability (UAAL) of $9.4 million and $7.3 million, respectively. The covered payroll (annual payroll of active employees covered by the plan) for the police and fire plan was $1.9 million and $1.3 million, and the ratio of the UAAL to the covered payroll was 485.2 percent and 568.3 percent, respectively. As of June 30, 2012, the OPEB plan for police and fire was 0.0 percent funded. The actuarial accrued liability for benefits was $0.4 million and $0.2 million for police and fire, respectively; and the actuarial value of assets was $0.0 million for police and fire; resulting in an unfunded actuarial accrued liability (UAAL) of $0.4 million and $0.2 million, respectively. The covered payroll (annual payroll of active employees covered by the plan) for the police and fire plan was $1.9 million and $1.3 million, and the ratio of the UAAL to the covered payroll was 18.4 percent and 17.3 percent, respectively. (68) CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 4 OTHER INFORMATION (CONTINUED) E. Retirement Plans (Continued) Public Safety Personnel Retirement System (PSPRS) (Continued) Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. 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. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce shortterm volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The City of Douglas, Arizona’s unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on a closed basis. The remaining amortization period at June 30, 2012, was 24 years. The preceding methods comply with the financial reporting standards established by the Governmental Accounting Standards Board. Three-Year Trend Information Police Fiscal Year Ended June 30, 2011 2012 2013 Annual Pension Cost (APC) $ Fiscal Year Ended June 30, 2011 2012 2013 472,674 569,043 679,993 Annual OPEB Cost $ 31,981 32,868 30,515 (69) Percent Contributed 100% 100% 100% Percent Contributed 100% 100% 100% Net Pension Obligation $ - OPEB Benefit Obligation $ - CITY OF DOUGLAS, ARIZONA NOTES TO BASIC FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 4 OTHER INFORMATION (CONTINUED) E. Retirement Plans (Continued) Public Safety Personnel Retirement System (PSPRS) (Continued) Funded Status and Funding Progress Three-Year Trend Information Fire Fiscal Year Ended June 30, 2011 2012 2013 Annual Pension Cost (APC) $ Fiscal Year Ended June 30, 2011 2012 2013 411,893 435,560 519,131 Annual OPEB Cost $ 18,740 20,045 19,203 Percent Contributed 100% 100% 100% Percent Contributed 100% 100% 100% Net Pension Obligation $ - OPEB Benefit Obligation $ - Additional historical trend information for the City’s PSPRS is disclosed on page 72. Historical trend information is presented in order for the reader to assess the progress made in accumulating sufficient assets to pay pension benefits as they become payable. (70) REQUIRED SUPPLEMENTARY INFORMATION THIS PAGE BLANK CITY OF DOUGLAS, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION PUBLIC SAFETY PERSONNEL RETIREMENT SYSTEM SCHEDULE OF FUNDING PROGRESS YEAR ENDED JUNE 30, 2013 Douglas Police Valuation Date June 30, Actuarial Value of Assets Entry Age Actuarial Accrued Liability (AAL) 2010 2011 2012 $ 7,498,002 7,416,284 7,381,173 $ 13,570,575 15,053,324 16,791,531 Percent Funded Over (Under) Funded AAL Annual Covered Payroll Under Funded AAL as a Percentage of Covered Payroll 55.3% 49.3 44.0 $ (6,072,573) (7,637,040) (9,410,358) $ 1,811,688 1,785,679 1,939,472 335.2% 427.7 485.2 Other Post Employment Benefits (Health Insurance Subsidy) Valuation Date June 30, 2010 2011 2012 Entry Age Actuarial Accrued Liability (AAL) Actuarial Value of Assets $ - $ 320,514 368,007 357,260 Percent Funded 0.0% 0.0 0.0 Over (Under) Funded AAL $ (320,514) (368,007) (357,260) Annual Covered Payroll $ 1,811,688 1,785,679 1,939,472 Under Funded AAL as a Percentage of Covered Payroll 17.7% 20.6 18.4 Douglas Fire Valuation Date June 30, Actuarial Value of Assets Entry Age Actuarial Accrued Liability (AAL) 2010 2011 2012 $ 5,036,495 4,928,154 4,510,557 $ 10,098,073 10,975,912 11,856,479 Percent Funded Over (Under) Funded AAL Annual Covered Payroll 49.9% 44.9 38.0 $ (5,061,578) (6,047,758) (7,345,922) $ 1,161,906 1,168,985 1,292,729 Under Funded AAL as a Percentage of Covered Payroll 435.6% 517.4 568.3 Other Post Employment Benefits (Health Insurance Subsidy) Valuation Date June 30, 2010 2011 2012 Entry Age Actuarial Accrued Liability (AAL) Actuarial Value of Assets $ - $ 221,080 234,971 223,089 Percent Funded 0.0% 0.0 0.0 (71) Over (Under) Funded AAL $ (221,080) (234,971) (223,089) Annual Covered Payroll $ 1,161,906 1,168,985 1,292,729 Under Funded AAL as a Percentage of Covered Payroll 19.0% 20.1 17.3 CITY OF DOUGLAS, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE GENERAL FUND YEAR ENDED JUNE 30, 2013 Original and Final Budget REVENUES Taxes: Sales Taxes Property Taxes Franchise Taxes Intergovernmental Revenues Fines and Forfeitures Licenses and Permits Charges for Services Rents and Royalties Investment Income Other Total Revenues $ 5,651,978 549,141 350,000 5,514,383 332,500 183,000 1,840,527 758,278 10,000 64,000 15,253,807 EXPENDITURES Current: General Government: Administration Finance Personnel General Government Management Information Systems Parking Lot Transit City Magistrate Cemetery Community Development Golf Course Economic Development Airport Call Center Total General Government Public Safety: Police Fire Emergency Medical Services Total Public Safety Highways and Streets: Public Works Actual $ 4,803,510 556,456 314,080 5,180,609 265,988 162,571 1,605,657 768,418 21,093 428,870 14,107,252 Variance With Final Budget $ (848,468) 7,315 (35,920) (333,774) (66,512) (20,429) (234,870) 10,140 11,093 364,870 (1,146,555) 510,898 498,324 1,075,885 409,253 566,005 45,216 410,982 71,862 94,038 89,036 518,778 35,000 183,702 66,959 4,575,938 536,093 492,565 430,598 169,041 510,161 33,758 292,900 73,837 101,025 87,065 493,104 15,013 151,528 60,628 3,447,316 (25,195) 5,759 645,287 240,212 55,844 11,458 118,082 (1,975) (6,987) 1,971 25,674 19,987 32,174 6,331 1,128,622 4,303,264 1,227,190 1,209,812 6,740,266 4,493,418 1,289,303 1,268,823 7,051,544 (190,154) (62,113) (59,011) (311,278) 894,992 736,145 158,847 (Continued) See accompanying Notes to Budgetary Comparison Schedule. (72) CITY OF DOUGLAS, ARIZONA REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE (CONTINUED) GENERAL FUND YEAR ENDED JUNE 30, 2013 (Concluded) EXPENDITURES (CONTINUED) Culture and Recreation: Parks Recreation Library Aquatics Visitor Center Total Culture and Recreation Original and Final Budget $ 572,647 121,066 358,727 312,058 93,172 1,457,670 Debt Service: Principal Retirement Interest on Long-Term Debt Total Debt Service Capital Outlay Total Expenditures $ 582,676 124,558 308,609 317,512 72,852 1,406,207 Variance With Final Budget $ (10,029) (3,492) 50,118 (5,454) 20,320 51,463 28,475 4,236 32,711 28,475 5,772 34,247 (1,536) (1,536) 134,469 13,836,046 135,484 12,810,943 (1,015) 1,025,103 1,417,761 1,296,309 (121,452) 467,062 (2,087,340) (1,620,278) 425,473 (1,535,456) (1,109,983) (41,589) 551,884 510,295 Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balance FUND BALANCE Beginning of Year End of Year Actual (202,517) $ See accompanying Notes to Budgetary Comparison Schedule. (73) 5,518,150 5,315,633 186,326 $ 4,761,141 4,947,467 388,843 $ (3,639,900) (368,166) CITY OF DOUGLAS, ARIZONA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE YEAR ENDED JUNE 30, 2013 NOTE 1 BASIS OF ACCOUNTING The General Fund budgetary comparison schedule is prepared on a budgetary basis of accounting. See Note 2 for a reconciliation of the General Fund Budgetary Comparison Schedule to the Statement of Revenues, Expenditures and Changes in Fund Balances. Expenditures may not legally exceed the expenditure limitation of all fund types as a whole. For management and legal purposes, the City Council adopts an annual budget by department for the General Fund. The City Manager, subject to City Council approval, may at any time transfer any unencumbered appropriation balance or portion thereof between departments. NOTE 2 BUDGETARY COMPARISON SCHEDULE RECONCILIATION Proceeds from capital leases and leased capital outlay expenditures are not recognized on the budgetary basis. Therefore the following reconciliation is necessary to reconcile the General Fund Budgetary Comparison Schedule to the Statement of Revenues, Expenditures and Changes in Fund Balances. Statement of Revenues Expenditures and Changes in Fund Balances Revenues $ Expenditures 14,107,252 Budgetary Comparison Schedule General Fund Adjustments $ 14,016,854 - $ 14,107,252 (1,205,911) 12,810,943 Excess (Deficiency) of Revenues Over Expenditures 90,398 1,205,911 1,296,309 Other Financing Sources and (Uses) 95,928 (1,205,911) (1,109,983) Net Change in Fund Balance Fund Balance, Beginning of Year Fund Balance, End of Year $ (74) 186,326 - 186,326 4,761,141 - 4,761,141 4,947,467 $ - $ 4,947,467 CITY OF DOUGLAS, ARIZONA NOTES TO REQUIRED SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULE YEAR ENDED JUNE 30, 2013 NOTE 3 EXCESS OF EXPENDITURES OVER APPROPRIATIONS Expenditures exceeded appropriations in the following funds: Amount of Overexpenditure General Fund: Administration City Magistrate Cemetery Police Fire Emergency Medical Services Parks Recreation Aquatics Capital Outlay Nonmajor Governmental Funds Police Grants Fund $ 25,195 1,975 6,987 190,154 62,113 59,011 10,029 3,492 5,454 1,015 30,846 Cash was available to meet all of the overexpenditures listed above. (75) THIS PAGE BLANK COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES THIS PAGE BLANK NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Highway Users Fund (HURF) – accounts for the City’s share of state taxes on gasoline, diesel fuels, and other transportation related fees to be used solely for street and highway purposes. Eligible expenditures include the cost of right-of-way acquisitions, construction, reconstruction, maintenance, repair, roadside development of city roads, streets and bridges and the payment of the interest and principal on highway and street bonds. Grants Fund – accounts for the activity of the City’s grants. Police Grants – accounts for the activity of grants received by the City’s police department. Local Transportation Assistance Fund (LTAF) – accounts for the City’s share of state lottery funds. Expenditures are restricted to transportation. Ten percent of revenues received may be used for culture and recreation with a match from other non-governmental sources. JCEF Restricted Court Fund – accounts for the activity of the JCEF court receipts. Public Housing Fund – accounts for the Douglas Housing Authority component unit of the City. The Douglas Housing Authority receives federal assistance and provides low rent housing for the area. CAPITAL PROJECTS FUND Capital Projects Fund – accounts for the acquisition and construction of major capital facilities other than those financed by proprietary funds and trust funds. DEBT SERVICE FUND Debt Service Fund – accounts for the accumulation of resources for, and the payments of, debt service principal, interest and related debt. . CITY OF DOUGLAS, ARIZONA NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2013 Special Revenue HURF ASSETS Cash and Cash Equivalents Receivables Accounts Receivable Taxes Receivable Intergovernmental Receivable Restricted Assets Total Assets LIABILITIES, DEFERRED INFLOWS, AND FUND BALANCES Liabilities Accounts Payable Accrued Wages and Benefits Insurance Claims Payable Unearned Revenue Customer Deposits Payable Total Liabilities $ 119,396 $ 101,347 220,743 $ 47,090 15,126 8,108 70,324 Deferred Inflows of Resources Unavailable Revenue Fund Balances Restricted Assigned Total Fund Balances Total Liabilities, Deferred Inflows of Resources and Fund Balances Grants $ $ 141,486 $ 224,103 365,589 $ 2,118 2,118 Police Grants $ 290,651 $ 290,651 $ 1,969 1,969 LTAF $ - $ - $ - - 60,190 - - 150,419 150,419 303,281 303,281 288,682 288,682 - 220,743 (76) $ 365,589 $ 290,651 $ - Special Revenue JCEF Restricted Court Public Housing $ 69,699 $ 69,699 $ $ 250 250 Total Special Revenue $ 366,464 $ $ 6,260 42,433 415,157 $ 5,527 17,250 20,040 9,666 52,483 987,696 Capital Projects $ - 6,260 325,450 42,433 $ 1,361,839 $ - $ $ 56,954 32,376 8,108 20,040 9,666 127,144 - Debt Service Total Nonmajor Governmental Funds $ 176,241 $ 1,163,937 $ 49,638 225,879 $ 6,260 49,638 325,450 42,433 1,587,718 $ 1,689 1,689 $ 58,643 32,376 8,108 20,040 9,666 128,833 - - 60,190 - - 60,190 69,449 69,449 362,674 362,674 1,174,505 1,174,505 - 224,190 224,190 1,174,505 224,190 1,398,695 415,157 $ 1,361,839 69,699 $ $ - (77) $ 225,879 $ 1,587,718 CITY OF DOUGLAS, ARIZONA NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCES YEAR ENDED JUNE 30, 2013 Special Revenue HURF REVENUES Taxes Sales Taxes Intergovernmental Revenues Fines and Forfeitures Charges for Services Investment Income Other Total Revenues $ 1,103,680 17,245 1,120,925 Grants $ 633,607 2,228 635,835 Police Grants $ 224,946 2,878 227,824 LTAF $ - EXPENDITURES Current General Government Public Safety Highways and Streets Culture and Recreation Redevelopment and Housing Debt Service Principal Retirement Interest on Long-Term Debt Capital Outlay Total Expenditures 849,311 - 8,710 1,989 194,415 882 - 85,601 - - 112,493 961,804 314,457 520,453 100,245 185,846 - Excess (Deficiency) of Revenues Over Expenditures 159,121 115,382 41,978 - 211,937 (282,840) (70,903) 137,354 (224,190) (86,836) 88,218 28,546 OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balances FUND BALANCES Beginning of Year, As Restated End of Year $ 62,201 150,419 (78) $ 274,735 303,281 $ - (211,937) (211,937) 41,978 (211,937) 246,704 288,682 $ 211,937 - Special Revenue JCEF Restricted Court $ Public Housing 7,487 7,487 $ 889,021 152 87,005 976,178 13,971 - 1,035,816 13,971 1,035,816 (6,484) (59,638) - - (6,484) $ Total Special Revenue 75,933 69,449 (59,638) $ 422,312 362,674 $ 2,851,254 7,487 5,258 104,250 2,968,249 Capital Projects $ 12,295 63,619 75,914 22,681 87,590 1,043,726 882 1,035,816 527,195 2,717,890 Total Nonmajor Governmental Funds Debt Service $ 560,802 777 561,579 $ 560,802 2,851,254 7,487 18,330 167,869 3,605,742 - - 22,681 87,590 1,043,726 882 1,035,816 139,075 139,075 1,159,110 499,219 1,658,329 1,159,110 499,219 666,270 4,515,294 250,359 (63,161) (1,096,750) (909,552) 349,291 (718,967) (369,676) (64,099) (64,099) 1,219,860 1,219,860 1,569,151 (783,066) 786,085 (119,317) (127,260) 123,110 (123,467) 1,293,822 $ 1,174,505 127,260 - $ (79) $ 101,080 224,190 $ 1,522,162 1,398,695 CITY OF DOUGLAS, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL HURF FUND YEAR ENDED JUNE 30, 2013 Original and Final Budget REVENUES Intergovernmental Revenues Other Total Revenues $ EXPENDITURES Current: Highways and Streets Debt Service: Principal Retirement Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) Net Change in Fund Balance FUND BALANCE Beginning of Year End of Year Actual 1,178,000 35,000 1,213,000 $ (80) $ (74,320) (17,755) (92,075) 1,003,350 849,311 154,039 5,000 182,980 112,493 5,000 70,487 1,191,330 961,804 229,526 21,670 159,121 137,451 175,477 (197,147) (21,670) 211,937 (282,840) (70,903) 36,460 (85,693) (49,233) 88,218 88,218 - $ 1,103,680 17,245 1,120,925 Variance With Final Budget - $ 62,201 150,419 $ 62,201 150,419 CITY OF DOUGLAS, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL GRANTS FUND YEAR ENDED JUNE 30, 2013 Original and Final Budget REVENUES Intergovernmental Revenues Investment Income Total Revenues $ EXPENDITURES Current: General Government Public Safety Highways and Streets Culture and Recreation Redevelopment and Housing Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Total Other Financing Sources (Uses) $ 8,710 1,989 194,415 882 314,457 520,453 120,305 115,382 206,485 $ (81) 633,607 2,228 635,835 10,700 4,500 869,117 1,000 69,000 3,015,091 3,969,408 94,715 (8,535) 86,180 Net Change in Fund Balance FUND BALANCE Beginning of Year End of Year 4,089,713 4,089,713 Actual 206,485 $ Variance With Final Budget $ (3,456,106) 2,228 (3,453,878) 1,990 2,511 674,702 118 69,000 2,700,634 3,448,955 (4,923) 137,354 (224,190) (86,836) 42,639 (215,655) (173,016) 28,546 (177,939) 274,735 303,281 $ 274,735 96,796 CITY OF DOUGLAS, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL POLICE GRANTS FUND YEAR ENDED JUNE 30, 2013 Original and Final Budget REVENUES Intergovernmental Revenues Investment Income Total Revenues $ EXPENDITURES Current Public Safety Capital Outlay Total Expenditures Excess (Deficiency) of Revenues Over Expenditures FUND BALANCE Beginning of Year End of Year $ (82) 155,000 155,000 Actual $ 224,946 2,878 227,824 Variance With Final Budget $ 69,946 2,878 72,824 55,000 100,000 155,000 85,601 100,245 185,846 (30,601) (245) (30,846) - 41,978 41,978 - $ 246,704 288,682 $ 246,704 288,682 CITY OF DOUGLAS, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL JCEF FUND YEAR ENDED JUNE 30, 2013 Original and Final Budget REVENUES Fines and Forfeits $ 10,500 Actual $ 7,487 Variance With Final Budget $ (3,013) EXPENDITURES Current: General Government 18,560 13,971 4,589 Excess (Deficiency) of Revenues Over Expenditures (8,060) (6,484) 1,576 FUND BALANCE Beginning of Year End of Year $ (83) (8,060) $ 75,933 69,449 $ 75,933 77,509 CITY OF DOUGLAS, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGE IN FUND BALANCE BUDGET AND ACTUAL DEBT SERVICE FUND YEAR ENDED JUNE 30, 2013 Original and Final Budget REVENUES Taxes Investment Earnings Total Revenues $ EXPENDITURES Debt Service: Principal Retirement Interest on Long-Term Debt Total Expenditures 671,987 1,500 673,487 Actual $ 1,162,246 508,871 1,671,117 Excess (Deficiency) of Revenues Over Expenditures Net Change in Fund Balance $ (111,185) (723) (111,908) 1,159,110 499,219 1,658,329 3,136 9,652 12,788 (1,096,750) (99,120) 1,158,134 1,219,860 61,726 160,504 123,110 (997,630) OTHER FINANCING SOURCES (USES) Transfers In 560,802 777 561,579 Variance With Final Budget (37,394) FUND BALANCE Beginning of Year End of Year $ (84) 160,504 $ 101,080 224,190 $ 101,080 63,686 STATISTICAL SECTION (UNAUDITED) This section of the City of Douglas, Arizona’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 government’s overall financial health. Financial Trends These schedules contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the government’s most significant local revenue source, sales tax. Debt Capacity These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the government’s financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services the government provides and the activities it performs. See the table of contents for page numbers of the schedules that encompass the above sections. CITY OF DOUGLAS, ARIZONA NET POSITION BY COMPONENT LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Year 2004 Governmental Activities: Net Investment in Capital Assets Restricted Unrestricted Total Governmental Activities Net Position