CITY OF GOODYEAR, ARIZONA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2008 Prepared by the Finance Department Larry A. Lange, Finance Director TABLE OF CONTENTS I. INTRODUCTORY SECTION Letter of Transmittal City of Goodyear Officials Organizational Chart Acknowledgements Page vii xv xvi xvii II. FINANCIAL SECTION Independent Auditors’ Report 1 A. Management’s Discussion & Analysis 5 B. Basic Financial Statements 18 Government-wide Financial Statements Statement of Net Assets Statement of Activities 19 20 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet Reconciliation of the Balance Sheet to the Statement of Net Assets Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Statement of Revenues. Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Budgetary Comparison Statements – General Fund 22 25 26 28 30 Proprietary Fund Financial Statements Statement of Net Assets Statement of Revenues, Expenses and Changes in Fund Net Assets Statement of Cash Flows 32 33 34 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets Statement of Changes in Fiduciary Net Assets 36 37 Notes to Financial Statements Note1. 2. 3. 4. 5. 6. 7. Summary of Significant Accounting Policies Cash and Investments Receivables Capital Assets Loans Payable General Obligation Bonds Payable Revenue Bonds Payable 41 48 50 51 52 53 55 i Notes to Financial Statements (continued) 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. Community Facilities Districts Bonds Payable Amortization of Bond Costs, Bond Discounts and Bond Premiums Changes in Long-term Liabilities Interfund Receivables, Payables, and Transfers Deficit Fund Balance Risk Management Retirement Plans Deficit Net Assets Commitments Purchase Water Rights Subsequent Events Page 56 59 60 61 62 62 62 65 65 66 66 C. Other Supplementary Information- Combining Fund Financial Statements Combining Fund Financial Statements Combining Balance Sheet Combining Statement of Revenues, Expenses and Changes in Fund Net Assets 68 72 D. Other Supplementary Information Budgetary Comparison Schedules - Other Major Governmental Funds Community Facilities Districts - Debt Service Capital Improvement Projects McDowell Road Improvement Community Facilities Districts - Capital Projects 78 79 80 81 Budgetary Comparison Schedules - Non-Major Governmental Funds Highway User Revenue Fund Grants Community Facilities District – General Community Facility Impact Fees General Government Impact Fees Public Works Impact Fees Fire Impact Fees Police Impact Fees Transportation Impact Fees Library Impact Fees Debt Service 84 85 86 87 88 89 90 91 92 93 94 Schedule of Operations- Budget and Actual-Proprietary Funds, Enterprise Funds Water and Sewer Sanitation Stadium 95 96 97 Capital Assets Used in the Operation of Governmental Activities Schedules by Source Schedules by Function and Activity Schedules of Changes by Function and Activity 99 100 102 ii III. STATISTICAL SECTION Net Assets by Component Changes in Net Assets Governmental Activities Tax Revenues by Source Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Governmental Activities Tax Revenues by Source Property Tax Rates Principal Property Tax Payers Assessed Value and Estimated Actual Value of Taxable Property Property Tax Levies and Collections Ratios of Outstanding Debt by Type Ratios of General Bonded Debt Outstanding Direct and Overlapping Governmental Activities Debt Legal Debt Margin Information Pledged Revenue Coverage Demographic and Economic Statistics Principle Employers Full-time Equivalent City Government Employees by Function Operating Indicators by Function Capital Asset Statistics by Function Table 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Page 104 106 113 114 116 121 122 127 128 131 132 134 135 136 137 138 139 141 142 145 IV. SINGLE AUDIT SECTION Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 149 Independent auditors’ Report on Compliance with Requirements Applicable to each Major Program and Internal Control Over Compliance in Accordance with OMB Circular A-133 151 Schedule of Federal Awards 153 Schedule of Findings and Questioned Costs 155 iii INTRODUCTORY SECTION December 12, 2008 Honorable Mayor, City Council, City Manager and Citizens of the City of Goodyear, Arizona: We are pleased to submit to you the Comprehensive Annual Financial Report (CAFR) of the City of Goodyear, Arizona (the City) for fiscal year ended June 30, 2008. The report is prepared by the Accounting Division of the Finance Department. This report represents management's report to its governing body, constituents, legislative and oversight bodies, and investors and creditors. Copies of this report will be sent to elected officials, management personnel, bond rating agencies, Nationally Recognized Municipal Securities Information Repositories, and other agencies, which have expressed interest in the City's financial matters. Copies of this financial report will be placed on the City’s website for use by the general public. Management’s Discussion and Analysis (MD&A) presented on pages 5-15 has a different focus and purpose than this transmittal letter and should be read in conjunction with this transmittal. THE FINANCIAL REPORTING ENTITY The City of Goodyear, incorporated in 1946, and chartered in 1988, has a Council-Manager form of government consisting of the Mayor and six Council Members. The Mayor is elected at-large for a four-year term. Council members are elected at-large for a four-year term. The City Council is vested with policy and legislative authority and is responsible for passing ordinances, adopting the budget, appointing committee, commission, and board members, and appointing the positions of City Manager, City Attorney, and Judge. 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 of the City. The City encompasses approximately 184 square miles in the western portion of Maricopa County, and is approximately 17 miles west of the downtown Phoenix business district. Between 1990 and 2000, the City's population increased by over 100 percent, from 6,300 to 19,695. The estimated June 2008 population is 58,462. The City's tremendous growth is attributable to excellent housing, small-town atmosphere, convenient access to the central Valley, and excellent school districts. Current economic conditions have caused the City to reduce its growth estimates from a trended average of 16% per year to approximately 4% per year. Proud past. Vibrant future! Finance Department 190 North Litchfield Road P.O. Box 5100 Goodyear, Arizona 85338 623-932-3015 Fax 623-932-3003 1-800-872-1749 TDD 623-932-6500 www.goodyearaz.gov vii The City provides a full range of municipal services, including police and fire protection, sanitation services, water and sewer services, construction and maintenance of streets, recreational, parks, and cultural events, public transportation, planning and zoning services, and general administrative services. Goodyear offers a wide range of community facilities including a community center, a swimming pool, and twelve parks encompassing 156 acres. FINANCIAL CONTROLS Internal Controls The management of the City of Goodyear is responsible for establishing and maintaining a system of internal control. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: 1) the safeguarding of assets against loss from unauthorized use or disposition, and 2) the 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 control is subject to periodic evaluation by management and is also considered by the independent auditors in connection 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 of Goodyear, like all 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. At a general election held in March 11, 2003 the citizens of Goodyear approved a permanent adjustment of the 1979 expenditure base for population and inflation growth. The City may utilize the additional expenditure authority for any local budgetary purposes. The permanent adjustment eliminates the need for voter approval every four years. The City maintains budgetary controls to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the Mayor and Council. Activities of the general fund, special revenue funds, debt service funds, capital project funds, enterprise funds and internal service fund are included in the annual appropriated budget. The legal level of budgetary control (i.e., the level at which expenditures cannot legally exceed the appropriated amount) is the total budget, as adopted by the City Council. The City additionally exercises management control and oversight of the budget at the department level within each fund. In addition to maintaining budgetary control via a formal appropriation, the City maintains an encumbrance accounting viii system. Encumbrances are made against appropriations upon the issuance of a purchase order. Encumbered appropriations lapse at fiscal year-end and are rebudgeted as needed in the next fiscal year. LOCAL ECONOMIC CONDITION AND OUTLOOK Goodyear continues to face many important growth issues, and its citizens and municipal government are committed to finding solutions for the future. This commitment helped make fiscal year (FY) 2008 another successful year and will provide for continued success in the years to come. FY 2008 marked a significant year in higher education growth for the City of Goodyear. Goodyear welcomed three institutions of post-secondary education to our community, University of the Incarnate Word, Franklin Pierce University and University of St. Francis. Three very different schools with differing philosophies and wide ranges of degree programs, while different, they are also very much alike because each is dedicated to delivering the highest quality, private education to its students. In FY 2008 Goodyear received the prestigious National Civic League Award as an All-America City. Being named an All-America City puts Goodyear in the select company of only 500 cities out of 4,000 nationwide who have tried for this designation over the past 59 years. Only three other cities in Arizona have received this award. Goodyear won this coveted award on its first try. It is an award for the whole community – our citizens, our businesses, and our City government. Goodyear has begun construction of the Spring Training Ballpark for the Cleveland Indians. This 52 acre site is a one-of-a kind sports complex that include a ballpark that seats 10,000 plus a separate clubhouse/practice field area that will serve as a yearround training facility for the Indians and provide Goodyear’s residents with a $75 million recreational sports and events complex. Approximately 50 percent of the approved cost of the facility will be repaid to Goodyear in future years by the Arizona Sports & Tourism Authority. Economic Outlook The economic slow down at the national level has had a direct impact at the state and local level economy. Goodyear has experienced a decrease in new residential building permits of approximately 40% from FY 2007. Goodyear’s General Fund revenues for FY 2009 are projected to decline by approximately 10% from $85.7 million for FY 2008 to $76.5 million for FY 2009. Sales Tax: The City of Goodyear, like all Arizona cities, places significant reliance on City sales tax revenues. Overall, City sales tax revenues for FY 2009 are expected to be approximately 50% of General Fund revenues. The City's sales tax rate is currently at 2% with an additional 2% restaurant/bar, an additional 2.5% lodging and an additional ix 1.5% for construction. For single item purchases of tangible personal property greater than $5,000 there is a 1.2% tax rate instead of 2%. State Shared Revenue. The City of Goodyear receives revenue allocations from the State. These “State Shared Revenues” include allocations of the state-collected income tax, sales tax, gas tax, motor vehicle in-lieu taxes, and state lottery proceeds. A significant portion of this revenue is placed in the City’s General Fund, where it is used to support the City’s day-to-day activities. The City budgeted FY 2009 ($16.5 million) state share revenue is essentially the same as the FY 2008. Property Tax. The City's combined (secondary and primary) property tax rate is $1.60 per $100 of assessed valuation for fiscal year 2008. Of this, $0.87 is for the secondary levy. The secondary levy can only be used for voter approved debt service on general obligation bonded indebtedness. The voter approved general obligation bond proceeds are used for construction of public facilities (parks, public safety, streets, etc.). The secondary assessed valuation is expected to grow 30.94% in FY 2009. The primary property tax rate is $.73 for 2008. The primary levy can be used for any general government purpose (such as supplies, personnel, maintenance, utilities, etc.) but is limited in size by State statute. The primary tax raised $4.2 million in fiscal year 2008. The primary property tax revenues are expected to be $4.9 million dollars in FY 2009. While this amount is less than 6% of the operating revenues, it is nonetheless an important component for the stability and revenue diversity of the City's operating revenues. Total primary assessed property value within the City has increased by approximately 27% over FY 2007. Because of the increasing assessed value of the City, primary property tax revenues continue to grow, as the City's primary rate has decreased slightly. Based on current development patterns, as well as expected economic conditions, property tax revenue is expected to increase at lower rates over the next few years. Labor Force. Goodyear has a well-educated and available labor force. The estimated median income level is $78,105 for FY 2008. This economic resource is at the forefront of our economic development efforts. The City is a member of the Greater Phoenix Economic Council (GPEC) which has been successful at introducing new businesses to the City. The City maintains an economic development department "in-house" which has been very instrumental in locating retail, hospitality, office, and industrial businesses to the City. MAJOR INITIATIVES AND SERVICE EFFORTS AND ACCOMPLISHMENTS For The Year During FY 2008, the City continued to invest in programs and amenities that keep Goodyear a very livable community. Emphasis was placed on public safety, parks and open space, basic infrastructure projects, and support services. x The following are a few of the departments' service efforts and accomplishments of the City during FY 2008: Mayor & City Council • Moved forward with negotiations for a second team for the Recreational Sports and Spring Training Complex. • Lease Agreement with University of the Incarnate Word finalized, and continued negotiations with Franklin Pierce University. • Received report regarding the city-wide Management Assessment (Matrix). • Continued the redevelopment of nonproductive properties from previous contamination as part of the National Brownfields Association. • Continued quality commercial and residential development, in conjunction with necessary infrastructure. • Provided funding and support for community projects. • Broadened and strengthened regional relationships. • Became a finalist for the coveted “All America City” Award. • Became a finalist for the Most Livable City Award. Fire • Received $750,000 Urban Area Security Initiative grant to provide a CBRNE (Chemical, Biological, Radiological, Nuclear, and Environmental) hazard response vehicle and equipment, and to certify 12 firefighters as Hazardous Materials Technicians. • Received two $5,000 Urban Area Security Initiative grants to provide sustainment funds for the Fire Department and Police Department Terrorism Liaison Officers. • Received $25,120 in grant funding from the 2007 Assistance to Firefighters Grant to complete installation of exhaust removal system in Fire Stations 181 and 183. • Participated in TOPOFF 4, a biannual national emergency management exercise, which involved activating the Emergency Operations Center • Community Education taught Urban Survival programs in 18 community schools to over 22,000 children. • Trained an additional 45 citizens as part of the Community Emergency Response Team (CERT). • Maintained 99% compliance with National Incident Management System (NIMS) training for all City staff. This is a federal requirement which also makes the City eligible for grant funding. Police • As a part of the zero tolerance towards gang crime policy, address property and street crimes through additional staffing in investigations and patrol. • Enhanced traffic operations as a step towards 24/7 coverage by 2010. • Provided additional patrol efforts and improve administrative efficiencies in order to increase unassigned patrol time from 9% to 15%. This is part of a multi-year plan to achieve 30% unassigned patrol time for our officers, and enhance the relationship between the community and the police department. • Partnered with West Valley Police agencies to create and implement the xi • • Southwest Crisis Services Center, an innovative center providing essential crisis services to victims. Implemented the Street Crimes unit in order to proactively address property crimes and special enforcement areas. Increased proactive patrol time to 12%. For a complete listing of all the City departments and their accomplishments for FY 2008, a copy of the City’s FY 2009 Budget is available on-line at http://www.goodyearaz.gov/index.asp?NID=394 or contact the City’s Budget and Research Division. For The Future The City's financial and operational plans will continue to support basic government services including roads, police, fire, water, sewer, solid waste management, building safety, code enforcement, and parks and recreation. In addition, the City Council has begun a process to assist in the identification, prioritization, and management of emerging strategic issues that, by virtue of their scope, complexity, and/or potential impact, requires a coordinated multi-departmental action plan and budget. The City Council works closely with City management to implement specific objectives and tasks designed to meet these goals. The following major goals were identified by the City Council as important priorities for the future: ƒ ƒ ƒ ƒ ƒ Improve the quality level of City services to its citizens Reduce crime in the City Improve the quality and level of public safety services to citizens Promote City's economic development through retention, expansion and recruitment of current and future businesses Continue, within financial constraints, the physical development of the City Employee Pension Plans The City maintains two employee pension plans. The general employee plan is administered through the Arizona State Retirement System. The Public Safety Pension Plan is administered by the Arizona Public Safety Personnel Retirement System. Both the employee and the employer make contributions directly to these organizations. Financial information about these plans can be found in the notes to the financial statements included in the Financial Section of this report. The City also administers a small pension fund that provides retirement income for volunteer firemen. The City no longer utilizes volunteer firemen, and only one former member currently receives payments under the plan. xii Debt Administration The Arizona Constitution provides that the general obligation bonded indebtedness for a city for general municipal purposes may not exceed six percent (6%) of the secondary assessed valuation of the taxable property in that city. In addition cities may issue general obligation bonds up to an additional twenty percent (20%) of the secondary assessed valuation for supplying water, artificial light, or sewers, and for the acquisition and development of land for open space preserves, parks, playgrounds and recreational facilities. The City of Goodyear anticipates selling additional General Obligation Bonds in FY 2009. The following is a summary of the City's outstanding debt, excluding the debt of the component Community Facilities Districts, as of June 30, 2008: • General Obligation Bonds • Public Improvement Corporation Bonded Debt • McDowell Road Corridor Improvement District • Revenue Bonds • Greater Arizona Development Authority Loan Total $129,845,000 74,265,000 47,165,000 2,345,000 9,443,402 $263,063,402 Cash Management The Finance Department manages the City's investment portfolio. The City's investment policy is to invest public funds with maximum security in a manner which will provide the highest return while meeting the daily cash flow demands of the City and conform to all applicable state and local statutes. The primary objectives, in priority order, are safety of principal, liquidity, and attaining a market rate of return. The City is permitted to invest in certificates of deposit, money market mutual funds, repurchase agreements, corporate securities, and direct U.S. Treasury debt, securities guaranteed by the U.S. Government or any of its agencies and instrumentalities, and the State of Arizona's Local Government Investment Pool. Temporary idle cash during the year was invested in the State Treasurer's Investment Pool. The average yield on unrestricted investments was 4.1% for the year ended June 30, 2008. The book value of the City's LGIP investment portfolio at June 30, 2008 was $102,613,565. For further information on the City's investments please refer to the notes to the financial statements. Risk Management The City is exposed to various risks of loss exposures and claims stemming primarily from general liability, public liability (includes public officials’ errors and omissions, automobile liability. During FY 07-08, the City was insured for losses up to $15 million. The City general liability deductible is $250,000 deductible with a $500,000 aggregate. xiii The City's Workers' Compensation program is fully insured and there are no additional exposures to loss outside of the fixed premium we pay. The Risk Management Division of the Human Resources Office administers the City’s liability and Workers’ Compensation insurance programs. The City’s commercial lines policies are insured with the Arizona Municipal Risk Retention Pool and Workers’ Compensation is insured with the State Compensation Fund of Arizona. The City of Goodyear has an aggressive safety program that promotes employee safety on the job and focuses on risk control techniques designed to minimize accident-related losses. Acknowledgments The preparation of this Comprehensive Annual Financial Report could not have been accomplished without the efficient and dedicated services of the staff of the Finance Department, especially the Accounting, Community Facilities District and Utility Customer Service Divisions. We also wish to thank the Mayor and members of the City Council, and the City Manager's Office for their interest and support in planning and conducting the financial affairs of the City in a responsible and progressive manner. Sincerely, Larry A. Lange Finance Director LAL/ts xiv CITY OF GOODYEAR LIST OF PRINCIPAL OFFICIALS MAYOR James M. Cavanaugh VICE MAYOR Rob Antoniak COUNCIL MEMBERS Richard A. Sousa Frank Cavalier Georgia Lord Brenda Holland Joanne Osborne SENIOR MANAGEMENT STAFF John Fischbach City Manager Michael Simonson Presiding Judge Roric Massey City Attorney Brian J. Dalke Deputy City Manager James R. Nichols Deputy City Manager Lynn Mulhall City Clerk Kay Wilkinson Human Resources Director Harry Paxton Economic Development Director Mark Brown Police Chief Mark Gaillard Fire Chief Harvey Krauss Community Development Director Larry Lange Finance Director Kathleen Fernandez Information Technology Director Cato Esquivel Public Works Director Patti Evans Community Services Director Shawn Bradford Water Resources Director Raul Varela Engineering Director xv Citizens of Goodyear Mayor & City Council Presiding Judge Michael Simonson Legal Services Roric Massey City Manager John Fischbach Courts Jeff Fine Administrator Deputy City Manager Jim Nichols Deputy City Manager Brian Dalke Community Development Harvey Krauss Director Economic Development Harry Paxton Director Finance Larry Lange Director Communications Paula Ilardo Manager City Clerk Lynn Mulhall Grants Community Services Patti Evans Director Intergov Fire Mark Gaillard Chief Mayor/Council Support Human Resources Kay Wilkinson Director Engineering Raul Varela Director Information Technology Kathy Fernandez Director Public Works Cato Esquivel