City of Eloy, Arizona Comprehensive Annual Financial Report For The Fiscal Year Ended June 30, 2013 _____________________________ 628 N. Main Street – Eloy, Arizona 85231 City of Eloy, Arizona COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2013 Prepared by the Finance Department Brian M. Wright, Finance Director CITY OF ELOY, ARIZONA TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal GFOA Certificate of Achievement Page i viii Organizational Chart ix List of Elected and Principal Officials x FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT 1 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) 5 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements: Statement of Net Position 23 Statement of Activities 24 Fund Financial Statements: Balance Sheet – Governmental Funds 28 Reconciliation of the Balance Sheet – Governmental Funds to the Statement of Net Position 31 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 32 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds to the Statement of Activities 35 Statement of Net Position – Proprietary Funds 36 Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds 38 Statement of Cash Flows – Proprietary Funds Notes to Financial Statements 40 41 CITY OF ELOY, ARIZONA TABLE OF CONTENTS (Cont’d) FINANCIAL SECTION (Concl’d) Page SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL (Required Supplementary Information) General Fund 68 Highway User Revenue Fund 70 Grants Fund 71 Note to Required Supplementary Information 72 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Combining Balance Sheet – Non-Major Governmental Funds 78 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Non-Major Governmental Funds 80 Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual Public Works Facility 82 Local Transportation Assistance Fund (LTAF) 83 Impact Fee 84 Judicial Collection Enhancement Fund (JCEF) 85 Court Recovery 86 Cemetery 87 Airport 88 Capital Projects 89 Perpetual Care 90 CITY OF ELOY, ARIZONA TABLE OF CONTENTS (Cont’d) STATISTICAL SECTION Financial Trends: Net Position by Component 93 Changes in Net Position 94 Fund Balances of Governmental Funds 96 Changes in Fund Balance of Governmental Funds 97 Revenue Capacity: Assessed, Limited and Full Cash Value of Taxable Property 98 Property Tax Rates – Direct and Overlapping Governments 99 Special Assessment Billings and Collections 100 Sales Tax Revenues by Industry 101 Direct and Overlapping Sales Tax Rates 102 Actual Excise Tax Collections 103 Debt Capacity: Ratios of Outstanding Debt by Type 104 Computation of Direct and Overlapping Debt 105 Legal Debt Margin Information 106 Pledged Revenue Coverage 107 CITY OF ELOY, ARIZONA TABLE OF CONTENTS (Concl’d) STATISTICAL SECTION (Concl’d) Page Demographic and Economic Information: Demographic and Economic Statistics 108 Principal Employers 109 Authorized Full-time Government Employees by Function/Program 110 Operating Information: Operating Indicators by Function/Program 112 Capital Assets Statistics by Function/Program 114 (This page intentionally left blank) INTRODUCTORY SECTION (This page intentionally left blank) 628 North Main Street, AZ 85122, (520) 466-9201, (520) 466-3760 Fax, (520) 466-7455 TDD December 20, 2013 To the Honorable Mayor, Members of the City Council and Citizens of the City of Eloy: Arizona state law requires that all general-purpose local governments publish, within six months of the close of each fiscal year, a complete set of financial statements presented in conformity with General Accepted Accounting Principles (GAAP) and audited in accordance with general accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report (CAFR) of the City of Eloy, Arizona (the City), for the fiscal year ended June 30, 2013. This report consists of management’s representations concerning the finances of the City of Eloy. Consequently, management assumes full responsibility for the accuracy of the data, and the completeness and fairness of all of the information presented in this report. To provide a reasonable basis for making these representations, the City has established a comprehensive internal control framework that is designed both to protect the City’s assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the basic financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. 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 City’s financial statements have been audited by Heinfeld, Meech & Co., P.C., certified public accountants. The goal of the independent audit is to prove reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2013 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosure in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement preparation. The independent auditors concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City’s statements for the fiscal year ended June 30, 2013 and are presented fairly in conformity with GAAP. The report of the independent auditor is presented as the first component of the financial section of this report. i Additionally, the City is required to have an independent audit (“Single Audit”) of federal financial assistance received by the City directly from federal agencies, or passed through to the City by the State of Arizona, or other governmental entities during the fiscal year. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the government’s internal controls and compliance with legal requirements having a direct and material impact on major programs, with special emphasis on internal controls and compliance requirements involving the administration of major federal awards. These reports are available in a separately issued Single Audit 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 the MD&A and should be read in conjunction with it. The City’s MD&A can be found immediately following the report of the independent auditor. PROFILE OF THE CITY OF ELOY The City provides a full range of municipal services, including police protection, the construction and maintenance of streets and infrastructure; as well as recreational and cultural activities. The City’s three enterprise funds provide water, wastewater, and solid waste disposal. The City also operates a library, a cemetery, and general aviation airport. The area surrounding the City began to carry the name of Eloy when a railroad switchyard was constructed by Southern Pacific Railroad to connect Tucson and Casa Grande in 1902. In 1918, during the period at the of World War I, three men W.L. Bernard, J.E. Meyer, and John Alsdorf purchased land with the idea to call the area Cotton City. After they purchased the land, they subdivided the land and began to grow cotton. In 1919, an application was made to establish a post office at which time the City founders favored the name Cotton City. However, this name was rejected by the Postal Service and the name Eloy was chosen instead. The City officially incorporated in 1949 and was home to approximately 4,700 residents. In 1965, the Toltec area was annexed and increased the City’s incorporated area to 11 square miles. By the year 2000, the City had increased to 71 square miles and approximately 10,375 residents. As of June 2013, the incorporated city limits is 112.88 square miles with a planning area of 542 square miles and has an estimated population of 17,433. Eloy is located in central Pinal County along Interstate 10 (I-10) approximately halfway between the cities of Phoenix and Tucson. Historically, the City’s economy has been largely dependent upon agriculture. The area is part of the Santa Cruz Basin which is one of Arizona’s most fertile soil and agricultural areas. The economy has diversified, with over three-quarters of its businesses and nearly half its employment now in the industrial, wholesale/retail trade, and service sector. The City operates under a Council-Manager form of government. Under this organization structure, the Mayor and Council appoint a city manager to act as the chief operating officer. The Mayor and City Council set policy direction and the city manager implements those policies in an efficient and effective manner. The City Manager is responsible for carrying out the policies and ordinances of the City Council as well as overseeing the day-to-day operations. ii FINANCIAL INFORMATION Internal Controls The City is responsible for establishing and maintaining a system of internal budgetary controls which are designed to ensure compliance with legal provisions of the annual budget adopted by the City Council. Internal account controls are designed to provide reasonable, but not absolute, assurance regarding: 1) safeguarding of assets against loss from unauthorized use or disposition, and 2) reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes: 1) the cost of a control should not exceed the benefits likely to be derived, and 2) the valuation of costs and benefits requires estimates and judgments by management. The system of internal controls is subject to periodic evaluation by management and is also considered by the independent auditors in connections with the annual audit of the City’s financial statements. All internal control evaluations occur within the above framework. The City’s internal accounting controls are considered to adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Budgetary Controls The City, like many cities in the State of Arizona, is subject to numerous budget and related legal requirements. Article IX, Section 20(1) of the Arizona Constitution sets limits on the City’s legal budget capacity. The City operates under the Home Rule Option that must be adopted by the local voters every four years. Home Rule allows the Mayor and Council, as part of the annual budget process, to adopt an Alternative Expenditure Limitation equal to the total amount of budgeted expenditures/expenses as it appears on the annual budget to be adopted each year after a public hearing at which the citizens of the City may comment. The City last adopted the Local Alternative Expenditure Limitation in March 2010 to be used through June 30, 2014. Under the Local Alternative Expenditure Limitation, the City is allowed to adjust the state imposed expenditure base from $10,843,039 to $71,387,550 for fiscal year 2012-2013. The City maintains budgetary controls, which are designed to ensure compliance with legal provisions of the annual operating budget adopted by the City Council. An operating budget is legally adopted by ordinance each fiscal year for the General fund, debt service, enterprise funds and several special revenue funds. 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. After final adoption, transfers between budget appropriations for non-exempt areas may be made by the City Council. iii The City is subject to the State of Arizona’s Spending Limitations Law for Cities and Towns. This law does not permit the City to spend more than budgeted revenues plus the carry-over 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 fiscal year. ECONOMIC CONDITIONS AND OUTLOOK The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Eloy operates. The economy of Eloy is a diverse combination of agriculture, manufacturing, commercial, private prisons, and service activities. The local tax base is mainly located along Interstate 10 which is supported by restaurants, truck stops and local businesses. Local indicators are pointing to continued stability. All local excise taxes, state-shared revenue, state income tax and highway user revenue have increased over the last several years. The City’s population has increased 68% since 2000. According to the Arizona Department of Administration, Office of Employment & Population Statistics, Eloy’s population is estimated at 17,433 as of July 1, 2012. Much of this growth was due to the continual development of Robson Ranch and the building of three private prisons which have been managed by Corporation Corrections of America (CCA) since 2000. These two developments have helped Eloy’s economy remain stable when much of the State was recovering from the recent recession. Local sales tax, also known as city sales tax, indicators have been mixed since 2008. Local sale taxes are comprised of retail, construction, manufacturing, restaurant/bar, hotel/motel, and other taxing categories. Since 2008-2009 local sales taxes have decreased 25.75%. This decline is due to the construction industry and economic development projects slowing. In 2012-13, local sales collections were $4,797,681 or $363,158 less than that of the prior year. Much of this fluctuation from local sales taxes is driven from the collection of construction sales tax. Construction Sales Tax represents the largest taxing source from the City’s local tax base. The tax rate is 4.5% with 3.0% dedicated to one-time capital projects and 1.5% dedicated to Street Improvements. It is also the most volatile and unstable tax. The graph to the right shows the fluctuations in construction sales tax collected from 2008-2013. In 2012-2013, construction sales tax was $986,143 or 21% of overall tax collected. The City of Eloy does not budget construction sales tax into the operations of city services, but uses this one-time revenue source to fund capital projects or one-time expenses. iv Retail sales tax is collected on items such as supplies, tools, clothing, materials, and etc. The tax rate for retail sales is 3%. Since 2008, retail sales tax has increased 9% over the last five years. A few contributing factors are from two new private prisons being built, continual residential growth in Robson Ranch, and expansion in the retail economy. Property Tax is one of the most stable sources of revenue because it is not subject to the same fluctuations sometimes experienced with other excise taxes. Eloy has a primary property tax rate only. Currently, there is no secondary property tax rate. The primary property tax increased from .9562 in 2011-2012 to 1.0387 in 2012-2013 per $100 of assessed valuation. v LONG-TERM FINANCIAL PLANNING The City’s responsiveness to emerging economic challenges and its careful long-range planning have been key factors in Eloy’s fiscal health. The City will continue to use General Fund onetime revenue to fund capital projects along with constructing, repairing and maintaining city road ways. The City will be undertaking strategic planning to set newly revised long-term plans for the City during the City’s budgeting sessions. The City is dedicated to enhancing the quality of life for its citizens and to provide municipal services in the most effective and efficient manner while exercising fiscal responsibility. The City has completed several major capital projects this past year which include:       The City completed 4 miles of double chip seal road projects on Hanna Road. A total of four streets were double chipped sealed at a cost of $238,121. The City purchased one Ford truck for the Police Department, two Ford trucks, one road grader for streets and a power broom for the Streets Department for an amount of $476,855. The City maintains a vehicle replacement plan for its fleet. The City obtained a loan for $2,900,000 with an annual interest rate of 3.10% for 20 years from Great Western Bank to purchase 280 acres of land around the Airport for $1,650,000, refinance the Public Works Building thus saving approximately $48,000 over the life of the original loan and $300,000 to remodel the old library. The City began construction of a new 16 inch-water line along a new alignment of Houser Road and a 12-inch water line along Toltec Road. The total cost of this project is $3,565,000 with $318,056 spent as of June 30, 2013. The project will be completed in early 2014. The City completed engineering and design services for Battaglia Road. Construction of Battaglia Road will be from 11 Mile Corner to Sunshine Blvd with the project being completed by November 2013. The City purchased 501and 505 North Main Street for $67,500 and accepted, as a donation, a property located at138 West Frontier Street. Awards and Acknowledgements 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 Eloy for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2012. This was the first year that the City has achieved this prestigious award. 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. vi The preparation of the Comprehensive Annual Financial Report would not have been possible without the efficient and dedicated staff of the Finance Department and to the many members of other departments who assisted and contributed to the preparation of this report. Credit also must be given to the Mayor and City Council for their leadership and support for maintaining the highest standards of professionalism in the management of the City of Eloy’s finances. Respectfully submitted, Harvey Krauss Interim City Manager Brian M. Wright Finance Director vii viii ix CITY OF ELOY List of Elected and Principal Officials for Fiscal Year Ended June 30, 2013 City Council Joseph Nagy Mayor Joel G. Belloc Vice Mayor Belinda Akes Etta Ruth Amerson Micah Powell Augustine Sauceda J.W. Tidwell City Manager Ruth Osuna Finance Director Brian Wright x FINANCIAL SECTION (This page intentionally left blank) 10120 N. Oracle Road Tucson, Arizona 85704 Tel (520) 742-2611 Fax (520) 742-2718 INDEPENDENT AUDITOR’S REPORT Honorable Mayor and Members of the City Council City of Eloy, Arizona Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of City of Eloy, 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. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s 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, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Eloy, 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 conformity with accounting principles generally accepted in the United States of America. TUCSON • PHOENIX • FLAGSTAFF www.heinfeldmeech.com 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 5 through 18 and budgetary comparison information on pages 68 through 72 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. 