Business-Type Activities: Net Investment in Capital Assets Restricted Unrestricted Total Business-Type Activities Net Position Primary Government: Net Investment in Capital Assets Restricted Unrestricted Total Primary Government Net Position $ 4,663,850 2,762,253 3,445,457 2005 $ 5,862,693 3,233,910 3,376,539 2006 $ 2007 6,617,585 3,008,022 3,586,626 $ 14,111,791 2,756,736 3,951,726 $ 10,871,560 $ 12,473,142 $ 13,212,233 $ 20,820,253 $ 11,497,904 1,910,464 $ 11,354,586 1,885,932 $ 11,052,102 2,010,602 $ 11,744,198 1,586,749 $ 13,408,368 $ 13,240,518 $ 13,062,704 $ 13,330,947 $ 16,161,754 2,762,253 5,355,921 $ 17,217,279 3,233,910 5,262,471 $ 17,669,687 3,008,022 5,597,228 $ 25,855,989 2,756,736 5,538,475 $ 24,279,928 $ 25,713,660 $ 26,274,937 $ 34,151,200 Source: The City’s Finance Department. (85) Fiscal Year 2008 2009 2010 2011 2012 2013 $ 13,509,453 2,939,323 3,491,020 $ 12,376,658 3,634,763 5,438,330 $ 13,775,501 477,084 7,049,956 $ 15,847,448 719,796 3,938,127 $ 20,735,227 871,510 3,923,990 $ 20,087,841 1,234,695 3,991,132 $ 19,939,796 $ 21,449,751 $ 21,302,541 $ 20,505,371 $ 25,530,727 $ 25,313,668 $ 12,314,881 1,815,909 $ 15,535,124 1,006,658 $ 15,872,761 1,205,402 $ 16,048,928 2,100,001 $ 15,921,451 3,880,161 $ 16,866,077 443,520 3,685,177 $ 14,130,790 $ 16,541,782 $ 17,078,163 $ 18,148,929 $ 19,801,612 $ 20,994,774 $ 25,824,334 2,939,323 5,306,929 $ 27,911,782 3,634,763 6,444,988 $ 29,648,262 477,084 8,255,358 $ 31,896,376 719,796 6,038,128 $ 36,656,678 871,510 7,804,151 $ 36,953,918 1,678,215 7,676,309 $ 34,070,586 $ 37,991,533 $ 38,380,704 $ 38,654,300 $ 45,332,339 $ 46,308,442 (86) CITY OF DOUGLAS, ARIZONA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Year 2004 EXPENSES Governmental Activities: General Government Public Safety Highways and Streets Culture and Recreation Redevelopment and Housing Interest on Long-Term Debt Total Governmental Activities $ Business-Type Activities: Water Sewer Solid Waste Total Business-Type Activities Total Primary Government Expenses PROGRAM REVENUES Governmental Activities: Fines, Fees and Charges for Services: General Government Public Safety Highways and Streets Culture and Recreation Redevelopment and Housing Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities Program Revenues Business-Type Activities: Charges for Services: Water Sewer Solid Waste Operating Grants and Contributions Capital Grants and Contributions Total Business-Type Activities Program Revenues Total Primary Government Program Revenues 2,446,006 4,840,034 1,794,385 1,676,356 202,831 227,622 11,187,234 2005 $ 2,989,561 4,985,627 2,144,672 1,792,405 20,744 186,596 12,119,605 2006 $ 3,406,989 5,720,526 2,938,401 1,771,149 281,392 165,418 14,283,875 2007 $ 3,725,063 6,043,744 2,271,480 1,983,227 25,159 159,577 14,208,250 1,649,980 808,261 659,918 3,118,159 1,758,738 902,247 814,419 3,475,404 1,774,516 861,899 842,263 3,478,678 1,838,462 938,588 872,341 3,649,391 $ 14,305,393 $ 15,595,009 $ 17,762,553 $ 17,857,641 $ $ $ $ 1,636,724 598,003 104,814 2,628,305 1,982,658 1,334,218 556,022 2,750 157,660 1,826,751 809,180 1,359,062 586,562 3,256 104,169 2,326,620 555,531 1,031,216 591,610 62 102,689 2,428,909 651,377 6,950,504 4,686,581 4,935,200 4,805,863 1,673,639 912,736 662,740 - 1,586,261 903,830 673,965 - 1,597,155 911,694 643,107 86,803 1,618,744 916,597 667,241 580,433 3,249,115 3,164,056 3,238,759 3,783,015 $ 10,199,619 Source: The City's Finance Department. (87) $ 7,850,637 $ 8,173,959 $ 8,588,878 Fiscal Year 2008 $ 4,340,737 6,348,866 1,760,251 2,189,769 132,857 180,077 14,952,557 2009 $ 3,999,501 6,604,306 2,702,979 2,074,291 497,600 727,564 16,606,241 2010 $ 4,639,733 6,715,219 2,970,829 1,986,674 53,973 760,128 17,126,556 2011 $ 5,121,084 6,700,135 2,773,973 1,936,579 51,599 704,510 17,287,880 2012 $ 4,840,153 7,186,954 2,555,331 1,827,388 664,519 17,074,345 2013 $ 4,989,484 7,799,983 2,605,395 1,868,116 1,041,957 579,592 18,884,527 1,455,706 952,579 891,003 3,299,288 1,344,052 1,385,910 707,042 3,437,004 1,261,985 1,337,193 716,047 3,315,225 1,367,914 1,320,648 755,546 3,444,108 1,698,669 1,313,976 765,647 3,778,292 1,666,863 1,310,421 785,788 3,763,072 $ 18,251,845 $ 20,043,245 $ 20,441,781 $ 20,731,988 $ 20,852,637 $ 22,647,599 $ $ $ $ $ $ $ 939,208 642,820 2,834 97,949 2,293,564 589,152 1,387,975 760,669 98,174 1,818,551 1,765,876 1,766,509 669,040 90,033 2,128,442 902,228 1,728,090 972,724 173,836 2,303,776 951,180 2,035,725 924,788 73,255 2,193,829 5,622,718 1,825,479 895,111 89,531 3,340,827 1,000,170 4,565,527 5,831,245 5,556,252 6,129,606 10,850,315 7,151,118 1,749,040 924,045 668,023 110,274 1,782,320 909,842 816,038 2,373,486 1,870,916 1,042,152 1,056,305 - 1,965,519 1,703,223 1,203,563 - 2,000,402 1,796,248 1,237,449 592,435 274,140 2,025,752 1,835,771 1,205,675 8,196 19,578 3,451,382 5,881,686 3,969,373 4,872,305 5,900,674 5,094,972 8,016,909 $ 11,712,931 9,525,625 $ 11,001,911 $ 16,750,989 $ 12,246,090 $ (88) CITY OF DOUGLAS, ARIZONA CHANGES IN NET POSITION (CONTINUED) LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Year (Concluded) NET (EXPENSE)/REVENUE Governmental Activities Business-Type Activities Total Primary Government Net Expense GENERAL REVENUES AND OTHER CHANGES IN NET POSITION Governmental Activities: Taxes: Sales Taxes Property Taxes Franchise Taxes Unrestricted Grants and Contributions State Revenue Sharing State Sales Tax Revenue Sharing Auto Lieu Tax Revenue Sharing Payments in Lieu of Taxes Gain (Loss) on Sale of Capital Assets Investment Income Other Transfers Total Governmental Activities 2004 2005 2006 2007 $ (4,236,730) 130,956 $ (7,433,024) (311,348) $ (9,348,675) (239,919) $ (9,402,387) 133,624 $ (4,105,774) $ (7,744,372) $ (9,588,594) $ (9,268,763) $ $ $ $ Business-Type Activities: Sales Tax Investment Income (Loss) Transfers Total Business-Type Activities Total Primary Government CHANGE IN NET POSITION Governmental Activities Business-Type Activities Total Primary Government 4,432,493 369,912 242,164 2,901,935 685,970 202,299 992 67,064 8,902,829 91,380 24,975 (67,064) 49,291 4,390,874 410,706 253,182 3,089,912 713,727 170,524 25 5,656 9,034,606 4,740,475 448,571 261,809 1,765,690 1,729,948 791,931 229,305 1,802 118,235 10,087,766 5,006,857 465,726 322,308 2,002,854 1,634,497 789,900 311,744 1,119 63,387 10,598,392 98,995 50,159 (5,656) 143,498 91,380 88,960 (118,235) 62,105 91,380 106,626 (63,387) 134,619 $ 8,952,120 $ 9,178,104 $ 10,149,871 $ 10,733,011 $ 4,666,099 180,247 4,846,346 $ 1,601,582 (167,850) 1,433,732 $ $ $ Source: The City's Finance Department. (89) $ $ 739,091 (177,814) 561,277 $ 1,196,005 268,243 1,464,248 Fiscal Year 2008 2009 2010 2011 2012 2013 $ (10,387,030) 152,094 $ (10,774,996) 2,444,682 $ (11,570,304) 654,148 $ (11,158,274) 1,428,197 $ (6,224,030) 2,122,382 $ (11,733,409) 1,331,900 $ (10,234,936) $ (8,330,314) $ (10,916,156) $ (9,730,077) $ (4,101,648) $ (10,401,509) $ $ $ $ $ $ 5,095,143 462,232 349,444 49,612 2,448,141 1,580,288 845,030 280,685 1,697 (323,514) 10,788,758 6,151,531 532,028 341,702 18,467 2,608,244 1,368,088 793,358 16,212 322,889 132,432 12,284,951 5,808,108 531,489 351,635 30,274 2,245,322 1,261,862 732,787 107,495 238,124 115,998 11,423,094 5,953,998 545,995 337,029 39,082 1,687,895 1,316,667 762,824 67,493 258,705 358,411 11,328,099 5,825,402 533,742 334,074 42,590 1,466,716 1,357,922 803,452 6,769 44,626 356,342 477,751 11,249,386 5,364,312 563,698 314,080 70,074 1,775,125 1,419,048 757,402 39,423 596,739 162,208 11,062,109 224,968 99,267 323,514 647,749 77,114 21,628 (132,432) (33,690) (1,769) (115,998) (117,767) 980 (358,411) (357,431) 8,052 (477,751) (469,699) 23,470 (162,208) (138,738) $ 11,436,507 $ 12,251,261 $ 11,305,327 $ 10,970,668 $ 10,779,687 $ 10,923,371 $ $ $ $ $ $ $ 401,728 799,843 1,201,571 $ 1,509,955 2,410,992 3,920,947 $ (147,210) 536,381 389,171 $ 169,825 1,070,766 1,240,591 (90) $ 5,025,356 1,652,683 6,678,039 $ (671,300) 1,193,162 521,862 THIS PAGE BLANK CITY OF DOUGLAS, ARIZONA GOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCE LAST TEN FISCAL YEARS (ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Sales Taxes $ 4,432,493 4,390,874 4,740,475 5,006,857 5,095,143 6,228,645 5,808,108 5,953,998 5,825,402 5,364,312 Property Taxes Franchise Taxes $ $ 330,022 416,850 448,571 465,726 462,232 532,028 531,489 545,995 533,742 563,698 Source: The City’s Finance Department. (91) 242,164 253,182 261,809 322,308 349,444 341,702 351,635 337,029 334,074 314,080 Total $ 5,004,679 5,060,906 5,450,855 5,794,891 5,906,819 7,102,375 6,691,232 6,837,022 6,693,218 6,242,090 CITY OF DOUGLAS, ARIZONA FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Year 2004 General Fund: Reserved Unreserved Non-spendable Unassigned Total General Fund All Other Governmental Funds: Reserved Unreserved, Reported in: Special Revenue Funds Capital Projects Funds Debt Service Funds Restricted Assigned Unassigned Total All Other Governmental Funds $ 2005 3,788,373 $ 3,788,373 5,878 4,076,080 $ 4,081,958 78,239 3,735,584 $ 3,813,823 $ $ $ $ $ 10,000 $ 2008 1,285 3,328,604 $ 3,329,889 10,000 $ 2007 60,472 3,035,409 $ 3,095,881 14,780 $ 2006 10,000 2,733,028 14,445 - 2,897,657 15,184 - 2,597,332 300 - 2,643,920 3,143 - $ 2,762,253 $ 2,922,841 $ 2,607,632 $ 2,657,063 $ 10,000 4,854,098 (68,512) - $ 4,795,586 Source: The City’s Finance Department. Note 1: The City implemented the provisions of GASB Statement No. 54 in the fiscal year 2011, which required fund balances to be reported in different categories. (92) Fiscal Year 2009 $ 2010 2011 2012 2013 68,239 3,962,160 $ 4,030,399 $ 4,174,438 $ 4,174,438 $ 58,493 4,683,978 $ 4,742,471 $ 652,189 4,108,952 $ 4,761,141 $ $ $ $ $ $ 10,000 5,335,420 (7,499) - $ 5,337,921 15,453 4,065,860 - $ 4,081,313 2,220,530 (29,857) $ 2,190,673 - 686,488 4,260,979 $ 4,947,467 - 871,510 228,340 - 1,174,505 224,190 - $ 1,099,850 $ 1,398,695 (93) CITY OF DOUGLAS, ARIZONA CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (MODIFIED ACCRUAL BASIS OF ACCOUNTING) (UNAUDITED) Fiscal Year 2004 REVENUES Taxes Intergovernmental Fines and Forfeitures Licenses and Permits Charges for Services Rents and Royalties Special Assessments Investment Income Other Total Revenues $ EXPENDITURES General Government Public Safety Highways and Streets Culture and Recreation Redevelopment and Housing Capital Outlay Debt Service Principal Retirement Interest on Long-Term Debt Issuance Costs Total Expenditures Excess of Revenues Over (Under) Expenditures OTHER FINANCING SOURCES (USES) Transfers In Transfers Out Issuance of Refunding Debt Issuance of Long-Term Debt Payment to Refunded Debt Escrow agent 5,004,679 6,773,955 177,795 318,126 834,821 15,600 202,299 262,423 13,589,698 $ 5,060,906 6,439,570 206,150 223,484 972,483 18,000 170,524 681,111 13,772,228 Debt Service as a Percentage of Noncapital Expenditures $ 2007 5,464,419 7,169,720 185,754 262,858 1,040,529 45,000 229,305 661,749 15,059,334 $ 5,782,276 7,507,537 199,420 270,278 1,012,858 45,000 311,744 324,140 15,453,253 3,579,484 4,989,254 2,700,498 1,671,445 20,744 - 3,477,225 5,764,769 3,166,478 1,767,630 281,392 38,999 3,801,423 5,992,153 2,551,227 2,266,214 25,159 - 304,083 207,138 137,176 12,391,842 390,742 145,630 13,497,797 413,349 124,452 15,034,294 418,837 118,611 15,173,624 1,197,856 274,431 25,040 279,629 1,161,277 (1,155,621) - (4,037,620) $ 2006 2,381,289 5,047,690 2,135,963 1,486,634 202,831 489,038 833,301 (766,237) 4,134,181 - Proceeds from Capital Leases Proceeds from Sale of Capital Assets Total Other Financing Sources (Uses) Net Change in Fund Balance 2005 1,374,466 (1,256,231) - 1,380,037 (1,316,650) - - - - - 114,509 - - - - - - 163,625 120,165 118,235 63,387 1,361,481 5.45% $ 394,596 3.97% Source: The City's Finance Department. (94) $ 143,275 3.59% $ 343,016 3.54% Fiscal Year 2008 $ $ 2009 5,914,743 7,805,787 141,232 169,697 1,059,989 36,000 280,685 307,449 15,715,582 $ 2010 7,012,223 8,372,584 195,644 126,224 1,386,022 538,928 16,212 322,889 17,970,726 $ 2011 6,689,354 7,184,648 189,333 192,309 1,410,391 733,549 107,495 238,124 16,745,203 $ 2012 6,831,876 7,083,337 201,361 172,602 1,745,359 755,328 67,493 258,705 17,116,061 $ 2013 6,707,653 6,783,653 319,294 196,385 1,759,653 758,436 44,626 356,342 16,926,042 $ 6,234,848 8,031,863 273,475 162,571 1,605,657 768,418 39,423 596,739 17,712,994 5,169,854 6,078,350 2,413,444 1,863,014 132,857 896,225 13,462,021 6,579,669 2,626,696 1,750,997 497,600 817,482 3,961,316 6,554,551 2,660,654 1,513,127 53,973 728,862 3,910,726 6,275,426 1,975,991 1,409,501 51,599 2,007,704 3,555,255 6,709,042 2,093,297 1,361,590 2,620,504 3,469,997 7,139,134 1,779,871 1,407,089 1,035,816 2,007,665 429,669 133,267 17,116,680 656,965 686,598 27,078,028 