Director Police Mark Brown Chief Water Resources Shawn Bradford Director xvi ACKNOWLEDGEMENTS The Comprehensive Annual Financial Report was prepared by the staff of the Finance Department – Accounting, Community Facilities District and Utility Customer Service Divisions: Theresa Simms, MBA, GGFM, CPA Carla Williamson MaryKae Struck Kathy Painter Regina Mullaney Rebecca Moreno Sheila Mills Carmelita Evans Marty Eckstaine xvii FINANCIAL SECTION Independent Auditors' Report The Honorable Mayor and Council City of Goodyear, Arizona We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Goodyear (the City), Arizona, as of and for the year ended June 30, 2008, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Goodyear, Arizona, as of June 30, 2008, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. In connection with our audit, nothing came to our attention that caused us to believe that the City of Goodyear failed to use highway user revenue fund monies received by the City of Goodyear pursuant to Arizona Revised Statutes Title 28, Chapter 18, Article 2 and any other dedicated state transportation revenues received by the City of Goodyear solely for the authorized transportation purposes. However, our audit was not directed primarily toward obtaining knowledge of such noncompliance. www.henryandhorne.com The Honorable Mayor and Council City of Goodyear, Arizona Page Two In accordance with Government Auditing Standards, we have also issued our report dated December 12, 2008 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. The management’s discussion and analysis and budgetary comparison information on pages five through thirteen, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Goodyear, Arizona’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and the statistical section, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of the City. The combining and individual nonmajor fund financial statements and the schedule of expenditures of federal awards have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory section and the statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. Casa Grande, Arizona December 12, 2008 2 FINANCIAL SECTION MANAGEMENT’S DISCUSSION & ANALYSIS MANAGEMENT’S DISCUSSION AND ANALYSIS For The Year Ended June 30, 2008 As management of the City of Goodyear, Arizona (City), we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2008 (2008). This discussion and analysis is designed to (1) assist the reader in focusing on significant financial issues, (2) provide an overview of the City’s financial activity, (3) identify changes in the City’s financial position, (4) identify any material deviations from the financial plan (the approved annual budget), and (5) identify individual fund issues or concerns. The discussion and analysis (MD&A) has different focus and purpose than the letter of transmittal presented on pages VII-XVII of this report and is designed to be read in conjunction with the transmittal letter as well as the financial statements beginning on pages 19 and the accompanying notes to the financial statements. FINANCIAL HIGHLIGHTS ♦ The City’s total net assets increased $74.7 million (17.3%) in fiscal year 2008, $38.3 million (a 11.8% increase) in governmental activities and $36.8 million (33.6% increase) in business-type activities. ♦ The City’s invested in capital, net of related debt increased by $107.9 million (81.6%) from the previous year. This increase is due to construction of infrastructure and spring training facility. ♦ The governmental activities program revenues increased by $25.5 million (31.3%) from the previous year. ♦ The business-type activities program revenues increased by $5.9 million (13.9%) from the previous year. ♦ At June 30, 2008, total fund balance of the governmental funds was $121.8 million, up $13.4 million (12.3%) from the previous year. Of this, $95.2 million (78.2) was unreserved (available for spending at the government’s discretion). ♦ General Fund revenues (on a budgetary basis) and actual revenue were almost identical for fiscal year 2008. The budgetary expenditures of the General Fund were $140.6 million and the actual expenditures were $108.9 million (77.5% of the budgeted expenditure) a $31.7 million in savings of the final budgeted expenditures. ♦ At June 30, 2008, unreserved fund balance for the General Fund was $42.2 million a decrease of $18.8 million (30.8%) from the prior fiscal year. This reduction is consistent with the budget adopted by the City Council, 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) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private sector business. All of the activities of the City, except those of a fiduciary nature, are included in these statements. 5 The activities of the City are shown in two columns on these statements – governmental activities and business-type activities. A total column for the City is also provided. • Governmental activities – Most of the City’s basic services are included here, such as general government (administration), public safety (police, fire and court), highways and streets, public works, culture and recreation, and community development. These activities are generally supported by taxes and general revenues. • Business-type activities – The services provided by the City included here are stadium, water, wastewater, and sanitation services. These activities are primarily supported through user charges or fees. The statement of net assets presents information on all of the City’s assets and liabilities, both current and long-term, with the difference between the assets and liabilities reported as net assets. The focus on net assets is designated to be similar to the emphasis for businesses. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City maybe changing. Increases in net assets may indicate an improved financial position; however, even decreases in net assets may reflect a changing manner in which the City may have previously accumulated funds (i.e. cash funding of capital projects). To assess the overall health of the City, other indicators, including nonfinancial indicators like the City’s property tax base and condition of its infrastructure, should also be considered. The statement of activities presents information showing how the City’s net assets changed over the most recent fiscal year. Since full accrual accounting is used for the governmentwide financial statements, all changes to net assets are reported at the time the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused compensated absences). The government-wide financial statements can be found on pages 19-20 of this report. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the City’s near-term financing decision. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. These reconciliations are on pages 25 and 28, respectively. The City maintains 16 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, Community Facilities Districts – Debt Service, Capital Improvement Projects, McDowell Road Improvements 6 Capital Projects, and Community Facilities Districts – Capital Projects Funds, all of which are considered to be major funds. Data from the other 11 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements and schedules beginning on page 68 of this report. The governmental fund financial statements can be found on pages 22-31 of this report. Proprietary funds. The City maintains three proprietary funds. Proprietary funds (enterprise and internal service) utilize full accrual accounting, the same method used by private sector business. The City uses separate enterprise funds to account for its stadium, water and sewer services and its sanitation services. These funds are considered to be major funds of the City. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The internal service fund reports activities that provide preventative maintenance, repairs and safety inspections for equipment. The Fleet Services is the City’s only internal service fund. Internal service fund activities are reported as governmental activities on the government-wide statements. The proprietary fund financial statements can be found on pages 32-35 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary fund financial statement can be found on pages 36-37 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 41-66 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s budget process. The City adopts an annual budget for all governmental funds. A budgetary comparison schedule has been provided for the General Fund as required supplementary information. The other supplementary information can be found on pages 78-94 of this report. The combining statements referred to earlier in connection with non-major governmental funds is presented immediately following the required Notes. Combining and individual fund statements and schedules can be found on pages 68-72 of this report. GOVERNMENT-WIDE FINANCIAL ANALYSIS The following tables, graphs and analysis discuss the financial position and changes to the financial position of the City as whole as of the year ended June 30, 2008 with comparative information for the previous year. Net Assets Net assets may serve over time as a useful indicator of a government’s financial position. The following table reflects the condensed Statement of Net Assets o the City for June 30, 2008 compared to the prior year. 7 Statement of Net Assets as of June 30 Governmental Activities 2008 Current and other assets Capital assets $ Total assets Other liabilities Long-term liabilities outstanding Total liabilities Net assets: Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $ Business-type Activities 2007 170,256,402 443,317,580 $ 135,836,711 325,621,851 613,573,982 461,458,562 2008 $ 60,963,655 277,132,238 338,095,893 Total Primary Government 2007 $ Percent 2008 2007 Change 19,475,538 169,732,210 $ 231,220,057 720,449,818 $ 155,312,249 495,354,061 48.9% 45.4% 189,207,748 951,669,875 650,666,310 46.3% 25,565,364 17,309,308 20,848,079 11,309,331 46,413,443 28,618,639 62.2% 225,002,997 119,473,772 171,340,366 68,366,127 396,343,363 187,839,899 111.0% 250,568,361 136,783,080 192,188,445 79,675,458 442,756,806 216,458,538 104.5% 256,047,572 70,835,115 36,122,934 206,294,183 60,388,579 57,992,720 159,100,622 (13,193,174) 101,366,083 8,166,207 415,148,194 70,835,115 22,929,760 307,660,266 60,388,579 66,158,927 34.9% 17.3% -65.3% 363,005,621 $ 324,675,482 $ 109,532,290 $ 508,913,069 $ 434,207,772 17.2% $ 145,907,448 The net assets of the City increased by $74.7 million (17.2%) in fiscal year 2008. Of this increase, $38.3 million was in governmental activities, a 11.8% increase and $36.4 million was in business-type activities, a 33.2% increase. Net assets consist of three components, the largest portion of which is invested in capital assets, net of related debt ($415.1 million or 81.6%) and reflects the City’s investment in capital assets net of accumulated depreciation and any related outstanding debt used to acquire or construct those assets. The City uses these assets to provide services to its citizens. Consequently, it is not the City’s intention to sell these assets and they are therefore not available for future spending. Although the capital assets are reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves are not intended to be used to liquidate these liabilities. This category of Net Assets increased by $107.5 million in fiscal year 2008 primarily as a result of the purchase, construction and donation of additional capital assets. The second portion of the City’s net assets are restricted net assets ($70.8 million or 13.9%), which represent resources that are subject to external restrictions on how they may be used. The increase of $10.4 million is due to issuance of debt for specific purpose. The third portion of the City’s net assets are unrestricted ($22.9 million or 4.5%) and may be used to meet the City’s ongoing obligations to citizens and creditors. This category decreased by $43.2 million in fiscal year 2008. Unreserved net assets are the balance of net assets remaining after calculating the other two categories discussed above. The decrease in unreserved net assets results from increased expenses during fiscal year 2008. 8 Changes in Net Assets. The following table compares the revenue and expenses for the current and previous fiscal year. Changes in Net Assets for Year End June 30 Governmental Activities 2008 REVENUES: Program revenues: Charges for services Operating grants and contributions Capital grants and contributions General revenues: Sales taxes Property taxes Franchise taxes State shared revenue Investment income Miscellaneous $ Total revenues EXPENSES: Program activities: Governmental activities: General government Public safety Highways and streets Public works Culture and recreation Community development Interest on long-term debt Business activities: Water and sewer Sanitation Stadium Total expenses Business-type Activities 2007 17,469,768 $ 2008 17,987,804 $ Total Primary Government 2007 20,285,457 $ 2008 18,118,171 $ 37,755,225 2007 $ Percent Change 36,105,975 4.6% 4,587,630 895,854 762,200 20,000 5,349,830 915,854 484.1% 85,108,447 62,732,783 27,405,133 24,414,623 112,513,580 87,147,406 29.1% 41,036,060 18,144,197 2,071,378 12,654,235 4,268,448 4,075,011 45,240,436 12,370,983 1,817,387 15,053,501 4,723,886 1,029,445 1,379,832 212,708 1,447,446 26,683 41,036,060 18,144,197 2,071,378 12,654,235 5,648,280 4,287,719 45,240,436 12,370,983 1,817,387 15,053,501 6,171,332 1,056,128 -9.3% 46.7% 14.0% -15.9% -8.5% 306.0% 189,415,174 161,852,079 50,045,330 44,026,923 239,460,504 205,879,002 16.3% 18,231,123 28,815,923 9,104,717 59,138,044 1,909,303 14,731,322 9,710,526 13,361,750 22,383,891 8,497,029 25,397,677 3,181,071 19,683,385 5,785,031 - - 18,231,123 28,815,923 9,104,717 59,138,044 1,909,303 14,731,322 9,710,526 13,361,750 22,383,891 8,497,029 25,397,677 3,181,071 19,683,385 5,785,031 36.4% 28.7% 7.2% 132.8% -40.0% -25.2% 67.9% - - 17,413,623 4,839,626 861,000 15,738,835 4,401,267 - 17,413,623 4,839,626 861,000 15,738,835 4,401,267 - 10.6% 10.0% 100.0% 141,640,958 98,289,834 23,114,249 20,140,102 164,755,207 118,429,936 39.1% 63,562,245 (56,622) 26,931,081 9,444,077 23,886,821 56,622 74,705,298 - 87,449,066 - -14.6% - Increase in net assets before transfers Transfers 47,774,217 (9,444,077) Increase in net assets Net asset July 1 Net asset June 30 $ 38,330,140 63,505,623 36,375,158 23,943,443 74,705,298 87,449,066 -14.6% 324,675,481 261,169,858 109,532,290 85,588,847 434,207,771 346,758,705 25.2% 324,675,481 $ 145,907,448 $ 109,532,290 434,207,771 17.2% 363,005,621 $ $ 508,913,069 $ The general revenues of governmental activities increased by $2.0 million (2.5%) from the previous year. Even though there is a slight increase in revenues for fiscal year 2008, revenues are down for state shared revenues; investment income and sales tax due to the economic slow down compared to fiscal year 2007. Program revenues of governmental activities increased by $25.5 million (31.3%), primarily for capital grants and contributions as a result of development activities. There were also increases in charges for service primarily from development fees. The program revenues of business-type activities increased by $5.9 million (13.9%) from the previous fiscal year. The increase in charges for service is a direct result of an increase in customer base and a rate increase for water, sewer and sanitation fees. For fiscal year 2008, total governmental revenues increased by $27.6 million (17.0%) and total business-type revenues increased by $6.0 million (13.7%) while the expenses increased by $43.4 million (44.1%) and $2.5 million (12.6%) for the governmental and business-type activities respectively. As seen in the following graph, the largest source of revenue is capital grants and contributions $112.5 million (47.0%), consisting of primarily donated assets which represent non-spendable resources. The City recorded contributed assets from developers of $51.5 9 million and constructed capital assets for $61.0 during fiscal year 2008. The next two largest financing sources are sales taxes $41.0 million (17.1%) and charges for services $37.8 million (15.8%). The major funding sources of the governmental activities are taxes (28.9% of total revenues, 36.7% of governmental revenues) and state shared revenues (7.3% of total revenues, 9.3% of governmental revenues). Taxes, including sales taxes, property taxes, and franchise taxes, increased by 32.3% from fiscal year 2007 to fiscal year 2008. Sales taxes decreased by 9.3% due to the downturn in the economy, while property taxes rose 46.7% and franchise taxes increased by 14.0%. The increase in property tax was due to growth in the assessed value of the City, especially in the blended component unit, Community Facilities Districts. Government-Wide Revenue Sources Fiscal Year 2008 Operating grants and contributions 2.2% State shared revenue 5.3% Miscellaneous 1.8% Charges for services 15.8% Franchise taxes 0.9% Capital grants and contributions 47.0% Investment income 2.4% Sales taxes 17.1% Property taxes 7.6% Business-type activities account for $23.1 million (14.0%) of functional expenses of the City for fiscal year 2008, while governmental activities account for $141.6 million (86.0%) of the functional activities. For the governmental activities, the largest users of resources are public works $59.1 million (35.9%) of total expenses, public safety $28.8 million (17.5%) of total expenses, general government $18.2 million (11.1%) of total expenses, and community development $14.7 million (8.9%) of total expenses. Total government-wide expenses (not including transfers out) of the City increased by $43.4 million (44.1%) in fiscal year 2008. These increases reflect the Council’s goals of completing capital projects, public safety, transportation and recreational opportunities. 10 Government-Wide Functional Expenses Fiscal 2008 Interest on longterm debt 5.9% Business activities 14.0% Public safety 17.5% Community development 8.9% Culture and recreation 1.2% General government 11.1% Public works 35.9% Highways and streets 5.5% FINANCIAL ANALYSIS OF THE CITY’S FUNDS The City maintains fund accounting to demonstrate compliance with budgetary and 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 funds (pages 22-31) is to provide information on nearterm inflows, outflows, and balances of spendable resources. All major governmental funds are discreetly presented on these financial statements, while non-major funds are combined into a single column. Combining statement for non-major funds may be found on pages 6875. The fund balance of the governmental funds is $121.8 million, an increase of $13.4 million, or 12.3% from the previous year. Of this, $26.3 million (an increase of $9.8 million (59.0%) from the previous year) is classified as “Reserved” because is segregated for debt service and capital projects. The remaining $95.3 million of governmental fund balance is classified as “Unreserved”. This balance may serve as a useful indicator of a government’s net resources available for spending at the end of the year. The unreserved fund balance increased by 5.0% during fiscal year 2008 due to debt issuance. The General Fund is the chief operating fund of the City and accounts for many of the major funds of the government, including general government (administration), public safety (police, fire and courts), public works, highways, culture and recreation and community development. The The General Fund revenues decreased by $5.5 million (6.1%) from the previous year. The City’s tax revenues decreased by $3.3 million (19.6%), while intergovernmental revenues increased by $1.1 million (9.1%) and contributions decreased by $8.5 million (70.3%). The overall decrease is due to the slow down in the economy. General Fund expenditures increased by $13.4 million (16.7%). The majority of this increase was for public safety 11 expenditures increased by $5.8 million (28.9%), community development expenditures increased by $3.3 million (55.0%) and capital outlay expenditures increased $2.5 million (7.9%). Employer health insurance and other personnel benefit costs continued to increase in fiscal year 2008. The General Fund balance decreased by $18.8 million to $42.2 million as of June 30, 2008. The Community Facilities Districts – Debt Service Fund balance showed an increase of $4.2 million to $12.3 million as of June 30, 2008. The McDowell Road Capital Improvement Projects Fund balance showed an increase of $16.9 million to $19.4 million as of June 30, 2008. The Community Facilities Districts – Capital Projects Fund increased by $3.2 million to $12.7 million as of June 30, 2008. These balance increased due to new debt issuance for capital projects. Proprietary funds The proprietary fund financial statements are prepared on the same accounting basis and measurement focus as the government-wide financial statement, but provide additional detail since each major enterprise fund is shown discretely. The proprietary funds statements can be found on pages 32-35. Net assets of the Enterprise Funds of the enterprise funds increased by $36.8 million (33.6%) in fiscal year 2008. The Water and Sewer Fund net assets increased by $34.8 million (32.1%), Sanitation Fund net assets increased by $.2 million (14.6%) and the Stadium Fund increased by $1.8 million (over 100.0%) from the previous year. The enterprise funds unrestricted assets decreased by $21.4 million (over 100.0%) from the previous year due to an increase in net assets reserved for invested in capital assets, net of related debt and new debt issuance. BUDGETARY HIGHLIGHTS The City’s annual budget is the legally adopted expenditure control document of the City. The schedules filed with the Auditor General’s office list the original budget adopted for the prior year, estimated expenditures through the end of the fiscal year and the adopted current year’s budget. Budgetary comparison schedules are required for the General Fund, all major funds, non-major funds and enterprise funds. The General Fund budgetary comparison schedule can be found on pages 30-31. The other budgetary comparison schedules can be found in the Other Supplementary Information section on pages 78-102. General Fund inflows (revenues and other financing sources) of $90.1 million, on a budgetary basis, was less than budget inflows of $90.3 million by $.2 million (.2%) while budgetary basis outflows (expenditures and other financing uses) of $108.9 million were only 77.5% of final budgeted outflows of $140.6 million. The excess of General Fund outflows over budgeted inflow is due to downturn in the economy and increased expenditures on capital projects. Sales tax collections, lead primarily by construction sales tax, are down by $11.6 million. The original General Fund expenditures and other financing uses budget of $144.8 million was decreased by $4.2 million to come to the final expenditure and other financing uses budget of $140.6 million. This change was primarily due to contingency transfers in capital outlay. Complete financial statements for each of the individual Component units may be obtained at the entities' administrative offices. 