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 introductory section, combining and individual fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules information is fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 20, 2013, on our consideration of City of Eloy, 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 results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Eloy, Arizona’s internal control over financial reporting and compliance. HEINFELD, MEECH & CO., P.C. CPAs and Business Consultants December 20, 2013 Page 2 MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) (Required Supplementary Information) Page 3 (This page intentionally left blank) Page 4 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 As management of the City of Eloy, Arizona (the City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ending June 30, 2013. We encourage readers to consider the information presented here in conjunction with additional information we have furnished in our letter of transmittal, which can be found in the introductory section of this report. FINANCIAL HIGHLIGHTS The financial statements, which follow Management’s Discussion and Analysis, provide those significant key financial highlights for 2013 as follow:  The assets of the City of Eloy exceeded its liabilities at the close of the most recent fiscal year by $44,135,924 (net position). Of this amount, $14,015,065 (unrestricted net position) may be used to meet the City’s ongoing obligations to citizens and creditors.  General revenues from governmental activities, excluding transfers, accounted for $9,732,426 or 19% of all revenues from governmental activities. Program specific revenues in the form of charges for services and grants and contributions accounted for $41,545,764 or 81% of total governmental activities revenues. The City had $4,175,642 of program revenues and $1,748 in general revenues related to business-type activities.  As of the close of the current fiscal year, the City of Eloy governmental funds reported the combined ending fund balances of $20,548,936, an increase of $605,439 in comparison with the prior year.  At the end of the current fiscal year, the unassigned fund balance for the General Fund was $10,968,659 or 99% of the total general fund expenditures.  As of June 30, 2013, the net capital assets for the City of Eloy were $36,762,206, an increase of $1,761,941 from the prior year. Governmental activities increased by $2,299,623 while business-type activities decreased by $537,681.  General Fund expenditures exceeded revenues by $656,735 before transfers. After transfers and loan proceeds of $1,770,203, a positive change in fund balance occurred in the amount of $1,113,468. This positive change was due to more revenue from permits and fees, conservative budgeting and fiscal constraints in spending.  Total business-type expenses exceeded total business-type revenues (excluding transfers) by $518,100 due to increases in operating expenses in water and sewer.  The current year net loss before transfers in the HURF Fund was $320,176 due to the final loan payment which was for the reconstruction of Sunshine Boulevard. Page 5 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 OVERVIEW OF FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements comprise three components: 1) governmentwide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-wide reporting – while governments have traditionally focused reporting on groupings of funds (i.e. General Fund, Special Revenue Funds, Capital Project Funds, etc.), the reporting model also contains financial statements on a government-wide basis. Fund financial statements – the reporting model maintains governmental, proprietary and fiduciary fund financial statements, but the focus is on major funds within each fund. Focus of governmental activities – in the government-wide financial statements all activities, including the governmental activities, are reported using the economic resources measurement focus and accrual basis of accounting. The current financial resources focus and modified accrual basis of accounting are maintained for the governmental fund and financial statements. Infrastructure reporting – the reporting model requires governments to report the value of infrastructure assets of governmental activities (roads, bridges, storm drainage systems, parks, street lighting, etc.). These assets are reported in the governmental-wide financial statements. Changes in budgetary reporting – the reporting model requires the display of both the original adopted budget and the amended budget in the budgetary comparison schedules. These schedules are only required for the general fund and major special revenue funds, although they may be presented for other funds as additional information. Required narrative analysis – The reporting model requires that the financial statements be accompanied by narrative introduction and analytical overview of the government’s financial activities in the form of “management’s discussion and analysis” (MD&A). Page 6 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 OVERVIEW OF FINANCIAL STATEMENTS (Cont’d) Government-wide Financial Statements The government-wide financial statements (see pages 23-25) are designed to provide a broad overview of the City’s finances in a manner similar to those used by private businesses. All of the activities of the City, except those of a fiduciary nature, are included in these statements. The activities of the City are broken into two columns on these statements – governmental activities and business-type activities. A total column for the City is also provided. The governmental activities include the basic services of the City including general government, culture and recreation, public safety, airport, and public works. Taxes and general revenues generally support these activities. The business-type activities include the private sector activities such as water, sewer, and sanitation. User charges and fees primarily support these activities. The statement of net position presents information on all of the City’s assets and liabilities, both current and long-term, with the difference between the two reported as net position. The focus of net position is designed to be similar to the emphasis for businesses. Over time any increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. To assess the overall health of the City, other indicators, including non-financial indicators like the City’s infrastructure condition should be considered. The statement of activities presents information showing how the City’s net position changed over the most recent fiscal year. Since full accrual is used for the government-wide financial statements, all changes to net position are reported at the time that the underlying event giving rise to the change occurs, regardless of the timing of the related cash flows. This statement also focuses on both the gross and net costs of the various functions of the City, based only on direct functional revenues and expenses. This is designed to show the extent to which the various functions depend on general taxes and revenues for support. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into two categories: governmental funds and proprietary funds. Governmental Funds - Governmental funds are used to account for most of the City’s basic services. Unlike the governmental activities column on the government-wide financial statements, these fund financial statements (pages 28-35) 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 is useful in looking at the City’s near-term financing requirements. Page 7 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 OVERVIEW OF FINANCIAL STATEMENTS (Concl’d) Since the governmental fund financial statements focus on near-term spendable resources, while the government activities on the government-wide financial statements have a long-term focus, a reconciliation of the differences between the two is provided with the fund financial statements. Fund Balance Reporting and Governmental Fund Type Definitions, also known as GASB Statement No. 54, is to enhance the usefulness of fund balance information by providing clearer fund balance classifications that can be more consistently applied and by clarifying the existing governmental fund type definitions. GASB 54 establishes fund balance classifications that comprise a hierarchy based primarily on the extent to which a government is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Clarifications of the governmental fund type definitions, in Note 2 (page 47), will reduce uncertainty about which resources can or should be reported in the respective fund types. Proprietary funds – Proprietary funds are used to account for business-type activities of the City. Proprietary funds, like the government-wide statements, provide both long and short-term financial information. Enterprise funds are used for activities that primarily serve customers outside the governmental unit for which fees are charged. The City has three enterprise funds: the Water, Sewer, and Sanitation funds. The basic proprietary fund financial statements can be found on pages 36-40 of this report. Notes to the financial statements - The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 41-66 of this report. Required supplementary information other than MD&A – Governments have an option of including the budgetary comparison statements for the general fund and major special revenue funds as either part of the fund financial statements or as required supplementary information after the notes. The City has chosen to present these budgetary statements as part of the required supplementary information after the notes. Additionally, governments are required to disclose certain information about employee pension funds. The City has disclosed this information starting with Note 16 (page 63-66) of the financial statements. Page 8 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 GOVERNMENT-WIDE FINANCIAL ANALYSIS The following tables, graphs and analysis present a summary of the City’s net position for the fiscal years ended June 30, 2013 and June 30, 2012. Current and Other Assets Capital Assets Total Assets Current Liabilities Noncurrent Liabilities Total Liabilities Net Position: Net Investments in Capital Assets Restricted Unrestricted Total Net Position Governmental Activities 2013 2012 $24,616,650 $24,163,906 20,207,405 17,907,782 44,824,055 42,071,688 Business-Type Activities 2013 2012 $3,167,593 $ 2,137,181 16,554,801 17,092,483 19,722,394 19,229,664 Total 2013 $27,784,243 36,762,206 64,546,449 2012 $ 26,301,087 35,000,265 61,301,352 4,305,656 3,457,149 7,762,805 4,182,252 2,418,102 6,600,354 1,176,419 11,471,301 12,647,720 4,294,564 8,049,997 12,344,561 5,482,075 14,928,450 20,410,525 8,476,816 10,468,099 18,944,915 16,961,904 4,624,572 15,474,774 $37,061,250 15,985,323 4,978,419 14,507,592 $35,471,334 8,089,091 559,631 (1,574,048) $7,074,674 9,090,283 291,532 (2,496,712) $ 6,885,103 25,050,995 5,184,203 13,900,726 $44,135,924 25,075,606 5,269,951 12,010,880 $ 42,356,437 The largest portion of the City’s net position (57%) reflects its investment in capital assets (e.g. land, building, infrastructure, vehicles, and equipment), less any related outstanding debt that was used to acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in capital assets is reported of net of related debt, it should be noted that the resources used to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net position (11%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of $14,015,065 is unrestricted and may be used to meet the City’s ongoing obligations to its citizens and creditors. The City’s financial position is the product of several financial transactions including the net results of activities, the acquisition and payment of debt, the acquisition capital assets and the depreciation of capital assets. The following are significant current year transactions that had an impact on net position.  Purchased 280 acres of land adjacent to the Airport.  Continuation of construction of a new 16-inch water line along Houser Road and a 12inch water line along Toltec Road.  Continuation of the design and engineering services for the reconstruction to Battaglia Road. Page 9 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont’d) Changes in Net Position The City’s total revenue for the year ended June 30, 2013 was $55,453,832. The total cost of all programs and services was $53,676,093. The following table presents a summary of the changes in net position for the fiscal years ended June 30, 2013 and June 30, 2012. Governmental Activities 2013 2012 REVENUES Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions General Revenue: City Sales Tax Property Taxes Franchise Taxes Share of State Income Tax Share of State Sales Tax County Auto Lieu Tax Investment Earnings (losses) Other Revenue Total Revenues EXPENSES Program Expenses: General Government Public Safety Public Works Culture and Recreation Community Development Health and Welfare CCA Pass-Through Interest on Long-Term Debt Water Sewer Sanitation Total Expenses Excess before Transfers Transfers Changes in Net Position Net Position, Beginning Net Position, Ending Page 10 Business-Type Activities 2013 2012 $1,109,237 $1,020,578 $ 4,164,954 $ 4,203,361 39,863,905 39,824,399 572,622 1,251,911 10,688 Totals $ 792,051 2013 2012 5,274,191 $ 5,223,939 39,863,905 39,824,399 583,310 2,043,962 4,797,681 5,160,839 897,160 846,923 139,478 135,939 1,698,821 1,403,669 1,361,278 1,299,551 724,822 703,979 56,673 64,587 1,748 1,908 56,513 $ 51,278,190 $51,712,375 $ 4,177,390 $ 4,997,320 4,797,681 897,160 139,478 1,698,821 1,361,278 724,822 58,421 56,513 $ 55,455,580 $ $ 2,535,814 $ 2,451,503 4,141,860 4,106,470 2,007,422 2,509,477 1,290,178 1,438,463 805,789 597,877 147,876 290,000 37,972,180 37,964,365 79,484 58,225 $ 48,980,603 49,416,380 1,921,729 1,275,294 1,498,467 4,695,490 2,297,587 2,295,995 (518,100) (707,671) (420,978) 707,671 1,589,916 1,875,017 189,571 35,471,334 33,596,317 6,885,103 $ 37,061,250 $35,471,334 $ 7,074,674 $ 1,950,484 2,264,921 1,379,485 5,594,890 (597,570) 420,978 (176,592) 7,061,695 6,885,103 5,160,839 846,923 135,939 1,403,669 1,299,551 703,979 66,495 56,709,695 2,535,814 $ 2,451,503 4,141,860 4,106,470 2,007,422 2,509,477 1,290,178 1,438,463 805,789 597,877 147,876 290,000 37,972,180 37,964,365 79,484 58,225 1,921,729 1,950,484 1,275,294 2,264,921 1,498,467 1,379,485 53,676,093 55,011,270 1,779,487 1,698,425 1,779,487 1,698,425 42,356,437 40,658,012 $ 44,135,924 $ 42,356,437 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Cont’d) Governmental Activities During the year, net position for governmental activities increased $1,589,916 from the prior fiscal year, which was $285,101 less (-15%) than the change in net position last year. Significant changes between fiscal year 2013 and 2012 program revenues are explained below:  Capital grants and contributions were $679,289 less (-54%) less than last year. The City incurred $403,166 less in housing rehabilitation grants than the previous fiscal year. Projects were moving forward at a slower pace in 2013 when compared to the pace of capital grants in the prior year.  General revenues increased $116,939 to $9,732,426, which comprised of 19% of all governmental activities revenue sources. Explanations for the primary impacts follow: o Property taxes were $50,237 more than last year primarily due to the increasing in the primary property tax rate from $.9562 to $1.0387. o State shared revenues were $377,722 more than last year. State distributions for these revenues are based upon proportional population figures. As shown on the chart below, all functions, except for CCA pass-through, had greater program expenses than program revenues. Accordingly, general revenues were used to fund each of these functions. $5,000 Governmental Activities Program Revenues and Expenses (In Thousands) $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 EXPENSES Page 11 REVENUES CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 GOVERNMENT-WIDE FINANCIAL ANALYSIS (Concl’d) Business-Type Actitivies Business-type activities increased the City’s net position by $189,571 in fiscal year 2013. Last year, the change in net position as a negative $176,592, a difference of $366,163 when compared to the current year change. Significant changes between fiscal year 2013 and 2012 program revenues are explained below:  Capital Grants and Contributions for business-type activities were $781,363 less (-99%) than last year primarily due to the completion of the Toltec Sewer-Tie In Project which connected over 150 homes to the City’s Wastewater facility.  Sanitation revenue was $47,636 more (3.2%) than last year. This increase is primarily due from the increase in the collections from roll-off customers.  