2,228,723 719,162 18,420,368 1,611,006 663,544 17,905,497 1,636,402 623,553 18,599,643 1,627,585 551,097 19,018,254 (1,401,098) (9,107,302) (1,675,165) (789,436) (1,673,601) (1,305,260) 1,553,137 (1,876,651) 3,000,000 1,020,458 (888,026) 9,000,000 1,303,871 (1,002,494) 400,000 2,837,907 (2,479,496) - 2,923,356 (2,445,605) - 2,480,730 (2,318,522) - - - - - - - 595,000 595,000 - 75,413 71,676 1,205,911 - - - - 52,021 - 3,271,486 9,727,432 701,377 433,824 601,448 1,368,119 1,870,388 4.05% $ 620,130 9.80% $ (973,788) 18.09% $ (355,612) 14.02% (95) $ (1,072,153) 14.27% $ 62,859 12.65% CITY OF DOUGLAS, ARIZONA TAXABLE SALES BY CATEGORY LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year 2004 Sales Category: Mining Communications and Utilities Transportation & Warehousing Construction Manufacturing Wholesale Trade Retail Trade Finance and Insurance Real Estate, Rental and Leases Restaurants and Bars Accommodations Public Administration Services Arts & Entertainment Other Total 2005 $ 788,852 9,522,557 118,643 5,509,385 3,669,492 3,853,589 133,948,362 105,986 5,231,069 11,927,045 1,971,777 241,021 1,851,152 15,673 2,417,236 $ 181,171,839 499,539 10,008,146 47,034 9,952,326 3,246,085 4,063,304 141,390,374 94,754 7,666,144 12,864,527 2,286,598 130,215 1,785,624 23,100 2,393,080 $ 196,450,850 466,247 15,039,614 40,313 8,593,952 3,375,254 3,994,393 145,310,162 84,995 6,656,980 12,923,634 2,600,819 108,890 2,714,689 8,285 2,532,122 $ 204,450,349 2.50% 2.50% 2.50% 2.50% Source: Arizona Department of Revenue. (96) $ 2007 505,885 9,284,375 144,228 17,584,695 3,070,108 4,388,768 120,347,438 211,112 5,319,960 12,705,315 2,237,920 626 2,571,763 8,912 2,432,757 $ 180,813,862 City Sales Tax Rate $ 2006 $ Fiscal Year 2008 $ 2009 $ 2010 $ 2011 $ 2012 510,450 23,876,918 15,283 7,578,438 4,144,993 4,093,177 146,386,134 194,035 5,664,318 12,932,385 2,277,339 100,106 3,342,416 3,121,725 $ 214,237,717 2,318,215 22,195,363 48,456 15,965,933 3,945,094 3,884,491 144,710,942 93,629 6,249,386 12,500,240 2,363,017 294,021 3,242,519 56,562 2,921,447 $ 220,789,315 2,318,215 22,195,363 48,456 15,965,933 3,945,094 3,884,491 144,710,942 93,629 6,249,386 12,500,240 2,363,017 294,021 3,242,519 56,562 2,921,447 $ 220,789,315 301,452 23,550,249 66,060 19,963,998 986,650 1,226,017 147,664,164 33,753 8,690,896 14,153,836 3,652,951 1,018,073 410,600 2,599,103 $ 224,317,802 6,606 21,998,591 36,614 18,615,619 136,449,566 8,369,967 15,215,328 4,552,670 1,224,696 758,552 276,830 $ 207,505,039 4,715 20,996,222 34,024 4,980,458 137,243,931 7,812,435 14,682,935 3,855,249 1,152,749 642,019 196,727 $ 191,601,464 2.50% 2.50% 2.80% 2.80% 2.80% 2.80% (97) $ 2013 $ CITY OF DOUGLAS, ARIZONA DIRECT AND OVERLAPPING SALES TAX RATES LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 City Direct Rate 2.50 % 2.50 2.50 2.50 2.50 2.80 2.80 2.80 2.80 2.80 Source: Arizona Department of Revenue. (98) Cochise County 6.10 % 6.10 6.10 6.10 6.10 6.10 6.10 7.10 7.10 6.10 CITY OF DOUGLAS, ARIZONA ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (IN THOUSANDS OF DOLLARS) (UNAUDITED) Assessed Value Fiscal Year Real Property 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $ 37,278 39,514 41,500 54,948 55,520 58,804 58,950 62,801 61,660 60,730 Personal Property Less: Tax Exempt Real Property Total Taxable Assessed Value $ $ $ 36,544 40,158 41,419 51,893 52,821 57,027 56,350 57,777 56,188 54,892 3,473 5,087 4,385 2,925 1,506 4,848 4,728 4,254 3,936 3,905 4,207 4,443 4,466 5,980 4,205 6,625 7,328 9,278 9,408 9,743 Source: The Cochise County Treasurer. (99) Total Direct Tax Rate Estimated Actual Taxable Value Assessed Value as a Percentage of Actual Value 11.20 11.15 10.70 8.70 8.87 10.55 13.07 8.23 8.36 7.21 $ 439,875 444,275 448,500 459,832 462,040 470,911 478,320 509,351 505,672 499,781 8.308% 9.039 9.235 11.285 11.432 12.110 11.781 11.343 11.112 10.983 CITY OF DOUGLAS, ARIZONA PROPERTY TAX RATES DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS (UNAUDITED) Primary Rates Fiscal Year City of Douglas Cochise County Cochise County Community College 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1.09 1.09 1.05 0.99 1.02 1.00 0.98 0.98 1.05 1.08 3.39 2.94 2.92 2.87 2.68 2.64 2.63 2.63 2.63 2.63 1.79 1.79 1.79 1.74 1.66 1.61 1.60 1.67 1.73 1.85 Secondary Rates Douglas Unified School District 4.93 5.33 4.94 3.10 3.51 5.30 7.86 2.95 2.95 1.65 Source: The Cochise County Treasurer. (100) Total Direct Rate 11.20 11.15 10.70 8.70 8.87 10.55 13.07 8.23 8.36 7.21 School District 1.90 0.83 1.58 1.72 1.78 0.96 1.07 0.87 0.53 0.86 County 0.51 0.51 0.51 0.40 0.40 0.40 0.34 0.45 0.55 0.55 Rate Total 13.61 12.49 12.79 10.82 11.05 11.91 14.48 9.55 9.44 8.62 CITY OF DOUGLAS, ARIZONA PRINCIPAL PROPERTY TAXPAYERS JUNE 30, 2013 AND 2004 (UNAUDITED) 2013 Taxpayer Wal-Mart Southwest Gas Corporation SFP Pool Five Shopping Center Safeway Inc. Qwest Corporation Phelps Dodge Corporation J C Penney Co Inc G6 Hospitality Property LLC Douglas Customs LLC DHD LLC Arizona Public Service Accotel Properties Investors LLC Newhall Douglas LTD PRT Borane Ronald J and Rona JT Rev T Taxable Assessed Value $ 2,162,111 440,761 465,790 518,204 450,539 612,035 332,280 278,889 392,261 618,852 $ 6,271,722 Rank 1 2 3 4 5 6 7 8 9 10 - Source: The Cochise County Assessor's Office. (101) 2004 Percentage of Total Taxable Assessed Value 3.94 % 0.80 0.85 0.94 0.82 1.11 0.61 0.51 0.71 1.13 11.43 % Taxable Assessed Value $ 1,136,367 771,078 810,682 955,884 290,846 461,917 1,540,039 296,952 300,233 246,543 $ 6,810,541 Rank 2 5 4 3 9 6 1 8 7 10 Percentage of Total Taxable Assessed Value 3.05 % 2.07 2.18 2.57 0.78 1.24 4.13 0.80 0.81 0.66 18.28 % CITY OF DOUGLAS, ARIZONA PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) Total Tax Levy Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $ 387,160 399,279 442,229 468,748 485,584 542,878 546,719 555,804 538,029 552,411 Current Tax Collections $ 359,258 242,065 411,452 423,146 440,446 489,507 477,007 504,613 490,427 501,212 Percent of Current Taxes Collected 92.79 % 60.63 93.04 90.27 90.70 90.17 87.25 90.79 91.15 90.73 Source: The Cochise County Treasurer. (102) Delinquent Tax Collections $ 27,902 156,777 29,834 44,386 43,886 50,200 66,030 46,936 41,393 - Total Tax Collections $ 387,160 398,842 441,286 467,532 484,332 539,707 543,037 551,549 531,820 501,212 Ratio of Total Tax Collections