12 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets As of June 30, 2008, the City had $415.1 million invested in various capital assets, net of accumulated depreciation and related debt, up 35.1% from the previous year. The capital assets of the City (net of depreciation, but not capital debt) are $720.8 million. This is a net increase of $225.5 million (45.5%) from fiscal year 2007. Of this increase, $117.7 million (36.1%) from governmental activities and $107.8 million (63.5%) resulted from business-type activities. Major additions to capital assets during the fiscal year included the following: ¾ The City issued bonds for construction of Spring Training Complex for the Cleveland Indians for $67.5 million. ¾ The City partnered with Maricopa County Department of Transportation to construct the Cotton Lane Bridge over the Gila River for $59.0 million. ¾ The City completed the construction of the Van Buren Street and Bullard Wash Bridge for $3.9 million. ¾ The City completed the construction of the Water Resources Administration Building for$3.9 million ¾ The City received contributed capital for infrastructure in the amount of $55.4 million. Additional information on the City’s capital assets can be found in Note 4 on pages 51-52 and in the schedules on pages 99-102 of this report. The following schedule presents capital asset balances and accumulated depreciation for the fiscal year ended June 30, 2008. Capital Assets at June 30 (Net of depreciation) Governmental Activities 2008 Business-type Activities 2007 2008 Total Primary Government 2007 2008 2007 Percent Change Land Construction in progress Right of way Streetscape Infrastructure Building and improvements Vehicles, furniture and equipment $ 17,855,748 116,495,138 77,184,740 7,091,027 174,403,487 38,276,679 12,010,755 $ 17,855,748 34,640,523 74,213,181 7,091,027 154,837,895 28,991,037 7,992,440 $ 14,039,261 112,750,647 265,000 4,944,633 139,171,833 6,390,933 $ 9,460,708 53,573,963 100,803,409 5,894,129 $ 31,895,009 229,245,786 77,449,740 7,091,027 179,348,119 177,448,512 18,401,688 $ 27,316,456 88,214,486 74,213,181 7,091,027 154,837,895 129,794,446 13,886,569 16.8% 159.9% 4.4% 0.0% 15.8% 36.7% 32.5% Total $ 443,317,575 $ 325,621,851 $ 277,562,307 $ 169,732,209 $ 720,879,881 $ 495,354,060 45.5% Debt Administration The City’s outstanding non-current long-term debt, including bonds, loans, and compensated absences, was $393.3 million at June 30, 2008. Of this total $225.3 million was in governmental activities and $168.0 million was in business-type activities. The City’s outstanding non-current debt increased by $41.7 million in fiscal year 2008. This City issued $44.5 million in general obligation bonds to construct certain improvements to the City’s water system, sewer system, street improvements and public facility improvement and pay the costs of issuance of the Bonds. Of the total outstanding bonds of $394.1 million, $129.8 million is general obligation bonds backed by the full faith and credit of the City. The outstanding debt also includes $131.1 million in Community Facilities District bonds where the City has no obligation for payment. All other outstanding debt is secured by pledges of specific revenue sources of the City. 13 The State constitution limits the amount of general obligation debt a city may issue to 20 percent of its total assessed valuation for water, sewer, lights, transportation, public safety, open space preserves, parks, playgrounds and recreational facilities. The current debt limitation for the City is $152.8 million. The City has $129.5 million outstanding general obligation debt for these purposes. State statutes also currently limit the amount of general obligation debt a city may issue to 6 percent of its total assessed valuation for all other purposes. The current debt limitation for the City is $45.9 million. The following schedule shows the outstanding debt of the City (both current and long-tem) as of June 30, 2008 and 2007. Additional information on the City’s long-term debt can be found in Notes 5 – 10 on pages 52-61 of this report. Outstanding Debt as of June 30 Governmental Activities 2008 General obligation debt Community Facilities District bonds Loan payable Revenue bonds Compensated absences $ 2007 $ 131,116,000 53,580,000 3,010,721 $ Total outstanding bonds 41,719,857 229,426,578 226,415,857 Business-type Activities $ 36,050,000 2008 $ Total Primary Government 2007 88,125,143 $ 54,145,000 76,844,000 3,185,000 3,320,000 2,727,241 9,443,402 70,195,000 305,526 9,985,013 2,460,000 282,218 122,126,241 $ 168,069,071 $ 66,872,231 119,399,000 167,763,545 66,590,013 2008 $ $ 129,845,000 2007 $ Percent Change 90,195,000 44.0% 131,116,000 9,443,402 123,775,000 3,316,247 76,844,000 13,170,013 5,780,000 3,009,459 70.6% -28.3% 2041.4% 10.2% 397,495,649 $ 188,998,472 110.3% 394,179,402 185,989,013 111.9% The City’s assigned underlying ratings on its general obligation debt are “A2” and “A+” from Moody’s Investors Service, Inc., and “Standard & Poor’s. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET The unemployment rate for Goodyear in June 2008 was 3.0%, which remains below both the State (4.8%) and national average (5.5%) due to the continued population growth of the State and metropolitan area, as well as the financial services and tourism sectors. Arizona cities remain dependent on sales taxes and other economically sensitive tax revenues and are susceptible to slowdowns in the economy. The City’s sales tax in the past fiscal years’ have steadily increased because of population growth and attraction of new businesses to Goodyear. However, because of the downturn in the economy the adopted fiscal year 2009 budget projects sales tax revenues to decrease 26% from the 2008 budget and the City operating revenues are down 9% from the previous fiscal year. To ensure the City remains financially strong, the adopted fiscal year 2009 budget is $405.0 million (a decrease of 18.6% from fiscal year 2008). It includes a $87.1 million operating budget (a decrease of 4.0% from fiscal year 2008) and a $195.2 million capital improvement projects (CIP) budget (a decrease of 6.6% from fiscal year 2008). The fiscal year 2009 budget included 7 new staff positions to support the new Stadium operations. The City has continued to build cash balances over the last few years, both for financial stability and in anticipation of the capital and ongoing operational needs of a growing city. The City has established reserves within the General Fund in accordance with the City’s adopted financial policies. 14 CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the resources it receives. A copy of the City's Comprehensive Annual Financial Report is available on-line at http://www.goodyearaz.gov/index.asp?NID=22. If you have questions about this report or need additional information, contact the City’s Controller, City of Goodyear, 190 N. Litchfield Road, Goodyear, Arizona 85338 or by mail at P.O. Box 5100, Goodyear, Arizona 85338. 15 FINANCIAL SECTION BASIC FINANCIAL STATEMENTS CITY OF GOODYEAR, ARIZONA STATEMENT OF NET ASSETS June 30, 2008 ASSETS Cash and cash equivalents Receivables (net of allowance for uncollectibles) Due from other governments Internal balances Inventories Prepaid items Deferred charges Restricted cash and cash equivalents Capital assets: Land and construction in progress Other capital assets (net of accumulated depreciation) Total assets LIABILITIES Accounts payable and other current liabilities Accrued payroll and employee benefits Accrued interest payable Deposits held for others Unearned revenue Noncurrent liabilities: Due within one year: Compensated absences Bonds payable Due in more than one year: Compensated absences Loans payable Bonds payable Interest payable Deferred amount on refunding Bond discount Bond premium Total liabilities NET ASSETS Invested in capital assets, net of related debt Restricted for: Special revenue purposes Debt service Unrestricted Total net assets See accompanying notes. Governmental Activities $ 79,786,769 37,809,227 102,921 4,851,654 423,830 471,933 5,660,079 41,149,989 Business-type Activities $ 9,323,947 1,612,927 419,200 (4,851,654) 528,924 58,464 1,827,196 52,044,651 Total $ 89,110,716 39,422,154 522,121 952,754 530,397 7,487,275 93,194,640 218,626,656 127,071,205 345,697,861 224,690,924 613,573,982 150,061,033 338,095,893 374,751,957 951,669,875 9,708,806 2,113,684 3,398,768 275,938 3,640,447 12,330,818 241,472 117,007 959,790 6,893,466 22,039,624 2,355,156 3,515,775 1,235,728 10,533,913 1,157,014 3,417,000 135,241 - 1,292,255 3,417,000 1,853,707 222,998,857 (296,793) (69,909) 2,370,842 250,568,361 170,285 9,443,402 158,320,143 1,264,099 2,312,722 192,188,445 2,023,992 9,443,402 381,319,000 1,264,099 (296,793) (69,909) 4,683,564 442,756,806 256,047,572 159,100,622 415,148,194 25,917,543 44,917,572 36,122,934 $ 363,005,621 (13,193,174) $ 145,907,448 25,917,543 44,917,572 22,929,760 $ 508,913,069 19 CITY OF GOODYEAR, ARIZONA STATEMENT OF ACTIVITIES For The Year Ended June 30, 2008 Program Revenues Operating Capital Charges for Grants and Grants and Services Contributions Contributions Expenses Functions/Programs Primary government: Governmental activities: General government Public safety Highways and streets Public works Culture and recreation Community development Interest on long-term debt Total governmental activities $ 18,231,123 28,815,923 9,104,717 59,138,044 1,909,303 14,731,322 9,710,526 141,640,958 Business-type activities: Water and sewer Sanitation Stadium Total business-type activities 17,413,623 4,839,626 861,000 23,114,249 15,139,535 5,145,922 20,285,457 762,200 762,200 27,405,133 27,405,133 $ 164,755,207 $ 37,755,226 $ 5,349,830 $ 112,513,580 Total primary government $ 3,988,792 954,472 343,274 12,183,231 17,469,769 $ 45,026 607,092 3,935,512 4,587,630 $ 3,575,130 51,453,542 30,079,775 85,108,447 General revenues: Sales taxes Property taxes Franchise taxes State shared revenues-not restricted to specific programs Investment income Miscellaneous Transfers in (out) Total general revenues and transfers Changes in net assets Net assets, beginning of year Net assets, end of year See accompanying notes. 20 Net (Expense) Revenue and Changes in Net Assets Governmental Activities $ (10,622,175) (27,254,359) 46,284,337 (29,058,269) (1,566,029) (2,548,091) (9,710,526) (34,475,112) (34,475,112) 41,036,060 18,144,197 2,071,378 Business-type Activities $ - Totals $ (10,622,175) (27,254,359) 46,284,337 (29,058,269) (1,566,029) (2,548,091) (9,710,526) (34,475,112) 25,893,245 306,296 (861,000) 25,338,541 25,893,245 306,296 (861,000) 25,338,541 25,338,541 (9,136,571) - 41,036,060 18,144,197 2,071,378 12,654,235 4,268,448 4,075,011 1,379,832 212,708 12,654,235 5,648,280 4,287,719 (9,444,077) 72,805,252 9,444,077 11,036,617 83,841,869 38,330,140 36,375,158 74,705,298 324,675,481 109,532,290 434,207,771 $ 363,005,621 $ 145,907,448 $ 508,913,069 363,005,621 145,907,448 21 CITY OF GOODYEAR, ARIZONA BALANCE SHEET GOVERNMENTAL FUNDS June 30, 2008 ASSETS Cash and cash equivalents Taxes receivable Interest receivable Accounts receivable Special assessments receivable Due from other governments Due from other funds Inventories Prepaid items Restricted cash and cash equivalents Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll and employee benefits Deposits held for others Due to other funds Deferred revenue Liabilities payable from restricted assets Total liabilities Fund balances: Reserved: Debt service Capital improvements Unreserved: Designated for capital replacement Unreserved, reported in: General fund Special revenue funds Capital improvements Total fund balances Total liabilities and fund balances General $ 33,895,877 8,034,271 92,811 1,994,896 5,734,983 13,031 409,154 $ 50,175,023 Community Facilities DistrictsDebt Service $ 12,177,718 224,740 10,407 26,549,308 44,088 $ 39,006,261 Capital Improvement Projects $ 2,234,030 40,606 8,597,835 $ 10,872,471 $ $ $ 3,452,512 2,035,320 199,856 2,267,526 7,955,214 - - 41,206,303 42,219,809 - See accompanying notes. 12,329,993 - 1,013,506 $ 50,175,023 26,676,268 26,676,268 $ 131,692 840,000 3,638,420 4,610,112 - 12,329,993 6,262,359 6,262,359 39,006,261 $ 10,872,471 - - 22 McDowell Road Improvements Capital Projects $ 77,504 20,636,821 $ 20,714,325 Community Facilities DistrictsCapital Projects $ 1,781,262 6,760 11,915,333 $ 13,703,355 Non-Major Governmental Funds $ 29,697,882 570,997 84,436 122,491 102,921 309,339 18,691 $ 30,906,757 Total Governmental Funds $ 79,786,769 8,830,008 312,524 2,117,387 26,549,308 102,921 5,734,983 322,370 471,933 41,149,989 $ 165,378,192 $ $ $ $ 1,268,487 1,268,487 - 10,942,787 - 20,714,325 - 1,753,840 12,696,627 $ 13,703,355 - 267,954 51,144 76,082 780,688 852,471 2,028,339 3,026,753 - - 19,445,838 19,445,838 $ 34,182 972,546 1,006,728 $ 3,852,158 2,086,464 275,938 814,870 30,636,265 5,879,453 43,545,148 15,356,746 10,942,787 1,013,506 25,851,665 28,878,418 41,206,303 25,851,665 27,462,037 121,833,044 30,906,757 $ 165,378,192 - - 23 CITY OF GOODYEAR, ARIZONA RECONCILIATION OF THE BALANCE SHEET TO THE STATEMENT OF NET ASSETS GOVERNMENTAL FUNDS June 30, 2008 Total governmental fund balances $ 121,833,044 Amounts reported for governmental activities in the Statement of Net Assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Governmental capital assets Less accumulated depreciation $ 512,410,258 (69,092,678) 443,317,580 Certain revenues earned but not received within 60 days of year-end are deferred for the governmental statements, but are recognized as revenue for the government-wide statements. Grants Property taxes Special assessments 65,879 380,633 26,549,306 Interest payable on long-term debt is not reported in the governmental funds. 26,995,818 (3,370,182) Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. Compensated absences payable Bond issuance cost Bond refunding amount Bond discount Bond premiums Bonds payable Net assets of governmental activities See accompanying notes. (3,010,721) 5,660,079 296,793 69,909 (2,370,842) (226,415,857) (225,770,639) $ 363,005,621 25 CITY OF GOODYEAR, ARIZONA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For The Year Ended June 30, 2008 REVENUES Taxes Licenses and permits Intergovernmental revenues Charges for services Fines and forfeits Investment income Special assessments Contributions Miscellaneous Total revenues $ EXPENDITURES Current: General government Public safety Highways and streets Public works Culture and recreation Community development Capital outlay Debt service: Principal retirement Interest and debt cost Total expenditures Excess (deficiency) of revenues over (under) expenditures General 47,233,288 7,160,922 12,605,150 9,625,983 678,594 1,076,965 3,582,694 3,717,232 85,680,828 Community Facilities Districts Debt Service $ 5,905,472 248,119 2,228,149 1,688,231 10,069,971 15,544,964 25,789,739 58,939 4,176,939 4,667,176 9,212,201 34,266,635 Capital Improvement Projects $ 90,199 90,199 - 10,828,222 39,780 93,756,373 2,066,000 5,280,079 7,346,079 113,824 10,942,046 (8,075,545) 2,723,892 (10,851,847) OTHER FINANCING SOURCES (USES) Debt issuance Debt premium Refunding bonds Refunding bonds premium Payment to refunded bond escrow agent Transfers in Transfers out Total other financing sources and uses 3,250,000 10,207 (3,470,427) 1,158,789 (11,690,343) (10,741,774) 1,431,896 35,635 1,467,531 8,745,000 100,701 4,632,291 (2,335,531) 11,142,461 Net change in fund balances (18,817,319) 4,191,423 290,614 61,037,128 8,138,570 5,971,745 Fund balances, beginning of year Fund balances , end of year See accompanying notes. $ 42,219,809 $ 12,329,993 $ 6,262,359 26 McDowell Road Improvements Capital Projects $ 859,513 85,037 944,550 Community Facilities Districts Capital Projects $ 954,637 2,989,963 3,944,600 Non-Major Governmental Funds $ 7,973,444 4,756,415 9,491,490 1,039,014 272,741 23,533,104 Total Governmental Funds $ 61,112,204 7,160,922 17,361,565 19,117,473 678,594 4,268,447 2,228,149 8,260,888 4,075,010 124,263,252 27,045,474 55,934,793 951,931 330,772 3,935,555 84,066 49,809 7,174,239 16,496,895 26,120,511 3,994,494 4,261,005 4,667,176 9,262,010 135,249,363 2,076,804 29,122,278 55,934,793 3,075,143 2,955,897 18,557,412 5,141,143 10,466,384 215,658,981 (28,177,728) (51,990,193) 4,975,692 (91,395,729) 47,165,000 1,772,153 (3,886,199) 45,050,954 54,906,104 329,577 (35,635) 55,200,046 3,165,000 87,554 (3,264,032) 5,734,956 (3,058,040) 2,665,438 112,248,000 2,202,431 6,415,000 97,761 (6,734,459) 11,561,671 (21,005,748) 104,784,656 16,873,226 3,209,853 7,641,130 13,388,927 2,572,612 9,486,774 21,237,288 108,444,117 28,878,418 $ 121,833,044 $ 19,445,838 $ 12,696,627 $ 27 CITY OF GOODYEAR, ARIZONA RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended June 30, 2008 Net change in fund balances - total governmental funds $ 13,388,927 Amounts reported for governmental activities in the Statement of Activities are different because: Governmental funds report capital outlays as expenditures. However, in the Statement of Activities the cost of those assets is allocated over their estimated useful lives as depreciation expense. Also, assets contributed to the City are not reported in the fund statement and are reported in the Statement of Activities. Contributions Expenditures for capitalized assets Less current year depreciation Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds and revenues received in the current year that were accrued in the Statement of Activities in prior years are reported as revenues in the funds. Grants Property taxes Special assessments Bond proceeds provide current financial resources to the governmental funds, but issuing debt increases long-term liabilities in the Statement of Activities. Interest expense in the Statement of Activities differs from the amount reported in governmental funds because accrued interest was calculated for bonds and notes payable for the Statement of Activities, but is expensed when due for the governmental fund statements. $ 51,453,542 73,570,807 (7,328,620) 117,695,729 (122,582) 139,431 13,681,531 (118,663,000) (1,457,876) Governmental funds report the effect of issuance costs, premiums, discounts and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. 2,298,207 Repayment of long-term debt are expenditures in the governmental funds, but the repayment reduces long-term liabilities in the Statement of Net Assets. Debt principal retirement Debt principal refunded 5,141,143 6,505,000 See accompanying notes. 28 Internal service funds are used by management to charge the costs of Fleet service to individual funds. The net income of certain activities of internal service funds is reported with governmental activities. 7,110 Compensated absences 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. Change in net assets of governmental activities (283,480) $ 38,330,140 29 CITY OF GOODYEAR, ARIZONA GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Original $ 58,803,006 8,808,204 12,870,203 4,023,551 597,115 1,224,811 75,863 2,905,717 89,308,470 Final $ 58,803,006 8,808,204 12,870,203 4,023,551 597,115 1,224,811 75,863 2,905,717 89,308,470 Actual $ 47,233,288 7,160,922 12,605,150 9,625,983 678,594 1,076,965 3,582,694 3,717,232 85,680,828 Variance with Final Budget Positive (Negative) $ (11,569,718) (1,647,282) (265,053) 5,602,432 81,479 (147,846) 3,506,831 811,515 (3,627,642) 559,822 1,068,089 4,155,275 642,834 1,798,926 4,454,146 2,323,912 2,790,232 4,334,850 20,000,000 607,370 1,068,089 3,587,959 642,834 1,664,982 4,670,916 2,576,920 2,790,232 4,243,418 20,000,000 470,813 776,702 2,650,788 654,059 1,326,811 2,079,566 2,056,194 1,987,100 3,542,931 - 136,557 291,387 937,171 (11,225) 338,171 2,591,350 520,726 803,132 700,487 20,000,000 13,024,347 11,064,994 948,650 622,490 13,029,347 11,011,754 943,150 577,490 13,004,066 11,238,215 1,062,803 484,655 25,281 (226,461) (119,653) 92,835 96,308 449,177 58,939 1,849,161 3,935,804 1,576,594 3,935,804 895,570 3,519 3,277,850 681,024 (3,519) 657,954 4,464,475 1,315,441 3,957,847 1,349,385 3,474,464 1,192,712 483,383 156,673 1,827,911 5,002,065 55,270,623 1,827,911 5,441,199 51,408,342 2,359,876 6,852,325 34,266,635 (531,965) (1,411,126) 17,141,707 165,000 186,785 141,902,140 165,000 186,785 137,712,505 39,780 93,756,373 165,000 147,005 43,956,132 (52,593,670) (48,404,035) (8,075,545) 40,328,490 Budgeted Amounts REVENUES Taxes Licenses and permits Intergovernmental revenues Charges for services Fines and forfeits Investment income Contributions Miscellaneous Total revenues EXPENDITURES Current General government Mayor and council City clerk City manager City attorney Community services Finance Information technology Human resources Engineering Reserved contingency Public safety Police Fire Municipal court City prosecutor Highways and streets Administration Public works Administration Fleet services Building services Culture and recreation Parks Recreation and aquatics Community development Economic development Community development Capital outlay Debt service Principal retirement Interest and fiscal charges Total expenditures Excess (deficiency) of revenues over expenditures See accompanying notes. 390,238 30 OTHER FINANCING Debt premium Refunding bonds Payment to refunded bond escrow agent Transfers in Transfers out Total other financing sources (uses) 1,016,124 (2,887,071) Net change in fund balance Fund balance, beginning of year Fund balance, end of year - - 10,207 3,250,000 10,207 3,250,000 1,016,124 (2,887,071) (3,470,427) 1,158,789 (11,690,343) (3,470,427) 142,665 (8,803,272) (1,870,947) (1,870,947) (10,741,774) (8,870,827) (54,464,617) (50,274,982) (18,817,319) 31,457,663 61,037,128 61,037,128 61,037,128 $ 6,572,511 $ 10,762,146 $ 42,219,809 $ 31,457,663 31 CITY OF GOODYEAR, ARIZONA STATEMENT OF NET ASSETS PROPRIETARY FUNDS June 30, 2008 Business-type Activities-Enterprise Funds ASSETS Current assets: Cash and cash equivalents Interest receivable Accounts receivable Due from other governments Due from other funds Prepaid items Inventories Total current assets Noncurrent assets: Deferred charges Restricted cash and cash equivalents Non-depreciable capital assets Depreciable capital assets Total noncurrent assets Total assets Water & Sewer $ 8,940,782 48,376 967,033 419,200 528,924 10,904,315 952,193 NET ASSETS Invested in capital assets, net of related debt Restricted Unrestricted Total net assets $ 14,831 716 498,422 58,464 572,433 - Stadium $ 368,334 48,380 50,000 2,682 469,396 Total $ 9,323,947 97,472 1,515,455 419,200 2,682 58,464 528,924 11,946,144 875,003 1,827,196 $ 101,460 101,460 - 10,843,632 77,079,546 148,725,567 237,600,938 248,505,253 875,864 875,864 1,448,297 41,201,019 49,991,659 459,602 92,527,283 92,996,679 52,044,651 127,071,205 150,061,033 331,004,085 342,950,229 101,460 1,561,460 9,662 192,880 1,764,002 5,781 187,415 959,790 6,893,466 39,776 - 14,281 4,854,336 - 241,472 4,854,336 959,790 6,893,466 27,220 68,459 - 7,171,333 10,683,823 - 5,330 12,238,160 135,241 25,532,130 LIABILITIES Current liabilities: Accounts payable Accrued payroll and employee benefits Accrued liabilities Accrued interest payable Due to other funds Deposits held for others Unearned revenue Liabilities payable from restricted assets Compensated absences payable Loan payable Bond premium payable Total current liabilities Noncurrent liabilities: Accrued interest payable Compensated absences payable Loan payable Bonds payable Revenue bonds payable Bond premium Total noncurrent liabilities Total liabilities Sanitation Governmental Activities Internal Service Fund 3,512,490 104,487 13,219,108 25,424 74,862 1,264,099 - - 101,460 1,264,099 - 142,825 9,443,402 78,438,068 2,345,000 928,481 92,561,875 105,780,983 27,425 27,425 102,287 35 77,537,075 1,384,241 78,921,351 91,159,511 170,285 9,443,402 78,438,068 79,882,075 2,312,722 171,510,651 197,042,781 145,493,794 875,864 12,730,964 159,100,622 - (10,893,796) $ 1,837,168 (13,193,174) $ 145,907,448 - (2,769,524) $ 142,724,270 See accompanying notes. 