Transfers were $286,693 more (68%) than last year. The primarily cause for the increase was due to capital projects. $4,500 Business-Type Activities Revenues by Source (In Thousands) $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 Charges for Services 2013 Page 12 Capital Grants and 2012 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The following is a brief discussion of financial highlights from the fund financial statements. Governmental funds The focus of the City’s governmental fund financial statements (pages 28-35) is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, discretionary (i.e., unassigned, committed and assigned) fund balances may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. For fiscal year ending June 30, 2013, the governmental funds reflect a combined fund balance of $20,548,936, an increase of $605,439 compared to last fiscal year. Approximately 53% of this total amount, $10,968,659, constitutes fund balance of the General Fund, which is available for contribution to assigned or committed fund balance. Governmental Fund Balances $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 2013 2012 General Fund HURF Fund Grants Fund $10,968,659 $9,855,191 $4,718,726 $5,038,902 $146,408 $147,581 2013 Page 13 Non-Major Governmental Funds $4,715,143 $4,901,823 2012 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 FINANCIAL ANALYSIS OF THE CITY’S FUNDS (Cont’d) The General Fund is the principal operating fund of the City and accounts for many functions of the government, including public safety, culture and recreation, and general government. The General Fund revenues total $10,415,295 for fiscal year ending June 30, 2013. The expenditures before other financing sources and uses totaled $11,072,030. The net change of fund balance for the General Fund was $1,113,468 after other financing sources and uses. This positive change was due to fiscal spending constraints, conservative budgeting forecasts, along with an increase in revenue permits and fees and intergovernmental revenue. The Highway User Revenue Fund (HURF) is required by state statute to track the state allocation of gasoline taxes and other state revenues shared with local governments and are required to be used for transportation purposes. Revenues in this fund totaled $1,675,416, while expenses totaled $1,995,592 for the fiscal year ending June 30, 2013. The net change of fund balance for HURF, prior to transfers, was a negative $320,176. In the Grants Fund, the net change in fund balance for June 30, 2013 was a negative $1,173. This negative variance is due from the City completing grants for which funds were received in prior fiscal years. Other non-major governmental funds of the City include the Airport Fund, LTAF Fund, Impact Fee Fund, Public Works Fund, JCEF Fund, Court Recovery Fund, Cemetery Fund, and Capital Projects Fund. All non-major funds of the City are combined into one column on the governmental fund statements. The fund balance for all other major governmental funds has decreased by $186,680. This decrease is attributed to the purchase of capital equipment with revenue from the Impact Fee Fund. Proprietary Funds The Proprietary Fund financial statements are prepared on the same accounting basis and measurement focus as the government-wide financial statements, but provide additional detail since each major enterprise fund is shown discreetly on the fund statements. Net position of the Proprietary Funds was $7,074,674 as of June 30, 2013. Operating revenues in fiscal year 2013 were $4,164,954 while operating expenses totaled $4,495,304 resulting in a loss of $198,438 before transfers. Page 14 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 FINANCIAL ANALYSIS OF THE CITY’S FUNDS (Concl’d) Proprietary Fund's Net Position $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $$(1,000,000) $(2,000,000) $(3,000,000) Unrestricted Restricted Net Investment in Capital Water 2013 $1,029,677 $94,102 $5,693,413 Water 2012 $1,121,236 $229,376 $5,825,319 Sewer 2013 $95,539 $465,529 $1,651,073 Sewer 2012 $(799,811) $62,156 $2,426,785 Sanitaiton Sanitation 2013 2012 $(2,699,264) $(2,818,137) $$$744,605 $838,179 BUDGETARY HIGHLIGHTS The City’s annual budget is the legally adopted expenditure control document of the City. Budgetary comparison statements are required for the General Fund and all major special revenue funds and may be found on pages 68-72. These statements compare the original adopted budget, the budget as amended throughout the fiscal year, and the actual expenditures prepared on a budgetary basis. Amendments to the adopted budget may occur throughout the year in a legally permissible manner (see pages 49-50 for more information on budget policies). No amendments increasing the City’s total adopted budget of $71,956,210 occurred during fiscal year 2013. Budget amendments between funds or from budgeted contingencies into operational expense/expenditures accounts did not occur. Page 15 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 BUDGETARY HIGHLIGHTS (Concl’d) Budgetary comparison highlights for the major governmental funds are as follows: General Fund expenditures of $11,072,030 were 115% of budgeted expenditures. Expenditures were over budget primarily due to the refinancing of debt for the Public Works facility and the purchase of 280 acres of land adjacent to the Airport. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets As of June 30, 2013, the City had invested $25,050,995 in various capital assets, net of accumulated depreciation and related debt. The capital assets of the City (net of depreciation, but not capital debt) are $36,762,206. This is a net increase of $1,761,941. There was an increase in capital assets of $2,299,623 within governmental activities. However, there was a decrease of $537,682 resulting from business-type activities. The following table provides a breakdown of capital assets of the City at June 30, 2013 and 2012. Additional information on the City’s capital assets may be found in Note 6 on pages 53-54. Governmental Activities 2013 Land Land Improvements Construction In Progress 2012 $ 7,118,128 $ 5,468,128 427,703 Business-Type Activities 2013 $ 347,468 $ 2012 347,468 378,935 Totals 2013 2012 $ 7,465,596 $ 5,815,596 427,703 378,935 206,208 129,845 594,022 181,249 800,230 311,094 4,442,780 4,452,986 1,713 1,803 4,444,493 4,454,789 Infrastructure 5,780,833 5,662,383 5,780,833 5,662,383 Furniture, Equipment and vehicles 2,231,753 1,815,506 910,144 1,023,698 3,141,897 2,839,204 Sewer System 8,383,749 8,896,600 8,383,749 8,896,600 Water System 6,317,705 6,641,664 6,317,705 6,641,664 Buildings and Improvements Total Page 16 $ 20,207,405 $ 17,907,783 $ 16,554,801 $ 17,092,482 $ 36,762,206 $ 35,000,265 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 CAPITAL ASSETS AND DEBT ADMINISTRATION (Concl’d) Major additions to capital assets during the fiscal year included the following:      The City completed 4 miles of double chip seal road projects on Hanna Road for an amount of $283,121. The City purchased 501 and 505 North Main Street for $67,500 and accepted, as a donation, a property located at 138 West Frontier. The City obtained a loan for $2,900,000 from Great Western Bank to purchase 280 acres around the Airport, refinance the Public Works building and to remodel the old library. The City began construction of a new 16-inch water line along Houser Road and a 12inch water line along Toltec Road. The total project is $3,565,000 with $318,056 being expended. The City purchased 3 vehicles, a road motor grader and power broom for an amount of $476,855. Long-term Debt The City’s outstanding long-term debt, including bonds, notes, leases, and compensated absences, was $11,906,000 at June 30, 2013. Of this total, $3,737,888 was in governmental activities. All outstanding debt is secured by pledges of specific revenue sources of the City. The following schedule shows the outstanding debt of the City (both current and long-term) as of June 30, 2013 and 2012. Revenue Bonds Loans Payable Capital Leases Compensated Absences Total Governmental Activities Business-Type Activities 2013 2012 2013 2012 $ $ $ 591,299 $ 612,743 $ 3,208,932 956,582 7,526,943 7,735,700 36,569 965,877 492,287 495,643 49,970 47,797 $ 3,737,788 $ 2,418,102 $ 8,168,212 $ 8,396,240 $ Totals 2013 2012 591,299 $ 612,743 10,735,875 8,692,282 36,569 965,877 542,257 543,440 11,906,000 $ 10,814,342 During 2013, governmental activities of the City obtained a loan of $2,900,000 from Great Western Bank to purchase of 280 acres of land, refinance the loan for the Public Works building, and to remodel the old library. Additional information on the City’s long-term debt can be found in Note 8 on pages 55-58. Page 17 CITY OF ELOY, ARIZONA MANAGEMENT’S DISCUSSION AND ANALYSIS YEAR ENDED JUNE 30, 2013 ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The City’s officials have considered many factors during the process of developing the budget for fiscal year 2013-2014. Three primary factors that were considered were the increasing cost to conduct business, aging infrastructure and failure of roadways. Also, considered in the development of the budget was the local economy. The adopted fiscal year 2013-2014 budget expects general fund revenues to increase $29,300. The primary increase is coming from increased revenue in state sales tax and state shared revenue. The overall budget for fiscal year 2013-2014 is expected to increase by $2,764,385 over fiscal year 2012-2013. The primary reasons for this increase were in the General Fund, $294,985, HURF, $2,035,700 and Impact Fees Fund, $1,793,820. The City’s population is expected to increase approximately 1.0% in the upcoming year. The unemployment rate in Eloy should remain stable at is 13.40% which is above the national average of 7.8% and Pinal County of 9.1%. These indicators were considered when adopting the budget for fiscal year 2013-2014. FINANCIAL CONTACT This financial report is designed to provide a general overview of the City of Eloy, Arizona’s finances and to demonstrate accountability for the use of public funds. Questions about any of the information provided in this report, or requests for additional financial information, contact the Finance Department, City of Eloy, 624 North Main Street, Eloy, Arizona, 85131. Page 18 BASIC FINANCIAL STATEMENTS Page 19 (This page intentionally left blank) Page 20 GOVERNMENT-WIDE FINANCIAL STATEMENTS Page 21 (This page intentionally left blank) Page 22 CITY OF ELOY, ARIZONA STATEMENT OF NET POSITION JUNE 30, 2013 Governmental Activities ASSETS Current assets: Cash and Cash Equivalents Other Receivables Property Taxes Receivable Due from Governmental Entities Accounts Receivable (Net of Allowance) Loan Proceeds Receivable Inventory Internal Balances Total current assets $ $ 52,409 7,118,128 458,258 6,730,776 612,040 7,465,596 458,258 6,763,480 24,634,970 7,113,463 8,437,605 800,230 (18,911,396) 37,374,246 64,546,449 2,665,678 594,022 (11,720,041) 17,114,432 19,722,394 480,530 28,352 140,984 60,838 4,305,656 22,429 433,012 4,998 65,764 350 1,176,419 4,013,675 459,386 140,984 23,982 22,429 640,440 54,227 65,764 61,188 5,482,075 3,457,149 3,457,149 7,762,805 11,471,301 11,471,301 12,647,720 14,928,450 14,928,450 20,410,525 16,961,904 8,089,091 25,050,995 559,631 559,631 2,354,568 146,408 1,883,212 240,384 13,900,726 44,135,924 23,982 207,428 49,229 $ 22,150,263 10,127 52,275 4,082,958 546,663 214,801 115,116 27,172,203 32,704 24,634,970 3,533,145 431,034 Noncurrent liabilities: Noncurrent Portion of Long-Term Obligations Total noncurrent liabilities Total liabilities 2,354,568 146,408 1,883,212 240,384 15,474,774 37,061,250 $ (1,574,048) 7,074,674 The notes to the basic financial statements are an integral part of this statement. Page 23 $ 559,631 347,468 7,113,463 5,771,927 206,208 (7,191,355) 20,259,814 44,824,055 LIABILITIES Current liabilities: Accounts Payable Accrued Salaries and Wages Payable Customer Deposits Obligations Under Capital Leases Bonds Payable Loans Payable Compensated Absences Interest Payable Other Current Liabilities Total current liabilities 1,912,561 Total 546,663 214,801 115,116 (181,179) 2,607,962 181,179 24,564,241 Noncurrent assets: Restricted Cash and Investments Land Land Improvements Buildings and Improvements Collection and Distribution Systems Infrastructure Furniture, Equipment and Vehicles Construction in Progress Accumulated Depreciation Total noncurrent assets Total assets NET POSITION Net Investment in Capital Assets Restricted for: Debt Service Highways and Streets Grants Capital Projects Other Purposes Unrestricted Total net position 20,237,702 10,127 52,275 4,082,958 Business-type Activities $ CITY OF ELOY, ARIZONA STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2013 Net (Expense) Revenue and Changes in Net Position Program Revenues Functions/Programs Primary Government Governmental activities: General Government Public Safety Public Works Community Development Health and Welfare Culture and Recreation CCA Pass-Through Interest on Long Term Debt Total governmental activities Business-type activities: Water Sewer Sanitation Total business-type activities Total primary government Expenses $ $ Charges for Services Operating Grants and Contributions 2,535,814 $ 4,141,860 2,007,422 805,789 147,876 1,290,178 37,972,180 79,484 48,980,603 531,214 $ 116,604 120,518 314,702 26,199 4,992 37,972,180 1,109,237 39,863,905 1,921,729 1,275,294 1,498,467 4,695,490 53,676,093 $ 1,662,936 978,252 1,523,766 4,164,954 5,274,191 $ Capital Grants and Contributions $ 251,452 1,635,281 Governmental Activities 30,000 $ 164,295 49,807 297,245 30,721 554 (1,974,600) (3,609,509) (201,816) (193,842) (117,155) (1,258,433) 572,622 (79,484) (7,434,839) 4,109 6,579 39,863,905 $ 10,688 583,310 (7,434,839) General revenues: Taxes: Sales Taxes Propert Taxes Levied for General Purposes Franchise Taxes County Auto Lieu Tax State Shared Revenues Investment Income Other Revenues Transfers Total general revenues and transfers 4,797,681 897,160 139,478 724,822 3,060,099 56,673 56,513 (707,671) 9,024,755 Changes in net position 1,589,916 Net position, beginning of year Net position, end of year The notes to the basic financial statements are an integral part of this statement. Page 24 35,471,334 $ 37,061,250 Net (Expense) Revenue and Changes in Net Position Business-type Activities $ Totals $ (1,974,600) (3,609,509) (201,816) (193,842) (117,155) (1,258,433) (79,484) (7,434,839) (254,684) (290,463) 25,299 (519,848) (519,848) 1,748 $ (254,684) (290,463) 25,299 (519,848) (7,954,687) 4,797,681 897,160 139,478 724,822 3,060,099 58,421 56,513 707,671 709,419 9,734,174 189,571 1,779,487 6,885,103 42,356,437 7,074,674 $ 44,135,924 Page 25 (This page intentionally left blank) Page 26 FUND FINANCIAL STATEMENTS Page 27 CITY OF ELOY, ARIZONA BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2013 General ASSETS Cash and Cash Equivalents Restricted Cash and Investments Other Receivables Property Taxes Receivable Due from Governmental Entities Due from Other Funds Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable Accrued Salaries and Wages Payable Deferred Revenue Due to Other Funds Other Current Liabilities Total liabilities $ $ $ 10,840,214 52,409 52,275 446,170 256,803 11,647,871 164,787 410,890 42,697 Highway User Revenue Fund $ 3,488,470 $ 4,778,557 $ 3,488,470 $ 44,667 15,164 $ 3,261,580 4,858 75,624 10,968,659 10,968,659 $ 11,647,871 $ 59,831 3,342,062 2,354,568 2,364,158 146,408 4,718,726 146,408 4,778,557 The notes to the basic financial statements are an integral part of this statement. Page 28 $ 147,142 60,838 679,212 Fund balances: Restricted Committed Assigned Unassigned Total fund balances Total liabilities and fund balances 4,631,415 Grants $ 3,488,470 Non-Major Governmental Funds Total Governmental Funds $ $ 4,766,073 10,127 1,176 $ 4,777,376 $ $ 62,111 122 $ 62,233 2,123,596 204,189 2,387,358 4,777,376 Page 29 3,533,145 431,034 42,697 75,624 60,838 4,143,338 4,624,572 2,568,347 2,387,358 10,968,659 20,548,936 4,715,143 $ 20,237,702 52,409 10,127 52,275 4,082,958 256,803 24,692,274 $ 24,692,274 (This page intentionally left blank) Page 30 CITY OF ELOY, ARIZONA RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2013 Total governmental fund balances $ 20,548,936 Amounts reported for governmental activities in the Statement of Net Position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Governmental capital assets Less accumulated depreciation $ 27,398,760 (7,191,355) Property taxes collected 60 days after fiscal year end will not be available to pay for current period expenditures and, therefore, are deferred in the funds. 20,207,405 42,697 Long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds. Compensated absences payable Obligations under capital leases Loans payable (492,287) (36,569) (3,208,932) Net position of governmental activities The notes to the basic financial statements are an integral part of this statement. Page 31 (3,737,788) $ 37,061,250 CITY OF ELOY, ARIZONA STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2013 General Revenues: Sales Taxes Property Taxes Franchise Taxes Licenses, Permits, and Fees Intergovernmental Revenue Charges for Services Fines and Forfeitures Investment Income Impact Fees CCA Pass-Through Other Revenues Total revenues $ 4,547,502 908,077 139,478 374,593 4,085,014 52,592 235,923 27,343 Highway User Revenue Fund $ Grants $ 1,654,681 702,212 20,735 37,972,180 44,773 10,415,295 Expenditures: Current General Government Public Safety Public Works Community Development Health and Welfare Culture and Recreation CCA Pass-Through Capital Outlay Debt service Principal Retirement Interest and Fiscal Charges Loan Issuance Costs Total expenditures 1,675,416 2,331,273 3,649,333 557,671 528,675 38,674,392 317,415 1,086,712 273,692 59,249 3,222 37,972,180 49,807 1,276,104 Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers In Transfers Out Loan Proceeds Total other financing sources (uses): 1,673,656 370,516 978,143 64,750 12,425 11,072,030 530,450 7,914 1,995,592 38,675,565 (656,735) (320,176) (1,173) (1,129,797) 2,900,000 1,770,203 Changes in fund balances 1,113,468 (320,176) (1,173) Fund balances, beginning of year 9,855,191 5,038,902 147,581 Fund balances, end of year $ 10,968,659 $ 4,718,726 The notes to the basic financial statements are an integral part of this statement. Page 32 $ 146,408 Non-Major Governmental Funds Total Governmental Funds $ $ 250,179 40,269 169,388 8,595 43,833 11,740 524,004 88,094 2,419,367 3,966,748 1,661,507 802,367 59,249 1,279,326 37,972,180 3,043,354 17,124 949,375 68,366 9,851 $ 4,797,681 908,077 139,478 374,593 6,482,176 221,980 235,923 56,673 43,833 37,972,180 56,513 51,289,107 1,132,810 1,576,959 82,515 12,425 52,875,997 (608,806) (1,586,890) 525,262 (103,136) 422,126 525,262 (1,232,933) 2,900,000 2,192,329 (186,680) 605,439 4,901,823 19,943,497 4,715,143 Page 33 $ 20,548,936 (This page intentionally left blank) Page 34 CITY OF ELOY, ARIZONA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2013 Net changes in fund balances - total governmental funds $ 605,439 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report the portion of capital outlay for capitalized assets as expenditures. However, in the Statement of Activities, the costs of those assets are allocated over their estimated useful lives as depreciation expense. Expenditures for capitalized assets Less current year depreciation $ 3,010,266 (710,746) 2,299,520 Issuance of long-term debt provides current financial resources to governmental funds, but the issuance increases long term liabilities in the Statement of Net Position. (2,900,000) Property taxes collected 60 days after fiscal year end do not provide current financial resources are not reported as revenues in the funds. (10,917) Repayments of long-term debt principal are expenditures in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Position. Capital lease principal retirement Loan principal retirement 929,308 647,651 1,576,959 103 15,456 3,356 18,915 Some expenses reported in the Statement of Activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Loss on sale on disposal of capital assets Accrued interest payable Compensated absences Change in net position in governmental activities The notes to the basic financial statements are an integral part of this statement. Page 35 $ 1,589,916 CITY OF ELOY, ARIZONA STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2013 Enterprise Funds Water ASSETS Current assets: Cash and Cash Equivalents Accounts Receivable (Net of Allowance) Loan Proceeds Receivable Inventory Total current assets $ Noncurrent assets: Restricted Cash and Investments Land Buildings and Improvements Collection and Distribution Systems Furniture, Equipment and Vehicles Construction in Progress Accumulated Depreciation Total noncurrent assets Total assets $ 94,102 112,535 $ 1,033,162 105,704 112,535 1,138,866 13,732,299 484,814 132,340 (5,746,687) 9,415,763 9,528,298 313,353 14,411 140,984 1,643,618 (899,013) 