to Total Tax Levy 100.00 % 99.89 99.79 99.74 99.74 99.42 99.33 99.23 98.85 90.73 Outstanding Delinquent Taxes $ 437 943 1,216 1,252 3,171 3,682 4,255 6,209 51,199 Ratio of Delinquent Taxes to Tax Levy -% 0.11 0.21 0.26 0.26 0.58 0.67 0.77 1.15 9.27 (103) CITY OF DOUGLAS, ARIZONA RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (UNAUDITED) Governmental Activities Fiscal Year Revenue Bonds 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 $ 4,435,000 4,095,000 3,735,000 3,370,000 2,995,000 2,605,000 2,205,000 1,790,000 1,365,000 920,800 Loans Payable $ 3,000,000 12,000,000 10,890,000 10,025,000 9,155,000 8,260,000 Business-Type Activities Capital Leases $ 785,356 771,477 623,828 483,879 947,738 1,275,773 957,050 701,457 431,731 1,345,057 Loans Payable $ 3,239,489 5,857,703 5,928,449 5,457,668 Source: The City's Finance Department. (104) Capital Leases $ 341,697 258,035 314,761 198,842 109,353 61,716 31,626 263,551 Total Primary Government $ 5,562,053 5,124,512 4,673,589 4,052,721 7,052,091 15,942,489 17,323,165 18,374,160 16,880,180 16,247,076 Percentage of Personal Income 2.93 % 2.31 1.99 1.57 2.73 5.65 5.62 6.24 6.44 7.15 Per Capita $ 327 298 268 220 371 862 864 913 854 935 CITY OF DOUGLAS, ARIZONA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT JUNE 30, 2013 (UNAUDITED) Governmental Unit Debt Repaid with Property Taxes Cochise County Cochise County Community College District Douglas Unified School District No. 27 Subtotal, Overlapping Debt City of Douglas, Arizona direct debt Total Direct and Overlapping Debt Outstanding Debt $ Estimated Percentage Applicable (1) 3,165,000 21,195,000 6,785,000 5.54% 5.54% 100.00% 10,525,857 100.00% Estimated Share of Overlapping Debt $ $ 175,183 1,173,143 6,785,000 8,133,326 10,525,857 18,659,183 Source: Cochise County Treasurer's Office. (1) Proportion applicable to the City of Douglas, Arizona, is computed on the ratio of secondary assessed valuation for 2012-13. (105) CITY OF DOUGLAS, ARIZONA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year 20% Debt Limit 2004 2005 2006 2007 2008 $ 7,173,258 $ 7,442,536 $ 8,283,788 $ 9,938,245 $ 10,378,721 - - - - - $ 7,173,258 $ 7,442,536 $ 8,283,788 $ 9,938,245 $ 10,378,721 - - - - - Total Applicable to Limit Legal Debt Margin Total Net Debt Applicable to the Limit as a Percentage of the Debt Limit Fiscal Year 6% Debt Limit Total Applicable to Limit Legal Debt Margin Total Net Debt Applicable to the Limit as a Percentage of the Debt Limit 2004 2005 2006 2007 2008 $ 2,151,977 $ 2,232,761 $ 2,485,137 $ 2,981,474 $ 3,113,616 - - - - - $ 2,151,977 $ 2,232,761 $ 2,485,137 $ 2,981,474 $ 3,113,616 - - - - - Source: The City's Finance Department and the Cochise County Assessor's Office. (106) Fiscal Year 2009 2010 2011 2012 2013 $ 10,890,226 $ 11,240,800 $ 11,387,094 $ 11,237,561 $ 10,978,476 - - - - - $ 10,890,226 $ 11,240,800 $ 11,387,094 $ 11,237,561 $ 10,978,476 - - - - - Fiscal Year 2009 2010 2011 2012 2013 $ 3,267,068 $ 3,372,240 $ 3,416,128 $ 3,371,268 $ 3,293,543 - - - - - $ 3,267,068 $ 3,372,240 $ 3,416,128 $ 3,371,268 $ 3,293,543 - - - - - (107) THIS PAGE BLANK CITY OF DOUGLAS, ARIZONA CALCULATION OF LEGAL DEBT MARGIN JUNE 30, 2013 (UNAUDITED) $ 54,892,380 Net Secondary Assessed Value Water, Sewer, Light, Parks, Open Space and Recreational Facility Bonds 10,978,476 Debt Limit - 20% of Net Secondary Assessed Value Debt Applicable to Limit General Obligation Bonds Outstanding Less: Amount Set Aside for Repayment of Debt Net Debt Applicable to Limit $ 10,978,476 20% Legal Debt Margin All Other General Obligation Bonds 3,293,543 Debt Limit - 6% of Net Secondary Assessed Value Debt Applicable to Limit General Obligation Bonds Outstanding Less: Amount Set Aside for Repayment of Debt Net Debt Applicable to Limit 3,293,543 All Other General Obligation Bonds debt Margin $ 14,272,019 Total Legal Debt Margin Source: Cochise County Assessor's Office. Note: The City did not have any debt subject to the debt limits. (108) CITY OF DOUGLAS, ARIZONA PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS (UNAUDITED) Revenue Bonds Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Excise Tax $ 3,552,034 3,518,881 3,796,816 4,012,867 4,067,101 5,095,143 5,808,108 5,953,998 5,825,402 5,364,312 Less: Operating Expenses $ Net Available Revenue - $ 3,552,034 3,518,881 3,796,816 4,012,867 4,067,101 5,095,143 5,808,108 5,953,998 5,825,402 5,364,312 Debt Service Principal Debt Service Interest $ $ 175,000 250,000 360,000 365,000 375,000 390,000 400,000 415,000 425,000 440,000 135,204 122,136 111,472 104,838 97,238 97,237 80,476 71,077 59,457 46,106 Coverage 1145.06 % 945.59 805.31 854.10 861.24 1045.72 1208.82 1224.90 1202.46 1103.53 Source: The City of Douglas' internal records. Note: The City's bonds are secured by City sales tax revenues. Sales tax revenues are applied first to the bonds and therefore no operating expenses are presented. (109) GADA Loan Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Less: Operating Expenses Excise Tax $ 10,217,630 11,456,914 9,545,898 9,274,436 9,383,676 9,243,530 $ - Net Available Revenue Debt Service Principal Debt Service Interest $ $ $ 10,217,630 11,456,914 9,545,898 9,274,436 9,383,676 9,243,530 170,000 110,000 110,000 115,000 24,369 147,935 142,812 128,638 123,775 121,264 Coverage N/A N/A N/A N/A 41928.80% 7744.56% 3051.64% 3886.40% 4013.98% 3912.37% Call Center Loan Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 City Sales Tax and Lease Revenue $ 483,499 704,620 1,421,131 1,319,984 1,276,280 Less: Operating Expenses $ 123,081 77,286 60,628 Net Available Revenue Debt Service Principal Debt Service Interest $ $ $ 483,499 704,620 1,298,050 1,242,698 1,215,652 1,260,000 675,000 700,000 740,000 Coverage 239,925 451,849 431,325 391,310 356,805 N/A N/A N/A N/A N/A 201.52% 41.16% 117.33% 113.87% 110.84% Coverage WIFA Loan Fiscal Year 2010 2011 2012 2013 Less: Operating Expenses Water/Sewer Revenues $ 2,749,697 3,540,996 3,722,556 3,779,059 $ 2,586,553 2,688,562 2,980,047 2,974,329 Net Available Revenue Debt Service Principal Debt Service Interest $ $ $ (110) 163,144 852,434 742,509 804,730 65,145 460,014 470,781 12,625 103,461 126,183 124,189 1292.23% 505.58% 126.67% 135.26% CITY OF DOUGLAS, ARIZONA DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Population 17,035 17,195 17,468 18,411 18,996 18,500 20,061 