470,146 $ 1,346,010 101,460 $ 32 CITY OF GOODYEAR, ARIZONA STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS For The Year Ended June 30, 2008 Total Governmental Activities Internal Service Fund 200,138 200,138 $ 20,285,457 212,708 20,498,165 $ 2,075,076 2,075,076 172,916 228,613 4,731 406,260 5,214,298 11,331,242 3,661,897 20,207,437 575,855 1,492,111 2,067,966 290,728 7,110 Business-type Activities-Enterprise Funds Water & Sewer Sanitation $ 15,139,535 12,240 15,151,775 $ 5,145,922 330 5,146,252 4,180,130 7,243,981 3,537,440 14,961,551 861,252 3,858,648 119,726 4,839,626 190,224 306,626 (206,122) 7,829,657 762,200 640,720 (2,452,072) 7,468 - 731,644 (454,740) 7,829,657 762,200 1,379,832 (2,906,812) - 6,780,505 7,468 276,904 7,064,877 - 6,970,729 314,094 70,782 7,355,605 7,110 Capital contributions Transfers in Transfers out 19,575,476 11,405,957 (3,565,225) (142,665) 1,746,010 - 19,575,476 13,151,967 (3,707,890) - Change in net assets 34,386,937 171,429 1,816,792 36,375,158 7,110 108,337,333 1,174,581 20,376 109,532,290 (7,110) $ 142,724,270 $ 1,346,010 $ 1,837,168 $ 145,907,448 Operating revenues: Charges for service Miscellaneous Total operating revenue Operating expenses: Administration Costs of sales and services Depreciation and amortization Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Impact fees Intergovernmental Investment income Interest expense Total nonoperating revenues (expenses) Income (loss) before capital contributions and transfers Net assets, beginning of year Net assets, end of year See accompanying notes. Stadium $ $ - 33 CITY OF GOODYEAR, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended June 30, 2008 Total Governmental Activities Internal Service Fund $ 20,879,171 (11,903,901) (5,139,537) $ 2,143,535 (1,586,417) (572,379) Business-type Activities Enterprise Funds Water & Sewer Sanitation Cash flows from operating activities: Received from customers $ 15,610,938 $ 5,118,095 Payments to vendors (7,741,071) (3,860,986) Payments to employees (4,136,170) (850,097) Net cash provided (used) by operating activities 3,733,697 407,012 Depreciation and amortization related financing activities: Intergovernmental Interfund transfers 762,200 7,840,732 (142,665) 8,602,932 (142,665) (44,961,730) 35,730,615 (2,158,543) (2,334,465) - (256,269) - Net cash provided (used) for noncapital and related financing activities Cash flows from capital and related financing activities: Acquisition and construction of capital assets Capital debt proceeds Interfund borrowing Interfund transfers Principal paid on long-term debt Interest paid on long-term debt Developer reimbursements Development impact fees received Net cash provided (used) for capital and related financing activities Cash flows from investing activities: Investment income received 7,829,657 Stadium $ (304,976) 3,835,733 (15,261) - 762,200 7,698,067 - - 8,460,267 - (35,852,787) 68,062,794 4,851,654 1,746,010 (454,740) - - (5,894,466) 150,138 (301,844) (153,270) (81,070,786) 103,793,409 4,851,654 1,746,010 (2,158,543) (2,789,205) - - (256,269) - 7,829,657 - 38,352,931 32,202,196 - 793,548 6,752 702,548 1,502,848 - 793,548 6,752 702,548 1,502,848 - 7,235,711 14,830 38,750,503 46,001,044 (15,261) Cash and cash equivalents, beginning of year 12,548,703 1 2,818,850 15,367,554 15,261 Cash and cash equivalents, end of year $ 19,784,414 $ 14,831 $ 41,569,353 $ 61,368,598 $ - $ 8,940,782 $ 14,831 $ $ 9,323,947 $ - 10,843,632 $ 19,784,414 $ 14,831 41,201,019 $ 41,569,353 52,044,651 $ 61,368,598 $ - Net cash provided by investing activities Net change in cash and cash equivalents Cash and cash equivalents Restricted cash and cash equivalents See accompanying notes. 368,334 34 CITY OF GOODYEAR, ARIZONA STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For The Year Ended June 30, 2008 Business-type Activities-Enterprise Funds Reconciliation of operating income (loss) to net cash provided (used) by operating activities Operating income (loss) Adjustment to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization (Increase) decrease in: Accounts receivable Inventories Increase (decrease) in: Accounts payable Accrued payroll and employee benefits Accrued liabilities Due to other funds Unearned revenue Deposits held for others Compensated absences payable Net cash provided (used) by operating activities Noncash investing, capital, and financing activities: Contributions of capital assets Amortization of bond premium Amortization of deferred bond costs Total See accompanying notes. Water & Sewer Sanitation $ Stadium Total $ (206,122) $ 290,728 Governmental Activities Internal Service Fund 190,224 $ 306,626 $ 7,110 3,537,440 119,726 4,731 3,661,897 - 1,131,434 (25,094) (28,157) - (50,000) - 1,053,277 (25,094) (57,796) 207,547 (2,338) (73,231) 131,978 (36,510) 34,683 (679,543) (805,117) 132,846 9,277 2,489 8,666 14,281 5,365 51,453 (679,543) (805,117) 132,846 23,308 3,476 68,459 - $ 3,733,697 $ 407,012 $ (304,976) $ 3,835,733 $ (15,261) $ 19,575,476 37,826 $ $ $ - 35,305 $ 19,648,607 $ - $ 34,910 $ 19,575,476 72,736 23,193 58,103 58,498 $ 19,706,710 $ - 35 CITY OF GOODYEAR, ARIZONA STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS June 30, 2008 ASSETS Cash and cash equivalents Interest receivable Total assets Pension Trust $ LIABILITIES Total liabilities NET ASSETS Held in trust for pension benefits See accompanying notes. 418,491 266 418,757 - $ 418,757 36 CITY OF GOODYEAR, ARIZONA STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS PENSION TRUST FUND For The Year Ended June 30, 2008 ADDITIONS Other revenue Total other revenue Pension Trust $ Investment income Net increase (decrease) in fair value of investments Interest Total investment income Total additions (35,839) 3,737 (32,102) (32,102) DEDUCTIONS Benefits Total deductions 1,893 1,893 Net increase Net assets, beginning of year Net assets, end of year See accompanying notes. - (33,995) $ 452,752 418,757 37 FINANCIAL SECTION NOTES TO FINANCIAL STATEMENTS CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Goodyear, Arizona (City) have been prepared in conformity with accounting principles generally accepted in the United Sates 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. 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 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 from the City, the primary government. The financial reporting entity consists of a primary government, and its component units. 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 are combined with the City for financial statement presentation purposes, and 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 Units - The Goodyear Community Facilities General District No. 1, Goodyear Community Facilities Utilities District No. 1, Wildflower Ranch Community Facilities General District No. 1, Wildflower Ranch Community Facilities General District No. 2, Estrella Mountain Ranch Community Facilities District, Cottonflower Community Facilities District, Centerra Community Facilities District, Cortina Community Facilities District, Palm Valley Community Facilities District No. 3, and King Ranch Community Facilities District were formed for the purpose of acquiring and improving public infrastructure in specified land areas. As special purpose districts and separate political subdivisions under the Arizona Constitution, the Districts can levy taxes and issue bonds independently of the City. Property owners in the designated areas are assessed for District taxes and thus for the cost of operating the Districts. The City Council serves as the Board of Directors; however, the City has no liability for the Districts’ debt. For financial reporting purposes, transactions of the Districts are combined together and included as if they were part of the City’s operations. Complete financial statements for each of the individual component units may be obtained at the entities administrative offices. B. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e. the statement of net assets and the statement of activities) present financial information about the City as a whole. For the most part, the effect of interfund activity has been removed from these statements. These statements are to distinguish between the governmental and business-type activities of the City. Governmental activities normally are supported by taxes and intergovernmental revenues, and are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. 41 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes, state-shared revenues, investment income and other items not included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting, and 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 revenues as soon as all eligibility requirements imposed by the grantor or provider have been met. As a general rule, the effect on internal activity has been eliminated from the government-wide financial statements. 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 services 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 service, special assessments and investment income associated with the current fiscal period are considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Grants and similar awards are recognized as revenues 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 revenues also arise when the City receives resources 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 have been recorded as deferred revenue. Receivables that will not be collected within the available period have also been reported as deferred revenue on the governmental fund financial statements. 42 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The City reports the following major governmental funds: General Fund - This fund is the general operating fund of the City. It accounts for all financial resources of the City, except those required to be accounted for in other funds. Community Facilities District - Debt Service Fund - This fund accounts for the debt portion of the City’s Community Facilities Districts, which are component units that provide general infrastructure and capital assets for the property within each District’s boundaries. Capital Improvement Projects Funds - This fund accounts for all the acquisition and construction of major capital facilities other than those financed by proprietary funds and the McDowell road improvements project. McDowell Road Improvements Capital Projects Fund - This fund accounts for all the acquisition and construction of major capital improvements on McDowell road. Community Facilities District - Capital Projects Funds - This fund accounts for all the acquisition and construction portion of the City’s Community Facilities District which are component units that provide general infrastructure and capital assets for the property within each District’s boundaries. The City reports the following major proprietary funds: Water and Sewer Fund - This fund accounts for the city’s water and sewer utility operations. Sanitation Fund - This fund is used to account for the activities of the City’s sanitation operations. Stadium Fund - This fund is used to account for the activities of the City’s stadium operations. The City reports the following internal service fund: Fleet Inter-Department Service Fund - This fund is used to account for maintenance and operations of City owned vehicles. The City reports the following fiduciary fund: Pension Trust Fund - This Pension Trust Fund is used to account for the City’s Volunteer Firefighter’s Relief and Pension Fund, a defined contribution plan for which the assets are held by the City in a trustee capacity. The Pension Trust Fund is reported using the accrual basis of accounting. Pursuant to GASB Statement No. 20, Accounting and Financial Reporting for Proprietary Funds and Other Governmental Entities that use Proprietary Fund Accounting, the City follows GASB guidance as applicable to its proprietary funds, and Financial Accounting Standards Boards Statements and Interpretations, Accounting Principals Board Opinions, and Accounting Research Bulletins issued on or before November 30, 1989 that do not conflict with or contradict GASB Pronouncements. 43 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprises fund are charges to customers for water, wastewater, and sanitation services. Operating expenses for these funds include the cost of sales and services, administrative expenses and depreciation. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, and then unrestricted resources, as they are needed. The focus of governmental fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Non-major funds are aggregated and presented in a single column. The City’s non-major funds are as follows: Special Revenue Funds Highway User Revenue Fund (HURF) Community Facilities Districts General Government Impact Fees Fire Impact Fees Transportation Impact Fees Grants Fund Community Facilities Impact Fees Public Works Impact Fees Police Impact Fees Library Impact Fees Debt Service Fund Fiduciary funds are reported by fund type. D. Cash and Cash Equivalents Cash represents amounts in demand deposits and amounts held in trust by financial institutions. The funds held in trust are available to the City upon demand. Cash equivalents are defined as short-term (original maturities of three months or less), highly liquid investments that are 1) readily convertible to known amounts of cash and 2) so near maturity that they present insignificant risk of changes in value because of changes in interest rates. The City has no formal policy relating to custodial credit risk for deposits. E. Investments Arizona Revised Statutes (ARS) authorize the City to invest public monies in the State Treasurer’s Local Government Investment Pool, interest-bearing savings account, certificates of deposit, and repurchase agreements in eligible depositories; bonds or other obligations of the U.S. government that are guaranteed as to principal and interest by the U.S. government; and bonds of the State of Arizona counties, cities, school districts, and special districts as specified by statute. The City has no formal policy relating to interest-rate risk or credit risk of investments, though in practice invests in highly liquid, low risk investments. 44 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 F. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Receivables and Payables Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the noncurrent portion of the interfund loans). All trade and property tax receivables are shown net of allowance for uncollectibles. Trade accounts receivable in excess of 180 days comprise the trade accounts receivables allowance for uncollectibles. Property taxes are levied by the City and collected by the Maricopa County Treasurer. Property taxes are levied no later than the third Monday in August and are payable in two installments due October 1 of the current year and March 1 of the subsequent year. Taxes become delinquent after the first business day of November and May, respectively. Interest attaches on installments after the delinquent date. Pursuant to ARS, 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. G. Inventory Inventories are stated at average cost using the first-in/first-out (FIFO) method. Governmental funds maintain inventories using the consumption method of accounting. H. Prepaid Items Certain payments to vendors reflect the cost applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. I. Restricted Assets Certain proceeds of the City’s bonds, as well as certain resources set aside for their repayment, are classified as restricted cash and investments on the balance sheet because their use is limited by applicable bond covenants. J. Capital Assets Capital assets, which include land, buildings, improvements other than buildings, 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. The City defines capital assets as assets with an initial, individual cost of $5,000 or more and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated fair market value at the date of donation. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are 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. 45 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Certain capital assets of the City are depreciated using the straight-line method over the following estimated useful lives: Assets Infrastructure Buildings Improvement other than buildings Vehicles, machinery and equipment K. Years 20-65 50 7-50 3-7 Compensated Absences The City’s employee vacation and sick leave policies provide for granting vacation and sick leave with pay. Sick leave and vacation benefits vest at the employee’s current rate of pay. The current and long-term liabilities for accumulated vacation and sick leave are reported on the government-wide financial statements and in the proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee leave, resignation and retirements. Resources from the General Fund are generally used to liquidate the governmental funds liabilities compensated absences. L. Long-term Obligations In the government-wide financial statements and proprietary fund financial statements, longterm debt and other long-term obligations are reported as liabilities in the statement of net assets. M. Fund Equity In the fund financial statements, governmental funds report reservations of the fund balance for amounts that are not available for expenditures or are legally restricted by outside parties for use for a specific purpose. Designations of fund balance represent management’s intended use of resources and reflect actual plans approved by the government’s senior management. At June 30, 2008, the City reserved and designated fund balance for several various purposes. N. 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. O. 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. 46 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 1 P. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Budgetary Data According to the laws of the State of Arizona, all operating budgets must be approved by their governing board on or before the second Monday in August to allow sufficient time for legal announcements and hearings required for the adoption of the property tax levy on the third Monday in August. In April, the proposed budget for the following fiscal year is presented by the City Manager to the City Council. The budget includes proposed expenditures and the means of financing them. Public meetings are held to obtain citizen comment. Prior to June 30, the City Council legally enacts the budget, through the passage of an ordinance. The ordinance sets the limit for expenditures for the year, within the voter mandated state expenditure limitation. Additional expenditures may be authorized if directly necessitated by a natural or man-made disaster as prescribed in the state constitution. There were no supplemental appropriations made during fiscal year 2008. The maximum legal expenditure permitted for the year is the total budget as adopted. All funds of the City have legally adopted budgets. The initial budget for the fiscal year may be amended during the year in a legally permissible manner. The City adopts the budget by departments for the General Fund and by fund for all others. The City Manager is generally authorized to transfer budgeted amounts within any specific department’s expenditure appropriation. Any budget revisions requiring a transfer between departments in the General Fund or a transfer between any other fund must be approved by the City Council. All unencumbered expenditure appropriations expire at the end of the fiscal year. Encumbered amounts are re-budgeted in the following year as deemed appropriate and necessary after review by the Budget Office staff. Budgetary carry forwards are approved by the City Council. The City approves its annual budget consistent with GAAP. GASB Statement #34 requires that budgetary comparison statements for the General Fund and major display revenue funds be presented in the annual financial statements. These statements must display original budget, amended budget and actual results (on a budgetary basis). 47 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 2 CASH AND INVESTMENTS At June 30, 2008, cash and cash equivalents are presented in the funds as follows: Cash and cash equivalents Restricted cash and cash equivalents Governmental Activities $ 79,786,769 Business Activities $ 9,323,947 41,149,989 52,044,651 $ 120,936,758 $ 61,368,598 Fiduciary Fund $ 418,491 $ $ 418,491 Total 89,529,207 93,194,640 $ 182,723,847 Cash and cash equivalents consisted of the following deposits and investments: Cash on hand Cash equivalents-investments Cash in bank $ 3,750 168,570,763 14,149,334 Total cash and cash equivalents $ 182,723,847 The restricted cash and cash equivalents are proceeds from debt issuances that are held in trustee accounts for the purpose of major capital improvements. Deposits At June 30, 2008, the City had $3,750 of cash on hand. The carrying amount of the City’s cash in bank totaled $14,149,334 and the bank balance was $19,421,774. The City’s deposits at June 30, 2008 were covered by Federal Depository Insurance to the extent of $273,734. Deposits of $40,208 were collateralized with securities held by the pledging financial institution or by its trust department or agent but not in the depositor-government’s name. Deposits of $19,107,832 were held in a sweep account, which purchases investments nightly. Investments ARS authorize the City to invest public monies in the State Treasurer’s Local Government Investment Pool, interest-bearing savings account, certificates of deposit, and repurchase agreements in eligible depositories; bonds or other obligations of the U.S. government that are guaranteed as to principal and interest by the U.S. government; and bonds of the State of Arizona counties, cities, school districts, and special districts as specified by statute. The City invests in the Local Government Investment Pool 5 (LGIP), an investment pool managed by the State Treasurer’s Office that allows governments within the State to pool their funds for investment purposes. The LGIP is not registered with the Securities Exchange Commission under the 1940 Investment Advisors Act. The State Board of Investment has oversight responsibilities of the investment pool in accordance with ARS 35-311. The pool’s policy is to invest in fixed-rate securities with a final maturity less than 36 months from the settlement date of the purchase and variable-rate securities with final maturity less than 5 years. The dollar weighted average portfolio maturity is less than 240 days. The net asset 48 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 2 CASH AND INVESTMENTS (Continued) value per share of the pool at June 30, 2008 was $1.00. The Arizona State Treasurer issues a publicly available financial report that includes financial statements and required supplementary information. Copies may be obtained by contacting the Arizona State Treasurer, 1700 West Washington, Phoenix, Arizona 85007. Funds held in the State Treasurer’s Local Government Investment Pool represent 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. At June 30, 2008, the City’s funds invested with the State Treasurer totaled $102,613,564. The City is invested in multiple mutual funds through the trust department of Wells Fargo. The mutual funds have a value of $64,949,376 at June 30, 2008. The City’s Community Facilities Districts are invested in repurchase agreements through the trust department of Wells Fargo. The repurchase agreements have a value of $667,000 at June 30, 2008. The City also owns investments that belong to the City’s Volunteer Fire Department. These funds are held by Linsco Private Ledger Investment Services and consist of multiple money market funds and mutual funds. The maturities of these investments are usually less than 30 days. The Fiduciary Fund investments have a value of $340,822 at June 30, 2008. Interest Rate Risk Interest rate risk is the risk of changes in market interest rates that will adversely affect the fair value of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value to changes in market interest rates. The repurchase agreements the City is invested in mature in July of 2016. All other investments have maturities of less than 12 months. Credit Risk Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization. Presented below is the actual rating as of year-end for each investment type. Governmental funds Investment Type LGIP Money market mutual funds Repurchase agreements Ratings as of Year-End Total $ 83,830,829 23,748,357 667,000 $ 108,246,186 $ AAA 23,748,357 $ 23,748,357 $ $ Unrated 83,830,829 667,000 84,497,829 49 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 2 CASH AND INVESTMENTS (Continued) Proprietary funds Ratings as of Year-End Investment Type LGIP Money market mutual funds Total $ 18,706,032 41,201,019 $ 59,907,051 AAA $ 41,201,019 $ 41,201,019 $ Ratings as of Year-End Fiduciary funds Investment Type LGIP Money market funds Mutual funds NOTE 3 Unrated 18,706,032 18,706,032 $ $ $ Total 76,703 3,807 337,015 417,525 AAA $ $ - Unrated 76,703 3,807 337,015 417,525 $ $ RECEIVABLES Receivables, net of allowance for uncollectibles, as of year-end for the City’s individual major governmental funds and nonmajor governmental funds in the aggregate are as follows: Community Community Facilities General Receivables: Taxes Interest Accounts Fund 92,811 1,996,755 $ Facilities Districts- Districts- Capital Road Debt Improvement Improvements Capital Non-Major Service Projects Capital Projects Governmental Fund $ 8,034,271 McDowell Fund 224,740 $ Projects - $ Fund - $ Fund - $ Total 570,997 $ 8,830,008 10,407 40,606 77,504 6,760 84,436 312,524 - - - - 122,491 2,119,246 Special assessments 10,123,837 26,549,308 - - - 26,784,455 40,606 77,504 6,760 777,924 26,549,308 37,811,086 Less: Allowance Net receivables (1,859) $10,121,978 $ 26,784,455 $ 40,606 $ 77,504 $ 6,760 $ 777,924 (1,859) $ 37,809,227 50 