744,605 1,883,471 120,321 3,620 46,856 10,321 181,179 22,429 99,825 3,255 6,420 350 601,027 Noncurrent liabilities: Compensated Absences Landfill Closure and Post Closure Costs Bonds Payable Loans Payable Total noncurrent liabilities Total liabilities 333,187 1,743 59,344 697,651 58,920 29,290 $ 15,682 3,763,528 568,870 475,425 1,073,585 1,674,612 6,618,506 6,618,506 7,316,157 3,779,210 3,838,130 5,693,413 1,651,073 744,605 94,102 1,029,677 6,817,192 465,529 95,539 2,212,141 $ The notes to the basic financial statements are an integral part of this statement. Page 36 Sanitation 465,529 347,468 32,704 10,902,671 537,246 461,682 (5,074,341) 6,954,064 8,491,804 LIABILITIES Current liabilities: Accounts Payable Accrued Salaries and Wages Payable Customer Deposits Due to Other Funds Bonds Payable Loans Payable Compensated Absences Interest Payable Other Current Liabilities Total current liabilities NET POSITION Net Investment in Capital Assets Restricted for: Debt Service Unrestricted Total net position 879,399 328,424 214,801 115,116 1,537,740 Sewer $ (2,699,264) (1,954,659) Enterprise Funds Totals $ 1,912,561 546,663 214,801 115,116 2,789,141 559,631 347,468 32,704 24,634,970 2,665,678 594,022 (11,720,041) 17,114,432 19,903,573 480,530 28,352 140,984 181,179 22,429 433,012 4,998 65,764 350 1,357,598 44,972 3,763,528 568,870 7,093,931 11,471,301 12,828,899 8,089,091 $ 559,631 (1,574,048) 7,074,674 Page 37 CITY OF ELOY, ARIZONA STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2013 Enterprise Funds Water Operating revenues: Charges for Services Rent and Other Revenues Total operating revenues $ 1,662,936 Sewer $ 978,252 1,662,936 978,252 Sanitation $ 1,523,348 418 1,523,766 Operating expenses: Salaries Employee Benefits Service, Supplies and Other Landfill Closure and Post Closure Expense Depreciation Total operating expenses 415,759 217,402 896,367 110,908 53,634 427,537 352,270 1,881,798 522,960 1,115,039 326,838 165,324 782,686 130,045 93,574 1,498,467 Operating income (loss) (218,862) (136,787) 25,299 1,030 (39,931) (38,901) 718 (160,255) (159,537) (257,763) (296,324) Transfers In Capital Contributions 450,171 4,109 257,500 6,579 Changes in net position 196,517 (32,245) 25,299 6,620,675 2,244,386 (1,979,958) Nonoperating revenues (expenses): Investment Income Interest Expense and Fiscal Charges Total nonoperating revenues (expenses) Income (loss) before capital contributions and transfers Total net position, beginning of year, as restated Total net position, end of year $ 6,817,192 $ 2,212,141 The notes to the basic financial statements are an integral part of this statement. Page 38 25,299 $ (1,954,659) Enterprise Funds Totals $ 4,164,536 418 4,164,954 853,505 436,360 2,106,590 130,045 968,804 4,495,304 (330,350) 1,748 (200,186) (198,438) (528,788) 707,671 10,688 189,571 6,885,103 $ 7,074,674 Page 39 CITY OF ELOY, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2013 Enterprise Funds Water Sewer Sanitation Total Increase (Decrease) in Cash and Cash Equivalents Cash Flows From Operating Activities: Cash Received from Customers, Service Fees Cash Received from Customers, Other Cash Paid to Supplies Cash Paid to Employees $ 1,586,894 $ (849,073) (415,029) Net cash provided by (used for) operating activities Cash Flows From Capital and Related Financing Activities: Capital Grants Acquisition of Capital Assets Principal Paid on Debt Interest Paid on Debt Impact Fees Net cash used for capital and related financing activities $ (442,171) (112,583) 322,792 Cash Flows From Non-Capital Financing Activities: Interfund Transactions Net cash provided by (used for) non-capital financing activities 1,667,982 1,113,228 1,516,904 418 (908,442) (325,209) $ 283,671 4,771,780 418 (2,199,686) (852,821) 1,719,691 450,171 (750,435) (300,264) 450,171 (750,435) (300,264) (336,403) (118,656) (33,516) 4,109 6,000 (94,717) (326,346) (100,910) 579 6,000 (431,120) (445,002) (134,426) 4,688 (484,466) (515,394) (999,860) Cash Flows From Investing Activities: Investment Income Net cash provided by investing activities 1,030 1,030 718 718 1,748 1,748 Net Increase (Decrease) In Cash and Cash Equivalents 289,527 (151,883) 283,671 421,315 Cash and Cash Equivalents, Beginning of Year, As Restated 683,974 617,412 749,491 2,050,877 Cash and Cash Equivalents, End of Year $ 973,501 $ 465,529 $ 1,033,162 $ 2,472,192 1,912,561 559,631 2,472,192 Reconciliation of Cash and Cash Equivalents to the Statement of Net Position Cash Restricted Cash and Investments Total Cash and Cash Equivalents $ $ $ 879,399 94,102 973,501 $ 1,033,162 $ $ 465,529 465,529 $ 1,033,162 $ $ (218,862) $ (136,787) $ 25,299 $ Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used for) Operating Activities Operating Income (Loss) Adjustments to Reconcile Operating Income (Loss) to Net Cash Provided by (used for) Operating Activities: Depreciation Changes in Assets and Liabilities: (Increase) Decrease in Accounts Receivable Increase in Inventory Increase in Compensated Absences Payable Decrease in Deposits Held for Others Increase in Accrued Payroll and Employee Benefits Increase (Decrease) in Accounts Payable Increase (Decrease) in Landfill Closure and Post Closure Payable Total Adjustments Page 40 352,270 522,960 93,574 968,804 (73,657) 4,010 585 (2,385) 996 259,835 689,730 (6,444) 609,629 4,010 2,173 (2,385) (487) 338,252 130,045 (1,069) $ 322,792 2,657 (506) 38,900 541,654 Net Cash Provided by (used for) Operating Activities (330,350) (977) 39,517 130,045 1,250,015 $ 1,113,228 258,372 $ 283,671 The notes to the basic financial statements are an integral part of this statement. 2,050,041 $ 1,719,691 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Eloy, Arizona have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant of the City’s accounting policies are described below. A. Reporting Entity The City is a municipal entity governed by an elected mayor and council. As required by accounting principles generally accepted in the United States of America, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the City’s operations and so data from these units are combined with data of the City, the primary government. The financial reporting entity consists of a primary government and its component units. A component unit is a legally separate entity that must be included in the reporting entity in conformity with generally accepted accounting principles. The City is a primary government that has a separately elected governing body, is legally separate, and is fiscally independent of other state or local governments. Furthermore, component units combined with the City for financial statement presentation purposes, and the City, are not included in any other governmental reporting entity. Consequently, the City’s financial statements include the funds of those organizational entities for which its elected governing body is financially accountable. Blended Component Unit – Eloy Municipal Property Corporation (MPC). The MPC Board of Directors consists of six members which are appointed by the City of Eloy, Arizona, City Council. The MPC, 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. For financial reporting purposes, transactions of the MPC are combined together and included as if they were part of the City’s operations. Page 41 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) present financial information about the City as a whole. The reported information includes all of the nonfiduciary activities of the City. For the most part, the effect of internal activity has been removed from these statements. These statements are to distinguish between the governmental and business-type activities of the City. Governmental activities normally are supported by taxes and intergovernmental revenues, and are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, investment income and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and the major individual enterprise fund are reported as separate columns in the fund financial statements. The City does not present funds that do not have activity. C. Measurement Focus, Basis of Accounting, and Financial Statement Presentation Government-Wide Financial Statements – The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule, the effect of internal activity has been eliminated from the government-wide financial statements; however, the effects of interfund services provided and used between functions are reported as expenses and program revenues at amounts approximating their external exchange value. Page 42 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Fund Financial Statements – Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, sales taxes, franchise taxes, licenses and permits, charges for services, and investment income associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenue as soon as all eligibility requirements imposed by the grantor or provider have been met. Miscellaneous revenue is not susceptible to accrual because generally they are not measurable until received in cash. Deferred revenue arise when resources are received by the City before it has legal claim to them, as when grant monies are received prior to meeting all eligibility requirements imposed by the provider. Delinquent property taxes and other receivables that will not be collected within the available period have been reported as deferred revenue on the governmental fund financial statements. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. The City reports the following major governmental funds. General Fund – This fund accounts for all financial resources of the City, except those required to be accounted for in other funds. Highway User Revenue (HURF) Fund – This fund accounts for state and county shared revenue sources that are legally restricted for road construction and maintenance. Grants Fund – This fund accounts for federal and state grants and other contributions that are restricted for a specific use. Page 43 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) The City reports the following major proprietary funds. Water Fund – This fund is used to account for the activities related to the City’s water storage and distribution system. Sewer Fund – This fund is used to account for the activities related to the City’s sewer collection and treatment operations. Sanitation Fund – This fund is used to account for the activities related to the City’s garbage collection and treatment operations. The Proprietary Fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting and are presented in a single column. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise fund are charges to customers for water, sewer and sanitation. Operating expenses for these funds include the cost of sales and services and depreciation expense. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. D. Cash and Investments For purposes of the Statement of Cash Flows, the City considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at year end were cash on hand, restricted and unrestricted cash in bank and investments. Nonparticipating interest-earning investment contracts are stated at cost. Money market investments and participating interest investment contracts with a remaining maturity of one year or less at time of purchase are stated at amortized cost. All other investments are stated at fair value. E. Investment Income Investment income is composed of interest, dividends, and net changes in the fair value of applicable investments. Page 44 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) F. Receivables and Payables Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Interfund balances between governmental funds are eliminated on the Statement of Net Position. All trade and property tax receivables, are shown net of an allowance for uncollectibles. G. Property Tax Calendar The property tax levy, as described in the Arizona State Statutes, is divided into two levies, a primary levy and a secondary levy. Secondary taxes are levied strictly for the retirement and redemption of bonded indebtedness, while the primary levy may be used for any legal operating purpose. The primary property tax levy is limited to a 2% annual increase over the prior year’s maximum allowable levy plus an adjustment for properties that were not taxed in the previous year. Property taxes are levied by the City and collected by the County Treasurer. Real property taxes are levied on or before the third Monday in August, which 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. The billings are considered past due after these dates, at which time the applicable property is subject to penalties and interest. Pursuant to A.R.S., a lien against assessed real and personal property attaches on the first day of January preceding assessment and levy; however according to case law, an enforceable legal claim to the asset does not arise. H. Capital Assets Capital assets, which include land, land improvements, buildings and improvements, sewer plant, water mains and lines, sewer collection system, vehicles, machinery, equipment, construction in progress, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of $5,000 or more and an estimated useful life of more than one year. Page 45 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Such assets are recorded at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are recorded at estimated fair market value at the date of donation. General government infrastructure capital assets include only those assets acquired or constructed since July 1, 2003. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. Certain capital assets of the City are depreciated using the straight line method over the following estimated useful lives: Assets Buildings and Improvements Improvements other than Buildings Furniture, Equipment, and Vehicles Streets Infrastructure Water and Sewer Plant I. Years 40 5-50 5-20 10-50 50 Compensated Absences For governmental funds, amounts of vested or accumulated vacation leave that are not expected to be liquidated with expendable available financial resources are reported as liabilities in the government-wide statement of net position and as expenses in the government-wide statement of activities. No expenditures are reported for these amounts in the fund financial statements. Vested or accumulated vacation and sick leave in the proprietary fund are recorded as an expense and a liability of that fund as the benefits accrue to the employees and are thus recorded in both the government-wide financial statements and the individual fund financial statements. Generally, resources from the General Fund are used to pay for compensated absences. J. Long-Term Obligations In the government-wide financial statements, long-term debt and other long-term obligations are reported as liabilities on the statement of net position. Debt premiums and discounts, as well as issuance costs and the difference between the reacquisition price and the net carrying amount of the old debt, are deferred and amortized over the life of the debt using the straightline method over the term of the related debt. Page 46 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concl’d) In the fund financial statements, governmental fund types recognize debt premiums and discounts, as well as debt 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. K. Interfund Activity Flows of cash from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers between governmental funds are eliminated in the Statement of Activities. Interfund transfers in the fund statements are reported as other financing sources/uses in governmental funds and after nonoperating revenues/expenses in proprietary funds. L. Net Position Flow Assumption In the government-wide and proprietary fund financial statements the District applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted amounts are available. M. Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. NOTE 2 – 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, restricted, and unrestricted, which includes committed, assigned, and unassigned fund balance classifications. Nonspendable. The nonspendable fund balance classification includes amounts that cannot be spent because they are not in spendable form, or legally or contractually required to be maintained intact. Page 47 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 2 – FUND BALANCE CLASSIFICATIONS (Cont’d) Restricted. Restricted fund balance is reported when constraints placed on the use of resources are either externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments or is imposed by law through constitutional provisions or enabling legislation. Committed. Committed fund balance can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision making authority, the City Council. A resolution, ordinance or vote by the City Council is required to establish, modify or rescind a fund balance commitment. Assigned. Assigned fund balance is constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed. The City Manager is authorized to assign amounts to a specific purpose in accordance with the City’s budget policy. Unassigned. Unassigned fund balance is the residual classification for the General Fund and includes all spendable amounts not contained in the other classifications. In other governmental funds, the unassigned classification is used only to report a deficit balance resulting from overspending for specific purposes for which amounts had be restricted, committed, or assigned. The City applies restricted resources first when outlays are incurred for purposes for which either restricted or unrestricted (committed, assigned, and unassigned) amounts are available. Similarly, within unrestricted fund balance, committed amounts are reduced first followed by assigned, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classifications could be used. Page 48 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 2 – FUND BALANCE CLASSIFICATIONS (Concl’d) The table below provides detail of the major components of the City’s fund balance classifications at year end. General Fund Fund Balances: Restricted: Highways and Streets Grants Capital Projects Court Equipment Cemetery Committed: Highways and Street Airport Cemetery Assigned: Capital Projects Unassigned Total Fund Balances $ Highway User Revenue Fund $ Grants Fund 2,354,568 $ Non-Major Governmental Funds $ 9,089 146,408 1,883,212 116,956 114,339 2,364,158 388,304 157,852 46,337 1,999,054 10,968,659 $ 10,968,659 $ 4,718,726 $ 146,408 $ 4,715,143 NOTE 3 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Stewardship, compliance, and accountability are key concepts in defining the responsibilities of the City. The use of budgets and monitoring of equity status facilitate the City’s compliance with legal requirements. Budgets and Budgetary Accounting – 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 public comment. Page 49 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 3 – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (Concl’d) 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 financial statements to total expenditures for reporting in accordance with the State’s uniform expenditure reporting system (A.R.S. §41-1279.07). 