20,122 19,772 17,378 Personal Income $ 190,042,460 222,142,205 235,241,556 258,453,618 277,987,464 282,199,000 308,277,387 294,364,738 262,236,036 227,252,106 Per Capita Personal Income $ Arizona Department of Economic Security Cochise College Center for Economic Research (111) 11,156 12,919 13,467 14,038 14,634 15,254 15,367 14,629 13,263 13,077 Median Age 30.50 30.50 30.50 30.50 30.50 31.00 31.10 32.20 32.20 32.20 Unemployment Rate 7.7 % 7.6 7.2 6.8 6.8 9.1 9.2 13.1 12.0 12.6 CITY OF DOUGLAS, ARIZONA PRINCIPAL EMPLOYERS CURRENT YEAR AND TEN YEARS AGO (UNAUDITED) 2013 Employer Arizona Department of Corrections Douglas Unified School District Wal-Mart Stores, Inc. Advance Call Center Technologies City of Douglas Cochise College Chiricahua Community Health Center Southeast Arizona Medical Center Havens of Douglas Cochise County Basha's Inc. Homeland Security: U.S. Border Patrol Homeland Security: U.S. Customs Gadsen Hotel Employees Rank 615 477 249 236 200 194 100 87 58 53 2,269 1 2 3 4 5 6 7 8 9 10 - 2004 Percentage of Total City Employment Employees 9.77 % 7.58 3.96 3.75 3.08 3.00 1.59 1.38 0.92 0.84 35.87 % 666 617 235 234 166 120 117 510 70 65 2,800 Rank 1 2 4 0 5 6 8 8 3 8 10 Source: Cochise College Center for Economic Research Arizona Department of Economic Security Note: This list includes only those employers who responded to the annual major employer survey. (112) Percentage of Total City Employment 11.98 % 11.10 4.23 4.21 2.99 2.16 2.10 9.17 1.26 1.17 50.35 % THIS PAGE BLANK CITY OF DOUGLAS, ARIZONA FULL-TIME EQUIVALENT EMPLOYEES BY FUNCTION LAST TEN FISCAL YEARS (UNAUDITED) Full-Time Equivalent Employees Function 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 General Government Management Services: Administration Human resources Court MIS Finance Economic Development Visitor Parking Center 5 3 2 2 3 1 - 5 3 2 2 3 - 5 3 1 2 4 1 - 7 4 3 2 6 1 5 7 4 3 3 7 1 5 5 4 3 3 6 1 4 5 3 2 3 6 - 5 3 2 4 6 4 5 3 2 4 6 4 5 3 2 3 6 1 Building (Housing) 4 4 4 4 4 5 4 8 9 7 Police Officers Civilians 30 14 32 13 35 13 29 15 31 16 37 14 34 14 32 14 32 14 32 15 Fire Firefighters and Officers Civilians 22 2 22 2 21 2 26 2 24 2 25 1 23 1 25 1 23 2 24 2 Public Works Engineering (PW Adm) Refuse Collections Mechanics Streets Street Maintenance 2 8 4 10 4 2 7 5 10 5 2 8 4 10 5 4 10 4 12 5 4 7 4 11 4 6 5 4 8 4 4 4 4 6 4 4 6 3 7 4 4 5 2 6 4 2 7 3 8 1 Parks and Recreation Comm Dev Admin Planning & Zoning Aquatics Construction Cemetery Parks Recreation Golf Course Library Transit 2 2 3 4 4 9 2 1 5 - 2 2 3 4 4 10 2 1 5 - 2 2 3 4 4 9 1 1 5 - 3 2 16 4 4 9 7 4 8 - 3 3 14 4 4 10 9 6 8 - 2 2 12 4 2 10 5 8 7 - 1 2 2 4 2 10 1 5 - 1 2 11 6 1 11 6 11 8 - 1 2 11 6 2 10 7 10 7 - 1 1 13 6 3 9 6 8 7 6 Water Field CIP Billing 7 3 4 7 3 4 7 1 4 10 6 4 9 8 4 8 7 4 4 4 4 7 4 3 7 4 3 8 2 3 Wastewater 6 5 7 7 8 7 7 6 5 6 168 169 170 223 227 213 163 205 200 200 Total Source: The City of Douglas' internal records. (113) CITY OF DOUGLAS, ARIZONA OPERATING INDICATORS BY FUNCTION LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year Function General Government Building Permits Issued Building Inspection Conducted Police Physical Arrests Parking Violations Traffic Violations Fire Emergency Responses Fires Extinguished Inspections Refuse Collection Refuse Collections (Tons/Day) Recyclables Collected (Tons/Day) Other Public Works Street Resurfacing (Miles) Potholes Repaired Parks and Recreation Athletic Field Permits Issued Community Center Admissions Aquatic Center Admissions Library Volumes in Collection Total Volumes Borrowed Water New Connections Water Main Breaks Average Daily Consumption (Thousands of Gallons) Peak Daily Consumption (Thousands of Gallons) Wastewater Average Daily Sewage Treatment (Thousands of Gallons) 2004 2005 2007 2006 2008 60 1,000 48 1,440 258 1,085 262 1,100 338 858 1,657 1,463 4,051 1,804 2,208 3,283 1,725 1,640 4,134 1,615 1,919 4,590 1,475 1,562 3,814 2,565 219 68 2,670 289 105 2,540 17 122 2,336 187 62 2,200 201 80 18.0 1.0 17.0 1.0 17.0 1.0 23.9 0.5 30.0 0.5 - 273 175 - 1.0 143 1.4 152 25 7,610 10,178 26 13,743 11,925 40 9,724 21,852 120 16,535 26,990 117 14,660 28,369 41,517 71,833 47,302 91,623 49,141 94,147 52,824 83,018 56,961 94,955 9 6 7 60 8 28 18 6,852,381 2,602,839 3,167,934 2,579,831 3,660,000 4,385,713 5,380,000 1.8 2.1 - - - 3.1 2.8 2.6 Source: The City of Douglas' internal records. (114) Fiscal Year 2009 2010 2011 2012 2013 354 400 305 344 198 305 221 778 264 695 1,917 648 4,569 1,795 646 4,300 1,564 745 4,211 554 545 3,888 1,332 252 4,158 2,030 216 80 2,312 198 101 2,829 61 150 2,437 55 200 2,459 231 161 30.0 0.5 16.3 - 23.5 - 26.5 - 27.5 - 1.5 195 2.1 680 1.0 1,360 0.5 2,100 2.1 1,600 120 9,071 36,761 119 10,036 31,408 122 11,021 14,808 125 8,812 21,301 93 10,199 16,685 60,856 85,595 59,649 86,098 57,684 74,141 56,715 63,180 47,157 61,256 68 5 10 2 16 9 10 8 11 12 2,638,660 3,662,519 3,500,000 3,177,000 3,216,045 3,613,013 148,101,000 5,023,000 4,725,000 4,716,136 1.6 1.5 1.7 1.7 2.0 (115) CITY OF DOUGLAS, ARIZONA CAPITAL ASSETS STATISTICS BY FUNCTION LAST TEN FISCAL YEARS (UNAUDITED) Fiscal Year Function Police Stations Patrol Units Fire Stations Refuse Collection Collection Trucks Other Public Works Streets (Miles) Streetlights Traffic Signals Parks and Recreation Acreage Playgrounds Baseball and Softball Diamonds Soccer/Football Fields Aquatic Centers Community Centers Water Water Mains (Miles) Fire hydrants Storage Capacity (Thousands of Gallons) Wastewater Sanitary Sewers (Miles) Storm Sewers (Miles) Maximum Treatment Capacity (Thousands of Gallons) 2004 2005 1 2006 1 - 1 1 25 1 1 21 1 1 20 1 - 4 5 5 - 110 1,192 13 110 1,192 13 110 1,194 14 92 5 6 13 2 1 92 5 6 13 2 1 95 2,083 42 2008 1 79 1,959 2007 62 2 1 2 1 92 5 6 13 2 1 65 338 80 338 81 445 81 445 83 526 500,900 500,900 500,900 500,900 500,900 69 2 75 2 75 2 75 2 78 2 1,800,000 2,000,000 2,000,000 2,000,000 2,000,000 - Source: The City of Douglas' internal records. (116) - Fiscal Year 2009 2010 2011 2012 2013 1 27 1 1 22 1 1 21 1 1 23 1 1 22 1 5 5 5 5 3 110 1,194 14 112 1,194 14 110 1,194 14 110 1,194 14 110 1,194 14 92 5 6 13 2 1 92 5 6 13 2 1 92 5 6 13 2 1 92 5 6 13 2 1 92 5 6 13 2 1 83 526 84 535 100 540 100 545 100 458 500,900 500,900 500,900 500,900 500,900 78 2 80 2 85 2 85 2 86 2 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 (117) THIS PAGE BLANK