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 3 RECEIVABLES (Continued) The following table summarizes the City’s receivables for the enterprise funds as of June 30, 2008. Water and Sewer Fund $ 48,376 1,397,839 1,446,215 Receivables: Interest Accounts Less: Allowance Net receivables $ (430,806) 1,015,409 Sanitation Fund $ 716 498,422 499,138 Stadium Fund $ 48,380 50,000 98,380 499,138 $ 98,380 $ $ $ Total 97,472 1,946,261 2,043,733 (430,806) 1,612,927 Revenues of the Water and Sewer Fund and Sanitation Fund are reported net of uncollectible amounts. Total uncollectible amounts related to water and sewer revenues of the current period are $203,305. NOTE 4 CAPITAL ASSETS A summary of capital assets activity for the fiscal year ended June 30, 2008 follows: Governmental Activities Capital assets, not being depreciated: Land Construction in progress Right of way Streetscape Total capital assets not being depreciated Capital assets, being depreciated: Infrastructure Buildings and improvements Vehicles, furniture and equipment Total capital assets being depreciated Less accumulated depreciation for: Infrastructure Buildings and improvements Vehicles, furniture and equipment Total accumulated depreciation Total capital assets, being depreciated, net Governmental activities capital assets, net Beginning Balance $ 17,855,748 34,640,523 74,213,181 7,091,027 Increases $ 93,784,532 2,971,559 - Ending Balance Decreases $ (11,929,914) - $ 17,855,748 116,495,141 77,184,740 7,091,027 133,800,479 96,756,091 (11,929,914) 218,626,656 193,017,907 31,925,002 28,642,521 253,585,430 33,959,900 9,900,402 6,168,484 50,028,786 (9,830,614) (9,830,614) 217,147,193 41,825,404 34,811,005 293,783,602 (38,180,012) (2,933,965) (20,650,081) (61,764,058) (4,563,690) (614,760) (2,150,170) (7,328,620) 191,821,372 42,700,166 (9,830,614) 224,690,924 $ 325,621,851 $ 139,456,257 $ (21,760,528) $ 443,317,580 - (42,743,702) (3,548,725) (22,800,251) (69,092,678) 51 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 4 CAPITAL ASSETS (Continued) Business-Type Activities Capital assets, not being depreciated: Land Construction in progress Total capital assets not being depreciated Capital assets, being depreciated: Improvements other than buildings Vehicles, machinery and equipment Water rights Total capital assets being depreciated Less accumulated depreciation for: Improvements other than buildings Vehicles, machinery and equipment Water rights amortization Total accumulated deprecation Total capital assets, being depreciated, net Business-Type activities capital assets, net Beginning Balance $ 9,460,708 53,573,964 Increases $ Ending Balance Decreases 4,843,552 79,754,490 $ (20,561,509) (20,561,509) $ 14,304,260 112,766,945 63,034,672 84,598,042 116,001,614 12,856,180 128,857,794 41,174,677 1,169,556 4,681,159 47,025,392 - 157,176,291 14,025,736 4,681,159 175,883,186 (15,198,205) (6,962,051) (22,160,256) (2,822,554) (672,752) (166,591) (3,661,897) - (18,020,759) (7,634,803) (166,591) (25,822,153) 106,697,538 43,363,495 - 150,061,033 $ 169,732,210 $ 127,961,537 $ (20,561,509) 127,071,205 $ 277,132,238 Depreciation expense was charged to functions/programs as follows: Governmental activities: General government Public safety Highway and streets Culture and recreation Public works Total depreciation expense Business-type activities Water and wastewater Sanitation Stadium Total depreciation expense NOTE 5 $ 641,175 1,725,647 4,781,545 51,171 129,082 $ 7,328,620 $ 3,370,849 119,726 4,731 $ 3,495,306 LOANS PAYABLE The City received two loans from the Water Infrastructure Finance Authority. The first loan was used to acquire the rights and make improvements to existing capacity in the wastewater treatment plant. The second loan will be used to finance the planning and design of a pilot recharge project and to construct a well distribution line. The loans payable at June 30, 2008, are as follows: 52 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 5 LOANS PAYABLE (Continued) Description Business-type activities: Water Infrastructure Finance Authority Loan Water Infrastructure Finance Authority Loan Total Business-type activities Interest Rate (Including Fees) Maturity Outstanding Principal June 30, 2008 Due Within One Year 4.06% 07/01/07 - 21 $ 3,257,076 $ - 4.06% 07/01/07 - 21 6,186,326 $ 9,443,402 $ - Annual debt service requirements to maturity on the loans payable at June 30, 2008 are summarized as follows: Fiscal year ending June 30, 2009 2010 2011 2012 2013 2014-2018 2019-2023 Total NOTE 6 Business-Type Activities Principal Interest $ $ 202,456 565,721 393,886 588,666 371,387 612,542 347,977 637,387 623,617 3,596,341 1,216,656 3,442,745 441,120 $ 9,443,402 $ 3,597,099 GENERAL OBLIGATION BONDS PAYABLE Bonds payable at June 30, 2008, consisted of the outstanding general obligation and refunding bonds presented below. The bonds are generally callable with interest payable semiannually. Of the total amounts originally authorized, $173,475,449 remains unissued. The bonds payable at June 30, 2008 are presented below. 53 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 6 GENERAL OBLIGATION BONDS PAYABLE (Continued) Description Governmental activities: General Obligation Bonds Series 1998 General Obligation Bonds Series 2002 General Obligation Bonds Series 2003 General Obligation Bonds Series 2007 General Obligation Bonds Series 2008 Total Governmental activities Business-type activities: General Obligation Bonds Series 2005 General Obligation Bonds Series 2007 General Obligation Bonds Series 2008 Total Business-type activities Outstanding Principal June 30, 2008 Due Within One Year $ $ Interest Rate Maturity 4.00 - 6.00% 7/1/07 - 13 3.65 - 4.25% 7/1/07 - 17 8,165,000 - 3.00 - 4.50% 7/1/08 - 18 10,050,000 - 3.00 - 5.00% 7/1/08 - 26 10,374,857 - 4.25 - 6.00% 7/1/09 - 27 8,745,000 $ 41,719,857 $ - 3.50 - 5.00% 7/1/07 - 20 $ 27,105,000 $ - 3.00 - 5.00% 7/1/08 - 26 25,225,143 4.25 - 6.00% 7/1/09 - 27 35,795,000 $ 88,125,143 $ - $ 129,845,000 $ - Total 4,385,000 - - Annual debt service requirements to maturity on governmental bonds payable at June 30, 2008 are summarized as follows: Fiscal year ending June 30, 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2028 2029-2033 2034-2038 Total Governmental Activities Principal Interest $ $ 962,664 3,026,876 1,778,583 3,174,762 1,644,356 3,311,618 1,510,429 3,482,634 1,369,124 15,717,614 4,763,620 6,830,050 2,108,300 6,176,033 601,423 $41,719,587 $14,738,499 Business-Type Activities Principal Interest $ $ 2,123,427 2,873,125 3,898,366 3,400,239 3,777,911 3,533,381 3,575,546 3,692,366 3,403,859 21,082,388 14,358,632 21,569,952 9,085,251 13,798,683 5,183,384 8,000,000 3,044,062 10,175,009 1,123,582 $88,125,143 $49,574,020 54 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 7 REVENUE BONDS PAYABLE On November 28, 2007, the city raised $6,415,000 in Municipal Facilities Refunding Bonds with an average interest rate of 4.25% to advance refund the Great Arizona Development Authority Loan dated October 1, 1998 and current refund the Municipal Facilities Revenue Bonds, Series 2002. The net proceeds of $6,734,459 were used to purchase US Government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the refunded bonds. As a result, the 1998 Greater Arizona Development Authority Loan & Series 2002 bonds are considered to be defeased and the liability for those bonds has been removed from the longterm liabilities in the financial statements. As of June 30, 2008, the total outstanding on the defeased bonds was $3,185,000. The city refunded the bonds to reduce its total debt service payments over the next 14 years. The transaction resulted in an economic loss (difference between the present values of the debt service on the old and new bonds) of approximately $229,459. The aggregate difference in debt service between the refunding debt and the refunded debt is $134,096. Revenue bonds payable at June 30, 2008 consisted of the outstanding revenue bonds presented below. The bonds are generally callable with interest payable semiannually. Governmental activities: Description Public Improvement Corporation Municipal Facilities Revenue Bonds, Series 2007B Public Improvement Corporation Municipal Facilities Revenue Bonds, Series 2007C McDowell Road Corridor Improvement District Bonds Interest Rate Maturity Outstanding Principal June 30, 2008 4.00 - 5.00% 7/1/08 - 13 $ 3,165,000 $ 435,000 4.00 - 4.50% 7/1/08 - 21 $ 3,250,000 $ 70,000 5.25% 1/1/10 - 32 $ 47,165,000 $ $ 53,580,000 $ 505,000 Due Within One Year $ - Business-type activities: Description Revenue Bonds, Series 1999 Public Improvement Corporation Municipal Facilities Revenue Bonds, Series 2007A Due Within One Year - Interest Rate 4.47 - 6.73% Maturity 7/1/07 - 18 Outstanding Principal June 30, 2008 $ 2,345,000 4.50 - 5.00% 7/1/20 - 32 $ 67,850,000 $ - $ 70,195,000 $ - 55 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 7 REVENUE BONDS PAYABLE (Continued) Revenue bond debt service requirements to maturity are as follows: Fiscal Year Ending June 30, 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2028 2029-2033 NOTE 8 Governmental Activities Principal Interest $ 505,000 $ 1,519,431 1,785,000 2,714,887 1,880,000 2,628,875 1,970,000 2,538,675 2,065,000 2,443,338 9,305,000 10,787,753 10,915,000 8,290,036 12,540,000 5,353,688 12,615,000 1,698,112 $ 53,580,000 $ 37,974,795 Business-Type Activities Principal Interest $ $ 3,501,628 300,000 3,449,250 280,000 3,459,250 275,000 3,484,250 260,000 3,504,250 1,070,000 17,626,250 14,585,000 15,236,875 23,650,000 10,196,625 29,775,000 3,865,625 $ 70,195,000 $ 64,324,003 COMMUNITY FACILITIES DISTRICTS BONDS PAYABLE Community facilities district bonds payable at June 30, 2008 consisted of outstanding general obligation and special assessment bonds. The bonds are generally callable with interest payable semiannually. The community facilities district bonds payable at June 30, 2008, are presented below. Outstanding Principal Due Within Description Interest Rate Maturity June 30, 2008 One Year General District No. 1: G.O. Bonds, Series 1994 7.50% 07/15/09 $ 50,000 $ 25,000 G.O. Bonds, Series 1996 (A) 6.5 - 7.0% 07/15/21 500,000 G.O. Bonds, Series 1998 4.55 - 5.25% 07/15/23 1,840,000 70,000 G.O. Bonds, Series 2000 4.6 - 5.3% 07/15/25 5,395,000 175,000 G.O. Bonds, Series 2003 3.3 - 5.75% 07/15/28 5,295,000 Assessment Bonds, Series 1996(C) 6.75 - 7.25% 07/01/16 2,219,000 214,000 Palm Valley: G.O. Bonds, Series 2006 4.25 - 5.30% 07/15/31 4,415,000 100,000 G.O. Bonds, Series 2007 4.25 - 5.80% 07/15/32 4,000,000 120,000 Utilities District No. 1: G.O. Bonds, Series 1998 4.55 - 5.25% 07/15/23 5,925,000 240,000 G.O. Bonds, Series 2000 4.7 - 5.2% 07/15/25 6,720,000 190,000 G.O. Bonds, Series 2003 3.3 - 5.75% 07/15/28 7,870,000 G.O. Bonds, Series 2005 3.5 - 4.5% 07/15/29 7,190,000 G.O. Bonds, Series 2005 Refunding 3.0 - 4.3% 07/15/21 1,415,000 80,000 G.O. Bonds, Series 2007 4.00 - 5.00% 07/15/32 24,015,000 750,000 Wildflower Ranch General District 1: G.O. Bonds, Series 1997 5.875 - 6.5% 07/15/22 515,000 20,000 G.O. Bonds, Series 1998 5.2 - 5.75% 07/15/23 610,000 25,000 56 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 8 COMMUNITY FACILITIES DISTRICTS BONDS PAYABLE (Continued) Description Wildflower Ranch General District 2: G.O. Bonds, Series 2000 G.O. Bonds, Series 2001 Estrella Mountain Ranch: Assessment Bonds, Series 2001(A) Assessment Bonds, Series 2002 G.O. Bonds, Series 2005 Assessment Bonds, Series 2007(M) G.O. Bonds, Series 2007 Assessment Bonds, Series 2007(G) Cottonflower: G.O. Bonds, Series 2003 G.O. Bonds, Series 2004 Cortina: G.O. Bonds, Series 2005 G.O. Bonds, Series 2006 Centerra: G.O. Bonds, Series 2005 G.O. Bonds, Series 2006 G.O. Bonds, Series 2008 Total Interest Rate Maturity Outstanding Principal June 30, 2008 Due Within One Year 6.0 - 7.0% 4.5 - 5.9% 07/15/25 07/15/26 625,000 675,000 20,000 20,000 7.88% 7.38% 5.0 - 5.8% 4.65 - 5.80% 4.50 - 6.20% 6.00 - 6.75% 07/01/25 07/01/27 07/15/30 07/01/32 07/15/32 07/01/32 6,170,000 4,194,000 4,775,000 7,680,000 12,750,000 6,928,000 317,000 126,000 100,000 - 4.1 - 5.7% 3.7 - 6.75% 07/15/28 07/15/28 1,630,000 1,270,000 45,000 30,000 5.0 - 5.7% 5.0 - 5.375% 07/15/29 07/15/31 1,635,000 935,000 40,000 15,000 5.50% 4.75 - 5.15% 4.875-6.625% 07/15/29 07/15/31 07/15/32 2,305,000 605,000 965,000 $ 131,116,000 55,000 5,000 130,000 $ 2,912,000 Community Facilities District bonds debt service requirements to maturity are as follows: Fiscal year ending June 30, 2009 2010 2011 2012 2013 2014-2018 2019-2023 2024-2028 2029-2033 Total Governmental Activities Principal Interest $ 2,912,000 $ 7,233,541 3,381,000 6,971,479 3,452,000 6,795,493 3,629,000 6,610,000 3,818,000 6,414,557 21,544,000 28,659,112 26,747,000 22,093,110 33,158,000 13,566,318 32,475,000 4,477,151 $ 131,116,000 $ 102,820,761 57 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 8 COMMUNITY FACILITIES DISTRICTS BONDS PAYABLE (Continued) On March 31, 2005, Community Facilities Utilities District #1 issued $1,455,000 of General Obligation Bonds to do an advance refunding of the 1996(B) bonds. Under the terms of the refunding issue, sufficient assets to pay all principal and interest on the refunded bonds issue have been placed in irrevocable trust accounts at commercial banks and invested in U.S. Government Securities, which, together with interest earned thereon, will provide amounts sufficient for future payment of principal and interest of the issue refunded. There is no amount outstanding on these bonds as of June 30, 2008. These bonds have been fully defeased. The $67,334 deferred amount on retirement of bonds is being amortized over the lives of the refunding bonds on the straight-line basis. Amortization for the year ended June 30, 2008 of $5,180 was taken on the deferred amount. Legal Debt Limit- General Obligation bonded indebtedness for each District cannot exceed 60 percent of the market value of the property in the District after the infrastructure is completed plus the value of the infrastructure improvement made. 58 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 9 AMORTIZATION OF BOND COSTS, BOND DISCOUNTS AND BOND PREMIUMS Bond costs, discounts and premiums are being amortized over the life of the bonds on the straight-line basis. Amortization has been offset against interest expense. A summary of the amortizations are as follows: Beginning Balance Bond Costs: Governmental Activities General Obligation Bonds Series 2007 Series 2008 Public Improvement Corporation Series 2007B Series 2007C Improvement District Bonds McDowell Road Community Facilities District Bonds Payable Palm Valley District #3 Series 2006 Palm Valley District #3 Series 2007 Utilities District #1 Series 2005 Utilities District #1 Series 2005 Refunding Utilities District #1 Series 2007 Estrella Mountain Ranch Series 2005 Estrella Mountain Ranch Series 2007 Estrella Mountain Ranch Series 2007(M) Estrella Mountain Ranch Series 2007(G) Centerra Series 2005 Centerra Series 2006 Centerra Series 2007 Cortina Series 2005 Cortina Series 2006 Business-type Activities General Obligation Bonds Series 2005 Series 2007 Series 2008 Public Improvement Corporation Series 2007 Revenue Bonds, Series 1999 $ 89,803 - Additions $ 113,824 Ending Balance Reductions $ 4,490 - $ 85,313 113,824 - 33,244 39,780 - 33,244 39,780 - 2,080,896 - 2,080,896 258,972 339,047 15,646 165,121 115,745 74,635 101,411 126,020 232,306 724,383 403,028 352,284 334,660 115,425 - 10,356 15,411 1,118 6,880 5,261 2,985 4,610 5,040 248,616 232,306 323,636 14,528 724,383 158,241 403,028 352,284 334,660 110,484 71,650 115,425 96,801 120,980 339,284 218,343 - 465,917 24,234 10,917 - 315,050 207,426 465,917 47,803 814,347 - 19,001 4,345 795,346 43,457 $ 1,891,830 $ 5,710,094 114,648 $ 7,487,275 $ 59 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 9 AMORTIZATION OF BOND COSTS, BOND DISCOUNTS AND BOND PREMIUMS (Continued) Beginning Balance Bond Premiums (Discounts) Governmental Activities General Obligation Bonds Series 2007 General Obligation Bonds Series 2008 Public Improvement Corporation 2007B Public Improvement Corporation 2007C Improvement District Bonds Community Facilities District Bonds Payable Utilities District #1 Series 2005 Utilities District #1 Series 2005 Refunding Utilities District #1 Series 2007 Estrella Mountain Ranch Series 2007 Business-type Activities General Obligation Bonds Series 2005 Series 2007 Series 2008 Public Improvement Corporation Revenue Bonds, Series 1999 $ $ 100,701 87,554 10,207 1,772,153 (73,238) 2,269 - $ NOTE 10 72,151 - Additions $ 3,608 - 321,867 7,710 417,234 175,425 28,826 412,190 1,351,783 - 622,667 $ 4,064,165 Ending Balance Reductions $ 68,543 100,701 87,554 10,207 1,772,153 (3,329) 162 - $ (69,909) 2,107 321,867 7,710 29,802 8,771 31,542 2,621 387,432 166,654 412,190 1,320,241 26,205 73,177 $ 4,613,655 CHANGES IN LONG-TERM LIABILITIES Long-term liabilities activity for the year ended June 30, 2008 was as follows: Beginning Balance Governmental activities: Compensated absences General obligation bonds payable Loans payable Community Facilities District bonds payable Public improvement bonds Revenue bonds payable Governmental activities long-term liabilities $ 2,727,244 Additions $ 1,707,442 Ending Balance Reductions $ 1,423,966 $ 3,010,721 Due Within One Year $ 1,157,014 36,050,000 3,185,000 8,745,000 - 3,075,143 3,185,000 41,719,857 - - 76,844,000 3,320,000 56,338,000 6,415,000 47,165,000 2,066,000 3,320,000 131,116,000 6,415,000 47,165,000 2,912,000 505,000 - $ 122,126,244 $ 120,370,442 $ 13,070,109 $ 229,426,578 $ 4,574,014 60 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 10 CHANGES IN LONG-TERM LIABILITIES (Continued) Beginning Balance Business-type activities Compensated absences General obligation bonds payable Public improvement bonds Revenue bonds payable Loans payable Business-type activities long-term liabilities NOTE 11 $ $ 282,218 Additions $ 220,791 54,145,000 2,460,000 9,985,013 35,795,000 67,850,000 - 66,872,231 $ 103,865,791 Ending Balance Reductions $ $ 197,482 $ 305,526 1,814,857 115,000 541,611 88,125,143 67,850,000 2,345,000 9,443,402 2,668,950 $ 168,069,071 Due Within One Year $ 135,241 - $ 135,241 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS At June 30, 2008, interfund balances were as follows: Interfund receivables/payable: Fund General Fund CFD Capital Project Funds Non-Major Governmental Funds Internal Service Fund Stadium Fund Total Receivable Amount $ 5,734,983 2,682 $ 5,737,665 Payable Amount $ 34,182 780,688 68,459 4,854,336 $ 5,737,665 All interfund borrowing resulted from the borrowing of funds to cover cash deficit. Interfund transfers: Fund General Fund Community Facilities Districts-Debt Service Capital Improvements McDowell Road Improvements Community Facilities Districts-Capital Projects Non-Major Governmental Funds Water and Sewer Fund Sanitation Fund Stadium Fund Total Transfers Out $ 11,690,343 2,335,531 3,886,199 35,635 3,058,040 3,565,225 142,665 $ 24,713,638 Transfers In $ 1,158,789 35,635 4,632,291 5,734,956 11,405,957 1,746,010 $ 24,713,638 All transfers made during the year were to cover operations or debt service as approved during budget development or were necessary for grant matching purposes. 61 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 12 CONTINGENT LIABILITIES Federal and State grants and loans- The City has received a number of grants and loans from both the Federal and State governments. Although the programs have been audited, not all audits have been approved as of June 30, 2008; however, the City expects no material disallowances of expenditures. Lawsuits – The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City’s legal counsel, the resolution of these matters will not have a material adverse effect on the financial condition of the City. NOTE 13 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; 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 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 authority to assess its members additional premiums should reserve and annual premiums be insufficient to meet the pool’s obligations. The City has no known claims in excess of $100,000 for the fiscal year ending June 30, 2008. The maximum liability for the City for the fiscal year is $500,000 and the deductible is $250,000 per occurrence. The City is insured by the Workers’ Compensation Insurance Fund for potential workerrelated accidents. NOTE 14 RETIREMENT PLANS All full-time City employees are covered by one of two contributory retirement and pension plans, which are administered by the State of Arizona under State Statute. Arizona State Retirement Plan Plan Description - The Arizona State Retirement System (ASRS) administers a cost-sharing multiple-employer defined benefits pension plan that covers general employees of the City. The ASRS is governed by the Arizona State Retirement System Board according to the provisions of ARS Title 38, Chapter 5, Article 2. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. ASRS issues a publicly available report that includes financial statements and required supplementary information. The report may be obtained in writing at Arizona State Retirement System, 3300 Central Avenue, P.O. Box 33910, Phoenix, Arizona 85067 or by calling 602-240-2200 or 1-800-621-3778. 62 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 14 RETIREMENT PLANS (Continued) Funding Policy - The Arizona State Legislature establishes and may amend active plan members’ and the City’s contribution rates. For the year ended June 30, 2008, active ASRS members and the City were each required by statute to contribute at the actuarially determined rate of 9.1 percent (8.6 percent retirement and .50 percent long-term disability) of the member’s annual covered payroll. The City’s contributions to ASRS for the years ended June 30, 2008, 2007, and 2006 were $2,044,154, $1,552,734, and $1,011,588, respectively, which were equal to the required contributions for the year. Arizona Public Safety Personnel Retirement System Plan Description - The Public Safety Personnel Retirement System (PSPRS) is an agent multiple-employer defined benefit pension plan that covers public safety personnel who are regularly assigned hazardous duty as employees of the State of Arizona or one of its political subdivisions. The PSPRS acting as a common investment and administrative agent is governed by a five-member board, known as The Fund Manager, and 167 local boards according to the provisions of ARS Title 38, Chapter 5, Article 4. The City contributes to one PSPRS plan for police and one for firefighters. Benefits are established by state statute and generally provide retirement, death, long-term disability, survivor, and health insurance premium benefits. PSPRS issues a publicly available report that includes financial statements and required supplementary information. The report may be obtained in writing at PSPRS, 1020 East Missouri Avenue, Phoenix, Arizona 85014 or by calling 602-255-5575. Funding Policy – The Arizona State Legislature establishes and may amend active plan members’ and the City’s contribution rates. For the year, ended June 30, 2008, active PSPRS members were required by statute to contribute 7.65 percent of the members’ annual covered payroll, and the City was required to contribute at the actuarially determined rate of 11.14% and 10.38% of the covered payroll to the Plan for the Police and Firefighters, respectively. Annual Pension Cost - The City’s pension cost for the agent plan for the year ended June 30, 2007, and related information follows: Contribution Rates: City Plan members Annual pension cost Contributions made Actuarial valuation date Actuarial cost method Actuarial assumptions: Investment rate of return Projected salary increases Includes inflation at cost-of-living adjustment Amortization method Remaining amortization period Asset valuation method Post retirement benefit increases PSPRS – Police 9.23% 7.65% $452,954 $452,954 June 30, 2007 Entry Age PSPRS - Fire 7.90% 7.65% $325,166 $325,166 June 30, 2007 Entry Age 8.5% 5.5% - 8.5% 8.5% 5.5% - 8.5% 5.5% Level Percent Open Open 20 Years Smoothed Market Based on Income 5.5% Level Percent Open Open 20 Years Smoothed Market Based on Income 63 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 14 RETIREMENT PLANS (Continued) Trend Information - Information for the PSPRS plan as of the most recent actuarial valuations follows: Plan PSPRS - Police Year Ended June 30, 2007 2006 2005 PSPRS - Fire 2007 2006 2005 Annual Pension Cost (APC) $ 452,954 419,311 298,580 325,166 293,449 89,277 Percentage of APC Contributed 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Net Pension Obligation - Funding Progress - An analysis of funding progress for each of the agent plan as most recent actuarial valuations, June 30, 2007 follows: PSPR - Goodyear Police Plan: Valuation Date June 30, 2007 2006 2005 Actuarial Value of Assets (a) $ 8,041,204 7,302,460 6,372,349 Actuarial Accrued Liability (AAL) (b) $ 12,267,389 8,870,283 7,439,933 Funded Ratio (a/b) 65.5% 82.3% 85.7% Annual Covered Payroll (c) $ 4,937,043 4,475,426 3,407,937 Unfunded AAL as a Percent of Covered Payroll ([b-a]/c) 85.6% 35.0% 31.3% Unfunded AAL Funded (b-a) Ratio (a/b) $ 1,414,272 82.0% (24,359) 100.4% (261,023) 106.0% Annual Covered Payroll (c) $ 5,397,930 4,406,608 3,561,253 Unfunded AAL as a Percent of Covered Payroll ([b-a]/c) 26.2% 0% 0% Unfunded AAL (b-a) $ 4,226,185 1,567,823 1,067,584 PSPR - Goodyear Fire Plan: Actuarial Valuation Value of Date Plan Assets June 30, (a) 2007 $ 6,438,344 2006 5,554,786 2005 4,580,344 Actuarial Accrued Liability (AAL) (b) $ 7,852,616 5,530,427 4,319,321 City of Goodyear Part-time Fireman’s Pension Plan The City of Goodyear Part-time Firemen’s Pension Plan is a single-employer defined contribution plan, which was approved by the City Council on February 27, 1990, under Arizona Revised Statutes Section 9-981. The authority to establish and amend benefit provisions rests with the City Council. In December 1999, the council revised the pension and benefit program for the part-time firefighters. The City discontinued using part-time firefighters as of December 1, 2005. 