4. The City follows a voter-approved alternative expenditure limitation that was adopted on March 9, 2010. 5. Expenditures may not legally exceed the expenditure limitation of all fund types as a whole. For management purposes, the City adopts a budget by department for the General Fund and in total by fund for 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. The adopted budget cannot be amended in any way without City Council approval. 6. 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. The City is subject to the State of Arizona’s Spending Limitation Law for Cities and Towns. This law does not permit the City to spend more than budgeted revenues plus the carry-over 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 made during the year. Individual Deficit Net Position – At year end, the Sanitation Fund, a major fund, reported a deficit of $1,954,659 in net position. The deficit arose because of operations during the year and prior years. Additional revenues received in future fiscal years due to user rate increases are expected to eliminate the deficit. Page 50 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 4 – CASH AND INVESTMENTS Arizona statutes authorize the City to invest public monies in the State Treasurer’s local government investment pools, the County Treasurer’s investment pool, in obligations of the U.S. Government and its agencies, obligations of the State and certain local government subdivisions, interest-bearing savings accounts and certificates of deposit, collateralized repurchase agreements, certain obligations of U.S. corporations, and certain other securities. By identification of permitted investments, all other investments are prohibited by the same statutes. The statutes do not include any requirements for credit risk, custodial credit risk, concentration of credit risk, interest rate risk, or foreign currency risk for the City’s investments. Custodial Credit Risk – Deposits. Custodial credit risk is the risk that in the event of bank failure the City’s deposits may not be returned to the City. The City does not have a deposit policy for custodial credit risk. At year end, the carrying amount of the City’s deposits was $22,562,165 and the bank balance was $22,873,241. Additionally, the City had cash on hand of $1,200. The State Treasurer’s pools are external investment pools, the Local Government Investment Pool (Pool 5) and Local Government Investment Pool-Government (Pool 7), with no regulatory oversight. The pools are not required to register (and are not registered) with the Securities and Exchange Commission. The activity and performance of the pools are reviewed monthly by the State Board of Investment. The fair value of each participant’s position in the State Treasurer investment pools approximates the value of the participant’s shares in the pool and the participants’ shares are not identified with specific investments. At year end, the City’s investments consisted of the following. Investment Type State Treasurer’s Investment Pool 5 State Treasurer’s Investment Pool 7 Total Average Maturities 25 days 15 days Fair Value $ 32,029 166,909 $ 198,938 Interest Rate Risk. The City does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk. The City has no investment policy that would further limit its investment choices. As of year end, the City’s investment in the State’s investment pool 5 received a credit quality rating of AAAF/S1+ from Standard & Poor’s and the State’s investment pool 7 had a weighted average rating of AA+ at year end as it was invested in obligations of the U.S. Government or obligations guaranteed by the U.S. Government. Custodial Credit Risk – Investments. The City’s investment in the State Treasurer’s investment pools represents a proportionate interest in the pool’s portfolio; however, the City’s portion is not identified with specific investments and is not subject to custodial credit risk. Page 51 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 5 – RECEIVABLES Receivable balances, net of allowance for uncollectibles, have been disaggregated by type and presented separately in the financial statements with the exception of due from governmental entities. Due from governmental entities, net of allowance for uncollectibles, as of year end for the City’s individual major funds and non-major governmental and proprietary funds in the aggregate, were as follows. General Fund Due from Other Governmental Entities: Due from Federal Government Due from State Government Due from County Government Due from other Governments Net Due from Governmental Entities $ Highway User Revenue Fund $ 417,386 28,784 $ 446,170 $ 96,249 50,893 Grants Fund Non-Major Governmental Funds $ 3,480,204 $ 8,266 147,142 $ 3,488,470 $ 1,176 1,176 Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the City had $42,697 of delinquent property taxes receivable in the General Fund. Page 52 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 6 – CAPITAL ASSETS A summary of capital asset activity for the current fiscal year follows. Governmental Activities Capital Assets, not being Depreciated: Land Construction in Progress Total Capital Assets, not being Depreciated Capital Assets, being Depreciated: Buildings and Improvements Furniture, Equipment and Vehicles Land Improvements Infrastructure Total Capital Assets being Depreciated Less Accumulated Depreciation for: Buildings and Improvements Furniture, Equipment and Vehicles Land Improvements Infrastructure Total Accumulated Depreciation Total Capital Assets, being depreciated, net Governmental Activities Capital Assets, net Beginning Balance Increase $ 5,468,128 129,845 5,597,973 $ 1,650,000 198,035 1,848,035 6,574,514 5,524,836 400,012 6,806,656 19,306,018 166,262 752,588 58,246 306,807 1,283,903 10,000 505,497 (2,121,528) (3,709,331) (21,077) (1,144,273) (6,996,209) (176,468) (336,443) (9,478) (188,357) (710,746) (10,000) (505,600) 12,309,809 $ 17,907,782 573,157 $ 2,421,192 Governmental activities: General Government Public Safety Public Works Health and Welfare Total Depreciation Expense Page 53 Decrease $ $ $ 121,672 121,672 515,497 (515,600) $ Ending Balance $ 7,118,128 206,208 7,324,336 6,730,776 5,771,927 458,258 7,113,463 20,074,424 (2,287,996) (3,540,174) (30,555) (1,332,630) (7,191,355) (103) 12,883,069 121,569 $ 20,207,405 82,977 186,429 352,713 88,627 710,746 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 6 – CAPITAL ASSETS (Concl’d) Business-Type Activities Capital Assets, not being Depreciated: Land and Water Rights Construction in Progress Total Capital Assets, being Depreciated: Water System Sewer System Buildings and Improvements Furniture, Equipment and Vehicles Total Capital Assets being Depreciated Less Accumulated Depreciation for: Water System Sewer System Buildings and Improvements Furniture, Equipment and Vehicles Total Accumulated Depreciation Total Capital Assets, being Depreciated, net Business-Type Activities Capital Assets, net Beginning Balance $ $ Business-type activities: Water Sewer Sanitation Total Depreciation Expense 347,468 181,249 528,717 Increase $ $ $ 412,773 412,773 10,884,322 13,732,299 32,704 2,690,017 27,339,342 18,349 (4,242,658) (4,835,699) (30,901) (1,666,318) (10,775,576) (342,308) (512,851) (90) (113,555) (968,804) 16,563,766 17,092,483 (950,455) (537,682) 18,349 $ Ending Balance Decrease 347,468 594,022 941,490 24,339 24,339 10,902,671 13,732,299 32,704 2,665,678 27,333,352 (24,339) (24,339) (4,584,966) (5,348,550) (30,991) (1,755,534) (11,720,041) $ 15,613,311 $ 16,554,801 $ 352,270 522,960 93,574 $ 968,804 Construction Commitments – At year end, the City had contractual commitments related to various capital projects for the construction of building improvements, infrastructure improvements, and water and sewer projects. At year end, the City had spent $800,230 on the projects and had estimated remaining contractual commitments of $4.9 million. The water and sewer projects are being funded with loan proceeds. Page 54 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 7 – OBLIGATIONS UNDER CAPITAL LEASES The City has financed airport improvements under the provisions of a long-term lease agreement classified as a capital lease. This lease agreement qualifies as a capital lease for accounting purposes and, therefore, has been recorded at the present value of its future minimum lease payments as of the inception date. Revenues from the Airport Fund, a nonmajor governmental fund, are used to pay this capital lease obligation. The assets acquired through capital leases that meet the City’s capitalization threshold are as follows. Governmental Activities Asset: Land $ 168,772 Buildings and Improvements 64,791 Less: Accumulated Depreciation (46,433) Total $ 187,130 The future minimum lease obligations and the net present value of these minimum lease payments at year end were as follows. Year Ending June 30: 2014 2015 Total Minimum Lease Payments Governmental Activities $ 25,368 12,684 38,052 Less: Amount Representing Interest Page 55 1,483 Present Value of Minimum Lease Payments $ 36,569 Due Within One Year $ 23,982 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 8 – LONG-TERM DEBT Bonds Payable - Business-Type Activities: Water Revenue Bonds, Series 1997A, bearing interest at 4.5% due in semiannual principal and interest installments, maturing January 1, 2031. $ 235,041 Water Revenue Bonds, Series 1997B, bearing interest at 4.5% due in semiannual principal and interest installments, maturing January 1, 2031. 356,258 Total Revenue Bonds Payable 591,299 Less Current Portion 22,429 Total revenue bonds, net of current portion $ 568,870 Principal and interest payments on the business-type activities bonds payable at year end are summarized as follows. Year Ending June 30: 2014 2015 2016 2017 2018 2019-23 2024-28 2029-31 Total Business-Type Activities Principal Interest $ 22,429 $ 26,609 23,459 25,599 24,536 24,544 25,664 23,439 26,843 22,284 153,884 92,156 192,630 54,200 121,854 10,420 $ 591,299 $ 279,251 Pledged Revenues – Business-Type Activities. The City has pledged future water and sewer revenues to repay the outstanding Water Revenue Bonds loans of $591,299 as of year end. Proceeds from the original bond issuances provided financing for improvements to the City’s water and sewer systems infrastructure. The bonds are paid solely from water and sewer revenues and are payable through 2031. The total principal and interest to be paid on the bonds is $870,551. The current total customer gross revenues were $2.6 million and the total principal and interest paid on the bonds was $34,748, or 1.3% of gross revenues. Page 56 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 8 – LONG-TERM DEBT (Cont’d) Loans Payable - Business-Type Activities: Water Infrastructure Finance Authority (WIFA) Loan 910103-09, bearing interest at 2.312% to 3.24% due in semiannual principal and interest installments, maturing July 1, 2021. $ 5,934,351 Water Infrastructure Finance Authority (WIFA) Loan 92A150-10, bearing interest at 2.933% due in semiannual principal and interest installments, maturing on July 1, 2029. 437,764 Water Infrastructure Finance Authority (WIFA) Loan 920216-12, bearing interest at 2.933% due in semiannual principal and interest installments. $2,000,000 has been authorized by WIFA; however, at June 30, 2013, the City had only drawn down $214,801. The City repaid $77,314 during the current fiscal year leaving an outstanding balance of $137,487 at June 30, 2013, which matures at July 1, 2014. The City expects to draw down the remaining balance during fiscal year 2014, and debt will then be scheduled to mature at July 1, 2031. 137,488 United States Department of Agriculture (USDA), bearing interest at 4.125% due in annual principal and interest installments beginning September 1, 2008, maturing September 1, 2045. 1,017,340 Total Loans Payable 7,526,943 Less Current Position Total Loans Payable, net of Current Position Page 57 433,012 $ 7,093,931 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 8 – LONG-TERM DEBT (Cont’d) Principal and interest payments on the business-type activities bonds payable at year end are summarized as follows. Year Ending June 30: 2014 2015 2016 2017 2018 2019-23 2024-28 2029-33 2034-38 2039-43 2044-48 Total Business-Type Activities Principal Interest $ 433,012 $ 180,186 419,402 182,125 369,021 173,113 376,959 163,900 385,075 154,482 2,053,730 677,081 2,286,260 402,756 636,531 144,591 183,500 102,418 225,454 61,252 157,999 13,161 $ 7,526,943 $ 2,255,065 Pledged Revenues – Business-Type Activities. The City has pledged future excise, transaction privilege, franchise, and income tax revenues to repay outstanding WIFA loans 910103-09 and 92A150-10 of $6.3 million as of year end, and has pledged future water revenues to repay WIFA loan 920216-12 of $137,487 as of year end. Proceeds from the original loan issuances provided financing for improvements to the City’s water and sewer systems infrastructure. Loans 910103-09 and 92A150-10 are paid solely from excise, transaction privilege, franchise, and income tax revenues and are payable through 2029. Loan 920216-12 is paid solely from water revenues and is payable through 2031. The total principal and interest to be paid on loans 910103-09 and 92A150-10 is $7.8 million. The current total excise, transaction privilege, franchise, and income tax revenues were $8.0 million and the total principal and interest paid on the loans was $462,959, or 5.8% of gross revenues. The total principal and interest to be paid on loan 920216-12 is $137,486. The current total water customer gross revenues were $1.7 million and the total principal paid on the loan was $77,314, or 4.6% of gross revenues. The City was not billed for interest on this loan during the fiscal year. Page 58 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 8 – LONG-TERM DEBT (Concl’d) Loans Payable – Governmental Activities: Great Western Bank, bearing interest at 0.05%, due in monthly principal and interest installments, maturing October 1, 2022. The interest rate is variable and will be adjusted on September 1, 2017. Great Western Bank, bearing interest at 3.1%, due in monthly principal and interest installments, maturing November 1, 2027. $ 380,694 2,828,238 Total Loans Payable 3,208,932 Less Current Portion 207,428 Total Loans Payable, net of Current Portion $ 3,001,504 Principal and interest payments on the governmental activities bonds payable at year end are summarized as follows. Year Ending June 30: 2014 2015 2016 2017 2018 2019-23 2024-28 Total Page 59 Governmental Activities Principal Interest $ 207,428 $ 89,832 212,698 84,563 217,918 79,342 223,712 73,547 229,476 67,785 1,099,660 247,423 1,018,040 81,816 $ 3,208,932 $ 724,308 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 9 – LANDFILL CLOSURE AND POSTCLOSURE COSTS State and federal laws and regulations require the City to place a final cover on its landfill site when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for 30 years after closure. Although closure and postclosure care costs will not be paid until near or after the date that the landfill stops accepting waste, the City reports a portion of these closure and postclosure care costs as an addition to long term liabilities on the Statement of Net Position in each period based on the landfill capacity the City used as of fiscal year end. The $3,763,528 reported as landfill closure and postclosure care liability at year end, represents the cumulative amount reported to date based on prior closure and post closure costs recognized and the use of 55% of the estimated additional capacity added to the landfill during the fiscal year. The City will recognize the remaining estimated cost of closure and postclosure care of $3,133,566 as the remaining estimated capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care in the current fiscal year. Resources from the Landfill Fund will be used to liquidate the landfill closure and postclosure payable. The estimated remaining life of the landfill site is 30 years. NOTE 10 – CHANGES IN LONG-TERM LIABILITIES Long-term liability activity for the current fiscal year was as follows. Beginning Balance Governmental activities: Loans Payable Compensated Absences Obligations under Capital Leases Governmental Activity LongTerm Liabilities Business-type activities: Compensated Absences Revenue Bonds Loans Payable Landfill Closure and Post-Closure Costs Payable Business-Type Activities LongTerm Liabilities Page 60 Additions Ending Balance Reductions Due Within One Year $ 956,583 495,643 965,877 $ 2,900,000 275,092 $ 647,651 278,448 929,308 $ 3,208,932 $ 492,287 36,569 207,428 49,229 23,982 $ 2,418,103 $ 3,175,092 $ 1,855,407 $ 3,737,788 $ 280,639 $ 47,797 612,743 7,735,700 $ $ $ 49,970 $ 591,299 7,526,943 4,998 22,429 433,012 214,801 3,633,483 $ 12,029,723 31,864 29,691 21,444 423,558 130,045 $ 376,710 3,763,528 $ 474,693 $ 11,931,740 $ 460,439 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 11 – INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS At year end, interfund balances were as follows. Due To/From Other Funds: Due From Sewer Fund Grants Fund Total Due To General Fund $ 181,179 75,624 $ 256,803 Interfund balances resulted from the time lag between the dates that (1) interfund goods and services are provided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3) payments between funds are made. Residual balances outstanding between the governmental activities and the business-type activities are netted and reported in the government-wide financial statements as internal balances. The terms for repayment of the interfund balances will be determined by the City Council and any amounts expected to be repaid within one year have not been determined as of the date of the financial statements. Interfund Transfers: Transfers In Transfers Out General Fund Non-Major Governmental Funds Total Non-Major Governmental Funds $ 522,937 2,325 $ 525,262 Water Fund $ 381,140 69,031 $ 450,171 $ $ Sewer Fund 225,720 31,780 257,500 $ $ Total 1,129,797 103,136 1,232,933 Transfers are used to (1) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and (2) use unrestricted revenues collected in certain funds to finance various programs accounted for in other funds in accordance with budgetary authorizations. NOTE 12 – CONTINGENT LIABILITIES Lawsuits – The City is a party to a number of various types of lawsuits, many of which normally occur in governmental operations. The ultimate outcome of the actions is not determinable, however, City management believes that the outcome of these proceedings, either individually or in the aggregate, will not have a materially adverse effect on the accompanying financial statements. Page 61 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 13 – CORRECTIONS CORPORATION OF AMERICA (CCA) PASS-THROUGH Corrections Corporation of America (CCA) is a private prison within the City limits. The City entered into contracts with both the Department of Homeland Security and the CCA to provide funding to CCA and retain 25 cents per inmate per day. Revenues and expenses for this agreement are reflected in the Grants Fund, a major governmental fund. NOTE 14 – RESTATEMENT Due an error in the posting of project expenses in a prior fiscal year, the July 1, 2012 net position of the Water and Sewer Enterprise Funds do not agree to the prior year financial statements as follows. Proprietary Funds Water Fund Sewer Fund Net Position, June 30, 2012, as Previously Reported Project Expense Posting Error Net Position, July 1, 2012, as Restated $ $ 7,175,931 (555,256) 6,620,675 $ $ 1,689,130 555,256 2,244,386 NOTE 15 – RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City’s insurance protection is provided by the Arizona Municipal Risk Retention Pool, of which the City is a participating member. The limit for basic coverage is $2.0 million per occurrence on a claims made basis. Excess coverage is for an additional $8.0 million per occurrence on a follow form, claims made basis. The aggregate limit is also $2.0 million. The Arizona Municipal Risk Retention Pool is structured such that member premiums are based on an actuarial review that will provide adequate reserves to allow the Pool to meet its expected financial obligations. The Pool has the authority to assess its members additional premiums should reserves and annual premiums be insufficient to meet the Pool’s obligations. 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 insured by Arizona Municipal Workers Compensation Pool for potential worker related accidents. The City continues to carry commercial insurance for all other risks of loss to include employee health and accident insurance. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. Page 62 CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 16 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS Plan Descriptions – The City contributes to the two plans described below. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. The Arizona State Retirement System (ASRS) administers a cost-sharing, multiple-employer defined benefit pension plan; a cost-sharing, multiple-employer defined health insurance premium plan; and a cost-sharing, multiple-employer defined benefit long-term disability plan that covers employees of the State of Arizona and employees of participating political subdivisions and school districts. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of A.R.S. Title 38, Chapter 5, Article 2. The ASRS benefits are established by state statute and the plan generally provides retirement, long-term disability, and health insurance premium benefits, including death and survivor benefits. The retirement benefits are generally paid at a percentage, based on years of service, of the retirees’ average compensation. Long-term disability benefits vary by circumstance, but generally pay a percentage of the employee’s monthly compensation. Health insurance premium benefits are paid as a fixed dollar amount per month towards the retiree’s healthcare insurance premiums, in amounts based on whether the benefit is for the retiree or for the retiree and his or her dependents. The Public Safety Personnel Retirement System (PSPRS) administers agent multipleemployer defined benefit pension plan and an agent multiple-employer defined benefit health insurance premium plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or one of its political subdivisions. The PSPRS, acting as a common investment and administrative agent, is governed by a sevenmember Board of Trustees and participating local boards according to the provisions of A.R.S. Title 38, Chapter 5, Article 4. Each plan issues a publicly available financial report that includes its financial statements and required supplementary information. A report may be obtained by writing or calling the applicable plan. The reports are also available on the respective website of the plan. ASRS 3300 N. Central Ave. Phoenix, AZ 85012-0250 (602) 240-2200 or (800) 621-3778 www.azasrs.gov Page 63 PSPRS 3010 E. Camelback Road Suite 200 Phoenix, AZ 85016 (602) 255-5575 www.psprs.com CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 16 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS (Cont’d) Funding Policy – The Arizona State Legislature establishes and may amend active plan members’ and the City’s contribution rates. Cost-sharing plan – The Arizona State Legislature establishes and may amend active plan members’ and the City’s contribution rates. For the current fiscal year, active ASRS members were required by statute to contribute at the actuarially determined rate of 11.14 percent (10.90 percent for retirement and 0.24 percent for long-term disability) of the members’ annual covered payroll and the City was required by statute to contribute at the actuarially determined rate of 11.14 percent (10.25 percent for retirement and 0.65 percent for health insurance premiums, and 0.24 percent for long-term disability) of the members’ annual covered payroll. The City’s contributions for the current and two preceding years, all of which were equal to the required contributions, were as follows. Retirement Fund Years Ended June 30, 2013 2012 2011 $ 391,741 369,239 299,011 Health Benefit Supplement Fund $ 24,842 23,568 21,903 Long-Term Disability Fund $ 9,172 8,978 8,297 Agent plan – For the current fiscal year, active PSPRS members were required by statute to contribute 7.65 percent of the members’ annual covered payroll, and the City was required to contribute at the actuarially determined rates of 16.92 percent for police. Additional information related to the police PSPRS agent plan follows. Actuarial Methods and Assumptions – The contribution requirements for the current fiscal year were established by the June 30, 2011 actuarial valuations, and those actuarial valuations were based on the following actuarial methods and assumptions. Actuarial Valuation Date Actuarial Cost Method Actuarial Assumptions: Investment Rate of Return Projected Salary Increases Includes Inflation at Amortization Method Remaining Amortization Asset Valuation Method Page 64 June 30, 2011 Entry age normal 8.25% 5.50% - 8.00% 5.00% Level percent-of-pay closed 25 years for underfunded 20 years for overfunded 7-year smoothed market CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 16 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS (Cont’d) Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events in the future. Actuarially determined amounts are subject to continual revision as the actual results are compared to past expectations and new estimates are made about the future. Actuarial calculations reflect a long-term perspective. Annual Pension/OPEB Cost – The City’s pension/OPEB cost for the agent plans for the current fiscal year end and related information follows. Police Annual Pension/OPEB cost Contributions Made Pension $ 273,542 $ 273,542 Health Insurance $ 20,228 $ 20,228 The required schedule of funding programs which follows provides multi-year trend information that shows whether the actuarial value of the plans’ assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits. Trend Information – Information for each of the agent plans as of most recent actuarial valuations follows. Year Ended June 30, Pension 2013 2012 2011 Health Insurance 2013 2012 2012 Page 65 Annual Pension Cost (APC) Percentage of APC Contributed Net Pension Obligation $273,542 271,377 237,649 100% 100% 100% -0-0-0- $ 20,228 20,720 19,816 100% 100% 100% -0-0-0- CITY OF ELOY, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2013 NOTE 16 – PENSIONS AND OTHER POSTEMPLOYMENT BENEFITS (Concl’d) Funding Progress – An analysis of funding progress for each of the agent plans as of the most recent actuarial valuations follows. Valuation Date June 30, Pension 2013 2012 2011 Health Insurance 2013 2012 2011 Page 66 Actuarial Value of Plan Assets (a) $6,120,133 5,626,814 5,374,288 -0-0-0- Actuarial Accrued Liability (b) Unfunded AAL (UAAL) (b-a) Funded Ratio (a/b) Covered Payroll (c) Unfunded Liability as Percentage of Covered Payroll ([b-a]/c) $7,548,661 7,200,563 6,579,788 $1,428,528 1,573,749 1,205,500 81.1% 78.1% 81.7% $1,747,297 1,750,752 1,683,248 81.8% 89.9% 71.6% $ 187,325 167,631 192,081 $ 187,325 167,631 192,081 0.0% 0.0% 0.0% $1,747,297 1,750,752 1,683,248 10.7% 9.6% 11.4% SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL (REQUIRED SUPPLEMENTARY INFORMATION) Page 67 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original & Final Actual Variance with Final Budget Positive (Negative) Revenues: Sales Taxes Property Taxes Franchise Taxes Licenses, Permits, and Fees Intergovernmental Revenue Charges for Services Fines and Forfetures Investment income Other Revenues Total revenues $ 4,700,000 896,705 137,590 213,500 3,809,875 50,100 348,200 40,000 276,150 10,472,120 $ 4,547,502 908,077 139,478 374,593 4,085,014 52,592 235,923 27,343 44,773 10,415,295 $ (152,498) 11,372 1,888 161,093 275,139 2,492 (112,277) (12,657) (231,377) (56,825) Expenditures: Current General Government Mayor and Council City Clerk Magistrate City Manager Finance Legal and Professional Contingency Total General Government Public Safety Law Enforcement Total Public Safety Public Works Vehicle Maintenance Facilities Maintenance Public Works Administration Total Public Works Community Development Community Development Total Community Development 227,710 330,365 417,420 511,800 515,885 153,000 333,590 2,489,770 207,866 272,360 364,339 481,481 441,575 150,812 412,840 2,331,273 19,844 58,005 53,081 30,319 74,310 2,188 (79,250) 158,497 3,792,305 3,792,305 3,649,333 3,649,333 142,972 142,972 187,555 347,560 99,410 634,525 184,737 293,058 79,876 557,671 2,818 54,502 19,534 76,854 649,930 528,675 121,255 649,930 528,675 121,255 (Continued) See accompanying notes to this schedule. Page 68 Budgeted Amounts Original & Final Culture and Recreation Park Maintenance Parks and Recreation Library Recreation Total Culture and Recreation Capital Outlay Total Capital Outlay Debt Services Principal Retirement Interest and Fiscal Charges Loan issuance Costs Total Debt Services Total expenditures Excess (deficiency) of revenues over expenditures Actual Variance with Final Budget Positive (Negative) 335,275 452,840 297,065 362,105 1,447,285 331,020 375,922 247,570 321,592 1,276,104 1,673,656 1,673,656 4,255 76,918 49,495 40,513 171,181 (1,673,656) (1,673,656) 629,082 41,643 (349,061) (23,107) 670,725 978,143 64,750 12,425 1,055,318 (372,168) 9,684,540 11,072,030 (1,451,919) 787,580 (656,735) 1,444,315 (3,204,085) (1,129,797) 2,900,000 2,074,288 2,900,000 (3,204,085) 1,770,203 4,974,288 (2,416,505) 1,113,468 (3,529,973) 2,416,505 9,855,191 7,438,686 Other financing sources (uses): Transfers Out Loan Proceeds Total other financing sources (uses) Change in fund balances Fund balances, beginning of year Fund balances (deficits), end of year Page 69 $ $ 10,968,659 $ 10,968,659 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL HIGHWAY USER REVENUE FUND YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original & Final Revenues: Intergovernmental Revenue Investment Income Total revenues $ Expenditures: Current Public Works Capital Outlay Debt service Principal Retirement Interest and Fiscal Charges Total expenditures Changes in fund balances 1,642,030 15,000 1,657,030 Actual $ Page 70 $ $ 12,651 5,735 18,386 2,055,279 370,516 1,086,712 370,516 968,567 538,366 7,914 2,972,075 530,450 7,914 1,995,592 7,916 976,483 (1,315,045) (320,176) 994,869 5,038,902 5,038,902 Fund balances, beginning of year Fund balances (deficits), end of year 1,654,681 20,735 1,675,416 Variance with Final Budget Positive (Negative) (1,315,045) $ 4,718,726 $ 6,033,771 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL GRANTS YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original & Final Revenues: Intergovernmental Revenue CCA Pass-Through Total revenues $ Expenditures: Current Public Safety Community Development Health and Welfare Culture and Recreation CCA Pass-Through Capital Outlay Total expenditures Changes in fund balances 4,713,935 40,000,000 44,713,935 Actual $ Page 71 $ $ (4,011,723) (2,027,820) (6,039,543) 572,215 888,000 2,727,220 18,000 40,000,000 500,000 44,705,435 317,415 273,692 59,249 3,222 37,972,180 49,807 38,675,565 254,800 614,308 2,667,971 14,778 2,027,820 450,193 6,029,870 8,500 (1,173) (9,673) 147,581 147,581 Fund balances, beginning of year Fund balances, end of year 702,212 37,972,180 38,674,392 Variance with Final Budget Positive (Negative) 8,500 $ 146,408 $ 137,908 CITY OF ELOY, ARIZONA NOTE TO REQUIRED SUPPLEMENTARY INFORMATION JUNE 30, 2013 NOTE 1 – BUDGETARY BASIS OF ACCOUNTING The adopted budget of the City is prepared on a basis of accounting consistent with accounting principles generally accepted in the United States of America. Page 72 (This page intentionally left blank) Page 73 (This page intentionally left blank) Page 74 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES Page 75 (This page intentionally left blank) Page 76 NON-MAJOR GOVERNMENTAL FUNDS Special Revenue Funds Special Revenue Funds account for the proceeds of specific revenue sources, other than major capital projects, that are restricted to expenditures for specified purposes. Public Works Facility – accounts for the collection of sales tax revenues which are set aside for the maintaining, repairing, and upgrading of streets. Local Transportation Assistance (LTAF) – accounts for the City’s share of lottery proceeds which are set aside for transportation costs and the maintaining, repairing, and upgrading of streets. Impact Fee – accounts for the collection of impact fees and the various infrastructure projects they fund. Judicial Collection Enhancement (JCEF) – accounts for monies received to improve the city’s court operations. Court Recovery – accounts for court enhancement fee revenues and the capital outlays funded by these revenues. Cemetery – accounts for the activities of the city’s cemetery. Airport – accounts for fuel sales, charges for services and related costs and expenses for operation of the City airport. Capital Projects Fund Capital Projects Funds are used to account for the construction and acquisition of capital assets. Capital Projects – accounts for the construction and acquisition of capital assets to be utilized by the City’s governmental funds. Permanent Fund Permanent Funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the reporting government’s programs. Perpetual Care – accounts for principal trust amounts received and related interest income. The interest portion of the trust can be used to maintain the community cemetery. Page 77 CITY OF ELOY, ARIZONA COMBINING BALANCE SHEET - NON-MAJOR GOVERNMENTAL FUNDS JUNE 30, 2013 Special Revenue Public Works Facility ASSETS Cash and Cash Equivalents Other Receivables Due from Governmental Entities Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts Payable Accrued Salaries and Wages Payable Total liabilities Page 78 Impact Fee JCEF $ 388,304 $ 15,101 $ 1,920,784 $ 65,961 3,055 $ 388,304 $ 15,101 $ 1,920,784 $ 69,016 $ 6,012 $ 37,572 $ $ Fund balances: Restricted Committed Assigned Total fund balances Total liabilities and fund balances LTAF 6,012 37,572 9,089 1,883,212 69,016 9,089 1,883,212 69,016 388,304 388,304 $ 388,304 $ 15,101 $ 1,920,784 $ 69,016 Special Revenue Capital Projects Cemetery Capital Projects Court Recovery Airport Permanent Perpetual Care Total NonMajor Governmental $ 50,802 1,542 $ 47,504 5,530 $ 156,798 $ 2,006,480 $ 114,339 $ $ 52,344 $ 53,034 $ 1,176 157,974 $ 2,006,480 $ 114,339 $ $ 4,404 $ 6,697 $ $ 7,426 $ 4,404 6,697 122 122 46,337 157,852 46,337 157,852 7,426 114,339 47,940 47,940 $ 52,344 Page 79 $ $ 53,034 $ 157,974 1,999,054 1,999,054 $ 2,006,480 114,339 62,111 122 62,233 2,123,596 592,493 1,999,054 4,715,143 114,339 $ 4,766,073 10,127 1,176 4,777,376 $ 4,777,376 CITY OF ELOY, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2013 Special Revenue Public Works Facility Revenues: Sales Taxes Intergovernmental Revenue Charges for Services Investment Income Impact Fees Other Revenues Total revenues $ 250,179 Impact Fee LTAF $ $ JCEF $ 11,957 250,179 Expenditures: Current General Government Public Works Capital Outlay Debt service Principal Retirement Interest and Fiscal Charges Total expenditures 1,763 5,813 43,833 1,763 49,646 11,957 392,279 85 17,124 206,152 Excess (deficiency) of revenues over expenditures 206,152 17,124 392,279 85 44,027 (15,361) (342,633) 11,872 44,027 (15,361) (342,633) 11,872 344,277 24,450 2,225,845 57,144 Other financing sources (uses): Transfers In Transfers Out Total other financing sources (uses): Changes in fund balances Fund balances, beginning of year Fund balances, end of year Page 80 $ 388,304 $ 9,089 $ 1,883,212 $ 69,016 Special Revenue Capital Projects Cemetery Capital Projects Court Recovery $ $ Airport $ $ Permanent Perpetual Care Total NonMajor Governmental $ $ 28,312 68,270 28,312 101,118 358 661 11,740 80,010 101,476 661 54,991 33,103 37,672 45,439 7,410 52,849 54,991 22,927 2,441 96,143 (24,537) 25,019 5,333 15,000 $ Page 81 250,179 40,269 169,388 8,595 43,833 11,740 524,004 313,187 88,094 17,124 949,375 313,187 68,366 9,851 1,132,810 (313,187) 661 (608,806) 507,938 (100,812) 407,126 2,324 2,324 525,262 (103,136) 422,126 15,000 (2,324) (2,324) (9,537) 22,695 5,333 93,939 2,985 (186,680) 57,477 23,642 152,519 1,905,115 111,354 4,901,823 47,940 $ 46,337 $ 157,852 $ 1,999,054 $ 114,339 $ 4,715,143 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL PUBLIC WORKS FACILITY YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original & Final Revenues: Sales Taxes Total revenues $ Expenditures: Current Capital Outlay Total expenditures Changes in fund