64 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 14 RETIREMENT PLANS (Continued) The assets of the plan are valued annually and the earnings or loss is distributed among the participant’s accounts in the plan. The only expenditures being made from this fund are administration fees, retirement payments, and refunds to those firefighters who leave the service of the Fire Department before becoming eligible for pension benefits. The cost of administering the plan is financed from investment earnings. Retirement with full benefits can be at age fifty-five (55) or twenty years of credited service. This plan was fully vested as of June 30, 2008. As of June 30, 2008, there were 6 eligible employees participating in the plan. The plan is administered by LPL Financial. As of June 30, 2008, the plan’s assets consisted of the following: Cash Mutual Funds $ 77,669 340,822 $ 418,491 The plan has never had an actuarial valuation; however, benefits cannot exceed plan assets. The market values of mutual funds are determined from readily available market quotations. The fund uses the accrual basis of accounting. Contributions are recognized when earned; benefits and refunds are expensed when incurred. NOTE 15 DEFICIT FUND BALANCE Grants Fund Deficit Fund Balance- At June 30, 2008, the Grants Fund contains a deficit fund balance of $35,859 in the fund financial statements. Future revenues are expected to cover this deficit. NOTE 16 COMMITMENTS The City has active construction projects as of June 30, 2008. The balances for work not yet complete as of June 30, 2008 were as follows: Alliance Service & Control Archer Western Contractors B & F Contracting Brown & Caldwell Hennesy Mechanical Johnson Carlier Inc Montezuma Paving Willco Art & Design $ $ 961 1,698,905 113,341 1,632,034 799,137 157,879 720 15,000 4,417,977 These commitments are being financed from existing fund balances. 65 CITY OF GOODYEAR, ARIZONA NOTES TO FINANCIAL STATEMENTS JUNE 30, 2008 NOTE 17 PURCHASED WATER RIGHTS The City entered into an agreement to purchase surface water rights for a 100-year period. Annual payments of $855,573 are due for the first 15 years of the agreement. Amortization expense relating to this agreement is being recorded on the straight-line basis totaling $128,336 per year. The City entered into other agreements to purchase surface water rights for a 100-year period. Payments totaling $4,259,996 were made during the year ending June 30, 2008. Amortization expense relating to this agreement is being recorded on the straight-line basis totaling $42,600 per year. NOTE 18 SUBSEQUENT EVENTS Investments Portions of the City’s investments are held by the Arizona State Treasurer in the Local Government Investment Pool 5. On September 15, 2008, the City received notification that an investment held by the pool, Lehman Brothers Holding Inc., filed for Chapter 11 reorganization. The City’s pro-rata share of the Lehman Brothers Holding’s bonds totaled $1,412,133 including $77,437 in the CFD’s, so the State Treasurer reduced the City’s investments by the same amount. Debt Issuance In December 2008, the City will issue $34,450,000 of City of Goodyear, Arizona Public Improvement Corporation Municipal Facilities Revenue Bonds, Series 2008. The purpose of these bonds will be for constructing certain public infrastructure. Interest rates range from 5.00 percent to 6.375 percent, with final maturity in 2031. 66 OTHER SUPPLEMENTARY INFORMATION COMBINING FUND FINANCIAL STATEMENTS CITY OF GOODYEAR, ARIZONA COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS June 30, 2008 Special Revenue ASSETS Cash and cash equivalents Taxes receivable Interest receivable Accounts receivable Due from other governments Inventories Prepaid items Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll and employee benefits Accrued interest payable Accrued liabilities Deposits held for others Due to other funds Deferred revenue Total liabilities Fund balances: Reserved: Debt service Unreserved, reported in Special revenue Total fund balances Total liabilities and fund balances Highway User Revenue $ 397,271 262,100 942 14,960 309,339 $ 984,612 $ $ $ 133,425 51,144 71,082 419,622 675,273 $ - 984,612 146,403 $ $ 140,727 1,603,552 1,603,552 $ $ 2,501 73,302 5,000 673,711 26,496 778,509 - (35,859) (35,859) $ 3,730 106,977 65,879 176,586 - 309,339 309,339 $ Grants 3,659 32,456 102,921 1,691 140,727 Community Facilities Districts $ 2,325,218 48,772 8,071 $ 2,382,061 2,382,061 - $ 531,214 68 Special Revenue Community Facilities Impact Fees $ 2,350,639 661 $ 2,351,300 General Government Impact Fees $ 4,603,343 15,999 $ 4,619,342 Public Works Impact Fees $ 5,125,535 17,568 $ 5,143,103 Fire Impact Fees $ 194,314 575 $ 194,889 Police Impact Fees $ 7,167,130 24,570 $ 7,191,700 Transportation Impact Fees $ 1,866,284 6,657 75,075 $ 1,948,016 $ $ $ $ $ $ - - 2,351,300 2,351,300 $ 2,351,300 $ 40,137 4,619,342 $ (635) 5,143,103 26,187 26,187 - 5,143,103 5,143,103 $ - 4,588,032 4,588,032 $ 31,310 31,310 194,889 (293) - 7,191,700 7,191,700 $ $ 198,500 198,500 - 168,702 168,702 $ - 7,191,700 1,749,516 1,749,516 $ 1,948,016 $ 21,263 $ 2,674 $ (1,441) (Continued on next page) 69 CITY OF GOODYEAR, ARIZONA COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS (CONTINUED) June 30, 2008 Special Revenue ASSETS Cash and cash equivalents Taxes receivable Interest receivable Accounts receivable Due from other governments Inventories Prepaid items Total assets LIABILITIES AND FUND BALANCES Liabilities: Accounts payable Accrued payroll and employee benefits Deposits held for others Due to other funds Deferred revenue Total liabilities Fund balances: Reserved: Debt service Unreserved: Special revenue Total fund balances Total liabilities and fund balances Library Impact Fees $ 2,772,887 9,393 $ 2,782,280 Debt Services $ 2,891,602 260,125 17,000 $ 3,168,727 Total Non-Major Governmental Funds $ 29,697,882 570,997 84,436 122,491 102,921 309,339 18,691 $ 30,906,757 $ $ $ 2,782,280 2,782,280 $ 2,782,280 $ 141,974 141,974 267,954 51,144 76,082 780,688 852,471 2,028,339 3,026,753 3,026,753 3,026,753 25,851,665 28,878,418 3,168,727 #REF! $ 30,906,757 #REF! 71 CITY OF GOODYEAR, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS For The Year Ended June 30, 2008 Special Revenue REVENUES Taxes Intergovernmental Charges for services Investment income Miscellaneous Total revenues EXPENDITURES Current: General government Public safety Highway and streets Public works Community development Capital outlay Debt service: Principal retirement Interest and debt costs Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Refunding bonds Refunding bonds premium Payment to refunded bond escrow agent Transfers in Transfers out Total other financing sources (uses) Net change in fund balances 3,926,719 40,164 317,046 8,836 49,809 874,820 951,931 - 3,966,883 1,250,511 951,931 (449,412) 48,729 734,834 449,412 449,412 - $ - Fund balances, beginning of year Fund balances, end of year 1,275,182 24,058 1,299,240 Community Facilities Districts $ 1,455,509 72,964 158,292 1,686,765 Highway User Revenue $ 3,481,233 4,270 16,652 15,316 3,517,471 309,339 $ 309,339 $ Grants - 48,729 734,834 (84,588) 868,718 (35,859) $ 1,603,552 72 Special Revenue Community Facilities Impact Fees $ 602,506 64,439 666,945 General Government Impact Fees $ 1,718,405 185,993 1,904,398 Public Works Impact Fees $ 1,099,446 194,442 1,293,888 Fire Impact Fees $ 1,178,523 6,858 1,185,381 Police Impact Fees $ 1,990,052 263,147 2,253,199 Transportation Impact Fees $ 2,504,066 66,066 75,075 2,645,207 13,726 2,191,462 11,891 1,165,727 9,513 137,052 14,166 1,081,460 12,822 163,939 25,644 1,519,615 2,205,188 1,177,618 146,565 1,095,626 176,761 1,545,259 726,780 1,147,323 89,755 2,076,438 1,099,948 (1,538,243) (1,538,243) - - 325,447 325,447 - - 726,780 1,147,323 415,202 2,076,438 1,099,948 3,889,543 3,861,252 3,995,780 (246,500) 5,115,262 649,568 $ 2,351,300 $ 4,588,032 $ 5,143,103 $ 168,702 $ 7,191,700 $ 1,749,516 73 CITY OF GOODYEAR, ARIZONA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON MAJOR GOVERNMENTAL FUNDS (CONTINUED) For The Year Ended June 30, 2008 Special Revenue REVENUES Taxes Intergovernmental Charges for services Investment income Miscellaneous Total revenues Library Impact Fees $ 394,222 106,650 500,872 EXPENDITURES Current: General government Public safety Highway and streets Public works Community development Capital outlay Debt service: Principal retirement Interest and debt costs Total expenditures 10,030 - Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Refunding bonds Refunding bonds premium Payment to refunded bond escrow agent Transfers in Transfers out Total other financing sources (uses) Fund balances, beginning of year $ Debt Service 6,517,935 61,803 6,579,738 - 951,931 317,046 3,935,555 97,792 49,809 7,174,239 10,030 3,075,143 2,955,897 6,031,040 3,075,143 2,955,897 18,557,412 490,842 548,698 4,975,692 - Net change in fund balances Fund balances, end of year $ Total Non-Major Government Funds $ 7,973,444 4,756,415 9,491,490 1,039,014 272,741 23,533,104 3,165,000 87,554 (3,264,032) 4,960,097 (3,058,040) 1,890,579 3,165,000 87,554 (3,264,032) 5,734,956 (3,058,040) 2,665,438 490,842 2,439,277 7,641,130 2,291,438 587,476 21,237,288 2,782,280 $ 3,026,753 $ 28,878,418 75 OTHER SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULES MAJOR GOVERNMENTAL FUNDS CITY OF GOODYEAR, ARIZONA COMMUNITY FACILITIES DISTRICTS - DEBT SERVICE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Taxes Investment income Special assessments Contributions Total revenues Original $ 5,905,472 248,119 2,228,149 1,688,231 10,069,971 7,112,000 18,444,054 25,556,054 7,112,000 18,444,054 25,556,054 2,066,000 5,280,079 7,346,079 5,046,000 13,163,975 18,209,975 5,060,400 5,060,400 2,723,892 (2,336,508) OTHER FINANCING SOURCES (USES) Debt issuance Transfers in Total other financing sources (uses) 14,402,000 - 14,402,000 - 1,431,896 35,635 (12,970,104) 35,635 14,402,000 14,402,000 1,467,531 (12,934,469) Net change in fund balance 19,462,400 19,462,400 4,191,423 (15,270,977) 8,138,570 8,138,570 8,138,570 $ 27,600,970 $ 27,600,970 $ 12,329,993 Excess (deficiency) of revenues over (under) expenditures Fund balance, beginning of year Fund balance, end of year 6,724,346 344,923 16,733,505 6,813,680 30,616,454 $ Actual 6,724,346 344,923 16,733,505 6,813,680 30,616,454 EXPENDITURES Debt service Principal retirement Interest and debt costs Total expenditures $ Final Variance with Final Budget Positive (Negative) $ (818,874) (96,804) (14,505,356) (5,125,449) (20,546,483) $ (15,270,977) 78 CITY OF GOODYEAR, ARIZONA CAPITAL IMPROVEMENT PROJECTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Intergovernmental Investment income Miscellaneous Total revenues Original $ EXPENDITURES Capital outlay Debt service Interest and debt cost Total expenditures 3,715,724 2,292,000 6,007,724 Final $ 3,715,724 2,292,000 6,007,724 Actual $ 90,199 90,199 Variance with Final Budget Positive (Negative) $ (3,715,724) 90,199 (2,292,000) (5,917,525) 272,499,286 103,100,449 10,828,222 92,272,227 272,499,286 103,100,449 113,824 10,942,046 (113,824) 92,158,403 (266,491,562) (97,092,725) (10,851,847) 86,240,878 OTHER FINANCING SOURCES (USES) Debt issuance Debt premium Transfers in Transfers out Total other financing sources (uses) 253,500,000 - 253,500,000 - 8,745,000 100,701 4,632,291 (2,335,531) (244,755,000) 100,701 4,632,291 (2,335,531) 253,500,000 253,500,000 11,142,461 (242,357,539) Net change in fund balance (12,991,562) 156,407,275 290,614 (156,116,661) 5,971,745 5,971,745 Excess (deficiency) of revenues over (under) expenditures Fund balance, beginning of year Fund balance, end of year 5,971,745 $ (7,019,817) $ 162,379,020 $ 6,262,359 $ (156,116,661) 79 CITY OF GOODYEAR, ARIZONA MCDOWELL ROAD IMPROVEMENTS CAPITAL PROJECTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Investment income Miscellaneous Total revenues EXPENDITURES Capital outlay Debt service Interest and debt cost Total expenditures Excess (deficiency) of revenues over (under) expenditures Original $ - Final $ Actual - $ 859,513 85,037 944,550 Variance with Final Budget Positive (Negative) $ 859,513 85,037 944,550 - 44,434,301 27,045,474 17,388,827 - 44,434,301 2,076,804 29,122,278 (2,076,804) 15,312,023 - (44,434,301) (28,177,728) 16,256,573 OTHER FINANCING SOURCES (USES) Debt issuance Debt premium Transfers out Total other financing sources (uses) - - 47,165,000 1,772,153 (3,886,199) 47,165,000 1,772,153 (3,886,199) - - 45,050,954 45,050,954 Net change in fund balance - (44,434,301) 16,873,226 61,307,527 2,572,612 2,572,612 Fund balance, beginning of year Fund balance, end of year 2,572,612 $ 2,572,612 $ (41,861,689) $ 19,445,838 $ 61,307,527 80 CITY OF GOODYEAR, ARIZONA COMMUNITY FACILITIES DISTRICTS - CAPITAL PROJECTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Variance with Final BudgetPositive (Negative) Budgeted Amounts REVENUES Investment income Contributions Total revenues Original $ EXPENDITURES Capital outlay Total expenditures 6,160,030 16,610,000 22,770,030 Final $ 6,160,030 16,610,000 22,770,030 Actual $ 954,637 2,989,963 3,944,600 $ (5,205,393) (13,620,037) (18,825,430) 275,328,069 275,328,069 275,328,069 275,328,069 55,934,793 55,934,793 219,393,276 219,393,276 (252,558,039) (252,558,039) (51,990,193) 200,567,846 OTHER FINANCING SOURCES (USES) Debt issuance Debt premium Transfers out Total other financing sources (uses) 238,687,524 - 238,687,524 - 54,906,104 329,577 (35,635) (183,781,420) 329,577 (35,635) 238,687,524 238,687,524 55,200,046 (183,487,478) Net change in fund balance (13,870,515) (13,870,515) 3,209,853 17,080,368 9,486,774 9,486,774 9,486,774 Excess (deficiency) of revenues over (under) expenditures Fund balance, beginning of year Fund balance, end of year $ (4,383,741) $ (4,383,741) $ 12,696,627 $ 17,080,368 81 OTHER SUPPLEMENTARY INFORMATION BUDGETARY COMPARISON SCHEDULES NON-MAJOR GOVERNMENTAL FUNDS AND ENTERPRISE FUNDS CITY OF GOODYEAR, ARIZONA HIGHWAY USER REVENUE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Intergovernmental Charges for services Investment income Miscellaneous Total revenues Original $ EXPENDITURES Current Highway and streets Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Total other financing sources (uses) Net change in fund balance Fund balance, beginning of year Fund balance, end of year $ 3,642,059 11,235 3,653,294 Final $ Actual Variance with Final Budget Positive (Negative) 3,642,059 11,235 3,653,294 $ 3,481,233 4,270 16,652 15,316 3,517,471 6,281,092 6,281,092 6,176,967 89,125 6,266,092 3,926,719 40,164 3,966,883 (2,627,798) (2,612,798) (449,412) 2,163,386 2,277,798 2,277,798 449,412 (1,828,386) 2,277,798 2,277,798 449,412 (1,828,386) (350,000) (335,000) 309,339 309,339 (40,661) $ (25,661) $ 2,250,248 48,961 2,299,209 - 335,000 309,339 $ 309,339 (160,826) 4,270 5,417 15,316 (135,823) $ 335,000 84 CITY OF GOODYEAR, ARIZONA GRANTS SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts Original Final Actual $ 1,863,499 1,863,499 $ 1,863,499 1,863,499 $ 1,275,182 24,058 1,299,240 EXPENDITURES Current General government Public safety Highway and streets Community development Capital outlay Total expenditures 46,490 375,000 50,000 2,637,132 3,108,622 46,490 477,600 50,000 2,849,314 3,423,404 317,046 8,836 49,809 874,820 1,250,511 Net change in fund balance (1,245,123) (1,559,905) (84,588) (84,588) $ (1,329,711) $ (1,644,493) REVENUES Intergovernmental Miscellaneous Total revenues Fund balance, beginning of year Fund balance, end of year Variance with Final Budget Positive (Negative) $ 46,490 160,554 (8,836) 191 1,974,494 2,172,893 48,729 1,608,634 (84,588) $ (35,859) (588,317) 24,058 (564,259) $ 1,608,634 85 CITY OF GOODYEAR, ARIZONA COMMUNITY FACILITIES DISTRICTS - GENERAL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Variance with Final BudgetPositive (Negative) Budgeted Amounts REVENUES Taxes Investment income Contributions Miscellaneous Total revenues Original Final Actual $ 1,720,656 37,900 1,366,351 360,000 3,484,907 $ 1,720,656 37,900 1,366,351 360,000 3,484,907 $ 1,455,509 72,964 158,292 1,686,765 4,184,907 4,184,907 4,184,907 4,184,907 951,931 951,931 3,232,976 3,232,976 1,434,834 EXPENDITURES Current General government Total expenditures Net change in fund balance Fund balance, beginning of year Fund balance, end of year $ (700,000) (700,000) 734,834 868,718 868,718 868,718 168,718 $ 1,603,552 168,718 $ $ (265,147) 35,064 (1,366,351) (201,708) (1,798,142) $ 1,434,834 86 CITY OF GOODYEAR, ARIZONA COMMUNITY FACILITIES IMPACT FEES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Charges for services Investment income Total revenues Original $ EXPENDITURES Current: Public works Capital outlay Total expenditures $ 1,563,988 1,563,988 Net change in fund balance (955,105) Fund balance, beginning of year Fund balance, end of year 608,883 608,883 Final 3,889,543 $ 2,934,438 $ 608,883 608,883 Actual $ 602,506 64,439 666,945 Variance with Final Budget Positive (Negative) $ (6,377) 64,439 58,062 18,300 2,373,859 2,392,159 13,726 2,191,462 2,205,188 4,574 182,397 186,971 (1,783,276) (1,538,243) 245,033 3,889,543 3,889,543 2,106,267 $ 2,351,300 $ 245,033 87 CITY OF GOODYEAR, ARIZONA GENERAL GOVERNMENT IMPACT FEES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Charges for services Investment income Total revenues Original $ EXPENDITURES Current Public works Capital outlay Total expenditures Net change in fund balance Fund balance, beginning of year Fund balance, end of year $ 1,963,516 1,963,516 Final $ 1,963,516 1,963,516 3,295,867 3,295,867 11,500 2,976,050 2,987,550 (1,332,351) (1,024,034) 3,861,252 3,861,252 2,528,901 $ 2,837,218 Actual $ 1,718,405 185,993 1,904,398 Variance with Final Budget Positive (Negative) $ 11,891 1,165,727 1,177,618 (391) 1,810,323 1,809,932 726,780 1,750,814 3,861,252 $ 4,588,032 (245,111) 185,993 (59,118) $ 1,750,814 88 CITY OF GOODYEAR, ARIZONA PUBLIC WORKS IMPACT FEES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Charges for services Investment income Total revenues Original $ EXPENDITURES Current Public works Capital outlay Total expenditures 1,701,654 1,701,654 Final $ 1,701,654 1,701,654 Actual $ 1,099,446 194,442 1,293,888 Variance with Final Budget Positive (Negative) $ (602,208) 194,442 (407,766) 374,221 374,221 9,200 461,564 470,764 9,513 137,052 146,565 (313) 324,512 324,199 Net change in fund balance 1,327,433 1,230,890 1,147,323 (83,567) Fund balance, beginning of year 3,995,780 3,995,780 3,995,780 - Fund balance, end of year $ 5,323,213 $ 5,226,670 $ 5,143,103 $ (83,567) 89 CITY OF GOODYEAR, ARIZONA FIRE IMPACT FEES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Charges for services Investment income Total revenues Original $ EXPENDITURES Current Public works Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfer in Total other financing sources (uses) Net change in fund balance Fund balance, beginning of year Fund balance, end of year $ 764,710 764,710 Final $ Actual 764,710 764,710 1,900,000 1,900,000 13,700 3,273,013 3,286,713 (1,135,290) (2,522,003) $ 1,178,523 6,858 1,185,381 Variance with Final Budget Positive (Negative) $ 14,166 1,081,460 1,095,626 413,813 6,858 420,671 (466) 2,191,553 2,191,087 89,755 2,611,758 - - 325,447 325,447 - - 325,447 325,447 415,202 2,937,205 (1,135,290) (2,522,003) (246,500) (246,500) (1,381,790) $ (2,768,503) (246,500) $ 168,702 $ 2,937,205 90 CITY OF GOODYEAR, ARIZONA POLICE IMPACT FEES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Charges for services Investment income Total revenues Original $ EXPENDITURES Current Public works Capital outlay Total expenditures $ 1,708,000 1,708,000 Net change in fund balance 5,115,262 $ 4,397,393 990,131 990,131 Actual $ 12,400 4,576,109 4,588,509 (717,869) Fund balance, beginning of year Fund balance, end of year 990,131 990,131 Final $ 1,990,052 263,147 2,253,199 $ 12,822 163,939 176,761 (3,598,378) 2,076,438 5,115,262 5,115,262 1,516,884 Variance with Final Budget Positive (Negative) $ 7,191,700 999,921 263,147 1,263,068 (422) 4,412,170 4,411,748 5,674,816 $ 5,674,816 91 CITY OF GOODYEAR, ARIZONA TRANSPORTATION IMPACT FEES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Charges for services Investment income Miscellaneous Total revenues Original $ EXPENDITURES Current Public works Capital outlay Total expenditures Net change in fund balance Fund balance, beginning of year Fund balance, end of year 1,548,742 1,548,742 Final $ $ 2,504,066 66,066 75,075 2,645,207 $ 955,324 66,066 75,075 1,096,465 5,505,440 5,505,440 24,800 5,942,766 5,967,566 25,644 1,519,615 1,545,259 (844) 4,423,151 4,422,307 (3,956,698) (4,418,824) 1,099,948 5,518,772 649,568 $ 1,548,742 1,548,742 Actual Variance with Final Budget Positive (Negative) (3,307,130) 649,568 $ (3,769,256) 649,568 $ 1,749,516 $ 5,518,772 92 CITY OF GOODYEAR, ARIZONA LIBRARY IMPACT FEES SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Charges for services Investment income Total revenues Original $ 374,107 374,107 Final $ 374,107 374,107 Actual $ 394,222 106,650 500,872 Variance with Final Budget Positive (Negative) $ 20,115 106,650 126,765 EXPENDITURES Current: Public works Capital outlay Total expenditures 150,000 150,000 9,700 150,000 159,700 10,030 10,030 (330) 150,000 149,670 Net change in fund balance 224,107 214,407 490,842 276,435 2,291,438 2,291,438 2,291,438 Fund balance, beginning of year Fund balance, end of year $ 2,515,545 $ 2,505,845 $ 2,782,280 $ 276,435 93 CITY OF GOODYEAR, ARIZONA DEBT SERVICE SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts REVENUES Taxes Investment income Total revenues Original $ EXPENDITURES Debt service Principal retirement Interest and debt costs Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES Refunding bonds Refunding bonds premium Payment to refunded bond escrow agent Transfers in Transfers out Total other financing sources Net change in fund balance 6,632,500 6,632,500 $ 6,632,500 6,632,500 3,200,000 4,841,773 8,041,773 (1,409,273) (1,409,273) $ 6,517,935 61,803 6,579,738 $ (114,565) 61,803 (52,762) 3,075,143 2,955,897 6,031,040 124,857 1,885,876 2,010,733 548,698 1,957,971 - - 3,165,000 87,554 3,165,000 87,554 - - (3,264,032) 4,960,097 (3,058,040) 1,890,579 (3,264,032) 4,960,097 (3,058,040) 1,890,579 2,439,277 3,848,550 (1,409,273) 587,476 $ Actual 3,200,000 4,841,773 8,041,773 (1,409,273) Fund balance, beginning of year Fund balance, end of year Final Variance with Final Budget Positive (Negative) (821,797) 587,476 $ (821,797) 587,476 $ 3,026,753 $ 3,848,550 94 CITY OF GOODYEAR, ARIZONA WATER & SEWER ENTERPRISE FUND SCHEDULE OF OPERATIONS - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts Original Final $ 15,927,877 19,204,168 35,132,045 $ 