balances 300,000 300,000 Actual $ Page 82 $ $ (49,821) (49,821) 506,480 506,480 206,152 206,152 300,328 300,328 (206,480) 44,027 250,507 344,277 344,277 Fund balances, beginning of year Fund balances (deficits), end of year 250,179 250,179 Variance with Final Budget Positive (Negative) (206,480) $ 388,304 $ 594,784 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL LTAF YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original & Final Revenues: Investment Income Total revenues $ Expenditures: Current Public Works Total expenditures Changes in fund balances 200 200 Actual $ Page 83 $ $ 1,563 1,563 20,500 20,500 17,124 17,124 3,376 3,376 (20,300) (15,361) 4,939 24,450 24,450 Fund balances, beginning of year Fund balances (deficits), end of year 1,763 1,763 Variance with Final Budget Positive (Negative) (20,300) $ 9,089 $ 29,389 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL IMPACT FEE YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original & Final Revenues: Investment Income Impact Fees Total revenues $ Expenditures: Current Capital Outlay Total expenditures Changes in fund balances Actual $ 36,100 36,100 5,813 43,833 49,646 606,000 606,000 392,279 392,279 213,721 213,721 (569,900) (342,633) 227,267 2,225,845 2,225,845 Fund balances, beginning of year Fund balances (deficits), end of year Page 84 $ Variance with Final Budget Positive (Negative) (569,900) $ 1,883,212 $ $ 5,813 7,733 13,546 2,453,112 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL JCEF YEAR ENDED JUNE 30, 2013 Variance with Final Budget Positive (Negative) Budgeted Amounts Original & Final Revenues: Intergovernmental Revenue Total revenues $ Expenditures: Current Capital Outlay Total expenditures 14,150 14,150 Actual $ $ (2,193) (2,193) 85 85 14,065 14,065 Changes in fund balances 11,872 11,872 Fund balances, beginning of year 57,144 57,144 Fund balances, end of year Page 85 14,150 14,150 11,957 11,957 $ $ 69,016 $ 69,016 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL COURT RECOVERY YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original & Final Revenues: Intergovernmental Revenue Total revenues $ Expenditures: Debt service Principal Retirement Interest and Fiscal Charges Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers In Total other financing sources (uses): 38,000 38,000 Actual $ 28,312 28,312 Variance with Final Budget Positive (Negative) $ (9,688) (9,688) 45,439 7,561 53,000 45,439 7,410 52,849 151 151 (15,000) (24,537) (9,537) 15,000 15,000 15,000 15,000 Changes in fund balances (9,537) (9,537) Fund balances, beginning of year 57,477 57,477 Fund balances, end of year Page 86 $ $ 47,940 $ 47,940 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL CEMETERY YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original & Final Revenues: Charges for Services Other Revenues Total revenues $ Expenditures: Current General Government Total expenditures 84,315 22,900 107,215 Actual $ 68,270 11,740 80,010 Variance with Final Budget Positive (Negative) $ (16,045) (11,160) (27,205) 103,865 103,865 54,991 54,991 48,874 48,874 3,350 25,019 21,669 (3,350) (3,350) (2,324) (2,324) 1,026 1,026 Changes in fund balances 22,695 22,695 Fund balances, beginning of year 23,642 23,642 Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers Out Total other financing sources (uses): Fund balances, end of year Page 87 $ $ 46,337 $ 46,337 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL AIRPORT YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original & Final Revenues: Charges for Services Investment Income Total revenues $ 77,385 Actual $ 77,385 Expenditures: Current General Government Capital Outlay Debt service Principal Retirement Interest and Fiscal Charges Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers In Total other financing sources (uses): 41,462 (37,672) 22,927 2,473 99,965 22,927 2,441 96,143 32 3,822 (22,580) 5,333 27,913 22,580 22,580 $ 23,733 358 24,091 33,103 37,672 (22,580) (22,580) Fund balances, beginning of year Page 88 $ 74,565 Changes in fund balances Fund balances, end of year 101,118 358 101,476 Variance with Final Budget Positive (Negative) $ 5,333 5,333 152,519 152,519 157,852 $ 157,852 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL CAPITAL PROJECTS YEAR ENDED JUNE 30, 2013 Budgeted Amounts Original & Final Expenditures: Current Capital Outlay Total expenditures $ Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers In Transfers Out Total other financing sources (uses): Changes in fund balances 2,534,910 2,534,910 Actual $ Page 89 $ $ 2,221,723 2,221,723 (2,534,910) (313,187) 2,221,723 1,400,000 1,400,000 507,938 (100,812) 407,126 (892,062) (100,812) (992,874) (1,134,910) 93,939 1,228,849 1,905,115 1,905,115 Fund balances, beginning of year Fund balances (deficits), end of year 313,187 313,187 Variance with Final Budget Positive (Negative) (1,134,910) $ 1,999,054 $ 3,133,964 CITY OF ELOY, ARIZONA SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - BUDGET AND ACTUAL PERPETUAL CARE YEAR ENDED JUNE 30, 2013 Variance with Final Budget Positive (Negative) Budgeted Amounts Original & Final Revenues: Investment Income Total revenues $ Expenditures: Current General Government Total expenditures 500 500 Actual $ Other financing sources (uses): Transfers In Total other financing sources (uses): (3,350) 661 4,011 3,350 3,350 2,324 2,324 (1,026) (1,026) 2,985 2,985 111,354 111,354 Fund balances, beginning of year $ 161 161 3,850 3,850 Changes in fund balances Page 90 $ 3,850 3,850 Excess (deficiency) of revenues over expenditures Fund balances, end of year 661 661 $ 114,339 $ 114,339 STATISTICAL SECTION The statistical section presents financial statement trends as well as detailed financial and operational information not available elsewhere in the report. The statistical section is intended to enhance the reader’s understanding of the information presented in the financial statements, notes to the financial statements, and other supplementary information presented in this report. The statistical section is comprised of the five categories of statistical information presented below. Contents: Page Financial Trends These schedules contain information on financial trends to help the reader understand how the City’s financial position and financial activities have changed over time. 93 Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City’s ability to generate revenue. 98 Debt Capacity These schedules present information to help the reader evaluate the City’s current levels of outstanding debt as well as assess the City’s ability to make debt payments and/or issue additional debt in the future. 104 Demographic and Economic Information These schedules present various demographic and economic indicators to help the reader understand the environment in which the City’s financial activities take place and to help make comparisons with other municipalities. 108 Operating Information These schedules contain information about the City’s operations and various resources to help the reader draw conclusions as to how the City’s financial information relates to the services provided by the City. 112 Fiscal year 2012 was the first year a comprehensive annual financial report was prepared by the City. Due to cost considerations for the accumulation of data, the City has elected to present less than ten years of data, or data from less than nine years prior, for certain statistical schedules or schedule elements. This information will be accumulated and reported each year until the complete ten years of data is presented. Page 91 (This page intentionally left blank) Page 92 CITY OF ELOY, ARIZONA Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Governmental Activities Net Investment in Capital Assets Restricted Unrestricted Total Governmental Activities Net Assets Business-type activities Net Investment in Capital Assets Restricted Unrestricted Total Business-Type Activities Net Assets Primary government Net Investment in Capital Assets Restricted Unrestricted 2005 $ 5,053,159 $ 1,640,154 1,633,119 8,326,432 $ 5,597,733 $ 3,096,941 950,379 9,645,053 $ 8,746,981 $ 3,821,864 2,827,121 15,395,966 $ 10,520,431 $ 5,556,173 4,480,947 20,557,551 $ 10,963,272 $ 8,049,208 8,617,832 27,630,312 $ 13,325,913 $ 10,268,206 7,964,489 31,558,608 $ 16,151,406 $ 7,273,444 8,009,711 31,434,561 $ 15,002,289 $ 5,429,281 13,164,747 33,596,317 $ 15,985,323 $ 4,978,419 14,507,592 35,471,334 $ 16,961,904 4,624,572 15,474,774 37,061,250 $ 2,503,907 $ 3,976,728 $ (762,817) 1,741,090 $ (333,944) 3,642,784 $ 5,061,783 $ 269,560 (1,465,858) 3,865,485 $ 5,024,582 $ 311,257 (3,145,956) 2,189,883 $ 5,415,998 $ 380,056 (3,195,169) 2,600,885 $ 7,665,730 $ 379,454 (2,739,943) 5,305,241 $ 9,775,100 $ 343,584 (2,965,864) 7,152,820 $ 9,532,520 $ 289,448 (2,760,273) 7,061,695 $ 9,090,283 $ 291,532 (2,496,712) 6,885,103 $ 8,089,091 559,631 (1,574,048) 7,074,674 7,557,066 $ 1,640,154 870,302 10,067,522 $ 9,574,461 $ 3,096,941 616,435 13,287,837 $ 13,808,764 $ 4,091,424 1,361,263 19,261,451 $ 15,545,013 $ 5,867,430 1,334,991 22,747,434 $ 16,379,270 $ 8,429,264 5,422,663 30,231,197 $ 20,991,643 $ 10,647,660 5,224,546 36,863,849 $ 25,926,506 $ 7,617,028 5,043,847 38,587,381 $ 24,534,809 $ 5,718,729 10,404,475 40,658,013 $ 25,075,606 $ 5,269,951 12,010,880 42,356,437 $ 25,050,995 5,184,203 13,900,726 44,135,924 $ $ $ Page 93 2006 $ 2007 2008 Fiscal Year 2009 2004 2010 2011 2012 2013 CITY OF ELOY, ARIZONA Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Expenses Governmental Activities: General Government CCA Passthrough Public Safety Public Works Culture and Recreation Community Development Health and Welfare Interest on Long-Term Debt Total Governmental Activities Expenses Business-Type Activities: Water Sewer Sanitation and Other Memorial Park Airport Total Business-Type Activities Expenses Total Primary Government Expenses 2004 $ $ Program Revenues Governmental Activities: Charges for Services: General Government Public Safety Public Works Community Development Culture and Recreation Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities Program Revenues Business-Type Activities: Charges for Services: Water Sewer Sanitation and Other Memorial Park Airport Operating Grants and Contributions Capital Grants and Contributions Total Business-Type Activities Program Revenues Total Primary Government Program Revenues 2,508,825 2005 $ Fiscal Year 2008 2009 2010 $ 39,069,442 $ 39,039,411 $ 40,977,710 $ 41,557,237 $ 2012 $ 2013 3,091,169 1,609,599 1,012,065 3,019,759 1,461,415 962,893 3,769,710 2,045,436 1,108,839 4,010,314 2,390,394 1,077,769 3,805,011 2,914,884 1,248,404 4,591,751 3,170,470 1,303,247 4,574,432 1,797,012 1,178,676 110,673 8,332,331 98,177 8,345,584 86,907 190,454 15,521,021 24,067 128,102 46,700,088 103,896 179,565 47,291,171 84,934 175,834 50,303,946 18,618 93,818 49,219,793 63,294 48,919,474 1,304,661 1,098,685 933,963 64,075 49,387 3,450,771 11,783,102 1,702,780 1,078,813 894,983 78,289 73,396 3,828,261 12,173,845 1,931,084 993,279 1,175,389 2,449,351 1,232,493 1,270,086 1,906,929 1,094,058 1,188,915 1,978,848 1,476,568 1,178,667 1,938,888 1,442,414 5,398,863 1,800,394 1,308,335 1,375,054 1,950,484 2,264,921 1,379,485 1,921,729 1,275,294 1,498,467 4,099,752 19,620,773 4,951,930 $ 51,652,018 4,189,902 $ 51,481,073 4,634,083 $ 54,938,029 8,780,165 $ 57,999,958 4,483,783 $ 53,403,257 5,594,890 $ 55,011,270 4,695,490 $ 53,676,093 $ 8,319,675 2011 2,451,503 37,964,365 4,106,470 2,509,477 1,438,463 597,877 290,000 58,225 49,416,380 $ 2,535,814 37,972,180 4,141,860 2,007,422 1,290,178 805,789 147,876 79,484 48,980,603 616,307 4,752 1,115,204 63,946 6,770,433 588,580 187,878 35,873,813 656,561 290,368 36,281,572 1,315,283 86,457 38,079,648 289,858 402,654 38,389,247 282,085 89,682 618,181 380,459 72,434 589,588 332,861 79,779 15,676 2,178,095 26,941 2,184,007 2,814,830 3,390,098 20,571 2,593,428 1,306,561 11,467,451 24,896 2,893,405 931,184 40,670,227 25,185 3,372,261 1,090,919 42,171,677 24,407 2,398,640 3,103,924 44,299,131 21,863 2,324,873 674,887 41,782,637 19,598 40,249,113 1,314,342 42,654,127 18,350 39,824,399 1,251,911 42,096,888 531,214 116,604 120,518 314,702 26,199 39,863,905 572,622 41,545,764 3,615,614 1,609,750 944,830 935,797 86,545 80,038 603,806 1,287,356 5,548,122 8,938,220 1,681,997 835,754 1,010,678 1,496,447 819,109 1,202,242 1,623,516 925,591 1,239,003 1,838,440 1,025,676 1,329,058 1,867,418 1,053,803 1,331,779 1,734,300 977,215 1,312,906 1,781,941 945,290 1,476,130 1,662,936 978,252 1,523,766 2,474,963 6,003,392 17,470,843 512,508 4,030,306 $ 44,700,533 113,016 3,901,126 $ 46,072,803 2,314,606 6,507,780 $ 50,806,911 2,821,830 7,074,830 $ 48,857,467 69,930 4,094,351 $ 46,748,478 792,051 4,995,412 $ 47,092,300 10,688 4,175,642 $ 45,721,406 138,315 $ $ 2007 2,878,214 38,053,366 3,744,811 2,609,546 1,570,243 $ 2,803,340 2006 395,793 4,149,722 6,964,552 $ $ (continued) Page 94 CITY OF ELOY, ARIZONA Changes in Net Position Last Ten Fiscal Years (Continued) Fiscal Year Net (expense)/revenue Governmental Activities Business-Type Activities Total Primary Government Net Expense General Revenues and Other Changes in Net Position Governmental Activities: City Sales Tax State Sales Taxes Auto Lieu Tax State Sales Taxes-Revenue Sharing Property Tax Franchise Tax Unrestricted Investment Earnings Gain on Sale of Assets Other Revenues Transfers Total Governmental Activities Business-Type Activities: Unrestricted Investment Earnings Transfers Total Business-Type Activities Total Primary Government Change in Net Position Governmental Activities Business-Type Activities Total Primary Government Page 95 $ $ $ $ $ $ 2004 2005 2006 (5,517,501) $ 698,951 (4,818,550) $ (4,955,486) $ 1,719,861 (3,235,625) $ (4,053,570) $ 1,903,700 (2,149,870) $ 2,941,389 872,849 489,963 935,507 397,381 104,217 11,470 $ 3,314,147 961,143 502,289 953,748 430,980 106,263 40,949 139,447 $ 4,734,172 1,101,748 639,807 1,086,256 558,062 118,019 118,291 (168,635) 5,584,141 (174,859) 6,274,107 (79,961) 8,276,394 2,181 168,635 170,816 5,754,957 6,974 174,859 181,833 6,455,940 11,580 79,961 91,541 8,367,935 66,640 869,767 936,407 $ $ $ 1,318,621 1,901,694 3,220,315 $ $ $ 2007 4,222,824 1,995,241 6,218,065 (6,029,861) $ (921,624) (6,951,485) $ 7,113,852 1,057,403 696,508 1,263,084 476,317 112,137 297,313 174,832 $ 33,638 $ $ 2009 (5,119,494) $ (288,776) (5,408,270) $ (6,004,815) $ 1,873,697 (4,131,118) $ 8,444,552 1,022,432 753,544 1,565,622 580,882 135,324 373,733 $ 15,944 683,834 699,778 12,892,033 5,161,585 $ (887,986) 4,273,599 $ 7,072,761 411,002 7,483,763 33,638 11,225,084 $ (683,834) 12,192,255 11,191,446 $ 2008 6,446,587 885,140 728,472 1,665,549 648,196 129,343 232,670 2010 $ (802,846) 9,933,111 $ $ $ 27,813 802,846 830,659 10,763,770 3,928,296 2,704,356 6,632,652 $ $ $ 2011 (7,437,156) $ (1,705,335) (9,142,491) $ 3,787,899 816,412 696,980 1,436,354 713,073 121,542 137,475 $ 2012 (6,265,347) $ (389,432) (6,654,779) $ 5,087,733 887,563 682,530 1,082,827 786,184 132,653 63,965 $ 2013 (7,319,492) $ (599,478) (7,918,970) $ 5,160,839 1,299,551 703,979 1,403,669 846,923 135,939 64,587 $ (7,434,839) (519,848) (7,954,687) 4,797,681 1,361,278 724,822 1,698,821 897,160 139,478 56,673 (396,626) 7,313,109 (296,353) 8,427,102 (420,978) 9,194,509 56,513 (707,671) 9,024,755 4,152 396,626 400,778 7,713,887 1,954 296,353 298,307 8,725,409 1,908 420,978 422,886 9,617,395 $ 1,748 707,671 709,419 9,734,174 1,875,017 $ (176,592) 1,698,425 $ 1,589,916 189,571 1,779,487 $ (124,047) $ (1,304,557) (1,428,604) $ $ 2,161,755 $ (91,125) 2,070,630 $ CITY OF ELOY, ARIZONA Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2004 General Fund Reserved Unreserved Total General Fund All other Governmental Fund Reserved: Roads and Highways Capital Projects Court Equipment Cemetery Other Purposes Committed for: Airport Cemetery Roads and Highways Assigned for: Capital Projects Unassigned: Total all other Governmental Funds Page 96 Fiscal Year 2009 2005 2006 2007 2008 - $ 1,675,989 $ 1,675,989 $ - $ 2,172,591 2,172,591 $ - $ 3,908,190 3,908,190 $ - $ 6,130,614 6,130,614 $ - $ 8,421,061 8,421,061 $ $ 945,612 $ 1,352,273 785,467 1,283,364 637,788 114,111 25,923 522,661 1,954,498 $ 1,167,674 147,972 446,995 4,387,854 $ 3,051,765 77,675 531,914 $ 950,272 $ 689,882 $ 2010 2011 2012 - $ 7,954,418 7,954,418 $ - $ 8,009,884 8,009,884 $ - $ 8,766,677 8,766,677 $ - $ 9,855,191 9,855,191 $ 7,926,530 $ 4,077,563 87,644 542,002 5,391,080 $ 3,646,925 95,200 434,694 2,885,592 2,171,477 101,915 108,605 161,692 2,379,018 2,225,845 114,621 111,354 147,581 $ 2013 $ 10,968,659 10,968,659 2,363,657 1,883,212 116,956 114,339 146,408 - - 131,349 - 140,451 23,371 - 140,925 39,896 - 114,271 48,702 - 140,275 42,794 - 148,855 34,250 2,684,334 152,519 23,642 2,684,334 157,852 46,337 2,752,462 - - - - - - - 1,942,442 2,249,392 1,999,054 $ 1,640,154 $ 3,083,352 $ 2,715,196 $ 3,880,961 $ 8,230,029 $ 12,796,712 $ 9,750,968 $ 10,239,162 $ 10,088,306 $ 9,580,277 CITY OF ELOY, ARIZONA Changes in Fund Balance of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year Revenues Taxes Licenses and Permits Intergovernmental Charges for Services Impact Fees Fines and Forfeitures Interest CCA Pass-Through Other Revenues Total Revenues Expenditures Current: General Government Public Safety Public Works Health and Welfare Community Development Culuture and Recreation CCA Pass-Through Capital Outlay Debt Service Principal Interest and Fiscal Charges Loan Issuance Costs Total Expenditures Revenues Over (Under) Expenditures Other Finance Sources (Uses) Sale of Assets Bond Proceeds Transfers In (Out) Total other Finance Scources (Uses) Net Change in Fund Balances Debt Service as a Percentage of Noncapital Expenditures Page 97 $ $ $ $ 2004 2005 3,442,980 $ 235,615 4,476,414 46,036 255,551 11,470 99,533 8,567,599 $ 3,836,516 $ 403,314 4,601,187 375,620 266,792 40,949 160,365 9,684,743 $ 2,437,850 $ 2,968,827 1,714,639 1,061,888 - 2,806,405 $ 3,262,770 1,912,079 1,099,607 - 220,968 110,673 8,514,845 229,995 98,177 9,409,033 52,754 275,710 2006 5,417,124 724,423 6,482,258 118,662 432,400 292,066 118,291 5,945,019 300,434 19,830,677 2007 $ $ 2,272,310 $ 3,606,255 2,052,251 10,798 1,040,826 5,923,351 2,733,783 7,706,397 897,405 6,653,899 103,595 530,406 364,033 297,313 34,950,830 187,054 51,690,932 2008 $ $ 9,164,388 1,352,303 6,648,617 114,303 715,465 381,384 373,733 35,327,401 973,802 55,051,396 2009 $ $ 7,193,555 654,224 7,416,635 119,015 59,193 340,520 232,670 37,205,992 130,040 53,351,844 2010 $ $ 4,605,355 311,252 6,002,186 118,283 110,755 292,267 137,475 37,738,433 159,211 49,475,217 2011 $ $ 6,008,308 415,189 6,069,630 105,856 114,901 277,601 63,965 38,053,366 270,504 51,379,320 2012 2013 $ 6,166,452 361,173 6,616,153 113,925 50,521 264,739 64,587 37,964,365 133,214 $ 51,735,129 $ 5,845,236 374,593 6,482,176 221,980 43,833 235,923 56,673 37,972,180 56,513 $ 51,289,107 $ 3,681,115 $ 3,824,777 2,179,189 24,071 1,010,410 34,922,393 2,043,192 3,490,572 $ 3,644,286 2,572,959 103,790 1,163,310 35,327,401 1,249,583 3,093,446 $ 3,959,263 2,787,310 84,842 1,209,750 37,205,592 2,649,461 2,588,439 $ 3,717,712 2,401,112 18,587 1,239,954 37,738,433 2,281,142 2,729,089 $ 2,262,749 3,462,398 3,727,083 2,038,234 2,057,173 290,000 597,877 1,209,228 1,270,781 38,053,366 37,964,365 1,421,235 1,485,800 684,011 174,494 18,498,079 740,497 153,928 48,579,572 578,008 151,198 48,281,107 508,096 151,198 51,648,958 1,996,608 86,882 52,068,869 855,204 69,226 49,837,980 641,584 79,082 50,376,494 1,576,959 82,515 12,425 52,875,997 1,332,598 3,111,360 6,770,289 1,702,886 (2,593,652) 1,541,340 1,358,635 (1,586,890) 276,832 276,832 3,388,192 3,060 550,000 (683,834) (130,774) 6,639,515 $ 3,200,000 (802,846) 2,397,154 4,100,040 $ (396,626) (396,626) (2,990,278) $ (296,353) (296,353) 1,244,987 $ (420,978) (420,978) 937,657 $ 1.57% 1.36% 1.95% 1.50% 50,000 (168,635) (118,635) (65,881) $ 205,000 1,633,949 (174,859) 1,664,090 1,939,800 $ (79,960) (79,960) 1,252,638 $ 4.05% 3.61% 5.76% 1.96% $ 4.37% 2,419,367 3,966,748 1,661,507 59,249 802,367 1,279,326 37,972,180 3,043,354 2,900,000 (707,671) 2,192,329 605,439 3.45% CITY OF ELOY, ARIZONA Assessed, Limited and Full Cash Value of Taxable Property Last Ten Fiscal Years Limited Property Value -Primary Fiscal Year 2003-2004 Net Assessed Value 30,083,715 Total Value 220,730,828 Net Assessed Value 32,092,485 Total Value 230,987,841 Ratio of Net Assessed to Total Values 14% 2004-2005 31,345,318 228,572,057 32,608,443 236,283,676 14% 2005-2006 33,084,566 239,929,880 34,074,814 246,154,691 14% 2006-2007 35,488,716 264,545,940 36,833,437 271,302,992 14% 2007-2008 47,148,069 353,590,419 63,489,149 456,137,673 14% 2008-2009 70,389,857 530,151,332 119,026,192 842,248,039 14% 2009-2010 81,605,192 616,477,382 125,354,097 900,434,027 14% 2010-2011 101,317,831 747,069,356 115,615,201 821,585,705 14% 2011-2012 90,183,109 659,116,219 94,517,290 675,875,514 14% 2012-2013 86,329,516 624,646,309 88,241,336 633,233,534 14% Source: Pinal County Assessor Page 98 Full Cash Value-Secondary CITY OF ELOY, ARIZONA Property Tax Rates - Direct and Overlapping Governments (Inclusive of Primary & Secondary Tax Rates) Per $100 of Assessed Value Last Ten Fiscal Years Tax Authority Fiscal Year 2007-2008 2008-2009 2003-2004 2004-2005 2005-2006 2006-2007 City of Eloy 1.3549 1.3497 1.3266 1.2917 1.2326 Pinal County 4.4532 4.4532 4.4532 4.3035 Eloy Fire District 1.7734 1.8429 1.9546 Pinal County Jr. College Toltec Elementary School District Casa Grande Union High School District Santa Cruz Unified School District Eloy Elementary School District 2.1737 2.1500 3.0228 Other Taxing Authorities Source: Pinal County Treasurer Page 99 2009-2010 2010-2011 2011-2012 2012-2013 0.9514 0.8363 0.8195 0.9562 1.0387 4.0183 3.4355 3.2316 3.9999 3.9999 3.7999 1.9792 1.9533 1.6388 1.6881 1.9655 2.2835 2.3358 2.1000 2.0528 1.8000 1.4100 1.4636 1.5854 1.8529 1.8786 2.2815 4.8805 3.6983 3.1657 3.0585 2.3283 2.3255 2.3255 2.9326 3.0307 2.9961 2.9355 2.8074 3.2091 2.8887 2.3972 2.3624 2.4860 2.5266 4.4168 4.4011 4.405 4.2236 4.0708 3.9656 3.7581 3.6517 3.7308 4.4195 5.5230 6.9661 6.8010 6.2520 5.5102 5.4636 4.0013 3.9656 4.1156 4.7645 0.8741 0.8592 0.8383 0.3834 0.3692 0.4008 0.7516 0.7878 0.8664 0.9182 CITY OF ELOY, ARIZONA Property Tax Billings and Collections Last Ten Fiscal Years Fiscal Year 2003-2004 Current Assessments Billed * Total Current Assessments Collected * Ratio of Collections to Amount Due 0.00% Total Current Outstanding Assessments * * 2004-2005 424,716 424,692 99.99% 2005-2006 439,629 439,143 99.89% 485 2006-2007 467,813 467,248 99.88% 565 2007-2008 580,518 579,874 99.89% 644 2008-2009 657,801 655,155 99.60% 2,646 2009-2010 719,780 715,864 99.46% 3,917 2010-2011 821,297 815,702 99.32% 5,596 2011-2012 835,355 828,538 99.18% 6,817 2012-2013 872,554 841,835 96.48% 30,720 Source: Pinal County Assessors Office and City of Eloy Finance Department * Means no data available during that fiscal year. Page 100 CITY OF ELOY, ARIZONA Sales Tax Revenues by Industry Fiscal Years 2008 Through 2013 Fiscal Year 2007-2008 Construction Manufacturing Transportation/Communication/ Utilities Wholesale Trade Retail Trade Restaurants/Bars Insurance/Real Estate Hotel/Lodging Services All Other Total Tax Paid Percentage of Total $ 4,909,603 162,936 58.16% 1.93% 677,648 33,601 926,918 1,062,237 129,904 127,598 305,641 105,883 8.03% 0.40% 10.98% 12.58% 1.54% 1.51% 3.62% 1.25% $ 8,441,969 100.00% Fiscal Year 2008-2009 Tax Paid $ $ 2,998,610 215,210 46.51% 3.34% 683,760 63,534 1,071,019 942,401 101,791 87,157 129,296 153,807 10.61% 0.99% 16.61% 14.62% 1.58% 1.35% 2.01% 2.39% 6,446,586 Fiscal Year 2009-2010 Percentage of Total 100.00% Tax Paid $ 830,116 286,748 20.15% 6.96% 684,547 91,143 940,694 836,373 121,700 84,893 154,429 88,512 16.62% 2.21% 22.84% 20.30% 2.95% 2.06% 3.75% 2.15% $ 4,119,155 Source: Arizona Department of Revenue Note: The categories presented are intended to provide alternative information regarding the source of the City's revenue. Page 101 Fiscal Year 2010-2011 Percentage of Total 100.00% Tax Paid $ $ Percentage of Total 1,637,402 273,899 31.17% 5.21% 659,001 124,332 981,398 1,042,401 219,347 84,651 126,222 104,424 12.55% 2.37% 18.68% 19.84% 4.18% 1.61% 2.40% 1.99% 5,253,078 100.00% Fiscal Year 2011-2012 Tax Paid $ $ Percentage of Total 1,257,602 268,820 24.59% 5.26% 638,519 118,652 1,172,126 1,107,200 202,784 82,686 156,361 109,512 12.49% 2.32% 22.92% 21.65% 3.97% 1.62% 3.06% 2.14% 5,114,261 100.00% Fiscal Year 2012-2013 Tax Paid $ $ Percentage of Total 986,143 223,290 20.60% 4.66% 646,302 150,107 1,181,505 959,115 247,337 71,811 170,100 150,885 13.50% 3.14% 24.68% 20.04% 5.17% 1.50% 3.55% 3.15% 4,786,595 100.00% City of Eloy Direct and Overlapping Sales Tax Rates As of June 30, 2013 City Tax Rates State and Pinal County Combined Privilege Tax, except retail, utilities, and telecommunication 3.0% 6.70% 9.700% Retail 3.0% 6.70% 9.700% Retail - privilege tax for single item over $6,000 1.5% 6.70% 8.200% Hotel/Motel (additional Tax) 4.0% 6.698% 10.698% Restaurant/Bar 6.0% 6.70% 12.700% Use Tax 3.0% 5.60% 8.600% Construction 4.5% 6.60% 11.100% Sources: City of Eloy Finance Department and Arizona Department of Revenue Page 102 CITY OF ELOY, ARIZONA Actual Excise Tax Collections Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 City Sales Tax $ 2,941,389 3,164,171 4,734,172 7,113,848 8,441,969 6,446,586 4,119,155 5,253,078 5,114,261 4,786,595 State Shared Sales Tax $ 792,827 961,143 1,101,748 1,057,403 1,022,432 885,140 816,413 887,563 1,229,551 1,361,278 Urban Revenue Share $ 935,507 953,748 1,086,256 1,263,084 1,565,622 1,665,549 1,436,354 1,082,827 1,403,669 1,698,821 Source: City of Eloy Finance Department and Department of Revenue Page 103 Franchise Tax $ 102,768 79,577 118,018 112,137 135,324 129,343 121,542 132,654 135,939 139,478 Auto Lieu Tax $ 484,673 502,289 639,807 696,508 753,544 728,472 696,980 682,530 703,979 724,822 Total $ 5,257,164 5,660,928 7,680,001 10,242,980 11,918,891 9,855,090 7,190,444 8,038,652 8,587,399 8,710,994 CITY OF ELOY, ARIZONA Ratios of Outstanding Debt by Type Last Ten Fiscal Years Fiscal Year 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 Governmental Activities General Capital Obligation Leases Bonds 906,885 2,046,065 2,182,075 1,816,070 1,959,931 1,528,160 1,584,470 1,141,332 1,436,419 746,845 1,295,853 333,208 1,149,118 176,179 1,059,802 965,877 36,569 * Means no data is available during that fiscal year Page 104 Loans Payable 536,932 3,711,329 2,076,403 1,516,872 956,582 3,208,932 Capital Leases 274,730 505,417 304,247 172,586 93,123 35,687 12,163 Business-Type Activities General Obligation Revenue Bonds Bonds 883,934 1,233,639 663,931 1,158,668 466,841 1,083,010 348,668 1,001,632 228,155 914,502 101,792 826,585 53,821 732,845 633,244 612,743 591,299 Loans Payable 4,109,076 3,909,020 4,784,338 4,573,580 4,351,499 7,548,401 8,023,437 7,735,701 7,389,455 7,526,943 Total Primary Government 9,457,329 10,235,181 10,126,527 8,822,268 8,307,475 13,852,855 12,223,966 10,945,619 9,924,657 11,363,743 Percentage of Personal Income * * * * * * * * * * Per Capita 908 1,002 966 824 650 948 735 658 585 652 CITY OF ELOY, ARIZONA Computation of Direct and Overlapping Debt As of June 30, 2013 Jurisdiction 2012-2013 Secondary Assessed Valuation Net Debt Outstanding Percentage Applicable to the City of Eloy Amount Applicable to the City of Eloy 2012-2013 Combined Tax Rate Per $100 Assessed State of Arizona $ 56,283,023,907 $ 0.16% $ Pinal County $ 2,177,012,575 $ 4.05% $ Pinal County Community College District $ 2,177,012,575 $ 4.05% $ Central Arizona Valley Institute of Technology $ 1,340,684,440 $ 6.58% $ 0.0500% Eloy Fire District $ 88,113,706 $ 100.00% $ 2.3358% Toltec ESD #022 $ 80,689,696 $ 3,805,000 49.19% $ 1,871,567 2.9326% Casa Grande UHS #82 $ 565,345,163 $ 30,330,000 7.05% $ 2,129,255 2.5266% Eloy ESD #011 $ 24,387,147 $ 1,490,000 100.00% $ 1,490,000 4.7645% Santa Cruz Valley UHS #840 $ 110,538,032 $ 6,245,000 12.36% $ 771,627 4.4195% City of Eloy $ $ 88,241,336 62,935,048,577 $ $ 11,363,743 147,163,743 100.00% $ $ 11,363,743 21,433,478 1.0387% 23.7462% 93,930,000 Source: Assessed value data used to estimate applicable percentages provided by Pinal County Assessor's Office. Debt outstanding data provided by each governmental agency. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Eloy. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsibility for repaying the debt, of each overlapping government. The percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining there portion of Pinal County's taxable assessed value that is within the government's boundaries and dividing it by the County's total taxable assessed value. Page 105 None 3.7999% 3,807,286 1.8786% CITY OF ELOY, ARIZONA Legal Debt Margin Information Last Ten Fiscal Years 2003-2004 $ 32,092,485 2004-2005 $ 32,608,443 2005-2006 $ 34,074,814 2006-2007 $ 36,833,437 2007-2008 $ 63,489,149 20% Limitation (a) Debt Limit Equal to 20% of Assessed Valuation $ 6,418,497 $ 6,521,689 $ $ $ Total Debt Applicable to 20% Limit $ $ $ Legal 20% Debt Margin (Available Borrowin Capacity) $ 6,418,497 Secondary Assessed Value Total Net Debt Applicable to the 20% Limit as a Percentage of 20% Debt Limit - - $ 6,521,689 $ 0.00% 0.00% 6% Limitation (b) Debt Limit Equal to 6% of Assessed Valuation $ 1,925,549 $ 1,956,507 $ Total Debt Applicable to 6% Limit $ $ $ Legal 6% Debt Margin (Available Borrowing Capacity) $ 1,925,549 $ 1,956,507 Total Net Debt Applicable to the 6% Limit as a Percentage of 6% Debt Limit 0.00% 0.00% - - 6,814,963 - 6,814,963 $ 2,044,489 - 2,044,489 (a) 20% Debt Limitation can be used for Water, Sewer, Light, Parks, and Open Space Purposes. Page 106 $ 0.00% Source: Pinal County Assessor's records (b) 6% Debt Limitation can be used for all other General Obligation Bonds. $ 0.00% 7,366,687 - 7,366,687 $ $ 0.00% $ $ $ 2,210,006 - 2,210,006 0.00% 12,697,830 Fiscal Year 2008-2009 $ 119,026,192 $ $ 2009-2010 125,354,097 $ 2010-2011 115,615,201 $ 2011-2012 94,517,290 $ 2012-2013 88,241,336 $ 23,805,238 $ 25,070,819 $ 23,123,040 $ 18,903,458 $ 17,648,267 $ 23,805,238 $ 25,070,819 $ 23,123,040 $ 18,903,458 $ 17,648,267 - 12,697,830 0.00% $ $ 3,809,349 - 3,809,349 0.00% 0.00% $ $ $ 7,141,572 - 7,141,572 0.00% 0.00% $ $ $ 7,521,246 - 7,521,246 0.00% 0.00% $ $ $ 6,936,912 - 6,936,912 0.00% 0.00% $ $ $ 5,671,037 - 5,671,037 0.00% 0.00% $ $ $ 5,294,480 - 5,294,480 0.00% CITY OF ELOY, ARIZONA Pledged Revenue Coverage Last Ten Fiscal Years Water Revenue Bonds Fiscal Year Ended June 30th 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Page 107 Utility Service Charges * 1,589,986 1,614,248 1,554,039 1,593,681 1,819,378 1,846,457 1,715,288 1,761,118 1,662,936 Less: Operating Expenses * 1,353,109 1,580,737 2,097,765 1,560,635 1,543,338 1,362,606 1,386,245 1,553,018 1,529,528 Net Available Revenue * 236,877 33,511 (543,726) 33,046 276,040 483,851 329,043 208,100 133,408 Debt Service Principal Interest * * 74,971 57,577 75,628 53,888 76,378 50,167 81,378 46,163 87,917 41,875 93,740 37,550 99,601 32,937 20,501 28,035 21,443 27,091 Coverage * 1.79 0.26 (4.30) 0.26 2.13 3.69 2.48 4.29 2.75 CITY OF ELOY, ARIZONA Demographic and Economic Statistics Last Ten Fiscal Years Fiscal Year 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 City Population 10,407 10,216 10,480 10,701 12,781 14,620 16,620 16,631 16,964 17,433 County Population 202,940 215,465 246,660 299,875 327,670 350,558 356,303 375,770 384,231 387,365 County Personal Income (in thousands)+ 4,107,473 4,500,589 5,001,332 6,041,934 7,164,122 7,892,358 8,259,897 8,860,496 9,301,723 9,766,809 County Per Capita Personal Income 20 21 20 20 22 23 23 24 24 25 School Enrollment 2,588 2,413 2,548 2,500 2,607 2,520 2,234 2,077 1,958 1,989 City Unemployment Rate 9.5% 8.8% 7.8% 6.4% 10.6% 18.5% 17.4% 16.1% 13.5% 13.4% Pinal County Unemployment Rate 6.4% 5.9% 5.2% 4.2% 7.1% 12.9% 12.1% 11.1% 9.2% 9.1% Sources: Population, County Per Capita Income and City Unemployment Rate - Arizona Department of Commerce and Arizona Department of Economic Security. School Enrollment - Toltec Elementary School District, Eloy Elementary School District and Santa Cruz Valley High School District based on 100th day count. + 2009-2011 amounts estimated based on an Bureau of Economic Analysis for personal income percent change from the proceeding year. Page 108 CITY OF ELOY, ARIZONA Principal Employers Current Year and Ten Years Ago 2013 Employer Corporation Corrections of America Eloy Elementary School District City of Eloy Republic Plastics Travel Center of America Santa Cruz Valley High School District Otto Plastics Arizona, LLC Pilot Travel Center Iron Skillet Restaurant Curiel Primary School Employees 1,632 150 117 110 100 85 70 70 63 60 2,457 2003 Percentage of Total City Employment 48.31% 4.44% 3.46% 3.26% 2.96% 2.52% 2.07% 2.07% 1.87% 1.78% 72.74% Employees 417 145 124 Sources: Central Arizona Regional Economic Development Foundation; various employers Page 109 92 86 58 75 65 56 1,118 Percentage of Total City Employment 16.25% 5.65% 4.83% 0.00% 3.59% 3.35% 2.26% 2.92% 2.53% 2.18% 43.57% CITY OF ELOY, ARIZONA Authorized Full-time Government Employees by Function/Program Last Ten Fiscal Years Function/Program Fiscal Year 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 General Government 24 24 24 24 24 23 22 20 19 20 Public Safety 49 50 52 51 48 46 46 43 44 43 Public Works/Streets 21 21 21 21 23 22 21 21 21 21 Culture & Recreation 14 14 14 14 14 13 13 13 13 13 Public Works/Water 10 10 10 10 9 9 9 9 9 10 Source: City Budget Note: Information is based on authorized positions approved by Council in the Budget. Page 110 Public Works/Sewer 5 5 5 5 5 3 3 2 2 2 Public Works/Sanitation 7 7 7 7 7 7 7 7 7 7 Total 130 131 133 132 130 123 121 115 115 116 (This page intentionally left blank) Page 111 CITY OF ELOY, ARIZONA Operating Indicators by Function/Program Last Ten Fiscal Years Fiscal Year Function/Program General Government Registered Voters Votes cast last primary election 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 3,438 708 * * 3,047 531 * * 3,135 369 * * 3,314 638 * * 3,322 891 * * 1,380 3,446 2,813 2,787 * 23,986 1,956 6,065 4,987 2,571 * 18,131 1,568 4,033 4,386 2,703 * 17,021 1,428 3,005 4,557 2,985 * 15,828 1,273 2,992 4,554 4,110 * 16,118 937 702 2,504 3,905 864 16,707 1,048 1,007 2,189 3,717 1,172 14,112 972 1,535 1,902 3,435 2,383 13,076 248 371 618 1,031 1,525 14,524 1,703 936 2,820 3,401 1,451 13,334 Highways & Streets Street resurfacing (miles) Cold Mix for Potholes (tons) Street sweeping (miles) * * 40 * * 40 * * 40 * * 40 3 212 42 3 271 42 4 168 42 3 197 46 1 145 46 1 96 46 Water New Residential Connections Line Breaks Average Daily Consumption 50 * * 75 * 1.31 76 * 1.31 34 * 1.31 8 179 1 1 252 1 0 204 1 3 177 1 0 69 1 0 87 1 Wastewater Average Daily Sewage Treatment (thousands of gallons) Line cleaning (feet) Line Plugs * * * * * * * * * * * * * * * 550 * 52 490 * 54 490 90,000 58 490 150,000 22 600 100,000 43 Police Arrests Citations Traffic Stops Officer Reports Photo Enforcement - Notices Printed Calls for Service (Continued) Page 112 Fiscal Year Function/Program Parks and Recreation Park Areas Parkland Acreage Playgrounds Afterschool Program Participants Aquatic Center Admissions 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 7 15 5 970 3,644 7 15 5 485 2,350 7 15 5 333 4,536 9 15 6 355 5,223 9 15 6 378 2,530 9 15 6 382 2,120 9 15 6 272 2,357 9 15 6 228 2,075 9 15 6 216 2,268 9 15 6 205 2,935 Airport Hangers T-Hangers 5 12 5 12 5 12 5 12 5 12 5 12 5 12 5 12 5 12 5 12 Economic Development Building Permits-Commercial Building Permits-Residential Housing Rehabilitations Code Enforcement Cases Planning Cases 10 74 1 * 25 26 94 10 * 65 23 310 11 * 110 23 113 3 * 97 38 44 4 * 75 22 35 6 1,104 58 20 78 7 1,267 50 14 48 12 2,087 24 12 37 1 1,601 25 15 96 4 1,729 32 14,388 11,184 989 8,760 549 15,433 11,954 1,020 7,990 359 16,046 11,830 684 8,200 401 16,386 16,381 718 9,000 307 17,809 13,433 864 9,318 628 16,362 14,559 920 11,636 790 18,924 16,544 817 16,544 1,821 19,086 32,281 858 17,490 2,204 20,857 35,398 975 17,481 2,274 23,900 35,867 991 23,107 3,629 Culture - Library Items in Collections Total Items Circulated Reference Transactions Computer Uses Inter Library Loan Sources: Various City Departments Note: Voter registration is taken every two years. * Not available Page 113 CITY OF ELOY, ARIZONA Capital Asset Statistics by Function/Program Last Ten Fiscal Years Function/Program Public Safety Stations Patrol units Highways and Streets Streets (miles) Streetlights Street poles Water Water mains (miles) Fire hydrants Sewer Sanitary Sewer (miles) Maximum daily treatment capacity (thousands of gallons) Recreation and Aquatics Parks Acreage Number of Parks Swimming Pools Tennis Courts Ball Fields * Not available Sources: Various City Departments Page 114 2003-2004 2004-2005 2005-2006 2006-2007 Fiscal Year 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 1 12 1 12 1 12 1 12 1 12 1 12 1 12 1 12 1 12 1 12 * 575 554 * 575 550 * 591 570 * 605 582 85 616 593 90 598 575 90 598 575 91 598 575 93 598 598 93 598 598 * * 120 315 120 315 120 315 120 321 120 321 123 321 123 326 123 326 123 327 * 44 44 44 45 45 47 47 47 47 2,000 15 7 1 1 3 2,000 15 7 1 1 3 2,000 15 7 1 1 3 2,000 15 9 1 1 3 2,000 15 9 1 1 3 2,000 15 9 1 1 3 2,000 15 9 1 1 3 2,000 15 9 1 1 3 2,000 15 9 1 1 3 2,000 15 9 1 1 3