15,927,877 19,204,168 35,132,045 4,131,712 39,690,679 43,822,391 4,131,712 90,792,650 94,924,362 (8,690,346) (59,792,317) 5,364,445 1,334,043 (1,632,929) 5,364,445 1,334,043 (1,632,929) 7,829,657 762,200 640,720 (2,452,072) 2,465,212 762,200 (693,323) (819,143) 5,065,559 5,065,559 6,780,505 1,714,946 Income (loss) before capital contributions and transfers (3,624,787) (54,726,758) 6,970,729 61,697,487 Capital contributions Transfers in Transfers out 8,180,000 (1,016,124) 8,180,000 (1,016,124) 19,575,476 11,405,957 (3,565,225) 11,395,476 11,405,957 (2,549,101) Change in net assets 3,539,089 (47,562,882) 34,386,937 81,949,819 108,337,333 108,337,333 108,337,333 $ 111,876,422 $ 60,774,451 $ 142,724,270 Operating revenues: Charges for service Miscellaneous Total operating revenue Operating expenses: Administration Costs of sales and services Depreciation Total operating expenses Operating income (loss) Nonoperating revenues (expenses): Impact fees Intergovernmental Investment income Interest expense Total nonoperating revenues (expenses) Net assets, beginning of year Net assets, end of year Actual Variance with Final Budget Positive (Negative) $ 15,139,535 12,240 15,151,775 $ 4,180,130 7,243,981 3,537,440 14,961,551 (788,342) (19,191,928) (19,980,270) (48,418) 83,548,669 (3,537,440) 79,962,811 190,224 59,982,541 $ 81,949,819 95 CITY OF GOODYEAR, ARIZONA SANITATION ENTERPRISE FUND SCHEDULE OF OPERATIONS - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts Operating revenues: Charges for service Intergovernmental Miscellaneous Total operating revenue Original Final Actual $ 5,003,879 22,400 5,026,279 $ 5,003,879 22,400 5,026,279 $ 5,145,922 330 5,146,252 874,754 4,495,663 23,408 5,393,825 874,754 4,560,663 23,408 5,458,825 861,252 3,858,648 119,726 4,839,626 Operating expenses: Administration Costs of sales and services Depreciation Total operating expenses Operating income (loss) (367,546) Nonoperating revenues (expenses): Investment income Total nonoperating revenues (expenses) - Income (loss) before transfers - (367,546) Transfers out (432,546) - Change in net assets - (367,546) Net assets, beginning of year Net assets, end of year (432,546) (432,546) 1,174,581 $ 807,035 $ Variance with Final Budget Positive (Negative) $ 142,043 (22,400) 330 119,973 13,502 702,015 (96,318) 619,199 306,626 739,172 7,468 7,468 7,468 7,468 314,094 746,640 (142,665) (142,665) 171,429 603,975 1,174,581 1,174,581 742,035 $ 1,346,010 $ 603,975 96 CITY OF GOODYEAR, ARIZONA STADIUM ENTERPRISE FUND SCHEDULE OF OPERATIONS - BUDGET AND ACTUAL For The Year Ended June 30, 2008 Budgeted Amounts Operating revenues: Miscellaneous Total operating revenue Original $ - Final $ Actual - $ 200,138 200,138 Variance with Final Budget Positive (Negative) $ 200,138 200,138 Operating expenses: Administration Costs of sales and services Depreciation Total operating expenses - 328,828 72,068,145 72,396,973 172,916 228,613 4,731 406,260 155,912 71,839,532 (4,731) 71,990,713 Operating income (loss) - (72,396,973) (206,122) 72,190,851 Nonoperating revenues (expenses): Investment income Interest expense Total nonoperating revenues (expenses) - Income (loss) before transfers - Transfers in Transfers out - Change in net assets - Net assets, beginning of year Net assets, end of year 20,376 $ 20,376 (72,396,973) (72,396,973) 20,376 $ (72,376,597) 731,644 (454,740) 276,904 731,644 (454,740) 276,904 70,782 72,467,755 1,746,010 - 1,746,010 - 1,816,792 74,213,765 20,376 $ 1,837,168 $ 74,213,765 97 CITY OF GOODYEAR CAPITAL ASSETS USED IN THE OPERATIONS OF GOVERNMENTAL FUNDS SCHEDULE BY SOURCE June 30, 2008 Governmental funds capital assets Land Right of Way Streetscape Buildings and improvements Improvements other than buildings Vehicles, machinery and equipment Infrastructure Construction in progress Total governmental funds capital assets Investment in governmental funds capital assets by source: Government funds Total governmental funds capital assets 2008 $ 17,855,748 77,184,740 7,091,027 25,156,970 16,668,433 34,811,005 217,147,193 116,495,141 $ 512,410,258 $ 512,410,258 $ 512,410,258 99 CITY OF GOODYEAR CAPITAL ASSETS USED IN THE OPERATIONS OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY June 30, 2008 Land Right of Way Streetscape Function and Activity General Government Public Safety Highways and Streets Culture and Recreation Public Works Total governmental funds capital assets $ 4,613,762 84,275,767 12,493,223 748,763 $ 102,131,515 Buildings and Improvements Improvements other than Buildings $ 17,131,734 813,910 7,211,326 $ 159,200 52,605 888,530 15,568,098 $ 25,156,970 $ 16,668,433 100 Vehicles, Machinery and Equipment $ 6,614,869 17,231,514 1,671,745 9,292,877 $ 34,811,005 Infrastructure $ Construction in Progress Total 217,147,193 - $ 28,981,127 175,745 6,544,234 80,794,035 $ 40,368,959 34,591,598 301,422,960 22,411,643 113,615,098 $ 217,147,193 $ 116,495,141 $ 512,410,258 101 CITY OF GOODYEAR CAPITAL ASSETS USED IN THE OPERATIONS OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY For the fiscal year ended June 30, 2008 Function and Activity General Government Public Safety Highways and Streets Culture and Recreation Public Works Total governmental funds capital assets Governmental Funds Capital Assets July 1, 2007 Additions $ 27,396,384 28,532,419 274,322,115 16,417,476 40,717,515 $ 19,751,130 9,812,940 36,931,459 5,994,166 72,897,585 $ (6,778,556) $ (3,753,761) (9,830,614) - 40,368,958 34,591,598 301,422,960 22,411,642 113,615,100 $ 387,385,909 $ 145,387,281 $ (20,362,931) $ 512,410,258 Deductions Governmental Funds Capital Assets June 30, 2008 102 STATISTICAL SECTION Contents Page Financial Trends 104 These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time. Revenue Capacity 122 These schedules contain information to help the reader assess the City’s most significant local revenue sources, property tax and sale and use taxes. Debt Capacity 132 These schedules present information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. Economic and Demographic Information 138 These schedules offer economic and demographic indicators to help the Reader understand the environment within which the City’s financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 141 City of Goodyear Net Assets by Component Last Six Fiscal Years (accrual basis of accounting) (Unaudited) Fiscal Year Governmental Activities Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Governmental Activities Net Assets Business-type Activities Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Business-type Activities Net Assets Primary Government Invested in Capital Assets, Net of Related Debt Restricted Unrestricted Total Primary Government Net Assets 2008 2007 2006 $ 256,047,572 70,835,115 36,122,934 363,005,621 $ 206,294,183 60,388,579 57,992,720 324,675,482 $ 144,405,463 67,199,030 49,858,294 261,462,787 101,366,083 8,166,207 109,532,290 61,259,814 24,329,033 85,588,847 307,660,266 60,388,579 66,158,927 $ 434,207,772 205,665,277 67,199,030 74,187,327 $ 347,051,634 159,100,622 (13,193,174) 145,907,448 415,148,194 70,835,115 22,929,760 $ 508,913,069 Note: The City implemented GASB 34 for the fiscal year ended June 30, 2003. Prior financial statements have not been restated to provide this information. Source: Statement of Net Assets City financial records and reports 104 Table 1 Fiscal Year 2005 2004 2003 $ 127,120,944 92,391,268 26,380,488 245,892,700 $ 162,387,951 36,249,889 31,059,204 229,697,044 $ 73,017,558 3,058,777 31,801,683 107,878,018 55,662,610 3,498,896 59,161,506 46,277,707 4,850,793 51,128,500 182,783,554 92,391,268 29,879,384 $ 305,054,206 208,665,658 36,249,889 35,909,997 $ 280,825,544 40,297,163 335,000 (4,302,180) 36,329,983 113,314,721 3,058,777 27,499,503 $ 143,873,001 105 City of Goodyear Changes in Net Assets Last Six Fiscal Years (accrual basis of accounting) (Unaudited) Fiscal Year 2007 2008 2006 Expenses Governmental Activities: General Government Police Financial Services Community Services Information Services Fire Municipal Services Human Resources Community Development Culture and Recreation Highways and Streets Public Works Interest on Long-term Debt Total Governmental Activities Expenses $ 9,260,326 18,491,397 2,751,164 1,290,021 2,931,295 8,840,019 1,484,507 1,998,317 14,731,322 1,909,303 9,104,717 59,138,044 9,710,526 $ 141,640,958 $ 5,020,742 11,091,150 2,233,303 1,277,245 1,769,833 10,129,091 1,163,005 1,976,324 19,683,385 3,181,071 9,581,333 25,397,680 5,785,031 $ 98,289,192 $ Business-type Activities Water Utility Wastewater Utility Sanitation Stadium* Total Business-type Activities Expenses $ 12,224,570 5,189,053 4,839,626 861,000 $ 23,114,249 $ 10,866,043 4,872,792 4,401,267 $ 20,140,102 $ 9,722,925 4,313,533 3,435,486 $ 17,471,944 $ 164,755,207 $ 118,429,294 $ 71,853,403 Total Primary Government Net Assets 3,007,708 9,305,303 1,768,327 1,108,528 1,551,418 5,839,807 853,289 1,361,992 6,668,282 2,016,304 13,536,118 1,791,319 5,573,064 $ 54,381,459 Note: * Stadium Fund did not have operating activity until 2008 N/A data was not separated in these years. 106 Table 2 continued Fiscal Year 2004 2005 2003 $ 4,238,904 7,798,053 2,888,511 1,012,533 1,434,932 7,275,586 981,256 1,276,457 4,613,424 2,591,911 8,007,969 6,398,665 4,567,604 $ 53,085,805 $ 481,277 7,416,958 2,690,132 1,326,811 2,056,194 5,862,554 1,460,026 1,987,100 5,386,786 1,716,362 4,217,554 2,744,892 5,649,175 $ 42,995,822 $ 5,731,101 6,507,095 1,151,840 479,498 1,907,004 4,879,245 811,904 1,525,546 888,182 1,925,726 6,433,665 3,409,198 4,153,359 $ 39,803,363 $ 15,150,219 N/A 2,588,541 $ 17,738,760 $ 13,696,021 N/A 2,133,917 $ 15,829,938 $ $ 70,824,565 $ 58,825,760 $ 51,250,831 9,535,629 N/A 1,911,839 $ 11,447,468 107 City of Goodyear Changes in Net Assets Last Six Fiscal Years (accrual basis of accounting) (Unaudited) Fiscal Year 2008 Program Revenue Governmental Activities: Charges for Services: General Government Fire Police Municipal Services Public Works Community Development Operating Grants and Contributions Capital Grants and Contributions Total Governmental Activities Program Revenues Business-type Activities Charges for Services: Water Utility Wastewater Utility Sanitation Stadium Operating Grants and Contributions Capital Grants and Contributions Total Business-type Activities Revenues $ 2007 3,988,792 57,630 210,707 686,135 343,274 12,183,231 4,587,630 85,108,447 $ 107,165,846 396,770 54,887 128,040 638,390 3,527,777 13,241,940 895,854 62,732,783 $ 81,616,441 $ $ $ $ 8,894,793 6,244,742 5,145,922 762,200 27,405,133 48,452,790 $ 2006 7,588,225 6,137,152 4,392,794 20,000 24,414,623 42,552,794 $ 124,169,235 286,419 61,456 67,264 529,007 126,800 14,584,804 648,756 26,761,281 $ 43,065,787 5,952,571 4,846,569 3,185,387 240,000 26,016,946 40,241,473 $ 83,307,260 Total Primary Government Revenues $ 155,618,636 Net (Expense)/Revenue Governmental Activities Business-type Activities Total Primary Government Net Revenue $ (34,475,112) $ (16,672,751) $ (11,315,672) 22,412,692 22,769,529 31,152,165 $ (3,322,947) $ 5,739,941 $ 11,453,857 108 Table 2 continued Fiscal Year 2005 $ 2004 2003 133,367 434,179 259,993 10,631,653 523,405 16,472,105 $ 28,454,702 $ 276,990 38,716 8,425 293,355 1,162,624 8,774,894 109,956 46,863,563 $ 57,528,523 $ $ 8,895,239 3,775,636 2,786,148 10,853,019 26,310,042 $ 10,525,392 3,631,132 2,335,547 12,702,625 29,194,696 $ $ 54,764,744 $ 86,723,219 $ 33,913,799 $ (24,631,103) $ 14,532,701 8,571,282 13,364,758 $ (16,059,821) $ 27,897,459 5,416,791 45,991 35,035 1,454,454 2,195,739 2,074,991 397,092 9,475,823 $ 21,095,916 2,334,840 3,729,617 1,939,809 4,813,617 12,817,883 $ (18,707,447) 1,370,415 $ (17,337,032) 109 City of Goodyear Changes in Net Assets Last Six Fiscal Years (accrual basis of accounting) (Unaudited) Fiscal Year 2008 2007 2006 Governmental Revenues and Other Changes in Net Assets Governmental Activities: Taxes $ 61,251,635 $ 59,428,806 $ 48,726,571 Intergovernmental 12,654,235 15,053,501 6,997,920 Interest and Investment Income 4,268,448 4,723,886 4,436,598 Miscellaneous 4,075,011 1,029,445 1,486,027 (56,622) (117,062) Transfers (9,444,077) Total Governmental Activities $ 72,805,252 $ 80,179,016 $ 61,530,054 Business-type Activities Interest and Investment Income Mitigation proceeds Miscellaneous Transfers Total Business-type Activities 1,379,832 212,708 9,444,077 $ 11,036,617 $ Total Primary Government $ 83,841,869 $ 81,709,767 $ 64,329,728 Changes in Net Assets Governmental Activities Business-type Activities Total Primary Government $ 38,330,140 36,375,158 $ 74,705,298 $ 63,505,623 23,943,443 $ 87,449,066 $ 50,214,382 25,569,203 $ 75,783,585 $ $ 1,447,446 26,683 56,622 1,530,751 $ $ 715,181 1,950,000 17,431 117,062 2,799,674 Note:The City implemented GASB 34 for the fiscal year ended June 30, 2003. Prior financial statements have not been restated to provide this information. Source: Statement of Net Assets City financial records and reports 110 Table 2 concluded Fiscal Year 2005 $ 31,498,052 5,973,538 1,079,720 1,641,295 634,153 $ 40,826,758 $ $ 2004 2003 $ 25,487,392 $ 21,111,029 5,756,754 5,587,983 556,145 (499,021) 408,114 233,858 (799,999) 2,257,938 $ 31,408,406 $ 28,691,787 88,211 $ 7,666 (634,153) (538,276) $ 119,849 67,756 799,999 987,604 $ $ 152,306 82,345 (2,257,938) (2,023,287) $ 40,288,482 $ 32,396,010 $ 26,668,500 $ 16,195,655 8,033,006 $ 24,228,661 $ 45,941,107 14,352,362 $ 60,293,469 $ $ 9,984,340 (652,872) 9,331,468 111 Table 3 City of Goodyear Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (accrual basis of accounting) (Unaudited) Fiscal Year Property 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 $ 18,144,197 12,370,983 9,826,690 8,583,676 7,187,270 5,718,332 2,169,086 1,622,925 1,085,812 1,033,137 Sales and Use Taxes Privilege & Use - Transient General Occupancy $ 41,036,060 $ 1,009,256 44,284,577 955,859 36,526,485 893,528 21,020,275 727,576 16,814,849 527,267 14,110,269 500,620 11,849,499 394,327 10,523,211 455,723 8,878,428 821,056 7,211,247 609,712 Franchise Taxes $ 2,071,378 1,817,387 1,479,868 1,166,525 958,006 781,808 751,432 550,374 453,842 382,703 Intergovernmental State Shared State Revenue Highway User Sales Sharing Revenue $ 6,101,593 6,307,272 3,225,710 2,600,534 2,582,196 2,224,251 2,255,263 1,606,992 1,497,368 1,045,506 $ 6,503,557 5,252,405 1,979,970 1,738,442 1,705,193 2,012,719 1,972,442 1,103,778 1,025,053 923,760 $ 3,401,589 3,493,824 1,792,240 1,634,562 1,469,365 1,351,013 1,679,426 1,221,327 809,530 717,521 Source: City financial records and reports 113 City of Goodyear Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (Unaudited) Fiscal Year General Fund Unreserved All Other Governmental Funds Reserved, Reported in: Debt Service Funds Capital Projects Funds Unreserved, Reported in: Special Revenue Funds Capital Projects Funds Total All Other Governmental Funds 2008 2007 2006 2005 $ 42,219,809 $ 61,037,128 $ 53,853,901 $ 29,393,457 15,356,746 10,942,787 8,726,046 7,810,178 7,833,170 21,303,978 6,643,132 9,704,731 25,851,665 27,462,037 20,649,813 10,220,953 19,835,781 3,354,296 14,475,469 46,019,494 $ 79,613,235 $ 47,406,990 $ 52,327,225 $ 76,842,826 Source: Statement of Net Assets City financial records and reports 114 Table 4 Fiscal Year 2004 2003 2002 $ 18,701,153 $ 12,456,038 $ 11,904,771 6,388,963 - 3,027,055 - 8,731,725 21,129,201 $ 36,249,889 2001 $ 2000 1999 7,876,202 $ 10,213,487 $ 5,774,914 4,096,549 - 3,804,079 - 1,859,019 - 1,899,115 - 4,613,137 32,003,402 3,773,232 18,922,708 2,973,780 25,862,738 2,195,574 15,351,548 1,306,407 19,660,937 $ 39,643,594 $ 26,792,489 $ 32,640,597 $ 19,406,141 $ 22,866,459 115 City of Goodyear Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (Unaudited) Fiscal Year Revenues Taxes Licenses and permits Intergovernmental Charges for services Rents and royalties Fines and forfeits Investment income Participation by others Special assessments Impact fees Contributions Miscellaneous Total Revenues Expenditures General Government Police Financial Services Community Services Information Services Fire Municipal Services Human Resources Community Development Culture and Recreation Highways and Streets Public Works Debt Service: Bond issuance costs Principal retirement Interest and debt cost Capital outlay Total Expenditures Excess of Revenues over (under) Expenditures 2008 2007 2006 2005 $ 61,112,204 7,160,922 17,361,565 19,117,473 678,594 4,268,447 2,228,149 8,260,888 4,075,010 124,263,252 $ 59,346,833 8,905,743 16,456,618 14,921,767 584,316 4,723,886 2,228,646 14,245,039 1,046,124 122,458,972 $ 48,669,770 10,593,032 7,691,531 12,590,311 482,604 4,436,598 2,197,445 1,717,842 1,433,513 89,812,646 $ 31,501,700 7,899,726 6,288,957 9,894,288 364,301 1,079,719 2,580,510 2,401,107 1,641,295 63,651,603 5,486,915 13,295,314 4,850,217 1,329,505 2,834,417 11,277,737 1,547,460 1,995,841 9,262,010 4,667,176 3,994,494 4,261,005 8,637,828 10,262,437 2,209,677 1,255,467 1,622,556 8,842,402 1,102,875 1,973,845 6,028,162 3,431,934 4,756,383 4,294,102 3,871,939 8,674,983 1,550,946 1,190,116 1,593,403 7,332,103 848,612 1,360,762 6,599,788 2,381,569 3,647,507 2,154,782 2,482,603 7,853,958 1,553,016 1,012,533 1,434,932 5,163,911 704,584 1,276,457 6,636,525 2,128,218 2,128,408 1,917,725 5,141,143 10,466,384 135,249,363 215,658,981 4,836,000 5,740,194 71,999,738 136,993,600 3,777,600 5,313,243 14,819,302 65,116,655 5,327,354 5,825,352 10,039,532 55,485,108 (91,395,729) (14,534,628) 24,695,991 8,166,495 116 Table 5 continued Fiscal Year 2004 $ 25,507,299 6,785,229 5,811,389 9,057,321 332,046 567,142 1,555,984 1,562,190 600,649 51,779,249 2003 2002 $ 21,092,384 $ 17,493,808 3,845,730 2,729,164 5,985,075 8,442,804 5,805,188 1,621,233 18,391 365,136 288,301 (499,021) 861,929 1,842,726 1,654,637 1,446,388 1,946,971 125,211 4,940,329 2,803,272 43,189,458 39,620,198 2001 2000 1999 $ 15,164,812 2,705,648 4,084,697 1,851,640 14,078 332,529 2,128,121 860,250 805,144 1,142,223 1,729 1,221,328 30,312,199 $ 12,946,841 1,920,547 3,848,972 2,378,270 5,770 253,629 1,703,719 1,087,874 1,517,828 1,018,250 17,545 844,288 27,543,533 $ 10,509,210 1,331,797 3,218,459 1,239,642 5,963 190,742 1,220,929 882,211 1,030,554 495,575 3,000 214,770 20,342,852 3,138,823 6,643,972 1,240,958 787,635 1,138,348 4,529,680 879,352 985,334 5,543,191 1,699,797 1,804,454 2,002,948 4,469,126 6,097,075 1,148,502 189,763 1,907,004 4,879,245 734,689 1,525,546 864,434 1,621,308 2,817,472 2,432,247 3,849,495 5,607,832 1,089,136 122,636 1,129,707 4,385,622 704,381 1,369,745 767,620 1,504,652 3,764,721 2,967,970 2,634,720 4,122,949 560,459 76,436 802,622 3,476,865 608,477 1,115,608 751,053 995,588 2,929,215 2,532,841 1,269,644 4,684,595 43,329 24,495 392,401 3,205,029 635,405 88,595 635,258 1,098,119 2,735,795 1,587,891 2,671,082 3,160,313 525,984 74,988 713,531 2,266,694 349,252 500,782 693,203 474,277 1,711,454 1,104,551 2,971,580 4,020,706 40,712,284 78,099,062 293,757 3,026,100 3,901,382 11,449,411 47,357,061 2,324,200 3,152,550 15,747,085 48,487,352 1,950,000 2,197,962 16,589,132 41,343,927 2,115,000 2,552,398 6,127,036 27,194,990 1,454,000 1,592,623 7,928,663 25,221,397 (26,319,813) (4,167,603) (8,867,154) (11,031,728) 348,543 (4,878,545) 117 City of Goodyear Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) (Unaudited) Fiscal Year 2008 Expenditures Transfer in Transfer out Capital lease agreements Debt issuance Debt Premium Refunding Bonds Total Other Financing Sources and (Uses) Net Change in Fund Balances Debt Service as a Percentage of Noncapital Expenditures 2007 2006 2005 $ 11,561,671 $ 17,288,179 $ 18,210,420 $ (21,005,748) (17,387,710) (47,966,568) 114,450,431 (221,698) 16,897,151 5,005,000 - - 104,784,656 16,797,620 $ 13,388,927 $ 2,262,992 19.1% 16.3% (24,751,148) $ 2,933,372 (2,299,219) 42,005,000 479,593 43,118,746 (55,157) $ 51,285,241 18.1% 24.5% Source: City financial records and reports 118 Table 5 concluded Fiscal Year 2004 $ 2003 2001 2000 8,994,203 $ (6,736,265) 27,050,000 18,310,000 272,362 (2,432,655) 5,078,915 21,188,698 - - - 18,012,644 6,682,162 - 18,407,645 7,047,615 21,928,899 629,712 24,367,856 978,255 $ 19,489,311 26,250,001 (69,812) $ 14,240,042 18.7% 19.3% $ 7,799,778 $ 10,043,729 $ (5,831,078) (9,303,528) 1999 2,242,149 $ (3,042,148) - $ 2002 (1,819,539) $ 10,897,171 16.7% 16.8% $ 3,557,416 $ (3,054,136) 126,432 22.2% 2,306,978 (2,633,928) 17.6% 119 Table 6 City of Goodyear Governmental Activities Tax Revenues By Source Last Ten Fiscal Years (modified accrual basis of accounting) (Unaudited) Fiscal Year Property 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 $ 17,763,564 12,289,010 9,769,889 8,583,676 7,187,270 5,718,332 4,460,668 3,370,249 2,612,205 2,141,054 Sales and Use Taxes Privilege Transient General Occupancy $ 40,026,804 44,284,577 36,526,485 21,747,851 17,342,116 14,610,889 13,033,140 11,794,563 10,334,636 8,368,156 $ 1,009,256 955,859 893,528 727,576 527,267 500,620 394,327 455,723 821,056 609,712 Franchise Taxes $ 2,071,378 1,817,387 1,479,868 1,166,525 958,006 781,808 751,432 550,374 453,842 382,703 Intergovernmental State Shared State Revenue Highway User Sales Sharing Revenue $ 6,101,593 6,307,272 3,225,710 2,600,534 2,582,196 2,224,251 2,255,263 1,606,992 1,497,368 1,045,506 $ 6,503,557 5,252,405 1,979,970 1,738,442 1,705,193 2,012,719 1,972,442 1,103,778 1,025,053 923,760 $ 3,401,589 3,493,824 1,792,240 1,634,562 1,469,365 1,351,013 1,679,426 1,221,327 809,530 717,521 Source: City financial records and reports 121 City of Goodyear Property Tax Rates Direct and Overlapping Governments1 Last Three Fiscal Years (Unaudited) City Direct Rate Overlapping Rates County-Wide Jurisdictions Fiscal Year 2008 2007 2006 Operating Rate $ 0.7321 0.7945 0.8222 Debt Service Rate $ 0.8679 0.7991 0.7778 Total City Rate $ 1.6000 1.5936 1.6000 County Library District Rate County Operating Rate $ 1.1046 1.1794 1.1971 $ 0.0391 0.0507 0.0521 County Flood District Rate Fire District Assistance Rate $ 0.0053 0.0068 0.0069 $ 0.1533 0.2047 0.2119 Note: Data prior to 2006 is not available. * = Assessed / Acreage Basis 1 Source: Maricopa County Assessor's Office 122 Table 7 continued Overlapping Rates County-Wide Jurisdictions County Education Equalization Rate $ 0.4358 Central Arizona Project Rate Community College Rate $ 0.9760 1.0646 1.0315 $ 0.1000 0.1200 0.1200 Special Health Care District Rate $ 0.0935 0.1184 0.1206 Total County Rate $ 2.4718 2.7446 3.1759 123 City of Goodyear Property Tax Rates Direct and Overlapping Governments1 Last Three Fiscal Years (Unaudited) Overlapping Rates Agua Fria/ Agua Fria/ Avondale Litchfield Rate Rate Buckeye/ Liberty Rate Other Special Taxing Districts West Maricopa Centerra Education Central Roosevelt Community Tolleson/ Center Arizona Irrigation Facilities Littleton District GRD District District Rate Rate Rate Rate* Rate $ 6.4298 7.8564 7.8631 $ 6.7267 7.3005 7.4944 $ 6.8078 7.3586 8.3794 School Districts $ 5.3545 6.8558 6.9430 $ 0.0500 0.0500 0.0500 $ 1.0000 1.0000 1.0000 $ 15.0000 15.0000 15.0000 $ 3.0000 3.0000 3.0000 Cortina Community Facilities District Rate $ 2.8500 2.8500 2.8500 Note: Data prior to 2006 is not available. * = Assessed / Acreage Basis 1 Source: Maricopa County Assessor's Office 124 Table 7 concluded Overlapping Rates Other Sepcial Taxing Districts Estrella Goodyear Goodyear Palm King Wildflower Wildflower Cottonflower Mtn. Ranch Community Community Valley Ranch Community Community Community Community Facilities Facilities Community Community Facilities Facilities Facilities Facilities General Utilities Facilities Facilities General General District District District #1 District #1 District #3 District District #1 District #2 Rate Rate Rate Rate Rate Rate Rate Rate $ 1.7639 3.0000 3.0000 $ 1.3000 1.3000 1.3000 $ 0.8040 1.0000 1.0000 $ 1.0000 1.0000 1.0000 $ 1.6295 2.0000 0.3000 $ 0.3000 0.3000 $ - $ 1.3123 2.1340 2.1893 $ 1.4154 2.3935 2.3547 125 Table 8 City of Goodyear Principal Property Tax Payers Last Two Fiscal Years (Unaudited) Fiscal Year 2008 Taxpayer Suncor Development Company Taxable Assessed Value 2003 Percentage of Total Taxable Assessed Rank Value Taxable Assessed Value Percentage of Total Taxable Assessed Rank Value $ 25,206,266 1 3.30% $ 14,143,894 1 6.36% NNP Estrella Mountain Ranch LLC 19,558,505 2 2.56% - 0.00% Arizona Public Service Company 17,302,544 3 2.26% 2 3.48% VHS of South Phoenix Inc. 14,712,935 4 1.93% - 0.00% First American Title Insurance Company 12,604,030 5 1.65% 6 1.61% Taylor Woodrow/Arizona, Inc. 11,094,596 6 1.45% - - 0.00% He Capital KR LLC 9,510,489 7 1.24% - - 0.00% Sun MP LLC 9,162,917 8 1.20% - - 0.00% BT Goodyear LLC 8,489,947 9 1.11% - - 0.00% Doa Properties I LLC 7,702,560 10 1.01% - - 0.00% 7,739,112 3,580,451 Byrd Enterprises of Arizona Inc. - - - 2,068,211 9 0.93% Rubbermaid, Inc. - - - 8,339,560 2 3.75% Sun Chase Estrella LP - - - 6,560,454 4 2.95% McLane Company - - - 4,492,243 5 2.02% Qwest Communications - - - 2,646,420 7 1.19% Dayton Judson - - - 2,246,121 8 1.01% Southwest Gas Corporation - - - 1,801,345 10 0.81% Total $ 135,344,789 3.32% $ 51,816,466 4.68% Note: Data not available prior to 2003. Source: Maricopa County Treasurer 127 City of Goodyear Assessed Value and Estimated Actual Value of Taxable Property1 Last Three Fiscal Years (Unaudited) Fiscal Year Ended June 30 Total Assessed Value Residential Property 2008 2007 2006 $ 464,968,904 259,063,526 219,161,231 Total Assessed Value Commercial Property $ 159,482,762 131,663,157 109,929,249 Agricultural/ Vacant Land $ 221,884,779 164,267,777 97,388,312 Other Less: Tax-Exempt Property Net Assessed Value $ 30,978 47,639 226,783 $ 82,130,285 60,129,086 35,549,177 $ 764,237,138 494,913,013 391,156,398 Note: Data prior to 2006 is not available. 1 Source: Maricopa County Assessor's Office Under Arizona law, there are two property valuations bases: PRIMARY and SECONDARY. The primary (limited) assessed valuation is used when levying for maintenance and operations. The secondary (full cash) assessed valuation is used when levying for debt retirement. 128 Table 9 Estimated Actual Taxable Value Secondary Tax Rate $ 0.8679 0.7991 0.7778 $ 6,700,379,823 4,159,221,424 3,254,133,854 Assessed Value as Percentage of Actual Value 11.4% 11.9% 12.0% 129 Table 10 City of Goodyear Property Tax Levies and Collections1 Last Ten Fiscal Years (Unaudited) Fiscal Year Ended June 30 Taxes Levied for the Fiscal Year 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 $ 10,843,797 7,424,246 6,070,318 6,049,416 5,096,682 4,287,085 3,204,131 2,541,008 1,977,135 1,682,349 Collected within the Fiscal Year of the Levy Percentage Amount of Levy $ 10,784,567 7,257,013 5,972,384 5,974,482 4,982,963 4,112,585 3,102,195 2,484,965 1,967,017 1,663,764 99.45% 97.75% 98.39% 98.76% 97.77% 95.93% 96.82% 97.79% 99.49% 98.90% Collection in Subsequent Years $ 49,075 51,203 2,469 277 - Total Collections to Date Percentage Amount of Levy $ 10,784,567 7,306,088 5,972,384 5,974,482 4,982,963 4,112,585 3,153,398 2,487,434 1,967,294 1,663,764 99.45% 98.41% 98.39% 98.76% 97.77% 95.93% 98.42% 97.89% 99.50% 98.90% 1 Source: City Financial Records and Reports Schedule includes General and Debt Service Funds 131 City of Goodyear Ratios of Outstanding Debt by Type Last Three Fiscal Years (Unaudited) Fiscal Year Ended June 30 General Obligation Bonds 2008 2007 2006 $ 41,719,857 36,050,000 27,280,000 Note: Governmental Activities Public Greater Improvement McDowell Arizona Corporation Road Development Municipal Corridor Authority Facilities Improvement Loan Revenue Bond District $ 3,185,000 3,645,000 $ 6,415,000 3,320,000 3,485,000 $ 47,165,000 - Community Facilities District Bonds $ 131,116,000 76,844,000 73,000,000 Data prior to 2006 is not available. Source: City Financial Records and Reports 132 Table 11 General Obligation Bonds $ 88,125,143 54,145,000 28,990,000 Business-Type Activities Public Improvement Corporation Municipal Facilities Revenue Revenue Bond Bonds Water Infrastructure Finance Authority Loan $ 67,850,000 $ $ 2,345,000 2,460,000 2,580,000 9,443,400 9,985,012 10,505,512 Total $ 394,179,400 185,989,012 149,485,512 Percentage of Personal Income 25.65% $ 12.34% 11.74% Per Capita 6,742 3,335 3,007 133 Table 12 City of Goodyear Ratios of General Bonded Debt Outstanding Last Seven Fiscal Years (Unaudited) Fiscal Year Ended June 30 General Obligation Bonds 2008 2007 2006 2005 2004 2003 2002 $ 129,845,000 90,195,000 56,270,000 58,265,000 30,395,000 22,270,000 11,210,000 Less: Amounts Available in Debt Service Fund $ 3,026,753 587,476 210,498 123,863 499 - Total $ 126,818,247 89,607,524 56,059,502 58,141,137 30,394,501 22,270,000 11,210,000 Percentage Estimated Actual Taxable Value of Property 11.40% 12.00% 12.00% 17.77% 11.49% 10.01% 6.43% Per Capita $ 2,169 1,607 1,128 1,410 849 733 420 Note: Data prior to 2002 not available. Source: City Records (Does not include Enterprise or Special Assessment bonds) 134 Table 13 City of Goodyear Direct and Overlapping Governmental Activities Debt As of June 30, 2008 (Unaudited) Governmental Unit Debt repaid with property taxes and special assessment liens Maricopa County Maricopa County Community College District Avondale Elementary School District #44 Liberty Elementary School District #25 Litchfield Elementary School District #79 Agua Fria Union High School District #216 Buckeye Union High School District #201 Centerra Community Facilities District Cortina Community Facilities District Cottonflower Community Facilities District Estrella Mountain Ranch Community Facilities District Goodyear Community Facilities Utilities District #1 Goodyear Community Facilities General District #1 Palm Valley Community Facilities District #3 Wildflower Ranch Community Facilities General District #1 Wildflower Ranch Community Facilities General District #2 King Ranch Community Facilities District City of Goodyear Debt Outstanding $ 507,390,000 27,035,000 8,835,000 28,565,000 56,120,000 56,335,000 3,685,000 2,515,000 2,825,000 17,425,000 51,875,000 12,810,000 8,195,000 1,080,000 12,960,000 129,845,000 Estimated Percentage Applicable (a) 1.1600% 1.7200% 77.6900% 51.1800% 35.7400% 49.2300% 17.2000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% 100.0000% Estimated Share of Overlapping Debt $ 8,727,108 21,003,492 4,521,753 10,209,131 27,627,876 9,689,620 3,685,000 2,515,000 2,825,000 17,425,000 51,875,000 12,810,000 8,195,000 1,080,000 12,960,000 129,845,000 (a) Proportion applicable to the City of Goodyear, Arizona is computed on the ratio of secondary assessed valuation for 2008-2009. Sources: Maricopa County Department of Finance, Maricopa County Assessor's Office and Official Statements. 135 Table 14 City of Goodyear Legal Debt Margin Information Last Three Fiscal Years (Unaudited) Fiscal Year 2008 2007 2006 Secondary Assessed Value $ 764,237,138 $ 494,913,013 $ 391,377,371 20% Limitation Debt Limit Equal to 20% of Assessed Valuation $ 152,847,428 $ 98,982,603 $ 78,275,474 129,540,000 90,195,000 47,795,000 8,787,603 $ 30,480,474 Total Debt Applicable to 20% Limit Legal 20% Debt Margin (Available Borrowing Capacity) Total Net Debt Applicable to the 20% Limit as a Percentage of 20% Debt Limit 6% Limitation Debt Limit Equal to 6% of Assessed Valuation Total Debt Applicable to 6% Limit Legal 6% Debt Margin (Available Borrowing Capacity) Total Net Debt Applicable to the 20% Limit as a Percentage of 6% Debt Limit $ 23,307,428 84.75% $ 91.12% 61.06% $ 45,854,228 $ 29,694,781 $ 23,482,642 305,000 - 8,475,000 $ 45,549,228 $ 29,694,781 $ 15,007,642 0.67% 0.00% 36.09% Note: Data prior to 2006 is not available. Sources: Maricopa County Treasurer's Office City financial records and reports 136 Table 15 City of Goodyear Pledged-Revenue Coverage Last Three Fiscal Years (Unaudited) Public Improvement Corporation Municipal Facilities Revenue Bonds Fiscal Year Ended June 30 Operating Revenue Less: Operating Expenses Net Operating Revenue 2008 $ 85,680,828 $ 56,456,349 $ 29,224,479 Debt Service Principal Interest $ 3,250,000 $ Coverage - 8.99 Water Infrastructure Finance Authority Loan Fiscal Year Ended June 30 Operating Revenue Less: Operating Expenses 2008 2007 2006 $ 15,151,775 13,760,462 10,816,571 $ 12,671,962 13,987,570 12,401,149 Net Operating Revenue Development Fee Revenue $ 2,479,813 $ 7,829,657 (227,108) 5,330,221 (1,584,578) 7,284,046 Net Revenue $ 10,309,470 5,103,113 5,699,468 Debt Service Principal Interest $ 541,612 520,500 502,118 $ 404,992 426,104 446,469 Coverage 10.89 5.39 6.01 Water and Sewer Revenue Bonds Fiscal Year Ended June 30 Operating Revenue Less: Operating Expenses 2008 2007 2006 $ 15,151,775 13,760,462 10,816,571 $ 14,961,551 13,987,570 12,401,149 Net Operating Revenue $ Development Fee Revenue 190,224 $ 7,829,657 (227,108) 5,330,221 (1,584,578) 7,284,046 Net Revenue $ 8,019,881 5,103,113 5,699,468 Debt Service Principal Interest $ 115,000 120,000 130,000 $ 70,000 80,000 70,000 Coverage 43.35 25.52 28.50 Note: Data prior to 2006 is not available. Source: City Financial Records and Reports 137 Table 16 City of Goodyear Demographic and Economic Statistics Last Three Fiscal Years (Unaudited) Fiscal Year 2008 2007 2006 Population 58,462 55,775 49,714 Personal Income (in thousands) $ 1,536,966 1,507,375 1,274,269 Per Capita Personal Income $ 26,290 27,026 25,632 Median Age 36.1 36.3 35.7 Education Level in Years of Schooling 13 to 16 13 to 16 13 to 16 Unemployment Rate 3.0% 2.3% 2.3% Note: Data prior to 2006 is not available. Source: City Financial Records and Reports 138 Table 17 City of Goodyear Principal Employers1 Last Two Fiscal Years (Unaudited) Fiscal Year 2008 Fiscal Year 2003 Percentage of Total City Employees Rank Employment* Employees Rank Percentage of Total City Employment* Arizona State Prison/Perryville 950 1 4.61% 825 2 4.29% Lockheed Martin 900 2 4.36% 0 1 0.00% City of Goodyear 570 3 2.76% 200 3 1.04% West Valley Hospital 555 4 2.69% 0 7 0.00% McLane Sunwest 500 5 2.42% 450 4 2.34% Amazon.com 500 6 2.42% 0 0 0.00% Wal-Mart Supercenter 495 7 2.40% 0 5 0.00% Cavco Industries, Inc. 475 8 2.30% 400 6 2.08% Macy's Logistics & Operations 250 9 1.21% 0 0 0.00% Snyder's of Hanover 230 10 1.12% 0 10 0.00% Newell Rubbermaid, Inc. 0 0 0.00% 250 4 1.90% Fry's Food and Drug Store 0 0 0.00% 225 5 1.71% Aviation Management Systems 0 0 0.00% 220 6 1.67% Target 0 0 0.00% 175 8 1.33% Lufthansa-German Airlines 0 0 0.00% 170 9 1.29% Arizona Galvanizing 0 0 0.00% 150 10 1.14% Major Corporation Total 4,475 2,240 Note: Data not available prior to 2003. 1 Source: City Records *2008 labor force = 20,626; 2007 labor force = 19,240 139 Table 18 City of Goodyear Full-time Equivalent City Government Employees by Function Last Three Fiscal Years (Unaudited) 2007 2008 2006 Function General Government Financial Services Information Services Police Officers Civilians Planning and Development Fire Firefighters and Officers Civilians Human Resources Community Services Economic Development Municipal Services Public Works Water Wastewater Sanitation Total 52 28 12 52 27 11 41 21 9 89 26 38 72 24 32 72 18 21 93 17 10 11 5 14 64 30 18 12 70 12 9 12 3 11 52 30 14 13 65 12 9 8 3 9 49 30 14 10 519 444 391 Note: Data prior to 2006 is not available. Source: City Financial Records and Reports 141 City of Goodyear Operating Indicators by Function Last Three Fiscal Years (Unaudited) Function 2008 General Government City Clerk's Office # of records requests 648 City Prosecutor's Office % of cases resolved at first court appearance (arraignment) 97.53% Charges filed/charges adjudicated (resolved) 2,469 City Manager's Office % of survey respondents rating "Your Neighborhood as a Place to Live" as good to excellent 94% Communications & Public Information News releases/media updates 182 Traffic construction alerts 462 Total newsletter pages sent to citizens 136 Web pages created/updated 5,788 Number of visits to website 1,509,717 Number of web pages viewed 7,203,478 Number of graphics/photography projects completed 200 Police # Total arrests # Moving violations citations Fire # Emergency responses # Fire extinguished # Inspections Financial Services # accounts payable checks issued # purchase orders # water meters read annually Information Services # documents requests for service (Help Desk tickets) # of SPAM emails blocked from being delivered to the staff # of emails received Fiscal Year 2007 576 2006 180 94.79% 3,653 94.77% 2,692 94% 91% 129 215 116 4,296 1,322,259 4,865,081 175 92 267 42 2,520 840,757 5,318,311 140 2,614 11,452 2,814 12,422 2,603 12,175 3,431 143 3,427 3,236 154 2,403 1,960 150 759 9,949 1,043 155,805 9,305 1,002 147,241 9,014 1,067 125,382 6,052 5,214,519 6,008,336 4,000 3,587,184 4,264,236 3,477 878,595 1,246,386 <5 1,340 <5 7,859 Planning and Development Customer wait-time (in minutes) at One Stop Shop Total Number of Permits Issued Provide applicant with pre-application meeting within 30 days of submitting request % of inspections performed within 24 hours of request 100% 100% 100% 100% 100% 100% Human Resources # of new hires (FT & PT) HR operating cost as a % of City payroll 179 4.36% 164 5.50% 174 5.26% <5 5874 142 Table 19 Function Parks and Recreation # attending Park & Recreation facilities and Libraries annually (Aquatics) # of square feet of medians and rights of way maintained Economic Vitality Sales Tax growth (% annual change) Bed Tax growth (% annual change) Municipal Services # of homes serviced by Residential Refuse Collection # of citizens serviced by Household Hazardous Waste collection program 2008 Fiscal Year 2007 2006 49,111 113,422,247 50,093 108,342,476 46,330 106,600,032 -10.25% 6% 19,811 634 21% 7% 70% 23% 18,664 17,228 510 531 Water Service Water Service Connections Drinking Water Supplied (million gallons per day) Reclaimed Water Supplied (million gallons per day) 13,500 10.80 0.27 13,051 6.86 0.09 11,597 6.95 0.09 Wastewater Sewer Service Connections Sewage Treated (millions gallons per day) 13,500 3.24 11,398 2.48 5,037 2.29 34 1,096 32.7 977 2,755 2,092 Other Public Works Street resurfacing (miles) Potholes repaired Citizen & Neighborhood Resources # of new Code Enforcement cases processed per year 0 783 2,698 Note: Data prior to 2006 is not available. Source: City Financial Records and Reports 143 Table 20 City of Goodyear Capital Asset Statistics by Function Last Three Fiscal Years (Unaudited) Function Fiscal Year 2007 2008 2006 Public Safety Police: Stations Police Vehicles Fire Stations 3 125 6 4 146 4 1 107 4 Highways and Streets Street (miles) Streetlights Traffic signals 904 9040 56 904 9040 37 791 7,915 30 16 156 1 6 1 12 117 1 6 1 11 82 1 2 1 257 2,370 11 173 2,053 12 Culture and Recreation Parks Parks Acreage Swimming Pools Tennis Courts Community Centers Water Water Mains (miles) Fire Hydrants Storage capacity (thousands of gallons) Wastewater Sanitary Sewers (miles) Storm Sewers (miles) Treatment capacity (thousands of gallons) 286 2,481 15 236 80 5.5 MGD 152 105 4.55 MGD 167 105 11.6 MGD Note: Data prior to 2006 is not available. Source: City Financial Records and Reports 145 SINGLE AUDIT SECTION REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS The Honorable Mayor and Council City of Goodyear, Arizona We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of City of Goodyear, Arizona (the “City”), as of and for the year ended June 30, 2008, which collectively comprise the City’s basic financial statements and have issued our report thereon dated November 21, 2008. 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. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. However, as discussed below, we identified certain deficiencies in internal control over financial reporting that we consider to be significant deficiencies. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City’s financial statements that is more than inconsequential will not be prevented or detected by the City of Goodyear’s internal control. We consider the deficiencies described in the accompanying schedule of findings and questioned costs to be significant deficiencies in internal control over financial reporting, 2008-1 and 2008-2. www.henryandhorne.com The Honorable Mayor and Council City of Goodyear, Arizona Page Two A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the City’s internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However, of the significant deficiencies described above, we consider item 2008-2 to be a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. The City’s response to the findings identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the City’s response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of management, City Council, others within the entity, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Casa Grande, Arizona December 12, 2008 150 INDEPENDENT AUDITORS’ REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 The Honorable Mayor and Council City of Goodyear, Arizona Compliance We have audited the compliance of the City of Goodyear (the City), Arizona with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2008. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the City’s management. Our responsibility is to express an opinion on the City’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the City’s compliance with those requirements. In our opinion, the City of Goodyear, Arizona, complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2008. www.henryandhorne.com The Honorable Mayor and Council City of Goodyear, Arizona Page Two Internal Control Over Compliance The management of the City of Goodyear, Arizona is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City’s internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A control deficiency in an entity’s internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity’s internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity’s internal control. Our consideration of the internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of management, City Council, others within the entity, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. Casa Grande, Arizona December 12, 2008 152 CITY OF GOODYEAR SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended June 30, 2008 Grant Number Federal CFDA Number CCG7-15 10.664 DG0605 14.218 350,000 * 350,000 C5008515200 C5008518200 16.738 16.738 71,000 * 11,000 * 82,000 STP-GDY-0(014) 20.205 113,424 * 2007-PT-025 20.600 20,341 133,765 XP-96926901-0 66.202 29,132 29,132 97044 12,560 97.067 97.067 97.067 97.067 4,732 8,715 1,803 376,416 404,226 U.S. Department of Agriculture - Forest Service: Passed through Arizona State Land Depatment Forestry Division - Urban & Community Forestry: Tree City USA Total U.S. Department of Agriculture U.S. Department of Housing and Urban Development: Passed through Maricopa County Department of Housing: Community Development Block Grant Total Department of Housing and Urban Development U.S. Department of Justice: Passed through Maricopa County: McNett Grant McNett Grant Total U.S. Department of Justice U.S. Department of Transportation: Passed through Arizona Department of Transportation: ITS Strategic Plan Study Passed through Arizona Governor's Office of Highway Safety: Highway Safety Total U.S. Department of Transportation U.S. Environmental Protection Agency: Congressionally Mandated Projects Total U.S. Environmental Protection Agency U.S. Department of Homeland Security Assistance to Firefighters EMW-2007-FO-09830 Passed through Arizona Division of Emergency Management: Arizona Dept of Homeland Security 2005-GE-T5-0030 Arizona Dept of Homeland Security 2006-GE-T6-0007 Arizona Dept of Homeland Security 2007-333825-01 Arizona Dept of Homeland Security 2007-333825-02 Total Department of Homeland Security Total Federal Financial Assistance and Expenditures of Federal Awards Expenditures $ $ 5,000 5,000 1,004,123 *Denotes major program 153 CITY OF GOODYEAR, ARIZONA NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2008 NOTE 1 BASIS OF ACCOUNTING The accompanying Schedule of Expenditures of Federal Awards includes the federal grant activity of the City of Goodyear, Arizona and is presented on the modified accrual basis of accounting. The information in this schedule is presented in accordance with requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. 154 CITY OF GOODYEAR, ARIZONA SCHEDULE OF FINDINGS AND QUESTIONED COSTS June 30, 2008 Summary of Auditors’ Results 1. The auditor’s report expresses an unqualified opinion on the financial statements of City of Goodyear. 2. Two significant deficiencies relating to the audit of the financial statements are reported. 3. No instances of noncompliance material to the financial statements of the City of Goodyear were disclosed during the audit. 4. No significant deficiencies relating to the audit of the major federal award programs are reported. 5. The auditor’s report on compliance for U.S. Department of Housing and Urban Development Community Development Block Grant passed through Maricopa County Department of Housing, U.S. Department of Justice McNett Grants passed through Maricopa County, and U.S. Department of Transportation ITS Strategic Plan Study Grant passed through Arizona Department of Transportation expresses an unqualified opinion. 6. The audit disclosed no findings that are required to be reported in accordance with Section 510(a) of OMB Circular A-133. 7. The programs tested as major programs include U.S. Department of Housing and Urban Development Community Development Block Grant passed through Maricopa County Department of Housing (CFDA 14.218), U.S. Department of Justice McNett Grants passed through Maricopa County (CFDA 16.738), and U.S. Department of Transportation ITS Strategic Plan Study Grant passed through Arizona Department of Transportation (CFDA 20.205). 8. The threshold used for distinguishing between Type A and B programs was $300,000. 9. City of Goodyear did not qualify as a low-risk auditee. 10. There were no prior year findings. 155 CITY OF GOODYEAR SCHEDULE OF AUDIT FINDINGS JUNE 30, 2008 Financial Statement Findings 2008-1 Segregation of duties Condition: There were several individuals within finance that had access to make changes to payroll information even though it was not part of their normal duties. Criteria: A proper segregation of accounting functions is necessary to assure adequate internal controls. Effect: Segregation of duties related to the payroll process was not adequate. This could create control situations which would allow personnel to misappropriate assets. Cause: Management did not evaluate and grant payroll access only to individuals that needed the access to perform their normal duties. Recommendation: We recommend management evaluate and grant payroll access only to those individuals that need the access to perform their normal duties. Management’s response: The changes necessary to achieve this recommendation were made determined and provided to the ITS security personnel in 2007. Everyone involved in the process, including ITS security personnel thought these changes were made at that time. Upon review by the auditors in connection with the 2008 audit, it was determined that these changes were not made at that time. The changes were subsequently made in October. No inappropriate access to the payroll information was noted during this timeframe. 2008-2 Journal entries related to capital assets Condition: The City did not have proper controls to record nonstandard acquisitions/contributions of capital assets. Criteria: Proper controls over the financial reporting process of capital assets are necessary to ensure proper application of generally accepted accounting principles. Effect: The City made several client journal entries to correct capital assets after audit fieldwork had started. Material audit adjustments were made to correct capital assets. 156 Cause: Management did not have proper oversight over the process of recording nonstandard acquisitions/contributions of capital assets. Recommendation: We recommend that the finance department have a process in place to monitor and review the recording of acquisitions/contributions of capital assets. We also recommend that finance personnel prepare a crosswalk of capital outlay expenditures and capital contribution revenue compared to capitalized assets for management to review prior to audit fieldwork. Management’s response: There were a couple of complex capital asset transactions recorded after the final adjusted balances were presented by the auditors. The adjustments impacting the capital asset accounts for the governmental fund types were found by City accounting staff in a follow up review of the information given to the auditors. In addition, there was a significant change in the accounting for the water rights in the Enterprise Funds that was generated by City Staff as a result of an analytical review of the draft financial statements that were compiled after the completion of the fieldwork. Training programs for accounting staff will be enhanced to emphasize capital asset accounting standards. 157